Champion REIT Earnings: Results in Line; Office Weakness Continues to Weigh on Distribution

Following its in-line results, we maintain our fair value estimate of HKD 2.32 for no-moat Champion REIT. First-half 2024 revenue dropped 4.5% year on year, with the weak office segment partly offset by a mild improvement in the Langham Place mall revenue. That said, we expect weaker retail performance in the second half, as management shared that the momentum has softened since the second quarter. We anticipate the net tourist outflow trend will continue to pressure Hong Kong retail sales performance. As such, we have fine-tuned our assumptions to reflect the latest numbers, but our forecasts are largely unchanged.