Csi Properties Limited · HKEX:497
Csi Properties — 1H FY2020/21 Earnings Presentation
59 slides from Csi Properties's earnings presentation, November 2020
Slide 1: Interim Results FY 2020/2021
Strictly confidential FY 2019 Final Results Presentation Jun 2019 Investor Presentation Interim Results FY 2020/ 2021 Nov 2020 Sep 2017
Slide 2: Disclaimer
DISCLAIMER The information contained in this presentation is provided by CSI Properties Limited (the "Company") based on information available to it and does not constitute a recommendation regarding the securities of the Company and or its subsidiaries The information contained in this presentation
Slide 3: Table of Contents
TABLE OF CONTENTS Section 1 1H FY2020/2021 Financial Highlights 3 Section 2 Key Strategies Highlights 16 Appendix 1 Prime Property Portfolio Review 24 Appendix 2 Investment Highlights 45 2
Slide 4: Section 1: 1H FY2020/2021 Financial Highlights
Section 1 1H FY2020/2021 Financial Highlights
Slide 5: 1H FY 2020/2021 Sales Highlights
Key themes 1H FY 2020/2021 Sales Highlights CSI recorded around HK$1 billion of sales (incl. JV/ Associates) this past interim period For the interim period ended 30 Sep 2020 % HK$'000 Group level Hong Kong residential properties N/A Hong Kong commercial properties 141,800 Sub-total 141,800 Joint Ve
Slide 6: 1H FY 2020/2021 key disposals
1 Strong recurrent income anchoring EBITDA 1H FY 2020/2021 key disposals CSI has recognized a few key disposals within this interim period to ensure profitability Date completed Projects sold and booked 1H FY2021 Location Apr 2020 – Sep 2020 6 units of Dukes Place at 47 Perkin’s Road (CSI-60%) Jardi
Slide 7: 1H FY 2020/21 interim results highlights
Prime Hong Kong properties focused strategy 2 1H FY 2020/ 2021 interim results highlights (Period ended 30 September) 1H FY2020/21 1H FY2019/20 % change (HK$m) (A) (B) (A/B-1) Gross revenue from property business 247 2,722 91% Property sale 142 2,610 Rental income 105 113 Gross profit 83 1,387 94% P
Slide 8: Visible disposal pipeline; strong balance sheet and liquidity
Visible disposal pipeline to further drive EBITDA – 3 annual target to sell c.HK$5-6 billion+ of prime assets 1H FY 2020/2021 interim results highlights (contd.) Strong balance sheet and liquidity to ensure financial stability 1H FY 2020/ 2021 FY 2020 (HK$m) 30th Sep 2020 31st Mar 2020 Properties &
Slide 9: Pro-forma Balance Sheet adjusted for market valuation
Pro-forma Balance Sheet adjusted for market valuation as at 30 Sep 2020 Properties valued at historical cost basis on book with no revaluation surplus. Even after revaluation adjustment, it still represents significant value in terms of a significant discount to pro forma adjusted NAV of HK$2.05 per
Slide 10: 1H FY 2020/2021 key credit metrics
1H FY 2020/2021 key credit metrics Key credit metrics 1H FY 2020/2021 FY 2020 FY 2019 (HK$m) (HK$m) (HK$m) EBITDA1 / interest expenses2 2.9x 6.3x 2.9x Net debt / total assets (net gearing ratio) 32.0% 31.6% 34.1% Net debt / adjusted total assets3 26.0% 25.5% 25.6% Net debt plus commitment to JVs /ad
Slide 11: Consistent profitability and growth
Consistent profitability and growth Revenue Gross profit and gross profit margin 3,969 4,000 3,710 2,000 51% 60% 307 3,439 212 302 40% 50% 3,000 2,722 1,500 (HKDm) (HKDm) 113 31% 33.7% 40% 2,000 3,662 1,000 22% 30% 3,137 3,498 2,609 1,498 1,387 20% 1,000 247 500 1,065 859 10% 105 83 0 142 0 0% FY201
Slide 12: 1H FY 2021 credit highlights
1H FY 2021 credit highlights Debt / EBITDA1 EBITDA1 / net interest expense2 and cash3 / short-term debt 30 14 24.1x 25 11.6x 12 19.0x 20 10 8 (x) 15 6.3x (x) 9.7x 6 10 7.7x 8.4x 4.2x 5.8x 5.0x 5.0x 3.7x 3.0x 3.8x 4 2.9x 5 1.9x 1.5x 2 0.8x 0.7x 0.5x 0 FY2018 FY2019 FY2020 1HFY2020 1HFY2021 0 FY2018 F
Slide 13: Resourceful pipeline to ensure profitability and liquidity
Resourceful pipeline to ensure profitability and liquidity FY 2021 50% of 16 residential units at Dukes Place, No. 47 Perkins Road (60% stake) (8 units sold already) Capital Centre (formerly AXA Centre) - Ground Floor shop and 51 car parks (in market) 20% of 17 residential units at 8-12 Peak Road (6
Slide 14: Well managed balance sheet with prudent gearing
Well managed balance sheet to grow asset portfolio with prudent gearing Diversified funding sources and well managed bank borrowing • The Group maintained a conservative approach to its bank borrowings with well balanced and staggered maturities • Bank loans are mostly project loans (land plus const
Slide 15: Conservative capital structure backed by prudent financial policies
Conservative capital structure backed by prudent financial policies • Prudent funding and treasury policy with regard to overall business operations Prudent funding and treasury policy • Majority HIBOR-based and effective interest rate ranges from 0.6% to 5.9% for the Group's bank borrowings as at 3
Slide 16: Portfolio of prime properties in premier locations
Portfolio of prime properties in premier locations (as at 30 Sep 2020) Commercial properties Gross area Market Book 1 1, 2 1 sq.ft. (000s) value value (approx) (HK$m) (HK$m) G/F, 51 carparks of Capital Centre (formerly known as AXA Centre) Wan Chai 17 743 150 Novotel Hotel, No. 348 Nathan Road Jorda
Slide 17: Section 2: Key Strategies Highlights
Section 2 Key Strategies Highlights
Slide 18: Management Strategy Highlights
Management Strategy Highlights 1 Build Strong Recurring Income to Anchor EBITDA 2 Construct High Quality Real Estate Portfolio 3 Manage Disposal Pipeline to Recycle Capital & Crystalise Profit 5 4 Maintain Prudent Financing for Strong Asset Coverage & Liquidity 17
Slide 19: Recurring Income to Anchor EBITDA
1 1. Recurring Income to Anchor EBITDA Rental Income 1 • Current Hong Kong & PRC investment portfolio has generated steady recurring income stream to anchor 400 EBITDA 2 • Commercial rental will further benefit from repositioning of 2 office buildings in Hong Kong (Harbourside HQ and Everest 307 302
Slide 20: High Quality Commercial Portfolio - Central
Visible disposal pipeline to further drive EBITDA – 3 annual target to sell c.HK$5-6 billion+ of prime assets 2 High Quality Commercial Portfolio Core Central 92-96 Wellington St 46-48 Cochrane St c.43k sqft GFA c.32k sqft GFA Comm’l Development Comm’l Development PMQ MTR SoHo Station Tai Kwun Herit
Slide 21: High Quality Commercial Portfolio
2 High Quality Commercial Portfolio • Continued focus on originating & executing value-added & development opportunities in prime locations in top cities • Hong Kong —— Core Central; Core Kowloon (TST/Jordan) and Kowloon East 46-48 Cochrane Harbourside HQ Street , Central Kowloon East c. 32K sqft Ev
Slide 22: High Quality Residential Portfolio
2 High Quality Residential Portfolio • Build brands & market recognition with goal to do more mass market residential projects over time • Hong Kong —— High-end Luxury; Designer Mass-market Dukes Place in Jardine Lookout “ Infinity Collection” - Luxury units on Single House on Barker Road Villa coll
Slide 23: Disposition Pipeline to Recycle Capital & Crystalize Profit
3 Disposition Pipeline to Recycle Capital & Crystalize Profit • Management prioritizes annual asset sales to recycle capital & crystalize profit • Strict and prudent principle of selling assets first before making new acquisitions to ride out the current storm • We have made no major acquisitions si
Slide 24: Prudent Financing with Strong Asset Coverage & Liquidity
4 Prudent Financing with Strong Asset Coverage & Liquidity As of 31 March 2020 Total Debt + Perpetual Notes Cash + Real Estate Assets at Market Value HK$ M 45,000 41,149 40,000 5,0181 35,000 30,000 12,023 HK$ M 25,000 20,000 25,000 20,217 20,000 1,539 15,000 1,924 24,108 15,000 10,000 9,328 10,000 2
Slide 25: Appendix 1: Prime Property Portfolio Review
Appendix 1 Prime Property Portfolio Review
Slide 26: Commercial properties highlights
Commercial properties highlights Key prime commercial assets in Hong Kong and Shanghai helps to anchor the Group’s rental income annually Novotel Hotel – Jordan Everest Building – Jordan Richgate Plaza – Shanghai The Harbourside HQ (previously OCTA Tower) – Kowloon Bay In Point – Shanghai
Slide 27: Central properties highlights
Central properties highlights Prime commercial assets under management in Central at GFA of 400,000+ sq.ft., anchoring Group’s future profit pipeline 92-96 Wellington St. Gage St./ Graham St. Commercial redevelopment site with GFA of • Commercial redevelopment site from URA c.43K sq.ft. tender with
Slide 28: Central properties highlights – Gage St./Graham St.
Central properties highlights – Gage St./ Graham St. (50% JV) URA Tender won for Gage Street and Graham Street site marks a new landmark for the Group • The Group won the tender for Site C of the Peel The Center Street/Graham Street project from the Urban Renewal Authority (“URA”), and our first URA
Slide 29: Central properties highlights – Oriental Crystal Commercial Building
Central properties highlights – Oriental Crystal Commercial Building No. 46 Lynhurst Terrace • The Group was originally acquired with 18 office floors, 2 ground floor shops and rooftop of this office building in Central/SOHO for a consideration of c. HK$700 million for GFA of around 43,000 sq.ft. •
Slide 30: Central properties highlights – SOHO Central
Central properties highlights – SOHO Central 2-4 Shelley Street, Central (Sale in Progress) • Situated in Central’s Soho area, this chic yet contemporary commercial tower has total GFA of over 40,000 sq.ft. (CSI - 100%) • Nestled in the heart of a bustling commercial zone along the famous Mid-Levels
Slide 31: Novotel Hotel Kowloon
Novotel Hotel Kowloon Novotel Hotel Jordan MTR Eaton • 4-star international branded hotel with commercial podium in Express Hotel prime Nathan Road Rail Link • 5-min travelling distance from future Express Rail Link terminus • 389 hotel rooms and prime shopping space in prime Jordan • Consolidated 1
Slide 32: Major Commercial Property Pipeline – Kowloon East
CSI’s Major Commercial Property Pipeline – Kowloon East 38 Wai Yip Street Office Tower The Harbourside HQ (previously OCTA Tower) • JV with Sino Land and Billion Development, the two • Bought the whole office tower with 3 other JV partners via a big landlords in Kowloon Bay CBD2 (CSI - 30%) at conso
Slide 33: Everest Building
Everest Building Prime commercial/ retail building at the heart of Jordan Everest Building (Grade B office/retail repositioning) • The Group purchased a prime commercial./ retail building at the heart of Jordan at a total cost of c. HK$1.9bn in May 2018 • The property is located at No. 241 and 243 N
Slide 34: Yuen Long Industrial Building Revitalization
Yuen Long Industrial Building Revitalization Yuen Long Industrial Building (Mixed Commercial Use Conversion) • CSI, together with another 50% JV partner, spent HK$1,037 million in late 2017 to acquire this industrial building with GFA of 388K sq. ft. for revitalization • Existing rent well below mar
Slide 35: In-Point Shopping Mall – Jing'an, Shanghai
In-Point Shopping Mall – Premium Retail Project in Jing’an, Shanghai Taikoo Hui Swire-HKRI Dazhongli Project In-Point Shopping Mall • Popular shopping mall located in the heart of Shanghai • GFA of 122,000 sq.ft. now after refurbishment with current market value at approximately HK$1,952 million • N
Slide 36: Richgate Plaza
Richgate Plaza – Premium Retail Project in XinTianDi, Shanghai Richgate Plaza • The Group purchased a retail shopping mall named Richgate Plaza in prime Xintiandi area for a original total consideration of RMB 1.37 billion with total GFA of 122k sqft in 2017 • Currently with mid-end tenants includin
Slide 37: Dukes Place
Dukes Place WORLD CLASS LUXURY APARTMENTS IN JARDINE’S LOOKOUT • Dukes Place is our world-class trophy landmark apartment project at the Jardine’s Lookout - a quiet ultra high net-worth neighborhood • Dukes Place offers 16 spacious apartments with multiple layouts, with saleable area ranging from ap
Slide 38: Nos. 8-12 Peak Road Project
Nos. 8-12 Peak Road Project Precious Residential Development with Victoria Harbour seaview Peak Road Project Interocean Court OPUS Hong Kong • 18 apartments and one house with total saleable area of approximately 44K sq.ft. Mount Nicholson • Completion of renovation at end of 2020 with sales to foll
Slide 39: COO Residence
COO Residence – (All residential units sold) Luxurious High-Rise in Tuen Mun • Located at Tuen Mun Yan Ching Street, adjacent to V city and the Traditional Tuen Mun Town Centre being the very heart of the city. • Presale started in early Sep 2017 and all of the 204 units presold for a total of appro
Slide 40: Residential site at Yau Tong
Residential site at Yau Tong • The Group acquired with its JV partner Sino Land (80% partner) through MTR tender in May 2018 a residential site at Yau Tong at the total consideration of approximately HK$2.6bn. + • The property is located near the Yau Tong MTR station and can be developed into a sale
Slide 41: Queen's Gate
Queen’s Gate – The Finest Expression of British Elegance • A luxurious villa district in Dahongqiao area, Shanghai named as Queen’s Gate and only 15 minutes driving distance from the new Hong Qiao International Airport • Developed into 224 luxurious villas with additional 96 apartment units • Majori
Slide 42: Knightsbridge (formerly Beijing Legendale)
Knightsbridge (formerly Beijing Legendale) – Luxurious Residential Renovation project in Beijing • The Group purchased in 2016 with a joint venture partner • 114 units and 124 car parking spaces totalling around 396k sqft. at Beijing Legendale, a luxury residential project at JinBao Street. • Surrou
Slide 43: Barker Road Project
• Acquired the heritage site at 45 Barker Road in 2011 Barker Road Project – • A rare address at Barker Road - the ultra premier residential area at the Peak Precious Single Lot House Site • The newly build house will blend in with its historical façade when on the Peak completed 42 • Estimated mark
Slide 44: Fan Kam Road Project
Fan Kam Road Project – Luxurious Manor Site in Kwu Tung South • The site at Lot No. 1909 Fan Kam Road was acquired by CSI Properties in 2015 and is a very rare manor site next to the Hong Kong Golf Club and Beas River Country Club of The Hong Kong Jockey Club. • Other than being adjacent to renowned
Slide 45: Maryknoll Missionary House – Project in Stanley
Maryknoll Missionary House – Project in Stanley • The Group acquired via a 50-50 JV the Maryknoll House in Stanley for a consideration of c. HK$780 million for the site of around 82,300 sq.ft. • The site is located adjacent to Stanley Knoll, a high end residential area in Stanley with stunning seavi
Slide 46: Appendix 2: Investment Highlights
Appendix 2 Investment Highlights
Slide 47: Why invest in CSI Properties
Why invest in CSI properties Leading HK-based Mid-Cap Property Investor and Developer 16 Years of Operation Since 2004 US$4Bn+ AUM Generated Average IRR of ~25% c.100 by Applying the Proven Strategy Real Estate Professionals Applied Proven Strategy of “Buy-Fix-Sell” to a Portfolio of ~3MM sq.ft. Pri
Slide 48: Corporate history and key milestone
2020 Net Assets Corporate history and key milestone Over 20 prime commercial and residential projects in Hong Kong and Shanghai (100 million HKD) • Total staff of over 220 people 2016 • The group has • Net asset over HK$12.0 billion successfully issued 250 million USD new bond 2015 in August 2016 12
Slide 49: Our business model
1 Strong recurrent income anchoring EBITDA Our business model Since the inception at 2004, CSI has evolved from an asset trading focused property company to becoming a solid, mid-cap full service real estate investor / developer with 5 major lines of business Commercial properties Couture Homes Comm
Slide 50: Proven track record in profit
Proven track record in profit Proven profitability for our properties with all cash profit only and no revaluation gain with stable profitability Net profit1 4,000 3,000 FY14: 815 FY17: 1,347 FY20: 1,156 (HK$m) FY13: 903 2,000 FY19: 530 FY11: 858 FY16: 1,645 1,000 FY12: 1,754 FY18: 1,010 FY10: 546 F
Slide 51: Proven track record in dividend
Prime Hong Kong properties focused strategy 2 Proven track record in dividend Steady dividend policy at c. 12-15% of net profit Dividend payout 250 HK$115m share buyback 204.0 198.0 200 162.6 150 140.0 131.0 HK$100m (HK$m) share HK$99m buyback share 106.0 buyback HK$193m 100 share 82.3 buyback 70.6
Slide 52: Successful new perpetual capital securities issue
Visible disposal pipeline to further drive EBITDA – 3 annual target to sell c.HK$5-6 billion+ of prime assets Successful new perpetual capital securities issue in 2017 reaffirms debt market as a solid financing avenue • The Group successfully completed the inaugural perpetual capital securities issu
Slide 53: Proven investment and capital recycling track record of attractive IRRs
Proven investment and capital recycling track record of delivering attractive IRR’s Selected projects and returns Months of Projects holding Cost (HK$m) Selling price (HK$m) IRR (%) 23% 288 234 B/F Ginza Plaza, Macau 3 171 47% 496 11/F – 23/F Henan Building, Wanchai 13 338 70 821 25% 1,029 Nos. 703-
Slide 54: Highly experienced and disciplined management team
Highly experienced and disciplined management team Group senior management • Acquired control in CSI in 2004 as a platform to expand his property investment business • Currently a non-executive director of HKT Limited, HKT Management Limited and HKC (Holdings) Limited and was previously a non-execut
Slide 55: Highly experienced and disciplined management team
Highly experienced and disciplined management team Commercial Property • Joined CSI in 2019 as Managing Director for its commercial property division. • Over 25 years of experience in finance and real estate investments in Asia and the U.S., including leadership roles in Lehman Brothers and Nomura I
Slide 56: Highly experienced and disciplined management team
Highly experienced and disciplined management team Couture Homes ("CH") • Joined CSI in 2011, prior to which he worked as the Director of Savills Hong Kong Limited Execution Director of CSI and Jimmy Fong Managing Director of Sales and • Over 20 years of experience in luxury residential property dev
Slide 57: Strong management team with accolades
Well managed balance sheet to grow asset portfolio with prudent gearing Strong management team with accolades • Chairman Chung was nominated as one of the “Asia’s Business Leaders” by CNBC Asia in 2014 • The Group was also awarded the “Best Mid–cap Company in Hong Kong” for 2018 and “Best Small–cap
Slide 58: Long term sponsorship from the Chairman and institutional equity register
Long term sponsorship from the Chairman and an institutional investor focused equity register Current shareholding overview1 • Strong commitment of Chairman and controlling shareholder indicating confidence in the future growth prospect of CSI Others 29.9% • Mr. Mico Chung's ownership interest in Co
Slide 59: Q&A
Q&A 20132018 & 2014 Best HK Mid-Cap Company