Kerry expects to hit sales target despite 56pc profit plunge in first half

Property revenue goal of HK$12 billion still on radar even as first-half profit dives 56 per cent on lower gains from logistics and revaluation

PUBLISHED : Thursday, 21 August, 2014, 1:48pm
UPDATED : Thursday, 21 August, 2014, 11:54pm

Kerry Properties said net profit plunged 56 per cent in the first half but it is confident it will hit its sales target for the year of HK$12 billion.

Net profit dived to HK$2.39 billion in the six months to June because of lower contributions from Kerry Logistics Network, which had been spun off, and smaller revaluation gains on investment properties.

The profit contribution of Kerry Logistics, hived off for a separate listing in December last year, fell 54.28 per cent to HK$208 million, compared with HK$455 million in the year-ago period.

Turnover dropped 20.18 per cent to HK$6.17 billion.

[The relaxation of housing curbs] alone is insufficient to move prices

A dividend of 30 HK cents per share was declared, down 14.28 per cent from 35 HK cents a year earlier.

"We have three projects, [which] will be launched in the second half, compared with just one in the first six months," said Louis Wong, the company's chief financial officer.

On Wednesday, Kerry pulled in HK$900 million from the sale of 16 units at its luxury residential project, Three Ede Road, in Kowloon Tong, Wong said.

In addition, the profit from the sale of Lions Rise Mall near Wong Tai Sin MTR station to the Link Real Estate Investment Trust for HK$1.38 billion will also be ready for booking in the second half.

"The deal has a net profit margin of 50 per cent," he said.

On the mainland, Kerry has 10 billion yuan (HK$12.59 billion) worth of properties available for sale, Wong said.

Chairman Wong Siu-kong said the recent loosening of housing restrictions on the mainland had boosted market sentiment. "But this (the relaxation of housing curbs) alone is insufficient to move property prices up or down," he said.

With HK$20 billion in cash and an undrawn bank loan, he said the company would actively explore land acquisition opportunities in Hong Kong and on the mainland.

Before taking into account a HK$586 million revaluation gain on investment properties, Kerry said underlying profit fell 21 per cent to HK$1.8 billion. In the same period last year, the revaluation gain was HK$3.08 billion.

Standard & Poor's Ratings Services yesterday said its ratings and outlook on Kerry was not affected by the likelihood of lower profit attributable to shareholders this year given the company previously issued a profit warning for the first six months.

"The decrease is mainly due to one-off and non-operational events that we do not believe directly affect its core earning ability," it said.

Kerry is expected to report a profit of HK$3.67 billion for this year, according to the consensus estimate from 15 analysts compiled by Bloomberg.

The company's shares fell 0.9 per cent to close yesterday at HK$27.60.

Kerry Properties is part of the Kerry Group, which also controls the SCMP Group, the publisher of the South China Morning Post.