Henderson Land expects trying times to persist, replenishes land bank as pandemic erodes property valuation

Interim earnings slump 62 per cent on revaluation setback, but revenue climbs 81 per cent on resilient residential project sales

Revaluation of Henderson’s investment properties leads to a fair-value loss of HK$2.3 billion

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Henderson added some retail properties along the stretch on Elgin Street in Soho to boosts its portfolio: Photo: Louise Moon

Published: 8:30pm, 20 Aug 2020Updated: 10:50pm, 20 Aug 2020

Henderson Land Development, Hong Kong’s third-largest developer by market value, expects trying times to continue after reporting a slump in interim earnings as the Covid-19 pandemic and economic recession eroded the value of its assets.

“The lingering Covid-19 pandemic, strained Sino-US relations and heightened geopolitical tensions have adversely affected the Hong Kong economy,” it said in an exchange filing late Thursday. “The operating environment for the Group’s various businesses is expected to remain challenging.”

Cracks in the real estate market this year prompted the Hong Kong Monetary Authority to ease financing rules for commercial and industrial properties from this week, rolling back its market-cooling measures for the first time since 2009. The HKMA cited a 10 to 15 per cent slide in prices of such properties between the recent peak in May 2019 and June this year.

Billionaire Lee Shau-kee, an executive director, seen here during its annual general meeting in 2016. Photo: Bruce Yan

Henderson, controlled by Hong Kong’s richest tycoon Lee Shau-kee, said net profit declined by 62 per cent to HK$2.8 billion in the six months through June 30, from a year earlier. This was primarily a result of a HK$2.3 billion erosion in the fair value of its investment properties amid the economic slump.

Revenue climbed 81 per cent to HK$5.4 billion over the period, driven by resilient residential property sales at projects including The Richmond in Mid-Levels and the Aquila Square Mile in Mong Kok. Still, they fell short of the consensus forecast of HK$7.1 billion tracked by Bloomberg.