New World Development Ltd., controlled by the family of Hong Kong billionaire Cheng Yu-tung, said full-year earnings climbed 26 percent on higher property sales in the city and mainland China.
Underlying profit, which excludes property revaluation gains and deferred taxes, rose to HK$6.33 billion ($816 million) for the 12 months ended June 30 from HK$5.02 billion a year earlier, the company said in a statement today. That compares with the HK$6.59 billion average estimate of 14 analysts compiled by Bloomberg.
New World and other Hong Kong developers,, including Cheung Kong Holdings Ltd., controlled by Asia’s richest man Li Ka-shing, are accelerating sales of smaller apartments as demand for bigger units from wealthy mainland Chinese buyers wanes. Revenue from home sales in Hong Kong and China rose 92 percent during the period under review, New World said today.
“Their sales have picked up considerably over the past year as they focus on smaller units, which are what buyers look for these days,” Adrian Ngan, an analyst at Citic Securities International, said today before the earnings were announced. “They should be able to keep this pace but I wouldn’t expect another big jump.”
New World’s shares, the best performer in the Hang Seng Property Index last year, are little changed in 2013. The stock fell 1.2 percent to HK$11.88 at the close of trading in Hong Kong. The earnings were announced during the noon trading break.
Cheng, 88, is 38th on the Bloomberg Billionaires Index with a net worth of $19.3 billion. Last year, he retired as chairman of the developer he helped found four decades ago and also from Chow Tai Fook Jewellery Group Ltd., the world’s largest listed jewelry chain. He was replaced by son Henry Cheng.
The company has sold more than 600 units at the Park Signature, a project in the city’s northern Yuen Long district, since sales began earlier this month, according to the company’s website.
New World has already sold HK$4.2 billion of homes since July, Executive Director Adrian Cheng told reporters in Hong Kong today. The developer is targeting HK$10 billion in home sales this fiscal year, he said.
Home prices in the city may drop about 10 percent at the most, Chairman Henry Cheng said at the briefing.
Sun Hung Kai Properties Ltd., the city’s biggest developer, said this month it will sell more smaller apartments after booking lower profit and home sales for the full year ended June 30.
Hong Kong home prices have more than doubled since early 2009 on record low mortgage rates and an influx of mainland Chinese buyers, prompting the government to impose measures, including extra transaction taxes and tighter mortgage lending rules, to quell concerns of an asset bubble.
New World, with businesses in property, infrastructure, hotels and retail, last year 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 owns hotels including the Grand Hyatt and Hyatt Regency in Hong Kong, and also operates the Hong Kong Convention and Exhibition Centre.
New World China Land Ltd., the company’s unit that focuses on property developments in mainland China, said yesterday contracted sales rose 69 percent in the year through June as it posted a 50 percent gain in profit.