PROPERTY group Hongkong Land : H78 0% on Friday (Jul 28) reported underlying profit of US$422 million for the first half of 2023, marginally down from US$425 million a year ago, amid lower planned sales completions.

Net loss for the six months ended Jun 30 was US$333 million, compared with a US$292 million net profit a year ago. The group recorded unrealised losses mainly from revaluations in its investment properties business – US$755 million in H1 2023, and US$133 million in H1 2022.

Loss per share was 15 US cents, compared with earnings per share of 12.83 cents in H1 2022. Underlying earnings per share were 19.02 US cents, up from 18.67 cents a year ago. Hongkong Land said it has invested US$599 million in its US$1 billion share buyback programme announced in September 2021 and July 2022, resulting in the total issued share capital being reduced by 5.1 per cent.

The board of directors has recommended an interim dividend of 6 US cents per share for the half-year, unchanged from 2022, to be paid out on Oct 11.

Revenue for the first half fell 25 per cent to US$670.3 million. Rental income was up 1.8 per cent to US$463.9 million, while service income increased 11.9 per cent to US$103.2 million. Sales of properties, however, fell 25 per cent to US$103.2 million.

Hongkong Land said the weak economic outlook in China weighed on consumer sentiment. However, the focus on premium residential products in a select number of top-tier cities produced a better sales performance than the general market, the group said.

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Attributable interest in contracted sales was US$745 million, compared to US$419 million in H1 2022 and US$881 million in H2 2022.

Hongkong Land had US$2.3 billion in sold but unrecognised contracted sales as at Jun 30, compared with US$2.1 billion at the end of 2022.

Results from the investment properties segment held steady, with an improved performance in the luxury retail portfolio offsetting a lower contribution from the Hong Kong office portfolio.

Physical and committed vacancy in the Central office portfolio was significantly lower than the average vacancy in the market. That said, physical occupancy increased to 6.9 per cent from 4.9 per cent, while committed vacancy increased to 6.2 per cent from 4.7 per cent.

Negative rental reversions resulted in average office rents decreasing to HK$107 (S$18) per square foot (sq ft), compared with HK$112 per sq ft in H1 2022 and HK$111 per sq ft in H2 2022.

Hongkong Land said trading conditions are likely to remain challenging in a number of key markets for the remainder of the year.

Full-year underlying profits are expected to improve, driven by the timing of project completions. The group believes improved retail trading performance is expected to offset negative rental reversions in Hong Kong.

The counter ended at US$3.59 on Friday, down US$0.02 or 0.6 per cent.