Kerry Properties Ltd, a real-estate developer focusing on luxury apartments, slashed its second-half dividend 40 percent as 2001 profit fell more than expected after selling apartments for less than they cost to build.
The Hong Kong builder, controlled by Malaysian tycoon Robert Kuok, said net income fall by almost half, to HK$395.8 million (US$50.8 million), or HK$0.345 a share, from HK$728.2 million, or HK$64.9. Profit was worse than the average estimate of HK$605 million of 15 analysts surveyed by IBES International Inc.
Kerry bought land for projects like Ocean Pointe in rural Sham Tseng at the peak of the property market in 1996 and the first half of 1997. It's now selling apartments at a loss because prices fell by half between 1997 and 2000.
"Luxury apartment sales last year were hit pretty hard," said Paul Pong, managing director at Pegasus Fund Managers Ltd, which invests US$64 million globally. "Whether it will pick up depends on the government's land policy this year."
Hong Kong will sell 24 percent more land for private housing in the upcoming financial year after record low sales this year swelled the budget deficit, the government said this afternoon after Kerry posted its earnings.
Operating profit fell 23 percent to HK$925.2 million. The company cut its final dividend to HK$0.12 from HK$0.20, making a full-year dividend of HK$0.32, compared with HK$0.40 in 2000.
"This is an exceptional year, with the results impacted by the provision and losses from sale of properties," said Chew Fook-aun, Kerry's chief financial officer "We expect to revert back to the normal dividend level when our results improve."
Only 209 new apartments for more than HK$10 million each -- a benchmark for luxury units -- were sold last year in Hong Kong, 73 percent fewer than in 2000, according to Centaline Property Agency Ltd Potential buyers such as bankers were among the record 6.7 percent of Hong Kong people who were jobless in January.
* Operating profit fell 23 percent to HK$925.2 million for Kerry Properties in it last fiscal year.
* The company cut its final dividend to HK$0.12 from HK$0.20, making a full-year dividend of HK$0.32, compared with HK$0.40 in 2000.
* The company's stock dropped 44 percent in the past 12 months.
Hong Kong new homes sales in February rose 25 percent from a year earlier to HK$14 billion, the government Land Registry said today. Analysts attributed the increase to developers' price cuts aimed at selling existing stock.
Sales rose to HK$5.04 billion from HK$3.20 billion. Kerry also generates sales from warehouses and hotels, and renting out apartments. Kerry wrote off HK$270 million as its share of the reduction in value of Constellation Cove, a delayed residential project in the northern suburb of Tai Po.
After the write-off, the value of apartments in Constellation Cove is HK$3,850 a square foot. The company has sold 68 of 208 apartments since Thursday at prices of between HK$4,200 and HK$5,000 a square foot, the company said.
Kerry Chairman Edward Kuok said he hoped the company would be able to write back some of charge in future.
Kerry shares rose 0.8 percent to HK$6.55 yesterday. The stock dropped 44 percent in the past 12 months, compared with a 19 percent decline in the Hong Kong All Ordinaries Index.