Sun Hung Kai & Co. Announces 2021 Interim Results

HONG
KONG SAR – Media
OutReach – 20 August 2021 – Sun Hung Kai & Co. Limited (Stock Code:
86.HK) (“SHK & Co.” or the “Company”, together with its subsidiaries, the
“Group”) announces its interim results for the period ended 30 June 2021.
Profit attributable to owners of the Company increased by 287.4% to HK$2,693.0
million (1H2020: HK$695.2 million); basic earnings per share (“EPS”) increased
by 290.3% to HK136.2 cents (1H2020: HK34.9 cents); book value per share increased
by 23.1% to HK$12.8 (1H2020: HK$10.4). 

The Board has
declared an interim dividend of HK12 cents per share for the six months ended 30
June 2021, which remained the same level as the first half of 2020. The Board
will review dividend policy at year end depending on the evolvement of COVID-19,
progress on economic recovery and the overall capital returned via the buy-back
program.  During the period, the Company
repurchased 550,000 shares for a total consideration of HK$2.3 million.

“The results
for the first half of 2021 represented a very strong performance, despite
continued volatility in the global financial market, prolonged impact from
COVID-19 and a changing regulatory environment. Throughout this challenging
period, the Group’s financial position remained strong and liquid, and we
continued to focus on appropriately containing risk and positioning the business
for expansion opportunities,” said Mr. Lee Seng Huang, the Group Executive
Chairman.

First half revenue in 2021 was HK$2,096.0 million (1H2020: HK$2,042.9
million), which mainly consisted of interest income from Financing Business amounting
to HK$1,966.6 million. Pre-tax profit for first half 2021 increased by 238.3%
to HK$3,215.7 million (1H2020: HK$950.5 million), and was mainly driven by significant
gains in the Group’s Investment Management.

Pre-tax profit of Investment Management for the period was
HK$2,312.2 million (1H2020: HK$436.3 million after re-presentation), increasing
by 430.0%, due to the strong performance across all asset classes and a total
realised gain and interest income of HK$1,611.5 million.

Financing Business also improved and generated pre-tax profit of
HK$919.4 million (1H2020: HK$607.8 million after re-presentation), up 51.3%,
continuing to be a consistent contributor to the Group’s pre-tax profit.

Segment Performance

*
Re-presented following the removal of Strategic Investments segment and
regrouping its items in the second half of 2020.

Investment
Management

Despite the
continuous challenges and uncertainties of the global financial markets, the
Group’s Investment Management segment has appropriately navigated the evolving
dynamics in the public markets and completed several successful exits, leading
to its significant contribution of HK$2,312.2 million to pre-tax profit, a substantial
increase of 430.0% from the HK$436.3 million contributed for the first half of
2020.

This business
has grown to over HK$20.2 billion in assets since it launched and has built out
a well-diversified portfolio consisting of investments in Public Markets, Alternatives
and Real Assets.

The Public
Markets portfolio consists of an internally managed credit strategy and
corporate holdings, which achieved the outstanding performance, with a
six-month return of 23.6% and assets of HK$4,500.8 million during the period.
In particular, the Corporate Holdings segment delivered a solid portfolio performance
with a six-month return of 35.3% and surpassed the performance of S&P 500
Index, NASDAQ 100 Index and MSCI World Index over the same period.

The Alternatives portfolio also delivered sound
returns, representing a six-month return of 13.7% and HK$13,440.5 million assets in
the first half of 2021. Of which, the Private Equity segment recorded strong
combined returns of 17.7% in the first half of 2021 mainly contributed by
successful exits from several flagship investments such as Fairstone Holdings
Inc and other exits in healthcare and TMT sector.

Funds
Management

In the first
half of 2021, we formally established our Funds Management vehicle – Sun Hung
Kai Capital Partners with SFC Type 1 & 9 licenses. Four partnerships have
been launched on this platform, namely East Point Asset Management, E15VC,
ActusRayPartners, and Multiple Capital Investment Partners. SHK & Co.
committed total seeding capital of over US$280.0 million, laying solid
foundation for the growth and performance generation in the coming years.

SHK Latitude Alpha Fund,
the previously in-house Fund of Hedge Funds (“FoHF”) strategy, was also
launched in July 2021 with SHK & Co.’s commitment of US$330 million.

Financing
Business

The Group’s
Financing Business division comprises of Consumer Finance, Specialty Finance
and Mortgage Loans businesses in Hong Kong and Mainland China.

The Consumer
Finance business conducted via its
majority-owned subsidiary United Asia Finance Limited (“UAF”) has been a
consistent and resilient income contributor to the Group. UAF’s pre-tax
contribution to the Group amounted to HK$871.9 million, an increase of approximately
68% compared to the first half of 2020. Revenue increased by 7% and the total
loan balance at the end of the period, on a gross and net basis (after
impairment allowance), increased by 16% and 17%, respectively, year-on-year. Given
management’s proven track record of managing all up and down cycles during
turbulence times over the last two years, it remained cautiously confident that
UAF can deliver a promising full year performance.

The Group’s
Mortgage Loans business is operated by its majority-owned subsidiary Sun Hung
Kai Credit Limited
(“SHK Credit”). SHK Credit also
entered the next phase of growth and will strive for enhancement in business
scale, revenue mix, capital and funding structures as well as product and
services to our customers as the Hong Kong economy and property market is starting
to recover in the first half of 2021.

Outlook

Looking ahead
for the second half of 2021 and potentially a large part of 2022, we expect
volatility and challenges to persist as a result of uneven recovery across the
globe. The Group is cautiously optimistic about the prospects and development
of our various business segments and will maintain high levels of liquidity as
we navigate these challenges.

Mr Lee added,
“The strong performance of our Investment Management business and establishment
of the Funds Management platform have demonstrated our commitment and execution
ability as we continue with our transformation into the leading alternative
investment platform in Hong Kong. The Group is committed to delivering sustainable
risk-adjusted returns over the long term with sound governance and risk controls
through all market conditions.”