EQS-News / 30/03/2020 / 22:29 UTC+8
[For immediate release]
30 March 2020, Hong Kong
Sun Hung Kai & Co. Announces 2019 Annual Results, Basic EPS Increased by 86%
Sun Hung Kai & Co. Limited (Stock Code: 86.HK) ("SHK & Co." or the
"Company", together with its subsidiaries, the "Group") announced its final
results for the year ended 31 December 2019: profit attributable to owners
of the Company for the year was HK$2,085.2 million (2018: HK$1,183.8
million),an increase of 76% year on year.
"At this time of year, we take a moment to look back and appreciate what we
achieved in a meaningful year for SHK & Co. as we celebrated the 50th
anniversary of our establishment in 1969. Our diverse yet complimentary
business portfolio made 2019 one of our strongest years and those results
show the strength of the Group's dual-engine growth model." said Mr. Lee
Seng Huang, the Group Executive Chairman. "We feel 2019's performance
further validates the strategic transformation we embarked on almost five
years ago."
The Group saw strong performance from several business segments, driven by
organic growth in the lending businesses as well as realized gains and a
marked improvement in Investment Management's portfolio value. These gains,
combined with improved capital efficiency through share repurchases last
year, helped basic earnings per share increase by 86% to HK104.4 cents. The
book value per share for the year increased by 7% to HK$10.2 and the Board
has declared a second interim dividend of HK14 cents per share, adding the
total dividend per share for 2019 to HK26 cents.
"As we all know, 2020 started with a global pandemic unlike anything we have
seen before. The effects are being felt here and around the world, causing
unprecedented economic stress and volatility." Mr. Lee added. "In the midst
of these ongoing challenges and uncertainties, I am proud of how quickly our
team at SHK & Co. continues to adapt, and to keep both safe and productive.
I believe that the strength of our team, financial position and longer-term
investment horizon puts us in a position to weather this storm." Mr. Lee
concluded.
The Group's Financing businesses remain the largest in terms of assets and
provide steady cash flow and organic growth, while Investment Management
focuses on higher return strategies across a broader range of sectors and
geographies. Looking forward, the Company plans to continue to expand the
Investment Management business by launching a Fund Management platform which
will manage external capital and bring additional assets and revenue. As the
Company continues to grow its offerings, the Investment Management business
is expected to be a driver of future growth.
2019 Final Results Summary
For the year ended 31 Dec 2019 31 Dec 2018 Change
Revenue (HK$ million) 4,216.8 4,175.7 +1%
Pre-tax profit (HK$ million) 2,743.4 1,831.3 +50%
Profit attributable to owners of 2,085.2 1,183.8 +76%
the Company
(HK$ million)
Book value per share (HK$) 10.2 9.5 +7%
Basic earnings per share (HK 104.4 56.2 +86%
cents)
Second Interim dividend (HK 14.0 14.0 -
cents)
Outlook
The outbreak of the coronavirus and its rapid advance around the globe has
disrupted businesses and markets in a way that no one has ever seen. The
effects of travel bans, national lockdowns, and investor panic has created
unprecedented market volatility. We are closely monitoring the situation and
the potential impact on all the Group's businesses and investments and will
continue to adjust our strategy to guide the Group through this turbulent
time. We believe our liquidity and longer-term investment horizon puts us in
a position to be patient and prudent as we navigate these turbulent markets.
Over the course of the year, we built out systems to allow our employees to
more easily work remotely, which helped us remain productive during the
coronavirus outbreak and will continue to add value once business
recommences.
The Group will continue its dual-engine model and aims to deliver strong
performance over the long term with sound governance and risk controls
through the various market conditions. We will also maintain diversified
funding sources and ample liquidity to provide staying power and enable our
business expansion.
Appendix: Business Segments Highlights
As part of its ongoing efforts to enhance public disclosure and in order to
better explain the business nature, the Company reclassified and renamed
certain assets across the business portfolio.
Financing Business
Consumer Finance
? Operated under United Asia Finance Limited ("UAF") to provide unsecured
individuals and business loans through its offline branches and online
platforms in Hong Kong and Mainland China
? On 27 June 2019, UAF completed the repurchase of 7.27% shareholding from
its minority shareholder which increased the Group's shareholding in UAF
from 58% to 63%.
? Loan book and loan origination reached a new high: the net loan balance
was HK$10,413.5 million (+7% YoY) and total loan origination was HK$17,021
million (+11% YoY).
? Contribution to pre-tax profit was HK$1,276.0 million (+6% YoY).
? Business operations were disrupted and impacted by coronavirus epidemic
in both markets and social unrest in Hong Kong. Management adopted a
conservative credit approach, is closely monitoring the situation and will
adjust strategy as the conditions develop.
Specialty Finance
? Formerly known as Private Credit
? Provides tailored financing solutions for corporates, investment firms
and high net worth individuals. All loans are secured or have guarantees
? Loan book shrank due to loan repayment and fewer new loans
? Pre-tax contribution was HK$64.8 million (-73% YoY)
? Conservative outlook for 2020 but potential to see opportunities against
a backdrop of uncertainty
Mortgage Loans
? Operated under Sun Hung Kai Credit Limited ("Sun Hung Kai Credit") and
provides mortgage loans in Hong Kong market.
? Reached scale and operating leverage: net loan balance was HK$3,626.9
million (-6% YoY) and loan to valuation level was lower than 65%.
? Low impairment losses and no bad debts as of end 2019
? Contributed a pre-tax profit of HK$121.4 million (+6% YoY)
? Focus on improving margins and efficiency
Investing Business
Investment Management
? Formerly known as Principal Investments
? Manages Group's investments in equity, credit and real estate assets
through public and private markets
? Leverages the Group's operating expertise, network and balance sheet to
seek out and invest in attractive risk-adjusted investment opportunities.
? Marked improvements in portfolio valuations. HK$13,129.7 million in
assets were invested across Public/Capital Markets (24%), Alternatives
(57%) and Real Assets (19%).
? The annual return on average value was 12.4% and after considering
internal funding and cost allocations, the segment contributed HK$1,083.2
million to profit before tax (+1,202% YoY)
? Increased liquidity of private equity portfolio with HK$746 million in
distributions received in 2019 and anticipated HK$1,248 million liquidity
in 2020, representing 16.7% of the Alternatives asset value.
? Will extend into Fund Management and launch new funds for managing both
internal and third-party capital in 2020
Strategic Investments
? Holds the Group's strategic interests in financial services sector
through investments in an associate (Everbright Sun Hung Kai Company
Limited, or "EBSHK") and a joint venture company (LSS Financial Leasing
(Shanghai) Limited, or "LSS Leasing").
? Segment's pre-tax contribution was HK$209.5 million (+3% YoY).
? EBSHK (30% owned) reported increases in both revenues and profits in
2019. At end of 2019, the carrying amount of the Group's 30% equity
interest in EBSHK together with fair value of the put right on the 30%
stake amounted to HK$2,363 million, representing 5.6% of the Group's total
assets and constituting a significant investment of the Group according to
the Listing Rule
? LSS Leasing (40% owned) delivered a steady performance during the year
even though facing an unfavorable industry environment. LSS Leasing is
evolving from a traditional car leasing business to a service and
financing solutions provider for ride hailing and goods delivery sectors.
About Sun Hung Kai & Co. Limited
Sun Hung Kai & Co. Limited (the "Company", together with its subsidiaries,
the "Group") is a financing and investing firm headquartered in Hong Kong.
Since its establishment in 1969, the Group has owned and operated
market-leading businesses in financial services. Building on its rich
heritage, experience and network, the Group aims to generate long-term
capital growth for its shareholders through a diverse, yet complementary,
financing and investment model. It is the major shareholder of leading
consumer finance firm United Asia Finance Limited, and a substantial
shareholder of Everbright Sun Hung Kai. Overall, the Group holds over HK$42
billion* in total assets.
For more information, please view our website at www.shkco.com [1].
*As at 31 December 2019
For enquiries, please contact:
Joseph Fuqua, Director of Investor Relations
+852 3748 2888
joseph.fuqua@shkco.com or investor.relations@shkco.com
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Document title: Sun Hung Kai & Co. Announces 2019 Annual Results, Basic EPS
Increased by 86%
30/03/2020 Dissemination of a Marketing Press Release, transmitted by EQS
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(END) Dow Jones Newswires
March 30, 2020 10:29 ET (14:29 GMT)
