HONG KONG Feb 28 Sun Hung Kai Properties Ltd , the world's No 2 property company by market value, posted a 1.9 percent drop in underlying profit for the fiscal first half to beat forecasts, and was upbeat on the sector's outlook despite tightening measures.
Analysts attributed the weaker results to an absence of large-scale projects during the period and have said investors should watch the progress of the company's new launches closely after a series of new measures to cool the overheated Hong Kong property market.
Asia's largest developer by market value reported an underlying profit of HK$11.5($1.5 billion), beating forecasts of HK$10.64 billion by four analysts polled by Reuters. The result compared with an underlying profit of HK$11.8 billion a year earlier.
The result was still the second best six-month profit ever for Sun Hung Kai, controlled by the Kwok family which were listed third on the 2012 Forbes ranking of Hong Kong's richest people.
The outlook for Hong Kong's powerful property tycoons has been overshadowed by a series of tightening measures, including higher stamp duties and home loan curbs on transactions announced on Friday.
It was the sixth round of policy measures since October 2009 to rein in property prices. Home prices rose an average of 20 percent last year, doubling from a trough in 2008 and driving the market beyond record levels set in 1997.
Sun Hung Kai said in a statement a healthy Hong Kong economy, riding on a strong mainland economy, would likely help support prices.
Its local competitors have so far seen little impact from the cooling steps, including a 15 percent tax on foreign buyers imposed in October.
On Wednesday, New World Development recorded a 91 percent year-on-year rise for net profit in the fiscal first half, while Sino Land's underlying net profit jumped 80.5 percent during the same period.
"Because the implementation of measures is so frequent, it will somehow affect the sales schedule," said Lau Ka-fai, chief analyst at Midland Realty.
"But overall we still believe property developers should continue to sell more units to the market."
BRIBERY CASE HANGS OVER KWOKS
Sun Hung Kai's billionaire Kwok brothers, Raymond and Thomas, are facing charges in an alleged bribery case in which they are accused of paying a senior government official to favour their interest.
The high-profile hearing involving the co-chairmen has been adjourned to next month.
Analysts said the case was unlikely to have any financial impact on the company but potential succession issues remained if the Kwok brothers were found guilty and asked to resign.
"The corruption case will take at least one to two years to settle and there will unlikely be any conclusion in 2013," Raymond Ngai, research analyst at Bank of America Merrill Lynch in Hong Kong, wrote in a note in January.
Sun Hung Kai, which also holds a portfolio of office space that includes Hong Kong's tallest building, International Commerce Centre, said net rental income grew 10.6 percent to HK$5.8 billion.
The company declared a dividend of HK$0.95 per share for the period.
The company's shares have fallen 5.7 percent so far in February, its biggest monthly decline since the arrest of the Kwok brothers in March 2012, amid renewed concerns that both Hong Kong and China would launch more curbs to cool their property markets.
The Hong Kong property sub-index, which inludes other property bellwethers such as Li Ka-shing's Cheung Kong (Holdings), has fallen 5 percent so far in February, lagging a 3 percent drop in the benchmark index.
Sun Hung Kai's shares rose 0.8 percent on Thursday ahead of the results, lagging a 2 percent rise in the benchmark index. (Reporting By Yimou Lee and Twinnie Siu; Editing by Anne Marie Roantree and Jeremy Laurence)