No need for spin-off, Hopewell says

Despite core profit drop, firm says it can finance Wan Chai project internally and with bank loans

PUBLISHED : Wednesday, 21 August, 2013, 12:00am
UPDATED : Wednesday, 21 August, 2013, 4:45am

Property and infrastructure conglomerate Hopewell Holdings had no immediate plans to revive a proposal to spin off its property unit, as it had sufficient capital to finance the development of its hotel-office-retail project in Wan Chai, managing director Thomas Jefferson Wu said.

"As the revival of the spin-off will be largely driven by market conditions and not a need to raise funds, we do not have an urgent need to proceed if there is a big increase in volatility," Wu said after announcing the group's full-year results yesterday.

In June, the firm deferred a plan to seek a separate listing for Hopewell Hong Kong Properties when the stock market fell sharply amid renewed worries over property tightening measures on the mainland.

Hopewell was looking to raise about HK$5 billion to help finance its development in Wan Chai.

The initial development stage of Hopewell Centre II will now require capital expenditure for next year and 2015 of about HK$750 million, Wu said yesterday, and this could be financed from internal resources and by bank borrowings.

The 55-floor tower, due to open in 2019, will have a total gross floor area of 1.1 million square feet.

Hopewell reported an 8.2 per cent decline in core earnings - excluding exceptional items and gains from investments and land conversions - to HK$1.23 billion for the year to June 30, with the bottom line weighed down by a lower contribution from mainland toll revenues. Turnover dropped 6 per cent to HK$6.14 billion.

But a substantial increase in revaluation gains on investment properties to HK$8.72 billion and a HK$2.24 billion land conversion gain on the commercial portion of Hopewell Centre II lifted net profit to a record HK$12.2 billion, up 236 per cent from HK$3.63 billion last year.

A final dividend of 55 HK cents will be paid, up from 54 HK cents a year earlier.

The net profit of the group's Hong Kong-listed subsidiary Hopewell Highway Infrastructure (HHI), fell 28 per cent to 601 million yuan (HK$761 million) for the year to June 30, owing to the mainland government's cutting of road tolls.

The toll-road operator's net toll revenue declined 7 per cent to 1.8 billion yuan.

To mark the 10th anniversary of HHI's listing on the stock exchange, a special dividend of 10 fen was paid to shareholders on top of a final dividend of nine fen, down 31 per cent from 12.95 fen a year ago.

Hopewell shares closed 1.59 per cent lower at HK$24.75 before yesterday's announcement, and HHI shares ended down 1.85 per cent at HK$3.71. The Hang Seng Index closed 2.2 per cent lower at 21,970.29 points.