Year to date, the share price has gained around 40% and is now at a discount of 42% to their appraised current NAV, state Jeff Yau, Percy Leung and Cherie Wong in their July 30 note.
"If the company successfully recycles its maturing assets and scale up its share buyback programme, the stock could trade higher," they add, giving a new target price of US$7.20, representing a 35% discount to their June 26 NAV estimate.
On July 29, Hongkong Land reported underlying profit of US$297 million for the half year ended June, versus red ink of US$7 million in the year-earlier period.
The improvement was partly led by lower provisions made for its projects in China, whose property market remains soft. Its Singapore office portfolio, on the other hand, was able to command higher rental.
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What generates investors' recent interest in the company is its active capital recycling efforts, including most notably, selling nine floors at One Exchange Square to the Hong Kong Exchange. Some US$1.3 billion in capital has been recycled, equal to 33% of its 2027 target.
In addition, Hongkong Land is actively buying back shares, which has the effect of supporting its NAV per share. With US$133 million spent since late April, its NAV per share has increased slightly from US$13.57 as of last December to US$13.62, marking its first increase in NAV per share since 2018.
According to the DBS analysts, continued share buybacks should lend support its near-term share price performance.
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Asset recycling progress including the disposal of MCL Land, its Singapore-based subsidiary, should dictate its share price performance for the rest of this year, according to DBS.
The company is keeping its interim dividend at 6 US cents.
Hongkong Land shares changed hands at US$6.14 as at 2.36 pm, down 2.54% for the day.
