Hongkong Land (HKL SP) - DBS Research 2017-08-02: 1H17 Result Preview

Hongkong Land (HKL SP) - DBS Vickers 2017-08-02: 1H17 Result Preview HONGKONG LAND HOLDINGS LIMITED H78.SI

Hongkong Land (HKL SP) - 1H17 Result Preview

  • 1H17 underlying earnings expected to be 5% higher y-o-y.
  • Modest improvement in gross rental revenue due to positive rental reversion for Central office portfolio.
  • Residential sales profits from China could be a swing factor on earnings.
  • BUY with US$8.93 TP.

What’s New 

  • Hongkong Land will announce its interim results for FY17 on 3 August. We forecast the company's underlying earnings to be 5% higher at US$414m on increased development earnings. Interim DPS is estimated to remain unchanged at US$0.06.
  • Gross rental receipt should rise 3% mainly driven by positive rental reversion for office portfolio in Central. For retail portfolio, base rent reversion, which was largely positive in FY16, had turned neutral in 1H17. 
  • In Singapore, the virtually fully let office portfolio should register mildly negative rental reversion due to supply glut. Residential sales earnings should rise markedly partly due to profit booking of Lakeville project in Singapore. This project has been substantially sold.
  • Development profit from China residential projects could remain a swing factor on the company's bottom-line earnings.
  • Key things to watch for include the vacancy and rental reversion trend of Central office portfolio, the company's outlook of office market in Hong Kong/Singapore, leasing progress of WF Central and an update on new investment plan in the region, among others.

Jeff YAU CFA DBS Vickers | Ian CHUI DBS Vickers | http://www.dbsvickers.com/ 2017-08-02
DBS Vickers SGX Stock Analyst Report BUY Maintain BUY 8.93 Up 8.510