Cheung Kong Property Holdings Ltd., the developer spun off from Asian billionaire Li Ka-shing’s conglomerate, said first-half profit jumped 22 percent as property sales in Hong Kong were stable and China eased residential curbs.
Net income in the six months to June 30 was HK$6.9 billion ($890 million), or HK$1.79 a share, from HK$5.6 billion, or HK$1.46 a share, a year earlier, according to a Hong Kong stock exchange statement on Tuesday. Profit before investment property revaluation rose to HK$5.5 billion from HK$5.1 billion.
CK Property said it expects results in the second half to improve “barring no unforeseen circumstances.” China’s devaluation of the yuan to spur slowing economic growth has triggered a worldwide equity selloff and Chinese stocks erased this year’s gains as investors shrugged off government attempts to prop up the market.
“Looking ahead, the overall market conditions in Hong Kong and the mainland will remain stable in the second half year barring no major unforeseen material adverse developments,” Li said in the statement. “Housing policies will continue to be a major factor in determining the direction of the long-term development of the property market.”
Barclays Plc analysts led by Paul Louie see a potential 27 percent drop in Hong Kong home prices if the residential market pulls back to 2012 levels in line with office rents and retail sales, which have already fallen to those levels.
CK Property shares rose 2.7 percent, the biggest gain in about six weeks, to close at HK$52.20 in Hong Kong before the earnings release. The shares have slumped 30 percent since it began trading on June 3 after Li combined the property assets of Cheung Kong Group and Hutchison Whampoa Ltd.
Earnings from property sales fell 18 percent to HK$3.8 billion, as contributions from Hong Kong declined and were not offset by a pickup in the mainland where the government cut interest rates and wound back some real estate curbs. Total revenue rose 24 percent to HK$19 billion.
“With a land bank sufficient for development over the next four to five years, we are well positioned to boost overall growth,” Li said in the statement.
The developer has the highest contracted sales among Hong Kong peers this year, after almost selling out four projects, including the 1,648-unit The Hemera co-developed with Nan Fung Group and MTR Corp., according to an Aug. 17 report from BNP Paribas SA. It recorded HK$21 billion of sales in the January-July period, according to BNP. CK Property set a 2015 sales target at HK$30 billion.
Prices of existing homes have risen 9 percent this year in Hong Kong, according to Centaline Property Agency Ltd.
More than 60 percent of CK Property’s net assets are in Hong Kong, including Li’s flagship Cheung Kong Center, and 32 percent are in mainland China, according to JPMorgan Chase & Co.
The developer may keep selling some held-for-rent properties in the near term, with an estimated value of HK$8 billion, according to Goldman Sachs Group Inc. analysts led by Justin Kwok and Anthony Wu. Rentals account for 26 percent of the developer’s net asset value, the analysts wrote in an Aug. 17 report.
The company is seeking to sell Century Link in Shanghai, a commercial complex in the city’s financial business district, according to a July report by local Shanghai media The Paper.
CK Property said it would pay a 35 Hong Kong cents interim dividend per share.
— With assistance by Emma Dong