Sun Hung Kai Properties Limited

For the year ended 30 June 2025, underlying profit was about HK$21.9 billion, up 0.5% year on year, and reported profit was HK$19.3 billion, up 1.2%. Underlying EPS rose 0.5% to HK$7.54, while reported EPS rose 1.2% to HK$6.65. Property development profit increased 5.6% to around HK$8.3 billion; net rental income decreased 3.2% to around HK$18.4 billion; hotel operating profit was HK$615 million versus HK$650 million in FY2024. Net debt was HK$93.3 billion and net gearing was 15.1%, improved from 17.8% at end-December; interest coverage was around 6x, and net finance costs dropped 24% year on year. The Board recommended a final dividend of HK$2.80 per share; together with the interim dividend of HK$0.95, full-year dividend is HK$3.75 per share. For outlook, management did not give formal earnings guidance, but said it expects recurring income to keep rising as new projects such as IGC and other West Kowloon developments come on stream, and said FY2026 Hong Kong development sales target is HK$30 billion, partly because of consent timing uncertainties. On the Mainland, it said most of the about RMB 8 billion of contracted sales not yet recognized should be recognized in FY2026, and it expects more project launches over the next 10 months.

Raymond Kwok said the group delivered stable performance despite an uncertain global backdrop and emphasized that the company remains confident in the long-term prospects of Hong Kong and the Mainland. His tone was constructive on residential demand, recurring income growth, and the role of West Kowloon and Shanghai ITC as future growth drivers. He repeatedly stressed prudent financial discipline, asset turnover, and the willingness to invest only when opportunities are right.

Management highlighted a stronger balance sheet and lower funding costs: net debt was HK$93.3 billion, net gearing improved to 15.1%, interest coverage was around 6x, and net finance costs fell 24% year on year. The interest cost was said to have come down from 4.4% last year to 3.7% this year, with around 55% to 60% of borrowings fixed or linked to RMB. The group also noted a better debt maturity profile and said Moody’s upgraded the outlook to stable while affirming the A1 rating. On capital allocation, management said it is focused on paying down debt, keeping “dry powder,” buying residential land selectively, and maintaining a payout policy of about 50% of underlying profit; it does not plan share buybacks at present.

Analysts pressed on whether Hong Kong residential has bottomed, whether pricing would become more aggressive, and what FY2026 sales targets and launch plans look like. Management said rising rents, lower rates, and stronger stock-market sentiment support a bottoming process, but it still plans to price selectively, with room to lift prices on Sierra Sea Phase 2 and a FY2026 Hong Kong development sales target of HK$30 billion. On offices and West Kowloon, management said leasing inquiries are improving, occupancy at IFC/ICC remains about 92%, and IGC is expected to be handed over starting in early 2026, with pre-leasing momentum building. On Mainland retail and ITC, management said Shanghai consumption is improving, the mall has seen a sales recovery since June, and it is in discussions with tenants for the space where an anchor tenant left.