It is a financial report where "accounting profit recovery" conceals a "shrinking core business scale." Once a capital miracle was witnessed in the market: relying solely on a signature property project, KERRY PPT sustained an entire high-performance cycle. Yet merely a year later, the illusion of a short-term blockbuster has been torn apart.
According to interim results disclosed by KERRY PPT, the company's shareholders' attributable profit for the first half of this year reached HK$735 million, a year-on-year increase of 20%; earnings per share stood at HK$0.51, with an interim dividend of HK$0.4 per share proposed, flat compared to the same period last year. In stark contrast to the profit growth, the group's consolidated revenue during the period fell sharply by 33% to HK$6.671 billion; contracted sales amounted to HK$6.872 billion, down 57.6% from HK$16.186 billion in the same period last year. This pattern of rising profits alongside falling revenue paints a true picture of this veteran Hong Kong-based property developer navigating under pressure through the industry's adjustment cycle.
Kua Hock Kwong, Chairman of KERRY PPT's board, stated that the group remains optimistic about the long-term prospects of Hong Kong and Mainland China, but faces significant challenges and risks in the medium to short term. The group will prioritize maintaining corporate financial health and operational resilience, striving for the best flexible balance across different development cycles.
Mainland sales plummet
The divergence in regional structure is key to understanding this report card from KERRY PPT, with pressure first emerging from the Mainland market. In the first half of 2026, contracted sales in Mainland China dropped a steep 87.8% to HK$1.301 billion, down from HK$10.644 billion in the same period last year. This dramatic gap partly stems from the "high base effect" of the first phase launch of Shanghai Jinling Huating in the first half of 2025, where all 158 units recorded sales of RMB 9.234 billion. On the other hand, KERRY PPT lacked major new project launches in Mainland China during the first half, with sales outside Shanghai remaining sluggish.
Vivian Cheung, Chief Financial Officer of KERRY PPT, noted that residential units of the Shanghai Jinling Road project are essentially sold out. For the second half, the Mainland market will focus on promoting the Shenzhen Qianhai Kerry Bay project, while the Shenyang Yasong Pavilion project will continue selling remaining inventory. "The Mainland market still faces challenges in the medium to short term. The group will invest prudently, prioritizing the Hong Kong residential market and distinctive commercial projects," Cheung emphasized.
Contrasting with the "cold" Mainland market, the Hong Kong market runs "hot." In the first half, Hong Kong projects accounted for over 80% of the group's total contracted sales, reaching HK$5.571 billion, up approximately 1% year-on-year. During the reporting period, the launched Hoi Tin Bay project recorded HK$1.821 billion, the Tivolí project recorded sales of HK$1.707 billion, and the Wong Chuk Hang MTR station projects Highpeak Square and Southland contributed a combined HK$1.722 billion.
In its interim report, KERRY PPT mentioned that Hong Kong's residential market continues to improve, with the inventory absorption period dropping to about 14 months, the lowest in three years. Tang Yiu Chung, Group Director and General Manager of Hong Kong Region at KERRY PPT, stated that Hong Kong developers' sales strategies have shifted from "seeking volume through price cuts" to "holding back supply," expecting stable property prices for the full year, with residential prices projected to rise approximately 11% to 12% year-on-year.
Based on this judgment, KERRY PPT actively pursued land acquisitions in Hong Kong during the first half, successfully securing three residential sites with a total gross floor area of approximately 235,000 square feet. "The current stock of first-hand residential units available for sale across Hong Kong has fallen to about 20,000, with tightening supply. Additionally, various talent schemes continue to generate housing demand for Hong Kong, providing positive support for the economic fundamentals."
The proactive land acquisition by KERRY PPT is based on an optimistic outlook for the Hong Kong market. HSBC Research believes KERRY PPT has adjusted its strategy, including replenishing land reserves in Hong Kong and optimizing sales strategies to enhance profitability. UBS suggests that the steady sell-through of Hong Kong's high-end properties provides crucial cash flow support for KERRY PPT.
The "fever" behind the profit
Revenue slid 33%, so why did profit still grow 20%? The answer lies in three key factors: gross margin recovery, halted impairment provisions, and investment property support. During the reporting period, KERRY PPT's development property gross margin jumped from 9% in the same period last year to 18%, nearly doubling. The company attributed this to delivery timing differences and an optimized product mix. In other words, "fewer units were sold, but they were higher-priced projects."
More crucial was the "absence" of impairment provisions. In the first half of 2025, KERRY PPT booked impairment provisions of HK$115 million for development properties, whereas in the same period of 2026, this provision was zero. This interplay provided a "protective umbrella" for the profit line. Additionally, fair value changes supplemented profits; excluding the revaluation effect of investment properties, KERRY PPT's underlying profit actually declined 9% year-on-year to HK$782 million.
In other words, part of the profit growth stems from property revaluation rather than substantive expansion in operational scale. Amid heightened volatility in sales during the first half, the investment property and hotel segment underpinned the revenue base. Revenue from investment properties and hotels edged up 3% against the trend, reaching HK$3.64 billion, surpassing development properties. During the period, non-cash fair value losses on investment properties narrowed significantly from HK$251 million in the same period last year to HK$47 million, though pressure at the fair value level has not fully dissipated.
Financial "deleveraging" efforts are also intensifying. As of end-June, KERRY PPT's gearing ratio fell to 31.3% from 33.3% at the end of 2025, holding cash and bank deposits totaling HK$17.391 billion. Management projects that the net gearing ratio will further decline to approximately 30% to 33% next fiscal year, benefiting from cash inflows generated by the higher selling prices of the Shanghai Jinling Huating project. Citi noted in a research report that KERRY PPT's current primary task is deleveraging, followed by dividends.
"This is a financial report where 'accounting profit recovery' masks 'shrinking core business scale.'" Market observers believe the first-half results reflect a profound structural adjustment underway in KERRY PPT's business. In the short term, volatility in property sales and the contraction of the Mainland market remain key challenges. If newly acquired land cannot quickly translate into sales cash flow, the group could face certain funding chain tests.
Despite the Mainland market entering a temporary trough due to launch schedules, KERRY PPT's strategic layout in China continues to advance cautiously. On July 30, a consortium led by KERRY PPT won the commercial parcel in Shanghai Pudong New Area's Yangsi region for a total price of RMB 2.705 billion, a premium of 80.44%. The site covers approximately 95,800 square meters, planned as a large-scale TOD commercial complex, with the group's maximum investment commitment around RMB 5.035 billion.
"This will further enhance the Group's investment property portfolio in Shanghai, and through the development of commercial and cultural properties, bring long-term and recurring income to the Group," KERRY PPT stated in an announcement. The Jinqiao Xinjia Center, previously developed by this consortium, officially opened on June 30, becoming one of Shanghai's TOP2 single-entity commercial landmarks, increasing the group's attributable GFA in Mainland investment properties to 14.383 million square feet.
However, the expansion of investment properties also carries underlying concerns. Office properties account for 35.4% of total investment properties, and due to pressure on rental income, they have become a drag on performance. "There are currently no plans to acquire land in mainland China in the short term; resources will be concentrated on developing the Hong Kong residential market," Cheung clearly signaled a stance of "cautious in Mainland, aggressive in Hong Kong."
The real test lies in the pace of residential project launches in the Mainland market for the second half. Unrecognized contracted sales as of end-June stood at approximately RMB 29.8 billion, with RMB 23.9 billion from Mainland China. The speed at which these "inventory" figures convert into actual cash collections will directly determine the final trajectory of KERRY PPT's full-year performance.
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