An exceptional gain of US$218 million from the disposal of Trafalgar House has helped Hongkong Land Holdings' record a 148 per cent increase in net profit to $445 million for the six months to June. Excluding the Trafalgar House's sale, net profit grew 10 per cent to $227 million. Earnings per share also rose 10 per cent to 8.64 cents. Including Trafalgar House, earnings per share were 16.89 cents. While the contribution from the Trafalgar House's sale was well-expected, some analysts said the group's half-year performance had been marginally better than expected. Net income from properties rose 7 per cent to $247 million. Operating profit was up 6 per cent to $234 million. The company declared an unchanged interim dividend of 3.5 cents a share, with a scrip option. Chairman Simon Keswick said: 'Net income from properties is expected to show a modest increase for the full year.' He said Hong Kong office rentals stabilised in the first half following a decline last year. The company's property portfolio in Central continued to achieve growth in net rental income from positive reversions but it said these would turn negative later this year. Occupancy of its portfolio was 96 per cent. Net asset value per share was $2.97 at the end of June, compared with $2.84 at the end of December and $3.48 at the end of June last year. Analysts were optimistic about Hongkong Land's long-term prospects after the disposal of Trafalgar House even though they predicted an earnings gap next year due to negative rental reversions. Negative reversions were expected because rentals achieved in existing leases due for renewal next year were agreed around the market's peak in 1994, they said. In the absence of any acquisition of major investment properties to boost rental income, analysts expected the company's earnings to report negative growth next year. Hongkong Land acquired an existing luxury project Stanley Court in Stanley for $38 million in July but analysts said this project's rental contribution was relatively limited. One analyst said Hongkong Land had recently spent a large amount of capital for a series of acquisitions in property and infrastructure in the region and suggested interest income from cash might drop next year. Analysts said Hongkong Land had become more aggressive in its business expansion which had attracted a rerating of the company's long-term prospects although many recent acquisitions would not bring about returns in the short term. Mr Keswick said: 'The initiatives taken by the group in 1996 to pursue its strategy of investment in property and infrastructure in Asia are establishing foundations for growth in the long term.' Besides acquiring a site in Quarry Bay for $104 million for redevelopment recently, the group reached agreements to participate in two berths at Container Terminal 8. It has established a joint venture to develop water infrastructure projects in China and participated in a $400 million residential project in Manila. The latest ventures were investments in a commercial development in Marina Square of Singapore and a 10 per cent interest in an Indonesian toll-road operating company.