CK Asset Holdings Limited

Good afternoon. Welcome to CK Asset Holdings Limited 2023 interim results presentation and question and answer session. My name is Gerald. As usual, I will be doing the first part of the presentation and Mr. Simon Mann will do the second part, followed by a Q&A session when our chairman, Mr. Victor Lee, joins us together with our Deputy MD, Mr. Edmund Ip. So without further ado, let's begin. Revenue came to $36.5 billion in 2023 first half, down 23%. If you look at profit attributable to shareholders from continuing operations, it came to HK$10.331 billion. From an earnings per share perspective, it was HK$2.88 compared to HK$3 on an Apple-to-Apple basis from continuing operations from last year. So earnings per share was down 4%. Next page. Dividend per share, we were happy to announce a 43 cents interim dividend, which was flat or essentially the same as last year. Netbook value per share up 1.4% to $106.73. 77% of our revenue is recurrent in nature, and 69% of our profit contribution is deemed recurrent as well. 39% of contribution from Hong Kong, 16% from the mainland, and 45% from overseas, a pretty even and diversified spread. Property Sales Division Revenue was $8.25 billion, profit contribution $3.53 billion, down 56%, but with a very healthy margin of 42.8%. Major contribution from Laguna Verona Dongguan, $774 million. Alfa Turo, $638 million, and Hupen Mindy Shanghai, $391 million. We recorded pretty healthy margins across all markets that we are in, 38.6% from Hong Kong, 47.3% from the mainland and 48.2% contribution margin from overseas. A total of 1,113 units of residential units were recorded in the first half, booked and recorded in the first half of 2023. In terms of contracted sales not yet recognized, we still have $14.8 billion of which $4.4 billion would be scheduled for recognition in the second half of 2023. In terms of calendar year contracting sales, so far we have sold roughly close to $9 billion worth of units. Turning to property rental division. We recorded a pretty healthy or solid overall margin of 81%, $2.32 billion of contribution, down 5% from last year. Overall occupancy was over 90%. Overall occupancy from our Hong Kong investment property portfolio was over 90%, I should say. Major contribution from CKC1, $595 million. Duwampoa, $333 million, and Hutchison Logistics Center, $324 million. We have a total of 17.1 million square feet of investment properties under management. Increase in fair value of investment properties came to $2.7 billion. Most of it was from the CKC2 project as it is very much close to completion and no longer an early under construction project. We had to follow the accounting protocol and use the residual method to value the assets and derive a pretty healthy fair value increase for the first half. Hotels and service street operation. Happy to see a steady recovery in the first half led by a very good increase in occupancy and a small increase in room rates. 637 million of profit contribution, up 102% compared to last year and a decent 32.7% margin. As expected, most of the contribution was from Hong Kong. From 58% average hotel occupancy rate at the end of last year, or full year of 2022, in the first half, the average hotel occupancy went up to 75%, and the average service suites occupancy exceeded 90%. Property and Project Management. We have a total of 268 million square feet of completed projects under our management and our contribution, as steady as can be, $198 million, up 9%, with a healthy contribution margin of 43.6%. Turning to our top division, close to or just under 2,700 pubs, three divisions, managed pubs, pub company, tenanted pubs, pub partners, and our distribution and brewery division. Our operation was obviously challenged by the well-covered inflationary environment in the UK, plus a bit of bad weather in the first half. So contribution dropped by 32% to 586 million Hong Kong dollars. And the comparison was also skewed by some disposal gain we had recorded last year, as well as some bad debt being written back in last year's results. Infrastructure and utility asset operation. Here's a list of our JVs and their respective joint venture percentages. We recorded very solid contribution from our infrastructure and utility division. You can see the healthy margins across the board on the right-hand side and overall contribution margin of 34.1%. and a $4 billion contribution from all of these assets. Point to note is Northumbrian Water. We sold 9% stake, bringing our joint venture shareholding to 27% from 36% last year. Have we not done that, the overall contribution actually would record an increase instead of a 3% decrease. I'll turn over the rest of the presentation to Simon.

Thank you, Jerry. The group's interest in the listed World Estate Investment Trust remained more or less the same at the interim period end date. 33.7% in the rich and rich, which own and manage a portfolio of 11.8 million square feet of hotel and service properties, office and retail properties on the mainland. And a 26.3% interest in the fortune rich, which own and manage a portfolio of 3 million square feet of retail properties in Hong Kong and Singapore. and 18.1% interest in the prosperity REIT, which owns and manages a portfolio of 1.3 million square feet of office, retail and industrial properties in Hong Kong. Wilson REIT is an associate and we share a net rental profit of HK$74 million and receive cash distribution of HK$73 million during the period. For Fortune REIT and Procedural REIT, cash distribution received during the period amounted to 132 million were recognized as investment income. Fifth of the page. For the Group's Gearing and Maturity Profile, At the interim period end day, the total bank and other borrowings amounted to $149.4 billion. And $9.2 billion will be repayable within one year. $31 billion within two to five years. And $9.2 billion will be beyond five years. Taking into account the bank balance and deposit of $43.8 billion on hand, the group carried a net debt of $1.5 billion. Both the net debt to shareholders fund and the net debt to net total capital ratio were approximately 1.4%. And for credit ratings awarded by Moody's, it is eight to stable. and by Standard & Poor's Single Aid Stable. For the group's land bank, at the interim period end date, we have a total land bank of 129 million square feet. 76 million square feet were under development. 17 million square feet were held for rental. 9 million square feet were held for hotel and service suite operation. 27 million square feet was held for pub operation. But geographical location, 29 million square feet was in Hong Kong, 67 million square feet were on the mainland, and 30 million square feet overseas, mainly in the United Kingdom, and some in Singapore and Ireland. So pass it back to Gerald for questions and answers. Thank you, Simon.

So with the presentation being completed, we now turn to our Q&A session and Chairman Mr. Victor Lee has joined us and you can continue to submit your questions online I will try to group the questions together at the same time, read them out in order from more macro questions and then to the more technical questions. So the first question we have, core profit seems a bit better and in line with market expectations. Are you happy with the first half results and any overall comments you may have?