Sun Hung Kai & Co. Announces 2024 Interim Results | 22.08.24

Conservative positioning remains the driving force
return to profitability

Sun Hung Kai & Co.Limited (Share 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 June 30, 2024, reflecting the benefits of its diversified business model and progress in its strategic transformation in a volatile and uncertain business environment.

Financial overview

Despite challenging market conditions, SHK & Co a turnover of HK$1,915.8 million (1H2023: HK$1,968.3 million), which consisted mainly of interest income of HK$1,650.2 million from the lending 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 proactively managing its investment portfolio, while maintaining a strong balance sheet with sufficient liquidity, enabling it to benefit from opportunities arising from market disruptions.

For the six months ended June 30, 2024, the Board of Directors has declared an interim dividend of HK$12 cents per share, which remains unchanged from the first half of 2023.

Company review

^ Represented as term loans from Private Credit were regrouped to Special Situations under Investment Management

The lending business continued its solid performance, delivering a pre-tax profit of HK$425.3 million for the period, with lower operating expenses than the same period last year. This reflects SHK & Co’s continued commitment to operational efficiency.

The Funds Management business maintained its profitability trend despite the challenging fundraising environment. Excluding the one-off impact of the sale of East Point revenue sharing rights in H1 2023, Funds Management’s pre-tax contribution grew by 116.7% year-on-year, supporting 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, to US$1.2 billion, a new record since the launch of this platform in 2021. Growth in assets under management was driven by net cash inflows of more than US$130 million and market gains of around US$100 million, with good contributions from almost all strategies. The Group is confident in the development of this segment, in particular with a strategic alliance with GAM Investment effective from 1 August 2024. This alliance has expanded its product offering and enhanced its client coverage and capabilities in Greater China.

The multi-family office platform, Family Office Solutions (“FOS”), continued to make progress and grow its client base by leveraging its access to global private investment opportunities. This unit provides tailored alternative investment solutions for family offices and high net worth individuals with similar investment approaches and time horizons, generating returns based on alignment of interests.

The Investment Management division also reported a significant improvement, with overall returns continuing to improve over the past two years, posting a positive gain of 0.4% for the period. Pre-tax loss narrowed 58.4% to HK$358.4 million after allocating an internal capital cost charge of HK$348.7 million, compared with HK$861.4 million for H1 2023. This positive development was largely attributed to improved performance in Private Equity, Hedge Funds and Corporate Holdings, while Special Situations and Real Estate continued to deliver solid gains. The Alternatives and Real Estate segments recorded an unrealised gain of HK$172.2 million, mainly due to solid returns delivered by Hedge Funds after actively adjusting to a more conservative exposure.

Mr. Lee Seng Huang, the Group Chairman said: “Throughout the first half of 2024, we have maintained a conservative position and continued to repurchase our own debt. While expected interest rate cuts provide some hope for relief, 2024 presents a complex landscape. As the global economic recovery remains uncertain with ongoing geopolitical tensions and uncertainties caused by the US presidential election, we remain cautiously optimistic but continue to reduce market exposure. With the new alliance with GAM Investments, we are excited about the potential opportunities it presents and will continue to build our investment and distribution capabilities.”

For more details on the 2024 interim profit figures, 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 financial institution based in Hong Kong, renowned for its expertise in alternative investments and asset management. Since 1969, the Company has built a diversified investment portfolio across public markets, credit and alternative strategies, including real estate and private equity, delivering long-term risk-adjusted returns. By leveraging its deep-rooted Asian heritage, SHK & Co supports and nurtures specialist emerging asset managers in the region, enabling them to excel. SHK & Co also leverages its long-standing investment expertise and resources to provide tailored investment solutions to like-minded partners and ultra-high-net-worth investors through its Family Office Solutions. As at 30 June 2024, the Group had approximately HK$39.5 billion in total assets.

For more information about SHK & Co, please visit www.shkco.com / follow us on LinkedIn.

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Hill and Knowlton

Joanne Lam +852 9839 6552

Sidney Leng +852 5443 4320

Lynn Zhang +852 9794 5751

Email address: [email protected]