Kerry Properties beats expectations

Kerry Properties generated better-than-expected contract sales last year, and has set a contract sales target of HK$10 billion for 2012.

The developer earned HK$11.7 billion from contract sales in 2011, up 17 per cent on its original target of HK$10 billion. Contract sales refer to sales of units in developments that were not yet completed, and therefore not yet booked into the profit and loss account.

Speaking at the release of the developer's financial results for the year ended December 31, chief financial officer Louis Wong said about 70 per cent of the 2012 contract sales will come from projects under construction in Hong Kong, while the remaining will come from mainland projects in second and third-tier cities.

Kerry Properties president Wong Siu-kong said housing demand on the mainland remained strong, though sales were sluggish because of tight credit conditions and restrictions on the buying of second homes.

'We plan to launch six or seven projects on the mainland this year and we will follow the market trend to adjust our selling prices,' he said.

Kerry reported that underlying profit for 2011, excluding a property revaluation gain, was up 7 per cent to HK$3.66 billion. Net profit dropped 20 per cent to HK$5.35 billion, while turnover fell 2.66 per cent to HK$20.66 billion.

The fall in turnover was due to the fact that sales revenues for SOHO 189 in Sheung Wan, and Lions Rise in Wong Tai Sin, will only be booked in 2012 when the residential projects are completed.

The company generated HK$6.6 billion from the sales of these two projects, and revenues from other projects brings the total to be booked so far this year to about HK$7 billion.

Rental income from investment properties on mainland was up 10.5 per cent to HK$893 million.

Wong Siu-kong said the mainland leasing market - especially for offices in Beijing and Shanghai - was active.

Kerry Parkside Shanghai Pudong was completed last year. The office and retail space was fully-occupied, while the occupancy rate of serviced apartment also reached 50 per cent.

Turnover at the company's logistics division jumped 47 per cent to HK$16 billion, driven by the strong momentum of its integrated logistics operations in Asia and international freight-forwarding business.

The company proposed a final dividend of 47 cents a share. Kerry Properties' shares dropped 3.05 per cent to close at HK$35 yesterday.

Kerry is controlled by the Kuok Group, the controlling shareholder of the SCMP Group, which publishes the South China Morning Post.