Cheung Kong sells mall amid profit squeeze
Sale of Tin Shui Wai shopping mall comes as developer is hit by government cooling policies
Billionaire Li Ka-shing's Cheung Kong (Holdings) has agreed to sell its shopping mall in Tin Shui Wai for about HK$5.85 billion, a move which analysts say aims to boost earnings affected by the government's housing policies.
The developer has signed a memorandum of understanding to sell Kingswood Ginza Property, one of the largest shopping centres in Yuen Long with 206 tenants, to Fortune Real Estate Investment Trust, which is also controlled by Li.
"It's not surprising news and the deal will create a win-win situation for Cheung Kong and its company [Fortune Reit]," said Eric Yuen Chi-fung, head of research at GuocoCapital.
"Since residential property sales have been slowed by the government's cooling policies, selling its assets will help boost the developer's profit in the short term," he said. "Other developers may adopt a similar strategy to smooth their earnings as they are also affected by the measures."
Cheung Kong will announce its interim results tomorrow, and analysts expect a year-on-year decline of as much as 27 per cent in core profit to HK$9.3 billion.
BNP Paribas property analyst Patrick Wong Chi-leung said Cheung Kong sold fewer than 300 flats in the first half of this year, totalling less than HK$3 billion. Selling the mall will allow it to cash in, while the company has been investing in overseas projects such as utilities in Europe to diversify its portfolio.
