What information does Sun Hung Kai's(00086.HK) financial report reflect in 2022

Sun Hung Kai's primary business is divided into: consumer finance (3.499 billion Hong Kong dollars), and mortgage loans (283 million Hong Kong dollars), accounting for 93.29% of the leading business.

However, judging from the actual profit situation, Sun Hung Kai's pre-tax profit from consumer finance reached 1.197 billion Hong Kong dollars in the sub-item profit and loss. In comparison, the pre-tax profit of mortgage loans was 122 million Hong Kong dollars, and the overall pre-tax profit in 2022 was a loss of 892 million Hong Kong dollars. , The actual loss came from the investment management business, which caused a loss of up to 2.403 billion Hong Kong dollars.

The current strategic plan proposed by Sun Hung Kai mentions that: through financing, investment management, and fund management, businesses create an accurate risk-adjusted report and transform into a leading alternative investment platform.

Then, a more in-depth research is needed on the alternative investment business in the study of Sun Hung Kai's business.

The overview of the alternative investment business in the annual report is "In the past few years, we have established an investment portfolio including private equity and hedge funds with the help of the Group's professional knowledge and financial strength. The investment of this portfolio is based on investment performance and strategy matching. Degree, market, and industry access are the criteria for selecting companies and fund managers."

From the perspective of return on investment, compared with the financial report in 2021, Sun Hung Kai will reduce its long positions on a large scale in 2022 and instead allocate to Asia and other markets. With a multi-strategy model, it can be seen that its long positions in stocks as a whole. It shows that it can beat the Hang Seng Index to a certain extent. However, because 40% of the parts are in neutral and fixed-income products contributing fixed interest, there is a high probability that long positions can show excess returns, with a scale of 4.173 billion Hong Kong dollars at the beginning of the period. Judging from it, it is an acceptable performance.

From the perspective of the rate of return of external funds, the realized rate of return in 2021 is 34.8%, while hedge funds are higher than 0.8%. In 2022, external funds will suffer a loss of 16.9%. Stronger CAGR.

Based on the two's investment ratio, external funds currently have a scale of 4.669 billion yuan, while hedge funds have a hierarchy of 3.339 billion yuan. For external funds with more robust excess returns, once the market rebounds later, they will continue to Sun Hung Kai contributes to profit.

The overall lending business in 2022 will decline to a certain extent compared with 2021, and the charge-off rate will also rise from 5.9% in 2021 to 7.8%. The core reason is that many irreversible events occurred in 2022, a one-off decline.

At the same time, in 2022, as the yield of the 10-year U.S. Treasury bond continues to rise, the overall financing cost will continue to grow. Taking the 2022 financial report as an example, the financing cost is about 101 million Hong Kong dollars for the revenue of 285 million Hong Kong dollars, accounting for the proportion of income. 35.43%, the explanation given by the company is that the financing channels are gradually diversifying, Tremella has controlled the increase in financing costs, but no matter how to expand the tracks, the rise of global benchmark interest rates will bring prices to the company's operations.

Therefore, it can be inferred from the company's share of business: the investment business will recover with the market's recovery, and the lending business will recover with the recovery of the real estate industry and travel lending. Judging from the company's current shareholder returns, the company will maintain a relatively long-term The high dividend payout ratio gives investors a pretty good dividend rate of return. However, due to its rich business types, it is difficult for the market to judge the valuation and pricing level that its sharing businesses can give when pricing. The current market value of Sun Hung Kai is 58. From 2014 to 2021, although the profit level will vary between RMB 1.1 billion and RMB 4 billion, the dividend payout will remain at RMB 500 million to RMB 600 million. Due to occasional losses, only in 2022 will the dividend payout drop to RMB 237 million. Therefore, the market The current dividend rate given to Sun Hung Kai for mature companies is about 10%, and this valuation level is expected to be maintained.

Regarding the business structure shown by Sun Hung Kai, it can be judged that with the economic recovery and the recovery of the capital market, Sun Hung Kai's alternative investment business will quickly achieve better profitability, and the lending business can significantly benefit from the economic recovery. In 2022 The impairment of the annual lending business was more of a one-time loss.

The current risk is whether there are significant macro uncertainties, which will cause great chances in the lending business, which is highly leveraged and cannot be avoided due to the black box effect of investment assets in advance.

Therefore, for the shareholders and investors of Sun Hung Kai, investing in Sun Hung Kai along with the economic cycle will be an excellent opportunity to earn beta income. Still, it also needs to follow up and identify risks in time.