K Wah International posts record profit

K Wah International posts record profit

Mid-sized developer K Wah International Holdings (0173), controlled by tycoon Lui Che-woo, saw its net profit and revenue climb to record highs in 2012, on the back of strong demand for residential property.

For the year to 31 December, net profit attributable to equity holders leaped two and a half times to HK$4.3 billion, according to a stock exchange announcement.

If the change in fair value of non-current investments, namely the company’s 3.9 percent stake in Macau casino operator Galaxy Entertainment (0027) was added to the net profit figure, then total comprehensive income attributable to equity holders was HK$6.92 billion, representing an increase of 169 percent year on year.

From left: Executive Director Alexander Lui Yiu-wah, Chairman Lui Che-woo, Executive Director Paddy Tang Lui Wai-yu, Chief Financial Officer Herbert Hui Leung-wah   (K Wah International Holdings)

From left: Executive Director Alexander Lui Yiu-wah, Chairman Lui Che-woo, Executive Director Paddy Tang Lui Wai-yu, Chief Financial Officer Herbert Hui Leung-wah (K Wah International Holdings)

The value of the investment in Galaxy, which Lui helped set up in 2002 to win one of the Macau gaming concessions, leapt from HK$883.9 million in 2011 to HK$2.61billion in 2012.

Revenue, from property sales in Hong Kong, Shanghai and Guangzhou, edged up 4.7 percent to HK$3.35 billion year on year.

But the company said if revenue of jointly entities and associated companies is taken into account, then total attributable revenue increased 2.7 times to a historical high of HK$11.84 billion.

In Hong Kong, it currently has 12 projects, some wholly owned and some as joint ventures, at various stages of development.

Out of these 12 projects, two sites in Tseung Kwan O and one in Yuen Long will begin foundation works soon while another one in Mid-Levels is still under planning and design.

In mainland China, the company is working on 10 projects in Shanghai, Guangzhou and Dongguan.

The company noted the measures taken in 2012 by the Hong Kong and mainland authorities to cool the overheating property markets.

“With strong fundamentals in both Hong Kong and the Mainland, the residential property market is now much more influenced by government policy initiatives,” the company said.

It added that it would continue to sell its projects despite the challenging market conditions while continuing to seek new projects due to its strong financial position with low gearing and a large cash pile.

According to its balance sheet, it had cash and bank balances totalling HK$5.7 billion at the end of 2012.

Gearing, defined as the ratio of total borrowings less cash and bank deposits to total equity, fell from 29 percent in 2011 to 21 percent at the end of 2012.

Danny Chung

 

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