Share fall prompts Hang Lung to mull raising stake in unit
Hang Lung Group may raise its stake in property development arm Hang Lung Properties as recent market turmoil has carried its share price down to an attractive level, said executive director Terry Ng Sze-yuen.
Given that Hang Lung Properties' fundamentals remained unchanged and the share price was only affected by the global market rout, Mr Ng said there was a long-term investment opportunity in the stock.
'The severe stock market correction has provided a big opportunity for the group and investors,' said Mr Ng, also an executive director of Hang Lung Properties. 'When others dump our shares, we will take them.'
Shares of Hang Lung Properties slumped 6.18 per cent to close at HK$22.75 last Friday, a far cry from the stock's 52-week high of HK$30.75 on July 27.
The stock fell about 9 per cent last week as the Hong Kong market suffered its worst trading week since the September 11, 2001, terrorist attacks in the United States.
Hang Lung Group's previous purchases of shares in its property unit were made at below the prevailing market price, Mr Ng said without providing details. The group holds a 50.8 per cent stake in Hang Lung Properties.
Mr Ng dismissed concerns that slowing Hong Kong property sales and the fact that the firm's new mainland shopping centres would not generate income until 2010 will crimp Hang Lung Properties' earnings in the short term.
'We can sell investment properties, which will generate a handsome profit,' he said without identifying projects for potential sale.
Rental income in the mainland will surpass that of Hong Kong by 2012, he said. Hang Lung Properties' earned HK$2.05 billion in rent from Hong Kong for the year ended June 30.
Its Shanghai leasing portfolio, which consists of Plaza 66 and Grand Gateway, will generate income equal to 80 per cent of that in Hong Kong in three years, Mr Ng said.
He said the company had studied nine commercial sites put up for sale by the Shanghai government, but none of them were in the city centre. Resettlement and pricing are two key hurdles to expansion in Shanghai, he said.
Hang Lung Properties aims to develop 18 shopping centres in the mainland by 2009 with a total investment cost of 40 billion yuan, a target Mr Ng said the company was confident of achieving. At present, the company has committed 19 billion yuan in six projects.