Hongkong Land

[winston]

vested

Interim Management Statement

8th November 2018 – Hongkong Land Holdings Limited has today issued an Interim
Management Statement for the third quarter of 2018.

In Hong Kong, positive rental reversions continued in the Group’s Central office portfolio
as market supply remained tight.

Vacancy declined to 0.8% at 30th September 2018, from 1.9% at 30th June 2018.

The Group’s Central retail portfolio remained effectively fully occupied and saw mildly positive base rental reversions.

Rental reversions in the Group’s Singapore office portfolio were also positive as the market there continued to improve. While vacancy increased to 2.8% at 30th September 2018 from 0.1% at 30th June 2018, it is expected to decline before the end of the year as tenants take up
committed space.

In Beijing, the Group’s luxury retail complex, WF CENTRAL, is performing in line with expectations. The official opening of the hotel component of the development, Mandarin Oriental Wangfujing, is expected early next year.

In Development Properties, the Group recorded lower contracted sales in China during the third quarter due to the timing of sales launches. Sentiment in the Group’s key markets remains stable, with contracted sales expected to increase in the last quarter.

In the three months under review, the Group’s attributable interest in contracted sales was US$154 million, compared to US$195 million last year. In the nine months to 30th September 2018, the Group’s attributable interest in contracted sales was US$804 million, compared to US$896 million in the same period in 2017.

In Singapore, the sales launch at Margaret Ville was successful, though market demand has
subsequently moderated due to additional cooling measures introduced by the
government. Sales at Parc Esta (formerly Eunosville) are expected to commence shortly.

Contracted sales levels at the Group’s other developments across Southeast Asia were
satisfactory.

The Group’s financial position remains strong. Net debt was US$3.7 billion at 30th September 2018 while net gearing was 10%, a moderate increase from 30th June 2018 primarily due to payments for land purchased in China.

http://infopub.sgx.com/FileOpen/2018110 ... eID=532894

[winston]

vested

2 Reasons Why Hongkong Land Holdings Limited Is A Bargain Right Now

by Lawrence Nga

Reason 1: Stable business track record

From 2013 to 2017, its net profit surged from US$1.19 billion to US$5.59 billion.

Non-trading items such as property revaluations played a huge role in the profit growth, but its underlying earnings per share – after stripping away non-trading items – also grew from US$0.397 to US$0.412 over the same period.

Moreover, Hongkong Land’s book value per share had increased by 37%, or 8.2% per year, from US$11.40 in 2013 to US$15.60 in 2017;

Reason 2: Stable dividends

From 2013 to 2017, it has raised its dividend from US$0.18 per share to US$0.20 per share.

Assuming that the company maintains its 2017 dividend in 2018, Hongkong Land’s share price of US$6.44 currently will give investors a dividend yield of 3.1%.

Source: Motley Fool

https://www.fool.sg/2018/12/26/2-reason ... right-now/

[winston]

not vested

Takeaways from China Management Presentation and Site Visit in Chongqing

Decent profit contributions from development projects which carry respectable margins

Contract sales to pick up in 2H19 from more new project launches

Property development in China should enhance earnings profile but may not necessarily re-rate
the stock due to the inherent risk perceived by the market on this sector

Valuation is undemanding; Maintain BUY with US$8.02 TP

Source: DBS

https://researchwise.dbsvresearch.com/R ... fchekgbcjj

[winston]

Standing strong in Central

Extended average office lease expiry may cushion downside for office rents.

We think HKL’s application for plot ratio increase in its mega JV project with SHKP in Yuen Long could drive growth in the medium term.

We keep our Add call with a TP of US$7.4, based on 45% discount to NAV

Source: CIMB

https://brokingrfs.cimb.com/XENprzG-tAu ... g5SjQ2.pdf

[winston]

not vested

Low valuations to cushion downside risk

1H19 underlying earnings rose 2% to US$466m, in line with our forecast

Positive rental reversion worked its way through Central office portfolio

Strengthening development earnings from China

BUY with US$7.70 TP

Source: DBS

https://researchwise.dbsvresearch.com/R ... gjgekgbcjj

[winston]

not vested

Low valuations to cushion downside risk

1H19 underlying earnings rose 2% to US$466m, in line with our forecast

Positive rental reversion worked its way through Central office portfolio

Strengthening development earnings from China

BUY with US$7.70 TP

Source: DBS

https://researchwise.dbsvresearch.com/R ... gjgekgbcjj

[winston]

not vested

Will Hongkong Land be able to withstand weakening office space demand?

by Samantha Chiew

DBS: The stock is trading at 53% discount to our appraised current NAV, against its 10-year average of 31%.

2H 2019: Share Buybacks?

Source: The Edge

http://www.theedgesingapore.com/capital ... ace-demand

[winston]

not vested

Hongkong Land Holdings (HKL SP)
Shining Gems Amid Hong Kong Turmoil

HKL is trading at an attractive 0.36x P/B, unrepresentative of its underlying asset quality.

HKL has a US$38.7b investment portfolio (c.88% of its gross assets), concentrated in the CBDs of Hong Kong (83%) and Singapore (10%).

Hong Kong developers have room to increase leverage further, to boost ROEs (and close P/B gaps
vs Singapore peers).

Share price catalysts include easing of the Hong Kong political stalemate, share buybacks and deployment of US$15.4b debt headroom into mainland China.

In 2018, HKL used c.US$132m on share repurchases in Apr 18 (ie average cost of US$7.00/share) and in Sep 18 (ie average cost of US$6.85/share)

Source: UOBKH

https://research.uobkayhian.com/content ... 4d5f22b11a

[winston]

not vested

Hongkong Land Holdings (HKL SP)
Shining Gems Amid Hong Kong Turmoil

HKL is trading at an attractive 0.36x P/B, unrepresentative of its underlying asset quality.

HKL has a US$38.7b investment portfolio (c.88% of its gross assets), concentrated in the CBDs of Hong Kong (83%) and Singapore (10%).

Hong Kong developers have room to increase leverage further, to boost ROEs (and close P/B gaps
vs Singapore peers).

Share price catalysts include easing of the Hong Kong political stalemate, share buybacks and deployment of US$15.4b debt headroom into mainland China.

In 2018, HKL used c.US$132m on share repurchases in Apr 18 (ie average cost of US$7.00/share) and in Sep 18 (ie average cost of US$6.85/share)

Source: UOBKH

https://research.uobkayhian.com/content ... 4d5f22b11a

[winston]

vested

Hongkong Land

Business overview

Hongkong Land (HKL SP, Add, TP: US$7.40) is a 50.01%-owned subsidiary of JS. It was founded in 1889 and is a major listed property investment, management and development group.

Hongkong Land owns and manages a total of more than 850,000 sq m of prime office and luxury retail property in major Asian cities like Hong Kong, Singapore and Beijing.

Hong Kong represents its largest exposure with c.450,000 sq m of prime property in Central
Hong Kong. This is followed by Singapore with c.165,000 sq m of office space. Hongkong Land also has a subsidiary, MCL Land, which is a well-established residential developer.

Financial performance

In FY18, Hongkong Land’s underlying net profit attributable to shareholders was up 9% to US$1.036bn.

Net gearing rose to 9% at end-FY18 and Hongkong Land expects this increased in 1H19 due to land purchases.

Rental income from investment properties, which contributed the majority of total revenue in FY18, benefited from positive rental reversions.

While the demand for Central office space has slowed in Hong Kong, the company expects occupancy to be cushioned from the lack of new supply and low vacancies in Central.

Hongkong Land’s underlying net profit attributable to shareholders for 1H19 rose 2% yoy.

Hongkong Land’s investment properties benefited from the continuing tight supply in the Hong Kong Central office leasing market.

Vacancy rate for the group’s Central office portfolio was 2.8% at end-Jun 2019 and would have been a lower 1.6% if new lease commitments were factored in.

At end-Dec 2018, its Hong Kong office vacancy was 1.4%. The retail portfolio remained effectively fully occupied.

In Singapore, there were positive rental reversions and vacancy rate for the group’s office portfolio was 3.3% at end-Jun 2019 and just 0.9% if new lease commitments were taken into account. Its Singapore office vacancy rate was 2.5% at end-Dec 2018.

In mainland China, net profit contribution from development properties for 1H19 was higher yoy as a result of more sales completions.

As at end-Jun 2019, the group had US$1,714m in sold-but-unrecognised contracted sales, compared with US$1,358m at end-Dec 2018.

Both sales completions and contracted sales in 1H19 were in line with the management’s expectations and we expect them to be stronger in the second half of the year.

Net profit contribution from the Singapore business was lower yoy. In 2018, profits were recognised from the completion of the 1,327-unit Sol Acres executive condominium development. At end-2018, presales were progressing satisfactorily at the Margaret Ville and Parc Esta projects, and the construction works for both are scheduled to be completed by 2021F.

The group’s joint venture projects in the rest of Southeast Asia are progressing on schedule,
according to the company.

Source: CIMB