Wharf (Holdings) Ltd. · HKEX:4
Wharf (Holdings) — The Wharf (Holdings) — H1 2014 Earnings Presentation
53 slides from Wharf (Holdings)'s earnings presentation, Aug 11, 2014
Slide 1: IP Drives Value
IP Drives Value The Wharf (Holdings) Limited 2014 Interim Result 11 August 2014 1
Slide 2: IP Underlying Profit +18% to $3,751M
IP Underlying Profit +18% to $3,751M Total IP Profit 75% of Group Underlying Profit (1H13: 56%) If Incl. Net Revaluation Surplus IP Underlying Profit (HKD billion) ($6,892M): $10,643M 7.0 91% of Group Total (1H13: 81%) 11% 6.0 IP Underlying Profit Growth 14% 5.0 (+18% in 1H14) Surpassed IP Underlyin
Slide 3: Quality Landlord
Quality Landlord Retail Property Leader Excelling in Retail, Merchandising & Marketing Wharf IP Book Value Ranked Top 3 in the World among Global Top 10 IP Book Value Wharf IP Book Value Publicly-Held Portfolios Disclosed USD billion Unibail Rodamco 39.3 HK$270B Retail Malls Account for SHK Prop 34.
Slide 4: Flagship Malls Sustained Outperformance
Flagship Malls Sustained Outperformance HC + TS Retail Sales Growth 10-yr CAGR (+16.9%, 2004-2013) HC+TS Retail Sales (HKD billion) vs +11.1% in HK 50 Outperformed HK by 5.8 ppts 40 30 HC & TS Account for ~9% of Total HK Retail Sales & ~2.3% 20 40.0 43.3 of HK GDP 36.3 27.7 10 19.4 21.8 21.9 16.7 11
Slide 5: Wheelock's Acquisition of Wharf's Stake to 54.82%
Wheelock’s Acquisition of Wharf’s Stake to 54.82% Wheelock Underlining Wheelock’s Confidence in Wharf’s Prospect 54.82% (52.16% as of 31 Dec 2013) Wharf as of 30 Jun 2014 5
Slide 6: Overall IP Another Record-breaking Performance
Overall IP 2013 HC/TS/PH Total Revenue Another Record-breaking Performance (Incl. Hotel) $11,042M Asset Enhancement & New China 796 Total IP Revenue (HKD million) 12,000 11,133 China HK IP Driving Growth CAGR (2004-2013) +12.7% 9,880 1,261 1H14 HK China Total 8,808 1,005 9,000 Retail +18% +99% +24%
Slide 7: Financial Highlights
Financial Highlights HKD million 1H14 1H13 % Change Group Revenue 16,315 14,880 +10% Operating Profit 7,124 6,080 +17% Underlying Profit** 5,019 5,683 -12% 1H14 Dividend Profit Before IP Revaluation Surplus 4,809 6,447 -25% +10% to $0.55/share Net IP Revaluation Surplus 6,892 10,793 -36% Profit afte
Slide 8: Business Review Hong Kong Investment Properties
Retail Sales Market Share Business Review Record Retail Revenue Hong Kong Investment Properties Times Square Harbour City 8
Slide 9: HK Retail – Gold Rush Set a High Base in 2013
HK Retail – Gold Rush Set a High Base in 2013 HK Retail Sales (2012-1H14) (HKD billion) 2Q14 625. HK Retail Sales -7% 2H 1H due to High Base Built by Gold Rush in 2Q13 500. 375. 241.6 1H14 225.5 HK Retail Sales -1.3% 250. +15% -1.3% HK Retail Trend to be 125. 220.0 252.9 249.6 Observed 0. 2012 2013
Slide 10: Renowned Landmarks Generating Another Record Sales & Revenue
Renowned Landmarks Generating Another Record Sales & Revenue HC/TS/PH Retail Sales Growth +7.2%, Total Retail Sales at HC, TS & PH (HKD billion) Outperformed HK by 9 ppts 50.0 Market Share at 9.3% 2H 1H 37.5 Attracts Best of Class Retailers that 24.2 Draw More Traffic 22.8 21.3 25.0 16.3 Retail Reta
Slide 11: The New Times Square Shopping Experience Re-Imagined
The New Times Square Shopping Experience Re-Imagined Record Breaking TS Retail Sales Growth vs. HK 1st Half Retail Sales Total Retail Sales at Times Square 1H14 (After Renovation) vs. 1H12 (HKD billion) (Before Renovation) 10. 2H 1H 1H14 vs. 1H12 1H14 vs 1H13 Retail Sales at $5.2B, +18% 7.5 Outperfo
Slide 12: The New Times Square Innovative Initiatives Driving Record Revenue
The New Times Square Innovative Initiatives Driving Record Revenue 1H14 Retail Revenue $909M, +34% Among The Most Successful Vertical (17 Floors) Malls in the World Increment HK$230M 0% 3% Unique & Signature Open Piazza, the Only Open Town Retail Office Square in Causeway Bay Average Rental Spot Ren
Slide 13: Times Square is the Core at 35%
65% Greater Times Square Retail Cluster 2.7 Million sf 35% Times Square is the Core at 35%, with Retail Space of 0.94 Million sf THIS IS YOUR TIME TIMES SQUARE 時代是你的 13
Slide 14: Harbour City Another Record Retail Sales
Harbour City Another Record Retail Sales 1H14 Retail Sales Total Retail Sales at Harbour City (HKD billion) $16.8B, +4.8%, Outperforming 40. HK Retail by 6.1 ppts 2H 1H 30. Reconfiguration of Retail 17.8 Spaces at Ocean Terminal 16.6 Completing by End-2015 20. 15.2 11.3 10. 16.0 16.8 4-Storey Extens
Slide 15: Pro-Active Management Produces Growth Creation
Pro-Active Management Produces Growth Creation 1H14 Retail Revenue Harbour City Retail Revenue (HKD million) $2,797M, +14% 6,250 5,000 CAGR (2004-2013) Continuous Value-Accretive +17.0% 3,750 Initiatives to Enhance +14% Shopping Experience 2,500 4,909 4,223 3,571 2,928 2,797 1,250 2,550 Best Retaile
Slide 16: Harbour City Show Case Effect
Harbour City Show Case Effect The Show Case and Finite Resource for International Brands Premier Location for Top Brands “International Tenants Cannot Afford Not to be Present in World’s Leading Shopping Destination Harbour City” 1% 5% Office Retail Average Spot Rent Critical Mass Largest Mall in HK
Slide 17: Harbour City is the Core at 35% Retail Space
65% Great Harbour City Retail Cluster 5.9 Million sf 35% Harbour City is the Core at 35% Retail Space with 2.05 Million sf One Harbour One Harbour City 一個海港,只有一個海港城 17
Slide 18: Business Review China Properties
China Commercial Properties Pipeline Record China IP Revenue Business Review Chengdu IFS China Properties Chongqing IFS Other IPs 18
Slide 19: China Commercial Properties Pipeline
China Commercial Properties Pipeline Total Commercial Properties in HK & China by 2017 will be 52.8M sf Completion Schedule of Commercial Properties Pipeline (Million sf) 50 New IFSs to 11.0 Changsha IFS Drive Future Growth 10.4 Chongqing IFS* 40 6.9 Suzhou IFS 5.4 6.9 4.0 Wuxi IFS 7% 30 2.0 2.7 2.7
Slide 20: China Expanding IP Portfolio Driving Future Growth
China Expanding IP Portfolio Driving Future Growth China IP Revenue(HKD million) 1H14 1400 Revenue + $839M, +57% Operating Profit +$425M, +20% 1050 +57% CAGR (2004-2013) CD-IFS Encouraging Sales since +29.4% Retail Opening in Jan-2014 700 1,261 CD-IFS Leasing On Track 1,005 Office 796 839 350 CQ-IFS
Slide 21: Chengdu IFS Unlocking Market Opportunities
Chengdu IFS Unlocking Market Opportunities One-stop Lifestyle Shopping Experience in Western China 5% 9% 34% Grade-A Office Buildings Setting Higher Benchmark for Future 20% Offices Development Area Retail Tenant Mix 15% Full Completion in 2015 38% Breakdown by Area (760,000 sm) (210,000 sm) 33% Ret
Slide 22: Chengdu IFS: ~90% Opened
Chengdu IFS Unlocking Market Opportunities RMB600M Expected Annual Retail Revenue at Full Operation (2015) 1H14 Retail Revenue ~HK$200M 1% Estimated 2014 Retail Revenue is RMB 400M 99% Occupancy Vacancy As of Jul 2014, ~90% Opened 22
Slide 23: Chengdu IFS Critical Mass Driving Footfall and Sales
Chengdu IFS Critical Mass Driving Footfall and Sales Debut Stores' Sales Exceeded Expectation, Chanel, MONCLER, Roger Vivier, MCM etc Sales psm +260% Traffic +171% Since Mall Opening Largest Flagship Stores for Dior and Louis Vuitton 23
Slide 24: Chengdu IFS Raising the Benchmark for Future Office
Chengdu IFS Office (2 Towers) GFA 278,000 s.m Raising the Benchmark for Future Office 50 Floors (Each Tower) Building Height 248m Designer – Kohn Pederson 2/3 of Total T1 Office Space Committed/Final Discussion Fox Associates Hotel New Marco Polo 33% Luxury Brand, Office T1 33% Niccolo RMB130–170/sm
Slide 25: Chongqing IFS Retail Pre-Leasing On Track
Chongqing IFS Retail Pre-Leasing On Track Retail Size Comparable to HK 6% TS (102,000 s.m.) 29% Luxury Niccolo Hotel Total Development Area (Incl. Basement Carparks) (645,000 sm) Mall Opening 16% 2016 49% Office Retail Carpark Full Completion Hotel 2016 25
Slide 26: China - Other IPs Resilient Performance
China - Other IPs Resilient Performance Dalian TS/ Chongqing TS/ Chengdu Times Outlet/ Wheelock Total Retail Sales at Group’s China Malls Square Produced 4,000 Solid Positive Rental YoY Growth RMB million 3,000 Chengdu IFS To Drive Future Rental 2,000 Growth Amidst a Challenging 3,428 Market 3,003 2
Slide 27: DP - Solid Execution in China
DP - Solid Execution in China China DP Revenue (Excl. JCE & Associates) (HKD billion) 14.0 1H14 Booked Sales 1H14 Completion: 488,700 s.m. 2H 1H Revenue* $5,215M +5% FY Target Completion: 1.9M s.m. Operating Profit* $839M -3% 10.5 Completed GFA 489,000 s.m. -25% Recognized GFA 626,000 s.m. +8% 2.7 6
Slide 28: Solid Execution in China
Solid Execution in China 45 Projects in 14 Cities on Sale LandBank at 11 M sm China Contracted Sales (RMB billion) 22.5 2.7M sm Sellable Resources in 2014 2H 1H 87% Accumulated Sell-through 10.0 15. Rate as of 30 Jun 2014 7.5 15% 6.4 7.5 6% 7.1 10.9 Contracted Sales 8.9 Breakdown by Region 54% 7.5 6
Slide 29: Business Review Other Businesses
Murray Building Modern Terminals Marco Polo Hotel Business Review Other Businesses Wharf T&T i-Cable 29
Slide 30: Murray Building
Murray Building A 50 year Landmark Building Land Cost $4.4 Billion, Estimated Total Cost about $7 Billion A Conservation Project for a Unique, Luxury Hotel in Central Design Planning Underway Target Opening 2017 30
Slide 31: Modern Terminals and Marco Polo Hotels
Modern Terminals Solid Throughput Growth in HK and China 1H2014 TEU Throughput Revenue HK 2.9M +11% $1,618M +8% Milestone of 100,000,000th TEUs was Achieved on TC 0.8M +27% 12th of June, 2014 Operating Profit $508M +11% DCB 0.6M +23% Marco Polo Hotel Revenue Revenue $760M $760M +8% +8% 13 Owned/Mana
Slide 32: Wharf T&T and i-Cable Results
CME Total Underlying Profit +$104M YoY Wharf T&T Record-setting Half-Year Financial Performance Revenue $947M, +3% Stable Net Cash Inflow Maintained Operating Profit $165M, +15% i-Cable Net Cash of $102M Maintained Operating Margin Improved Significantly YoY; Revenue Plenty of Room for Margin Improv
Slide 33: Financial Management
Net Debt to Total Equity Average Interest Rate Debt Maturity Financial Management Diversified Income Sources and Funding 33
Slide 34: Prudent Financial Management
Prudent Financial Management Net Debt / (Cash) 30.06.2014 31.12.2013 30.8% (HKD billion) 31% Wharf 25.6% (exclude below 47.7 46.7 24.3% 23.4% subsidiaries) 24% 21.1% 20.6% 21.7% 20.4% 20.6% MTL 11.4 11.2 Net Debt to Total Equity 20.6% 18.8% 19.2% HCDL 0.8 0.4 17% 15.8% i-CABLE (0.1) (0.2) Own Net De
Slide 35: Diversified Income Sources and Funding
Diversified Income Sources and Funding Diversified & Multiple Sources Major Capital and Development Expenditure Rental Income HKD billion 40 35.5 from Investment $5.3B 32.8 32.4 33.0 Properties Operating Profit 1H14 30 26.8 (HK & China) 24.9 20 15.5 Logistics, Hotels $0.8B 8.9 & CME Operating Profit
Slide 36: Coming Attractions
Coming Attractions Ocean Terminal 4-Storey Extension Chengdu IFS Phase 2 Chongqing IFS Murray Building Crawford House 36
Slide 37: CSR Business in Community Project WeCan
Project WeCan Our Impact (Up to Date) CSR Business in Community Project WeCan 37
Slide 38: Project WeCan
Project WeCan A Business-in-Community initiative empowering underprivileged students An Open Platform driven by business sponsors, professionals and retirees A Multi-year Partnership Project offering love, care, guidance and opportunities to students Our Goals • 150 schools • 150,000 students • HK$5
Slide 39: Our Impact (up to date)
Our Impact (up to date) - 500+ staff volunteers, families & friends - 44 schools - Over 40,000 students - Support from: • 10+ Corporates (banking, insurance, retail firms, etc.) • Tertiary Institutions (CUHK, Poly U & City U) • Consulates, Business Associations, NGOs & Retirees We Can, Yes, We Can!
Slide 40: Appendix
Exceptional IP Portfolio 1H14 HK IP Performance Pro-Actively Driving Revenue/Fair Value HK Office - Resilient Performance IFS Pipeline Contracted Sales Breakdown Appendix New Projects Launched in 1H 14 Key Projects on Sale in1H14 Land Bank Break Down China Property Completion New Projects for Sale i
Slide 41: Exceptional IP Portfolio
Exceptional IP Portfolio 1H14 IP Revenue: $6,399M 1H14 IP Valuation: $249.9B Dominant Retail Contribution 71% 3% 58% By Business By Business 32% Disciplined Quality Improvement Retail Driving Retail Income & Valuation Office Retail 26% S.A & Others Office 10% S.A & Others Selected IPs Designed by Ce
Slide 42: 1H14 HK IP Performance
1H14 HK IP Performance Harbour City Times Square Plaza Hollywood 1H14 Revenue % Chg Revenue % Chg Revenue % Chg (HKD million) Retail 2,797 14% 909 34% 256 10% Office 1,027 13% 324 8% - - Remarkable IP Performance Hotels & club 694 11% - - - - Serviced apt. 152 0% - - - - Another Record Retail Revenu
Slide 43: Pro-Active Management Driving Revenue and Fair Value
Pro-Active Management Driving Revenue and Fair Value Stellar IP Performance Retail Valuation IP Operating Profit (HK & China) 175 HKD billion 10.0 HKD billion Retail Valuation 140 CAGR (2010 – 2013) 7.5 +28.5% 105 5.0 Operating Profit (HK & China) 9.3 70 138.0 8.2 CAGR (2010 – 2013) 7.3 114.0 6.2 +1
Slide 44: HK Office Resilient Performance
HK Office Resilient Performance Hong Kong Office Revenue (HKD million) 1H 2H 3,000 Continues to Provide Positive 2,566 Rental Reversion 2,371 +8% 2,219 +7% 2,148 +3% 2,250 -5% 1,317 High Occupancy Rate 1,210 (96% - 97%) 1,085 1,142 +11% 1,500 Solid Lease Renewal 750 1,161 1,249 1,381 Retention Rate
Slide 45: IFS Pipeline
IFS Pipeline Wuxi IFS Suzhou IFS 250,000 s.m. 368,000 s.m. Grade A offices & Grade A offices, Changsha IFS hotel apartments & hotel No Retail No Retail 340m tower 450m tower Taihu Plaza CBD Suzhou new CBD wholly-owned 80:20 JV with Genway All IFS Projects are Progressing per 2014 2017 Schedule Chong
Slide 46: China Contracted Sales Breakdown By City
China Contracted Sales Breakdown By City 15% 6% No. of projects on Contracted GFA Sold Region City sale in 1H14 Sales (%) (%) By Contracted Sales 54% Eastern China Shanghai 4 9% 3% Suzhou 5 18% 16% 25% Wuxi 5 7% 10% Changzhou 2 8% 16% China East China West China South Others Ningbo 2 1% 1% Hangzhou
Slide 47: 5 New Projects Launched in 1H14
5 New Projects Launched in 1H14 Attributable Attributable Average Price Projects City New Launch Proceeds GFA Sold (RMB psm) (RMB’M) (s.m) Royal Seal Hangzhou Jan 318 7,400 42,800 Times City Chengdu Mar 21 3,500 6,100 Tangzhen Shanghai May 288 6,100 47,300 Bellagio Suzhou May/Jun 142 15,300 9,300 Mo
Slide 48: China Key Projects on Sale in 1H14
China Key Projects on Sale in 1H14 Attributable Attributable GFA Average Price Projects City Proceeds Ownership sold (s.m) (RMB’M) (RMB’M) Unique Garden Beijing 938 20,800 45,200 33% Le Palais Chengdu 857 95,100 9,000 100% Times City Suzhou 745 52,900 13,000 80% Ambassador Villa Suzhou 460 18,600 24
Slide 49: China Land Bank Breakdown by City
China Land Bank Breakdown by City Region City GFA million (s.m) % Total 11% Eastern China Shanghai 0.8 7% 4% Suzhou 1.4 13% Wuxi 1.3 12% Changzhou 1.2 11% LandBank Ningbo 0.1 1% 11,100,000sm 53% Hangzhou 1 9% by Region Eastern China Sub-Total: 5.8 53% 32% Western China Chengdu 2.4 22% Chongqing 1.1
Slide 50: China Property Completion
China Property Completion Projects Attributable GFA (s.m) Key completion in 1H14 Suzhou Times City 151,500 Wuxi Times City 132,000 Chengdu Times Town 47,300 Chongqing The Thorne 45,000 Hangzhou Greentown Zhijiang No.1 34,900 Projected key completion in 2H14 Changzhou Times Palace 340,400 Changzhou F
Slide 51: China New Projects for Sale in 2H 2014
China New Projects for Sale in 2H 2014 Projects City Ownership Shanghai South Station Shanghai 27% Feng Huang Site 03 Project (Huang He Lu Changzhou 100% and Feng Xiang Lu) Dalian Buxiuxiang Dalian 60% 天津市海河地塊項目 Tianjin 50% 寧波江北區天水家園以北地塊項目 Ningbo 100% Shanghai Pudong Huangpujiang Project Shanghai 10
Slide 52: Thank You
>< WHARF THANK YOU
Slide 53: End of Presentation
End of Presentation The Wharf (Holdings) Limited [HKEx Stock Code: 0004.HK] Disclaimer All information and data are provided for information purposes only. All opinions included herein constitute Wharf’s judgment as of the date hereof and are subject to change without notice. The Group, its subsidia