Brokers' FY 2024 DPU forecast for Link REIT prior to full year results announcement

Link Reit (0823.HK), the largest real estate investment trust in Asia, is due to report its full year results for fiscal year 2024 on Wednesday, May 29th. AAstocks released a summary of brokers' latest expectations for Link Reit's 2024 full year distribution per unit (DPU). See table below for details.

The following table is a summary of brokers' forecast of Link Reit's 2024 full year DPU (prior to the results announcement):

Source: AAstocks

For the record, the full year DPU for 2023 = 2.7431 HK$. The average of the six brokers' DPU forecast is 2.567 HK$. That represents a 6.42% decrease from FY2023.

Based on the closing price of 33.45 HK$ on 28th May, the expected dividend yield is  7.67%. With the current 10 year Hong Kong Government Bond yielding 3.76%, the expected yield spread of 3.91% is relatively attractive.

Potential catalysts for the rerating of Link REIT stock includes:

• Potential inclusion in the Southbound Stock Connect program: Link Reit, as the largest REIT listed on the Hong Kong Stock Exchange, and as one of Asia's largest real estate investment trust, is expected to be a key beneficiary of the CSRC's plan to include Hong Kong listed Reits in the Southbound Stock Connect program. Such a move can potentially bring in fresh mainland funds that is expected to provide a much needed boost to the stock price.
• Potential exemption of withholding tax for mainland investors: According to recent news reports, mainland China regulators including the China Securities Regulatory Commission and the State Taxation Administration are reviewing a plan submitted by Hong Kong to waive the 20 percent withholding tax on dividends from Hong Kong stocks bought via the Southbound Stock Connect program. If this plan is approved in the near future, it will also provide a much needed injection of fresh funds from mainland China income investors.