Kerry Properties (683) H2 2023 earnings summary

Executive summary

• FY2023 revenue was HK$13,090m, down 10% YoY; shareholder profit rose 18% to HK$3,243m, while underlying profit fell 22% to HK$2,518m.

• Shareholder profit growth reflected a HK$725m fair value increase in investment properties; underlying profit excludes non-cash fair value changes and exceptional 2022 warehouse-disposal gains.

• Contracted sales rose 163% to HK$14,071m, led by residential launches in Shanghai, Hangzhou and Hong Kong; hotels recovered to close to 90% of 2019 activity levels.

Financial highlights

• Revenue declined to HK$13,090m from HK$14,590m; property sales fell 26% to HK$6,349m, rental and other revenue was HK$4,986m, and hotel revenue rose 66% to HK$1,755m.

• Gross profit was HK$6,721m; operating profit rose to HK$5,502m from HK$3,822m, while profit before tax increased to HK$6,859m from HK$5,168m.

• Net profit was HK$4,164m, including HK$3,243m attributable to shareholders; EPS increased 18% to HK$2.23.

• Investment and hotel property revenue in Hong Kong and the Mainland grew 14% to HK$7,711m; development property combined revenue rose 22% to HK$10,416m.

Outlook and guidance

• No significant improvement in the economic landscape was expected in 2024; a cautious approach would continue, prioritizing project delivery, asset optimization and deferral of unnecessary capex.

• Priority is to sell development projects while balancing sales pace and margins; rental assets will focus on tenant and shopper offerings, expense control and steady performance.

• Hong Kong’s removal of property cooling measures, expected interest-rate stabilization and further Mainland market-regulation easing were viewed as supports for sentiment and confidence.