Hongkong Land's (SGX:H78) proper execution of its strategic shift, which includes getting out of its build-to-sell business, would lead to better leverage and support earnings, S&P Global Ratings said in a Thursday release.
The developer plans to wind down its build-to-sell segment, which includes residential projects in mainland China and Singapore, and move to recycle capital from the business to develop new premium commercial properties in Asian gateway cities.
S&P expects the asset recycling effort to boost the company's cash balance and support new investments, although it is also subject to long-duration and execution risks.
The company estimates $10 billion in proceeds from asset recycling, which should help ease its earnings volatility.
The rating agency expects the developer to continue having debt discipline and limit new acquisitions and higher shareholder returns.
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