HANG LUNG GROUP(00010)2023-04-04 10:37Financial Performance - In 2022, the total revenue from property leasing was HKD 10,625 million, with a slight increase from HKD 10,619 million in 2021[11]. - The operating profit for property leasing was HKD 7,596 million, down from HKD 7,898 million in 2021, reflecting a decrease of approximately 3.8%[11]. - The net profit attributable to shareholders was HKD 2,680 million, compared to HKD 2,627 million in 2021, indicating a growth of about 2%[11]. - Total revenue for the year ended December 31, 2022, remained stable at HKD 10.941 billion[16]. - Basic net profit attributable to shareholders was approximately HKD 3.002 billion, with basic earnings per share at HKD 2.20, remaining roughly flat compared to 2021[16]. - After accounting for property revaluation, net profit attributable to shareholders increased by 5% to HKD 2.718 billion, with earnings per share rising to HKD 2.00[16]. - The board proposed a final dividend of HKD 0.65 per share, totaling HKD 0.86 per share for the year ended December 31, 2022[16]. - The company maintained a dividend per share of HKD 0.86 for both 2022 and 2021, with a payout ratio based on net profit of 43%[12][13]. Market Conditions - The operational environment in 2022 was challenging, particularly in the second half of the year due to pandemic restrictions[16]. - The company anticipates benefiting more than competitors due to its prime locations in major cities[16]. - The overall performance in a difficult environment was considered satisfactory by the company[16]. - The company acknowledges the need for significant changes in Hong Kong to maintain competitiveness, particularly in industries like tourism that must recover rapidly post-pandemic[21]. - The company highlights the importance of integrating with the mainland market, recognizing the vast opportunities available there compared to the local market[22]. - The company notes that the influx of well-educated individuals from mainland China is a new driving force for economic growth in Hong Kong[22]. - The company expresses concern over the political climate affecting Hong Kong's international standing and its economic framework under the "one country, two systems" principle[23]. Sustainability Initiatives - The company has established 25 sustainability targets to be achieved by the end of 2025, aiming for net-zero greenhouse gas emissions by 2050[10]. - The company achieved significant milestones in sustainability, including a commitment to net-zero greenhouse gas emissions by 2050 and a 25% renewable energy usage target for its mainland property portfolio by 2023[165][166]. - The company has entered a three-year sustainability partnership with LVMH Group to lead climate action and sustainability initiatives in the real estate and retail sectors[167]. - Hang Lung Properties is the first real estate developer in Hong Kong and mainland China to receive SBTi approval for its short-term and long-term net-zero emissions targets, committing to a 46.6% reduction in Scope 1 and 2 absolute greenhouse gas emissions by 2030 based on 2019 levels[168]. - The company has pledged to achieve net-zero value chain greenhouse gas emissions by 2050, aligning with the Paris Agreement and the recommendations of the Intergovernmental Panel on Climate Change to limit global warming to below 1.5°C[169]. Property Development and Strategy - The company has developed a total of ten major commercial projects in mainland China, reinforcing its market presence[5]. - The company’s strategy focuses on developing high-quality properties in prime locations across major cities in mainland China[10]. - The company has been proactive in asset optimization plans, which have benefited both short-term and long-term performance[17]. - The company anticipates continued demand for luxury brands in its shopping malls, as mainland China remains the largest and fastest-growing luxury goods market globally[18]. - The company is expanding its footprint with new projects, including hotels and residential buildings, set to open in 2023 and 2024[44]. Tenant and Leasing Performance - The average rental income from office buildings recorded robust growth, increasing by 9% last year, with the office rental income in mainland China surpassing that of Hong Kong since 2021[20]. - The rental rate for the newly built office buildings in Wuxi, Kunming, and Wuhan is approaching 90%, with the Wuhan office, opened during the pandemic peak in November 2020, achieving nearly 75% occupancy[19]. - The company has successfully maintained a leading position in nearly all cities it operates in, with a significant gap between the market leader and competitors[17]. - The company’s office buildings are expected to complement its shopping mall business, with a focus on developing world-class office buildings in second-tier cities[18]. - The company aims to optimize its tenant mix in 2023 by introducing more luxury and personal care brands to attract affluent young consumers[57]. Challenges and Risks - The company acknowledges the ongoing structural downturn in the residential market, with many developers likely to struggle in the current environment[21]. - There is a potential supply shortage in new housing due to insufficient land sales, which may lead to a slight recovery in property prices in the short term[21]. - The ongoing international situation poses significant risks, with potential impacts on the supply chain and overall economic stability[29]. - The company recognizes the challenges posed by rising costs and inefficiencies in production as labor moves outside of China[29]. - The company identifies three major economic challenges currently facing China, including the high costs of pandemic control measures, a potential real estate market bubble, and the simultaneous emergence of multiple economic difficulties[27]. Corporate Governance - The company has adopted and fully complied with the Corporate Governance Code, exceeding many of its requirements[187]. - The board consists of 11 members, including four executive directors and seven non-executive directors, ensuring a balanced composition[189]. - The nomination and remuneration committee is fully composed of independent non-executive directors, enhancing governance quality[187]. - The company has published independent sustainability reports since the 2017 fiscal year, showcasing its transparency and accountability[187]. - The board held six meetings in 2022, demonstrating active governance and oversight[187]. Community Engagement - The company has a strong commitment to community welfare, with over 11,400 volunteers contributing more than 135,000 service hours since 2012[8]. - The company established a HKD 13 million "Hang Lung Anti-Epidemic Fund 2.0" to support urgent anti-epidemic projects in Hong Kong and mainland China, particularly in Shanghai, Shenyang, and Dalian[173]. - The company is committed to sustainable growth and community development, launching initiatives to support young people and promote diversity and inclusion in 2022[176].