Hui Xian reit profit exceeds forecast
Hui Xian, the trail-blazing yuan-denominated real estate investment trust launched by Li Ka-shing, posted higher than expected profit but its dividend payout has failed to impress investors.
The yuan reit yesterday reported 404 million yuan (HK$489.3 million) in total revenue, and 149 million yuan in profit before tax, up 6.4 per cent from the 140 million yuan that was forecast in the offering document.
Investors will receive an interim distribution of 4.03 fen per unit, which represents an annualised distribution yield of 4.83 per cent, which is higher than the 4.26 per cent forecast in the offer document.
However, the yuan reit closed yesterday at 4.57 yuan per unit, down 0.436 per cent, or two fen. It was also lower than its offering price in April of 4.83 yuan per unit.
Castor Pang, research director at Core Pacific-Yamaichi, said Hui Xian failed to draw investors because its yield was 'unattractive' compared with other reit products. For example, Link Reit offered 57.6 HK cents per unit in final dividend payment in June and Sunlight Reit offered 8.5 HK cents per unit in interim dividend payment in February, both higher than Hui Xian.
Despite the fact that it was denominated in yuan, Pang said Hui Xian was not even a particularly attractive option for investors who were drawn by the yuan - which has been steadily appreciating - rather than dividend yield.
'Some investors may have thought that they could kill two birds with one stone - to benefit from the yuan's strengthening and from the return on investment,' he said. 'However, the yuan factor alone would not make it a good investment. We don't see the benefit of a stronger yuan being translated into its dividend payment.'
Oriental Plaza in Beijing is Hui Xian's only asset. It comprises a shopping centre, eight blocks of Grade A office towers, two blocks of serviced apartments and a business hotel. Earlier this year, Oriental Plaza was estimated to have a gross value of 32.7 billion yuan.
Hui Xian paid back outstanding bank loans of 200 million yuan on July 1, making it completely debt-free. It did not disclose any plans for acquisitions.