TIDMMPO
RNS Number : 0115T
Macau Property Opportunities Fund
15 July 2020
15 July 2020
Macau Property Opportunities Fund Limited
("MPO" or the "Company")
Investor Update
First Half 2020
Key Data
Inception date 5 June 2006
Exchange London Stock Exchange
---------------------- -----------------------
Domicile Guernsey
---------------------- -----------------------
Market capitalisation GBP38.2 million
---------------------- -----------------------
Portfolio valuation US$ 279.6 million(1) -5.0%
(vs 31 December 2019)
---------------------- -----------------------
Adjusted NAV US$140.0 million(1)
---------------------- -----------------------
Adjusted NAV per share US$2.26(1) /184p(2) -10.2%
(vs 31 December 2019)
---------------------- -----------------------
Share price 61.75p -44.6%
(vs 31 December 2019)
---------------------- -----------------------
Discount to Adjusted 66.4% 46.1%
NAV
(as at 31 December
2019)
---------------------- -----------------------
Cash balance US$19.9 million(1)
---------------------- -----------------------
Total debt US$146.8 million(1)
---------------------- -----------------------
Loan-to-Value ratio 49.0%(1)
---------------------- -----------------------
([1]) As at 31 March 2020.
(2) Based on a US$/GBP exchange rate of 1.23086 as at 30 June
2020.
All other data are as at 30 June 2020.
Summary
Macau's economy and property market suffered a setback due to
Covid-19 control measures. Despite this, three apartments with a
cumulative value of US$5.8 million were divested above valuation
during the period.
The entire mainland China is now off Macau's list of highly
infected areas, which means all visitors from mainland China can
now enter Macau without undergoing quarantine, paving the way for
the gradual recovery of Macau's economy.
Portfolio
Macau's luxury residential property market remained quiet
throughout H1 2020 and will likely remain so through Q3 2020.
The Waterside
The Waterside, MPO's landmark asset, with 59 luxury apartments
for lease in downtown Macau, saw its occupancy rate drop from 58%
as at end December 2019 to 36% at the end of June this year. The
decline was due mainly to tenants being unable to return to Macau
following the imposition of strict border control measures by
territorial authorities in March. Security deposits equivalent to
three months' rental have been forfeited and the apartments have
been put on the market for new leases.
Our leasing team has put together new lease packages to improve
occupancy at The Waterside and achieve a more diverse tenant mix,
but occupancy levels are likely to remain muted until travel
restrictions are eased and mainland Chinese visitors return to the
city.
In line with our focus on divesting our portfolio, we completed
the disposal of an individual unit at One Central Residences in
April for HK$19 million (US$2.4 million) or HK$10,288 per sq ft
(c.US$1,327 per sq ft), around 2% above the latest valuations as at
the end of March. This leaves one remaining unit in the development
for sale.
The Fountainside
The Fountainside is a low-density residential development in the
Penha Hill district, comprising 42 homes and 30 car-parking spaces.
Our sales team focused on local purchasers in H1 2020. Despite the
limited buyer pool and the difficulties in arranging viewings, we
have signed the promissory sale and purchase agreements for two
apartments and a car-parking space for HK$28.4 million (US$3.7
million). Deposits have been received and the transactions are
expected to complete by the end of July and early November
respectively. The total selling price of the two residential units
is approximately 5% above the latest valuations by Savills. We
continue to pursue creative strategies to aid the sales process for
the remaining 9 units.
Estrada da Penha
During this enforced quiet period, we have been carrying out
further enhancement works at Estrada da Penha, a prestigious,
colonial-style villa atop Penha Hill. Following our efforts to
market this trophy home to ultra-high-net-worth investors through
our local and international network, we have received several
viewing requests from agents. These viewings will proceed after the
completion of the enhancement works, although they may be subject
to travel restrictions for potential buyers from outside Macau.
Macau
Covid-19 containment
Macau Chief Executive, Ho Iat Seng, described the outbreak
situation as "basically under control" in his first policy address
on 20 April. Only one imported case was reported over the past
three months. The total number of infections in Macau stands at 46,
with 45 patients having recovered. Remarkably, and laudably, Macau
has suffered no Covid-19 deaths to date.
Given the stabilised situation, the entire mainland China is now
off Macau's list of highly infected areas, which means all visitors
from mainland China can now travel to Macau without undergoing
quarantine. In addition, Guangdong authorities announced that
visitors arriving from Macau who meet certain health requirements
no longer have to undergo the quarantine period in Guangdong from
15 July. This is a welcome interim measure as the governments of
Macau, Hong Kong and Guangdong are near finalising the framework
for a "travel bubble" within the Greater Bay Area, but have delayed
its implementation in the light of recent new Covid-19 outbreaks in
Hong Kong.
Nevertheless with many countries easing lockdown rules, a
potential second wave of the pandemic cannot be ruled out,
particularly given Macau's proximity to Hong Kong and mainland
China, where new clusters of infection emerged recently. However,
China and the two SARs have taken swift and decisive action in
controlling new outbreaks, thereby providing a high level of
confidence that the pandemic is being closely monitored and
effectively managed in the region, as opposed to certain
others.
Economic impact
Nevertheless, the Covid-19 containment measures have taken a
toll on the economy, as Macau's twin economic engines - gaming and
tourism - were all but shut down. Macau's economy in Q1 2020
contracted 49% YoY in real terms.
Latest forecasts by the International Monetary Fund (IMF), the
Economist Intelligence Unit (EIU) and Fitch Ratings projected a
2020 contraction in Macau's economy of between 24% and 69.8% YoY.
GDP forecasts for 2021 differ widely, from a 12.6% positive growth
by Fitch Ratings to bullish expansion of 31% by the EIU and 32% by
the IMF.
Tourism
Visitor arrival numbers for April reflect the full impact of the
Covid-19 containment measures, plummeting 99.7% YoY. The lack of
momentum continued into May, which saw YoY decline of 99.5% in
visitor arrivals to 16,133, although this was a 46.1% month on
month (MoM) increase. For the period between January and May,
visitor arrivals totalled 3.2 million, a decline of 81.1% YoY.
Gaming
With the sharp fall in visitor numbers and following the 15-day
closure of casinos in February, gross gaming revenue (GGR) slumped
77.4% YoY during the first half of the year. GGR for the month of
June alone contracted by 97.0% YoY.
The government has provided little further insight into the
renewal of Macau's gaming concessions, which expire in 2022. The
chief executive's policy address outlined the government's plan to
hold a public consultation on the territory's gaming laws in H2
2020. After obtaining public feedback, the legislation will be
revised and a fresh public tender for gaming rights will be
conducted.
Despite the uncertainties, Sands China Ltd and Galaxy
Entertainment Group Ltd have indicated that they are proceeding
with their previously announced expansion plans. Sands began trial
operations at The Grand Suites at Four Seasons while its new
Londoner Macau is on track for launch this year; Galaxy has
announced that work on phases 3 and 4 of its flagship Galaxy Macau,
in Cotai, are continuing.
Government relief measures
The Macau government's stated focus on social welfare, job
creation and institutional reform demonstrates its swift reaction
to the economic impact of Covid-19. A package of economic relief
measures has been rolled out to boost local spending and reduce the
financial burden on local businesses, particularly small and
medium-sized enterprises, including consumption subsidies, rental
waivers, job-training opportunities, tax deductions, interest-free
loans and other business incentives.
To further boost the economy, the government will increase
investments in public works projects including the Light Rail
Transit linking Cotai and Hengqin Island, and streamline approvals
for private construction projects.
Property
The economic contraction and uncertain recovery trajectory of
the gaming and tourism sectors have had a spillover effect on the
property sector. In Q1 2020, residential sales were at their lowest
levels in more than a decade, and commercial property sales hit a
record low. Only 1,106 residential properties were sold, a decline
of 22% YoY, and average transaction prices declined 8% YoY.
However, in Q2 as the Covid-19 outbreak was brought under
control, market sentiment improved. Property viewings began picking
up and developers launched new units with incentives such as
flexible payment methods. In May, transaction volume improved by
41% MoM, although on a YoY basis, it was 39% lower. During the
first five months of the year, a total of 2,083 residential units
were transacted, down 33% YoY. Average transaction price decreased
by 6% YoY in May to US$1,236 per square foot, but increased by 9%
MoM, showing signs of improvement.
Overall, first-time buyers continued to dominate the market,
making up 84% of transactions between January and May, and
residential properties priced below MOP8 million (US$1 million)
remain the most sought-after.
Outlook
Revitalising the economy
Macau's economy, which depends heavily on gaming and tourism,
has been hampered by border control restrictions. The recent easing
of quarantine requirements for people travelling between Macau and
mainland China is an encouraging step towards the formalisation of
a wider travel bubble, paving the way for the gradual recovery of
Macau's economy.
In addition, Macau's government is also seeking the Chinese
central government's approval to restart and expand the Individual
Visit Scheme (IVS), which allows mainland Chinese visitors from 49
cities to travel individually to Macau instead of being subject to
a general requirement for group travel.
Property sector likely to improve as travel restrictions are
lifted
As the Covid-19 pandemic has hit the property sector hard, we
are hopeful that the government will introduce policies to support
it in due course. As Macau acted swiftly and decisively to manage
the viral outbreak, we expect renewed demand for quality housing in
the territory when potential buyers look to invest in property in
the Greater Bay Area.
Although market sentiment in the property sector has improved in
tandem with developments related to Covid-19, the property market
is likely to pick up only after travel restrictions on visitors
from the Chinese mainland are lifted, enabling potential buyers
from mainland China to return to Macau. This is a setback for MPO
because it unavoidably places our disposal timetable in limbo, with
potential buyers remaining in a holding pattern until the travel
restrictions have been eased.
- End -
About Macau Property Opportunities Fund
Macau Property Opportunities Fund Limited is a closed-end
investment company registered in Guernsey and is the only quoted
property fund dedicated to investing in Macau, the world's largest
gaming market and the only city in China where gaming is
legalised.
The Company is premium listed on the London Stock Exchange.
Launched in 2006, the Company targets strategic property
investment and development opportunities in Macau. Its portfolio of
property assets was valued at US$279.6 million as at 31 March
2020.
www.mpofund.com
About Sniper Capital Limited
The Company is managed by Sniper Capital Limited, an Asia-based
property investment manager with an established track record in
fund management and investment advisory.
For further information
Investor Relations
Sniper Capital Limited
Tel: +852 2292 6789
info@snipercapital.com
www.snipercapital.com
Corporate Broker
Liberum Capital
Gillian Martin / Owen Matthews
Tel: +44 20 3100 2234
Company Secretary & Administrator
Ocorian Administration (Guernsey) Limited
Kevin Smith
Tel: +44 14 8174 2742
Stock Code
London Stock Exchange: MPO
LEI
213800NOAO11OWIMLR72
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
PFUKKQBKDBKBDOD
(END) Dow Jones Newswires
July 15, 2020 02:00 ET (06:00 GMT)
Macau Property Opportuni... (AQSE:MPO.GB)
Graphique Historique de l'Action
De Nov 2024 à Déc 2024
Macau Property Opportuni... (AQSE:MPO.GB)
Graphique Historique de l'Action
De Déc 2023 à Déc 2024
