Soaring property prices send NWD profits up 314%
Updated: 2008-03-19 07:14
By Kwong Man-ki(HK Edition)
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The net profits of property developer New World Development (NWD) jumped 314 percent in the second half of 2007, thanks to rising property sales and special gains.
Controlled by tycoon Cheng Yu-tung, the firm saw its net profits reach HK$5.64 billion in the six months ending on Dec 31. The turnover soared 22 percent to HK$13 billion.
The developer's profits from property sales jumped 146 percent to HK$1.7 billion, mainly from residential projects such as Harbour Place in Hunghom.
Excluding special gains, Henry Cheng, managing director at NWD, said the underlying profits of the firm soared 162 percent to HK$1.73 billion. It will pay shareholders an interim dividend of HK$0.18, up from HK$0.15 a year earlier.
Supported by the decent results and rate-cut expectations, NWD's shares climbed 4 percent yesterday to close at HK$16.12.
The developer plans to list 1,200 residential units for sale this year. They include Wylie Court in Homantin, the Ma Tin Road project in Yuen Long, the Belcher Street project in the Island West district and the Hanoi Road project in Tsim Sha Tsui.
Cheng is optimistic about the property market. "I see a 10 percent increase in property prices for the coming year from now."
The US subprime woes, Cheng said, are affecting the global economy, "but the impact on Hong Kong is relatively minimal on the back of strong growth on the mainland".
He added that Hong Kong may follow the United States in further cutting lending rates, and that will benefit Hong Kong's property sector.
NWD now has a land bank of 2.4 million sq ft, and 22 million sq ft of agricultural land reserve.
Cheung said the firm is discussing with the government the possibility of converting 8 million sq ft of agricultural land into commercial or residential land. However, he said that due to the booming property market, it is more difficult to reach an agreement with the government.
"We will keep talking with the government, but paying a high land premium is unavoidable," he said.
(HK Edition 03/19/2008 page2)