Hang Lung profit falls as property losses and weak offices offset record mall rents
Record mall rental income was offset by property writedowns and weak offices, while Shanghai’s Plaza 66 aims to grow beyond luxury shopping
Underlying net profit declined 10 per cent from a year earlier to HK$1.44 billion (US$184 million) in the six months ended June 30, while revenue rose 23 per cent to HK$6.11 billion, driven by the handover of residential units at Hong Kong projects including The Aperture in Ngau Tau Kok. Net profit attributable to shareholders decreased 17 per cent to HK$758 million.
The company also announced a change in management. A CEO-designate will join the company on September 7 and succeed Weber Lo as CEO on October 1, ending Lo’s eight-year tenure. Chairman Adriel Chan credited Lo with leading the company through “challenging” years which included the coronavirus pandemic and China’s prolonged property downturn.
Chan described Hang Lung’s performance this year as “relatively good” given China’s uneven property recovery. While consumer spending started the year strongly, momentum faded in the second quarter, though he said he remained “cautiously optimistic” that the full-year outlook “won’t be too bad”.
The biggest drag came from the development business. Although revenue from home sales surged more than sixfold to HK$1.04 billion thanks to a recovery of Hong Kong’s luxury property market, the segment still posted a wider operating loss after the company took HK$124 million of non-cash impairment charges on slow-selling mainland residential projects such as Heartland Residences in Wuhan, central Hubei province.
Lo said the writedowns reflected a “prudent” accounting approach, particularly for the Wuhan flats.