Soho China reports falling earnings, shift in business

Shares of Soho China Ltd (0410.HKG) fell as much as 8.6% on Friday after the property developer said it would shift its business to leasing, rather than selling, key commercial properties, sparking concern of weaker short-term earnings, The Wall Street Journal reported. Beijing’s biggest developer by land bank, Soho China announced Thursday that first-half net profit fell 65% year-on-year to RMB613 million (US$96.4 million), while revenue fell 54% to RMB1.22 billion due to fewer projects completed in the period. The company said it will shift to a “build-hold” business model for around 1.5 million square meters of gross floor areas of its Beijing and Shanghai commercial properties, an effort to profit from asset appreciation and rising rents at these locations. Analysts said the plan was likely to bolster longer-term profit but remained concerned about earnings in the next few years; some cut their 2013 net profit targets for the company by as much as 61%.