CK Asset H1 Profit Falls 15% as Ailing Economy Hits Home Sales, Office Leasing Suffers

Li Ka-shing’s CK Asset Holdings posted a 15 percent year-on-year drop in first-half attributable profit to HK$8.6 billion ($1.1 billion) as economic weakness in Hong Kong and mainland China hurt home sales.

The developer controlled by Hong Kong’s richest man saw revenue fall 4.9 percent year-on-year to HK$34.7 billion during the six-month period, according to a Thursday stock filing. Revenue from property sales totalled HK$4.6 billion, plunging 44 percent from year-earlier levels, and mainly consisted of sales at two New Territories residential projects and various developments in mainland China.

Although home sales in Hong Kong rose briefly after February’s cancellation of cooling measures, high interest rates remained a damper on market sentiment, CK Asset chairman Victor Li said in the filing.

“Housing policies and interest rate movements will continue to be determining factors for the property market,” said Li, the billionaire tycoon’s elder son.

Civitas Lifts Rental Revenue

Six-month revenue from CK Asset’s rental properties reached HK$3.1 billion, up 8.9 percent year-on-year, with declines in Hong Kong and mainland China offset by overseas income, led by the Civitas care home business in Britain.

CK Asset acquired Civitas last year for £485 million (then $612 million), giving the group control of 697 UK assets focused on social housing and healthcare. The Hong Kong company had been working with Civitas Investment Management, the investment advisor of Civitas Social Housing, as far back as 2019 to build its own portfolio of care homes targeting disabled tenants.

In the hotel and serviced suite segment, six-month revenue rose 9.2 percent year-on-year to HK$2.1 billion. The mostly Hong Kong-based portfolio recorded average occupancy rates of 81 percent for hotels and 88 percent for serviced suites.

CK Asset booked an increase of HK$1.4 billion in fair value of investment properties for the first half, with capitalisation rates ranging from 4 to 8 percent.

The group’s investment properties in Hong Kong include Cheung Kong Center and Cheung Kong Center II in Central. The latter office tower was completed in May with only 10 percent of its 550,000 square feet (51,000 square metres) of space having been leased, Bloomberg reported at the time.

Revenue from the Greene King pub business rose 5 percent year-on-year to HK$11.8 billion as the UK-based operation upped prices during the six-month period to maintain profit margin.

Eye on Infrastructure

CK Asset’s first-half investments were made primarily through the developer’s participation in UK acquisitions led by sister firm CK Infrastructure Holdings.

The companies joined forces with CK Infrastructure unit Power Assets Holdings to buy Northern Ireland gas distributor Phoenix Energy and British renewable-power provider UU Solar earlier this year. Bloomberg reported this week that the consortium was nearing a deal to acquire 32 onshore wind farms across England, Scotland and Wales for £350 million ($450 million).

Together with the Civitas buy, the infrastructure interests have strengthened the recurrent income base and enhanced diversification across geographies and sectors in CK Asset’s portfolio, the group said.