AMTD Research | Far East Consortium (35.HK): Riding on the Tide of COVID-19 Macro Recovery

We published a research report on Far East Consortium (35.HK) on the back of its recent annual results announcement.

Key Highlights:

FEC reported a 14.3% YoY decline in FY2021 adjusted cash profit, but we believe the worst is behind us and global macro recovery from COVID-19 will drive FEC’s share price higher.  Maintain Buy.

• We believe that FEC’s FY2021 results reflects the full year impact of COVID-19 on the company’s operations and thus FY2022E will start to see a recovery in growth, in our view.
• The recent sale of Dorsett City London Hotel for GBP115m proves that the company’s asset values are intact and the deep 54% disc. to NAV that the stock is currently trading at is unwarranted.
• We believe the stock will be the recovery play on the global economic recovery from COVID-19 during FY2022E.
• The stock is trading at 54% disc. to NAV, 5.5x FY22E P/E and offering a 6.1% div yield.
• Compared to its peers of Australia and UK Property Developers, which are trading at 16.2x-19.5x FY2021E P/E, 1.3x FY2020 P/B and 2.1% div yield on average, we believe FEC is significantly undervalued.