Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of HKD 164.37 [1][5] Core Insights - The company reported a strong revenue growth of 32% year-on-year, achieving HKD 52.7 billion in revenue for FY1H26, with a core net profit of HKD 12.2 billion, up 17% year-on-year [1][2] - The growth is primarily driven by the release of profits from mainland property development, sales of investment properties, and reduced interest expenses [2] - The company is actively expanding its land reserves in Hong Kong after reducing its debt levels, positioning itself to benefit from the recovery of the Hong Kong real estate market [3] Summary by Sections Financial Performance - For FY1H26, the core net profit growth was attributed to a HKD 2.7 billion increase in profits from mainland property development, mainly from high-margin projects in Hangzhou and Suzhou [2] - The sale of investment properties in Hong Kong contributed an additional HKD 0.8 billion in realized fair value gains [2] - The company’s financial expenses decreased by HKD 0.6 billion due to reduced interest-bearing debt and financing costs [2] Property Development - The company’s equity sales in Hong Kong decreased by 30% year-on-year to HKD 17.4 billion, but subsequent sales from the SIERRA SEA Phase II project contributed HKD 9 billion [3] - The company expects equity sales to reach HKD 35 billion for FY26, continuing to lead among Hong Kong property developers [3] Property Leasing - Despite rental pressures in Hong Kong and mainland cities, the company’s rental income remained stable, with a slight decline of 1% in rental yield [4] - Upcoming projects in Hong Kong and mainland China are expected to increase the company’s investment property area by 10% and 46% respectively by FY28, driving rental income growth [4] Profit Forecast and Valuation - The forecasted core net profits for FY26-28 are HKD 23.3 billion, HKD 24.5 billion, and HKD 25.4 billion respectively, reflecting slight upward adjustments in project price assumptions [5] - The company’s NAV is estimated at HKD 635.1 billion, with a target price adjustment to HKD 164.37, reflecting a 25% discount based on the recovery trend in the Hong Kong real estate market [5][25]

Financial Data and Key Metrics Changes - The group's underlying profit for the six months ended December 2025 was HKD 12.2 billion, a year-on-year increase of 16.7% driven by higher profits from trading and investment properties and lower finance costs [2][3] - Reported profit increased to HKD 10.2 billion, reflecting a 36.2% year-on-year growth [3] - The underlying earnings per share was HKD 4.21, while reported earnings per share was HKD 3.54 [3] - An interim dividend of HKD 0.98 per share was declared, marking a 3.2% increase from HKD 0.95 last year [3] - Net debt stood at HKD 83.6 billion with an improved gearing ratio of 13.5% compared to 15.1% in June 2025 [4][5] Business Segment Data and Key Metrics Changes - In property development, profit reached approximately HKD 4.9 billion, a substantial increase of 94.9% primarily due to higher profit recognition from Mainland projects [3] - The hotel business recorded an operating profit of HKD 428 million, up from HKD 377 million in the same period last year [4] - Profit from other business segments decreased by 11.7% year-on-year to about HKD 2.3 billion [4] - The group's total operating profit for the first half of fiscal year 2026 was HKD 16.5 billion, representing a 14.3% increase year-on-year [4] Market Data and Key Metrics Changes - The Hong Kong primary residential market saw higher transaction volumes and a modest price recovery, with contracted sales of about HKD 17.4 billion during the period [8][9] - The group's gross rental income in Hong Kong remained stable at around HKD 8.8 billion, with an overall average occupancy of approximately 92% [10] - The Mainland rental portfolio's gross rental income held steady at about RMB 3.1 billion, with a slight decrease of 0.8% in RMB terms [13] Company Strategy and Development Direction - The company aims to maintain a strong financial position to seize land opportunities in Hong Kong while focusing on prudent financial management [5][17] - The strategy includes leveraging a reputable brand to drive premium sales and ongoing portfolio reviews to enhance returns [5][17] - The company plans to continue launching new residential projects and unsold units while enhancing the competitiveness of its property investment portfolio [17][18] Management's Comments on Operating Environment and Future Outlook - The management expressed confidence in the Hong Kong market's recovery, supported by robust IPO activities and favorable mortgage conditions [16][17] - The company anticipates continued strong demand for residential properties, driven by low mortgage rates and improving supply-demand dynamics [35][36] - The management highlighted the importance of adapting to new circumstances and leveraging technology to enhance property quality and services [18] Other Important Information - The group has a total land bank in Hong Kong of about 57.3 million sq ft and in Mainland China of 64.6 million sq ft [6][12] - The International Gateway Centre (IGC) is positioned as a key commercial landmark with high connectivity and sustainability credentials [23][24] - The company is committed to sustainability initiatives and enhancing the quality of living through its developments [16] Q&A Session All Questions and Answers Question: What is your view and outlook for the Hong Kong property home price? - Management noted that the Hong Kong residential market is entering a new phase of recovery, with positive rental carry attracting investors and end users [34] Question: Can we have an update on the leasing progress for the IGC and Artist Square Towers? - Management indicated strong interest in IGC, with leasing progressing well, particularly from the financial services sector [41][42] Question: What is your latest pricing strategy for residential projects in Hong Kong? - The company adheres to current market conditions, with moderate price increases to achieve sales targets while balancing volume and margin [54] Question: Any plans for asset disposal or changes in dividend policy? - Management stated there are no current plans for further asset disposals beyond Dynasty Court, and the dividend policy remains at 40%-50% of profits [57][93]