Hot stock: Hongkong Land surges as much as 13.6% on proposed US$500m share buyback plan
SHARES of mainboard-listed Hongkong Land Holdings H78 jumped as much as 13.6 per cent during Tuesday's early morning trading session, following news of the property group's proposed share buyback plan on Monday evening.
Hongkong Land said it intends to invest up to US$500 million to buy back its shares in a programme extending until Dec 31, 2022. The purpose of the share buyback is to reduce the company's capital.
Its counter reached a high of US$4.77 as at 10.38am on Tuesday, up 13.6 per cent or US$0.57. The last time the company's shares were trading near this level was in June 2021.
Hongkong Land's shares closed at US$4.73, up 12.62 per cent or US$0.53.
No married deals were recorded, according to ShareInvestor data.
The company said in a bourse filing that the buyback is in line with its longstanding capital-allocation practice. This practice prioritises investment in new assets to drive long-term growth and shareholder value; continue paying steady and over time, increasing dividends; as well as invest in existing assets on an opportunistic basis, including through share buybacks.
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"The group has and remains committed to retaining a strong balance sheet which provides financial resilience through the cycle," Hongkong Land said.
The company, which is a member of the Jardine Matheson Group, owns and manages office and luxury retail properties in Hong Kong, Singapore, Beijing and Jakarta.
It had narrowed its net loss to US$863.2 million for the half-year ended June 30, from US$1.8 billion a year ago. The loss included net non-cash losses of US$1.3 billion arising from the revaluation of the group's investment properties due to lower open market rents.
Net asset value (NAV) per share as at end-June fell to US$14.75 from US$15.30. This means Hongkong Land is currently trading at a third of its NAV.
Lim & Tan Securities on Tuesday said it continues to reiterate "accumulate" on Hongkong Land. Its consensus target price stands at US$5.81, representing an upside of 22.8 per cent from Tuesday's closing price.
The brokerage was referencing comments made by Colliers International that Hong Kong's office sector will remain a "tenant's market" in the next 12 months. The property firm is projecting a correction in office rents before recovering from 2022 onwards.
The group's properties in Hong Kong are among the most prestigious, Lim & Tan said, noting tenants such as JPMorgan, KPMG and the Hong Kong Exchanges & Clearing.
The brokerage added that valuations for the stock are "extremely undemanding". Hongkong Land is trading at a forward price-to-earnings ratio of 10 times and is also trading at 0.3 times its book value, with an attractive 5.35 per cent dividend yield, Lim & Tan said.
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