NANYANG HOLD(00212) - 2023 - 中期业绩

Company Overview and Financial Summary This section provides an overview of Nanyang Holdings Limited's financial performance, highlighting key profit and revenue figures for the period Performance Summary Nanyang Holdings Limited recorded a profit attributable to equity holders of HKD 125.8 million for the six months ended June 30, 2023, a significant turnaround from a loss of HKD 10.3 million in the prior year, primarily due to dividend income, investment gains, and fair value gains on investment properties - The Group recorded a profit attributable to equity holders of HKD 125.8 million (2022: loss of HKD 10.3 million)[2] - Profit for the period primarily included dividend income of approximately HKD 67.2 million from Shanghai Commercial Savings Bank Co., Ltd. for its 2022 earnings (after 21% withholding tax)[2] - Net fair value gain on investment properties (including those owned by a joint venture) was HKD 28.7 million (2022: loss of HKD 21.8 million)[2] Earnings/(Loss) Per Share | Indicator | 2023 (HKD) | 2022 (HKD) | | :--- | :--- | | Earnings/(Loss) per share | 3.70 | (0.30) | | Earnings per share (excluding net impact from fair value revaluation of investment properties) | 2.86 | 0.34 | Group Financial Summary The Group Financial Summary for the six months ended June 30, 2023, shows a 157% increase in revenue and other income/(loss), a 1,320% growth in profit attributable to equity holders, and a significant rise in earnings per share Group Financial Highlights | Indicator | 2023 (HKD thousand) | 2022 (HKD thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue and other income/(loss) | 142,565 | 55,552 | 157% | | Profit/(Loss) attributable to equity holders of the Company | 125,809 | (10,314) | 1,320% | | Profit attributable to equity holders of the Company (after deducting changes in fair value of investment properties and related tax impact) | 97,106 | 11,505 | 744% | | Earnings/(Loss) per share | HKD 3.70 | HKD (0.30) | 1,333% | | Earnings per share (after deducting changes in fair value of investment properties and related tax impact) | HKD 2.86 | HKD 0.34 | 741% | Unaudited Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements, including the statement of profit or loss, comprehensive income, and financial position Unaudited Condensed Consolidated Statement of Profit or Loss For the six months ended June 30, 2023, the Group's operating profit significantly increased to HKD 144,320 thousand from HKD 11,575 thousand in the prior year, driven by substantial growth in revenue and other income/(loss) and positive fair value changes in investment properties Consolidated Statement of Profit or Loss Highlights | Indicator | 2023 (HKD thousand) | 2022 (HKD thousand) | | :--- | :--- | :--- | | Revenue | 122,062 | 125,023 | | Other income/(loss) | 20,503 | (69,471) | | Revenue and other income/(loss) | 142,565 | 55,552 | | Gross profit | 132,415 | 46,902 | | Changes in fair value of investment properties | 31,000 | (16,159) | | Operating profit | 144,320 | 11,575 | | Profit before income tax | 145,247 | 9,652 | | Profit/(Loss) attributable to equity holders of the Company | 125,809 | (10,314) | Unaudited Condensed Consolidated Statement of Comprehensive Income For the six months ended June 30, 2023, total comprehensive income attributable to equity holders increased to HKD 165,780 thousand, up from HKD 106,695 thousand in 2022, primarily due to the turnaround in profit for the period and fair value gains on financial assets Consolidated Statement of Comprehensive Income Highlights | Indicator | 2023 (HKD thousand) | 2022 (HKD thousand) | | :--- | :--- | :--- | | Profit/(Loss) for the period | 125,809 | (10,314) | | Exchange differences on translation of foreign operations | 5,352 | 13,409 | | Fair value gains on financial assets | 34,619 | 103,600 | | Other comprehensive income for the period, net of tax | 39,971 | 117,009 | | Total comprehensive income for the period attributable to equity holders of the Company | 165,780 | 106,695 | Unaudited Condensed Consolidated Statement of Financial Position As of June 30, 2023, the Group's total assets increased to HKD 5,307,185 thousand from HKD 5,158,336 thousand on December 31, 2022, driven by increases in investment properties, financial assets at fair value through other comprehensive income, and trade and other receivables Consolidated Statement of Financial Position Highlights | Indicator | June 30, 2023 (HKD thousand) | December 31, 2022 (HKD thousand) | | :--- | :--- | :--- | | Assets | | | | Non-current assets | 4,773,371 | 4,705,113 | | Current assets | 533,814 | 453,223 | | Total assets | 5,307,185 | 5,158,336 | | Equity | | | | Capital and reserves attributable to equity holders of the Company | 5,197,070 | 5,065,258 | | Liabilities | | | | Non-current liabilities | 31,895 | 33,368 | | Current liabilities | 78,220 | 59,710 | | Total liabilities | 110,115 | 93,078 | | Total equity and liabilities | 5,307,185 | 5,158,336 | Notes to the Condensed Consolidated Interim Financial Information This section details the basis of preparation, accounting policies, and specific notes to the condensed consolidated interim financial information Basis of Preparation and Accounting Policies This interim financial information is prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the HKICPA, consistent with the accounting policies and methods used in the 2022 annual financial statements, except for the adoption of new and amended standards effective for the financial year ending December 31, 2023 Basis of Preparation This interim financial information is prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the HKICPA and should be read in conjunction with the 2022 annual financial statements - This interim financial information should be read in conjunction with the 2022 annual financial statements, which were prepared in accordance with Hong Kong Financial Reporting Standards ("HKFRSs")[7] - The interim financial information for the six months ended June 30, 2023, has been prepared in accordance with Hong Kong Accounting Standard ("HKAS") 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA")[24] Accounting Policies The accounting policies and methods of computation used in preparing the interim financial information are consistent with those applied in the 2022 annual financial statements, and the adoption of new and amended standards has not caused any significant changes or impacts on the Group's performance and financial position - The accounting policies and methods of computation used in preparing the interim financial information are consistent with those applied in the 2022 annual financial statements[8] - The adoption of new and amended standards has not caused any significant changes to the accounting policies or any significant impact on the Group's performance and financial position[25] New and Amended Standards The Group has adopted several new and amended standards effective January 1, 2023, including amendments to HKFRS 17, HKAS 1, 8, and 12, while other amendments effective January 1, 2024, or later have not been early adopted and are not expected to have a significant impact on the Group's operating results and financial position - For the period ended June 30, 2023, the Group has adopted the following new and amended standards, which are mandatory for the accounting period beginning January 1, 2023: Amendments to HKFRS 17, Amendments to HKAS 1 and HKFRS Practice Statement 2, Amendments to HKAS 8, and Amendments to HKAS 12[9] - The following issued amendments to standards and interpretations are mandatory for the Group's accounting periods beginning on or after January 1, 2024, and have not been early adopted by the Group: Amendments to HKFRS 16, Amendments to HKAS 1, Amendments to HKAS 7 and HKFRS 7, HK(IFRIC)-Int 5 (2020), and Amendments to HKFRS 10 and HKAS 28[26] - The Group has commenced an assessment of the impact of the above amendments to standards and interpretations and does not expect them to have any significant impact on the Group's operating results and financial position[44] Revenue and Other Income/(Loss) and Segment Information The Group's revenue primarily consists of rental income, financial investment income, and dividend income, with two main business segments: property and financial investment, where the financial investment segment contributed significantly to segment results in the first half of 2023, and revenue and non-current assets are mainly concentrated in Taiwan, Hong Kong, and Mainland China Details of Revenue and Other Income/(Loss) The Group's revenue primarily includes rental income from investment properties, investment income from financial assets at fair value through profit or loss, dividend income from financial assets at fair value through other comprehensive income, and investment property management fee income, while other income/(loss) mainly represents net realized and unrealized gains/(losses) from financial assets at fair value through profit or loss - Revenue primarily includes rental income, investment income from financial assets at fair value through profit or loss, and dividend income from financial assets at fair value through other comprehensive income[14] - Other income/(loss) represents net realized and unrealized gains/(losses) from financial assets at fair value through profit or loss[14] Revenue and Other Income/(Loss) Breakdown | Revenue Item | 2023 (HKD thousand) | 2022 (HKD thousand) | | :--- | :--- | :--- | | Gross rental income from investment properties | 29,300 | 34,660 | | Investment income from financial assets at fair value through profit or loss | 2,293 | 1,133 | | Dividend income from financial assets at fair value through other comprehensive income | 85,319 | 83,198 | | Management fee income from investment properties | 4,978 | 5,624 | | Other income | 172 | 408 | | Total Revenue | 122,062 | 125,023 | | Other income/(loss) (net realized and unrealized gains/(losses) from FVTPL financial assets) | 20,503 | (69,471) | | Total Revenue and Other Income/(Loss) | 142,565 | 55,552 | Segment Results The Group operates two main business segments: property and financial investment, with the financial investment segment contributing significantly more to segment results than the property segment for the six months ended June 30, 2023 - The Group operates two main business segments globally: property (investment and leasing of industrial and commercial buildings) and financial investment (holding and trading of investment securities)[27][45] Segment Performance | Segment | 2023 (HKD thousand) | 2022 (HKD thousand) | | :--- | :--- | :--- | | Property segment results | 40,073 | 34 | | Financial investment segment results | 104,247 | 11,541 | | Total Segment Results | 144,320 | 11,575 | Segment Assets and Liabilities As of June 30, 2023, the financial investment segment held higher segment assets, while the property segment had higher segment liabilities, with certain assets and liabilities, such as investments in joint ventures, right-of-use assets, deferred income tax liabilities, and lease liabilities, being centrally managed and excluded from segment reporting - Segment assets exclude investments in a joint venture and right-of-use assets, while segment liabilities exclude deferred income tax liabilities, lease liabilities, and other non-current liabilities, all of which are centrally managed[48] Segment Assets and Liabilities (June 30, 2023) | Segment | Segment Assets (HKD thousand) as of June 30, 2023 | Segment Liabilities (HKD thousand) as of June 30, 2023 | | :--- | :--- | :--- | | Property | 2,533,262 | 50,448 | | Financial Investment | 2,684,194 | 24,285 | | Total | 5,217,456 | 74,733 | Segment Assets and Liabilities (December 31, 2022) | Segment | Segment Assets (HKD thousand) as of December 31, 2022 | Segment Liabilities (HKD thousand) as of December 31, 2022 | | :--- | :--- | :--- | | Property | 2,502,356 | 51,026 | | Financial Investment | 2,561,380 | 5,243 | | Total | 5,063,736 | 56,269 | Geographical Information For the six months ended June 30, 2023, the Group's revenue and other income/(loss) primarily originated from Taiwan and Hong Kong, while the total non-current assets were mainly located in Hong Kong and Mainland China Revenue and Other Income/(Loss) by Region | Region | 2023 (HKD thousand) | 2022 (HKD thousand) | | :--- | :--- | :--- | | Hong Kong | 33,401 | 32,502 | | United States | 12,182 | (23,975) | | Europe | 10,944 | (28,793) | | Taiwan | 85,078 | 83,198 | | Other countries | 960 | (7,380) | | Total | 142,565 | 55,552 | Non-Current Assets by Region | Region | June 30, 2023 (HKD thousand) | December 31, 2022 (HKD thousand) | | :--- | :--- | :--- | | Hong Kong | 2,530,750 | 2,501,510 | | Mainland China | 84,117 | 87,251 | | Total | 2,614,867 | 2,588,761 | Operating Profit For the six months ended June 30, 2023, operating profit was HKD 144,320 thousand, with key deductions including employee benefit expenses of HKD 13,003 thousand and investment property management fee expenses of HKD 6,508 thousand Operating Profit Components | Item | 2023 (HKD thousand) | 2022 (HKD thousand) | | :--- | :--- | :--- | | Depreciation of property, plant and equipment | 23 | 22 | | Depreciation of right-of-use assets | 1,748 | 1,930 | | Employee benefit expenses (including directors' emoluments) | 13,003 | 11,873 | | Management fee expenses for investment properties | 6,508 | 5,934 | Finance Income/(Expenses) For the six months ended June 30, 2023, finance income primarily from bank interest income increased to HKD 338 thousand from HKD 164 thousand in the prior year, while finance expenses slightly decreased Finance Income/(Expenses) Breakdown | Item | 2023 (HKD thousand) | 2022 (HKD thousand) | | :--- | :--- | :--- | | Bank interest income | 338 | 164 | | Interest expense on lease liabilities and other non-current liabilities | (89) | (101) | Income Tax Expense For the six months ended June 30, 2023, total income tax expense was HKD 19,438 thousand, slightly lower than HKD 19,966 thousand in the prior year, primarily comprising Hong Kong profits tax, withholding tax, and deferred income tax Income Tax Expense Breakdown | Item | 2023 (HKD thousand) | 2022 (HKD thousand) | | :--- | :--- | :--- | | Hong Kong profits tax | 1,294 | 1,815 | | Withholding tax | 17,866 | 17,472 | | Deferred income tax | 278 | 679 | | Total Income Tax Expense | 19,438 | 19,966 | - Hong Kong profits tax is provided at a rate of 16.5% (2022: 16.5%) on the estimated assessable profit for the period[32] - Withholding tax is calculated based on the prevailing tax rates in the countries where the investment companies are located for dividends receivable from overseas investments (including a joint venture)[32] Earnings/(Loss) Per Share For the six months ended June 30, 2023, basic and diluted earnings per share significantly improved to HKD 3.70, compared to a loss of HKD 0.30 per share in the prior year, calculated based on profit attributable to equity holders and the weighted average number of ordinary shares outstanding Earnings/(Loss) Per Share Calculation | Indicator | 2023 (HKD thousand) | 2022 (HKD thousand) | | :--- | :--- | :--- | | Profit/(Loss) attributable to equity holders of the Company | 125,809 | (10,314) | | Weighted average number of ordinary shares outstanding (thousand shares) | 33,968 | 33,968 | | Earnings/(Loss) per share (basic and diluted) | HKD 3.70 | HKD (0.30) | - The Company has no dilutive potential ordinary shares, and diluted earnings/(loss) per share is equal to basic earnings/(loss) per share[35] Dividends The Board of Directors decided not to declare an interim dividend for the six months ended June 30, 2023, while the Group paid a total of HKD 33,968 thousand in final and special dividends for 2022 in 2023 - The Directors have decided not to declare an interim dividend for the six months ended June 30, 2023 (2022: nil)[40][55] Dividends Paid | Item | 2023 (HKD thousand) | 2022 (HKD thousand) | | :--- | :--- | :--- | | Final dividend for 2022 of HKD 0.70 per share paid | 23,778 | 23,778 (2021 final) | | Special dividend for 2022 of HKD 0.30 per share paid | 10,190 | 23,777 (2021 special) | | Total | 33,968 | 47,555 | Trade and Other Receivables As of June 30, 2023, total trade and other receivables significantly increased to HKD 95,620 thousand, primarily due to a substantial rise in dividends receivable, and the Group does not offer any credit period to customers Trade and Other Receivables Breakdown | Item | June 30, 2023 (HKD thousand) | December 31, 2022 (HKD thousand) | | :--- | :--- | :--- | | Trade receivables | 7 | 163 | | Other receivables, prepayments and deposits | 9,278 | 8,611 | | Dividends receivable | 85,077 | – | | Amounts due from a joint venture | 1,258 | 1,364 | | Total | 95,620 | 10,138 | - The Group does not offer any credit period to customers[57] Trade and Other Payables As of June 30, 2023, total trade and other payables remained stable at HKD 54,106 thousand, compared to HKD 54,049 thousand on December 31, 2022 Trade and Other Payables Breakdown | Item | June 30, 2023 (HKD thousand) | December 31, 2022 (HKD thousand) | | :--- | :--- | :--- | | Trade payables | 2,565 | 2,341 | | Rental and management fee deposits | 19,858 | 19,271 | | Other payables and accrued expenses | 31,683 | 32,437 | | Total | 54,106 | 54,049 | Investment in a Joint Venture The joint venture period and land use rights for Shanghai Shennan Textile Co., Ltd. expired on May 31, 2022, and the Group is currently negotiating with its Chinese joint venture partner to continue operations at the same location, pending resolution of land issues - The joint venture period and land use rights for Shanghai Shennan Textile Co., Ltd., the Group's joint venture, expired on May 31, 2022[39] - We are negotiating with our Chinese joint venture partner to continue operating the joint venture at the same location, but the land issue must be resolved first[61] Business Review and Outlook This section reviews the Group's property and financial investment businesses, along with its financial position and future outlook Property Business The Group's property business in Hong Kong faces challenges due to economic weakness and oversupply in the Kwun Tong Nanyang Plaza industrial and commercial leasing market, leading to rent adjustments and intense competition, while Shanghai Southern Textile Co., Ltd. performed satisfactorily despite a slowdown in retail tenant business, and specific details for Shenzhen property business were not provided Hong Kong Property The local Hong Kong property market faces challenges, with leasing activities for industrial and commercial floors at Kwun Tong Nanyang Plaza affected by economic weakness and a large supply of commercial buildings, leading to intense competition, and the Group has lowered rents and offered favorable terms to retain existing tenants and attract new ones, with an occupancy rate of approximately 80% - The local property market continues to face challenges, with leasing activities for industrial and commercial floors at our Nanyang Plaza in Kwun Tong affected by economic weakness and a large supply of commercial building floors in the Kwun Tong area, leading to intense competition for the few potential tenants[41] - To retain existing tenants, we have lowered rents upon renewal and offered favorable leasing terms and reasonable rental levels to attract new tenants[41] - The Group's 290,000 square feet of industrial and commercial floor area currently has an occupancy rate of approximately 80%[41] Shanghai Property Southern Textile Co., Ltd., in which the Group holds a 45% equity interest, continues to show satisfactory profitability, with its total floor area of approximately 18,400 square feet fully leased to third parties, despite a continued slowdown in retail tenant business due to economic weakness following China's reopening - Southern Textile Co., Ltd., in which the Group holds a 45% equity interest, continues to show satisfactory profitability[66] - A total floor area of approximately 18,400 square feet has been fully leased to third parties[66] - Despite China's reopening in early 2023, the economy remains weak, and the business of retail tenants continues to slow down[66] Shenzhen Property Shenzhen is mentioned in the report, but no specific review or outlook for its property business is provided - Shenzhen is mentioned in the report, but no specific review or outlook for its property business is provided[42] Financial Investment Business The Group's financial investment portfolio increased by approximately 5.8% in the first half of 2023, generating net realized and unrealized gains of HKD 20.5 million, with a highly diversified allocation primarily in equities and bonds, and the Group holds approximately 4% equity in Shanghai Commercial Savings Bank (SCSB), receiving significant dividend income, while SCSB also reported substantial growth in net profit after tax - For the six months ended June 30, 2023, the investment portfolio (including cash held within the portfolio) increased by approximately 5.8%[43] - The Group recorded net realized and unrealized gains of HKD 20.5 million and investment income of HKD 2.3 million[43] Investment Portfolio Allocation (as of June 30, 2023) | Asset Class | Percentage | | :--- | :--- | | Equities | 71.3% | | - United States | 49.5% | | - Europe | 18.2% | | - Japan | 3.1% | | - Asia Pacific ex-Japan | 15.3% | | - Emerging Markets | 13.9% | | Bonds | 22% | | - United States | 85% | | - Europe | 7.3% | | - Emerging Markets and Others | 7.7% | | Commodity Investments | 3.5% | | Cash | 3.2% | - The Group currently holds 190,585,095 shares in Shanghai Commercial Savings Bank ("SCSB"), representing approximately 4% of SCSB's total issued share capital, with this investment valued at HKD 2,145.8 million classified as financial assets at fair value through other comprehensive income under non-current assets[68] - The Group received net cash dividends of approximately HKD 67.2 million for SCSB's 2022 earnings (2022: net cash dividends of approximately HKD 65.4 million for SCSB's 2021 earnings)[68] - For the six months ended June 30, 2023, SCSB's audited net profit after tax attributable to its owners was approximately NTD 9,769.8 million (2022: net profit attributable to its owners was approximately NTD 7,256.6 million)[80] Financial Position The Group's investment properties valued at HKD 2,351 million were pledged for general banking facilities but remained unutilized as of June 30, 2023, with the debt-to-equity ratio decreasing from 0.15% on December 31, 2022, to 0.11% on June 30, 2023, and net current assets increasing to HKD 455.6 million at period-end - The Group's investment properties valued at HKD 2,351 million were pledged as collateral for general banking facilities, which were not utilized as of June 30, 2023, and December 31, 2022[68] - The debt-to-equity ratio decreased from 0.15% (December 31, 2022) to 0.11% (June 30, 2023)[68] - At the end of the period, the Group's net current assets were HKD 455.6 million (December 31, 2022: HKD 393.5 million)[68] Outlook The Group maintains a cautious stance on the economic outlook for the remainder of the year, anticipating a potential end to interest rate cycles in the US and Europe, while economic stimulus measures by Chinese authorities are expected to provide market support, and the investment portfolio has risen by approximately 6.6% as of August 14, 2023, with the Group closely monitoring new investment opportunities - The economic outlook for the remainder of the year is uncertain, and we are hopeful that the interest rate cycles in the US and Europe may be nearing an end[70] - Recent measures by Chinese authorities to promote economic growth and stabilize the property market, as well as other industries, are likely to provide market support[70] - As of August 14, 2023 (the latest practicable date), the investment portfolio has risen by approximately 6.6% year-to-date, with the value of the investment portfolio (including cash) being approximately USD 51 million or HKD 399.3 million[70] - We remain cautious and will closely monitor any new investment opportunities[70] Other Information This section covers additional corporate information, including share transactions, employee details, corporate governance, and board composition Purchase, Sale or Redemption of Shares Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's shares during the period - Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's shares during the period[60] Employees As of June 30, 2023, the Group employed 13 staff members, with remuneration determined by qualifications and experience, annual review of salaries and discretionary bonuses, and benefits including medical insurance and provident fund - As of June 30, 2023, the Group employed 13 staff members (2022: 12 staff members)[82] - Remuneration is determined with reference to the qualifications and experience of the relevant staff, and salaries and discretionary bonuses are reviewed annually[82] - The Group also provides other benefits, including medical insurance and a provident fund[82] Corporate Governance The Company confirms compliance with the Code Provisions of the Corporate Governance Code in Appendix 14 and the Model Code for Securities Transactions by Directors of Listed Issuers in Appendix 10 of the Listing Rules for the six months ended June 30, 2023, with the Audit Committee having reviewed the Group's accounting principles, internal controls, risk management, and financial reporting matters, including the unaudited condensed consolidated financial statements - The Directors of the Company are not aware of any information that would reasonably indicate that the Company has not complied with the Code Provisions of the Corporate Governance Code set out in Appendix 14 of the Listing Rules at any time during the six months ended June 30, 2023[83] - The Directors of the Company have confirmed that for the six months ended June 30, 2023, the Directors have complied with the required standards set out in the Model Code[84] - The Audit Committee has reviewed with management the accounting principles and practices adopted by the Group and discussed auditing, internal control, risk management, and financial reporting matters, including reviewing with management the unaudited condensed consolidated financial statements for the six months ended June 30, 2023[84] - The Group's unaudited interim financial statements for the six months ended June 30, 2023, have been reviewed by the Group's external auditor, PricewaterhouseCoopers, in accordance with Hong Kong Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the HKICPA[84] Board Information As of the date of this announcement, the Board of Directors comprises seven directors, including executive directors, independent non-executive directors, and a non-executive director - As of the date of this announcement, the Board of Directors comprises the following seven directors: Executive Directors Rong Zhiquan (Managing Director), Chen Zhenni (Assistant Managing Director and Financial Controller); Independent Non-executive Directors Bi Shaofu (Chairman), Shi Xitao, Huang Zhiguang, Gao Fuhua; Non-executive Director Rong Kangxin[77][86] Publication of Detailed Results Announcement The detailed 2023 interim results announcement is available on the website of The Stock Exchange of Hong Kong Limited and the Company's website - Please refer to the detailed 2023 interim results announcement on the website of The Stock Exchange of Hong Kong Limited and the Company's website at http://www.nanyangholdingslimited.com[76](index=76&type=chunk)