Aug. 27 (Bloomberg) -- Wharf (Holdings) Ltd., the Hong Kong builder expanding in at least 14 other Chinese cities, said first-half underlying profit rose 5 percent after posting gains in rental income from its shopping malls in the city.
Profit excluding property revaluations and one-time gains advanced to HK$5.68 billion ($732 million) in the six months ended June 30 from HK$5.43 billion a year earlier, Wharf said today in a filing to Hong Kong’s stock exchange. That compares with a HK$5.4 billion median estimates of three analysts surveyed by Bloomberg News.
Wharf’s Times Square and Harbour City shopping malls in Hong Kong posted gains as Chinese tourists continued spending in the city even as the nation’s economy slows. The developer’s earnings were partly offset by lower profit margin in its China projects and also lower home sales profit booked in Hong Kong and Shanghai, according to Alfred Lau, an analyst at Bocom International Holdings Co.
“China is obviously experiencing a bit of a slowdown and it looks like Wharf’s being impacted,” he said. “Performance of their Hong Kong shopping malls is still strong and in-line with our expectation.”
Shares of Wharf, controlled by the family of billionaire Chairman Peter Woo, declined 3.9 percent to HK$64 at the close of trading in Hong Kong, after earnings were announced. That cut its gain this year to 5.6 percent, compared with the 8.3 percent decline in the nine-member Hang Seng Property Index.
Profit from property development fell to HK$922 million from HK$3.43 billion, as the “exceptionally large contribution” from projects in Shanghai and Hong Kong in the previous year wasn’t repeated, Wharf said.
Operating profit from rental income rose 12 percent to HK$4.56 billion, with contributions from Harbour City and Times Square malls gaining 17 percent and 6 percent respectively, the company said.
Retail rents in Hong Kong will post their first annual decline since 2008 this year as a pledge by the Chinese government to limit additional stimulus adds to the risk of a deeper economic slowdown, property broker Cushman & Wakefield Inc. said in a July report.
Wharf will pay an interim dividend of 50 Hong Kong cents, compared with 45 Hong Kong cents a year earlier.
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