Hongkong Land: Hong Kong Office Market Remains Challenging, Given Near-Term Oversupply

Our view of narrow-moat Hongkong Land is unchanged after we joined the company's pre-earnings blackout call. While we believe the shares are undervalued, we continue to think the weak office market in Hong Kong remains an overhang to the company’s operations and share price performance in the near term. We have adjusted our assumptions to better reflect the high interest rates in 2023, an impairment on two property development projects in Wuhan, and the departure of the Harvey Nichols department store from the Landmark mall in May 2024. Consequently, we have lowered our 2023 and 2024 earnings per share forecasts by 6% and 3%, respectively. We keep our fair value estimate at USD 6.10 per share and forecast a stable dividend per share of USD 0.22 in both 2023 and 2024.