Chairman's Statement

DEAR SHAREHOLDERS,

On behalf of the Board of Directors (the “Board”) of HONG FOK CORPORATION LIMITED (the “Company” and together with its subsidiaries, the “Group”), I am pleased to present our Annual Report for the financial year ended 31 December 2023 ("FY2023").

REVIEW OF FY2023

In FY2023, contributions from the operation of the Group’s hotel investment property, YOTEL Singapore Orchard Road, improved from FY2022, as visitor arrivals and tourism receipts in Singapore continued to grow in 2023.

In April 2023, the applicable Additional Buyer’s Stamp Duties (“ABSD”) rates were increased across the board and, in particular, foreigners were some of the most impacted with an increase of ABSD rates from 30% to 60% for the purchase by any foreigner of any residential property. This impacted the sales of the Group’s residential units in Concourse Skyline with only six units sold in 2023 as compared to ten units sold in 2022.

For FY2023, the Group’s net profit was approximately $95 million, of which approximately $88 million was attributable to Owners of the Company.

The Group maintained a strong financial position as of 31 December 2023 with net current assets of approximately $145 million, of which cash and cash equivalents was approximately $64 million. Net asset value per share was $3.57 on 31 December 2023.

PROSPECTS FOR FY2024

The recovery of the tourism sector is expected to continue in 2024 with improved global flight connectivity, increased flight capacity and the implementation of the mutual 30-day visa-free travel between China and Singapore. Hence the Group is optimistic about the room rates and occupancy rate of YOTEL Singapore Orchard Road.

As long as leasing demand for commercial and residential units remains generally healthy, the occupancy rates of the Group’s investment properties are expected to remain stable.

The higher ABSD rates for residential properties in Singapore will continue to deter foreign buyers and investors. The current residential market is likely to continue to remain moderately weak with buying momentum driven mainly by local buyers. Nevertheless, the Group is expected to continue to recognise revenue from the sales of its residential units in Concourse Skyline.

APPRECIATION

On behalf of the Board, I would like to express our heartfelt appreciation to our shareholders, tenants, customers, business associates and bankers for their continued support and confidence in the Group.

On behalf of the Board, I would also like to thank our Board members for their invaluable contributions and guidance. The Board would especially like to extend our appreciation to Mr Lim Jun Xiong Steven for his contributions and guidance during his nine-year tenure as Non-executive Independent Director. The Board also welcomes Mr Kwik Sam Aik and Mr Tan Kok Kwee who joined us as Non-executive Independent Directors in August 2023 and February 2024 respectively. I am confident that they will prove to be strong assets to the Board.

The Board would also like to thank our management and staff for their hard work and contribution during the year.

CHAN PENGEE, ADRIAN

Non-executive Independent Chairman