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HSBC cuts Champion REIT (02778) to HK$6.2
HSBC Global Research cut its target price for
Champion REIT (02778) to HK$6.2 from HK$6.3, and reiterated its "hold" rating.
  The research house said Champion's FY2017 results are in line with HSBC's estimates. The
satisfactory results were driven by strong positive office rental reversion in Three 
Garden Road project (TGR), and an expansion of NPI margin by 1.0pp y-o-y to 80.2%.
  HSBC said it was a solid set of results, but the research house's previous concerns on 
rising interest costs are materializing. It could slow down its DPU growth rate.
  Meanwhile, investors may get disappointed given no update on its potential disposal of 
its Langham Place Office Tower, which the company announced in July 2017.
  HSBC anticipates 2018 DPU growth to slow down to 2.6%, compared to 5.8% growth in 2017 
and 16% in 2016, given an emerging negative factor related to the interest rate. It would
partially dilute the impact of its positive rental reversion from TGR.

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