K Wah’s interim core profit drops as it defers booking most of its home sales under accounting rule
K Wah International, the property developer chaired by casino magnate Lui Che-woo, announced a plunge in its first-half core earnings as it had only booked one-sixth of its property sales.
Underlying profit, excluding revaluation gain on investment properties, declined 28.7 per cent to HK$1.29 billion (US$165.2 million) for the six months to June, according to a statement to Hong Kong’s stock exchange.
Net profit, taking into account a revaluation gain of HK$137.4 million, rose 14 per cent to HK$2.16 billion while turnover fell 11.2 per cent to HK$4.91 billion. The developer would pay an interim dividend of HK$0.05, the same as last year.
The developer sold HK$10.3 billion worth of properties during the first half, including 90 per cent of the 900-unit K. City, The Spectra and other joint ventures in Hong Kong, Grand Summit in Shanghai and J Metropolis in Guangzhou.
Under Hong Kong’s accounting rules, developers can only book profit when the flats are completed.
K Wah has booked HK$1.5 billion of the proceeds in the interim period, with the remaining HK$8.8 billion to be booked during the second half, and in 2018, the company said in its statement.
“The primary market remained active during this period, due to strong demand from end-users. In
addition, developers continued to offer various beneficiary packages to lure buyers, while an active
land sale market also helped to boost confidence,” K Wah said.
Hong Kong’s home prices continued to remain at record levels, even as the US Federal Reserve has signalled higher interest rates and the end of the er of cheap financing.
In January, K Wah paid off the land premium of HK$5.87 billion for a new residential site at Kai Tak
acquired last December.
“Planning and design work is currently in progress,” it said.
The group won development rights for a residential project at Kam Sheung Road Station for HK$8.33 billion in May. Other investors are Sino Land and China Overseas Land & Investment.