Wharf sees more struggles ahead in Hong Kong, mainland China after reporting weak property sales, profit in 2023

Total property sales fell by 44 per cent last year, while underlying net profit before provisions slipped by 9 per cent, the developer said in a stock exchange filing in Hong Kong on Tuesday. It sold two ultra-luxury houses in Hong Kong to shore up its income, and has not replenished its land bank on the mainland since 2019 amid a poor market outlook.

“China faces considerable domestic challenges, from a sluggish property market to weak consumer sentiment,” the developer said. “Overall, with numerous external and domestic uncertainties compounding volatility, business outlook remains clouded, and these challenging conditions may take an extended period to fully resolve.”

Wharf has proposed to pay a second interim dividend of HK$0.20 per share on April 25. The stock dropped 0.2 per cent to HK$27.35 on Tuesday, while the Hang Seng Index surged 3.1 per cent to erase all of its declines this year.

The developer said recent measures to remove decade-old financing curbs could breathe new life into the housing market. However, the city’s underlying economic performance still depends heavily on China’s economy, given the deepening integration.

Wharf reported a net profit of HK$945 (US$120.8 million) for the year to December 31, compared with a HK$1.7 billion loss in 2022. The turnaround was aided by a 70 per cent drop in provisions to HK$1.6 billion. They were related to its development properties in mainland China, foreign-exchange losses due to the yuan’s weakness, and fair-value loss on its HK$42 billion investment portfolio.