Sun Hung Kai bleeds as profit plummets 14%

Its Hong Kong revenues plunge 54%.

Sun Hung Kai Properties, Hong Kong’s largest developer, yesterday reported a 14% plunge in full year profits to HK$18.6 billion, its first loss since 2005. The company, which has a market value of US$35.5 billion, is also the world’s second-largest developer by market value.

Sun Hung Kai reported group revenues for property sales in Hong Kong were HK$16.3 billion or a 54% fall on-year. Sales of properties in mainland China, however, rose 113% to HK$3.6 billion

Hong Kong developers blame government steps to rein in runaway property prices for their dismal results. Among these steps are higher stamp duties for buyers and home loan curbs. The curbs have weakened demand, which is further expected to slump with the upcoming tapering by the US Federal Reserve of its US$85 billion monthly bond purchases.

An increase in US interest rates will automatically increase rates in Hong Kong, whose currency is pegged to the US dollar.

CLSA expects residential prices in Hong Kong to drop as much as 15% over the next 18 months. The Hong Kong government is not expected to revoke the tough property cooling measures in the next 12 to 24 months.