Sino Land's Ex-Items Profit Falls to $451 Million on Fewer Apartment Sales

Sino Land Co., the Hong Kong developer controlled by billionaire Robert Ng, said full-year profit excluding revaluation gains fell 2.6 percent after it booked fewer apartment sales.

Profit excluding increases in real estate values declined to HK$3.51 billion ($451 million) in the year ended June 30 from HK$3.6 billion a year earlier, Sino Land said in a Hong Kong Stock exchange statement today. That was better than the median estimate of HK$3.37 billion of 15 analysts surveyed by Bloomberg. Sales fell to HK$7.7 billion from HK$9.69 billion.

Home prices in Hong Kong have surged 45 percent since the beginning of 2009 on record low mortgage rates and an influx of mainland Chinese buyers, prompting the city’s government to announce a series of measures since October to curb the formation of an asset bubble.

“There remains some uncertainties about further government measures, but these will only affect sentiment in the short term,” Cusson Leung, Hong Kong-based analyst at Credit Suisse Group AG, said before earnings were announced. Sino Land “is a good vehicle to ride,” Leung said.

Sino Land is the smallest among the seven Hong Kong developers included in the Hang Seng Property Index. The company derives almost all of its sales and profit from property development and investment in Hong Kong.

The developer’s shares have lost 10 percent in Hong Kong trading this year, compared with the 4.6 percent decline in the property index. The stock was unchanged at HK$13.58 at the 4 p.m. close today, before the earnings announcement.

Palazzo, Lake Silver

Sino Land reported a HK$2.56 billion increase in the value of investment properties, compared with a gain of HK$694 million last year. Including gains from revaluation, net income rose to HK$6.09 billion from HK$3.73 billion a year earlier.

The developer will pay a final dividend of 30 Hong Kong cents per share, unchanged from a year earlier.

The residential developer and owner of commercial buildings founded by the late father of Ng, who is chairman, booked sales from Hong Kong projects including the Palazzo, Lake Silver, and the Dynasty, and Park Place in the mainland Chinese city of Xiamen, during the year, it said.

The company will book earnings from the sales at the Hermitage project in the Tai Kok Tsui district, of which 80 percent of the units have been sold, in the 2011 financial year and may soon launch another two projects in the Kowloon Tong and Cheung Sha Wan districts, said Credit Suisse’s Leung.

The group had a total land bank of 42 million square feet (3.9 million square meters) at the end of June, it said. Hong Kong developers sell apartments as they are still under construction and book the income on completion.

Sino Land bought land and buildings in Hong Kong as property prices were doubling from their 2003 nadir. It then benefited from rising property prices and rents as the city’s 2003-2007 economic expansion, its longest in almost a decade, fuelled demand for new apartments and office space.

Cheung Kong (Holdings) Ltd., the builder owned by Asia’s second-richest man, Li Ka-shing, said last month net income rose 4 percent to HK$11.9 billion on home sales and investment- property values. Sun Hung Kai Properties Ltd., the world’s biggest developer by value, will report full-year earnings on Sept. 20.

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

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