HONG KONG: Weaker sales for Hang Lung Properties Ltd, the fifth largest developer by market capitalization in the city, have driven its earnings down to 31 percent of the total for the financial year ended June.

Net profit for the period stood at HK$4.13 billion, down from HK$13.16 billion in the previous year.

Outstripping revaluation gains from investment properties, the developer's underlying net profit fell 53 percent to HK$2.38 billion, in line with market expectations of a 41 percent to 62 percent year-on-year drop.

The company sold only four residential units in the financial year since the onset of the global financial crisis, Chairman Ronnie Chan told reporters yesterday at a press briefing following the company's results announcement.

Hang Lung was planning to market around 530 residential units in its HarbourSide project in Kowloon in the coming months, to take advantage of the current boom in the local property market, Executive Director Terry Ng told the same press briefing.

"Our strategy is simple: we will put up our projects for sale only when the market is robust, in order to maximize the margins," Chan said.

The property leasing operation still fared relatively well during the period despite the difficult economic environment after the global financial crisis, the company said.

Operating profit from property leasing business grew 13 percent to HK$3.44 billion as rental income increased 11 percent to HK$4.16 billion from a year ago.

Hong Kong still carried more clout in the company's property leasing business, with operating profit from its Hong Kong investment properties growing 9 percent to HK$2.02 billion from a year ago.

Meanwhile, its leasing operation in Shanghai enjoyed stellar growth, with operating profits jumping 19 percent to HK$1.42 billion.

The company plans to pay a final dividend of 51 Hong Kong cents, unchanged from the previous year.

Chan said the company would focus more on its property leasing operation on the mainland, as good opportunities are rare now in Hong Kong.

The company has committed a total of HK$38 billion in capital expenditure for its six large investment property projects in mainland cities, including Shanghai, Tianjin, Wuxi, Jinan, Dalian and Shenyang, Chan said.

"We are always ready to acquire more projects either in Hong Kong or on the mainland. The matter is the (right) price," he said, replying to questions about whether the company will continue to expand its investment property portfolio.

He stressed that the company will never pursue expensive land acquisitions as other developers have on the mainland.

At the end of June, the company has net cash assets of HK$2.77 billion, indicating zero leverage.

(HK Edition 08/01/2009 page2)