Kerry Properties (683) H2 2024 earnings summary

Executive summary

• Combined revenue rose 18% year-over-year to HK$21.4 billion, driven by strong property sales in Hong Kong and steady investment property performance despite subdued markets in both Hong Kong and Mainland China.

• Profit attributable to shareholders dropped 75% to HK$808 million due to significant non-cash provisions, fair value losses, and conservative property revaluations, while underlying profit (excluding exceptional items) increased 25% to HK$3,973 million.

• Final dividend per share maintained at HK$0.95, with total annual dividend at HK$1.35, reflecting a stable payout policy.

• Hong Kong property market remained subdued with a 7% drop in prices and weak consumption; Mainland China faced low business and consumer confidence, impacting demand and rental activity.

Financial highlights

• Combined revenue increased 18% to HK$21.4 billion, mainly from a 33% rise in property sales revenue; development properties: HK$13.8 billion (+33%), investment properties and hotels: HK$7.5 billion (-2%).

• Gross margin declined to 32% (from 44% last year), reflecting a different product mix; Hong Kong margins remained higher than Mainland.

• Net debt rose to HK$48.4 billion from HK$41.3 billion, with gearing at 41.5% (up from 34.1%).

• Effective interest rate stable at 4.6%; average debt maturity at 2.6 years.

• Earnings per share (reported) fell 75% to HK$0.56, while underlying EPS rose 25% to HK$2.74.

Outlook and guidance

• Market conditions for office properties expected to worsen in 2025; company maintains a conservative approach and focus on deleveraging and stable dividends.

• Targeting reduction of gearing to mid-30% within two years as sales proceeds from new projects are realized.

• Positive long-term outlook for both Hong Kong and Mainland China due to structural growth, urban development, and emerging middle-class consumption, but short-term recovery in confidence remains uncertain.