Hysan Development Company (14) H1 2026 earnings summary

Executive summary

• Turnover remained stable for the interim period of 2026, with Recurring Underlying Profit up 1.7% and Underlying Profit up 7.4% year-on-year, driven by gains from Bamboo Grove residential sales and cost control.

• Retail, office, and residential portfolios all registered positive growth, with residential revenue up 34% year-on-year when normalizing for Bamboo Grove sales.

• Lee Gardens rejuvenation and asset enhancement initiatives drove full recovery of tenant sales and prime rents to pre-COVID levels, with luxury and experiential retail demand fueling 17% tenant sales growth and 8% increase in foot traffic.

• Strategic diversification includes expansion into Shanghai, growth in flex office business, and healthcare investments.

• Major projects, including Lee Garden Eight and the Lee Gardens connectivity project, are on schedule for completion in late 2026.

Financial highlights

• Group turnover was HK$1,728 million, down 0.1% year-on-year, with retail portfolio turnover up 1.2% to HK$861 million and occupancy at 96%.

• Tenant sales in Hong Kong retail portfolio increased 17% in the first half; turnover rents up 8% year-on-year.

• Residential leasing portfolio turnover was HK$100 million, occupancy improved to 90%, and positive rental reversions were recorded.

• Shareholders' fund at HK$65.3 billion; NAV per share HK$63.6; interim dividend maintained at HK$0.27.

• Gross profit margin at 82.5% and reported profit at HK$73 million, down 2.7% year-on-year.

Outlook and guidance

• Management remains confident but cautious for the second half of 2026, citing market volatility and the need for continued dynamic curation and engagement.

• Lee Garden Eight and the integrated pedestrian walkway system are set to open in Q4 2026, expected to expand the leasable portfolio by 30% and enhance connectivity.

• Continued focus on deleveraging, capital recycling, and business diversification, including Shanghai and healthcare investments.

• Confident in refinancing the HK$10 billion Lee Garden Eight project loan before 2027 maturity.