Wheelock’s HKD 10.1b sales in 1H14 hits full-year target

One Bay East sale achieved HKD5.4bn.

Wheelock’s contracted sales in 1H14 amounted to HKD10.1bn, which already achieved the company’s full-year sales target of HKD10bn.

According to a research note from Nomura, HKD5.4bn came from the sale of One Bay East

(East Tower) and pre-sale of Grand Austin contributed another HKD4.1bn.

Up to July 2014, 99% or 685 units of Grand Austin were already presold, generating sales proceeds of HKD15.1bn.

On August 11 2014, Crawford House was sold to Wharf at a valuation of HKD5.8bn, showing Wheelock’s focus on HK property development business, and Wharf’s focus on HK/China investment properties going forward. Wheelock management currently has no plan to sell Wheelock House in Central.

Here’s more from Nomura:

The company declared an interim DPS of HKD0.385, up 10% y-y (1H13: HKD0.35) which is consistent with Wharf’s interim DPS growth.

Wheelock has no fixed dividend policy at this point, and future dividends will likely depend on cash requirement and the level of development profits.

Outlook:

1) Full completion of Austin and Grand Austin is scheduled for 2015F.

2) Completion of One Bay East is scheduled for 2H15F.

3) Kensington Hill – management plans pre-sales in 2H14F.

4) Tseung Kwan O TKOTL119, first site in Tseung Kwan O acquired in Jan 2012 – management plans pre-sales in 1H15F or earlier.

5) One Harbour Gate – management plans to launch for pre-sales in 2015F.

Balance sheet – Wheelock’s financial position remains healthy. As at 30 Jun 2014, Wheelock’s own net debt to shareholders’ equity (on an attributable net asset value basis) was 23.7% at end-2013, higher than 21.1% at end- 2013, but still comfortable when compared with management’s threshold of 25%-30%.

In fact, after the sale of Crawford House on August 11, we estimate its gearing ratio has further come down to close to 20%.

Hence, we believe there is room for Wheelock to continue replenishing its landbank over the next twelve months.

We revise down our FY14F EPS by 8% to factor in lower profits from China property development owing to slower sales volume and lower margins.