Top Stock Market Highlights of the Week: Hongkong Land, Sheng Siong and CICT

Royston Yang
·4-min read

Welcome to this week’s edition of top stock market highlights.

Hongkong Land Holdings (SGX: H78)

Hongkong Land, or HKL, has revealed its new corporate strategy after several months of review by its new CEO, Michael Smith.

The blue-chip group identified a clear competitive positioning in the ultra-premium commercial sector with strength in a commercial-led integrated model.

Its current mix of businesses lack clear positioning which is a problem.

Hence, the plan is to engage in capital recycling to accelerate growth and improve overall return on equity.

It will also make no more new investments in standalone “build-to-sell” assets.

HKL’s strategic vision for 2035 is to double its underlying earnings and grow its assets under management to US$100 billion.

The group will do so by recycling up to US$10 billion of capital.

In 11 years, HKL hopes to double its dividend per share.

The diagram below provides a glimpse of how HKL intends to execute its 2035 strategic vision.

Source: HKL’s Strategy Presentation Slides

The group will focus its attention on ultra-premium office and luxury retail as its core gateway assets.

These will be augmented by luxury hotels and residences that will serve as key components of these gateway assets.

Management intends to use third-party capital to support the group’s growth plans and help to improve its financial outcomes.

This capital can be deployed into development and mature assets as well as in listed vehicles (e.g. REITs) or in private funds.

Of HKL’s US$100 billion AUM target, around 60% will comprise third-party capital.

By 2035, the property giant aims to pay out between 60% to 80% of its recurring income as dividends.

Meanwhile, up to 20% of the proceeds from capital recycling will be deployed to buy back shares.

Sheng Siong (SGX: OV8)

Sheng Siong recently released its financial report for the third quarter of 2024 (3Q 2024).

Revenue grew 5% year on year to S$363.2 million with operating profit increasing by 15.8% year on year to S$45.7 million.

Net profit for the quarter came in at S$39.1 million, up 12.4% year on year.

The supermarket operator continued to maintain a clean balance sheet with S$350.1 million of cash and no debt.

Sheng Siong also generated a positive free cash flow of S$54.6 million for 3Q 2024, 3.5% higher year on year.

For the first nine months of 2024 (9M 2024), the retailer churned out an impressive free cash flow of S$141.3 million.

As of 30 September 2024, the group operated 73 stores in Singapore with a total retail area of 642,200 square feet.

A total of four new stores were opened in 9M 2024.

Sheng Siong purchased a Jelita property last month and plans to open a new store at Toa Payoh by 4Q 2024.

HDB released a total of 17 shops for tender in 9M 2024 of which Sheng Siong was awarded four tenders with another four pending results.

Management anticipates one more tender to be put up in 4Q 2024.

As for its China subsidiary, it incurred losses in 3Q 2024 due to start-up costs for its sixth store in Kunming but was profitable for 9M 2024.

The group will focus on strengthening its core competencies and diversifying its supply chain to help build resilience.

It will work to further optimise its sales mix to enable gross margins to continue improving and work with good suppliers to ensure its products are delivered with high quality and at competitive prices.

CapitaLand Integrated Commercial Trust (SGX: C38U)

CapitaLand Integrated Commercial Trust, or CICT, received resounding support for its S$1.85 billion proposed acquisition of a 50% stake in ION Orchard Mall.

99.88% of eligible unitholders voted for the resolution at an extraordinary general meeting held on 29 October 2024.

This strong support shows that unitholders buy into the merits of this transaction, which include a sanguine rental outlook along with accretion for CICT’s distribution per unit (DPU).

The addition of ION Orchard Mall also enhances CICT’s portfolio diversity as the enlarged portfolio will comprise 35% retail, up from the current 30%.

Orchard Road properties will make up a quarter of the REIT’s total retail net lettable area, up from just 14% currently.

Unitholders can also look forward to active asset management that will help ION Orchard to achieve higher occupancy (current: ~96%).

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Disclosure: Royston Yang does not own shares in any of the companies mentioned.

The post Top Stock Market Highlights of the Week: Hongkong Land, Sheng Siong and CICT appeared first on The Smart Investor.

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