New World Development Co. Ltd. · HKEX:17
New World Development — FY2024 Earnings Presentation
32 slides from New World Development's earnings presentation, Sep 26, 2024
Slide 1: FY2024 Annual Presentation Analyst Briefing
FY2024 ANNUAL PRESENTATION ANALYST BRIEFING 26 September 2024 W E C R E AT E , W E A R E A R T I S A N S , W E A R E C S V resilience. reset. reborn.
Slide 2: Premium Brand Delivers Resilient DP Sales
DEVELOPMENT PROPERTIES PREMIUM BRAND DELIVERS RESILIENT DP SALES Pavilia Collection: Total Contracted Sales ~HKD100B Pavilia Brand Others ~HKD9.3B ~HKD10.1B ~HKD20.1B ~HKD16.0B ~HKD37.3B ~HKD2.3B Gross Contracted sales Gross Contracted sales Gross Contracted sales Gross Contracted sales Gross Contra
Slide 3: Innovative Design and the Powerful NWD Brand
DEVELOPMENT PROPERTIES INNOVATIVE DESIGN AND THE POWERFUL NWD BRAND The Pavilia Farm Unique Broke HK record in Innovative subscription & unit price NWD / Pavilia 10大發明 brand ✓ 80x over-subscribed - broke record for the 3rd time since 97 ✓ Record unit price in the New Territories Effective Attracting
Slide 4: Solid Growth Since 2008
INVESTMENT PROPERTIES SOLID GROWTH SINCE 2008 STRONG K11 GROWTH FY20-24 CAGR (Segment Results) K11 MUSEA +32.4% K11 Art Mall +10.9% NWD IP +10.0% FY20 FY21 FY22 FY23 FY24 Musea Art Mall 4
Slide 5: Business Reset
Resilience. Reset. Reborn. SECTION ONE BUSINESS RESET
Slide 6: Revaluation & Impairments to Facilitate Reset
REVALUATION & REDUCING DEBT & SOLID BUSINESS IMPAIRMENTS TO INTEREST, ENSURING FUNDAMENTALS & LONG- FACILITATE LIQUIDITY & FINANCIAL TERM EARNINGS RESET FLEXIBILITY GROWTH with diversified funding as mega IPs completing and sources robust DP pipeline contributing BEGINNING OF RATE CUT CYCLE 6 6
Slide 7: Situation Update
SITUATION UPDATE Significant corporate action to reposition NWD around its core businesses, and optimize cost structure to maximize value to shareholders Illustrative Structure After the Transaction Benefits of the Transaction NWD Total consideration: HK$209m 1 Prioritize on NWD’s core businesses K1
Slide 8: Financial Highlights
Resilience. Reset. Reborn. SECTION TWO FINANCIAL HIGHLIGHTS
Slide 9: Navigating Through a Challenging Environment
FINANCIAL HIGHLIGHTS NAVIGATING THROUGH A CHALLENGING ENVIRONMENT Core Operating Profit (1) (2) Segment Results (2) Loss Attributable To Shareholders HK$7,375M HK$19.7B HK$6,898M -23% YoY Non-cash losses -18% YoY K11 Revaluation / NWS disposal IP impairment +9% YoY +12% YoY HK$9.2B HK$8.3B (3) G&A (
Slide 10: Our Deleveraging Strategy
Resilience. Reset. Reborn. SECTION THREE OUR DELEVERAGING STRATEGY
Slide 11: Dual-Pronged Approach for Earnings Growth and Accelerated Deleveraging
DELEVERAGING STRATEGY DUAL-PRONGED APPROACH FOR EARNINGS GROWTH AND ACCELERATED DELEVERAGING Net gearing ratio(1) (2.2%) (0.7%) (0.5%) (3.3%) 55.0% 55.0% 52.9% 49.9% 49.9% 52.2% 51.8% Dec-23 Jun-24 Adjusted for Adjusted forAdjustments delayed Qianhai NCD Adjusted for DP impairments and IP FV changes
Slide 12: Resilient HK DP Sales in Challenging Markets
11. DEVELOPMENT PROPERTIES RESILIENT HK DP SALES IN CHALLENGING MARKETS RESIDENTIAL: RESILIENT DEMAND ON THE BACK OF PREMIUM NWD BRANDS The Pavilia Forest Premium Practical Effective sales NWD/ Pavilia Gross contracted sales strategy innovations brand 十大發明 ~HKD2.3b Launched in July 2024 (456 out of
Slide 13: Solid Office Sales with Increased Momentum
11. DEVELOPMENT PROPERTIES SOLID OFFICE SALES WITH INCREASED MOMENTUM INCREASING DEMAND FOR PREMIUM OFFICES IN WEST KOWLOON Estimated Driving Time Thriving Cheung Sha Wan District – New core commercial area in West Kowloon 1 NCB Innovation Centre 8 mins 15 mins 24 mins 26 mins (888 Lai Chi Kok Road)
Slide 14: Resilient PRC DP Sales in Challenging Markets
11. DEVELOPMENT PROPERTIES RESILIENT PRC DP SALES IN CHALLENGING MARKETS OUTPERFORM MARKET WITH IMPROVED RANKING KEY PROJECTS (FY24-25) GUANGZHOU HANXI SHENYANG NEW WORLD Contracted Sales FY24 National sales ranking* RMB 12.5B GBA & YRD #77 (Jan-Jul 2024) FY24 Contracted Sales ~RMB3.6B FY24 Contract
Slide 15: Solid and Resilient IP Results on the Back of K11
21. INVESTMENT PROPERTIES SOLID AND RESILIENT IP RESULTS ON THE BACK OF K11 IP SEGMENT RESULTS Solid performance in FY24 (HK$B) Occupancy Footfall YoY Mall Sales YoY IP FY24 YoY K11 FY24 YoY +9.3% +11.9% MUSEA 97% +20% +17% Art Mall 99% +10% +16% FY20-24 CAGR K11 MUSEA 3.5 (Segment Results) +32.4% 3
Slide 16: Continuous Tenant Optimization with International Brands
21. INVESTMENT PROPERTIES CONTINUOUS TENANT OPTIMIZATION WITH INTERNATIONAL BRANDS HIGH SPACE PRODUCTIVITY DRIVES TENANT UPGRADE 7 Major Brands Doubling Footprint at K11 MUSEA Audemars Piguet Balenciaga Brunello Cucinelli Loewe K11 Art Mall Jul Duplex expansion 2024 Asia’s First Toys“R”Us Store expa
Slide 17: K11 Pipeline: Beginning of the Ramp-Up Phase
21. INVESTMENT PROPERTIES K11 PIPELINE: BEGINNING OF THE RAMP-UP PHASE K11 ECOAST in Shenzhen Prince Bay 11 SKIES One-Stop Largest Entertainment, Retail and Commerce Landmark K11’s inaugural flagship 3 Grade A office towers project in PRC K11 ATELIER 11 SKIES Retail, dining ~228k M² Total GFA & prof
Slide 18: Non-Core + Other Disposals
3 NCD NON-CORE + OTHER DISPOSALS Non-core disposals to recycle capital and accelerate deleveraging Non-core + other disposals ahead of market Progress update ✓ NWD has been actively disposing non-core assets since FY2019 for capital HK$b NWS recycling 28 NCD ✓ FY24 completed NCD of HK$7.7b ➢ Disposa
Slide 19: Continuous Progress on Farmland Monetization
3 FARMLAND CONTINOUS PROGRESS ON FARMLAND MONETIZATION Policy Support: Increased Plot Ratio 1 Strategic cooperation with SOEs 2 Farmland direct sale 3 Farmland resumption Co-development of sites in prime locations For smaller land parcels Current compensation rate by gov’t*: with well-connected tran
Slide 20: Explore Corporate Actions for Various Businesses and Assets
45. CORPORATE ACTIONS EXPLORE CORPORATE ACTIONS FOR VARIOUS BUSINESSES AND ASSETS TO UNLOCK VALUE, MAXIMIZE SHAREHOLDER RETURN AND ACCELERATE DELEVERAGING Actively exploring strategic options for various NW Group Businesses businesses in order to: Investment Development Properties Properties Others
Slide 21: Significantly Lower Capex in FY24
5 CAPEX & OPEX OPTIMIZATION SIGNIFICANTLY LOWER CAPEX IN FY24 CAPEX Optimization HK$b 37.0 34.8 Significantly Lower in FY24 19.3 4.5 14.8 <15 2H: 7.3 1H: 7.5 FY21A FY22A FY23A (1) FY24A (1) FY25 (1) CAPEX Optimization Initiatives ✓ Large-scale IP projects ✓ Capex for DP with short largely completed
Slide 22: Opex Optimization to Reduce G&A
53. CAPEX & OPEX OPTIMIZATION OPEX OPTIMIZATION TO REDUCE G&A A Group-wide Continuous Improvement Program to drive down G&A cost and staff costs OPEX Optimization (HK$m) FY24 FY24 G&A expenses staff costs 5,068 (Excl. NWS) (Excl. NWS) 4,196 FY23 FY24 -17% YoY -14% YoY G&A (excl. NWS) ✓ Corporate fun
Slide 23: Temporary Dividend Halt to Accelerate Deleveraging
66. TEMPORARY DIVIDEND HALT TEMPORARY DIVIDEND HALT TO ACCELERATE DELEVERAGING Remain committed to returning capital as part of creating long-term shareholder value DPS with reference to core operating profit and profit attributable to shareholders Pre-emptive impairment exercise will give room for
Slide 24: Diversified Funding Channels
7 TREASURY MANAGEMENT DIVERSIFIED FUNDING CHANNELS Abundant access to capital, both offshore and onshore at low funding costs and long tenures HK$50B+ Bank loans and bonds arranged and repaid (1) 1 3 Offshore Loans Offshore Bonds Long-standing banking relationship with US$400M (HK$3.1B) ~60 banks Of
Slide 25: Continuous Progress in Debt Reduction with Average Maturity Extended
7 TREASURY MANAGEMENT CONTINUOUS PROGRESS IN DEBT REDUCTION WITH AVERAGE MATURITY EXTENDED Interest rates to go down on the back of rate cuts Short-term Debt Fully Covered by Total Debt Trending Down Sufficient Capital Resources (HK$b) Debt Reduction Over FY24 (HK$b) 13.0 HK$12.4B Long-term Short-te
Slide 26: Appendix
Resilience. Reset. Reborn. APPENDIX
Slide 27: DP and IP Results Under Challenging Environment
KEY HIGHLIGHTS IN FY24 DP AND IP RESULTS UNDER CHALLENGING ENVIRONMENT HK$m Hong Kong Mainland China A B 3,356 3,087 1,909 1,841 2,536 IP 2,263 Revenue: Investment 931 955 HK$5.2bn (+4.0%) Properties Segment results: HK$3.5bn (+9.3%) Revenue Segment results Revenue Segment results FY23 FY24 FY23 FY2
Slide 28: Continuous Pipeline Growth of K11
A B INVESTMENT PROPERTIES K11 PIPELINE CONTINUOUS PIPELINE GROWTH OF K11 34 K11 projects upon completion with ~2.7M sqm in portfolio K11 projects 1 1 Status Site Type GFA (sqm) Status Site Type GFA (sqm) Hong Kong K11 Art Mall Retail 34,000 Hong Kong Kai Tak Sports Park Retail Retail 65,000 Hong Kon
Slide 29: Resilient Contracted Sales on the Back of Abundant Saleable Resources
C D DEVELOPMENT PROPERTIES RESILIENT CONTRACTED SALES ON THE BACK OF ABUNDANT SALEABLE RESOURCES FY2025 + (selected projects) Landbank (GFA) 4.0m sqft HK Farmland Plot Reserves 17.1m sqft x Ratio (Site Area) Landbank (GFA) 40.1m sqft PRC Urban Renewal Projects 17.4m sqft (GFA) 29
Slide 30: NWD Projects Key Beneficiary of Policy Address
C DEVELOPMENT PROPERTIES UNIQUE FARMLAND RESOURCES FOR PROPERTIES DEVELOPMENT IN HONG KONG NWD PROJECTS KEY BENEFICIARY OF POLICY ADDRESS Northern Metropolis Strategy: Increased clarity and certainty solidify value of NWD’s farmland resources Proposed 藍綠康樂旅遊生態圈 Farmland (Selected) Status Attr. GFA (
Slide 31: Generating Value Through Sustainability Initiatives
ESG INTEGRATION GENERATING VALUE THROUGH SUSTAINABILITY INITIATIVES New World Development ranked Environment Social 43rd in TIME Magazine’s Enhancing portfolio resilience and protecting Improving employee resilience through “World’s Most Sustainable Companies of 2024” asset value through climate ris
Slide 32: Disclaimer
DISCLAIMER Important notice The information contained in these materials is intended for reference and general information purposes only. Neither the information nor any opinion contained in these materials constitutes an offer or advice, or a solicitation, inducement, invitation, recommendation or
New World Development Company — FY2024 Earnings Presentation on 6ix