CICC: First payment for Jiulongcang Real Estate (01997) “outperforming the industry” rating target price of HK$36

The Zhitong Finance App learned that CICC released a research report stating that it covered Jiulongchang Real Estate (01997) for the first time and gave it a “outperforming industry” rating. The target price was HK$36, corresponding to a 33% NAV (net asset value) discount, a target dividend yield of 5.2% for 2026, and an upward margin of 17%. The bank believes that the company has high-quality assets, high operating stability, positive shareholder returns, and long-term position value.

CICC's main views are as follows:

The business focuses on core high-quality commercial assets in Hong Kong, China

On average, 90% of the company's revenue and 95% of operating profit over the past five years have come from the investment property and hotel business, and the core underlying net profit from the Hong Kong project in China accounts for 96% of the Group's basic net profit. In 2025, the Harbour City and Times Square projects accounted for 76% and 12% of revenue, respectively; by business format, shopping malls contributed 57% of revenue, 24% of office buildings, and 13% of hotels; profits mainly depended on shopping malls and office buildings.

Seaport City has excellent endowments and a stable position, and Times Square is gradually absorbing competitive pressure

Harbour City has an excellent location. Its shopping center gathers flagship luxury brands and has an outstanding competitive position. It has a solid appeal for visitors to Hong Kong and the local customer base. The bank expects that the economic environment in Hong Kong, China will continue to support a moderate recovery of the project. Although the Times Square shopping mall has an obvious location advantage, it is facing fierce regional competition. Currently, it is gradually bottoming out. Retail sales are now showing signs of stabilizing, and rents will still take some time.

Stable financial leverage and positive dividend payback

The company maintains good financial discipline. The net debt ratio for the first half of 2026 was 15.9%, a new low since listing. The dividend announced by the company was based on 90% of the core profits of investment properties and hotels in Hong Kong, China, and was actively disbursed. Its operating cash flow matching the profit also effectively supported the dividend base. The certainty of the company's dividend payments has increased, and the pursuit of long-term dividend value by incremental capital is expected to further support stock prices. In terms of potential catalysts, core project operations have gradually stabilized, and performance and dividends have been steadily realized.

Profit forecasting and valuation

The bank estimates that the company's EPS for 2026-2027 will be HK$2.09 and HK$2.20, respectively, and the 2025-2027 CAGR will be 4%. The forecast has not yet included the impact of the Marco Polo Hotel refurbishment or reconstruction, but the related impact is manageable, and the magnitude is expected to be low in units. The bank gave a “outperforming industry” rating and a target price of HK$36, corresponding to a 33% NAV discount, a target dividend yield of 5.2% for 2026, and an upward margin of 17%. The company is currently trading with a 2026 dividend yield of 6.1% and a 42% NAV discount.

Risk Alerts

The recovery of economic and financial activity in Hong Kong, China fell short of expectations; Hibor interest rates rose above expectations; and competition in the core project, Harbour City, surpassed expectations.