Swire Properties Limited · HKEX:1972
Swire Properties — H1 2021 Earnings Presentation
60 slides from Swire Properties's earnings presentation, Aug 12, 2021
Slide 1: 2021 Interim Results | Analyst Briefing
2021 INTERIM RESULTS | ANALYST BRIEFING 12TH AUGUST 2021
Slide 2: Disclaimer
DISCLAIMER This presentation has been prepared by Swire Properties Limited (“the “Company”, and together with its subsidiaries, the “Group”) solely for information purposes and certain information has not been independently verified. No representation or warranty, express or implied, is made as to,
Slide 3: Agenda
AGENDA 1. Results Highlights 2. Investment Portfolio Guy Bradley, 3. Trading Portfolio Chief Executive 4. Hotel Portfolio 5. Financial Highlights Fanny Lung, 6. Sustainable Development Finance Director 7. Prospects 8. Q&A 3
Slide 4: Rebound, Resilience and Recovery
REBOUND, RESILIENCE AND RECOVERY HK$ 1,984 M HK$ 3,716 M HK$ 4,513 M HK$ 49.21 per share 1H 2021 1H 2021 1H 2021 Equity attributable to +93% Reported profit +0.4% Recurring profit +20% Underlying profit shareholders -0.3% (1H 2020 at HK$1,029M) (1H 2020 at HK$3,702M) (1H 2020 at HK$3,753M) (Dec 2020
Slide 5: Key Developments
KEY DEVELOPMENTS ENCOURAGING ACHIEVEMENTS IN 2021 IN ALL REGIONS January March March EIGHT STAR STREET Empire City, HCMC EDEN Hong Kong Vietnam Singapore ▪ Sales launched ▪ Minority investment ▪ All 20 units sold (15.73%) ▪ 26 of 37 units pre-sold (1) ▪ Residential-led mixed- use development Artist
Slide 6: Strategic Growth Roadmap
STRATEGIC GROWTH ROADMAP 2021 2022 2023 2024 2025 & onwards GFA sq ft ▪ Two Taikoo Place ▪ 46-56 Queen’s Road East ▪ Wong Chuk Hang Station ▪ Wah Ha / Zung Fu Office Project (2) HK ▪ EIGHT STAR STREET (Pacific Place office extension) Package Four ▪ Quarry Bay Residential Project (3) + 2.9 M Hong Kon
Slide 7: Investment Portfolio
Two Taikoo Place INVESTMENT PORTFOLIO
Slide 8: Hong Kong Office
HONG KONG OFFICE PORTFOLIO RESILIENCE – POSITIVE REVERSIONS AT TAIKOO PLACE AND OVERALL FIRM OCCUPANCY HK$M 3,500 3,277 3,044 Loss of rental from Cityplaza One 3,000 98% 2% HK$ 3,044 M 2,500 Taikoo Place & Vs 1H 2020 (excl. Cityplaza Attri. Gross Rental 2,000 Pacific Place One) 1,500 1,000 1% HK$ 17
Slide 9: Hong Kong Retail
HONG KONG RETAIL GRADUAL RECOVERY – REBOUND IN RETAIL SALES AND REDUCED CASH CONCESSIONS HK$M 1,336 1,167 1,400 1,200 1,000 Flattish HK$ 1,167 M 800 Almost Fully let vs 1H 2020 (excl. amortised Attri. Gross Rental concessions) 600 400 200 - Amortised rental concessions 2% HK$ 45.5 bn effects vs Dec
Slide 10: Chinese Mainland Portfolio
CHINESE MAINLAND PORTFOLIO SIGNIFICANT CONTRIBUTION – LEVERAGING TAIKOO LI AND TAIKOO HUI BRANDS ▪ Chinese Mainland overall portfolio contributed 36% attributable gross rental income in 1H 2021. ▪ Chinese Mainland retail is the second largest rental contributor. Chinese Mainland Attributable Gross R
Slide 11: Chinese Mainland Retail
CHINESE MAINLAND RETAIL STRONG RENTAL GROWTH – ROBUST RETAIL SALES, STRONG LOCAL DEMAND AND RMB APPRECIATION HK$M 2,108 2,000 95-100% 38% HK$ 2,108 M 1,529 Overall Occupancy vs 1H 2020 Attri. Gross Rental 1,500 (23% growth disregarding amortised rental 1,000 concessions and 9% RMB appreciation) 500
Slide 12: Chinese Mainland Retail
CHINESE MAINLAND RETAIL IMPRESSIVE TENANTS’ SALES – OVERALL RETAIL SALES GROWTH OF 77%(1) IN 1H 2021 100% 66% 83% 88% 85% 6% 80% 60% 40% 73% 20% 36% 23% 26% 15% 20% 6% 11% 0% 2019 2020 1H 2021 2019 2020 1H 2021 2019 2020 1H 2021 2019 2020 1H 2021 2019 2020 1H 2021 -18% -12% -20% Sino-Ocean Taikoo Li
Slide 13: Chinese Mainland Office
CHINESE MAINLAND OFFICE LARGELY STEADY PERFORMANCE WITH IMPROVED OCCUPANCY HK$M 500 388 431 400 88-99% 11% HK$ 431 M 300 Overall Occupancy vs 1H 2020 Attri. Gross Rental 200 100 Flattish HK$ 14.3 bn - 1H 2020 1H 2021 vs Dec 2020 Attri. Valuation Attributable Gross Rental Income Taikoo Hui, INDIGO, H
Slide 14: Taikoo Li Qiantan, Shanghai
TAIKOO LI QIANTAN, SHANGHAI SIXTH DEVELOPMENT IN CHINESE MAINLAND OPENING SOON 1.2 M sq ft * 3-line metro Sept > 80% 50:50 JV GFA Interchange Station Pre-leasing Open-plan 2021 86,000 sq ft green area Lanes-driven opening > 200 shops Lujiazui + Swire 14 * On a 100% basis
Slide 15: Taikoo Li Qiantan, Shanghai
TAIKOO LI QIANTAN, SHANGHAI FOCUSING ON WELLNESS AND SUSTAINABILITY 15
Slide 16: Taikoo Li Sanlitun West, Beijing
TAIKOO LI SANLITUN WEST, BEIJING ADDING ~ 20% RETAIL AREA TO EXISTING TAIKOO LI SANLITUN 0.3 M sq ft GFA Extension to Taikoo Li Sanlitun 2H 2021 100% Pre-leasing Refurbished opening 16
Slide 17: Zhangyuan Revitalisation, Shanghai
ZHANGYUAN REVITALISATION, SHANGHAI LEVERAGING OUR TRACK RECORD IN URBAN REGENERATION 0.6 M sq ft * 43 shikumen blocks Leasing & 60:40 JV Above ground GFA 170 historical bldgs Revitalisation Management with Shanghai Jing’an Real office | resid. | hotels | retail 28 different styles Estate (Group) Co.
Slide 18: Dual Growth Engines
DUAL GROWTH ENGINES Expected Attributable GFA of Completed Property Portfolio (incl. Hotels) (‘000 sq ft) Hong Kong Portfolio 16% 18% (vs 2020) Chinese Mainland Portfolio (vs 2020) 15,000 14,597 13,818 779 11,151 218 218 11,000 9,722 13,000 12,582 1,000 1,000 1,429 9,466 256 256 11,000 619 619 619 9
Slide 19: Trading Portfolio
EIGHT STAR STREET TRADING PORTFOLIO
Slide 20: Hong Kong Trading Portfolio
HONG KONG TRADING PORTFOLIO ENCOURAGING PRE-SALE PROGRESS, CONTINUOUS RESIDENTIAL PIPELINE Expected Residential GFA Completions in Hong Kong (100% Basis) GFA (‘000 sq ft) 694 946,000 sq ft (Attributable basis) 638 400 31 2022 2024 Beyond 2025 Wong Chuk Hang Station Package Four 25% Interest Exp. Com
Slide 21: Overseas Trading Portfolio
OVERSEAS TRADING PORTFOLIO EDEN AND ALMOST ALL REACH & RISE SOLD OUT, 3 PROJECTS UNDERTAKEN IN SOUTH EAST ASIA Ho Chi Minh City, Vietnam Jakarta, Indonesia Singapore Miami, U.S.A. The River Empire City Savyavasa EDEN Reach & Rise 20% Interest 15.73% Minority interest 50% Interest 100% Interest 100%
Slide 22: Hotels
HOTELS DI4 Swire PROPERTIES
Slide 23: Hotel Portfolio
HOTEL PORTFOLIO RETURNED TO PROFITABILITY AT OPERATING LEVEL ▪ Trading conditions were challenging in HK due to COVID-19 and associated travel restrictions. ▪ Better business performance in the Chinese Mainland and U.S.A. with higher RevPAR and occupancy. ▪ Returned to an EBITDA profit (1) of HK$4M
Slide 24: Financial Highlights
Taikoo Li Sanlitun FINANCIAL HIGHLIGHTS
Slide 25: Underlying Profit
UNDERLYING PROFIT HIGHER UNDERLYING PROFIT ON DISPOSAL GAINS AND BUSINESS IMPROVEMENTS Underlying Profit HK$M Non-recurring ▪ Underlying profit increased by 20%, reflecting the sale of car parking spaces at 24,130 Recurring Taikoo Shing. ▪ Recurring underlying profit recorded a marginal increase of
Slide 26: Rental Income
RENTAL INCOME MAINTAINING RENTAL GROWTH – INCREASING CONTRIBUTION FROM CHINESE MAINLAND PORTFOLIO Attributable Gross Rental Income HK$M 14,117 14,058 HK Office ▪ Loss of rental from the disposal of Cityplaza One. 7% ▪ Disregarding Cityplaza One, attributable rental income decreased by 2%. ▪ Positive
Slide 27: Dividend Return
DIVIDEND RETURN SUSTAINED DIVIDEND GROWTH Dividend Per Share HK$ / Share ▪ Our policy continues to be to deliver sustainable growth in dividends to our shareholders and to 0.91 0.88 pay out approximately half of our underlying profit 0.84 in ordinary dividends over time. 0.77 0.71 ▪ Full year (2016-
Slide 28: Investment Properties Valuation
INVESTMENT PROPERTIES VALUATION INCREASE IN CHINESE MAINLAND PORTFOLIO VALUATION OFFSET BY DECREASE IN HK PORTFOLIO VALUATION Movement in Investment Properties Valuation* (excl hotels and investment properties held under JVCs) ▪ The decrease in the valuation in the HK$M investment property portfolio
Slide 29: Net Debt and Gearing
NET DEBT AND GEARING STRONG BALANCE SHEET Net Debt Reconciliation (HK$M) Financial Ratios * 2017 2018 2019 2020 Jun 2021 Net debt at 31st December 2020 (6,605) Total equity (HK$M) 259,378 281,291 288,911 290,680 289,849 Net rental, fee receipts and proceeds from property trading / development 9,140
Slide 30: Maturity Profile and Liquidity
MATURITY PROFILE AND LIQUIDITY Maturity Profile of Available Committed Facilities (at 30th Jun 2021) Total 33,066 2,800 12,737 700 1,100 3,940 4,583 2,140 4,262 - 804 HK$M Dec 2020 Jun 2021 Drawn 25,466 950 8,887 200 1,100 2,540 4,583 2,140 4,262 - 804 Cash 21,232 16,917 Undrawn - committed 11,751 7
Slide 31: Capital Commitments
CAPITAL COMMITMENTS Profile of Capital Commitments for Investment Properties and Hotels – at 30th Jun 2021 HK$M Expenditure Forecast Expenditure Total Commitments* Commitments relating to JVCs Six months Six months 2022 2023 2024 & At 30th Jun 2021 At 30th Jun 2021 ended 30th ending 31st later Jun 2
Slide 32: Sustainable Development
Fighting Climate Change “We’re All in” SUSTAINABLE DEVELOPMENT Sustainable Development Report 2020 ESG Update for Investors (Jun 2021)
Slide 33: Renewable Energy Generation and Procurement
RENEWABLE ENERGY GENERATION AND PROCUREMENT GREEN AND CLEAN ENERGY TO SUPPORT NET ZERO EMISSIONS Offsite Renewable Energy Procurement Onsite Renewable Energy Generation in 2020 ~57,690,000 kWh (1) Taikoo Hui, Guangzhou Sourced offsite 100% renewable electricity since Jul 2021 INDIGO, Beijing Taikoo
Slide 34: Places Impact Report
PLACES IMPACT REPORT TAIKOO LI SANLITUN CONTRIBUTES TO A VIBRANT MIXED-USE COMMUNITY Read the Add QR report online code now! Four Dimensions of Place Key Findings VIBRANCY LIVELIHOOD International Points of interests Local residents and brands often have grown visitors have a open their first WELLBE
Slide 35: Tenant Engagement
TENANT ENGAGEMENT JOINTLY ADVANCE ENVIRONMENTAL PERFORMANCE THROUGHOUT TENANCY LIFECYCLE Smart Waste Reduction Pilot Green Kitchen initiative 15 Participating Offices (Swire + Tenants) 322 k+ Floor Area (sq ft) 42 F&Bs recognised with Green Kitchen Awards (since launch in 2018) Green Performance Ple
Slide 36: Green Financing
GREEN FINANCING PREFERRED FINANCING STRATEGY ~31% 2025 TARGET: Achieve a minimum of 50% of of our current bond and bond and loan facilities from green loan facilities come from financing green financing (1) 2018 2019 2020 2021 1st green bond in Hong Kong that 1st sustainability-linked loan in Launch
Slide 37: Prospects
Taikoo HKRI Place Taikoo Hui PROSPECTS
Slide 38: Accelerate Digitalisation
ACCELERATE DIGITALISATION Effective Customer Engagement ~0.6 M sq ft GFA Greater Efficiency through Stronger Synergies with Partners with Digital Enablers Smarter Processes via Digital Connections Powerful CRM Strategy AI & Big data Partnership with Tsinghua University through x Advanced Data Analyt
Slide 39: New Ventures and Tech Applications
NEW VENTURES AND TECH APPLICATIONS Technology sourcing and innovation targeting the scaled application of cutting-edge technology Corporate Venture Tech Experimentation Fund Capital Programme US$50M venture fund investing in Innovation & Collaboration global Series A – C companies 50+ Tech Trials ac
Slide 40: Prospects
PROSPECTS GROWING OUR BUSINESS WITH GREAT FUNDAMENTALS AND A BALANCED PORTFOLIO ❑ Signs of economic recovery maintaining its momentum. ❑ Business expected to continue to improve in 2H 2021. ▪ HK office leasing momentum to pick up gradually. Taikoo Li Qiantan ▪ Mixed HK retail sentiment but gradual r
Slide 41: Q&A
HKRI Taikoo Hur DI4 Swire PROPERTIES
Slide 42: Appendix
sland Place APPENDIX DI4 Swire PROPERTIES
Slide 43: 2021 Interim Results Summary
2021 INTERIM RESULTS SUMMARY THE ROAD TO BUSINESS RECOVERY HK$M 1H 2020 1H 2021 Change Revenue 6,551 9,068 38% Valuation losses on investment properties (2,621) (2,525) n.m. Operating profit 1,473 2,467 67% Underlying profit 3,753 4,513 20% Recurring underlying profit 3,702 3,716 0.4% Reported profi
Slide 44: Key Business Strategies
KEY BUSINESS STRATEGIES ▪ Hong Kong Portfolio Map SUSTAINABLE GROWTH IN SHAREHOLDER VALUE IN THE LONG TERM Continue to create long-term value by conceiving, designing, developing, owning and managing transformational mixed-use and other projects in urban areas. ▪ Maximise the earnings and value of o
Slide 45: Property Portfolio at a Glance
PROPERTY PORTFOLIO AT A GLANCE A LEADING PROPERTY DEVELOPER, OWNER AND OPERATOR Investment Props / Hotels Office Retail Hotels (1) Residential / Under Total Attributable Investment Props / Attributable GFA (M sq ft) Serv. Apts Planning Hotels by Region (GFA M sq ft) Completed Hong Kong 8.7 2.5 0.8 0
Slide 46: Geographical Analysis
GEOGRAPHICAL ANALYSIS TOWARDS A MORE BALANCED PORTFOLIO Attributable Gross Rental Income by Region Net Asset Employed Hong Kong Chinese Mainland U.S.A. Hong Kong Chinese Mainland U.S.A. and elsewhere 1H 2021 61% 36% 3% JUN 2021 80% 18% 2% FY 2020 67% 30% 3% DEC 2020 81% 16% 3% Completed Investment P
Slide 47: Lease Expiry Profile
LEASE EXPIRY PROFILE ONLY SMALL PROPORTION OF HONG KONG LEASES EXPIRING IN 2H 2021 Lease Expiry Profile as at 30th Jun 2021 Hong Kong Portfolio Chinese Mainland Portfolio 60.5% 54.4% 68.3% 79.1% 27.9% 25.0% 27.7% 17.4% 14.5% 17.7% 3.5% 4.0% Office Retail Office Retail 2023+ ▪ Top 10 office tenants o
Slide 48: Tenant Mix
TENANT MIX A BALANCED TENANT PROFILE Jewellery & Fashion & Others Watches Accessories 20.9% 1.8% 29.5% Fashion and Accessories Jewellery and 39.6% Watches Supermarkets 2.9% Food & 5.5% Chinese Beverages HK Retail Cinemas Cinemas Mainland 19.8% 4.9% 4.2% Retail Ice Rink Supermarkets 0.9% 5.6% Departm
Slide 49: Hong Kong Projects
HONG KONG PROJECTS REINFORCING THE TWO GLOBAL BUSINESS DISTRICTS Taikoo Place Hong Kong Portfolio Map Pacific Place Two Taikoo Place Artist Impression Two Taikoo Place Wah Ha / Zung Fu 46 – 56 Queen’s Road East redevelopment ▪ ~ 1M sq ft GFA ▪ ~ 779,000 sq ft GFA ▪ Pacific Place office extension ▪ 1
Slide 50: Chinese Mainland Projects
CHINESE MAINLAND PROJECTS SCALING UP INVESTMENT AND ASSET REINFORCEMENT IN BEIJING AND SHANGHAI Beijing Hong Kong Portfolio Map Shanghai Two TaikooArtist PlaceImpression Artist Impression Taikoo Li Sanlitun West INDIGO Phase Two Taikoo Li Qiantan Zhangyuan Revitalisation ▪ Taikoo Li Sanlitun retail
Slide 51: Hong Kong Portfolio Map
HONG KONG PORTFOLIO MAP Completed Investment Props (incl. Hotels) (100% basis) Hong Kong Portfolio Map Investment Props under Development (100% basis) 5.47 M sq ft GFA 0.22 M sq ft GFA Pacific Place 46-56 Queen’s Road East 4.1 M (Attri. basis) Completed Investment Props (incl. Investment Props under
Slide 52: Hong Kong Portfolio Map
HONG KONG PORTFOLIO MAP Hong Kong Portfolio Map Completed Investment Props (incl. Hotels) (100% basis) 1.33 M sq ft GFA Citygate 0.27 M (Attri. basis) 52
Slide 53: Chinese Mainland – Beijing Portfolio
CHINESE MAINLAND – BEIJING PORTFOLIO Hong Kong Portfolio Map Completed Investment Props (incl. Hotels) (100% basis) INDIGO Mall ONE INDIGO Retail occupancy 98% 1.74 M sq ft GFA EAST, Beijing Retail sales growth 6% Taikoo Li Sanlitun INDIGO Phase Two Office occupancy 88% (under development) Artist Im
Slide 54: Chinese Mainland – Guangzhou & Chengdu Portfolio
CHINESE MAINLAND – GUANGZHOU & CHENGDU PORTFOLIO Hong Kong Portfolio Map Completed Investment Props (incl. Hotels) (100% basis) 3.84 M sq ft GFA Taikoo Hui, Sino-Ocean Taikoo Li Occupancy 95% Guangzhou The Temple House Retail sales growth 66% 3.72 M (97% basis) Completed Investment Props (incl. Hote
Slide 55: Chinese Mainland – Shanghai Portfolio
CHINESE MAINLAND – SHANGHAI PORTFOLIO Hong Kong Portfolio Map Completed Investment Props (incl. Hotels) (100% basis) 3.54 M sq ft GFA HKRI Taikoo Hui, Taikoo Li Qiantan (to open in Sep 2021) Pre-leasing > 80% Shanghai 1.77 M (50% basis) Completed Investment Props Taikoo Hui Mall (100% basis) HKRI Ce
Slide 56: Miami, U.S.A. Portfolio
MIAMI, U.S.A. PORTFOLIO Completed Investment Props (incl. Hotels) (100% basis) 0.83 M sq ft GFA Brickell City Centre 0.6 M (Attri. Basis) Shopping Mall Retail occupancy (1) 97% EAST, Miami Retail sales growth 71% Under planning (100% basis) 1.97 M sq ft GFA One Brickell City Centre / Other developme
Slide 57: Hotel Portfolio
HOTEL PORTFOLIO Managed Hotels No. of Rooms Interest Owned but Non-managed Hotels No. of Rooms Interest (100% basis) (100% basis) Hong Kong The Upper House 117 100% Hong Kong Island Shangri-La Hong Kong 561 20% EAST, Hong Kong 345 100% JW Marriott Hotel Hong Kong 608 20% Headland Hotel (1) 501 0% Co
Slide 58: Sustainable Development
SUSTAINABLE DEVELOPMENT SETTING NEW KPIS FOR 2025 AND 2030 SD Vision: Achieved Established “To be the leading SD performer in our industry globally by 2030” 80+ 40+ KPIs for 2020 milestone new KPIs for 2025 and 2030 The first real estate developer in Hong Kong and the Chinese mainland to commit to a
Slide 59: Business Outlook
BUSINESS OUTLOOK HK ▪ Resilient office portfolio with high occupancy. CM ▪ Optimistic about Chinese Mainland retail market as supported Office Retail by strong local consumption. ▪ Leasing activity to show a gradual pick up. ▪ Continue to reinforce and expand our two core portfolios ▪ Strong demand
Slide 60: © Swire Properties Limited
Di SwirRE PROPERTIES © Swire Properties Limited