Afternoon, welcome to the CK Asset Holdings Limited 2022 interim results presentation. My name is Gerald. As usual, we have our Chairman, Mr. Victor Li, Mr. Edmond Ip, and Mr. Simon Man joining me on the panel. I will go through quickly our result presentations before opening the floor for questions. Revenue in the first half 2022 reached HKD 47.6 billion. Profit attributable to shareholders almost HKD 13 billion, up 55%. Earnings per share HKD 3.55, up 58% as a result of some of our share buyback activities. Dividend per share HKD 0.43, up 5%. Net book value up 1.3% to HKD 103.21.
Looking at our principal activities, 50% of our profit contribution can be considered as recurrent in nature, up from 41% from the same period last year. 50% of our contribution is from Hong Kong in the first half, 17% from the Mainland, and 33% from the United Kingdom. and others. Looking at divisional performances. Property sales, HKD 20.4 billion in revenue. Profit contribution HKD 8 billion, up 2% from last year, and a healthy margin of almost 40%.
Just a note that in the same period last year, we had three projects from the Mainland with extraordinary margins of over 60% last year. Hence, you can see from the chart that last year, contribution margin was almost 54%. This year, the Mainland margins have returned to normal, but we are still recording a very encouraging 40% margin overall. Major contribution from Sea To Sky, over HKD 4 billion. City Link, Shanghai, HKD 1.5 billion, and 21 Borrett Road, HKD 1.4 billion. Healthy margins across different markets, Hong Kong 42.5%, Mainland 34.5%, and overseas 32.4%. We booked a total of over 2,800 units in the first half of this year, including car parks. If it is just residential units, it is about 1,500 of them. We still have HKD 13 billion of contracted sales, but not yet recognized.
About HKD 5.6 billion will be recognized in the second half of 2022. Just for your information, first half calendar year contracted sales came to almost HKD 6 billion. Property rental. Overall margins continue to be very healthy at 81%. Profit contribution dropped 16%. If you exclude the disposal effects of five Broadgate and exclude 1881 Heritage, the profit contribution reduction percentage would have been about 9%. We recorded a surplus on disposal of HKD 738 million from the sale of five Broadgate, which was booked in March 2022. Great contribution from CKC, HKD 653 million, HKD 327 million from Whampoa Garden, and HKD 305 million from Hutchison Logistics Centre. Investment property square footage amounts to almost 17 million square feet. We recorded a fair value decrease of close to HKD 700 million. Most of it came from 1881 Heritage.
Hotels & Serviced Suites division. Happy to report improved contribution resulted from higher hotel occupancy to HKD 315 million, with a contribution margin of 20.5%. Mainland contribution still affected substantially by the COVID restrictions on the Mainland. Average hotel room occupancy went up from 37% last year to 65% in the first half. Average service suites occupancy maintained a very high 88%. Property and project management, steady as usual, HKD 182 million profit contribution with a margin of 41.3%. Pub operation. Post the lifting of restrictions, the pub sector or division started its recovery. We are still affected by the inflationary pressure and cost pressure. But the division recorded a HKD 866 million of profit contribution on the back of over HKD 10 billion of revenue. And hopefully, the recovery will continue in the second half, and the performance will continue to improve. Infrastructure and utility asset operation.
The seven JVs that we have, as you can see here, from Duet in Australia, Reliance in Canada, and the second one, ista, headquartered in Germany, and the third one and the four additional, infrastructure businesses that we purchased or added in terms of share percentage in May 2021 of this year. Hence, the profit contribution went up from HKD 3.3 billion last year to HKD 4.148 billion this year with a very healthy contribution margin of over 35%. Over to Simon for the remaining pages. Simon, please.
Thanks, Gerald. The group's interest in the listed real estate investment trust remain more or less the same. As of June 30, 2022, it's 33.1% in the Hui Xian REIT, which invests and manage a total of 11.8 million square feet of hotels, service suites, office, and retail properties on the mainland. 26.6% in the Fortune REIT, which invest and manage a total of 3 million square feet of retail properties in Hong Kong. 18.4% in the Prosperity REIT, which invest and manage a total of 1.3 million square feet of office, retail, and industrial properties in Hong Kong. Hui Xian REIT is an associate, and we share its net rental profit of HKD 130 million for the period, and receive distribution of HKD 60 million during the period.
Cash distribution received from Fortune REIT and Prosperity REIT in the total amount of HKD 128 million were recognized as investment income during the period. Turn the page. in April 2022, the group completed the disposal of its investment in aircraft asset and discontinued the operation of aircraft leasing business. A post-tax profit of about HKD 2 billion was recognized, which include a gain of HKD 1.4 billion on the disposal of the aircraft assets. As of June 30, 2022, the group had a total bank and other loans of HKD 45.9 billion. A decrease of HKD 50.6 billion when compared with bank and other borrowings at the end of last year. Of which HKD 5.2 billion will be payable within one year, HKD 28 billion within two to five years, and HKD 12.7 billion after five years.
Taking into account the bank balance and deposit of HKD 59.8 billion on hand, the group had a net cash of HKD 13.9 billion.
The group's current corporate credit rating by Moody's is A2 stable and by S&P A2 stable. Looking at the land bank, currently the group have a total land bank of 128 million square feet. 76 million square feet is under development. 17 million square feet is held for rental. 9 million square feet is under hotel and service suite operation. 26 million square feet is held for pub operation. By geographical location, 26 million square feet is in Hong Kong, 17 million square feet on the mainland, and 32 million square feet overseas in Singapore and the U.K.
Property acquisition during the period in Hong Kong. In March 2022, the group was awarded a tender by the Urban Renewal Authority for the combined development of projects at Hung Fuk Street, Kai Ming Street, and Wing Kwong Street in To Kwa Wan. A total developable gross floor area of approximately 526,000 s q ft would be built on the site. Pass it back to you, Gerald.
Thanks very much, Simon. With that, we will open the floor for questions. I will consolidate similar questions. I encourage you to continue to send your questions online to us through our Nova system. I will go through each of the questions and Mr. Li will respond or delegate to one of us to respond. The first question, there have been talks recently about revaluation issues, problems pertaining to commercial properties. Is CKA facing such problems?
First, CK Asset does not have any problem whatsoever regarding the downward revaluation of properties. We have been well known for being ultra-conservative in financial management, and this includes our revaluation policy. In fact, sometimes people complain to us for being too conservative. We noticed that the valuation of our properties are substantially lower than that of others in similar locations. But looking back, it looks like our ultra-conservative policy we have adopted over many, many years is now serving us well. We have not much pressure on any downward revaluation at all.
The next question, what is your view on the residential property market now? Do you have plans to buy more land or assets like the Evergrande building?
I am not going to comment on particular property, but the first question is a tough question. There is a strong demand for residential properties in Hong Kong. At the same time, the government is looking at implementing measures to increase supply and interest rates are going up, and I think Prime Rate will definitely go up. As expressed many times over the years, my advice to consumer is, [Non-English content] . I will translate it. Ensure one's financial situation is within one's means when getting into the market. On the second question, I do not think I can answer that directly, but we have always had a proactive land acquisition strategy. As in all our acquisition, we never have a must-win mentality. If a piece of land clears our return hurdle, then we are ready to move.
We have now plenty of resources to do both property and sometimes non-property deals. I am sorry, I am not going to comment on specific property.
Thank you, Mr. Li. The next question, with such a diversified business mix, do you still consider CKA a property company, or do you see yourself more as a conglomerate?
Our name is CK Asset, and property is one of our most important assets. I think that is my answer. You look at even our pub business can be considered a property business as we not only own the business, we own the land and the property and the buildings. So another way to look at it is in terms of identity, we consider ourselves very much a return or annuity-focused company, and we are agnostic when it comes to sectors, markets, or geography. Incidentally, diversification of industries and geography are factors which strengthen our resilience. I think that is starting to become more evident in our income profile and in the last six months results. While Hong Kong probably may be starting to be a bit stressed, the income from our international division give us a boost and help us strengthen our war chest on the next acquisition.
I think the-
I think the answer is we are CK Asset. We focus on the running of asset and property will continue to be an important one. But not property as in the most simplistic format.
Thank you, Mr. Li. The next question, what were the drivers of the revaluation deficit recorded in your results?
The current valuation deficit is a tiny component within our portfolio. I wouldn't even focus on this. But look at the amount. This tiny amount highlights our super conservative revaluation approach that we have adopted over many years. That's why, I don't know how to translate this.
I guess the translation would be we don't have to give it back.
Give it back. Yeah.
Next question. The CK Group has announced the sale of 25% of Northumbrian Water recently. The price is an attractive one for your group. Will you be divesting more assets coming up?
As I mentioned before, the CK Group has a number of assets which are considered real treasures. In Chinese, they're called [Non-English content]. Currently, we carry them at relatively conservative value. That's why whenever a transaction takes place relating to these assets, the potential real market value of these assets become more prominent. But, as always, we would like to continue our conservative valuation of our assets on our books.
The next question. Your interim results are very impressive. What is your projection for the whole year?
This is going to get me into trouble. I cannot make any profit forecast. I would caution anyone trying to extrapolate half year results for the whole year. Sorry, I cannot make projections. We are optimistic about our future, let's put it this way.
The next question is on the office market. Overall Hong Kong office vacancy has remained high. Do you expect further drop in property rental contribution in the second half of 2022? When will CKC II commence pre-letting?
I have a temptation. Hold on one second. This is a brand new photo. This is CKC II rendering. Come back to me. Our rental contribution has dropped in the first half because we sold 5 Broadgate in London, so the portfolio is different. We took our profits. In terms of Hong Kong office rentals, rental rate will continue to be more what I call tenant friendly. In terms of vacancy in Central, I'm cautiously optimistic because when rental rates drop a bit in core Central, history tells me that tenants from other areas will relocate back to CBD. This is the strength of Central. Completion of CKC phase II is expected to be in late 2023. So pre-letting most likely will commence in later part of this year.
So that you know, the architectural expression of CKC II will look like a twin of CKC I.
Next question is on the pub business. What is your outlook for the pub division?
Gerald, you have to tell me when you want to add more to the pub business. The way I see it is the operation of the pub division returned to normal following the lift of the COVID restrictions. Sales are almost back to pre-COVID level, which was driven by increasing in prices and also volume. Volume is still about 10% below pre-COVID. We expect the pace of recovery to continue. Inflation continues to be a concern on cost. I am quite happy to report is that the COVID just gave the pub operation a major stress test that it has never seen in its history. We have seen that the pub culture is an integral part of the British way of life. This sector has demonstrated its resilience to economic downturns and COVID and whatever.
People's habit of going back to pub is very, very strong. I think the team will continue to deliver the best possible returns. Also, don't forget there are property opportunities that we are enjoying right now. Some of the pubs we sold as redevelopment opportunities, potential joint ventures with the property group. At the same time, we are continuing to acquire some pubs when we see opportunities around. So there is movement on purchase and sale assets within the pub division. Normally they are small, so each of them is small. That is why it is not in the news.
The next question is on our cash position. CKA is in a net cash position. Could you share with us your outlook on CKA in the second half and your capital deployment plans?
Well, there are uncertainties on the macro level, be it economic or geopolitical. We are still optimistic that the quality of our assets and our financial discipline, the second one is very important to me, will allow us to perform well. We have now a very good war chest. And we will continue to be on the outlook for new deals.
Next question. Are you concerned with rising interest rates and its impact on your interest expenses?
Interest rates now have very little impact on us. We are practically debt-free. And we are in a net cash position of HKD 13.9 billion. So maybe an extra points would give us additional income.
The next question is on the share buyback. Any plans for further share buyback?
How can I answer this diplomatically? Share buyback is one of our capital management strategies to enhance shareholder value. The pace of which, of course, depends on market conditions.
I think the next one should be the last question, based on what I can see. Your DPS is higher than interim 2021, but the increase is below your profit growth. What should investors expect from CKA as a dividend policy going forward?
Let me give you the simple answer, then maybe I conclude from another angle and see whether I can answer this question better. The simple answer is this is only the interim dividend. Don't read it as an indication of particular any long-term strategy. If you go back to my earlier questions, I keep emphasizing on the fact that we are debt-free. We are for good war chest. We have no downward revaluation pressure at all. When the right opportunities arise, our aim is to deliver value to shareholders on a per share basis. You notice that in the last six months, the earnings growth and the earnings per share growth are slightly different because of the share buyback that has already happened. So we'll be looking out for deals. I think we may be at the right time at the right place.
Gerald, I think I've answered all questions. Can I go to the next one?
Yes. With that, thank you, Mr. Li. Thank you, Ms. Emily and Simon Man. And thank you all for joining. We would end the analyst and fund manager meeting now, and we will see you soon.
Gerald, I will log out and log back in, right?
Yes.
Okay. Thank you.
Thank you all.
Thank you, everybody.
Bye.
Thank you for your support.
Thank you.