Sales of upmarket homes help property developer post earnings of HK$5.27b Henderson Land Development, the third-largest property developer in Hong Kong by market value, said underlying profits rose 19.4 per cent to HK$5.27 billion in the year to June, boosted by high margins in property sales and rentals. The company, headed by Lee Shau-kee, yesterday said the property development division recorded a profit contribution of HK$1.35 billion, representing an increase of 197.6 per cent compared with HK$455 million for the previous year. The increase was due mainly to the sale of flats at its upmarket residential project CentreStage on Hollywood Road and Royal Terrace in Mid-Levels, it said. Profit contribution from its 9.24 million square feet of rental properties increased 17.7 per cent to HK$1.7 billion, as office and residential rents surged. Including property revaluation gains of HK$7.3 billion and one-off gains from the privatisation of mainland developer Henderson China Holdings, the company said net profit amounted to HK$13.55 billion or HK$7.47 per share, up 24.8 per cent from the previous year. Turnover rose 16 per cent to HK$6.77 billion. It declared a final dividend of 65 HK cents a share, bringing the full-year dividend to HK$1.05, up 5 per cent from a year earlier. However, some analysts voiced concerns over the outlook of the firm in the wake of slow progress in the sale of its unsold properties, as well as in farmland conversion. Plagued by tepid market sentiment, the company last year deferred the sales schedule of its properties that were due to be booked this year and next. As a result, the company reaped property sales of only HK$3.43 billion from the sale or presale of its developments compared with HK$6.81 billion last year. According to accounting rules, presales can be booked only once the units are delivered. Mr Lee insisted the strategy is paying off: 'In the light of the then-cautious market sentiment, we decided to defer the launch of a few new developments, including Grand Waterfront at To Kwa Wan until this August.' He said so far, more than 1,000 units in these projects have been sold. In anticipation of improving market conditions, Mr Lee expects both volume and price for residential projects will pick up gradually, encouraging the company to launch a number of projects soon, including the low-rise development Beverly Hills in Tai Po. As of June 30, the company had a land bank with a gross floor area of 20.6 million square feet, including completed investment properties and hotels with 9.24 million sqft of gross floor area. It also has agricultural land of 29.9 million sqft. Its China unit, Henderson China, which was privatised by Henderson in August last year, said negotiations are at their final stage for a number of sizable land lots, in deals that will involve a cost of about 5.5 billion yuan. Overall, it has invested HK$13.9 billion in China, representing 11.1 per cent of its total assets. Meanwhile, Henderson's 70 per cent-owned Henderson Investment said underlying profit, which excludes the property revaluation gains and the exceptional loss from the privatisation of Henderson Cyber, fell 6.9 per cent to HK$2.01 billion as earnings from its mainland infrastructure projects dropped. Net profit grew 4.5 per cent to HK$3.67 billion or HK$1.28 per share, including a one-time loss of HK$161.8 million from the privatisation of Henderson Cyber and property revaluation gain of HK$1 billion. Turnover dropped 11 per cent to HK$1.15 billion. Directors declared a final dividend of 15 HK cents, bringing the full-year dividend to 28 HK cents.