Hongkong Land Holdings, which has been persistently trading at less than a third of its NAV, plans to spend up to US$500 million to buy back shares from the market between now and Dec 31 2022.
The purpose of the buy backs is to reduce the capital of the company, which owns large tracts of prime properties in both Hong Kong, Singapore, and across the region.
As the holding of treasury shares is not provided for in the company’s constitution, any shares which are repurchased by the company will be cancelled.
According to Hongkong Land in its Sept 6 announcement, the buyback is in line with its long-standing capital allocation practice.
Its priorities are, first, investment in new assets to drive long-term growth and shareholder value; next, continued payment of steady and, over time, increasing dividends and last but not least, investment in existing assets on an opportunistic basis, including through share buybacks.
“The group has and remains committed to retaining a strong balance sheet which provides financial resilience through the cycle,” the company adds.
For 1HFY2021 ended June 30, the company, having taken a write down in the fair value of its properties, reported a loss of US$865 million, an improvement from US$1.8 billion in the red from the year earlier period.
Without the writedown, the company’s underlying earnings for the same period would be US$394 million, up 12% y-o-y from US$353 million.
Despite the losses, Hongkong is paying an interim dividend of 6 US cents per share – the same amount paid this time last year.
As at June 30, the company’s net asset value was US$14.75, down slightly from US$15.30 as at June 30 2020.
Hongkong Land shares closed Sept 6 at US$4.20, down 0.47% for the day and up 2.19% year to date.
