New World Development net profit surges 31 per cent as chairman Cheng Kar-shun ‘recovering very well’
The billionaire tycoon’s son, Adrian Cheng Chi-kong, tells the media his father will return to work soon after he reportedly suffered a stroke last month
Billionaire Henry Cheng Kar-shun’s New World Development reported better-than-expected earnings for the first half of the current financial year.
The Hong Kong real estate developer saw its net profit climb 31.4 per cent to HK$4.3 billion (US$ 559 million) in the six months ended December 31, the company said in a statement to the stock exchange. Earnings per share stood at 46 HK cents. Analysts polled by Bloomberg had forecast a net profit of HK$3.4 billion.
New World’s 70-year-old chairman Cheng Kar-shun was reported to have suffered a stroke last month and he did not attend Wednesday’s annual results briefing.
His son, Adrian Cheng Chi-kong, executive vice-chairman and joint general manager, hosted the press conference and told reporters his father is in good condition.
“He is recovering very well and will return to the post soon,” he said.
New World also announced that, effective from March 1, Cheng Chi-Kong will be re-designated to the role of executive vice-chairman and general manager.
Chen Guanzhan, an executive director and joint general manager, is retiring but will continue as a non-executive director and an adviser to the company.
Cheng Chi-Kong stressed at the media briefing that the management changes have nothing to do with his father’s health.
New World generated revenue of HK$26.6 billion in the six-month period, down 21.1 per cent from the same period a year earlier, but its underlying profit, excluding one-off effects, jumped 52 per cent to HK$5 billion year on year, helped by a big decrease in sales costs.
The company declared an interim dividend of 13 HK cents per share.
During the period, New World recorded property sales in Hong Kong of $HK$5.6 billion, mainly contributed by its Skypark development in Mong Kok and Double Cove Summit in Ma On Shan.
Including the newly launched residential project, The Pavilia Bay, New World said that by mid-February its contracted sales in Hong Kong had already exceeded its 2017 fiscal year sales target of HK$10 billion.
“The recent strong sales suggest a better full year result,” said Ivan Li Sing-yeung, head of research at Sinopac Securities.
Cheng Chi-kong emphasised that 80 per cent of The Pavilia Bay buyers are first-time home purchasers, so the government’s latest market-cooling measure — raising stamp duty on second home buyers - would not have much impact on its sales.
“We expect new home prices in Hong Kong to increase another 8-10 per cent given US rate hikes are coming more slowly than expected and individual salaries in Hong Kong remain stable,” he said.
Hong Kong’s primary market for residential properties regained momentum in the third quarter, supported by stable, local end-user demand. Selected developments with prime school-net locations and offering sound ancillary facilities were in high demand, Cheng Chi-Kong added in the result filing.
Meanwhile, the company is also actively bidding for commercial properties in the city.
Last week, New World won a government commercial site in Kowloon for HK$7.79 billion amid fierce competition at auction. It plans to develop it into two grade-A office towers.
Referring to the redevelopment of Tsim Sha Tsui’s New World Centre, Cheng said the 60-storey-plus office tower is expected to be completed by the end of this year and 40 per cent of the space is occupied already. Mizuho Bank will be one of the anchor tenants.
Shares of New World Development had climbed 3.5 per cent to close at HK$9.78 on Wednesday after its earnings announcement.