New World cautious with new target despite record sales
Developer's net profit slumps 31.3pc on the back of decline in property revaluation gains, though contracted sales were double the set target
New World Development kept a conservative target for contracted sales in the fiscal year to June 2015, even though its contracted sales hit a record in the previous financial year.
"The property sales were faster than our expectations," New World chairman Henry Cheng Kar-shun said yesterday. "Our sales target for the new financial year is conservative."
The developer's contracted sales target in the current financial year to 2015 has been set at HK$11 billion to HK$12 bil- lion. In the first quarter of the existing financial year, the firm has already generated nearly HK$5.9 billion from contracted sales.
Cheng believes property sales would remain healthy because housing demand is strong. He added that prices were not likely to weaken in the future.
"Property prices are unlikely to drop because of the high construction cost. It cost about HK$4,000 per square foot. Developers have to sell the flats with a higher price in order to make money," he said.
"A rise in interest rates will put property prices under pressure. But developers [can] cut the prices of new homes and this could offset the impact. We would cut the price if it is the only way to lure buyers."
The developer yesterday said underlying profit, excluding property revaluation gains, climbed 2.8 per cent to HK$6.51 billion for the 12 months to June.
Net profit slumped 31.3 per cent to HK$9.73 billion.
The plunge in net profit was mainly caused by an 80.89 per cent decline in property revaluation gains to HK$1.43 billion during the period.
Revenue grew 20.8 per cent to HK$56.5 billion. The revenue generated from property sales grew 20.95 per cent to HK$29.33 billion. It included the sales of Woodside and Park Signature in Yuen Long.
The main drivers for its property sales in the future would be Pavilia Hill, a luxury residential project in Tin Hau, the remaining 29 special flats at the Masterpiece in Tsim Sha Tsui and Double Cove Starview Prime in Ma On Shan.
"We are interested in the tender of MTR Corp's Tai Wai Station residential project," Cheng said, referring to the keenly contested upcoming tender for the property.
"We will continue to replenish our land bank through public tenders, the acquisition of old buildings and farmland conversion."
The company declared a final dividend of 30 HK cents a share, unchanged from the previous year.
