On August 8th, Wharf Holdings (HK.0004) announced its financial results for the first half of 2024: the Group’s revenue dropped by 14% year-on-year to HKD 7.032 billion (H1 2023: HKD 8.13 billion), and operating profit decreased by 2% year-on-year to HKD 3.085 billion (H1 2023: HKD 3.139 billion).
By segment, investment property revenue fell by 5% year-on-year to HKD 2.364 billion (H1 2023: HKD 2.48 billion), and operating profit declined by 6% year-on-year to HKD 1.573 billion (H1 2023: HKD 1.679 billion), mainly due to softening rents in Mainland China malls and office buildings. Hotel revenue dropped by 2% year-on-year to HKD 291 million (H1 2023: HKD 296 million), while operating profit plummeted by 73% year-on-year to HKD 12 million (H1 2023: HKD 44 million), primarily due to declining room rates amid a weak market. Additionally, the Group’s development property revenue decreased by 25% year-on-year to HKD 2.028 billion, and logistics revenue dropped by 12% year-on-year to HKD 1.073 billion.
Geographically, revenue from the Chinese Mainland fell by 14.4% year-on-year to HKD 5.028 billion (H1 2023: HKD 5.876 billion), with operating profit increasing by 7.4% year-on-year to HKD 1.865 billion. In Hong Kong, revenue decreased by 9.6% year-on-year to HKD 1.943 billion, while revenue from other regions plummeted by 41.9% year-on-year to HKD 61 million.
As of the market close on August 8th, the Group’s stock price dropped by 2.35% to HKD 20.8 per share, with a total market capitalization of approximately HKD 63.5 billion.
Founded in 1886, Wharf Holdings is the 17th registered company in Hong Kong, with most of its business related to real estate, including investment properties, hotels, and development properties across Hong Kong and the Chinese Mainland. Other businesses include Modern Terminals and Hong Kong Air Cargo Terminals, which operate logistics services. In November 2017, the Group spun off parts of its investment properties in Hong Kong and Singapore, which were listed in Hong Kong as Wharf REIC.
Wharf Holdings’ Mainland China shopping centers include Changsha IFS, Chengdu IFS, Chongqing IFS, Times Square in Shanghai, Wheelock Square in Shanghai, Times Square in Chongqing, Times Square in Dalian, and Times Outlets in Changsha and Chengdu. The Group’s hotel brands include Niccolo, Marco Polo, and the newly launched Maqo in 2023.
The Group stated that the Chinese Mainland retail market remained weak in the first half of the year. Concerns about deflation risks, job security, and real estate market turbulence kept consumer spending cautious, particularly in non-essential goods. The resumption of outbound tourism led to a flow of consumption abroad, posing additional challenges to the retail and service sectors. Although the central government introduced real estate support policies, their impact on development properties varied across cities and developers, with overall activity remaining sluggish.
The slowdown in domestic consumption, partly due to the outflow of spending overseas, led to weak sales performance among mall tenants, putting pressure on occupancy rates and rents. The smaller and older Times Square properties faced greater challenges.
In the hotel segment, Wharf Hotels opened a second hotel in Changsha IFS under the new upscale lifestyle brand Mansion in November 2023.
The Group currently operates 16 hotels in Hong Kong, the Chinese Mainland, and the Philippines under the Niccolo, Marco Polo, and Maqo brands, with four wholly-owned hotels and one with a 50% ownership stake.
Additionally, in June this year, Changsha IFS welcomed the Group’s third hotel, which operates under the Park Hyatt brand. This is the first hotel owned by the Group but not self-operated since the 1980s.
Looking ahead, the Group stated that its business outlook remains overshadowed by economic instability and market volatility. The U.S. interest rate direction, trade tensions, and geopolitical risks are increasingly affecting the global economy. The Chinese Mainland faces challenges such as high leverage and high inventory in the real estate sector, as well as weakening consumer sentiment and rising savings rates. In Hong Kong, a strong Hong Kong dollar and tight financial conditions are also hindering economic recovery. The Group will continue to manage its finances prudently and seize opportunities during economic downturns to enhance business performance.
| Source: Official Financial Report
| Image Credit: Wharf Holdings
| Editor: LeZhi
