PROPERTY developer Hongkong Land : H78 0% said that it expects its underlying profit for H1 FY2024 to be “significantly lower” than the previous financial year as it faces slower sales in China.
In its interim management statement on Thursday (May 23), the group, which is a member of the Jardine Matheson Group, said that buyer sentiment in China towards the residential sector has continued to deteriorate, with reduced sales and pricing.
The group said that its attributable interest in contracted sales was US$262 million in Q1, down 36 per cent compared to the same period in FY2023.
Therefore, contracted sales for FY2024 are expected to be lower than FY2023 levels, with profit margins affected by reductions in sales prices across a number of projects.
Meanwhile, its total contributions form the investment and development properties businesses was “broadly unchanged”. For investment properties, better performance from the luxury retail portfolio across the region and Singapore office offset lower contributions from the Hong Kong office.
Nevertheless, the group is undertaking an “extensive review” of the group’s projects as a result of deteriorating market conditions, it said.
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Where projected sales prices are lower than development costs, the investment carrying value will be impaired. It expects a non-cash impairment charge of US$200 million to US$300 million to be reflected in H1 results as of June 30, 2024.
The company does not expect the review to have a material impact on its financial position.
Its gearing stood at 16 per cent and its committed liquidity was US$3.1 billion as at Mar 31.
