Wheelock's contracted sales beat target with HKD14.3bn by end-September

Management noted solid outlook in general.

Wheelock's contracted sales in HK reached HKD14.3bn by end-September, beating its HKD10bn target set at the beginning of the year.

According to a research note from Nomura, key contributors include Grand Austin (almost completely sold), One Bay East (sold en bloc) and Kensington Hill (60% pre-sold).

In general, Nomura noted that Wheelock management presented a generally solid outlook and financial profile during its presentation at its Hong Kong Corporate Day, which was well-received by investors.

Here's more from Nomura:

Division of labour within the group - HK property development will remain Wheelock’s core business. China and HK investment properties will remain as the core business of its subsidiary Wharf (4 HK, not rated). Wheelock Singapore (WP SP, not rated) continues to focus on the Singapore market and also looks for opportunities overseas. Wheelock has no intention of changing the group organisation structure.

Future launch pipeline – (1) Parkside at Tseung Kwan O (TKO) South – pre-sale consent has been obtained recently. Pre-sale preparation is underway, with launch possibly by the end of this year. Management hopes to ride on the sales momentum of a neighbouring project Wings III by Sun Hung Kai Properties (16 HK, not rated). (2)

One Harbour Gate at Hunghom – Wheelock targets to sell this commercial property en bloc during 2015F. Negotiations with potential buyers are ongoing.

HK residential home price outlook – Wheelock expects a stable pricing environment in 2015F. Impact from Occupy Central appears to fall more on secondary market transaction volumes (as buyers and sellers wait and see) rather than on prices.

Dividend policy – Wheelock does not have a set dividend policy, given the fluctuating nature of property development profits. However, it hopes to maintain, at least, a stable DPS, supported by recurring dividend streams from Wharf as well.

Strong financial position – Management indicated that Wheelock’s own net gearing should have moderated further from 23.7% as at end-June 2014, and there should be

HKD12bn sales receivable to be recouped by end-2015F. Outstanding bonds and bank borrowings have an average maturity of 37 months with the next repayment due in

March 2016. Hence, we think its financial position looks very comfortable at the moment.