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Review of Hongkong Land
24 Aug 2021 (553 views)  

I wish to give up latest view about Hongkong Land. 

It has fallen by 20% over about 6 months, from $5.26 on 10 March to $4.22 on 24 August. What is the reason from this drop?

Hongkong Land issued the financial results for the first half of 2021 on 29 July.
See here. 

The underlying earnings per share is 16.9 cents (USD) and the loss per share, after accounting for writedown of assets, is 37.06 cents. 

The writedown of assets is 54 cents. 
 Investors probably looked at the loss and sold the stock.

Based on the market price of $4.22 and the annualized EPS of 16.9X2, the PE ratio is 12.5 times and the earnings yield is 8%.

The forward dividend yield is 5.28%.

This means that Hongkong Land is able to earn 8% on its assets (before adjusting for writedown) and pay 5.28%.

If we accept a dividend yield of 4%, the price of this stock should be $4.22 X 5.28/4 = $$5.58 (or 26% higher than the current price).

If we accept a lower dividend yield of 3%, the price of this stock should be $4.22X5.28/3=$7.42 (or 76% higher than the current price).

I am not worried about the writedown of 54 cents per share in the value of the assets. 

The asset value per share is $14.75, which is considerably higher than the current stock price of $4.22. Any writedown reduces the asset value but the underlying profit remains intact.

I find that a share price of $5.58 (4% yield) or $7.42 (3% yield) is reasonable, compared to the asset value of $14.75.

I find Hongkong Land considerably undervalued.

Recently, Kerry Property, which is listed in Hong Kong, announced surprising good results. See report.  This caused the stock price to increase by 13% over the past two weeks. 

Both Kerry Property and Hongkong Land has a large property portfolio in Hong Kong. 

I hope that Hongkong Land will also post good financial results for the next half year. I intend to add to my holdings.

Note - I am sharing my personal view. I am not giving financial advice. I am not recommending a purchase of this stock at any specific price.

Tan Kin Lian

I hold 27,000 shares at an average cost of $4.82. I just bought another 10,000 shares at $4.25. 



 

Review of Hongkong Land
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I wish to give up latest view about Hongkong Land. 

It has fallen by 20% over about 6 months, from $5.26 on 10 March to $4.22 on 24 August. What is the reason from this drop?

Hongkong Land issued the financial results for the first half of 2021 on 29 July.
See here. 

The underlying earnings per share is 16.9 cents (USD) and the loss per share, after accounting for writedown of assets, is 37.06 cents. 

The writedown of assets is 54 cents. 
 Investors probably looked at the loss and sold the stock.

Based on the market price of $4.22 and the annualized EPS of 16.9X2, the PE ratio is 12.5 times and the earnings yield is 8%.

The forward dividend yield is 5.28%.

This means that Hongkong Land is able to earn 8% on its assets (before adjusting for writedown) and pay 5.28%.

If we accept a dividend yield of 4%, the price of this stock should be $4.22 X 5.28/4 = $$5.58 (or 26% higher than the current price).

If we accept a lower dividend yield of 3%, the price of this stock should be $4.22X5.28/3=$7.42 (or 76% higher than the current price).

I am not worried about the writedown of 54 cents per share in the value of the assets. 

The asset value per share is $14.75, which is considerably higher than the current stock price of $4.22. Any writedown reduces the asset value but the underlying profit remains intact.

I find that a share price of $5.58 (4% yield) or $7.42 (3% yield) is reasonable, compared to the asset value of $14.75.

I find Hongkong Land considerably undervalued.

Recently, Kerry Property, which is listed in Hong Kong, announced surprising good results. See report.  This caused the stock price to increase by 13% over the past two weeks. 

Both Kerry Property and Hongkong Land has a large property portfolio in Hong Kong. 

I hope that Hongkong Land will also post good financial results for the next half year. I intend to add to my holdings.

Note - I am sharing my personal view. I am not giving financial advice. I am not recommending a purchase of this stock at any specific price.

Tan Kin Lian

I hold 27,000 shares at an average cost of $4.82. I just bought another 10,000 shares at $4.25. 



 

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