PCRD FY2025 Results: Navigating Lower Revenue, Dividend Support, and a Challenging Outlook

Pacific Century Regional Developments Limited (“PCRD”) released its full year results for the year ended 31 December 2025. The results reflect a year of sharply lower revenue, ongoing losses, and a significant reduction in equity, despite continued dividend payments. The company’s performance is highly dependent on its major associate, PCCW Limited, and distributions from HKT.

Key Financial Metrics and Performance Overview

Historical Performance and Trends

• Revenue: Fell significantly, primarily due to the absence of distributions from non-core financial assets (wound down as planned) and reliance on HKT distributions.
• Profitability: The group posted a net loss of S\$22.4 million, further widening from the prior year loss of S\$15.7 million.
• Net Asset Value: Collapsed from S\$0.098 to S\$0.002 per share, mainly due to heavy dividend outflows exceeding earnings, as well as losses from equity accounting of PCCW and borrowing costs.
• Dividends: Despite losses, the company declared S\$215.96 million in dividends for FY2025, supported by cash flow from PCCW and asset sales, but at the expense of equity erosion.

Dividends and Shareholder Returns

Other Key Topics

Exceptional Items and Corporate Actions

• Asset Disposals: The group completed a full redemption of its holdings in Exoduspoint Partners International Fund, Ltd, recognising a cumulative gain of S\$3.6 million in 2025.
• Share Buybacks: 412,100 shares were repurchased and cancelled in 2025 (S\$160,000), a small capital return measure.
• Borrowings: Net borrowings increased by S\$92.3 million, largely to fund dividend payouts and cover operating expenses. Borrowings are secured by pledges of shares in PCCW and HKT.

Related Party Transactions

• All interested person transactions were below S\$100,000 and thus not material. The group confirmed compliance with all related-party transaction requirements.

Directors’ Remuneration

• Key management personnel compensation for 2025 was S\$1.51 million, similar to the prior year.

Chairman’s Statement & Management Tone

“Throughout 2025, Hong Kong’s economic recovery progressed steadily, even as global trade uncertainties and cautious consumer sentiment persisted. Against this backdrop, PCCW delivered a solid performance, supported by the expanding scale of and prudent investments in our video streaming business, the broader scope of our domestic entertainment operations and the unwavering market leadership of HKT Limited (“HKT”)…

Whilst PCCW continues to benefit from HKT’s steady and robust growth, we remain firmly committed to a disciplined dividend policy that prioritises strengthening our financial position to support sustainable growth while striving to deliver returns for our shareholders. This policy will be reviewed regularly to ensure it remains aligned with evolving market conditions and continues to optimise shareholder value.”

The tone is measured but cautious, with an emphasis on prudent investment, market leadership, and regular review of the dividend policy to ensure sustainability.

Outlook and Risks

• The group’s performance is closely tied to PCCW, which itself faces the uncertainties of the Hong Kong and global markets.
• Dividend support is likely to remain, but the company notes that further equity depletion is possible if dividends and losses continue at the current pace.
• No new impairment losses were recognised, as the market value of PCCW remains well above book value.
• Net asset value is now extremely low, reflecting aggressive capital returns (dividends) and persistent operating losses.

Conclusion and Investor Recommendations

Overall assessment: PCRD’s financial performance in FY2025 is weak, with sharply lower revenue, continued losses, and a collapse in net asset value per share. Dividends were maintained at a high level, but this was achieved mainly through asset sales and increased borrowings, not operating profits. The group’s fortunes are overwhelmingly dependent on its holding in PCCW, which faces its own uncertainties but remains profitable at the operating level.

Recommendation for Existing Shareholders:

If you are currently holding PCRD, caution is warranted. The maintenance of dividends has come at the cost of eroding equity and increasing leverage. Unless there is a turnaround in earnings, continued capital returns could further weaken the company’s balance sheet. Consider reducing exposure or holding only if you are comfortable with the high reliance on PCCW’s dividends and a potential cut in dividends in the near future.

Recommendation for Prospective Investors:

If you do not currently hold PCRD shares, it is prudent to remain on the sidelines. The risk/reward balance is skewed to the downside unless there is a major improvement in underlying earnings or a strategic shift. The current high dividend yield is not sustainable without earnings recovery or continued asset disposals.

Disclaimer: This analysis is based strictly on the company’s disclosed financials and statements. It is not investment advice. Please do your own research and consult with a licensed financial adviser before making investment decisions.

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