Hong Kong Property Developers Face Challenges as Sino Group Reports 24.7% Profit Dip

Challenges in Hong Kong Property Market

Sino Land’s profit declined by about a quarter in its financial year ending in June, as sales of homes and car parks slowed while revaluation losses surged, according to the latest earnings report from one of Hong Kong’s major developers.

Net profit amounted to HK$4.4 billion (US$564 million), down 24.7 percent from HK$5.8 billion in its 2022-2023 financial year, Sino Land said in a filing to the Hong Kong stock exchange on Tuesday. Revaluation losses were more than three and a half times higher from a year ago at HK$580 million. Revenue from property sales for the financial year was HK$8.89 billion, down 25.5 percent from HK$11.93 billion.

Property Revenue Sources

• Property revenue mainly derived from residential units and car parking spaces at its Grand Victoria phases 2 and 3 in southwest Kowloon.
• One Soho in Mong Kok and remaining stock of other projects in Wong Chuk Hang, Ho Man Tin, and Kwun Tong.

Future Developments

During the financial year, the group launched two new residential developments – La Montagne in Wong Chuk Hang, which is 6.8 percent sold, and Villa Garda III in Tseung Kwan O, which is 34.9 percent sold.

“Looking ahead, the group has a pipeline of new projects to be launched,” Sino Land said, which includes Once Central Place in Central and Grand Mayfair III in Yuen Long, both having obtained presale consents. The developer anticipates presale consent for two additional residential projects in Yau Tong and Lohas Park for the financial year 2024-2025.

Market Impacts and Insights

For the year ahead, lingering challenges such as high interest rates, sustained inflation, and geopolitical tensions persist. “The cautious spending and investment patterns of consumers and businesses reflect these prevailing economic challenges,” said Robert Ng See Chiong, Sino Land chairman.

“In response to these evolving market conditions, it is imperative for companies to respond swiftly to the new operational landscape to stay competitive,” Ng added. He emphasized the importance of meeting the challenges with solid fundamentals, integrity, and ongoing prudent financial management.

Dividends and Financial Performance

Sino Land proposed a dividend of HK$0.43 per share, with the board of directors giving shareholders the option to receive the final dividend in new shares instead of cash, subject to conditions.

Separately, Sino Hotels, a unit of Sino Group whose portfolio includes City Garden Hotel and Conrad Hong Kong, returned to profit with earnings of HK$64.3 million in the year ending June compared with a net loss of HK$19.5 million for the previous year.

City Garden maintained 100 percent occupancy, while Conrad achieved an average room occupancy rate of 69.1 percent. The hotel unit proposed a HK$1.5 cents per share dividend, allowing shareholders to receive new shares instead of cash.

Tsim Sha Tsui Properties, another listed company under the group, saw its profits fall about 24 percent from HK$3.28 billion last year to HK$2.50 billion in the latest financial year.