CTF Services Limited Sponsored ADR

FY2025 AOP increased 7% year on year to about HKD 4.5 billion; excluding Free Duty and Wai Kee, AOP was up 9% to HKD 4.5 billion. Adjusted EBITDA increased 1% to HKD 7.3 billion, and profit attributable to shareholders increased 4% to HKD 2.2 billion. The board approved a final ordinary dividend of HKD 0.35 per share; including the interim ordinary dividend of HKD 0.30 and the one-off interim special dividend of HKD 0.30, total dividend for the year was HKD 0.95 per share. Cash on hand was HKD 20.2 billion, undrawn facilities were HKD 9.6 billion, net debt was HKD 14.7 billion, net gearing was 37%, and net debt to adjusted EBITDA was 2x. Average borrowing cost fell from 4.7% in fiscal 2024 to 4.1% in fiscal 2025, helped by more RMB debt; RMB debt was 62% of total debt and fixed-rate debt was about 70%. On guidance, management said the ordinary dividend in absolute terms will not be lowered, but DPS may change after the 1-for-10 bonus issue; they also expect borrowing costs to keep coming down as rates ease, and they aim to refinance most of the debt due in the next 12 months before December 2025.

The CEO framed FY2025 as a stable year of portfolio redefinition rather than aggressive expansion. He emphasized acquisitions and disposals, the rebranding of the Insurance segment to Financial Services, the logistics rebrand to CTF Logistics, and the use of the Chow Tai Fook brand and network to build a broader wealth management platform. His tone was constructive and confident, repeatedly pointing to resilient cash flows, disciplined capital allocation, and a long-term focus on maximizing shareholder value.

The CFO highlighted a solid liquidity and balance-sheet position, citing HKD 20.2 billion of cash, HKD 9.6 billion of undrawn committed facilities, and close to HKD 30 billion of available liquidity. He said net debt was HKD 14.7 billion, gearing was 37%, and net debt to adjusted EBITDA was 2x, while average borrowing cost improved to 4.1% from 4.7% thanks to more RMB borrowing and lower HIBOR. He also noted the debt maturity profile, with about HKD 9.4 billion, or 27%, maturing within 12 months, and said most refinancing should be completed before December 2025. On capital allocation, he said the group has used convertible bonds and the newly announced HKD 2.2 billion exchangeable bond to restore free float and improve liquidity, and reiterated the target gearing range of 40% to 45% near to medium term.

Analysts pressed management on possible toll-road disposals, the effect of the shrinking concession runway on the road business, logistics occupancy recovery, construction strategy after adding Hsin Chong Aster, dividend policy after the 1-for-10 bonus issue, and the expected synergy between CTF Life, uSmart, and Blackhorn. Management said there is no immediate plan to sell the whole road portfolio, but selective disposals could happen if pricing is attractive; they also said they will not invest blindly to preserve road assets and will only expand or modify roads if returns justify it. For logistics, management said 85% occupancy at ATL should be achievable, but getting to 90%+ would depend on improved domestic consumption; for construction, they said Hsin Chong Aster strengthens competitive bidding, especially for design-and-build and M&E-heavy projects. On dividends, management said total dividend in absolute terms will not be lowered, but DPS may change after the bonus issue, and on wealth management they described the strategy as keeping policyholders within a broader in-house ecosystem rather than quantifying near-term accretion.