The Group is principally engaged in the businesses of (i) property development, (ii) property investment and (iii) property and carpark management, and mainly focused on three major cities in Mainland China, namely Shenzhen, Guangzhou and Chongqing as well as in Hong Kong and Japan.
The Group's loss attributable to shareholders for the year ended 31-03-2025 amounted to HKD 675.3 million. Basic loss per share was HKD 0.9374. A dividend of HKD 0.03 per share was declared. Turnover amounted to HKD 1.01 billion, a decrease of 6.8% over the same period last year, gross profit margin down 1.5% to 52.0%. (Announcement Date: 26 Jun 2025)
The Group recorded revenues of HK$1,013 million (2024: HK$1,087 million), primarily derived from the property sales of the residential project in Guangzhou, The Riverside, and the remaining inventories in Nanhai, as well as rental income from investment properties in Hong Kong, Mainland China and Japan.
The Group successfully achieved operating profit amid the subdued property market and high interest cost environment, with core operating profit amounted to HK$12.7 million (2024: HK$132.1 million). During the year, the Mainland property market condition has improved slightly. Since our project“The Riverside”was launched to market for pre-sale, it received satisfactory responses given its prime location and features. Up to the date of this results announcement, total contracted sales of“The Riverside”reached HK$612 million.However, owing to the delay in obtaining the Certificate of Completion to late 2024, only a portion of the units sold were delivered to buyers before 31 March 2025 with the corresponding sales revenue of HK$399 million booked in this financial year. It is expected that the contracted but not yet recognised sales amounting to HK$213 million will be recognised in the following financial year 2025/2026.
In light of the decline in market value of the properties in Hong Kong and the Mainland, the Group recorded net revaluation losses on investment properties of HK$688.0 million (2024:HK$127.5 million) during the year. Yet, such unrealized revaluation losses are non-cash in nature and will not affect the overall financial position of the Group.
Taking into account the net revaluation deficit on investment properties, net loss attributable to shareholders was HK$675.3 million (2024: profit of HK$4.6 million). Basic loss per share was HK$0.9374 (2024: earnings per share of HK$0.0063). As at 31 March 2025, shareholders’equity was HK$10,527 million (2024: HK$11,060 million) and net assets per share attributable to shareholders stood at HK$14.61 (2024: HK$15.35).Gearing ratio of the Group increased slightly to 48.7% as at 31 March 2025 (2024: 46.4%) which lay in the safety range in the industry.
As we enter our sixth year of“survival”mode, we saw the first hits to our strong balance sheet through heavy revaluation losses. My previous warnings of continuous downward pressure on the economy and sentiments have come true. But the good news is that we may have reached the bottom. Nevertheless, this does not mean there is a V-shape recovery, instead I think we have stabilized at a level that we can maintain for the coming year.
Economic growth in China will keep up a healthy 5% trajectory and exports will continue to lead to a rising trade surplus with the rest of the world.
The Donald Trump initiated US China tariff war is unsettling international trade. Every country has had to contend with unpredictable and capricious tariff schedules. The level of risk has gone up, as evident with higher bond yields. US Fed have also halted their reduction of interest rates as the outlook of US economy is uncertain.
Hong Kong is our home. Despite US Fed rates not dropping as fast as anticipated, we saw the Hong Kong Inter Bank Rate (HIBOR) drop starting in April all the way down below 1%.The lower rates have given borrowers some breathing room for the first time in 2 years.
We also had better news in hospitality. The Hong Kong Airport saw passenger traffic recover to the pre-pandemic levels. With the opening of the third runway at the end of 2024, those numbers are expected to climb. Another potential bright spot is the student accommodation as supply remains low and higher numbers of Asian students are coming to Hong Kong. We also see opportunities from the HK Government’s Northern Metropolis project where it plans to create a new town with a residential population of 2.5 million and 650,000 jobs. Together with China’s National 14th Five-Year Plan which clearly positioned Hong Kong’s development as a key finance and technology hub, it will propel Hong Kong to the next phase of growth, or what I have referred to previously as Hong Kong 4.0. Our Group is repositioning to take advantage of a future where Hong Kong will be the financial hub for China’s great technology export boom.
Our Central Government is also better positioned to weather the trade storm. In addition to announcing measures to alleviate the impact of the trade war (such as lowering borrowing costs and increasing capital liquidity), there are also measures to restructure the economy to focus on EV, robotic, low altitude and AI driven high-technology and manufacturing.
Even though residential sales remained subdued, there are some bright spots in tier-1 cities like Shanghai, Guangzhou and Shenzhen. With the Central Government’s commitment to stabilizing the overall property market environment, we see healthier economic growth in the medium to long term. China remains the place to be for future economic growth.
As a real estate developer, we are looking for opportunities to help China urbanize from its current 65% to 80% of its population. We will look for opportunities that will cater to buyers in the 35-45 urban demographic looking to trade up to higher quality homes. And we will look for ways to service what I look forward to as the growing legions of technology companies. We will do this as we further reduce costs to match market conditions.
While I acknowledge and express regret for our Company’s diminished losses last financial year mainly brought by revaluation losses, I am still bullish for our medium- and long-term prospects. There are generational opportunities in this crisis. In the coming year, we will rationalize our portfolio and resource allocations to prepare for our next phase of growth. Our flagship Bauhinia Central Hotel will come back online, and we expect our Japanese properties to continue to outperform.
We faced a tough business environment for financial year 2024 and to better position the Company for next phase of growth, we started to onboard a new management team who are qualified to maintain our agility through the ongoing market volatility. And with many of those changes ongoing or in place, we have much to look forward to.
Source: Hon Kwok Land Inv (00160) Annual Results Announcement