Henderson Land Falls After Missing Estimates: Hong Kong Mover

Henderson Land Development Co. (12), controlled by billionaire Lee Shau-kee, fell to a two-week low in Hong Kong trading after 2011 underlying profit missed analysts’ estimates as the property market cooled.

Henderson Land dropped 0.8 percent to HK$45.70 at the close of trading, the lowest since March 9, cutting its gain this year to 18 percent. Profit excluding property revaluation gains and deferred taxes rose 10 percent to HK$5.6 billion ($721 million) in the 12 months ended Dec. 31, missing the HK$6.1 billion median estimate of five analysts surveyed by Bloomberg News.

The builder didn’t start selling any new residential projects last year in Hong Kong, where home prices and transactions fell in the second half because of rising mortgage rates and curbs imposed by the government to prevent the formation of an asset bubble. Hong Kong home prices declined 4 percent in the second half, after gaining more than 70 percent since the beginning of 2009.

“We think a risk of disappointment remains” for 2012, Standard Chartered Plc’s Hong Kong-based analysts Paul Yau and Allen Chan wrote in a report today. “Good sales execution will be necessary before any re-rating.”

Profit from property sales was HK$2.2 billion, compared with a loss of HK$211 million a year earlier, after the company booked sales from projects including the Beverly Hills and Headland Road, Henderson Land, founded by Lee in 1973, said in a statement to the Hong Kong stock exchange yesterday. Lee, 84, is 27th on the Bloomberg Billionaires Index with a net worth of $19.9 billion.

The company was expected to post profit from property sales of HK$2.5 billion, Raymond Ngai, an analyst at Bank of America Corp.’s Merrill Lynch & Co. unit, wrote in a March 19 report. Hong Kong developers sell apartments as they’re being built and book profits upon completion.

Retail Rents

The seven-member Hang Seng Property Index, of which Henderson Land is a member, fell 0.2 percent today. It has climbed 15 percent this year.

The city’s fourth-biggest builder by value in 2011 sold a total of 812 units in the city for HK$16.2 billion, accounting for about 9 percent of total residential units sold in Hong Kong, according to data compiled by Centaline Property Agency Ltd.

“Starting from mid-2011, stabilizing measures introduced by the Hong Kong SAR Government, the lingering European debt crisis and the growing concerns over economic deterioration in both mainland China and the United States led to a stagnant property market in the latter half of the year,” the company said in the statement.

Rental Income

The company’s gross rental income increased 11 percent to a record in 2011 as the influx of tourists from other parts of China and expansion by financial companies fueled growth in retail and office properties.

Henderson Land, which co-owns the International Finance Centre office and mall complex in the city’s central business district, said profit from investment properties in the city rose to HK$2.6 billion from HK$1.9 billion.

Hong Kong’s prime shopping mall rents, which climbed more than 12 percent last year, will “stay strong” in 2012 with international brands continuing to come into the market, said Tom Gaffney, head of retail for property broker Jones Lang LaSalle Inc. Office rents, which rose 16 percent in 2011, will drop 15 percent this year, according to Jones Lang, the world’s second-biggest publicly traded commercial-property broker.

Including revaluation net of non-controlling interests and deferred taxes, profit rose to HK$17.2 billion, or HK$7.44 a share, from HK$15.8 billion, or HK$7.32, the company said.

Henderson Land, which has been buying rural farm land with plans to convert it into residential projects, continued “its prudent practice” of buying old tenement buildings in urban areas for redevelopment, it said in the statement.

The company will pay a final dividend of 70 Hong Kong cents a share, unchanged from last year.

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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