No need for spin-off, Hopewell says
Despite core profit drop, firm says it can finance Wan Chai project internally and with bank loans
Property and infrastructure conglomerate Hopewell Holdings had no immediate plans to revive a proposal to spin off its property unit, as it had sufficient capital to finance the development of its hotel-office-retail project in Wan Chai, managing director Thomas Jefferson Wu said.
"As the revival of the spin-off will be largely driven by market conditions and not a need to raise funds, we do not have an urgent need to proceed if there is a big increase in volatility," Wu said after announcing the group's full-year results yesterday.
In June, the firm deferred a plan to seek a separate listing for Hopewell Hong Kong Properties when the stock market fell sharply amid renewed worries over property tightening measures on the mainland.
Hopewell was looking to raise about HK$5 billion to help finance its development in Wan Chai.
The initial development stage of Hopewell Centre II will now require capital expenditure for next year and 2015 of about HK$750 million, Wu said yesterday, and this could be financed from internal resources and by bank borrowings.
The 55-floor tower, due to open in 2019, will have a total gross floor area of 1.1 million square feet.
Hopewell reported an 8.2 per cent decline in core earnings - excluding exceptional items and gains from investments and land conversions - to HK$1.23 billion for the year to June 30, with the bottom line weighed down by a lower contribution from mainland toll revenues. Turnover dropped 6 per cent to HK$6.14 billion.
But a substantial increase in revaluation gains on investment properties to HK$8.72 billion and a HK$2.24 billion land conversion gain on the commercial portion of Hopewell Centre II lifted net profit to a record HK$12.2 billion, up 236 per cent from HK$3.63 billion last year.
A final dividend of 55 HK cents will be paid, up from 54 HK cents a year earlier.
The net profit of the group's Hong Kong-listed subsidiary Hopewell Highway Infrastructure (HHI), fell 28 per cent to 601 million yuan (HK$761 million) for the year to June 30, owing to the mainland government's cutting of road tolls.
The toll-road operator's net toll revenue declined 7 per cent to 1.8 billion yuan.
To mark the 10th anniversary of HHI's listing on the stock exchange, a special dividend of 10 fen was paid to shareholders on top of a final dividend of nine fen, down 31 per cent from 12.95 fen a year ago.
Hopewell shares closed 1.59 per cent lower at HK$24.75 before yesterday's announcement, and HHI shares ended down 1.85 per cent at HK$3.71. The Hang Seng Index closed 2.2 per cent lower at 21,970.29 points.