Company Name: HONGKONG LAND HOLDINGS LIMITED
| Research House: UBS | Price Call: HOLD | Target Price: 7.90 |
UBS raises Hongkong Land target to US$7.90 ($9.77) from US$6.50 after lowering its NAV discount to 20% from 25% and raising its NAV on improved fundamentals. "We believe the tighter target discount to NAV is justified as Central rents will reverse to a positive trend in 2013 from a negative trend last year."
It raises its 2013 Central office rental assumptions to a 5%-10% on-year rise from the previous expectation for a 0%-5% rise, amid a stabilization of Central rental trends. But it notes the 5%-10% growth rate is slower than previous upcycles, likely related to higher current rental rates and uncertain macro conditions; it adds, more finance firms have relocated back offices to decentralized districts, lowering HKL’s office exposure to the segment. UBS also cites a potential vacancy risk at Chater House as HK SFC, which occupied about 1.7%-1.9% of HKL’s Central portfolio, will vacate its space.
It keeps a Neutral call; “as there is limited upside on rents and demand remains subdued over the near tern, we believe the positives have been priced in at current valuations.” The stock is down 2.0% at US$7.85.
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ReplyDeleteIf it really raises its 2013 Central office rental assumptions to a 5% on-year rise from the previous expectation, amid a stabilization of Central rental trends.
ReplyDeleteWhether UBS raises its price of HK lands but according to the market researchers the demand.
ReplyDeleteDemand will remain subdue for a certain period of time until the price for land drops down and stock price will also be moving down.
ReplyDelete