Soho China Ltd. · HKEX:410
Soho China — H1 2018 Earnings Presentation
41 slides from Soho China's earnings presentation, August 2018
Slide 1: 2018 Interim Results Presentation
2018 Interim Results Presentation August 2018
Slide 2: Executive Summary
Executive Summary - Aggressive expansion of SOHO 3Q - SOHO 3Q achieves 88% average occupancy - Operating profit of RMB1,530 million, up 144% YoY (before valuation gains on IPs) - SOHO China 1H2018 rental income up 17%* YoY - Borrowing cost low at 4.4% - Foreign debt accounts for only 4% of total deb
Slide 3: Aggressive Expansion of SOHO 3Q
Aggressive Expansion of SOHO 3Q 7 cities Beijing 31 centers Nanjing Shanghai Hangzhou Chengdu 30,409 seats Chongqing Shenzhen 2
Slide 4: Strong Demand for Co-working Office Space
Strong Demand for Co-working Office Space 88% average occupancy achieved at SOHO 3Q Centers Increasing number of large tenants (100+ seats) Fast occupancy ramp-up after opening 3
Slide 5: SOHO 3Q's Unique Competitive Advantages
SOHO 3Q´s Unique Competitive Advantages One of the Most Recognized Clear Advantage to Gain Household Brand Names Market Awareness Pan Shiyi & Zhang Xin Influential Business Leaders Leveraging SOHO China’s Brand Name • 25 years experience in commercial property operations • SOHO China holds prime inv
Slide 6: Events in 1H18, including Visit by President of France Emmanuel Macron
234 Events in 1H18, including Visit by President of France Emmanuel Macron 5
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Slide 10: High-quality Tenants
High-quality Tenants Ese PING AN RR RAT BAZAR Wits Mercedes-Benz = el 5 AALLS 4 J SG HUAWEI Q soHo®
Slide 11: 56% of SOHO 3Q Revenue from Large Clients with >100 Seats
56% of SOHO 3Q Revenue from Large Clients with >100 Seats TMT Accounts for 53% of Total Tenants Revenue (by seats) Tenants mix (by seats) TMT >100 seats >100 seats TMT, 53% Consulting 56% 21-50 seats Culture&Media 1-4 seats Offline Sales 51-100 seats Individuals 5-10 seats Finance 11-20 seats Design
Slide 12: Tailor-made Offices for Large Clients
Tailor-made Offices for Large Clients Large clients have become a key focus of SOHO 3Q Require customized office design, facilities, and services Stronger demand and ability to pay for customized product 11
Slide 13: 46% of Revenue from Orders of 6-12 Months
46% of Revenue from Orders of 6-12 Months Revenue (by term) 6-12 months 46% 6-12 months <=1 month 1-3 months 3-6 months >12 months 12
Slide 14: SOHO 3Q - The Future Office
SOHO 3Q - The Future Office An Asset Light Business Model A Business Community for Entrepreneurs and Ideas A Provider of Customized Office Services
Slide 15: Financials in 1H2018
sonotg chine Financials in 1H2018
Slide 16: Operating Profit up 144% YoY
Operating Profit up 144% YoY 3 3 1 Operating profit in 1H2018 (before adjustment for the current revaluation of investment properties) of RMB1,530mn vs. RMB628mn 1H2017, up 144% YoY Significant valuation gains in 1H2017 reflected reduced cap rates and significant increase in rental rates since t
Slide 17: Operating Profit up 144% YoY
Operating Profit up 144% YoY RMB million 1H2018 1H2017 YoY% Change Turnover 848 1,070 -21% -Leasing 848 818 4% -Sales 0 252 N/A Gross profit 644 735 -10% Gross margin 76% 69% Operating profit 2,010 6,783 -70% - Operating profit before valuation gains 1,530 628 144% - Valuation gains on IPs 480 6,155
Slide 18: Rental Income up 17% YoY
Rental Income up 17% YoY 3 3 1 RMB 848 million rental income in 1H2018, up from RMB 818 million over 1H2017 Rental income from retained properties in 1H2018 increased by 17% from 1H2017, adjusted to exclude effect of the disposals of Hongkou SOHO and Sky SOHO in 2017 17
Slide 19: SOHO China Properties Greatly Outperformed the Market in Spot Rate Growth
SOHO China Properties Greatly Outperformed the Market in Spot Rate Growth 3 3 1 SOHO China Properties General Market1 Project Spot Rate % Change YoY City Spot Rate % Change YoY Wangjing SOHO 21% Guanghualu SOHO II 20% Beijing 4.5% Galaxy SOHO 9% SOHO Fuxing Plaza 18% SOHO Tianshan Plaza 4% Shanghai
Slide 20: Public Bidding Sets Leasing Prices
Public Bidding Sets Leasing Prices Strong demand for SOHO China properties Public bidding brings higher rental rates Bidding Rent Rate Previous Rent Rate Rent Growth 45 79% 80% 40 59% 60% 50% 35 40% 40% 33% 28% 20% 30 29 0% RMB/sqm/day 25 22 21 -20% 20 20 19 -40% 15 13 12 12 -60% 11 10 10 8 8 -8
Slide 21: 97% Occupancy Achieved Throughout the Portfolio
97% Occupancy Achieved Throughout the Portfolio 3 3 1 99% 98% 96% 96% 96% 92% Wangjing SOHO Guanghualu SOHO II Qianmen Avenue Bund SOHO SOHO Fuxing Plaza SOHO Tianshan Plaza As at 30 June 2018 20
Slide 22: Borrowing Cost 4.4%, Minimal FX Risk
Borrowing Cost 4.4%, Minimal FX Risk Average borrowing cost remains low at 4.4% as at 30 June 2018 Foreign debt accounts for only 4% of total debt, almost no foreign exchange risk Flexible funding channels, e.g. Operation loans, CMBS, Corporate Bond, Offshore loans etc. 21
Slide 23: Net Gearing Ratio Healthy at 43%
Net Gearing Ratio Healthy at 43% RMB million 30-Jun-18 31-Dec-17 Investment Properties 57,146 56,276 Total Cash 3,915 4,326 Total Debt 18,507 21,034 Equity Attributable to Shareholders 33,899 32,704 Total Assets 67,039 71,218 Net Gearing Ratio 43% 51% 22
Slide 24: Pipeline Project GUBEI SOHO
Pipeline Project GUBEI SOHO 23
Slide 25: Pipeline Project GUBEI SOHO
Pipeline Project GUBEI SOHO 24
Slide 26: Pipeline Project GUBEI SOHO
Pipeline Project GUBEI SOHO Total leasable GFA: 113,416 sqm Completion Year: End of 2018 Located in the core area of the Hongqiao Foreign Trade Center in Shanghai’s Changning District Right above Subway Line 10, and neighboring Gubei Takashimaya Shopping Mall and Gubei Fortune Plaza 25
Slide 27: Pipeline Project SOHO Leeza
Pipeline Project SOHO Leeza 26
Slide 28: Pipeline Project SOHO Leeza
Pipeline Project SOHO Leeza 27
Slide 29: Pipeline Project SOHO Leeza
Pipeline Project SOHO Leeza Total leasable GFA: 133,780 sqm Completion Year: Mid 2019 Located in the center of Lize Business District, right above intersection of subway Line14 and Line 16 Connected to downtown check-in station and Airport Express to the new airport in south Beijing Lize Financial B
Slide 30: Property Portfolio
Property Portfolio # of Status/ Project Attributable City Total GFA Office Retail Projects Completion Time Name Leasable Area sq.m. sq.m. sq.m. sq.m. 1 Completed Qianmen Avenue Beijing 54,691 54,543 - 54,543 2 Completed Galaxy/Chaoyangmen SOHO Beijing 56,122 44,882 15,036 29,846 3 Completed Wangjing
Slide 31: Appendix
sOHOT CHINA Appendix
Slide 32: Financial Results Summary – Income Statement
Financial Results Summary – Income Statement RMB million 1H2018 1H2017 YoY% Change Turnover 848 1,070 -21% -Leasing 848 818 4% -Sales 0 252 N/A Gross profit 644 735 -10% Gross margin 76% 69% Operating profit 2,010 6,783 -70% - Operating profit before valuation gains 1,530 628 144% - Valuation gains
Slide 33: Financial Results Summary – Balance Sheet
Financial Results Summary – Balance Sheet RMB million 30-Jun-18 31-Dec-17 Investment Properties 57,146 56,276 Total Cash 3,915 4,326 Total Debt 18,507 21,034 Equity Attributable to Shareholders 33,899 32,704 Total Assets 67,039 71,218 Net Gearing Ratio 43% 51% 32
Slide 34: Qianmen Avenue
Qianmen Avenue Location Qianmen ,Tiananmen South, Beijing Transportation Subway lines 1 & 2 All-in Cost RMB 1.86 billion Total GFA Retail 54,691 sq.m. Lettable GFA Retail 54,543 sq.m. Design Firm Fei Chang Jian Zhu 33
Slide 35: Wangjing SOHO Tower 3
Wangjing SOHO Tower 3 Location Wangjing, Beijing Transportation Subway lines 13 & 15; Airport Express Land Cost RMB 1.4 billion Development Cost RMB 2.0 billion Total GFA 157,318 sq.m. Lettable GFA 133,766 sq.m. Office 123,568 sq.m. Retail 10,198 sq.m. Completion Date Sep 2014 Design Firm Zaha Hadid
Slide 36: SOHO Fuxing Plaza
SOHO Fuxing Plaza Location Near Xintiandi, Puxi, Shanghai Transportation Subway lines 10 & 13 Land Cost RMB 2.6 billion Development Cost RMB 1.8 billion Total GFA 124,461 sq.m. Lettable GFA 88,234 sq.m. Office 46,344 sq.m. Retail 41,890 sq.m. Completion Date Sep 2014 Design Firm GMP 35
Slide 37: Guanghualu SOHO II
Guanghualu SOHO II Location Central Business District, Beijing Transportation Subway lines 1 & 10 Land Cost RMB 1.3 billion Development Cost RMB 1.2 billion Total GFA 165,201 sq.m. Lettable GFA 94,279 sq.m. Office 63,308 sq.m. Retail 30,971 sq.m. Completion Date Nov 2014 Design Firm GMP 36
Slide 38: Bund SOHO
Bund SOHO Location Bund, Shanghai Transportation Bund's transportation hub Land Cost RMB 2.3 billion Development Cost RMB 1.5 billion Total GFA 141,043 sq.m. Lettable GFA 72,826 sq.m. Office 51,317 sq.m. Retail 21,509 sq.m. Completion Date Aug 2015 Design Firm GMP 37
Slide 39: SOHO Tianshan Plaza
SOHO Tianshan Plaza Location Hongqiao Foreign Trade Center, Shanghai Transportation Subway line 2 Land Cost RMB 1.9 billion Est. Construction Cost RMB 1.9 billion Total GFA 166,377 sq.m. Leasable GFA 95,385 sq.m. Completion Time Dec 2016 Design Firm KPF 38
Slide 40: Investment Properties Under Construction Gubei SOHO
Investment Properties Under Construction Gubei SOHO Location Hongqiao Foreign Trade Center, Shanghai Transportation Subway line 10 Land Cost RMB 3.3 billion Est. Construction Cost RMB 1.7 billion Total GFA 158,648 sq.m. Leasable GFA 113,416 sq.m. Completion Time 2019 Design Firm KPF 39
Slide 41: Investment Properties Under Construction SOHO Leeza
Investment Properties Under Construction SOHO Leeza Location Between Southwest 2nd & 3rd Ring Road, Beijing Transportation Subway lines 14 & 16 (in planning) Land Cost RMB 1.98 billion Est. Construction Cost RMB 1.8 billion Total GFA 172,800 sq.m. Leasable GFA 133,780 sq.m. Completion Time 2019 Desi