HONG KONG: The infrastructure and property conglomerate Hopewell Holdings (Hopewell) recorded a sharp drop in profits during the first six months of fiscal year 08-09.

The company blamed a significant slowdown of growth in the Peal River Delta region, as profits slipped from HK$5.26 billion to HK$931 million.

The slowdown, in conjunction with the global recession, adversely affected the growth of traffic on the company's highway, the report said.

On the property front, the company's rental business grew by 20 percent from HK$229 million to HK$275 million.

Hopewell Executive Director William Wong yesterday noted that average rents on renewals of rental contracts were HK$29.9 per square foot in January. That represents a 10 percent fall from the peak. But Wong said the company's office rents will not face downside pressure.

Regarding the project at 12 Broadwood Road, Hopewell Co-Managing Director Thomas Wu noted that the company will invest HK$700 million to develop it into a 45-floor residential building. The project is scheduled for completion in the second half of 2010.

As for the mainland market, Wu said that the first and second phase of a residential project in Huadu District of Guangzhou will be complete by the end of the year. Those projects entail 112,000 square meters.

Meanwhile, the revaluation of leasing property contributed HK$511-million to corporate revenues, against HK$371-million in the 07-08 financial year. The gain was mainly due to the revaluation of the service apartment Garden East.

Hopewell's turnover rose to HK$1.53 billion from HK$1.51 billion over the corresponding period during the previous financial year.

The company distributed an interim dividend of HK$0.4 per share and a special interim dividend in the proportion of one share of Hopewell Highway Infrastructure (HHI) for 10 shares of Hopewell.

Wu said that the arrangement is meant to increase the circulation of HHI, saying it can widen the foundation of HHI shareholders and bring about HK$155 million profit to shareholders.

Separately, the group's infrastructure arm HHI posted a 59 percent decrease in net profit to HK$579 million for the six months ended 31 December 2008.

Wu said that the daily traffic flow of the Guangzhou-Shenzhen Superhighway decreased 5 percent to 319,000 vehicles.

Shares of Hopewell yesterday dropped 1.33 percent to HK$22.20, while HHI shares increased 1.30 percent to HK$4.65.

(HK Edition 02/27/2009 page16)