Henderson Land's underlying profit jumps 46pc

Developer expects improved sales, a strong land bank and higher rental income to sustain growth

PUBLISHED : Wednesday, 27 August, 2014, 1:28am
UPDATED : Wednesday, 27 August, 2014, 1:45am

Henderson Land Development chairman Lee Shau-kee was optimistic about the outlook for the firm's earnings this year after it posted a better-than-expected underlying profit of HK$5.03 billion for the first half.

The 46 per cent jump from the same period last year beat analysts' forecasts of an increase of between 6 and 30 per cent.

The growth came on the back of an increase in property sales, a slight improvement in rental income and a one-off gain from the sale of investment properties, Henderson said in a filing with the Hong Kong stock exchange.

Looking forward, Lee said he expected growth to be sustained by improved property sales amid better market sentiment, the developer's strong land bank, higher rental income and contributions from its associates.

In the second half, the company plans to launch seven residential projects for sale.

Kenny Tang Sing-hing, a general manager at AMTD Financial Planning, said Henderson would be one of the major developers to benefit from the improved sentiment in the property market.

The Centa-City Leading Index, created by Centaline Property Agency to monitor prices in the secondary market, hit 125.66 on August 16, surpassing the record of 124 set the week before.

The index dipped to 125.31 on Friday, but prices on Hong Kong Island set a record with a week-on-week rise of 0.22 per cent.

Henderson said it had a strong land bank with about 2,600 finished and unfinished units in Hong Kong available for sale, and 31 urban redevelopment projects with 80 to 100 per cent of their ownership acquired.

Lee said the firm's land reserve in the New Territories had increased to 42.6 million sqft, the largest holding among the city's developers.

JP Morgan said in a report in June that the expansion of Henderson's land bank in recent years was starting to bear fruit. The developer was able to maintain a profit margin of more than 30 per cent, the report said.

Including the change in fair value of investment properties, Henderson reported net profit of HK$9.46 billion, an increase of 22 per cent over a year earlier.

The board declared an interim dividend of 34 HK cents per share, up from 32 HK cents.

Separately, the company's subsidiary Henderson Investment posted a net loss of HK$9 million, compared with a net profit of HK$7 million for the same period last year.

The loss was mainly due to a net exchange loss of about HK$5 million arising from the depreciation of the yuan against the Hong Kong dollar.

But the firm's board declared an interim dividend of 2 HK cents per share, unchanged from last year.