Property developer Henderson Land Development Co will likely report a lower H1 profit following the failed sales transaction of 20 luxury apartments.
The company’s profit, excluding revaluation gains, is likely to drop to HK$1.71 billion for the first half of 2010 from last year’s HK$2.11 billion, said Cusson Leung, an analyst at Credit Suisse Group AG, in an interview.
Mr. Leung based the figures on the company’s earnings last year, as it revised its financial year from June to December in 2009.
Henderson Land, which is Hong Kong’s fifth largest property developer by value, announced in June that sales amounting to HK$2.67 billion at its 39 Conduit Road project had failed, prompting the Hong Kong government to order property developers to better disclose transactions and improve sales tactics.
“First-half earnings will mainly be about profits from the sale of inventories at various projects,” said Mr. Leung.
Recently, Henderson Land said it sold two units at a Headland Road luxury project in the Island South district for more than HK$1 billion. It is also restarting the sales of 39 Conduit Road, with units being offered for around HK$186 million.
Given the current market condition, “the prices achieved at Headland Road are somewhat out of our expectation;” said Mr. Leung, adding that “investors will also pay attention to sales at 39 Conduit Road as these will be the main contributors for second-half profit.”
Founded in 1973, Henderson Land has been acquiring land sites outside of government auctions to build nearly 40 million sq ft of landbanks in the rural New Territories of Hong Kong. The company plans to build around 45,000 apartment units across the city-state, said Lee Shau-kee, the Hong Kong billionaire who controls Henderson Land.
The company’s landmark properties include luxury residential projects like the Grand Waterfront, the Grand Promenade and the International Financial Center.