Henderson Land Development Company (0012) H2 2023 earnings summary

Executive summary

• FY2023 revenue rose 8% to HK$27,570mn; profit attributable to shareholders increased 0.2% to HK$9,261mn and underlying profit rose 0.8% to HK$9,706mn.

• Underlying profit included a HK$1,591mn net gain from the Sunlight REIT accounting change; excluding aggregate net one-off gains, underlying profit was HK$8,186mn, down 15%.

• Leasing and HKCG earnings grew, while property development underlying profit fell 22.6% as attributable contracted sales remained flat at HK$20,668mn.

• Net gearing improved to 22.6%; cash and bank balances rose to HK$21,623mn, while net debt fell to HK$73,869mn.

Financial highlights

• Revenue increased to HK$27,570mn from HK$25,551mn; profit from operations before fair value changes rose to HK$7,907mn from HK$7,207mn.

• Reported EPS was HK$1.91, unchanged; underlying EPS was HK$2.00 versus HK$1.99. The HK$1.80 full-year dividend per share was unchanged YoY.

• Profit before tax declined to HK$10,444mn from HK$10,780mn; profit for the year increased to HK$9,778mn from HK$9,503mn.

• Net fair value loss on investment properties and properties under development was HK$1,700mn before tax and non-controlling interests, versus HK$12mn in 2022.

• Net finance costs rose to HK$1,320mn from HK$1,033mn; bank interest income increased to HK$679mn from HK$204mn.

Outlook and guidance

• HK$13,617mn of HK and Mainland China contracted sales backlog was expected to be recognized in 2024, from total backlog of HK$17,737mn at end-2023.

• Twelve HK development projects were planned for sale in 2024; with unsold stock, ~7,100 attributable residential units and 180,000 sq.ft. of office/industrial space were expected to be available.

• Belgravia Place Phase 1 launched in March 2024; all 138 units in its first sale round sold on launch day.

• Site 3 Phase 1, estimated at 0.66mn sq.ft., is planned for 2026; Phase 2, estimated at 0.95mn sq.ft., is planned for 2032.

• After removal of demand-side stamp duties, 946 residential units totalling HK$5,899mn sold in the three weeks following the policy announcement.