Sales increase drives 45pc gain in core earnings at Kerry Properties
Kerry Properties said its core profit rose 45 per cent to HK$2.59 billion for the year to December as property sales grew.
The upmarket developer said net profit excluding revaluation gains from investment properties fell 12 per cent to HK$2.59 billion for the year.
But the decline was due to a one-off gain of HK$1.16 billion in 2006 from the sale of its 10.16 per cent stake in Citibank Plaza in Central.
Including revaluation gains of HK$3.97 billion, the bottom line was HK$6.56 billion, up 40 per cent.
According to Thomson Financial Mean Estimates, analysts had expected Kerry Properties to announce a net profit of HK$2.79 billion, excluding revaluation gains.
Major profit contributors were the Hong Kong and mainland property divisions, contributing HK$1.64 billion and HK$262 million, respectively. The logistics network posted a profit of HK$552 million.
Turnover rose 23 per cent to HK$12.5 billion. Earnings per share were HK$4.95.
A final dividend of 65 HK cents a share was declared, with a scrip dividend alternative. The full-year dividend was 95 HK cents a share, up 12 per cent.
Looking ahead, the firm expressed confidence in the Hong Kong and mainland markets.
Chief executive Wong Siu-kong said the company's projects were in prime areas of cities, insulating prices from Beijing's austerity measures.
'Factors such as the appreciation of the yuan, vast demand within the domestic market, the resultant urban population expansion as urbanisation gathers pace, the scarcity of land, and rising costs of land and construction will continue to underpin robust demand,' according to a company statement.
This year, the company is expected to complete 1.2 million square feet of gross floor area on the mainland, mainly from the sale of the Everbright City development in Shanghai and a residential project in Beijing.
Kerry also is optimistic on upmarket Hong Kong properties. 'With home completions and new constructions in 2007 touching a 10-year low, Hong Kong residential property prices are likely to continue their upturn as strong demand accentuates limited supply and negative interest rates provide a favourable environment,' the statement said.
The company will book profits from its 640,000 square feet of gross floor area in Hong Kong, including SOHO 38 at 38 Shelly Street in Mid-Levels and the remaining units at 15 Homantin Road.
This year, Kerry Properties expects capital expenditure of HK$13.9 billion, of which HK$6.3 billion will be for land acquisition. It has a mainland land bank of 30 million sqft.
JP Morgan analyst Raymond Ngai said the company would perform better this year due to more projects coming up for sale.
As most of the firm's projects were mixed-used developments, this would further cushion it from the impact of the cooling measures, he said.
Kerry Properties is controlled by the Kuok Group, the controlling shareholder of the SCMP Group, which publishes the South China Morning Post.
