20220913-招银国际-Hopson__Repayment_track_records_count_3页_455kb

CMBI Credit Commentary – HPDLF Summary

Core Content

This document is a credit commentary on Hopson's offshore bonds and financial position, highlighting its strong repayment track record, liquidity profile, and debt reduction strategy. The analysis is provided by CMBI Fixed Income Department and includes key financial data, market performance, and investment portfolio details.

Main Points

• Repayment Track Record:
  Hopson has demonstrated a strong history of repaying debt, even during challenging market conditions. It repaid RMB1.8bn in Feb'10, USD350mn and USD300mn in Sep'12 and Jan'18, and cUSD1.1bn in Jun and Jul'22.

• Current Valuations:
  The current valuations of HPDLFs (offshore bonds) are considered attractive due to their low-beta and short-tenor characteristics. The YTM for the bonds is 57.0%, 39.4%, and 41.5% for the 8% '23 (CBs), 6.8% '23, and 7% '24 bonds, respectively.

• Liquidity and Debt Profile:
  Hopson maintains a strong liquidity position with adequate cash reserves and financial assets. The company has a manageable offshore debt maturity profile, with USD787.5mn in outstanding offshore bonds as of Jun'22.

• Debt Reduction:
  Hopson has continued its deleveraging trend since 1H21, with net debt decreasing by 6.8% to HKD77.4bn in 1H22. Net gearing and adj. liab/assets ratios have improved to 68.3% and 60.0% in Jun'22, respectively.

• Resilient 1H22 Performance:
  Despite a weakened performance, Hopson's 1H22 results were relatively resilient compared to its peers. Excluding investment losses and fair value gains, recurring revenue increased by 35.4% to HKD15.0bn, though gross profit and EBIT declined.

• Investment Portfolio:
  Hopson's offshore investment portfolio includes listed investments and private equity (PE) holdings. The book value of financial assets was HKD8.0bn as of Jun'22, with current financial assets mainly consisting of HK-listed equities. The estimated market value of its listed investments in HKEX is cHKD4.6bn, including a 9.1% stake in Ping An Healthcare.

• Alternative Liquidity Source:
  The offshore investments, including listed and private equity holdings, offer a good alternative liquidity source. Even excluding margin loans, the value of these investments is estimated to be over HKD10bn.

• Onshore CMBS Access:
  Since 2018, Hopson has been gradually accessing onshore CMBS by collateralizing its high-quality investment properties. As of Jun'22, its investment property portfolio was valued at cHKD85bn, with 95% of GFA in Tier 1 cities and LTM rental income of HKD4.2bn.

Key Financial Figures (Table 3)

• Cash on hand: Decreased from 1.1x to 0.9x against ST debts in Jun'22.
• Current financial investments: Declined from 1.8x to 1.0x against ST debts.
• Net debt: Reduced to HKD77.4bn in 1H22.
• Net gearing: Improved to 68.3% in Jun'22.
• Adj. liab/assets: Improved to 60.0% in Jun'22.
• (Cash + current financial investments)/ST debts: Decreased from 1.9x to 1.0x.
• 3 Red Lines Status: Transitioned from Green to Yellow in Jun'22.

Key Investment Portfolio Details (Table 2)

• Investment income: Declined significantly in 2H21 and 1H22.
• Current financial assets: Reduced from HKD27.1bn in 1H21 to HKD2.6bn in Jun'22.
• Non-current financial assets: Remained largely stable.
• Margin loan: Declined from HKD10.2bn in 1H21 to HKD1.5bn in Jun'22.
• Estimated LTV: Reduced from 32.5% in 2H20 to 18.3% in Jun'22.
• Investments in JVs: Declined from HKD12.1bn in 1H21 to HKD8.8bn in 2H21.

Conclusion

Hopson is viewed as a resilient player in the sector with a strong repayment history and a manageable debt structure. The current valuations of its offshore bonds are considered attractive, offering a good risk-return profile. Its offshore investment portfolio provides additional liquidity, and its access to onshore CMBS through high-quality investment properties supports its financial stability.