Hong Kong company reporting season

Wheelock’s first half net profit up 10.26pc on rising rental income

PUBLISHED : Monday, 14 August, 2017, 5:56pm
UPDATED : Monday, 14 August, 2017, 10:56pm

Hong Kong property and logistics conglomerate Wheelock and Co reported a 10.26 per cent rise in first half net profit to HK$6.24 billion (US$798 million) due to rising rental contribution at subsidiary Wharf Holdings.

It recorded HK$3.06 earnings per share, which was above the market consensus of HK$2.12 per share, according to one analyst polled by Bloomberg.

Excluding investment property revaluation gains and exceptional items, core profit was HK$5.41 billion for the six months to June 30, up 5.66 per cent from a year ago.

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Wheelock, which owns 58 per cent of Wharf (Holdings), said operating profit from investment property increased 4 per cent to HK$6.8 billion but fell 13 per cent to HK$2.65 billion from property development.

Turnover rose 21.35 per cent to HK$33 billion for the six month period.

An interim dividend of 47.5 HK cents per share was declared, up from 45 HK cents a year earlier.

The company said it achieved total contracted sales of HK$10.1 billion in the first half of this year.

Wheelock also said it would distribute iCable shares to shareholders when it received the distribution from subsidiary Wharf.

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Alvin Cheung Chi-wai, associate director of Prudential Brokerage, said Wharf’s proposed spin off of its investment properties would streamline the group’s corporate structure.

He said Wheelock would focus on land acquisition and development in Hong Kong while Wharf’s focus would be investment and development of properties on the mainland.

“Some investors will only be interested in the group’s investment properties while others will just like its property development,” he said.

Last week, Wharf said it was spinning off six investment properties in Hong Kong, with a market value of more than HK$230 billion (US$29.4 billion), into a new entity named Wharf Real Estate Investment.

“We don’t have any plan other than the spin-off for now,” said Douglas Woo, chairman and managing director of Wheelock, when asked about the possibility of the reorganisation or privatisation of Wharf.

Wheelock’s expectation is for a 5 to 10 per cent rise in Hong Kong home prices this year, as recent economic numbers, including the employment rate, show that the Hong Kong economy is doing well, Woo said.

The properties to be spun off are Harbour City and Times Square – Hong Kong’s two biggest malls in shopping districts – and Plaza Hollywood, Crawford House, Wheelock House and the Murray building.

The spin-off proposal has been approved by the Hong Kong stock exchange, but Wharf Real Estate Investment is still “in the process of preparing its application” for a separate listing, Wharf said.

Before the profit announcement on Monday, shares of Wheelock rose 1.76 per cent to close at HK$63.6.