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Link Real Estate Investment Trust: Link REIT To Achieve Long-Term Growth Through Capital Recycling

Link Real Estate Investment Trust (REIT) has a last price of 32.45 HKD with a fair value estimate of 45.00 HKD, indicating it is currently undervalued. The company owns 154 properties primarily in Hong Kong, focusing on retail spaces that cater to local communities, and has expanded its investment mandate to include international acquisitions. Despite strong historical performance, concerns exist regarding future growth potential due to market saturation and high competition in Hong Kong's retail sector.

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Link Real Estate Investment Trust: Link REIT To Achieve Long-Term Growth Through Capital Recycling

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Morningstar Equity Analyst Report | Report as of 18 Jan 2025 09:34, UTC | Reporting Currency: HKD | Trading Currency: HKD

| Exchange: HONG KONG EXCHANGES AND CLEARING LTD Page 1 of 22

Link Real Estate Investment Trust 00823 QQQQ 17 Jan 2025 17:22, UTC

Last Price Fair Value Estimate Price/FVE Market Cap Economic MoatTM Equity Style Box Uncertainty Capital Allocation ESG Risk Rating Assessment1
32.45 HKD 45.00 HKD 0.72 83.80 HKD Bil None 1 Large Value Medium Exemplary ;;;;;
17 Jan 2025 30 May 2024 06:24, UTC 17 Jan 2025 1 Jan 2025 06:00, UTC

Price vs. Fair Value

Fair Value: 45.00

30 May 2024 06:24, UTC
84
Last Close: 32.45
69 Overvalued
Undervalued
54

24
2020 2021 2022 2023 2024 YTD
0.91 0.83 0.67 0.74 0.73 0.72 Price/Fair Value
-10.64 1.24 -12.14 -16.78 -18.87 -1.37 Total Return %
Morningstar Rating

Total Return % as of 17 Jan 2025. Last Close as of 17 Jan 2025. Fair Value as of 30 May 2024 06:24, UTC.
Contents
Business Description Link REIT to Achieve Long-Term Growth Through Capital
Business Strategy & Outlook (30 May 2024)
Bulls Say / Bears Say (7 Nov 2024) Recycling
Economic Moat (30 May 2024)
Fair Value and Profit Drivers (7 Nov 2024)
Business Strategy & Outlook Xavier Lee, Equity Analyst, 30 May 2024
Risk and Uncertainty (30 May 2024)
Capital Allocation (7 Nov 2024) Link REIT is one of the world’s largest retail-focused REITs. Its portfolio contains 154 properties across
Analyst Notes Archive Hong Kong, mainland China, Australia, Singapore, and the United Kingdom. The Hong Kong retail
Financials
properties make up over 50% of portfolio value. Its retail space in Hong Kong can be categorized into
ESG Risk
three subsegments. Destination or flagship properties are malls with an enhanced trade mix and unique
Appendix
Research Methodology for Valuing Companies
branding, while community malls are midsize, serving as local community hubs. Smaller properties are
at a neighborhood level, providing essential goods and services for daily living. With the majority of its
Important Disclosure
The conduct of Morningstar’s analysts is governed by Code of Ethics/Code of overall portfolio in community and neighborhood malls, Link is a dominant player in the more resilient
Conduct Policy, Personal Security Trading Policy (or an equivalent of), and
Investment Research Policy. For information regarding conflicts of interest, please
district center-type assets.
visit: http://global.morningstar.com/equitydisclosures.

The primary analyst covering this company does not own its stock. Since its IPO, the company has demonstrated strong earnings and distribution growth. By applying

The ESG Risk Rating Assessment is a representation of Sustainalytics’ ESG Risk

1 asset-enhancement initiatives, or AEIs, and industry-best practices in property management, Link has
Rating.
achieved higher rental and declining vacancies. The following phase of growth has been driven by asset
consolidation and district dominance. After disposing of lower-tier assets, Link uses the proceeds to
acquire commercially developed properties. Link typically looks for properties in districts where its top-
tier assets already hold leading positions. With the acquisitions, it seeks to establish a dominant
portfolio of retail assets in the area. Link then gradually repositions the assets' focus from mass-market
to midmarket discretionary, expanding catchment to residents of private housing estates nearby. This
© Morningstar 2025. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
Morningstar Equity Analyst Report | Report as of 18 Jan 2025 09:34, UTC | Reporting Currency: HKD | Trading Currency: HKD | Exchange: HONG KONG EXCHANGES AND CLEARING LTD Page 2 of 22

Link Real Estate Investment Trust 00823 QQQQ 17 Jan 2025 17:22, UTC

Sector Industry opens the assets to a new category of retailers, allowing continuously rising rent levels and enabling
u Real Estate REIT - Retail
new AEIs.
Business Description
Link REIT is Asia's largest REIT, listed in 2005 to privatize Through capital recycling, the company has expanded into new areas. In Hong Kong, it converted a
retail assets held by the Hong Kong Housing Authority. It former government office building into a retail complex and developed an office project in Kowloon East.
owns 154 properties and about 57,000 car park spaces. Acquisitions continued apace in retail, office, and logistics assets in mainland China, Singapore,
It expanded its investment mandate in 2014 to allow
Australia, and the UK. The company is looking to further expand through capital partnerships, targeting
overseas acquisitions and has since acquired retail,
assets in Australia, Singapore, and Japan.
office, and logistics properties in China, as well as an
office development project in Hong Kong. More recently,
Bulls Say Xavier Lee, Equity Analyst, 7 Nov 2024
Link expanded its footprint to Sydney, Melbourne,
u Capital recycling is expected to enable Link REIT to consolidate around its top assets and dominate key
London, and Singapore.
districts. The portfolio effect enables the company to initiate another round of AEIs and reposition its
assets, in our view.
u We believe enhanced infrastructure connecting Hong Kong and the Pearl River Delta benefits the

company’s assets in outlying districts, potentially expanding their catchment.

u Acquisitions in China represent another potent growth driver. Link REIT is one of the few mass-retail-

focused companies with the necessary capital and experience.

Bears Say Xavier Lee, Equity Analyst, 7 Nov 2024

u The company exhausted its primary growth driver of higher rents and lower vacancies for its Hong Kong

portfolio and is seeking riskier expansion internationally.

u The company is unable to utilize proceeds from rights issue on accretive acquisitions.

u The company's Hong Kong retail portfolio is unable to maintain the current high occupancy and rental

rates as there is more leakage of Hong Kong tenant sales given the northbound traveling trend.

Economic Moat Xavier Lee, Equity Analyst, 30 May 2024

We assign Link REIT a no-moat rating. Link acquired its earliest assets from the Hong Kong Housing
Authority in 2005, which were developed a few decades ago to serve nearby public housing estates in
Hong Kong. Link later widened its investment mandate to allow for property development and
acquisition outside of Hong Kong. It has since expanded its footprint to office, retail and logistics assets
in mainland China, Sydney and Melbourne in Australia, London in the UK as well as Singapore. The
company continues to look for opportunities in select overseas markets, after its rights issue in early
2023. While we think it is possible for the Hong Kong retail portfolio to benefit from efficient scale, we
think future investments outside of Hong Kong are less likely to ensure an excessive return over cost of
capital as land is generally less constrained. Adding on to that, the current high interest rate
environment may lead to an expansion in capitalization rates, putting downward pressure on property
valuations. As a result, Link REIT may not be able to reproduce valuation gains that had historically
allowed it to achieve high returns above its cost of capital.

© Morningstar 2025. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
Morningstar Equity Analyst Report | Report as of 18 Jan 2025 09:34, UTC | Reporting Currency: HKD | Trading Currency: HKD | Exchange: HONG KONG EXCHANGES AND CLEARING LTD Page 3 of 22

Link Real Estate Investment Trust 00823 QQQQ 17 Jan 2025 17:22, UTC

Competitors
Link Real Estate Investment Trust 00823 Hang Lung Properties Ltd 00101 Swire Properties Ltd 01972 Wharf Real Est...estment Co Ltd 01997

Fair Value Fair Value Fair Value Fair Value

45.00 10.00 22.50 31.00
Uncertainty : Medium Uncertainty : Medium Uncertainty : Medium Uncertainty : High

Last Close Last Close

Last Close Last Close
32.45 6.26 15.34 19.42

Economic Moat None None Narrow Narrow

Currency HKD HKD HKD HKD
Fair Value 45.00 30 May 2024 06:24, UTC 10.00 31 Jul 2024 04:48, UTC 22.50 8 Jul 2024 12:25, UTC 31.00 7 Aug 2024 09:22, UTC
1-Star Price 60.75 13.50 30.38 48.05
5-Star Price 31.50 7.00 15.75 18.60
Assessment Undervalued 17 Jan 2025 Undervalued 17 Jan 2025 Undervalued 17 Jan 2025 Undervalued 17 Jan 2025
Morningstar Rating QQQQ17 Jan 2025 17:22, UTC QQQQQ17 Jan 2025 17:20, UTC QQQQQ17 Jan 2025 17:21, UTC QQQQ17 Jan 2025 17:21, UTC
Analyst Xinfu Lee, Equity Analyst Xinfu Lee, Equity Analyst Xinfu Lee, Equity Analyst Xinfu Lee, Equity Analyst
Capital Allocation Exemplary Standard Standard Standard
Price/Fair Value 0.72 0.63 0.68 0.63
Price/Sales 5.96 2.52 6.12 4.42
Price/Book 0.49 0.22 0.32 0.31
Price/Earning — 7.73 12.89 9.71
Dividend Yield 8.24% 11.50% 6.91% 6.44%
Market Cap 83.80 Bil 29.95 Bil 88.91 Bil 58.96 Bil
52-Week Range 29.75—42.05 5.28—10.42 12.00—17.56 18.00—29.25
Investment Style Large Value Mid Value Large Value Large Value

As of March 2024, Link REIT has 98 retail properties in Hong Kong, with an area of over 8 million square
feet. They are generally located in heavily trafficked and built-up areas with large residential
catchments, including both public and private housing estates, serving the daily needs of the population
in the neighborhood. As such, Link REIT’s malls are dominated by tenants in the nondiscretionary trade.
Link REIT’s assets frequently represent the only or the majority of the shopping facilities in the vicinity.
We think the demand for retail space in the relevant areas is closely tied with the population in the
nearby estates. We believe demand in areas where Link REIT has a presence is largely mature, and we
do not anticipate a material increase in demand due to a lack of suitable sites for new housing supply.

We do not expect new entrants to develop new retail assets in areas where Link has a strong presence,
due to the high cost of land given the land scarcity in Hong Kong, and that the areas are already highly
built up. Stock of retail assets in Hong Kong increased by only 3.7% in the past five years, according to
data from the Rating and Valuation Department. The increase was primarily driven by key development
© Morningstar 2025. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
Morningstar Equity Analyst Report | Report as of 18 Jan 2025 09:34, UTC | Reporting Currency: HKD | Trading Currency: HKD | Exchange: HONG KONG EXCHANGES AND CLEARING LTD Page 4 of 22

Link Real Estate Investment Trust 00823 QQQQ 17 Jan 2025 17:22, UTC

areas, such as Kwun Tong Town Centre and Tseung Kwan O, where Link REIT does not have a
significant presence. That said, with most of Link’s Hong Kong retail assets having undergone some
degree of upgrade or asset enhancement, we are concerned that it may not be able to increase
valuations in the future as it did historically. This is compounded by the current high interest rate
environment pressuring asset valuations.

Link has expanded its footprint to other asset classes in mainland China, Australia, the UK, and
Singapore. The first step after the expansion of Link’s investment mandate was the acquisition of land
in Kowloon East for an office property development project via a joint venture with Nan Fung
Development. Later in 2016, Link acquired 700 Nathan Road through government tender, which has a
25-story office tower above the retail portion. We do not think Link’s Hong Kong office portfolio can
benefit from efficient scale. Grade A office supply in Kwun Tong, where Link REIT’s key office asset is
located, has increased significantly, with an 8.3% CAGR in the past two decades. We think the new
supply was spurred by the redevelopment of industrial properties to retail and office properties, given
the government’s ambition to develop the area as a second central business district, or CBD. The area
will continue to see about a 4% increase in Grade A office supply in the coming two years, despite a
vacancy of 18.7% as of end-2023, well above 12.8% for overall Hong Kong Grade A offices, according to
data from JLL. We do not think that Link REIT’s key office asset will be able to outcompete its peers
amid the oversupply, given the distance to the subway station.

Similarly for the Shanghai office property, we do not think it can benefit from efficient scale. Although
the Shanghai office property, Link Square, is located favorably in the Huangpu District in Shanghai and
is well-serviced by metro lines, the office stock in existing CBDs is less constrained, and new CBDs are
being created. According to Cushman & Wakefield data, there is 1.1 million square meters, or 13% of
existing stock, of Grade A office planned and under construction in the Shanghai CBDs. Link also owns a
number of retail assets in Tier 1 cities in China. Yet, retail area supply in these cities is less constrained
than that in Hong Kong, with over 20% increase in supply in the respective submarkets in the coming
years, according to Cushman & Wakefield data. In addition, Link REIT’s mainland retail portfolio typically
represents 1-2 small to medium-size malls in each city it operates in, and represents only a small portion
of the respective submarkets.

Link has also entered into the industrial space in China. The trust holds five logistics assets in the
Greater Bay Area, or GBA, and Yangtze River Delta, or YRD, accounting for 1.1% of total portfolio value.
These assets are externally managed, as Link REIT gradually accumulates experience in the asset class.
These properties are typically located in city fringes where land supply is less constrained. According to
Savills, Changshu, where two of Link’s assets are located, doubled its stock in 2022; while Dongguan
and Foshan, where Link’s GBA assets are located, both showed double-digit increases in stock. We
continue to expect new supply of premium logistics space and hence, we do not ascribe a moat to the
logistics segment.
© Morningstar 2025. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
Morningstar Equity Analyst Report | Report as of 18 Jan 2025 09:34, UTC | Reporting Currency: HKD | Trading Currency: HKD | Exchange: HONG KONG EXCHANGES AND CLEARING LTD Page 5 of 22

Link Real Estate Investment Trust 00823 QQQQ 17 Jan 2025 17:22, UTC

For its overseas portfolio, we think Jurong Point in Singapore can benefit from an efficient scale moat
source. Jurong Point is the largest suburban mall in Singapore. It is also the only mall in the vicinity,
amid a highly built-up residential area. The mall enjoys great connectivity, with access to a subway
station and bus interchange. This, together with a population catchment of around 360,000 persons, or
6% of Singapore’s total population, enables excellent shopper footfall within the asset. We think the
mall will continue to enjoy high occupancy and healthy rental growth in the future. However, we think
the overall segment has no moat as Jurong Point only makes up about 40% of Link REIT’s overseas
portfolio, while we believe the rest of its overseas assets do not dominate their respective submarkets.

We see prudent management of environmental, social, and governance issues in Link REIT and believe
the trust’s ESG risk exposure is an immaterial effect on our Uncertainty Rating. REITs in general face
environmental issues associated with green buildings as well as energy and water consumption in
managing their properties. Link has set clear policies on responsible property investment, or RPI, which
takes into account the sustainable qualifications of buildings in the due diligence of investment process.
The trust has also extended RPI to operations and maintenance, aiming to reduce energy and water
consumption through the use of renewable energy, recycled water, and water-efficient fittings and
fixtures. We believe this is positive as the reduced energy consumption has a direct impact on the
trust’s operating expense.

For Link REIT, the impact of district and neighborhood malls on the daily lives of the local communities
means there is a greater importance on "social" aspects within ESG issues, relative to peers, in our view.
One example is the asset-enhancement initiatives, which improve the quality of the mall but at the
same time, results in a rental increase for its tenants. The latter may be passed on to consumers and is
particularly sensitive for its assets located closer to public housing estates. In finding the right balance,
Link has set out policies and procedures on tenant engagement, as well as providing assistance to the
underprivileged, among other measures taken. Link’s effort in ESG integration was recognized by
inclusion in the Dow Jones Sustainability Asia Pacific Index, FTSE4Good Index Series, and the Hang
Seng Corporate Sustainability Index. Link’s ESG efforts also have a direct impact on profitability as it
enables interest cost savings in all its sustainability-linked bonds, provided they achieve sustainability
milestones based on their performance in the Global Real Estate Sustainability Benchmark.

Fair Value and Profit Drivers Xavier Lee, Equity Analyst, 7 Nov 2024

Our fair value estimate is HKD 45 per unit, which implies a forward price/book of 0.68 times and
dividend yield of 5.7% in fiscal 2025. Our valuation is based on a cost of equity of 9% and a weighted
average cost of capital of 7.6%.

Over 60% of Link's Hong Kong retail rental revenue is from nondiscretionary trade, which leaves it more
resilient through economic downcycles. Link’s first-half fiscal 2025 tenant sales showed a slower 4.3%
© Morningstar 2025. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
Morningstar Equity Analyst Report | Report as of 18 Jan 2025 09:34, UTC | Reporting Currency: HKD | Trading Currency: HKD | Exchange: HONG KONG EXCHANGES AND CLEARING LTD Page 6 of 22

Link Real Estate Investment Trust 00823 QQQQ 17 Jan 2025 17:22, UTC

year-on-year decline, compared with the 8.8% decline for overall Hong Kong retail sales. That said, the
portfolio saw a 0.7% positive rental reversion in the first half of fiscal 2025, given active tenant mix
optimization and asset enhancement initiatives. Over the longer term, we expect Link to manage rental
pressure from the northbound traveling trend through active tenant mix management, and assume an
average annual rental income growth of 3% in our explicit forecast period.

Link’s mainland China retail portfolio saw a negative 3.2% rental reversion in first-half fiscal 2025. We
expect the operating environment for the mainland China retail portfolio to remain challenging as the
weaker economic outlook weighs on household consumption power. We forecast a 26.5% revenue
growth in the mainland China portfolio for fiscal 2025, but expect much of it to be driven by the
consolidation of Qibao Vanke Plaza, which was completed in February 2024, and the full-year
contribution of newly acquired logistics assets. We assume mainland China rental growth to slow to 3%
annually thereafter.

We expect occupancy for the overseas portfolio to remain above 95%, given the long weighted average
lease expiry at 100 Market Street and The Cabot, as well as the recovery in tourism in Sydney. The
Australia office assets, including 100 Market Street, have a 4% rental escalation built in, and we also
assume other overseas properties to increase rental by 4% annually.

We estimate Link’s terminal value by using an exit cap rate at the end of the explicit forecast period.
The exit cap rate is derived from the current net property income yields computed using the latest
valuation disclosed in the annual report. We further applied 75- to 100-basis-point yield expansions as
we factor in increased perceived risks on rentals. We find this method useful in gauging the underlying
value of the trust as it captures the likelihood of realizing this value through an asset sale or merger and
acquisition activity. The computed terminal value is added to Link’s enterprise value.

Risk and Uncertainty Xavier Lee, Equity Analyst, 30 May 2024

We assign Link REIT a Medium Morningstar Uncertainty Rating. With over 70% of its portfolio by value
located in Hong Kong, the company faces the key risk of a significant deterioration in economic
activities in the city. However, given the focus on mass- and mid-market non-discretionary and a tenant
mix skewed toward defensive trades, such as food and beverage and supermarket, the company is less
exposed to the cyclicality of consumer spending and the risk of online shopping.

That said, we think there is a structural shift in Hong Kong residents' retail consumption habits as more
people travel to Shenzhen for cheaper goods and services. We believe this creates higher operational
risk for Link REIT's Hong Kong retail assets as greater competition for shopper traffic and tenant sales
could pressure rental growth. We also think new growth initiatives of capital recycling and overseas
acquisitions may involve a higher degree of execution risk.

We believe Link REIT’s ESG risks are low and immaterial to the company. We therefore do not expect
© Morningstar 2025. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
Morningstar Equity Analyst Report | Report as of 18 Jan 2025 09:34, UTC | Reporting Currency: HKD | Trading Currency: HKD | Exchange: HONG KONG EXCHANGES AND CLEARING LTD Page 7 of 22

Link Real Estate Investment Trust 00823 QQQQ 17 Jan 2025 17:22, UTC

material value destruction from ESG issues.

Capital Allocation Xavier Lee, Equity Analyst, 7 Nov 2024

We assign Link REIT an Exemplary Capital Allocation Rating. The REIT has sound balance sheet
management, which we think can support its debt obligations even through times of distress. Link’s net
gearing ratio of 20.6% as of end-September 2024 is well below the regulatory threshold of 50%,
suggesting a manageable leverage level, and implying that there remains debt headroom available. The
majority of Link REIT’s assets focus on nondiscretionary trade malls, so we do not expect any material
decline in profitability during economic downturns. With its staggered debt maturity profile, we do not
expect Link to experience any difficulty in handling its debt obligations, given its stable cash flows and
record of successfully refinancing its debt.

We view Link’s investments as exceptional, given its active asset-enhancement initiatives and capital
recycling programs. Historically, Link has invested in asset-enhancement projects to upgrade its
properties. In the first decade since its listing, Link has increased its book value per share by a
compound annual growth rate of 19%, partly attributable to net property income growth. By improving
the attractiveness of its assets, Link has achieved a five-year average historical return on AEI of over
15%. On the acquisition side, the REIT has historically performed capital recycling by divesting some of
its smaller and lower-yielding assets to consolidate its position in dominance in certain growing
districts, which we believe would fortify its narrow moat in efficient scale. From 2016, the REIT has
expanded its mandate to include assets in mainland China, Sydney, Melbourne, London, and Singapore
in its portfolio. We believe these higher-yielding assets could bring diversification benefits as well as
improved profitability to Link, thus adding value to shareholders. Link’s target is to increase its mainland
and overseas assets to around 30%-40% of its total portfolio. With a strong cash position and a slightly
undergeared balance sheet, we expect more investment opportunities for Link.

With the growth opportunities mainly financed by capital recycling, Link has historically maintained a
100% payout ratio, well above the mandated 90%. The REIT has also been active in various capital-
return programs, including share-buyback programs, as well as additional discretionary distributions in
fiscal 2020 and fiscal 2021.

Analyst Notes Archive

Link REIT Earnings: Hong Kong Retail Remains Challenging; Attractive Distribution Yield Xavier
Lee,Equity Analyst,7 Nov 2024

Link REIT’s first-half fiscal 2025 (ending March) revenue increased 6.4% year on year, in line with our
expectations. Growth was mainly driven by the full consolidation of Link Plaza Qibao in Shanghai, while
the operating environment for its core Hong Kong retail portfolio remains challenging. That said, finance
costs came in slightly lower than we expected, given debt repayment and a lower average all-in
© Morningstar 2025. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
Morningstar Equity Analyst Report | Report as of 18 Jan 2025 09:34, UTC | Reporting Currency: HKD | Trading Currency: HKD | Exchange: HONG KONG EXCHANGES AND CLEARING LTD Page 8 of 22

Link Real Estate Investment Trust 00823 QQQQ 17 Jan 2025 17:22, UTC

borrowing cost of 3.69%, compared with 3.78% for fiscal 2024. As such, we lowered our net interest
expense assumptions and raised our fiscal 2025-26 adjusted net income and distribution per unit
forecasts by 5%. We retain our fair value estimate of HKD 45 per unit, as we keep our long-term
forecasts largely unchanged. With units currently trading at a 15% discount to our valuation, we think
Link is undervalued, supported by a fiscal 2025 distribution yield of 6.9%. We believe this is attractive
under the current interest-rate-cut cycle.Our view for Link is unchanged as we continue to expect its
Hong Kong retail portfolio to be more resilient, given its focus on nondiscretionary trades, underpinning
a steady long-term growth in rental income and distribution. This is reflected in the stable Hong Kong
retail portfolio occupancy of 97.8% and its relative outperformance in tenant sales, which showed a
slower year-on-year decline of 4.3% during the first half of fiscal 2025 compared with an 8.8% decline in
overall Hong Kong retail sales. While Link managed to achieve a mild 0.7% positive rental reversion
—given active tenant mix optimization and asset enhancement initiatives—management shared that it
would be difficult to maintain positive rental reversion in the second half as the operating environment
remains weak. Overall, we forecast a mild 1% revenue growth for its Hong Kong retail portfolio in fiscal
2025.

China’s Slowing Economy Remains a Key Headwind for Shanghai Office and Retail Assets Xavier
Lee,Equity Analyst,15 Oct 2024

We maintain the fair value estimates of Swire Properties, CapitaLand Investment, Mapletree Pan Asia
Commercial Trust, or MPACT, and Link REIT after visiting their office and retail assets in Shanghai. We
think China’s slowing economic growth remains a key headwind for consumer spending and business
expansion. For retail malls, we note that vacancy rates for Shanghai downtown retail districts remain
healthy at 5.4% as of third-quarter 2024, according to Cushman & Wakefield. This should provide some
support for market rents that are being weighed down by weak retail sales performance and supply of
new retail malls, albeit in the secondary retail areas. On the other hand, office rents remain soft in
Shanghai given the elevated central business district vacancy rate of 16.6% as of third-quarter 2024,
according to Cushman & Wakefield. While the Chinese government is looking to revive its economy with
a series of policy stimulus efforts, we think that business owners and consumers may still exercise
caution until they are convinced of a durable economic recovery. For landlords and REITs with mainland
China exposure, our preferred pick is Swire Properties that is trading at a 29% discount to our fair value.
Swire Properties remains steadfast in its long-term plan to invest in China, allocating half its HKD 100
billion investment plan to China. We expect these projects to start contributing from 2026, with the bulk
of it coming from 2027.

Link REIT: Resilient Through Current Downturn; We Continue to See Long-Term Value Xavier
Lee,Equity Analyst,4 Oct 2024

We maintain our fair value estimate of HKD 45 per unit for no-moat Link REIT after its pre-results
© Morningstar 2025. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
Morningstar Equity Analyst Report | Report as of 18 Jan 2025 09:34, UTC | Reporting Currency: HKD | Trading Currency: HKD | Exchange: HONG KONG EXCHANGES AND CLEARING LTD Page 9 of 22

Link Real Estate Investment Trust 00823 QQQQ 17 Jan 2025 17:22, UTC

blackout meeting as our long-term thesis is unchanged. We think the spending leakage due to the
northbound traveling trend in Hong Kong has already been priced in, and we believe that Link’s focus
on nondiscretionary trades leaves its portfolio resilient through economic cycles. This underpins steady
rental and distribution growth over the long term. Despite the recent unit price rally, we continue to see
Link REIT as undervalued, with a 13% discount to our valuation. Our fiscal 2025 (ending March)
distribution per unit forecast of HKD 2.51 also implies an attractive 6.4% distribution yield.The resilience
in Link’s Hong Kong portfolio was reflected in the stable occupancy and tenant sales outperformance in
the current downturn. While end-June occupancy was robust at 97.5%, it further improved in the
September quarter. Although tenant sales were weak during the June quarter, with a 5.9% year-on-year
decline, this still outperformed the 9.9% decline for overall Hong Kong. Management shared that tenant
sales performance picked up in the September quarter, compared with a deterioration for overall Hong
Kong, which saw 11.8% and 10.1% year-on-year declines in July and August, respectively, according to
the Census and Statistics Department of Hong Kong. We continue to expect a low-single-digit rental
growth for the Hong Kong portfolio in fiscal 2025 despite the challenging retail landscape, in line with
management’s guidance of a mildly positive rental reversion.For the mainland China portfolio,
management shared that demand softened on weakening consumer spending, but we expect that to be
mitigated through tenant mix management and asset enhancement initiatives. Notably, the Link
CentralWalk basement transformation completed in July 2024 achieved a return on investment of
43.8%, and took footfall and tenant sales to a historical high, according to management.

Link REIT Earnings: Cutting Fair Value by 24% as Northbound Travel Puts Pressure on HK Retail
Assets Xavier Lee,Equity Analyst,30 May 2024

No-moat Link REIT’s fiscal 2024 (ending March) results were within our expectations, with 11% year-on-
year revenue growth driven by full-year contribution of the newly acquired Singapore retail assets.
Distributable income increased by a smaller 6% year on year due to higher financing costs. Despite the
in-line results, we cut our fair value estimate to HKD 45 per share from HKD 59, and raised our
Morningstar Uncertainty Rating to Medium from Low. In our view, there is a structural shift in Hong
Kong residents' retail consumption habits, as traveling up to mainland China for cheaper goods and
services has become a regular activity for part of the population. This creates higher operating risks for
Link’s Hong Kong retail malls, as they now face greater competition for shopper traffic and tenant sales.
Our updated forecasts reflect 1) weaker midcycle retail rental growth in Hong Kong; 2) margin pressure
given higher Hong Kong marketing costs; 3) increased fiscal 2025-26 financing costs; 4) higher exit
capitalization rates for the investment properties portfolio on the back of a higher-for-longer interest-
rate environment; and 5) increased perceived risks on rentals. We also raised our cost of equity
assumption to reflect Link’s higher operating risk, bringing our weighted average cost of capital to 7.6%
from 6.9%.Our fiscal 2025-27 earnings estimates were lowered by 6%-10%, and we forecast a fiscal
2025 distribution per unit of HKD 2.51, implying a distribution yield of 7.2%. Despite slower rental
© Morningstar 2025. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
Morningstar Equity Analyst Report | Report as of 18 Jan 2025 09:34, UTC | Reporting Currency: HKD | Trading Currency: HKD | Exchange: HONG KONG EXCHANGES AND CLEARING LTD Page 10 of 22

Link Real Estate Investment Trust 00823 QQQQ 17 Jan 2025 17:22, UTC

growth, we continue to see Link’s units as undervalued, at a 23% discount to our new fair value
estimate. We think Link’s Hong Kong malls will remain relevant as they continue to serve the daily
needs for much of the catchment area. We also believe the inclusion of Hong Kong REITs in the Stock
Connect scheme could also improve liquidity for Link REIT and support unit prices.

Link REIT: Acquisition of Remaining 50% Interest in Shanghai Qibao Vanke Plaza Is Accretive Xavier
Lee,Equity Analyst,9 Feb 2024

No-moat Link REIT announced the acquisition of the remaining 50% interest in Qibao Vanke Plaza in
Shanghai. The estimated consideration of CNY 2.4 billion is based on an agreed property value of CNY
5.2 billion, which represents a 26.3% discount to the appraised property value of CNY 7.1 billion as of
end-January 2024. With a monthly passing income of CNY 40.6 million from the mall and the car park,
we estimate an attractive net property income yield of around 7%. After updating our model for this
acquisition, we raise our fiscal 2025 and 2026 (ending March) distribution per unit forecast slightly to
HKD 2.63 and HKD 2.86, respectively, implying a fiscal 2025 distribution yield of 6.9%. We maintain our
fair value estimate of HKD 59 as we previously assumed that the rights issue proceeds would be
redeployed for acquisitions.Although the acquisition represents only around 1% of the current
investment properties portfolio value, we like that the deal is accretive and should help alleviate
investors’ earlier concern on the lack of acquisition after the rights issue in February 2023. The
consideration paid represents only 14% of the rights issue proceeds, and the low pro forma net gearing
of 20.4% implies there remains headroom for further investments. We believe more accretive
acquisitions are needed to restore investors’ confidence on Link REIT’s capital management. That said,
we think units are currently undervalued with a 35% discount to our fair value estimate.

Link REIT: South China Retail Malls Revitalized by Asset Enhancements; Competition Remains
Intense Xavier Lee,Equity Analyst,27 Nov 2023

We maintain our fair value estimate of HKD 59 for Link REIT after a tour of the trust’s retail assets in
Guangzhou, Shenzhen, and Hong Kong. In our view, Link REIT’s malls are professionally managed with a
tenant mix that is well curated and carefully positioned across the malls. We think this is an important
differentiating factor in mainland China where there are many shopping malls competing for shoppers.
Within Guangzhou and Shenzhen, we visited Link CentralWalk, Link Plaza Guangzhou, and Link Plaza
Tianhe. Of these three malls, we like Link Plaza Guangzhou the most as it is well connected by two
subway lines and serves local residents. There is also potential to capture tourist shoppers as the mall is
near popular tourist destinations YongQing Fang and Shamian Island. According to management, the
mall’s current footfall has already surpassed its pre-COVID-19 level and we expect this to grow further
as new residential developments in the area are completed, coupled with a recovery in tourism.As for
Link CentralWalk, we commend management’s asset enhancements and efforts to decorate the mall to
make it look more attractive. Management shared their “first-store” strategy, which aims to persuade
© Morningstar 2025. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
Morningstar Equity Analyst Report | Report as of 18 Jan 2025 09:34, UTC | Reporting Currency: HKD | Trading Currency: HKD | Exchange: HONG KONG EXCHANGES AND CLEARING LTD Page 11 of 22

Link Real Estate Investment Trust 00823 QQQQ 17 Jan 2025 17:22, UTC

new brands to open their first mainland Shenzhen or Futian stores in CentralWalk. The mall also has a
good catchment of office workers in Futian business district with potential weekend Hong Kong tourists
and business travelers. In addition, management has shifted its tenant mix to food and beverages and
leisure and entertainment after the exit of Carrefour. We like the focus on evening entertainment, with
bars and nightclubs operating extended hours, because it is a differentiating factor for the mall. K

Link Real Estate Investment Trust 00823 QQQQ 17 Jan 2025 17:22, UTC

Competitors Price vs. Fair Value

Hang Lung Properties Ltd 00101

Fair Value: 10.00

31 Jul 2024 04:48, UTC
21
Last Close: 6.26
16 Overvalued
Undervalued
11

1
2020 2021 2022 2023 2024 YTD
0.93 0.73 0.69 0.57 0.62 0.63 Price/Fair Value
23.45 -17.40 0.00 -23.59 -36.12 0.48 Total Return %
Morningstar Rating

Total Return % as of 17 Jan 2025. Last Close as of 17 Jan 2025. Fair Value as of 31 Jul 2024 04:48, UTC.

Swire Properties Ltd 01972

Fair Value: 22.50

8 Jul 2024 12:25, UTC
28
Last Close: 15.34
23 Overvalued
Undervalued
18

8
2020 2021 2022 2023 2024 YTD
0.78 0.72 0.64 0.51 0.70 0.68 Price/Fair Value
-9.52 -9.07 6.45 -15.27 7.59 -3.76 Total Return %
Morningstar Rating

Total Return % as of 17 Jan 2025. Last Close as of 17 Jan 2025. Fair Value as of 8 Jul 2024 12:25, UTC.

Link Real Estate Investment Trust 00823 QQQQ 17 Jan 2025 17:22, UTC

Competitors Price vs. Fair Value

Wharf Real Estate Investment Co Ltd 01997

Fair Value: 31.00

7 Aug 2024 09:22, UTC
53
Last Close: 19.42
44 Overvalued
Undervalued
35

17
2020 2021 2022 2023 2024 YTD
0.89 0.87 0.99 0.54 0.64 0.63 Price/Fair Value
-11.55 1.51 18.28 -39.16 -19.89 -2.41 Total Return %
Morningstar Rating

Total Return % as of 17 Jan 2025. Last Close as of 17 Jan 2025. Fair Value as of 7 Aug 2024 09:22, UTC.

Link Real Estate Investment Trust 00823 QQQQ 17 Jan 2025 17:22, UTC

Morningstar Historical Summary

Financials as of 30 Sep 2024
Fiscal Year, ends 31 Mar 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 YTD TTM
Revenue (HKD Bil) 7.72 8.74 9.26 10.02 10.04 10.72 10.74 11.60 12.23 13.58 7.15 14.01
Revenue Growth % 7.9 13.2 5.9 8.3 0.1 6.8 0.2 8.0 5.5 11.0 6.4 8.4
EBITDA (HKD Bil) 28.42 17.72 19.36 49.87 22.26 -15.63 2.78 9.15 17.99 1.40 -2.56 0.82
EBITDA Margin % 368 202 209 497 221 -145 25.9 78.9 147 10.3 -35.8 5.9
Operating Income (HKD Mil) 5,232 6,145 6,652 7,246 7,284 7,804 7,810 8,264 8,545 9,304 4,918 9,542
Operating Margin % 67.8 70.3 71.9 72.3 72.6 72.8 72.7 71.2 69.9 68.5 68.8 68.1
Net Income (HKD Bil) 27.23 16.30 17.71 47.76 20.33 -17.12 1.19 6.89 15.45 -1.98 -3.68 -2.29
Net Margin % 352 186 191 476 202 -159 11.0 59.4 126 -14.6 -51.5 -16.4
Diluted Shares Outstanding (Mil) 2,370 2,335 2,299 2,265 2,188 2,157 2,127 2,192 2,243 2,561 2,560 2,571
Diluted Earnings Per Share (HKD) 11.49 6.99 7.71 21.08 9.29 -7.94 0.55 3.18 6.92 -0.77 -1.44 -0.88
Dividends Per Share (HKD) 1.70 1.87 2.13 2.31 2.52 2.74 2.79 2.99 2.93 2.49 1.33 2.63

Valuation as of 31 Dec 2024

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Recent Qtr TTM
Price/Sales 13.2 12.4 16.8 17.2 16.8 13.8 12.6 10.3 8.2 6.0 6.0 6.0
Price/Earnings 5.8 8.0 6.7 3.9 9.8 -5.3 12.4 8.3 -52.9 -37.5 -37.5 -37.5
Price/Cash Flow 20.6 18.9 25.4 29.0 27.3 22.8 20.3 16.6 13.4 9.6 9.6 9.6
Dividend Yield % 4.14 4.34 3.29 3.26 3.42 4.06 4.49 5.26 5.68 8.13 8.13 8.13
Price/Book 0.9 0.9 1.1 0.9 0.9 1.0 0.9 0.7 0.6 0.5 0.5 0.5
EV/EBITDA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Operating Performance / Profitability as of 30 Sep 2024
Fiscal Year, ends 31 Mar 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 YTD TTM
ROA % 21.2 10.6 10.4 24.3 9.2 -7.9 0.6 3.2 6.3 -0.8 -1.5 -0.9
ROE % 25.4 13.3 13.3 30.2 11.1 -9.8 0.7 4.3 8.8 -1.1 -2.1 -1.3
ROIC % 22.6 11.5 11.3 26.0 9.9 -8.1 0.9 3.7 7.2 -0.2 -1.3 -0.3
Asset Turnover 0.1 0.1 0.1 0.1 0.0 0.0 0.1 0.1 0.0 0.1 0.0 0.1
Financial Leverage
Fiscal Year, ends 31 Mar 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Recent Qtr TTM
Debt/Capital % 11.4 16.9 16.4 11.5 10.0 17.4 18.2 21.3 24.3 22.3 21.7 —
Equity/Assets % 82.5 77.9 78.6 82.5 83.2 76.9 75.6 72.1 70.5 70.9 71.4 —
Total Debt/EBITDA 0.6 1.5 1.4 0.5 1.1 -2.2 13.9 5.4 3.6 42.3 -21.5 —
EBITDA/Interest Expense 82.4 44.3 53.3 110.3 51.1 -17.7 3.3 9.8 11.3 0.6 -2.5 0.4

Morningstar Analyst Historical/Forecast Summary as of 06 Nov 2024

Financials Estimates Forward Valuation Estimates
2023 2024 2025 2026 2027
Fiscal Year, ends 31 Mar 2024 2023 2024 2025 2026 2027
Price/Sales 10.5 6.3 5.9 5.7 5.4
Revenue (HKD Mil) 12,234 13,578 14,161 14,755 15,507 Price/Earnings 18.0 12.8 12.3 12.0 11.9
Revenue Growth % 5.5 11.0 4.3 4.2 5.1 Price/Cash Flow — — — — —
EBITDA (HKD Mil) 18,041 947 10,079 10,244 10,893 Dividend Yield % 5.4 7.8 8.1 8.3 8.4
EBITDA Margin % 147.5 7.0 71.2 69.4 70.2 Price/Book 0.6 0.5 0.5 0.5 0.5
EV/EBITDA 10.0 139.2 13.3 13.1 12.3
Operating Income (HKD Mil) 8,545 9,304 9,764 10,173 10,762
Operating Margin % 69.9 68.5 69.0 68.9 69.4
Net Income (HKD Mil) 6,311 6,718 6,781 7,059 7,265
Net Margin % 51.6 49.5 47.9 47.8 46.9
Diluted Shares Outstanding (Mil) 2,243 2,561 2,575 2,617 2,657
Diluted Earnings Per Share(HKD) 2.81 2.62 2.63 2.70 2.73
Dividends Per Share(HKD) 2.74 2.63 2.63 2.70 2.73

Link Real Estate Investment Trust 00823 QQQQ 17 Jan 2025 17:22, UTC

ESG Risk Rating Breakdown

Exposure Subject Subindustry (28.0) u Exposure represents a company’s vulnerability to ESG

Company Exposure1 25.3 risks driven by their business model
25.3
u Exposure is assessed at the Subindustry level and then
– Manageable Risk 24.9 Low
2 0 55+ specified at the company level
Unmanageable Risk 0.4
Low Medium High u Scoring ranges from 0-55+ with categories of low, me-

dium, and high-risk exposure

Management
u Management measures a company’s ability to manage
Manageable Risk 24.9 ESG risks through its commitments and actions
66.2%
– Managed Risk3 16.5 Strong
u Management assesses a company's efficiency on ESG

Management Gap4 8.4 100 0 programs, practices, and policies

Strong Average Weak u Management score ranges from 0-100% showing how

Overall Unmanaged Risk 8.8 much manageable risk a company is managing

ESG Risk Rating ESG Risk Rating Assessment5

8.84
Negligible

Negligible Low Medium High Severe ESG Risk Rating is of Jan 01, 2025. Highest Controversy Level is as of Jan 08,
2025. Sustainalytics Subindustry: REITs. Sustainalytics provides Morningstar
ESG Risk Ratings measure the degree to which a company’s value is impacted by environmental, social, and governance with company ESG ratings and metrics on a monthly basis and as such, the
risks, by evaluating the company’s ability to manage the ESG risks it faces. ratings in Morningstar may not necessarily reflect current Sustainalytics’
scores for the company. For the most up to date rating and more information,
1. A company's Exposure to material ESG issues 2. Unmanageable Risk refers to risks that are inherent to a particular business model that cannot be managed by please visit: sustainalytics.com/esg-ratings/.
programs or initiatives 3. Managed Risk = Manageable Risk multiplied by a Management score of 66.2% 4. Management Gap assesses risks that are not
managed, but are considered manageable 5. ESG Risk Rating Assessment = Overall Unmanaged Risk = Management Gap plus Unmanageable Risk

Peer Analysis 01 Jan 2025 Peers are selected from the company's Sustainalytics-defined Subindustry and are displayed based on the closest market cap values
Company Name Exposure Management ESG Risk Rating

Link Real Estate Investment Trust 25.3 | Low 0 55+ 66.2 | Strong 100 0 8.8 | Negligible 0 40+

Sun Hung Kai Properties Ltd 31.9 | Low 0 55+ 61.4 | Strong 100 0 12.8 | Low 0 40+

Hang Lung Properties Ltd 28.8 | Low 0 55+ 55.0 | Strong 100 0 13.2 | Low 0 40+
Swire Properties Ltd 27.2 | Low 0 55+ 63.7 | Strong 100 0 10.2 | Low 0 40+

Wharf Real Estate Investment Co Ltd 29.6 | Low 0 55+ 43.9 | Average 100 0 16.8 | Low 0 40+

Appendix
Historical Morningstar Rating
Link Real Estate Investment Trust 00823 17 Jan 2025 17:21, UTC

Dec 2025 Nov 2025 Oct 2025 Sep 2025 Aug 2025 Jul 2025 Jun 2025 May 2025 Apr 2025 Mar 2025 Feb 2025 Jan 2025
- - - - - - - - - - - QQQQ
Dec 2024 Nov 2024 Oct 2024 Sep 2024 Aug 2024 Jul 2024 Jun 2024 May 2024 Apr 2024 Mar 2024 Feb 2024 Jan 2024
QQQQ QQQQ QQQQ QQQQ QQQQ QQQQ QQQQQ QQQQ QQQQQ QQQQQ QQQQQ QQQQQ
Dec 2023 Nov 2023 Oct 2023 Sep 2023 Aug 2023 Jul 2023 Jun 2023 May 2023 Apr 2023 Mar 2023 Feb 2023 Jan 2023
QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ
Dec 2022 Nov 2022 Oct 2022 Sep 2022 Aug 2022 Jul 2022 Jun 2022 May 2022 Apr 2022 Mar 2022 Feb 2022 Jan 2022
QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQ QQQQ QQQQ QQQQ QQQQ QQQQ QQQQ
Dec 2021 Nov 2021 Oct 2021 Sep 2021 Aug 2021 Jul 2021 Jun 2021 May 2021 Apr 2021 Mar 2021 Feb 2021 Jan 2021
QQQQ QQQQ QQQQ QQQQ QQQQ QQQ QQQ QQQ QQQ QQQQ QQQQ QQQQ
Dec 2020 Nov 2020 Oct 2020 Sep 2020 Aug 2020 Jul 2020 Jun 2020 May 2020 Apr 2020 Mar 2020 Feb 2020 Jan 2020
QQQQ QQQQ QQQQ QQQQ QQQQ QQQQQ QQQQ QQQQQ QQQQ QQQQ QQQ QQ

Hang Lung Properties Ltd 00101 17 Jan 2025 17:20, UTC

Dec 2025 Nov 2025 Oct 2025 Sep 2025 Aug 2025 Jul 2025 Jun 2025 May 2025 Apr 2025 Mar 2025 Feb 2025 Jan 2025
- - - - - - - - - - - QQQQQ
Dec 2024 Nov 2024 Oct 2024 Sep 2024 Aug 2024 Jul 2024 Jun 2024 May 2024 Apr 2024 Mar 2024 Feb 2024 Jan 2024
QQQQQ QQQQQ QQQQQ QQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ
Dec 2023 Nov 2023 Oct 2023 Sep 2023 Aug 2023 Jul 2023 Jun 2023 May 2023 Apr 2023 Mar 2023 Feb 2023 Jan 2023
QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQ QQQQQ
Dec 2022 Nov 2022 Oct 2022 Sep 2022 Aug 2022 Jul 2022 Jun 2022 May 2022 Apr 2022 Mar 2022 Feb 2022 Jan 2022
QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQ QQQQQ QQQQ QQQQ
Dec 2021 Nov 2021 Oct 2021 Sep 2021 Aug 2021 Jul 2021 Jun 2021 May 2021 Apr 2021 Mar 2021 Feb 2021 Jan 2021
QQQQ QQQQ QQQQ QQQQ QQQQ QQQQ QQQQ QQQ QQQ QQQQ QQQ QQQ
Dec 2020 Nov 2020 Oct 2020 Sep 2020 Aug 2020 Jul 2020 Jun 2020 May 2020 Apr 2020 Mar 2020 Feb 2020 Jan 2020
QQQQ QQQ QQQQ QQQ QQQ QQQQ QQQQ QQQQ QQQQ QQQQQ QQQQ QQQQ

Swire Properties Ltd 01972 17 Jan 2025 17:21, UTC

Dec 2025 Nov 2025 Oct 2025 Sep 2025 Aug 2025 Jul 2025 Jun 2025 May 2025 Apr 2025 Mar 2025 Feb 2025 Jan 2025
- - - - - - - - - - - QQQQQ
Dec 2024 Nov 2024 Oct 2024 Sep 2024 Aug 2024 Jul 2024 Jun 2024 May 2024 Apr 2024 Mar 2024 Feb 2024 Jan 2024
QQQQ QQQQ QQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ
Dec 2023 Nov 2023 Oct 2023 Sep 2023 Aug 2023 Jul 2023 Jun 2023 May 2023 Apr 2023 Mar 2023 Feb 2023 Jan 2023
QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQ
Dec 2022 Nov 2022 Oct 2022 Sep 2022 Aug 2022 Jul 2022 Jun 2022 May 2022 Apr 2022 Mar 2022 Feb 2022 Jan 2022
QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ
Dec 2021 Nov 2021 Oct 2021 Sep 2021 Aug 2021 Jul 2021 Jun 2021 May 2021 Apr 2021 Mar 2021 Feb 2021 Jan 2021
QQQQQ QQQQQ QQQQQ QQQQQ QQQQ QQQQ QQQQ QQQQ QQQQ QQQQ QQQQ QQQQ
Dec 2020 Nov 2020 Oct 2020 Sep 2020 Aug 2020 Jul 2020 Jun 2020 May 2020 Apr 2020 Mar 2020 Feb 2020 Jan 2020
QQQQ QQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQ

Wharf Real Estate Investment Co Ltd 01997 17 Jan 2025 17:21, UTC

Dec 2025 Nov 2025 Oct 2025 Sep 2025 Aug 2025 Jul 2025 Jun 2025 May 2025 Apr 2025 Mar 2025 Feb 2025 Jan 2025
- - - - - - - - - - - QQQQ
Dec 2024 Nov 2024 Oct 2024 Sep 2024 Aug 2024 Jul 2024 Jun 2024 May 2024 Apr 2024 Mar 2024 Feb 2024 Jan 2024
QQQQQ QQQQQ QQQQ QQQQ QQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ
Dec 2023 Nov 2023 Oct 2023 Sep 2023 Aug 2023 Jul 2023 Jun 2023 May 2023 Apr 2023 Mar 2023 Feb 2023 Jan 2023
QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQ QQQQ QQQQ QQQQ QQQQ QQQ QQQ
Dec 2022 Nov 2022 Oct 2022 Sep 2022 Aug 2022 Jul 2022 Jun 2022 May 2022 Apr 2022 Mar 2022 Feb 2022 Jan 2022
QQQ QQQQ QQQQ QQQQ QQQQQ QQQQQ QQQQQ QQQQ QQQQ QQQQ QQQQQ QQQQ
Dec 2021 Nov 2021 Oct 2021 Sep 2021 Aug 2021 Jul 2021 Jun 2021 May 2021 Apr 2021 Mar 2021 Feb 2021 Jan 2021
QQQQ QQQQ QQQQ QQQQ QQQQ QQQ QQQ QQQ QQQ QQQ QQQ QQQQ
Dec 2020 Nov 2020 Oct 2020 Sep 2020 Aug 2020 Jul 2020 Jun 2020 May 2020 Apr 2020 Mar 2020 Feb 2020 Jan 2020
QQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ QQQQQ

Research Methodology for Valuing Companies

Overview turns on invested capital (or ROIC) over and above our es- rive our annual free cash flow forecast.
At the heart of our valuation system is a detailed projec- timate of a firm’s cost of capital, or weighted average
Stage II: Fade
tion of a company’s future cash flows, resulting from our cost of capital (or WACC). Without a moat, profits are
The second stage of our model is the period it will take
analysts’ research. Analysts create custom industry and more susceptible to competition. We have identified five
the company’s return on new invested capital—the re-
company assumptions to feed income statement, balance sources of economic moats: intangible assets, switching
turn on capital of the next dollar invested (“RONIC”)—to
sheet, and capital investment assumptions into our glob- costs, network effect, cost advantage, and efficient scale.
decline (or rise) to its cost of capital. During the Stage II
ally standardized, proprietary discounted cash flow, or
Companies with a narrow moat are those we believe are period, we use a formula to approximate cash flows in
DCF, modeling templates. We use scenario analysis, inde-
more likely than not to achieve normalized excess returns lieu of explicitly modeling the income statement, balance
pth competitive advantage analysis, and a variety of other
for at least the next 10 years. Wide-moat companies are sheet, and cash flow statement as we do in Stage I. The
analytical tools to augment this process. Moreover, we
those in which we have very high confidence that excess length of the second stage depends on the strength of
think analyzing valuation through discounted cash flows
returns will remain for 10 years, with excess returns more the company’s economic moat. We forecast this period to
presents a better lens for viewing cyclical companies,
likely than not to remain for at least 20 years. The longer last anywhere from one year (for companies with no eco-
high-growth firms, businesses with finite lives (e.g.,
a firm generates economic profits, the higher its intrinsic nomic moat) to 10–15 years or more (for wide-moat com-
mines), or companies expected to generate negative
value. We believe low-quality, no-moat companies will panies). During this period, cash flows are forecast using
earnings over the next few years. That said, we don’t dis-
see their normalized returns gravitate toward the firm’s four assumptions: an average growth rate for EBI over the
miss multiples altogether but rather use them as support-
cost of capital more quickly than companies with moats. period, a normalized investment rate, average return on
ing cross-checks for our DCF-based fair value estimates.
new invested capital (RONIC), and the number of years
We also acknowledge that DCF models offer their own
When considering a company's moat, we also assess until perpetuity, when excess returns cease. The invest-
challenges (including a potential proliferation of estim-
whether there is a substantial threat of value destruction, ment rate and return on new invested capital decline un-
ated inputs and the possibility that the method may miss
stemming from risks related to ESG, industry disruption, til a perpetuity value is calculated. In the case of firms
shortterm market-price movements), but we believe these
financial health, or other idiosyncratic issues. In this con- that do not earn their cost of capital, we assume marginal
negatives are mitigated by deep analysis and our
text, a risk is considered potentially value destructive if its ROICs rise to the firm’s cost of capital (usually attribut-
longterm approach.
occurrence would eliminate a firm’s economic profit on a able to less reinvestment), and we may truncate the
cumulative or midcycle basis. If we deem the probability second stage.
Morningstar’s equity research group (”we,” “our”) be-
lieves that a company’s intrinsic worth results from the of occurrence sufficiently high, we would not characterize
the company as possessing an economic moat. Stage III: Perpetuity
future cash flows it can generate. The Morningstar Rating
Once a company’s marginal ROIC hits its cost of capital,
for stocks identifies stocks trading at a discount or premi-
2. Estimated Fair Value we calculate a continuing value, using a standard per-
um to their intrinsic worth—or fair value estimate, in
Combining our analysts’ financial forecasts with the petuity formula. At perpetuity, we assume that any
Morningstar terminology. Five-star stocks sell for the
firm’s economic moat helps us assess how long returns growth or decline or investment in the business neither
biggest risk adjusted discount to their fair values, where-
on invested capital are likely to exceed the firm’s cost of creates nor destroys value and that any new investment
as 1-star stocks trade at premiums to their intrinsic worth.
capital. Returns of firms with a wide economic moat rat- provides a return in line with estimated WACC.
Four key components drive the Morningstar rating: (1) our ing are assumed to fade to the perpetuity period over a
longer period of time than the returns of narrow-moat Because a dollar earned today is worth more than a dollar
assessment of the firm’s economic moat, (2) our estimate
firms, and both will fade slower than no-moat firms, in- earned tomorrow, we discount our projections of cash
of the stock’s fair value, (3) our uncertainty around that
creasing our estimate of their intrinsic value. flows in stages I, II, and III to arrive at a total present
fair value estimate and (4) the current market price. This
value of expected future cash flows. Because we are
process ultimately culminates in our singlepoint star rat-
Our model is divided into three distinct stages: modeling free cash flow to the firm—representing cash
ing.
available to provide a return to all capital providers—we
discount future cash flows using the WACC, which is a
1. Economic Moat Stage I: Explicit Forecast
weighted average of the costs of equity, debt, and pre-
The concept of an economic moat plays a vital role not In this stage, which can last five to 10 years, analysts
ferred stock (and any other funding sources), using ex-
only in our qualitative assessment of a firm’s long-term make full financial statement forecasts, including items
pected future proportionate long-term, market-value
investment potential, but also in the actual calculation of such as revenue, profit margins, tax rates, changes in
weights.
our fair value estimates. An economic moat is a structural workingcapital accounts, and capital spending. Based on
feature that allows a firm to sustain excess profits over a these projections, we calculate earnings before interest,
3. Uncertainty Around That Fair Value Estimate
long period of time. We define economic profits as re- after taxes (EBI) and the net new investment (NNI) to de-
Morningstar’s Uncertainty Rating is designed to capture
the range of potential outcomes for a company’s intrinsic
Morningstar Equity Research Star Rating Methodology
value. This rating is used to assign the margin of safety
required before investing, which in turn explicitly drives
our stock star rating system. The Uncertainty Rating is
aimed at identifying the confidence we should have in as-
signing a fair value estimate for a given stock.

Our Uncertainty Rating is meant to take into account any-

thing that can increase the potential dispersion of future
outcomes for the intrinsic value of a company, and any-
© Morningstar 2025. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
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Research Methodology for Valuing Companies

thing that can affect our ability to accurately predict Morningstar Equity Research Star Rating Methodology
these outcomes. The rating begins with a suggested rat-
ing produced by a quantitative process based on the trail-
ing 12-month standard deviation of daily stock returns.
An analyst overlay is then applied, with analysts using
the suggested rating, historical rating data, and their own
knowledge of the company to inform them as they make
the final Uncertainty Rating decision. Ultimately, the rat-
ing decision rests with the analyst. Analysts take into ac-
count many characteristics when making their final de-
cision, including cyclical factors, operational and financial
factors such as leverage, company-specific events, ESG
risks, and anything else that might increase the potential
dispersion of future outcomes and our ability to estimate
those outcomes.

Our recommended margin of safety—the discount to fair

value demanded before we’d recommend buying or
selling the stock—widens as our uncertainty of the es-
timated value of the equity increases. The more uncertain
we are about the potential dispersion of outcomes, the
greater the discount we require relative to our estimate of
the value of the firm before we would recommend the
purchase of the shares. In addition, the Uncertainty Rat-
ing provides guidance in portfolio construction based on
risk tolerance. Once we determine the fair value estimate of a stock, we justed return is highly likely over a multiyear time frame.
compare it with the stock’s current market price on a Scenario analysis developed by our analysts indicates
Our Uncertainty Ratings are: Low, Medium, High, Very daily basis, and the star rating is automatically re-calcu- that the current market price represents an excessively
High, and Extreme. lated at the market close on every day the market on pessimistic outlook, limiting downside risk and maximiz-
which the stock is listed is open. Our analysts keep close ing upside potential.
Margin of Safety
tabs on the companies they follow, and, based on thor-
Qualitative Analysis
QRating ough and ongoing analysis, raise or lower their fair value QQQQ We believe appreciation beyond a fair risk-ad-
Uncertainty Ratings QQQQQRating
estimates as warranted. justed return is likely.
Low 20% Discount 25% Premium
Medium 30% Discount 35% Premium QQQ Indicates our belief that investors are likely to re-
Please note, there is no predefined distribution of stars.
High 40% Discount 55% Premium ceive a fair risk-adjusted return (approximately cost of
That is, the percentage of stocks that earn 5 stars can
Very High 50% Discount 75% Premium equity).
fluctuate daily, so the star ratings, in the aggregate, can
Extreme 75% Discount 300% Premium
serve as a gauge of the broader market’s valuation. When
there are many 5-star stocks, the stock market as a whole QQ We believe investors are likely to receive a less than
Our uncertainty rating is based on the interquartile range, fair risk-adjusted return.
is more undervalued, in our opinion, than when very few
or the middle 50% of potential outcomes, covering the
companies garner our highest rating.
25th percentile–75th percentile. This means that when a Q Indicates a high probability of undesirable risk-adjus-
stock hits 5 stars, we expect there is a 75% chance that ted returns from the current market price over a multiyear
We expect that if our base-case assumptions are true the
the intrinsic value of that stock lies above the current time frame, based on our analysis. Scenario analysis by
market price will converge on our fair value estimate over
market price. Similarly, when a stock hits 1 star, we ex- our analysts indicates that the market is pricing in an ex-
time generally within three years (although it is im-
pect there is a 75% chance that the intrinsic value of that cessively optimistic outlook, limiting upside potential and
possible to predict the exact time frame in which market
stock lies below the current market price. leaving the investor exposed to Capital loss.
prices may adjust).

4. Market Price Our star ratings are guideposts to a broad audience and Other Definitions
The market prices used in this analysis and noted in the individuals must consider their own specific investment Last Price: Price of the stock as of the close of the mar-
report come from exchange on which the stock is listed goals, risk tolerance, tax situation, time horizon, income ket of the last trading day before date of the report.
which we believe is a reliable source. needs, and complete investment portfolio, among other
factors. Capital Allocation Rating: Our Capital Allocation (or
For more details about our methodology, please go to Stewardship) Rating represents our assessment of the
https://shareholders.morningstar.com The Morningstar Star Ratings for stocks are defined be- quality of management’s capital allocation, with particu-
low: lar emphasis on the firm’s balance sheet, investments,
Morningstar Star Rating for Stocks QQQQQ We believe appreciation beyond a fair risk ad- and shareholder distributions. Analysts consider compan-
© Morningstar 2025. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
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Research Methodology for Valuing Companies

ies’ investment strategy and valuation, balance sheet starting at zero (no risk) with lower scores representing vice to any specific investor. Therefore, investments dis-
management, and dividend and share buyback policies. less unmanaged risk and, for 95% of cases, the unman- cussed herein may not be suitable for all investors; in-
Corporate governance factors are only considered if they aged ESG Risk score is below 50. vestors must exercise their own independent judgment as
are likely to materially impact shareholder value, though to the suitability of such investments and recommenda-
either the balance sheet, investment, or shareholder dis- Based on their quantitative scores, companies are tions in the light of their own investment objectives, ex-
tributions. Analysts assign one of three ratings: "Exem- grouped into one of five Risk Categories (negligible, low, perience, taxation status and financial position. Morning-
plary", "Standard", or "Poor". Analysts judge Capital Alloc- medium, high, severe). These risk categories are absolute, star encourages Report recipients to read all relevant is-
ation from an equity holder’s perspective. Ratings are de- meaning that a ‘high risk’ assessment reflects a compar- sue documents (e.g., prospectus) pertaining to the secur-
termined on a forward looking and absolute basis. The able degree of unmanaged ESG risk across all subindus- ity concerned, including without limitation, information
Standard rating is most common as most managers will tries covered. relevant to its investment objectives, risks, and costs be-
exhibit neither exceptionally strong nor poor capital alloc- fore making an investment decision and when deemed
ation. The ESG Risk Rating Assessment is a visual representa- necessary, to seek the advice of a financial, legal, tax,
tion of Sustainalytics ESG Risk Categories on a 1 to 5 and/or accounting professional. The information, data,
Capital Allocation (or Stewardship) analysis published pri- scale. Companies with Negligible Risk = 5 Globes, Low analyses and opinions presented herein are not warran-
or to Dec. 9, 2020, was determined using a different pro- Risk = 4, Medium Risk = 3 Globes, High Risk = 2 Globes, ted to be accurate, correct, complete or timely. Unless
cess. Beyond investment strategy, financial leverage, and Severe Risk = 1 Globe. For more information, please visit otherwise provided in a separate agreement, neither
dividend and share buyback policies, analysts also con- sustainalytics.com/esg-ratings/ Morningstar, Inc. or the Equity Research Group repres-
sidered execution, compensation, related party transac- ents that the report contents meet all of the presentation
tions, and accounting practices in the rating. Ratings should not be used as the sole basis in evaluating and/or disclosure standards applicable in the jurisdiction
a company or security. Ratings involve unknown risks and the recipient is located.
Capital Allocation Rating: Our Capital Allocation (or uncertainties which may cause our expectations not to
Stewardship) Rating represents our assessment of the occur or to differ significantly from what was expected Except as otherwise required by law or provided for in a
quality of management’s capital allocation, with particu- and should not be considered an offer or solicitation to separate agreement, the analyst, Morningstar, Inc. and
lar emphasis on the firm’s balance sheet, investments, buy or sell a security. the Equity Research Group and their officers, directors
and shareholder distributions. Analysts consider compan- and employees shall not be responsible or liable for any
ies’ investment strategy and valuation, balance sheet Risk Warning trading decisions, damages or other losses resulting from,
management, and dividend and share buyback policies. Please note that investments in securities are subject to or related to, the information, data, analyses or opinions
Corporate governance factors are only considered if they market and other risks and there is no assurance or guar- within the report.
are likely to materially impact shareholder value, though antee that the intended investment objectives will be
either the balance sheet, investment, or shareholder dis- achieved. Past performance of a security may or may not The Report and its contents are not directed to, or inten-
tributions. Analysts assign one of three ratings: "Exem- be sustained in future and is no indication of future per- ded for distribution to or use by, any person or entity who
plary", "Standard", or "Poor". Analysts judge Capital Alloc- formance. A security investment return and an investor’s is a citizen or resident of or located in any locality, state,
ation from an equity holder’s perspective. Ratings are de- principal value will fluctuate so that, when redeemed, an country or other jurisdiction where such distribution, pub-
termined on a forward looking and absolute basis. The investor’s shares may be worth more or less than their lication, availability or use would be contrary to law or
Standard rating is most common as most managers will original cost. A security’s current investment performance regulation or which would subject Morningstar, Inc. or its
exhibit neither exceptionally strong nor poor capital alloc- may be lower or higher than the investment performance affiliates to any registration or licensing requirements in
ation. noted within the report. Morningstar’s Uncertainty Rating such jurisdiction.
serves as a useful data point with respect to sensitivity
Capital Allocation (or Stewardship) analysis published pri- analysis of the assumptions used in our determining a fair Where this report is made available in a language other
or to Dec. 9, 2020, was determined using a different pro- value price. than English and in the case of inconsistencies between
cess. Beyond investment strategy, financial leverage, and the English and translated versions of the report, the Eng-
dividend and share buyback policies, analysts also con- lish version will control and supersede any ambiguities
sidered execution, compensation, related party transac- General Disclosure associated with any part or section of a report that has
tions, and accounting practices in the rating. been issued in a foreign language. Neither the analyst,
Unless otherwise provided in a separate agreement, re-
cipients accessing this report may only use it in the coun- Morningstar, Inc., or the Equity Research Group guaran-
Sustainalytics ESG Risk Rating Assessment:The ESG tees the accuracy of the translations.
try in which the Morningstar distributor is based. Unless
Risk Rating Assessment is provided by Sustainalytics; a
stated otherwise, the original distributor of the report is
Morningstar company. This report may be distributed in certain localities, coun-
Morningstar Research Services LLC, a U.S.A. domiciled
financial institution. tries and/or jurisdictions (“Territories”) by independent
Sustainalytics’ ESG Risk Ratings measure the degree to third parties or independent intermediaries and/or distrib-
which company’s economic value at risk is driven by en- utors (“Distributors”). Such Distributors are not acting as
This Report is for informational purposes, should not be
vironment, social and governance (ESG) factors. agents or representatives of the analyst, Morningstar,
the sole piece of information used in making an invest-
ment decision, and has no regard to the specific invest- Inc. or the Equity Research Group. In Territories where a
Sustainalytics analyzes over 1,300 data points to assess a Distributor distributes our report, the Distributor is solely
ment objectives, financial situation or particular needs of
company’s exposure to and management of ESG risks. In responsible for complying with all applicable regulations,
any specific recipient. This publication is intended to
other words, ESG Risk Ratings measures a company’s un- laws, rules, circulars, codes and guidelines established by
provide information to assist investors in making their
managed ESG Risks represented as a quantitative score. local and/or regional regulatory bodies, including laws in
own investment decisions, not to provide investment ad-
Unmanaged Risk is measured on an open-ended scale
© Morningstar 2025. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
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Research Methodology for Valuing Companies

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Research Methodology for Valuing Companies

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Morningstar Equity Analyst Report | Report as of 18 Jan 2025 09:34, UTC | Reporting Currency: HKD | Trading Currency: HKD

| Exchange: HONG KONG EXCHANGES AND CLEARING LTD Page 1 of 22

Price vs. Fair Value

Fair Value: 45.00

The ESG Risk Rating Assessment is a representation of Sustainalytics’ ESG Risk

company’s assets in outlying districts, potentially expanding their catchment.

focused companies with the necessary capital and experience.

Bears Say Xavier Lee, Equity Analyst, 7 Nov 2024

portfolio and is seeking riskier expansion internationally.

Economic Moat Xavier Lee, Equity Analyst, 30 May 2024

Fair Value Fair Value Fair Value Fair Value

Last Close Last Close

Economic Moat None None Narrow Narrow

Risk and Uncertainty Xavier Lee, Equity Analyst, 30 May 2024

material value destruction from ESG issues.

Capital Allocation Xavier Lee, Equity Analyst, 7 Nov 2024

Analyst Notes Archive

Competitors Price vs. Fair Value

Hang Lung Properties Ltd 00101

Fair Value: 10.00

Swire Properties Ltd 01972

Fair Value: 22.50

Competitors Price vs. Fair Value

Wharf Real Estate Investment Co Ltd 01997

Fair Value: 31.00

Morningstar Historical Summary

Valuation as of 31 Dec 2024

Morningstar Analyst Historical/Forecast Summary as of 06 Nov 2024

ESG Risk Rating Breakdown

Exposure Subject Subindustry (28.0) u Exposure represents a company’s vulnerability to ESG

dium, and high-risk exposure

Management Gap4 8.4 100 0 programs, practices, and policies

Overall Unmanaged Risk 8.8 much manageable risk a company is managing

ESG Risk Rating ESG Risk Rating Assessment5

Hang Lung Properties Ltd 00101 17 Jan 2025 17:20, UTC

Swire Properties Ltd 01972 17 Jan 2025 17:21, UTC

Research Methodology for Valuing Companies

Our Uncertainty Rating is meant to take into account any-

Research Methodology for Valuing Companies

Our recommended margin of safety—the discount to fair

Research Methodology for Valuing Companies

Research Methodology for Valuing Companies

Research Methodology for Valuing Companies

vestment Adviser India Private Limited offers Investment

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