Hongkong Land

[winston]

vested

Hongkong Land

In Hong Kong, political woes continue to weigh on the economy and the property sector.

Our CGS-CIMB Research colleagues in Hong Kong think that there are concerns that Hong Kong’s position as one of the top cities for corporates to do business in would be jeopardised.

Our Hong Kong property team expects home prices to experience a modest correction of 5-10% over the next six months.

Only 30% of Hongkong Land’s office area will be subject to rent review or expiration in the coming 18 months, and its weighted average lease expiry (WALE) extended to 4.6 years at end-Jun 2019 from four years at end-Dec 2018.

Although enquiries for its office space have been subdued because of headwinds in the global economy, we think the extended WALE (mainly for legal and financial services clients) and low supply in Central would cushion any downside in its office rents.

In China, we think there could be opportunities for Hongkong Land amid credit tightening faced by developers.

As at end-Jun 2019, Hongkong Land’s net gearing was 10%.

Hongkong Land has a solid track record of property development in China.

Source: CIMB

[winston]

not vested

What’s New

Reversionary growth for Central office portfolio to moderate as the market there has peaked out

Despite challenges surrounding its Central portfolio, low valuation cushions downside risk

Negatives largely discounted, maintain BUY with US$6.64 TP

Source: DBS

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

[behappyalways]

Hongkong Land wins $6.2 bil bid for Shanghai West Bund site
https://www.theedgesingapore.com/news/p ... -bund-site

[winston]

not vested

Hongkong Land's full-year earnings drop 92%

HONGKONG Land Holdings reported a 92 per cent drop in net profit for the full year ended December 2019 to US$198 million from US$2.5 billion a year ago owing to net losses from lower valuations of the group’s investment properties versus net gains a year ago.

Underlying net profit jumped to a record US$1.08 billion from US$1.04 billion, said the company in its results announcement.

The group said profits from the investment properties businesses remained stable despite the social unrest in Hong Kong, while a higher contribution from the development properties business in mainland China was partially offset by lower contributions from other markets.

Hongkong Land, a member of the Jardine Matheson Group, said it made good progress over the year in acquisition of new sites and since then, also acquired a strategic large mixed-use investment property site in a prime location in Shanghai.

However, it added: “The performance of the group’s development properties business in the Chinese mainland and the impact of rent relief on the group’s retail properties, particularly in Hong Kong, will depend on the length and impact of the Covid-19 outbreak”.

Revenue for the year fell 13 per cent to US$2.32 billion from US$2.67 billion in 2018.

Earnings per share for the period under review came in at 8.48 US cents, down from US$1.05 a year ago. On an underlying basis, earnings per share improved 4 per cent to 46.12 US cents.

The net asset value per share at end-December 2019 was US$16.39 versus US$16.43 at the end of 2018.

The company has recommended a final dividend of 16 US cents per share, unchanged from a year ago, which will be payable on May 13 2020, subject to approval at the annual general meeting to be held on May 6 with book closure date set for March 20.

That brings total dividend per share for 2019 to 22 US cents, unchanged from last year.

The company warned that its results for the current financial year will be impacted by the Covid-19 outbreak, and expects the performance of development properties in the Chinese mainland and the group’s retail properties to be most affected.

“The extent of the impact will be dependent on the duration and geographic extent of the outbreak,” said chairman Ben Keswick, adding that the group’s other businesses are expected to to have stable contributions, although financing costs could rise.

HongKong Land shares rose 6 US cents or 1.2 per cent to finish at US$5.05 on Thursday.

Source: Business Times

https://www.businesstimes.com.sg/compan ... gs-drop-92

[winston]

not vested

Hongkong Land (HKL SP): BUY
Market Cap: US$11,882m | Average Daily Value: US$10.8m
Last Traded Price: US$5.05; Price Target: US$5.81 (Upside 15.0%) (Prev US$6.52)

Negatives priced in

FY19 underlying profit grew 4% to US$1.08bn, 3% above our forecast due to stronger-than-expected rise in development earnings from China

Coronavirus outbreak likely to lead to project delays and lower sales completions in China

To minimise occupancy risk for Central offices by extending lease expiry profile

BUY, TP revised to US$5.81 TP

What’s New
Hongkong Land’s FY19 underlying profit came in at US$1.08bn, up 4% y-o-y. The improvement was mainly led by increased development profit from China due to higher sales completions despite lower residential contribution from Singapore. Final DPS was flat at US$0.16, taking the full-year DPS of US$0.22, which represents a yield of 4.4%.

Gross rental receipts rose by a modest 2% thanks to improved office contributions from its Central portfolio. Office rental reversion remained positive. This led to average office rents increasing 4% y-o-y to HK$118psf. However, with subdued leasing demand amid the prolonged protests and US-China trade dispute, vacancy rose to 2.9% in Dec-19 from Dec-18’s 1.4%.

Retail portfolio remained effectively fully let in Dec-19 with positive base rent reversion. However, due to temporary rental relief, average retail rents fell to HK$222psf in 2019 from HK$233psf in 2018. Office vacancy of its Singapore portfolio stood at 5% in Dec-19. However, on a committed basis, vacancy was low at 0.7%. Favourable rental growth was recorded upon lease renewals. This resulted in average office rents rising to S$9.7psf in 2019 from S$9.2psf in 2018.

Hongkong Land’s attributable contracted sales in China surged 18% to US$1.87bn in 2019, due to a change in sale location mix. As of Dec-19, sold but unrecognised contracted sales from China stood at US$1.86bn, up 37% from a year ago.

In Feb-20, Hongkong Land acquired a mixed-use site in West Bund of Shanghai via government auction for Rmb31.05bn or US$4.4bn. This marked the largest land acquisition the company has ever made in China. Located in Xuihi District along the Huangpu River, this site will house a Grade A office, retail, hotel, residential development and convention centre with total developable GFA of c.1.1msm.

About 22% of GFA including office and residential will be earmarked for sale. The land premium will be paid by instalments in 2020. This sizeable project will be constructed in multiple phases with targeted completion in 2023-27. When completed, this mixed-use development is set to boost the company’s recurring income.

Net debt stood at US$3.59bn in Dec-19. This translated into a gearing of 9%. Upon the full payment of land premium for the recently acquired Shanghai site, the company’s gearing should increase to c.20%.

Following the acquisition of this large-scale strategic mixed-use site in Shanghai, the pace of new investments is expected to moderate this year compared to recent years. Despite higher gearing, Hongkong Land’s financial risk should remain manageable.

The Central office market has peaked out with lackluster leasing demand from corporates. According to Jones Lang LaSalle, vacancy rose to 4% in Jan-20. Office rents there have fallen c.7% since mid-19.

Hongkong Land has made effort to extend the leases of major tenants in recent years. As a result, the weighted average lease expiry of its office portfolio has increased to 4.7 years as at end-2019 from 2018’s 4 years. This helps minimise occupancy risks.

The coronavirus outbreak has led to temporary halt in development activities. The resulting delays in sales completions is likely to lower the contributions from residential sales in China. Retail properties in Hong Kong and Beijing are also impacted by the virus outbreak.

YTD, Hongkong Land’s share price has fallen 12% amid growing global economic uncertainty led by the coronavirus outbreak. The counter is trading at a 59% discount to our appraised current NAV, near the low end of the historical trading range.

This should cushion further downside risk on share price despite Central office market experiencing headwinds. By assigning a wider target discount of 50% to our Dec-20 NAV estimate, we derive a TP of HK$5.81, which still suggests 15% upside from the current level. Reiterate BUY.

Source: DBS

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

[winston]

not vested

Property developer and investment company Hongkong Land on Wednesday announced that it made a net loss of US$1.8 billion in its first half ended June 30, compared to a net profit of US$411 million a year ago.

Source: Phillips

[winston]

not vested

BRIEF-Hongkong Land Holdings Says HY Loss Attributable US$1,828 Mln

July 29 (Reuters) - Hongkong Land Holdings Ltd :

* HY LOSS ATTRIBUTABLE US$1,828 MILLION VERSUS PROFIT US$411 MILLION

* DECLARED INTERIM DIVIDEND OF US¢6.00 PER SHARE

* H2 UNDERLYING PROFITS EXPECTED TO BENEFIT FROM HIGHER DEVELOPMENT PROPERTIES COMPLETIONS ON CHINESE MAINLAND THAN IN H1

Source: Reuters

[winston]

not vested

Hongkong Land, under Jardine Strategic (JSH), saw weaker overall performance particularly in relation to retail rent in the investment properties business, though contributions from the office portfolio remained stable during the quarter.

Source: The Edge

[winston]

not vested

Property developer and investment company Hongkong Land's full-year underlying performance is expected to be moderately affected by a reduced contribution from its investment properties portfolio, the mainboard-listed company said in an interim management statement on Thursday.

This is due to the provision of temporary retail rent relief and a delay in the timing of profit recognition in respect of development properties in mainland China caused by pandemic-related construction delays, Hongkong Land said.

The group is also expecting further losses on the revaluation of investment properties in the second half of the year due to adverse market conditions.

Source: Phillips

[winston]

not vested

Hongkong Land (HKL SP, Add, TP US$5.10)

Its HK Central office portfolio continued to register positive rental reversion in 1H20 despite rising vacancy.

Reiterated Add call in view of its resilient investment property portfolio, coupled with
attractive valuation (60% discount to NAV).

Source: CIMB