HKBN (1310) H2 2024 earnings summary

Executive summary

• Revenue declined 9% year-over-year to HK$10,651 million, mainly due to weaker handset and product sales, while EBITDA rose 6% year-over-year (excluding handsets) and net profit turned positive at HK$10 million.

• Adjusted free cash flow decreased 19% year-over-year to HK$620 million, but cash and equivalents increased 20% year-over-year.

• Enterprise Solutions showed resilience, with revenue stable at HK$4,828 million and backlog up 15% to HK$4.8 billion, outperforming a 5% market decline in enterprise customers.

• Residential Solutions revenue declined 2% year-over-year, but ARPU increased 2% to HK$182 and broadband subscriptions rose 1% half-on-half.

• Ongoing digital transformation and cost optimization reduced opex by 13% year-over-year, improving opex/revenue ratio to 18.2%.

Financial highlights

• H2 EBITDA margin reached 27% (excluding handsets), up 12% year-over-year.

• Adjusted net profit decreased 2% year-over-year to HK$191 million.

• Capital expenditure reduced by 26% to HK$379 million.

• Net leverage ratio improved to 4.93x from 5.12x in FY23.

• Full-year dividend per share was 31.5 HK cents, with a final dividend of 16.5 cents per share proposed.

Outlook and guidance

• Management expects backlog conversion to revenue and EBITDA to accelerate, with full-year impact of recent initiatives expected in coming years.

• Focus remains on expanding product offerings, increasing human resources, and leveraging the GigaFast network advantage for growth.

• CapEx is expected to return to normal levels in FY25, with selective investment in strategic areas.

• Dividend policy will balance growth, loan repayment, and shareholder returns, targeting at least 75% payout of adjusted free cash flow.

• FY25 focus on operational efficiency, profitability, and capital structure optimization.