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Peggy Sito

Property income growth to continue this year, say analysts
Cheung Kong (Holdings) reported strong underlying earnings in the first half, a trend analysts said would continue for the full year because  of higher property income in Hong Kong.
The second-largest developer in Hong Kong in terms of market value yesterday announced a higher than expected 93 per cent rise in underlying earnings to HK$5.55 billion which excluded property valuation and the contribution from associate Hutchison Whampoa.
But its bottom line dropped 35 per cent to HK$12.02 billion from the first half of last year  due to a reduced contribution from Hutchison.
The earnings contribution from Hutchison fell 63 per cent to HK$5.34 billion as first-half earnings for the conglomerate fell 63 per cent to HK$10.69 billion.
Included in the  period last year was  a one-off gain of HK$28.8 billion from the disposal of the group's  mobile business in India.
It is the first time Cheung Kong's first-half net earnings have surpassed Hutchison's since 1998.
Turnover amounted to HK$10.29 billion, an increase of 193 per cent from the HK$3.51 billion recorded in the first half of last year.
Earnings per share dropped 35 per cent to HK$5.19 from HK$8. The interim dividend remained unchanged at  50 HK cents per share.
Shares in Cheung Kong yesterday fell 2.79 per cent to HK$101.10 after a 1.96 per cent gain on Wednesday.
Earnings growth potential for next year  will remain strong but the  pace would  depend partly on its contribution from the mainland, said Adrian Ngan Wai-hung, an executive director of CCB International Securities' research department.
The company would complete more than 2 million square feet of mainland properties  in the next two years and it would be a significant contribution if all were sold,  Mr Ngan said.
However, uncertainties had clouded the mainland property industry since the central government imposed measures to cool off property prices and tighten lending in the fourth quarter of last year.
United States investment bank Merrill Lynch said in a research report on Monday that Cheung Kong's full-year underlying profit this year  would grow to HK$12.14 billion.
Commenting on Hong Kong's property market, Cheung Kong deputy chairman Victor Li Tzar-kuoi said that the group believed it could be a challenging year for the city which has been  hit by global economic uncertainties.
However,  negative interest rates could benefit the local property sector, Mr Li said.
The Merrill Lynch report lowered its home price forecast to 10-plus per cent for this year and next  from the previous 20-plus per cent for this year  on the back of lower economic growth.
Meanwhile, commenting on Hong Kong's competition law, chairman Li Ka-shing said the government must be very careful before making a decision to introduce the law as it would affect the prospects of many Hong Kong businessmen.



Cheung Kong reports 93pc jump in underlying earnings