Sun Hung Kai Properties (SHKP) could report its full-year net earnings
dropped by up to 24.6 per cent due to poor flat sales and a possible
property provision, analysts said.
Forecasts of 25 securities houses surveyed by Thomson First Call
predict Hong Kong's largest developer by sales will post an average
13.9 per cent fall in net profit for the year to the end of June.
ABN Amro predicts the biggest decline of 24.6 per cent to HK$6.415
billion, down from HK$8.52 billion a year earlier.
Nomura Research Institute forecasts a 2.12 per cent rise in net profit
to HK$8.7 billion.
Citigroup Smith Barney, which expects earnings to be down 24 per cent
to HK$6.44 billion, or HK$2.68 per share, forecast a billion-dollar
"We are estimating a property provision of about HK$1.1 billion,
which is mainly attributed to the remaining units at Ocean Shores [in
Tseung Kwan O] and the remaining phases at Park Island [in Ma Wan],"
Citigroup's head of Hong Kong research Y K Fu said.
Fu also forecast a charge of HK$500 million for tech unit SuneVision's
data centres and technology investments.
Stripping out the provisions, Fu said SHKP's net earnings would be 13
per cent lower, due mainly to lower contributions from property sales
and rentals. Profits from flat sales were likely to fall 19 per cent
year-on-year, while rental income was expected to be 7 per cent lower
on softer office rentals and loss of income from the disposal of
retail properties in the first half.
SHKP will announce its results on Thursday.
HSBC Securities analyst Derek Cheung forecast a 19 per cent drop in
earnings to HK$6.93 billion, despite its exceptional profits from
The disposals included 14 floors in International Finance Centre to
the Hong Kong Monetary Authority for HK$1 billion, a 25 per cent
interest of 495,311 square feet of retail gross floor area and 1,059
carpark spaces in City One Sha Tin and Waldorf Garden in Tuen Mun.
"Our forecast of HK$1.57 billion exceptional profit from asset
disposals is not enough to offset the expected 53 per cent decline in
development profit and HK$800 million in provision for Park Island and
Ocean Shores," Cheung wrote in a report.
Assuming HK$800 million in provisions, the book costs for the 2,700
and 700 unsold units at Park Island and Ocean Shores falls to HK$2,500
per sq ft and HK$2,700 per sq ft, respectively.
"We are forecasting a 53 per cent fall in full-year development
profit to HK$2.26 billion. Major profit contributors are Park Central
phase 1 and 2, No 1 Ho Man Tin Hill and Villa by the Park in Yuen
Long," Cheung said. "We believe the sale of Park Island in the next
one or two years will continue to suppress SHKP's overall development
Cheung cut forecast 2004 earnings from HK$1.3 billion to HK$240
Both Citigroup and HSBC Securities are expecting a final dividend of
HK$1, the same as the previous year, taking full-year payout to
HK$1.6. SHKP shares fell 3.78 per cent to close at HK$57.25 on Friday.
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