The Wharf (Holdings) (4) H2 2024 earnings summary

Executive summary

• Revenue declined 36% year-over-year to HK$12,115 million, with operating profit down 18% and underlying net profit down 22%, mainly due to Mainland China development properties and impairment provisions.

• Net loss attributable to shareholders was HK$3,224 million, driven by significant investment property revaluation deficit and impairment provisions.

• Gearing improved to 5% and net debt reduced to HK$7.1 billion, with strong liquidity from listed investments.

• Dividend per share for 2024 maintained at HK$0.40.

• Over 60% of total assets are in Hong Kong and Mainland properties, with a strategic shift away from Mainland land replenishment since 2019.

Financial highlights

• Revenue: HK$12,115 million (-36% YoY); Operating Profit: HK$5,644 million (-18% YoY); Underlying Net Profit: HK$2,798 million (-22% YoY).

• Attributable investment property revaluation deficit after tax: HK$5,990 million; Loss attributable to equity shareholders: HK$3,224 million.

• Dividend per share: HK$0.40 (flat YoY); Underlying EPS: HK$0.40 (flat YoY).

• Net debt at HK$7.1 billion; gearing ratio at 5%.

• Average interest rate on debt reduced to 3.7% (from 4.7% in FY23); interest cover at 9.6x.

Outlook and guidance

• Management expects Hong Kong luxury residential to be the most interesting segment in the next quarters.

• No clear outperformer expected between Hong Kong and Mainland malls; both face similar challenges.

• Volatility anticipated due to trade tensions, geopolitical risks, and US Fed rate trajectory.

• Mainland policy effects expected to be gradual; consumer confidence rebuilding is a challenge.

• Focus remains on prudent financial management and core competencies.