Hang Lung Real Estate core net profit fell 13%

Hang Lung Properties (00101) In recent years, while Hong Kong’s property market is booming, the sales of its residential units are still in line with the market expectation due to the low remaining revenue last year with the decrease of sales revenue. The core net profit dropped 12.8% yoy to RMB5.53 billion.

Leasing business out of the retail winter

Chen Qizong, chairman of the board, said at the performance meeting that the group’s leasing business in the Mainland has been under pressure to cut their rent and rentals in the past few years. However, the situation has been improving in the past two years, especially in luxury goods sales. He believes the group has bottomed out from the retail winter but still has time to reflect its performance. “It will take another year and a half.” Chief Executive Paul Chan added that the mainland leasing business picked up and most of the rents have been raised , While retail sales also see growth and confidence in the future.

As of the end of last year, Hang Lung real estate revenue was 11.199 billion yuan, down 14.2%, but the single leasing business revenue rose 1% to 7.779 billion yuan. However, revenue from leasing business was driven by property in Hong Kong. Hong Kong’s rental income rose 2.1% to HK $ 3,821 million while rental income in the Mainland dropped 0.9% to HK $ 3,958 million. Taking property revaluation into account, the Group’s net profit was 81.24 billion yuan, an increase of 31.1%, while the final dividend was unchanged from 2016 at 0.58 yuan per share. As Hang Lung Plaza in Shenyang and Dalian needs to be impaired, Chen Nanlu explained that due to the major remodeling activities in the past year and the need to free up some shopping arcades, it affected the rental income.

Although the market has expected Hang Seng core net profit performance down, but Credit Suisse estimated that the final interest rate or the outside world disappointed, Hang Lung Real Estate shares fell 5.4% yesterday to close at 20.1 yuan, while the same day last year’s performance Hang Lung Group (00010) also fell nearly 3 %, To close at 29.4 yuan. Hang Lung Group’s core net profit also decreased 12.1% to 3,314 million, the final dividend of 0.61 yuan per share, the same as in 2016.