Henderson Land Expects ’Stable’ Hong Kong Property Market

Henderson Land Development Co. expects the city’s property market to remain stable after the Hong Kong builder controlled by billionaire Lee Shau-kee posted higher earnings from home sales and rentals. The stock rose.

Revenue from home sales in Hong Kong and mainland China rose 16 percent to HK$4.97 billion ($641 million) in the first half, while rental income from offices and malls gained 12 percent to HK$2.46 billion, the developer said in a statement to the city’s stock exchange yesterday after the market closed. Shares of Henderson Land gained as much as 3.5 percent today and were 2.2 percent higher at HK$47.20 as of 10:07 a.m.

Henderson Land, which focuses on building and selling units targeting middle-class homebuyers, sold the most homes among developers in the first half as sales of more expensive units plunged following tougher measures by the city’s government to rein in real estate prices. Lee, 85, in June said prices “will consolidate” in the next couple of years and developers “won’t make big profits.”

“Hong Kong’s property market should remain stable,” the company said in yesterday’s statement. Buyers’ interest in Henderson Land’s projects “demonstrates that small to medium-sized units of superior quality are popular among the local end-users.”

Better Position

The builder sold about 1,800 residential units in the first half for HK$10.8 billion, the most among Hong Kong developers, according to figures compiled by realtor Centaline Property Agency Ltd. Sun Hung Kai Properties Ltd., the city’s biggest builder, was second with about 1,100 unit sales with a total value of HK$12.2 billion.

“They’re in a better position compared to most developers,” Lee Wee Liat, Hong Kong-based analyst at BNP Paribas SA, said. “Property sales should gradually pick up next year and smaller units will continue to sell better.”

Hong Kong developers sold a total of 4,316 new homes in the first half for HK$40 billion, both figures the lowest since the second half of 2008, according to Centaline.

Lee is 30th on the Bloomberg Billionaires Index with a net worth of $21.6 billion. He founded Henderson Land in 1973 and grew it into one of the city’s biggest developers, mainly by buying out dilapidated and old apartment buildings with multiple owners for redevelopment.

Lee predicted in January that Hong Kong’s benchmark Hang Seng Index would reach 26,000 in the first half and rise as high as 28,000 by year-end, according to a report by Radio Television Hong Kong. The index has fallen about 8 percent since reaching a 2013 peak of about 23,800 at the end of January.

Farmland Donation

Henderson Land has about 43 million square feet of land reserves in the city’s north, it said in the statement yesterday.

The company will gain HK$1.4 billion in profit from a government plan to purchase land from developers in the area to build housing, Ming Pao reported today, citing unidentified analysts who attended a conference call with Henderson Land’s management yesterday.

Lee, this month, said he’s discussing with the government to donate farmland in Hong Kong’s north to help provide homes for the city’s young people at below market prices, the South China Morning Post reported Aug. 10.

Henderson Land’s shares have fallen 5.2 percent this year, outperforming a 7 percent drop in the Hang Seng Property Index, which tracks nine of the biggest Hong Kong-listed developers including Henderson Land.

Profit Declines

First-half underlying profit, which excludes revaluation gains and deferred taxes, fell 4 percent from a year earlier to HK$3.45 billion as gains in property sales and rental income failed to compensate for a decline in contributions from Hong Kong & China Gas Co., the city’s main fuel supplier, which Henderson Land controls. That compares with the HK$3.7 billion median estimate of three analysts surveyed by Bloomberg News.

Home prices in the city have more than doubled since early 2009 on record-low mortgage rates and a shortage of new supply. Leung Chun-ying, who took over as Hong Kong’s leader in July last year, has imposed extra transactions taxes and raised minimum mortgage down-payment requirements to curb prices.

Including revaluation net of non-controlling interests and deferred taxes, profit was HK$7.76 billion, or HK$2.92 a share, compared with HK$7.73 billion, or HK$2.97 a share, a year earlier, the company said.

Henderson will pay an interim dividend of 32 Hong Kong cents, unchanged from a year earlier.

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