Aug. 15 (Bloomberg) -- Wharf (Holdings) Ltd., a Hong Kong commercial landlord and container terminal operator, said first- half underlying profit rose 38 percent, helped by China property sales and sea-cargo demand.

Profit excluding property revaluation gains rose to HK$2.63 billion ($336 million) from HK$1.9 billion a year earlier, the company said in a Hong Kong Stock Exchange statement today. That was more than the HK$2.49 billion median estimate in a Bloomberg News survey of three analysts.

Wharf made a profit of HK$903 million from property developments in the period, compared with a year-earlier loss, after it sold residential units in two developments in China. The company's container terminal operator also handled more cargo as China's trade growth fueled demand.

``Second-half earnings will still be driven by property developments and port growth,'' Cusson Leung, a Hong Kong-based Credit Suisse Group analyst, said before the announcement.

Including revaluation gains, Wharf's net income fell 29 percent to HK$4.43 billion, or HK$1.81 a share, compared with HK$6.26 billion, or HK$2.56 a share, a year earlier. Sales rose 33 percent to HK$8.61 billion.

Residential Units

Wharf sold 94 percent of the residential units at its Wellington Garden development in Shanghai by the end of June and 87 percent of the units at Wuhan Times Square, it said.

``We will continue to look for new projects in China and will speed up investments at the right time,'' Stephen Ng, Wharf's deputy chairman and managing director, told reporters in Hong Kong today.

Operating profit from offices, shopping malls and other rental properties rose 19 percent to HK$2.29 billion in the first half, as Wharf benefited from higher rents and retail spending in Hong Kong. The company's properties include Harbour City in Hong Kong and Times Square commercial complexes in Hong Kong, Beijing and Shanghai.

Wharf is ``optimistic'' about Hong Kong rents in the second half, Ng said. It also plans to sell more non-core industrial and office properties, following the sale of its remaining stock in a ``godown'' building in Hong Kong in May, he added.

Wharf shares fell 0.8 percent to HK$29.95 on the Hong Kong stock exchange today, before the earnings were announced. The stock has gained 4.2 percent this year, lagging behind a 7.1 percent gain in the benchmark Hang Seng Index.

Modern Terminals

Wharf's logistics unit, including Modern Terminals Ltd., increased its operating profit by 3 percent to HK$854 million. Modern Terminals hold stakes in container terminals in Hong Kong and Shenzhen, southern China. China's exports of toys, clothes and other goods rose 27 percent in the first half, boosting sea- cargo traffic.

Operating profit in the company's communications, media and entertainment division rose 29 percent to HK$182 million, helped by cost controls and expansion in wholesale voice services.

I-Cable Communications Ltd., 73 percent owned by Wharf, made an operating profit of HK$100 million, little changed from a year earlier. The Hong Kong-listed unit is vying with PCCW Ltd.'s Now Broadband for top spot in the city's pay-television market.

Wharf, a unit of Hong Kong-listed developer Wheelock & Co., will pay a first-half dividend of 36 Hong Kong cents, unchanged from last year. Wheelock is controlled by the family of billionaire Peter Woo, who is chairman of both companies.

To contact the reporter on this story: Kelvin Wong in Hong Kong at kwong40@bloomberg.net; Clare Cheung in Hong Kong at scheung4@bloomberg.net

Last Updated: August 15, 2007 06:49 EDT