Hong Kong developer Sino Land to give special dividend after core profit rises by 218 per cent

Hong Kong developer Sino Land said on Wednesday it will pay out a special dividend after posting a 218.6 per cent jump in underlying profit for the July to December period. Its earnings were helped by a one-off gain from the disposal of a development in Chengdu, which also offset a sharp decline in property sales.

The special dividend of 45 HK cents will be given on top of an interim dividend of 13 HK cents.

The underlying net profit attributed to shareholders, excluding the effect of fair value charged on investment properties and fair value gains such as the 20 per cent gain retained for The Palazzo in Chengdu, was HK$8.73 billion, compared with HK$2.74 billion in 2016, according to a filing with the Hong Kong stock exchange on Wednesday.

The underlying profit was within the range forecast – HK$8.38 billion and HK$9.61 billion – by Goldman Sachs and Morgan Stanley.

The company’s revenue plunged by 63.8 per cent to HK$3.93 billion while property sales tumbled by 51.9 per cent to HK$4.56 billion.

“The group will continue to maintain a policy of selectively and continuously replenishing its land bank, which will enable it to strengthen earnings and shareholders’ value,” said chairman Robert Ng Chee Siong.

Sino Land boosts its cash with sale of most of stake in Chengdu property for US$1.34 billion

“It is positive news for shareholders and may help its share open higher on Thursday,” said Ivan Cheung, the head of research at SinoPac Securities (Asia).

Sino Land sold 80 per cent of The Palazzo, a residential, commercial and hotel project, for HK$10.51 billion in September. The vendor was Wealth Express Development, a subsidiary of Shenzhen-listed Shenzhen Overseas Chinese Town.

The developer’s net profit rose by 201.2 per cent to HK$10.36 billion for the six months to December, driven by bigger revaluation gains on property. The net profit included a revaluation gain of HK$869.1 million from investment properties, compared with HK$694 million a year ago.

Sino Land’s gross rental increased by 2.1 per cent to HK$2 billion during the period.

Sino Land’s US$3 billion spending spree makes it Hong Kong’s most active buyer of land this year

“Sino Land was active in landbanking in the second half of 2017, but we tend to believe the risk appetite of the company is unchanged, likely as a result of less fierce competition from Chinese players,” Justin Kwok, an analyst at Goldman Sachs, wrote in a report.

Sino Land has spent HK$15 billion on acquiring land since July 2017, according to a report by Morgan Stanley.

The developer said it had added 1 million sq ft of gross floor area in five residential sites it had acquired during the period. Only the site in Whitehead, Ma On Shan, that it won in July 2017 through a government tender for HK$1.38 billion, was wholly owned by the developer, while the others were acquired through joint ventures.

Sino Land has a land bank of about 22.3 million sq ft in attributable floor area in Hong Kong, the mainland, Singapore and Sydney.

Shares in the developer fell by 2.4 per cent to HK$13.84 on Wednesday.