Dear readers, if you have caught up with stock-related news today, you would have known that one stock has rallied by 10.80% in just a day today!
This stock is none other than Hongkong Land Holdings Limited stock. The stock has staged its biggest one-day percentage gain in over 20 years on investors’ hope and confidence of the company’s strategy. In an announcement after the market closed yesterday, Hongkong Land has said that it will simplify its business by stopping the investment in the build-to-sell segment and recycle the capital out from this segment to focus on investment properties in Asia’s gateway cities, generating growth in long-term recurring income.
Isn’t the strategy of Hongkong Land quite similar to that of one of Singapore’s largest blue-chip company: the former Capitaland? As a quick recap, from September 2021, Capitaland has operated as two clearly defined entities: Capitaland Investment which comprises Capitaland’s listed global real estate investment management business and the privatised Capitaland Development with its extensive property development capabilities.
Given that a Hong Kong based and SGX-listed entity has considered adjusted its business model to investing in properties, I will similarly like to see another similar stock (Hong Kong based and SGX-listed entity) restructure its business in a same manner.
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This stock is none other than Hutchinson Port Holdings trust (HPH trust).
Ever since its IPO in 2011, the stock has gone from USD$1.01 at IPO price to just USD$0.16. I am one of the investors who bought HPH trust at IPO price and I can say that the only saving grace is that the company still manages to give out somewhat decent dividends every year.
It is close to impossible in my opinion for HPH trust to go back to its IPO price as doing so will require the trust to be a 10-bagger. One way for the trust to unlock value to investors is to either privatise or restructure its port business.
Privatisation may be the less preferred option between the two above options given that exit offer is likely to be below IPO prices and investors will still suffer a non-profit. A more attractive option will be for HPH to reference what HongKong Land or Capitaland has done. In my opinion, HPH can spin off like what Capitaland does: having a listed arm of an investment management business and a privatised entity to hold its port assets.
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I believe the proposed restructuring will do justice to HPH’s listed entity, attracting renewed interest among investors with a new breath of life to HPH.