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SCMP Reporter

Wang On Group will invest up to $500 million in  property development this year, according to chairman Tang Ching-ho.

The group, which also operates wet markets and shopping malls, is beginning work on five sites with construction costs expected to be about  $70 million to $100 million each, Mr Tang said.

Four of the sites - at Sha Tin Heights, Fairview Park Boulevard in Yuen Long, Kennedy Town and Ho Chung in Sai Kung - were acquired during the year to March  for  $277.8 million.

Mr Tang said the developments would be completed in the middle of next year at the earliest and make a contribution to company revenues  next year and in 2007.

Wang On had $312 million cash on hand and a gearing  of 3.9 per cent as of the end of March. Mr Tang said the company would receive sufficient funds from the sale of several retail store spaces this year to fund the construction costs.

The firm's  net profit surged 1.39 times to $70.12 million last year  due to significant gains from property investment. This is the highest level of profits the  firm has recorded since  listing in 1995.

Earnings per share rose to 48.9 cents from 24.1 cents.

The board has proposed a final dividend of 12 cents per share, as well as one bonus share for every five existing shares held. Total dividend for the year is 15 cents,  compared with 10 cents for  last year.

The company sold various properties last year for a  combined $241.7 million. As a result of rising property prices, the company also benefited from a $23 million surplus on revaluation of investment properties.

Wang On's associate Wai Yuen Tong Medicine Holdings, however, incurred a loss of $66.98 million for the year. Wang On holds  28.57 per cent  of Wai Yuen Tong and last year disposed of a 99.79 per cent effective interest in Luxembourg Medicine  to Wai Yuen Tong. This translated into a loss of $20.87 million.

On its wet market operations, Mr Tang said it could be expanded significantly if the Link Reit  was cleared for listing.

'There are   more than 150 wet markets controlled by the Housing Authority, but only 33 are licensed  as single operator markets,'  he said. 'If Link becomes listed and is freed from the burdens of political considerations, then  the operation of many more markets will be outsourced to private firms and that represents a huge opportunity.'

The company's wet market operations contributed $149.29 million in turnover for  the year, an 8.3 per cent increase  on last year's $137.86 million.



Wang On to spend $500m on five sites