For immediate release

15 August 2018, Hong Kong

Sun Hung Kai & Co reports 36% growth in half year profit

Sun Hung Kai & Co. Limited (SEHK: 86) (the "Company", together with its subsidiaries, the "Group") delivered solid results for the six-month period ending 30 June 2018. Profit attributable to owners of the Company was HK$1,058 million, an increase of 36% year-on-year.

The increase was driven by the performance of the Principal Investments business, as well as the growth in interest income from the Group's loan businesses.

Group Executive Chairman Mr Lee Seng Huang said, "The results are commendable under the challenging market conditions during the period. We continue to build a steady track record since the Group's transformation commenced three years ago, and are committed to deliver long term capital growth to our shareholders."

The book value per share reached HK$9.31 and a HK12 cents interim dividend per share was declared. The 145 million shares buyback transaction announced in May 2018 will be completed in September 2018.

2018 lnterim Results Summary
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Six months ending	30 Jun 2018	30 Jun 2017	Change
(HK$ Million)
Pre-tax profit	1,385.2	1,115.6	+24%
Profit attributable to owners of the Company	1,058.0	780.1	+36%
Book value per share (HK dollars)	9.31	8.55	+9%
Earnings per share (HK cents)	49.2	36.0	+37%
Interim dividend (HK cents)	12.0	12.0

 

Business Segment Highlights:

Consumer Finance

- Operated under United Asia Finance Limited ("UAF").

- Revenue increased by 18% and the loan book increased by 17% year-on-year to HK$9,046.3 million at the end of June 2018.

- Contribution to profit before tax decreased marginally (-2%) to HK$ 609.2 million, mainly due to the absence of write-backs from the collective impairment allowance recorded in first half 2017 when the business Mainland China experienced a turnaround. Credit conditions there were also worse-than-expected during the first half of 2018.

- Although a more disciplined market should benefit the consumer finance market in the longer term, the consolidation in the P2P market led to an abrupt drop in liquidity which impacted credit conditions.

- In Hong Kong, UAF maintained its market leadership in a competitive market with a steady increase in profit.

- In Mainland China, UAF continued with its O2O strategy and commenced its partnership with POS machine network operator All In Pay, following on from its success with China Union Pay Merchant Services. Total loan origination for the period was HK$2.7 billion (+54% YoY). The majority of loans are now processed online, which allowed further consolidation of the branch network to create greater efficiency.

Principal Investments

- Segment assets amounted to HK$17.1 billion as at 30 Jun 2018 and contributed HK$680.4 million to pre-tax profit (first half 2017: HK$432.3 million). The six-month return on average assets was 6.1%.

- The segment assets are invested across public equities (19%), private equities (32%), public credit (17%), private credit (21%) and real estate (12%).

- Private Equity was an important contributor to the performance, mainly driven by our early positioning in the pharmaceutical and technology sectors. As we enter into the fourth year of the investment business, there will be an increased focus on exits and liquidity for the portfolio. We continue to invest in opportunities that can provide strategic value to the Group.

Mortgage Loans

- Having just surpassed the HK$2 billion mark at the end of 2017, Sun Hung Kai Credit's the loan portfolio reached HK$3 billion at the end of June 2018. The contribution to pre-tax profit increased three-fold to HK$48.8 million with better operating leverage.

- The business enjoyed good momentum from the partnerships built with real estate agents and property developers. Whilst the first mortgage business is expected to remain solid, we also seek to further penetrate other customer segments for a more balanced approach to growth, and new marketing schemes are being planned.

Financial Services

- Pre-tax contribution from this segment increased 64% to HK$101.8 million.

- The 30% owned Everbright Sun Hung Kai business delivered a satisfactory increase in profit during the period, from the growth in commission revenue as well as higher interest income from the client financing businesses. Its client assets reached a new high of HK$143 billion.

- LSS Financial Leasing (Shanghai) Limited (40% shareholding) continued its evolution from a simple leasing business to a one-stop financing solutions provider to the car supply chain as well as new modes of transportation. From inventory, equipment and car leasing, to a financing provider for new transportation models such as the partnership on the 58 "Suyun" (58速運) platform, LSS Leasing has formed a strong foundation for more substantial future contribution.

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About Sun Hung Kai & Co. Limited
Sun Hung Kai & Co. Limited (the "Group") is an investment firm headquartered in Hong Kong. Since its establishment in 1969, the Group has owned and operated market-leading businesses in financial services. Building on its rich heritage, experience and network, the Group aims to generate long-term capital growth for its shareholders through a diverse, yet complementary, portfolio of businesses and investments across multiple asset classes. It is the major shareholder of leading consumer finance firm United Asia Finance, and a substantial shareholder of Everbright Sun Hung Kai. The Group currently holds about HK$40 billion* in total assets.
*As at 30 Jun 2018

For more information about Sun Hung Kai & Co. Limited (SEHK: 86), please visit its website at www.shkco.com.

For enquiries, please contact:
Mokka Mok +852 2533 9971 mmok2@webershandwick.com