Hongkong Land’s Share Price is Scraping a Multi-Year Low: Can the Property Giant See a Rebound?

The Smart Investor03-28

[ Share Facebook Twitter LinkedIn Email WhatsApp Investors in Hongkong Land (SGX: H78), or HKL, are going through a tough time. Shares of the property developer have hit a multi-year low...

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Can investors hope for a rebound anytime soon?","collect":0,"end_time":0,"defaultTopTitle":"thesmartinvestor.com.sg","property":[],"viewcount":null,"language":"en","relate_stocks":{"H78.SI":"置地控股有限公司","BK6520":"工商业服务概念","CFA.SI":"NikkoAM-STC Asia REIT","BK6110":"房地产经营公司","BK6512":"房地产股","BK6139":"房地产运营公司","BK6027":"贸易公司与经销商","RS1.SI":"中国环境资源"},"translate_title":"香港置地的股价正跌至多年低点：这家房地产巨头能看到反弹吗？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"CFA.SI":1,"H78.SI":1,"RS1.SI":1},"content_text":"[\n\n\n\nShare\n\n\nFacebook\n\nTwitter\n\nLinkedIn\n\nEmail\n\nWhatsApp\n\n\n\n\n\nInvestors in Hongkong Land (SGX: H78), or HKL, are going through a tough time.\nShares of the property developer have hit a multi-year low of S$3.06 recently and have declined by 26.9% in the past year.\nThe bearishness stems from troubles in Hong Kong and China amid a property downturn.\nHowever, the blue-chip property group is holding its own with its portfolio of high-quality properties even as it grapples with weak sentiment.\nCould investors see a rebound in its share price anytime soon?\nRevenue and profits are under pressure\nHKL released a resilient set of results for 2023 despite facing headwinds.\nThe group did, however, see year-on-year declines in its revenue and net profit.\nFor 2023, revenue fell by 17.8% year on year to US$1.8 billion as HKL saw lower sales of development properties in China along with reduced profit margins.\nThe property giant also booked a US$1.3 billion fair value loss on its investment properties, resulting in the group reporting a net loss of US$582.3 million for the year.\nStripping out this exceptional item, HKL’s core underlying profit would have dipped by just 5% year on year to US$734 million.\nIncome-seeking investors will be pleased that the group kept its 2023 dividend constant at US$0.22 per share, unchanged from 2022’s pay out.\nFree cash flow generation also remained healthy at US$616.3 million but was nearly 20% lower than the US$763.7 million churned out a year ago.\nInvestment properties holding the fort\nHKL has two main business segments – investment properties and development properties.\nIts Investment Properties division contributed 78% of the group’s operating profit for 2023 and accounted for 82% of its gross assets for the period.\nTherefore, this division forms the bulk of HKL’s profits and is a stable cash flow contributor that enjoys consistent rental income along with steady capital appreciation.\nProfits from the Investment Properties division rose 3% year on year and helped to hold the fort for the group.\nThis was despite a 5% year-on-year decline in the valuations for its Investment Properties, led mainly by its Hong Kong portfolio.\nFor 2023, vacancy for its Hong Kong investment properties stood at 6.8% on a committed basis, up from 4.7% in 2022.\nHowever, this level was still lower than the 9.9% logged for Hong Kong’s central Grade A office market.\nHKL also saw slight negative rental reversion where the average office rent dipped from HK$111 in 2022 to HK$106 in 2023.\nSingapore’s portfolio fared much better with committed vacancy levels at just 0.9% in 2023, down from 2.2% in 2022.\nPositive rental reversion also saw the average rent increase from S$10.6 per square foot (psf) in 2022 to S$10.9 psf in 2023.\nWeaker contributions from development properties\nThe development properties division saw a tepid 2023 because of challenging market conditions in mainland China.\nBecause fewer properties were sold in 2023 compared with 2022, HKL’s attributable interest in revenue recognised came in at US$1.62 billion, down from US$1.87 billion in 2022.\nIn addition, management also recognised an impairment of US$90 million on several smaller residential projects, including two in Wuhan, China.\nDespite these setbacks, investors should note that HKL is developing luxury and premium lifestyle retail properties in China in addition to selling residential properties.\nCurrently, the group has four properties with an attributable net leasable area of 175,000 square metres (sqm).\nA further 10 projects with net leasable area of 358,000 sqm will be launched from 2024 to 2028.\nHKL’s development properties pipeline in China stood at 37 projects with a developable area of nearly 8.4 million sqm, of which construction is 74% completed.\nEncouraging business development efforts\nAside from the above, HKL also reported encouraging business development efforts as it maintained its discipline in selecting strategic investment opportunities.\nThe group invested US$1.3 billion in new land and property acquisitions back in 2023.\nTwo new acquisitions were made in Chongqing and Beijing.\nThe Chongqing site has a developable area of around 301,000 sqm and will comprise residential units while HKL took up a 20% interest in the development of a mixed-use site in western Beijing with a total developable area of 194,000 sqm.\nBack in Singapore, the group acquired two residential sites that will be developed in joint ventures with other developers.\nHKL’s effective interest in these projects amounts to around 584,000 square feet of developable area.\nGet Smart: A robust pipeline of projects\nHKL may be facing tough times now, but its portfolio of high-quality investment properties should stand it in good stead to weather the downturn.\nThese investment properties generate a dependable stream of rental income that enables the group to report positive free cash flow and maintain its US$0.22 a year dividend.\nMeanwhile, the property developer also has a steady pipeline of projects in both Singapore and China that it is working on in the next four years.\nInvestors need to have patience as China deals with the fallout from the property bust but HKL’s business looks sturdy enough to withstand any further shocks.\nWe’ve just released a new Special FREE Report: “How to Make Your Child a Millionaire.” It’s a simple, no-nonsense guide for parents who care for their child’s financial future. You’ll also find 3 stocks (one even had a 55.8% jump in dividends) you can consider today to kickstart your child’s “piggy bank.” Click HERE to download now.\nDisclosure: Royston Yang does not own shares in any of the companies mentioned.\n\n\n\nYahoo\n]","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2422515740"}