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]

Revenue and Profitability - Revenue for the year ended June 30, 2023, increased by 12% to HKD 2,346 million, driven by demand from "hyperscale" customers for data center space and price increases for existing customers[2] - Profit attributable to shareholders increased by 7% to HKD 905 million, indicating solid profitability growth[2] - The group's revenue increased by 12% year-on-year to HKD 2.346 billion, driven by demand from existing and new customers in data center and IT facilities[16] - Revenue from data center and IT facilities rose by 11% to HKD 2.161 billion, supported by new contracts signed in the 2022/23 fiscal year[16] - Operating profit increased by 14% year-on-year to HKD 1.192 billion, with EBITDA rising by 12% to HKD 1.677 billion, maintaining a strong EBITDA margin of 71%[16] - The company reported a pre-tax profit of HKD 1,083,694,000 for the year ended June 30, 2023, compared to HKD 1,012,865,000 for the previous year[39] Investments and Projects - The company plans to invest over HKD 1.5 billion in the MEGA IDC project, which will more than double the existing design power capacity of approximately 100 MW[4] - The MEGA IDC facility is expected to be operational next year, with significant customer interest already secured[5] - The company has acquired sufficient land to meet growth demands for the next four years, with the upcoming MEGA IDC providing an additional 700,000 square feet of data center space[8] - The MEGA IDC flagship project will provide around 1.2 million square feet of total floor area and support up to 180 megawatts of IT power capacity, with the first phase expected to be completed in Q4 2023[12] - The company is investing in new data center projects to enhance capacity in response to increasing data demands, indicating a commitment to long-term capital investment[17] Financial Position and Equity - The total equity of the group as of June 30, 2023, is HKD 4.7 billion, which could increase to HKD 29.8 billion based on independent property valuations[6] - The adjusted debt-to-equity ratio could significantly decrease to 45% (including shareholder loans) and 32% (excluding shareholder loans) based on market valuations[6] - As of June 30, 2023, total equity amounted to HKD 4,655,821,000, an increase from HKD 4,591,536,000 as of June 30, 2022, reflecting a growth of approximately 1.4%[24] - The company’s retained earnings reached HKD 1,753,006,000 as of June 30, 2023, up from HKD 1,684,299,000 a year earlier, representing an increase of approximately 4.1%[24] Costs and Expenses - The company is taking measures to manage rising costs, particularly in labor, construction, and equipment, while maintaining a focus on cost discipline[5] - The company is facing ongoing inflationary pressures, with rising operational costs including wages and construction materials, which have increased financing costs due to high interest rates[12] - Financing costs rose by 266% to HKD 109 million due to increased loan rates and levels[16] - The company’s total financial costs for 2023 were 108,772 thousand HKD, significantly higher than 29,715 thousand HKD in 2022, marking an increase of about 265.5%[45] Dividends - The proposed final dividend for the year ended June 30, 2023, is HKD 0.112 per share, with a payout ratio of approximately 50%, down from around 100% in recent years[4] - The company declared a final dividend of HKD 787,313,000 for the year, consistent with the previous year's distribution[24] - The total dividend for the year ending June 30, 2023, is HKD 0.112 per share, compared to HKD 0.208 per share for the previous year[59] Customer Demand and Market Position - There is strong demand for "hyperscale" capacity, particularly from major cloud service providers, with increased inquiries and contract renewals from existing customers[5] - The company is strategically positioned to capitalize on the increasing demand for high-density power from cloud service providers and new economy companies[10] - The company has received multiple customer commitments for the MEGA IDC, indicating strong demand for its data center services[12] Employee and Operational Metrics - The company employed 461 full-time employees as of June 30, 2023, focusing on employee health and safety while maintaining high service standards[19] - The total employee compensation for 2023 was 279,392 thousand HKD, up from 252,784 thousand HKD in 2022, reflecting an increase of approximately 10.5%[45] Compliance and Governance - The company has complied with the corporate governance code as per the Hong Kong Stock Exchange listing rules for the year ending June 30, 2023[64] - The company's financial statements for the year ending June 30, 2023, have been reviewed by the audit committee and audited by Deloitte, with an unmodified opinion issued[63] Accounting Standards and Regulations - The company applied revised Hong Kong Financial Reporting Standards for the first time in the current year, which did not significantly impact its financial position or performance[28] - The company expects that the application of new and revised Hong Kong Financial Reporting Standards will not have a significant impact on the consolidated financial statements in the foreseeable future[29] - The amendments to HKAS 12 regarding international tax reform require separate disclosure of current tax expenses/income related to the second pillar tax during the reporting period starting on or after January 1, 2023[30]

Financial Performance - Revenue increased by 11% year-on-year to HKD 1,108 million for the six months ended December 31, 2022, driven by new and existing customer demand for data center services[6] - EBITDA rose by 11% year-on-year to HKD 805 million, reflecting strong operational performance[5] - Profit attributable to shareholders increased by 6% year-on-year to HKD 433 million[5] - Revenue increased by 11% year-on-year to HKD 1.108 billion, driven by demand from existing and new customers in data center and IT facilities[16] - Operating profit rose by 11% year-on-year to HKD 558 million, with EBITDA also increasing by 11% to HKD 805 million, maintaining a strong EBITDA margin of 73%[16] - Gross profit for the same period was HKD 630,619, representing a gross margin of 56.8%, compared to HKD 585,272 and a margin of 58.8% in the prior year[46] - Operating profit increased to HKD 558,156, up 10.7% from HKD 504,112 year-on-year[46] - Profit attributable to shareholders for the period was HKD 433,124, a rise of 5.5% from HKD 410,338 in the previous year[46] - Basic earnings per share for the period was HKD 0.1067, compared to HKD 0.1011 in the same period last year, reflecting a 5.5% increase[46] - Total comprehensive income for the period was HKD 433,153, slightly up from HKD 410,327 in the previous year[47] Business Growth and Expansion - The data center business generated HKD 815.9 million in EBITDA, indicating robust growth in this segment[4] - Strong demand from cloud service providers continues, with several clients expanding their capacity in the company's facilities[7] - The completion of MEGA Gateway adds approximately 200,000 square feet of floor area and 20 megawatts of power capacity, with over 60% of the space already committed by customers[9] - The total floor area of data centers in Hong Kong will expand from 1.5 million square feet as of December 31, 2022, to nearly 3 million square feet after the completion of MEGA Gateway and MEGA IDC[12] - The power capacity of the data centers will increase from 80 megawatts to over 280 megawatts following the full operation of the new facilities[12] - MEGA IDC's first phase, targeting 500,000 square feet, is expected to be operational by Q4 2023, with a second phase of approximately 700,000 square feet planned for 2026[12] - The MEGA Gateway and MEGA IDC projects are part of a robust growth plan, positioning the group to benefit from the ongoing demand for data centers in Asia and Hong Kong[10] Sustainability and Efficiency - The company is investing in energy efficiency projects to reduce operational costs and carbon footprint amid rising inflation and energy prices[7] - The group is committed to investing in energy-efficient equipment and infrastructure for its data centers, achieving top ratings in green building certifications[9] - The group declared and distributed dividends totaling HKD 844,287,000, an increase of 7.2% from HKD 787,313,000 in the previous year[82] Capital Structure and Financing - The company is managing its capital structure prudently during the current interest rate hike cycle to ensure cost-effective financing[7] - The group’s net bank loans increased by 15% to approximately HKD 8.968 billion as of December 31, 2022[18] - The group’s debt ratio (net debt to equity) was 306%, which would drop to 215% when excluding a long-term unsecured shareholder loan of HKD 3.8 billion[18] - The company has considered various funding sources for future liquidity, including internal resources and available bank credit lines[53] - New bank loans raised during the period totaled HKD 1,150,000,000, a substantial increase from HKD 400,000,000 in the previous year[52] Legal and Regulatory Matters - The company has received a favorable final judgment regarding a legal case related to the Tseung Kwan O Industrial Estate, which supports a competitive environment in the data center industry[8] - The company confirmed compliance with the corporate governance code during the six-month period ending December 31, 2022[114] - All directors confirmed adherence to the standard code of conduct for securities trading during the same period[113] Management and Governance - The company reported a director's fee of HKD 52,500 and total compensation of approximately HKD 8,908,000 for the CEO for the fiscal year ending June 30, 2022[22] - The company’s COO received a director's fee of HKD 45,000 and total compensation of approximately HKD 4,929,000 for the fiscal year ending June 30, 2022[25] - The company emphasizes annual reviews of executive compensation based on market levels and individual contributions[22] - The board of directors consists of five executive directors, six non-executive directors, and six independent non-executive directors as of the report date[114] Shareholder Information - Major shareholders include Sunco Resources Limited and HSBC Trustee (C.I.) Limited, holding a combined total of 3,441,594,000 shares, representing 147.14% of the issued share capital[107] - The company has authorized a total of 233,905,733 stock options under the 2022 plan, effective from November 1, 2022[104] - The company holds 963,536,900 shares in Vivid Synergy Limited, representing 20.00% of the issued shares as of December 31, 2022[99] Operational Metrics - The company reported a financial cost of HKD 38,160, significantly higher than HKD 13,687 in the prior year, indicating increased borrowing costs[46] - The company incurred a net cash outflow from investing activities of HKD 883,126,000, compared to HKD 618,196,000 in the prior period, indicating a significant increase in capital expenditures[52] - The total amount of property, plant, and equipment additions was approximately HKD 1,225,215,000, significantly higher than HKD 853,722,000 in the previous year, showing increased investment in assets[71]

Financial Performance - Revenue for the period ending June 30, 2022, was HKD 2,085,845, an increase from HKD 1,873,950 in the previous year, representing a growth of approximately 11%[6] - EBITDA for the data center business reached HKD 786,035, reflecting an increase from HKD 747,046 in the previous year, which is a growth of about 5%[6] - The company reported a net profit attributable to shareholders of HKD 436,493 for the period, up from HKD 410,338 in the previous year, marking an increase of about 6%[6] - Operating profit for the period was HKD 538,468, compared to HKD 504,112 in the previous year, indicating a growth of approximately 7%[6] - Revenue for the year ended June 30 increased by 11% to HKD 2.086 billion, driven by demand from existing and new customers for data centers[15] - EBITDA rose by 10% to HKD 1.501 billion, or 11% when excluding COVID-19 related subsidies[16] - Profit attributable to shareholders increased by 8% to HKD 847 million, or 9% when excluding COVID-19 related subsidies[16] - The group reported a revenue increase of 11% year-on-year to HKD 2.086 billion, driven by demand from existing and new customers in data centers and IT facilities[29] - The operating profit rose by 8% year-on-year to HKD 1.043 billion, with data center and IT facilities contributing to a 9% increase in operating profit before corporate expenses, interest, and tax[29] - The EBITDA increased by 10% year-on-year to HKD 1.501 billion, maintaining a strong EBITDA margin of 72% due to economies of scale and cost efficiency improvements[29] Data Center Operations - The total floor area of data centers is approximately 3 million square feet, with a market share of around 26%[8] - The company operates 6 data centers, with a total floor area of 1.5 million square feet, contributing significantly to its revenue stream[8] - Two new data centers are under construction, with a total floor area of 1.4 million square feet and power capacity increasing from 80 MW to over 280 MW[10] - The company plans to expand its data center capabilities, leveraging government-designated land for high-end data center use in Tseung Kwan O[8] - Demand for "hyperscale" capacity remains strong, with most cloud service customers expanding their capacity in the company's data centers[16] - The company has a strong growth plan, with total data center floor area in Hong Kong expected to expand from 1.5 million square feet to nearly 3 million square feet after the completion of new projects[19] - Power capacity will increase from the current 80 MW to over 280 MW to meet growing customer demand[19] - MEGA IDC, the flagship project in Tseung Kwan O, aims to become the largest single data center in Hong Kong with a first phase floor area of approximately 500,000 square feet, targeting a 2023 opening[19] - The second phase of MEGA IDC will have a floor area of approximately 700,000 square feet, with a target opening in 2026[19] - The company is recognized as the largest telecommunications-neutral and cloud-neutral data center operator in Hong Kong, well-positioned to benefit from the ongoing demand growth in the data center market[20] Financial Position and Debt - Total assets as of June 30, 2022, were HKD 18,142,782, with total liabilities of HKD 13,551,246, resulting in total equity of HKD 4,591,536[7] - As of June 30, 2022, the group's bank balance and deposits were HKD 310 million, with bank loans totaling HKD 8.087 billion, resulting in net bank loans of approximately HKD 7.777 billion, a 7% increase from HKD 7.292 billion on December 31, 2021[31] - The group's debt ratio (net debt to equity attributable to shareholders) was 253% as of June 30, 2022; excluding the HKD 3.8 billion long-term unsecured shareholder loan from Sun Hung Kai Properties, the ratio was 170%[32] - The adjusted debt ratio, considering the fair value of completed data centers, would significantly reduce to 42% and 28% with and without shareholder loans, respectively[33] - The financing costs increased by 33% year-on-year to HKD 30 million, primarily due to higher loan levels[29] - The group successfully secured a HKD 3 billion 5-year term loan and revolving loan financing in November 2021 to fund multiple data center projects[32] Shareholder and Dividend Information - The company plans to distribute a final dividend of HKD 0.208 per share, subject to approval at the annual general meeting[17] - The company proposed a final dividend of HKD 0.208 per share for the year ended June 30, 2022, an increase from HKD 0.194 per share in 2021, totaling HKD 0.208 for the full year[61] - The board of directors emphasized a stable dividend policy, contingent on the group's financial performance, capital needs, and overall economic conditions[61] Corporate Governance and Management - The board of directors is responsible for the overall leadership and strategic direction of the company, ensuring compliance with corporate governance standards[130] - The company emphasizes high business ethics and corporate governance standards as a key objective to enhance shareholder value[128] - The board consists of 17 members, including 2 female directors, representing approximately 12% of the board[132] - The company aims to increase the proportion of female members on the board when suitable candidates are available[132] - The company has established formal service agreements for executive and non-executive directors, ensuring clarity in their roles and responsibilities[134] - The company has mechanisms in place to ensure the board receives independent viewpoints, enhancing the board's independence and decision-making[133] - The company has a code of conduct that outlines standards for employees to perform their duties with honesty and integrity[159] Risk Management - The company has implemented a risk management policy to effectively identify, assess, mitigate, report, and monitor key business risks across all business units[153] - The risk management committee identifies risks that could adversely affect the achievement of business objectives at least once a year[153] - The ongoing COVID-19 pandemic poses a risk of operational disruptions, particularly if there are strict lockdowns affecting data center operations and staff availability[154] - The political instability from the US-China trade war is creating uncertainty for the company's clients and future business prospects[154] Employee and Director Compensation - The company reported a director's remuneration of HKD 52,500 for the position of Vice Chairman and committee member as of the fiscal year ending June 30, 2022[37] - The CEO's total compensation, including basic salary, bonuses, and retirement benefits, amounted to approximately HKD 8,908,000 for the fiscal year ending June 30, 2022[38] - The company has a discretionary bonus system that considers overall group performance and individual contributions when determining bonuses[94] - The company provides medical, provident fund, and vacation benefits to ensure basic needs for employees[93] Shareholder Transactions and Interests - The company engaged in several transactions with Sun Hung Kai Properties and its affiliates during the year, with certain directors abstaining from voting to avoid conflicts of interest[70] - The company has identified significant related party transactions during the fiscal year, which are disclosed in the financial statements[101] - Major shareholders include Sunco Resources Limited and HSBC Trustee (C.I.) Limited, holding 1,719,427,500 shares each, representing approximately 147.02% and 147.11% of the issued share capital respectively[99][100]

Financial Performance - Revenue for the six months ended December 31, 2021, increased by 8% to HKD 995 million compared to HKD 923 million in the same period of 2020[5]. - EBITDA rose by 10% to HKD 728 million, up from HKD 662 million, excluding COVID-19 related subsidies[5]. - Profit attributable to shareholders increased by 6% to HKD 410 million from HKD 389 million[5]. - The group's revenue increased by 8% year-on-year to HKD 995 million, driven by a 9% rise in data center and IT facility revenue to HKD 935 million[15]. - Operating profit rose by 7% year-on-year to HKD 504 million, with data center and IT facility operating profit increasing by 9% to HKD 523 million[15]. - EBITDA increased by 10% year-on-year to HKD 728 million, with an EBITDA margin improvement from 72% to 73%[15]. - The company reported a net profit of HKD 410,338,000 for the six months ended December 31, 2021, up from HKD 388,661,000 in the same period of 2020, indicating a growth of approximately 5.5%[69]. - The company reported a total comprehensive income of HKD 410,327,000 for the period, compared to HKD 388,631,000 in the previous year[48]. Data Center Operations - Data center business revenue grew by 9% to HKD 935 million, compared to HKD 856 million in the previous year[5]. - The demand for data center services remains strong, driven by high usage of online applications such as video conferencing and e-commerce[7]. - The company’s data centers, including MEGA Two and MEGA Plus, provide advanced infrastructure and quality services to meet increasing customer demands[7]. - All data centers are owned by the company, ensuring long-term service stability without rental expenses, positively impacting EBITDA quality[7]. - The company expects continued demand for "hyperscale" capacity, unaffected by geopolitical tensions[7]. - The EBITDA quality of the company is considered superior to many industry peers that rely on rented data center facilities[7]. - The company has benefited from the expansion of cloud service providers in Hong Kong, enhancing its service offerings[7]. - New data centers MEGA Gateway and MEGA IDC are set to launch in the second half of 2022 and the first half of 2023, respectively, significantly increasing service capacity[9]. - Total floor area of data centers in Hong Kong will expand from 1.4 million square feet to nearly 3 million square feet, with power capacity increasing from 70 MW to 280 MW[9]. - MEGA Fanling, the eighth data center, is fully leased to a cloud service provider and will soon commence operations[9]. - The company aims to achieve a cooling performance coefficient of 5 or above by 2030, significantly reducing carbon intensity in data center cooling[9]. - The company has received strong demand from major clients for the new MEGA Gateway and MEGA IDC facilities, indicating robust market interest[9]. Financial Stability and Investments - Net bank loans increased by 6% to approximately HKD 72.92 billion as of December 31, 2021[17]. - The debt-to-equity ratio was 272%, which would be 179% excluding a long-term unsecured shareholder loan of HKD 3.8 billion[17]. - The company continues to receive strong support from major shareholders and banks for its expansion financing needs[9]. - Financing of HKD 3 billion was successfully secured for new and existing data center projects[17]. - The group secured a new long-term bank financing of HKD 3,000,000,000 during the period, with unused bank financing totaling HKD 2,600,000,000 as of December 31, 2021[79]. Corporate Governance and Executive Compensation - The company has established a remuneration committee to determine the director's annual salary based on contributions and market benchmarks[21]. - The company is committed to annual reviews of executive compensation based on market levels and individual contributions[24][25]. - The company has a governance committee to oversee corporate governance practices[20]. - The CEO received a total compensation of approximately HKD 9,240,000, including a director's fee of HKD 52,500 for the fiscal year ending June 30, 2021[21]. - The total remuneration for key management personnel during the period was HKD 14,340,000, compared to HKD 8,004,000 in 2020, reflecting an increase of approximately 79%[88]. Compliance and Audit - The independent directors have no relationships with any major shareholders or executives of the company[40][41]. - The company’s board of directors is responsible for the preparation and presentation of the financial data in accordance with applicable standards[44]. - Deloitte conducted a review of the company’s financial data as of December 31, 2021, and found no significant issues[44]. - The interim financial results for the six months ending December 31, 2021, were reviewed by Deloitte, confirming compliance with Hong Kong accounting standards[109]. Shareholder Information - The company has issued 4,073,833,000 shares as of December 31, 2021, reflecting a slight increase from 4,435,223,000 shares as of June 30, 2021[49]. - The company’s shareholding in related corporations, such as Sun Hung Kai Properties, accounted for 18.73% of the issued share capital as of December 31, 2021[96]. - The company’s shareholding in SmarTone Telecommunications Holdings Limited represented 1.08% of the issued share capital as of December 31, 2021[98]. - As of December 31, 2021, the total number of shares held by directors and senior management represented approximately 1.57% of the issued share capital[94]. Employee and Operational Metrics - The group employed 388 full-time employees as of December 31, 2021, focusing on employee health and safety amid the ongoing pandemic[18]. - Total employee compensation for the period was HKD 127,921,000, compared to HKD 103,570,000 in the previous year, marking an increase of about 23.5%[67]. - The company has implemented strict health and safety measures across all data centers to ensure uninterrupted service during the COVID-19 pandemic[10].

Financial Performance - Revenue from continuing operations increased by 9% year-on-year to HKD 1,874 million, driven by demand for data center services, particularly from hyperscale and cloud customers [15]. - EBITDA from continuing operations rose by 15% year-on-year to HKD 1,360 million [14]. - Basic profit attributable to shareholders increased by 11% year-on-year to HKD 788 million [14]. - The company reported a profit from continuing operations of HKD 399,066 million for the period [9]. - The gross profit for the first half of 2021 was HKD 560,211 million, compared to HKD 543,951 million in the same period of 2020 [9]. - Operating profit for the first half of 2021 was HKD 490,743 million, an increase from HKD 470,478 million in the previous year [9]. - Operating profit from continuing operations increased by 11% year-on-year to HKD 961 million [27]. - Net profit attributable to shareholders rose by 1% year-on-year to HKD 788 million, excluding a fair value gain of HKD 74 million from the sale of investment properties [27]. - Financial costs decreased by 38% year-on-year to HKD 22 million due to lower interest rates [27]. - The company reported a profit of HKD 787,727 thousand for the year, slightly down from HKD 783,249 thousand in the previous year, indicating a marginal decrease of about 0.6% [164]. Assets and Liabilities - Total assets as of June 30, 2021, amounted to HKD 16,471,609 million, up from HKD 15,181,752 million in 2020 [10]. - Total liabilities increased to HKD 12,021,277 million in 2021 from HKD 10,856,529 million in 2020 [10]. - The company’s total equity as of June 30, 2021, was HKD 4,450,332 million, compared to HKD 4,325,223 million in 2020 [10]. - The debt-to-equity ratio was 229%, which would be 155% excluding the long-term unsecured shareholder loan from Sun Hung Kai Properties [30]. - Non-current assets increased to HKD 15,694,200 thousand in 2021 from HKD 14,419,009 thousand in 2020, representing a growth of approximately 8.8% [162]. - Current assets rose to HKD 15,697,910 thousand in 2021, up from HKD 14,422,719 thousand in 2020, indicating an increase of about 8.8% [162]. - Total liabilities decreased from HKD 1,455,241 thousand in 2020 to HKD 1,144,950 thousand in 2021, a reduction of approximately 21.3% [162]. Dividends - The board proposed a final dividend of HKD 0.194 per share for the year ended June 30, 2021, to be distributed on November 25, 2021, pending shareholder approval [16]. - The company reported a final dividend of HKD 0.194 per share for the year ended June 30, 2021, an increase from HKD 0.175 per share in 2020, totaling HKD 0.194 for the full year [58]. - The board's dividend policy aims to provide stable distributions to shareholders, contingent on financial performance, capital needs, future investment plans, cash flow, and overall business and economic conditions [58]. Data Center Expansion - The company aims to expand its data center services to meet increasing customer demand in the cloud sector [15]. - The new data center MEGA IDC (TKOTL 131) in Tseung Kwan O is expected to be completed by the end of 2022, with advanced infrastructure and ultra-high power density [17]. - The total floor area of the company's data centers in Hong Kong will expand from 1.4 million square feet to nearly 3 million square feet, with power capacity increasing from 70 MW to 280 MW upon completion of three new projects [24]. - MEGA-i currently has approximately 15,000 fiber optic interconnections, enhancing its position as a major network hub in Asia [21]. - The company has completed optimization projects that increased power capacity by 40%, receiving very positive feedback from customers [21]. - A new single-user data center project announced on July 7, 2021, will become the company's eighth data center in Hong Kong, fully leased by a major hyperscale customer [23]. - The new data centers are strategically positioned to meet the growing demand for high-end data center facilities in Hong Kong [24]. Governance and Management - The company has a governance structure that includes a remuneration committee to oversee compensation matters [33]. - The company emphasizes the importance of market performance and individual contributions in determining director remuneration and bonuses [34][35]. - The board conducts annual reviews of director remuneration to ensure alignment with market standards and company performance [34]. - The company has established a service contract with the Executive Director since March 1, 2003, which is also subject to a three-year term and can be terminated with six months' notice [35]. - The company has a governance structure with various committees including audit, remuneration, and nomination committees [39]. - The board consists of 17 members, including 5 executive directors and 6 independent non-executive directors, ensuring a balanced governance structure [121]. - The company has adopted major corporate governance practices to uphold high standards of business ethics and corporate governance [117]. - The board is responsible for setting corporate goals, monitoring performance, and approving significant acquisitions and disposals [123]. Risk Management - The group has implemented a risk management policy that includes identifying, assessing, mitigating, reporting, and monitoring key business risks [143]. - The board has ensured that resources, employee qualifications, and training related to accounting and internal control functions are adequate [144]. - The group aims to manage rather than eliminate risks that may prevent achieving business objectives [144]. - The group has established procedures for handling and disclosing inside information in compliance with securities regulations [145]. - The group has identified key risks including the timely completion of two new data centers and upgrading existing ones to meet market demand [142]. Share Options and Remuneration - The company has a stock option plan that allows for the granting of options without performance targets or minimum holding periods prior to exercise [6]. - The company’s share options plan aims to attract, retain, and incentivize high-performing participants for future development and expansion [79]. - The company’s remuneration policy includes regular market benchmarking to ensure competitiveness [84]. - The group implements a performance-based culture with discretionary bonuses based on overall performance and individual contributions [85]. Compliance and Legal Matters - The company is committed to ensuring compliance with various legal regulations, which incurs significant internal resources and additional operational costs [60]. - The company has maintained compliance with public float requirements as per the listing rules [116]. - All independent non-executive directors have confirmed their independence according to the listing rules [66]. - The company has no relationships with any of its directors that could affect their independence [47][48]. Financial Reporting and Standards - The company’s financial performance and operational results are detailed in the audited consolidated financial statements for the year ended June 30, 2021 [57]. - The independent auditor confirmed that there were no significant uncertainties regarding the company's ability to continue as a going concern [157]. - The company’s consolidated financial statements are prepared based on historical cost, except for investment properties and certain financial instruments measured at fair value [176]. - The group recognizes revenue upon the transfer of control of goods or services to customers, with specific performance obligations defined [180].