Hongkong Land’s Fiscal 2021 Result Resilient Despite Challenging Economic Conditions

Narrow-moat Hongkong Land’s fiscal 2021 result was resilient and reflects the quality of its Hong Kong investment properties portfolio. Excluding revaluation loss, underlying profit was largely steady against last year at USD 966 million. Final dividend of USD 0.16 per share is unchanged from last year, taking full year dividend to USD 0.22 per share and in line with our forecast. Our fair value estimate of USD 7.40 is unchanged and we continue to see Hongkong Land as undervalued. An earlier announced USD 500 million share buyback is ongoing--with USD 228 million remaining in the program--and is expected to be supportive of Hongkong Land’s share price, in our view. However, near-term positive catalysts are lacking, given the ongoing coronavirus situation and the uncertainty of the reopening of borders with mainland China and internationally. The latter remains a key driver for Hongkong Land, in our opinion, as offices contribute to 75% of total rent revenue, based on our estimate.