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Here’s What You Need To Know About Hongkong Land Holdings Limited’s Dividend And Why It Is Trading Below Book Value

Last week, Hongkong Land Holdings Limited (SGX: H78) had released its full-year earnings for 2015 and hosted a presentation on that for analysts.

In the earnings briefing, there were questions for Hongkong Land’s management that related to the company’s dividend and book value which may be of interest to investors.

As a brief background for context later, Hongkong Land 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.

On dividends

For 2015, Hongkong Land had reported an underlying profit that was 3% lower than in 2014. Given that the company’s an owner of real estate in prime locations in Hong Kong and Singapore, there were questions asked about the level of its dividend payout. For perspective, Hongkong Land’s dividend for 2015 was US$0.19 per share, the same as in 2014.

John Witt, Hongkong Land’s chief financial officer, gave his take on the issue:

“With respect of dividends, I suppose we have just declared the dividends for 2015, so a bit early to think about the dividends for 2016. I think our view has always been to look at the dividends if the results support it – to grow the dividends at a reasonably stable fashion over time. But it is something we review from time to time with respect to dividends or dividend payouts.”

To be sure, the dividend from Hongkong Land had also increased from US$0.16 per share in 2012 to US$0.19 in 2015 as previously mentioned.

On book values

With regard to the book value discussion, there was also a question on the gap between the company’s net asset value (NAV) per share and share price. For reference, Hongkong Land’s NAV per share was US$12.19 at the end of December 2015. In contrast, the firm’s share price had closed at US$6.02 yesterday, less than half the NAV per share.

YK Pang, Hongkong Land’s chief executive, was the one who replied to the question. He said:

“Well, the share price is actually up to the shareholders and people buying and selling the shares. So, I think what you might write [referring to the analyst in attendance], more than my efforts, is going to change people’s perception of whether the share price will go up or go down. Or whether the gap is bridged or not bridged, so it is not up to me, it’s up to the people in the market.”

Pang’s answer is candid and speaks to the larger point about how a company’s share price is largely beyond the control of management. It may be better for a company’s management team to focus on the business rather than the stock price.

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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