Link REIT: Resilient Through Current Downturn; We Continue to See Long-Term Value

We maintain our fair value estimate of HKD 45 per unit for no-moat Link REIT after its pre-results 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.