Singapore shares on track for 2nd weekly loss, US impasse weighs

Stock Name: HKLand US$
Company Name: HONGKONG LAND HOLDINGS LIMITED

Research House: Citigroup

Price Call: BUY

Target Price: 7.90

Singapore shares touched a three-week low on Friday and were on course for a second week of losses as investors stayed on the sidelines to watch for repercussions from the U.S. government shutdown.

The Singapore Exchange also suspended trading of three stocks - Asiasons Capital, LionGold Corp and Blumont Group - after their share prices tumbled earlier in the day.

The benchmark Straits Times Index was nearly flat at 3,144.75 points after slipping earlier to 3,131.14, its lowest since Sept. 13. Some 64 million shares changed hands, less than a quarter of the 30-day average daily volume.

The index was headed for a weekly decline of 2%, its biggest such fall in over a month.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.2%.

Hongkong Land Holdings was the worst performer on the index, down 2% to US$6.40 ($8.00) in its third day of declines, though Citi analysts believe there is room for the share price to grow.

“We expect HKL’s earnings will see continuous growth on a higher development profit from property sales in Singapore and China,” Citi said in a research note, putting the target price at US$7.90.

UBS raises HK Land target to US$7.90 vs US$6.50

Stock Name: HKLand US$
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.

JPMorgan cuts Hongkong Land to underweight

Stock Name: HKLand US$
Company Name: HONGKONG LAND HOLDINGS LIMITED

Research House: JP Morgan Chase

Price Call: SELL

Target Price: 4.60

JPMorgan has downgraded Singapore-listed property developer Hongkong Land (HKLD.SI) to underweight from overweight and cut its target price to US$4.60 ($5.7) from US$8.32.

JPMorgan has revised its ratings for Hongkong Land as it expects demand for office space in Hong Kong’s central areas to slow and rents to fall in 2012.

“Previously, we were positive on the office rental outlook in the tight supply situation, but as a few financial institutions are planning to cut staff globally and IPO activities are slowing down, we expect office rents to decline in 2012,” said JPMorgan in a report.

The brokerage has also cut its 2012 earnings estimates by 7% and by 9% for 2013.

Hongkong Land’s shares have fallen 25.7% since the start of the year to close at $5.36 on Monday.

Hongkong Land Holdings rated 'buy' by Nomura

Stock Name: HKLand US$
Company Name: HONGKONG LAND HOLDINGS LIMITED

Research House: Nomura

Price Call: BUY

Target Price: 9.40

Nomura Research in a July 29 research report says: "HKL's NAV growth in 1H11 remained strong at 17% h-o-h, which we estimate reflected around +18% h-h revaluation gain related to its HK commercial portfolio.

"The NAV growth was comparable to the +16% h-o-h rise in Central office spot rents in 1H11, likely suggesting spot rental growth as the main revaluation driver. As a result, HKL's NAV rose from US$8.64 as of December 2010 to US$10.08 as of June 2011, thus implying 0.66x current P/B, which is 12% below the historical average of 0.75x and should provide valuation support, in our view.

"HKL declared interim dividends of US$0.06 per share, flat y-o-y and in-line with our expectations. Target price of US$9.4. BUY"

HKLand US$ - Hongkong Land started at Reduce by BNP Paribas with US$5.42 target

Stock Name: HKLand US$
Company Name: HONGKONG LAND HOLDINGS LIMITED
Research House: BNP Paribas

BNP Paribas starts Hongkong Land (H78.SG) at Reduce with US$5.42 ($7.24) target price, according to Dow Jones.



BNP Paribas notes current share price has exceeded its 2008 peak by 33%, but rents in Central HK still 20%-25% below their 2008 levels.



Research house says Hongkong Land still faces negative reversionary pressure on rents as existing expensive leases get renewed in 2011; “even if the rise in spot rents were to maintain its momentum, greater benefits would only be seen in 2012, when we expect 10% growth in gross-rental income.”



Shares up 0.2% at US$5.98.