2022 INTERIM RESULTS ANALYST BRIEFING Hysan Development Company Limited 22 August 2022 Disclaimer This document has been prepared for general information purposes only, and is not, and should not be construed as an offer to sell, or a solicitation of an offer to buy any securities. Information and estimates contained and opinions expressed herein have been complied in good faith by Hysan Development Company Limited. No representation or warranty (whether expressed or implied) is made as to their accuracy, c ...

2022 ANNUAL RESULTS ANALYST BRIEFING Hysan Development Company Limited 17 February 2023 1 Disclaimer This document has been prepared for general information purposes only, and is not, and should not be construed as an offer to sell, or a solicitation of an offer to buy any securities. Information and estimates contained and opinions expressed herein have been complied in good faith by Hysan Development Company Limited. No representation or warranty (whether expressed or implied) is made as to their accuracy ...

1 Disclaimer This document has been prepared for general information purposes only, and is not, and should not be construed as an offer to sell, or a solicitation of an offer to buy any securities. Information and estimates contained and opinions expressed herein have been complied in good faith by Hysan Development Company Limited. No representation or warranty (whether expressed or implied) is made as to their accuracy, completeness or correctness. All information, estimates and opinions are provided with ...

2023 ANNUAL RESULTS ANALYST BRIEFING Hysan Development Company Limited 22 February 2024 1 Disclaimer 3 2023 : A mix of challenges and opportunities This document has been prepared for general information purposes only, and is not, and should not be construed as an offer to sell, or a solicitation of an offer to buy any securities. Information and estimates contained and opinions expressed herein have been complied in good faith by Hysan Development Company Limited. No representation or warranty (whether exp ...

2024 INTERIM RESULTS ANALYST BRIEFING Hysan Development Company Limited 23 August 2024 Disclaimer This document has been prepared for general information purposes only, and is not, and should not be construed as an offer to sell, or a solicitation of an offer to buy any securities. Information and estimates contained and opinions expressed herein have been complied in good faith by Hysan Development Company Limited. No representation or warranty (whether expressed or implied) is made as to their accuracy, c ...

2024 ANNUAL RESULTS ANALYST BRIEFING Hysan Development Company Limited 18 February 2025 Disclaimer This document has been prepared for general information purposes only, and is not, and should not be construed as an offer to sell, or a solicitation of an offer to buy any securities. Information and estimates contained and opinions expressed herein have been complied in good faith by Hysan Development Company Limited. No representation or warranty (whether expressed or implied) is made as to their accuracy, ...

Financial Performance - Revenue for 2024 reached HKD 3,409 million, representing a 6.2% increase compared to HKD 3,210 million in 2023[63] - The recurring basic profit for 2024 was HKD 1,956 million, up 6.8% from HKD 1,832 million in 2023[64] - Total assets (excluding cash and debt securities) amounted to HKD 110,982 million, reflecting a 1.2% increase from HKD 109,678 million in 2023[65] - The net debt-to-equity ratio increased to 31.4% in 2024 from 27.2% in 2023[72] - The interest coverage ratio (excluding capitalized interest) was 2.3 times, down from 2.4 times in 2023[72] - The average interest rate on debt was 4.3%, slightly up from 4.2% in 2023[73] - Retail revenue from shops increased by 9.5% to HKD 1,678 million in 2024, while office revenue decreased by 1.5% to HKD 1,440 million[77] - The occupancy rate for retail shops in Hong Kong was 92% in 2024, down from 97% in 2023[82] - The cash and cash equivalents at the end of 2024 were HKD 1,564 million, down from HKD 2,583 million at the beginning of the year[87] - Total revenue increased by 6.2% to HKD 3,409 million in 2024, compared to HKD 3,210 million in 2023[99] - The company's recurring basic profit grew by 6.8% to HKD 1,956 million in 2024, up from HKD 1,832 million in 2023[94] - Investment properties valued at HKD 96,547 million as of December 31, 2024, reflecting a 0.6% increase from HKD 96,005 million in 2023[91] - Fair value loss on investment properties was HKD 1,506 million in 2024, down from HKD 2,763 million in 2023[91] - The retail segment's revenue rose by 9.8% to HKD 1,684 million in 2024, compared to HKD 1,533 million in 2023[105] - The office segment's revenue decreased by 4.4% to HKD 34,109 million in 2024, down from HKD 35,688 million in 2023[91] - The company declared a second interim dividend of HKD 0.81 per share for 2024, consistent with the previous year[101] - The company's investment property portfolio in Shanghai began contributing to recurring profits in 2024, with a commercial floor area of approximately 900,000 square feet[100] - The property expenditure ratio improved to 18.9% of revenue in 2024, compared to 19.3% in 2023[104] - The group’s operating cash flow for 2024 was HKD 2,543 million, an increase of 4.6% from HKD 2,431 million in 2023[149] - Interest income decreased to HKD 134 million in 2024 from HKD 198 million in 2023, attributed to a reduction in bank deposits[146] - Total capital expenditure increased to HKD 1,890 million in 2024, up from HKD 1,669 million in 2023, primarily due to construction projects[152] - The total debt of the group rose to HKD 26,717 million as of December 31, 2024, compared to HKD 25,717 million in 2023, driven by strategic capital expenditures[154] - The debt-to-equity ratio increased to 31.4% in 2024 from 27.2% in 2023, while the net interest coverage ratio decreased to 8.8 times from 9.6 times[161] - Cash and bank deposits held by the group totaled approximately HKD 2,211 million as of December 31, 2024, down from HKD 3,854 million in 2023[163] - The group repurchased HKD 728 million of perpetual capital securities in 2024, with a total principal repurchase amount of HKD 777 million[150] - The group paid dividends totaling HKD 1,109 million in 2024, compared to HKD 1,479 million in 2023[151] - The average debt repayment period was 3.4 years as of December 31, 2024, down from 4.5 years in 2023[157] - The group maintained an investment-grade credit rating with Moody's at Baa2 and Fitch at BBB as of December 31, 2024[162] Strategic Developments - Hysan's retail and office portfolio maintained stable performance, with office occupancy rates remaining steady due to prime location and quality specifications[18] - The revitalization plan for Lee Gardens began to yield financial contributions, with over ten new luxury flagship stores set to open by 2025, including recently reopened Hermès, Dior, and Cartier[15] - The Lee Gardens Phase 8 project will expand the total area of Lee Gardens by nearly 30%, with a total area exceeding 1 million square feet, including 60,000 square feet of green open space[15] - A five-year memorandum of understanding was signed with the Academy for Performing Arts to enhance cultural facilities within Lee Gardens Phase 8, responding to the government's cultural development blueprint[16] - Hysan secured a four-year syndicated loan agreement of HKD 8 billion with 20 international and local banks to ensure ample liquidity for refinancing and operational needs[19] - The retail sector faced challenges but remains optimistic, with expectations for a gradual recovery in visitor numbers and spending due to government measures to attract tourists[17] - The office business showed strong demand growth in various sectors, including co-working spaces and wealth management, contributing to organic growth[18] - The new pedestrian system in Lee Gardens is set to be completed by 2026, enhancing connectivity for office users and shoppers[15] - Hysan's commitment to sustainable development is reflected in the new standards set by the Lee Gardens Phase 8 project[15] - The company continues to focus on maintaining a robust balance sheet and flexible capital management strategies to navigate uncertain market conditions[19] - The company has signed contracts for nearly half of the garden villas and apartments in the Linhai Mountain City project by the end of 2024[37] - Shanghai Li Garden recorded a strong growth with a rental rate of 70%, contributing new recurring profits starting in 2024[39] - The company plans to establish a new pedestrian passage system connecting various buildings in the Li Garden area, enhancing accessibility for office users and shoppers[33] - The Li Garden area will see the opening of over ten newly renovated luxury flagship stores in 2024, further solidifying its position as a premier location for luxury brands[28] - The company is investing in strategies that promote regional expansion and core business development opportunities[36] - The new office ecosystem solutions in the Greater Bay Area have shown robust growth, with high occupancy rates[43] - The company’s healthcare investment projects continue to maintain growth momentum and expand operations[45] - The Li Garden Phase 8 project is set to become a core green area, establishing new standards for quality and sustainable office spaces, expected to be completed by 2026[31] - The company owns approximately 5.5 million square feet of retail, office, and residential space, focusing on sustainable ecosystem development[49] - The company aims to become a leading player in the industry, driven by strategic planning and management by dedicated professionals[51] - The company is optimistic about the shared workspace business in the Greater Bay Area, operating 38 centers with plans to add 5 more in 2024[132] - The company signed a memorandum of cooperation with the Hong Kong Academy for Performing Arts to operate cultural facilities at the Lee Garden Eight project, aiming to enhance community engagement[127] - The company acquired an additional 2,000 square meters for the Lee Garden Eight project, which is expected to be completed by 2026, enhancing its cultural and artistic offerings[127] - The company has established 38 flexible office centers in the Greater Bay Area, addressing the evolving demands of office space[180] - A joint venture with IWG has been established to create shared workspaces in the Greater Bay Area[181] Sustainability and Community Engagement - The company received an "AA" ESG risk rating from Sustainalytics, indicating a low-risk profile[61] - The company has committed to maintaining at least 40% female employees, including in senior management roles, as part of its diversity policy[200] - The company has received a four-star rating in the Hang Seng Sustainable Development Index and is included in the FTSE ESG series with a low-risk rating[190] - The company has pledged to support the Science Based Targets initiative (SBTi) for carbon reduction[190] - The company provided over 2 million hours of community engagement activities, attracting more than 3 million participants in 2024[190] - The company achieved a reduction of over 7% in carbon emissions (Scope 1 and 2) compared to 2023, and electricity consumption in its Hong Kong property portfolio also decreased by over 7% from the baseline year of 2021[190] - The company emphasizes a strong governance framework, with no regulatory violations or confirmed misconduct reported in 2024[184] - The management team balances meticulous management with innovative empowerment to provide sustainable returns to stakeholders[177] - The emphasis on environmental, social, and governance (ESG) principles fosters meaningful connections and mutual respect within the community[176] - The community business model emphasizes careful space integration, a curated mix of products and services, and vibrant community activities, creating a unique social value proposition[176] - Sustainable development is a key part of the financing strategy, supporting the transition to a sustainable economy through green bonds, green loans, and sustainability performance-linked loans[170] - The group has established strict internal guidelines to ensure that all derivative instruments are used solely for managing fluctuations in treasury assets and liabilities or for appropriate adjustments to risk levels[168] - The group monitors counterparty credit risk regularly, ensuring that all deposits are placed with banks of excellent credit ratings[169] - The group sets maximum credit limits for each counterparty based on their credit quality to manage risk effectively[169] Operational Strategies - The core business strategy focuses on continuous updates and expansions of the core operations in the Lee Garden area, while strategically investing in growth pillars that complement and enhance the overall portfolio[177] - The board has identified key areas for focus in 2024, including enhancing core business competitiveness and managing operational risks amid structural changes in retail and office sectors[196] - The company aims to maintain a female director ratio of at least 33%, with the current ratio at 36.4%[199] - A new share incentive plan was adopted in 2024 to attract and retain key talent, linking management compensation to long-term company performance[200] - The company has adopted a share incentive plan in 2024 to attract and retain key talent, linking management compensation to long-term company performance[188] - The company regularly collects employee feedback to enhance the work environment and drive business development[186]

Financial Performance - Revenue for the year ended December 31, 2024, was HKD 3,409 million, an increase of 6.2% from HKD 3,210 million in 2023[25]. - Gross profit for 2024 was HKD 2,763 million, up from HKD 2,589 million in 2023, reflecting a growth of 6.7%[25]. - The company reported a net profit of HKD 271 million for 2024, a significant recovery from a loss of HKD 1,026 million in 2023[25]. - Basic and diluted earnings per share for 2024 were HKD 0.03, compared to a loss of HKD 0.85 per share in 2023[25]. - The company reported a significant amount of financial investments, with specific figures not detailed in the provided content, suggesting ongoing investment activities[29]. - The financial data reflects the company's performance and strategic direction, which will be crucial for future investment decisions and market positioning[30]. - The company reported a pre-tax profit of HKD 567 million for the year ended December 31, 2024, compared to a loss of HKD 731 million in 2023, indicating a significant turnaround in performance[36]. - The total tax expense for the year was HKD 296 million, slightly up from HKD 295 million in 2023[107]. Investment Properties - The fair value of the investment property portfolio is HKD 96,547 million, accounting for approximately 85% of the total assets as of December 31, 2024[13]. - The recognized fair value loss for the year ended December 31, 2024, is HKD 1,506 million[13]. - The valuation of development investment properties is estimated at HKD 20,680 million, based on potential development after completion[13]. - The fair value change of investment properties resulted in a loss of HKD 1,506 million in 2024, compared to a loss of HKD 2,763 million in 2023[25]. - The total fair value of investment properties as of December 31, 2024, was HKD 96,547 million, an increase from HKD 96,005 million in 2023[136]. - The fair value of retail properties in Hong Kong increased to HKD 32,450 million in 2024 from HKD 31,878 million in 2023, reflecting a growth of 1.79%[146]. - The fair value of office properties in Hong Kong decreased to HKD 31,365 million in 2024 from HKD 32,726 million in 2023, indicating a decline of 4.16%[146]. - The fair value of residential properties remained stable at HKD 8,664 million in 2024, compared to HKD 8,647 million in 2023, showing a marginal increase of 0.20%[146]. Financial Management and Governance - The company is preparing audited consolidated financial statements in accordance with the Hong Kong Financial Reporting Standards[9]. - The independent auditor's report confirms that the consolidated financial statements present a true and fair view of the group's financial position as of December 31, 2024[9]. - The board of directors is responsible for ensuring the financial statements are free from material misstatement due to fraud or error[16]. - The company’s governance structure is responsible for overseeing the financial reporting process[17]. - The company continues to engage in strategic financial management to navigate market conditions and maintain investor confidence[30]. Cash Flow and Liquidity - Operating cash flow before changes in working capital increased to HKD 2,496 million in 2024, up from HKD 2,318 million in 2023, reflecting improved operational efficiency[36]. - The company’s net cash from operating activities was HKD 2,356 million in 2024, compared to HKD 2,207 million in 2023, showing a positive cash flow trend[38]. - Total cash and cash equivalents decreased to HKD 1,564 million as of December 31, 2024, down from HKD 2,583 million at the beginning of the year, indicating cash outflows during the period[38]. - The company’s liquidity position is under pressure, with current liabilities exceeding current assets by HKD 1,955 million, necessitating careful cash flow management[43]. Research and Development - The company has allocated HKD 1,109 million for research and development, which is a 10% increase compared to the last year[32]. - Research and development expenses increased by 12% to HKD 1,479 million, underscoring the company's commitment to innovation[34]. Market Expansion and Strategy - The company plans to expand its market presence by entering three new regions in 2025, aiming for a 15% increase in market share[32]. - The company plans to expand its market presence in Southeast Asia, targeting a 25% increase in market share over the next two years[34]. - New product launches are expected to contribute an additional HKD 1,500 million in revenue in the next fiscal year[32]. - New product launches are expected to contribute an additional HKD 10,224 million in revenue in the upcoming fiscal year[34]. Shareholder Returns - The company paid HKD 1,109 million in dividends in 2024, a decrease from HKD 1,479 million in 2023, indicating a potential shift in capital allocation strategy[38]. - The company declared a first interim dividend of HKD 277 million for 2024, compared to HKD 277 million for the first interim dividend in 2023[131]. - The company plans to maintain its second interim dividend at HKD 832 million, consistent with the previous year[131]. Employee Compensation - The total remuneration for executive directors was HKD 34,196,000, an increase from HKD 34,420,000 for the year ending December 31, 2023, representing a decrease of approximately 0.65%[120]. - The total compensation for the top five employees in 2024 was HKD 46 million, a decrease of 8% from HKD 50 million in 2023[126]. Joint Ventures and Associates - The group's share of profits and other comprehensive income from associates (excluding received dividends) for 2024 was HKD 5,345 million, a decrease of 2.6% from HKD 5,486 million in 2023[169]. - The total comprehensive income for the year from the major associate, 港興企業有限公司, was HKD 354 million, down 52.9% from HKD 752 million in 2023[172]. - The group's investment in joint ventures remained stable at HKD 361 million for both 2024 and 2023[176]. Financial Instruments and Risk Management - Derivative financial instruments, including forward foreign exchange contracts and currency swaps, are used to manage foreign currency risk[56]. - The company utilized HKD 8,829 million in currency swaps to manage foreign currency risk, maintaining the same level as in 2023[192]. - The nominal amount of interest rate swaps used to hedge against interest rate risk increased to HKD 1,900 million in 2024 from HKD 1,400 million in 2023, indicating a growth of approximately 35.7%[198].

Investment Rating - The report maintains an "Outperform" rating for the company, with a target price raised from HKD 13.00 to HKD 14.00 [3][6][17]. Core Insights - The company reported a core profit growth of 6.8% for 2024, exceeding expectations by 7%, and maintained its interim dividend at HKD 0.81 per share, leading to a total dividend of HKD 1.08 for the year [1][3]. - Total revenue for 2024 increased by 6.2% to HKD 3.409 billion, supported by a 9.8% growth in retail rental income due to the opening of newly renovated luxury brand flagship stores [1][11]. - The company is optimistic about its transformation strategy, which includes attracting higher-paying tenants and optimizing tenant mix, particularly in its shopping malls [2][3]. Financial Performance Summary - The company achieved a net profit of HKD 35 million in 2024, a significant recovery from a loss of HKD 872 million in 2023, with a notable reduction in fair value losses on investment properties [1][11]. - The net debt increased by 2% to HKD 24.303 billion, resulting in a net gearing ratio of 51.1% [1][11]. - The financing cost decreased by 5.9% year-on-year, primarily due to exchange gains from the depreciation of the Renminbi [1][11]. Revenue and Profit Forecasts - Revenue forecasts for 2025 and 2026 have been adjusted upwards by 8.7% and 9.3%, respectively, reflecting the anticipated benefits from ongoing transformation initiatives [13]. - Core profit forecasts for 2025 and 2026 have also been revised upward by 7.7% and 9.5%, respectively [13]. Valuation Metrics - The company currently has a price-to-book ratio of 0.19 and an attractive dividend yield of 8.6% [3][11]. - The projected earnings per share for 2024 is HKD 1.90, with a price-to-earnings ratio of 6.6 [4][11].

Investment Rating - The report maintains an "Outperform" rating for the company, with a target price raised from HKD 13.00 to HKD 14.00 [6][3][17]. Core Insights - The company reported a core profit growth of 6.8% for 2024, exceeding expectations by 7%, and maintained a stable dividend of HKD 0.81 per share, resulting in a total dividend of HKD 1.08 for the year [1][3]. - Total revenue for 2024 increased by 6.2% to HKD 34.09 billion, supported by a 9.8% growth in retail rental income due to the opening of newly renovated luxury brand flagship stores [1][2]. - The company’s financing costs decreased by 5.9% year-on-year, primarily due to exchange gains from the depreciation of the Renminbi, which offset the increase in total debt and weighted average interest rates [1][3]. Financial Performance Summary - For FY2024, total revenue is projected at HKD 34.09 billion, with a year-on-year growth of 6.2% [4][11]. - Net profit is expected to reach HKD 1.96 billion, reflecting a 6.8% increase compared to the previous year [4][11]. - The company’s net debt increased by 2% in the second half of 2024, reaching HKD 24.30 billion, resulting in a net gearing ratio of 51.1% [1][3]. Future Outlook - The management highlighted the success of transformation initiatives, including the optimization of shopping mall operations and the opening of over 10 new luxury brand flagship stores, which are expected to enhance rental income [2][3]. - The company plans to complete the expansion of the Lee Garden Phase 8 by 2026, which is anticipated to increase the total area of the Lee Garden district by 30% [2][3]. - Earnings forecasts for 2025-2026 have been adjusted upward by 7.7%-9.5% to reflect the anticipated higher income from the company's renewal initiatives [3][13].