HKBN (1310) H2 2024 earnings summary

Executive summary

• Revenue declined 9% year-over-year to HK$10,651 million, mainly due to weaker handset and product sales, while EBITDA rose 6% year-over-year (excluding handsets) and net profit turned positive at HK$10 million.

• Adjusted free cash flow decreased 19% year-over-year to HK$620 million, but cash and equivalents increased 20% year-over-year.

• Enterprise Solutions revenue was stable year-over-year at HK$4,828 million, with backlog up 15% to HK$4.8 billion and cloud business sales up 22%.

• Residential Solutions revenue dropped 2% year-over-year, but ARPU increased 2% to HK$182 and broadband subscriptions rose 1% half-on-half.

• Ongoing digital transformation and cost optimization reduced opex by 13% year-over-year, improving opex/revenue ratio to 18.2%.

Financial highlights

• H2 EBITDA margin reached 27% (excluding handsets), up 12% year-over-year; full-year EBITDA margin (excluding handsets) was 26%.

• Adjusted net profit decreased 2% year-over-year to HK$191 million.

• Net leverage ratio improved to 4.93x by year-end, down from 5.12x.

• Cash from operations/EBITDA at 96-97%.

• Full-year dividend per share was 31.5 HK cents, with a final dividend of 16.5 cents proposed.

Outlook and guidance

• Focus on operational efficiency, profitability, and capital structure optimization in FY25, with CapEx to return to normal levels and selective investment.

• Continued expansion in ICT, cloud, and value-added residential services, leveraging a 12-15 month competitive edge in high-speed broadband.

• Dividend policy will balance growth, loan repayment, and shareholder returns.

• Refinancing exercises are on track with strong support from relationship banks.