Profits at top Hong Kong developers Sun Hung Kai Properties and New World hit by Covid restrictions

SHKP’s half-yearly underlying profit fell 36 per cent to HK$9.47 billion (US$1.2 billion), while NWD’s underlying profit declined 14 per cent to HK$3.36 billion

SHKP said it would pay an unchanged interim dividend of HK$1.25 per share, while NWD reduced its dividend to 46 HK cents per share from 56 HK cents

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Sun Hung Kai Properties said Hong Kong’s residential market saw a period of consolidation amid weak domestic economic conditions and rising mortgage rates. Photo: SCMP

Published: 8:44pm, 23 Feb 2023

Hong Kong’s leading developers Sun Hung Kai Properties (SHKP) and New World Development (NWD) reported disappointing half-yearly earnings, as their underlying profits were hit by the city’s pandemic restrictions.

SHKP, the city’s biggest developer by market value, posted a 36 per cent year-on-year drop in underlying profit to HK$9.47 billion (US$1.2 billion) for the six months ended December. Meanwhile, NWD’s underlying profit fell 14 per cent year on year to HK$3.36 billion for the six months to December.

“We will review the group’s overall structure and the value of all our business lines through corporate actions,” said Adrian Cheng, executive vice-chairman and CEO of NWD at a results briefing on Thursday.

The group will “release the value” of different businesses to further enhance shareholder returns as it has done in the past 20 years through “different corporate actions”, he added.

Adrian Cheng, executive vice-chairman and CEO of NWD. Photo: Bloomberg

Hong Kong’s pandemic-related restrictions hurt the economy over the past three years, casting a shadow over the city’s residential and office markets. Home prices fell 15.6 per cent in 2022, their biggest drop in 24 years and the number of residential property transactions plunged by almost 40 per cent to a low of about 45,000 deals. Some analysts expect the office vacancy level, currently at 14.6 per cent, to edge up to as much as 16 per cent by the end of the year.

When asked whether NWD planned to spin off and list some businesses, such as property brand K11 or insurer FT Life, and whether there was any timetable for the corporate actions, Cheng declined to provide further details.

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