New World rules out dive in home prices
Group cautious as profit rises 124pc to HK$9.67b
New World Development managing director Henry Cheng Kar-shun says he does not expect property prices in Hong Kong to fall sharply despite the deepening global financial crisis.
Mr Cheng admits that it is difficult to predict the outlook for the property sector but he believes any falls will not be dramatic.
'Property sales will drop as people have adopted a wait-and-see attitude,' Mr Cheng said yesterday.
'But most of the developers will not cut prices since they don't have financial pressure [to do so].'
He expects sales to remain low and property prices may fall 8 to 10 per cent but sees them picking up once the economy has recovered.
New World yesterday announced that net profit jumped 124 per cent to HK$9.67 billion for the year to June.
It attributed the increase to sales of flats at Harbour Place in Hung Hom as well as property revaluation gains.
Eric Wong Chun-yu, the co-head of Asia real estate research at investment bank UBS, said the developer's underlying profit was HK$5.7 billion, 14 per cent higher than his expectation of HK$5 billion.
Revenue from property sales jumped 95 per cent to HK$3 billion mainly from the sale of 1,472 of the 2,470 units at Harbour Place.
The company plans to launch four residential projects in Tsim Sha Tsui, Western district, Yuen Long and Ho Man Tin worth more than HK$10 billion this financial year.
'It would be the major profit driver of the group for the current financial year if we sold the projects, particularly the Hanoi Road project in Tsim Sha Tsui,' Mr Cheng said.
Operating profit from the hotel business fell 8 per cent to HK$618 million in the past financial year because of renovation projects and expenditure on acquisitions.
The company has set up a management unit to develop the business, which included five hotels on the mainland by the end of June.
Mr Cheng said the hotel management business would go public in the long term.
Adrian Cheng Chi-kong, an executive director of New World, said the company would merge New World Strategic Investment with New World China Enterprises Projects within a year.
New World Strategic Investment has invested about HK$3 billion in various projects on the mainland and will increase the scale to HK$10 billion within three to five years after the two units merge.
New World Development proposed a final dividend of 25 HK cents a share, the same as in the previous year.
The company's shares rose 3.92 per cent to end at HK$7.95 yesterday.
