What Investors Need to Know About Hongkong Land Holdings Limited’s Latest Earnings
Hongkong Land Holdings Limited (SGX: H78) announced its financial results for the full year ended 31 December 2017 last week. Here are 10 things investors should know from the earnings announcement:
1. Revenue for the year slipped from US$1.99 billion to US$1.96 billion, a fall of 2%. The decline was due to lower sales of properties.
2. Underlying profit attributable to shareholders, however, grew 14.4% to US$969.7 million. As a result, underlying earnings per share (EPS) went up from 36.03 US cents to 41.21 US cents. Underlying profit excludes non-trading items such as change in fair value of investment properties.
3. Profit attributable to shareholders surged 66.9% to US$5.59 billion mainly due to higher valuations of investment properties. Consequently, EPS rose from US$1.422 to US$2.374.
4. Underlying profit margin for 2017 stood at 49.5%, up from 42.5% seen a year ago.
5. Hongkong Land said that its investment properties produced better results due to higher rents in Hong Kong and continuing low vacancies in both Hong Kong and Singapore. Development properties also contributed positively due to increased sales in China, partially offset by lower contribution in Singapore.
6. As at 31 December 2017, Hongkong Land had a net debt position of US$2.5 billion, an increase from US$2.0 billion seen one year prior. Net gearing at the end of 2017 rose to 7%, as compared to the end of 2016’s figure of 6%.
7. Net asset value per share climbed 18% to US$15.63.
8. Operating cash flow for the year tumbled 27% to US$800.2 million. With capital expenditure at US$213.7 million for 2017, free cash flow came in at US$586.5 million. This is down from 2016’s free cash flow of US$856.7 million.
9. The board has recommended a final dividend of 14 US cents per share, giving a total dividend for 2017 of 20 US cents per share. This marks a 5% improvement as compared to 2016’s total dividend of 19 US cents per share.
10. As for the outlook, chairman of Hongkong Land, Ben Keswick, mentioned:
“The strong contribution from the Group’s investment properties to underlying profit is expected to be maintained in 2018, while further improvements are anticipated from the Group’s development properties in mainland China and Singapore.”
Hongkong Land closed at US$6.97 yesterday. This translates to a price-to-book ratio of 0.45 and a dividend yield of 2.9%.