Shui On Land Ltd. · HKEX:272
Shui On Land — FY2017 Earnings Presentation
47 slides from Shui On Land's earnings presentation, Mar 21, 2018
Slide 1: Shui On Land Limited 2017 Annual Results Announcement
Shui On Land Limited (0272.HK) 2017 Annual Results Announcement 21st March 2018
Slide 2: Contents
Contents 1. Chairman’s Message 2. 2017 Financial Results Highlights - Performance Highlights - Income Statement and Total Property Sales - Investment Property Portfolio and Valuation - Financial Position and Debt Profile 3. Residential Developments - Saleable Resources - Relocation Progress Update 4
Slide 3: Key Achievements in 2017
Key Achievements in 2017 Solid overall growth: For 2017, the Group has achieved solid growth in many of its key financial indicators driven by improved sales margin and positive contribution from various asset divestments. Total property sales, including but not limited to property sales recognise
Slide 4: Key Achievements in 2017
Key Achievements in 2017 New investments under Asset Light Strategy: The continuous pursuit of the Asset Light Strategy has enabled the Group to realise value of its mature assets, strengthen its financial position, and form strategic partnerships which allowed us to participate in new ventures wi
Slide 5: Higher Total Property Sales and Core Earnings
Higher Total Property Sales and Core Earnings (RMB’mn) Total Property Sales (RMB’mn) Core Earnings 35,000 3,500 30,296 3,147 30,000 3,000 38% 75% 25,000 21,960 2,500 20,000 2,000 1,798 15,000 1,500 10,000 1,000 5,000 500 0 0 2016 2017 2016 2017 (RMB’mn) Turnover (RMB’mn) Profit Attributable to Share
Slide 6: Contracted Sales Reached Target Set
Contracted Sales Reached Target Set Slowdown in residential sales offset by other asset disposal Contracted Sales The Group has achieved the sales (RMB’bn) target of RMB21 billion for the year 25 23 2017. 1.7 21.4 20 5.0 41% - Residential property sales 11.0 51% - Other asset disposal 15 8%
Slide 7: Focus on Increasing Shareholders' Return
Focus on Increasing Shareholders’ Return Increased dividend payout DPS The Board recommends 2017 final (HKD cents) dividend at HKD0.07 per share, full 7 7 year dividend is HKD0.10 per share, an increase of 100% 6 compared to last year. The 5 increase was driven by: 4 4 4 3.9 2016 Dividend per shar
Slide 8: Gearing Target Achieved
Gearing Target Achieved Net gearing ratio at 51% as at 31 December 2017 Net Gearing Net Debt (RMB’mn) 100% 45,000 90% 87% 41,170 81% 40,000 37,378 79% 80% 75% 35,535 34,610 35,000 70% 68% 31,556 64% 29,182 28,875 30,000 60% 57% 24,939 51% 25,000 50% 20,000 40% 15,000 30% 20% 10,000 10% 5,000 0% 0 1H
Slide 9: Asset Light Model: Joint Venture Platform
Asset Light Model: Joint Venture Platform Joint Ventures with China Life for commercial properties in Shanghai Contracted Net Disposal Target Assets Total GFA Partners & Equity Sales Proceeds Gain/(Loss) (% disposed of) (sq.m.) Holding (RMB’mn) (RMB’mn) (RMB’mn) KIC Project 51% - SOL1 253,000 2,949
Slide 10: Asset Light Model: Divestments
Asset Light Model: Divestments Unlock hidden value and enhance cash flow Target Assets Contracted Net Proceeds Disposal Gain/(Loss) (% disposed of) Sales(RMB’mn) (RMB’mn) (RMB’mn) Chongqing Partnership Portfolio 4,133 3,913 1,248 (79.2% equity interest) Dalian Tiandi1 3,160 3,102 (524) (entire equit
Slide 11: Asset Light Model: New Landbank
Asset Light Model: New Landbank New investments highlight the Group’s long term commitment to Shanghai and Wuhan Total Total GFA Partners & Equity Target Assets Consideration Status (sq.m.) Holding (RMB’ mn) Commenced construction on Wuhan Optics Valley 50% - SOL 19 Mar 2018; First batch of 35% for
Slide 12: 2018 Outlook
2018 Outlook Remain cautious and pursue Asset Light Strategy Global Economy: The global economy staged a broad-based upturn in 2017, but heightened financial market volatility since February this year reflects immense geopolitical risks which can undermine the pace of economic recovery. US-China t
Slide 13: Contents
Contents 1. Chairman’s Message 2. 2017 Financial Results Highlights - Performance Highlights - Income Statement and Total Property Sales - Investment Property Portfolio and Valuation - Financial Position and Debt Profile 3. Residential Developments - Saleable Resources - Relocation Progress Update 4
Slide 14: Performance Highlights
Performance Highlights 2017 2016 Change % Contracted Sales Contracted sales (RMB’mn) 21,366 22,975 (7%) Contracted ASP for residential property 45,300 35,200 29% (RMB per sq.m.) Selected Financial Information (RMB’mn) Turnover 18,451 17,600 5% Gross profit 7,858 5,905 33% Profit for the year 2,324 1
Slide 15: Income Statement
Income Statement Gross profit up 33% to RMB7,858 million underpinned by higher margin RMB’mn 2017 2016 Change % Turnover of the Group 18,451 17,600 5% Property sales 16,169 15,604 4% Rental & related income (including income from hotel operations) 1,961 1,716 14% Construction and others 321 280 15%
Slide 16: Income Statement (Cont'd)
Income Statement (Cont’d) Profit attributable to shareholders increased 53% RMB’mn 2017 2016 Change% Profit before taxation 6,250 4,635 35% Taxation (3,926) (2,859) 37% Profit for the year 2,324 1,776 31% Attributable to: Non-controlling shareholders of subsidiaries 82 239 (66%) Owners of perpetual
Slide 17: Total Property Sales
Total Property Sales1 Total RMB30,296 million for 2017 RMB’mn 2017 2016 Change % Property Sales (including carparks) 16,169 15,604 4% TPQ 1,999 3,711 (46%) RHXC 7,858 3,633 116% KIC 2 125 (98%) Wuhan 1,269 3,980 (68%) Chongqing 1,488 1,530 (3%) Foshan 324 2,625 (88%) Chongqing Partnership Portfolio
Slide 18: RMB8.6 Billion Locked-in Sales for Delivery in 2018 and Beyond
RMB8.6 Billion Locked-in Sales for Delivery in 2018 and Beyond Locked-in Sales Locked-in Sales GFA (RMB’bn) (sq.m.) 15 13.6 600,000 502,000 3.7 10 8.6 400,000 193,000 368,000 3.5 184,000 5 9.9 200,000 309,000 5.1 184,000 0 0 31 Dec 2016 31 Dec 2017 31 Dec 2016 31 Dec 2017 Residential Commercial Resi
Slide 19: Valuation of Investment Property Portfolio
Valuation of Investment Property Portfolio RMB40,636 million portfolio on 1.3% valuation gain 66% of completed IP carrying value was located in Shanghai Leasable Fair Value Gain / Carrying Value as at Gain / (Loss) to Project Product GFA (Loss) in 2017 31 December 2017 Carrying Value sq.m. RMB’mn RM
Slide 20: Financial Position
Financial Position Net gearing ratio at 51% Net debt decreased by RMB16,231 million in the past 2.5 years RMB’mn 31 Dec 2017 31 Dec 2016 Change % 30 Jun 2015 Change % Total cash and bank deposits 16,760 15,567 8% 7,126 135% Total debt 41,699 47,123 (12%) 48,296 (14%) Bank and other borrowings 30,993
Slide 21: Debt Profile
Debt Profile Repaid USD1,252 mn and RMB2,500 mn senior notes Repaid USD500 mn perpetual notes Debt Profile – Nature & Maturity Breakdown 2017 vs. 2016 2020- 2023 & RMB’mn 2018 2019 Total FX Debt 2022 after Un-hedged FX Debt USD Senior 27% Unhedged 4,1771 1,632 3,293 - 9,102 RMB 26% Notes Hedging Loa
Slide 22: Bond Repayment and New Issues
Bond Repayment and New Issues Senior Notes Repaid in 2017 Amount Coupon First Callable Repaid Repayment Maturity Date (Currency’ mn) Rate Date Amount (mn) Date RMB2,500 6.875% - 26 Feb 2017 - USD500 8.700% - 24 Nov 2017 Fully - Redeemed USD500 10.125% 10 Dec 2017 Perpetual - USD202 9.75% 19 May 2017
Slide 23: Contents
Contents 1. Chairman’s Message 2. 2017 Financial Results Highlights - Performance Highlights - Income Statement and Total Property Sales - Investment Property Portfolio and Valuation - Financial Position and Debt Profile 3. Residential Developments - Saleable Resources - Relocation Progress Update 4
Slide 24: Residential Available for Sale and Pre-sale in 2018
Residential Available for Sale and Pre-sale in 2018 Group’s Attributable Residential projects Product type GFA sq.m. interest % GFA sq.m. Shanghai Taipingqiao – High-rises 42,500 98.00% 41,700 Lakeville Luxe (Lot 116) Shanghai RHXC High-rises 21,300 99.00% 21,100 Wuhan Tiandi High-rises 27,400 100.0
Slide 25: Residential Developments
Residential Developments Estimated over RMB55 billion attributable saleable resources from Shanghai & RMB20 billion from other cities (base on current selling price) Shanghai Shanghai Attributable Saleable GFA: 250,500 sq.m. Attributable Saleable GFA: 198,080 sq.m. (Completed & PUD) (Under relocatio
Slide 26: Relocation Progress Update
Relocation Progress Update Lots 10 and 1 at RHXC completed relocation in 2017 Lot 7 at RHXC is scheduled to be cleared in 2018 Leasable & Actual/ % of relocation % of relocation Year of Saleable Estimated year of Lot completed as at completed as at relocation GFA relocation 31 Dec 2016 31 Dec 2017 s
Slide 27: Contents
Contents 1. Chairman’s Message 2. 2017 Financial Results Highlights - Performance Highlights - Income Statement and Total Property Sales - Investment Property Portfolio and Valuation - Financial Position and Debt Profile 3. Residential Developments - Saleable Resources - Relocation Progress Update 4
Slide 28: Completed Investment Property Portfolio
Completed Investment Property Portfolio Rental and related income grew to RMB1,869 mn, increased 14% YOY Completed IP at Valuation by City Rental and Related Income1 Foshan 13% (RMB’mn) Chongqing 12% 2,000 1,869 1.124 mn Shanghai 54% 1,638 sq.m. 1,539 1,600 Leasable 1,278 GFA 1,200 1,056 1,151 Wuhan
Slide 29: Rental and Occupancy Rates Analysis
Rental and Occupancy Rates Analysis 77% rental income generated from Shanghai projects Rental & related Occupancy rate Effective Project Product Leasable income Change as at Interest RMB’mn GFA 31 Dec 31 Dec 2017 2016 % % sq.m. 2017 2016 Shanghai Taipingqiao Shanghai Xintiandi Office / Retail 54,000
Slide 30: Rental and Occupancy Rates Analysis
Rental and Occupancy Rates Analysis Continued leasing progress made at HORIZON and NOVA Rental & related Occupancy rate Effective Project Product Leasable income Change as at Interest RMB’mn GFA 31 Dec 31 Dec 2017 2016 % % sq.m. 2017 2016 Wuhan1 Wuhan Xintiandi Retail 46,000 85% 95% 102 99 3% 78.11%
Slide 31: Completed Commercial Property Portfolio
Completed Commercial Property Portfolio 955,000 sq.m. of attributable GFA Shanghai Portfolio1 (Attributable leasable GFA: 449,400 sq.m.) Taipingqiao THE HUB RHXC KIC Office & Retail Office & Retail Retail Office, Retail & Hotel Leasable GFA: 104,000 sq.m. Leasable GFA: 263,000 sq.m. Le
Slide 32: Commercial Property Portfolio
Commercial Property Portfolio 1,854,700 sq.m. of attributable GFA under development or for future development Shanghai – RHXC Lot 10 Shanghai – RHXC Lot 167 Wuhan Tiandi Office & Retail Office & Retail Office & Retail Leasable/saleable GFA: 338,000 sq.m. Leasable/saleable GFA: 147,000 sq.m
Slide 33: Thank You Q & A
Thank You Q&A 33
Slide 34: Appendix
Appendix CAPEX and Core Earnings Major Commercial Property Disposals Market Information Company Introduction 34
Slide 35: Capital Expenditure (CAPEX)
Capital Expenditure (CAPEX) RMB’bn 2017 2016 Construction Cost 3.7 5.1 % of total CAPEX 46% 73% Land Premium 2.1 - Relocation Cost 2.2 1.9 % of total CAPEX 54% 27% Total CAPEX 8.0 7.0 Total committed and available bank loan facilities as at 31 December 2017: RMB2.4 billion - Construction and workin
Slide 36: Core Earnings
Core Earnings RMB’mn 2017 2016 Change % Profit attributable to shareholders of the Company 1,669 1,088 53% Net increase in fair value of the remaining investment properties (518) (1,176) (56%) Effect of corresponding deferred tax charges 129 294 (56%) Realised fair value gains of investment properti
Slide 37: Major Commercial Property Disposals
Major Commercial Property Disposals Realising value of commercial properties at appropriate timing for recycling of capital Contracted Amount GFA Sold Year Project (RMB’mn) (sq.m.) 2011 Wuhan Tiandi Corporate Centre 5 963 58,800 2011 Shanghai KIC C2 Lot 5-5 600 14,400 2011 Chongqing Tiandi B12-3, B1
Slide 38: Market Information
Market Information Indicator Year China Shanghai Wuhan Chongqing Foshan Dalian 2015 67,671 2,496 1,091 1,572 800 773 GDP (RMB billion) 2016 74,413 2,747 1,191 1,756 863 681 2017 82,712 3,013 1,341 1,950 955 736 2015 1,375 24.15 10.61 30.17 7.43 7.03 Population (million) 2016 1,383 24.19 10.77 30.48
Slide 39: Market Information (cont'd)
Market Information (cont’d) Indicator Year China Shanghai Wuhan Chongqing Foshan Dalian 2015 9.1% 17.5% 15.6% (5.0%) (2.5%) 2.1% Residential Housing 2016 11.3% 24.1% 6.8% 5.2% 11.6% 4.0% Price Growth 2017 5.7% 22.6% 1.8% 31.1% 5.3% 10.9% Residential 2015 1,124 15.0 22.7 16.3 14.1 2.6 Transaction Are
Slide 40: Large-scale Mixed-use City Center Development
Large-scale Mixed-use City Center Development Xintiandi – Entertainment Area Corporate Avenue – Grade A Office Tower High-end Residential Shopping Centre Man-made Lake 40
Slide 41: A Strong Asset Base
A Strong Asset Base Total assets were RMB114.3 billion as at 31 December 2017 IP consists of 42% of total Growing Asset Base Asset Value – by Nature (RMB’bn) Others 140.0 122.2 Assets Held for Sale 11% 117.2 114.31 3% 120.0 108.3 Cash & Bank IP at Valuation 98.6 Balances 100.0 15% RMB114.3 bn 36% 89
Slide 42: Landbank in High Growth Cities
Landbank in High Growth Cities 6.8 mn sq.m GFA excluding Dalian Tiandi Wuhan Tiandi Shanghai 0.9 mn sq.m. Taipingqiao Total Landbank1,2,3: 0.7 mn sq.m. GFA 6.8 mn sq.m. Shanghai Wuhan Optics RHXC Valley 1.0 mn sq.m. 1.3 mn sq.m. Shanghai KIC Chongqing Wuhan 0.25 mn sq.m. 1.4 mn sq.m.4 Chongqing Shan
Slide 43: Shanghai Taipingqiao and Rui Hong Xin Cheng
Shanghai Taipingqiao and Rui Hong Xin Cheng Shanghai Taipingqiao Shanghai Rui Hong Xin Cheng Project Information Project Information (representing leasable & saleable GFA) (representing leasable & saleable GFA) Total GFA 1,266,000 sq.m. Total GFA 1,743,000 sq.m. 299,000 sq.m. (Sold & delivered 746,0
Slide 44: Shanghai KIC and THE HUB
Shanghai KIC and THE HUB Shanghai KIC THE HUB Project Information Project Information (representing leasable & saleable GFA) (representing leasable & saleable GFA) Total GFA 498,000 sq.m. Total GFA 308,000 sq.m. 45,000 sq.m. (Sold & delivered 249,000 sq.m. (Sold & delivered) Completed Completed hote
Slide 45: Wuhan Tiandi and Wuhan Optics Valley
Wuhan Tiandi and Wuhan Optics Valley Wuhan Tiandi Wuhan Optics Valley Project Information Project Information (representing leasable & saleable GFA) (representing leasable & saleable GFA) Total GFA 1,581,000 sq.m. Total GFA 1,277,000 sq.m. Properties for Completed 669,000 sq.m. (Sold & delivered) fu
Slide 46: Chongqing Tiandi and Foshan Lingnan Tiandi
Chongqing Tiandi and Foshan Lingnan Tiandi Chongqing Tiandi Foshan Lingnan Tiandi Project Information Project Information (representing leasable & saleable GFA) (representing leasable & saleable GFA) Total GFA 2,803,000 sq.m. Total GFA 1,524,000 sq.m. 279,000 sq.m. (Sold & 1,398,000 sq.m. (Sold & de
Slide 47: Dalian Tiandi
Dalian Tiandi Dalian Tiandi1 Project Information (representing leasable & saleable GFA) Total GFA 3,104,000 sq.m.2 1. On 14 November 2017, the Group entered into the agreement in relation to 368,000 sq.m. (Sold & delivered ) the disposal of 61.54% share interest of Richcoast, the offshore loans and