Hongkong Land’s potential divestment of MCL Land in line with strategy: JP Morgan
Sources cited by Bloomberg claimed that Hongkong Land is looking to divest MCL Land at a premium to its book value of $1.1 billion. Whilst this is lower than Hongkong Land’s net investment for Singapore development real properties of US$ 1.362 billion ($ 1.83 billion) reported as of end-June, it presents approximately 8% of the team’s complete funding recycling target of US$ 10 billion and about 14% of its US$ 6 billion capital reusing target for property development properties, according to JP Morgan.
JP Morgan has preserved its “neutral” rating on Hongkong Land, with a target cost of US$ 4.10. “We think HKL’s present assessments are fair, and therefore we remain Neutral, yet we might transform much more beneficial if Hongkong Land shows its ability to carry out value-accretive arrangements.”
In October, Hongkong Land publicized in a calculated assessment that the group will most likely no longer pay attention to investing in the build-to-sell segment throughout Asia. Instead, the group is anticipated to begin reusing capital from the segment into brand-new integrated business estate prospects as it completes all occurring projects.
Regardless, the study house feature that selling MCL Land above account worth may be “a little bit challenging”, provided existing market problems and that it “would most likely not be stunned if the firm winds up disposing of MCL Land at somewhat below account value” to suit its capital recycling targets. Alternatively, the group may get its moment offering its development property projects and diminishing its land bank.
An upcoming project, anticipated to be opened next year, is a brand-new 500-unit nonpublic residence development at Clementi Avenue 1. MCL Land and joint project partner CSC Land Group beat five more to win the location with a proposal of $633.45 million ($ 1,250 psf per plot ratio) last November.
Recently, Bloomberg disclosed that Asian real estate group Hongkong Land Holdings is thinking about offering its 100%- owned Singapore property development subsidiary, MCL Land. The action, if true, would certainly be in channel with the previous’s method to stop investing in development properties, claims JP Morgan in an equity study record.
In November, MCL Land released the 552-unit Nava Grove in Pine Grove, District 21. A conjoint property with Sinarmas Land, the 99-year leasehold condo attained 65% sales on launch weekend at an average price of $2,448 psf.
