Hong Kong developer Henderson Land posted a 22.5 per cent rise in half-year net profit yesterday, thanks to a property market rebound that analysts expect will speed up apartment sales in the coming months.

The firm said it was confident housing prices would continue to rise, adding that it was interested in buying land through government auctions in the coming year.

Many analysts think soaring land prices will squeeze the profits of Hong Kong developers, despite a property market boom.

"It's anticipated that demand for local residential properties will continue to increase and residential property prices will record satisfactory increases," Henderson said in a statement.

In the latest in a series of upbeat results from Hong Kong property firms, Henderson reported a net profit of HK$1.296 billion for the six months to December 31, 2004 - in line with forecasts and up from HK$1.058 billion in the same period in 2003. Analysts' forecasts were in a range of HK$1.14 billion to HK$1.38 billion.

Most analysts are upbeat on the stock, which was trading at HK$35 at yesterday's market close, down 0.28 per cent on the day.

They say Henderson's earnings should climb for the six months to June, because a major apartment project, the Grand Promenade, will be completed during the period and sales booked.

Henderson said sales at the project attributable to the group had reached HK$4.8 billion by the end of 2004.

Rents should also start rising at Henderson's prime office and retail project in the Central business area, to reflect Hong Kong property values that jumped by a third last year and are seen rising by another 20 per cent in 2005.

UBS analyst Paul Louie, who has a "buy" recommendation on Henderson Land shares, says the stock is trading at an "undemanding" 25 per cent discount to current net asset value, compared to an average 15 per cent discount in the past.

Rival Sun Hung Kai Properties, Asia's most valuable listed property firm, is trading at around its net asset value, while mid-tier Sino Land is trading at a 15 per cent discount, Louie said.

Sun Hung Kai surpassed expectations earlier this month when it said it almost doubled half-year earnings.

Henderson's stock has fallen 10 per cent in the last three months since a rally at the end of last year, compared to a fall of around 6 per cent for the Hong Kong property sector index.

(HK Edition 03/18/2005 page3)