报告名称：The Wharf (Holdings) Limited(00004.HK)Not as bad as what its valuation is implyi
报告类型：港股研究
报告日期：2015-08-19
研究机构：摩根大通银行
股票名称：九龙仓集团
股票代码：00004
页数：16
简介：Reality versus expectation. The retail sales at Harbor City and Times Squaredropped by 7.1% and 9.6% respectively in 1H15, in line with what otherlandlords have reported. Retail rental reversion at HC and TS was still at 30%although this is likely to decline to about 20% for the full year. Occupancy costsof 19% and 21% at HC and TS are also in line with what two other landlordsreported. However, from Wharf's current valuation at a 55% discount to NAV,it is factored in a 47% drop in its retail rental revenue back to 2010 level.
Pressure of rent cut from tenants? As retail sales in Hong Kong are generallyunder pressure, especially from the high-end brands, major brand owners haveindicated they will cut their shop exposure in Hong Kong unless landlords arewilling to reduce rents. However, Wharf's management cited that it has NOTencountered any significant requests from its tenants for a cut in rent, and it isnot feeling any pressure as rental reversion is still strong at 30%.
China DP will become more concentrated in selected areas. Wharf madeRmb10.3bn of contracted sales in 1H15 and spent about Rmb3.9bn in landbanking. However, it is likely to focus land bank replenishment on selectedareas. While its China DP EBIT margin was about 17% in 1H15, we estimateits net profit margin to be at a high-single-digit level. This may not appear to bea very impressive margin level, but increasing asset turnover seems to be theprimary objective of the company.
Not strong, but not as bad as its valuation implies. We cannot say thatWharf’s 1H15 contained a lot of positive surprises. However, we believe thereported numbers on both the Hong Kong retail and the China DP are not as badas the stock’s current valuation is implying. We believe the de-rating of Wharf issignificantly overdone.

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