Hysan Development Company Limited (00014.HK) Announces 2025 Final Results: Key Developments and Investor Insights

Overview of 2025 Financial Performance

• Turnover: HK\$3,464 million, up 1.6% year-on-year
• Recurring Underlying Profit: HK\$1,918 million, down 1.9% year-on-year
• Underlying Profit: HK\$2,510 million, up 28.3% year-on-year (boosted by fair value gains on Bamboo Grove disposals)
• Reported Profit: HK\$315 million, compared to HK\$35 million in 2024
• Full-year Dividend: Maintained at HK108 cents per share; second interim dividend of HK81 cents per share
• Net Asset Value per Share: HK\$63.7, down 0.9% from previous year
• Shareholders’ Funds: HK\$65,456 million, a slight decrease of 0.8%

Key Business Developments and Strategic Highlights

1. Retail Portfolio – Outperformance and Expansion

• Retail turnover grew by 2.6% to HK\$1,727 million, with Hong Kong’s portfolio up 1.5% and Mainland China’s Lee Gardens Shanghai surging to HK\$23 million from HK\$6 million.
• Retail occupancy in Hong Kong improved to 95% (from 92%), driven by robust rental reversions and the introduction of over 50 new brands to the Lee Gardens precinct.
• Tenant sales posted double-digit year-on-year growth in H2 2025, and foot traffic rose over 10% since Q2, outperforming the Hong Kong market.
• The Lee Gardens rejuvenation project and Lee Garden Eight under construction are expected to further enhance retail value and visitor experience.

2. Office Portfolio – Resilience and Improved Occupancy

• Office turnover remained stable at HK\$1,508 million. Hong Kong office turnover declined by 2.3% but this was offset by a 50% jump in Mainland turnover (to HK\$101 million).
• Occupancy in Hong Kong’s office portfolio improved sharply from 90% to 94%, alleviating the impact of negative rental reversions amid a challenging market.
• Lee Gardens Shanghai office space achieved commitments for 81% of total space, with occupancy rising to 72% (from 66%).
• Flexible workspace joint venture with IWG now operates 47 centres across the Greater Bay Area, capturing demand for asset-light growth and flexible working.

3. Residential Portfolio – Strong Rebound and Capital Recycling

• Residential turnover increased by 5.0% to HK\$229 million, with occupancy rising to 87% (from 73%).
• Positive rental reversions and robust leasing demand, particularly from expatriates and new talent arrivals in Hong Kong.
• Phased disposal of two Bamboo Grove blocks (124 apartments): 92 units contracted by year-end, with 54 units handed over, unlocking HK\$2.1 billion cash proceeds (26% of a targeted HK\$8 billion five-year capital recycling program).
• Strong sales momentum at VILLA LUCCA (Tai Po) and presale consent for To Kwa Wan Residential Project secured; both expected to drive cash flows and value creation.

4. Major Projects and Capital Expenditure

• Lee Garden Eight, a landmark one-million-square-foot joint venture with Chinachem, topped out in Q4 2025, with completion on track for Q3 2026. This will expand Lee Gardens’ leasable portfolio by 30% and is expected to boost retail traffic by over 20%.
• The integrated pedestrian walkway system, due for completion with Lee Garden Eight, will connect the precinct directly to the Causeway Bay MTR, enhancing connectivity and retail exposure.
• Capital expenditure increased to HK\$2,633 million (from HK\$1,890 million), reflecting strategic investments in development and asset enhancement.
• Lee Garden Eight won multiple sustainability and mixed-use development awards in 2025, reinforcing Hysan’s ESG credentials and market leadership.

5. Financial Position, Gearing, and Dividends

• Gross debt increased to HK\$28,737 million (from HK\$26,717 million), mainly for project financing and capex. Net debt-to-equity ratio was 32.4% (2024: 31.4%).
• Cash and bank deposits stood at HK\$3,831 million, up from HK\$2,211 million, with additional undrawn committed facilities for liquidity.
• Effective interest rate on debt decreased to 3.7% (from 4.3%). Fixed-rate debt ratio was 54% at year-end.
• Group maintains investment-grade ratings: Moody’s Baa2, Fitch BBB (stable outlook).
• Dividend payout maintained: total HK108 cents per share (unchanged), reflecting stable distribution policy.

Potentially Price-Sensitive and Shareholder-Relevant Developments

• Capital Recycling Programme: HK\$2.1 billion cash realised in 2025 from the sale of Bamboo Grove units (26% of HK\$8 billion target). Additional HK\$1.6 billion contracted for 2026. This deleveraging and redeployment of capital to core assets and strategic projects could positively impact shareholder value and drive share price re-rating.
• Lee Garden Eight & Connectivity Project: The timely completion and expected uplift in retail and office demand, in addition to the award-winning design and sustainability features, could be significant catalysts for future earnings and NAV growth.
• Retail Rejuvenation and New Brand Introduction: Over 50 new brands and curated experiential campaigns have demonstrably increased footfall and tenant sales, positioning Hysan as an outperformer in the retail sector’s recovery.
• Mainland China Expansion: Lee Gardens Shanghai is ramping up faster than expected, with strong improvement in both retail and office occupancy, providing new streams of recurring income and geographic risk diversification.
• Flexible Workspace JV: The 47-centre network with IWG across the Greater Bay Area positions Hysan for further asset-light growth and recurring fee income, appealing to the evolving needs of office tenants.
• Strong Balance Sheet and Prudent Financial Management: Adequate liquidity, proactive debt management (including refinancing and repurchase of perpetual securities), and a disciplined approach to capital allocation underpin continued dividend stability and resilience.

Other Notable Points for Investors

• Fair value loss of HK\$1,405 million was recognised on investment properties, mainly reflecting office sector risk. However, this was largely offset by gains from capital recycling and improved operational performance.
• Group’s sustainability drive underpins its ability to secure green finance (44% of total debts/facilities are “sustainable”), supporting longer-term ESG-focused investor demand.
• Board and management reaffirm commitment to prudent growth, capital recycling, and innovation—strategies that have delivered outperformance relative to peers in a challenging Hong Kong and regional market.

Conclusion

Hysan Development’s 2025 results reveal a company in active transformation, balancing prudent financial management with targeted capital recycling, and reinvesting for growth in both Hong Kong and Mainland China. Key projects such as Lee Garden Eight, the rejuvenation of Lee Gardens, and expansion into flexible workspace and healthcare are all set to drive future revenue, recurring income, and asset value.

The combination of stable dividend payout, a strong balance sheet, and strategic capital redeployment positions Hysan as a resilient and innovative leader in the Hong Kong property sector. Shareholders should monitor progress on the capital recycling programme, leasing momentum in new projects, and continued resilience in the retail and office portfolios as potential catalysts for share price outperformance.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research and consult professional advisors before making investment decisions. The information herein is based on the company’s published announcement and is subject to change without notice.

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