New World core profit surges 72% to HK$6.08b

HONG KONG: New World Development's underlying profit surged 72.4% to HK$6.08 billion (RM2.43 billion) for the year to June, thanks to strong property sales in Hong Kong and China.

Net profit, including property revaluation gains, jumped 457% to HK$11.61 billion from HK$2.08 billion a year earlier. Turnover grew 24% to HK$30.22 billion.

The company generated HK$12.57 billion from property sales, 495% more than the HK$2.11 billion in the year-ago period.

Of the total sales, HK$6.06 billion was generated from Hong Kong including The Masterpiece in Tsim Sha Tsui, Harbour Place in Hung Hom and Wylie Court in Ho Man Tin.

The developer planned to launch four new projects offering 1,135 flats in the current financial year to June next year. The projects have a total gross floor area of 1.28 million square feet. Executive director Stewart Leung Chi-kin estimates that the flats can generate HK$15 billion.

Despite the government releasing more residential sites to cool down the overheated property market, New World Development managing director Henry Cheng Kar-shun believes that property prices will continue to rise in the next three years.

"New supply of residential units will not increase immediately because of the policy. It takes two to three years to develop the residential sites," he said.

Cheng suggested the government resume the development of the Home Ownership Scheme, which could help lower-income families to buy their own homes.

He said the government should also resume regular land auctions, which would allow developers to better plan for the future.

The company declared a final dividend of 28 HK cents a share, up from 21 HK cents a share in the previous year.

Meanwhile, its China property arm New World China posted a 94% jump in net profit to HK$2.64 billion for the year to June. Profit from property sales surged 145% to HK$1.45 billion.

The company has completed 11 projects with a total gross floor area of 734,939 sq metres, 7% more than a year earlier. As 33% of the projects are located in second-tier cities such as Changsha and Chengdu, the average price did not increase significantly, it said.

Contracted sales of the company surged 141% to 1.32 million sq metres during the period, while sales volume increased to 10.2 billion yuan (RM4.72 billion). About 37% of the floor area worth 3.9 billion yuan will be booked in the current financial year. Cheng expects contracted sales will grow a further 20% for the year to June next year.

The firm declared a final dividend of 7 HK cents a share, up from 6 HK cents a year ago.

Separately, Chow Tai Fook Enterprises, a private company held by the Cheng family, and NWS Holdings have subscribed for US$100 million worth of shares in AIA Group, which has kicked off a US$15 billion initial public offering.

Shares in New World Development surged 4.9% to HK$16.70 on Wednesday, while New World China climbed 3.45% to HK$3. — South China Morning Post