Here are the domino effects of Cheung Kong's hotel disposal plans

Disposel and separate listing of 4 serviced hotels may bring good news.

According to Maybank Kim Eng, Cheung Kong announced yesterday after market closed that it intended to dispose of and separate listing of 4 serviced hotels, Horizon Hotels.

Here's more from Maybank Kim Eng:

The subject properties are located in Hung Hom, Ma On Shan and Kwai Chung with aggregate GFA of 3.32m sq ft and 4,833 rooms. The occupancy ranges from 88.6-94.0% for 1H6/12A while CK will own no more than 30% of the disposed entity after listing.

The developer owned 100% of these hotels except Horizon Suite Hotel (Ma On Shan), which CK and Hutchison (13, NR) owned 51% and 49%, respectively. CK did not disclose the consideration of the disposal in the announcement.

We expect that the average price of each room to be HKD3.7m (or HKD5,386 psf of average GFA of 687 sq ft per room), bringing the whole entity’s ex-debt valuation to HKD17.9b, or 6.9% of CK’s current market cap.

We expect share price of CK will react positively to the news. Other local developer with substantial hospitality income is New World Dev (17, NR), which has a hotel revenue and contribution of HKD3.6b and HKD641m, respectively, for FY6/12F.