Hong Kong’s biggest developer sees 57% profit rise

Bloomberg

Sun Hung Kai Properties Ltd., Hong Kong’s largest developer by market value, said half-year underlying earnings rose 57 percent, as sales benefited from a surging home market.
Profit excluding property revaluations climbed to HK$14.6 billion ($1.9 billion) in the six months ended December 31, compared with HK$9.3 billion a year earlier, the firm said in a statement to the Hong Kong stock exchange on Tuesday.
Sun Hung Kai’s earnings were buoyed by resurgent demand in Hong Kong’s housing market, where existing home prices this month reached an all-time high and builders bid up prices for land plots, including a record purchase last week. Sun Hung Kai was one of the most aggressive of local major developers in wooing new buyers during a brief correction last year, offering discounts and mortgages valued at more than a home’s value. The developer’s shares have risen 16 percent this year, compared with a 15 percent gain in the Hang Seng Property Index.
“Hong Kong’s primary residential market has become active again since the beginning of 2017 with new launches well received by end users,” Sun Hung Kai said in the statement accompanying its earnings. “This is in contrast to a quiet market in the last two months of 2016 with low transaction volumes as a result of new stamp duty measures and interest rate hikes.”

RESILIENT DEMAND
Looking forward, despite “more stringent” home-buying restrictions and an expected increase in mortgage rates, the firm anticipates that buyers’ demand will be resilient, according to its statement.
Profit generated from property sales surged to HK$8.3 billion in the first half, more than tripling from a year earlier, Sun Hung Kai said. Revenue at the developer increased to HK$46.3 billion from HK$34.9 billion a year ago, according to the statement.
Sun Hung Kai has the strongest
residential project pipeline this year among Hong Kong developers, Deutsche Bank AG analysts Jason Ching and Iris Poon wrote in a Feb. 20 report. It has 4,282 residential units available for sale, followed by rival Henderson Land Development Co., which has 3,550 units, the report says.
Sun Hung Kai expects to complete more than 3 million square feet of residential projects for sale annually in the next few years, sustaining a sizable residential production “in the medium-to-long term,” it said in the statement.