China Net Finance August 6 (Intern Reporter Gan Chenghao) On August 5, Hutchison Real Estate (01997.HK) released its 2021 interim performance report.
report shows that in the first half of 2021, Hutchison Whampoa Real Estate Hong Kong retail sales resumed, but rental income is still under pressure, the economy is unclear and the new work culture weakens the demand for office buildings; strict cross-border controls are still being implemented, and hotel business is still losing money.
Source: Hutchison Whampoa Real Estate Performance Announcement
Increase in revenue but not increase profits Mainland projects have become the main reason for revenue growth
In the first half of 2021, Hutchison Whampoa Real Estate is still in a state of "increasing revenue but not increasing profits". The company's unaudited operating income increased by 10% to HK$7.485 billion, operating profit decreased by 11% to HK$4.428 billion, and basic net profit decreased by 15% to HK$3.272 billion.
Waterland Real Estate stated that the reason for the increase in revenue is the increase in the group's property development revenue. In the first half of 2021, Hutchison Real Estate Development Property Revenue was HK$1.402 billion, a 362.71% increase from HK$303 million in the same period in 2020.
It is worth noting that the increase in property revenue of Hutchison Whampoa Real Estate is mainly due to the confirmation of sales of listed subsidiary seaport enterprise (00051.HK). Haigang Enterprise semi-annual report shows that in the first half of 2021, some periods of Suzhou International Financial Center were completed and delivered to buyers, which helped the development of property revenue to HK$1.402 billion and the operating profit increased by HK$146 million.
This also means that whether Hutchison Whampoa Real Estate or Harbour Enterprise , the increase in development property revenue is due to the sales revenue of Suzhou Guojin Financial Center.
In addition, the reason why Hutchison Real Estate "does not increase profits" is mainly due to the weak investment property in the main business. In the first half of 2021, the revenue of this part of the business decreased by 10% to HK$5.483 billion, the operating profit decreased by 17% to HK$4.31 billion, and the net profit of investment properties decreased by 14% to HK$3.321 billion.
Waterland Real Estate 's hotel business is still in a loss state, with an operating loss of HK$208 million in the first half of 2021. Waterland Real Estate said that most of the current government relief plans including "employment protection" with huge funding have ended, and incoming passengers have disappeared, and the hotel is still losing money. Even though revenues have increased significantly from last year, they are still not enough to offset basic operating costs and the outlook is not yet clear.
In the first half of 2021, the group's profit attributable to shareholders of Hutchison Whampoa Real Estate also turned losses into profits, reaching HK$2.97 billion, and a loss of HK$4.454 billion in the same period in 2020.
Source: Waterland Real Estate Announcement
and turned losses into profits is the "fair value of investment properties". In the first half of 2020, this value decreased by HK$7.529 billion, and by the first half of 2021, it only decreased by HK$284 million.
abandons the mainland market. The performance has been sluggish in recent years
To a certain extent, Hutchison Real Estate 's sluggish performance is related to its business layout being too concentrated in Hong Kong.
In November 2017, Hutchison Whampoa Group (00004.HK) split out Hutchison Whampoa Real Estate and listed separately in Hong Kong. The split Hutchison Whampoa Real Estate is mainly engaged in property investment and operation, and its main income comes from the rent of investment properties. The main projects include Harbour City and Times Square. The former is one of the largest shopping malls in Hong Kong, attracting shopping customers and tourists; the latter is a hybrid development project that directly connects to the Causeway Bay MTR Station and has shopping malls and office properties.
At that time, Hutchison Whampoa Real Estate stated in the announcement that all properties in the mainland held by the affiliated listed company seaport enterprise are planned to be sold in the next few years.
Until March 5, 2018, Hutchison Real Estate held a performance meeting in Hong Kong. Chairman and Executive Director Wu Tianhai said that in the mainland, Hutchison Real Estate is currently mainly for sale in residential properties. Currently, there is a hotel in Changzhou and office buildings under construction in Suzhou that will be processed. After that, it will completely withdraw from the mainland market and have no plans to return to the mainland real estate market. In the future, the core of the business will continue to be placed in the Hong Kong market.
However, in the following years, Hutchison Real Estate 's performance was not ideal, and its revenue showed a continuous decline.Annual report data shows that in 2018, 2019 and 2020, the revenue of Hutchison Real Estate was HK$16.481 billion, HK$16.043 billion and HK$15.515 billion, respectively, down 21.16%, 2.66%, and 3.29%, respectively.
In addition, in terms of operating profit, the decline in Hutchison Real Estate has also continued to expand in the three years from 2018 to 2020, reaching 9.89%, 66.96%, and 179.20%, respectively. It is worth noting that in 2019, when the epidemic was not affected by the epidemic, the net profit of Hutchison Real Estate recorded 3.928 billion yuan, a year-on-year decline of 78.21%.
Data source: Hutchison Whampoa Real Estate annual report
Industry insiders analyzed that the development of the Hong Kong market has reached a certain level, the market is becoming saturated, and the space is too small. Hutchison Whampoa Real Estate abandons the mainland market and its business layout is too concentrated in the Hong Kong market, which is already quite risky. In addition, the impact of black swan events such as the epidemic is easy to encounter development shackles.
and financial institution UBS also released rating reports on Hutchison Real Estate twice within a week. On August 2, UBS released a rating report that reduced Hutchison Real Estate from "neutral" to "selling", with a target price cut of 13% from HK$46 to HK$40. On August 6, the profit forecast of , Hutchison Whampoa Real Estate, was lowered from 1% to 4% from 2021 to 2023, and the target price was slightly lowered from HK$40 to HK$38.3 accordingly.
UBS report stated that since it is expected that Hong Kong retail in China will not return to pre-epidemic levels in 2025, it will take time for passengers to recover, and the transformation of luxury retail in the mainland will also erode tourism consumption. The bank said it believes that high rental costs are currently unsustainable and will be offset by a moderate recovery in retail.
As of the close of August 6, Hutchison Real Estate was quoted at HK$38.35 per share, down 1.16%.
(Editor in charge: Wang Qingyu)
