Construction firm sees earnings jump 386pc in the first half Shui On Construction and Materials saw its net profit jump 386 per cent to HK$491 million in the six months to September due to a one-off HK$530 million contribution from the initial public offering of its mainland property subsidiary Shui On Land. Shui On said gains from the Shui On Land share sale would continue to improve its bottom line in the second half, when it expects to see increased earnings from its distressed property developments, cement business and venture capital investments. More contribution derived from the listing would be seen in the second half, chairman Vincent Lo Hong-sui said. Shui On originally owned 28.7 per cent of Shui On Land but its holding fell to 17.8 per cent after the flotation. During the period, the company received a contribution of HK$619 million from Shui On Land. Stripping out the HK$530 million profit from the float, Shui On also shared HK$90 million property earnings from Shui On Land. Profit from its new core business - distressed property development - amounted to HK$32 million during the period. The company has so far invested about HK$300 million in five incomplete distressed projects - one each in Dalian, Qingdao and Chengdu and two in Beijing. Mr Lo said the company would maintain a sharp focus on growing the distressed property development business and would partner with international firms to expand. 'The board of directors has just given approval to invest in one more distressed property project in a mainland city,' said Mr Lo, who declined to unveil details. The company saw a profit of HK$7 million from its cement business, against a loss of HK$30 million in the same period last year. Last year, Shui On teamed up with Lafarge, the world's largest building materials maker, in a US$650 million joint venture to develop the mainland's cement business. Projected production capacity of Lafarge Shui On Cement early next year is estimated at 23.3 million tonnes per annum. On venture capital investments, the company said listings and fund-raising initiatives of a number of the investee companies were expected to bring positive returns to the operation. A number of companies the company invested in have listed on the Alternative Investment Market in the London Stock Exchange, enhancing the values of the company's investments, according to chief executive Frankie Wong Yuet-leung. On the construction front, the company achieved a profit of HK$24 million. Basic earnings per share were HK$1.78, up 368 per cent from 38 HK cents in the year-ago period. Directors recommended a dividend of 18 HK cents per share, compared with 12 HK cents a year earlier. Meanwhile, Mr Lo said Shui On Land would repay a loan indirectly from the Shanghai Social Security Fund by the end of this month. Before its listing, Shui On Land drew 875 million yuan from a 1.5 billion yuan loan agreement with Shanghai Pudong Development Bank, which incorporated an entrustment arrangement with the Shanghai Social Security Fund.
