Strong result for Cheung Kong

PUBLISHED : Wednesday, 30 March, 2011, 12:00am
UPDATED : Wednesday, 30 March, 2011, 12:00am

Cheung Kong (Holdings) yesterday reported full-year earnings of HK$26.48 billion, a 35 per cent increase on 2009, beating the market's expectations.

Excluding property revaluation gains and profit contribution from associate Hutchison Whampoa, Cheung Kong's net earnings were up 26 per cent to HK$11.44 billion.

The second-largest developer in Hong Kong in terms of market capitalisation also announced an increase in dividend payment, with a final dividend of HK$2.45 per share, up 11.4 per cent year on year. It brings the full-year dividend to HK$2.95 per share, up 9.3 per cent from 2009.

Chairman Li Ka-shing predicted the government's measures to curb speculation in the property sector would slow the market. While the company was not against the government's determination to ensure sustainable and healthy development of the industry, Li said he was still upbeat on the long-term prospects of Hong Kong's real estate market.

'There is a real demand [for homes] in the market,' Li said at the company's results press conference.

Profit contribution from Cheung Kong's property sales from wholly owned or jointly owned developments for the year rose 9.89 per cent to HK$8.9 billion, while profits from hotels and serviced suites jumped 64.8 per cent to HK$852 million. Rental income grew slightly to HK$1.82 billion from HK$1.74 billion.

Deputy chairman Victor Li Tzar-kuoi said the company sold 7,700 flats last year. But not all sales showed up in the books.

Contribution from property sales for this year will mainly be derived from sales of flats in Le Prime in Tseung Kwan O, Oceanaire in Ma On Shan, Festival City phase two in Tai Wai, Meridian Hill at Broadcast Drive in Kowloon and Uptown in Yuen Long. All flats in Le Prime and Oceanaire have been pre-sold.

The company included sales of 30 per cent of the flats in Festival City phase two in last year's books, the rest would show up in this year's accounts, said Li Tzar-kuoi.

Li Ka-shing said the past few months had witnessed active home sales and he reiterated the recommendation he made last year, that it was the right time to buy property for owner use, especially in the face of rising inflation.

Loose monetary policy in the United States 'is good for their economy, but is causing problems in other countries', he told reporters.

The 82-year-old billionaire expressed strong confidence in the group's performance this year. Globally, the company has a land bank that can generate 250 million square feet of gross floor area. But he declined to comment when asked if he would buy company shares today after the results announcement.

Cheung Kong's shares rose 0.5 per cent to HK$122.50 yesterday before the earnings announcement. The stock gained 2.2 per cent so far this year and is the second-best performer in the Hang Seng Property Index.

Room to grow

Globally, Cheung Kong has a land bank that can generate this amount of gross floor area, in square feet, 250m