Hongkong Land back in the black with H1 underlying profit of US$297 million
Excluding the impact of non-cash provisions for its build-to-sell segment in China, H1 underlying profit stood at US$320 million, 11 per cent higher than the US$288 million recorded the year before.
In an interview with The Business Times on Tuesday (Jul 29), Hongkong Land's chief financial officer Craig Beattie said market sentiment in Hong Kong has improved significantly in the first six months of this year, led by the huge jump in capital markets activity.
Rents in Hong Kong have been on the decline for five years, and that is unlikely to continue, he added.
'The uptick in capital markets activity combined with rents being at a level that many occupiers feel this is a good point to really jump (in)... has meant that we've seen an improvement in inquiries.
'When you start to see some very savvy (and) large financial firms securing their presence in Hong Kong for the long term, I think people sit up and start to realise that maybe this could be the bottom of the market.'
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Vacancies on a committed basis for the group's portfolio declined to 6.9 per cent as at end-June, compared to 7.1 per cent at the end of 2024. This was also lower than the 11.8 per cent vacancy in Hong Kong's wider Central Grade A office market.
In Singapore, the group's office portfolio 'continued to perform well and was effectively fully let', Hongkong Land said. Rental reversions were positive, with average rents increasing to S$11.40 per square foot (psf), compared to S$11.10 psf for the same period in 2024.
The group uses underlying profit in its internal financial reporting to distinguish between ongoing business performance and non-trading items, as its management considers this to be a key measure that provides additional information on the group's underlying business performance.
Revenue for the first half of 2025 fell to US$751.2 million, down 23 per cent from US$972.4 million year on year as the group winds down its build-to-sell business .
Including net non-cash valuation movements, the group recorded US$221 million in profit attributable to shareholders, compared to a loss of US$833 million in H1 2024.
Underlying earnings per share for H1 2025 stood at US$0.1351, from an underlying loss per share of US$0.0031 in H1 2024.
The board is proposing an interim dividend of US$0.06 per share, unchanged from a year ago.
Giving an update on its capital recycling efforts, Hongkong Land said that, as at Jun 30, it has secured 33 per cent of its US$4 billion target. This includes the sale of office floors and retail space in One Exchange Square to the Hong Kong Stock Exchange for US$810 million.
'Capital recycling continues to be prioritised to reduce net debt and increase investment capacity, with a number of significant initiatives currently under way.'
On the build-to-sell segment, the group said the outlook is 'expected to remain challenging with weak sales levels across most cities on the Chinese mainland'. 'Stimulus measures have had a limited impact on improving broader market sentiment outside of Tier 1 cities. Profit contribution is likely to be substantially lower in the second half of 2025 due to lower profit margins on completed projects.'
The group's Landmark retail space in its Hong Kong Central portfolio will continue to be impacted by renovations in the second half of 2025, although this is expected to be 'partially offset' by scheduled re-openings in the fourth quarter.
Asked about the impact of tariff uncertainty on the group, Beattie said that in terms of capital recycling, for strategic transactions where buyers see long-term value, those deals will continue to move forward.
'Given the fact that Hong Kong has been in a difficult place but hopefully (is) now coming out of that… I think a lot of investors are perhaps thinking this could be a time to pivot back into this part of the world.'
Speaking on whether Hongkong Land still plans to divest MCL Land, Beattie said the group's Singapore property development arm is 'a very strong business overall'.
'Most of our projects are almost effectively fully sold. Whether there (are) opportunities for a buyer to take over the custodianship of our business... we'll just have to see. There's a number of options that we're looking at (in) the moment.'
Shares of Hongkong Land closed 2.1 per cent or US$0.13 higher at US$6.39 on Tuesday, before the H1 results were announced.
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