Swire posts 57.8pc gain in first half
Swire Pacific, a conglomerate with interests ranging from property to airlines, reported a 57.82 per cent jump in net profit in the first half which it attributed to a sharp rise in the value of its investment properties and the sale of a port stake.
Profit rose to HK$12.49 billion in the first six months from HK$7.92 billion a year earlier, while turnover increased 9.87 per cent to HK$10.34 billion from HK$9.41 billion.
The company booked HK$7.23 billion as net property revaluation gain, up from HK$4.43 billion a year ago, and HK$1.07 billion from the sale of its 17.2 per cent stake in Shekou Container Terminal.
The company also benefited from higher rental income and the contribution from Cathay Pacific Airways, of which it owns 39.92 per cent.
'The strong operating results in the first half will provide a firm base for the year as a whole and prospects for the group moving forward remain good,' said Swire chairman Christopher Pratt.
Gross rental at Swire Properties increased 17 per cent to HK$2.64 billion due to continued strong demand for office and retail space in the high-end market, including the company's Pacific Place shopping complex in Admiralty.
Underlying profit from Cathay Pacific rose 34.77 per cent to HK$965 million as the airline, which reported its earnings on Wednesday, sold more first and business-class tickets.
'The positive results were expected considering Cathay Pacific posted better than expected earnings a day earlier,' said Eric Yuen Chi-fung, an analyst at Dao Heng Securities.
However, profit dropped 10.3 per cent to HK$209 million at Swire's trading and industrial division, which distributes Columbia sportswear, Taikoo sugar and cars.
Swire yesterday said it accepted a land premium levy of HK$807 million from the government to convert two houses on Stubbs Road into a 12-storey residential building with potential floor area of 68,000 square feet.
With the premium charge at HK$11,867 per square foot, analysts said Swire would need to sell completed flats for more than HK$20,000 per square foot to make a profit.
Meanwhile, increasing new supply in Kowloon might put Swire's rental income under pressure next year, analysts said.
According to Jones Lang LaSalle, more than 4.4 million sqft of office space will be available in the market, including 900,000 sqft at phase one of International Commerce Centre (ICC) in West Kowloon. The 118-storey ICC will be Hong Kong's tallest building and has lured investment bank Morgan Stanley to move there from Central.
Keith Kerr, the chairman of Swire Properties, said about 50 per cent of the 1.5 million sqft at commercial complex One Island East in Quarry Bay either had their leases renewed or under negotiation.
Mr Kerr said financial services firms were among target tenants.
Shares of Swire closed 1.47 per cent lower at HK$87.20 yesterday.
