Wheelock shares hit historic high after record annual core profit. Officials expect HK home prices to rise 5 pc this year
Developer studying a separate listing of some investment properties from its subsidiary, Wharf Holdings
Wheelock and Company Limited, the Hong Kong property and logistics conglomerate that controls Wharf Holdings, saw its shares surge to a record high on Friday following strong core earnings for 2016, thanks to a greater profit contribution from Wharf, strong home sales in the mainland and Hong Kong, and robust rental income.
Annual core profit, excluding investment property revaluation gains and exceptional items, surged 11 per cent to HK$11.8 billion in 2016, the company revealed.
Net profit rose 14.5 per cent year on year to HK$16.3 billion, with earnings per share rising to HK$8.02.
Wheelock declared a second interim dividend of 85 HK cents, adding to the annual dividend of HK$1.30, up 13 per cent.
The developer’s shares jumped as much as 7.6 per cent to HK$56.50, their highest level since its listing decades ago. They closed at HK$55.90, a 6.5 per cent daily rise.
Core profit contribution from Wharf soared 32 per cent to HK$8.3 billion, compared with a 25 per cent rise in Wharf’s core earnings last year, as Wheelock increased its holding from 59.2 per cent to 61 per cent.
Excluding the contribution from Wharf, Wheelock’s core profit dropped 19 per cent to HK$3.5 billion, according to a research note by Citigroup.
“That was because we haven’t booked some sales into the [latest] financial book,” said Horace Lee, a company director and its group financial controller, told a news conference.
Wheelock saw contracted sales increase 71 per cent to a record high of HK$22.1 billion last year, of which residential sales accounted for 76 per cent. They jumped 156 per cent to HK$16.9 billion, thanks to robust sales of residential projects like Mount Nicholson development on the Peak as well as office building sales.
Its net order book increased 27 per cent to HK$15.9 billion, and Wheelock said its land bank under management was maintained at 8.2 million square feet, which is adequate for development for the next four to five years.
“It’s widely expected we will see at least one interest rate rise in the United States, while it remains uncertain whether they will rise three times or more”, as some have suggested, Wheelock chairman Douglas Woo added.
“We expect Hong Kong’s home prices to rise 5 per cent this year, considering various factors like interest rates, employment levels and economic growth in the city,” Woo said.
Wharf Holdings announced on Thursday that it will exit i-Cable Communications’ unprofitable pay-TV service.
Woo said Wharf is waiting for opinions from financial consultants on that, while reassuring shareholders the senior management would “pay attention to the benefits of clients, employees and shareholders”.
Wheelock has also just kicked off a study to consider the possible separate listing of some investment properties assets from Wharf Holdings, adding that a proposal to evaluate all pros and cons will be provided soon.
Wharf’s shares ended up 8.7 per cent at HK$67.65, amid hopes of the spin-off listing, while i-Cable closed 34.4 per cent down to 61 HK cents.