Wharf (holdings) Ltd. · HKEX:4

Wharf (holdings) — The Wharf (Holdings) — FY2016 Earnings Presentation

57 slides from Wharf (holdings)'s earnings presentation, Mar 9, 2017

  1. Slide 1: Properties Growth Continues

    Properties Growth Continues The Wharf (Holdings) Limited 2016 Final Results 9 March 2017 1

  2. Slide 2: Overview Backdrop

    Overview Backdrop  Group Core Profit +25% to $13.8B  Properties’ Share 92% (2015: 88%) due to 31% Growth  IP 6% Growth on Large Base to $8.8B  DP Nearly Tripled on Record Revenue (& Sales)  Wharf T&T Disposal Realized Proceeds of $9.5B  Net Cash Inflow On/Off Balance Sheet $31B (After Dividend

  3. Slide 3: Surging Core Profit from Properties

    Overview Surging Core Profit from Properties Total Core Profit  Core Profit from Properties: +31% to China $12.7B Properties 19%  HK Properties: +35% to $10.1B HK 73% $13.8 billion Properties (+25%)  China Properties: +16% to $2.6B, 8% Others Despite a Weaker RMB  Properties: 92% of Group Total

  4. Slide 4: Solid IP Growth Despite Headwinds

    Overview Solid IP Growth Despite Headwinds IP Core Profit (HKD billion) $8.8B (+6%)  High Occupancy  Favourable Rental Reversion  High Productivity Secures Pricing Power 8.3 8.8 7.6 6.5 5.9  Keen Demand from the Trendiest & Aspirational Brands 2012 2013 2014 2015 2016 4

  5. Slide 5: Record-High DP Sales & Revenue; Core Profit Tripled

    Overview Record-High DP Sales & Revenue; Core Profit Tripled Total DP Revenue* (HKD billion) $37.1B (+35%) China HK 6.4 HK & China DP 0.0  Core Profit: Nearly 3x to $4B 0.1  Record Revenue: $37B 0.1 30.7 2.6 27.4  Record Sales: $40B 18.9 23.3 15.2 2012 2013 2014 2015 2016 * Incl. JVs & Associates

  6. Slide 6: Financial Highlights

    Overview Financial Highlights HKD Million 2016 2015 % Chg Group Revenue 46,627 40,875 +14% Operating Profit 17,065 14,853 +15%  Core Profit +25% Core Profit** 13,754 10,969 +25%  IP Revaluation Surplus: $906M* Profit Before IP Revaluation Surplus 20,534 9,793 +110% Net IP Revaluation Surplus 906 6

  7. Slide 7: Agenda

    Agenda Hong Kong Properties China Properties Other Businesses Strategic Reviews Financial Management Next 7

  8. Slide 8: Hong Kong Properties

    Agenda Hong Kong Properties China Properties Other Businesses Strategic Reviews Financial Management Next 8

  9. Slide 9: Challenging Outlook amid Macro Uncertainties

    HK IP Challenging Outlook amid Macro Uncertainties HK Retail Sales (HKD billion) Title 2016 1Q 2Q 3Q 4Q Growth -12.5% -8.2% -7.5% -3.7% 494.5 493.2 475.2 436.6 (-8.1%)  Sales & Tourist Arrivals – 241.6 243.6 Sequentially Stabilizing 229.6 216.9  Strong HKD; Cloudy Macro Environment Obscure Outlook

  10. Slide 10: Retail Sales Stabilizing

    HK IP Retail Sales Stabilizing HC Retail Sales (HKD billion) Title TS Retail Sales (HKD billion) 2016 1Q 2Q 3Q 4Q 2016 1Q 2Q 3Q 4Q Growth -18.9% -9.6% -6.4% -3.8% Growth -20.0% -10.3% -6.3% -7.0% -9.9% -11.3% 18.2 5.3 17.8 15.2 5.1 4.5 14.4 4.2 16.0 16.8 15.6 5.2 4.7 13.3 4.4 3.9 2013 2014 2015 2016

  11. Slide 11: Mixed Retail Outlook

    HK IP Mixed Retail Outlook  Strong HKD; Currency / Interest Rate Movements  Global Economic & Political Uncertainties  Europe Terrorist Threats to Affect Tourist Flow 11

  12. Slide 12: Proactive Management Cushions Downside Risks

    HK IP Proactive Management Cushions Downside Risks Retail Revenue by Segment  Stabilizing Retail Sales Enhances 3% Others Rental Visibility 68% $9.1 billion 6% PH (+5%)  Active AEI Creates Value HC 23% TS  Widening Customer Base (Through Promotions in SE Asia*)  HK – the 1 Travel Destination for

  13. Slide 13: HC – Relentless Value Creation

    HK IP HC – Relentless Value Creation HC Retail Revenue (HKD billion) $6.2B (+4%) 1H 2H  Diversification & Balanced Mix 2.9 3.1 2.9 Mitigating Market Risk 2.5  Solid Rental Reversion 2.1  OT Extension Building by 2H17 3.0 3.1 2.8 2.4 2.1 2012 2013 2014 2015 2016 13

  14. Slide 14: TS – Unfolding AEI Value

    HK IP TS – Unfolding AEI Value TS Retail Revenue (HKD billion) $2.1B (+6%) 1H 2H  Solid Retailers’ Demand (99% 1.0 1.0 1.0 Occupancy) 0.8 0.7  F&B, Cosmetics & Luxury Clusters Further Strengthened 1.0 1.1 0.9 0.7 0.7 2012 2013 2014 2015 2016 14

  15. Slide 15: HC & TS – Global Showcase for the Best Brands

    HK IP HC & TS – Global Showcase for the Best Brands HC TS (Selected Brands) (Selected Brands) Expansion HK Debut Kowloon Debut NA Other Commitments 15

  16. Slide 16: HC & TS – Effective Marketing Initiatives

    HK IP HC & TS – Effective Marketing Initiatives HC TS 16

  17. Slide 17: Office - Steady

    HK IP Office - Steady HK Office Revenue (HKD billion) $3.4B (+9%) 1H 2H 1.8  Occupancy Remained High (97%) 1.5 1.6 1.3 1.2  Positive Rental Reversion 1.5 1.6 1.2 1.4 1.2 2012 2013 2014 2015 2016 17

  18. Slide 18: Mount Nicholson

    HK DP Mount Nicholson  Ultra-Luxury Residences on the Peak 50%-Owned Mount Nicholson  6 Villas & 16 Apartments Sold for Launch Date 1Q 2016 $9.9B in 2016 Product Type* 19 Villas 48 Apartments  Relevant Profits* Recognized in 2016 OP Issued *Villas: 7,000 – 10,000 s.f (3 Apartments & 1 Villa Sold

  19. Slide 19: China Properties

    Agenda Hong Kong Properties China Properties Other Businesses Strategic Reviews Financial Management Next 19

  20. Slide 20: China IP Underpins Long-term Growth

    China IP China IP Underpins Long-term Growth China IP Revenue (HKD billion) $2.4B (+2%) 1H 2H RMB Devaluation  Encourages PRC Domestic 1.2 Consumption & Retail Sales 1.2 1.2  Location & Critical Mass Create a Snowball Effect 0.8 0.5  Revenue +9% YoY in RMB (+2% in 1.1 1.2 HKD) 0.8 0.5 0.5  CAGR

  21. Slide 21: CDIFS Mall – Outshines Competition

    China IP CDIFS Mall – Outshines Competition 2016 CDIFS Mall Net Revenue (Net of Tax) RMB633M (+11%)  Beat Expectation Foot Traffic Growth +19% Turnover Rent Portion 17%  Consistently Remarkable Occupancy Cost* 14% Performance * Occupancy Cost = Retail Rent/Retail Sales  Among the Top in Western C

  22. Slide 22: CDIFS Office – Finest Premium

    China IP CDIFS Office – Finest Premium  39.5% Committed or ~110,000 s.m Leased (in 3 Years)  Leasing Progress Comparable to SWS  Rental Rates Achieved among the Highest in CD  Selective Tenants 22

  23. Slide 23: New IFS Malls – Progressing at Full Speed

    China IP New IFS Malls – Progressing at Full Speed  New IPs to Further Strengthen Recurrent Income Base Mall CQIFS CSIFS  CSIFS & CQIFS – Pre-leasing Status GFA (s.f) 1.2M* 2.7M on Track Scheduled for Sep 2017 4Q17 Opening  Replicating the Success of CDIFS & % of Area Under Harbour City (HK) Offe

  24. Slide 24: Record-breaking Sales

    China DP Record-breaking Sales Contracted Sales (RMB billion) RMB31.4B (+21%) 1H 2H  2016 Sales Exceeded Target by 31%  GFA Sold 1.5M s.m (+6%); ASP 15.1 RMB19,900/s.m (+11%) 15.7 10.0 12.6  2017 Sales Target RMB24B (2016: 7.5 RMB24B) 16.3 10.9 10.3 7.5 8.9  2017 Sellable Resources 1.6M s.m (201

  25. Slide 25: Stronger-than-expected Operating Results

    China DP Stronger-than-expected Operating Results  Share of Group Core Profit Increased 2016 Operating Matrix* to 14% Revenue $30,676M +12%  Improving Operating Margin Operating Profit $5,133M +22% Operating Margin 16.7% +1.4 ppts  Net Order Book RMB27B or 1.2M Completed GFA 1.7M s.m +3% s.m Reco

  26. Slide 26: Disciplined Landbanking

    China DP Disciplined Landbanking Attributable  Selective & Prudent Approach Date City Attributable Consideration Ownership GFA (s.m) (RMB)  Focus on 4 Tier 1 Cities, Selective Feb16 Beijing 47,800 2.05B 40% Top Tier 2 Cities Jun16 Hangzhou 17,700 0.28B 25% Dec16 Shenzhen 51,000 1.34B 100%  DP Lan

  27. Slide 27: Other Businesses

    Agenda Hong Kong Properties China Properties Other Businesses Strategic Reviews Financial Management Next 27

  28. Slide 28: MTL

    Other Businesses MTL  Revenue $2,635M (-4%) Throughput (million TEUs)  Operating Profit $710M (+5%) HK 5.2 +15%  Market Throughput DCB 1.3 +8% TC 2.2 Flat  South China: -1% Total 8.7 +10%  Kwai Tsing: -2% 28

  29. Slide 29: Hotels

    Other Businesses Hotels  Revenue $1,587M (+2%); Operating Profit $289M (+4%)  Operating Environment Remains Challenging  CDIFS Niccolo Hotel Emerged as the City’s Market Leader in Room Yield (in Just a Year)  336-Room The Murray – Iconic Luxury Hotel Befitting the Most Prestigious Visitors, to O

  30. Slide 30: 2016 Key Awards

    Others 2016 Key Awards Niccolo Chengdu Niccolo Hotels Best Business Hotel in Chengdu Best Luxury Hotel Brand of the Year 25th Annual Business Traveller Awards 2016 Asia Hotel Awards CDIFS CDIFS The 2016 VIVA Best-of-the- Grand Award Best Design and Quality Building Award 2016 Development Award Harbo

  31. Slide 31: Strategic Reviews

    Agenda Hong Kong Properties China Properties Other Businesses Strategic Reviews Financial Management Next 31

  32. Slide 32: Strategic Reviews

    Strategic Reviews Strategic Reviews CME IP  Year-long Review Led the Group to  Commenced Study for a Separate Exit the Segment Listing by Way of Distribution in  Wharf T&T was Disposed for $9.5B & Specie to Wharf Shareholders a Gain of $7.3B  All Discussions to Dispose i-Cable have Ended; Fundin

  33. Slide 33: Financial Management

    Agenda Hong Kong Properties China Properties Other Businesses Strategic Reviews Financial Management Next 33

  34. Slide 34: Prudent Financial Management

    Financial Management Prudent Financial Management Net Debt to Total Equity 25.6% 21.7% 20.6% 20.4% 18.8% 19.2% 18.9%  Net Gearing Further Dropped to 7.3% 15.8% 14.9%  Group Net Debt -$23.4B to $23.8B, 7.3%  Net Cash Inflow: $31B* 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016  Floating Rate D

  35. Slide 35: Prudent Financial Management

    Financial Management Prudent Financial Management Average Interest Cost Debt Maturity (HKD billion) 16.8 15.2 3.2% 3.2% 3.2% 10.1 2.8% 2.8% 5.7 7.2 5.8 2012 2013 2014 2015 2016 Jan17-Dec17 Jan18-Dec18 Jan19-Dec19 Jan20-Dec20 Jan21-Dec21 Jan22 & After 35

  36. Slide 36: Overview of Application of Funds

    Financial Management Overview of Application of Funds Major Capital and Development Expenditure Major Capital and Development Expenditure (HKD billion) FY16 FY17 35.5 HKD (Actual) (Projected) 32.8 31.5 China DP $12.4B $12.8B 26.9 23.4 22.8 China IP $4.5B $6.0B HKIP $7.9B $1.5B Others $2.1B $2.5B 201

  37. Slide 37: New Achievements on Panda Bond Issuance

    Financial Management New Achievements on Panda Bond Issuance  1 Tranche Issued on 12 Oct 2016 st  RMB4B (Over-subscribed 3x)/RMB20B  Coupon Rate: 3.1% 37

  38. Slide 38: Next

    Agenda Hong Kong Properties China Properties Other Businesses Strategic Reviews Financial Management Next 38

  39. Slide 39: Coming Attractions

    Next Coming Attractions CSIFS Mall & Niccolo CQIFS Mall & Niccolo 1Q 2Q 3Q 4Q 2017 2018 OT 4-Storey Extension OT 4-Storey Extension The Murray 39

  40. Slide 40: Corporate Social Responsibility

    Corporate Social Responsibility 40

  41. Slide 41: 2016 Key Achievements

    CSR 2016 Key Achievements  Published the 2 CSR Report Based on GRI G4 Guidelines, with the nd Coming CSR Report (Issued in July) Also Complying with the HKEX’s ESG Disclosure Requirements  Hang Seng Corporate Sustainability Index (top 30)  Accredited the HKQAA’s CSR Index Plus mark 41

  42. Slide 42: Business-in-Community (Highlights)

    CSR Business-in-Community (Highlights) Flagship Business-in-Community Programme Key Youth Development Programme Project WeCan Architectural Design Internship Project Partners Project Partners 2 Universities 31 Companies 5 Universities 3 Consulates 3 Organizations Awardees 20 Postgraduates (Architect

  43. Slide 43: Appendix

    WHARF Appendix

  44. Slide 44: IP Portfolio

    IP Portfolio 2016 IP Revenue: $15,289M 2016 IP Valuation: $302.6B By Business By Business Office S.A. & Office S.A. & 27% Others 10% Others 4% 34% 69% 56% Retail Retail China China 15% 14% 85% 86% HK HK 44

  45. Slide 45: HKIP Performance

    HKIP Performance Harbour City Times Square Plaza Hollywood 2016 Revenue % Chg Revenue % Chg Revenue % Chg (HKD million) Retail 6,207 +4% 2,137 +6% 546 +3% Office 2,437 +5% 701 +5% - - Hotels & Club 1,286 -2% - - - - Serviced Apt. 316 +5% - - - - Total 10,246 +4% 2,838 +6% 546 +3% Valuation* as of $1

  46. Slide 46: Commercial Properties Pipeline

    Commercial Properties Pipeline Commercial Properties Completion Schedule (Million s.f) 53.9M s.f Changsha IFS 9.4 11.2 Suzhou IFS 8.9 Changsha Outlets 4.1 4.1 0.8 0.8 0.8 0.8 2.7 2.7 2.7 Wuxi IFS 2.7 6.5 6.5 6.5 2.2 2.2 4.6 Chongqing IFS* 2.0 2.0 8.2 8.2 8.2 8.2 Chengdu IFS 6.6 7.4 3.9 Other China C

  47. Slide 47: China Commercial Properties Pipeline

    China Commercial Properties Pipeline Wuxi IFS Suzhou IFS Chongqing IFS Changsha IFS 250,000 s.m 383,000 s.m 604,000 s.m.* 1,043,000 s.m Grade A Offices Grade A Offices, Apartments & Retail, Grade A Offices & Retail, Grade A Offices & Hotel Hotel Hotel No Retail 339m Tower No Retail Retail 114,000 s.

  48. Slide 48: Chongqing City Profile

    Chongqing City Profile  China’s Western Development Strategy Chongqing 2016 Tertiary Industry +11.0% 48.4% of CQ GDP  Strong Presence of Population 29.9 million Tertiary Primary International Brands 2016 GDP +10.7% (National Avg.: 48% 7% +6.7%)  The World’s Largest 2016Retail Sales +13.2% Municip

  49. Slide 49: Changsha City Profile

    Changsha City Profile Changsha 2016 Tertiary Industry +12.4%  Hub City in Central China 47.6% of CS GDP Population 7.3 million Tertiary  Beneficiary of China’s “Rise +9.4% 4% Primary 48% of Central China” Campaign 2016 GDP (National Avg.: +6.7%)  Important Entertainment 2016 Retail Sales +11.6% C

  50. Slide 50: China Contracted Sales Breakdown by City

    China Contracted Sales Breakdown by City Region City No. of Projects Contracted GFA Sold on Sale in 2016 Sales (%) (%) Eastern China Shanghai 6 20% 5% Suzhou 5 16% 12% Wuxi 4 9% 14% Changzhou 3 3% 9% Ningbo 3 5% 5% Hangzhou 10 23% 18% Eastern China Sub-Total: 31 76% 63% Western China Chengdu 7 6% 12

  51. Slide 51: New Projects Launched in 2016

    4 New Projects Launched in 2016 Attributable Attributable Average Price Projects City New Launch Proceeds GFA Sold (RMB psm) (RMB’M) (s.m) Crown Land Beijing Feb 201 9,500 21,100 The Exquisite Palace (Longxi) Hangzhou Apr 738 26,200 28,100 The Pearl on the Crown Beijing May 209 10,000 21,000 Hangzho

  52. Slide 52: China Key Projects on Sales in 2016

    China Key Projects on Sales in 2016 Attributable Attributable Average Price Projects City Proceeds GFA sold (RMB psm) Ownership (RMB’M) (s.m) Shanghai Pudong Shanghai 5,635 59,100 95,400 100% Huangpujiang Suzhou Times City Suzhou 2,093 65,400 28,700 80% Qiantang Bright Moon Hangzhou 1,345 46,200 27,

  53. Slide 53: China Land Bank Breakdown by City

    China Land Bank Breakdown by City Region City GFA million (s.m) % Total Eastern China Shanghai 0.5 8% Suzhou 0.8 11% Wuxi 0.8 12% Changzhou 0.4 5% Ningbo 0.1 1% Hangzhou 0.6 9% Eastern China Sub-Total: 3.2 46% Western China Chengdu 1.5 23% Chongqing 0.7 10% Western China Sub-Total: 2.2 33% Southern

  54. Slide 54: China key Properties Completion

    China key Properties Completion Projects Attributable GFA (s.m) Key Completion in 2016 Suzhou Times City 193,900 Changzhou Ambassador Villa 121,800 Ningbo Park Mansion 103,800 Changzhou Feng Huang Hu 102,000 Greentown Wharf Qiantang Bright Moon 94,800 Shanghai Zhoupu 91,300 Projected Key Completion

  55. Slide 55: China New Projects for Sale in 2017

    China New Projects for Sale in 2017 Projects City Ownership Hangzhou Site 18 Hangzhou 25% Jingan Garden Shanghai 55% Beijing Chaoyang LiangMa Site Beijing 40% Longxi (Site 12) Hangzhou 100% 55

  56. Slide 56: Thank You

    Properties Growth Continues Thank You 56

  57. Slide 57: End of Presentation

    End of Presentation The Wharf (Holdings) Limited [HKEx Stock Code: 0004.HK] Disclaimer 1) 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 subsi

The Wharf (Holdings) — FY2016 Earnings Presentation on 6ix