Archive for 七月, 2011

Hang Lung reports 59% drop in full-year profit

Hang Lung Properties Ltd, the third largest developer in Hong Kong, reported a 59 percent drop in its full-year underlying profit after selling fewer properties during the period.

Net income excluding revaluation gains and deferred tax for the financial year ended June 30, 2011, fell 59 percent to HK$2.74 billion. This compares to HK$6.67 billion a year earlier, the developer said in a statement to the Hong Kong stock exchange on Friday.

Hang Lung generated almost all of its earnings from its core property leasing business in Hong Kong and the mainland, which rose 18 percent from the HK$2.32 billion it earned a year earlier.

Property sales, however, were virtually frozen as the company only earned HK$2 million from home sales, in comparison with the HK$4.36 billion sales gain a year earlier.

Ronnie Chan, chairman of Hang Lung Properties said that due to the current uncertain market conditions, Hang Lung decided to retain its already completed flats, which resulted in insignificant property sales last year.

“We have not bought any land in Hong Kong for the past 11 years and we have ample cash on hand now,” Chan told a media briefing on Friday. “The property market in Hong Kong is lukewarm at the moment. We will release these unsold units when the market picks up again,” Chan added.

However, Castor Pang, research director at Cinda International, noted that Hang Lung may only have some 20 luxury flats unsold in the city at the moment and whether they are sold or not will have little effect on the company’s bottom line.

“Hang Lung has basically given up on the Hong Kong market and is putting its full attention on the mainland. If Chan was still bullish on the city’s property market, he wouldn’t have done nothing in Hong Kong in the past few years,” said Pang.

Hang Lung, which entered the mainland in 1992, will open a shopping mall in Jinan, Shandong province in August, its fourth outside Hong Kong.

It is also planning to open seven more shopping mall-based projects in second-tier cities on the mainland, with a total investment amounting to HK$50 billion, according to Chan.

In March this year, Chan said the company planned to spend more than HK$30 billion over the next few years to buy land on the mainland.

He also said Friday that the company has bought 20 billion yuan last year in the offshore Hong Kong market to finance its projects on the mainland.

Shares of Hang Lung tumbled HK$1.25 or 4.16 percent to close at HK$28.8 on Friday, compared with the 0.58 percent drop in the city’s benchmark Hang Seng Index.

The stock has declined 20 percent this year, making it the worst performer in the seven-member Hang Seng Property Index, which has lost 4.2 percent this year, according to a report by Bloomberg News.

Hang Lung Group Ltd, its parent company, also posted a full-year underlying profit of HK$1.73 billion on Friday. It fell 53 percent from the HK$3.70 billion it earned last year.

litao@chinadailyhk.com
China Daily
(HK Edition 07/30/2011 page2)

http://www.chinadaily.com.cn/hkedition/2011-07/30/content_13015608.htm

2011
07/31
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China Daily HK
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Power Assets profit up

Hong Kong’s second largest power supplier, Power Assets Holdings Ltd, has announced a record 47 percent gain in half-year profit due to faster growth in earnings outside the city.

The power utility, formerly known as Hong Kong Electric Holdings Ltd, said its net income for the six months ended June 30, 2011 rose to HK$4.1 billion or HK$1.9 per share, from HK$2.8 billion, or HK$1.29 per share.

Earnings from the group’s operations outside Hong Kong were HK$2.275 billion in the first half, 133 percent higher than the HK$978 million recorded for the first half of 2010, which also outstripped the HK$1.781 billion profit made in the city, according to a statement to the Hong Kong stock exchange on Wednesday.

“For the first time the proportion of earnings derived from activities outside Hong Kong exceeded earnings from our Hong Kong operations,” Power Assets said in the statement.

The group attributed the outstanding first-half performance to higher earnings from assets in the UK in particular, including Northern Gas Networks, as well as Seabank Power Station and UK Power Networks Ltd, which were both acquired by the group in the second half of 2010.

The profitability of Power Assets’ overseas business could be very impressive to investors, Alvin Chung, associate director at Prudential Brokerage, noted.

“The stock may achieve HK$65 per share or even more during the rest of the year as Power Assets’ business expansion shows no signs of abating,” said Chung, citing the performance of the stock which has gained about HK$12 or 24 percent so far this year.

The blue-chip company closed at HK$60.85 in Hong Kong trading Wednesday, up HK$0.45 or 0.75 percent from a day earlier compared with the 0.13 percent loss on the city’s benchmark Hang Seng Index.
Power Assets supplies power to Hong Kong Island, while Hong Kong’s biggest power producer CLP Holdings supplies power to Kowloon and the New Territories.

Power Assets is “the most defensive Hong Kong utility”, a July 7 JP Morgan report said, as 95 percent of its earnings comes from its regulated assets – a result of Power Assets’ conservative investment approach in which it only acquires utility businesses that can generate stable returns backed by a strong regulatory regime.

The power supplier, which changed its name in February this year as it positions itself beyond Hong Kong as “a global investor”, currently owns investments in a number of markets including the mainland, the UK, Australia, Thailand, Canada and New Zealand.

Compared with the more-than-double gains outside the city, Power Assets’ Hong Kong operations in the first half were basically unchanged at HK$1.781 billion, compared with the HK$1.776 billion gain during the same period last year.

However, profits from its mainland plants could drop as much as 25 percent year-on-year in the first half due to coal price hikes, a report released by Citigroup on June 10 forecast. It estimated a 40 percent profit gain of the group for the first six months of the year.

Power Asset didn’t elaborate on its profit from the mainland in the statement. It only indicated that their power stations in Guangdong province benefited from increased electricity demand while the impact was partly offset by higher coal prices.

The group also recommended an interim dividend of HK$0.62 per share this time, unchanged from last year.

litao@chinadailyhk.com
China Daily
(HK Edition 07/28/2011 page2)
http://www.chinadaily.com.cn/hkedition/2011-07/28/content_12996974.htm

2011
07/28
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China Daily HK
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Cross-border home sales ease as curbs begin to bite

The number of Hong Kong citizens buying property on the mainland fell slightly in the first half of 2011 due to central government measures to curb the sector, statistics released on Tuesday show.

In the first half of 2011, Hong Kong residents bought between 7,300 to 8,300 residential units on the mainland, totaling 8 billion yuan ($1.24 billion), property broker Land Power said on Tuesday.

This was 7 percent lower by transaction volume and down 5 percent in total contract value compared with the same period in 2010, according to the broker.

Shenzhen and Guangzhou are still Hong Kong investors’ favorite destinations, which together attract half of the total home purchases, followed by other cities in the Pearl River Delta (PRD) region and Shanghai.

The total number of home purchases by Hong Kong citizens is likely to reach 15,100 to 16,100 or 16.2 billion yuan this year, said Michael Choi, chairman of Land Power, who added that the estimates are down 5 percent and 6 percent respectively, compared with a year earlier.

The gloomy property market in first-tier mainland cities have dampened the enthusiasm of Hong Kong investors, Choi added.

Data provided by Land Power shows that home prices in Shanghai, Beijing, Guangzhou and Shenzhen have decreased by 9 percent, 8.9 percent, 6.8 percent and 4 percent in the first half respectively, in comparison with the first half of 2010.

“Some large cities have also announced a home price cap, which would inevitably further cool the market in the second half as well as Hong Kong people’s property investment on the mainland,” Choi told a media briefing in Hong Kong on Tuesday.

The central government has imposed a series of measures to cool the market, including lifting interest rates and limiting the number of purchases as home prices have continued to climb since 2009.

On July 19, the mainland-based 21st Century Business Herald reported that Shenzhen has set a tough “zero increase” target for property prices by August 1, 2011, harsher than the previous policy of targeted annual rises.

However, the Shenzhen Urban Planning Bureau denied this, according to a report by Down Jones. Nevertheless, curbs on property and lending have dented Shenzhen’s appeal for Hong Kong investors. Only 1,800 to 2,000 home purchases were recorded through June 30, compared with 2,000 to 2,200 during the same period in 2010, according to Land Power.

Yang Qiu, director of the Real Estate Research Center at the Chinese Real Estate Association, told China Daily that Hong Kong people mainly bought homes for private use or as an investment but that the number of the latter was significantly higher.

“Market sentiment is crucial to Hong Kong investors. As home price increases have now halted in major cities, most investors from Hong Kong will choose to wait and make decisions when the market condition becomes clearer,” said Yang.

The central government will continue to implement property tightening measures to discourage speculators and restrict house purchases in more second and third-tier cities that have witnessed excessive property price growth, according to a statement released on July 14.

China Daily
(HK Edition 07/27/2011 page2)

http://www.chinadaily.com.cn/hkedition/2011-07/27/content_12989088.htm

2011
07/27
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CATEGORY
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China Daily HK
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Opportunities in emerging markets

Other than the mainland, Hong Kong’s small and medium enterprises should consider exploring more business opportunities in emerging markets such as Indonesia, according to the city’s trade development authority.

The booming ASEAN market embeds huge business potential seen from the city’s buoyant exports to the country, due to its surging needs for electronic accessories and components, fashion products and toys, Benny Chui, an economist from the Hong Kong Trade Development Council (HKTDC), said during a seminar on Wednesday.

The city’s exports to Indonesia surged 29 percent to $2.8 billion in 2010, official data shows. Exports of office machines and computers recorded the strongest growth, which surged by 114 percent and 77 percent respectively in the past year.

Indonesia is about one tenth the size of mainland’s retail market. The growing middle class in Indonesia has also driven increasing demands for lifestyle products and the booming modern malls and chain stores in the country are also destinations for Hong Kong’s brand building and consumer food services.

With its double-digit annual growth rate and the less competition from the mainland in the retail market, setting up production bases in Indonesia is also plausible as its location, improved logistics and public utilities, and the competitive wage levels in particular, offer a solid alternative for Hong Kong business manufacturers, said the council.

And wages in Indonesia – with the fourth largest population in the world – currently still range from $70 to $150 per month.

The mainland, on the contrary, aims to increase urban and rural per capita net income by more than 7 percent per year in real terms over the five years to 2015.

During the first quarter of 2011, 13 provinces on the mainland raised their minimum wages by an average 20.6 percent, and the highest statutory minimum wage in neighboring Shenzhen reached 1,320 yuan ($203) per month, the Ministry of Human Resources and Social Security said on its website last month, adding that the minimum wage is expected to grow by an average rate of at least 13 percent over the next five years.

Labor quality is good in general and hiring is easy in Indonesia, according to Chui, who added that locals there usually have a positive image of Hong Kong, which could be helpful for Hong Kong brands to open up the Indonesian market.

Indonesia is the largest economy among ASEAN countries with a population of approximately 235 million. It is located on the cross roads of two continents, namely Asia and Australia, as well as the Indian and Pacific oceans, which offer some comparative advantages to investors.

“Diverting some production lines to Southeast Asian countries was a hot topic in Hong Kong in the past years as the lower cost in countries like Vietnam and Indonesia could help those export-oriented manufactures save a bunch of money,” said import & export functional constituency legislator Wong Ting-kwong.

“Due to the huge domestic demands in the market, most Hong Kong manufacturers may still keep to the mainland where they share the same roots and culture,” Wong added.

The competitiveness of the mainland as a production base will not be weakened as its well-established industrial clusters, highly efficient and skilled labor force and infrastructure systems are able to offset the disadvantage of rising costs associated with wage increases, Pansy Yau, deputy chief economist of the HKTDC, told China Daily in an earlier interview.

litao@chinadailyhk.com

China Daily

(HK Edition 07/07/2011 page2)

http://www.chinadaily.com.cn/hkedition/2011-07/07/content_12850890.htm

2011
07/07
POSTED BY
CATEGORY
Business News
China Daily HK
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