Wharf Real Estate Investment (1997) investor relations material

Executive summary

• Deleveraging remains a key focus, with net debt reduced by 36% from the 2020 peak to HK$33.3 billion and gearing at a record low of 17.6%, despite asset value declines and a widened non-cash revaluation deficit.

• Core underlying net profit remained stable at HK$3,119 million, up 3% year-over-year, supported by lower borrowing costs, while underlying EPS reached HK$1.03.

• Group loss attributable to equity shareholders increased to HK$2,406 million, mainly due to a larger non-cash investment property revaluation deficit of HK$5,118 million.

• Interim dividend per share rose 3% to HK$0.66, maintaining a 65% payout ratio and consistent dividend policy.

• Market conditions remain weak, but Q2 saw increased visitor arrivals and retail sales, with cautious optimism for further improvement.

Financial highlights

• Group revenue decreased by 1% year-over-year to HK$6,407 million; operating profit fell 5% to HK$4,684 million.

• Investment properties revenue declined 3% to HK$5,371 million; operating profit down 4% to HK$4,528 million.

• Hotel revenue increased 2% to HK$766 million, with operating profit nearly doubling to HK$47 million.

• Borrowing costs dropped 27% year-over-year, reducing average interest cost to 4.4%.

• Basic loss per share was HK$0.79, compared to HK$0.35 in the prior year period.

Outlook and guidance

• Retail market is in a base-building phase, with no expectation of a quick turnaround in the second half.

• Management will maintain proactive strategies, low leverage, and selective capital investment amid macroeconomic uncertainty and geopolitical risks.

• Hong Kong's stock market and major events, such as the opening of Kai Tak Sports Park, are expected to boost tourism and market sentiment.