Henderson Land Underlying Profit Rises 28% on Home Sales, Rents

Henderson Land Development Co., controlled by Hong Kong billionaire Lee Shau-kee, said 2012 underlying profit rose 28 percent after booking more home sales and posting higher rental income.

Profit excluding changes in revaluation gains and deferred tax rose to HK$7.1 billion ($915 million) from HK$5.6 billion a year earlier, the company said in a statement to Hong Kong’s stock exchange today. The result was inline with the HK$7.1 billion average estimate of 22 analysts compiled by Bloomberg. Sales rose to HK$15.6 billion from HK$15.2 billion in 2011.

Hong Kong’s home prices have more than doubled since early 2009 on record low mortgage rates and an influx of mainland Chinese buyers, boosting profits for developers. Earnings at Henderson Land were also boosted by income from shopping malls including the International Finance Centre in the Central business district, as shoppers from China fueled growth in demand for high-end retail shops.

The shares rose 1.5 percent today to HK$50 before the earnings statement.

Henderson Land booked sales in Hong Kong residential projects including The Gloucester and Hill Paramount last year.

Mass Market

Including revaluation gains, net income rose to HK$20.3 billion from HK$17.6 billion.

The Hong Kong government has introduced a spree of measures to curb property prices, including extra transaction taxes and higher mortgage down payment requirements.

Henderson, which also has investments in utilities and hotels in Hong Kong and mainland China, is among major builders in the city that focuses on building apartments catered to the mass market.

While most major Hong Kong developers bought land through government auctions and tenders, Henderson Land sent negotiators to persuade owners of dilapidated buildings in older residential areas in the city to sell. It has 37 such projects under development.

The company has also acquired agricultural land, which will require developers to pay a premium to the government before converting them into residential uses.

Lee said this month he plans to pay Henderson Land for some of the farmland the company owns and donate them to the government for development of affordable homes for young people, the Standard newspaper reported March 5.

Henderson was founded in 1973 by Lee, who is 26th on the Bloomberg Billionaires Index with a net worth of $23.2 billion. Lee, 85, said in June he will gradually reduce his workload in the running of the group. Elder son Peter Lee will take over most of Henderson Land’s business in mainland China, while his brother Martin Lee will focus on Hong Kong, the elder Lee said.

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