SHKP fundraising to boost land bank

PUBLISHED : Friday, 28 February, 2014, 5:27pm
UPDATED : Saturday, 01 March, 2014, 5:02am

Sun Hung Kai Properties said first-half core profit fell 7.8 per cent as it announced plans to raise up to HK$22 billion by issuing bonus warrants to be used to build up its land bank in Hong Kong in the years ahead.

The company said interim underlying profit slid to HK$10.64 billion for the six months to December because of lower property sales.

Earnings from property sales dropped 12.17 per cent to HK$5.63 billion, compared with HK$6.41 billion a year earlier.

Turnover rose 2.29 per cent to HK$32.51 billion.

Attributable profit dropped 15.49 per cent to HK$19.03 billion.

SHKP yesterday proposed a bonus warrant for every 12 shares on top of an interim dividend of 95 HK cents per share. Each warrant will entitle the holder to subscribe for one new share of the developer - the city's second-largest by market capitalisation - at HK$98.60, a 0.7 per cent discount to the stock's close of HK$99.30 yesterday.

"The new capital will be used for land acquisition in Hong Kong as more sites [are put] up for sale for the next several years," said co-chairman and managing director Raymond Kwok Ping-luen.

The warrants will be exercisable at any time during the 24 months from the date of issue, which is expected on April 23.

Kwok rejected the suggestion that the move was similar to a rights issue, saying the developer had issued such bonus warrants in 1986 and 1991 and nearly 99 per cent of shareholders subscribed to them.

Thomas Kwok Ping-kwong, the firm's co-chairman and managing director, said the Kwok family, which owns 43 per cent of the company through a family trust in SHKP, would subscribe to the bonus warrants.

"We, including my mother Kwong Siu-hing, will give full support to SHKP. We are continuing to increase our stake in the company and not sell a single share," he said.

Based on the controlling shareholder's 43 per cent stake in SHKP, it will cost the Kwok family about HK$9.5 billion to subscribe the bonus warrants.

Each of the three Kwok brothers and their families holds a third of the trust and this means each of them would have to fork out more than HK$3 billion to subscribe to the warrants.

Alfred Lau, a property analyst at Bocom International, said the company would not receive the capital until two years from now when the shareholders exercised the warrants.

"But shareholders may prefer to sell the option once it is listed on the stock exchange instead of waiting for two years," Lau said, pointing out the Kwok family might also exercise the warrants earlier if the developer needed fresh funds.