Yuexiu Real Estate Investment Trust (405) H1 2024 earnings summary

Executive summary

• Gross income for the six months ended 30 June 2024 was RMB1,034.1 million, down 2.5% year-over-year; net property income was RMB742.7 million, down 2.6% year-over-year.

• Net loss after tax before transactions with unitholders was RMB40.5 million, compared to a profit of RMB87.5 million in the prior year, mainly due to fair value losses on investment properties.

• Interim distribution per unit was HK$0.0405 (RMB0.0371), a 31.4% decrease year-over-year, with a total interim distribution of RMB185.2 million.

• Property portfolio valuation remained stable at RMB42.54 billion, with net assets attributable to unitholders at RMB15.49 billion.

Financial highlights

• Gross income: RMB1,034.1 million (down 2.5% year-over-year); net property income margin was 71.8%.

• Net loss after tax: RMB40.5 million (down from a profit of RMB87.5 million year-over-year).

• Distribution per unit: HK$0.0405 (down 31.4% year-over-year); distribution yield was 4.26% (annualized 8.52%).

• Net assets per unit: RMB3.10 (down from RMB3.18 at year-end 2023).

Outlook and guidance

• The macroeconomic environment remains challenging, with weak global growth, geopolitical tensions, and subdued domestic demand.

• The office market in key cities is expected to face continued pressure from new supply and tenant bargaining power, leading to further rent declines.

• Management will focus on asset upgrades, tenant mix optimization, proactive leasing, and refinancing to lower financing costs.

• Refinancing strategy will prioritize replacing foreign currency debt with lower-cost RMB financing.