http://www.businesstimes.com.sg/arch...rofit-20130802

Published August 02, 2013

Lower valuation gains drag on HK Land profit

Before non-trading items, net profit is up 63% on higher S'pore revenues

By Felda Chay


A DROP in valuation gains from investment properties led Hongkong Land to a 4 per cent fall in net profit for the first six months of this year, to US$598.4 million from US$625.5 million a year ago.

Excluding non-trading items such as the valuation gains, the property group's net profit for the period ended June 30 actually rose 63 per cent to US$519 million from US$318 million on strong performances from its commercial and residential portfolios in Singapore.

Revenue rose 90.6 per cent to US$912 million compared with US$478.4 million last year.

It has declared an interim dividend of 6 US cents per share, unchanged from last year.

Said chairman Ben Keswick in a statement: "While the operating environment generally remains uncertain, the group is well positioned in its key markets.

"Conditions in the Hong Kong office leasing market have shown some improvement and positive rental reversions are expected to continue for the remainder of the year. During the second half, the group will also benefit from the completion of a third residential project in Singapore as well as ongoing completions in mainland China."

Subsidiary MCL Land is due to complete its 608-unit The Estuary, which has been fully pre-sold, in the next few months.

Construction of MCL Land's three already launched projects - J Gateway, Palms@Sixth Avenue and Hallmark Residences - is on schedule, added Hongkong Land.

The 738-unit J Gateway saw strong buying interest at its launch in June. Palms@Sixth Avenue, a freehold, 32-unit landed housing development launched in March, is 19 per cent pre-sold, while four of the 75 units at Hallmark Residences were sold in May.

For the January to June period, Hongkong Land saw higher rents from its commercial properties and the completion of two large residential projects in Singapore.

It recorded a net gain of US$79 million following an independent valuation of its investment properties on June 30, 2013, including its share of properties in joint ventures. This compares with a US$308 million gain made in the first half of 2012.

Net asset value per share as at June 30 was 11.21 US cents, compared with 11.11 US cents at Dec 31, 2012.

Hongkong Land is a unit of the Jardine Matheson group. Two other Jardine Matheson units also announced their results yesterday.

One is hotel chain Mandarin Oriental International, which saw a 91 per cent jump in net profit for the first six months of this year to US$56.8 million from US$29.7 million last year. This was due to contributions from the Paris hotel it acquired in February.

The group acquired the freehold rights of the building that houses Mandarin Oriental Paris - which it had held under a 12-year lease beginning April 2011 - and two street-front retail units from Société Foncière Lyonnaise for 290 million euros (S$488 million).

"The first half benefited from US$7 million of one-off items relating to the acquisition in February of the freehold rights of the group's Paris hotel. Underlying earnings have also benefited from the resulting increased contribution from the Paris hotel and rental income from the two retail units," said Mr Keswick.

Earnings per share for the period ended June 30, 2013 rose to 5.67 US cents from 2.98 US cents last year. Revenue rose to US$327.2 million from US$313.6 million.

Mandarin Oriental will open four new hotels in Taipei, Marrakech Bodrum and Beijing in the next 18 months.

Grocery store operator Dairy Farm International Holdings Ltd, meanwhile, saw net profit for the first six months fall 6 per cent to US$229.1 million from US$243 million last year due to the overstatement of supplier income and a drop in non-trading gains.

Earnings per share for the period ended June 30, 2013, in turn fell to 16.95 US cents from 18 US cents last year.

Sales rose 7 per cent to US$5.1 billion from US$4.8 billion last year. Non-trading gains recorded was US$1 million, compared with US$2 million last year.

Said Mr Keswick: "While trading conditions remain challenging in some areas, progress is being made in addressing margin pressures and the group continues to invest for long-term growth in all its key businesses. After a weaker first half, the outlook is for a modest improvement in the remainder of the year."

Mandarin Oriental declared an interim dividend of 2 US cents per share, while Dairy Farm's is 6.5 US cents a share.

Yesterday, Hongkong Land's shares fell 0.3 per cent to US$6.75. Mandarin Oriental rose 0.6 per cent to US$1.60 and Dairy Farm closed unchanged at US$11.90.