Morgan Stanley: SEAZEN (01030) operations have returned to normal, and it is expected to resume dividends this year.

Morgan Stanley released a research report stating that after updating the risk-return analysis of SEAZEN (01030), it maintains an "Overweight" rating, with a target price of HK$2.30 based on a 40% discount to net asset value (NAV) and a comprehensive valuation method considering net debt, continuing to regard it as a preferred stock. The bank noted that SEAZEN's operations are returning to normal, with reduced drag from the release of investment property value and residential development business, which are the main arguments for its bullish outlook on the stock. Morgan Stanley has lowered its core profit forecasts for SEAZEN by 10%, 4%, and 5% for 2026 to 2028 to reflect rising interest expenses, but this has been partially offset by better-than-expected savings in sales and administrative expenses. The bank believes that SEAZEN's current valuation is attractive, equivalent to about four times the forecasted recurring profit for 2027 and 0.2 times the historical price-to-book ratio. It expects rental income to achieve a stable compound annual growth rate of 3% to 4% supported by solid mall operations, benefitting from further market share expansion in lower-tier cities and increased support for consumption from the central government over the next five years. Additionally, a potential spin-off of public and private real estate investment trusts in the next one to two years is expected to unlock value in its shopping mall portfolio, further reducing debt and enhancing book value. As operations normalize, the bank believes SEAZEN is likely to resume dividend payments this year.