CK Asset Holdings Limited

Good afternoon. Welcome to the CK Asset Holdings Limited 2025 Annual Results Analyst Presentation. My name is Gerald. On my right are two of my fellow A-School members, Simon Mann and Yuxing Qiu. Our Chairman, Mr. Victor Lee, will join us shortly for the Q&A session after the presentation. So we'll quickly go into it. 2025 results highlights. Revenue came to 85.85 billion, up 19.9%. Profit before investment property revaluation, 11.96 billion, or $3.42, up 2.7%. We recorded a IP revaluation deficit of 1.11 billion. last year, or 32 cents, leading to a profit attributable to shareholders of $10.85 billion, or $3.10, down 20.3%. We declared a final dividend of $1.39, making full-year dividend $1.78, Dividend per share hence up 2.3% over last year. Net book value per share also has risen by 2.3% to $113.28. Turning to our principal activities. 76% of our revenue and 85% of our profit contribution are now recurrent in nature by geography 31% of contribution from Hong Kong 11% from the mainland and 58% from overseas making us a very different company compared to other property companies in Hong Kong looking at Divisional Performances Property Sales So we recorded much stronger sales recognition this year, last year, but margins were low due to provisions for properties for sale. Revenue came to $20.5 billion, up 105.3%, profit contribution after provisions. at $2.7 billion, up 24%. Overall margin post-provision was 13.4%. Major contribution came from three projects. The Greenwich Phase II, Beijing, $1.15 billion. The Coastline Phase I and II in Hong Kong, $1.1 billion. And Regency Garden Phase VB, from Shanghai, $957 million. If you look at the Hong Kong contribution margin, it was 4.2%, the mainland, 27.8%, and overseas, 11.6 billion, making the post-provision margin overall margin at 13.4%. The pre-provision overall margin was 24.9%. We still have $20.7 billion of contracted sales which we have not yet recognized, the bulk of which will be recognized in 2026. Turning to our property rental division. Performance from last year was was pretty resilient from this division. As you can see, revenue dropped by only 1.9%, just over six billion, and profit contribution dropped by 2.2%, came to 4.6 billion. And margin was pretty steady at 76.6%. Major contribution came from Cheung Kong Center, 945 million, Hutchinson Logistics Center, 640 million, and the Wampoa, 622 million. As you can see, overall revenue dropped by 1.9%, but it's not quite apple to apple because our social infrastructure income from Sweden and Germany were not recorded as part of social infrastructure income revenue here. They are actually recorded as part of our gain from financial instruments. and last year's results also included Shanghai Westgate development which no longer, the joint venture has ended this year. So if you take Shanghai Westgate out from last year's results and include our Swedish and German portfolio into this year's results, actually the overall revenue would have gone up by 2.7%. in terms of contribution, as you can see, is a small decrease of 2.2%. So the increase of social infrastructure property contribution actually have successfully offset the challenges we have faced in the Hong Kong and mainland markets. In total, we have 22.4 million square feet of investment properties and recorded a revaluation deficit of close to $1.1 billion. And it mostly came from three assets, 1881 commercial mall and CKC1 and CKC2. Hotel and service suite operation. Very solid contribution in a pretty competitive market. 4.6 billion of revenue, up 6%. Profit contribution, you see here, is up 0.4%. But last year, we actually had some written back provision. So if you take that out, we actually, profit contribution would have gone up by 8.1% compared to last year. So very, very solid. That good performance was largely because of the improvement in the hotel occupancy compared to 2024, from 82% to 90%. So as you can see, both our hotel room occupancy and our average service suite occupancy were roughly around 90% last year. Property and project management extremely steady, 910 million revenue, 367, largely the same compared to last year, and 40, a very healthy 40.3% contribution margin with over 248 million square feet under our management. So we have 2,500, roughly 2,500 pubs in the UK. 1,500 under pub company, what we call managed, directly managed, operated pubs, about 1,000 under pub partners division, what we call tenanted or lease or franchise pubs, and two breweries, one in England, one in Scotland. Revenue went up by 7.4% to $26.23 billion last year and operating profit before asset impairment went up by 9.1% to $1.9 billion. We recorded a $1.6 billion of asset impairment largely due to the well-publicized continued cost pressure in the UK and tough macro conditions. As a result, the profit contribution post-impairment came to $313 million, down 41.9%. These are our joint ventures together with our sister companies within the infrastructure and utility asset operations division. As you can see, their respective shareholding on the right. Very healthy 3.6% increase in profit contribution to $8.6 billion. Contribution margin was 31.4%. And welcome to our chairman. And two interesting points in terms of performance. Northumbrian Water, a healthy contribution margin of 32.1, a contribution of $1.05 billion, which is up 29% from last year due to very good price resets. as well as Dutch Enviro Energy, $119 million of contribution, up 61% from last year due to the full recovery from our energy from waste operation post the reconstruction or redevelopment of our plant. In January, we completed the disposal of Eversholt UK Rails and we will be able to book a gain of $670 million which will be recognized this year.

If I may, Ed, just a comment on pubs. Earlier, we keep calling it pub operation and sometimes our shareholder may misunderstand as if the main business is the operation of the pub but actually it's two businesses. One is the operation and one is property. We haven't forgotten that we're mainly a property company. So we own most of the shops. So the asset impairment is mainly on the property. Operation is growing. So one is a non-cash, one is a cash. And let's separate between operation and shops. So I think Simon is correct if I'm wrong. But I think the best way maybe in the future we refer to it, we put in a name sort of property or something like that. No, no, I'm not going to come up with a name. You should come up with a name. But something to reflect the fact that we're not renting the shops, that we're the owner of the shops.

So that's right. 90% of our properties are actually freehold or extremely long, 300 years or 900 years long leasehold.