Cheung Kong’s profit rises 59 pct as home sales rebound

Billionaire Li Ka-shing, chairman of Cheung Kong Holdings Ltd.

Cheung Kong Holdings Ltd., the property developer controlled by billionaire Li Ka-shing, said first-half profit gained 59 percent on a one-time gain and an increase in Hong Kong home sales.
Net income rose to HK$21.3 billion (USD2.7 billion) from HK$13.4 billion a year earlier, the Hong Kong-based company said in a statement yesterday. Excluding property revaluation and one-off gains, profit was HK$12.8 billion, missing the HK$13.6 billion median estimate of five analysts compiled by Bloomberg.
Cheung Kong, the best performer on the Hang Seng Property Index this year, offered discounts to lure buyers after both Hong Kong and mainland China stepped up measures to thwart a property bubble. While home sales in Hong Kong increased, the company’s China property business was below expectations, it said yesterday.
“Policy measures will remain a major factor in determining the direction of the local property market” in Hong Kong, Li, Cheung Kong’s chairman, said in the statement. “We are confident in our growth prospects on the mainland over the longer term despite a modest slowdown.”
Contribution from Hutchison Whampoa Ltd., the unit with businesses such as retail, ports and telecommunications, more than doubled to HK$14.2 billion, which includes a HK$8 billion gain from the listing of Li’s Hong Kong electricity company.
Earnings from property sales rose 22 percent to HK$4.7 billion, while total revenue rose 1 percent to HK$14.7 billion.
New home sales in the city may increase 54 percent this year from 2013, according to Centaline Property Agency Ltd.
The developer has the highest contracted sales among Hong Kong peers so far this year after starting four residential projects, including a 1,717-unit estate of which more than 90 percent has been sold, according to BNP Paribas SA. It may start sales of four more projects totaling 3,226 units in the second half, according to JPMorgan Chase & Co.
“Cheung Kong will stay competitive in pricing to clear its projects given its large pipeline and the sell-through rate will continue to be satisfactory,” JPMorgan analysts Cusson Leung and Leo Ng said in a report ahead of the announcement.
Prices of existing homes have risen 3.6 percent this year, after falling as much as 5 percent from a record high in March 2013 following a doubling of the sales tax on properties valued at more than HK$2 million. The tax increase was passed by Hong Kong’s Legislative Council this month. Bloomberg

Michelle Yun