Hang Lung Properties H1 net dives as sales tumble

HONG KONG, Feb 10 (Reuters) - Hang Lung Properties (0101.HK), the fourth-largest locally-listed property developer by market value, said on Tuesday its first half profit dived 83 percent on slower property sales amid the global financial crisis.

The property group said during the market's midday break that its profit fell to HK$1.22 billion ($156.4 million) for the six months ended in December, against HK$7.27 billion profit in the year-earlier period.

Excluding gains on revaluation of investment properties and related tax, underlying net profit fell 68 percent to HK$1.197 billion, the developer said.

"We sold substantially fewer residential units during the period under poor market conditions," Chairman Ronnie Chan said in a statement.

Four brokerage houses forecast Hang Lung Properties would post an average 70 percent drop in first half underlying profit due to insignificant contributions from property sales. The profit estimates ranged from HK$991 million to HK$1.12 billion.

Hang Lung Properties, which is 52.36 percent owned by Hang Lung Group Ltd (0010.HK), said its leasing business enjoyed stellar growth as rental turnover and profits grew 15 and 16 percent to a respective HK$2.041 billion and HK$1.68 billion.

Despite a difficult economic climate, property leasing in Hong Kong has generated rental income growth with rental turnover increasing 9 percent to HK$1.21 billion and profits rising 8 percent to HK$973 million.

Rental turnover from Shanghai properties jumped 23 percent to HK$829.0 million and profits rose 30 percent to HK$703.6 million, the company said.

It said it maintained a strong balance sheet with cash and bank deposits amounting to HK$9.31 billion at the end of 2008, against total borrowings of HK$5.94 billion. It also maintained its interim dividend payout at HK$0.15 per share.

CHINA EXPANSION

Analysts expect Hang Lung Properties, seen having the most consistent China expansion strategy among local property firms, to be on track with its China commercial property expansion.

Last November, Chairman Ronnie Chan said the company had a good chance of meeting its 2009 land acquisition target for commercial projects in China, which seemed in doubt before the financial crisis brought more properties to the market.

Hang Lung Properties, which has developed two landmark shopping complexes in downtown Shanghai, set a target in 2003 to acquire land for 18 commercial projects in China by the end of 2009 at a total cost, including development, of 40 billion yuan ($5.86 billion).

Chan had said the financial crisis would weigh on the firm's earnings this fiscal year and it was hard to sell even one apartment but had to rely entirely on rent.

Parent Hang Lung Group posted a 78 percent fall in half year profit to HK$905.5 million for the period under review.

Shares of Hang Lung Properties fell 3.01 percent to HK$16.10 at midday, while Hang Lung Group edged up 0.23 percent to HK$22.25. (US$1=HK$7.8)