Keck Seng Investments Hong Kong : Interim Report 2018

CORPORATE INFORMATION

DIRECTORS

HO Kian Guan -Executive ChairmanHO Kian Hock -Deputy Executive ChairmanTSE See Fan Paul

CHAN Lui Ming Ivan YU Yuet Chu Evelyn HO Chung Tao

HO Chung Hui

* HO Kian Cheong

• ** CHAN Yau Hing Robin

• ** KWOK Chi Shun Arthur

• ** WANG Poey Foon Angela

• ** YU Hon To David

  HO Chung Kain (Alternate to HO Chung Hui)

*Non-executive Director**Independent Non-executive Director

AUDIT COMMITTEE

CHAN Yau Hing Robin -ChairmanKWOK Chi Shun Arthur

WANG Poey Foon Angela YU Hon To David

REMUNERATION COMMITTEE

WANG Poey Foon Angela -ChairmanCHAN Yau Hing Robin

KWOK Chi Shun Arthur YU Hon To David

TSE See Fan Paul YU Yuet Chu Evelyn

NOMINATION COMMITTEE

KWOK Chi Shun Arthur -ChairmanCHAN Yau Hing Robin

WANG Poey Foon Angela YU Hon To David

TSE See Fan Paul HO Chung Tao

AUDITORS

KPMG

8th Floor Prince's Building 10 Chater Road Central

Hong Kong

SHARE REGISTRARS & TRANSFER OFFICE

Tricor Tengis Limited

Level 22, Hopewell Centre 183 Queen's Road East Hong Kong

COMPANY SECRETARY

NG Sing Beng

REGISTERED OFFICE

Room 2902 West Tower Shun Tak Centre

168-200 Connaught Road Central Hong Kong

COMPANY'S WEBSITEwww.keckseng.com.hk

INTERIM RESULTS

The board of directors (the "Board") of Keck Seng Investments (Hong Kong) Limited (the "Company") is pleased to announce the unaudited condensed consolidated interim financial information of the Company and its subsidiaries (the "Group") for the six months ended 30 June 2018.

The consolidated profit attributable to equity shareholders of the Company for the six months ended 30 June 2018 was HK$91,340,000 (HK$0.268 per share), compared to HK$24,285,000 (HK$0.071 per share) for the first six months of 2017.

The Board has declared an interim dividend of HK$0.04 (2017: HK$0.03) per share for 2018 payable on Thursday, 25 October 2018, to equity shareholders whose names appear on the register of members of the Company on Thursday, 11 October 2018.

REVIEW OF OPERATIONS

The Group's business is organised by geographical locations. These locations are mainly divided into Macau, the People's Republic of China (the "PRC"), Vietnam, Japan, the United States (the "US"), Canada and other markets.

A summary and analysis of the operations are as follows.

Macau

Gaming revenue in Macau was MOP150.2 billion, recording an increase in the first half of 2018. Macau's GDP was MOP107.4 billion in the first quarter of 2018, representing a year-on-year growth of 12.9%. Unemployment remained low at 1.9% whilst median income rose to MOP20,000 for Macau residents.

During the first half of 2018, rental revenue from Macau operations decreased slightly to HK$43.1 million, as compared to HK$46.8 million in the first half of 2017, a decrease of 7.9%. This is due to a slight decrease in rental rates for residential properties. However, occupancy rate for office building units in the property portfolio was close to 100%, with increases in rental rates upon reversion. Occupancy rate for residential buildings have also been improving during the year of 2018.

The sale of properties by the Group in Macau was HK$4.8 million during the period.

After reviewing Macau property market conditions and the state of the economy, the Group has decided to defer sale of the properties currently classified under properties held for sale to a later time in order to capture the benefits to be accrued with the opening of the Hong Kong-Zhuhai-Macau Bridge and the Macau light-rail transit system. In the meantime, the Group will continue to lease out vacant units in order to maximise income.

The People's Republic of China

The Chinese economy has been undergoing a period of adjustment in the past years. GDP in the first half of 2018 grew by 6.8%, as compared to a growth rate of 6.9% for the same period in 2017.

Holiday Inn Wuhan Riverside

During the first half of 2018, room revenue of the hotel slightly increased to RMB16.0 million, as compared to RMB15.9 million in the first half of 2017, an increase of 0.6%. However, the food and beverage revenue of the hotel has decreased to RMB9.6 million in the first half of 2018 from RMB9.9 million in the first half of 2017, a reduction of 3.0%.

For the first half of 2018, average room rate was at RMB418 per room per night, as compared to RMB405 per room per night during the first six months of 2017. Occupancy rate has decreased to 69.3% during the first half of 2018, as compared to 71.2% for the first half of 2017.

Vietnam

Vietnam's economy expanded at 7.1% in the first half of 2018, which is approximately the same as in the corresponding period last year. The economy is still highly dependent on the manufacturing and agricultural sectors as the main drivers of economic growth.

During the first six months of 2018, the Group's revenue from Vietnam increased to HK$392.8 million, as compared to HK$350.3 million in the first half of 2017, an increase of 12.1%.

Sheraton Saigon Hotel and Towers

For the first half of 2018, average room rate was at US$165 per room per night, as compared to US$153 per room per night during the first six months of 2017. Occupancy rate has decreased to 74.9% during the first half of 2018, as compared to 76.3% for the first half of 2017.

Caravelle Hotel

For the first half of 2018, average room rate was at US$119 per room per night, as compared to US$113 per room per night during the first six months of 2017. Occupancy rate has decreased to 62.8% during the first half of 2018, as compared to 66.7% for the first half of 2017.

Japan

Japan's GDP in the first half of 2018 grew by 1.1%, as compared to 1.4% for the first half of 2017.

Best Western Hotel Fino Osaka Shinsaibashi

The competition in the Osaka lodging market had increased due to a number of new hotels being completed and the increase in private lodging choices. For the first half of 2018, average room rate was at JPY10,041 per room per night, as compared to JPY11,159 per room per night during the first six months of 2017. Occupancy rate has increased to 89.1% during the first half of 2018, as compared to 88.9% for the first half of 2017.

The United States ("US")

The US economy grew steadily in the first half of 2018. Gross domestic product in the first half of 2018 grew at 2.7%, as compared to 2.1% for the first half of 2017. Operating performance of our two hotels was not as robust as expected due to increasing market competition in San Francisco and New York, and the continuing impact of Airbnb.

W San Francisco

For the first half of 2018, average room rate was at US$354 per room per night, as compared to US$343 per room per night during the first six months of 2017. Occupancy rate has slightly decreased to 86.0% during the first half of 2018, as compared to 89.5% for the first half of 2017.

Sofitel New York

For the first half of 2018, average room rate was at US$332 per room per night, as compared to US$326 per room per night during the first six months of 2017. Occupancy rate has slightly dropped to 82.7% during the first half of 2018, as compared to 85.6% for the first half of 2017. The operating performance of the hotel is still affected by an increase in competition in the market as a result of new room supply entering the city as well as continuing pressure from the Airbnb segment. During this period, hotel operations and income was negatively impacted by labour union disruption.

Canada

The Canadian economy expanded by 2.3% in the first quarter of 2018, compared to 2.4% growth in the first quarter of 2017. The sustained growth was due to increase in consumer spending, housing starts, and an improvement in the investment environment.

The Sheraton Ottawa Hotel

For the first half of 2018, average room rate was at C$195 per room per night, as compared to C$196 per room per night during the first six months of 2017. Occupancy rate has increased to 74.8% during the first half of 2018, as compared to 66.0% for the first half of 2017.

Delta Hotels by Marriott Toronto Airport & Conference Centre (formerly known as the "International Plaza Hotel" and rebranded since 28 June 2017)

For the first half of 2018, average room rate was at C$138 per room per night, as compared to C$113 per room per night during the first six months of 2017. Occupancy rate has increased to 73.7% during the first half of 2018, as compared to 58.3% for the first half of 2017.

Other net gains/(losses)

Other net gains were at an amount of HK$2.1 million, as compared to net losses of HK$14.0 million in the first half of 2017. It was mainly attributable to net exchange gains for the first half of 2018 which amounted to HK$3.2 million, as compared to net exchange losses of HK$13.9 million in the first half of 2017.