Swire Properties 1H14 underlying profit surges 34% to $3.8b

Thanks to unexpectedly better net rental income.

Swire Properties' results for 1H14 came in above Barclays’ estimates, as 1H14 underlying profit rose 34% to HK$3,775mn, 17% and 19% above its and Bloomberg consensus estimates.

According to a research note from Barclays, the beat was mainly from higher-than-expected net rental income (7% ahead).

Another factor as well was the timing difference of recognition of property sales in Hong Kong.

Here’s more from Barclays:

With strong rental and property trading income, Swire raised its interim DPS from HK$0.20 to HK$0.22, beating our estimate of HK$0.20.

Looking ahead, management believes that the Central office rents are likely to remain stable but that the Island East rents will continue to grow. With both Central landlords Champion REIT and HK Land remaining cautious on the Central office outlook at their interim result briefings, we continue to believe the pricing power of other Central landlords is likely to be affected.

Currently, Swire Properties is trading at 0.74x trailing P/B, compared with HK Land at 0.60x and Champion REIT at 0.45x.