Hongkong Land expects ‘significantly lower’ H1 profits amid weak buyer sentiment in China

SINGAPORE – Property developer Hongkong Land said it expects its underlying profit for the first half of financial year 2024 to be “significantly lower” than in the same period of financial year 2023 as it faces slower sales in China.

In its interim management statement on May 23, the group, which is a member of the Jardine Matheson Group, said buyer sentiment in China towards the residential sector has continued to deteriorate, with reduced sales and pricing.

The group said its attributable interest in contracted sales was US$262 million (S$354 million) in the first quarter, down 36 per cent compared with the same period in FY2023.

Therefore, contracted sales for FY2024 are expected to be lower than FY2023 levels, with profit margins affected by reductions in sales prices across a number of projects.

Meanwhile, its total contributions from the investment and development properties businesses were “broadly unchanged”.

For investment properties, better performance from the luxury retail portfolio across the region and the Singapore office offset lower contributions from the Hong Kong office.

Nevertheless, the group is undertaking an “extensive review” of its projects as a result of deteriorating market conditions, it said.

Where projected sales prices are lower than development costs, the investment carrying value will be impaired. The group expects a non-cash impairment charge of US$200 million to US$300 million to be reflected in first-half results as at June 30, 2024.

The company does not expect the review to have a material impact on its financial position. Its gearing stood at 16 per cent and its committed liquidity was US$3.1 billion as at March 31.

THE BUSINESS TIMES