Sun Hung Kai’s Annual Earnings Fall 14% on Lower Home Sales

Sun Hung Kai Co-Chairmen Raymond Kwok and Thomas Kwok
Sun Hung Kai Properties Ltd. Co-Chairman Raymond Kwok, left, and Sun Hung Kai Properties Ltd. Co-Chairman Thomas Kwok arrive for a news conference in Hong Kong. Photographer: Lam Yik Fei/Bloomberg

Sun Hung Kai Properties Ltd., the world’s second-biggest developer by market value, said full-year earnings fell more than estimated as home sales slowed after the government implemented tougher measures to curb prices.

Underlying profit, or those excluding property revaluations, declined to HK$18.6 billion ($2.4 billion) for the 12 months ended June 30, compared with HK$21.7 billion a year earlier, the company said in a statement to the city’s stock exchange today. That compares with the HK$19.6 billion mean estimate of 20 analysts surveyed by Bloomberg News.

Hong Kong builders are selling the fewest homes in more than four years after the government in February imposed its toughest measures yet to rein in prices that Savills Plc says are now the world’s highest. Sun Hung Kai this month paid a record 21.8 billion yuan ($3.6 billion) for a commercial site in Shanghai, as it seeks to expand in mainland China.

“Given the tough market conditions, they’ll probably stay conservative with their sales strategy in Hong Kong,” Alfred Lau, a Hong Kong-based analyst at Bocom International Holdings Co., said before earnings were announced. “They won’t cut prices aggressively to push sales.”

Falling Sales

The developer sold HK$32.9 billion of properties for the year ended June 30, down from HK$38.2 billion a year earlier, it said today. Sun Hung Kai in March lowered its home-sales target for the period to HK$32 billion from the HK$35 billion set in September last year, because of the government measures.

Sun Hung Kai’s shares have declined 11 percent this year, compared with a 4.5 percent drop in the Hang Seng Property Index, which tracks nine of the city’s biggest developers including the company. The stock rose 0.5 percent to HK$103.10 at the close of trading today, before the results were announced.

The company plans to sell HK$28 billion of properties in Hong Kong and mainland China in the year through June 2014, Victor Lui, deputy managing director, said at a briefing in Hong Kong today.

The developer, controlled by the family of co-chairmen Thomas and Raymond Kwok, sold more than 1,100 apartments in the city for about HK$12.2 billion in the first half, according to figures compiled by realtor Centaline Property Agency Ltd.

Developers sold about 4,300 units in the first half, the fewest since the second half of 2008, when homebuyers were deterred by the global credit crisis.

Cheung Kong Holdings Ltd., Hong Kong’s largest developer after Sun Hung Kai, said Aug. 1 that first-half profit fell 13 percent after booking fewer apartment sales in the city.

Related News and Information:

Before it's here, it's on the Bloomberg Terminal. LEARN MORE