Wharf (holdings) Ltd. · HKEX:4
Wharf (holdings) — The Wharf (Holdings) — FY2015 Earnings Presentation
56 slides from Wharf (holdings)'s earnings presentation, Mar 9, 2016
Slide 1: The Wharf (Holdings) Limited 2015 Final Results
2015 The Wharf (Holdings) Limited 2015 Final Results 9 March 2016 1
Slide 2: Resilient IP Core
2015 Resilient IP Core The Wharf (Holdings) Limited 2015 Final Results 9 March 2016 2
Slide 3: Backdrop
2015 Backdrop • Core Profit Steady Growth was Sustained in 2015 • IP Resilience Continued and is Expected to Spill Over into 2016 • Headwinds – Global Economic Slowdown, Currency Instability & Uncertainty, HK Retail, China Office 3
Slide 4: Resilient Foundation to Move Ahead
2015 Resilient Foundation to Move Ahead • Navigating Through Tough Times; Stability in Challenging Times • Resilient Core Operations • China IP Starting to Bear Fruit; New Malls Outperform 4
Slide 5: Steady Growth in IP Assets
2015 Steady Growth in IP Assets Total Assets • Total Assets were Stable at $444B DP (Incl. JVs & Associates) • IP Portfolio Increased by 3% to 15% $310B IP 70% $444 billion 15% Others • DP Decreased to $38B (excl. JVs & Associates) 5
Slide 6: IP – Strong Execution Amid Tough Market
2015 IP – Strong Execution Amid Tough Market IP Core Profit (HKD Billion) $8.3B (+9%) • IP / Core Profit: 76% (2014: 73%) 8.3 6.5 7.6 4.6 4.9 5.7 5.9 • Core Expertise of a Unique 2.3 2.9 3.7 Portfolio 2009 2006 2007 2008 2010 2011 2012 2013 2014 2015 Core Profit • Proven Retail Management Drove Chin
Slide 7: Balanced Blend of Stability & Growth
2015 Balanced Blend of Stability & Growth Total IP Revenue (HKD billion) $14.5B (+8%) HK China • Core Rental Operations Steady, 2.3 Despite Strong Headwinds 2.0 1.3 • Proactive Asset Management 1.0 Driving Healthy Growth 0.5 0.8 11.4 12.2 0.6 9.9 • Market Dominance Strengthens 0.4 0.5 6.6 7.0 8.0 8.
Slide 8: Financial Highlights
2015 Financial Highlights HKD Million 2015 2014 % Chg Group Revenue 40,875 38,136 +7% Operating Profit 14,853 14,283 +4% • Core Profit +5% to $11B Core Profit** 10,969 10,474 +5% • $6.2B Net IP Revaluation Surplus Profit Before IP Revaluation Surplus 9,793 8,247 +19% Net IP Revaluation Surplus 6,231
Slide 9: Agenda
A Hong Kong IP B China IP & DP Agenda C Others D Next 9
Slide 10: HK Retail – Prolonged Structural Weakness
A Hong Kong HK Retail – Prolonged Structural Weakness HK Retail Sales (HKD billion) Title • Huge Market Challenges (Strong HK Dollar); Lack of Feel-Good 494.5 493.2 475.1 (-3.7%) Factor 127.1 127.4 118.9 4Q • Retail Sales Declined by 3.7% in 114.5 116.3 110.7 3Q 2015 Followed a Flat 2014 123.6 115.0
Slide 11: Retail Sales in a Tough Market
A Hong Kong Retail Sales in a Tough Market HC Retail Sales (HKD billion) Title TS Retail Sales (HKD billion) Title -12.1% -12.8% 33.8 35.0 10.5 30.7 9.4 9.1 2013 2014 2015 2013 2014 2015 11
Slide 12: Proactive Initiatives to Weather Downturn
A Hong Kong Proactive Initiatives to Weather Downturn • Ongoing AEIs & Tenant Mix Refinement Underway to Provide Upside • Improving Retail Offer with the Most Differentiating & Aspirational Brands to Enhance One-Stop Lifestyle Experience • Powerful Promotions Underway; Proactively Expanding Customer
Slide 13: 2016 Retail Outlook
A Hong Kong 2016 Retail Outlook • Retail Weakness Likely a Multi-Year Story; Heading to a Tough 2016 • HK is a Dynamic Place for International Young Brands & Start-Ups • Continue to Provide Productive Environment for Our Tenants to Trade, to Have Effective Market Presence & to Meet Shoppers 13
Slide 14: Proven Retail Management Driving Performance
A Hong Kong Proven Retail Management Driving Performance Retail Revenue By Segment $8.7B (+6%) • Stable Performance in a Tough Market 2% Others 6% PH • Prime & Quality Malls Driving HC 69% Strong Retailers’ Demand 23% TS • Best-Positioned Destination Retail; Steady Occupancy Cost Retail Revenue Grow
Slide 15: HC – Diverse Trade Mix Mitigates Luxury Retail Pressure
A Hong Kong HC – Diverse Trade Mix Mitigates Luxury Retail Pressure • 3/F OT Retail & F&B Upgrade HC Retail Revenue (HKD billion) Continued $5.9B (+5%) 1H 2H • Additional Premium Brands on Canton Road 2.9 2.9 2.5 • 4/F GW Conversion – New Dining 1.9 2.1 & Retail Experiences 1.4 1.5 1.1 2.8 3.0 0.9 2
Slide 16: TS – Re-Tenanting On Right Track
A Hong Kong TS – Re-Tenanting On Right Track TS Retail Revenue (HKD billion) • Renovation Completed at End- $2.0B (+7%) 1H 2H 2015, Value to be Unveiled • Renovation Disruption Partially 1.0 1.0 Explained Weakness 0.8 0.7 • Introduced New Kids Category, 0.5 0.6 0.7 Attractive, Lifestyle Brands & 0.4
Slide 17: Office – Steady Performance
A Hong Kong Office – Steady Performance HK Office Revenue (HKD billion) $3.1B (+8%) 1H 2H 1.5 1.6 1.2 1.3 1.1 • High Occupancy (98%) 1.1 1.2 1.2 1.4 1.5 • Positive Rental Reversion 2011 2012 2013 2014 2015 • Less Affected vs Retail HK Revenue Growth 2013 2014 2015 Retail +15% +18% +6% Office +8% +11
Slide 18: Agenda
A Hong Kong IP B China IP & DP Agenda C Others D Next 18
Slide 19: China IP – Continuing to Add Growth Impetus
B China China IP – Continuing to Add Growth Impetus China IP Revenue (HKD billion) $2.3B (+16%) 1H 2H • Starting to Bear Fruit 1.2 • China Retail – Another Pillar and a 1.2 New Growth Engine 0.8 • China Retail Performance Offsets 0.5 0.5 1.1 Sector Headwinds in HK 0.1 0.2 0.2 0.3 0.3 0.3 0.5 0.5 0.8
Slide 20: China IP – Continuing to Add Growth Impetus
B China China IP – Continuing to Add Growth Impetus • China IP Helped Counter HK Retail Pressure • Increasingly Significant, Growth Rates Outpaced HKIP Revenue 2013 2014 2015 HK Retail $6,915M $8,160M $8,671M +15% +18% +6% China Retail $704M $1,318M $1,507M +39% +87% +14% China Retail/Total Retail 9
Slide 21: CDIFS Mall – Showing Continued Strength
B China CDIFS Mall – Showing Continued Strength Retail Revenue (RMB million) +9% +25% 605 660 483 • Exceeding Expectation 2014 2015 2016E • Good Retail Earnings Momentum CDIFS 2015 (2nd Yr of Operation) Foot Traffic +40% • Standing Out in a Tough Market & Turnover Rent Portion 14% Outshine Competiti
Slide 22: CDIFS Office – Leasing On Track
B China CDIFS Office – Leasing On Track • Leasing Status In Line with Expectation • Over 90,000 s.m Leased, Including ~50,000 s.m in 2015 • Rental Rates Achieved among the Highest in the City • Expected Commitment to Reach Over 50% by End-2016 22
Slide 23: Solid IFS Pipeline – Poised for Growth
B China Solid IFS Pipeline – Poised for Growth IFSs Mall Opening Date Leasing Status • IFSs Progressing at Full Speed to CDIFS Jan 2014 Fully Leased Accelerate Growth Momentum >85% Under Offer & CQIFS Early-2017 Discussion • A Significant Earnings & Valuation CSIFS 3Q 2017 >75% Under Offer & Growth
Slide 24: DP – Sales Above Expectation
B China DP – Sales Above Expectation Contracted Sales (RMB billion) $26.0B (+21%) 1H 2H • Record Sales, Ahead of Target by 7.5 10.0 12.6 15.7 21% 6.4 6.3 7.5 10.9 8.9 10.3 • Projects Received Favourable 2011 2012 2013 2014 2015 Responses, Encouraging Sales 2015 Contracted Sales RMB26B +21% Momentum
Slide 25: DP – Improving Revenue Booking
B China DP – Improving Revenue Booking 2015 Operating Matrix* Revenue $27,404M +18% • Contribution to Core Profit Operating Profit $4,200M +51% Increased to 11%^, excl. Operating Margin Completed GFA 15.3% 1.7M s.m +3.4ppts -8% Greentown China Recognized GFA 1.6M s.m -5% • Solid Execution * Incl. JV
Slide 26: DP – Prudent Landbanking Strategy
B China DP – Prudent Landbanking Strategy Date City Attributable Attributable GFA (s.m) Consideration(RMB) Ownership Jan15 Beijing 44,700 1.05B 25% Jan15 Beijing 39,900 1.12B 25% Mar15 Foshan 48,600 0.31B 50% Jun15 Hangzhou 43,300 0.66B 100% • Selective & Disciplined Approach Jun15 Hangzhou 53,500 0
Slide 27: Agenda
A Hong Kong IP B China IP & DP Agenda C Others D Next 27
Slide 28: HKDP – Mount Nicholson
C Others HKDP – Mount Nicholson • First Villa Sold for $830M Mount Nicholson (Peak Property) ($87,800 psf) in Feb 2016 Launch Date 1Q 2016 19 Villas (6,000-10,000 s.f) • Prestigious Location Product Type 48 Apartments (4,200-4,500 s.f) • Prestigious Harbour View Phase 1 17 Villas • Prestigious Desig
Slide 29: MTL
C Others MTL • Revenue $2,739M (-15%) Taicang Throughput (TEUs) • Operating Profit $676M (-35%) 1.8 2.2 • Attributable Profit $1,641M (+66%) 1.4 Million Million +23% Million +23% • HK Throughput 4M TEUs 2013 2014 2015 • DCB Throughput 1.2M TEUs • $908M Disposal Gain from Sale of Half of Stake in Tai
Slide 30: Marco Polo Hotel
C Others Marco Polo Hotel • Revenue $1,549M (-$51M) • Operating Profit $278M (-$109M) • Hospitality Industry Under Pressure • Niccolo in CDIFS Commands One of the Highest Room Yields in Chengdu in Less than One Year from Opening 30
Slide 31: CME
C Others CME* Wharf T&T i-Cable • Achieved Record Results • Revenue $1,510M (-$156M) • Revenue $1,991M (+$41M) • Operating Loss $246M • Operating Profit $362M (+$10M) • Early Signs of Subscription • Free Cash Flow Improved to Revenue Stabilization $450M * Strategic Review to Evaluate Different Optio
Slide 32: Prudent Financial Management
C Others Prudent Financial Management Net Debt to Total Equity 25.6% 20.6% 21.7% 21.1% 20.4% • Disciplined Capital Allocation 18.8% 15.8% 19.2% 18.9% 14.9% • Net Debt to Total Equity Fell Below 15% (2014: 19%) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 • Group Net Debt $47B, Net Debt / Wharf
Slide 33: Prudent Financial Management
C Others Prudent Financial Management Average Interest Cost 3.2% 3.2% 2.8% 2.8% • Floating Rate Debt: 83% of 2.3% Total Debt RMB Devaluation Impact: 2011 2012 2013 2014 2015 • Net Loss $158M Debt Maturity (HKD billion) 14.1 • Shareholders’ Equity: Net 8.5 13.1 11.9 15.3 Exchange Deficit $6.5B 7.8 Ja
Slide 34: Overview of Sources & Application of Funds
C Others Overview of Sources & Application of Funds Diversified & Multiple Sources Major Capital and Development Expenditure Rental Income from (HKD billion) Investment Properties $11.8B (HK & China) Operating Profit 2015 35.5 32.8 31.5 24.9 26.8 23.4 $1.1B 15.5 Logistics, Hotels & CME Operating Pro
Slide 35: Agenda
A Hong Kong IP B China IP & DP Agenda C Others D Next 35
Slide 36: Next Highlights
D Next Next Highlights CQIFS OT 4-Storey CSIFS Extension 36
Slide 37: CSR
CSR WHARF
Slide 38: Corporate Social Responsibility
2015 Corporate Social Responsibility 2015 Key Achievements: Business •1 standalone CSR Report, based on the st -in- Community international sustainability reporting guidelines, published •Hang Seng Corporate Sustainability Index Environment People (top 30) •Poly U’s HK Business Sustainability Index
Slide 39: Business-in-Community
2015 Business-in-Community Flagship Business-in-Community initiative Key Youth Development initiative Project WeCan Architectural Design Internship Project Partners Project Partners 27 Companies 3 Universities 2 Universities 3 Consulates 2 Organizations Awardees Supporting 16 postgraduates (architec
Slide 40: Appendix
Appendix x WHARF 40
Slide 41: IP Portfolio
2015 IP Portfolio 2015 IP Revenue: $14,470M 2015 IP Valuation: $292.9B By Business By Business Office S.A. & Office S.A. & 26% Others Others 4% 34% 9% 70% 57% Retail Retail China China 16% 14% 84% 86% HK HK 41
Slide 42: HKIP Performance
2015 HKIP Performance Harbour City Times Square Plaza Hollywood 2015 Revenue % Chg Revenue % Chg Revenue % Chg (HKD million) Retail 5,949 +5% 2,017 +7% 529 +3% Office 2,317 +9% 670 +1% - - Hotels & Club 1,315 -10% - - - - Serviced Apt. 301 +0% - - - - Total 9,882 +3% 2,687 +6% 529 +3% Valuation* as
Slide 43: Retail Performance
2015 Retail Performance Retail Valuation Retail Operating Profit (HKD billion) (HKD billion) 163.5 167.6 8.4 138.0 7.8 114.0 6.4 80.0 5.5 4.8 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 43
Slide 44: Commercial Properties Pipeline
2015 Commercial Properties Pipeline Commercial Properties Completion Schedule (Million s.f) 53.8M s.f Changsha IFS 11.0 Suzhou IFS 8.7 Changsha Outlets 4.0 0.8 0.8 2.7 2.7 Wuxi IFS 2.2 6.9 6.9 2.2 2.0 Chongqing IFS* 2.0 6.6 7.4 8.2 8.2 Chengdu IFS 3.9 5.7 5.7 5.7 5.7 5.7 Other China Commercial Prop.
Slide 45: China Commercial Properties Pipeline
2015 China Commercial Properties Pipeline Wuxi IFS Suzhou IFS Chongqing IFS Changsha IFS 250,000 s.m. 368,000 s.m. 645,000 s.m.* 1,026,000 s.m. Grade A offices & hotel Grade A offices, apartments & hotel Retail, Grade A offices & hotel Retail, Grade A offices & hotel No Retail No Retail Retail 102,0
Slide 46: Chengdu City Profile
2015 Chengdu City Profile Chengdu 2015 Tertiary Industry +9.0% 53% of CD GDP • Financial Center & Population 14 million (National: 50.5%) Trading Hub in SW China 2015 GDP +7.9% (National Avg.: +6.9%) Tertiary Primary 4% • Thriving City for Business 2015 Retail Sales +10.7% 53% Start-Ups 2015 Disposa
Slide 47: Chongqing City Profile
2015 Chongqing City Profile • China’s Western Chongqing 2015 Tertiary Industry +11.5% 48% of CQ GDP Development Strategy Population 29.9 million • Strong Presence of 2015 GDP +11.0% (National Avg.: +6.9%) Tertiary 48% 7% Primary International Brands 2015 Retail Sales +12.5% • The World’s Largest 201
Slide 48: Changsha City Profile
2015 Changsha City Profile • Hub City in Central China Changsha 2015 Tertiary Industry +12.1% 43% of CS GDP • Beneficiary of China’s Population 7.3 million “Rise of Central China” 2015 GDP +9.9% (National Avg.: +6.9%) Tertiary 43% 4% Primary Campaign 2015 Retail Sales +12.1% • Important Entertainmen
Slide 49: China Contracted Sales Breakdown by City
2015 China Contracted Sales Breakdown by City Region City No. of projects Contracted GFA Sold on sale in 2015 Sales (%) (%) Eastern China Shanghai 6 27% 12% Suzhou 5 21% 20% Wuxi 4 7% 14% Changzhou 3 3% 8% Ningbo 3 3% 3% Hangzhou 8 17% 10% Eastern China Sub-Total: 29 78% 67% Western China Chengdu 7
Slide 50: 7 New Projects Launched in 2015
2015 7 New Projects Launched in 2015 Attributable Attributable Average Price Projects City New Launch Proceeds GFA Sold (s.m) (RMB psm) (RMB’M) Changzhou Feng Huang Hu Changzhou Jan 225 40,800 5,500 South Station Shanghai Apr 929 26,300 35,300 Park Mansion Hangzhou May 209 11,200 18,600 Park Mansion
Slide 51: China Key Projects on Sales in 2015
2015 China Key Projects on Sales in 2015 Attributable Attributable Average Price Projects City Proceeds GFA sold (RMB psm) Ownership (RMB’M) (s.m) Suzhou Times City Suzhou 3,203 180,900 17,400 80% Shanghai Pudong Shanghai 2,590 34,200 75,700 100% Huangpujiang Zhoupu Shanghai 2,451 72,400 33,900 100%
Slide 52: China Land Bank Breakdown by City
2015 China Land Bank Breakdown by City Region City GFA million (s.m) % Total Eastern China Shanghai 0.7 8% Suzhou 0.9 11% Wuxi 1.0 11% Changzhou 0.6 7% Ningbo 0.1 2% Hangzhou 0.8 10% Eastern China Sub-Total: 4.1 49% Western China Chengdu 1.7 21% Chongqing 0.9 10% Western China Sub-Total: 2.6 31% Sou
Slide 53: China Key Properties Completion
2015 China Key Properties Completion Projects Attributable GFA (s.m) Key completion in 2015 Suzhou Times City 243,200 Wuxi Times City 166,900 Hangzhou Palazzo Pitti (Lot C/D) 152,400 Hangzhou Shi Ji Hua Fu 128,100 Hangzhou Junting 127,300 Chengdu Le Palais 113,800 Projected key completion in 2016 Ch
Slide 54: China New Projects for Sale in 2016
2015 China New Projects for Sale in 2016 Projects City Ownership Site No. 12 Hangzhou 100% Site No. 13 Hangzhou 100% Jingan Garden Shanghai 55% The Pearl on the Crown Beijing 25% Crown Land Beijing 25% 54
Slide 55: Thank You
2015 Resilient IP Core Thank You 55
Slide 56: End of Presentation
2015 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