SUN HUNG KAI CO(HK:00086)2022-04-07 09:13Financial Performance - The company's overall business portfolio achieved a 10.4% increase in profit attributable to shareholders, reaching HKD 2,813.7 million in 2021, compared to HKD 2,547.7 million in 2020[19]. - Earnings per share rose by 11.2% to HKD 142.7 cents, up from HKD 128.3 cents in 2020[19]. - The company's revenue for 2021 was HKD 4,324.0 million, representing a 6.6% increase from HKD 4,056.6 million in 2020[40]. - Profit attributable to shareholders for 2021 was HKD 2,813.7 million, up 10.4% from HKD 2,547.7 million in 2020[41]. - The financing business rebounded strongly, contributing a record pre-tax profit of HKD 1,665.4 million, while mortgage loans contributed HKD 120.0 million, a 6.5% increase year-on-year[21]. - The investment management business reached HKD 21,087.9 million in assets by the end of 2021, with realized gains and interest income totaling HKD 3,481.5 million, a 98.4% increase from the previous year[21]. - The financing business contributed a pre-tax profit of HKD 1,790.5 million, a significant increase of 46.9% from HKD 1,218.9 million in 2020[44]. - The consumer finance segment achieved a pre-tax profit of HKD 1,665.4 million, marking a record high with a growth of 34.5% compared to HKD 1,238.5 million in 2020[44]. - The investment management segment reported a pre-tax profit of HKD 1,934.4 million, down 9.0% from HKD 2,126.4 million in 2020[43]. Asset and Equity Growth - The total assets of the group as of December 31, 2021, were approximately HKD 48.8 billion[4]. - The company's total assets increased by 10.7% to HKD 48,790.1 million, while shareholder equity rose by 10.8% to HKD 25,075.2 million[29]. - The capital-to-debt ratio improved from 41.4% to 49.0%, reflecting a stronger financial position[29]. - The total loan balance reached HKD 12,680.5 million by the end of 2021, marking a 12.0% year-on-year increase[47]. - The total loan balance in Hong Kong increased by 5.4% to HKD 8,767.3 million, with new loans issued rising by 17.4% to HKD 12,177.3 million[50]. - The total loan balance in mainland China increased to HKD 3,913.2 million in 2021, up 30.4% from HKD 3,000 million in 2020[53]. Dividend and Shareholder Returns - The company declared a total dividend of HKD 30.0 cents per share for 2021, an increase of 15.4% from HKD 26.0 cents in 2020, with a payout ratio of 21.1%[20]. - The company repurchased 9.1 million shares at a net cost of HKD 37.8 million during the year[41]. - The company declared a total dividend of HKD 0.30 per share for 2021, which includes a special dividend of HKD 0.04 per share[41]. Business Structure and Strategy - The group has successfully established a diversified and complementary business structure, with financing, investment management, and fund management as its core pillars[13]. - The fund management division was officially launched in 2021, providing an additional source of income and further diversifying the company's products and investment strategies[7]. - The company has initiated six partnerships/funds in 2021, covering various strategies including Asia-Pacific long/short equity funds and real estate loan funds[17]. - The company plans to prudently expand its real estate investment portfolio, focusing on opportunities with strong downside protection in developed economies[17]. - The financing business provides stable returns and is less correlated with market conditions, complementing the investment management and fund management operations[8]. - The company plans to continue exploring new business partnerships to expand its customer base and enhance loan volumes[54]. Risk Management and Compliance - The group has established a comprehensive risk management framework, with a dedicated Risk Management Committee reporting directly to the Board[121]. - The risk management process includes three stages: risk assessment, risk mitigation, and risk monitoring, involving consultations with the Board and relevant stakeholders[123]. - The group emphasizes compliance with legal regulations and has strengthened its compliance framework to protect investor interests[119]. - The group identified major risks in 2021, including the ongoing impact of COVID-19 on the business environment, particularly in retail and hospitality sectors[128]. - The group has improved its emergency planning and resilience capabilities in response to COVID-19 restrictions, with no major impact on operations reported[150]. Employee and Corporate Governance - As of December 31, 2021, the total number of employees in the group was 1,738, a decrease from 2,219 on December 31, 2020, primarily due to the ongoing online transition of consumer finance operations in mainland China[116]. - Total employee costs amounted to HKD 886.9 million in 2021, compared to HKD 852.8 million in 2020, reflecting the successful expansion of the fund management business[116]. - The group has maintained a high level of corporate governance, emphasizing integrity, transparency, accountability, and independence[153]. - The board includes independent non-executive directors who provide extensive expertise and experience, ensuring independent judgment on strategic matters[156]. - The company has adopted a board diversity policy since September 1, 2013, aiming to enhance the overall skills, knowledge, and experience of the board members[169]. Investment Performance - The company's investment portfolio achieved an annual return of 18.5% in 2021, outperforming the Hang Seng Index and the Nasdaq Golden Dragon China Index[76]. - The alternative investment portfolio totaled HKD 14,991.7 million at year-end 2021, with a year-to-date return of 17.4%[80]. - Private equity investments recorded a strong composite return of 23.7% in 2021, driven by successful exits from several funds and direct investments[81]. - The real estate investment portfolio was valued at HKD 2,364.3 million as of December 31, 2021, generating HKD 87.7 million in income during the year[86]. - The company's holdings in the U.S. accounted for 51.1% of its total investments, followed by Mainland China at 17.3%[78]. Fund Management Development - The company successfully launched a fund management platform and split its equity strategies into East Point Asset Management and SHK Latitude Alpha Fund in 2021[69]. - The company established its fund management platform, Sun Hung Kai Capital Partners, in the first half of 2021, holding licenses for Type 1, 4, and 9 from the Securities and Futures Commission[88]. - The SHK Latitude Alpha Fund was launched in July 2021, with over $600 million in seed capital invested across six partner funds, laying a solid foundation for future growth[89]. - The company raised over $100 million in external funding for its fund management business in 2021, indicating solid progress in its development[89]. Future Outlook - The company remains cautiously optimistic amid global uncertainties, maintaining a robust liquidity level and a balanced diversified business portfolio[26]. - The company plans to focus on developing alternative investment strategies and customized solutions in 2022, aiming to establish itself as a leading alternative investment firm in Asia[102]. - The company remains cautiously optimistic about its business outlook for 2022, citing factors such as achieving critical mass in asset management and the absolute return of investment strategies[94].