HANG LUNG PPT(00101)2024-07-30 04:03Revenue Performance - Total revenue for the six months ended June 30, 2024, increased by 17% to HKD 6.114 billion, with property sales contributing HKD 1.228 billion, compared to none in 2023[3][8] - Revenue for the first half of 2024 increased to HKD 6,114 million (RMB 5,606 million), up from HKD 5,237 million (RMB 4,626 million) in the same period last year, representing a growth of 16.7% in HKD terms[52] - Total revenue for the first half of 2024 reached HKD 6,114 million, compared to HKD 5,237 million in the same period in 2023, representing a 16.7% increase[58] - Property leasing revenue decreased to HKD 4,243 million in 2024 from HKD 4,582 million in 2023, a decline of 7.4%[58] - Property sales revenue in 2024 was HKD 1,228 million, a new segment compared to no revenue in 2023[58] Property Leasing Performance - Property leasing revenue decreased by 7% to HKD 4.886 billion, impacted by weak luxury consumption in mainland China, a slowdown in Hong Kong's retail and office markets, and RMB depreciation[8] - Mainland China property leasing revenue decreased by 6% in HKD terms to HKD 3.338 billion, with a 3% decline in RMB terms[3][12] - Hong Kong property leasing revenue dropped by 8% to HKD 1.548 billion, with operating profit down 11% to HKD 1.217 billion[3][12] - The company's overall mall portfolio recorded a 3% year-on-year decline in revenue, with high-end malls experiencing a 4% drop, while sub-high-end malls saw growth ranging from 1% to 15%[14] - Shanghai Plaza 66, the flagship high-end mall, saw an 8% decline in revenue and a 23% drop in tenant sales due to cautious luxury spending and overseas shopping trends[16] - Shanghai Grand Gateway 66, a sister mall to Plaza 66, reported a 4% decrease in revenue and a 14% decline in tenant sales, maintaining a high occupancy rate of 97%[17] - Dalian Henglong Plaza achieved an 8% revenue growth and a 2% increase in tenant sales, with occupancy rising 4 percentage points to 93%[17] - Shenyang Huangcheng Henglong Plaza, a sub-high-end mall, recorded a 3% revenue increase and a 2% rise in tenant sales, with occupancy up 6 percentage points to 92%[19] - Jinan Henglong Plaza saw a 1% revenue increase, with occupancy rising 3 percentage points to 92%, and expects further improvements from ongoing asset optimization[19] - Tianjin Henglong Plaza reported a 15% revenue growth and a 9% increase in tenant sales, with occupancy surging 14 percentage points to 94%[19] - The company's office portfolio contributed 18% of total rental income in mainland China, with overall office revenue declining 4% to RMB 556 million due to competitive markets in Shanghai and Shenyang[20] - Property leasing revenue in mainland China decreased by 4% to RMB 556 million, with Shanghai Plaza's revenue dropping 7% due to a 10 percentage point decline in occupancy rate to 88%[21][22] - Hong Kong property leasing revenue fell 8% to HKD 1.548 billion, with retail revenue down 7% to HKD 940 million and office revenue down 8% to HKD 507 million[24][25] - Wuhan Plaza's office occupancy rate decreased by 4 percentage points to 68%, despite a 2% increase in revenue[22] - Shenyang Plaza's office revenue declined 5% despite a 4 percentage point increase in occupancy rate to 90%[22] - Wuxi Plaza's office revenue increased 2% with a 6 percentage point rise in occupancy rate to 89%[22] Profit and Financial Performance - Operating profit declined by 10% to HKD 3.430 billion, with property leasing operating profit down 11% to HKD 3.441 billion[4][8] - Basic profit attributable to shareholders fell by 22% to HKD 1.735 billion, primarily due to lower leasing operating profit and increased financial expenses[5][8] - Net revaluation loss on investment properties attributable to shareholders was HKD 674 million, compared to a net revaluation gain of HKD 169 million in 2023[5][8] - Net profit attributable to shareholders decreased to HKD 1,061 million (RMB 964 million) in H1 2024, down from HKD 2,394 million (RMB 2,120 million) in H1 2023, a decline of 55.7% in HKD terms[52] - Profit before tax for 2024 was HKD 2,068 million, down from HKD 3,530 million in 2023, a decrease of 41.4%[59] - 2024 interim shareholder's attributable profit was HKD 1,061 million, a decrease from HKD 2,394 million in 2023[68][69] - Basic earnings per share decreased to HKD 0.23 (RMB 0.21) in H1 2024, down from HKD 0.53 (RMB 0.47) in H1 2023[52] - Basic earnings per share for 2024 was HKD 0.38, down from HKD 0.49 in 2023[69] Debt and Financial Position - Net debt-to-equity ratio increased to 32.9% as of June 30, 2024, up from 31.9% at the end of 2023[7] - Total borrowings as of June 30, 2024, were HKD 53.229 billion, with 35% denominated in RMB as a natural hedge for net investments in mainland China. Fixed-rate debt accounted for 41% of total debt[38] - The net debt-to-equity ratio increased to 32.9% as of June 30, 2024, from 31.9% at the end of 2023, primarily due to increased borrowings for capital expenditures in mainland China and Hong Kong[41] - The average maturity of the debt portfolio was 3.0 years as of June 30, 2024, with 65% of loans maturing after 2 years[42] - The company had HKD 14.255 billion in undrawn committed bank credit facilities and USD 2.107 billion in undrawn medium-term notes as of June 30, 2024[43] - Average effective borrowing rate increased to 4.3% in H1 2024, up from 3.9% in 2023, leading to a 21% increase in total financial expenses to HKD 1.063 billion[44] - Net financial expenses (excluding capitalized amounts) increased to HKD 455 million in H1 2024[44] - Interest coverage ratio decreased to 3.0x in H1 2024 from 4.2x in 2023[44] - Net interest expense for 2024 was HKD 429 million, up from HKD 260 million in 2023, a 65% increase[62] Investment Properties and Development - Total investment properties and properties under development were valued at HKD 193.007 billion, with mainland properties accounting for HKD 130.765 billion and Hong Kong properties for HKD 62.242 billion[31] - The company has HKD 24.43 billion in properties for lease and HKD 7.825 billion in properties for sale under development, with total capital commitments of HKD 15 billion for investment property projects[32] - Investment properties increased to HKD 168,577 million (RMB 155,258 million) as of June 30, 2024, compared to HKD 169,046 million (RMB 153,511 million) at the end of 2023[54] - Investment properties and development properties additions amounted to HKD 1.915 billion in 2024, up from HKD 1.569 billion in 2023[70] - The company's investment properties and development properties were valued by Savills Valuation and Professional Advisory Limited as of June 30, 2024[71] Sustainability and Green Initiatives - 50% of operational properties in mainland China are now powered by renewable energy, covering five projects across four cities[48] - 16 tenants across 14 properties with over 78,000 sqm of leased area are participating in the Changemakers sustainability program[49] - The company issued RMB 800 million in green bonds and secured RMB 1.9 billion in green loan facilities in H1 2024, accounting for 60% of its total debt and available credit facilities as of June 30, 2024[36] Dividends and Shareholder Returns - The company declared an interim dividend of HKD 0.12 per share, down from HKD 0.18 in 2023[10] - The company declared an interim dividend of HKD 0.12 per share for 2024, down from HKD 0.18 per share in 2023[66] - The company paid a final dividend of HKD 0.60 per share for 2023, consistent with the previous year[67] Cash and Liquidity - As of June 30, 2024, the company's cash and bank deposits totaled HKD 6.573 billion, with HKD 4.297 billion (65%) in HKD, RMB 2.275 billion (35%) in RMB, and USD 1 million[37] - Cash and bank deposits rose to HKD 6,573 million (RMB 6,094 million) as of June 30, 2024, up from HKD 5,352 million (RMB 4,868 million) at the end of 2023, reflecting a 22.8% increase in HKD terms[54] - Net current assets rose to HKD 8,278 million (RMB 7,687 million) as of June 30, 2024, up from HKD 7,844 million (RMB 7,143 million) at the end of 2023[54] Market Conditions and Outlook - Office leasing demand is expected to remain weak in H2 2024 due to challenging market conditions[51] - Translation loss due to RMB depreciation was HKD 682 million in H1 2024, compared to HKD 3.394 billion in 2023[46] Corporate Governance and Compliance - The company maintained compliance with the Corporate Governance Code during the first half of 2024[75] - The interim results for 2024 were reviewed by the company's audit committee and KPMG[76] Employee and Operational Costs - Employee costs for the first half of 2024 totaled HKD 928 million, with a total of 4,059 employees as of June 30, 2024[74] Other Financial Metrics - Total assets increased to HKD 218,939 million in 2024 from HKD 217,302 million in 2023, a growth of 0.75%[60] - Total assets minus current liabilities stood at HKD 202,941 million (RMB 186,786 million) as of June 30, 2024, compared to HKD 202,165 million (RMB 183,566 million) at the end of 2023[54] - Total equity increased slightly to HKD 141,900 million (RMB 130,268 million) as of June 30, 2024, compared to HKD 142,123 million (RMB 128,972 million) at the end of 2023[54] - Other comprehensive income for the period showed a loss of HKD 613 million (RMB 964 million) in H1 2024, compared to a loss of HKD 3,371 million (RMB 1,152 million) in H1 2023[53] - Total comprehensive income for the period was HKD 726 million (RMB 2,181 million) in H1 2024, compared to a loss of HKD 639 million (RMB 3,572 million) in H1 2023[53] - Accounts receivable and other receivables totaled HKD 746 million as of June 30, 2024, compared to HKD 148 million as of December 31, 2023[72] - Accounts payable and other payables amounted to HKD 4.197 billion as of June 30, 2024, slightly down from HKD 4.342 billion as of December 31, 2023[73] - Total tax expense for 2024 was HKD 729 million, compared to HKD 798 million in 2023, a decrease of 8.6%[65] Development Projects - Kunming Junyue Residence, offering 254 units including 3 top-tier villas, and Kunming Junyue Hotel, with 331 rooms and suites, are key components of the remaining development projects at Kunming Plaza. Both properties received completion certificates in April 2024, with the hotel set to open in Q3 2024[33] - Wuxi Plaza Phase II includes Wuxi "Henglong Mansion" with 573 units and a Hilton Curio Collection boutique hotel with 105 rooms. The project topped out in December 2023 and is expected to be completed in phases starting in 2025[33] - Hangzhou Plaza, a high-end commercial complex, includes a shopping mall, five Grade A office towers, and the luxurious Mandarin Oriental Hangzhou hotel with over 190 rooms and suites. The hotel is expected to open in H2 2026, with other parts of the project set to be completed in phases starting in 2025[33] - Shanghai Plaza has received government approval to construct a 3,000 sqm retail building on existing landscaped areas, expected to be completed in 2026, enhancing the shopping experience and solidifying its leadership position in Shanghai[33] Tenant and Customer Initiatives - Wuhan Plaza opened its second members-only VIP lounge in May 2024, with a third planned for Kunming Plaza by year-end[51] - The company plans to continue selling high-end serviced residences in mainland China, including Wuhan, Kunming, and Wuxi[51]