Unexpected swing comes as analysts warn of more surprises arising from new accounting rules on property revaluations
Investors in property companies should brace themselves for a reporting season of surprises as revaluations under new accounting rules may result in bigger than expected swings, analysts said.
This was graphically demonstrated yesterday by Hysan Development, the biggest landlord in Causeway Bay and the first locally listed property firm to report results prepared under the new regime. Its first-half earnings soared 742.5 per cent.
'The new accounting rules do increase transparency by publishing the change in the valuation on a six-monthly basis so that investors can track the book value more easily,' said CLSA head of regional property research John Saunders.
'But having huge swings in earnings isn't enormously helpful.'
Under the HKAS40 of the new accounting rules, which became effective this year, listed companies are required to book fair value changes in their investment properties on their income statements, instead of on a separate property valuation reserve account.
