Kerry Properties' profit up 5% to $3.7b

Its asset value also edged up by 2%.

In FY 2016, in terms of contracted sales, Kerry Properties said in a release that the company has achieved HK$12.2bn from projects in HK, and HK$14.2bn from projects in the PRC, totalling HK$26.4bn, achieved 203% the full year sales target of HK$13b.

In HK, key projects sold include the inventory units of The Bloomsway, One and Three Ede Road, 8 LaSalle, Dragons Range and Mantin Heights, which was successfully launched in the first half of the year.

In the PRC, the Group was able to achieve contracted sales growth of 109% YoY, as a result of the satisfactory market responses to the pre-sale of Castalia Court in Hangzhou, Nanjing Jinling Arcadia Court, Phase II of The Metropolis-Arcadia Court in Chengdu. Other key projects sold include the inventory units of projects in Putian, Nanchang, Shenyang, Tianjin, and Shanghai.

During 2016, the Group signed Shares Transfer Agreements with independent third parties to divest the entire investment in Yingkou, Phase III of The Metropolis-Arcadia Court in Chengdu, and Changsha. Completion of the shares transfer for Phase III of The Metropolis-Arcadia Court in Chengdu and Changsha were completed in October 2016 and January 2017, respectively. Shares transfer for Yingkou is expected in 2017.

In the Mainland, Hangzhou Kerry Centre is the new addition during 2016 to the portfolio of large-scale mixed-use projects in the CBDs of major cities. In pursuance of the Group’s focus on maintaining a steady revenue base, the resulting rental property portfolio is now posting rental and occupancy rates that meet expectations. PRC property rental and hotel revenue increased 7% YoY to HK$4.7bn in FY 2016.

Overall PRC occupancy for office, commercial and serviced apartments maintained at 95% as of December 31, 2016. Hotel revenue increased by 15% YoY, mainly due to new and increasing contributions from Midtown Shangri-La, Hangzhou, which was soft-opened in March 2016 and Nanchang Shangri-La hotel.

The Group’s underlying profit increased 5% YoY to HK$3.7bn in FY 2016. An increase in fair value of investment properties (net of deferred taxation) of HK$2,866 million were recorded in FY 2016 (FY 2015: HK$2,049 million). After taking into account the net increase in fair value, profit attributable to shareholders increased 18% YoY to HK$6,537 million (FY 2015: HK$5,530 million).

Net asset value increased by 2% from beginning of the year to HK$57.34 per share as of December 31, 2016. Balance sheet position is solid, with HK$16.5bn in cash and bank balances and HK$9.3bn in available undrawn bank loan facilities, making up a total of HK$25.8bn in available funds as of December 31, 2016. Net debt to total equity increased to 30.3% as of December 31, 2016 from 27.8% as of December 31, 2015.

Final dividend per share at HK$0.80 has been declared, representing an annual payout ratio of 43.3%. During the year, the Group completed the acquisition of the entire building at Nos. 168-–168C Boundary Street in Ho Man Tin and will jointly redevelop the site together with a site at Nos. 10-12A LaSalle Road with an aggregate developable GFA of 45,000 square feet, scheduled for completion in 2019.

The Group also increased its land bank by acquiring a residential site in Beacon Hill with a buildable GFA of approximately 343,000 square feet and a site in Qianhai for commercial use of a planned GFA of approximately 1.19 million square feet jointly with Kerry Holdings Limited and The Bank of East Asia in 2016.