TIDMMPO
RNS Number : 1988A
Macau Property Opportunities Fund
19 January 2024
MPO Investor Update H2 2023
Caption: Light installation at Macau's Winter Flower Show with
the Cotai Strip in the background.
KEY DATA
Inception date 5 June 2006
Exchange London Stock Exchange
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Domicile Guernsey
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Market capitalisation GBP25.1 million
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Portfolio valuation US$192.6 million(1) -1.5%
(vs 30 June 2023)
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Adjusted NAV US$86.1 million(1)
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Adjusted NAV per share US$1.39(1) /109p(2) -4.8%
(vs 30 June 2023)
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Share price 40.6p -30.6%
(vs 30 June 2023)
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Discount to Adjusted 62.8% 51.5%
NAV
(as at 30 June 2023)
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Cash balance US$2.9 million(1)
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Total debt US$99.4 million(1)
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Loan-to-value ratio 50.9%(1)
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([1]) As at 30 September 2023.
(2) Based on a US$/GBP exchange rate of 1.273642 as at 31
December 2023.
All other data are as at 31 December 2023.
Opening Paragraph
The Company has continued its carefully managed divestment
programme, achieving sales valued at approximately US$52 million
since commencement. Macau's economy, meanwhile, has continued to
rebound following the lifting of COVID-related restrictions in
early 2023, although its property market has remained sluggish.
Looking forward, recently announced government measures to relax
long-standing anti-speculation property restrictions from early
2024, may provide some support to the luxury residential
segment.
Portfolio
The Waterside
Since the divestment programme was initiated in mid-2022, the
Company has sold 19 units - around one in three of the tower's 59
units - generating gross revenues of c.US$52 million . Of the net
proceeds, 75% has been deployed to pay down the Company's debt,
while the balance has been made available for working capital.
During H2 2023, the Company made loan repayments of HK$60 million
(approximately US$7.7 million). A further debt repayment tranche of
HK$75 million is scheduled for the end of Q1 2024, which the
company is aiming to meet through its ongoing divestment
programme.
At the end of 2023, the occupancy rate at The Waterside was 50%,
based on the gross floor area of the unsold units.
The Fountainside
At The Fountainside, four villas, three reconfigured apartments
and two car-parking spaces remain available for sale. The Company
is deploying several active sales and marketing strategies to
divest these assets.
The three reconfigured apartments being modified from two
original duplexes have been the subject of requests for additional
alterations at a very late stage by Macau authorities. Upon
receiving the construction licence, on-site works began at the end
of November, and are expected to be completed imminently. An
application for the occupancy permits will be made once the works
are completed.
Penha Heights
Potential buyers' interest in Penha Heights has picked up since
Macau's pandemic-era travel restrictions were lifted. The number of
inquiries and viewings has increased, but it will take time to
identify a buyer, given the value and unique nature of the
property, one of very few large, detached houses in Macau. The
Company will thus explore a variety of new marketing
opportunities.
Caption: Living and dining area of a duplex unit at the
Waterside
Property
Macau's property sector has remained sluggish due to higher
interest rates and the uneven progress of the territory's economic
recovery following the worst of the COVID pandemic. Economic
headwinds both globally and in mainland China have also weighed on
investor sentiment.
In the residential property segment overall, 2,354 transactions
were recorded during the first three quarters of 2023, a
year-on-year (YoY) improvement of 9% from a 40-year low in 2022.
Prices appeared to have stabilised at HK$5,721 per square foot in
Q3 2023, 1% lower than in Q3 2022. In the luxury residential
segment, comprising units larger than 150 square metres, only 118
units were transacted during the first three quarters of the year,
an increase of 13% YoY, while average prices in Q3 2023 declined
10% YoY.
Sentiment in the luxury segment, however, received a potential
boost when Macau's government announced several measures late in Q4
to rekindle interest in property by rolling back some
anti-speculation policies from January 2024. It has abolished a 5%
stamp duty for transactions involving second homes, and purchasers
of properties valued at MOP8 million (c.US$1 million) or more can
now enjoy 70% ceilings on mortgage loan-to-value ratios, up from
50% previously.
Amid signs of stabilisation of mainland China's property sector,
ongoing efforts to stimulate the Chinese economy, and the
relaxation of Macau's anti-speculation measures, the Company is
cautiously optimistic that investor sentiment towards luxury
residential properties in the territory will gradually improve.
Macau
Economy
Macau registered robust gross domestic product growth of 78% YoY
during the first three quarters of 2023, and full-year 2023 growth
is expected to be 75% YoY. GDP growth has been driven mainly by the
recovery of the territory's twin economic engines - tourism and
gaming - but businesses in other sectors, such as small and
medium-sized enterprises and local retail stores, face an uphill
battle to recover from the damage wrought by the pandemic. Although
Moody's downgraded Macau's credit outlook from "stable" to
"negative" in December 2023 - in tandem with its downgrade of
mainland China's credit outlook, based on the tight institutional,
economic and financial linkages between the territory and the
mainland - its assessment appears to be at variance with Macau's
overall pace of economic recovery.
Tourism and gaming
Total tourist arrivals during 2023 were around 28 million,
translating to a daily average of 77,000 visitors, approximately
72% of Macau's pre-pandemic peak. International visitor arrivals
also recovered steadily, from 1,000 arrivals daily in January to
more than 7,000 in December, which is 90% of the pre-pandemic peak.
Hotel occupancy recovered to an average of 81% during the first 11
months of the year, albeit remaining short of the 91% rate for the
same period in 2019. Visitor spending (excluding gaming) surpassed
2019 levels, with per-capita spending of MOP2,612 during the first
nine months of 2023, 65% higher than in 2019. The extension of the
Barra-Taipa Light Rail Transit ushers in a new era of
transportation for the city, greatly improving accessbetween the
Macau Peninsula and Taipa.
Gross gaming revenue (GGR) for 2023 stood at MOP183 billion
(US$22.68 billion), approximately 62% of 2019 levels. It exceeded
the MOP180 billion threshold that obliges gaming concessionaires to
make additional commitments of up to 20% to non-gaming and overseas
marketing spend. Morgan Stanley predicts that Macau's 2024
full-year GGR will grow 24% YoY to approximately 80% of 2019's
level.
Caption: The new Barra Station has extended the Light Rail's
connectivity from Taipa to Macau.
Outlook
The International Monetary Fund has forecast Macau's GDP to grow
by 27% in 2024, reflecting the general health of the territory's
economy. In addition to recent government measures to boost the
property market, indications from the US Federal Reserve are that
US interest rate hikes are on pause amid a market consensus that
lower rates may be on the horizon. This could provide a much-needed
boost to the market as Macau's interest rates are set with
reference to US rates. Any consequent easing of the Company's debt
service levels alongside a recovery in investment sentiment will
provide a boost to the Company's bottom line and ultimately benefit
its shareholders.
The Company's focus will remain the divestment of its portfolio
and implementing its debt reduction strategy. We will also look to
capitalise on any emerging divestment opportunities that may arise
amid improved investor sentiment.
We thank our shareholders for supporting the continuation of the
Company at the Annual General Meeting in December. We recognise
that although the reduction of debt is necessary, as is the careful
management of our divestment programme, the return of capital is
our single most important objective, upon which all our efforts are
focused.
Investor Relations
Sniper Capital Limited
Tel: +853 2870 5151
info@snipercapital.com
www.snipercapital.com
Corporate Broker
Liberum Capital
Darren Vickers / Owen Matthews
Tel: +44 20 3100 2222
Company Secretary and Administrator
Ocorian Administration (Guernsey) Limited
Kevin Smith
Tel: +44 14 8174 2742
Stock Code
London Stock Exchange: MPO
LEI:
213800NOAO11OWIMLR72
About The Company
Premium listed on the London Stock Exchange, 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 leading gaming market
and the only city in China where gaming is legalised.
Launched in 2006, the Company targets strategic property
investment and development opportunities in Macau. Its current
portfolio comprises prime residential property assets.
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.
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