Main points of investment
2023H1 has stable dividend payout and strong anti-cyclical ability: 2023H1 achieved operating income of HK $5.237 billion, which was restricted by RMB depreciation and no property sales income during the period, down 1.23% from the same period last year; of which, revenue from the mainland was HK $3.554 billion, up 5.55% from the same period last year; revenue from Hong Kong was HK $1.683 billion, down 13.02% from the same period last year; operating profit was HK $3.824 billion, up 3.13% from the same period last year The net profit of home ownership was HK $2.225 billion, an increase of 0.36% over the same period last year. 2023H1 paid a dividend of HK $0.18 per share, unchanged from the same period last year, with a dividend rate of 36.73%, and the distribution remained stable.
High-end shopping malls in the mainland rebounded quickly after the epidemic, and RMB income from property leasing in the mainland maintained double-digit growth:
2023H1, the company's mainland property rental revenue reached 3.138 billion yuan, an increase of 13% over the same period last year, reaching an all-time high. Due to the devaluation of the RMB, the growth rate of the Hong Kong dollar was reduced to 6% compared with the same period last year. The revenue from shopping malls was 2.496 billion yuan, up 13% from the same period last year, mainly due to the rapid recovery of sales in high-end shopping malls. 2023H1's revenue from high-end shopping malls in the mainland increased by 16% compared with the same period last year, while that of sub-high-end shopping malls fell slightly by 3%. Thanks to the company's active marketing, strengthening the connection of loyal customers through membership programs and attracting new members, the overall tenant sales of 2023H1 mainland shopping malls increased by 42% compared with the same period last year. In the second half of 2023, the company will optimize the tenant portfolio of sub-high-end shopping malls in the mainland, and its rental income performance is expected to improve.
Hong Kong property rental income returned to positive growth: 2023H1 Hong Kong property portfolio income was HK $1.683 billion, an increase of 4% over the same period last year; among them, the retail market recovered more obviously, with retail portfolio income of HK $1.009 billion, an increase of 6% over the same period last year, benefiting from preferential promotional activities, the rebound in visitors to Hong Kong and the stimulation of Hong Kong government consumption vouchers In an environment of ample supply and weak demand, office revenue was HK $552 million, still up slightly by 1 per cent from a year earlier, while the average rental rate of Kanglan House rose, offsetting some of the drop in rental rates caused by the Yufeng renovation project. income from residential and service apartments was HK $122 million, down slightly by 1 per cent from a year earlier.
Cash abundance, financial security: 2023H1, the company's net debt ratio is 30.4%, an increase of 2.3% over the end of 2022; the average lending rate is 3.9%, up 0.4% from the end of 2022, mainly affected by RMB depreciation and interest rate increases. The company's financial security is high. As of 2023H1, the company's total interest-bearing liabilities are HK $47.16 billion, of which only 9% are due within one year. Cash on hand is HK $4.712 billion, with interest protection multiples of 4 times.
Our view: the company is rich in cash, high dividend, high-quality commercial assets in the mainland and Hong Kong, strong anti-cyclical ability and fast recovery, rental income to maintain steady growth, can contribute to healthy cash flow every year. As of August 7, the company's dividend yield for the past 12 months was 7.1%.
Risk tips: macroeconomic growth slows; liquidity tightens; RMB depreciates; rental rate is lower than expected; retail sales in shopping malls are lower than expected.