hang Lung: Mainland retail winter rent has not been reflected

Hang Lung Properties (00101) Chairman Chen Qizong that the first half of the mainland shopping malls tenants retail sales rose the ideal, so that he is now the mainland retail market recovery more confident, directed at “the winter may have passed”, but limited by the lease The next one to two years is difficult to reflect in the rental income.

In recent years, China’s focus on the development of office space and shopping mall business Hang Lung, the first half of the Mainland property portfolio rental income fell 4%, but excluding foreign exchange losses rose 1%; shopping portfolio revenue rose 2%.

Chen Qizong said, 6 months to 1 year ago has seen the mainland retail market has a small recovery, and now more confident in recovery, the most affected by the oldest luxury goods industry, the fastest improvement, which first-line city performance is very good, two Line city recovery time is slow, but as long as the appropriate location, shopping malls prospects are still good, such as the Shenyang Imperial Plaza Hang Lung Plaza, the first half of the rental income rose 10%, Wuxi Hang Lung Plaza rent income fell 12%, but the worst days have passed.

Such as the beginning of spring is not a moment of hot time gap

“The mainland economy is long-term by the residents, so the local retail sales market is still 20 to 30 years of good times.” Chen Qizong said, will not only focus on short-term rental income, as long as the environment continues to be good, can be reflected in the performance.

Managing Director Chen Nanlu added, the property portfolio of the lease is generally signed 3 to 4 years, so an average of about 20% to 30% lease expires, I believe that rental income will gradually reflect the improvement of the retail market factors. “There will be no difference in retail sales figures and rental income in time.”

With the construction of shopping malls, Hang Lung in the Mainland has 10 shopping malls, Chen Qizong said, shopping malls business model is “simple than complex good”, only to retain the most profitable shopping malls, the mainland is a fast-growing economy, different policies one after another, The biggest risk of investing in the Mainland is the risk of policy change.

Brokers are not satisfied with the improvement of shopping malls slow

Although Chen Qizong optimistic about the prospects for the mainland shopping malls, but the broker is not satisfied with the current results. Morgan Stanley that Hang Lung Jinan and Tianjin Hang Lung Plaza rent in the first half of the rent should be negative, dragged down by these second-tier cities, the Mainland lease property EBIT before the profit margin remained at 65%, lower than the estimated 3 percentage point.

Hong Kong, Wuxi, Wuxi, Hang Lung Plaza, the performance is not satisfactory, although the Shanghai Hang Lung Plaza to complete the optimization project to reopen, rental income increased by 23%, but the increase Still less than expected, the future will pay attention to Hang Lung in the adjustment of tenants portfolio can be successful.

For both leased properties, total rental income and operating profit increased by 1%. Mr Chan said that the retail market in Hong Kong was like the situation of the Mainland one year ago. Fortunately, the Group has done a lot of asset appreciation projects in the past few years. The rent income of Hong Kong has not fluctuated but has been higher. However, Road recovery, rent income can only be moderate rise.