Wharf Real Estate Investment Company (1997) H2 2024 earnings summary

Executive summary

• Revenue declined by 3% year-over-year to HK$12,912 million amid global economic and geopolitical uncertainties, with Hong Kong investment properties contributing 81% of total revenue and declining by 1%.

• Underlying net profit rose 2% to HK$6,139 million, supported by non-core improvements and lower borrowing costs, but reported profit attributable to shareholders fell sharply to HK$891 million due to a significant investment property revaluation deficit.

• Net debt reduced by HK$2.1 billion to HK$34.2 billion, and gearing ratio improved to 17.8%, the lowest since listing.

• Net borrowing costs decreased by 10% year-on-year, with average interest cost at 5.6% and interest cover at 4.7 times.

• Retail and office segments faced rent pressure but maintained high occupancy, especially in prime locations.

Financial highlights

• Group revenue and operating profit both declined by 3% year-over-year; operating profit was HK$9,691 million.

• Underlying net profit: HK$6,139 million (+2%); reported net profit: HK$891 million (-81%).

• Dividend per share for 2024 is HK$1.24, representing 65% payout of core underlying net profit.

• Net debt at a record low, down by HK$17.8 billion since 2020.

• Investment property revaluation deficit: HK$5,621 million.

Outlook and guidance

• Full market recovery remains uncertain due to ongoing trade tensions, unfavorable interest rates, currency headwinds, and weak visitor spending.

• No optimism for retail improvement in the first half of 2025; second half remains unpredictable.

• Central government stimulus, local efforts, and infrastructure projects may help market recovery once cyclical factors improve.