Hong Kong’s Biggest Developer Posts Slightly Higher Profit

(Bloomberg) -- Sun Hung Kai Properties Ltd., Hong Kong's largest developer, reported a 1.7% increase in annual profit as it began to recover from the pandemic and political tensions that weighed on business.

Underlying earnings, which exclude property revaluations, rose to HK$29.9 billion ($3.8 billion) in the year ended June 30, Sun Hung Kai said in a filing Thursday. That compared with the average estimate of HK$30.6 billion from 13 analysts surveyed by Bloomberg.

The pandemic has hurt Hong Kong's property companies, particularly in retail and hospitality as tourism slumped. The company's rental income from properties including shopping malls, office buildings and hotels rose just 2.4% from a year ago, while revenue from home sales increased 12% in the period. 

Sun Hung Kai is set to benefit further from the heated residential market in the city, where home prices hit a record high last month on limited supply, outsized demand and low borrowing costs. Hong Kong has the world's least affordable residential market, putting pressure on developers to address the issue. 

The company said it would speed up the conversion of agricultural land into buildable sites in Hong Kong and make efforts to provide more homes to help alleviate the housing problem.

Sun Hung Kai expects Hong Kong's economic recovery to continue as a result of “enhanced social and business environment, a well-contained local pandemic, supportive consumption stimuli, a robust mainland economy and improved global prospects,” according to the filing.

Shares of Sun Hung Kai closed 0.7% higher before the announcement, taking this year's gain to 9.6%. The stock dropped 16% in 2020. 

New home sales have also picked up in recent months, with Sun Hung Kai's Wetland Seasons Bay in the Tin Shui Wai area being one of the most popular projects. The developer sold all of the 285 units available for purchase on Saturday.

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