Hong Fok Corp has made a series of share buybacks in recent weeks. Meanwhile, joint CEO Cheong Sim Eng has raised his stake by buying shares from the open market.
In the latest transaction, Hong Fok on April 6 acquired 695,000 shares at between 88.5 cents and 89 cents each. Just a day earlier, the company had bought back 525,300 shares at 88 cents each.
As of April 6, the company has bought back a total of 5.83 million shares.
In his latest purchase on April 1, Cheong had acquired 80,000 shares for $70,400 or 88 cents each. This brings his direct stake to 115.1 million shares or 13.698%.
Cheong is deemed interested in roughly another 53.7 million shares or 6.385% that are held by his wife and several related entities. This means Cheong’s total interest in the company is around 168.8 million shares or 20.083%.
His last purchase before this was on March 1 when he acquired 42,000 shares at $31,080 or 74 cents each.
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As at Dec 31, 2021, Hong Fok’s investment properties in both Singapore and Hong Kong are collectively carried in its books at just over $3.2 billion.
The key asset is The Concourse, a 41-storey commercial cum office block at Beach Road valued at $1.4 billion. Yotel Singapore Orchard Road and The International Building, also on Orchard Road, are valued at $767.9 million and $443.3 million respectively.
As at Dec 31, 2021, the company’s net asset value was $3 per share, up slightly from $2.95 as at Dec 31, 2020. In contrast, Hong Fok shares closed at 89 cents on April 5.
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On Feb 28, Hong Fok reported revenue of $91.2 million for FY2021 ended December 2021, up 5% over FY2020’s $87.2 million on sales of more units in its residential projects such as Concourse Skyline, aided by additional property management and dividend income.
However, Hong Fok had to bear with lower rental income from its hospitality operation at Yotel Singapore Orchard Road as well as its Hong Kong investment properties.
In FY2021, Hong Fok recorded earnings of $38.9 million, reversing the loss of $8.7 million incurred in FY2020. This was due to revaluation gains of $35.7 million for FY2021 versus a revaluation loss of $30.6 million booked for FY2020.
In its Feb 28 earnings commentary, Hong Fok says with gradual reopening, the performance of its Yotel operations “may improve although the speed of recovery is difficult to predict. The economic outlook still looks uncertain and remains challenging as the Omicron variant is a major downside risk for the hospitality industry”.
It expects to continue to recognise revenue from the sales of the residential units of Concourse Skyline. “However, sales of development properties are still affected by travel restrictions leading to a decrease in the pool of potential foreign buyers,” the company notes, citing the December 2021 cooling measures put in place by the government.
Elsewhere at Digital Core REIT, a fund manager has pared its stake. On March 31, Amsterdam-based APG Asset Management sold around 2.5 million units at US$1.11 ($1.51) each. This brings its stake in the in data centre REIT down to just over 88.6 million units or 7.87% from 8.1% earlier.
On the other hand, another institutional investor has emerged as a substantial shareholder of the REIT. On Feb 17, Daiwa Securities Group acquired 9.1 million shares, bringing its stake to 5.74% from 4.93%. Digital Core REIT shares traded at US$1.13 on Feb 17.
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Digital Core REIT owns a portfolio of 10 data centres in the US worth some US$1.4 billion. They are located in areas such as Silicon Valley, Los Angeles and Northern Virginia and have a combined net rentable area of 1.2 million sq ft.
As at June 30, 2021, they are 100% occupied and are all freehold. The 12 customers leasing these data centres are mainly in the Fortune 500.
The sponsor of the REIT is Digital Realty, itself a US-listed REIT which ranks among 10 largest US REITs and also one of the world’s largest global providers of cloud and carrier-neutral data centres.
