About KWIH
Chairman's Message?

Dear Shareholders,

2018 was a fruitful year for KWIH with satisfactory business results. KWIH's attributable contracted sales amounted to HK$12.1 billion for the financial year ended 31 December 2018, exceeding the HK$10 billion benchmark for the fourth consecutive year. Attributable revenue reached HK$10,918 million. Profit attributable to equity holders amounted to HK$4,046 million. Underlying profit was HK$3,005 million.

The Board has recommended a final dividend of 14 HK cents per share for the year ended 31 December 2018. Together with the interim dividend of 6 HK cents per share, the dividend for the full year would amount to 20 HK cents per share, a 11% year-on-year increase that illustrates the Board's confidence in the Group to sustain its long-term business growth.

We have endured an eventful year of change in terms of political and economic developments, both in Hong Kong and globally - notably with the Mainland China-US trade conflict and the shadow of Brexit. In the meantime, four successive US interest rate hikes were matched by the first hike in Hong Kong's prime rates since 2006. While the Hong Kong Government introduced new housing policies, economic sentiment turned cautious. As Mainland China-US trade disputes continued, the local Hong Kong property market experienced an adjustment in the second half of the year with a slowdown in new project sales. Registered primary sales of private residential units for the full year reduced by approximately 16%, year-on-year, to 15,600 transactions, although the average sales amount per transaction increased by approximately 8% to more than HK$14 million, as compared to 2017.

Adhering to its prudent yet precise strategic approach, during the period under review the Group accurately timed the launches of its premium projects, while their quality was clearly recognised in the market, resulting in outstanding sales. Solaria in Pak Shek Kok, Tai Po launched sales in June 2018 and approximately 700 units were sold in just a two-month period. At the same time, a unit at K. City, Kai Tak was sold for HK$109 million at an average price of more than HK$50,000 per square foot, a figure that set a record price per square foot for the project and the Kai Tak area.

In 2018, the Mainland China property market continued its consolidation: During the first three quarters, China's tier-one and other major cities maintained their stringent restrictive measures over primary residential property. Consequently, the supply and sales volume of residential units stayed at comparatively low transaction levels, whereas housing prices remained relatively stable. As the effects of these restrictive measures became evident, some of the cities began to ease part of their housing policies in the fourth quarter. During the year, the Group reported satisfactory sales for their projects in Shanghai, Nanjing, Guangzhou and Dongguan.

During the year under review, KWIH affirmed its flexible development strategy and acquired projects on its own and also via joint ventures. Located in the Pearl River Delta and Yangtze River Delta regions, the new projects acquired in the year under review increased the Group's land bank by approximately 280,000 sqm of attributable GFA and further expanded its business footprint.


In 2019, global political and economic uncertainties, including trade protectionism - in particular the trade conflict between Mainland China and US - geopolitical risks, the monetary policies of various central banks and also Brexit will all continue to impact both the Hong Kong and global economy.

Nevertheless, the fundamentals of success on which Hong Kong has been built in the past, as an international city, have not changed. We believe that Hong Kong will continue to attract global investments to its property market. Meanwhile, our stable, growing population and low unemployment rate will continue to support the end-user demand for residential properties. The Group believes that Hong Kong's housing market will again be underpinned by improving market sentiments when there are less uncertainties. Furthermore, the Hong Kong Government has continued to put efforts into improving its housing policies and increasing land supply to cater for residents' housing demands, benefitting the healthy development of the property market in the long term.

In Mainland China, the Central Government have pledged to stabilise land and home prices as well as market expectations in the property market. The Group expects the Central Government will continue to support end-user housing demand and step up efforts to curtail speculative purchases. With our long-established presence in the Mainland China market, the Group has gained competitive advantages over the years and KWIH is wellprepared to address vulnerabilities through full execution of and flexibility in its distinctive development strategy.

With all the challenges ahead, KWIH will closely monitor global political and economic developments while continuing to stick to its strategy of "Quality and Excellence". By providing premium properties and services that exceed customer expectations, our ongoing efforts are set to bolster our overall competitive strengths. The Group will continue to apply a pro-active, discipline and strategic approach for land replenishment at opportune time that promises satisfactory returns in Hong Kong, the Yangtze River Delta and the Pearl River Delta regions. Underpinned by improving cross-border transport connectivity, such as the Hong Kong- Zhuhai-Macao Bridge and the development of the Guangdong-Hong Kong-Macao Greater Bay Area, the Group will continue to increase its investments in the Greater Bay Area, with a view to further extending the well-established brand reputation of "K. Wah".

To conclude, I would like to thank the leadership of the management team and recognise the hard work of all our colleagues. I am grateful to them all for their outstanding contributions to KWIH. I look forward to their continued efforts and co-operation in enhancing our operations, as we reward our stakeholders for their longstanding support and create more value to our shareholders, while realising our vision for the Group's long-term and sustained business growth.

Dr. Lui Che-woo


20 March 2019

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