Hang Lung Development's net profit slumped 59.52 per cent to $1.02 billion after the property firm made an unexpected $1.33 billion provision for the year to June 30. The huge provision for property developments hit Hang Lung's share price hard in afternoon trading yesterday. The stock fell 35 cents, or 5.22 per cent, to $6.35. Hang Lung's investment property arm Amoy Properties fared better with earnings rising 6.42 per cent to $2.65 billion. Amoy shares surged 37.5 cents or 7.69 per cent to close at $5.25. Hotel subsidiary Grand Hotel Holdings saw profit slip 47.99 per cent to $119.2 million but announced a $381.7 million special cash bonus payout. Grand Hotel's A shares went up 45 cents, or 38.79 per cent, to $1.61 while B shares rose 3.9 cents or 34.51 per cent to 15.2 cents. Group executive director Alfred Li Hung-kwan said Hang Lung's $1.33 billion provision was mainly attributed to two residential projects in Ma On Shan and Tsuen Wan. This reflected the company's prudent strategy of providing for potential losses, he said. The cavity problem of the Ma On Shan project and delays in construction had driven up costs. The Tsuen Wan project involved an industrial building at Sha Tsui Road, bought for $930 million last year, for residential redevelopment. Salomon Smith Barney property research regional head Otto Wong said the provision reflected Hang Lung management's cautious and conservative revaluation of land-bank sites. The adjustment would also give the group a greater flexibility to maintain earnings growth in future, he said. Analysts said the provision enabled Hang Lung to cut the dividend payment for cash preservation. Hang Lung will pay a final dividend of five cents per share, making a total payout of 31 cents for the year, down from 74.5 cents a year earlier. Mr Li said the dividend payout ratio was maintained at 40 per cent. Earnings per share for Hang Lung were 77.1 cents, compared with $1.87 previously. Amoy's basic earnings per share were 92.5 cents. Fully-diluted earnings were 91 cents a share. A final dividend of 31 cents per share was recommended. Grand Hotel's earnings were 17.49 cents per A share and 1.75 cents per B share. The firm also announced a special cash bonus of 56 cents per A share and 5.6 cents per B share, in addition to a final dividend of four cents per A share and 0.4 cent per B share. Mr Li said the bonus payout was to return the built-up cash reserves to shareholders because of the lack of hotel investment opportunities. Amoy's results were bolstered by the sale of Argyle Centre in Mongkok and an increase in net interest income amounting to $189.5 million. Its property rental income stayed firm and contributed $1.97 billion to operating profit. Analysts said earnings prospects for Hang Lung and Amoy were poor because of the lack of development sales and expected falls in property rents.