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Joseph Lo

A stagnant property market has been blamed for Wheelock & Co's 21 per cent fall in interim turnover.

However, the 143-year-old property-to-retailing conglomerate's retail operations surprised analysts with a turnaround from last year's operating losses.

Wheelock said turnover for the six months to September 30 was HK$1.43 billion, down from last year's HK$1.81 billion.

The company said a 52 per cent drop in property sales income for the period was largely to blame for the decline.

While sales of various property projects continued during the period, the 'spasmodic and irregular' property market affected the company, it said.

Property - both sales and rentals - contributed only 37 per cent of turnover for the period, down from 55 per cent last year.

Wheelock said that until deflationary pressures in the SAR subsided, there would be no significant recovery in the property market.

Meanwhile, 'sentiment in the Hong Kong business community is picking up as the economy continues to revive', it said.

Despite the drop in turnover, the company managed to hold net profit steady at HK$460.5 million, a 1.1 per cent increase from HK$455.4 million a year ago.

Retailing and trading earned a surprising HK$32.8 million, after having posted a HK$24.8 million interim loss last year. It accounted for 53 per cent of Wheelock's turnover.

The company owns upmarket department store chain Lane Crawford and has equity stakes in niche retailers Joyce Boutique and City Super.

'The retail market has decidedly picked up in the first six months of the year largely because of an improved feel-good factor and increasing tourist arrivals,' Wheelock said.

James Loh, an investment analyst at Typhoon 8 Research, said the results were within expectations, given the prevailing property slump and economic climate in Hong Kong. However, he said the retail results were 'surprising'.

'They've done very well at Lane Crawford, given their losses over the last couple of years,' he said.

Earnings per share were 22.7 HK cents, up from 22.4 HK cents in the previous year. It plans to offer shareholders a 2.5 HK cents interim payout, the same as last year.

'A strong office rental market, encouraging improvements in the cable television and telecommunications businesses, along with impressive performances in other areas of business, have all indicated continual uptrend for the remainder of the year,' Wheelock said.

In the early 1980s, Wheelock - one of the original South China hongs but by then in decline - was the subject of a bitter takeover battle by Sir Yue-kong Pao's World-Wide Group.

It was renamed World International by Sir Y.K. but subsequently reverted back to the original name in 1993 after his death and the ascendancy of his son-in-law, Peter Woo Kwong-ching, in the company.



Retail growth cushions Wheelock turnover fall