Financial Performance - Revenue for the six months ended December 31, 2024, increased by 14% year-on-year to HKD 1,469.93 million, driven by contributions from new data center revenues[6]. - EBITDA rose by 17% year-on-year to HKD 1,053.05 million, with an improved margin from 70% to 72%[7]. - Profit attributable to shareholders increased by 11% year-on-year to HKD 483.99 million, supported by revenue growth and improved rental income[7]. - Operating cash flow (excluding changes in working capital) increased by 37% year-on-year to HKD 982 million[6]. - The group reported a 14% year-on-year increase in revenue to HKD 1.47 billion, driven by a 15% increase in revenue from data center and IT facilities to HKD 1.36 billion[32]. - The operating profit increased by 21% year-on-year to HKD 752 million, benefiting from revenue growth in data center and IT facilities[33]. - The EBITDA rose by 17% year-on-year to HKD 1.05 billion, with an EBITDA margin of 72% due to improved rental and new customer occupancy[33]. - The company reported a profit of HKD 483,994,000 for the six months ended December 31, 2024, compared to HKD 435,440,000 for the same period in 2023, representing an increase of approximately 11.2%[102]. - Basic and diluted earnings per share for the period were both HKD 0.1192, up from HKD 0.1073 in the same period last year, marking a 17.7% increase[94]. Infrastructure Development - The MEGA IDC Phase 1 successfully commenced trial operations in the first half of 2024, with plans for Phase 2 to add approximately 350,000 square feet of total floor area, expected to be completed in 2026/2027[9]. - The MEGA Gateway data center opened in Q1 2023, with 90% of deployed capacity utilized by a strong customer mix including cloud, telecom, and banking sectors[23]. - MEGA-i currently has approximately 15,000 fiber interconnects, enhancing the company's ability to meet the growing high-power demand from customers[22]. - The strategic positioning of MEGA Gateway aims to become the next major network connection hub in Hong Kong, focusing on high-value, connectivity-intensive customers[23]. - MEGA Plus and MEGA Two are fully operational, strategically positioned to attract large-scale cloud service providers due to their optimized facilities[24]. - The total floor area of data centers in Hong Kong will expand from 2.3 million square feet to nearly 3 million square feet upon completion of the MEGA IDC project[26]. - The group is actively constructing the second phase of MEGA IDC, which will add approximately 350,000 square feet and is expected to be completed in the 2026/2027 fiscal year[26]. Financial Position and Debt Management - The company maintains a healthy adjusted debt-to-equity ratio of 52%, or 37% excluding shareholder loans, ensuring a strong financial position[11]. - The adjusted debt ratio is calculated based on net debt divided by total equity and revalued surplus, with a capitalization rate range of 4.75% to 6.25%[16]. - The group's debt ratio (net debt to equity attributable to shareholders) was 324% as of December 31, 2024; excluding the HKD 5 billion long-term unsecured shareholder loan from Sun Hung Kai Properties, the ratio was 233%[36]. - As of December 31, 2024, the bank balance and deposits amounted to HKD 517 million, while bank loans totaled HKD 12.212 billion, resulting in a net bank loan of approximately HKD 11.695 billion, a 3% increase from June 30, 2024[36]. - The company has available funding sources totaling HKD 2,300,000,000 from internal resources and unused credit facilities from financial institutions and shareholders[104]. Market Demand and Strategic Focus - Demand for high-quality data center infrastructure and services in Hong Kong remains strong, particularly driven by AI-driven applications[8]. - The company remains optimistic about the potential opportunities brought by the rapid development of artificial intelligence, with trends favoring growth in demand for AI "inference" data centers[14]. - The company is focusing future investments on customer-related equipment and the development of MEGA IDC Phase 2, while maintaining strict cost control amid rising capital costs[9]. - The number of fiber interconnections continues to grow steadily, with strong demand expected to persist as more international cables pass through Hong Kong[9]. Sustainability and Corporate Responsibility - The company is committed to environmental sustainability, achieving carbon neutrality certification for two consecutive years and utilizing solar power generated from a private solar farm[18]. - The group has committed approximately 45% of its bank financing to sustainability-linked initiatives, enhancing its long-term sustainable performance[29]. Governance and Management - The company has a diverse board with members holding degrees from prestigious institutions such as the University of Cambridge and the University of Chicago[69]. - The board includes members with extensive experience in finance, engineering, and project management, enhancing the company's strategic decision-making capabilities[71][74]. - The company has maintained a consistent director's fee structure across its non-executive directors, indicating a stable governance approach[65][67][70]. - The independent non-executive directors play a crucial role in the company's audit and remuneration committees, ensuring transparency and accountability[71][75]. - The company continues to leverage the expertise of its board members to navigate market challenges and drive growth initiatives[69]. Employee and Compensation - The group employed 518 full-time employees as of December 31, 2024, and implemented measures to promote employee health and safety[38]. - The company has a competitive compensation package for employees, including performance-based stock options to retain talent[38]. - Mr. Chen received a total compensation of approximately HKD 6,614,000, which includes a director's fee of HKD 45,000 for the fiscal year ending June 30, 2024[52]. - The remuneration for key management personnel rose to HKD 3,148,000 from HKD 2,596,000, an increase of 21.2%[142]. Audit and Compliance - The interim results for the six months ending December 31, 2024, are unaudited but have been reviewed by Deloitte[167]. - The financial data presented complies with the relevant regulations and accounting standards as of December 31, 2024[90]. - The review of the financial data was conducted according to the Hong Kong Institute of Certified Public Accountants' standards[91]. - The audit committee consists of four members, including three independent non-executive directors, ensuring compliance with listing rules[168]. Financing Agreements - Hong Wei Development Limited secured a commitment financing agreement with Bank of China (Hong Kong) for up to HKD 1.5 billion in term loans and HKD 1.5 billion in revolving loans[171]. - A subsequent financing agreement with Bank of China (Hong Kong) was signed for up to HKD 1 billion in term loans and HKD 1 billion in revolving loans, with repayment terms set for five years from the agreement date[172]. - On June 15, 2023, Hong Wei Development entered into a financing agreement with HSBC for a total of up to HKD 3 billion, including HKD 2 billion in term loans and HKD 1 billion in revolving loans, with a repayment period of 35 months[174]. - A financing agreement with Chuang Hing Bank was established for a total of HKD 1 billion in term loans and HKD 600 million in revolving loans, with a repayment period of 60 months from the first drawdown[175]. - The company has a commitment to maintain at least 51% ownership of its issued share capital by Sun Hung Kai Properties, which is a condition for the financing agreements[173]. - A new financing agreement with Bank of China was signed on March 27, 2024, for up to HKD 2.2 billion in term loans and HKD 800 million in revolving loans, with a repayment period of 60 months[176]. - A financing agreement with China Construction Bank (Asia) was established for a total of HKD 800 million in term loans and HKD 400 million in revolving loans, also with a repayment period of 60 months[177].

Investment Rating - The investment rating for the company is downgraded to Neutral [2][8]. Core Insights - The company's performance slightly exceeded expectations, driven by strong demand for data centers, but the valuation has fully reflected the positive fundamentals [5][6]. - The target price has been raised to HKD 8.58, reflecting a potential downside of 3.6% from the current price of HKD 8.90 [1][5]. - The company has shown significant growth in revenue and operating cash flow, with a year-on-year revenue increase of 14.0% in the first half of the fiscal year 2025 [5][6]. Financial Overview - For the fiscal year ending June 30, 2023, the company reported revenue of HKD 2,346 million, with projected revenue growth to HKD 3,322 million by 2025, representing a compound annual growth rate (CAGR) of 24.3% [4][9]. - Net profit for 2023 was HKD 905 million, expected to rise to HKD 1,198 million by 2025, indicating a growth rate of 32.0% [4][9]. - The adjusted EBITDA for the first half of fiscal year 2025 was HKD 1,053 million, up 17.1% year-on-year, with an EBITDA margin of 71.6% [5][6]. Market Position and Capacity - The company has successfully launched its first phase of the MEGA IDC, which is set to be the largest data center in Hong Kong, with a total floor area of approximately 500,000 square feet and a power capacity of 50 MW [5][6]. - The company anticipates a decrease in capital expenditures by 10-20% annually from 2025 to 2027, having passed the peak of capital spending and interest rate cycles [5][6]. - The total capacity is expected to reach 280 MW, with current equipped capacity at 103 MW, reflecting a year-on-year increase of 12 MW [5][6].

Financial Performance - Revenue for the six months ended December 31, 2024, increased by 14% to HKD 1.47 billion, driven by contributions from new data center revenues, particularly from the MEGA IDC Phase 1 trial operation[3] - EBITDA rose by 17% year-on-year to HKD 1.053 billion, with an improved profit margin increasing from 70% to 72%[4] - Net cash generated from operating activities (excluding changes in working capital) increased by 37% to HKD 982 million[4] - Operating profit rose by 21% year-on-year to HKD 752 million, benefiting from revenue growth in data center and IT facility businesses[29] - The net profit attributable to shareholders for the period was HKD 483.994 million, an increase from HKD 435.440 million year-on-year[39] - The group reported a total comprehensive income of HKD 483,994,000 for the six months ended December 31, 2024, compared to HKD 435,440,000 for the same period in 2023, representing an increase of approximately 11.1%[42] Operational Developments - The MEGA IDC Phase 1 is successfully in trial operation and is expected to support high-density server deployments, with Phase 2 construction underway to add approximately 350,000 square feet of total floor area, scheduled for completion in 2026/2027[6] - The company is focusing future investments on customer-related equipment and the development of MEGA IDC Phase 2, while maintaining strict cost control in capital and operational expenditures[7] - MEGA Gateway, opened in Q1 2023, has 90% of its deployed capacity utilized by a strong customer mix, including a large Asian technology company[19] - MEGA-i has approximately 15,000 fiber interconnections, enhancing the company's ability to meet the growing high-power demand from customers[18] - The company’s facilities have been upgraded to meet the increasing demand for powerful computing capabilities driven by the emergence of artificial intelligence[18] Financial Position - The adjusted debt ratio remains at a healthy level of 52%, or 37% excluding shareholder loans, reinforcing the company's strong financial position[7] - As of December 31, 2024, the group's bank balance and deposits amounted to HKD 517 million, while bank loans totaled HKD 12.212 billion, resulting in a net bank loan of approximately HKD 11.695 billion, an increase of 3% from HKD 11.398 billion on June 30, 2024[33] - The group's debt ratio (net debt to equity attributable to shareholders) was 324% as of December 31, 2024; excluding the HKD 5 billion long-term unsecured shareholder loan from New World Development, the ratio was 233%[35] - The total equity of the group was HKD 5.2 billion based on historical cost accounting, which could increase to HKD 31.9 billion based on fair market value assessments of data centers[35] - The company’s cash and cash equivalents increased to HKD 516,866,000 from HKD 498,741,000, reflecting a rise of about 3.4%[41] Market and Industry Trends - The demand for quality data center infrastructure and services in Hong Kong remains strong, particularly driven by the growth of AI-driven applications[5] - The company remains optimistic about the potential opportunities brought by the rapid development of artificial intelligence, with trends favoring growth in the medium term[11] - The strategic focus on strict capital allocation and excellent business operations positions the company to effectively respond to external challenges such as high interest rates and geopolitical tensions[12] Sustainability and Governance - The company has achieved carbon neutrality certification for two consecutive years and is committed to sustainable development, recognized by the 2024 UN Sustainable Development Goals Hong Kong Achievement Award[14] - The group has linked approximately 45% of its bank financing to sustainability initiatives, reinforcing its commitment to environmental goals[26] - The company emphasizes the need for transparency and accountability from the Science Park regarding compliance and enforcement actions against violations[10] - The company has complied with the corporate governance code as per the listing rules during the reporting period[88] Legal and Regulatory Matters - The company has successfully won a legal case against the Science Park regarding unauthorized subleasing activities, highlighting ongoing regulatory challenges in the sector[8]

Investment Rating - The report assigns a "Buy" rating to the company, indicating an expectation of total returns exceeding the relevant industry over the next 12 months [2][11]. Core Insights - The company is projected to achieve stable growth in the first half of the 2025 fiscal year, driven by the MEGA IDC project, improved utilization rates of existing and new data centers, and price increases [7]. - The MEGA IDC project is expected to be a key growth driver, with a committed and signed leasing rate of approximately 60% for the first phase by the end of the 2024 fiscal year [7]. - Anticipated interest expenses are expected to peak, leading to faster net profit growth, with a projected year-on-year increase of over 20% in net profit for the first half of 2025 [7]. - The target price has been raised from HKD 4.50 to HKD 5.22, reflecting an expected potential upside of 17.0% [1][7]. Financial Overview - Revenue is forecasted to grow from HKD 2,346 million in 2023 to HKD 4,433 million by 2027, with a compound annual growth rate (CAGR) of approximately 14.2% [6]. - Net profit is expected to increase from HKD 905 million in 2023 to HKD 1,639 million by 2027, reflecting a significant growth trajectory [6]. - The EBITDA for the fiscal years 2025, 2026, and 2027 has been revised upwards to HKD 22.08 billion, HKD 25.42 billion, and HKD 28.60 billion respectively [7]. - The company’s market capitalization is approximately HKD 18,103.47 million, with a current share price of HKD 4.46 [4][11].

Financial Performance - Revenue for the period from January 1, 2024, to June 30, 2024, was HKD 1,383,861,000, an increase from HKD 1,289,640,000 in the previous period[6]. - Gross profit for the same period was HKD 731,819,000, compared to HKD 682,537,000 in the prior period, reflecting a growth of approximately 7.2%[6]. - EBITDA for the data center business was HKD 957,656,000, up from HKD 906,851,000 in the previous period, indicating a growth of about 5.8%[6]. - Profit attributable to shareholders for the current period was HKD 471,748,000, compared to HKD 435,440,000 in the previous period, representing an increase of approximately 8.3%[6]. - Operating profit for the period was HKD 657,148,000, an increase from HKD 621,998,000 in the previous period, showing a growth of about 5.6%[6]. - The company reported a pre-tax profit of HKD 541,614,000, compared to HKD 517,892,000 in the previous period, reflecting an increase of approximately 4.6%[6]. - Revenue for the fiscal year ending June 30, 2024, increased by 14% to HKD 2,673,501,000 compared to HKD 2,345,903,000 in 2023[18]. - EBITDA rose by 10% year-on-year to HKD 1,849,000,000, up from HKD 1,677,000,000 in the previous year[18]. - The company reported a net profit attributable to shareholders of HKD 907,188,000, which is nearly unchanged from HKD 905,000,000 in 2023[19]. Operational Highlights - The company is focusing on expanding its data center operations, which are expected to drive future revenue growth[5]. - New product developments are underway, aimed at enhancing service offerings in the data center sector[5]. - The company is exploring potential mergers and acquisitions to strengthen its market position and expand its service capabilities[5]. - The total floor area of operational data centers reached 2.3 million square feet, capturing approximately 33% of the high-end data center market in Hong Kong[8]. - The company plans to expand the MEGA IDC with an additional 700,000 square feet and increase power capacity from 150 MW to over 280 MW[15]. - The MEGA IDC Phase 1, recently launched, is the largest data center in Hong Kong by power capacity, attracting strong interest from major international cloud service providers[21]. - The demand for "hyperscale" capacity has significantly increased, driven by the rise of artificial intelligence and the need for high-quality data center services[21]. Financial Position - Total assets increased to HKD 24,071,835,000 in 2024 from HKD 20,777,612,000 in 2023, reflecting a growth of approximately 16%[7]. - The company maintains a strong operating cash flow, with net cash from operating activities (excluding changes in working capital) rising by 8% to HKD 1,671,000,000[19]. - The company maintains a healthy debt ratio of 49% including shareholder loans, or 35% excluding them, ensuring a cost-effective capital structure[22]. - The adjusted debt ratio is calculated based on the fair value of completed data centers as of June 30, 2024, and net debt[22]. - The company has approximately HKD 4.99 billion in bank cash deposits and total bank loans of HKD 11.897 billion as of June 30, 2024[36]. Sustainability and Governance - The company has received LEED Gold certification for new facilities like MEGA IDC and MEGA Gateway, demonstrating commitment to environmental best practices[24]. - The company has achieved carbon neutrality certification for two consecutive years and is collaborating with Sun Hung Kai Properties to utilize green electricity from solar systems[24]. - The company emphasizes its commitment to environmental, social, and governance (ESG) principles in its data center investments[24]. - The company has been recognized with the 2024 United Nations Sustainable Development Goals Hong Kong Achievement Award for its sustainable development efforts[24]. - The company is committed to compliance with various legal regulations, including employment and privacy laws, to ensure operational integrity[59]. - The company emphasizes high standards of business ethics and corporate governance to enhance shareholder value[128]. Shareholder Information - The board proposed a final dividend of HKD 0.112 per share for the fiscal year ending June 30, 2024[20]. - The company reported a final dividend of HKD 0.112 per share for the year ending June 30, 2024, consistent with the previous year[58]. - The company emphasizes a stable dividend policy, contingent on financial performance, capital needs, and overall economic conditions[58]. - The company encourages shareholders to submit proposals for discussion at general meetings, provided they hold at least 10% of the voting rights[166]. Risk Management - The company has implemented a risk management policy to identify, assess, and mitigate key business risks, including ESG risks[158]. - The risk management framework is overseen by the board, audit committee, and a dedicated risk management working group[158]. - The company emphasizes that its risk management systems aim to manage rather than eliminate risks associated with business objectives[158]. - The board has conducted an annual review of the effectiveness of the risk management and internal control system, finding it sufficient for the fiscal year ending June 30, 2024[161]. Board and Management - The board consists of 17 members, including 3 executive directors and 7 independent non-executive directors, with female representation at approximately 12%[135][136]. - The chairman and CEO roles are distinct, with the chairman leading the board and the CEO overseeing the group's various businesses, ensuring no concentration of power[140]. - The company has established mechanisms to ensure independent viewpoints are represented in board discussions, with most members of the audit, remuneration, and nomination committees being independent non-executive directors[137]. - The company secretary assists in preparing agendas and ensuring compliance with applicable rules and regulations for board meetings[138]. - The board is responsible for approving annual and interim performance, as well as major financing arrangements and acquisitions[134]. Contracts and Agreements - A construction contract was established with a total amount of HKD 821,143,855 for a project in Tsuen Wan, Hong Kong[100]. - A second construction contract was signed for a high-end data center with a total contract amount of HKD 3,605,000,000[100]. - The total amount for the approved person consultancy service agreement is HKD 15,400,000[107]. - The group has a service fee cap for maintenance arrangements with Sun Hung Kai Properties of HKD 74.4 million, HKD 84.8 million, and HKD 96.6 million for the fiscal years ending June 30, 2024, 2025, and 2026 respectively[111]. Employee and Compensation - The group employed 487 full-time employees as of June 30, 2024, focusing on employee well-being and talent retention strategies[35]. - The group regularly conducts market benchmark surveys to ensure the competitiveness of its overall compensation system[91]. - The group implements a discretionary bonus system based on overall performance and individual contributions[92].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 4.50, indicating a potential upside of 33.9% from the current price of HKD 3.36 [1][5]. Core Insights - The company reported a revenue of HKD 2.674 billion for the fiscal year 2024, representing a year-on-year growth of 14.0%. The revenue growth was driven by a 58% contribution from new data centers and a 42% contribution from existing projects due to increased power capacity and pricing [1]. - The adjusted EBITDA for the fiscal year 2024 was HKD 1.849 billion, reflecting a 10.3% increase year-on-year, although slightly below expectations due to delays in tenant occupancy at MEGA IDC Phase 1 [1][4]. - The company has a high pre-leasing rate for new data centers, with significant demand driven by AI computing needs. The MEGA IDC Phase 1 has commenced operations, providing approximately 500,000 square feet of total floor area and 50 MW of power capacity, making it the largest data center in Hong Kong [1][4]. - The company anticipates stable revenue growth supported by high pre-leasing rates and AI demand, having passed the peak of capital expenditure and interest rate cycles [1]. Financial Summary - For the fiscal year 2024, the company expects revenues to reach HKD 2.674 billion, with net profit projected at HKD 907 million, reflecting a slight increase of 0.2% year-on-year [3][6]. - The EBITDA margin is expected to be around 69.2%, down from 71.5% in the previous year, indicating a slight contraction in profitability [4][6]. - The company plans to maintain a dividend payout of HKD 0.112 per share, with a payout ratio of 50% [1][4]. Future Projections - Revenue is projected to grow to HKD 3.322 billion in 2025, with a year-on-year growth rate of 24.3% [3][6]. - The company anticipates a continued increase in power capacity utilization, with total capacity expected to reach 280 MW in the future [1].

Revenue and Financial Performance - Revenue for the year ended June 30, 2024, increased by 14% to HKD 2,674 million, driven by price increases and power upgrades for existing customers, along with contributions from new data center revenues[2] - EBITDA rose by 10% year-on-year to HKD 1,849 million, reflecting strong operational performance despite increased financial costs due to high interest rates[3] - Net cash generated from operating activities (excluding working capital changes) increased by 8% to HKD 1,671 million, indicating robust cash flow management[3] - The group reported revenue of HKD 2.674 billion for the year ended June 30, 2024, an increase from HKD 2.346 billion in the previous year, with a gross profit of HKD 1.414 billion compared to HKD 1.321 billion[22] - The operating profit for the year was HKD 1.279 billion, up from HKD 1.192 billion in the previous year, while the profit attributable to shareholders was HKD 907 million, slightly up from HKD 905 million[22] - The company reported a total comprehensive income of HKD 907,188 thousand for the year, contributing to the increase in retained earnings[26] - The company’s total revenue for the year ending June 30, 2024, was HKD 2,673,501,000, compared to HKD 2,345,903,000 in 2023, representing a growth of approximately 13.9%[37] Dividends and Shareholder Returns - The company proposed a final dividend of HKD 0.112 per share for the fiscal year ending June 30, 2024, with intentions to maintain or increase this amount in the next fiscal year[4] - The group plans to continue its current dividend policy, maintaining stable dividends for shareholders, supported by available financial resources including internally generated funds and available bank credit[20] - The proposed final dividend for the fiscal year ending June 30, 2024, is HKD 11.20 per share, unchanged from the previous year, with total dividends amounting to HKD 454,616,000[45] - The total dividend for the year ending June 30, 2024, is also HKD 0.112 per share, unchanged from 2023[57] Operational Developments - Demand for "hyperscale" capacity has significantly increased, particularly driven by artificial intelligence, leading to strong interest in the MEGA IDC data center from major international cloud service providers[5] - The MEGA IDC data center has commenced trial operations, attracting initial customers and demonstrating exceptional power capacity, which is among the best in Hong Kong[5] - The MEGA-i network connection hub is a key growth driver, with increasing demand for fiber interconnections despite price hikes[6] - The company has secured a 15-year renewal contract from a hyperscale customer for MEGA Plus, indicating strong demand from global cloud service providers[12] - The company has increased power capacity in its facilities to meet the growing demand for higher computing power applications driven by artificial intelligence[11] - MEGA-i currently has approximately 15,000 fiber interconnections, enhancing the company's ability to meet high-intensity power demands[11] Financial Position and Debt Management - The company maintains a healthy debt ratio of 49% when including shareholder loans, and 35% when excluding them, ensuring a solid financial position for future investments[6] - The debt ratio (net debt to equity attributable to shareholders) was 311% as of June 30, 2024, and 233% when excluding the long-term unsecured shareholder loan of HKD 4.5 billion from New World Development[19] - As of June 30, 2024, the group's bank cash deposits amounted to HKD 499 million, while bank loans totaled HKD 11.897 billion, resulting in a net bank loan of approximately HKD 11.398 billion, an increase of 4% from HKD 10.977 billion on December 31, 2023[19] - The group’s total equity as of June 30, 2024, was HKD 5.1 billion based on historical cost accounting, while independent property valuation would estimate total equity at HKD 32.2 billion, maintaining a healthy debt-to-asset ratio of 49% including shareholder loans[19] - The company is actively managing its balance sheet and capital structure to ensure cost-effective investments while meeting confirmed orders[6] Sustainability and Environmental Initiatives - The company is committed to achieving carbon neutrality and has received carbon-neutral certification for two consecutive years[9] - The new MEGA IDC and MEGA Gateway have received LEED Gold certification, reflecting the company's commitment to environmental sustainability[9] - Approximately 45% of the group's bank financing is linked to sustainability initiatives, reflecting a commitment to sustainable operations[15] - The company has begun collaborating with Sun Hung Kai Properties to utilize green electricity generated from solar photovoltaic systems[9] Employee and Corporate Governance - The group employed 487 full-time employees as of June 30, 2024, and continues to focus on employee health and safety, offering competitive compensation and regular training workshops[21] - The company has complied with the corporate governance code as per the Hong Kong Stock Exchange rules during the fiscal year ending June 30, 2024[63] - The company’s financial statements for the year ending June 30, 2024, were reviewed by the audit committee and audited by Deloitte, with an unmodified opinion issued[62] Market and Industry Recognition - The group won multiple industry awards, including the Best Data Center Silver Award and the Technology Development Innovation Award, recognizing its leadership in the data center industry[14]

Financial Performance - Revenue for the six months ended December 31, 2023, increased by 16% year-on-year to HKD 1,290 million, driven by customer pricing and power usage growth[6]. - EBITDA rose by 12% year-on-year to HKD 899 million, reflecting strong operational performance despite increased interest costs[7]. - Net profit attributable to shareholders for the period was HKD 435 million, a 1% increase compared to the previous year[6]. - Operating cash flow (excluding working capital changes) increased by 8% year-on-year to HKD 715 million, indicating robust cash generation[7]. - The group's total equity is HKD 4.6 billion based on historical cost minus depreciation, which could increase to HKD 30.1 billion when adjusted for fair market value[9]. - The group's debt-to-equity ratio would be 49% (including shareholder loans) or 36% (excluding shareholder loans) based on the market valuation[9]. - The company aims to manage financial leverage prudently to ensure long-term value for shareholders amid rising interest rates[11]. - The group’s net bank loans rose by 16% to approximately HKD 10.977 billion as of December 31, 2023[16]. - The debt ratio (net debt to equity) was 319%, which would drop to 237% when excluding a long-term unsecured shareholder loan of HKD 3.8 billion[16]. - The company incurred a financial cost of HKD 104,106,000, which is a substantial increase from HKD 38,160,000 in the previous year, indicating a rise of 173.5%[48]. - The company reported a significant increase in cash flow from financing activities, which amounted to HKD 729,538,000, compared to HKD 174,243,000 in the previous year, an increase of 318.5%[48]. Data Center Demand and Expansion - Demand for data center services has significantly increased, particularly in "network-connected" and "hyperscale" data center services[8]. - The first phase of the advanced MEGA IDC facility is set to commence operations by the end of March 2024, with new clients including major international banks and cloud service providers[8]. - The surge in interest for high-quality data centers is closely linked to the growth of artificial intelligence applications, which require high-power servers[8]. - The total floor area for future phases of MEGA IDC will increase by an additional 700,000 square feet to support "hyperscale" business growth[10]. - Demand for high-end data center space is expected to significantly increase due to the requirements of high-power AI servers, particularly in North America and Asia[10]. - The group has secured commitments from major financial institutions and cloud service providers for the use of the MEGA IDC facility, indicating strong future demand[13]. - The new data center MEGA Gateway opened in Q1 2023, strategically positioned to become a major network connectivity hub[13]. - The group operates seven data centers in Hong Kong, with six owned by the group, and is constructing another engineering project to enhance international connectivity and business resilience[13]. Environmental, Social, and Governance (ESG) Commitments - The company continues to focus on environmental, social, and governance commitments, achieving top ratings for energy efficiency in its data centers[11]. - The group is committed to strict cost and cash flow management due to rising costs in human resources, equipment, and construction[9]. - The group aims to enhance its environmental, social, and governance performance by investing in infrastructure solutions for startups[14]. Employee Compensation and Management - The company focuses on employee well-being by implementing various measures to ensure health and safety[17]. - Competitive compensation packages are provided to employees, including regular reviews of benefits such as MPF contributions and medical insurance[17]. - Selected directors and employees are granted stock options based on performance as part of their compensation[17]. - The company continues to develop and retain talent in a competitive labor market[17]. - The chairman and executive director received a director's fee of HKD 60,000 for the fiscal year ending June 30, 2023[18]. - The company’s management compensation decreased to HKD 2,596,000 from HKD 13,199,000 in the previous year[81]. Corporate Governance - The company has a corporate governance committee that oversees the governance practices and policies[34]. - The company’s independent non-executive directors do not have service contracts with the company[36]. - The company has adopted the standard code of conduct for securities trading by directors and relevant employees, confirming full compliance for the six-month period ending December 31, 2023[113]. - The company adhered to the corporate governance code as per the listing rules, with the exception of the chairman's absence at the annual general meeting on October 27, 2023[114]. - The audit committee consists of four members, including three independent non-executive directors and one non-executive director[109]. Financial Reporting and Audit - The company’s financial data for the six months ending December 31, 2023, is prepared in accordance with Hong Kong Accounting Standards[38]. - Deloitte conducted a review of the company’s financial data and found no issues that would lead them to believe the data was not prepared in accordance with the relevant standards[38]. - The interim results for the six months ended December 31, 2023, are unaudited and have been reviewed by Deloitte according to the Hong Kong Institute of Certified Public Accountants' standards[108]. Capital Expenditure and Investments - Capital expenditure is expected to peak this fiscal year as the group completes the first phase of MEGA Gateway and MEGA IDC construction[15]. - The company reported a total of HKD 1,716,018,000 in additions to property, plant, and equipment during the period, compared to HKD 1,225,215,000 in the previous year[66]. - The total amount of shareholder loans remains at HKD 3,800,000,000, with a fixed interest rate of 3% since August 1, 2020[74]. Shareholder Information - The company declared a final dividend of HKD 0.112 per share for the year ending June 30, 2023, totaling HKD 454,616,000, down from HKD 844,287,000 for the previous year[62]. - The company announced dividends of HKD 454,616,000 during the period, a decrease from HKD 844,287,000 in the same period last year, reflecting a reduction of approximately 46%[77]. - Major shareholder Sunco Resources Limited holds 1,726,857,500 shares, representing 147.34% of the issued share capital[106]. - HSBC Trustee (C.I.) Limited holds 1,728,997,500 shares, accounting for 147.43% of the issued share capital[106].

Financial Performance - Revenue for the six months ended December 31, 2023, increased by 16% to HKD 1.29 billion compared to HKD 1.11 billion in 2022[2] - EBITDA rose by 12% year-on-year to HKD 899 million, up from HKD 805 million[2] - Net profit attributable to shareholders increased by 1% to HKD 435 million, compared to HKD 433 million in the previous year[2] - Operating cash flow (excluding working capital changes) increased by 8% to HKD 715 million from HKD 662 million[2] - Operating profit rose by 11% year-on-year to HKD 622 million, with data center and IT facility business operating profit increasing by 10% to HKD 623 million[15] - EBITDA increased by 12% year-on-year to HKD 899 million, with an EBITDA margin slightly declining to 70%[15] - The gross profit for the same period was HKD 682,537,000, compared to HKD 630,619,000 in 2022, indicating a gross margin improvement from 56.8% to 57.0%[18] - The profit attributable to shareholders for the period was HKD 435,440,000, slightly up from HKD 433,124,000 in the previous year, resulting in an earnings per share of HKD 10.73, compared to HKD 10.67 in 2022[18] - The total comprehensive income for the period was HKD 435,440,000, compared to HKD 433,153,000 in the previous year, indicating stable performance[20] Market Demand and Expansion - Demand for data center services has significantly increased, particularly in "network-connected" and "hyperscale" data center services[4] - The first phase of the advanced facility MEGA IDC is set to commence operations by the end of March 2024, with new clients including two major international banks and a large cloud service provider[4] - The company is prioritizing investments to increase power capacity to meet the high demand from cloud customers, including multinational corporations[4] - The total floor area of MEGA IDC will increase by 700,000 square feet, supporting the growth of the "hyperscale" business[10] - The total floor area of data centers in Hong Kong will expand from 1.7 million square feet to nearly 3 million square feet upon completion of the MEGA IDC project, with power capacity increasing from 100 MW to over 280 MW[12] - MEGA Gateway, a new data center, opened in Q1 2023 and is strategically positioned to become a major network connection hub[11] - The demand for "hyperscale" capacity remains strong, with multiple cloud service providers expanding their capacity in the group's facilities[10] - The group has received commitments from major financial institutions and cloud service providers for the MEGA IDC project, which will be the largest data center in Hong Kong by power capacity[12] Financial Position and Capital Management - Total equity of the group as of December 31, 2023, was HKD 4.6 billion, which could increase to HKD 30.1 billion based on independent property valuations[5] - The adjusted debt-to-equity ratio is projected to be 49% including shareholder loans, or 36% excluding them[5] - The group is focusing on prudent capital allocation and cost structure adjustments in response to potentially rising interest rates[12] - The group secured a sustainable performance-linked loan of HKD 3 billion, marking the first of its kind in Hong Kong's data center industry[15] - The net bank loans increased by 16% to approximately HKD 10.977 billion as of December 31, 2023[16] - The debt-to-equity ratio was 319%, which would drop to 237% when excluding a HKD 3.8 billion long-term unsecured shareholder loan[16] - The company reported a liquidity concern with current liabilities exceeding current assets by HKD 4,002,942,000 as of December 31, 2023[25] - The company plans to continue utilizing internal resources and available credit facilities to support its business operations[25] - The company has drawn down the full amount of HKD 3,800,000,000 from a shareholder loan agreement, which has a fixed annual interest rate of 3%[41] Cost and Operational Challenges - The company is facing rising costs in human resources, electromechanical equipment, and general construction, which may impact short-term financial performance[5] - The total financial costs increased to HKD 104,106,000 in 2023 from HKD 38,160,000 in 2022, representing a significant rise of approximately 173%[33] - The overdue receivables exceeding 90 days amounted to HKD 20,519,000 as of December 31, 2023, compared to HKD 18,476,000 as of June 30, 2023, reflecting an increase of about 11.2%[37] Sustainability and Corporate Responsibility - The group has implemented best environmental practices in managing data centers, achieving top ratings in green building certifications[10] - The group completed its first purchase of international renewable energy certificates to offset all carbon emissions from general building electricity usage[15] - The company has implemented various measures to enhance employee welfare and maintain high service standards, focusing on talent retention and competitive compensation[17] - The group received multiple industry awards, including the Best Data Center Silver Award and the InnoESG Award for sustainable development[14] Strategic Initiatives - The company continues to focus on market expansion and new product development as part of its strategic initiatives[17] - The group is enhancing its international connectivity with the construction of a second cable landing station (HKIS-2) to support additional submarine cable connections[12] - The company did not recommend the payment of an interim dividend for the six months ended December 31, 2023, compared to no dividend in 2022[46]

Financial Performance - Revenue for the period from January 1, 2023, to June 30, 2023, was HKD 1,237,780,000, an increase from HKD 1,108,123,000 in the previous period[6] - Gross profit for the same period was HKD 690,181,000, compared to HKD 630,619,000 in the prior period, reflecting a growth of approximately 9.5%[6] - EBITDA for the data center business reached HKD 886,367,000, up from HKD 815,900,000, indicating a year-over-year increase of about 8.6%[6] - Profit attributable to shareholders for the period was HKD 472,241,000, an increase from HKD 433,124,000, representing a growth of approximately 9%[6] - Operating profit before financial costs was HKD 634,310,000, compared to HKD 558,156,000 in the previous period, marking an increase of around 13.7%[6] - The company reported a pre-tax profit of HKD 563,698,000, up from HKD 519,996,000, which is an increase of about 8.4%[6] - Revenue for the year ended June 30, 2023, reached HKD 2,345,903, an increase of 12.4% compared to HKD 2,085,845 in 2022[7] - Annual underlying profit increased to HKD 889,840, up 5.1% from HKD 846,831 in the previous year[7] - The company reported a total comprehensive income of HKD 902,761 thousand for 2023, slightly up from HKD 895,492 thousand in 2022[170] - The company's profit for the year increased to HKD 905,365,000, up from HKD 846,831,000 in the previous year, representing a growth of approximately 6.5%[174] Data Center Operations - The company continues to focus on expanding its data center operations, which are a significant contributor to its revenue growth[6] - The company operates 7 data centers with a total floor area of 1.7 million square feet, capturing approximately 29% of the high-end data center market in Hong Kong[8] - A new data center, MEGA IDC, is set to be completed in Q4 2023, with a total floor area of 1.212 million square feet and a power capacity increase from 100 MW to over 280 MW[9] - The company is developing two submarine cable landing stations, enhancing connectivity and routing diversity for future growth[10] - The MEGA Plus data center, completed in 2017, is positioned as a high-end flagship data center with significant cloud service capabilities[8] - The company has a strategic focus on expanding its data center footprint to meet increasing demand in the cloud era[9] - The flagship MEGA IDC project will offer around 1.2 million square feet of floor space and support up to 180 megawatts of IT power capacity, with the first phase expected to be completed in Q4 2023[19] - The total floor space of the company's data centers in Hong Kong will expand from 1.7 million square feet as of June 30, 2023, to nearly 3 million square feet upon full activation of new facilities[19] Financial Position and Equity - Total assets amounted to HKD 20,777,612, while total liabilities were HKD 16,121,791, resulting in total equity of HKD 4,655,821[7] - The total equity increased from HKD 4,591,536 in 2022 to HKD 4,655,821 in 2023, reflecting a growth of 1.4%[7] - The total equity of the group as of June 30, 2023, was HKD 4.7 billion, which could increase to HKD 29.8 billion based on independent property valuations[13] - The company’s total equity as of June 30, 2023, was HKD 4,655,821,000, compared to HKD 4,591,536,000 in the previous year, marking an increase of about 1.4%[172] Debt and Financing - The company is committed to maintaining a cost-effective capital structure while managing debt prudently in a high-interest environment[13] - The company’s net bank loans increased by 6% to approximately HKD 9.498 billion as of June 30, 2023[25] - The company’s debt-to-equity ratio was 286%, which improved to 204% when excluding a long-term unsecured shareholder loan of HKD 3.8 billion[25] - The company’s financial costs increased significantly to HKD 108,772,000 from HKD 29,715,000, indicating a rise of about 265%[174] - A financing agreement was signed with Bank of China (Hong Kong) for up to HKD 1.5 billion in term loans and up to HKD 1.5 billion in revolving loans[121] - The company entered into a financing agreement with HSBC for a total amount not exceeding HKD 3 billion, consisting of HKD 2 billion in term loan financing and HKD 1 billion in revolving loan financing[123] Dividend Policy - The company plans to distribute a final dividend of HKD 0.112 per share, with a payout ratio of approximately 50%, a decrease from the previous years' payout ratio of around 100%[12] - The proposed final dividend is HKD 0.112 per share for the year ended June 30, 2023, down from HKD 0.208 per share in 2022[55] - Total annual dividend for the year ended June 30, 2023, is HKD 0.112 per share, compared to HKD 0.208 per share in 2022[55] - The company continues to monitor and review its dividend policy, considering various factors including interest rates and capital expenditure needs[12] Governance and Management - The company has a structured governance framework with various committees led by experienced directors[34] - The board of directors consists of 17 members, including 2 female directors, representing approximately 12% of the board[129] - The company emphasizes the importance of performance-based bonuses for its directors, which are determined based on operational performance and individual contributions[30] - The board is responsible for setting corporate goals, developing strategies, and monitoring their implementation[130] - The company has established a clear delegation of authority to management for daily operations, with management required to report to the board and seek approval for certain decisions[138] Risk Management - The company has established a risk management policy to effectively identify, assess, mitigate, report, and monitor key business risks across all business units[149] - The audit committee and internal audit department have reviewed the effectiveness of the risk management and internal control systems for the fiscal year ending June 30, 2023, finding them adequate[153] - The company identifies key risks including project development risks related to timely completion of new data centers and upgrades to existing ones[151] - Geopolitical risks may impact the company's operations, including potential delays in international submarine cable connections to Hong Kong[151] Compliance and Regulations - The company is committed to compliance with various legal regulations, which may incur additional operational costs[56] - The company has confirmed that the continuing connected transactions are conducted on normal commercial terms and are in the overall interest of shareholders[112] - The company adheres to regulations regarding the disclosure of inside information, ensuring timely public announcements when necessary[154] - The company has mechanisms in place to ensure the board receives independent viewpoints and regularly reviews these mechanisms for effectiveness[147] Share Options and Compensation - The company has a stock option plan that allows for the issuance of options, which are treated as non-listed securities derivatives[66] - The company’s stock options plan aims to attract and retain high-performing participants for future development and expansion[80] - The group maintains a competitive compensation policy, regularly conducting market benchmark surveys[86] - The group has implemented a discretionary bonus system based on overall performance and individual contributions[87] Construction and Contracts - The total contract amount for the construction contract signed on May 5, 2020, is HKD 821,143,855, which is subject to adjustments[95] - The major contract signed on March 17, 2023, has a total contract amount of HKD 142,791,000 plus a 10% contingency[96] - The total project management fee for the projects is HKD 11,000,000, which includes HKD 7,000,000 for the Tsuen Wan project and HKD 4,000,000 for the Chai Wan project[97] Audit and Financial Reporting - The auditor's report for the fiscal year ended June 30, 2023, was reviewed by the audit committee and issued an unqualified opinion[119] - The financial statements were prepared in accordance with Hong Kong Financial Reporting Standards, ensuring compliance with disclosure requirements[161] - The auditors assessed the appropriateness of the accounting policies adopted by the directors and the reasonableness of accounting estimates and related disclosures[167]