Henderson Land, Hong Kong’s third-largest developer, warns of tough times ahead as it reports 9 per cent profit fall for 2021

Henderson Land Development, one of Hong Kong’s biggest home builders, reported a 9 per cent slump in profit to HK$13.6 billion (US$1.7 billion) in 2021, worse than the 1 per cent decline expected by analysts.

Last year’s earnings were dented by the absence of a one-off gain from the Miramar Hotel and Investment Company when it became Henderson’s subsidiary in 2020, according to a company filing with the Hong Kong stock exchange on Tuesday.

The developer has nonetheless proposed a dividend of HK$1.30 per share.

A consensus estimate of 10 analysts polled by Bloomberg pegged Henderson’s net income at HK$14.6 billion, a 1 per cent drop.

Hong Kong’s struggle to contain the fifth wave of coronavirus, and the Russian invasion of Ukraine which triggered sanctions that have hit global trade, are likely to subdue the city’s economic recovery, according to a joint statement by company chairmen Lee Ka Kit and Lee Ka Shing.

“Coupled with the geopolitical tensions between China and the US, as well as a potential US dollar interest-rate hike resulting from inflationary pressure in the US, Hong Kong’s economic recovery is restrained,” they said.

“As a result of the tightening of social distancing measures, the retail and F&B sectors are expected to remain challenging for some time and some businesses may discontinue their operations.

“The group has once again offered rent concessions to distressed tenants so as to help them ride out the difficult times.”

The government’s latest HK$10,000 electronic consumption vouchers scheme may provide some relief, they said.

And its employment support scheme and decision to increase the amount available for mortgages on homes with a loan-to-value ratio of 80 per cent will “benefit” the property market, they said.

Henderson, which won the bid for Hong Kong’s most expensive commercial land parcel in November by paying a record HK$50.8 billion for a 50-year land grant on New Central Harbour front Commercial Site 3, said that in 2021 attributable revenues and pre-tax profit contribution from property sales in Hong Kong were HK$11.6 billion and HK$4.2 billion, down by 17 per cent and 46 per cent respectively.

Last year, the developer’s attributable contracted sales rose 77 per cent to HK$14.2 billion as it launched new projects such as The Henley in Kai Tak, The Upper South in Ap Lei Chau, The Holborn in Quarry Bay and Caine Hill in Mid-Levels.

Meanwhile, Henderson Investment, a unit that runs department stores in Hong Kong, said its profit fell 73 per cent to HK$34 million owing to “the non-occurrence of wage subsidies from the Hong Kong government’s ‘employment support scheme’ and rental concessions from landlords.”

The easing of social distancing measures last year did not help the unit as it reduced customers’ demand for food and daily necessities at its supermarkets.

Henderson Investment has proposed a dividend of HK$0.1 per share.