Affected by factors such as the recurrent epidemic and economic downturn, in the first half of 2023, the comprehensive occupancy rate of logistics parks operated by the Group for more than one year (excluding the Greater Bay Area) was 82%.

With the implementation of consumption promotion policies and the upgrading of consumption methods, the rental situation of the park is expected to steadily increase. By placing a greater emphasis on "retaining clients, retaining rents, and retaining occupancy rates", the Group will adopt effective measures to strengthen its core competencies in investment promotion and operation to enhance its operational efficiency and maintain relatively high occupancy rates in parks that have been in operation for more than a year. The Group will, under the premise of sound risk management, explore more businesses integrating asset-heavy and asset-light operations and value-added services, to improve its profitability of asset-heavy operations before interest and taxes and average net operating profit margin of its mature parks.

As at 30 June 2023, the Group had a total of 57,000 square meters of intelligent and cold storage warehouse space in operation, and approximately 287,000 square meters are currently under construction, proposed for construction or in the planning process. It is expected that 73,000 square meters of intelligent warehouse space and 60,000 square meters of cold storage warehouse space will be put into operation in the second half of 2023.

In its development of intelligent warehouses, the Group continued to carry out intelligent transformations of existing projects. A total of 37,000 square meters of area have undergone intelligent transformation and commenced operations, enhancing customers' storage space utilization rates and inventory turnover efficiency while significantly reducing labor costs. Meanwhile, Shijiazhuang Zhengding Project's intelligent pharmaceutical warehouse has achieved real-time visualized control of temperature and humidity, developing as a leading shared intelligent warehouse for the pharmaceutical industry.

In respect of the cold chain business, the Group has continued to make encouraging progress in the planning and construction of cold storage warehouses at its logistics hubs. It has jointly established a cold chain joint venture operation with cold chain logistics company "VX Logistics" to accelerate the development of its cold chain business, guided by the "Self-exploration of asset-heavy project + Joint operation of asset-light project" strategic model. As the first part of this, the jointly developed cold storage warehouse of SZ Liguang Project, with an area of approximately 39,000 square meters, is intended to be developed as an ecological, intelligent, innovative benchmark demonstration project. As at 30 June 2023, the construction of approximately 24,000 square meters of cold storage warehouse space had been completed, and the Group aims to complete the construction works of the cold storage warehouse in this project by the end of 2023. The Group has also been expediting the development of the cold chain project at the airport of Nanjing, which includes a planned cold storage warehouse area of approximately 33,000 square meters. Since the signing of a land transfer contract in June 2023, the Group has been proactively preparing for pre-construction work. In addition, the Group commenced the transformation of Shanghai Minhang Project from a dry warehouse into a cold storage warehouse in the first half of 2023. Once transformed, the cold storage warehouse, which has an area of approximately 52,000 square meters, is expected to commence operations in 2024.

For the outlook for the second half of 2023, the Group will actively advance its intelligent warehousing and cold chain logistics operations by leveraging its existing logistics park network, aiming to realize more diversified income and returns, and serving as an enabler for the upgrading of the pharmaceuticals, high-end manufacturing and consumer industries. The Group will drive the implementation of new projects and initiate upgrades of cold chain park projects, including Shanghai Minhang Project, with the objective of expediting the construction of a nationwide cold chain network. In addition, capitalizing on its strategic investments in Hubei Prolog Technology Co., Ltd. and China Comservice, the Group will pursue high-quality investment and merger and acquisition opportunities, and seize development opportunities in the intelligent warehousing and cold chain sub-segments.

During the Period, revenue from the port and related services business decreased by 16% to HK$1,326 million as compared to the corresponding period of the previous year, primarily due to the varying degrees of production load reduction by end-users such as power and cement corporates, resulting in relatively weak market demand. Profit attributable to shareholders decreased by 6% to HK$50.45 million as compared to the corresponding period of the previous year (profit attributable to shareholders maintained at a similar level when excluding the impact of exchange rate).

The port business is an important segment in the Group's "Four Growth Engines" layout strategy. In the port business, the Group aims to stabilize and improve the performance of Nanjing Xiba Port and supply chain business while proactively overcoming the impact of the market downturn. The Group will also accelerate the development of the operational capabilities of newly commissioned projects, with the objective of bolstering the core competitiveness and market position of its port segment through integrating operations. Targeting to spin off its port segment, the Group will expedite project investment and operations, with strong emphasis on boosting its efficiency, while strategically allocating project investment funds in line with its objectives outlined in the "14th Five-Year" development plan.

The Group's management attaches great importance to fund management and cost reduction. At the beginning of the year, the priority of the Group was to strengthen fund management, maintain fund stability, and gradually reduce costs. The main measures taken by the Group to control financial costs are as follows:

To minimize the impact of exchange rate, reduce interest expenses, as well as to cut overall funding costs, the Group has been actively pursuing the optimization of its domestic and foreign currency structure. This includes issuing onshore bonds in the PRC in replacement of offshore debt in Hong Kong dollar ("HKD"). In July 2023, the Group issued corporate bonds to professional investors in the PRC. The bonds, listed on the Shenzhen Stock Exchange, were in the principal amount of RMB1,500 million with a coupon rate of 2.88% and RMB1,600 million with a coupon rate of 2.99%, respectively. The Group has made use of its internal funds and proceeds from such onshore bond issuance to repay and replace offshore foreign currency loans, optimize debt maturity and currency structure, further reduce the amount of foreign currency loans, secure long-term low-cost funding, and reduce financial costs.

To further mitigate funding risks, the Group will continue to closely monitor the volatility of the RMB exchange rate and dynamics of domestic and international capital markets, adjust its funding plans in a timely manner, and optimize its foreign currency debt structures and short and long-term capital structures.

For the six months ended 30 June 2023, the Group recorded a total revenue of approximately HK$6,918 million, representing a decrease of 8% as compared to the corresponding period of the previous year (revenue maintained at a similar level when excluding the impact of exchange rate). Profit attributable to shareholders was approximately HK$92.05 million, representing a decrease of 84% as compared to the corresponding period of the previous year, which was mainly due to the absence of the one-off gain from the capital contribution of Shenzhen International Qianhai Business Development (Shenzhen) Co., Ltd ("Qianhai Business"), which was recognized during the corresponding period of the previous year, as well as other factors including the depreciation of Renminbi ("RMB") and the increase in financial costs.

The Group's South China Logistics Park is located in the central axis and core node of Shenzhen. With a site area of approximately 580,000 square meters, it is the largest traditional warehousing and logistics park the Group owns in Shenzhen. Promoting the transformation of the first phase of SZI South China Logistics Park into a south China digital economy super headquarters base is a crucial task for the Group in exploring the long closed-loop "Investment, Construction, Operation and Transformation" development model, following the Qianhai Project.

The long closed-loop model of "Investment, Construction, Operation and Transformation" has been developing in an orderly manner, with SZI South China Logistics Park has been included in the Shenzhen Urban Renewal and Land Reconditioning Plan, and its transformative vision has been included in the spatial planning of Longhua District. Significant progress has been made in the transformation and upgrading of the park. According to the public reading of "Longhua District National Land and Space Plan (2021-2035) (draft)" released by the Longhua District government, SZI South China Logistics Park is included in the spatial scope of the "North Railway Station Hub Urban Function Node" and "Strategically Reserved Area". It has been written into the spatial blueprint for the medium to long-term development of the Longhua District for the next 15 years.

In the coming years, the Group will actively develop the project in alignment with government planning and proactively advance its work process, aiming to achieve mutually beneficial outcomes for all parties, and expeditiously unlock the project's intrinsic value.

The Qianhai Project will be developed in three phases.

The first phase of the Qianhai Project has a total gross floor area of approximately 110,000 square meters, comprising residential area of approximately 51,000 square meters (PARKVIEW BAY, which was jointly developed by the Group and Shum Yip Land Company Limited), office area of approximately 35,000 square meters (Yidu Building), and commercial area of approximately 25,000 square meters (Qianhai Yinli), all of which have been put into operation and delivered for use.

The second phase of the Qianhai Project has a plot ratio-based gross floor area of approximately 110,000 square meters in aggregate, and comprises residential area of approximately 91,000 square meters. The development of this phase will be carried out in two parts. The first part, which is the "SZI Properties (Shenzhen Yicheng Qiwanli)" ("Yicheng Qiwanli") component developed and operated solely by the Group, has a total gross floor area of approximately 65,000 square meters, comprising a residential gross floor area of approximately 51,000 square meters and a commercial gross floor area of approximately 6,000 square meters. "Yicheng Qiwanli" commenced pre-sales on 28 September 2022 and achieved a sales rate of approximately 98.5% on its launch day. As at 30 June 2023, the Group received payments of approximately RMB510 million and "Yicheng Qiwanli" is expected to be completed and delivered by the end of 2023.

Another residential component of the second phase of the Qianhai Project, developed jointly with Shenzhen Vanke Development Company Limited ("Shenzhen Vanke"), comprises residential area of approximately 40,000 square meters and commercial area of approximately 3,400 square meters. Pre-sales of the residential units began in 2022, and the construction of the main structure is currently in steady progress. Roofing is expected to be completed by the end of 2023.

The third phase of the Qianhai Project has a plot ratio-based gross floor area of approximately 172,000 square meters in aggregate. The residential project of the third phase of the Qianhai Project, developed jointly with Shenzhen Vanke, has a plot ratio-based gross floor area of approximately 80,000 square meters, comprising residential area of approximately 50,000 square meters, apartment area of approximately 25,000 square meters and commercial area of approximately 5,000 square meters. Pre-sales of the residential project began on 1 April 2023 and it achieved a sales rate of approximately 87% as at 30 June 2023. The construction of the main structure is currently in steady progress.

The Group owns two separate land parcels in the third phase of the Qianhai Project, which are designated for office and commercial uses. This land parcels have an aggregate plot ratio-based gross floor area of approximately 92,000 square meters, comprising office gross floor area of approximately 79,000 square meters, commercial gross floor area of approximately 12,000 square meters and community service center with a gross floor area of approximately 1,000 square meters. The Group is currently in discussions with government departments regarding related development matters.

In the first half of 2023, civil aviation industry experienced a noticeable revival. During the Period, Shenzhen Airlines carried 15.81 million passenger trips and recorded a passenger traffic of 24,395 million passenger-km, representing an increase of 142% and 146%, respectively, as compared to the corresponding period of the previous year.

Shenzhen Airlines' total revenue for the Period increased by 164% to RMB14,023 million (equivalent to HK$15,753 million) as compared to the corresponding period of the previous year (2022: RMB5,308 million (equivalent to HK$6,377 million)). Passenger revenue increased by 184% to RMB13,166 million (equivalent to HK$14,790 million) (2022: RMB4,632 million). However, due to the steep fuel costs and fluctuations in exchange rates and interest rates, changes in the willingness and mode of passenger travels, market dynamics and intensified competition, Shenzhen Airlines continues to experience considerable operational pressures. During the Period, Shenzhen Airlines recorded a net loss of RMB1,420 million (equivalent to HK$1,596 million) (2022: net loss of RMB4,594 million (equivalent to HK$5,519 million)). Based on equity method accounting, when the Group's share of accumulated losses in an associate equals or exceeds its interest in the associate, the Group does not recognize further losses. As the Group's interest in Shenzhen Airlines was reduced to nil, it did not recognize any further losses relating to the carrier during the Period (2022: loss of HK$2,710 million).

With the passing of the epidemic and the continuous recovery of the domestic economy, the demand for air passenger transportation has significantly increased, and the civil aviation market has significantly rebounded, resulting in a significant reduction in losses for Shenzhen Airlines. For the future equity matters of Shenzhen Airlines, on the premise of safeguarding the interests of the Company and shareholders, the Group communicates and coordinates with multiple units such as the Shenzhen Municipal Government and Air China , striving for appropriate solution. If there is further plan, it will be announced to the market.

The Group's toll road business and general-environmental protection business is managed and operated through a listed subsidiary of the Company, Shenzhen Expressway. During the Period, Shenzhen Expressway recorded a total revenue of HK$4,633 million, representing a decrease of 6% as compared to the corresponding period of the previous year (it remained at a similar level when excluding the impact of exchange rate). Due to the rebound of traffic volume on toll roads operated or invested in by Shenzhen Expressway, coupled with stringent cost control, Shenzhen Expressway recorded a net profit of HK$1,043 million, which maintained at a similar level with that of the corresponding period of the previous year (the net profit increased by 6% when excluding the impact of exchange rate). The profit of Shenzhen Expressway attributable to the Group for the Period increased by 3% as compared to the corresponding period of the previous year to HK$ 537 million.

In the second half of 2023, the Group will continue to further advance the development of the toll road and general-environmental protection businesses through Shenzhen Expressway. In the toll road business, the Group will implement a refined approach to operational management, focusing on cost reduction and efficiency enhancement to bolster the profitability of operating projects. The Group will also explore investment opportunities in high-quality highway projects. In order to ensure the expeditious and high-quality completion of major construction projects, the Group will ensure timely realization of the road network interface by steadily progressing the construction of the second phase of Coastal Project. Preparatory work for the third phase of Shenzhen Outer Ring Expressway will also be accelerated, with the aim of commencing construction within 2023. The Group is fully committed to optimizing the construction plan and investment and financing scheme for Jihe Reconstruction and Expansion Project with the aim of commencing the construction at the earliest.

In the general-environmental protection business, the Group will focus on the fields of solid waste treatment and clean energy to further enhance its capacity to develop market-oriented projects. Leveraging collaborative relationships with industry-leading enterprises, the Group will intensify its efforts to engage in mergers and acquisitions and new construction projects in premium regions, consolidating and strengthening its existing competitive edge. By bolstering its construction and management capabilities, the Group will ensure the timely completion and operation of projects currently in progress, including Guangming Environmental Park Project and Bioland Environmental Project. The Group will also optimize cost control while actively fostering a business model that highlights the integration of assets and financing, and internal collaboration. These efforts aim to enhance the profitability of organic waste treatment projects and further drive cost reduction and efficiency improvement at wind farm operations, ultimately enabling the Group to achieve high-quality sustainable development.

To establish its first platform of publicly traded REITs, the Group is actively planning for the issuance of publicly traded REITs, with the first batch intended to include mature logistics hub projects in Hangzhou and Guizhou as underlying assets.

The issuance of publicly traded REITs is aimed at revitalizing the Group's premium logistics assets, further accelerating capital recovery and optimizing its investment portfolio, thus creating a positive cycle with the prerequisite of retaining the rights to operate the parks. Currently, the Group is in the preparation stage of applying to issue publicly traded REITs. The Group has submitted the application in accordance with Practice Note 15 of the Rules Governing the Listing of Securities ("Listing Rules") on The Stock Exchange of Hong Kong Limited ("Stock Exchange") and has made phased progress. Other preparatory work is also proceeding in an orderly manner. The Group will seek timely approvals from relevant regulatory bodies (including but not limited to the National Development and Reform Commission, the China Securities Regulatory Commission and the Shenzhen Stock Exchange) regarding the issuance.

In the second half of 2023, the Group will optimize its short closed-loop "Investment, Construction, Financing and Operation" business model through a range of channels, further accelerating asset securitization, expanding financing channels, and enhancing the efficiency of its capital utilization. First, the Group will expedite the issuance of publicly-traded REITs by facilitating communication and coordination, and target to complete the initial issuance of the first tranche of publicly-traded REITs within 2023. Second, the Group will steadily push forward the setting up of a private equity fund and finalizing the proposal for a new logistics warehousing and storage infrastructure fund. The schedule of future asset securitization is still under research and will actively cooperate with the overall development plan of the company.