Chinese Estates profit soars on divestments

Proceeds of the sale of The One in Nathan Rd helped property company Chinese Estates increase its profit by 340 per cent to HK$16.78 billion.
But such good news failed to prevent the company’s share price falling 8.65 per cent after the figures were announced as investors continued to demonstrate jitters about the state of the Hong Kong retail real estate market.
Asset disposals drove the profit boom – especially the high profile multi-level shopping centre in Tsim Sha Tsui – along with other buildings in Chengdu, Chongqing and Shanghai.
Net profit, including revaluation gains on investment properties, fell 11.67 per cent to HK$7.72 billion last year due to lower rental income after its disposal of Silvercord and The One in Tsim Sha Tsui. Turnover fell 41.22 per cent to HK$1.54 billion.
Chairman Lau Ming-wai said the group remains “cautiously optimistic” about rental income growth from its retail investment properties.
Post divestments, gross rental income from Hong Kong fell 35.23 per cent to HK$1.09 billion last year. Rental income from retail properties fell 50.8 per cent, while rental income from non-retail properties rose 7.09 per cent.
Controlling shareholder Joseph Lau Luen-hung said retailers relying on tourist trade had probably reached their peak, but the company was well-placed to manage that trend.
“Although the group’s well-located retail investment properties in Hong Kong leased well during the year, the group will continue to closely monitor the changes in local consumption patterns, refine its tenant mix, boost customer flow and spending for its retail investment properties by organising various marketing and promotional activities,” Lau said.

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