FSE LIFESTYLE's mid-term profit decreased by 10%. CFO: The current contracts of HKD 8 billion hit a new high, maintaining a stable dividend

FSE Lifestyle (331) reported a mid-term net profit of HKD 216 million at the end of last year, a year-on-year decrease of 10.6%. The company declared a mid-term dividend of HKD 0.189 per share, a year-on-year reduction of 10.4%, maintaining a payout ratio of 40%. During the period, revenue was HKD 3.777 billion, down 7.7% year-on-year. Project Delays Weigh on Profitability FSE Lifestyle's Chief Financial Officer and Company Secretary, Chan Tso-wai, stated that the decline in profit was mainly due to the electromechanical engineering sector, with related revenue decreasing by HKD 390 million, primarily due to project delays and the completion of large projects. However, the company improved its overall gross profit margin from 12.8% to 13.7% through cost optimization and business structure adjustments, enhancing profit quality. Uncompleted Contracts to Be Recognized in Two to Three Years He pointed out that the company has a sufficient order backlog, with uncompleted contracts reaching HKD 8 billion by the end of 2025, a record high; the amount won in the past six months was HKD 4.2 billion, bringing the total uncompleted contracts to HKD 15.2 billion, an increase from HKD 14.6 billion at the end of June last year. Related revenue is expected to be recognized gradually over the next 2 to 3 years. He mentioned that the electromechanical sector won contracts worth HKD 2.2 billion in the mid-term, significantly higher than HKD 1.2 billion in the same period last year. Company Holds Net Cash, Financially Capable of Acquisitions and Dividends Regarding future dividend levels, Chan Tso-wai emphasized that the company's financial condition has always been stable, with a net debt ratio maintained at zero, indicating a net cash position, providing ample financial capacity to support acquisitions and business expansion. Therefore, the company will continue to balance shareholder returns with long-term development and maintain a stable dividend policy. Transitioned from Electromechanical Business to Property Management Company Chan Tso-wai stated that the effectiveness of the business transformation is evident, as the company has evolved from a single electromechanical enterprise to a one-stop integrated lifestyle service group, with property management and integrated lifestyle services accounting for nearly 73% of operating revenue, while the electromechanical sector's share has decreased to about 27%, effectively reducing the risk of economic cycle fluctuations. He mentioned that the company has added property asset management services, extending from traditional property management to leasing, buying and selling, and one-stop asset management services. Northern Metropolis Seen as Key Growth Engine Chan Tso-wai also mentioned that the Northern Metropolis will become a key growth engine, revealing that the company has actively laid out plans in areas such as Kwu Tung, Yuen Long, and Fanling, participating in public housing and housing association projects. In terms of transportation infrastructure, the company has won the Tuen Mun South Extension Line contract and will strive for the upcoming bidding for the Northern Link contract, while also focusing on urban redevelopment projects in areas such as East Mong Kok, South Yau Ma Tei, Ma Tau Wai, and Sai Wan Village, expanding its share through optimized bidding strategies. Major Events Drive Revenue Additionally, Chan Tso-wai stated that driven by the local event economy, revenue and gross profit margin from security and event services have improved simultaneously. During the period, the company organized 64 large-scale events covering the Convention and Exhibition Centre, AsiaWorld-Expo, and Kai Tak Sports Park, with related venue bookings already scheduled until 2028. The company has the capability to serve 100,000 attendees in a single day