Hang Lung Group (10) H1 2025 earnings summary

Executive summary

• Revenue for the first half of 2025 declined 18% year-over-year to HK$5,202 million, mainly due to an 87% drop in property sales revenue, with rental revenue down 3% year-over-year.

• Operating profit decreased by 6% to HK$3,408 million, with underlying net profit attributable to shareholders down 7% to HK$1,191 million.

• Net profit attributable to shareholders was HK$697 million, down from HK$888 million a year earlier, reflecting higher revaluation losses and lower operating profits.

• Interim dividend maintained at HK$0.21 per share.

• Hotels segment saw strong growth, with revenue up 84% year-over-year, though it remained a small contributor and posted an operating loss.

Financial highlights

• Property leasing revenue fell 3% to HK$4,912 million; operating profit from leasing dropped 4% to HK$3,499 million.

• Total revenue for 1H25 was HK$4,968 million, down 19% year-over-year; underlying net profit was HK$1,587 million, down 9% year-over-year.

• Net decrease in fair value of properties attributable to shareholders was HK$494 million, higher than last year’s HK$393 million.

• Earnings per share based on underlying net profit was HK$0.87 (2024: HK$0.94); based on net profit, HK$0.51 (2024: HK$0.65).

• Gross margin remained stable at 72%.

Outlook and guidance

• Management expects moderate demand growth in mainland China, supported by fiscal expansion and government measures, while Hong Kong retail remains challenging but with a positive long-term outlook.

• New projects, including Westlake 66 in Hangzhou and other major developments, are set to open from 2H25 onwards, expanding the portfolio.

• Ongoing focus on asset management, tenant retention, immersive retail experiences, and sustainability initiatives.

• Pre-sale launches and asset enhancements in both Hong Kong and mainland China are expected to support future growth.

• Dividend policy is expected to normalize after major project completions.