CK ASSET(01113) - 2025 H1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for the first half of 2025 reached CNY 39.13 billion, an increase of 12.7% compared to 2024 [2] - Profit before IP revaluation was CNY 6.8 billion, with a per share profit of CNY 1.94, up 1.6% [2] - Profit attributable to shareholders decreased to CNY 6.3 billion or CNY 1.8 per share, down 26.2% [3] - Recurring revenue increased to CNY 31.76 billion, representing 81% of total revenue, while recurring profit contribution improved to CNY 8.5 billion, accounting for 83% of profit contribution [3] Business Line Data and Key Metrics Changes - Property sales revenue increased to CNY 7.34 billion, up almost 59%, but profit contribution decreased by 2.9% to CNY 1.77 billion [4] - Property rental revenue was CNY 3 billion, down 3.7%, with a profit contribution of CNY 2.3 billion, down 5.3% [6] - Hotel and service suite revenue reached CNY 2.2 billion, up 2.9%, while profit contribution was CNY 794 million, down 3.5% [9] - Infrastructure and utility operations saw revenue of CNY 12.5 billion, up 5.9%, with profit contribution increasing by 5.4% to CNY 629 million [11] Market Data and Key Metrics Changes - Contribution from Hong Kong was 27%, Mainland China 15%, and overseas markets 58% [3] - Overall occupancy in Hong Kong was around 86%, while the European portfolio exceeded 99% [6] - The retail properties experienced an 11.5% drop in revenue, primarily due to the expiration of a joint venture in Shanghai [7] Company Strategy and Development Direction - The company aims to maintain a low leverage while generating significant cash flow for new investments, particularly in commercial and retail properties in Hong Kong [21][23] - The focus is on returns and risks rather than specific sectors or regions for new investments [25] - The company is interested in land replenishment and corporate lending transactions in Hong Kong [26] Management's Comments on Operating Environment and Future Outlook - The macro environment remains uncertain, but there is optimism regarding cash generation and potential interest rate decreases [21] - The Hong Kong residential property market is expected to see generous launch pricing due to high inventory levels [27] - The company is targeting Hong Kong buyers for properties in the Greater Bay Area, with positive responses reported [31] Other Important Information - The company has a total land bank of 124 million square feet, with 67 million square feet under development [16] - The company maintains a stable credit rating from Moody's and Standard & Poor's [15] Q&A Session Summary Question: What is your view on earnings in the next few years, particularly your earnings from development operations? - Earnings from recurring income businesses are expected to remain strong, but earnings from development operations will not be significant in the next few years [20][20] Question: What is the company's capital allocation strategy for the remainder of the year? - The company will not expand or invest at the expense of leverage and is focused on maintaining cash flow while exploring new investments [21][22] Question: What are the key criteria for new investments and acquisitions? - The focus is on returns and risks rather than specific sectors or regions, with an interest in land replenishment and property investments in Hong Kong [25][26] Question: What is your view on the Hong Kong residential property market? - The primary market has seen increased volume, but price momentum is lacking due to high inventory levels [27] Question: Could you provide an update on the completion schedule of the Anderson Road project? - A delay in the project completion date cannot be avoided, but the impact on operations is expected to be small [29] Question: What kind of development margins should we expect for the full year? - The second half is expected to contribute profit from several projects, but Blue Coast will incur losses [30] Question: What is your strategy to generate sales momentum in the Mainland? - Marketing campaigns targeting Hong Kong buyers for properties in the Greater Bay Area have shown good responses [31] Question: What is the outlook for the pub division in the UK? - The team is working to improve efficiency and protect operating margins, with hopes for a better second half of the year [37]