Interim underlying profit at Swire Properties jumps 34pc
Property developer is optimistic about future performance as office, retail and residential demand are expected to increase in second half
Swire Properties posted a 34.2 per cent jump in first-half underlying profit to HK$3.78 billion on strong property sales and rising rental income, with the property giant looking to build on its gains as it expected a positive performance in the second half.
The strong result also gave a earnings boost to its parent Swire Pacific. The conglomerate said its underlying profit for the same period grew 31 per cent to HK$4.33 billion on higher profits from its property, aviation, beverage and trading and industrial divisions.
John Slosar, who chairs both Swire Pacific and Swire Properties, said demand for space in Swire Properties' office buildings is expected to show further improvement, with modest additional demand in the Central district and firm rental levels on renewals in Island East.
Swire Properties chief executive Martin Cubbon said the performance of the company's retail properties outperformed the market, despite the fall in retail sales in the city.
"We remain optimistic about the retail sector," he said.
The company is confident about the future performance of its retail properties such as Pacific Place and the Taikoo Shing mall.
"The fall in retail sales in Hong Kong has resulted in retailers becoming more cautious. However, this is not expected to have a significant adverse effect on Swire Properties' retail properties in Hong Kong which remain fully let," a company report said.
Swire Properties' bottom line dropped 7.06 per cent from the same period last year to HK$6.46 billion on smaller gains on property revaluations. Turnover jumped 44.9 per cent to HK$8.34 billion.
Gross rental income rose 7.09 per cent to HK$5.05 billion, reflecting positive rental reversions from office and retail properties in Hong Kong.
Gross rental income from Taikoo Hui in Guangzhou and Taikoo Li Sanlitun in Beijing also benefited from positive rental reversions and higher retail sales.
Swire Properties' operating profit from property sales soared 190 per cent to HK$807 million, propelled by sales of Mount Parker Residences in Quarry Bay, Argenta in Mid-Levels West and the joint-venture project Dunbar Place in Ho Man Tin. The developer released the 92-unit Mount Parker Residences for sale in March and has sold 73 flats so far. The profit from the sale of 57 flats was recognised in the first half.
Swire Properties declared an interim dividend of 22 HK cents a share, up from 20 HK cents a year ago.
The company has appointed director Guy Bradley as its new chief executive from next year. The incumbent, Cubbon, will join the board of the parent company as its director of finance and corporate development.
Slosar said the company saw corporate development as a more important part of the business, and Cubbon would drive future development for the group as they saw opportunities in other parts of the world.
Swire Pacific declared interim dividends of HK$1.10 per A share and 22 HK cents per B share.
Shares of Swire Properties closed up 1.16 per cent yesterday to end at HK$26.15, while Swire Pacific A shares fell 0.05 per cent to settle at HK$99.90.