Shares of SEAZEN (01030) dropped over 4% in Hong Kong trading, recently falling 3.86% to HK$1.37 with a turnover of HK$29.09 million.

The decline follows the company's interim results for 2026, which showed revenue of RMB 17.686 billion, a 20.24% decrease year-over-year. Profit attributable to equity holders stood at RMB 608 million, down 12.07% from the same period last year.

During the period, the group's property development business generated approximately RMB 10.564 billion in revenue. The total gross floor area delivered reached 1.8596 million square meters, with the average selling price of properties delivered and recognized for sale at approximately RMB 5,681 per square meter.

Where the opportunity lies

Morgan Stanley noted in a research report that SEAZEN's current valuation is attractive, trading at roughly 4 times its projected 2027 recurring profit and 0.2 times historical price-to-book ratio. The bank anticipates rental income will achieve a steady compound annual growth rate of 3% to 4%, supported by solid mall operations, further market share expansion in lower-tier cities, and the central government's intensified consumption support over the next five years.

Additionally, a potential public-private REIT spin-off within the next one to two years could unlock the value of its shopping mall portfolio, further reducing leverage and enhancing book value. As operations normalize, Morgan Stanley believes SEAZEN has the potential to resume dividend payments this year.