Wharf Real Estate Investment Co (1997) AI Stock Analysis

• Market Cap: $73.05B
• Dividend Yield: 5.24%
• Average Volume (3M): 4.00M
• Price to Earnings (P/E): ―
• Beta (1Y): 0.96
• Revenue Growth: -3.87%
• EPS Growth: -124.27%
• Country: HK
• Employees: 2,900
• Sector: Real Estate
• Sector Strength: 53
• Industry: Real Estate - Services
• EPS (TTM): 1.03
• Shares Outstanding: 3,036,227,300
• 10 Day Avg. Volume: 3,626,616
• 30 Day Avg. Volume: 4,004,247
• PEG Ratio: -0.83
• Price to Book (P/B): 0.32
• Price to Sales (P/S): 4.67
• P/FCF Ratio: 9.58
• Enterprise Value/Market Cap: 1.44
• Enterprise Value/Revenue: 8.19
• Enterprise Value/Gross Profit: 10.40
• Enterprise Value/Ebitda: 10.82
• 1Y Price Target: $25.98
• Price Target Upside: 7.91% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 60 Neutral
• Price Target: HK$26.00 ▲(7.97% Upside)

The overall stock score reflects a mixed financial performance with strong margins but significant cash flow issues. Positive technical momentum supports the stock, but valuation concerns due to a negative P/E ratio weigh on the score. The attractive dividend yield provides some offsetting benefit.

Positive Factors

Strong Gross and EBIT Margins

High gross and EBIT margins indicate efficient cost management and strong pricing power, which can sustain profitability despite revenue challenges.

Stable Balance Sheet

Low leverage enhances financial stability, providing the company with flexibility to invest in growth opportunities and weather economic downturns.

High Dividend Yield

A high dividend yield can attract income-focused investors, providing a steady return and signaling confidence in future cash flows.

Negative Factors

Declining Revenue

A decline in revenue suggests challenges in market demand or competitive positioning, which could impact long-term growth and profitability.

Significant Cash Flow Issues

Lack of cash flow generation raises concerns about liquidity and the ability to fund operations and investments, potentially affecting future growth.

Low Net Profit Margin

A low net profit margin indicates reduced profitability, which can limit reinvestment in the business and affect shareholder returns over time.

Wharf Real Estate Investment Co Business Overview & Revenue Model

Company Description

Wharf Real Estate Investment Company Limited, an investment holding company, invests in, develops, owns, and operates properties and hotels in Hong Kong, Mainland China, and Singapore. The company operates through four segments: Investment Properties, Development Properties, Hotel, and Investment segments. It primarily operates Harbour City, a commercial space comprising offices, retail shops, serviced apartments, hotels and clubs, and car parking spaces; and Times Square, a retail space that consists of office and car parking spaces. The company also operates Wheelock House and Crawford House commercial properties; The Murray, a luxury hotel that consists of 336 rooms; Plaza Hollywood, a shopping mall with retail outlets, restaurants, and a stadium housing six-screen cinema multiplex; The Star Ferry, which provides two inner harbour ferry services, including Tsim Sha Tsui and Wan Chai; and Wheelock Place and Scotts Square mall. In addition, it offers leasing, finance, and management services; and engages in property investment. The company was founded in 1886 and is headquartered in Kowloon, Hong Kong.

How the Company Makes Money

Wharf Real Estate Investment Co generates revenue primarily through its real estate investments, which include rental income from commercial and residential properties, sales of developed properties, and management fees from its property management services. The company benefits from a diverse revenue model that encompasses long-term leasing agreements, short-term rentals, and property sales, allowing it to capitalize on both stable income streams and market fluctuations. Significant partnerships with local and international developers, along with strategic collaborations in urban development projects, further enhance its financial performance. Additionally, the company may leverage its assets for financing and investment opportunities, contributing to its overall earnings.

Wharf Real Estate Investment Co Financial Statement Overview

Summary

The company's financial performance is mixed. Strong gross and EBIT margins are offset by a low net profit margin and declining revenue. The balance sheet is stable with low leverage, but cash flow issues are significant, with no operating or free cash flow reported, raising liquidity concerns.

Income Statement

The company's income statement shows mixed results. Gross profit margin is strong at 80.1%, and EBIT margin is healthy at 75.1%. However, the net profit margin is low at 6.9%, reflecting reduced profitability. Revenue has declined by 3% from the previous year, indicating a downward trend in sales. While EBITDA margin is robust at 76.9%, the overall performance is impacted by declining revenue and low net profitability.

Balance Sheet

The company's balance sheet reflects stability with a debt-to-equity ratio of 0.20, indicating low leverage. The equity ratio is high at 78.9%, suggesting strong equity financing. However, return on equity is relatively low at 0.5%, showing limited returns for shareholders. The company's asset base has decreased, which may impact future growth potential.

Cash Flow

The cash flow statement indicates significant challenges, with no operating cash flow or free cash flow reported for the latest year, which raises concerns about cash generation capacity. Operating cash flow to net income ratio and free cash flow to net income ratio are not calculable, pointing to potential liquidity issues.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	12.82B	12.91B	13.31B	12.41B	16.04B	15.52B
Gross Profit	10.10B	10.34B	10.68B	9.65B	10.38B	10.84B
EBITDA	9.70B	9.94B	10.24B	9.12B	9.21B	10.74B
Net Income	-463.00M	891.00M	4.77B	-8.86B	4.39B	-7.85B
Balance Sheet
Total Assets	234.22B	238.07B	245.32B	255.25B	272.27B	277.91B
Cash, Cash Equivalents and Short-Term Investments	1.37B	1.31B	1.12B	1.34B	1.80B	2.26B
Total Debt	34.73B	35.54B	37.42B	46.49B	49.33B	54.28B
Total Liabilities	44.73B	46.09B	49.72B	60.37B	61.39B	68.50B
Stockholders Equity	185.23B	187.82B	191.41B	190.36B	206.11B	204.55B
Cash Flow
Free Cash Flow	6.51B	6.30B	5.82B	6.65B	7.77B	4.65B
Operating Cash Flow	6.46B	6.34B	5.87B	6.69B	7.97B	4.82B
Investing Cash Flow	-109.00M	-174.00M	7.17B	-2.16B	199.00M	-8.13B
Financing Cash Flow	-5.97B	-5.96B	-13.25B	-4.90B	-8.66B	2.59B

Wharf Real Estate Investment Co Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 24.08
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:1997, the sentiment is Neutral. The current price of 24.08 is below the 20-day moving average (MA) of 24.38, above the 50-day MA of 23.59, and above the 200-day MA of 21.51, indicating a neutral trend. The MACD of 0.16 indicates Positive momentum. The RSI at 48.11 is Neutral, neither overbought nor oversold. The STOCH value of 39.19 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for HK:1997.

Wharf Real Estate Investment Co Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
0101	71 Outperform	HK$45.16B	21.28	1.52%	5.82%	-9.76%	-28.29%
1209	67 Neutral	HK$97.23B	24.02	23.11%	3.01%	10.31%	8.93%
6098	66 Neutral	HK$20.76B	14.00	3.72%	4.90%	7.23%	―
Sector *	65 Neutral	$2.17B	12.19	3.79%	4.94%	3.15%	1.96%
1997	60 Neutral	$73.05B	-157.80	-0.25%	5.24%	-3.87%	-124.27%
2602	58 Neutral	HK$22.24B	17.53	7.08%	1.73%	5.75%	-31.63%

Wharf Real Estate Investment Co Corporate Events

Wharf Real Estate Investment Co Enters New Tenancy Agreement

Wharf Real Estate Investment Co and Wharf Group have entered into a New Master Tenancy Agreement with WAC to manage connected transactions for property rentals and licenses among group members. This agreement, effective from January 2026 to December 2028, aims to streamline operations and ensure compliance with listing rules, impacting the company’s operational efficiency and stakeholder relations.

Wharf Real Estate Investment Co Enters New Property Services Agreement

Wharf Real Estate Investment Co, along with Wharf and HCDL, has entered into a New Master Property Services Agreement to regulate continuing connected transactions among WAC Group Members. This agreement, effective from January 1, 2026, to December 31, 2028, aims to streamline property services across their development and investment properties, ensuring compliance with the Listing Rules while exempting them from certain approval requirements.

Wharf and WREIC Sign New Hotel Services Agreement

Wharf Real Estate Investment Co and Wharf Group have entered into a New Master Hotel Services Agreement to regulate ongoing connected transactions related to hotel services. This agreement, effective from January 1, 2026, to December 31, 2028, outlines the provision of comprehensive hotel-related services by Wharf Group to WREIC. The agreement ensures compliance with listing rules, setting annual cap amounts for service fees and allowing for individual service agreements. This strategic move aims to streamline operations and strengthen the partnership between the two entities, potentially enhancing their market positioning and operational efficiency.

Wharf REIC to Forfeit Unclaimed 2019 Dividends

Wharf Real Estate Investment Company Limited announced the forfeiture of unclaimed dividends from 2019, amounting to HK$1.10 per share, which will revert to the company if not claimed by October 9, 2025. This move underscores the company’s adherence to its articles of association and may impact shareholders who have not yet claimed their dividends, urging them to act promptly.