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Henderson Reports Full-Year Underlying HK$5.04 Billion, Beating Estimates

Henderson Land Development Co., the Hong Kong builder controlled by tycoon Lee Shau-kee, said 2010 underlying profit rose 9 percent as gains from asset sales offset losses from canceled transactions.

Profit excluding property revaluation gains and deferred taxes rose to HK$5.04 billion ($646 million), or HK$2.33, in the 12 months ended Dec. 31, from HK$4.63 billion, or HK$2.15, a year earlier, the company said in a statement to the Hong Kong stock exchange today. That compares with an average HK$4.56 billion estimate of 13 analysts surveyed by Bloomberg News.

Home prices in Hong Kong surged more than 65 percent since early 2009 as the city, a trade and financial hub for China, recovered from its worst recession in a decade. Part of Henderson’s 2010 earnings were hurt by the cancellation of sales of 39 Conduit Road in Hong Kong’s Mid-Levels district, the company said, which amounted to HK$734 million for the company.

Henderson’s profit was “dragged by the write-back,” Raymond Ngai, a Hong Kong-based analyst at Bank of America Corp.’s Merrill Lynch & Co. unit, said in a report before the results were released. “The main thing to watch for is its fund-raising plan.”

Henderson, the fifth-biggest developer in the benchmark Hang Seng Property Index, has fallen 14 percent this year, compared with an 8.3 percent decline in the seven-member gauge. The shares fell 1.4 percent to HK$45.60 at the 4 p.m. close today, before earnings were announced.

Conduit Road

Henderson said in June that HK$2.67 billion worth of sales at its 39 Conduit Road project fell through, including one apartment that the company said was sold at a world-record price. The collapse sparked a probe by authorities and prompted the government to tighten rules on disclosure of transactions as it tries to cool home prices.

Henderson, founded by Lee in 1973, last year sold HK$5.42 billion worth of properties, including those from the Beverly Hills and 8 Royal Green in Hong Kong, it said. Lee was ranked No. 3 on Forbes Magazine’s list of Hong Kong’s richest people, with a net worth of $19.5 billion.

Hong Kong home prices rose to a 13-year high in the week ended March, according to the Centa-City Leading Index, an indicator compiled by the city’s biggest closely held realtor. The increase may mean a series of government measures since early 2010 to curb speculation haven’t been effective.

The company, which co-owns the International Finance Centre office and mall complex in the city’s central business district, said net rental income from its investment properties in the city rose 9 percent to HK$3.15 billion.

Asset Sales

The group made a gain of HK$1.01 billion from the sale of a unit which operates and manages department stores in Beijing, it said in the statement.

Including revaluation gains from investment properties, net income rose 11 percent to HK$15.8 billion, or HK$7.32 a share, from HK$14.3 billion, or HK$6.65 a share a year earlier, Henderson said. The company will pay a final dividend of 70 Hong Kong cents, bringing the year’s payout to HK$1, unchanged from a year earlier, it said.

Unlike most local developers which focus on replenishing land through government auctions, Henderson relies on persuading owners of dilapidated buildings in older residential areas in the New Territories that border the mainland to sell. Henderson also acquires agricultural land from the government and owners.

Henderson acquired land that will allow it to sell as much as 8.9 million square feet of residential projects beginning from this year, the company said. The company plans to build 45,000 units across the city on such land, Lee said in June, without giving a timeframe.

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

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

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