Hong Kong property developer Chinese Estates Holdings says full-year profit to tumble by as much as 78 per cent

Hong Kong property developer Chinese Estates Holdings said on Wednesday it expected a drop as much as 78 per cent in its full-year net profit for 2018, which it said was down to poor sales performance and losses on investments.

The net profit attributable to its shareholders will drop by between 68 per cent and 78 per cent from the HK$3.7 billion (US$471.41 million) in gains reported in 2017, according to a company filing with the Hong Kong stock exchange ahead of its annual results release.

Revenue for 2018 is also expected to plunge by 39 per cent to 49 per cent as compared with HK$1.5 billion in 2017. The developer also highlighted a HK$3.1 billion unrealised loss on its investment in shares of mainland developer China Evergrande Group.

The company, which is chaired by Lau Ming-wai, son of Hong Kong property tycoon Joseph Lau Luen-hung, said an about 70 per cent drop in property sales was the main reason for the poor results. Last year, the company sold only one residential unit at its luxury development, 55 Conduit Road. The deal for the 4,170 square foot unit in Hong Kong’s Mid Levels neighbourhood, together with two car parking lots, contributed a total of HK$274 million to Chinese Estates Holdings’ revenue.

Home prices in Hong Kong, the most expensive real estate market globally, tumbled by 9.2 per cent between August and December last year, amid headwinds ranging from rising mortgage rates, a cooling economy and uncertainties around the US-China trade war.

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The developer was also a victim of the bearish Hong Kong stock market, which tumbled by 13.6 per cent, its worst performance in seven years, last year. Chinese Estates Holdings said a total of HK$711 million were lost in securities investments in 2018 as compared with a net profit of HK$16 billion for the previous year.