SUN HUNG KAI CO: Profit surged 10 times, stock price jumped 20%, "ecological flywheel" model reshapes asset management valuation logic

In the first half of 2025, the global capital market is undergoing a stress test—tariff barriers are reconstructing the smoke of geopolitical games, the dual deficits in the U.S. combined with high debt narratives are guiding a significant rebound in gold, and the weakness of the dollar along with the decline in interest rate spreads is directing funds towards emerging markets. Against the backdrop of a "multi-clue" intertwined and turbulent macro environment, SUN HUNG KAI CO (00086) still achieved strong risk-adjusted returns.

The financial report shows that in the first half of 2025, the company's total revenue was HKD 1.803 billion (unit: HKD, same below), total income was HKD 2.8 billion, a year-on-year increase of 43.47%; the profit attributable to shareholders was HKD 887 million, a year-on-year increase of 1076%; basic earnings per share were HKD 0.453, with an interim dividend proposed at HKD 0.12 per share.

With net profit growth exceeding tenfold, this report card, which stands out during the mid-year reporting season, undoubtedly reflects the precise realization of the unique investment research gene of Hong Kong capital institutions—possessing a global vision for cross-market arbitrage while being deeply aware of the subtle pulses of policy cycles in the Asia-Pacific region. SUN HUNG KAI CO has transformed volatility into a catalyst for excess returns through robust investment returns, strict risk management, and operational flexibility.

The capital market is voting with real money for the strategic achievements of SUN HUNG KAI CO. Since the profit warning announcement in early August, the company's stock price has surged over 20%, and year-to-date, the stock price has skyrocketed by 60%. This strong performance has already shown the characteristic premium of an alternative asset management giant—its TTM price-to-earnings ratio has rapidly expanded to around 7 times, corresponding to a price-to-earnings ratio (net) exceeding 21.88 times. Behind this is the repricing by buy-side institutions of its "risk-adjusted return" capability.

Forging a 10-fold Profit Growth Asset Management Ark Amid Macro Chaos

As the global capital market in the first half of 2025 experiences severe turbulence amid multiple narratives—tariff shockwaves reconstructing the valuation coordinates of global supply chains, the dual deficits and debt ceiling in the U.S. pressuring gold to shine amid a currency faith crisis, and the weak dollar cycle igniting a wave of asset repricing in emerging markets—SUN HUNG KAI CO, with its carefully constructed alternative investment ecosystem, demonstrates cross-cycle growth resilience. The fertile cash flow of its credit business nurtures the canopy of investment management returns, while the new branches of fund management in turn nourish the expansion vitality of the entire ecosystem. This organic synergy of the business matrix has built an asset management Noah's Ark in the eye of the storm.

In the first half of 2025, the revenue structure of SUN HUNG KAI CO quietly underwent a transformation: out of the total income of HKD 2.8 billion, the investment management business alone accounted for HKD 1.035 billion, a staggering year-on-year increase of 897%, becoming the company's largest revenue engine; the fee and interest-related businesses (credit + funds) maintained a stable contribution of HKD 1.726 billion, showcasing strong anti-cyclical capabilities; the corporate business contributed HKD 39.3 million.

In terms of profit performance, the investment management business saw a strong turnaround in pre-tax profit from a loss of HKD 147.5 million in the same period last year to a profit of HKD 785.6 million, not only contributing over 70% of the company's profit source but also driving overall pre-tax profit to achieve a robust growth of 253.7%. Behind this business matrix's report card indicates that the "ecological flywheel" model driven by the three engines of SUN HUNG KAI CO is accelerating its launch

It is not difficult to see that the explosive growth of investment management business has become the key driver of SUN HUNG KAI CO's epic profit growth in 2025. By decoding the investment management business, investors may gain a clearer understanding of how it forges an asset management ark with over 10 times profit growth.

In the first half of 2025, SUN HUNG KAI CO's investment management business achieved investment income of 998 million yuan, a year-on-year surge of 1638.5%. Behind this revenue figure is the investment management team's ability to navigate the capital cycle.

Specifically, the company's private equity is the "main battlefield" for value realization, contributing 582 million yuan in revenue, accounting for nearly 60%. This strong performance is primarily attributed to two landmark exit projects. The dual success of Jefferson Capital's NASDAQ listing and Saint Bella's Hong Kong IPO not only realized the classic closed loop of private equity "investment-value enhancement-exit," but also showcased its ecological investment management philosophy that transcends economic cycles.

It is worth noting that the value multiplier of the company's ecological synergy should not be underestimated. First, third-party capital synergy, through a joint investment platform, leverages external capital to achieve growth in management fee income. Second, collaboration with excellent external private equity GPs gathers the strengths of both parties to provide enterprises with "1+1>2" composite resource support and strategic guidance. Third, under the independent direct investment model, relying on SUN HUNG KAI CO's strong foundation, mature professional experience, and extensive business network, it provides deep and efficient exclusive support to enterprises, empowering their accelerated growth.

This value creation system that spans the entire cycle of "fundraising-investment-management-exit" has led to a significant increase in the pre-tax contribution of its private equity.

In addition to private equity, the company's equity holdings reversed from a loss to a profit of 304 million yuan, reflecting SUN HUNG KAI CO's dual advantages in long-term value excavation and short-term market opportunity capture in portfolio management.

In the first half of 2025, SUN HUNG KAI's investment portfolio achieved excellent diversified allocation between high-growth technology stocks (such as AI, fintech) and stable value stocks (such as commodities, leading consumer brands), effectively reducing single market risk while seizing investment opportunities across different economic cycles. This approach of rational allocation and dynamic adjustment of various assets in different market environments not only effectively resisted market fluctuations but also achieved steady asset appreciation.

SUN HUNG KAI CO's equity portfolio demonstrated an outstanding return of 22.3%, showcasing its unique wisdom in cross-market allocation. This is not only a victory in asset selection but also a comprehensive interpretation of trend prediction, regional rotation, and risk management In short, the reason why SUN HUNG KAI CO's asset management Ark can navigate through the turbulent waves of 2025 lies fundamentally in the reconstruction of three core capabilities: first, the ecological value discovery capability, which is committed to creating significant value for invested enterprises through flexible investment models, empowering their full-cycle growth; second, the cross-cycle allocation capability, which builds an asymmetric risk-return structure among various asset classes such as private equity, corporate holdings, and hedge funds; finally, the dynamic risk management capability, which transforms market volatility from a threat into a source of income, achieving dual optimization of the Sharpe ratio and maximum drawdown. The company has demonstrated a tenfold profit growth: in the midst of macro trend fragmentation, leveraging the effect of capital reallocation through refined operations is of significant importance for value creation.

Credit + Fund Provides 1.726 Billion Cash Flow to Steadily Guard Value Ballast

In the year 2025, when global financial asset volatility surged, SUN HUNG KAI CO's credit and fund businesses jointly contributed HKD 1.726 billion in revenue, serving as a ballast in the giant ship, providing crucial stability amidst the macro storm. Behind these figures is a meticulously designed risk-adjusted return strategy—ensuring the foundational cash flow of traditional businesses while optimizing returns through innovative financial instruments, showcasing the art of balance between offense and defense at SUN HUNG KAI CO.

First, the refined operation of the credit business. UA Finance, a wholly-owned subsidiary of SUN HUNG KAI CO, once again confirms its unshakeable market position—ranking first among non-bank unsecured loan institutions in Hong Kong for the eighth consecutive year, and maintaining a top-five performance among all types of loan institutions in the region.

During the period, UA Finance demonstrated exceptional operational resilience—while maintaining prudent loan approval, it achieved efficiency improvements through refined cost management, ultimately recording revenue of HKD 1.599 billion, a year-on-year increase of 2.0%, with a cost-to-income ratio optimized to 30.6%, leading the industry, and a loan return rate maintained at an ideal level of 28.4%, reflecting the continuous optimization of risk pricing capability. This performance report embodies its strategic determination and operational management capability of "quality over scale."

As the core vehicle of SUN HUNG KAI CO's credit business, UA Finance's role goes beyond being a cash flow stabilizer; its data asset pool and innovative testing ground are also significant. On one hand, the company’s accumulation of tens of millions of customer behavior data feeds back into the group's investment decision-making model; on the other hand, once new technologies like AI risk control mature, they can be applied to other businesses within the group.

While some peers in consumer finance are still struggling to balance scale expansion and asset quality, UA Finance has proven a sustainable development path through dual efforts of prudent risk control and operational efficiency—true competitiveness lies not in the growth rate of loan balances, but in the revenue efficiency created by unit risk consumption. This steady growth performance not only consolidates its leadership position in Hong Kong's unsecured loan market but also highlights the synergistic value of SUN HUNG KAI CO's diversified business model—in a volatile market environment, stable credit income is becoming a solid backing for the group to explore alternative investment territories

Secondly, the innovation in fund business creates value. Sun Hung Kai Capital Partners Limited (“SHKCP”), a subsidiary of SUN HUNG KAI CO, is the regulated entity executing fund management business for the group. During the period, the company's total assets under management surged to USD 2.6 billion, setting a record.

The breakthrough growth is attributed to the company's fund partnerships, family office solutions, and SHKCP funds collectively recording a net cash inflow of USD 434 million and market gains of USD 155 million. This combination not only reflects its strong capital absorption capability but also demonstrates exceptional investment management strength, showcasing the dual advantages of "new capital recognition" and "appreciation of existing assets."

In terms of capital inflow, fund partnerships have become the main contributors, with ActusRayPartners (which adopts a market-neutral strategy in Europe, Asia, and Japan) having a total assets under management exceeding USD 1.7 billion; family office solutions and SHKCP show strong appeal, building a cross-regional investor network that connects Asia-Pacific family offices with global institutional capital needs. Through an ecological layout of capital synergy, it achieves genuine interest binding rather than a simple distribution relationship. The trust-based growth model not only brings stable capital sources to SHKCP but also indicates that asset managers can build long-term win-win partnerships with investors.

It is worth mentioning that the fund business of SUN HUNG KAI CO is completing a strategic transformation from "self-capital driven" to "third-party capital driven"—the proportion of external investor capital has increased from 79.9% to 85.0%, while self-balance sheet capital has decreased from 20.1% to 15.0%. This structural change not only reflects the market's high recognition of its investment capabilities but also highlights the maturity enhancement of its position as a leading alternative investment management platform in Asia.

This optimization of capital structure effectively creates a virtuous cycle: higher quality external capital injection → enhanced investment capability and scale → better performance → attracting more external capital. Once the virtuous cycle is initiated, the company's platform capabilities are validated, and the sustainability of the business model is enhanced.

In summary, SUN HUNG KAI CO's strategic layout in the fund business is deepening, forming a strong network effect: SHKCP demonstrates its fund manager selection capability through ActusRayPartners, showcases asset management strength through Latitude Alpha, and expands product boundaries through collaborations with Wentworth and Mubadala. This unique model of "boutique professional capability + platform resource integration" attracts capital through outstanding investment performance, expands boundaries through deep strategic cooperation, and builds trust through extreme transparency This capability-driven rather than scale-driven development model is setting a new benchmark for the Asian alternative investment industry.

Summary: The Three-Part Value Reassessment and Premium of Ecological Asset Management Platforms

From the perspective of valuation evolution, the current valuation reconstruction of Sun Hung Kai Co. is merely the initial stage of the value discovery process and a repricing by the capital market of the business model innovation of alternative asset management giants—essentially reflecting its paradigm shift from traditional credit institutions to ecological asset management platforms.

According to Zhitong Finance APP, the core valuation premium of Sun Hung Kai Co. stems from three structural transformations: first, the premium from the reconstruction of the revenue model—investment management business contributes over 70% of profits, marking the company's upgrade from interest margin-driven to alpha-driven, deserving a valuation system distinct from traditional financial institutions; second, the premium from the scarcity of ecological barriers—the cross-border investment network, third-party capital collaboration mechanism, and transparency management system established by Sun Hung Kai Capital Partners create a platform value that is difficult to replicate; finally, the premium from the certainty of cross-cycle capabilities—achieving a 1076% profit growth in a macro high-volatility environment proves its unique ability to convert market fluctuations into excess returns.

The valuation reconstruction story of Sun Hung Kai has just begun—when the market truly understands its three-in-one model of providing stable cash flow through credit business (valuation cornerstone), generating excess returns through investment management (valuation elasticity), and nurturing future growth through fund management (option value), this Hong Kong premium asset management stock may become the preferred vehicle for global capital allocation in Asian alternative assets