Hongkong Land set to report 60pc hit due to provisions
Hongkong Land Holdings, the largest landlord in the Central property market, is expected to report a drop in attributable earnings of as much as 60 per cent when it unveils its results today.
A poll of analysts indicated that the Jardine company was expected to take a substantial charge against some of its development properties, with estimates of the provision ranging from US$150 million to $220 million.
That would slash net profit by as much as 60 per cent to just $155 million for the year to December, next to $395 million net profit recorded the previous year.
Clarion Capital investment analyst Adam Osborne said Hongkong Land could take as much as $192 million in provisions for the year.
The company had already taken a $31 million provision against certain Southeast Asian investment properties in the first half.
One analyst said some people might be slightly surprised by the size of the charge that Hongkong Land will take.
'Some analysts are still talking about a $30 million charge like the company took in the first half, but these people are forgetting the fact that Hongkong Land's reporting criteria are very stringent,' he said. 'Each of Hongkong Land's buildings must be revalued and accounted for separately - not just as a basket of properties as is the practice of many other developers.' Some analysts said Hongkong Land's fall in profitability would probably be matched by the Jardine group's two holding companies, Jardine Matheson Holdings and Jardine Strategic, which unveil their results tomorrow.
A Singapore-based analyst said he expected Jardine Matheson to show a decline of 63 per cent in bottom-line profits for the year.
'Jardine Matheson's attributable earnings could fall to as low as $120 million, down from last year's $325 million,' he said.
At the heart of Jardine Matheson's difficulties will be a 31.9 per cent slide in recurrent profits before provisions.
'The problem with Jardines is the heavy property and retail focus of the group. That's a pretty negative factor weighing against them,' the analyst said.
'If you look at which sectors have been most affected by the troubled regional economies, the Jardine group is involved in most of them.'
