Hap Seng – land sales could not sustain its performance
Although it is a diversified group, I would consider Hap Seng predominantly a property company as about 70% of its net assets were deployed for the property segment.
The past decade has been tough for Hap Seng. For many years, it had to rely on sales of land and/or other assets to maintain the contribution from the property segment. Despite this its ROE had declined from an average of 19% in 2014/15 to an average of 11% in 2022/23.
I would like to think that things would improve moving forward as there were no longer any need for land sales in 2023. I also think that we have reached the bottom of the property cycle. The challenge is whether the market has already priced in all these better prospects?
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