Why Wharf's Poor Performance Has Left Its Shares Undervalued
HONG KONG -- Investors who missed out on the Hang Seng Index's recent record run might want to tap underperforming Wharf Holdings as a long-term investment opportunity.
The conglomerate's shares are the fourth-worst performer in Hong Kong's 33-share Hang Seng so far this year.
Investors fear listing delays on its property trust, office-rental competition, and lackluster port operations. In August, the conglomerate reported a drop of 31% in first-half net profit, to HK$6.26 billion (US$804.1 million).
Analysts say that investor concerns are overstated. Wharf's share performance suggests that the market has already priced in most of the negatives and any one of a number of potential catalysts could lift the stock price. "Investors can bet on Wharf for its laggard story and deep discount to its net-asset value," says Y.K. Chan, portfolio manager at Philip Asset Management. Mr. Chan says his funds don't own Wharf shares.
Shares of Hong Kong-listed Wharf, with interests in retailing, ports, telecommunications and real estate, ended yesterday at HK$26.65 each, down 2.7% so far this year. The benchmark Hang Seng is up 27%.
Based on an average of nine analyst forecasts, Wharf has a potential upside of 18% to a target price of HK$31.54.
Wharf is trading at a 30% to 38% discount to current net-asset value and a 38% to 46% discount to its estimated 2007 net asset value, according to the analysts' forecasts. Other property-led conglomerates, such as Swire Pacific and Cheung Kong (Holdings), are trading at a discount of about 18% to 21% to their current net asset values, based on analysts' estimates.
For Wharf, "such a deep discount is unjustified," says Cusson Leung, an analyst at Credit Suisse, who has an "outperform" rating on the stock with a target price of HK$32. Daiwa Institute of Research also rates the stock outperform, while UBS has a "buy" on the shares. Others have a "neutral" or "hold" rating on the stock, but a few of them say they are reviewing their calls in the face of the shares' underperformance against the broader market.
The major reason investors have shunned Wharf was perceived risk in its core rental operations, which provided more than 50% of the company's 2005 total earnings before interest and tax, or Ebit, analysts say. Some investors fear that Wharf's office occupancy and rates in Hong Kong's Tsim Sha Tsui tourist district could fall when rival Sun Hung Kai Properties launches International Commerce Centre, which offers massive grade-A spaces in the nearby West Kowloon area.
Analysts note that Sun Hung Kai's development is aimed at different tenants. While Wharf's Harbour City in Tsim Sha Tsui rents mainly to small- and midsize trading companies, Sun Hung Kai is expected to lure financial institutions. They also say they believe Wharf's developments on the Kowloon side of Hong Kong will enjoy vibrant demand from tenants moving across the harbor from the Central business district, where prices are high and supplies are tight.
Wharf has a "very strong" retail-property portfolio, says Jeff Yau, an analyst at DBS Vickers. That includes a plethora of office and retail spaces in other attractive areas of Hong Kong, including Causeway Bay's Times Square and Ocean Terminal, in Tsim Sha Tsui. Analysts dismiss worries that Wharf's retail income will slow, predicting that a robust recovery in local consumption would offset any dropoff in mainland tourist arrivals.
Wharf is also expanding its foothold in China, where retail and residential complexes in Wuhan and Dalian are due for completion between late 2007 and mid-2008.
The company is increasing port capacity in China through Modern Terminals, or MTL, unit, which operates ports in Hong Kong and on the mainland.
A weak port operation had been one reason for Wharf's drop in first-half profit. MTL delivered 0.7% growth in container throughput in the first six months, because of a sudden surge in capacity from unlisted competitor Asia Container Terminals. Analysts say the new capacity has been absorbed and that recent throughput at MTL recovered, with percentage growth in the low- to mid-teens. MTL is also staying competitive by adding capacity with the opening of the second phase at Taichang Container Port and the start of operations of Dachan Bay in Shenzhen.
Finally, some investors have been put off by uncertainty about the fate of the Ocean Terminal shopping mall when Wharf's lease on the land expires in 2012. The shopping mall is next to a cruise-ship terminal that is being relocated to Kai Tak, the site of Hong Kong's former airport.
Analysts say they believe Wharf may be able to negotiate a new lease. A good resolution for Wharf could be a catalyst for share-price gains, analysts say. Other catalysts could be a possible relaunch of Wharf's Diamond real-estate investment trust and a restructuring of the company's communications, media and entertainment segments, they add.
"The market has overlooked the fundamental quality of Wharf's assets," says Mr. Leung of Credit Suisse.
九龙仓集团或被低估
那些在恒生指数最近史无前例的上涨过程中没能抓住机会大赚一笔的投资者，或许会买进九龙仓集团(Wharf Holdings)这只股票以作长期投资。
该股是恒生指数33只成份股中今年迄今为止表现第四差的股票。
该公司旗下房地产信托的上市日期被推迟、写字楼租赁行业的竞争以及港口运营业务的不景气都是令投资者对该股感到担忧的原因。今年8月，九龙仓集团宣布其上半年的净利润下降了31%，降至62.6亿港元(8.041亿美元)。
分析师说，投资者的担心有些过度了。从九龙仓集团的股价看，它已经消化了大多数负面因素，该股诸多潜在上涨动因中任何一项发挥作用都能够提振这只股票的价格。辉立资产管理公司(Philip Asset Management)的投资组合经理陈煜强(Y.K. Chan)说，鉴于九龙仓集团的表现逊于大盘，且该股的价格大大低于其每股资产净值，因此投资者倒不妨在该股身上赌一把。陈煜强说他管理的基金不持有九龙仓集团这只股票。
香港上市股票九龙仓集团的股价周二收于26.65港元，该股今年迄今已下跌了2.7%，而恒生指数今年迄今为止的涨幅为27%。九龙仓集团经营的业务涉及零售、港口、电信和房地产等。
将9位分析师的预期数字平均计算，九龙仓集团还有18%的上涨空间，可以升至31.54港元。
从分析师们提供的估测数字看，九龙仓集团的股价较其目前的资产净值低30%至38%，较其2007年的预期每股资产净值低38%至46%。而太古(Swire Pacific)和长江实业(Cheung Kong)等以房地产为主业的企业集团其股价则比分析师目前估计的其每股资产净值低18%至21%。
瑞士信贷集团(Credit Suisse)的分析师梁启棠(Cusson Leung)说，九龙仓集团的股价较其每股资产净值低这么多是不合理的。梁启棠将该股的评级定为“强于大盘”，并将其目标价定为32港元。大和研究所(Daiwa Institute of Research)也将该股的评级定为强于大盘，而瑞士银行(UBS)则将该股的评级定为“买进”。其他分析师将九龙仓集团的股票评级定为“中性”或“持有”，但他们中的一些人表示，鉴于九龙仓集团的表现弱于大盘，他们正在重新评估自己所作的评级。
分析师们认为，投资者对九龙仓集团退避三舍的主要原因是他们觉得该公司核心的租赁业务存在风险，该公司2005年利息、税项前收益的一半以上都来自这一业务。一些投资者担心，在九龙仓集团的竞争对手新鸿基地产(Sun Hung Kai Properties)于西九龙地区推出其有大量A级写字楼的环球贸易广场(International Commerce Centre)后，九龙仓集团在西九龙附近尖沙咀地区的写字楼无论是出租率还是租金水平都会下降。
分析师指出，新鸿基地产开发的房地产项目针对的是另一类租户。九龙仓集团在尖沙咀的海港城(Harbour City)主要面向中小型贸易公司出租写字楼，而新鸿基地产预计会吸引金融机构成为自己的租户。分析师们还说，相信九龙仓集团在维多利亚湾九龙一侧开发的物业项目会大受从香港岛中环商业区分流出来租户的欢迎，香港岛中环区的写字楼租金昂贵且供应紧张。
DBS唯高达(DBS Vickers)的分析师Jeff Yau说，九龙仓集团有一批“非常抢手”的商铺资产。这些物业包括在香港其他有吸引力地区的大量写字楼和商铺，如铜锣湾的时代广场(Times Square)和尖沙咀的海运大厦(Ocean Terminal)等。分析师们认为，不必担心九龙仓集团商铺租金的增速将会放缓，因为香港本地消费的强劲复苏预计会抵消大陆访港游客下降所产生的不利影响。
九龙仓集团还在扩大自己在中国大陆的立足点，该公司在武汉和大连兴建的商业和住宅建筑将在2007年底至2008年中期间陆续完工。
该公司还在通过旗下的现代货箱码头有限公司(Modern Terminals)扩大在中国大陆的港口吞吐能力，现代货箱码头有限公司在香港和大陆从事港口运营业务。
港口运营业务不景气是导致九龙仓集团上半年净利润下降的原因之一。现代货箱码头有限公司今年前6个月的集装箱处理量只增长了0.7%，原因是其竞争对手亚洲货柜码头有限公司(Asia Container Terminals)的集装箱处理能力大幅增长。分析师们说，这些新增加的集装箱处理能力已被逐步消化，现代货箱码头有限公司的集装箱处理量最近已开始以10%至17%的速度增长。随着泰昌集装箱码头(Taichang Container Port)二期工程的开工以及深圳大铲湾业务的开始运营，现代货箱码头有限公司的集装箱处理能力正在不断增加，这也提高了该公司的竞争力。
海运大厦购物中心前景难料也是一些投资者不看好九龙仓集团的原因之一，因为该公司对购物中心用地的租期将于2012年到期。这家购物中心旁边的一个轮渡码头就已被迁移到了前启德机场所在的地块。
分析师们说，他们相信九龙仓集团能够续签租约，而此事的圆满解决将会推动该公司股价上扬。能推动该股上扬的其他动力还包括：九龙仓集团有可能重新启动其钻石房地产投资信托基金(Diamond)以及该公司的通讯、媒体和娱乐业务有可能重组。
瑞士信贷集团的梁启棠说，市场忽视了九龙仓集团旗下资产的基本面质量。
Joyce Li
