Cheung Kong Property Rises to Two-Month High After Share Buyback

  • Developer buys 0.3% of outstanding shares for HK$536 million
  • Company trades at 50% discount to asset value, analyst says

Billionaire Li Ka-shing’s Cheung Kong Property Holdings Ltd. rose to the highest in more than two months after the company announced it had repurchased almost 0.3 percent of outstanding shares.

The shares rose as much as 4.1 percent to HK$48.70, the highest since Jan. 8, in Hong Kong. They have declined 3.6 percent this year, as the Hang Seng Properties Index has fallen almost 2 percent.

CK Property purchased more than 11.5 million shares for a total of HK$536 million ($69 million) on March 18, the developer said in a statement to the Hong Kong stock exchange on Monday. The company said last week it was exploring new sources of revenue other than real estate, citing unattractive land prices in Hong Kong where it has unsuccessfully bid on several projects in the past year.

"This is definitely positive," said David Ng, research analyst at Macquarie Group Ltd. who has a buy rating on the stock, which he said is trading at close to a 50 percent discount to his estimate of HK$91.40 net asset value per share. "It makes sense for the company to increase shareholding at the current price."

CK Property’s repurchase comes as Hong Kong property prices had their biggest weekly decline since 2008, according to the Centaline Property Centa-City Leading Index, which is down more than 13 percent from its September high.

The market, especially in Hong Kong, is seeing increasing competition at land auctions from new entrants, the company said last week in a statement accompanying its annual results.

“It is therefore not an easy task to acquire land at reasonable costs,” CK Property said March 17.

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