SHKP profit plunges 62.5pc as investment earnings fall
Sun Hung Kai Properties, the city's largest developer by market value, said net profit plunged 62.5 per cent in the year to June as investment earnings fell along with the fair value of its properties.
Owing to the sharp fall in profit on the disposal of long-term investments and a decrease in the fair value of investment properties, net profit came to HK$10.35 billion, compared with HK$27.6 billion a year earlier.
Disposal gain from the sale of long-term investment dropped 91.8 per cent to HK$87 million, while there was a HK$2.32 billion decline in revaluation value on investment properties.
Excluding the effect of fair-value change on investment properties net of deferred tax, the developer said underlying profit rose 2 per cent to HK$12.41 billion.
A final dividend of HK$1.70 was declared, the same as last year. Turnover rose 39.9 per cent to HK$34.23 billion.
Eric Chow Kwok-yin, an executive director of Sun Hung Kai Real Estate Agency, said the developer would offer 3,500 flats worth HK$23 billion for pre-sale this financial year.
Large residential projects that would go on sale in the next nine months include Aria in Kowloon and Park Island Phase 6 on Ma Wan.
The group would actively seek opportunities to expand its land bank on the mainland.
Vice-chairman and managing director Raymond Kwok Ping-luen said the developer had taken part in land auctions in Guangzhou and Shanghai in the past few months.
'But our bids were less aggressive than rivals' and could not win any sites in the auctions so far,' he said.
The developer aims to increase investment on the mainland to 30 per cent from 20 per cent to its asset value.
SHKP has a mainland land bank of 55.3 million square feet as of June, of which more than 70 per cent was being developed for high-end residences and serviced apartments.
In Shanghai, it has seven million sqft of top-grade offices, shopping centres and hotels under construction.
One key project is the Shanghai IFC development, which comprises offices, a shopping centre and hotel, with a total gross floor area of four million sqft.
The first phase of the retail complex and Ritz-Carlton hotel will open in the middle of next year and the entire development is scheduled for completion by the first half of 2011.
For the year to June 2010, Kwok said the group would complete 2.8 million sqft of residential projects and 1.27 million sqft of office space.
He said he did not see rampant speculation in the Hong Kong property market as mass residential prices were still 30 per cent below the 1997 peak level.
During the year, profit from property sales rose 10 per cent to HK$7.11 billion, largely from the sale of the Cullinan above Kowloon Station, the Latitude in Kowloon, Peak One in Sha Tin, La Grove in Yuen Long and Lime Habitat in North Point.
Net rental income increased 21 per cent to HK$7.27 billion, while hotel operation declined 34 per cent to HK$295 million.
