Sun Hung Kai Properties

SHKP cuts property sales target as first-half profit falls

As core profit falls in the first half, the developer says it expects home transactions to drop in wake of government measures to cool market

PUBLISHED : Thursday, 28 February, 2013, 5:42pm
UPDATED : Friday, 01 March, 2013, 5:48am

Sun Hung Kai Properties, Hong Kong's biggest developer by market value, has cut its sales target for this financial year by 8.5 per cent, after reporting its first decline in core earnings since 2009.

The fall in sales for the full year would be unavoidable, said Victor Lui Ting, a deputy managing director of SHKP, because of the measures imposed by the government to rein in property price growth.

It is inevitable to see a fall in property transactions under the new curbs

"It is inevitable to see a fall in property transactions under the new curbs," Lui said, while presenting the group's results for the six months to December.

The results showed a 1.93 per cent fall in underlying profit to HK$11.55 billion from HK$11.77 billion a year earlier.

Following the government measures to cool the property market, SHKP said it lowered its annual sales target to HK$32 billion from HK$35 billion.

Earnings from property sales for the first half dropped 18.7 per cent to HK$6.41 billion, compared with HK$7.88 billion a year earlier.

Turnover dropped 12.8 per cent to HK$31.78 billion, but after taking an increase in the fair value of investment properties of HK$12 billion into account, net profit climbed 6.5 per cent to HK$22.51 billion.

SHKP declared an interim dividend of 95 HK cents per share, unchanged from the year-ago period.

Raymond Kwok Ping-luen, a co-chairman and managing director of the group, said it would continue selling its non-core assets in a bid to support earnings growth.

The group would offer an office building in Kwun Tong for sale in coming months, Lui said.

Co-chairman and managing director Thomas Kwok Ping-kwong said home prices were unlikely to fall significantly given soaring construction costs.

"Construction workers in our construction unit have received an annual 15 per cent increase in salaries, with some getting rises of up to 30 per cent since last year. But I disagree with importing labour to solve the shortage problem. Instead, we should encourage more young people to enter the industry," he said.

He rejected claims that developers colluded by not submitting any bids in last week's tender, saying technical difficulties was the major reason.

"I did not call any developers and I did not receive calls from others [not to bid for the Tin Shui Wai site last week]," he said.

"We found the land sale document requiring the winning bidder to complete the housing project in five years that includes relocating the existing light railway station too hard to achieve in such a short time frame."

MTR Corp last week withdrew its residential site in Tin Shui Wai from tender after it did not receive any bid for the site by the deadline.

SHKP said it sent an opinion letter to MTR about the project.

In response to whether SHKP would follow Henderson Land Development in donating land for building cheap homes for first-time buyers, Thomas Kwok said the government had not released details about how the proposal would work.

"Let's see if the proposal works first,' he said.

SHKP shares yesterday edged up 0.84 per cent to finish at HK$120.