Hysan Development Company (14) H2 2025 earnings summary

Executive summary

• Turnover grew by 1.6% year-over-year to HK$3,464 million, with underlying profit up 28.3% due to fair value gains from asset disposals, outperforming the market.

• All core segments—retail, office, and residential—registered positive turnover growth, with retail up 2.6%, office up 0.1%, and residential up 5.0% versus 2024.

• Major asset enhancement projects and luxury flagship openings drove double-digit tenant sales growth in H2 2025.

• Office occupancy improved from 90% to 94%, with strong tenant retention and new demand, mitigating negative rental reversions.

• HK$8 billion capital recycling program underway; 26% achieved with HK$2.1 billion collected and HK$1.6 billion contracted for 2026.

Financial highlights

• Revenue reached HK$3,464 million (+1.6% YoY); underlying profit HK$2,510 million (+28.3% YoY); recurring underlying profit HK$1,918 million (-1.9% YoY); reported profit HK$315 million.

• Shareholders’ fund at year-end was HK$65.5 billion, down 0.8% year-on-year; NAV per share HK$63.7, down 0.9%; DPS HK$1.08 (flat).

• Gross profit margin: 80.2% (vs. 81.1% in 2024); basic EPS: 31 HK cents (vs. 3 HK cents in 2024).

• Net gearing ratio: 32.4%; net interest coverage: 6.3x; effective interest rate: 3.7% (down from 4.3%).

• Cash and bank deposits: HK$3,831 million; liquidity covers attributable debts for the next two years.

Outlook and guidance

• Management expects continued challenges in 2026 but remains confident in navigating market changes, focusing on prudent financial management, capital recycling, and strategic growth.

• Lee Gardens rejuvenation, including Lee Garden Eight and new walkways, targets completion in 2H 2026, expected to boost retail traffic by over 20%.

• Office market recovery is expected to lag behind retail and residential, with demand anticipated to grow as the financial sector recovers.

• Retail and residential segments expected to benefit from tourism recovery and improved sentiment.

• Continued focus on business and geographic diversification, including expansion in Shanghai and healthcare investments.