Conservative positioning continues to drive
Sun Hung Kai & Co. Limited (Stock Code: 86.HK) ("SHK & Co" or the "Company", together with its subsidiaries, the "Group") announces a significant turnaround in its interim results for the period ended 30 June 2024, reflecting the benefits of its diversified business model and progress in its strategic transformation amidst volatile and uncertain business environment.
Financial Summary
Despite challenging market conditions, SHK & Co delivered a revenue of HK$1,915.8 million (1H2023: HK$1,968.3 million), which mainly consisted of interest income of HK$1,650.2 million from the Credit business. Profit attributable to the owners of the Company was HK$75.4 million, a significant turnaround from a loss of HK$287.5 million for the same period last year.
The Group remained cautious and focused on managing its investment portfolio proactively and continued to maintain a strong balance sheet with ample liquidity, allowing it to capitalise on opportunities arising from market dislocations.
For the six months ended 30 June 2024, the Board has declared an interim dividend of HK12 cents per share, which remains unchanged from the first half of 2023.
Business Review
^ Re-presented as term loans of Private Credit were regrouped to Special Situations under Investment Management
Credit business maintained its solid performance, contributing a pre-tax profit of HK$425.3 million for the period with lower operating costs than the same period last year, which reflected SHK & Co's ongoing commitment to operational efficiency.
Funds Management business maintained its trend of profitability despite the challenging fundraising environment. Excluding the one-off impact from the sale of revenue share rights in East Point in the first half of 2023, pre-tax contribution from Funds Management grew 116.7% year-on-year, assisting the Group's transformation into a leading alternative investment platform.
It reported robust growth in the collective AUM (Asset under Management) of its funds and that of its fund partners, reaching US$1.2 billion, a new record since the launch of this platform in 2021. The growth in assets under management was driven by a net cash inflow of over US$130 million and market gains of about US$100 million, with good contributions from almost all strategies. The Group is confident in the development of this segment, particularly with a strategic alliance with GAM Investment effective from 1 August 2024. This alliance has expanded its product offerings and enhanced its client coverage and capabilities across Greater China.
The multi-family office platform, Family Office Solutions ("FOS"), continued to make strides, expanding client base by leveraging its access to global private investment opportunities. This unit provides customised alternative investment solutions for family offices and high-net-worth individuals with similar investment approaches and horizons, generating returns based on the alignment of interests.
Investment Management division also reported significant improvement. The overall return continued to improve over the past two years and recorded a positive gain of 0.4% for the period. Pre-tax loss was narrowed by 58.4% to HK$358.4 million after allocating an internal cost of capital charge of HK$348.7 million, compared to HK$861.4 million for the first half of 2023. This positive development was largely attributed to enhanced performance across Private Equity, Hedge Funds, and Corporate Holdings, while Special Situations and Real Estate continued to deliver solid gains. Alternatives and Real Estate segments recorded an unrealised gain of HK$172.2 million, mainly due to the solid returns contributed by Hedge Funds after actively adjusted towards a more conservative exposure.
Mr. Lee Seng Huang, the Group Executive Chairman said, "Throughout the first half of 2024, we have maintained a conservative position, and continued to buyback of our own debt. While the anticipated interest rate cuts offer some hope of relief, 2024 presents a complex landscape. As the global economic recovery remains uncertain with continued geopolitical tensions and uncertainties brought by US presidential election, we remain cautiously optimistic but continue to reduce market exposures. With the new alliance with GAM Investments, we are excited by the potential opportunities it presents and will continue to execute on the buildup of our investment and distribution capabilities."
For more details of the 2024 interim earnings, please refer to the official announcement.
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About Sun Hung Kai & Co. Sun Hung Kai & Co. Limited (SEHK: 86) ("SHK & Co" / the "Company", together with its subsidiaries, the "Group") is a leading Hong Kong-based financial institution recognised for its expertise in alternative investments and wealth management. Since 1969, the Company has built a diversified investment portfolio across public markets, credit and alternatives strategies including real estate and private equity, delivering long-term risk-adjusted returns. Leveraging its deep-rooted Asian heritage, SHK & Co supports and nurtures specialist emerging asset managers in the region, empowering them to excel. SHK & Co also utilises its long-standing investment expertise and resources in providing tailored investment solutions to like-minded partners and ultra-high-net-worth investors through its Family Office Solutions. As of 30 June 2024, the Group held about HK$39.5 billion in total assets. For more information about SHK & Co, please visit www.shkco.com / follow us on LinkedIn.
For media enquiries, please contact: Hill and Knowlton Joanne Lam +852 9839 6552 Sidney Leng +852 5443 4320 Lynn Zhang +852 9794 5751 Email: SHKCo@hkstrategies.com 22/08/2024 Dissemination of a Financial Press Release, transmitted by EQS News. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
