CK Asset Holdings Limited

Welcome to CK Asset Holdings Limited 2023 Annual Results Presentation. My name is Gerald. As usual, I will be going through our presentation quickly, followed by a Q&A session with our management team. So our annual results highlights revenue reached $71 billion in 2023, Profit attributable to shareholders, $17.34 billion. In per share terms, $4.86 compared to 5.41 from last year, a reduction of 10.2%. We declared a final dividend of 1.62, making full-year dividend $2.05. So in terms of dividend per share, it's a reduction of 10.1% compared to last year. Netbook value per share, up 3.2% to $108.72. Going to principal activity analysis. 70% of our profit contribution is now recurrent in nature versus 81% of our revenue being recurrent in nature. 45% of our contribution from Hong Kong, 11% from the mainland and 44% from overseas. quite a diversified mix. So turning to divisional performance, property sales. So a reduction or drop in divisional activity has led to a lower contribution in 2023. Revenue was $13.1 billion profit contribution, $4.5 billion and a drop of 57%. Margin was a healthy 34%. Major contribution from Laguna Verona, Dongguan, $1.2 billion. Gupei Mendi, Shanghai, $748 million. And El Futuro, $635 million. And 21 Board Road, $548 million. So despite the tough conditions, virtually all of our markets experienced very healthy margins, 35.7% in Hong Kong, 33.8% from the mainland, and 22% from overseas. We still have $19.4 billion of contracted sales not yet recognized. about $7 billion would be scheduled for recognition in 2024. In terms of contracted sales in calendar year 2023, it totaled about $18.2 billion, which was up from financial year 2022 or calendar year 2022, which was $12.2 billion. turning to property rental. $5.9 billion of revenue, $4.6 billion of profit contribution, roughly the same as 2022. Margin was a very healthy 78.4%. Major contribution from CKC1, $1.1 billion. Social health care rental properties, $751 million. The Whampoa or Whampoa Garden, $668 million. And Hutchinson Logistics Center, $625 million. A bit of an analysis for you. You can see there's a slight shift in revenue mix. Out of the $5.9 billion, $1.2 billion is from others, mainly an increase from our social and healthcare rental properties, giving us a more diversified mix of contribution. Although if you look at the geographical spread, the bulk of our contribution, $3.7 billion out of the $4.6 billion was from Hong Kong. It's now a total of 22 million square feet of investment properties that we manage and own. And we had a fair value increase in value of $3.2 billion, mostly coming from the almost completing CKC2 office property, as well as Hutchinson Logistics Center. hotels and service suites operation, margins has recovered back to pre-COVID level, almost 35%, and a big jump in profit contribution to $1.5 billion, which is still shy of pre-COVID, but this is a very encouraging development indeed. The bulk of our contribution, to no surprise, from Hong Kong, $1.65 billion. And average hotel occupancy in 2023 was 79%, and average service suites occupancy was 90%. We now have 267 million square feet under our management. in the property and project management division, providing us a very steady $359 million of contribution and almost 40% margin. Turning to our pub operation, again, three division managed pubs. We call it pub company, pub partners, which is tenanted pubs, and our own brewing and brands division. So if you look at the $997 million contribution, it is a 19% increase from 2022. But if you exclude fixed asset impairment and the disposal gain from 2022, Just look at profit contribution in its plainest form, then it's actually a slight reduction compared to 2022 because of the well talked about and well covered cost pressure that we experienced last year. Infrastructure and Utility Asset Operations. So these are the joint ventures we have. We added one in this category, the UK rail or rolling stock after the equity capitalization exercise that we did last year. So now it is classified as part of our joint venture portfolio. and a very healthy margin, indeed, 33% overall. It's very, very resilient and also very steady and resilient contribution, $7.77 billion in 2023, up 4% from 2022. So I'll turn the next two pages to my colleague, Mr. Simon Mann. Simon?

The Group's interest in listed REITs remains more or less the same at the end of the year. 34% in the 3-cent REIT, which owns and manages a portfolio of 11.8 million square feet of hotel and service suites, office and retail properties on the mainland, and 26.2% in the Fortune REIT, which own and manage a portfolio of 3 million square feet of retail properties in Hong Kong and Singapore. And 18.2% in the Prosperity REIT which own and manage a portfolio of 1.3 million square feet of office, retail and industrial properties in Hong Kong. Wootenry is an associate and the group share a net profit of $55 million for the year. taking into account its net rental for the year and the exchange loss realized on bank loan repayment during the year. And distribution received from fortune rate and prosperity rate amounted to 55 million in 2023 and were recognized as investment income. For the group's gearing and maturity profile, At the year-end date, the Groups Bank and other borrowings amounted to $54.9 billion, with $17.8 billion repayable within one year, $30.4 billion within two to five years, and $6.7 billion beyond five years. Taking into account the bank balance and deposit of $42.5 billion at the year-end date, the group carried a net debt of $12.4 billion. And it's 3.2% rate if you take the net debt to shareholders fund, and 3% if we take the net debt to the net total capital. And our credit rating from Moody's is A2 stable, and from Standard & Poor's is A stable. At the end, we have a land bank of 132 million square feet. 74 million square feet was under development, of which 7 million was in Hong Kong, 63 million square feet on the mainland, and 4 million square feet overseas. About 22 million square feet was held for rental income, including 30 million square feet in Hong Kong, 5 million sqft on the mainland and 4 million sqft overseas. 9 million sqft was held for hotel and service suite operations with 8 million sqft in Hong Kong and 1 million sqft on the mainland. About 27 million sqft was held for pub operations in the United Kingdom. So it adds up to a total of 130 million square feet at the end day. Gerald, I'll pass it back to you to talk about ESG.

Thanks, Simon. So in terms of progress on the ESG front, I'll just highlight a few things from the next two pages. In terms of decarbonization progress, we had submitted our SPTs in the early part of this year, and it's in a validation process. We also have obtained, in terms of green finance, two additional sustainability-linked loans. Turning to the next page, if you look at property development CKC, which is the building... we are in now, our headquarter. We have received the platinum rating as an existing building recently. In terms of pop operation, we have committed to net zero in 2040 and as well as aiming to procure 80% of renewable energy by 2025 and 100% by 2030. Our Hotel and Service Resort Division have also been a signatory to the Energy Saving Charter and the 4T Charter organized by the Environmental Bureau of the government. Even our 267 million square feet property manager, our City-based Goodwill and Hutchinson Property Management Company have all been accredited with the ISO 14001 certification, environmental management system certification. So these are what we've been doing so far, and there's a lot more to come on this front. I think that is all in terms of presentation. We will now open the floor for questions. I'm already seeing many questions from our online audience. I will consolidate some of your questions into one and hopefully don't miss out any of them. So we welcome the rest of our management team, our chairman, Mr. Victor Lee, our deputy MD, Mr. Edmund Ip, of course, Simon and myself. So again, thank you for your questions. The first question is, What are your thoughts on your profits or earnings per share dropping 18.7%? You have to remember, in 2022, we still have the aircraft leasing business, and we sold it off at the end of 2022.