Cheung Kong feels home sales pinch
Cheung Kong (Holdings) said underlying first-half earnings dived 36.7 per cent as sales dropped amid a sluggish housing market.
Profit excluding contributions from associate Hutchison Whampoa slumped to HK$2.82 billion for the six months to June from HK$4.46 billion in the same period last year. Turnover fell to HK$5.9 billion from HK$6.38 billion.
The drop came as developers delayed home sales to wait for better housing market sentiment. The residential market has slowed as homebuyers have hesitated to buy amid rising interest rates.
Cheung Kong's property sales in the first half fell 22.5 per cent to HK$1.79 billion from HK$2.3 billion a year earlier, while gains from revaluation on investment properties shrank to HK$642 million from HK$962 million.
'As the level of interest rates is likely to remain steady in the near future given the US decision not to increase interest rates in August, Hong Kong's housing market will see a positive prospect,' chairman Li Ka-shing said yesterday. 'I am confident of the market outlook and the sales performance of our projects is not bad.'
First-half net profit rose 33.2 per cent to HK$12.22 billion, thanks to a HK$9.39 billion contribution from 50 per cent-owned Hutchison. That is slightly below the HK$13 billion median forecast of six analysts in a Bloomberg survey.
Shares of Cheung Kong dropped 2.54 per cent to close at HK$84.45 yesterday, shaving this year's gain to 6.2 per cent.
Cheung Kong, like many local developers, has been expanding outside Hong Kong - such as in Britain, Singapore and the mainland - to diversify its income streams. The company and Hutchison invested in London, Qingdao and Guangzhou in the first half.
'Outside Hong Kong, the company and Hutchison together have more than 200 million square feet of land for development,' deputy chairman Victor Li Tzar-kuoi said.
In Hong Kong, the group had 46 million square feet of land and its reserves were sufficient for development in the next six years, he said.
Projects completed and due for completion this year included Metro Town Phase 1 in Tseung Kwan O, which has been largely sold. Others include Seasons Palace in Yuen Long and Central Park Towers Phase 1 in Tin Shui Wai.
Contribution from property rental was HK$453 million in the first half, down HK$5 million from a year earlier.
Cheung Kong lifted its interim dividend to 46 HK cents per share from 42 HK cents.