Swire Properties (1972) H1 2024 earnings summary

Executive summary

• Underlying profit for H1 2024 was HK$3,857 million, down 1% year-on-year, mainly due to higher net finance charges and lower Hong Kong office rental income, partially offset by gains from asset disposals.

• Recurring underlying profit declined 8% to HK$3,570 million, reflecting lower office rental income and increased losses in property trading and hotels.

• The balance sheet remains strong with a gearing ratio of 13.3% and net debt at HK$37,796 million.

• A share buyback program of up to HK$1.5 billion was announced, and the interim dividend increased by 3% to HK$0.34 per share.

• The HK$100 billion investment plan is underway, with over 60% committed, focusing on Hong Kong, the Chinese Mainland, and Southeast Asia.

Financial highlights

• Revenue was flat at HK$7,279 million in H1 2024.

• Operating profit rose 12% to HK$3,217 million; reported profit dropped 19% to HK$1,796 million, impacted by fair value losses on investment properties.

• Attributable gross rental income decreased 3% year-on-year to HK$7,484 million.

• Net debt rose to HK$37,796 million; gearing ratio at 13.3%.

• Underlying earnings per share at HK$0.66, recurring underlying EPS at HK$0.61, both slightly down year-over-year.

Outlook and guidance

• Hong Kong office market expected to remain subdued in 2024 due to oversupply and weak demand, but premium assets outperform submarkets.

• Hong Kong retail market faces challenges from outbound travel and changing consumer behavior, but sales performance of malls expected to remain resilient.

• Chinese Mainland retail market normalizing after 2023 peak; demand for luxury retail space in Guangzhou and Chengdu remains strong.

• Residential market sentiment in Hong Kong remains soft but is expected to be resilient in the medium to long term.

• Hotel business outlook to improve as travel recovers, with focus on third-party management expansion.