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DBS: Hang Lung Properties Ltd – Buy Target Price HK$20.10

Posted on July 27, 2022July 27, 2022 By alanyeo No Comments on DBS: Hang Lung Properties Ltd – Buy Target Price HK$20.10
Result preview : Aided by development profit
  • Underlying interim earnings expected to rise 2%
  • Wuhan Heartland 66 offered increased rental contributions
  • The Hong Kong portfolio continued to suffer from negative rental reversion

Hang Lung Properties will announce its interim results for FY22 on 28 July. We forecast its underlying earnings to be 2% higher at HK$2.25bn in 1H22 mainly due to development profits and higher rental earnings. Interim DPS is expected to remain unchanged at HK$0.18.

We forecast gross rental receipts to rise 4% aided by higher contributions from China rental portfolio. Despite pandemic-led disruptions, China rental income should grow 7% driven by full-period contributions from Wuhan Heartland 66 mall, and rising contributions from Dalian Olympia 66 mall. Office income from Kunming Spring City 66 and Wuhan Heartland 66 should also improve with increased occupancy. On the other hand, its Hong Kong portfolio should see a slight drop as negative rental reversion was working through its portfolio. With slightly lower rental margins expected, rental earnings are expected to increase by 3%.

The company should book development earnings of HK$120m from selling a luxury house at 23-39 Blue Pool Road in Happy Valley (1H21: loss of HK$22m).

Key things to watch out for include tenants’ sales performance of China malls, the company’s outlook of retail markets in China and Hong Kong, and apartment launches in China, among others. 

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Research - Equities Tags:Hang Lung Properties

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  • My Opinions/ Views
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