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SCMP Reporter

TAI Cheung Holdings is expected to record robust results once again this year as more office developments come on stream.

  The company's net profits rocketed 126 per cent to $1.05 billion last year, thanks mainly to the sale of the Peninsula Square development in Hunghom. About 92 per cent of the profits from this development have been booked.

  Another Tai Cheung project, Concordia Plaza, an office development in Tsim Sha Tsui East in which it has a 20 per cent interest, is earmarked for sale in the third quarter of this year and due to be completed early next year.

 The project has an attributable gross floor area of 143,000 square feet costing about $3,000 per sq ft. It should reap pre-tax profits of $12.8 billion next year, assuming a selling price of $12,000 per sq ft.

  The other major development scheduled for 1995 is the Citimark office in Sha Tin, 70 per cent of which has already been sold internally. Results of the public pre-sale at the end of 1993 were satisfactory.

 The two projects should generate pre-tax development profits of $1.82 billion for 1995.

  In 1996, the company's wholly-owned 670,000 sq ft office development in Aberdeen will come on stream. It should generate more than $2 billion in pre-tax profits for the year.

 Adding the Sha Tin industrial project and the San Po Kong office development should bring 1996 pre-tax development profits to $2.3 billion.

  Brokerage Smith New Court forecasts Tai Cheung's profits in the next two years will give low prospective price-earnings ratios (P/Es) of four times in 1995 and three times in 1996.

  The land bank will dry up in 1997. Replenishment is essential in the next six to nine months to generate bookable development profits by March 1997.

 However, this should not be a problem given Tai Cheung's cash hoard (which is estimated at at least $1.6 billion in 1995) and current consolidation in the Hong Kong property market, which should offer opportunities to acquire good sites at reasonable prices.

  While Tai Cheung may appear unattractive at less than a 20 per cent discount to net asset value of $14.30, the stock is driven more by earnings than by assets, and forecasts of 108 per cent compound earnings growth for the next two years should result in outstanding share-price performance.



New office developments expected to boost profits for Tai Cheung