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2008-2-20 02:59:00 p.m. HKT, XFNA
Hong Kong's Hang Lung Properties H1 core profit rise on property sales UPDATE
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(adds details, analyst comment)
HONG KONG (Thomson Financial) - Hang Lung Properties, one of the city's
largest real estate developers, said its core net profit more than quadrupled
in the six months to December after it sold several housing units during the
period.
Hang Lung's core net profit, which excludes gains from changes in the
value of its property investments, rose 339 percent to 3.8 billion Hong Kong
dollars in the first half, in line with analysts forecasts.
""This remarkable growth in profit was achieved by timely disposal of our
residential properties, as well as stellar growth in leasing activities both
in Hong Kong and Shanghai,"" said Hang Lung in a statement.
The company sold over 750 units of its Long Beach project -- a high-end
residential development in West Kowloon -- and another 109 units of its other
residential project The HarbourSide, also in Kowloon.
Including revaluation gains, net profit reached 7.3 billion dollars, up
from 2.3 billion dollars a year ago.
Turnover stood at 7.8 billion dollars, up from 1.9 billion a year earlier.
Hang Lung Group, which derives most of its revenue from the property
unit, announced core net profit jumped 36 percent to 1.9 billion dollars. Its
net profit, including gains from the revaluation of investment properties,
rose 76 percent to 4 billion dollars.
Hang Lung Properties, which leases commercial spaces in Hong Kong's
busiest districts including Causeway Bay and Central, said leasing activities
within the territory contributed 901 million dollars to overall profits.
In Shanghai, it rental profits rose 66 percent to 540 million dollars
from a year earlier.
Analysts said the key share price driver for Hang Lung Properties is the
pace of its expansion in China.
""We think the key share price driver remains growth prospect of its China
portfolio, which is driven by its execution of existing developments and new
project acquisitions,"" said Anthony Wu, analyst at Goldman Sachs prior to the
result announcement.
The company is developing new projects in Tianjin and Changsha, although
lately the company has not been buying additional real estate assets in
China, said Wu.
Hang Lung said it plans to stick to its strategy of releasing remaining
properties ""at the best possible time to maximize property development profit
margin.""
Analysts said the market may revise down full year earnings if Hang Lung
spread the sale of its properties over a long period to maintain good
earnings growth before its Chinese projects make meaningful contribution to
earnings.
Hang Lung was last down 2.05 dollars or 6.4 percent at 29.90 dollars as
investors locked in profits following sharp gains in recent trade.
Its parent, Hang Lung Group, was down 1.40 dollars or 3.6 percent at 37.
85 dollars.
(1 US dollar = 7.8 Hong Kong dollars)
leonora.walet@thomson.com lw/jg
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