Sales commentary, not BofA research

Headlines

l  Y’day: NKY -1.06%, HSI -1.84%, SHCOMP -1.95%, KOSPI -0.81%

l  Overnight: Dow +1.44%, SPX +1.05%, Nasdaq +0.66%

l  COVID-19: Gilead said Remdesivir linked to a reduction in mortality risk

l  CN: Starts taxing its citizens for global income; those in HK & SG are among the 1st hit

l  CN: raised flood response alert to 2nd highest lvl, w/ Jiangsu & Jiangxi among the worst hit

l  CN: CBIRC said banks shld brace for a big jump in bad loans due to coronavirus-induced economic pain

l  CN: PBOC said to extend grace period for WMP regulations

l  HK: New Central Harbourfront Site 3 up for sale, cld be devpd into GFA 1.6mft²

l  HK: Govt anncd new social-distancing rules effected Sat midnight

l  HK: 38 new cases, total confirmed 1,470 cases.

l  HK: Macau govt announce 14-day mandatory quarantine for HK arrivals

l  HK: passengers from ‘high-risk’ countries to test negative b/f flying

l  SINO-US: Kudlow said "unwise" for Americans to invest in China right now

l  SINO-US: US warns Americans in China of heightened arbitrary detention risk

l  SINO-US.: Trump admin. plans announcement this wk re escalating South China Sea tensions

l  SINO-US: Trump: Ph 2 China trade deal unlikely as r/ship b/w Washington & BJ deteriorated too much

l  SINO-UK: National Security Council to decide Huawei 5G role tmr

l  US: SEC considering requiring investors w/ $3.5b in equities to disclose holdings quarterly

l  US: Virus cases ↑2.3%, record 71,389 new infections. Exceeds 1.9% ave daily ↑ of prev 7 days

l  US: Trump Commutes Prison Sentence of Long-Time Ally Roger Stone

l  AU: Victoria daily 273 new virus cases Sundaym 177 Monday

l  S.KR:  Korea unleashes new prop curbs amid soaring prices

WeWork to have +ve Cash Flow in 2021, Chairman Tells FT. Co will be “a profitable venture w/ an incredible diversity of assets” a yr from now. Revenue has been flat during coronavirus crisis w/ strong demand for work space offset by the termination of other leases & some tenants refusing to pay rent. (FT)

Finally: 3D home tours let buyers & sellers keep their distance. Co’s & products such as Matterport, VPiX & Zillow 3D Home allow users to electronically stitch together photographs, allowing prospective buyers to look around as they virtually walk through the home.  "It's almost like you are there. You can look up, you can look down — there's so much you can do," says Volkie Yelkovan, Matterport's director of product mkting.  Vs in-person showings, 3D home tours possess the adv of being available at all hours. & it might to become the norm "b/c buyers can narrow down their list b/f they see [homes] in person." But there are some limitations. For example, "Does it smell like animals — or worse, mold?" "What's the neighborhood like?" (MSN)

Chinese prop devrs’ financing ↑66%MoM or ↑33%YoY in Jun, per CRIC. (CN Daily)

Hainan duty-free shopping saw strong gwth a/f restrictions eased. During the 1^st wk a/f lifting duty-free shopping quota to Rmb100k/capita, daily duty-free sales were ↑ 60% vs 1H20 daily avg to RMB450m (from 65k visitors). The most popular category was cosmetics, followed by perfumes. Daigous were also attracted, even though China’s Customs indicated that Daigous would be banned for 3 yrs if found. (Wind) >>> Karl: According to Apple Daily, the duty-free prices for cosmetics were 10-20% lower than Japan/S. Korea/Singapore/HK prices.  Hainan duty-free shopping could pose a more significant competition for HK even when travel restrictions are eventually eased.

Vanke acq’d 15% stake of Wanda’s studio project in Changchun. Incl 0.23m m² commercial mall, 0.35m m² studio, 75k m² hotel, & 2.5m m² resi. (The Paper)

Merchants Shekou to buy 24% stake in Shenzhen Nanyou for Rmb7b. (Sina)

Kaisa issues US$400m 9.75% senior notes due 2023 + $300m 11.25% senior notes due 2025. (Co)

Times China appoints new CFO Niu Jimin, former CFO Wong Wing Nin has stepped down. (Co) >>> Wong has been involved in a scandal recently.

Joy City -ve profit warning. Interim NP to ↓70-85%. (Co)

Greenland 1H contract sales Rmb13.3b (↓48%YoY) w/ GFA 1.1m m². (Co)

Country Garden Services: Chairman Yang retirement report untrue. (Co)

HK puts up for sale an iconic commercial site in CBD. The 4.76ha waterfront plot named New Central Harbourfront Site 3, cld be devpd into GFA 1.6mft². (Mingtiandi)

HK govt anncd new social-distancing rules effected Sat midnight. Restaurants must operate at a maximum capacity of 60% & seat just 8 people per table, while the cap for bars will be four. (SCMP)

CKA received approval from the UK govt to start construction for its Convoys Wharf project.  CKA will build 3,500 resi units on 1.74mft² site, of which 2,000 will be sold at mkt prices while the rest wld be sold at subsidized prices. CKA invested ₤100m in the project 10 yrs ago, but construction was delayed by local organizations keen on preserving historic sites. (Apple Daily) >>> Karl: According to CKA’s annual report, >3mft² GFA of resi & commercial GFA will be built.  Presales may start in 2-3 yrs.

250 primary transactions were posted over the w/e, ↓13.5%WoW.  CKA’s Sea to Sky project sold 100 units out of 285 units (35% sell thru rate). Wheelock’s KOHO Hillssold 85 units out of 165 units (51.5% sell thru rate). (AAstocks) >>> Karl: At Sea to Sky, 2 bedrooms w/ transaction val at <HK$10mn (hence subject to lower LTV) continue to sell briskly, while 3- & 4-bedroom unit sales are slower. KOKO Hills received up to 1,400 indications of interest prior to its launch, so the sell-through rate was somewhat disappointing. Most of KOKO Hills’ units are priced above HK$10mn, however.

Evergrande sold out 54 available units of the Vertex, Cheung Sha Wan for >HK$470m (> HK$20k/ft²). Then launched another 55 units for sale. (HKET)

Fortune REIT to report a net loss 1H, as indicated to book HK$2.5bn non-cash IP revaln loss in 1H20 (↓5.8%HoH). >>> Fan: Fortune joins the long list of HK property companies that have issued profit warning for 1H20 due to IP revaluation loss. However, given the mostly non-discretionary nature of Fortune’s tenant mix, we expect its operating performance to be more shielded compared to most of its peers, even though rental reversions were likely slightly negative in 1H20.

Adidas will close its 18kft² flagship store in Central when lease expires in Q3. Swatch will also move out from China Bldg. + GAP & TOPSHOP. Total 60kft² ground fl retail space in Central to be vacated. (HKET)

NWD entity applies for compulsory auction of old bldgs in Sai Ying Pun, 3 ground fl shops + 12 resi units. Mkt val est’d HK$155m. (Apple Daily)

Kerry 1H profit↓70-75%YoY, lower contribution from prop devt, hotel & absence of IP revaln gains. (Co)

CCL Index +0.27%WoW, Mass Index -0.05%WoW, Small & Medium Index +0.09%WoW, & Large Index +1.21%WoW. (Centaline) >>> Large Index hits 19wks high, the largest ↑in last 22wks.

Singapore General Elections 2020: PAP takes 61.24% of the valid vote, loses a 2^nd GRC to WP. (Biz Times)

HDB resale volume ↑6.7x MoM to 2,450 in Jun, per SRX. (Biz Times)

City Devts says continues to be in robust finl position. sees net attributable PATMI materially, adversely impacted. 1H pretax profit xpctd to reduce `substantially'. invsmt props segment also impacted. sees prop devt segment rev ↓10%. near-term outlook continues to remain highly challenging. Sees hotel ops segment contributing significant 1H losses. (Co)

Myer & David Jones move by insurers ‘ominous’ sign of stores’ financial health. End of trade receivable insurance, threatens to strip shelves at Myer & DJs, stoking concerns a/b their ongoing viability. (News.AU)

Australian mall vacancy hits highest rate in 20 years as retailers shrink: JLL

Cromwell starts US$1b data center fund in Europe, Asia Pac.  (AFR)

Auga Capital directors recommend Centuria offer.

New Zealand home val ↑ 7.4%YoY in Jun. (Biz Times)

Sofitel Auckland Viaduct Harbour hotel liquidates and closes operations

Total 3,107 2^nd-hand apts were reported to have sold across greater Tokyo in Jun, ↑83.6%MoM. (JPC)

Office vacancies in Tokyo 5 wards ↑for 4^th mth to 1.97% from 1.64% in May, as pandemic gives tenants pause. (BBG) 

Open House to raise up to ￥50.2b from share sale, to be priced as soon as July 20. (Co)

GreenOak acqs 24,000m² GFA office bldg in Kojimachi, Chiyoda for reportedly ￥35bn from Unizo. (Nikkei)

TCS said only 1% of > 400k workforce back in office; xpct 25% will be back in office gradually. (Times Now)

350,000ft² office space leased @ Equinox Business Park in Mumbai to 5 corporate clients

Indonesia’s retail sales index ↓ 20.6%YoY in May, biggest ↓ since ‘08. (Jakarta Post)

Malaysia’s Sunway is set to reap the gains from its early bet on China. Co to record $37m devt profit in 2H from projects in China & Singapore. (BBG)

Ayala Land’s P15.1b REIT offer plan cleared by Regulator. Primary & 2ndary shrs to be offered as many as 456.9m shrs, w/ overallotment option of 45.89m 2ndary shares; max offer price P30.05/sh. AREIT IPO may be July 27 - 31. AREIT cld raise P1.33b which will fund purchase of a building in Cebu province. Ayala Land cld net P13.31b from 2ndary offer. (Manila Standard)

Thai int’l tourist arrivals xpctd to ↓ 80%YoY to 8.2m, revenue to Bt396b in 2020, per TAT. (Bangkok Post)

Thailand land sales ↓ 3.9%YoY during past 9 mths, as difficulties foreign investors face entering Thai + economic slowdown amid pandemic. (Bangkok Post)

Centara Hotels & Resorts to open 8 hotels in Thailand. (Bangkok Post)

Supalai bought back 270,800shrs @ Bt16.5-16.7/sh for Bt4.5m on Jul 10. Cumulative # 195m shrs (9.1% shrs) for ~Bt3b. Co now ends repo.  (Co)

Korea unleashes new prop curbs amid soaring prices. Will raise prop taxes for multiple-home owners. (BBG)

* My pa holdings: BAC US, 1 HK, 6 HK, ST SP