REG - Macau Prop Opp Fund - Investor Update H2 2024

Macau Property Opportunities FundAnnouncement

16/01/2025 07:00

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250116:nRSP4952Ta&default-theme=true

RNS Number : 4952T  Macau Property Opportunities Fund  16 January 2025

Macau Property Opportunities Fund Limited

 ("MPO" or the "Company")

 

Investor Update H2 2024

 

KEY DATA

 Inception date               5 June 2006
 Exchange                     London Stock Exchange
 Domicile                     Guernsey
 Market capitalisation        £15.5 million
 Portfolio valuation          US$135.9 million1      +0.8%

                                                     (vs 30 June 2024)
 Adjusted NAV                 US$64.4 million1
 Adjusted NAV per share       US$1.04 1/ 83 p2       -2.6%

                                                     (vs 30 June 2024)
 Share price                  25 p                   -29.8%

(vs 30 June 2024)
 Discount to adjusted NAV     70%                    63%

                                                     (as at 30 June 2024)
 Cash balance                 US$3.3 million1
 Total debt                   US$69.2 million1
 Loan-to-value ratio          49.7 %1

 1  As at 30 September 2024.

2 Based on a US$/£ exchange rate of 1.256 as at 31 December 2024.

All other data are as at 31 December 2024.

 

 

Opening Paragraph

The Company made further progress with divestments, despite ongoing challenges
in the property sector. Notably, two villas at The Fountainside were sold,
along with five additional units at The Waterside. These transactions brought
total gross sales proceeds to c.US$93 million since the divestment programme
began in mid-2022. The Company allocated up to 85% of the sales proceeds to
debt reduction, reducing its overall loan-to-value ratio to 49.4%.

 

 

Portfolio

The Waterside

The Company sold a further five units at The Waterside in H2 2024for a total
gross value of HK$696.9 million (US$89.6 million). A total of 32 units out of
a total of 59 have now been sold since the divestment programme began in
mid-2022. Although the leasing programme at The Waterside has been terminated
to facilitate sales, some of the remaining 27 units continue to be leased for
shorter terms. At the end of 2024, the occupancy rate for the remaining units
was approximately 52% of the gross floor area.

 

The Fountainside

Two villas together with car-parking spaces at The Fountainside were sold in
H2 2024. The two villas were sold on an individual basis after the Manager was
unable to progress discussions with an en-bloc buyer. Further details about
the sales will be presented in the Company's forthcoming interim results.

 

Three reconfigured apartments and two car-parking spaces now remain available
for sale. Bureaucratic challenges have arisen relating to approvals for the
newly built parking spaces, which has affected the divestment of these units.
The Company continues to deploy numerous sales and marketing strategies to
divest the remaining assets.

 

Penha Heights

Investor interest in this trophy home had been hampered by the Covid-19
pandemic and remains affected by the prevailing high-interest rate environment
and weakness in China's economic recovery. To expand its appeal to potential
purchasers who currently remain on the sidelines, the Company has engaged a
firm of specialist Hong Kong real estate agents to market the property to
ultra-high-net-worth individuals in the region. In addition, the Company
continues to explore marketing avenues to showcase the property to a select
group of potential purchasers.

 

Property

Macau's real estate industry is beginning to benefit, albeit slowly, from the
government's removal of anti-speculation measures in early 2024 that had
dampened demand in the territory's residential property market for more than a
decade. The broader residential market concluded the first three quarters of
2024 with a transaction volume of 2,496 units, representing a 6% year-on-year
(YoY) increase.

 

The luxury residential market outperformed the overall market, with 163 sales
involving apartments of more than 150 square metres recorded during the first
three quarters of 2024, an overall increase of 38% YoY, albeit from a low
base. However, the number of transactions began to decline between Q2 and Q3,
with an overall 10% drop-in activity between the two quarters. The market also
saw a 7% decline in the average transaction price over the same period and,
despite a subsequent improvement in transaction volumes, prices continued on a
downward trajectory to hit a nine-year low.

 

Despite three interest rate cuts by the Monetary Authority of Macao in 2024,
new approvals for bank loans to purchase residential and commercial properties
saw declines, with residential mortgage approvals dropping by 57% month on
month to October, suggesting that potential purchasers were still sitting on
the sidelines.

 

The Chinese government has introduced a number of significant stimulus
measures to support GDP growth and the country's real estate sector. These
measures have started to have a visible impact on the residential property
sector in tier-1 cities in mainland China, but potential investors in Macau
have remained cautious and have continued to take a "wait and see" attitude.

 

 

Macau

Economy

During the first nine months of 2024, Macau's GDP expanded by 11.5% to
approximately 86% of 2019's figure. In Q3 2024, the territory's GDP rose by
4.7% YoY to 87.3% of Q3 2019's reading. This represents a continued growth
trajectory through 2024 to an expected GDP growth rate of 10.6% for the full
year, bringing the economy close to 93% of its 2019 pre-pandemic size of
approximately MOP419 billion (around US$52 billion).

 

However, the recovery remains uneven, with tourism and gaming leading the
rebound, but other sectors lagging behind. Many local enterprises are
performing poorly as they face stiff competition from businesses in nearby
cities such as Zhuhai, hampering their growth prospects.

 

The appointment of Macau's new chief executive, Sam Hou Fai, who took office
on 20 December with Chinese President Xi Jinping attending, is regarded as a
positive development for the territory. The change of leadership raises the
possibility of further economic support for Macau.

 

It is too early to assess extensively the impact on Macau of the recent US
presidential election. However, Macau's prospects remain firmly focused on
mainland China, where the outlook is potentially looking more positive in the
months ahead.

 

Tourism and gaming

Macau's visitor arrivals for 2024 showed strong growth in the second half of
2024, surging past the 30 million threshold for the first time since the
pandemic. Total visitor arrivals for full-year 2024 reached more than 34
million, 24% higher than in 2023 and 88% of their volume in 2019. For
full-year 2023, Macau recorded a total of around 28 million visitor arrivals.
The territory also showed remarkable progress in attracting international
visitors, growing that segment by 75% YoY to approximately 76% of 2019's
pre-pandemic level.

 

The gaming sector continued its strong performance in the second half of 2024,
with gross gaming revenue (GGR) reaching MOP227 billion for full-year 2024, a
24% increase YoY that equated to around 78% of pre-pandemic GGR in 2019.

 

 

Outlook

 

While Macau's economic outlook remains positive with the tourism and gaming
sectors expected to maintain their strong performance and GDP growth
forecasted at 5% for 2025, any meaningful benefits to the property market have
yet to materialise.

 

Property industry professionals in Macau have urged the government to take
further steps to stimulate the real estate sector. They propose expanding the
"residency through investment" programme to include property investments as
qualifying investments. This would align with measures introduced in Hong Kong
in late 2024 to revitalise its property market by encouraging foreign
investment.

 

The Company remains committed to its divestment programme, focusing on meeting
debt repayment schedules and returning capital to shareholders. A clear
strategy for 2025, including property-specific tactics, has been established.
The Board sincerely thanks shareholders for voting to extend the Company's
life for another year at the Annual General Meeting on 20 December 2024.

 

The Company's Interim Results are due to be published by late February.

 

About Macau Property Opportunities Fund

Premium listed on the London Stock Exchange, Macau Property Opportunities Fund
Limited (http://mpofund.com) 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.

The Company is managed by Sniper Capital Limited (http://snipercapital.com/) ,
an Asia-based property investment manager with an established track record in
fund management and investment advisory.

 

Stock Code

London Stock Exchange: MPO

 

LEI

213800NOAO11OWIMLR72

 

 

For further information:

 

Manager

Sniper Capital Limited

Group Communications

Tel: +853 2870 5151

Email: info@snipercapital.com (mailto:info@snipercapital.com)

 

 

 

Corporate Broker

Panmure Liberum

Darren Vickers

Tel: +44 20 3100 2222

 

Company Secretary & Administrator

Ocorian Administration (Guernsey) Limited

Kevin Smith

Tel: +44 14 8174 2742

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  PFUPKPBBOBKDBDD