Hong Kong developer SHKP lowers sales goal as measures bite
City's largest developer says it expects to sell 14.9 per cent less during this financial yearas it announces 6.4 per cent drop in net profit
Sun Hung Kai Properties, Hong Kong's largest developer by market value, has set a lower target for contracted sales for this financial year as the government's property-market cooling measures bite.
SHKP said it would aim for contracted sales of HK$28 billion for the year to June - 14.9 per cent less than the HK$32.91 billion it achieved in the past financial year.
"The current property market relies on end-users. Property speculation stopped after the government introduced additional stamp duties," said Victor Lui Ting, the firm's deputy managing director. "We believe the mid-range property market will be more active this year and that prices will remain stable."
About HK$19 billion of the company's sales target will be generated from Hong Kong properties, while HK$9 billion will come from mainland properties. The firm said the government's cooling measures had affected the luxury residential market the most.
Co-chairman Thomas Kwok Ping-kwong said: "We will definitely follow the market trend. Most of our new projects to be released for sale will be small to medium-sized flats. Our acquisition targets will be mass residential development sites."
Lui said the five sites acquired in the past financial year were mainly for building small to medium-sized flats and that SHKP would continue to acquire plots in Hong Kong.
On the mainland, the company paid 21.77 billion yuan (HK$27.4 billion) for a commercial site in Shanghai, its largest single investment.
Kwok said the firm would focus on this development and not buy any new sites on the mainland anytime soon.
"Our gearing ratio is still less than 20 per cent even after we bought the land in Shanghai. We have no plans to finance the project," he said.
"About 40 per cent of the site's gross floor area will be released for sale in the next five years. We will be able to generate HK$20 billion from sales."
Co-chairman Raymond Kwok Ping-luen said the project would generate rental income of HK$3 billion in 2015.
SHKP said yesterday its underlying profit dropped 14.11 per cent to HK$18.62 billion in the year to June, below market expectations for a HK$19.63 billion result. Net profit, including property revaluation gains, fell 6.4 per cent to HK$40.33 billion.
Profit generated from property dropped 45 per cent to HK$7.19 billion from HK$13.07 billion.
Thomas Kwok said the poor result was because new home sales were affected by the Residential Properties (First-hand Sales) Ordinance, a law forcing developers to disclose more to buyers of flats in new projects that took effect on April 29.
"Property sales turned slow in the first half of this year," he said, adding that SHKP would speed up the obtaining of pre-sale consents. Pre-sale consents allow developers to sell unfinished properties.
In the coming nine months, the developer plans to start selling five residential projects and two office projects. SHKP declared a final dividend of HK$2.40 per share.
SHKP shares rose 0.49 per cent to close at HK$103.10 yesterday, before the results release.