Beijing's efforts to cool the overheated property market sliced Midland Holdings' annual net profit by nearly 23 per cent.
Midland recorded a net profit of HK$532.79 million for the year to December, a decline of 22.9 per cent from its record profit of HK$691.23 in 2009, blaming the government's efforts to brake the property sector.
Midland chairman Freddie Wong Kin-yip said the profit fall was due to 'the government's frequent intervention in China's property market which affected our mainland operations' as well as intensified competition in Hong Kong's real estate agency industry.
As a percentage of total revenue, the mainland business's contribution fell to 10.5 per cent last year from 14.2 per cent in 2009, executive director Angela Wong said. Its commercial and retail business in Hong Kong accounted for 13.3 per cent of its total revenue last year, up 3.3 percentage points over 2009. The contribution from local residential business also grew slightly by 0.2 percentage point to 75.2 per cent of total revenue.
Midland's data showed that primary and secondary flat transactions in some key mainland cities such as Shanghai and Shenzhen last year fell as much as 48 per cent year-on-year.
Despite the drop in net profit, group turnover rose 10 per cent to more than HK$3.73 billion last year.
The group expected the property market to remain relatively stable this year, and declared a final dividend of 20.28 HK cents, and a special cash bonus of 11.8 HK cents to commemorate its 38th anniversary.
The firm gave shareholders a final dividend of 43.8 HK cents in 2009.
The company is planning to add at least 20 more local outlets to its property agency chain, Midland Realty, on top of its existing 200 outlets this year.
It also expects double digit growth in staff numbers, which currently stand at more than 2,000.
Asked about the impact of last week's earthquake in Japan on the Hong Kong property market, Midland's senior executive director Albert Wong Kam-hong said he thought it would have some cooling effect as investors showed more caution. He resumed an earlier forecast that home prices would still rise 11 per cent this year.
Midland's shares closed at HK$5.76 yesterday, down 17 HK cents from Wednesday.
Primary and secondary flat sales in some mainland cities fell by as much as 48 per cent
As a percentage of total revenue, the mainland business's contribution fell to: 10.5%
Despite the drop in net profit, group turnover still increased: 10%