Hysan Development Company (14) H1 2025 earnings summary

Executive summary

• Turnover increased by 2.2% year-over-year to HK$1,730 million for H1 2025, with recurring underlying profit up 1.2% to HK$1,031 million, demonstrating resilience in a challenging market.

• Retail, office, and residential segments all posted year-over-year growth, with residential turnover up 12.4% and occupancy rates improving to 94% (retail), 92% (office), and 70% (residential).

• Lee Gardens Precinct remains a vibrant commercial and cultural hub, with significant tenant sales and traffic growth, supported by ongoing rejuvenation and connectivity projects.

• Strategic focus on diversification, prudent financial management, and capital recycling underpins long-term growth, with a HK$8 billion program launched for asset sales and redeployment.

• Interim dividend maintained at HK$0.27 per share.

Financial highlights

• Group turnover grew by 2.2% year-on-year; recurring underlying profits up 1.2%; reported profit dropped to HK$75 million from HK$427 million due to a HK$964 million fair value loss on investment properties.

• Retail, office, and residential portfolio turnover increased by 2.1%, 0.8%, and 12.4% year-on-year, respectively.

• Retail tenant sales rose 4% year-on-year, with Q2 retail tenant sales up 8% and traffic up 19% year-on-year.

• Net asset value per share decreased by 1.2% to HK$63.5 as at 30 June 2025.

• Operating costs to turnover ratio increased to 25.8% (2024: 25.0%).

Outlook and guidance

• Management remains optimistic but cautious due to global economic uncertainties and market headwinds, with confidence in Hong Kong’s long-term prospects.

• Lee Garden Eight project is on track for 2026 completion, expected to expand leasable area by 30% and increase daily footfall by 20%.

• Continued investment in Lee Gardens and a diversified growth strategy to capitalize on emerging opportunities.

• Retail rental reversion predominantly positive in H1; office rental reversion remains negative but improved, with increased leasing activity.

• Focus on sustainable growth, prudent risk management, and capital discipline.