Property investor Great Eagle Holdings gave the market a pleasant surprise last week when it reported a 21.91 per cent rise in interim earnings.
But most analysts who drilled down into the numbers came away feeling that a bearish stance on the stock remained justified. That is despite the fact that the counter is trading at a huge discount of 60 per cent to JP Morgan's estimate of its net asset value (NAV).
'There's good reason for it to be trading at a big discount to NAV,' said Raymond Tsui Yick-ki, the head of institutional sales at South China Securities.
For a start, the improvement in Great Eagle's bottom line came from lower interest expenses and the additional 12 floors at its key asset, Citibank Plaza in Central, which the company bought back from Citibank last year.
'If we exclude the new contribution from last year's acquisition, Great Eagle actually saw a 15 per cent decline in rental income,' said Winnie Chiu, an analyst with DBS Vickers Securities.
That is a trend that is likely to continue, analysts say.
