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Chinese Estates' core earnings slump 89pc

Chinese Estates reported an 88.7 per cent dive in core earnings last year due to a HK$1.24 billion loss from selling investment securities.

The drop came despite higher property development and rental earnings.

The real estate investment firm's full-year underlying profit was HK$214.5 million, compared with HK$1.89 billion in 2010. Revenue plummeted 80.2 per cent to HK$527.79 million. No final dividend was proposed.

The firm said it lost HK$1.22 billion from selling shares and HK$21 million from selling bonds. 'In view of the performance of investment securities last year and the challenges in the global economic environment in the year ahead, the board would continue its policy of maintaining higher cash reserves in 2012,' chairman Joseph Lau Luen-hung said.

The firm's cash holdings amounted to HK$4.26 billion as of December. Its investment in listed securities and treasury products amounted to HK$5.74 billion as of December, down from HK$7.6 billion in 2010.

'The group would also consider selling particular investment properties in Hong Kong or on the mainland, or investment securities, when such disposal is beneficial to the group and shareholders as a whole,' Lau said.

Chinese Estates owns a portfolio of retail and office properties in prime locations. They include Windsor House in Causeway Bay, Silvercord and The One in Tsim Sha Tsui, and Harcourt House and MassMutual Tower in Wan Chai.

Strong demand for commercial property boosted its net rental income by 36.2 per cent to HK$1.56 billion last year. Rental revenue from the retail sector rose 3.8 per cent to HK$942.7 million, while non-retail rental revenue surged 56.4 per cent to HK$571.1 million.

The overall occupancy rate of the group's retail property portfolio was 95.95 per cent, and 94.56 per cent for its office portfolio.

Earnings from property development last year climbed 118 per cent to HK$891.6 million, largely boosted by sales revenue at an upmarket residential project, The Hermitage, in West Kowloon. It has a 25 per cent stake in The Hermitage.

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