SUN HUNG KAI CO(HK:00086)2024-03-21 13:35Financial Performance - The company reported a significant improvement in shareholder losses for 2023, amounting to HKD 471.4 million, compared to a loss of HKD 1,534.8 million in the previous year, primarily due to reduced investment management losses [4]. - The company's consumer finance business achieved a pre-tax profit of HKD 979.5 million in 2023, down from HKD 1,197.1 million in 2022, impacted by rising interbank rates [5]. - The group reported total revenue of HKD 3,998.4 million for the year ended December 31, 2023, a decrease of 3.7% from HKD 4,153.6 million in 2022 [12]. - Interest income was HKD 3,764.4 million, down from HKD 3,932.0 million in the previous year, reflecting a decline of 4.3% [12]. - The net loss for the year was HKD 201.3 million, significantly improved from a net loss of HKD 1,176.9 million in 2022 [12]. - Basic loss per share was HKD 24.1, compared to HKD 78.2 in the previous year, indicating a reduction in losses [12]. - The group reported a profit before tax of HKD 76.6 million, a significant improvement from a loss of HKD 892.3 million in 2022 [50]. - The loss attributable to shareholders was HKD 471.4 million, down 69.3% from HKD 1,534.8 million in the previous year [50]. - The basic loss per share improved to HKD 0.241 from HKD 0.782 in 2022, reflecting a 69.2% reduction [49]. Asset Management - The asset management scale reached nearly USD 1 billion by year-end, with net inflows exceeding USD 150 million during the year [2]. - The company’s fund management business, SHKCP, saw a 24.3% year-on-year increase in fee income, supported by a diversified strategy [6]. - The company’s family office solutions have shown encouraging development, leveraging extensive relationships built over 55 years of operation [2]. - The asset management scale of the company's funds and partners totaled USD 964 million at year-end, a decrease of 1.1% from 2022, mainly due to the full redemption of certain funds [96]. - External capital accounted for 62.8% of the total asset management scale, an increase of 16.3 percentage points year-over-year [105]. Dividends and Shareholder Returns - The company maintained a dividend of HKD 0.26 per share for 2023, consistent with the previous year, despite a challenging fundraising environment [4]. - The total dividend declared for 2023 was HKD 511.1 million, slightly down from HKD 512.1 million in 2022 [36]. - The company repurchased a total of 2,203,000 shares during the year ended December 31, 2023, at a total cost of HKD 5,897,190 [136]. Operational Efficiency - The company will continue to invest in upgrading risk management systems and technology infrastructure to enhance operational efficiency [10]. - The company’s management expenses decreased to HKD (1,116.1) million in 2023 from HKD (1,159.6) million in 2022, reflecting cost control measures [33]. - Operating costs decreased by 6.1% to HKD 1,467.8 million from HKD 1,563.3 million in the previous year, reflecting cost rationalization efforts [53]. - The operating costs for the investment management segment in 2023 amounted to HKD 959.3 million, a 15.9% increase compared to the previous year, mainly driven by performance-related expenses [72]. Market Challenges - The real estate market in Hong Kong faced significant challenges, with pre-tax contributions from mortgage lending dropping to HKD 65.7 million from HKD 122.3 million in 2022 [6]. - The company plans to maintain a cautious approach in 2024 due to ongoing geopolitical tensions and rising financing costs [10]. - The company anticipates that 2024 will remain challenging due to high interest rates and structural changes in the Chinese economy, maintaining a cautious investment approach [109]. ESG and Governance - The group's ESG risk rating improved from 29.2 in 2022 to 24.5 in 2023, reflecting progress in enhancing ESG standards [8]. - The board has established a dedicated ESG committee to lead the company's efforts in integrating ESG principles into its business strategy [8]. - The company has complied with the corporate governance code principles, with some deviations noted in the annual report [131]. - The company’s governance structure separates the roles of the chairman and the CEO, enhancing internal communication and decision-making processes [132]. Loans and Financing - The total amount of overdue consumer finance customer loans and advances (net of impairment provisions) was HKD 10,627.2 million as of December 31, 2023, compared to HKD 11,025.9 million in 2022 [38]. - The company reported a significant reduction in the number of overdue mortgage loans, with overdue loans less than 31 days at HKD 707.9 million in 2023, compared to HKD 705.0 million in 2022 [40]. - The financing costs increased by 45.3% to HKD 504.7 million due to rising interbank rates [59]. Future Outlook - The company plans to streamline and focus its operations, improve workflows, upgrade technology infrastructure, and invest in talent in 2024 [110]. - The company aims to enhance its service platform and innovate product offerings while protecting capital and solidifying future growth foundations [109]. - The company plans to continue evaluating new opportunities in artificial intelligence, private credit, and secondary markets while maintaining strict standards for cash flow and valuation [85].