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Peggy Sito

PROPERTY analysts began lowering their estimates for Sino Land's year-end profits yesterday in light of the developer's lower-than-expected interim results announced on Monday.

  On average, brokerages have revised down their profit forecasts by 10 per cent.

  The latest forecasts have been scaled down from a consensus of $1.74 billion, to between $1.33 billion and $1.62 billion, mainly due to analysts' cautious outlook on the company's income from property sales.

   DBS Securities property analyst Winnie Chiu Wing-yin said: 'The adjustment is mainly caused by the development profits which will not be as high as our original forecast for the full year.

  'However, the performance will be better in the second half because of the improving buying sentiment in the housing market.' Sino Land posted a profit for the six months to December 31 of a lower-than-expected $511.49 million.

   It represented a drop of 9.7 per cent compared with the figures over the same period in 1993.

  The company attributed the outcome to the separation of hotel earnings under the recent spin-off and the slowdown in property sales.

  The unexpected result led to a drop of less than one per cent to $5.80 in its shares against a 0.16 per cent drop in the Hang Seng Index.

   Analysts said Sino Land was expected to achieve about $1.2 billion to $1.45 billion in pre-tax profits from property sales this year.

  They said the amount would be largely dependent on the sales response for the major developments to be booked in the second half.

  They included the remaining units of its 100 per cent-owned Avon Park project in Fanling and the residential development Parc Royale at Sha Tin, in which Sino owns about 22 per cent.

   The Sha Tin development was scheduled to be finished in the second half and would be marketed with the remaining units of other completed projects such as the fifth phase of Parc Oasis.

  The 33 per cent-owned large scale industrial-office (I/O) development in Hung To Road is another potential major profit contributor.

  'Given the remaining units of Avon Park can be sold out in the coming 21/2 months, the sale of the development will generate a pre-tax profit of $730 million,' Ms Chiu said.

   Ms Chiu was optimistic about the sale of the development in the next few months.

 Some property analysts doubted if Sino would sell enough over the next few months to meet its profit forecast.

  Kleinwort Benson property analyst Walter Chang said: 'I predict the company can only sell 80 per cent of Avon Park units and 50 per cent of apartments in Parc Royale.' His firm predicted a net profit of $1.49 billion for Sino this year.

  There were other concerns about the I/O sector.

   Mr Chang said the brokerage firm originally predicted the sales income of the I/O building in Hung To Road would be booked this year.

  'However, it is unlikely to meet our forecast in the face of the poor sentiment and oversupply in the sector,' he said.



Experts cut forecasts on Sino results