Developer defies cooling measures but warns prices may be hit in second half Hopson Development Holdings said first-half underlying earnings jumped 19.7 per cent from last year's level, as sales continued to grow despite the central government's efforts to cool the surging property market. The company warned, however, that the austerity measures are likely to affect property prices in the second half. The mainland developer posted underlying profit of HK$322 million for the six months ending June 30, up from HK$269 million in the same period a year ago, according to the management. The firm is controlled by Chu Mang-yee, who Forbes magazine last year ranked as China's second-richest man. The figures are derived by stripping out one-time gains from a HK$24 million property revaluation and HK$91 million in negative goodwill which arose from Hopson's acquisitions of four sites for which it paid less than fair market values. Including the two non-cash items, Hopson's net profit climbed 10 per cent year on year to HK$437.07 million or 36 HK cents per share from last year's level which was itself inflated by non-cash gains of HK$127.4 million. 'China's housing demand is still buoyant thanks to its growing economy,' said deputy managing director and chief financial officer Tam Lai-ling. 'However, we believe the government's austerity measures will have some negative impact on the overall property market,' he added. 'Property markets in first-tier cities such as Beijing and Guangzhou will see ... stable growth in the second half of this year.' Hopson derives all its revenue from residential sales in China's first-tier cities, including Guangzhou, Beijing and Shanghai. Its turnover surged 27 per cent year on year to HK$2.02 billion in the first half, with 57 per cent of the sales coming from Beijing and 31.3 per cent from Guangdong province. Average property prices in 70 cities rose 5.5 per cent year on year in August, down from the 5.7 per cent in July, according to the National Development and Reform Commission. Mr Tam said the company will book at least HK$4 billion in revenue from property sold but not yet recognised on its books in the second half. Average selling prices for contracted sales in the first half increased 24 per cent year on year to 7,801 yuan per square metre, though its gross profit margin was flat at 38 per cent in the first half. The company's land bank rose to 13.59 million square metres of gross floor area as of June 30, up from 12.95 million square metres at the end of 2005. The company will pay a half-year dividend of 10.8 HK cents per share, up from 9.75 HK cents in the same period last year. Hopson shares closed down 1.84 per cent at HK$18.18 yesterday. Its results were released at midday.