Hang Lung to shed more HK assets in profit drive
Developer Hang Lung Properties said it would continue to sell its non-core properties in Hong Kong, with the mainland offering better returns and lower risks than the local market.
Speaking at its interim results press conference yesterday, chairman Ronnie Chan Chi-chung said the developer had been looking to sell its older and non-core properties with lower rental income for two years.
But the best opportunities had only come of late.
'After expanding new sources of revenue on the mainland for two years, we are now confident that we can rapidly increase our rental income on the mainland ... [to] cover the loss of income after selling the properties in Hong Kong,' Chan said.
'In the last few months ... we were given some reasonable and attractive offers. We'll continue selling when the prices are good.'
Hang Lung, Hong Kong's third-biggest developer by market value, sold its 28-year-old office building in Cheung Sha Wan for HK$625 million last month, after selling Star Centre in Kwai Chung in May for HK$528 million and parking lots in Park Towers in Causeway Bay for HK$220 million. The latter two, booked in its interim results, generated a profit of HK$220 million.
But Chan said it had no plans to sell prime properties in core areas, including Causeway Bay, Central and Mong Kok.
Hang Lung reported that its underlying profit rose 72 per cent to HK$2.52 billion in the first six months of this year. Its rental profit generated from investment properties in Hong Kong grew 5 per cent to HK$1.251 billion for the period, while its mainland properties recorded a 26 per cent growth in profit to HK$1.171 billion.
Nine units of its HarbourSide residential project near Kowloon Station and 108 units of The Long Beach at Tai Kok Tsui were sold at average prices of HK$32,100 and HK$10,600 per square foot respectively. The sales generated a total profit of HK$798 million, or an average margin of 63 per cent.
Chan said the shopping mall at Hang Lung's Forum 66 development in Shenyang, which is scheduled to open in September, was already fully let. He said he expected it to generate a high return yield of 9 per cent in the first year of operation - double the original target - showcasing the attractiveness of investing on the mainland.
Last month, Hang Lung submitted a bid for a government site in North Point after years of staying away from land purchases in Hong Kong. Chan explained that the company was trying to see if it could get a cheap deal. The site finally went to Sun Hung Kai Properties.
Although it is focusing on building commercial properties on the mainland, he said he was still positive about the property market in Hong Kong and would buy land here if it was cheap.
Shares of Hang Lung jumped 3.8 per cent to HK$27.6 yesterday.
Its parent company, Hang Lung Group, said its underlying net profit rose 52 per cent to HK$1.435 billion in the first half.
The growth in rental profit from Hang Lung's investment properties in Hong Kong in the first six months