SEHK:823

Stock Analysis Report

Link Real Estate Investment Trust

Executive Summary

Link Real Estate Investment Trust ("Link REIT", Hong Kong stock code: 823), is Managed by Link Asset Management Limited, we are the first Real Estate Investment Trust listed in Hong Kong.

Rewards

PE ratio (9.9x) is below the Hong Kong market (10.5x)

Pays a high and reliable dividend of 3.39%

Risk Analysis

Earnings are forecast to decline by an average of -6.5% per year for the next 3 years

Large one-off items impacting financial results

Profit margins are lower than last year



Snowflake Analysis

Established dividend payer and overvalued.

Share Price & News

How has Link Real Estate Investment Trust's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: 823 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

5.6%

823

3.6%

HK REITs

1.5%

HK Market


1 Year Return

8.7%

823

3.1%

HK REITs

5.9%

HK Market

Return vs Industry: 823 exceeded the Hong Kong REITs industry which returned 0.3% over the past year.

Return vs Market: 823 exceeded the Hong Kong Market which returned 5.6% over the past year.


Shareholder returns

823IndustryMarket
7 Day5.6%3.6%1.5%
30 Day9.3%6.1%4.2%
90 Day3.5%2.9%8.7%
1 Year12.2%8.7%7.6%3.1%9.8%5.9%
3 Year84.8%66.5%59.7%38.8%27.7%14.7%
5 Year95.5%62.1%77.1%38.8%21.4%1.2%

Price Volatility Vs. Market

How volatile is Link Real Estate Investment Trust's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Link Real Estate Investment Trust undervalued compared to its fair value and its price relative to the market?

10.2x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: 823 (HK$83.5) is trading above our estimate of fair value (HK$75.64)

Significantly Below Fair Value: 823 is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: 823 is poor value based on its PE Ratio (9.9x) compared to the REITs industry average (9.9x).

PE vs Market: 823 is good value based on its PE Ratio (9.9x) compared to the Hong Kong market (10.5x).


Price to Earnings Growth Ratio

PEG Ratio: 823's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: 823 is overvalued based on its PB Ratio (0.9x) compared to the HK REITs industry average (0.5x).


Next Steps

Future Growth

How is Link Real Estate Investment Trust forecast to perform in the next 1 to 3 years based on estimates from 15 analysts?

-6.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 823's earnings are forecast to decline over the next 3 years (-6.5% per year).

Earnings vs Market: 823's earnings are forecast to decline over the next 3 years (-6.5% per year).

High Growth Earnings: 823's earnings are forecast to decline over the next 3 years.

Revenue vs Market: 823's revenue (6.5% per year) is forecast to grow slower than the Hong Kong market (10.2% per year).

High Growth Revenue: 823's revenue (6.5% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: 823's Return on Equity is forecast to be low in 3 years time (3.5%).


Next Steps

Past Performance

How has Link Real Estate Investment Trust performed over the past 5 years?

7.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 823 has a large one-off gain of HK$12.0B impacting its September 30 2019 financial results.

Growing Profit Margin: 823's current net profit margins are lower than last year .


Past Earnings Growth Analysis

Earnings Trend: 823's earnings have grown by 7.5% per year over the past 5 years.

Accelerating Growth: 823's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: 823 had negative earnings growth (-60.2%) over the past year, making it difficult to compare to the REITs industry average (-44.3%).


Return on Equity

High ROE: 823's Return on Equity (9.4%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Link Real Estate Investment Trust's financial position? (This company is analysed differently as a bank or financial institution)


Financial Position Analysis


Debt to Equity History and Analysis


Balance Sheet

Inventory Level: 823 has a high level of physical assets or inventory.

Debt Coverage by Assets: 823's debt is not covered by short term assets (assets are 0.2x debt).


Financial Institutions Analysis

Asset Level: 823's level of assets compared to its equity is low.

Allowance for Bad Loans: Insufficient data to determine if 823 has a sufficient allowance for bad loans.

Low Risk Liabilities: 823 reports no customer deposits, loans are made up entirely of externally borrowed funds.

Loan Level: Insufficient data to determine if 823 has an acceptable proportion of non-loan assets held.

Low Risk Deposits: 823 has advanced significantly more loans than the customer deposits it holds.

Level of Bad Loans: Insufficient data to determine if 823 has an appropriate level of bad loans.


Next Steps

Dividend

What is Link Real Estate Investment Trust's current dividend yield, its reliability and sustainability?

3.28%

Current Dividend Yield


Dividend Yield vs Market

company3.3%marketbottom25%2.2%markettop25%6.0%industryaverage4.4%forecastin3Years3.6%

Current dividend yield vs market & industry

Notable Dividend: 823's dividend (3.39%) is higher than the bottom 25% of dividend payers in the Hong Kong market (2.17%).

High Dividend: 823's dividend (3.39%) is low compared to the top 25% of dividend payers in the Hong Kong market (6.02%).


Stability and Growth of Payments

Stable Dividend: 823's dividends per share have been stable in the past 10 years.

Growing Dividend: 823's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: At its current payout ratio (89%), 823's payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: 823's dividends in 3 years are forecast to be thoroughly covered by earnings (0.05% payout ratio).


Next Steps

Management

What is the CEO of Link Real Estate Investment Trust's salary, the management and board of directors tenure and is there insider trading?

2.0yrs

Average management tenure


CEO

George Hongchoy (57yo)

9.7yrs

Tenure

HK$78,265,000

Compensation

Mr. Kwok Lung Hongchoy, also known as George, has been the Chief Executive Officer of Link Asset Management Limited, Manager of Link Real Estate Investment Trust since May 2010. Mr. Hongchoy served as the  ...


CEO Compensation Analysis

Compensation vs Market: George's total compensation ($USD10.07M) is above average for companies of similar size in the Hong Kong market ($USD1.00M).

Compensation vs Earnings: George's compensation has been consistent with company performance over the past year.


Management Age and Tenure

2.0yrs

Average Tenure

49yo

Average Age

Experienced Management: 823's management team is considered experienced (2 years average tenure).


Board Age and Tenure

5.5yrs

Average Tenure

63yo

Average Age

Experienced Board: 823's board of directors are considered experienced (5.5 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

SellHK$7,000,00005 Dec 19
State Street Global Advisors, Inc.
EntityCompany
Shares87,500
Max PriceHK$80.00
BuyHK$2,160,00005 Dec 19
State Street Global Advisors, Inc.
EntityCompany
Shares27,000
Max PriceHK$80.00
BuyHK$680,00005 Dec 19
State Street Global Advisors Trust Company
EntityCompany
Shares8,500
Max PriceHK$80.00
SellHK$18,063,19803 Dec 19
State Street Global Advisors Trust Company
EntityCompany
Shares222,700
Max PriceHK$81.11
BuyHK$5,471,55003 Dec 19
State Street Global Advisors, Inc.
EntityCompany
Shares63,000
Max PriceHK$86.85
BuyHK$86,85003 Dec 19
State Street Global Advisors Trust Company
EntityCompany
Shares1,000
Max PriceHK$86.85
SellHK$182,539,28417 Oct 19
Capital Research and Management Company
EntityCompany
Shares2,217,500
Max PriceHK$82.32
SellHK$42,829,10208 Oct 19
Kwok Lung Hongchoy
EntityIndividual
Role
Chief Executive Officer
CEO & Executive Director of Link Asset Management Limited
Shares500,000
Max PriceHK$85.66
BuyHK$8,514,00004 Oct 19
State Street Global Advisors Trust Company
EntityCompany
Shares99,000
Max PriceHK$86.00
SellHK$117,974,76905 Sep 19
Capital Research and Management Company
EntityCompany
Shares1,365,000
Max PriceHK$86.43
SellHK$2,586,77402 Sep 19
Elaine Young
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director of Link Asset Management Limited
Shares30,000
Max PriceHK$86.23
SellHK$36,890,40923 Aug 19
State Street Global Advisors, Inc.
EntityCompany
Shares416,935
Max PriceHK$88.48
BuyHK$232,429,33109 Aug 19
BlackRock, Inc.
EntityCompany
Shares2,554,000
Max PriceHK$91.01
SellHK$30,244,16726 Apr 19
BlackRock, Inc.
EntityCompany
Shares334,000
Max PriceHK$90.55
SellHK$1,345,320,19609 Apr 19
JPMorgan Chase & Co, Private Banking and Investment Banking Investments
EntityCompany
Shares14,609,579
Max PriceHK$92.08
BuyHK$133,821,45208 Apr 19
State Street Global Advisors, Inc.
EntityCompany
Shares1,445,000
Max PriceHK$92.61
SellHK$89,290,33829 Mar 19
State Street Global Advisors, Inc.
EntityCompany
Shares1,027,625
Max PriceHK$86.89
BuyHK$24,461,56928 Mar 19
BlackRock, Inc.
EntityCompany
Shares277,500
Max PriceHK$88.15
SellHK$233,862,48021 Mar 19
BlackRock, Inc.
EntityCompany
Shares2,685,500
Max PriceHK$87.08
BuyHK$220,854,57219 Mar 19
State Street Global Advisors, Inc.
EntityCompany
Shares2,784,349
Max PriceHK$79.32
BuyHK$1,622,961,84715 Mar 19
JPMorgan Chase & Co, Private Banking and Investment Banking Investments
EntityCompany
Shares18,514,450
Max PriceHK$87.66
BuyHK$3,188,672,15613 Mar 19
JPMorgan Chase & Co, Private Banking and Investment Banking Investments
EntityCompany
Shares36,375,785
Max PriceHK$87.66
BuyHK$29,117,07615 Feb 19
BlackRock, Inc.
EntityCompany
Shares336,500
Max PriceHK$86.53

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Hubert Chak (58yo)

    Director of Finance

    • George Hongchoy (57yo)

      CEO & Executive Director of Link Asset Management Limited

      • Tenure: 9.7yrs
      • Compensation: HK$78.27m
    • Kok Siong Ng (48yo)

      Chief Financial Officer of Link Asset Management Limited

      • Tenure: 1.7yrs
    • Eric Yau (45yo)

      Chief Strategy Officer of Link Asset Management Limited

      • Tenure: 2yrs
    • Christine Chan (44yo)

      Director of Investment for Link Asset Management Limited

      • Tenure: 6.7yrs
    • Phyllis Ng (55yo)

      Director of Human Resources of Link Asset Management Limited

      • Tenure: 3.8yrs
    • Kenneth Wong (49yo)

      Group General Counsel & Company Secretary of Link Asset Management Limited

      • Tenure: 0.4yrs
    • Max Wong (54yo)

      Director of Project & Operations

      • Lorraine Chan (49yo)

        Director of Corporate Affairs & Marketing of Link Asset Management Limited

        • Tenure: 1yrs
      • Patty Wu

        Head of Internal Audit & Risk Management


        Board Members

        • Blair Pickerell (63yo)

          Independent Non-Executive Director of Link Asset Management Limited

          • Tenure: 3.8yrs
          • Compensation: HK$1.48m
        • Ian Keith Griffiths (65yo)

          Non-Executive Director of Link Asset Management Limited

          • Tenure: 12.3yrs
          • Compensation: HK$1.41m
        • George Hongchoy (57yo)

          CEO & Executive Director of Link Asset Management Limited

          • Tenure: 9.7yrs
          • Compensation: HK$78.27m
        • Peter Tse (68yo)

          Independent Non-Executive Director of Link Asset Management Limited

          • Tenure: 5.5yrs
          • Compensation: HK$1.72m
        • Nick Allen (64yo)

          Chairman of the Board of Link Asset Management Limited

          • Tenure: 3.8yrs
          • Compensation: HK$4.64m
        • May Tan (63yo)

          Independent Non-Executive Director of Link Asset Management Limited

          • Tenure: 6.9yrs
          • Compensation: HK$1.78m
        • Ed Chan (56yo)

          Independent Non-Executive Director of Link Asset Management Limited

          • Tenure: 3.9yrs
          • Compensation: HK$1.43m
        • Elaine Young (54yo)

          Independent Non-Executive Director of Link Asset Management Limited

          • Tenure: 6.9yrs
          • Compensation: HK$1.54m
        • Nancy Tse (66yo)

          Independent Non-Executive Director of Link Asset Management Limited

          • Tenure: 5.5yrs
          • Compensation: HK$1.55m
        • Poh Lee Tan (60yo)

          Independent Non-Executive Director of Link Asset Management Limited

          • Tenure: 4.2yrs
          • Compensation: HK$1.53m

        Company Information

        Link Real Estate Investment Trust's company bio, employee growth, exchange listings and data sources


        Key Information

        • Name: Link Real Estate Investment Trust
        • Ticker: 823
        • Exchange: SEHK
        • Founded: 2005
        • Industry: Retail REITs
        • Sector: Real Estate
        • Market Cap: HK$178.856b
        • Shares outstanding: 2.07b
        • Website: https://www.linkreit.com

        Number of Employees


        Location

        • Link Real Estate Investment Trust
        • Tower 1
        • 20th Floor
        • Kwun Tong
        • Kowloon
        • Hong Kong

        Listings

        TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
        823SEHK (The Stock Exchange of Hong Kong Ltd.)YesUnitsHKHKDNov 2005
        L5RDB (Deutsche Boerse AG)YesUnitsDEEURNov 2005
        LKRE.FOTCPK (Pink Sheets LLC)YesUnitsUSUSDNov 2005
        2964SEHK (The Stock Exchange of Hong Kong Ltd.)NPV (PARALLEL 22/01/2020)HKHKDJan 2020

        Biography

        Link Real Estate Investment Trust ("Link REIT", Hong Kong stock code: 823), is Managed by Link Asset Management Limited, we are the first Real Estate Investment Trust listed in Hong Kong. With a portfolio comprising retail facilities, car parks and offices across Hong Kong, Beijing, Shanghai, Guangzhou, and Shenzhen, we serve local communities by fashioning dynamic urban destinations that enhance our tenants' businesses, engage shoppers and visitors with delightful experiences, and promote a shared sense of community. We invest and manage sustainable, income-producing retail and commercial properties (excluding hotels and serviced apartments) in Hong Kong and tier-one cities in mainland China. 


        Company Analysis and Financial Data Status

        All financial data provided by Standard & Poor's Capital IQ.
        DataLast Updated (UTC time)
        Company Analysis2020/01/18 12:42
        End of Day Share Price2020/01/17 00:00
        Earnings2019/09/30
        Annual Earnings2019/03/31


        Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.