Home » , » HongKong Land - Benefitting from office market upcycle in Central

HongKong Land - Benefitting from office market upcycle in Central

Shared By Stock Fanatic on Friday, July 31, 2015 | 31.7.15

Pic Credits : hkland.com
■ 1H15 underlying earnings, excluding provision writeback, were broadly in line with our estimate

■ Benefitting from tight vacancy and limited new supply in Central’s office market

BUY with US$9.32 TP

Modest earnings decline on lower provision write-back
HongKong Land’s (HKL) 1H15 underlying earnings fell a modest 3% to US$419m, due to lower provision write-back for MCL’s Singapore projects. Interim DPS was flat at US$0.06. Gross rental receipts were broadly stable. Office rental reversion for the Central portfolio turned slightly positive in 1H15, with vacancy improving to 4.2% in Jun 15, from Dec 14’s 5.4%. Retail portfolio continues to be fully let with 4% yo-y rise in average rents. Strong performance from HKL’s commercial portfolio should continue in 2H15. Despite the absence of contributions from Hong Kong, residential segment posted higher profits led by China projects. Net debt stood at US$2.6bn in Jun 15, down 3% from Dec 14’s US$2.7bn; this puts its gearing at a comfortable 9%.

China an increasingly important earnings contributor
HKL’s attributable contracted sales in China rose 25% to US$328m in 1H15. As of Jun-15, net order book reached US$585m, which should be gradually recognised upon project completion in future years. Moreover, WF CENTRAL, a luxury retail project in Beijing, is scheduled for completion in late 2016. In May 15, HKL signed a MOU with CIFI Holdings to codevelop a mixed-use project in Shanghai. Overall, China should become an increasingly important earnings platform for HKL.

Technical Analysis
Daily Chart
BUY with US$9.32 TP
The stock is trading at a 29% discount to our assessed current NAV, against its 10-year average of 20%. Tight vacancy and limited new supply should exert further upward rental pressure for Central offices, and this would benefit HKL. Proposed inclusion in MSCI (HK) adds to its investment appeal. Maintain BUY with US$9.32 TP, premised on 20% target discount to our Jun 2016 NAV estimate. (Read Report)

Read Related Reports
Hongkong Land Holdings - Steady and improving
Tuesday, 4 August 2015
- Daiwa Capital Markets
Hongkong Land Holdings Limited - Further improvement in office vacancy
Monday, 3 August 2015
- Credit Suisse Asia Pacific Equity Research
Hongkong Land - Tailwind from Central office market to continue
Sunday, 2 August 2015
- JP Morgan Asia Pacific Equity Research
HK Land - Core H1' 15 in line with forecast
Friday, 31 July 2015
- UBS Securities Asia Limited

Source : DBS Group Research

Posted on Friday, July 31, 2015 | 31.7.15
With No comments

Join Me On: Facebook | Twitter | Google Plus ::: Thank you for visiting ! :::
Some of the photos shown in this blog are randomly sourced from the Public Domain. If there is an infringement in the copyright of the photos; kindly inform us and it will be removed immediately. Thank you for your kind understanding.
Share this article :

Post a Comment

Modified by : Stockfanatic
Copyright © 2008 - 2018. Singapore Stock Market News - All Rights Reserved
Template Created by Creating Website Published by Mas Template
Proudly powered by Blogger
Related Posts with Thumbnails