HongKong Land - DBS Research 2018-09-19: Central Offices In Demand

HONGKONG LAND HOLDINGS LIMITED (SGX:H78) | SGinvestors.io HONGKONG LAND HOLDINGS LIMITED SGX:H78

HongKong Land - Central Offices In Demand

  • A Chinese bank reportedly agreed to take up half of office space at Three Exchange Square surrendered by HNA.
  • Leasing demand from China-based financial institutions remains strong.
  • Maintain BUY with US$8.57 Target Price.



What’s New

  • China-based HNA Group reportedly surrendered 8 floors (Levels 24-31) at Three Exchange Square in Central with lettable area of 88,000sf. The lease has just commenced in Jun-18 and will expire in May-27. This move should not surprise the market as this conglomerate has been reducing its business operations in Hong Kong in the previous year.
~ SGinvestors.io ~ Where SG investors share
  • According to the press, China Merchants Bank has agreed to take up four floors for business expansion based on market sources. Reportedly, new monthly rent reached HK$160psf, c.15% higher than those currently paid by HNA. This reflects sustained leasing demand for Central office space among Chinese financial institutions. https://SGinvestors.io ~ Where SG investors share
  • According to Jones Lang Lasalle, office vacancy in Central remained tight at 1.5% in Aug-18. With solid demand from Chinese firms on one hand and tight vacancy on the other, it should not be difficult for the market to absorb the remaining space surrendered by HNA.
  • Hongkong Land is trading at 45% discount to our assessed current NAV. Valuation sounds inexpensive from the historical perspective. And Central office market remains in good shape. 
  • We maintain our BUY call with Target Price of US$8.57. 





Jeff YAU CFA DBS Group Research | Ian CHUI DBS Research | Jason LAM DBS Research | https://www.dbsvickers.com/ 2018-09-19
SGX Stock Analyst Report BUY Maintain BUY 8.570 Same 8.570



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