Financial Performance - Revenue for the six months ended June 30, 2024, was HKD 12,290,690, an increase of 8.1% from HKD 11,369,355 in the same period of 2023[7]. - Gross profit for the same period was HKD 5,469,042, slightly up from HKD 5,461,429, indicating stable profitability[7]. - Profit before tax decreased to HKD 3,664,178, down 7.1% from HKD 3,942,351 in the previous year[7]. - Net profit for the period was HKD 2,665,782, a decrease of 6.5% compared to HKD 2,851,135 in 2023[7]. - Basic and diluted earnings per share were HKD 0.3688, down from HKD 0.3865 in the same period last year[7]. - Total comprehensive income for the period was HKD 2,259,527, significantly up from HKD 934,897 in the previous year, reflecting a substantial recovery[8]. - The company's profit for the six months ended June 30, 2024, was HKD 2,665,782, a decrease of 6.5% compared to HKD 2,851,135 for the same period in 2023[8]. - The pre-tax profit for the consolidated group for the six months ended June 30, 2024, was HKD 3,664,178, a decrease of 7.1% from HKD 3,942,351 in the same period of 2023[22]. - The net profit for the consolidated group for the six months ended June 30, 2024, was HKD 2,665,782, a decrease of 6.5% from HKD 2,851,135 in the same period of 2023[22]. - The unaudited consolidated profit attributable to owners for the six months ended June 30, 2024, was HKD 2.411 billion, a decrease of 4.6% compared to HKD 2.527 billion in the same period last year[80]. Expenses and Costs - Total operating expenses, including selling and administrative expenses, decreased to HKD 1,501,480 from HKD 1,636,782, reflecting cost control measures[7]. - The total finance costs for the period amounted to HKD 646,553, an increase from HKD 586,302 in the previous year[30]. - The effective tax expense for the period was HKD 998,396, down from HKD 1,091,216 in the same period of 2023[34]. Assets and Liabilities - Non-current assets totaled HKD 85,505,815 as of June 30, 2024, compared to HKD 84,688,161 at the end of 2023, indicating a growth in asset base[9]. - Current assets decreased slightly to HKD 54,324,280 from HKD 55,277,811, primarily due to changes in inventory and properties held for sale[9]. - Total liabilities decreased to HKD 80,562,132 from HKD 81,936,347, indicating effective management of obligations[10]. - The company's equity increased to HKD 59,267,963 as of June 30, 2024, up from HKD 58,029,625, reflecting a stronger financial position[10]. - The total assets of the company reached HKD 43,117,947,000 as of June 30, 2024, compared to HKD 41,802,210,000 at the start of the year, indicating a growth of approximately 3.14%[11]. - The company's total liabilities as of June 30, 2024, were HKD 80,562,132, down from HKD 81,936,347 as of December 31, 2023[25]. - Total liabilities as of June 30, 2024, were HKD 27,244,841, a decrease from HKD 28,576,924 as of December 31, 2023[45]. - Current liabilities amounted to HKD 25,856,851, down from HKD 27,193,739 as of December 31, 2023[45]. Cash Flow - Net cash inflow from operating activities for the six months ended June 30, 2024, was HKD 4,875,738, an increase of 12% from HKD 4,353,697 in the same period of 2023[13]. - Cash and cash equivalents at the end of the period were HKD 12,361,739, down from HKD 13,685,986 at the end of June 2023, a decrease of 10%[14]. - The net increase in cash and cash equivalents for the six months was HKD 1,044,227, compared to HKD 5,209,539 in the same period last year, indicating a significant decline[14]. - The financing activities resulted in a net cash outflow of HKD 1,528,835, contrasting with a net inflow of HKD 2,326,172 in the same period of 2023[13]. Segment Performance - Water resources segment revenue for the six months ended June 30, 2024, was HKD 7,051,438, a decrease of 11.3% from HKD 7,950,125 in the same period of 2023[19]. - Property investment and development segment revenue for the six months ended June 30, 2024, was HKD 3,582,522, an increase of 114.5% from HKD 1,673,223 in the same period of 2023[19]. - The hotel operations and management segment reported a pre-tax profit of HKD 60,216 for the six months ended June 30, 2024, down from HKD 91,160 in the same period of 2023[21]. - The water resources segment generated revenue of HKD 6,653,978, down 12.0% from HKD 7,567,492 in the previous year[29]. - The property investment and development segment saw a significant increase in revenue to HKD 2,890,506, up 171.5% from HKD 1,064,468[29]. Dividends - The interim dividend declared is HKD 0.2397 per share, to be distributed around October 30, 2024[3]. - The interim dividend declared was HKD 23.97 cents per share, an increase from HKD 18.71 cents per share in the previous year[35]. - The board declared an interim dividend of HKD 0.2397 per share for the six months ending June 30, 2024, an increase from HKD 0.1871 per share in 2023[133]. Strategic Focus - The company plans to maintain its focus on market expansion and new product development in the upcoming quarters[7]. - The company plans to continue expanding its investment in infrastructure projects in mainland China, focusing on roads and bridges[18]. - The company plans to continue expanding its market presence and investing in new technologies to enhance operational efficiency and service offerings[24]. - The company aims to enhance operational efficiency and market competitiveness through strategic transformation and a focus on high-quality development[112]. - The company is actively pursuing high-value business opportunities in the Guangdong-Hong Kong-Macao Greater Bay Area[114]. Governance and Compliance - The company has complied with the corporate governance code during the six months ended June 30, 2024[123]. - The company has no purchases, sales, or redemptions of its listed securities during the six months ended June 30, 2024[127].

Investment Rating - Maintains an "Overweight" rating [2][4] Core Views - The company demonstrates stable operations with steady growth in water resource operations and sufficient cash flow, maintaining a high dividend payout ratio of 65% [3][4] - The company's water resource and power generation businesses show stable growth, offsetting the decline in property investment and development profits and the 2.2% depreciation of RMB against HKD [4] - The property investment and development business has shown improvement, with significant revenue growth in certain segments [4] Financial Performance - 2024H1 revenue reached HKD 12.291 billion, an 8% year-on-year increase, while net profit attributable to shareholders decreased by 5% to HKD 2.411 billion [4] - Adjusted 2024-2025 net profit forecasts to HKD 3.69 billion (previously HKD 4.55 billion) and HKD 4.14 billion (previously HKD 4.91 billion), respectively, and introduced a 2026 forecast of HKD 4.45 billion [4] - EPS for 2024-2026 is projected at HKD 0.56, HKD 0.63, and HKD 0.68, respectively [4] Business Segments Water Resource Operations - Water supply revenue to Hong Kong increased by 2% to HKD 2.802 billion, while revenue from Shenzhen and Dongguan decreased by 1% to HKD 683 million [4] - Pre-tax profit from the East River-Shenzhen Water Supply Project (excluding exchange differences and net financial expenses) grew by 5% to HKD 2.325 billion [4] - Current water supply and sewage treatment capacities under construction are 1.287 million tons/day and 50,000 tons/day, respectively [4] Property Investment and Development - Revenue from Yuehai Tianhe City property investment increased by 11% to HKD 793 million, driven by higher average rental rates and occupancy levels, as well as contributions from the newly opened Yuehai Tiandi project [4] - Yuehai Property revenue surged by 188% to HKD 2.804 billion, with sales revenue from properties reaching HKD 2.779 billion [4] - Pre-tax loss for Yuehai Property was HKD 283 million, but adjusted for fair value changes, impairment of properties under development, and net financial expenses, the pre-tax loss was HKD 105 million [4] - As of mid-2024, Yuehai Property held completed properties for sale worth HKD 8.664 billion and properties under development worth HKD 21.949 billion, totaling HKD 30.613 billion [4] Dividend Policy - The company maintains a high dividend payout ratio of 65%, with an interim dividend of HKD 23.97 cents per share [4] - Operating cash inflow for 2024H1 was HKD 4.876 billion, with capital expenditures of HKD 445 million [4] Market Data - Current stock price: HKD 4.68 [5] - 52-week price range: HKD 3.35 - HKD 6.21 [5] - Current market capitalization: HKD 30.597 billion [5]

Financial Performance - Revenue for the six months ended June 30, 2024, was HKD 12,290,690 thousand, an increase of 8.1% compared to HKD 11,369,355 thousand in the same period of 2023[2] - Pre-tax profit decreased by 7.1% to HKD 3,664,178 thousand from HKD 3,942,351 thousand year-on-year[4] - Profit attributable to owners of the company was HKD 2,410,985 thousand, down 4.6% from HKD 2,526,909 thousand in the previous year[4] - Basic earnings per share decreased to HKD 36.88 cents from HKD 38.65 cents, reflecting a decline of 4.6%[4] - The company reported a total comprehensive income of HKD 2,259,527 thousand for the six months ended June 30, 2024, compared to HKD 934,897 thousand in the same period of 2023[5] - The company reported a net foreign exchange loss of HKD (1,998) thousand for the six months ended June 30, 2024, compared to a gain of HKD 10,469 thousand in the same period of 2023[18] - The company’s net profit for the first half of 2024 was HKD 2,665,782 thousand, down from HKD 2,851,135 thousand in the first half of 2023, reflecting a decrease of approximately 6.5%[16] - The total tax expense for the six months ended June 30, 2024, was HKD 998,396, a decrease from HKD 1,091,216 in the same period of 2023, representing a reduction of approximately 8.5%[29] Dividends and Shareholder Returns - The interim dividend per share increased by 28.1% to HKD 23.97 cents from HKD 18.71 cents in the prior period[4] - The interim dividend declared for the six months ended June 30, 2024, is HKD 0.2397 per share, an increase from HKD 0.1871 per share in 2023[8] - The company will suspend share transfer registration on October 14, 2024, to facilitate the distribution of the interim dividend[76] Assets and Liabilities - Non-current assets totaled HKD 85,505,815 thousand as of June 30, 2024, compared to HKD 84,688,161 thousand at the end of 2023[6] - Current assets decreased to HKD 54,324,280 thousand from HKD 55,277,811 thousand at the end of 2023[6] - As of June 30, 2024, current liabilities totaled HKD 42,184,589, a decrease of 7.5% from HKD 45,666,192 as of December 31, 2023[7] - Non-current liabilities amounted to HKD 38,377,543, reflecting an increase of 5.8% from HKD 36,270,155[7] - The company's equity total was HKD 59,267,963, up 2.1% from HKD 58,029,625[7] - The reserve increased to HKD 34,151,770, a rise of 4% from HKD 32,836,033[7] - Total assets minus current liabilities reached HKD 97,645,506, an increase of 3.5% from HKD 94,299,780[7] Revenue by Segment - Revenue from external customers in the Water Resources segment was HKD 7,051,438, a decrease of 11.3% from HKD 7,950,125 in the same period last year[13] - The Property Investment and Development segment reported revenue of HKD 3,582,522, down from HKD 1,673,223, reflecting a decline of 6.5%[13] - The Department Store Operations segment generated revenue of HKD 389,592, a slight decrease of 3.5% compared to HKD 403,813 in the previous year[13] - The Power Generation segment's revenue was HKD 629,462, down from HKD 697,542, representing a decrease of 9.8%[15] - The Hotel Operations and Management segment reported revenue of HKD 315,188, an increase of 4.5% from HKD 302,337 in the same period last year[15] - The Roads and Bridges segment's revenue was HKD 322,488, a decrease of 5.8% compared to HKD 342,315 in the previous year[15] - Total revenue for the group was HKD 7,091,395, down from HKD 7,988,119, reflecting a decline of 11.2%[13] Strategic Plans and Market Focus - The company plans to expand its market presence in mainland China and Hong Kong through strategic investments in infrastructure projects[10] - The group is focusing on enhancing its operational efficiency and exploring potential mergers and acquisitions to drive growth[10] - The company aims to enhance operational efficiency and market competitiveness through strategic transformation and organizational optimization[71] - The company plans to expand its water resource business and optimize its asset portfolio while focusing on high-value-added services[72] Operational Metrics - The total designed water supply capacity of the company's operational water supply plants was 10,736,800 tons per day as of June 30, 2024, compared to 10,086,800 tons per day in 2023[44] - The total water supply capacity as of June 30, 2024, is 8,786,800 tons per day, an increase from 8,136,800 tons per day as of June 30, 2023, representing a growth of approximately 8%[46] - The total wastewater treatment capacity as of June 30, 2024, is 2,054,400 tons per day, up from 1,929,400 tons per day as of June 30, 2023, indicating an increase of about 6.5%[46] Employee and Compensation - As of June 30, 2024, the group had a total of 11,472 employees, a slight decrease from 11,495 employees as of December 31, 2023[70] - Total employee compensation for the period was approximately HKD 901,354,000, down from HKD 975,816,000 in 2023[70] Corporate Governance and Compliance - The company has adopted revised Hong Kong Financial Reporting Standards effective from January 1, 2024, which did not significantly impact financial performance[9] - The company has maintained consistent accounting policies for the interim financial information compared to the previous fiscal year[9] - The audit committee has reviewed the unaudited interim financial report for the six months ended June 30, 2024[77] - The interim results announcement has been published on the company's website and the Hong Kong Stock Exchange[78] - The company remains committed to maintaining high standards of corporate governance in line with stakeholder interests[73]

Summary of Conference Call Company or Industry Involved - The document does not specify a particular company or industry, but it emphasizes the confidentiality of the conference call content. Core Points and Arguments - The conference call content is strictly for internal reference among consumers, and any disclosure or external sharing of the information is prohibited [1] - The document warns against any requests for, leaks of, or dissemination of the conference call minutes, labeling such actions as infringement [1] - The organization reserves the right to pursue legal action against individuals who leak or forward the conference call minutes [1] Other Important but Possibly Overlooked Content - The emphasis on confidentiality suggests that the information discussed may contain sensitive or proprietary insights that could impact market perceptions or competitive positioning if disclosed [1]

Summary of Conference Call Company or Industry Involved - The document does not specify a particular company or industry, but it emphasizes the confidentiality of the conference call content. Core Points and Arguments - The conference call content is strictly for internal reference among consumers, and any disclosure or external sharing of the information is prohibited [1] - The document warns against any requests for, leaks of, or dissemination of the conference call minutes, labeling such actions as infringement [1] - The research entity reserves the right to pursue legal action against individuals who leak or forward the conference call minutes [1] Other Important but Possibly Overlooked Content - The emphasis on confidentiality suggests that the information discussed may contain sensitive data that could impact market perceptions or company valuations if disclosed [1]

Financial Performance - The unaudited consolidated revenue for the three months ended March 31, 2024, was HKD 6,389,233,000, representing a 19.8% increase from HKD 5,332,649,000 in the same period of 2023[2]. - The unaudited consolidated profit before tax decreased by 6.3% to HKD 1,914,668,000, compared to HKD 2,044,184,000 in the previous year[2]. - The unaudited profit attributable to owners of the company was HKD 1,272,397,000, a slight decrease of 0.9% from HKD 1,284,561,000 in the same period last year[2]. - The company reported a net loss of HKD 20,528,000 from fair value changes in investment properties, compared to a gain of HKD 311,008,000 in the previous year[2]. - The pre-tax loss for the period was HKD 133,852,000, compared to a pre-tax profit of HKD 181,230,000 in 2023, primarily due to increased sales and marketing expenses[17]. Asset and Equity - The total assets as of March 31, 2024, were HKD 138,490,885,000, down 1.1% from HKD 139,965,972,000 as of December 31, 2023[2]. - The equity attributable to owners of the company increased by 3.0% to HKD 43,048,779,000 from HKD 41,802,210,000 as of December 31, 2023[2]. - The company holds completed unsold properties valued at approximately HKD 9.967 billion and development properties valued at HKD 21.502 billion as of March 31, 2024[18]. Water Supply Projects - The total water supply for the Dongshen Water Supply Project was 602 million tons, an increase of 2.2% from 589 million tons in 2023, generating revenue of HKD 1,761,000,000, up 2.4% from HKD 1,720,000,000[5]. - The pre-tax profit for the Dongshen Water Supply Project was HKD 1,178,000,000, reflecting a 5.9% increase from HKD 1,112,000,000 in the previous year[5]. - The total designed water supply capacity and sewage treatment capacity of other water resource projects remained stable at 16,150,200 tons and 3,345,900 tons per day, respectively[6]. - The operational water supply capacity of subsidiaries and joint ventures increased to 10,736,800 tons per day from 8,901,800 tons per day in the previous year[6]. - The total water supply capacity of the group's subsidiaries as of March 31, 2024, is 8,786,800 tons per day, while the wastewater treatment capacity is 2,054,400 tons per day, representing an increase from 6,951,800 tons and 1,925,900 tons respectively in the previous year[8]. - The group is currently constructing water supply plants with a total capacity of 1,237,000 tons per day and wastewater treatment capacity of 50,000 tons per day as of March 31, 2024[9]. - The wastewater treatment capacity of the group's subsidiaries is significantly bolstered by various projects, with notable capacities such as 600,000 tons per day from Jianghe Port Wu Water Co., Ltd.[8]. Property Investment and Development - The property investment and development segment, specifically from Guangdong Tianhe City, saw an 18.3% increase in revenue to HKD 416,509,000, up from HKD 352,100,000 in 2023[10]. - The pre-tax profit from property investment activities rose by 23.2% to HKD 248,632,000, compared to HKD 201,868,000 in the previous year, driven by increased rental income[10]. - The group operates several shopping malls under Guangdong Tianhe City, contributing to the overall increase in property investment revenue[10]. - Tianhe City Plaza reported a 12.6% increase in revenue to HKD 190,717,000 for Q4 2024, with an average occupancy rate of 98.9%[11]. - Tianhe City Shopping Center in Tianjin saw a significant revenue increase of 32.4% to HKD 68,590,000, with an occupancy rate of 97.6%[11]. - Guangzhou Animation Star City achieved a remarkable revenue growth of 79.7% to HKD 18,415,000, maintaining a high occupancy rate of 99.9%[11]. - The newly opened Yuehai Tiandi generated HKD 8,740,000 in revenue, achieving a 100% occupancy rate since its opening in December 2023[11]. - The total leasable area across all properties is approximately 576,900 square meters, with total revenue for Q4 2024 reaching HKD 416,509,000, reflecting an 18.3% increase compared to the previous year[11]. - The total floor area of completed and pending sale properties is approximately 2,000,000 square meters, with several projects expected to complete by 2027[13][14]. - The cumulative signed floor area for the Shenzhen Yuehai City project reached 91.2%, with a total area of 114,986 square meters available for sale[15]. - In Zhongshan, the cumulative signed floor area for Yuehai City reached 33.1%, with a total area of 236,728 square meters[16]. - The cumulative delivered floor area for Jiangmen Yuehai One Gui Fu is 66.5%, with a total area of 158,407 square meters available for sale[16]. - Revenue for the period increased by 303.7% to HKD 1,740,586,000, compared to HKD 431,118,000 in 2023, with property sales contributing HKD 1,727,973,000[17]. - The total area of signed and delivered properties reached approximately 58,000 square meters, up from 71,000 square meters in 2023, while delivered area increased to 79,000 square meters from 35,000 square meters[17]. Hotel and Other Operations - The average occupancy rate for the hotel segment was 95.4%, with an average room rate of HKD 1,248, compared to HKD 1,153 in 2023[22]. - The total revenue from the hotel management business increased by 16.2% to HKD 162,829,000, with a pre-tax profit of HKD 37,266,000, up 67.7% from HKD 22,217,000 in 2023[22]. - The average rental rate for the investment property increased to 97.1%, with total revenue rising by 1.7% to HKD 12,233,000[19]. - The total revenue from the department store operations decreased by 19.7% to HKD 130,933,000, with a pre-tax profit of HKD 28,384,000, down 18.6% from HKD 34,863,000 in 2023[20]. Energy and Infrastructure - Electricity sales volume for the energy project increased by 7.1% to 634 million kWh, while revenue decreased by 3.4% to HKD 390,680,000 due to lower electricity prices[23]. - The average daily traffic for the Xingliu Expressway increased by 2.7% to 29,743 vehicles, but revenue decreased by 4.5% to HKD 167,446,000[24]. Strategic Initiatives - The company aims to maintain a stable development strategy amidst global economic uncertainties, focusing on risk control and long-term value creation for stakeholders[26]. - The company plans to expand its efforts in the water resource industry chain, targeting high value-added businesses while optimizing asset allocation[26]. - The company will actively seek market acquisition opportunities related to the "Guangdong-Hong Kong-Macao Greater Bay Area" development strategy[26]. - The company has established a wholly-owned subsidiary, Dongguan Yuehai Yinpeng Development and Construction Co., Ltd., to fulfill its responsibilities in the Yinpeng project[25]. - As of March 31, 2024, four project roads have been completed, and one road is under construction[25]. - The company emphasizes a development strategy of "seeking progress while maintaining stability" to ensure core business stability[26]. Project Costs and Financial Review - Cumulative construction costs for the Yinpeng project amount to approximately RMB 1.999 billion (equivalent to about HKD 2.205 billion) as of December 31, 2023[25]. - Interest, management, and maintenance costs recognized for the Yinpeng project increased by 16.6% to HKD 39.343 million for the period[25]. - Pre-tax profit for the Yinpeng project rose by 10.1% to HKD 33.896 million for the period[25]. - The financial data for the three months ending March 31, 2024, has been reviewed by the company's audit committee but remains unaudited[27].

Financial Performance - Revenue for the year ended December 31, 2023, was HKD 24,199,894, representing a 4.3% increase from HKD 23,196,238 in 2022[6]. - Profit attributable to owners for the year decreased by 34.5% to HKD 3,122,069 from HKD 4,763,503 in 2022[6]. - Basic earnings per share for 2023 was HKD 0.4775, down 34.5% from HKD 0.7286 in 2022[6]. - EBITDA for 2023 was HKD 8,158,138, down 19.2% from HKD 10,092,429 in 2022[6]. - Consolidated profit before tax decreased by 36.4% to HKD 4.60 billion, down from HKD 7.24 billion in 2022, primarily due to a decline in property investment and development profits[25]. - The net profit attributable to the company's owners decreased by 34.5% to HKD 3.12 billion, compared to HKD 4.76 billion in 2022[25]. - The company's consolidated profit attributable to owners for 2023 was HKD 3.122 billion, a decrease of 34.5% compared to HKD 4.764 billion in 2022[20]. - The group’s consolidated revenue for the year ended December 31, 2023, was HKD 24.20 billion, an increase of 4.3% from HKD 23.20 billion in 2022[25]. Dividends - Proposed final dividend is HKD 0.1233 per share, a decrease from HKD 0.4262 per share in the previous year, resulting in a total dividend payout ratio of 65.01%[6][7]. - The company proposed a final dividend of HKD 0.1233 per share, totaling HKD 0.3104 for the year, down from HKD 0.6133 in 2022[21]. - The interim dividend per ordinary share was HKD 0.1871, consistent with the previous year[70]. Assets and Liabilities - Total assets increased by 4.8% to HKD 139,965,972 from HKD 133,514,620 in 2022[6]. - The total liabilities increased to HKD (81,936,347,000) in 2023 from HKD (75,005,303,000) in 2022, reflecting a rise of about 9.6%[73]. - The equity total as of December 31, 2023, was HKD 58,029,625,000, a slight decrease from HKD 58,509,317,000 in 2022, indicating a decline of approximately 0.8%[73]. - The group's cash and bank balances increased by HKD 3.656 billion to HKD 12.594 billion as of December 31, 2023, up from HKD 8.938 billion in 2022[49]. - Total financial borrowings increased by HKD 1.692 billion to HKD 42.428 billion as of December 31, 2023, compared to HKD 40.736 billion in 2022[49]. Operational Highlights - The annual water supply from the Dongshen Water Supply Project was 2.21 billion tons, generating revenue of HKD 6.38 billion, a decrease of 1.1% from HKD 6.46 billion in 2022[26]. - Revenue from water supply to Hong Kong increased by 1.4% to HKD 5.02 billion, while revenue from Shenzhen and Dongguan decreased by 9.4% to HKD 1.37 billion[27]. - The hotel management segment saw a significant increase in revenue due to the end of the pandemic, contributing HKD 648.78 million[23]. - The company plans to focus on high-value water services and steady property sales in 2024, aiming to leverage opportunities from the Guangdong-Hong Kong-Macao Greater Bay Area development[24]. Market Conditions - The overall economic recovery remains slow and uneven, with challenges such as geopolitical tensions and high borrowing costs impacting growth prospects[22]. - The company will continue to monitor foreign exchange risks and implement strategies to mitigate exposure[23]. Corporate Governance - The company emphasizes a performance-driven culture, promoting a meritocratic system where capable employees are rewarded, aiming to enhance market competitiveness and corporate value[58]. - The management team includes experienced professionals, such as the newly appointed chairwoman Bai Tao, who has extensive experience in manufacturing and real estate sectors[59][60]. - The board of directors includes experienced professionals with backgrounds in law, finance, and management, enhancing the company's governance[66][67]. - The company emphasizes the importance of independent directors in its governance structure, with several members having significant experience in public service and corporate governance[62]. Environmental and Social Responsibility - The company is committed to quality control and regular inspections of production sites to prevent product safety risks, while also being open to market supervision for timely improvements[58]. - The company has established environmental policies in response to China's 2060 carbon neutrality goal, emphasizing climate awareness and risk assessment[143]. - The Environmental, Social, and Governance (ESG) Committee was formed in 2018 to oversee and report on ESG management effectiveness and stakeholder impact[144]. Financial Reporting and Compliance - The financial statements are prepared in accordance with Hong Kong Financial Reporting Standards, ensuring compliance and transparency[185]. - The independent auditor confirmed that the consolidated financial statements reflect the company's financial position and performance fairly as of December 31, 2023[150]. - The group has adopted new and revised Hong Kong Financial Reporting Standards, including HKFRS 17 on insurance contracts, which had no significant impact on the financial statements[187]. Future Outlook - The company aims to strengthen its core businesses in water resource management, property investment, and infrastructure, while enhancing its competitive advantage[107]. - The company plans to expand into high-end water treatment membranes and integrated equipment, targeting high-value-added sectors[107].

Investment Rating - The report has downgraded the investment rating to "Hold" [4] Core Views - The company's net profit for 2023 was HKD 3.122 billion, a decrease of 34.5% year-on-year, with earnings per share at HKD 0.48. The total dividend for 2023 is HKD 0.31, resulting in a dividend payout ratio of 65%, which is below expectations [4] - The decline in profit is primarily attributed to a property impairment of HKD 1.81 billion, while the company's revenue for 2023 was HKD 24.2 billion, reflecting a year-on-year increase of 4.3% [4] - The water business remains stable, contributing approximately 85% to the pre-tax profit, with a pre-tax profit of HKD 5.706 billion for 2023, consistent with 2022 [4] - The company is facing pressure from the real estate sector, which may continue to suppress profits in the future [4] - The company has adopted a new dividend policy, reducing the dividend payout ratio from 84% in 2022 to 65% in 2023, indicating uncertainty in future dividends due to ongoing real estate pressures [4] Financial Data and Earnings Forecast - Revenue for 2023 was HKD 24.2 billion, with a year-on-year growth rate of 4% [5] - The net profit forecast for 2024 and 2025 has been adjusted to HKD 3.692 billion and HKD 3.737 billion, respectively, down from previous estimates of HKD 4.289 billion and HKD 4.455 billion [4][5] - The projected earnings per share for 2024, 2025, and 2026 are HKD 0.56, HKD 0.57, and HKD 0.54, respectively [5] - The price-to-earnings ratio for 2024, 2025, and 2026 is projected to be 6.2, 6.1, and 6.5 times, respectively [5]

Financial Performance - Revenue for the year ended December 31, 2023, was HKD 24,199,894 thousand, representing a 4.3% increase from HKD 23,196,238 thousand in 2022[3] - Pre-tax profit decreased by 36.4% to HKD 4,604,055 thousand compared to HKD 7,243,538 thousand in the previous year[4] - Net profit attributable to owners of the company was HKD 3,122,069 thousand, down 34.5% from HKD 4,763,503 thousand in 2022[4] - Basic earnings per share decreased to HKD 0.4775 from HKD 0.7286, a decline of 34.5%[4] - Total comprehensive income for the year was HKD 2,041,687 thousand, compared to HKD 469,732 thousand in 2022[6] - The company's consolidated profit attributable to owners for 2023 was HKD 3.122 billion, a decrease of 34.5% compared to HKD 4.764 billion in 2022[59] - The net profit from the fair value adjustment of investment properties was HKD 230,115,000, down from HKD 762,820,000 in 2022[92] Dividends - Proposed final dividend per share is HKD 0.1233, down 71.2% from HKD 0.4262 in the previous year, resulting in a total dividend of HKD 0.3104, a 49.4% decrease[3] - The proposed final dividend for 2023 is HKD 0.1233 per share, compared to HKD 0.4262 per share in 2022, resulting in a total annual dividend of HKD 0.3104 per share, down from HKD 0.6133 per share in 2022[60] Assets and Liabilities - Non-current assets increased to HKD 84,688,161 thousand from HKD 81,293,868 thousand in the previous year[8] - Total current assets increased to HKD 55,277,811 thousand in 2023 from HKD 52,220,752 thousand in 2022, representing a growth of approximately 5.0%[10] - Total current liabilities rose to HKD 45,666,192 thousand in 2023, up from HKD 35,668,282 thousand in 2022, indicating an increase of about 28.5%[10] - Net current assets decreased to HKD 9,611,619 thousand in 2023 from HKD 16,552,470 thousand in 2022, a decline of approximately 41.5%[10] - Total non-current liabilities decreased to HKD 36,270,155 thousand in 2023 from HKD 39,337,021 thousand in 2022, reflecting a reduction of about 7.9%[10] - Total equity decreased slightly to HKD 58,029,625 thousand in 2023 from HKD 58,509,317 thousand in 2022, a decrease of approximately 0.8%[10] - The company's reserves decreased to HKD 32,836,033 thousand in 2023 from HKD 34,362,465 thousand in 2022, a decline of about 4.5%[10] - The total assets of the company reached HKD 139,965,972 thousand in 2023, compared to HKD 133,514,620 thousand in 2022, reflecting an increase of approximately 4.1%[31] - The total liabilities rose to HKD 81,936,347 thousand in 2023, up from HKD 75,005,303 thousand in 2022, indicating an increase of around 9.6%[31] Segment Performance - The water resources segment generated revenue of HKD 15,329,381, a decrease of 9.6% from HKD 16,949,113 in 2022[21] - The property investment and development segment reported revenue of HKD 5,304,259, an increase of 84.5% from HKD 2,870,880 in 2022[21] - The department store operations segment's revenue decreased slightly to HKD 758,786 from HKD 798,860, a decline of 5%[21] - The power generation segment's revenue was HKD 1,475,698, down 3.5% from HKD 1,529,210 in 2022[23] - The hotel operations and management segment saw revenue increase to HKD 648,780, up 77.8% from HKD 386,660 in 2022[23] - The road and bridge segment reported revenue of HKD 682,990, an increase of 3.9% from HKD 661,515 in 2022[23] Cash Flow and Financing - Cash and bank balances rose to HKD 12,593,616 thousand from HKD 8,938,120 thousand, indicating improved liquidity[8] - Bank and other borrowings decreased to HKD 27,175,184 thousand in 2023 from HKD 30,690,800 thousand in 2022, a decrease of about 11.0%[10] - The group’s bank and other borrowings included loans from subsidiaries totaling HKD 6.5513 billion in 2023, down from HKD 8.7651 billion in 2022[56] - The company experienced a significant increase in bank interest income, which rose to HKD 226,050 thousand in 2023 from HKD 144,027 thousand in 2022, an increase of about 57.1%[25] Operational Highlights - The company plans to continue expanding its market presence in mainland China and Hong Kong, focusing on infrastructure and property development[20] - The company is exploring new technologies in water treatment and energy efficiency to enhance operational performance[20] - The company aims to provide stable and sustainable returns to shareholders while retaining sufficient funds for business expansion and operations[60] - The company plans to extend its water business into high value-added services and continue to develop property investment and development business steadily[64] - The company is actively monitoring macroeconomic conditions, including global inflation and geopolitical tensions, which may impact future financial performance[112] Employee and Governance - The company reported a total employee count of 11,495 as of December 31, 2023, with a total salary expenditure of approximately HKD 2,502,471,000, slightly down from HKD 2,513,717,000 in 2022[117] - The company is focused on employee development through targeted professional training to enhance overall employee quality[118] - The company is committed to high standards of corporate governance and compliance with the Hong Kong Stock Exchange's corporate governance code[120] Future Outlook - The company will focus on leveraging opportunities from the "Guangdong-Hong Kong-Macao Greater Bay Area Development Plan" to enhance long-term value creation[64] - The company plans to continue expanding its property portfolio with new developments and sales strategies in the coming years[88]

Financial Performance - The unaudited consolidated revenue for the nine months ended September 30, 2023, was HKD 16,435.34 million, a decrease of 7.6% compared to HKD 17,783.87 million in the same period of 2022[2] - The unaudited consolidated profit before tax decreased by 15.8% to HKD 5,953.39 million, down from HKD 7,070.93 million in the previous year[2] - The unaudited profit attributable to owners of the company was HKD 3,827.69 million, representing an 18.6% decrease from HKD 4,699.83 million in 2022[2] - The net gain from the fair value adjustment of investment properties was HKD 486.80 million, down from HKD 1,210.81 million in the previous year[2] - The company recorded a pre-tax loss of HKD 58,193,000, excluding the impact of fair value changes and net financial costs[17] Assets and Equity - Total assets as of September 30, 2023, amounted to HKD 142,231.57 million, reflecting a 6.5% increase from HKD 133,514.62 million as of December 31, 2022[2] - The equity attributable to owners of the company decreased to HKD 41,903.77 million from HKD 43,328.64 million, a decline of 3.3%[2] Water Supply and Treatment - The total water supply for the Dongshen Water Supply Project was 1.729 billion tons, an increase of 1.3% from 1.707 billion tons in 2022, generating revenue of HKD 5.136 billion[5] - Revenue from water supply to Hong Kong increased by 1.6% to HKD 4.104 billion, while revenue from Shenzhen and Dongguan decreased by 9.2% to HKD 1.032 billion[5] - The total water supply capacity of the group's subsidiaries as of September 30, 2023, is 8,536,800 tons per day, an increase from 5,481,800 tons per day in the previous year, representing a growth of 55.5%[8] - The total wastewater treatment capacity of the group's subsidiaries is 2,054,400 tons per day, up from 1,888,900 tons per day in the previous year, reflecting an increase of 8.8%[8] - The total designed water supply capacity of other water resource projects increased to 16,090,200 tons per day as of September 30, 2023, compared to 15,893,200 tons per day at the end of 2022[6] Property Investment and Development - The property investment and development revenue from Guangdong Tianhe City decreased by 5.0% to HKD 1,111,978,000, down from HKD 1,170,731,000 in the previous year[10] - The pre-tax profit from property investment business decreased by 18.3% to HKD 603,318,000, compared to HKD 738,852,000 in the previous year[10] - The average occupancy rate for the property investment business declined compared to the previous year, contributing to the decrease in revenue[10] - The total rental area across various properties is approximately 564,700 square meters, with a total revenue of HKD 1,111,978,000 for the nine months ending September 30, 2023, reflecting a decrease of 5.0% compared to HKD 1,170,731,000 in 2022[11] - The rental rate for Tianhe City Plaza – Tianhe City Shopping Center is 99.3%, with revenue of HKD 493,031,000, down 17.1% from HKD 594,877,000 in 2022[11] Market Expansion and Projects - The company signed several investment cooperation agreements for the construction/expansion of water supply and sewage treatment plants in Jiangxi and Jiangsu provinces, with a total estimated investment of approximately HKD 802 million[6] - The group is currently constructing water supply plants with a total supply capacity of 1,260,000 tons per day and wastewater treatment capacity of 50,000 tons per day[9] - The company is actively expanding its market presence through acquisitions and new developments, including the recent opening of Shenzhen Tianhe City[11] - The projected completion for several projects, including Jiangmen Tianhe City, is set for 2026[14] Operational Efficiency and Strategy - The company aims to enhance operational efficiency in water resource management, property investment, and infrastructure while optimizing asset allocation and resource configuration[25] - The company will actively seize potential development opportunities arising from major strategic initiatives such as "Chinese-style modernization" and "carbon peak and carbon neutrality" strategies[25] - The company is focused on identifying quality public-private partnership projects and related market acquisition opportunities to drive profit growth[25] - The company emphasizes the importance of risk management and will continue to seek business expansion opportunities while ensuring the stable development of existing business segments[25] Economic Outlook - The global economic growth is expected to remain under pressure due to inflation, tightening monetary policies, and other uncertainties, impacting overall demand in the short term[25]