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Wharf Real Estate Investment Co Ltd 01997

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Stock XHKG Rating as of
HK$30.52 +0.06 (0.20%)
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As of Delayed Price Closed

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Wharf REIC's Growth Underpinned by Strong Luxury Portfolio in Harbour City Mall

Kathy Chan

Wharf REIC's flagship properties are Harbour City and Times Square, which are well-known destinations for locals and tourists alike. Historically, the two properties collectively account for around 8%-10% of total retail sales in Hong Kong. As the company intends to hold Hong Kong investment properties exclusively, the China operation is being progressively scaled down. The Murray hotel was added to the Hong Kong portfolio in mid-2018, but given the corporate mandate and the current real estate environment, we do not expect Wharf REIC to make significant acquisitions in the near term. Its rental revenue growth is limited to reversion of the existing assets. While asset enhancement opportunities exist for Marco Polo Hong Kong Hotel, the biggest driver is the state of retail sales in Hong Kong.

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Price vs Fair Value

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01997 is trading at a LOCK|TGtDg& premium.
Price
HK$30.52
Fair Value
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Uncertainty
LOCK|?Nh
1-Star Price
LOCK|.l%Q
5-Star Price
LOCK|.G
Economic Moat
LOCK|&m#!>
Capital Allocation
LOCK|M@ShCFm

Bulls Say, Bears Say

Bulls

The company's flagship asset successfully weathered previous retail downturns in Hong Kong, reflecting their desirability for leading retailers.

Bears

The flagship assets have seen tremendous growth over the past decade, but with the changing behavior of mainland tourists, the golden age for Hong Kong retail is in the past, in our view.

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Trading Information

Previous Close Price
HK$30.46
Day Range
HK$30.10–30.64
52-Week Range
HK$20.26–34.82
Bid/Ask
HK$30.50 / HK$30.52
Shares Outstanding
3.04B
Market Cap
HK$92.67B
Volume/Avg
5M / 5M

Key Statistics

Price/Earnings (Normalized)
63.49
Price/Sales
7.27
Dividend Yield (Trailing)
5.24%
Dividend Yield (Forward)
5.24%
Dividend Payment Schedule
Apr, Sep
Total Yield
5.24%

Company Profile

Wharf spun off Wharf Real Estate Investment Co. in November 2017. It is a leading property investor with a focus on Hong Kong prime retail assets. Rental income from flagship assets Harbour City and Times Square accounts for over 85% of revenue. The balance comes from Plaza Hollywood, The Murray, and Marco Polo hotels, and two offices in the central business district. The group also holds the Scotts Square retail podium in Singapore and a mixed development in Suzhou. Wheelock holds a 49% stake in the group.
Sector
Real Estate
Industry
Real Estate Services
Stock Style Box
Large Value
Total Number of Employees
2,800
Website
https://www.wharfreic.com

Competitors

Valuation

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Metric
01997
01972
00016
Price/Earnings (Normalized)
 63.4944.5213.73
Price/Book Value
 0.520.520.50
Price/Sales
 7.278.383.34
Price/Cash Flow
 13.4017.9411.53
Price/Earnings
01997
01972
00016

Financial Strength

Metric
01997
01972
00016
Quick Ratio
 0.190.580.64
Current Ratio
 0.241.193.28
Interest Coverage
 0.264.9013.99
Quick Ratio
01997
01972
00016

Profitability

Metric
01997
01972
00016
Return on Assets (Normalized)
 2.89%2.11%—
Return on Equity (Normalized)
 3.65%2.77%—
Return on Invested Capital (Normalized)
 3.54%2.51%—
Return on Assets
01997
01972
00016

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