HK developers starting to reap mainland rewards
Interim results show profits growing up to 40pc as sales are solid across the board
Hong Kong developers' earnings from their mainland projects have started taking off, and the profit contribution from these sources will continue to grow, according to analysts.
In the half-year reporting season just ended, local developers reported solid interim earnings, with some posting profit growth of up to 40 per cent.
The results were boosted by high average selling prices across the board, with the revenue finally rolling into the developers' bottom line.
"Hong Kong property companies have scaled up their China investments since about 2004, and we believe one clear message from their latest results is that their China earnings have finally started to come through," said Jonas Kan, a senior vice-president who tracks property plays for Daiwa Capital Markets in Hong Kong, in his latest property report.
Among the major local developers, Hang Lung Properties still has the largest proportion of its earnings coming from the mainland, with 50 per cent of its gross rental income coming from across the border.
But Cheung Kong and Wharf were the "stars" of the latest reporting season, posting strong mainland earnings in the first half, said Alfred Lau, a property analyst at Bocom International.