Dear Shareholder,

KWIH reported satisfactory sales as it launched a number of well-timed premium residential projects in Hong Kong and the Mainland, while adhering to its prudent strategy under the principles of “impeccable quality” and “K. Wah Plus”. For the financial year ended 31 December 2022, the Group reported attributable contracted sales of approximately HK$18.8 billion. Attributable revenue amounted to approximately HK$9.35 billion. Profit attributable to equity holders was HK$1.37 billion, with underlying profit amounted to HK$1.45 billion. The Board has recommended a final dividend of 14 HK cents per share for the year ended 31 December 2022. Together with the interim dividend of 7 HK cents per share, the dividend for the full year amounted to 21 HK cents per share, continuing to provide shareholders with stable returns.

The worldwide economy and business environment were subject to challenging factors and conditions in 2022. The global supply chain was disrupted by escalating geopolitical tensions, resulting in surging prices for oil and other resources which further pushed up global inflation, underpinned by the highest inflation rate reported in the United States in the past forty years. To curb inflation, major western economies have entered into a new cycle of interest rate hikes. While the Mainland and Hong Kong were experiencing relatively mild inflation, economic activities across the board suffered a serious blow and investors’ confidence was dampened by subdued economic performance as COVID-19 variants continued to spread through the year.

Despite the substantial decline in transactions in the primary and secondary residential property markets resulting from higher HIBOR, on which property mortgage rates are set, in tandem with the United States, the Group launched Grand Mayfair and Villa Garda, two premium residential developments in Hong Kong, in a timely manner. They were well received by buyers. In the Mainland, the debt crisis of local property developers lingered as a general decline in transactions of residential properties in major cities was noted. Property prices were trending down amidst lacklustre sentiments. Nevertheless, a range of policies announced by the Central Government to support property developers, including policies targeted at the supply side, produced a stabilising effect on the property market and boosted investors’ optimism for the recovery of the Mainland property sector. To mark the 30th anniversary of its entry in the Mainland market, KWIH launched a number of residential projects during the year, including Navale, a luxury residential project in Pudong New District, Shanghai and Sierra, the residential portion of a large integrated development in Hexi New Town, Jianye District, Nanjing. All of them have been met with enthusiastic sales.

During the year under review, KWIH continued to participate in land tenders based on its prudent land-bidding strategy and successfully added new projects to its portfolio. In Hong Kong, the Group secured a new land parcel at Hospital Road, Hong Kong Island in July on a sole basis. In the Mainland, the Group participated in an urban redevelopment project in Huangpu District, Guangzhou, while taking the lead in a joint venture in acquiring a large comprehensive development in Huajing Town, Xuhui District, Shanghai in September. The Group will continue to pursue opportunities for development in Hong Kong, the Yangtze River Delta and Pearl River Delta regions in a prudent and disciplined manner.

Outlook

In 2023, global economic growth will continue to be overshadowed by uncertainties caused by geopolitics, interest rate hikes and high inflation. Nevertheless, unrestricted travel between the Mainland and Hong Kong has now fully resumed. With all social distancing measures lifted, Hong Kong has also reopened to the world and economic activities have been back to normal across all sectors. It is expected that buyers’ confidence in the property market will gradually pick up, supported by resilient underlying demand. Meanwhile, with economic activity restarting and the Central Government’s series of measures implemented in support of the property market, the residential markets of major Mainland cities are expected to remain stable in general, ensuring the long-term and healthy development. With a cautiously optimistic outlook on the mediumto long-term development of the property markets in Hong Kong and the Mainland, KWIH will continue to develop unique, premium properties on the back of its solid financial strength and proven experience.

On behalf of the Board, I wish to thank all our staff for their relentless effort contributing to the Group. Thanks to their dedication and commitment in the periods when the pandemic was raging severely in Hong Kong and the Mainland, the Group has been able to maintain effective operations. I look forward to their continued collaboration with the Group to cope with the challenges ahead and to realise the Group’s vision for long-term and sustained business growth.

Dr Lui Che-woo

Chairman & Managing Director

22 March 2023