Swire Properties (1972) H2 2023 earnings summary

Executive summary

• FY 2023 underlying profit rose 33% to HK$11,570M, mainly from One Island East disposal gains; recurring underlying profit increased 2% to HK$7,285M.

• Retail and hotel recovery supported results, while office demand remained subdued; almost 60% of the HK$100bn investment plan was committed.

• Full-year dividend per share rose 5% to HK$1.05, extending annual dividend growth to seven consecutive years.

Financial highlights

• Revenue was HK$14,670M, up 6% YoY; operating profit was HK$5,180M versus HK$9,024M in FY 2022.

• Reported profit was HK$2,637M, down 67%; underlying EPS rose 33% to HK$1.98 and recurring underlying EPS increased 2% to HK$1.25.

• Attributable gross rental income increased 4% to HK$15,205M; excluding Renminbi depreciation, growth was 27%, mainly reflecting the increased Taikoo Li Chengdu stake.

• Investment property valuation was HK$281,271M at Dec 2023, up 4%; valuation losses were HK$2,829M versus gains of HK$801M in FY 2022.

Outlook and guidance

• FY 2024 Hong Kong office market expected to remain subdued amid weak demand and increased availability; Grade-A demand may recover if financial markets improve and rates stabilise.

• Retail sales momentum expected to continue in the Chinese Mainland; Hong Kong retail footfall and tenant sales were improving despite economic, travel and market uncertainty.

• Chinese Mainland office rents are expected to decline and have yet to bottom; the Hong Kong residential trading outlook is expected to stabilise in 2024 and remain positive over the medium to long term.

• Hotel businesses in Hong Kong and the Chinese Mainland are expected to grow in 2024; U.S. hotel performance is expected to be stable.

• Targeting mid-single-digit annual dividend growth and ordinary dividend payout of approximately half of underlying profit over time.