Hot stock: Hongkong Land rises 12.3% after unveiling new business strategy

SHARES of Hongkong Land gained some ground on Wednesday (Oct 30) morning, following news that it will exit the build-to-sell residential development business.

The counter rose 12.3 per cent or US$0.48 to US$4.37 as at 9.38 am, after 6.3 million securities changed hands. The last time the counter traded at such levels was in June last year.

By 9.44 am, Hongkong Land was one of the most actively traded counters in terms of both volume and value. It was trading up 12.1 per cent or US$0.47 at US$4.36, with 6.6 million securities worth US$27.9 million being transacted. No married deals were recorded in early trade, ShareInvestor data indicated.

The counter closed at US$4.31, up US$0.42 or 10.8 per cent.

On Tuesday, the 135-year-old listed property group announced that it will pivot towards fund management and focus on ultra-premium integrated commercial properties in Asia’s gateway cities.

The new business strategy will reinforce its core capabilities, generate growth in long-term recurring income and deliver superior returns to shareholders, said Hongkong Land, which is part of the Jardine Matheson conglomerate.

The group intends to recycle up to US$10 billion in capital by 2035, and grow assets under management from US$40 billion today to up to US$100 billion by then. It expects to double its profit before interest and tax, and double dividends per share in that time.

The moves came after a strategic review of its business. Hongkong Land swung to an underlying loss of US$7 million in the six months to Jun 30, 2024, from an underlying net profit of US$422 million in the year-ago period.

The property developer’s holdings include a cluster of prime commercial buildings in Hong Kong’s Central area, the West Bund mixed-use project under development in Shanghai, China, and the Marina Bay Financial Centre and One Raffles Quay in Singapore.

Its development properties are primarily premium residential and mixed-use developments built to sell in China, Singapore and South-east Asia.

Hongkong Land also said that it will tap strategic partnerships to expand its portfolio, venture into new markets and secure new projects.

Its chief financial officer Craig Beattie had also told The Business Times that the group will “work closely” with third-party capital, perhaps a listed platform such as a real estate investment trust which it may look to establish, as well as collaborate with or create private funds.

Deal-sourcing and fundraising capabilities will be established, and the group will also make strategic hires.

The group will also further invest in Hong Kong, Singapore and Shanghai, and selectively pursue expansion opportunities into other major gateway cities in Asia which benefit from the flight-to-quality trend.