Saturday, January 15, 2022

SOLD: HongKongLand (worth more than USD100K)


Sold 15,900 shares of HongKongLand (HKL) on 4 Jan and another 5,300 shares on 11 Jan with average price at USD5.38

Total profit, including dividend is S$11,571.16 (7.6%) in 2 years 5 months.

Reason for selling: 

1) HKL is an unlove gems

HKL doesn't seem to get much analysts coverage attention.

Therefore despite having good quality properties portfolio, the share price remain super low (PB0.37).

If not for the USD500M shares buyback initiates by HKL itself, I doubt the price will cross above USD5 anytime soon.

As such, this is a very boring stock and it will take long time for Mr Market to reflect its worth.

2) Zero COVID policy

As the world starts to shift from "zero covid policy" to "living with covid", China and Hong Kong are the last few remaining countries on "zero covid policy". 

China economy still can self sustain itself with "zero covid policy", but Hong Kong economy will struggle with this. Especially when Covid hit the country right after their protests.

HKL profit contributor rely heavily on Hong Kong, followed by China.


3) Bearish on Commerical Office sector

Post covid, in the new normal, WFH is getting more and more common and in years to come, it might be the preferred choice for company to implement this.

Hot desking, virtual meeting, work from anywhere are the trend moving forward.

This result in reducing office space needs.

4) Share price is pushed up by USD500M shares buyback

I had been monitoring the share buyback activity daily.

The highest price of share buyback is usually the highest day range, if not, just a few cents different.

When there is no share buyback for that day, HKL share price mostly are moving sideway or downward.

As of 15 Jan, almost 42% of the USD500M budget had been spent on share buyback.

If HKL were to execute not more than 400,000 shares per day, the share price will be few cents different from the previous day close price.

Since HKL had until end of 2022 to execute the share buyback budget, it make sense for HKL to take it slowly so that it will not cause a sudden spike in its share price. This method is the best value for money approach to take.

Once this whole share buyback exercise completed, the NAV and dividends % should increase as all these number of shares are cancel out. Likely need to wait for the effect to take place in 2023.

5) Diversification

REITs share price have been trending downward recently, likely due to FED signal in increasing interest rate 4 times in 2022 and reducing their bonds purchases. 

You can refer back to similar exercise in Dec 2015 (Finally! Fed raises interest rates) and 2016 (Finally: Fed raises rates for first time in 2016) to see how REITS share price performed to prepare yourself mentally.

I had used HKL capital to purchase Frasers Centrepoint Trust (Link) and Mapletree Industrial Trust (Link) so far. Still had enough firepower to purchase 1 more stock soon.

Related post:

1) HongKongLand: Invested more than USD100k into this stock (Part 7)

2) HongKongLand: Invested more than USD100k into this stock (Part 6)

3) HongKongLand: Invested more than USD100k into this stock (Part 5)

4) HongKongLand: Invested more than USD100k into this stock (Part 4)

5) HongKongLand: Invested more than USD100k into this stock (Part 3)

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