Struggles in Hong Kong's property market lead to a 26% drop in CK Asset's first-half profits reported.
CK Asset Holdings Reports Weaker-Than-Expected First-Half Profit
CK Asset Holdings, a company owned by the Li Ka-shing family, reported weaker-than-expected first-half profit in 2025. The decline was primarily due to falling property asset values and lower-margin home sales due to necessary discounts in a tough market environment in Hong Kong and other regions.
The company's attributable profit dropped 26.2% to HK$6.3 billion, falling well short of analysts' expectations of around HK$14.2 billion. This decline was attributed to several key reasons.
Firstly, there was a HK$503 million write-down on the fair value of investment properties, reversing a previous gain of HK$1.9 billion in the first half of 2024. This weakened the balance sheet.
Secondly, while revenue grew by about 12.7-15% to HK$25.4-39.1 billion due to ongoing contributions from property leasing and infrastructure businesses, the profit from property sales decreased sharply. The company had to use discounts aggressively to sell homes in a weak residential market.
The residential property market in Hong Kong remained challenging, with continued weakness in retail and commercial sectors depressing rental incomes and overall profits. CK Asset is expected to maintain its home discounting strategy to clear inventory, including significant discounts on premium projects like Blue Coast in Hong Kong, which will continue to weigh on near-term profitability.
Despite these challenges, some operational profits outside property sales grew, largely offsetting declines from property sales. The group reported underlying profit growth excluding asset revaluations, supported by infrastructure and utility joint ventures in the UK and Europe.
In a filing to the Hong Kong stock exchange on Thursday, Chairman Victor Li Tzar-kuoi stated that the residential property market in Hong Kong remains challenging. He also noted that the retail and commercial property sector remained weak during the first half of 2025.
Li predicted that housing and land policies, as well as interest rate movements, will continue to be determining factors for the property market. He mentioned that the Hong Kong government has introduced measures to support the real estate market and improve investor sentiment.
The earnings per share dropped to HK$1.8 from HK$2.44, and the profit attributable to shareholders fell by 26.2% to HK$6.3 billion. CK Asset's property sales in Hong Kong for the first half of 2025 were HK$2.8 billion, an increase from HK$2.6 billion the previous year due to rising presales. However, the company also experienced a decline in rental income from its commercial properties.
Despite the challenges, CK Asset Holdings remains optimistic about its future prospects. The company is focusing on leveraging its strong position in the property market to navigate the current challenges and position itself for growth in the future.
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