HK's largest developer says may miss sales target as economy slows (updated)

Hang Lung Properties

26/02/2016 12:24

* H1 underlying profit HK$9.3 bln vs HK$8.46 bln last year 
    * HK contracted H1 sales HK$11.3 bln vs HK$32 bln FY f/cast 
    * Says contracted sales could be 10 pct less than forecast 
    * Targeting HK$5 bln in contracted sales in mainland China 
 
 (Adds executive comments, details on contracted sales and 
outlook) 
    By Clare Baldwin 
    HONG KONG, Feb 26 (Reuters) - Hong Kong's largest developer 
reported an almost 10 percent rise in first-half underlying 
profit on Friday but warned it could miss its contracted sales 
target as the city's property sector remains under pressure in a 
slowing economy.  
    Sun Hung Kai Properties Ltd  0016.HK , which has long 
benefited from its diverse portfolio of flats and office space 
in some of Hong Kong's best locations, said it may slow down the 
launch of its projects and sell them off in stages but it would 
not cut prices on its luxury flats. 
    "The market has softened a little bit because of external 
factors," Deputy Managing Director Victor Lui told reporters. 
"Overall there will only be a small adjustment to our sales 
target, not more than 10 percent." 
    Lui said that while he expected stable property prices this 
year, they could fall 10-15 percent, "depending on 
circumstances."  
    Analysts are predicting such a fall. 
    Two other Hong Kong developers recently reported sharp drops 
in earnings and difficulty selling flats. On Thursday, Hong 
Kong's Development Secretary said the government was prepared to 
sell into a falling market and did not have a policy requiring 
it to obtain the high land premiums of recent years. 
 urn:newsml:reuters.com:*:nL2N1640K3 
    The property sector accounts for nearly a fifth of Hong 
Kong's economy, which is expected to grow 1-2 percent this year, 
its slowest in four years.  urn:newsml:reuters.com:*:nL3N1623MI 
    The mainland Chinese economy - to which Hong Kong is 
increasingly linked - is experiencing its slowest growth in two 
and a half decades.      
    Sun Hung Kai reported an underlying profit of HK$9.3 billion 
in the six months ended Dec. 31, above the HK$8.46 billion in 
the same period last year. 
    It reported contracted sales of HK$14.4 billion in the first 
half of its fiscal 2015-2016 year, $11.3 billion from Hong Kong. 
    On Friday, executives said full-year contracted sales in 
Hong Kong could be as much as 10 percent less than the HK$32 
billion they forecast in September.  urn:newsml:reuters.com:*:nH9N10T017 
    The company also said it was expecting HK$5 billion of 
contracted sales in mainland China this year. 
     
    PRICE CUTS, REBATES AND EASIER MORTGAGES 
    Other Hong Kong developers are struggling more. 
    Hang Lung Properties Ltd  0101.HK , which reported earnings 
last month, saw its full-year profit plunge almost 57 percent 
and its chairman said he did not see a bottom to China's 
economic weakness.  urn:newsml:reuters.com:*:nL3N15C3KG 
    New World Development Co Ltd  0017.HK  reported this week 
its half-yearly profit fell 43.6 percent.  urn:newsml:reuters.com:*:nL3N16222Q    
    Property agents say developers are offering incentives 
ranging from price cuts and cash rebates to easier mortgage 
terms. They say some are also asking the government to withdraw 
its cooling measures. 
    Ratings agency S&P said this month Hong Kong developers 
could withstand a 30 percent drop in prices with no impact to 
their credit ratings, and Sun Hung Kai was among the 
best-positioned.  urn:newsml:reuters.com:*:nL2N15U06B          
    Sun Hung Kai shares closed up 2.8 percent compared with a 
2.6 percent rise in the Hang Seng property sub-index  .HSNP . 
 
 (Reporting by Clare Baldwin; Additional reporting by Teenie Ho 
and Stella Tsang; Editing by Miral Fahmy and Mark Potter) 
 ((Clare.Baldwin@thomsonreuters.com; + 852 2843 6571; Reuters 
Messaging: clare.baldwin.thomsonreuters@reuters.net)) 
 
Keywords: SHK PROPERTIES RESULTS/