Sun Hung Kai’s First-Half Earnings Fall on Lower Home Sales

Sun Hung Kai Properties Ltd. (16), Hong Kong’s second-largest developer, posted an 8 percent decline in first-half earnings amid government property curbs and said it may raise as much as HK$22.2 billion ($2.9 billion) from issuing convertible warrants. Underlying profit, which excludes property revaluations, declined to HK$10.6 billion, or HK$3.98 a share, for the six months ended Dec. 31, from HK$11.55 billion, or HK$4.41, a year earlier, the company said in a statement to the city’s stock exchange today. That compares with the HK$10.05 billion median estimate of four analysts surveyed by Bloomberg. Sun Hung Kai, whose co-chairmen brothers Thomas and Raymond Kwok face charges in a bribery case involving a former chief secretary, booked a lower profit from apartment sales as the city stepped up measures to prevent a bubble in the world’s most-expensive residential market. Property prices, which more than doubled since the start of 2009, may drop as much as 20 percent this year on expectations of rising interest rates, according to Standard & Poor’s. “The market sentiment has not been easy for developers, and Sun Hung Kai didn’t complete many major projects in the first half,” Joyce Kwock, a Hong Kong-based property analyst at Credit Suisse Group AG, said before the announcement. “With its plan to market projects in the next months and portfolio of different types of properties, the developer should have a better second-half of the year.”

Property Sales

The developer will issue one bonus warrant for every 12 shares held, which entitles holders to subscribe to one new share at HK$98.60 each, according to a separate statement. The new shares will represent 7.69 percent of the enlarged capital upon full subscription. The company will use the proceeds to strengthen its capital base and for business opportunities inHong Kong, it said. The stock rose 0.2 percent to HK$99.30 at the close of trading in Hong Kong today, before earnings were announced. Sun Hung Kai’s shares are up 1 percent this year after losing 15 percent last year. Profit from property sales fell to HK$5.6 billion in the fiscal first-half from HK$6.4 billion a year earlier, the company said today. Rental income at the developer, which owns the International Finance Centre office and mall complex and the International Commerce Centre, Hong Kong’s tallest building, rose 16 percent to HK$9.1 billion, it said. Earlier, Cheung Kong Holdings Ltd., the city’s biggest developer by market value, reported that property sales in mainland China and contributions from a unit offset “much lower” property sales in Hong Kong. To contact Bloomberg News staff for this story: Bonnie Cao in Shanghai at bcao4@bloomberg.net To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net. Source :   http://www.bloomberg.com/news/2014-02-28/sun-hung-kai-s-1h-earnings-fall-on-lower-home-sales-correct-.html