Kerry Properties Underlying Profit Rises on Larvotto Project

Kerry Properties Ltd. (683), the Hong Kong builder controlled by the family of Malaysian billionaire Robert Kuok, said first-half underlying profit rose 52 percent after booking profit at its Larvotto luxury housing project.

Profit excluding revaluation gains climbed to HK$2.77 billion ($355 million) in the six months ended June 30 from a restated HK$1.82 billion a year earlier, Kerry said in a statement to Hong Kong’s stock exchange today.

Kerry’s earnings were bolstered by profit from sales at its Larvotto project in Hong Kong’s Island South district, which began before the government’s latest measures to curb housing prices that have surged more than 70 percent since early 2009. Excluding that, the company booked lower profits from its operation in both Hong Kong and the rest of China.

“Both investors and end users will take a cautious approach when it comes to purchasing properties,” Kerry’s Chairman Kuok Khoon Chen said in today’s statement. “The depreciation of the Hong Kong dollars, high inflation and the underlying currents affecting the U.S. and European financial systems will create uncertainties for the local economy.”

Kerry booked profit of HK$361 million from apartment sales in Hong Kong, compared with HK$1.08 billion a year earlier, it said in the statement. The company also said it booked almost HK$2 billion from its share of the earnings of associates, including Larvotto, a project 35 percent-owned by Kerry.

Declining Mainland Profit

Operating profit from mainland China, where the group has projects in Shanghai, Shenzhen, Hangzhou and Chengdu, fell to HK$1.03 billion in the first half from HK$1.4 billion after it booked lower earnings from property sales.

Over the past six months Kerry sold properties at its Lion Rise and Soho189 projects in Hong Kong. The developer achieved its full-year sales target for 2011 with those sales, according to an Aug. 4 report by DBS Group Research.

Hong Kong developers begin selling apartments while they’re still under construction and book profits upon completion.

The group and its two partners on Aug. 9 bought a site in Hong Kong’s Sha Tin district for HK$5.5 billion at a government auction, less than analysts’ estimates.

Kerry’s shares fell 2.3 percent to HK$32.05 as of 1:32 p.m. in Hong Kong trading. The stock has lost 21 percent this year, compared with the 15 percent decline in the Hang Seng Property Index that tracks the city’s seven-biggest developers and doesn’t include Kerry.

Including revaluation gains, Kerry’s net income rose to HK$3.07 billion, or HK$2.10 a share, from HK$2.74 billion, or HK$1.89 a share, a year earlier. Sales fell to HK$9.32 billion from HK$11.7 billion.

Robert Kuok, 87, was ranked 61st on Forbes Magazine’s latest list of the world’s richest people with a net worth of $12.5 billion, making him Malaysia’s wealthiest man.

Kerry will pay an interim dividend of 40 Hong Kong cents, compared with 35 Hong Kong cents a year earlier.

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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