Wharf Real Estate Investment Company (1997) H1 2024 earnings summary

Executive summary

• Underlying net profit rose 2% year-over-year to HK$3,123 million, but a HK$4.4 billion non-cash revaluation deficit on investment properties led to a group loss of HK$1,052 million attributable to equity shareholders.

• Revenue and operating profit were stable at HK$6,501 million and HK$4,915 million, respectively, amid a challenging post-pandemic recovery and global headwinds.

• Interim dividend of HK$0.64 per share declared, totaling HK$1,943 million, representing 65% of underlying net profit from Hong Kong investment properties and hotels.

• Net asset value per share was HK$61.8, 16% lower than five years ago.

Financial highlights

• Group revenue was HK$6,501 million, nearly unchanged year-over-year; operating profit down 1% to HK$4,915 million.

• Investment properties revenue up 2% to HK$5,542 million; hotel revenue up 7% to HK$748 million.

• Underlying net profit increased by 2% to HK$3,123 million; basic loss per share was HK$0.35 due to revaluation deficit.

• Net debt reduced by HK$1.2 billion to HK$35.1 billion, lowest since listing; gearing ratio improved to 18.3%.

• Shareholders’ equity decreased to HK$187.5 billion, or HK$61.76 per share.

Outlook and guidance

• Ongoing global economic slowdown and geopolitical tensions continue to impact Hong Kong’s economy.

• Retail and hotel sectors face headwinds from shifting consumption patterns, supply-demand imbalance, and weak demand.

• Management expects similar performance in the second half, barring unforeseen circumstances.

• Office rent correction expected to persist until business conditions improve.

• Retail rental reversion is expected to remain positive, but occupancy cost has increased due to rising rents and declining sales.