M Stanley Forecasts 3% Drop in Office Rental Rates This Year, Favors Office Sector Over Retail for Homebuilders

The analyst rating for HYSAN DEV (00014.HK) is Neutral, as assigned by UBS. This rating is based on several factors: 1. Improvement in Fundamentals: There have been improvements in the fundamentals of Hong Kong's retail and office building markets, which positively impacts HYSAN DEV's outlook. 2. Operating Cash Flow: UBS estimates that HYSAN DEV's operating cash flow should largely cover its dividend payments for 2025-26, although the buffer is expected to be small. 3. Risks of Deterioration: There is a cautionary note regarding potential deterioration in market fundamentals, which could lead to challenges in obtaining new financing and possibly trigger a dividend cut. 4. Revised EPS Forecasts: UBS has lowered its EPS forecasts for HYSAN DEV for 2026-27 by 7-9%, indicating some concerns about future earnings. 5. Target Price Adjustment: Despite the lowered EPS forecasts, UBS raised its target price from HKD 11 to HKD 15.7, reflecting a more favorable view on the stock's potential. Overall, the Neutral rating reflects a balance between the positive developments in the market and the risks associated with potential future challenges.