Morningstar

Morningstar, Inc.

Equity Bottom-Up

Shares of Wharf Real Estate Investment performed strongly during the first half of the year, owing to the recovery of retail sales in its key assets as well as the city as a whole. Since then, negative market sentiment over the Hong Kong property sector has dragged the stock lower. The shares declined 18% since June, underperforming the market. We believe the shares are undervalued at this point. The company’s retail assets in Hong Kong are largely stable, and the main issue facing the company…

Wharf Real Estate Investment reported core profit of HKD 5 billion, up 8% year on year, or about 58% of our full-year estimate. The investment property portfolio achieved turnover and operating profit of HKD 7.1 billion and HKD 6.3 billion, respectively, up 8% and 7% over a year ago. The top-line run rate is 53% of our full-year estimate with slightly better margin. Interest expense was sharply lower as subsidiary loans were refinanced with bank loans, resulting in an effective interest rate of…

The Hong Kong retail environment continued to recover in 2018. Through May of this year, the latest month for which the data is available, retail sales grew 14% while tourist arrivals were up 10%. Wharf Real Estate Investment Co, or WREIC, a proxy to the city's retail, has seen impressive retail sales growth of 37% and 23% at its key assets Harbour City and Time Square during the first quarter of the year. Retail sales at the company's key assets tend to be more volatile given their large share…

Wharf Real Estate Investment Co, or WREIC, reported 2017 full-year results ahead of our projection due to recovering retail assets in Hong Kong and high margin on one-off development projects in China. The company achieved core profit of HKD 9.5 billion, up 12% year on year. This is 8% higher than our estimate, mostly attributed to higher-than-expected profit on development properties in China. Excluding that, the results are mostly in line with retail assets outperforming slightly in a citywide…

Hong Kong

Wharf Real Estate Investment Company Limited provides real estate investment services. The Company develops, invests, and operates residential and commercial properties. Wharf Real Estate Investment operates business in Hong Kong.

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