Sun Hung Kai & Co. Announces 2021 Interim Results
Profit Attributable to Owners up 287% to HK$2.7 billion
Backed by Significant Gains in Investment Management and Strong Recovery in Consumer Finance
Financial Highlights
For the 6-month period ended
30 Jun 2021
30-Jun-20
Change
Revenue (HK$ million)
2,096.0
2,042.9
+2.6%
Pre-tax Profit (HK$ million)
3,215.7
950.5
+238.3%
Profit Attributable to Owners of the Company (HK$ million)
2,693.0
695.2
+287.4%
Basic Earnings per Share (HK Cents)
136.2
34.9
+290.3%
Interim Dividend (HK Cents)
12.0
12.0
--
Book Value per Share (HK$)
12.8
10.4
+23.1%
HONG KONG,Aug. 19,2021 -- Sun Hung Kai & Co. Limited (Stock Code: 86.HK) ("SHK & Co." or the "Company",together with its subsidiaries,the "Group")announces its interim results for the period ended 30 June 2021. Profit attributable to owners of the Company increased by 287.4% to HK$2,693.0 million (1H2020: HK$695.2 million); basic earnings per share ("EPS") increased by 290.3% to HK136.2 cents (1H2020: HK34.9 cents); book value per share increased by 23.1% to HK$12.8 (1H2020: HK$10.4).
The Board has declared an interim dividend of HK12 cents per share for the six months ended 30 June 2021,which remained the same level as the first half of 2020. The Board will review dividend policy at year end depending on the evolvement of COVID-19,progress on economic recovery and the overall capital returned via the buy-back program. During the period,the Company repurchased 550,000 shares for a total consideration of HK$2.3 million.
"The results for the first half of 2021 represented a very strong performance,despite continued volatility in the global financial market,prolonged impact from COVID-19 and a changing regulatory environment. Throughout this challenging period,the Group's financial position remained strong and liquid,and we continued to focus on appropriately containing risk and positioning the business for expansion opportunities," said Mr. Lee Seng Huang,the Group Executive Chairman.
First half revenue in 2021 was HK$2,096.0 million (1H2020: HK$2,042.9 million),which mainly consisted of interest income from Financing Business amounting to HK$1,966.6 million. Pre-tax profit for first half 2021 increased by 238.3% to HK$3,215.7 million (1H2020: HK$950.5 million),and was mainly driven by significant gains in the Group's Investment Management.
Pre-tax profit of Investment Management for the period was HK$2,312.2 million (1H2020: HK$436.3 million after re-presentation),increasing by 430.0%,due to the strong performance across all asset classes and a total realised gain and interest income of HK$1,611.5 million.
Financing Business also improved and generated pre-tax profit of HK$919.4 million (1H2020: HK$607.8 million after re-presentation),up 51.3%,continuing to be a consistent contributor to the Group's pre-tax profit.
Segment Performance
Pre-tax Contribution for the
Segment Assets as at
6-month ended
(HK$ Million)
Jun-21
Jun-20
Change
Jun-21
Dec-20
FINANCING BUSINESS
Consumer Finance
871.9
520.0
+67.7%
18,477.6
17,937.0
Specialty Finance
(11.4)
22.3*
N/A
1,479.4
3,153.0
Mortgage Loans
58.9
65.5
-10.1%
3,490.9
3,117.4
INVESTING BUSINESS
Investment Management
2,312.2
436.3*
+430.0%
20,298.9
14,603.4
GMS
(15.9)
(93.6)
-83.0%
3,907.2
5,272.4
Total
3,215.7
950.5
+238.3%
47,654.0
44,083.2
* Re-presented following the removal of Strategic Investments segment and regrouping its items in the second half of 2020.
Investment Management
Despite the continuous challenges and uncertainties of the global financial markets,the Group's Investment Management segment has appropriately navigated the evolving dynamics in the public markets and completed several successful exits,leading to its significant contribution of HK$2,312.2 million to pre-tax profit,a substantial increase of 430.0% from the HK$436.3 million contributed for the first half of 2020.
This business has grown to over HK$20.2 billion in assets since it launched and has built out a well-diversified portfolio consisting of investments in Public Markets,Alternatives and Real Assets.
The Public Markets portfolio consists of an internally managed credit strategy and corporate holdings,which achieved the outstanding performance,with a six-month return of 23.6% and assets of HK$4,500.8 million during the period. In particular,the Corporate Holdings segment delivered a solid portfolio performance with a six-month return of 35.3% and surpassed the performance of S&P 500 Index,NASDAQ 100 Index and MSCI World Index over the same period.
The Alternatives portfolio also delivered sound returns,representing a six-month return of 13.7% and HK$13,440.5 million assetsin the first half of 2021. Of which,the Private Equity segment recorded strong combined returns of 17.7% in the first half of 2021 mainly contributed by successful exits from several flagship investments such as Fairstone Holdings Inc and other exits in healthcare and TMT sector.
Funds Management
In the first half of 2021,we formally established our Funds Management vehicle - Sun Hung Kai Capital Partners with SFC Type 1 & 9 licenses. Four partnerships have been launched on this platform,namely East Point Asset Management,E15VC,ActusRayPartners,and Multiple Capital Investment Partners. SHK & Co. committed total seeding capital of over US$280.0 million,laying solid foundation for the growth and performance generation in the coming years.
SHK Latitude Alpha Fund,the previously in-house Fund of Hedge Funds ("FoHF") strategy,was also launched in July 2021 with SHK & Co.'s commitment of US$330 million.
Financing Business
The Group's Financing Business division comprises of Consumer Finance,Specialty Finance and Mortgage Loans businesses in Hong Kong and Mainland China.
The Consumer Finance business conducted viaits majority-owned subsidiary United Asia Finance Limited ("UAF") has been a consistent and resilient income contributor to the Group. UAF's pre-tax contribution to the Group amounted to HK$871.9 million,an increase of approximately 68% compared to the first half of 2020. Revenue increased by 7% and the total loan balance at the end of the period,on a gross and net basis (after impairment allowance),increased by 16% and 17%,respectively,year-on-year. Given management's proven track record of managing all up and down cycles during turbulence times over the last two years,it remained cautiously confident that UAF can deliver a promising full year performance.
The Group's Mortgage Loans business is operated by its majority-owned subsidiary Sun Hung Kai Credit Limited ("SHK Credit").SHK Credit also entered the next phase of growth and will strive for enhancement in business scale,revenue mix,capital and funding structures as well as product and services to our customers as the Hong Kong economy and property market is starting to recover in the first half of 2021.
Outlook
Looking ahead for the second half of 2021 and potentially a large part of 2022,we expect volatility and challenges to persist as a result of uneven recovery across the globe. The Group is cautiously optimistic about the prospects and development of our various business segments and will maintain high levels of liquidity as we navigate these challenges.
Mr Lee added,"The strong performance of our Investment Management business and establishment of the Funds Management platform have demonstrated our commitment and execution ability as we continue with our transformation into the leading alternative investment platform in Hong Kong. The Group is committed to delivering sustainable risk-adjusted returns over the long term with sound governance and risk controls through all market conditions."
About Sun Hung Kai & Co. Limited
Sun Hung Kai & Co. Limited (SEHK: 86) is a leader in alternative investing headquartered in Hong Kong. Since its establishment in 1969,the Group has owned and operated market-leading platforms in Financial Services. The Group invests across public markets,alternatives and real assets and has an established track record of generating long-term risk adjusted returns for its shareholders. Most recently,it has extended its strategy to incubate,accelerate and support emerging asset managers in the Asian region. It is also the major shareholder of leading Consumer Finance firm,United Asia Finance Limited. The Group currently holds about HK$48 billion in total assets as at 30 June 2021.
For more information aboutSHK & Co.,please visit its corporate website www.shkco.com.
For enquiries,please contact Hill+Knowlton Strategies Asia:
Joanne Lam/ Margaret Lam
Tel: (852) 2894 6211 / (852) 2894 6258
Email: SHKCo@hkstrategies.com
