Swire Pacific (0019) issued a profit warning yesterday, saying that due to the continued demonstrations in Hong Kong, the retail sales of Swire Properties (1972) continued to be affected, and some retail tenants were offered rental concessions, and the occupancy rate of its hotels was also dragged down
The Group also expects that the vacancy rate in Central Hong Kong will rise, which will put downward pressure on office rents in Central District. However, its Taikoo Place development project is expected to stabilize its office rents due to high demand and high occupancy rates.
Many businesses are under pressure to support investment property
On the other hand, the global economy was dragged down by geopolitical and trade frictions, resulting in a decrease in demand for air passenger and cargo. The demonstrations in Hong Kong also reduced the number of visitors to Hong Kong in July, reducing the number of passengers in Cathay Pacific (0293). The booking situation of the aircraft has an adverse impact, so the Group no longer expects Cathay Pacific’s performance in the second half of this year to be better than the first half. The Group continued to point out that the sales of Swire Resources’ retail outlets continued to be affected by local factors, and it is expected that Gion Foods will record a larger loss.
The Group mentioned in the announcement that although the offshore business showed signs of recovery, it did not reach the previous expectations and is currently not very optimistic about its prospects
The offshore business prospects have an important impact on the value of the fleet of Taikoo Ocean Development Group. Therefore, the above groups have been reviewed. The book value of the fleet; after the review, the company’s consolidated profit forecast for the year is now included in the current estimated impairment of approximately RMB 2.12 billion. In addition, Swire has impaired the cabin design and packaging business of the Port Machinery (Americas) and the Gion Foods business. The current estimated impairment charge is approximately RMB 440 million, which will have an impact on the company’s comprehensive basic profit for the year.
Taikoo expects that, based on various factors, the Group’s comprehensive and regular basic profit will be lower than last year, mainly due to Cathay’s expected results. However, after the Group’s sale of investment properties and other non-recurring factors, the consolidated basic profit for this year is still significantly higher than last year. The Group’s sale of investment properties in the first half of the year recorded a revenue of 11.94 billion yuan, and the sale of investment properties in the second half of the year was approximately 1.442 billion yuan.