Wharf firms up balance sheet as Hong Kong home sales cushion profit slump

Wharf, a Hong Kong developer, is relying more heavily on the luxury-home market in Hong Kong to counteract declining profits from projects in mainland China. The company's revenue from Hong Kong properties nearly tripled in the first half, reaching HK$1.35 billion, compared to HK$475 million. Operating profit from these properties also more than quintupled to HK$166 million.

In contrast, revenue from mainland development properties dropped by 54%, with a HK$547 million impairment provision due to declining property values. Wharf's Hong Kong residential market is showing "meaningful gains" in both price and transaction volume, but the recovery faces a new threat from China's stricter outbound capital investment rules.

Chairman Stephen Ng noted that Hong Kong development properties are now generating more revenue than mainland projects. Wharf strengthened its balance sheet, ending June with HK$6.2 billion in net cash, allowing it to maintain shareholder payouts despite weaker headline earnings. The company declared a HK$0.40 interim dividend, double the payout from the previous year, including a special HK$0.20 dividend for its 140th anniversary.

Wharf plans to invest the cash in Hong Kong's property sector, particularly in the Northern Metropolis. The logistics infrastructure business, a significant source of revenue, faced challenges due to regional port competition and global trade disruptions, with Hong Kong throughput falling 6% to 1.6 million TEUs.