STOCKWATCH: Swire Pacific extends losses after weaker-than-expected results

HONG KONG (AFX-ASIA) - Swire Pacific shares extended their losses in the afternoon, following its weaker-than-expected 2000 results, hit by the 1.70 bln provision made against its residential property trading portfolio, dealers said. At 3:01 pm, Swire Pacific was down 2.50 hkd or 4.67 pct at 51.0, on trade of 1.09 mln shares. The Hang Seng Index was down 15.92 points at 14,193.03. Swire recorded a net profit of 3.889 bln hkd in 2000, compared with 4.435 bln the previous year. Kenneth Chan, an analyst with Kim Eng securities, said Swire Pacific was beleaguered with a higher-than-expected provision for its Ocean Shore development, a residential project in Tseng Kwan O. The company had to make a provision for the project because selling prices are unlikely to match the development's cost. Some analysts are forecasting the Ocean Shore project will be sold at an average 3,600 hkd per square foot, compared with the development cost of 4,100 hkd. Swire had previously warned it might book a provision for the Ocean Shore project in its 2000 results. The company also made a provision of 250 mln hkd related in connection with the 4.50 bln hkd land premium it owes the government in respect of its Taikoo Shing development. Swire has appealed for the land premium to be reduced. "If the provision is excluded, the results were slightly better than forecast, because of the improvement in rental income for commercial properties," Chan said. Looking ahead, the company will continue to benefit from the recovery in commercial rental rates, while associate Cathay Pacific will likely make a similar contribution in 2001 to that achieved in 2000. On Wednesday, Cathay Pacific announced a net profit of 5.00 bln hkd for 2000, compared with 2.18 bln hkd in the pervious year. "The other businesses for Swire, like industrial and trading, are shrinking ... but Cathay Pacific will remain a profit generator for the company," he said. He said his house has a "buy" recommendation for Swire.

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