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New World’s Underlying Profit Up 45% on Hong Kong Home Sales

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Feb. 27 (Bloomberg) -- New World Development Co., the Hong Kong builder controlled by billionaire Cheng Yu-tung, said underlying profit jumped 45 percent, beating estimates, after it booked more apartment sales in the city. The shares rose.

Profit excluding property revaluations advanced to HK$4.1 billion ($529 million) for the six months ended Dec. 31 from HK$2.83 billion a year earlier, New World said in a statement to Hong Kong’s stock exchange today. That compares with the HK$3.26 billion median estimate of four analysts compiled by Bloomberg News. Sales rose to HK$24.5 billion from HK$19.1 billion.

New World is accelerating apartment sales and the pace of replenishing its land reserves in Hong Kong as the government pledged to increase land supply to help make housing more affordable to the general public. The developer and a unit of China Vanke Co. in January paid HK$3.4 billion for a project atop a train station in the city’s northwestern Tsuen Wan district.

Ongoing low interest rates and an undersupply of housing “will create favorable room for development for the residential market of Hong Kong,” Chairman Henry Cheng said in today’s statement.

The stock rose as much as 6.3 percent, the most in more than a year, and was trading 3.9 percent higher at HK$13.78 as of 1:22 p.m. local time, bringing its gain this year to 14 percent. New World was the best performer in the nine-member Hang Seng Property Index last year after its share price almost doubled. The property gauge gained 1.8 percent so far in 2013.

Home Prices

Cheng Yu-tung, 87, retired last year as chairman of the company and was replaced by son Henry Cheng. The elder Cheng, who also controls the world’s biggest jewelry retailer, is 35th on the Bloomberg Billionaires Index with a net worth of $20.1 billion.

Hong Kong’s home prices have doubled in the past four years on record low mortgage rates, an influx of mainland Chinese buyers and lack of new supply.

New World, with businesses in property, infrastructure, hotels and retail, in September won the right, for an undisclosed price, from the Hong Kong government to develop a residential and retail project in the city’s Mong Kok district.

The company will pay an interim dividend of 12 Hong Kong cents a share, compared with 10 Hong Kong cents a year earlier.

To contact the reporter 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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