Sino Land Profit Drops 25% on Revaluation Loss

Hong Kong developer Sino Land’s annual attributable profit fell 25 percent to HK$4.4 billion ($560 million) as investment property markdowns ate into earnings.

The builder controlled by tycoon Robert Ng booked a revaluation loss on the investment portfolio of HK$580 million for the 12 months to the end of June, widening from a year-earlier revaluation loss of HK$163 million, according to a Tuesday filing with the Hong Kong stock exchange.

Underlying profit, which strips out changes in fair value of investment properties, slid 15 percent to HK$5.2 billion. Attributable property sales tumbled 26 percent to HK$8.9 billion, with revenue stemming mainly from sales of residential units and car parking spaces at projects completed during the financial year.

“The cautious spending and investment patterns of consumers and businesses reflect the prevailing economic challenges,” Ng said in the filing. “In response to these evolving market conditions, it is imperative for companies to respond swiftly to the new operational landscape to stay competitive.”

Sluggish Launches

At Sino Land’s two Hong Kong residential projects launched during the financial year, the joint venture La Montagne with Kerry Properties, Swire and MTR in Wong Chuk Hang had sold a mere 6.8 percent of total units, while Villa Garda III in Tseung Kwan O was 34.9 percent sold.

Among the group’s previously launched projects, St. George’s Mansions in Ho Man Tin was 36 percent sold, Grand Victoria in South West Kowloon was 86.4 percent sold, Villa Garda in Tseung Kwan O was 44.8 percent sold and One Soho in Mong Kok was 99.7 percent sold.

Sino Land’s launch pipeline includes One Central Place in Central and Grand Mayfair III in Yuen Long, both of which have obtained pre-sale consents. The group also expects to obtain pre-sale consents for the Yau Tong Ventilation Building development and Lohas Park Package 13 during the current financial year.

“The timing for launching these projects for sale will depend on when the presale consents are received and the prevailing market conditions,” Ng said.

Sino Land won three Hong Kong development plots during the year to June with a total attributable floor area of 806,150 square feet (74,894 square metres), including a low-density Lantau Island site and two Kowloon parcels.

Overall occupancy of the investment property portfolio was 90.8 percent for the financial year, down 0.4 points from a year earlier. By sector, residential rose 4.8 points to 86.8 percent and industrial climbed 2.3 points to 90 percent while office edged down 0.1 points to 86.5 percent and retail dipped 1.5 points to 93.5 percent.

“The market landscape remained fluid throughout the year,” Ng said. “The reopening of borders in early 2023 spurred a steady influx of tourists to Hong Kong, yet the numbers have not rebounded to pre-pandemic levels.”

Developer Roll Call

Sino Land’s annual report arrived in the wake of half-year results issued last week by fellow listed developers Hysan Development and Kerry Properties.

Hysan posted a recurring underlying profit of just over HK$1 billion for the six-month period, down 0.7 percent year-on-year despite the Causeway Bay landlord seeing turnover climb to HK$1.69 billion, up 5.1 percent from a year earlier.

Kerry’s underlying profit, meanwhile, fell 19 percent year-on-year to HK$1.4 billion for the six months, taking into account the exclusion of a one-off provision for certain land parcels in the New Territories’ Kwu Tung area, where the group reportedly spent nearly HK$500 million for 17 agricultural sites in 2021.