Hysan Development posts 4.7pc gain in underlying interim profit

PUBLISHED : Friday, 08 August, 2014, 2:57pm
UPDATED : Tuesday, 12 August, 2014, 12:42pm

Hysan Development, the largest landlord in Causeway Bay with properties such as Hysan Place, boosted its underlying interim profit by 4.7 per cent as it relied more on base rents than turnover rents to maintain a stable income.

For the six months to June, Hysan said underlying interim profit was HK$1.08 billion. Turnover registered a year-on-year 4.2 per cent increase to HK$1.59 billion for the same period.

An interim dividend of 23 HK cents will be paid, up 4.5 per cent from 22 HK cents a year earlier.

"Last year, our internal study forecast [that] Hong Kong retail sales just grew 4 or 5 per cent, compared to the market's expectation of a 12 per cent increase. We were the most bearish then, and we even started to change our strategy to rely on base rents two years ago," said Lau Siu-chuen, Hysan's deputy chairman.

In the first half, Hysan's retail rentals increased 5.8 per cent to HK$893 million, while turnover rents dropped 6.25 per cent to HK$60 million. Lau declined to reveal the internal prediction this year for retail sales in the city but said it would be "no worse than last year".

According to government statistics, Hong Kong retail sales in the first half of this year decreased 1.3 per cent - the worst first-half performance since 2009 at the height of the global financial crisis.

Lau added that an estimated HK$150 million asset enhancement project would take place in The Lee Gardens One. After completion, it would create an additional 10,000 square feet of retail space, including a 5,000 sq ft street-level shop.

Chairman Irene Lee Yun-lien said retail leasing at the company's prime malls in core districts remained stable. "The grade A office leasing market continued to benefit from limited supply," she said.

Net profit, including a HK$1.94 billion revaluation gain on investment properties, fell 10.9 per cent to HK$2.88 billion. The revaluation gain was 17.44 per cent less than the HK$2.35 billion posted in the year-earlier period.

Total rental income for the period, including retail, office and residential, was HK$1.41 billion, up 4.44 per cent from a year earlier.