Hang Lung Properties Ltd., the Hong Kong developer investing more than $8.5 billion building malls in mainland China, said 2013 underlying profit dropped 18 percent as the company sold fewer investment properties.
Profit excluding revaluation gains and deferred taxes fell to HK$5.05 billion ($651 million) from HK$6.18 billion a year earlier when it had a one-time gain, Hang Lung said in a filing today. That compares with the HK$4.79 billion average estimate of 18 analysts surveyed by Bloomberg. Sales rose to HK$9.14 billion from HK$7.37 billion, helped by rental growth in mainland China, the company said.
Chairman Ronnie Chan has been leading Hang Lung to expand in mainland China since the late 1990s, betting that rising consumption by an expanding middle class will fuel demand for high-end shopping malls. The developer will weather slowing demand amid Chinese government efforts to crack down on extravagant spending by officials in a bid to root out corruption, a move that could curb shopping, Chan said today.
“Although the anti-corruption campaign hurts us in the short-term, we believe it will be beneficial for long-term property investments,” Chan said at a press briefing in Hong Kong today.
More than 80 percent of rental income came from Plaza 66 and Grant Gateway 66 in Shanghai, Chan said. The developer’s new shopping mall in Tianjin, Riverside 66, is scheduled to open in the second half, while other projects under development are progressing as planned, according to the company.
Hennes & Mauritz AB, Europe’s second-biggest clothing retailer, will open a 46,000-square-foot (4,274-square-meter) store in Hang Lung Centre in the Causeway Bay area, Manager Director Philip Chen said at the same briefing, adding that more details on other tenants will be released next year.
Hang Lung’s shares dropped 5.1 percent to close at HK$23.10 in Hong Kong. The benchmark Hang Seng Index lost 1.5 percent.