Hongkong Land says underlying profit for 1QFY2023 lower y-o-y

Shares in Hongkong Land closed 2 US cents lower or 0.46% down at US$4.38 on May 18.

Hongkong Land H78 has reported a lower underlying profit on a y-o-y basis for the 1QFY2023 ended March 31. While no figures were reported, the group said that the marginal increase in contribution from its investment properties were more than offset by the reduced contribution from its development properties business.

The lower contribution from the development properties business was attributed to the fewer planned sales completions on the Chinese mainland.

In Hong Kong, the group’s Central office portfolio reported physical vacancy of 6.3% as at March 31, compared to the 4.9% as at Dec 31, 2022. On a committed basis, vacancy was 5.8%.

In comparison, vacancy for the overall Central Grade A office market was 9.0%.

Rental reversions continued to be negative in the period.

Leasing activity, however, was said to have improved in the recent months with a “meaningful” increase in enquiries in the 1QFY2023 compared to the 4QFY2022 and 1QFY2022. Headwinds in global financial markets, however, have dampened incremental office demand from the financial services sector.

The group’s Landmark retail portfolio saw a “significant rebound” in tenant sales on a y-o-y basis. Sales in the 1QFY2022 were deeply impacted by the fifth wave of the Covid-19 pandemic. According to the group, the strong recovery also resulted in tenant sales being only marginally lower than its pre-Covid-19 levels. As at March 31, physical and committed vacancy for the portfolio remained low at 0.5%.

In the 1QFY2023, tenant sales and footfall at the group’s Central series luxury retail malls in Beijing and Macau saw a “strong recovery” compared to the same quarter in the year before due to the lifting of anti-pandemic restrictions.

The group’s Singapore office portfolio saw positive rental reversions during the period although the group is expecting reversions to moderate during the remainder of the year.

In development properties, the group reported attributable interest in contracted sales of US$408 million ($548.8 million) in the 1QFY2023, 91.5% higher y-o-y. This was mainly due to more planned sales launches with sales activity continuing to recover in April. Planned sales completions in FY2023 are expected to be higher y-o-y. Overall, the group saw a “modest recovery” in market sentiment for residential properties on the Chinese mainland underpinned by government support during the quarter.

As at March 31, the group’s net debt fell to US$5.2 billion, down from US$5.8 billion as at Dec 31, 2022. As at the same period, 54% of the group’s debt interest are on fixed rates. As at April 30, the total amount invested in its buyback programme since it was first announced was US$598 million.

In March, the group upped its stake in the Nanjing Yue City Project by 15% to 48%. In Singapore, residential market sentiment and demand remained healthy. The group commenced sales for the 638-unit Tembusu Grand in April; 53% of the units were sold on its launch weekend. The group’s attributable interest in contracted sales in the city was US$171 million in the period, compared to US$45 million in the equivalent period in 2022.

On Singapore’s latest set of cooling measures in April, the group notes that it is “too early” to assess any impact.

Shares in Hongkong Land closed 2 US cents lower or 0.46% down at US$4.38 on May 18.

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