HONG KONG: Hang Lung Properties Ltd, Hong Kong's fourth-largest developer by market value, has reported that its profit excluding revaluation gains and deferred tax profit was HK$5.51 billion ($807 million) in fiscal first half ending December 31.

Including gains in investment-property values, net income climbed more than 13 times to HK$17.4 billion, or HK$4.14 a share, from HK$1.22 billion, or 29 cents, a year earlier. Sales more than quadrupled to HK$9.73 billion from HK$2.05 billion.

Rental profit from Shanghai, where it owns two commercial properties, rose 15 percent to HK$811 million, it said. Hong Kong rental profit rose 5 percent to HK$1.02 billion.

"China rents are higher than expectations; that's a good sign for expansion in China overall," Cusson Leung, an analyst at Credit Suisse Group AG, said yesterday after Hang Lung's announcement.

However, Hang Lung shares fell as much as 4.7 percent in local trading after announcing first-half underlying profit increased less than analysts had estimated.

Hang Lung fell 4.3 percent to HK$26.60, the lowest since September 7, at the close of trading in Hong Kong, after posting earnings during the midday break. Ngan estimates Hang Lung's per-share fair value as between HK$20 and HK$30, based on the earnings statement.

"Hang Lung's properties under construction aren't as valuable as the market expected," Adrian Ngan, property analyst at CCB International Securities Ltd, said in a phone interview yesterday.

"The shares' fair value is slightly below the current price and the market is pricing this in," he added in the interview.

Investors may also have been disappointed by the small increase in the dividend, given that profit ex-items rose more than fourfold, Ngan said. The company will pay an interim dividend of 17 Hong Kong cents a share, up from 15 cents a year earlier.

Hang Lung Group Ltd, Hang Lung Properties' largest shareholder, posted a first-half profit of HK$9.59 billion, or HK$7.09 a share, on sales of HK$9.99 billion. It will pay an interim dividend of 19 Hong Kong cents per share.

Hang Lung is the first of Hong Kong's builders to post earnings in 2010. Cheung Kong (Holdings) Ltd, the city's second-biggest developer by value, will report on March 30.

China Daily/Bloomberg News

(HK Edition 01/28/2010 page4)