Hongkong Land Holdings Limited (SGX: H78) is one of the cool companies in Singapore’s stock market that shares webcasts and/or transcripts of their earnings presentations. There may be useful information that investors can learn from the webcasts and transcripts. Last week, Hongkong Land had released its full-year results for 2015. I had spent some time watching the webcast for the earnings release and noted nine key takeaways. But before I share them, here’s a quick background on Hongkong Land for context. The company is a leading property investment, management, and development group with operations primarily in Hong Kong, Singapore, and mainland…
There may be useful information that investors can learn from the webcasts and transcripts. Last week, Hongkong Land had released its full-year results for 2015. I had spent some time watching the webcast for the earnings release and noted nine key takeaways.
But before I share them, here’s a quick background on Hongkong Land for context. The company is a leading property investment, management, and development group with operations primarily in Hong Kong, Singapore, and mainland China. Its business can be segmented into the commercial office rental market and residential real estate development. You can read more about Hongkong Land in here.
With that, here are my notes from the Hongkong Land webcast:
- YK Pang, Hongkong Land’s chief executive, said the company owns over 8 million square feet in attributable commercial space when speaking on the firm’s commercial property portfolio. The most significant portion is the near 5 million square feet of space that the company has in Hong Kong. Pang said that the Hong Kong properties were valued at US$23 billion recently.
- As of 31 December 2015, the vacancy rate for Hong Kong Central Grade “A” office space had dropped to 1.2%. Pang said that this is the lowest it has been in the past twenty years. Given the lack of new office space expected in the near future, real estate research outfit Jones Lang LaSalle is expecting the vacancy rate to remain low. This could help prop up rental rates for Hongkong Land. In comparison, Hongkong Land ended 2015 with vacancy levels of around 3.4%. Pang noted that this is higher than the general market, but said that Hongkong Land remains focused on obtaining the right yields for its properties.
- As noted in a previous article, a large majority of Hongkong Land’s Hong Kong office tenant portfolio comes from financial services and legal services. Companies involved with financial services and legal services made up 39% and 31%, respectively, of Hongkong Land’s office tenant profile in Hong Kong at the end of 2015.
- For the company’s Hong Kong Central Office portfolio, the average net rent for 2015 was HK$101 per square foot per month. The weighted average lease expiry (WALE) stood at 4.1 years for the office segment, up from 3.4 years the year before.
- For the company’s Hong Kong Central Retail portfolio, the average net rent for 2015 was HK$221 per square foot per month. The WALE came in at 2.4 years, slightly lower than the 2.8 years recorded a year ago. Hongkong Land had maintained a 0% vacancy rate for this portfolio in 2015.
- At the Singapore front, the vacancy rate in the Singapore CBD (Central Business District) Grade “A” office market was 5%. The vacancy rate for Hongkong Land’s Singapore office portfolio was 3% at the end of 2015. Pang added that the vacancy would have been 1% if new committed leases were included. Meanwhile, the average gross rental came in at S$9.50 per square foot per month, an increase from the S$9.20 recorded in 2014. WALE stood at 5.1 years. In a similar manner to its Hong Kong portfolio, Hongkong Land’s Singapore portfolio contains a high proportion of financial services firms – 74% of Hongkong Land’s office tenants in Singapore come from financial services.
- On the residential front, Hongkong Land is involved in the development of over five million square meters of residential projects. Pang highlighted that the projects are typically developed over a period of 10 years. Hongkong Land has completed only 27% of the outstanding projects so far. A little under 1 million square feet of land area is under construction.
- Hongkong Land invested in two new residential developments in 2015. The first one, Parkville Shanghai, represents its first foray into Shanghai, which Pang considers to be an important step. The second project is an adjoining development in ChongQing named the New Bamboo Grove. Pang felt that the latter will consolidate the company’s strong position in ChongQing.
- For 2015, the majority of its recognized revenue came from projects ongoing in ChongQing, followed by Chengdu. As of 31 December 2015, Hongkong Land had US$821 million in sold but unrecognized sales in Mainland China. Around 70% of the sales are expected to be recognised in 2016.
The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong owns shares in Hongkong Land Holdings.