Hongkong Land has reversed to profitability with earnings of US$292 million ($405.0 million) for the 1HFY2022 ended June, compared to the US$865 million loss seen in the same period the year before.
During the period, underlying profit attributable to shareholders increased by 8% y-o-y to US$425 million.
According to the company, its underlying profit is deemed to be a more accurate measure of its performance.
The higher earnings were mainly due to the higher number of residential sales completions in China, which resulted in a higher contribution from Hongkong Land’s development properties business.
During the 1HFY2022, earnings per share (EPS) stood at 12.83 US cents, while underlying EPS stood at 18.67 US cents.
As at June 30, Hongkong Land’s net asset value (NAV) per share stood at US$14.99, down from the US$15.05 as at Dec 31, 2021.
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The company announced a second US$500 million round of share buyback, which is estimated to last till end of 2023.
“Resilient financial performance at Hongkong Land in the first half of 2022 was pleasing to see, although contracted sales of China development properties were affected by weak market sentiment,” says Ben Keswick, chairman of the group.
He adds that the group’s full-year underlying profits are expected to be “significantly lower” than the year before due to the planned timing of sales completions and the impact of pandemic-related restrictions on construction activities on the Chinese mainland.
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The restrictions will result in some completions being deferred from the second half of 2022 into 2023, he explains.
As at June 30, Hongkong Land’s physical vacancy was 5.4%, up by 0.2 percentage points h-o-h. On a committed basis, physical vacancy was 5.1% compared to 4.9% as at the end of 2021.
Rental reversions were negative, reflecting the lower market rents.
In the 1HFY2022, average office rents were HK$112 ($19.79) per sq ft, compared to HK$118 per sq ft and HK$115 per sq ft in the first and second halves of the FY2021 respectively.
Vacancy at the group’s Landmark retail portfolio was unchanged from the end of 2021, although base rental reversions remained negative.
Footfall and tenant sales at the group’s retail operations in Beijing and Macau were also negatively impacted by pandemic-related restrictions.
City-wide lockdowns in Shanghai suspended development activities for over two months.
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In Singapore, the group’s office portfolio continued to benefit from healthy leasing momentum, with average office rents increasing to $10.50 per sq ft in the first half of 2022, compared to $10.20 per sq ft and $10.30 per sq ft in the first and second halves of 2021, respectively.
As at end-June, cash and cash equivalents stood at US$742.2 million.
An interim dividend of 6 US cents per share, which will be payable on Oct 12, has been declared.
Shares in Hongkong Land closed 7 US cents lower or 1.42% down at US$4.86 on July 28.
