Friday, August 31, 2012
Fortune REIT: In Jul, the HK retail sales climbed 3.8% YoY by value, significantly lower than the median 9.0% forecast of economists surveyed by Dow Jones Newswires and the YoY increases from Jan-Jun, which varied between 8.7% and 17.1%. A government spokesman attributed Jul's slow growth to the external economic environment and more cautious local consumer sentiment. Retail sales growth could be more moderate in 2H12 than 1H12 and this will reduce the extent of possible rental increases. A new visa policy to be implemented starting 1 Sep will help more mainlanders travel to HK. OCBC estimate that mainland arrivals account for only 19% of HK retail sales, so any increase in retail sales due to the visa policy will likely be moderate. For suburban mall operators like FRT, local consumer sentiment will still be a more important driver for positive rental reversions. House maintain fair value of HK$5.33 and HOLD rating.