Group 1 - Goldman Sachs predicts that Hong Kong residential property prices will stabilize this year after a nearly 30% decline from the peak in 2021, with increased trading activity as most cooling measures have been lifted [1] - The firm expects excess inventory to be cleared by the end of 2025, with a year-on-year increase of over 20% in transaction volume in the first quarter [1] - Rental yields are expected to drive price increases, with rents growing at a mid-single-digit pace since the influx of new talent to Hong Kong began two years ago [1] Group 2 - Goldman Sachs has lowered its earnings per share forecasts for covered Hong Kong developers by an average of 3%, 6%, and 4% for the fiscal years 2025 to 2027, respectively, and has adjusted target prices down by an average of 4% [2] - The firm maintains a "buy" rating for New World Development (00016) and Cheung Kong Holdings (01113), with target prices of HKD 86 and HKD 45.7, respectively, offering 8% to 9% recurring free cash flow yields [2] - The firm holds a "sell" rating for Henderson Land Development (00012) with a target price of HKD 18.8 due to concerns over leverage and capital expenditure impacting dividend prospects [2] Group 3 - The property development sector's EBITDA remains a key driver of industry profitability, accounting for about 30% of total EBITDA, down from 60% pre-COVID [3] - The reliance on Hong Kong property development, combined with a weak residential market, has led to a 45% average downward adjustment in consensus earnings per share for the sector over the past five years [3] - The firm believes that a bottom in earnings per share and dividends will only form when Hong Kong residential prices stabilize, with current yields aligning with the average of the past decade [3]

Financial Performance - The group's revenue for the six months ended December 31, 2024, was HKD 39,933 million, representing a 45.0% increase compared to HKD 27,542 million in the same period last year[7]. - The attributable profit to shareholders, excluding fair value changes of investment properties, was HKD 10,463 million, up 17.5% from HKD 8,906 million year-on-year[7]. - The basic earnings per share based on the accounts was HKD 2.60, down 17.7% from HKD 3.16 in the previous year[7]. - The interim dividend declared was HKD 0.95 per share, unchanged from the same period last year[11]. - The group recorded a net profit of HKD 7,841 million, a decrease of 17.3% compared to HKD 9,473 million in the previous year[71]. - The total comprehensive income for the period was HKD 11,002 million, reflecting strong operational performance despite market challenges[75]. - The company reported a total comprehensive income of HKD 6,749 million for the period, compared to HKD 11,372 million in the previous year[71]. - The company reported a profit of HKD 9,145 million for the period, contributing to a total equity attributable to shareholders of HKD 602,330 million as of December 31, 2024[75]. Property Development - The group recorded property development profit of HKD 2,506 million, compared to HKD 2,040 million in the previous year, with total contracted sales amounting to approximately HKD 25,500 million[12]. - The group recorded a contract sales amount of approximately HKD 24.8 billion during the period, primarily from projects such as Kai Tak and North Point[17]. - The group has unrecognized contract sales amounting to HKD 30.4 billion as of December 31, 2024, with an estimated HKD 20.2 billion expected to be recognized in the second half of the fiscal year[20]. - The group aims to continue expanding its property portfolio to enhance recurring income streams and support future growth[15]. - The group plans to launch several new projects, including the sale of residential units in YOHO WEST PARKSIDE and multiple projects in mainland China, such as Suzhou Lakeside Seasons and Hangzhou International Financial Center[61]. Rental Income - Total rental income decreased by 1.4% to HKD 12,280 million, while net rental income fell by 3.5% to HKD 9,004 million[7]. - The total rental income from the property investment portfolio decreased slightly by 1% year-on-year to HKD 8.813 billion, with an overall occupancy rate maintained at approximately 93%[22]. - The average occupancy rate of the group's office portfolio remained stable at around 90% during the period, despite pressure from new supply in core areas[24]. - The rental income from the group's office portfolio was impacted by a decline in market rents due to intense competition and an uncertain external environment[35]. - Rental income from Hong Kong investment properties decreased by 1% to HKD 88,813 million, while net rental income fell by 4% to HKD 63,390 million[140]. Investment Properties - The fair value decrease of investment properties amounted to HKD 20,340 million, compared to a fair value increase of HKD 4,320 million in the previous year[10]. - The fair value of completed investment properties in Hong Kong is HKD 275.1 billion, with a capitalization rate of 5.1%[115]. - The fair value of completed investment properties in Mainland China is HKD 73.6 billion, with a capitalization rate of 6.6%[115]. - The group acquired investment properties worth HKD 5.5 billion during the period, with HKD 597 million for completed properties and HKD 4.9 billion for properties under development[109]. Financial Position - The group's debt ratio decreased to 17.8% as of December 31, 2024, with an interest coverage ratio maintained at a high level of 5 times[46]. - The group maintained a strong financial position with total equity of HKD 605 billion as of December 31, 2024[151]. - The total debt as of December 31, 2024, was HKD 122.26 billion, with 67% being bank loans and 33% being notes and bonds[152]. - The average interest rate on debt decreased to 4.0% from 4.5% in the previous year[148]. - The group has a solid foundation for recurring income, supported by ongoing property sales cash flow and substantial bank credit lines[157]. Sustainability Initiatives - The group successfully reduced greenhouse gas emissions from major commercial properties by 25% compared to the fiscal year 2019/20, ahead of its ten-year target[51]. - The group plans to reduce greenhouse gas emissions by 35% by the end of the fiscal year 2029/30, based on the same benchmark year[51]. - The group is constructing Hong Kong's first privately developed solar power plant on a landfill site, expected to produce 1.2 million kWh of green electricity annually upon completion in 2025[51]. - The number of fast electric vehicle charging stations installed in the group's shopping malls has doubled to 80, promoting the use of electric vehicles[51]. - The group is committed to sustainable community development, integrating nature, environmental protection, and healthy living elements in its projects[61]. Market Outlook - The global economic outlook for 2025 faces uncertainties due to geopolitical risks and trade policy unpredictability, although major central banks have begun a rate-cutting cycle to aid economic recovery[56]. - The company aims to maintain a low debt ratio and substantial recurring income from rental properties, while focusing on cost control and asset turnover in property development[58]. - The company is focused on expanding its real estate business in both Hong Kong and mainland China, with directors overseeing regional operations[194][197]. Corporate Governance - The board of directors includes experienced professionals with significant contributions to various sectors, ensuring robust governance[178][183]. - The company is committed to corporate governance, with independent directors serving on key committees such as the nomination and remuneration committees[189]. - The company has a clear succession plan in place, with younger directors being groomed for future leadership roles[192]. - The independent non-executive directors have extensive backgrounds in finance and management, contributing to informed decision-making[176][182].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 96.1 [1][5][6] Core Insights - The company's mid-year performance for the fiscal year 2025 is stable, with total revenue increasing by 45% year-on-year to HKD 39.9 billion, while gross profit margin decreased by 11.3 percentage points to 38.9% [1][2] - Core net profit rose by 17.5% year-on-year to approximately HKD 10.5 billion, aligning with market expectations [1][2] - The company anticipates maintaining a dividend payout ratio of 40-50% for the full year despite a slight decrease in the interim dividend payout ratio to 26.3% [1][2] Revenue Breakdown - Real estate development revenue surged by 323% year-on-year to HKD 16.4 billion, driven by strong sales and deliveries, particularly from projects like YOHO WEST Phase 1 and Flying Phase 2 [1][2] - Rental income saw a minor decline of 1.3% to HKD 9.99 billion, with office rental income dropping by 5.3% to HKD 2.85 billion, while retail rental income only slightly decreased by 0.9% to approximately HKD 4.59 billion [1][2] - Data center business revenue increased by 14% year-on-year to HKD 1.47 billion, supported by rising demand [1][2] Future Outlook - The company expects to launch six new projects in Hong Kong over the next ten months, with a total attributable gross floor area of approximately 2.28 million square feet [1][2] - The report highlights that the recent fiscal budget adjustments to stamp duty for small units are likely to stabilize the Hong Kong real estate market [1][2]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 96.1, indicating a potential upside of 28.2% from the current price of HKD 74.95 [6]. Core Insights - The company's mid-year performance for the fiscal year 2025 is stable, with total revenue increasing by 45% year-on-year to HKD 39.9 billion, while gross profit margin decreased by 11.3 percentage points to 38.9% [1][2]. - Core net profit rose by 17.5% year-on-year to approximately HKD 10.5 billion, aligning with market expectations [1]. - The company anticipates maintaining a dividend payout ratio of 40-50% for the full year, despite a slight decrease in the interim dividend payout ratio to 26.3% [1]. Summary by Sections Financial Performance - Total revenue increased by 45% to HKD 39.9 billion, with property development revenue surging by 323% to HKD 16.4 billion [2]. - Gross profit rose by 12.3% to HKD 15.5 billion, while net profit decreased by 17.7% to HKD 7.5 billion [2]. - The company reported a decrease in rental income by 1.3% to HKD 9.99 billion, with office rental income down by 5.3% [1][2]. Property Development - The company’s contract sales amounted to HKD 24.8 billion, with HKD 30.4 billion in unsold contracts expected to be recognized in the second half of 2025 [1]. - The company plans to launch six new projects in Hong Kong over the next ten months, totaling approximately 2.28 million square feet [1]. Rental and Other Income - Rental income from data center operations increased by 14% to HKD 1.47 billion, while other business lines remained stable [1]. - The report highlights that the company expects a recovery in retail rental income starting from Q4 2024 due to eased travel restrictions [1].

Financial Performance - The company's basic profit attributable to shareholders for the six months ended December 31, 2024, was HKD 10.46 billion, compared to HKD 8.90 billion in the same period last year, representing an increase of approximately 17.5%[2] - The basic earnings per share for the same period was HKD 3.61, slightly down from HKD 3.70 in the previous year, indicating a decrease of about 2.4%[2] - The profit attributable to shareholders, including deferred tax and non-controlling interests, was HKD 7.52 billion, down from HKD 9.14 billion year-on-year, reflecting a decrease of approximately 17.7%[3] - Revenue for the six months ended December 31, 2024, was HKD 39,933 million, an increase of 45% compared to HKD 27,542 million in the same period of 2023[71] - Operating profit for the same period was HKD 12,098 million, up 10.5% from HKD 10,953 million year-on-year[71] - Net profit attributable to shareholders decreased to HKD 7,523 million, down 17.7% from HKD 9,145 million in the previous year[71] - Total comprehensive income for the period was HKD 6,749 million, down 40.1% from HKD 11,372 million in the same period last year[72] Revenue Breakdown - The property development segment in Hong Kong generated revenue of HKD 16,031 million with an operating profit of HKD 2,325 million, while the mainland contributed HKD 330 million in revenue and HKD 86 million in profit[78] - The rental property segment in Hong Kong reported revenue of HKD 7,485 million and an operating profit of HKD 5,319 million, while mainland operations contributed HKD 2,508 million in revenue and HKD 1,970 million in profit[78] - The hotel business generated revenue of HKD 2,278 million with an operating profit of HKD 313 million, and the telecommunications segment reported revenue of HKD 3,492 million with an operating profit of HKD 420 million[78] Property Development and Sales - The total contracted sales amount for the group during the period was approximately HKD 25.5 billion, reflecting a strong market performance[5] - The group achieved contracted sales of approximately HKD 24.8 billion in Hong Kong, driven by several key projects, including Kai Tak and North Point[9] - The group anticipates that approximately HKD 202 billion of the unrecognized contract sales of HKD 304 billion will be recognized in the second half of the fiscal year[12] - The group has approximately 1.3 million square feet of residential properties available for sale in the second half of the fiscal year[11] - The group recorded contract sales of over RMB 660 million during the period, mainly from quality residential units in multiple projects, including Guangzhou and Foshan[26] Rental Income and Occupancy - The total rental income for the group decreased by 1% year-on-year to HKD 12.28 billion, while net rental income fell by 3% to HKD 9.04 billion[6] - Total rental income decreased slightly by 0.1% year-on-year to HKD 8.813 billion, with an overall occupancy rate maintained at approximately 93%[13] - The average occupancy rate of the group's office portfolio remains stable at around 90% despite pressure from new supply in core areas[18] - The average occupancy rate of the group's hotels in Hong Kong improved from 84% to 90% during the reporting period[107] Investment Properties and Development Projects - The group is developing a major project at the West Kowloon High-Speed Rail Station, which will feature premium office space and high-end retail, with completion expected in early 2026[22] - The group plans to open a new shopping mall at The Millennity in 2025, with a total floor area of approximately 500,000 square feet, featuring selected specialty restaurants and shops[21] - The group is constructing the Hangzhou International Finance Center, which integrates smart and green elements, showcasing the group's commitment to innovative and sustainable property development[35] - The final phase of the Shanghai ITC project is expected to be completed in 2025, featuring over 5 million square feet of space, including a flagship mall and a high-rise office building[34] Financial Management and Debt - The group maintains a debt ratio of 17.8% and an interest coverage ratio of five times, reflecting strong financial management[46] - The company issued RMB 700 million in offshore bonds in July 2024 and RMB 2 billion in commercial mortgage-backed securities in August 2024, achieving the lowest interest rates for similar financing that year[47] - The group is committed to utilizing RMB debt financing to balance its RMB assets and liabilities, aiming to lower interest expenses[48] - The total debt as of December 31, 2024, was HKD 122.26 billion, with 67% being bank loans and 33% being notes and bonds[117] Sustainability and Corporate Responsibility - The group has successfully reduced greenhouse gas emissions from major commercial properties by 25% compared to the fiscal year 2019/20, achieving its ten-year target ahead of schedule[54] - The group aims to further reduce emissions by 35% from the same baseline year by the end of the fiscal year 2029/30[54] - The group has increased the number of fast electric vehicle charging stations to 80 across Hong Kong, promoting the use of electric vehicles and reducing carbon emissions[56] - The group has been recognized with eight awards at the 2024 Euromoney Real Estate Awards, including being named the "Best Real Estate Company" globally, in the Asia-Pacific region, and in Hong Kong[51] Market Outlook and Economic Conditions - The global economic outlook for 2025 faces increased uncertainty due to geopolitical risks and international trade policy uncertainties[61] - The Hong Kong economy is expected to grow slowly, prompting the government to implement reforms to solidify its traditional advantages and explore new growth points[62] - The government is promoting policies to attract talent and investment, which will support the recovery of the local property market[62] Corporate Governance and Future Plans - The company has complied with the corporate governance code provisions as of December 31, 2024, with a balanced distribution of power among the board members[133] - The mid-term report detailing all financial and related information will be published by the end of March 2025[134] - The company plans to continue expanding its market presence and investing in new technologies to enhance operational efficiency and drive future growth[80]

Group 1 - Bank of America downgraded Sun Hung Kai Properties from "Buy" to "Neutral" [1] - Target price reduced from HKD 93 to HKD 80 [1] - The company is expected to maintain a dividend per share of HKD 3.75 from fiscal year 2025 to 2027 [1] Group 2 - The anticipated stagnation in dividends is due to the expectation that the company will not see an increase in dividends for fiscal years 2025 to 2026 [1] - Participation in the land sale plan in the Northern Metropolis of Hong Kong may slow down the company's deleveraging progress [1]

Key Projects - The company's key projects include Shanghai Xujiahui ITC, Shanghai Lujiazui Shanghai IFC, Hong Kong Kai Tak The Cullinan, Hong Kong West Kowloon ICC, Hong Kong Central IFC II, and Hong Kong West Kowloon High-Speed Rail Station Development Project[2] - The high-speed rail West Kowloon Terminus development project, expected to be completed in 2026, includes two premium Grade A office towers and a podium mall[29] - The ITC Phase III in Shanghai, including the B office tower and ITC Maison mall, will be completed in phases by 2025[55] - The Millennity's base mall in Kwun Tong is planned to open in phases starting from the end of 2024, and the first office tower at IGC above the West Kowloon High-Speed Rail Station will begin delivery to tenants in early 2026[55] - The company plans to launch multiple major Hong Kong projects in the next ten months, including the first phase of Kai Tak's The Cullinan Skyline, a new building at The YOHO Hub II in Yuen Long, and the second phase of YOHO WEST in Tin Shui Wai[56] - The International Gateway Centre (IGC) project, with a total gross floor area of 2.6 million square feet, is expected to be completed and delivered to major tenants by early 2026[119] - The Art Square development in the West Kowloon Cultural District will provide approximately 672,000 square feet of Grade A office space and 27,000 square feet of retail space, with completion expected by the end of 2026[119] - The Mong Kok integrated commercial project, with a gross floor area of 1.4 million square feet and a 320-meter-high commercial tower, is expected to be completed by 2030[120] - The Tianshi residential project in Kai Tak will feature a 220,000 square feet retail podium, expected to open in 2026, with seamless connectivity to the Kai Tak MTR station[121] Financial Performance - Group revenue increased slightly by 0.4% to HKD 71,506 million compared to HKD 71,195 million in the previous year[9] - Profit attributable to shareholders decreased by 20.3% to HKD 19,046 million from HKD 23,907 million[9] - Rental income rose by 2.8% to HKD 24,991 million, with net rental income increasing by 2.9% to HKD 19,000 million[9] - Net debt to equity ratio increased marginally by 0.14 percentage points to 18.3%[9] - Basic earnings per share attributable to shareholders decreased by 20.3% to HKD 6.57 from HKD 8.25[9] - Total dividends for the year decreased by 24.2% to HKD 3.75 per share from HKD 4.95 per share[9] - The company's underlying profit attributable to shareholders for the year ended June 30, 2024, was HKD 21.739 billion, compared to HKD 23.885 billion in the previous year[14] - The total dividend per share for the year was HKD 3.75, a 24% decrease compared to the previous year[15] - Profit from property sales for the year was HKD 7.85 billion, down from HKD 11.299 billion in the previous year[16] - Total rental income increased by 3% year-on-year to HKD 24.991 billion, with net rental income also rising by 3% to HKD 19 billion[17] Land Reserves and Property Development - Total land reserves in Hong Kong decreased by 0.3% to 57.8 million square feet, with completed properties increasing by 4.9% to 38.2 million square feet[9] - Mainland China land reserves decreased by 1.2% to 66.7 million square feet, with completed properties increasing by 2.9% to 21.0 million square feet[9] - The company added three residential sites with a total gross floor area of approximately 1.548 million square feet during the year[19][20] - The company's land reserve in Hong Kong as of June 30, 2024, was approximately 57.8 million square feet, with 38.2 million square feet being diversified completed properties[20] - The company's land reserve in mainland China totaled approximately 66.7 million square feet, with 21 million square feet completed and 45.7 million square feet under development[30] - The group's total gross floor area of land reserves in Hong Kong reached 57.8 million square feet as of June 30, 2024, including 19.6 million square feet of properties under development and 38.2 million square feet of completed properties[69] - The group added three new residential sites to its land reserves during the year, with a total gross floor area of approximately 1.5 million square feet[69] - The group's land reserves in Hong Kong include approximately 13.3 million square feet for the development of various types of residential properties for sale[69] - The group's completed property portfolio is primarily used for long-term rental and investment, with many core commercial projects located along railway lines and certified as green buildings[69] Rental Income and Property Portfolio - Total rental income from diversified investment properties in Hong Kong increased by 1% year-on-year to HKD 17.94 billion[25] - The retail property portfolio achieved an average occupancy rate of approximately 94%, with a total gross floor area exceeding 12 million square feet[25] - The average occupancy rate of the office portfolio remained at approximately 91%, supported by high green building standards and strong tenant relationships[27] - The group's net rental income from its diversified high-quality rental property portfolio was HK$13.423 billion, an increase of 1% compared to the previous fiscal year[68] - Total rental income increased by 1% year-on-year to HKD 17.94 billion, with an average occupancy rate of approximately 92% for the property investment portfolio[108] - Retail property portfolio's total rental income rose by 3% year-on-year to HKD 9.283 billion, with an average occupancy rate maintained at 94%[108] - The retail property portfolio has a total gross floor area of over 12 million square feet[108] - The company's office portfolio maintains an average occupancy rate of 91%[115] - The Millennity and its base mall achieved WELL Core Platinum certification, making it the first WELL-certified office and retail project in Hong Kong[115] Sustainability and ESG Initiatives - The company has achieved a 25% reduction in greenhouse gas emissions from its major commercial properties over four years[48] - The company plans to double the number of fast EV charging stations in its shopping malls in the coming months, currently having installed nearly 40 stations[50] - The company is developing Hong Kong's first solar power plant on a landfill site, expected to generate 1.2 million kWh annually[50] - The company has secured LEED Platinum pre-certification for its Hangzhou International Finance Center project in mainland China[48] - The company has been awarded the highest AAA rating in the Hang Seng Corporate Sustainability Index and an A rating from MSCI ESG[47] - The company has introduced electric construction equipment, becoming a pioneer in Hong Kong's construction industry[50] - The company has been recognized as the "Best Property Company in Hong Kong" by Euromoney and Finance Asia[47] - The company has entered the Dow Jones Sustainability Asia Pacific Index, ranking in the top 20% for sustainability performance in the Asia-Pacific region[47] - The company is committed to sustainable development, integrating ESG elements into its property development and management operations[58] Corporate Governance and Leadership - The company's board of directors includes executive directors such as Kwok Ping Luen (Chairman and Managing Director) and non-executive directors like Lau Tak Yiu and Fung Sau Yin[4] - The company's audit and risk management committee is chaired by Lee Ka Shing, with members including Yip Dick Kay and Leung Nai Pang[5] - The company's registered office is located at 45/F, Sun Hung Kai Centre, 30 Harbour Road, Hong Kong, with contact details provided[6] - The company's shares are listed on the Hong Kong Stock Exchange and traded as American Depositary Receipts (ADRs) in the US over-the-counter market[7] - The company provides options for shareholders to choose the language version or method of receiving company communications, with details on how to request printed copies or change preferences[8] Mainland China Operations - Contract sales in mainland China reached approximately RMB 11 billion, primarily from landmark projects in Shanghai and Hangzhou[31] - Approximately 1.5 million square feet of properties were completed in mainland China, including the Suzhou Four Seasons Hotel, which opened at the end of 2023[31] - The group's total rental income in mainland China increased by 12% year-on-year to RMB 5.822 billion, driven by contributions from newly completed projects and joint ventures[34] - The group's unbooked contract sales in mainland China reached RMB 12.6 billion as of June 30, 2024, with approximately RMB 8 billion expected to be recognized in the 2024/25 fiscal year[32] - The Nanjing International Finance Center Mall, with a total gross floor area of 1 million square feet, officially opened in July 2024, achieving high occupancy rates since its trial operation in January 2024[36] - The Shanghai ITC Phase 3A office building, with a total gross floor area of 1.1 million square feet, has achieved a leasing rate of over 70%[37] - The Hangzhou International Finance Center project is progressing well, with the office buildings in the West Hub set to begin marketing soon and expected to be completed in phases starting from 2025[38] - The group's shopping malls in Hong Kong and Guangzhou maintained high occupancy rates, with innovative marketing activities and pet-friendly events driving customer engagement[36] - The group's hotel business in Hong Kong saw a significant recovery, with high occupancy rates maintained at flagship properties like the Four Seasons Hotel and The Ritz-Carlton[39] Technology and Innovation - The group's 5G user base has grown to nearly 40%, with 5G home broadband services becoming a key growth driver[40] - The group's "Di Shang" membership program has exceeded 180,000 members, with a significant increase in mainland members[39] - The group's telecommunications subsidiary, SmarTone, won a prestigious international award for its AI solution at the Mobile World Congress in February 2024[42] - New Internet's MEGA IDC in Tseung Kwan O, equipped with state-of-the-art facilities, saw its first phase launched in the first half of 2024, attracting inquiries from major international cloud service providers and financial institutions, with two banks and a major cloud service provider already moving in[44] - New Internet's data centers are nearly fully leased, with significant increases in renewal rents, demonstrating strong performance[44] - The company is leveraging technology, including AI assistants and mobile apps, to enhance customer satisfaction and streamline operations such as check-in and dining[181] - The company's property management arm, Kai Shing, won the "Property Management (Enterprise Diamond Award)" at the PropTech Excellence Awards for integrating AR technology into its systems[185] - The company's property management team upgraded its real-time typhoon monitoring platform in 2023 to better manage extreme weather challenges[185] - The company's property management division introduced the Mall e-asy mobile app to improve communication with mall tenants and enhance customer shopping experiences[186] - The company is implementing IoT and AI platforms to improve energy efficiency and reduce food waste across its hotels[182] Transportation and Logistics - The Hong Kong Business Aviation Centre recorded strong growth, with passenger volume nearing pre-pandemic levels, and its terminal is undergoing a major renovation to enhance customer experience, aiming to become Asia's best private jet base[43] - The Airport Freight Terminal's business remained stable due to improved export volumes, and it plans a major renovation to upgrade facilities to world-class standards[43] - Introduced 82 electric buses, including 52 double-decker buses, reducing 3,800 tons of carbon emissions and covering 40 routes with over 2.7 million kilometers traveled[198] - Airport Freight Terminal Co., Ltd. operates over 1.6 million square feet of logistics facilities, planning a full renovation to be completed by 2026[198] - Kowloon Motor Bus implemented a preventive maintenance system and real-time passenger load information display to enhance safety and passenger experience[198] - Cross-border transportation services with Shenzhen Bus Group to capitalize on Greater Bay Area development opportunities[198] - Port operations include 4 berths and a 3.3-hectare container yard in Kwai Tsing, with 50% ownership of a 65-hectare river terminal in Tuen Mun[199] - Global economic weakness and geopolitical risks continue to pressure cargo handling volumes in port operations[199] - Hong Kong Business Aviation Centre holds a 35% stake and achieved Stage 3 certification under the International Business Aviation Council standards[200] - Recognized as "Best Business Aviation Base in Asia" for the 17th consecutive year and "Best Business Aviation Base in Asia-Pacific" in 2024[200] Future Development and Strategy - The company expects a significant decrease in overall construction expenses in the next few fiscal years[55] - The company's property investment portfolio will be enhanced with new projects, contributing to recurring income and rental revenue in the next two to three years[55] - The company maintains a large recurring income from rental properties and non-property businesses, leveraging its high-quality reputation to accelerate asset turnover in property development[55] - The company's strategy focuses on balancing income sources, concentrating on Hong Kong, and expanding in mainland China[61] - The company will continue to sell completed residential units and some non-core properties, with the North Point's Victoria Harbour II units recently starting tender sales[56] - The company's core values include building quality properties, providing excellent services, and creating sustainable value for communities[59] - The company is involved in smart green collective transportation system projects currently in the planning phase[103] - The West Rail Line and Cross-Harbour Tunnel areas are identified as potential future development sites[103]

Investment Rating - The report maintains a "Buy" rating for the company with a target price adjusted to HKD 96.10, indicating a potential upside of 29.1% from the current closing price of HKD 74.45 [1][5]. Core Insights - The company is expected to achieve stable performance in FY2024, with revenue projected to increase by 8.9% year-on-year to approximately HKD 77.5 billion, driven by a low base from the previous year and recovery across various business lines [1]. - Rental income is anticipated to reach HKD 20 billion, with a 1.7% year-on-year increase in the first half of FY2024, particularly benefiting from a 3.5% growth in the retail segment [1]. - The report has revised down revenue and profit forecasts for FY2024/25/26, reflecting a decline in development profit margins and increased interest costs due to a high-interest environment [1]. Financial Summary - Revenue (in million HKD): - FY2022: 77,747 - FY2023: 71,195 - FY2024E: 77,541 - FY2025E: 84,049 - FY2026E: 88,737 - Core Profit (in million HKD): - FY2022: 28,729 - FY2023: 23,885 - FY2024E: 22,303 - FY2025E: 24,414 - FY2026E: 26,248 - The report indicates a projected core profit decline of approximately 7% year-on-year to HKD 22.3 billion for FY2024 [4][6]. Market Context - The report highlights that recent adjustments in stamp duty and mortgage policies will significantly reduce the acquisition costs for small to medium-sized units, positioning the company favorably in the mid-market segment [1]. - The recovery in rental income and moderate revival in tourism are expected to enhance consumer spending and tenant capacity in the company's mid to high-end shopping malls [1].

Financial Performance - The company's underlying profit attributable to shareholders, excluding the impact of investment property fair value changes, was HKD 21.739 billion, compared to HKD 23.885 billion last year[2] - Revenue for the fiscal year ending June 30, 2024, was HKD 71,506 million, compared to HKD 71,195 million in the previous year[44] - Gross profit for the fiscal year ending June 30, 2024, was HKD 32,214 million, down from HKD 34,458 million in the previous year[44] - Operating profit for the fiscal year ending June 30, 2024, was HKD 26,752 million, compared to HKD 27,545 million in the previous year[44] - Net profit attributable to shareholders for the fiscal year ending June 30, 2024, was HKD 19,046 million, down from HKD 23,907 million in the previous year[44] - Basic and diluted earnings per share for the fiscal year ending June 30, 2024, were HKD 6.57, compared to HKD 8.25 in the previous year[44] - The company's underlying profit, excluding investment property valuation changes, was HKD 21,739 million for 2024[58] - The company's attributable profit to shareholders for 2024 was HK$19,046 million, a decrease from HK$23,907 million in 2023[59] - The fair value decrease in investment properties for 2024 was HK$1,481 million for subsidiaries and HK$1,352 million for joint ventures, compared to an increase of HK$593 million and HK$77 million respectively in 2023[59] - The total dividends declared and paid for 2024 were HK$10,867 million, down from HK$14,344 million in 2023[60] - The company's underlying profit attributable to shareholders for 2024 was HK$21,739 million, a decrease of 9% from HK$23,885 million in 2023[68] - The total revenue for the company's business segments (including joint ventures and associates) for 2024 was HK$83,636 million, slightly up from HK$83,381 million in 2023[69] - The operating profit for the company's business segments decreased by 7% to HK$32,359 million in 2024[69] - Underlying profit for the year was HKD 21.739 billion, excluding unrealized revaluation losses of HKD 2.412 billion and including realized revaluation gains of HKD 281 million from the sale of investment properties[78] Dividends and Shareholder Returns - The total dividend per share for the year was HKD 3.75, a decrease of 24% compared to the previous year[3] - The board proposed a final dividend of HKD 2.80 per share for the year ended June 30, 2024, bringing the total annual dividend to HKD 3.75 per share[93] Property Development and Sales - Profit from property sales was HKD 7.85 billion, down from HKD 11.299 billion last year, with total contract sales of approximately HKD 37.5 billion[4] - The company added three residential sites with a total gross floor area of approximately 1.548 million square feet[7] - As of June 30, 2024, the company's land reserve in Hong Kong was approximately 57.8 million square feet, with 38.2 million square feet being diversified completed properties[8] - The company recorded contract sales of approximately HKD 25.6 billion in Hong Kong, primarily from projects such as YOHO WEST Phase 1 and The YOHO Hub II[9] - Six projects in Hong Kong were completed during the year, with a total gross floor area of approximately 3.5 million square feet, including 2.5 million square feet of residential properties for sale[10] - The company's unbooked contract sales in Hong Kong as of June 30, 2024, reached HKD 24.9 billion, with approximately HKD 19.6 billion expected to be recognized in the 2024/25 fiscal year[11] - The company's land reserves in mainland China total approximately 66.7 million square feet, with 21 million square feet completed and 45.7 million square feet under development, over 50% of which will be developed into high-quality residential and office properties[17] - The company achieved contracted sales of approximately RMB 11 billion in mainland China, primarily from two landmark projects: Binjiang Triumphal Gate Phase 3 in Shanghai and Hangzhou International Finance Centre (Huidong) Phase 3 in Hangzhou[18] - The company completed approximately 1.45 million square feet of properties in mainland China, including the Suzhou Four Seasons Hotel, which opened at the end of 2023[19] - Unrecognized contracted sales in mainland China amounted to RMB 12.6 billion as of June 30, 2024, with approximately RMB 8 billion expected to be recognized in the 2024/25 fiscal year[20] - Hong Kong property development revenue increased by 4% to HKD 24.745 billion, driven by sales of residential projects such as NOVO LAND 2A & 2B, University Hill 2A & 2B, and Silicon Hill[71] - Mainland China property development revenue decreased by 49% to HKD 2.677 billion due to reduced residential unit sales[71] Property Rental Income - Total rental income increased by 3% year-on-year to HKD 24.991 billion, with net rental income also rising by 3% to HKD 19 billion[5] - Total rental income from the company's diversified investment property portfolio in Hong Kong increased by 1% year-on-year to HKD 17.942 billion[12] - The retail property portfolio achieved an average occupancy rate of 94%, with rental income recording moderate growth despite challenges in the retail sector[13] - The company's office property portfolio maintained an average occupancy rate of 91%, with flagship properties like International Finance Centre and Global Trade Plaza exceeding 90% occupancy[15] - Total rental income in mainland China increased by 12% year-on-year to RMB 5.822 billion, driven by new contributions from completed projects and strong performance of the company's premium shopping malls[21] - Hong Kong property investment rental income increased by 1% to HKD 17.942 billion, with retail property rental income up 3% to HKD 9.283 billion[71] - Mainland China property investment rental income increased by 8% to HKD 6.305 billion, with a 12% increase in RMB terms to RMB 5.822 billion[71] Investment Properties - The fair value of completed investment properties in Hong Kong increased to HK$274,585 million in 2024 from HK$263,266 million in 2023, with a weighted average capitalization rate of 5.1%[64] - The fair value of investment properties under development in Hong Kong decreased to HK$25,578 million in 2024 from HK$33,151 million in 2023, with a capitalization rate range of 3.5%-5.5%[65] - Investment properties recorded a net fair value loss of HKD 1.481 billion, primarily due to declining market rents for office properties[75] Debt and Financial Position - The group's debt ratio as of June 2024 is 18.3%, with a strong financial position and A+ credit rating from S&P[29] - The group secured a HKD 23 billion syndicated loan agreement with 23 banks in May 2024[29] - The group issued offshore RMB bonds totaling RMB 8 billion (5-year) and RMB 2.85 billion (2-year) in 2024[29] - The group's total borrowings as of June 2024 include 46% in HKD fixed-rate or RMB-denominated debt[30] - Net debt increased to HKD 110.866 billion (2023: HKD 109.773 billion), with a debt-to-equity ratio of 18.3% (2023: 18.2%)[80] - Total debt amounted to HKD 127.087 billion, with 68% being bank loans and 32% being notes and bonds, all maturing by June 2033[81] - Approximately 76% of the total debt is due after two years, with a weighted average repayment period of 3.3 years[82] - Debt composition by currency (post-currency swap) shows 79% in HKD, 20% in RMB, and 1% in GBP[83] - Fixed-rate debt accounts for 31% of total debt, primarily consisting of medium-term notes and RMB 2 billion commercial mortgage-backed securities issued in mainland China[84] - The company maintains a strong financial position with ample liquidity, supported by recurring income, property sales cash inflows, and substantial unused credit facilities[85] - Foreign exchange risk is minimal, with RMB-denominated net assets accounting for approximately 17% of total net assets, and a RMB depreciation of 0.5% against HKD resulting in a HKD 450 million exchange loss[86] - The total nominal principal amount of interest rate swaps, cross-currency interest rate swaps, and foreign exchange forward contracts used to manage interest rate and foreign exchange risks was HKD 16.389 billion as of June 30, 2024[87] - Bank deposits and cash amounted to HKD 16.221 billion as of June 30, 2024, with 61% in HKD, 33% in RMB, and 6% primarily in USD[88] - Subsidiaries pledged bank deposits totaling HKD 48 million and assets with a book value of HKD 5.84 billion as collateral for bank guarantees and loans[89] - Contingent liabilities related to guarantees for joint venture loans and other guarantees totaled HKD 1.907 billion as of June 30, 2024[90] ESG and Sustainability - The group ranked in the top 20% of the Dow Jones Sustainability Asia Pacific Index for ESG performance[32] - The group achieved the highest AAA rating in the Hang Seng Corporate Sustainability Index[32] - The group received an A rating in the MSCI ESG Ratings[32] - The company has achieved a 25% reduction in greenhouse gas emissions from its major commercial properties over four years[33] - The company plans to double the number of fast EV charging stations in its shopping malls in the coming months, currently having installed nearly 40 stations[33] - The company is developing Hong Kong's first solar power plant on a landfill site, expected to generate 1.2 million kWh annually[33] - The company has purchased several electric construction equipment, becoming a pioneer in this area among Hong Kong developers[34] Corporate Governance and Compliance - The company complied with the Corporate Governance Code during the year, except for not separating the roles of Chairman and CEO, as major decisions are made collectively by the board and senior management[97] - The 2023-2024 annual report will be published on the Hong Kong Exchanges and Clearing Limited website and the company's website by the end of October 2024[98] Employee and Community Initiatives - The company has lent a plot of land in Yuen Long to the government for the construction of 2,100 simplified public housing units, expected to be completed by 2025[35] - The company is supporting the "2024 Hong Kong Reading +" carnival to promote reading culture and cross-border exchanges with Shenzhen[35] - The company is collaborating with the Hong Kong Sports Association to promote the 2024 Paris Olympics across its shopping malls[35] - The company is launching comprehensive training programs for employees, covering AI, data mining, and blockchain technologies[37] - The company's total employee compensation before reimbursements was approximately HKD 14.888 billion for the year, with over 40,000 employees as of June 30, 2024[91] Market Outlook and Economic Environment - The company expects moderate economic growth in Hong Kong, driven by government measures to attract international talent and investment[38] - The company anticipates a recovery in inbound tourism and a positive impact on the property market due to potential interest rate cuts[38] Infrastructure and Transportation - Infrastructure and transportation business performance varies, with the Hong Kong Commercial Aviation Center recording strong growth, nearing pre-pandemic passenger levels[27] - Cross-border transport volume remains below pre-pandemic levels, impacting traffic flow[27] - The Hong Kong Airport Air Cargo Terminal plans a major renovation to upgrade facilities to world-class standards[28] Telecommunications and Data Centers - SmarTone's 5G user base has reached nearly 40%, with 5G home broadband services driving growth[25] - SmarTone's roaming service revenue increased significantly after Hong Kong reopened its borders[25] - SUNeVision's MEGA IDC Phase 1, a state-of-the-art data center, was launched in H1 2024 and has attracted inquiries from major cloud service providers and financial institutions[26] - SUNeVision's data centers are nearly fully leased, with significant rental growth[26] - Data center business revenue increased by 14% to HKD 2.674 billion, driven by growing demand for data center services[73] New Projects and Developments - TOWNPLACE WEST KOWLOON, operational since October 2023, offers mixed lease options and has successfully attracted young professionals and corporate clients[15] - The newly opened YOHO MIX in Yuen Long, with a total retail area of 107,000 sq ft, integrates with the existing YOHO MALL to form the largest retail property in the Northwest New Territories, totaling approximately 1.1 million sq ft[15] - The high-speed rail West Kowloon Terminus development project is expected to contribute to the company's recurring income, with the International Gateway Centre (IGC) office tower already leased by UBS for 460,000 square feet[16] - The Nanjing International Finance Centre Mall, with a total gross floor area of approximately 1 million square feet, officially opened in July 2024, featuring high-end brands and innovative design[21] - Shanghai ITC Phase 3A has been completed with a total floor area of 1.1 million sq. ft. and a leasing rate exceeding 70%[22] - Shanghai ITC Phase 3B, a 370-meter skyscraper with 2.4 million sq. ft. of office space, is expected to be completed by 2025[22] - ITC Maison, a flagship mall with 2.6 million sq. ft. of retail space, is set to open in phases and has received positive initial market response[22] - Hangzhou International Finance Centre, located in the CBD of Qianjiang New Town, is progressing well and expected to be completed in phases by 2025[22] - The Millennity base mall in Kwun Tong is planned to open in phases starting from the end of 2024[39] - The first office tower at IGC above the West Kowloon High-Speed Rail Station is expected to be delivered to tenants in early 2026[39] - ITC Phase III in Shanghai, including the B office tower and ITC Maison mall, is expected to be completed in phases by 2025[39] - The company plans to launch several major Hong Kong projects in the next ten months, including The YOHO Hub II in Yuen Long and YOHO WEST Phase 2 in Tin Shui Wai[40] - The company is developing the West Saddle Mountain project, which includes the West Saddle GO PARK, a new sports and entertainment landmark[40] Membership Programs and Retail Initiatives - The Point membership program expanded its coverage to approximately 60% of tenants in the company's major shopping malls, with stable member spending despite a challenging environment[14] - The "Di Rewards" membership program has grown to over 180,000 members, with a significant increase in mainland China members[24] - The company's retail properties, including Shanghai IAPM and Guangzhou Tianhuan, maintained high occupancy rates and introduced new brand concepts and pet-friendly events to enhance their market positioning[21] Other Financial Metrics - Total assets increased to HKD 756,082 million in 2024 from HKD 752,577 million in 2023, reflecting growth in non-current and current assets[46] - Property development revenue in Hong Kong reached HKD 24,745 million with a profit of HKD 6,513 million, while mainland China contributed HKD 2,677 million in revenue and HKD 1,337 million in profit[50] - Property rental revenue in Hong Kong was HKD 17,942 million with a profit of HKD 13,423 million, and mainland China contributed HKD 6,305 million in revenue and HKD 5,027 million in profit[50] - Hotel business revenue totaled HKD 5,261 million with a profit of HKD 650 million, while telecommunications revenue was HKD 6,221 million with a profit of HKD 701 million[50] - Transport infrastructure and logistics revenue reached HKD 8,612 million with a profit of HKD 1,712 million, and data center business revenue was HKD 2,674 million with a profit of HKD 1,266 million[50] - Total segment revenue for the year was HKD 83,636 million, with a combined segment profit of HKD 32,359 million[50] - Operating profit for the year was HKD 32,042 million, including other net gains of HKD 1,671 million and unallocated administrative expenses of HKD 1,988 million[50] - Investment property fair value changes resulted in a loss of HKD 2,780 million, with significant losses in Singapore (HKD 1,299 million) and mainland China (HKD 1,030 million)[50] - Net finance costs for the year were HKD 4,281 million, contributing to a pre-tax profit of HKD 24,981 million[50] - The company reported a net profit of HKD 19,605 million for the year, after accounting for taxes of HKD 5,376 million[50] - Property development revenue in Hong Kong reached HKD 23,853 million, with a performance of HKD 8,467 million, accounting for 13% of total revenue[51] - Property leasing revenue in Hong Kong was HKD 14,996 million, with a performance of HKD 11,081 million, contributing significantly to the overall leasing segment[51] - The company recorded other net gains of HKD 1,766 million, including HKD 1,095 million from land resumption by the Hong Kong government[52] - Revenue from the Hong Kong market increased to HKD 65,267 million in 2024, up from HKD 63,512 million in 2023[53] - Net financial expenses for 202

Financial Performance - For the six months ended December 31, 2023, the group's revenue was HKD 27,542 million, a slight increase of 0.4% compared to HKD 27,428 million in the same period last year[6]. - The attributable profit to shareholders was HKD 9,145 million, representing an increase of 8.7% from HKD 8,410 million year-on-year[6]. - Basic earnings per share were HKD 3.16, up 8.7% from HKD 2.90 in the previous year[10]. - Total comprehensive income for the period was HKD 11,372 million, significantly higher than HKD 4,180 million in the prior year, indicating a substantial increase of 171.5%[44]. - The net profit for the period was HKD 9,473 million, up from HKD 8,790 million, representing a growth of 7.8% year-on-year[44]. - The company reported a profit of HKD 8,410 million for the period, contributing to a total comprehensive income of HKD 3,847 million[47]. - The company reported a profit of HKD 9,145 million for the six months ended December 31, 2023, compared to a profit of HKD 9,473 million for the previous period[48]. - The total operating profit, including fair value changes of investment properties, was HKD 13,881 million, with a pre-tax profit of HKD 11,244 million[52]. Revenue Sources - Total rental income increased by 4% to HKD 12,454 million, while net rental income rose by 4.9% to HKD 9,326 million[6][13]. - The hotel business generated revenue of HKD 2,757 million, with a profit of HKD 430 million[51]. - The telecommunications segment reported revenue of HKD 3,390 million, contributing HKD 361 million to the overall performance[51]. - Property sales in Hong Kong generated revenue of HKD 3,612 million, while mainland property sales contributed HKD 256 million[51]. - The hotel division's revenue increased by 48% to HKD 2.76 billion, with an operating profit of HKD 430 million, recovering from a loss of HKD 63 million in the previous year[90]. Dividends and Shareholder Returns - The interim dividend declared is HKD 0.95 per share, a decrease of 24% compared to HKD 1.25 in the same period last year[11]. - The company declared a dividend of HKD 10,722 million for the year-end, consistent with previous distributions[47]. - The interim dividend will be paid in cash on March 20, 2024, with the ex-dividend date set for March 12, 2024[151]. Property and Investment Developments - The group added two residential land parcels through land deed amendments, with a total buildable floor area of approximately 1 million square feet[14]. - The group recorded a profit from property sales of HKD 2,040 million, down from HKD 3,366 million in the previous year[12]. - The group expects a significant increase in completion volume to approximately 3.1 million square feet in the second half of the fiscal year, with about 2.5 million square feet being residential properties for sale[17]. - The group has unrecognized contract sales amounting to HKD 32.8 billion, with an estimated HKD 22.4 billion expected to be recognized in the second half of the fiscal year[17]. - The group is integrating sustainable development and technology elements into new projects, including smart home features and green spaces[16]. Financial Position and Debt Management - The company's bank and other borrowings increased significantly to HKD 20,290 million from HKD 7,508 million, reflecting a rise of 169.5%[45]. - The net debt as of December 31, 2023, was HKD 127.8 billion, up from HKD 109.8 billion as of June 30, 2023, with a debt-to-equity ratio of 21.2%[94]. - The average effective interest rate increased to 4.5% as of December 31, 2023, compared to 3.1% in 2022, due to rising borrowing costs[96]. - The company maintains a strong financial position with ample unused credit facilities, ensuring sufficient liquidity for future investment opportunities[101]. Corporate Governance and Management - The company is committed to high levels of corporate governance, with a diverse board of 19 members ensuring effective strategy and risk management[32]. - The company has a strong governance structure with independent non-executive directors serving on various committees, including audit, risk management, and remuneration[111][112][113]. - The company continues to engage with its independent directors to leverage their expertise in navigating market challenges and opportunities[111][112][113]. - The company is committed to continuous improvement in governance practices, reflecting best practices in corporate governance and accountability[111][112][113]. Sustainability and Community Engagement - The group is actively involved in community support initiatives, including sponsoring cycling events and educational programs to promote reading among youth[36]. - The group has achieved significant ESG recognition, being included in the S&P Global Sustainability Yearbook for the second consecutive year and receiving the highest AAA rating in the Hang Seng Sustainability Index since 2020[33]. - The group is the first developer in Hong Kong to purchase and use fully electric construction equipment, aiming to reduce carbon emissions on construction sites[35]. Employee and Workforce Management - The total employee compensation for the group was approximately HKD 7.135 billion, reflecting the company's commitment to market-level compensation and individual performance[149]. - The company has over 40,000 employees as of December 31, 2023, indicating a stable workforce size[149]. - The company has a long-term incentive plan in place for key employees, which includes stock options and share reward plans[149].