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Salina Li

Hong Kong developer Hang Lung Properties reported a 56 per cent slump in net profit for the first half because of lower operating leasing profits and higher finance costs.
The shares sank as much as 15.2 per cent, the most in 24 years, before erasing some losses to close 11.7 per cent lower at HK$5.42. The stock has lost more than 85 per cent since reaching a record high of HK$40.30 in November 2020.
Net profit attributable to shareholders came in at HK$1.06 billion (US$135.7 million) in the six months to June, which included a net revaluation loss on properties attributable to shareholders, according to the company’s earnings statement to the Hong Kong stock exchange on Tuesday. The net profit a year earlier stood at HK$2.39 billion.
“Now is the time to adopt a more cautious approach, rather than focus on expansion,” Adriel Chan, chairman of Hang Lung Properties told a media briefing. “It is necessary to take responsible steps to preserve cash reserves and maintain a healthy financial position, while supporting the capital requirements of our projects under development.”
The company’s net gearing ratio stood at 32.9 per cent in June, up 1 per cent compared with the end of last year. The developer hopes to maintain the level in the mid-thirties in the short terms and reduce it to 30 per cent or below in the long-term.
Hang Lung Properties will pay an interim dividend of HK$0.12 per share, 33 per cent less than a year earlier.
“The key considerations that we are now facing – macro challenges and the business environment in the first half – were more severe than expected,” he said.

“In Hong Kong, the market experienced a slower-than-expected recovery in the first half of the year,” Hang Lung said in the filing. “Uncertainties in the geopolitical and economic environment led to negative reversion of some anchor tenants and dragged down our rental revenue and operating profit, which declined by 8 per cent and 11 per cent, respectively, in the first half of the year.”
Revenue from property leasing decreased by 7 per cent to HK$4.88 billion, primarily affected by weakened luxury consumption on the mainland, the softening of retail and office markets in Hong Kong, and the yuan’s depreciation, the company said.
Rental revenue from its mainland portfolio dropped by 3 per cent in yuan terms and 6 per cent in Hong Kong dollar terms. “Our offices, particularly those in Shanghai, face challenges due to the oversupply of office spaces and soft demand,” it added.
The cost of servicing its debt in the first half rose by 52 per cent to HK$455 million, versus HK$299 million a year earlier.
Overall operating profit dropped by 10 per cent to HK$3.43 billion.
“Results are soft across key lines,” said Jefferies analysts in a note. “Ongoing weakness in luxury sales may put further pressure on future earnings. Pickup in interest expense and margin were also worse than expected. As such the decline in the first half underlying profit was wider than the previously expected 9-10 per cent.”
In terms of property sales, Hang Lung offloaded 114 units at its only mass residential project in Hong Kong, The Aperture, in Kowloon Bay, and one house at 23-39 Blue Pool Road in the first half.
It also sold four units at its Heartland Residences in Wuhan, capital of central Hubei province, for a total of HK$1.23 billion.
The company still has around 1,000 unsold units across all its existing projects in both Hong Kong and mainland China.
Chan said the company will try to sell all units “as soon as possible at reasonable prices”.
Its parent company, Hang Lung Group, which owns 60 per cent, reported a first-half net profit attributable to shareholders of HK$1.28 billion, 47.2 per cent lower than a year earlier.
The company will pay an interim dividend of HK$0.21 per share.


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Hang Lung Properties’ profit sinks 56% amid Hong Kong, mainland China slowdown

Shares of Hang Lung Properties sank 12.7 per cent on Tuesday, the most in 24 years. Photo: Shutterstock

Adriel Chan took over as the chairman of Hang Lung Group in April. Photo: Jonathan Wong

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(L-R)Vice Chair of Hang Lung Group &amp; Hang Lung Properties, Mr. Adriel Chan; Chief Executive Officer of Hang Lung Group &amp; Hang Lung Properties, Mr. Weber Lo; Chair of Hang Lung Group &amp; Hang Lung Properties, Mr. Ronnie C. Chan; Chief Financial Officer of Hang Lung Group &amp; Hang Lung Properties, Mr. Kenneth Chiu; pose for a picture at the 2023 Annual Results.

Hong Kong property group Hang Lung has named Adriel Chan to succeed his father Ronnie Chan as its chairman. Photo: Handout

Third generation takes charge at Hang Lung Group as stalwart Ronnie Chan steps down from Hong Kong commercial landlord

Ronnie Chan Chi-chung poses for a photo at Asia Society in Admiralty, Hong Kong in March 2023 Photo: Jonathan Wong

Adriel Chan takes over the Hang Lung group in a succession plan first announced in January this year. Photo: Handout

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Hang Lung Group’s new chairman Adriel Chan, May 27, 2024. Photo: Jonathan Wong

Adriel Chan took over as chairman of Hang Lung Group in late April after his father Ronnie Chan Chi-chung (pictured) stepped down. Photo: Jonathan Wong

An illustration of the Plaza 66 project in Shanghai, developed by Hang Lung Properties. Photo: Handout

An illustration of the Grand Gateway 66 project in Shanghai, developed by Hang Lung Properties. Photo: Handout

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First-half net profit declines to HK$1.06 billion (US$135.7 million), from HK$2.39 billion a year earlier on lower rental revenues, higher costs


First-half net profit fell to HK$1.06 billion (US$135.7 million), from HK$2.39 billion a year earlier on lower rental revenues, higher costs.


Hang Lung Properties’ profit sinks 56% amid Hong Kong, mainland China slowdown

.css-1mniedq{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;}First-half net profit declines to HK$1.06 billion (US$135.7 million), from HK$2.39 billion a year earlier on lower rental revenues, higher costs

First-half net profit declines to HK$1.06 billion (US$135.7 million), from HK$2.39 billion a year earlier on lower rental revenues, higher costs