新鸿基公司（0086.HK）2025年中期业绩发布投资者线上会议
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会议摘要
After the change in market sentiment, the company's investment management business brought positive returns through high-quality investment targets. The hedge fund conservative strategy achieved a return of 6.8%, and the real estate sector business was solid. Despite an increase in AUM in the fund management business, fee income decreased in the first half of the year, and the pre-tax loss was mainly due to the closure of the Australian real estate private credit strategy and team expansion. It is expected that future operating profits will significantly improve, demonstrating confidence in business transformation and long-term growth. In the first half of 2025, the company's total revenue was 2.8 billion Hong Kong dollars, a year-on-year increase of 43.5%, with pre-tax profit of 1.09 billion Hong Kong dollars. The credit, investment management, and fund management businesses all performed well, and asset management assets grew with external capital contributing 85%. In the second half of the year, the company will optimize capital operation efficiency, strengthen risk management, expand business opportunities, consolidate its leading position in alternative investment platforms, and continue to create long-term value for shareholders.
会议速览
Company Performance and Growth Strategy: Synergies of Credit, Investment Management, and Fund ManagementThe company management introduced the performance of the first half of 2025, emphasizing the stability of credit business, diversified returns of investment management, and the growth in the scale of fund management. Through strategic alliances to broaden the product range, strengthen the balance sheet, adhere to dividend policies and share buybacks, the company is committed to maximizing shareholder value.
The group's performance significantly improved in the first half of 2025, with investment business being the main driving force.In the first half of 2025, the group's performance significantly improved, with total revenue of 2.8 billion Hong Kong dollars, a year-on-year increase of 43.5%. Pre-tax profit increased from 307 million Hong Kong dollars to 1.09 billion Hong Kong dollars, mainly due to the outstanding performance of the investment business. Revenue from fee and interest-related businesses was 1.7 billion Hong Kong dollars, investment business revenue was 1 billion Hong Kong dollars, and corporate segment revenue was 39 million Hong Kong dollars. The board of directors announced a mid-year dividend of 12 Hong Kong dollars per share. The group has adjusted its financial reporting and management discussion and analysis methods to improve capital efficiency, reducing the net debt ratio to 29.6% and increasing the annualized return on equity to 8.2%.
Strong growth in investment management business, continued optimization of net debt ratio.Total assets of the investment management business grew by 4.2% year-on-year, with pre-tax profit reaching HK$786 million benefiting from the increased valuation of IPO projects. Net debt decreased, resulting in a net debt ratio of 29.6%. The balance sheet is stable, with strong cash reserves and a large investment asset base.
Analysis of Investment Portfolio Performance in the First Half of 2024 and Outlook for the Second Half of the YearIn the first half of 2024, the overall return on the investment portfolio increased from 0.4% to 6.4%, with outstanding performances in corporate holdings and private equity, achieving returns of 22.3% and 6.8% respectively. Real estate investments incurred a loss of -2.9% due to market adjustments, but European hotel investments performed well. Hedge funds and special opportunity investment strategies remained stable, with returns of 6.8% and 4.5% respectively. In the second half of the year, the company plans to continue optimizing the investment portfolio, strengthening risk management, seizing market opportunities, especially in the fields of artificial intelligence, energy, and distressed assets, while adjusting real estate investment strategies, focusing on downside protection.
Steady development of fund management business: Connecting general partners with limited partners, creating value together.As the core of the fund management business, New Hope Capital Panos platform connects general partners and limited partners, providing seed funding or growth capital for emerging fund managers, and also serving as a funding channel for mature fund management institutions in the Asian market. As of the end of June this year, the asset management scale reached $2.6 billion, with fund partner relationships contributing $1.9 billion, family office solutions and proprietary funds contributing $260 million. In the first half of the year, there was a net cash inflow of $430 million and a market performance of $155 million, with the proportion of external capital contribution increasing to 85%. Despite a slight loss in fund management business in the first half of the year, the future prospects are promising with the platform construction and team expansion.
Family office solution: deep collaboration between alternative investment platforms and strategic alliances.Discussed family office solutions, namely alternative investment platforms, aimed at providing carefully selected investment opportunities for external clients such as family offices and ultra-high net worth individuals, covering private equity, special opportunity investments, etc. Emphasized four core advantages: access to unique investment opportunities through a wide network of resources, ensuring alignment of interests through proprietary capital, deep professional expertise to become long-term partners, institutional-level investment controls to strengthen performance and risk management. Additionally, mentioned strategic alliances with mobilia capital, gm, and sam, developing customized wealth solutions by leveraging respective strengths, deepening cooperation and utilizing mature distribution networks, as well as progress in redeploying Australian real estate private credit capital and strategies.
Asian United Financial: Robust Growth in Credit Business, Strong Performance in Hong Kong MarketAsian United Finance has shown strong performance in its credit business, with the outstanding balance of unsecured loans continuing to lead the industry. In the first half of the year, loan balance grew by 3.6% compared to the same period last year, while income increased by 2%, and cost optimization had a significant impact. Total loan amount in the Hong Kong business increased, profitability improved, and transaction volume in Sim credit card business surged by 60%. In the mainland market, a conservative strategy was adopted with a 8.2% increase in loan balance compared to the previous year, with the non-performing loan ratio remaining at a low level. With a tightening regulatory environment, the company is actively responding to ensure sustainable business development.
New World Development exercises caution in mortgage lending operations, with a pre-tax profit of 9.5 million Hong Kong dollars in the first half of the year.New World Home Loan Limited has been operating mortgage loan businesses in Hong Kong since 2015. Faced with the continuous decline in residential property prices, the company has maintained a cautious approach in granting new loans and focused on managing its existing loan portfolio. The total outstanding balance of loans in the first half of the year was HK$1.8 billion, a decrease of 22% year-on-year. Income decreased to HK$99 million, with a loan return rate of 9.9%. The company was appointed as the service provider for a US$70 million residential mortgage loan portfolio, with service fee income of HK$1.6 million. Operating costs decreased by 3%-13% to HK$22 million, while financing costs decreased significantly by 58% to HK$17 million. Due to the economic slowdown and property valuation decline, the company made a provision for impairment losses of HK$50 million in the first half of the year, but actively worked to recover the impairment losses. Pre-tax profit in the first half of the year was HK$9.5 million, with the cost-to-income ratio within the target range.
Strengthening risk management and ESG practices, group's strategic outlook for the second half of the year.In the first half of the year, the group strengthened risk management, improved ESG ratings, actively participated in community activities, and demonstrated social responsibility. In the second half of the year, facing global uncertainties, the group will optimize capital operations, strengthen credit and investment management, deepen digital transformation, expand asset management scale, consolidate the position of alternative investment platforms, and continue to create shareholder value.
Factors driving performance and future prospects of investment management business in the first half of the year.The performance of the investment management business in the first half of the year has significantly improved, mainly benefiting from the successful private equity IPO projects, the selection of high-quality targets, and the improvement of market conditions. In the future, as long as the underlying assets are good, it is expected to continue to show positive performance.
Analysis of growth in assets under management and decrease in fee revenue, and profit expectations.The discussion focused on the reasons for the growth of Fund Management business AUM, including contributions from fund partnerships and market performance. At the same time, the reasons for the decrease in fee income were analyzed, such as the closure of the in-house fund MCIP and unrealized performance fees. The loss mainly stems from the decrease in income and the increase in operating expenses due to team expansion. Despite the short-term loss, the high operating leverage of the business model indicates significant profit contribution after future scaling up.
要点回答
Q：At today's meeting, Xue Li will share the company's performance in the first half of 2025 and outlook for the second half, as well as development plans. Can you first summarize the company's core business and operating sectors?
A：The company's core business mainly revolves around three main areas, including credit, investment management, and fund management. The credit business is conducted through Asia United Financial and New Horizons Credit, providing stable cash flow; the investment management business offers unique investment opportunities with strong professional knowledge and institutional-level regulatory oversight; the fund management business holds comprehensive regulatory licenses and explores diversified strategies and new sources of income through fund partnerships, proprietary fund family office solutions, and strategic alliances.
Q：What are the core strengths and unique features of the company?
A：The core strength and uniqueness of the company lies in its very robust business model, unique investment access, and alignment of interests with customers and investors. We have strong corporate governance levels, high information transparency, and a risk management culture. Complementary business lines support the profitability and long-term success of the entire group, while also providing access to high-quality investment opportunities and achieving good investment returns. We base our investments on the balance sheet and invest together with customers to ensure alignment of interests with them.
Q：How can the company's risk management culture help to address uncertainty and maintain long-term competitiveness?
A：We adhere to the business philosophy of honesty, responsibility, and transparency, establish a mature risk management culture to deal with market fluctuations and uncertainties, and maintain long-term competitiveness. Through continuous promotion of business growth and enhancement of shareholder value, the effectiveness of this risk management culture is reflected in stable returns generated by consumer finance business, prudent loan issuance strategies of credit business, and diversified investment portfolios and global investment capabilities of investment management business.
Q：What are the changes in the financial report? What adjustments have been made to the management discussion and analysis section?
A：Starting from this period, the company will reclassify the net income from financial assets and liabilities measured at fair value with changes in fair value recognized in profit or loss, as well as dividends from listed and unlisted investments, as net investment income. In addition, the group's management and support departments will no longer charge internal funding costs to the investment management segment. Capital funding costs will be allocated based on the average asset size of the two segments. This adjustment will not affect the overall performance of the group, but it will ensure consistency in the accounting treatment of shareholder equity across different business segments. The management discussion and analysis section will categorize businesses into three main categories: fee and interest-related businesses (credit and fund management), investment businesses, and corporate segments (group management and support). Furthermore, a more detailed breakdown of operating costs for each business segment will be provided, along with the disclosure of the cost-to-income ratio for fee and interest-related businesses, to better evaluate operational efficiency.
Q：How is the business performance in the first half of the year?
A：In the first half of the year, total revenue was HK$2.8 billion, up 43.5% year-on-year. Expenses and interest-related businesses contributed HK$1.7 billion, investment businesses recorded HK$1 billion, and corporate contributions amounted to HK$39 million. Pre-tax profit rebounded from HK$307 million in the first half of 2024 to HK$1.09 billion in the first half of this year, mainly due to significant improvement in investment management business. Profit attributable to shareholders was HK$887 million, more than ten times higher than last year, and after deducting non-recurring items, adjusted shareholder profit was HK$928 million.
Q：In terms of balance sheet and capital structure, what is our current situation?
A：As of the end of June, our balance sheet remains healthy, with total assets of HK$37.7 billion. 26% of total borrowings are in the form of fixed-rate notes, while 74% are floating-rate bank and other borrowings. In the first half of this year, we repurchased USD 12.4 million in medium-term notes, resulting in a decrease in net debt to HK$6.5 billion and a further reduction in the net debt ratio to 29.6%.
Q：What is the specific performance of investment management business?
A：The total assets of the investment management business increased by 4.2% year-on-year, reaching 16.2 billion Hong Kong dollars by the end of June. Alternative investments, real estate, and public markets accounted for 75%, 14%, and 11% respectively. The growth of individual assets was mainly driven by the increase in valuation of different asset classes. The total investment income during the period increased significantly to 998 million Hong Kong dollars, with private equity contributing the most at 583 million Hong Kong dollars, benefiting from the valuation increase of IPO projects. After deducting financing and operating costs, the investment management business recorded a pre-tax profit of 786 million Hong Kong dollars, showing an improvement from a loss of 148 million Hong Kong dollars in the first half of last year.
Q：What are the investments and synergies in terms of technological infrastructure and investment teams?
A：We continue to strengthen our technical infrastructure and actively use AI tools to enhance operational efficiency. At the same time, we are increasing our investment in the investment team and continuously improving the risk management framework. The synergies between investment management business and fund management and credit business are increasingly enhancing, consolidating our market position in alternative investments.
Q：The overall return rate has improved from 0.4% in the first half of 2024 to 6.4% in the first half of this year, how did specific asset categories perform?
A：Overall returns have improved significantly, with positive returns for all asset classes except real estate. Equity holdings performed strongly, recording a six-month return of 22.3%. Alternative investments generated an overall return of 6.6%, with private equity and hedge funds recording six-month returns of 6.8% each. Special opportunity investments and structural credit had a positive return of 4.5%, while real estate had a return of -2.9%, mainly due to adjustments in the valuation of Hong Kong real estate assets and portfolio optimization.
Q：How does the investment portfolio perform in terms of holding shares in enterprises and private equity?
A：The company's equity investment portfolio recorded a return of 22.3%, mainly benefiting from investments in Chinese assets, especially strategic holdings in financial technology, large internet platforms, and new consumer enterprises. In the US, focusing on artificial intelligence infrastructure development and energy investment opportunities arising from geopolitical tensions also yielded positive returns. In terms of private equity, the largest project generated a return of 6.8%, with two direct and follow-up projects listing in the first half of the year, seizing the opportunity for valuation growth and driving future returns realization.
Q：How is the performance of the hedge fund's investment portfolio?
A：The hedge fund investment portfolio recorded a 6.8% profit in the first half of 2025, mainly benefiting from market neutral arbitrage, long/short equity, and event-driven strategies. Starting the new year with a conservative risk exposure, the fund achieved steady returns. The selection and allocation of fund managers is crucial for good investment returns, and funds with higher allocations all achieved positive returns in the first half of the year.
Q：How is the performance of special opportunity investments and structured credit strategies?
A：Special opportunity investments and structured credit strategies have achieved a 4.5% positive return in the first half of the year, mainly investing in distressed or mispriced assets, expanding our presence in Western Europe, North America, and Asia. Among them, common investments in projects in the tourism industry during the epidemic have benefited from the return to normal international tourism after the epidemic, bringing in returns for the period.
Q：How is the situation of the real estate investment portfolio?
A：The real estate investment portfolio suffered a loss of 2.9% in the first half of this year, mainly due to the impact of the market conditions of some office assets in Hong Kong. Valuation adjustments were made and the investment portfolio was continuously optimized to recoup capital. In the first half of the year, we partially sold the European real estate platform, resulting in a net loss. However, other hotel investments in Europe performed well, benefiting from booming tourism demand.
Q：How is the development of the fund management business?
A：The fund management business model is stable, serving as a platform that connects general partners, limited partners, and itself. It provides seed funding or growth capital support to emerging fund managers, while also expanding investment opportunities for mature fund management institutions and providing capital channels and strategic value-added support to investors.
Q：How does Sun Hung Kai Capital Panos platform create value through cooperation with customers?
A：Through collaboration with clients, especially based on a highly aligned sharing mechanism, New Horizons Capital Panos platform provides limited partners with professional investment team support and exclusive investment opportunities. Within a family office framework, the platform serves as an extension of the client's investment team, sharing its professional skills, investment capabilities, investment channels, and corporate governance experience. The core value of the platform lies in connecting limited partners with general partners, driving the growth of fund managers, creating value for investors, and enhancing its own business strength.
Q：What is the scale of asset management of Sun Hung Kai, and what are the driving factors for growth?
A：As of the end of June this year, New Horizons' total assets under management reached HK$26 billion, with the asset management scale of fund partner relationships accounting for US$1.9 billion. The growth was primarily driven by net cash inflows (US$430 million) and market performance (US$155 million). In addition, the proportion of external capital contributions has increased to 85%, reflecting market recognition of New Horizons' strategy, products, and alternative investment platform capabilities.
Q：How is the composition of Sun Hung Kai's own capital and external capital, and what are the financial performance characteristics? What are the performance and challenges in credit business?
A：By the end of June, the proportion of external capital contribution had significantly increased to 85%, while the proportion of self-owned funds correspondingly decreased. The fee management fee income decreased by 0.6% year on year, while operating expenses increased by 47% to 23 million Hong Kong dollars due to team expansion and platform construction, resulting in a small loss of 5 million Hong Kong dollars in the fund management business in the first half of this year. Credit business is a traditional strength of New Horizons, with consumer finance operations operated by Asia United Financial. Since 2017, it has consistently ranked first in outstanding unsecured loans in Hong Kong, and has maintained a position in the top five among all loan institutions. Despite facing challenges, Asia United Financial as a whole has shown strong pre-tax contributions, with profitability and loan volume in the Hong Kong business both increasing. The total outstanding loan balance increased by 3.6% year on year to 11.3 billion Hong Kong dollars. At the same time, by continuously optimizing the cost structure to improve operational efficiency, it maintains stable loan return rates and cost-to-income ratios.
Q：What are the target customers, characteristics, and advantages of Family Office Solutions (FOS)?
A：FOS primarily serves family offices and ultra-high net worth individuals both domestically and internationally. In line with their investment philosophy, FOS provides carefully selected opportunities such as private equity, special situation investments, structured credit, hedge funds, and co-investments. Its four core strengths include access to opportunities, alignment of interests, professional expertise, and corporate governance. By leveraging a wide network of resources to access unique investment opportunities and investing its own capital to ensure alignment with clients' interests, FOS can be a long-term partner for clients. With rich professional experience and practices, FOS can strengthen investment performance and enhance risk management and operational efficiency through institutional-level investment governance and infrastructure.
Q：How is the strategic alliance and business progress of Sun Hung Kai?
A：In the first half of this year, New World Development established a strategic alliance with Mobilia Capital, leveraging the strengths of both parties to build a powerful platform for accessing high-quality sovereign wealth funds and joint investment opportunities. At the same time, we have also deepened our cooperation with other partners such as GM and Sam, as well as the Australian fund manager One Word, to optimize the capital allocation of real estate private credit strategies.
Q：The Hong Kong government released a consultation paper on the regulation of licensed money lenders on June 23, proposing to strengthen the regulation in this area. What specific measures are proposed? What is the company's loan business strategy in the mainland market?
A：The Hong Kong government's proposed strengthened regulatory measures for licensed moneylenders mainly include several key areas: implementing stricter supervision of unsecured personal loans, enhancing protection for loan consultants, and improving the assessment mechanism for borrowers' repayment capacity. These enhanced measures aim to ensure that lending institutions effectively manage credit risks and promote the sustainable and healthy development of the entire industry. In the mainland market, companies are adopting a relatively conservative strategy, given the uncertainty of the market and economic conditions, we strive to manage risk exposure. As of the end of June, the total outstanding loan balance increased by 8.2% year-on-year, reaching 2.1 billion Hong Kong dollars. We continue to focus on secured loan business to generate stable returns. The non-performing loan ratio remained at an extremely low level of 0.8% in the first half of the year, coupled with stringent cost control, the mainland business contributed positively to the group's profit.
Q：How is the mortgage loan business performance of Sun Hung Kai Credit Limited?
A：Since its operation in Hong Kong in 2015, Sun Hung Kai Credit Limited has been cautious in issuing new loans in the face of declining residential property prices in the Hong Kong market in recent years. At the same time, it actively manages and expands its mortgage loan services business. The total balance of loans is HK$1.8 billion, a decrease of 22% year-on-year, with mortgage loans accounting for over 90%. Due to the reduction in loan size, the income for the period decreased to HK$99 million, but the loan return rate remained at 9.9%.
Q：How did Sun Hung Kai Credit perform as a residential mortgage loan portfolio service provider in the first half of this year?
A：New World Development Credit was appointed as the service provider for a $70 million residential mortgage loan portfolio in the first half of this year, with service fee revenue of HK$1.6 million. Operating costs decreased by 3% year-on-year to HK$22 million, mainly due to a centralized operating model and streamlined marketing expenses. The cost-to-income ratio remained within the set target range at 22.4%.
Q：What is the financing cost and impairment provision situation of New World Development's credit?
A：The financing cost of New World Development's loans decreased significantly by 58% to 17 million Hong Kong dollars compared to the same period last year, mainly due to reduced borrowing and a decrease in Hybrid. In the first half of the year, the economic slowdown led to a decline in the credit status of borrowers and a decrease in the valuation of loan properties, resulting in an impairment provision of 50 million Hong Kong dollars. However, the company actively managed its investment portfolio and made efforts to recover this loss. In conclusion, New World Development's pre-tax profit contribution for the first half of the year was 9.5 million Hong Kong dollars.
Q：What are the latest developments of Sun Hung Kai Credit in risk management, ESG performance and future outlook?
A：In the first half of this year, New Horizons Credit has continued to strengthen risk management by reviewing and enhancing existing control measures, enhancing risk identification, assessment and management capabilities, and effectively reducing overall risk exposure. At the same time, ESG ratings have significantly improved, and environmental performance has also improved. In the second half of the year, in the face of increasing global uncertainties and geopolitical tensions arising from ongoing trade negotiations, the group will maintain a cautious and optimistic attitude, prioritizing capital operation efficiency, strict risk management, and improving operational efficiency. In terms of credit business, the company will expand its products and services, optimize loan portfolio management, and improve efficiency and risk assessment accuracy through digital investment.
Q：What are the main drivers of the good returns achieved by the investment management business in the first half of the year? Does the company believe that this performance is sustainable?
A：Thank you for the investors' questions. In the first half of the year, the entire investment management business achieved comprehensive positive returns, with significant improvements in investment performance across various asset classes compared to the same period last year. The highlight of the private equity section was the successful IPOs of two projects, namely Jeffson Capital listing on the Nasdaq and Saint Bella in the domestic market. As early investors, these two IPO projects not only boosted asset value but also laid favorable conditions for future gradual exits and realization of investment returns. Therefore, the successful IPOs of these private equity projects are one of the key factors driving the company's investment management business to perform well in the first half of the year. The company believes that, despite facing many challenges in the complex and volatile global economic environment, by strengthening risk management, optimizing capital operating efficiency, and prudently seizing investment opportunities, it is expected to continue to maintain stable business development and profitability.
Q：Can you share the investment return situation and main driving factors in the first half of this year in the public market?
A：In the first half of this year, our public market investments achieved a six-month investment return of 22.3%. The main driving factors behind this outstanding performance are our rigorous investment process and the selection of high-quality companies. We focus on companies with operational resilience, stable cash flow, and solid underlying assets, which can remain stable even in market sentiment headwinds and generate positive investment returns when market sentiment shifts. In addition, special opportunity investments and structured credit businesses achieved a 4.5% investment return in the first half of this year, benefiting from our in-depth analysis of value misaligned assets and continuous monitoring of project reversals and business improvements.
Q：During the epidemic, what highlights have you shown in becoming a leader in the tourism industry market?
A：During the pandemic, we invested in the market leader of the tourism industry in North America. After the pandemic, as travel gradually resumes, its performance and valuation have significantly improved. Additionally, some structured credit transactions provide a large amount of interest income through bond forms, which is very positive for the entire sector.
Q：How did the hedge fund business perform in the first half of the year? What are the main strategies?
A：After adjusting the hedge fund business, the overall position is more conservative, with market neutral strategies and other defensive strategies accounting for the largest proportion. Therefore, a return of 6.8% was achieved in the first half of this year, and the entire investment management sector has basically been improved.
Q：How is the real estate sector performing in the current economic cycle?
A：In the current real estate cycle in Hong Kong, we are inevitably facing some devaluation (on paper or market adjustment), but thanks to a solid asset base, especially in the Admiralty area, despite low vacancy rates, rental income continues to contribute, leading to an overall improvement in the sector. As long as the underlying assets are of high quality, we expect to continue to see positive investment performance in the future.
Q：We noticed that the AUM of the fund management business continues to grow, but the fee income decreased in the first half of the year and recorded a pre-tax loss. What is the main reason for this? When do you expect to achieve profitability?
A：The growth of AUM mainly comes from fund partnerships, especially the stock market neutral strategy funds of after three partners, whose stable returns drive the growth of AUM. The reasons for the decrease in management fee income are twofold: one is that we are gradually closing the Australian real estate private credit strategy (MCIP) fund; the other is that, although performing well, performance fees were not confirmed in the first half of this year, as performance fees are usually settled at the end of the year. As for losses, in addition to a slight decrease in management fee income, there are also increased operating expenses due to business expansion. However, the strategic significance of this business lies in driving the group's transformation into an alternative investment platform, and with the increase in scale and management fee income, operating expenses will be relatively fixed, resulting in a significant contribution to profits. Therefore, although profit margin is not a focus at present, we will gradually improve and optimize profitability in the future.
SUN HUNG KAI CO
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