Hongkong Land: Back In The Black; Capital Recycling Tops Agenda.

Hongkong Land - DBS Research 2025-07-30: Back In The Black; Capital Recycling Tops Agenda

SGinvestors.io

Published: 2025-08-25 03:30 PM

Hongkong Land (SGX:H78) returned to profitability in 1H25 with underlying profit of US$297m (1H24: loss of US$7m) due to significantly lower impairment provisions made for its China projects.
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Underlying EPS rose by larger 12% due to reduced outstanding number of shares led by share repurchase. Interim Hongkong Land's dividend remained flat at US$0.06.

Attributable gross rental receipts fell 6% mainly due to lower contributions from its Central portfolio. Physical vacancy at its Central office portfolio inched up to 7.5% in Jun-25 from Dec-24’s 7.3%. On a committed basis, vacancy improved to 6.9% from Dec-24’s 7.1%. This compared favourably with the broad market in Central where vacancy rose 0.2ppts h-o-h to 11.8% in Jun-25, according to Jones Lang LaSalle, reflecting ongoing “flight-to-quality” demand.
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Ongoing transformation and tenant movement at LANDMARK luxury portfolio resulted in 33% of lettable retail space currently under renovation and hence led to 20% fall in retail income. Tenants’ sales therefore fell 10% y-o-y in 1H25. Average retail rents inched up 7% y-o-y or 2% h-o-h to HKD220psf, reflecting positive base rent reversion.
Vacancy stayed low at 3% (or 1.2% on a committed basis) in Jun-25. Prada and Saint Lauren will open their new retail flagship Maisons in 2H25.
Singapore office portfolio remains a bright spot, benefitting from continued positive rental reversions with average net rents up 3% y-o-y and 3% h-o-h to S$11.4psf. In Jun-25, vacancy remained low at 2% or 1.2% on committed basis (Dec-24: 1.6%/1%). Contributions from Central series luxury retail malls in China & Macau fell mainly because One Central Macau saw lower contributions due to the challenging operating landscape.