- May 11, 2021
We believe that Far East Consortium (FEC) is a key beneficiary of the UK economy reopening. As the UK economy and labour market bounces back, we believe it will underpin a rebound in FEC’s UK property sales. We estimate UK property sales to contribute to ~19% of its FY2021E-23E total property sales on average. Maintain Buy.
Key Highlights:
- As a global property developer of mixed-used property projects, UK is one of the more significant property markets for FEC.
- We estimate that UK property projects contribute to ~19% of FEC’s FY2021E-2023E property sales.
- We believe the acceleration in the UK economic growth and improved jobs market will underpin the demand for UK properties, driving property sales and property prices higher, in our view.
- UK jobs market in April 2021 has risen at the fastest rate since late 1990’s according to Reuters, citing the monthly index of demand for staff from the Recruitment and Employment Confederation (REC) and KPMG.
- On 6 May 2021, Bank of England has raised its forecast for British economic growth in 2021 to 7.25% from its previous estimate of 5.0%. The UK lockdown is set to further relax from 17 May 2021 onwards.
- The stock is currently trading at undemanding valuations of 59% disc. to NAV and implying a 6.6x FY21E P/E or 4.6x FY22E P/E.
- Major shareholder Mr. David Chiu has been regularly repurchasing shares since its interim results announcement.
