Wharf (Holdings) Ltd. · HKEX:4
Wharf (Holdings) — The Wharf (Holdings) — FY2018 Earnings Presentation
53 slides from Wharf (Holdings)'s earnings presentation, Mar 7, 2019
Slide 1: Focus on Properties Unchanged
Focus on Properties Unchanged The Wharf (Holdings) Limited 2018 Final Results 7 Mar 2019
Slide 2: Results Highlights
Overview Results Highlights Properties (Book Value ~$165B) • ~80% of Total Non-cash Assets • ~80% of Group Revenue, 90% of Operating Profit & Underlying Net Profit DP • China: Another Good Year of Earnings • HK: Lower Recognition More than Erased Gains from Other Segments IP • China IP Reported Prom
Slide 3: Results Highlights
Overview Results Highlights Logistics (Book Value $16B) CME2 (Book Value $16B) • Performance Declined amid HK's Loss of • Formative Stage Competitiveness • Insignificant Additions to Position & No • Seek to Reverse through Strategic Disposal in 2018 Alliance among Local Operators 3
Slide 4: Asset Balance
Overview Asset Balance Total Assets (Excl. cash) $210 B Properties ~80% • Properties: Backbone HK/China • Logistics: MTL & HACTL • CME2: Listed & Unlisted Investments Logistics ~8% CME2 ~8% Others ~4% 4
Slide 5: Financial Highlights
Overview Financial Highlights HKD Million 2018 2017 % Chg (Ex. WREIC*) Group Revenue 21,055 24,321 -13% • NAV $135B ($44.45/Share) Operating Profit 8,752 6,458 +36% • IP Valuation $75B Underlying Net Profit# 6,511 7,328 -11% • Listed Equities ^ Profit Attributable to 6,623 13,119 -50% Shareholders –
Slide 6: Segment Results
Overview Segment Results Underlying Net Profit* 2018 Segmental Analysis HKD Million 2018 2017 % Chg % of Underlying Net % of Operating % of Revenue (Ex. WREIC) Profit Profit HK Properties 847 2,391 -65% 13% 1% 1% China DP 3,856 3,840 Flat 59% 64% 61% China IP 1,012 755 +34% 16% 22% 16% Others 796 34
Slide 7: Agenda
Agenda Hong Kong Properties China DP China IP Others Financial Management 7
Slide 8: Agenda: Hong Kong Properties
Agenda Hong Kong Properties China DP China IP Others Financial Management 8
Slide 9: Land Bank
Hong Kong Properties Land Bank Total Attributable GFA: 3.0M s.f Kowloon Tong 15% Portfolio Kowloon East 57% Waterfront Portfolio Peak Portfolio 10% Others 18% 9
Slide 10: Luxury & Scarcity
Hong Kong Properties Luxury & Scarcity Kowloon Tong Kowloon East Peak Portfolio Portfolio Waterfront Portfolio • Mount Nicholson • Residential Land Site • Kowloon Godown • 1 & 11 Plantation Road on Lung Cheung Road • Yau Tong Bay (15% JV) • 77 Peak Road • Peninsula East • Chelsea Court • Strawberry
Slide 11: Mount Nicholson
Hong Kong Properties Mount Nicholson 2018 Sales 2 Houses 3 Apartments $126,700 psf $123,200 psf (Average) (Average) • Most Valuable in Asia • Total Proceeds $3.8B (Gross Basis) • Attributable Profit Booked $0.9B 11
Slide 12: Kowloon Tong Portfolio
Hong Kong Properties Kowloon Tong Portfolio Lung Cheung Road Site Acquisition Date Jan 2018 Site Location Lung Cheung Road, Kowloon Product Type Private Luxury Residential GFA 436,400 sf No. of Block 4 No. of Storey 13 12
Slide 13: Agenda: China DP
Agenda Hong Kong Properties China DP China IP Others Financial Management 13
Slide 14: Contracted Sales Beat Target
China DP Contracted Sales Beat Target 2018 Contracted Sales Sales RMB22.8B -5% GFA 0.7M s.m -16% • Another Year of Good Earnings ASP RMB 31,400 psm +20% • Dec 18 was Record Month for Sales – Firm Market Demand Confirmed 2019 Sales Target 2019 Target RMB 18B • 96% Accumulated Sell-through Rate Sellab
Slide 15: Margin Improvement
China DP Margin Improvement 2018 Operating Matrix* Revenue $22,236M -21% Operating Profit $7,949M +19% • Net Order Book RMB21.8B (0.7M Operating Margin 36% +12 ppts s.m) Completed GFA 0.8M s.m +7% • 2019 Target Completion 0.8M s.m Recognized GFA 0.8M s.m -20% * Incl. JVs & Associates on an Attributa
Slide 16: Selective & Disciplined
China DP Selective & Disciplined Land Acquisition 0.81M s.m* Suzhou 47% Hangzhou 36% • Selective Purchase to Enhance Quality & Return • Strategic Focus: Beijing, Shanghai, Suzhou, Hangzhou, Guangzhou & Shenzhen • China DP Landbank 3.7M* s.m Foshan 14% Guangzhou 3% * Up to End-Dec 2018 16
Slide 17: Agenda: China IP
Agenda Hong Kong Properties China DP China IP Others Financial Management 17
Slide 18: Creating Value
China IP Creating Value China IP Revenue (HKD billion) 1H 2H $3.4B (+30%) • Operating Profit +28%; Underlying Net Profit +34% 1.8 • Retail Sales Firm Despite Online 1.2 1.2 1.4 Competition 1.2 • Office Take-up Gradual & Steady 1.6 1.1 1.2 1.2 0.8 2014 2015 2016 2017 2018 18
Slide 19: IFS - Impetus for Growth
China IP IFS - Impetus for Growth International Finance Square • Trendsetting Landmark in Ground Zero Location or New CBD • “City within a City” Concept: – One-stop Retailtainment Experience – Grade A Office – Contemporary Chic Hotel by Niccolo 19
Slide 20: China IP
China IP Changsha IFS Chengdu IFS Chongqing IFS 20
Slide 21: Strong Momentum
China IP Strong Momentum Chengdu IFS Mall Net Revenue (Net of Tax) RMB879M (+16%) Average Monthly Sales (psm) >RMB5,000 Foot Traffic Growth +18% • Retail Sales RMB6B (+20%) Turnover Rent Portion 28% • Leading Sales Productivity in China Occupancy Cost* 13% West Retail Sales (RMB billion) 1H 2H • Off
Slide 22: Changsha IFS
China IP Changsha IFS • Opened in May 2018 • First 7 Full Months Sales* RMB2.2B+(Matching Chengdu IFS Sales in Year 1 ) # • 370+ Retail Shops (70+ Hunan Debuts, 30+ Duplex Flagships) • Over 295,000 Foot Traffic on NYE *Jun – Dec 2018 (First 7 Full Months after Opening) # Chengdu IFS was Opened in Ja
Slide 23: Replicating Success
China IP Replicating Success 2H Performance in Year 1 (W/ Seasonality Neutralized) Changsha IFS Mall Chengdu IFS Mall Opening May 2018 Jan 2014 GFA (s.m.) 246,000 204,000 Retail Area Leased* 98% 99% Retail Opening Rate* 96% 97% No. of Shops* 380 255 Average Monthly Sales# RMB 304M RMB 239M Average M
Slide 24: New Landmark
China IP New Landmark Chongqing IFS Mall GFA (s.m.)* 109,300 Retail Area Leased 98% • Emerging Financial Hub w/ Retail Sales RMB791M Enhancing Infrastructure Occupancy Cost# 11% • Largest Cluster of First-tier Brands in Chongqing • Office 47% Committed *Chongqing IFS is 50%-owned, 109,300 s.m is Tot
Slide 25: Niccolo Hotels
China IP Niccolo Hotels Niccolo Hotels in IFSs Chengdu Chongqing^ Changsha • Chengdu (Opened Apr 2015): Market No. of Room 230 252 243 Leader in Room Yield since 2016 RGI* 168 118# NA## • Chongqing (Opened Sep 2017): Amazing GOP (>32%) in First Full Year • Changsha (Opened Oct 2018): Market Leader i
Slide 26: Agenda: Others
Agenda Hong Kong Properties China DP China IP Others Financial Management 26
Slide 27: Wharf Hotels Management
Others Wharf Hotels Management Niccolo Marco Polo Contemporary Chic Hotels Classic Brand Providing Upscale Full-service Hong Kong The Murray, Hong Kong, a Niccolo Hotel* Hong Kong Marco Polo Hongkong Hotel* Gateway Hotel* Prince Hotel* China Niccolo Chengdu China Marco Polo Parkside, Beijing * Marco
Slide 28: Wharf Hotels Management
Others Wharf Hotels Management 2018 Operating Matrix Total No. of Rooms 5,750 +11% Total Revenue $2,868M +22% Total GOP $849M +20% Total No. of Staff 6,639 +21% 28
Slide 29: Logistics - Macro Uncertainties
Others Logistics - Macro Uncertainties Modern Terminals Revenue $2,605M (-4%) Operating Profit $587M (-10%) Throughput (million TEUs) • Macro Uncertainties & Regional Kwai Tsing, HK 5.3 +2% Competition DCB (65%-owned) 1.2* -7% • Combined Book Value $16B SCT (20%-owned) 5.7* +7% Total 12.2 +3% • Taki
Slide 30: To Rebuild HK Port's Competitiveness
Others To Rebuild HK Port’s Competitiveness Hong Kong Seaport Alliance • Jointly Operate 23 Berths in Kwai Agreement Date January 2019 Tsing Container Terminals Companies Modern Terminals Limited • More Efficient Operation to Save Time Hongkong International Terminals Limited & Cost COSCO-HIT Termin
Slide 31: CME2
Others CME2 CME1 Wharf T&T & i-CABLE Exited in 2016 & 17 • Long-term Investment (HK-based Business with Market Size Limit) • Timing Dec 2017 & Jan 2018 (after WREIC Demerger & New B/S) CME 2 • Insignificant Additions & No Re-Invest Capital & Profit Released from CME1 Disposal since then Infrastructu
Slide 32: Agenda: Financial Management
Agenda Hong Kong Properties China DP China IP Others Financial Management 32
Slide 33: Prudent Financial Management
Financial Management Prudent Financial Management Debt Maturity (HKD billion) • Net Debt: $25.6B • Gearing: 18.5% • Average Interest Cost: 3.5% 11.2 10.1 10.0 • Interest Cover: 6.5x 5.6 3.9 2.3 • Floating Rate Debt: 70% 2019 2020 2021 2022 2023 2024 & After 33
Slide 34: Outlook
Outlook >< WHARF Outlook
Slide 35: Cautious Outlook
Outlook Cautious Outlook Sino-US Conflicts European Political Instability/Brexit Global Currency & Interest Rate Movements Global Economic Slowdown 35
Slide 36: Sustainability
CSR Sustainability 36
Slide 37: 2018 Key Achievements
CSR 2018 Key Achievements • Published the 4th standalone Sustainability Report in accordance with GRI Standards • Awarded a “Special Mention of the Sustainability and Social Responsibility Reporting Award (Non-HSI Large Market Capitalization)” at HKICPA’s 2018 Best Corporate Governance Awards • Hang
Slide 38: Business-in-Community
CSR Business-in-Community abc • Project WeCan is a Business-in-Community initiative launched by Wharf in 2011, providing secondary school students who are disadvantaged in learning with opportunities and care • Using an “Adopt a School” model, there are now 68 project partners: 48 Companies 5 Univer
Slide 39: Community Care
CSR Community Care Highlights • Supported various community programmes in the areas of environmental protection, animal welfare and social inclusion, etc. through donations, venue sponsorship, logistics support and staff volunteerism. 39
Slide 40: Sustainable Property Design
CSR Sustainable Property Design China IP • Incorporated green features and used locally sourced materials in property design • Take into accounts of energy efficiency, indoor air quality, emissions reduction and the like • Aim to earn LEED certification for its Mainland China development projects •
Slide 41: Appendix
Appendix >< WHARF Appendix
Slide 42: Summary of HK Properties
Appendix – HK Properties Summary of HK Properties Portfolio Usage Status Locations Attributable GFA (s.f.) 1. Peak Portfolio Residential Sales Mount Nicholson (50%-JV) 52,100 Lease Chelsea Court 43,100 Strawberry Hill 13,300 Redevelopment 1 Plantation Road 90,700 11 Plantation Road 46,300 77 Peak Ro
Slide 43: China Contracted Sales Breakdown by City
Appendix – China DP China Contracted Sales Breakdown by City Region City Contracted Sales (%) GFA Sold (%) Eastern China Shanghai 31% 8% Suzhou 1% 1% Wuxi 10% 17% Ningbo 1% 1% Hangzhou 15% 15% Eastern China Sub-Total: 58% 42% Western China Chengdu 9% 21% Chongqing 11% 19% Western China Sub-Total: 20
Slide 44: 9 Projects Launched in 2018
Appendix – China DP 9 Projects Launched in 2018 Attributable Attributable GFA Average Price Projects City New Launch Proceeds sold (s.m) (RMB psm) (RMB M) Xixi Yunlu Hangzhou Feb 147 2,200 64,000 Rosy Mansion Foshan Jun 72 5,600 12,900 Jingan Garden Shanghai Aug 4,457 34,300 130,100 Glory Garden Fos
Slide 45: China Key Projects on Sales in 2018
Appendix – China DP China Key Projects on Sales in 2018 Attributable Attributable GFA Average Price Projects City Proceeds sold (s.m) (RMB psm) Ownership (RMB M) Jingan Garden Shanghai 4,457 34,300 130,100 55% Shanghai Pudong Huangpujiang (E18) Shanghai 2,628 24,000 109,500 100% West Manor Beijing 2
Slide 46: China DP – New Land Acquisitions
Appendix – China DP China DP – New Land Acquisitions* Attributable Consideration City Date Attributable GFA (s.m) Ownership (RMB) Foshan Jan-18 109,100 0.81B 50% Jan-18 7,700 0.19B 10% Guangzhou Jan-18 21,800 0.72B 18% Jan-18 95,600 1.97B 50% Jan-18 69,500 2.82B 100% Hangzhou Jan-18 42,000 1.64B 100
Slide 47: China DP Land Bank Breakdown by City
Appendix – China DP China DP Land Bank Breakdown by City* Region City GFA million (s.m) % Total Eastern China Shanghai 0.1 3% Suzhou 0.8 22% Wuxi 0.1 3% Ningbo 0.0 0% Hangzhou 0.6 15% Eastern China Sub-Total: 1.6 43% Western China Chengdu 0.8 22% Chongqing 0.3 8% Western China Sub-Total: 1.1 30% Sou
Slide 48: China Key Properties Completion
Appendix – China DP China Key Properties Completion Projects Attributable GFA (s.m) Key Completion in 2018 Wuxi Glory of Time 122,200 Suzhou Bellagio, G09 (碧堤半島) 82,500 Wuxi Times City 79,700 Suzhou Bellagio, G08 (碧堤雅苑) 75,800 Wuxi River Pitti 65,000 Projected Key Completion in 2019 Suzhou Yangcheng
Slide 49: China New Projects for Sales in 2019
Appendix – China DP China New Projects for Sales in 2019 Projects City Ownership Yangcheng Lake (Site 27) Suzhou 100% Xiangcheng Yaoxiang Road (Site 77) Suzhou 100% Xiangcheng Huayuan Road (Site 78) Suzhou 100% Gaoxin District Huangpu Street (Site 82) Suzhou 49% Xingtang Street East Suzhou 30% Jinsh
Slide 50: Appendix – China IP
Appendix – China IP Commercial Properties Completion Schedule (’000 s.m) 3.5x 3,146 Changsha IFS 987 1,001 Wuxi IFS 251 251 251 251 Chongqing IFS* 427 541 541 541 214 214 186 186 Chengdu IFS 892 752 752 752 752 604 687 362 Other China Commercial Prop. 530 530 530 602 602 602 602 Total Development Ar
Slide 51: Overview of Application of Funds
Appendix Overview of Application of Funds Major Capital & Development Expenditure 2018 2019 HKD (Actual) (Projected) Hong Kong Properties 12.8B 0.9B China IP 4.6B 0.7B China DP 27.7B 12.2B Others 0.2B 0.6B Total 45.3B 14.4B * China DP Self-financed by Sales; China IP Mainly IFS Under Construction 51
Slide 52: Thank You
Focus on Properties Unchanged Thank You 52
Slide 53: 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