Wharf Core Profit Rose Despite Challenging Market
August 10 , 2016
Despite a challenging market, Hong Kong’s biggest shopping mall landlord Wharf Holdings reported company core profit increased 14% to HKD 5.97 billion(USD770million) for the first half ended June. Core profit from investment property sector increased by 11% to account for 78% of the total.
Wharf Holdings, which owns Hong Kong's largest shopping mall the Harbour City, at the same time reported profit attributable to shareholders, including investment property revaluation surplus and other mark-to-market accounting gains/losses, for the period shed 3% to HKD6.73 billion. Basic earnings were HKD2.22 per share. Gearing ratio was maintained at 15% by the end of the first half.
During the reporting period, the firm's investment property revenue in total grew by 7% to HKD 7.64billion. Among which, revenue from Hong Kong investment property increased by 7% to HKD6.48billion while revenue from investment properties in China grew 7% to HKD1.20 billion.
Operating profit from investment property grew by 8% to HKD 6.38 billion (2015: HKD5.894 billion) with Hong Kong increasing by 7% to HKD5.69 billion and mainland China by 17% to HKD689 million.
In contrast, development property sector recorded 28% higher property sales to HKD8.409 billion with operating profit rose by 18% to HKD1.31billion (2015: HKD1.11billion) from projects in the Mainland.
Hotel revenue grew by 3% to HKD740 million (2015: HKD718 million) but operating profit declined 10% to HKD104 million during the reporting period. Hong Kong was adversely impacted by the weak market while the newly opened hotels in Mainland China have started to contribute. Logistics revenue decreased by 10% to HKD1.29 billion and operating profit by 12% to HKD293 million resulting from lower profit from Modern Terminals, the company said.
A flurry of government stimulus measures continued to revive the property sector amid a slowdown in the broader economy. The easing environment boosted housing demand and spurred a 58% increase in the company's attributable interest in contracted sales, representing 68% of the full-year target and above budget, the company chief executive officer Stephen Ng said.
Company management is upbeat on its business outlook in the second half and saying it is adjusting the tenant profile compositions in order to minimize the negative impact coming from online-shopping growth.
Wharf holding is 60% held by the Wheelock Group by the end of reporting period.
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