Swire Pacific Limited

Reported first-half 2026 underlying profit rose 43% year on year to HKD 7.8 billion. Recurring underlying profit increased 48% to HKD 7.0 billion, with property up 37%, beverages up 5%, and aviation up 39%. Swire Coca-Cola’s recurring attributable profit was HKD 907 million, up 5%; China was HKD 727 million, up 24%; Vietnam and Cambodia were HKD 98 million, down 13%; Thailand and Laos were HKD 95 million, down 10%; Hong Kong was HKD 58 million, up 5%. EBITDA for Swire Coca-Cola increased 11%, and margin edged up from 12.8% to 12.9%. The interim dividend was raised 15% to HKD 1.50 per A share. On the balance sheet, debt was down 4%, gearing was 19.3%, weighted average cost of debt was 3.4%, and 75% of borrowings were fixed-rate. Forward commentary: management expects consumer sentiment improvement to continue into the second half, sees positive momentum across property portfolios, and said beverage margins should keep improving though raw material and logistics pressures remain elevated. They also guided to continued strong aviation performance, while noting ongoing investment across core businesses and a possible share buyback in addition to progressive dividends.

Guy Bradley framed the half as unusually strong, saying first-half recurring underlying profit was the highest the group has reported and attributing that to improving consumer sentiment across divisions. He emphasized that Swire is still investing at record levels, with the property plan nearly 70% committed and multiple projects moving ahead in Hong Kong, the Chinese Mainland and overseas. His tone was upbeat but measured, repeatedly saying the strength should continue barring anything untoward.

Martin Murray focused on the quality of earnings, cash generation and balance-sheet strength. He said strong underlying and recurring profit led to strong cash flow, reduced gearing and support for record investment and a progressive dividend; he cited gearing of 19.3%, weighted average cost of debt of 3.4%, debt down 4%, and 75% fixed-rate borrowings. He also noted refinancing in 2028-2029 is being pushed to 2031-2032, and that the group is considering share buybacks only after investment and dividends, not instead of them.

Analysts pressed management on the Cathay exchangeable bond, asking whether the company would likely avoid repayment given Cathay’s share price and whether a similar structure could be used for Swire Properties. Martin said the bond was issued opportunistically in June, remains flexible, and there has been no discussion of doing the same for Swire Properties. Another question focused on whether the group is entering a ‘harvest period’ as gearing falls; management said no, the strategy remains active investment in core businesses, especially property, with more than HKD 60 billion recycled already and no move into new non-core segments. Questions to Karen focused on Mainland China and beverage margins: she said volume growth is coming from channel shifts to e-commerce, immediate consumption, tourism and sports events, plus smart cooler deployment, while margin pressure from aluminum, oil and logistics should persist in the second half despite mitigation efforts.