Hysan: The merchant portfolio will continue to adjust

Hysan (00014) announced its first-half results. The profit for the period was 3.01 billion yuan, an increase of 303.9% year-on-year. Excluding the change in fair value of investment properties, the core profit was 1.28 billion yuan, up 4.3% year-on-year, mainly benefiting from local retail sales. The market was in good condition; the first interim dividend was 27 cents, an increase of 3.8% year-on-year.

Half-year core profit increased by 4.3%

The Group’s turnover in the first half of the year increased by 6.8% to 1.91 billion yuan. The occupancy rate of retail and office buildings was 96% and 95% respectively, and the turnover of retail business fell by 2.3% to 960 million yuan, mainly due to the adjustment of the merchant mix. The company’s chairman, Li Yunlian, said that in the next 5 to 10 years, the company will continue to adjust the merchant portfolio to cater to the market changes, and some of the shop rents will change during the adjustment process.

Lv Ganwei, Chief Operating Officer, revealed that the overall rent renewal of retailers in the first half of the year was flat year-on-year. Among them, 80% of the rent-renewing merchants had some increase in rents. They believed that the market adjustment of the merchant portfolio would help to have a healthier rent level in the future. The rent is expected to stabilize in the second half of the year.

In the first half of the year, the number of retail outlets of the Group’s retail stores increased by 10% year-on-year. The retail sales of retailers increased by more than 25% year-on-year, which is better than the growth of retail sales in Hong Kong by 13.4%. For the second half of the year, Chief Financial Officer He Shuren said that factors such as the trade war and RMB depreciation in the second half of the year will affect the economy and the retail environment. The company will strive to enhance the attractiveness of the mall. Lee Yun Lian also mentioned that the group’s shopping malls will launch promotional activities to attract more people.

In the office business, the turnover in the first half of the year increased by 22% to 820 million yuan. He Shuren pointed out that the third phase of the Liyuan project is progressing well, and the tenants have successively entered the third phase of the Lee Garden. The current office occupancy rate is 95%. The project is in the fourth quarter. The official opening is expected to bring in rental income of 300 million to 350 million yuan next year.