Hong Kong's largest developer plans to slow the pace of new project launches this year, a move analysts interprete as taking advantage of a projected shortfall in the supply of flats. Sun Hung Kai Properties (SHKP) yesterday said it would dispose of 3,000 flats this year, generating estimated revenues of $16 billion. The developer had originally projected sales of 4,000 units for $18 billion for this year. It sold 4,700 flats for $13 billion last year. SHKP vice-chairman and managing director Raymond Kwok Ping-luen said: 'The revision in our sales target was due in part to a change in the layout of apartment units.' The company had consolidated some small units into larger flats to meet market demand, delaying completion and sales schedules, he said. But analysts said major developers such as SHKP would adopt a low volume, high profit margin approach in a market marked by rising prices and dwindling supply. Home prices rose by an estimated 30 per cent last year, and the growth was even stronger for luxury flats. DBS analyst Winnie Chiu said that SHKP was likely to hold off on clearing its supply of flats in hopes of realising greater returns later. According to a study by the Rating and Valuation Department, the number of new flats completed next year is expected to be 17,400, the lowest since 1976, when 15,425 were built. Agents said the number could drop to as low as 12,000 by 2007. SHKP yesterday announced a 95.38 per cent surge in interim net profit to $5.54 billion for the six months to December last year. Strong property sales and improved rental income boosted the results. It also enjoyed $1.88 billion in exceptional gains, mainly from a $1.41 billion profit contribution from the sale of its investment in Asia Container Terminals Holdings. Stripping out the exceptional gains, net profits would have risen by about 29 per cent. SHKP said projects to be sold this year included two upmarket developments, the Arch at Kowloon Station and a project at Olympic Station in Tai Kok Tsui. SHKP vice-chairman and managing director Thomas Kwok Ping-kwong expressed optimism about the high-end residential market, but said the mass market was unlikely to sustain buoyant price rises. 'Mass housing will see only 5 to 10 per cent rises this year,' he said. Directors declared an interim dividend of 70 cents per share, a 17 per cent increase over the same period in 2003. SHKP shares were unchanged yesterday at $71.50.