Hong Kong company reporting season

HAECO to issue special dividend after HK$805m disposal gain

Shares soar 14pc, despite forecasts of a more troubling second half

PUBLISHED : Tuesday, 16 August, 2016, 1:16pm
UPDATED : Tuesday, 16 August, 2016, 10:57pm

Shares in Hong Kong Aircraft Engineering Company (HAECO), which is 75 per cent owned by Swire Pacific, soared 14 per cent in Hong Kong on Tuesday after it announced a special interim dividend of HK$2.35 per share.

The rise came as the company reported a strong set of interim results, but it also warned that it foresaw weaker demand in the second half.

At the close of trading on Tuesday, HAECO’s shares were at HK$63.3.

HAECO’s net profit attributable to shareholders was HK$1,111 million for the six months to June 30, an increase of 337 per cent from HK$254 million for the same period last year, thanks largely to a

HK$805 million gain from its sale of a stake in Hong Kong Aero Engine Services Ltd (HAESL), and the disposal of its interest in Singapore Aero Engine Services Pte Ltd (SAESL), as part of a restructuring of shareholdings, completed on June 30.

If profits from the sales are excluded, HAECO’s net profit rose by 29 per cent to HK$328 million, due to increased contributions from the group’s mainland Chinese units.

Haeco’s group finance director, Fanny Lung said at a media briefing the proceeds of the sale of the stake in SAESL would be primarily used for the special dividend, and for HAECO’s purchase of a further five per cent of HAESL.

John Slosar, HAECO chairman said in the stock exchange listing that HAESL’s performance in the second half of this year was likely to be adversely affected by reduced demand for its engine overhaul services, while wholly owned subsidiary HAECO Americas and partially owned HAECO Xiamen were likely to see less work.

HAECO group chief executive officer Augustus Tang told a media briefing that the declines would be a result of seasonal factors and the engine maintenance cycle.

HAECO’s Hong Kong operations saw their net profit fall by 17 per cent in the first half, following a reduction in demand for airframe services and increased charges, while HAECO’s US operations made a loss comparable to the same period last year.