Sun Hung Kai Properties Limited

For FY2025, underlying profit was about HK$21.9 billion, up 0.5% year on year. Reported profit was HK$19.3 billion, up 1.2% year on year. Underlying EPS rose 0.5% to HK$7.54, and reported EPS rose 1.2% to HK$6.65. Full-year dividend per share will be HK$3.75, including a final dividend of HK$2.80 and an interim dividend of HK$0.95. By segment, property development profit increased 5.6% to around HK$8.3 billion. Net rental income decreased 3.2% to around HK$18.4 billion, and hotel operating profit was HK$615 million versus HK$650 million in FY2024. Total operating profit was about HK$32.2 billion. Net debt was HK$93.3 billion, net gearing was 15.1% versus 17.8% at end-December, and interest coverage was around 6x versus 4.6x a year ago. Net finance costs dropped 24% year on year, and the group said its interest cost fell from 4.4% last year to 3.7% this year. Forward-looking, management said Hong Kong contracted sales target for FY2026 is HK$30 billion, reflecting some uncertainty around presale consent approvals. The group said around HK$35.6 billion of Hong Kong contracted sales and about RMB 8 billion of Mainland contracted sales remain unrecognized, most expected to be booked in FY2026. It also expects 3 ITC in Shanghai to be completed later this year and IGC in Hong Kong to hand over starting in early 2026.

The chairman said the group maintained stable performance despite an uncertain global backdrop and remains confident in the long-term prospects of Hong Kong and Mainland China. He emphasized high asset turnover in development, continued investment in recurring income assets, and prudent financial discipline. He also said recurring rental income should keep rising as new projects come on stream, while the group waits for the right opportunities to acquire land.

Management highlighted a stronger balance sheet and lower funding costs. Net debt fell to HK$93.3 billion, net gearing improved to 15.1%, interest coverage reached around 6x, and net finance costs dropped 24% year on year; the CFO also said interest cost declined from 4.4% to 3.7%. They noted that about 55% of total borrowings were either fixed rate or tied to RMB floating rates, and that the group has raised RMB funding to better match RMB assets and liabilities. They also pointed to Moody’s upgrading the outlook to stable from negative while affirming the A1 rating, and said dividend policy remains around 50% of underlying profit.

Analysts pressed management on whether Hong Kong residential prices had bottomed, how aggressive pricing would be on upcoming launches, and whether the government might add property-support measures such as easing stamp duty. Management said falling inventory, rising rents, low-rate expectations and strong stock-market sentiment are supporting a bottoming process, while also indicating they may have room to lift prices on Sierra Sea Phase 2. On capital allocation, the company said it will keep buying land only at the right opportunity, focus mainly on residential land, and retain financial flexibility rather than pursue buybacks. Questions also focused on office leasing, Shanghai ITC, student housing, C-REITs, Northern Metropolis, and Mainland residential strategy. Management said Hong Kong office demand is stabilizing with more inquiries and positive net take-up, Shanghai ITC Tower B is in the final construction stage with talks underway for replacement tenants, and the group is not considering C-REITs. On student accommodation, they said some hotel-to-student use conversions are possible but better-quality offices are unlikely to be suitable, and on Northern Metropolis they framed the area as a major long-term opportunity while the government leads the process.