Chinese Estates returns to profit, rewards investors

PUBLISHED : Tuesday, 30 March, 2004, 12:00am
UPDATED : Tuesday, 30 March, 2004, 12:00am

Chinese Estates Holdings shareholders will receive their first full-year dividend in five years after the company returned to the black with a net profit of $1.15 billion last year - its best result since 1997.

In a rare move for the property company, executive director Joseph Lau Luen-hung announced the results and vowed to improve the firm's transparency.

Improved rental income, strong contribution from property sales, a $108.4 million gain from a securities investment and a $438 million unrealised gain from its stock portfolio helped Chinese Estates mark a significant turnaround last year.

In 2002, the company suffered a net loss of $1.47 billion due to a $1.39 billion provision for the fall in the value of Hong Kong properties and slow sales.

Last year's strong result prompted Chinese Estates to propose a final dividend of 12 cents, bringing the total payout to 17 cents.

In 1997, it distributed a payout of 21 cents on the back of a $916 million net profit.

Financial controller Lam Kwong-wai said the company intended to maintain last year's dividend payout ratio of about 32 per cent.

Asked if Mr Lau's attendance at the media briefing indicated his intention to resume the chairmanship, he said: '[Yesterday], my younger brother [chairman Thomas Lau Luen-hung] was busy marketing the listing of another company ... I am very much engaged in the firm's business.'

Thomas Lau was hosting a fund managers' meeting to promote the initial public offering of Sogo department store operator Lifestyle International Holdings, which is majority owned by the Lau brothers and New World Development chairman Cheng Yu-tung.

Commenting on whether the residential market could face another bubble crisis, Joseph Lau said he believed luxury homes in selected areas could encounter problems.

'We saw a big jump in home prices only because of the sharp fall during the Sars outbreak,' Mr Lau said.

Shares in Chinese Estates eased 0.93 per cent to $5.30 yesterday.