Wharf to seek new funds as needed
Wharf (Holdings) may engage in more fund-raising exercises as it rapidly expands its mainland property portfolio, according to chairman Peter Woo Kwong-ching.
'If there are good opportunities and we want to take them, then we will need capital,' said Woo, speaking after the company's annual general meeting.
Earlier this year, the company held a rights issue and last month announced an US$800 million convertible bond offering.
Woo said if the company identified good projects, he did not rule out the possibility of further fund raising this year.
Wharf's long-term plan is to raise its mainland investments portfolio to 50 per cent of its total assets, a share equal to its portfolio in Hong Kong.
Five years ago, when the company formed its expansion plan on the mainland, its property portfolio there accounted for about 5 per cent of the group's total assets.
'Now it has jumped to about a third of our total,' Woo said. 'Such expansion needs resources - both human resource and capital.'
Woo said the policy is transparent and hoped minority shareholders would support it. However, during the meeting, some shareholders raised concerns about two rights issues in recent years.
'I don't have the money to follow [the subscription], but I don't want to sell my shares,' one minority shareholder said, concerned that her holding would be diluted.
She requested that Wharf management consider the matter fully be fore making decisions on rights issues in future.
In February, Wharf announced a HK$10.05 billion rights issue to raise capital to fund property investment on the mainland. In 2008, the company raised HK$9.18 billion through a rights issue.
While capital is needed, Woo said the company has no plans about the method that would be used.
'This is a challenge for the team,' he said, adding that the company would act prudently. The gearing ratio will be kept at 25 to 30 per cent.
As of March 31, Wharf's gearing ratio was 17 per cent.
Woo said the central government's policy tightening to curb property price growth would slow the mainland housing market, making it more challenging for the company to achieve this year's sales target of 14 billion yuan (HK$16.7 billion).
'But it is not impossible. We will try to achieve it,' he said.
As of May 31, the company had sold about five billion yuan of property.
Meanwhile, managing director Stephen Ng Tin-hoi, reiterated that Wharf planned to acquire its parent Wheelock's property investments on the mainland this year, making Wharf a major vehicle for the group's mainland investments.
Wharf, which is 50.02 per cent controlled by Wheelock & Co, also operates container terminals and provides communications and media services in Hong Kong. It also owns two of the city's most popular shopping centres - Harbour City and Times Square.
Woo said demand for prime retail space was strong. During March to May, he said he had noted an increase in mid-ranged international brands looking for space to open outlets in Hong Kong.
Retail rents will continue to rise because of strong demand, he said.