DBS Group Research has kept its "buy" call on Hongkong Land, but with its target price of US$7.20 under review for now.
In its Sept 19 note, DBS says that net proceeds from the sale will help reduce Hongkong Land's gearing by 2.3 percentage points to 14%.
In addition, Hongkong Land will increase its ongoing share buyback programme by another US$150 million, which is seen to be accretive to its NAV of US$13.62 as at end June.
MCL Land is in the midst of developing six projects in Singapore and Malaysia, mostly sold.
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To date, Hongkong Land has recycled US$2 billion in capital, which is at around half its 2027 target of US$4 billion.
The disposal includes US$1.2 billion from its build-to-sell inventory wind-down and US$0.8 billion from the sale of investment property.
"Despite the sale, Singapore remains a strategic market for Hongkong Land. The company continues to focus on expanding its prime commercial portfolio in this key gateway city," says DBS.
DBS notes that Hongkong Land is now trading at a 40% discount to its appraised NAV.
"The expanded buyback programme should offer near-term support to the share price, while ongoing capital recycling efforts remain a key catalyst," adds DBS.
