KWG Property (01813.HK)

[soros]

The record price paid for land by the Chinese buyers is a signal that developers don’t see home prices declining anytime soon. The purchase works out to about HK$22,000 per square foot for the land alone, which is more than prices of existing homes in the area. Hong Kong developers have withdrawn some of their units on offer and raised prices after the Friday sale, the Hong Kong Economic Journal reported.

Logan Property Holdings Co. and KWG Property Holding Ltd.beat 13 other bidders including Cheung Kong Property Holdings Ltd. and Sun Hung Kai Properties Ltd., in the record government tender for a rare piece of land in Ap Lei Chau island. The area is linked to Hong Kong island by bridge, and was connected to the city’s extensive subway lines in December.

Assuming the construction cost is $8000 per square ft ,  the sale price will have to be pitched  at $30,000 +  per square ft.    Ap Lei Chau Island is not a recognised area for luxury class residential property . 

So I wonder who will be willing pay $30,000 per square ft to live on Ap Lei Chau Island when for the same money you can live in Perkins Road /Jardines Lookout which is a luxury class  residential area ?.

https://www.bloomberg.com/news/articles/...hot-market

[soros]

The KWG shares were sold off today causing the share price to fall from $5 to $4.73 in morning and only managed to recover back to $4.90 just before market closing .
The total volume traded was 32 Mil and seems to cancel out the 30 Mil shares buying surge seen on 8th Feb 2016.

I had invested in some KWG shares at around $5 level because I thought the shares were undervalued ( NAV = $8.75 , Dividend = 34 cents and yield = 6.9% ) and one broker had recommended the shares as a buy with target price at $6.80 level.

I was expecting the 2016 Annual Report (due out soon), will show better results compared to 2015 Annual Report and the share price can rise up to the target level.

But today JP Morgan ( US Broker ) have called a new target price at $5.30 due to dilutive effect on NAV by latest land purchase at overpaid price level.

Its become difficult to decide whether to sell or hold ???

[opmi]

went Ap Lei Chau to walk around, when doing research for Dan Form a few years back.....long bus ride ...think now has MTR

Property

The Group’s industrial properties situated at Ap Lei Chau, Hong Kong, the Harbour Industrial Centre and the Oceanic Industrial Centre held by the associate (33.3% owned) recorded an average occupancy level of approximately 90% and the properties have been improving in leasing out.

[soros]

Thanks opmi.

Yes, MTR South Island Line (East ) to Ap Lei Chau commenced service on 28 Dec 2016 so I expect local property prices will be rising due to quicker travel times for residents to/from Admiralty MRT and stations beyond.

https://en.wikipedia.org/wiki/South_Isla...oposal.svg

I have now decided to hold because :

1. The profit or loss result from development of this property purchase on Ap Lei Chau is actually 3-4 years away in 2020 or 2021 and, since the shortage of building land is a very major problem for HK Government and no solution in sight , the development may turn out profitable in 3-4 years time.

2. KWG reported the 2016 property sales reached RMB 22.3 Bil , up 260 % on 2015 property sales. So I am expecting the KWG shareprice to benefit from good results reported for years ending 2016 and 2017.

[bmann025]

Bought in after a UOB research on March 6.

In their peer comparison table KWG had the lowest 2017 PE estimate (3.8), the second highest yield estimate (8.7%) and a RNAV of $18.36 HK, translating into the second largest discount.

Phillip Capital may explain that big difference between NAV and RNAV in a recent research:

http://research.cyberquote.com.hk/page/h...61124e.pdf

[soros]

The trading results for 2016 will be known on Tuesday evening or Wednesday morning.

I am hoping for better results than 2015.

[bmann025]

Phillip Capital discussing the project today

http://www.poems.com.hk/en-us/research-a...ch-report/

[soros]

Wah , Big tumble today with KWG shareprice closing at HK $5.53 including annual dividend HK $0.56 ( ex-div on 7 Jun 2017) means over 10% yield.

Total Volume traded was 27 Mil shares and I am sure those sellers were not Valuebuddies

[soros]

AASTOCKS WEBSITE REPORTED :

Report: KWG PROPERTY Wins Sydney's Development Project
2017/05/16 14:22

KWG PROPERTY (01813.HK) +0.040 (+0.729%) Short selling $4.44M; Ratio 12.385% tapped into Australian market for the first time and won a quality piece of land in the core urban area of Northern Sydney, the mainland's guandian.cn cited sources.
(Quote is delayed for at least 15 mins.Short Selling Data as at 2017-05-17 16:25.)

[soros]

AASTOCKS website reported on 17 May 2016 , KWG joined with Longfor ( 00960.HK) to bid for another property site :


LONGFOR PPT (00960.HK) +0.980 (+7.195%) Short selling $11.89M; Ratio 25.093% announced that the company, together with KWG PROPERTY (01813.HK) +0.150 (+2.664%) Short selling $10.92M; Ratio 21.808% , jointly won the bid for Kai Tak Area 1K Site 1 (NKIL 6567) with $7.23 billion. This symbolised that Longfor has officially entered the Hong Kong market.