Hang Lung Property Interim 2016 Shines on Property Sales
July 28, 2016
Hong Kong's Peak Mall landlord Hang Lung Properties reports interim revenue rose 37% to HKD 6.3 billion for the month ended June on higher property sales. Operating profit advanced 23% year on year to HKD4.32 billion during the reporting period.
Underlying net profit attributable to shareholders advanced 29% to HKD 3.167 billion. After including a revaluation loss on investment properties due to a lower valuation of the mainland China property, net profit attributable to shareholders increased 3% to HKD2.94 billion. Earnings per share increased to HKD 0.65. The company board proposed 17 HK cents per share cash dividend for the first half of the year.
At company's home market Hong Kong, despite lukewarm economic growth and sliding retail sales, the company said it managed to increase the revenue and operating profit of Hong Kong leasing portfolio by 7% to HKD 1.87 billion and HKD 1.60 billion. Overall rental margin was 86%.
On the company's other major market mainland China, against the backdrop of slower economic growth coupled with RMB depreciation and mall renovation, the company's total revenue of mainland China properties decreased 4% to HKD2.04 billion. Operating profit retreated by 9% while average margin dropped 4 points to 65%. If excluding the 6% RMB depreciation effect, revenue and operating profit of our mainland China portfolio increased by 2% and decreased by 3%, respectively. The mainland China portfolio accounted for 52% of the total leasing revenue and and 45% of operating profit of Hang Lung Properties.
Hung Lung made majority profit in the first half from two project sales in Hong Kong. For the six months ended June 30, revenue were up 223% to HKD2.40 billion and and operating profit up 147% to HKD1.39 billion. The company's net debt to equity ratio were 2.1% at June end.
The company expects both mainland China and Hong Kong will continue to face the challenges posed by slow economic growth and weak retail consumption sentiment in the second half of the year. And the decision of Britain leaving the European Union (“Brexit”) has also increased the uncertainty of global economic outlook, it said.
In response to these tough market conditions, "we will continue to raise our facilities and service standards to enhance the shopping experience at our malls and at the same time closely manage our operating costs", company chairman Ronnie Chan said during the result announcement meeting, "In addition to introducing new retail ideas to our malls, we will launch more promotion programs to help our tenants drive sales."
"We will continue to closely monitor the residential property market in Hong Kong, and will sell some of the residential units on hand and may further build our land bank when opportunities arise" Chan added.
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