Henderson Land Profit Climbs on Rental Income, Energy Units

Henderson Land Development Chairman Lee Shau-kee
Lee Shau-kee, chairman of Henderson Land Development Co. Photographer: Jerome Favre/Bloomberg

Henderson Land Development Co., the Hong Kong builder controlled by billionaire Lee Shau-kee, reported first-half profit that beat estimates as higher rental income and earnings from its energy businesses offset lower property sales. Shares rose to the highest in a year.

Underlying profit, which excludes revaluation gains, advanced to HK$3.59 billion ($463 million) in the six months ended June 30, from HK$3.43 billion a year earlier, the company said in a stock exchange statement. That compares with the HK$2.7 billion median estimate of three analysts surveyed by Bloomberg News. The shares rose as much as 6.4 percent and finished trading in Hong Kong 4.7 percent higher at HK$49.05, the highest since Aug.2, 2011.

“This was above our estimate,” Morgan Stanley analysts, led by Praveen Choudhary, said in a note to clients today. “The stock remains attractively valued, especially given the prospect of much better market share -- or pre-sale -- over the next six to nine months.”

Henderson Land and developers including billionaire Li Ka-shing’s Cheung Kong (Holdings) Ltd. are reporting lower apartment sales in the first half as the city’s government pledged to increase housing supply to curb prices that have gained more than 80 percent since early 2009. Hong Kong developers sold 5,530 homes in the first half, the third-lowest for a six-month period since the start of 2006.

Revenue from property sales was HK$4.28 billion in the first half, almost half the HK$8 billion a year ago. The company said more than 4,000 homes will be available for sale in the second half of 2012.

Home Sales

“The deepening debt crisis in Europe and slowdown in the global economy had affected the Hong Kong economy,” the company said. Still, “pay rises, thriving inbound tourism, low interest rates and a rising inflationary environment are expected to lend support to housing demand.”

The company, founded by Lee in 1973, said rental income rose to HK$2.19 billion in the first half, from HK$1.87 billion a year ago. Property rental operating profit jumped 22 percent to HK$1.5 billion from a year ago, boosted by higher occupancy at Henderson Metropolitan in Shanghai and World Financial Centre in Beijing.

Profit was also helped by contributions from units. Henderson’s share of underlying profit from associates in the six months rose 26 percent to HK$1.67 billion from HK$1.33 billion a year earlier.

Energy Units

Hong Kong & China Gas Co. posted a HK$4.1 billion profit in the first half, an increase of HK$897.4 million from a year earlier, boosted by earnings from China and a one-time gain, Henderson said in the statement. The utility’s unit, Towngas China Co., had an 18 percent jump in profit to HK$357 million, the developer said.

Hong Kong Ferry (Holdings) Co. also posted a 29 percent gain in profit to HK $274.9 million in the first half, it said, while Miramar Hotel and Investment Co.’s net income climbed 4 percent to HK$665 million.

Hong Kong builders usually begin selling homes while they’re still being constructed and book profit upon completion.

Transactions in the city have slowed because of curbs imposed by the government to prevent the formation of an asset bubble. The number of homes sold in the first seven months of 2012 fell 22 percent to 46,910, from the same period a year earlier, according to data released by the Land Registry.

Lee, 84, is 31st on the Bloomberg Billionaires Index with a net worth of $19.2 billion.

The builder, the fifth-biggest developer in the benchmark Hang Seng Property Index. The stock’s gain today increased its advance this year to 27 percent, compared with the 19 percent gain in the seven-member gauge.

Including revaluation net of non-controlling interests and deferred taxes, profit fell 12 percent to HK$7.7 billion, or HK$3.26 a share, from HK$8.82 billion, or HK$3.92 a share, a year earlier, the company said.

Henderson will pay an interim dividend of 32 Hong Kong cents, compared with 30 cents a year earlier.

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