Wharf (Holdings) Ltd. · HKEX:4
Wharf (Holdings) — The Wharf (Holdings) — H1 2019 Earnings Presentation
44 slides from Wharf (Holdings)'s earnings presentation, Aug 8, 2019
Slide 1: Portfolio Facing Headwind
Portfolio Facing Headwind The Wharf (Holdings) Limited 2019 Interim Results 8 Aug 2019 1
Slide 2: Highlights
Highlights - Mainland China Assets • Over RMB100B/ About 70% of Group Business Assets • Contribute ~80% of Group Profit - The Roller-coaster Sino-US Conflict - Profound Impact on both Economies & HK’s - RMB -0.4% vs HKD in 1H19 & Faces Continued Uncertainty - In HK, Weak Demand has been Further Weak
Slide 3: A Property-focused Company
A Property-focused Company Total Revenue Underlying Net Profit Business Assets China DP HK China DP HK China DP HK 38% Properties 46% Properties 37% Properties 1% 5% 22% $8,064 M $2,236 M $180B +3% China IP -12% China IP -1% China IP 24% 33% 31% Others Others Others 37% 16% 10% Overview 3
Slide 4: Financial Highlights
Financial Highlights HKD Million 1H19 1H18 %Chg Group Revenue 8,064 7,823 +3% - NAV $143B ($46.77/ Share) Operating Profit 3,701 2,768 +34% - DPS $0.25/ Share Underlying Net Profit (UNP)* 2,236 2,527 -12% - Listed Equities (as at 30 Jun 2019) ^ Profit Attributable to Equity Shareholders 2,450 2,860
Slide 5: Asset Turns
Asset Turns Recurring Income Services Financial Management 5
Slide 6: Selective Landbanking
Selective Landbanking Return-enhancing Strategy HKDP - Luxury-focused Beijing - Landbank ~3M s.f * Suzhou China DP Shanghai Hangzhou - Key Cities: Hangzhou, Beijing, Shanghai & Suzhou Hong Kong - Landbank 3.6M s.m * Incl. IPs in HK Asset Turns 6
Slide 7: Quality Projects – Mount Nicholson
Quality Projects – Mount Nicholson - Prestigious Peak Project - Symbol of Luxury & Scarcity - Among the Most Valuable in Asia Asset Turns 7
Slide 8: Quality Projects – China
Quality Projects – China - 10 Projects: ~80% of Total Sales - Sound Reputation & Good Demand - 3 New Projects Launched in 1H19 Shanghai One Jingan Asset Turns 8
Slide 9: HKDP - Mount Nicholson
HKDP - Mount Nicholson 1H19 Sales - Steady Demand for Luxury Homes, 4 Houses 2 Apartments Sales Tempo Differs from Mass Market $92,000 psf $99,000 psf - Contracted Sales $3.6B (Gross Basis) (Average) (Average) - Booking Impacted by Recognition Total Contracted Sales $3.6B (Gross Basis) Timing Asset
Slide 10: China DP – Policy-driven Market
China DP – Policy-driven Market 1H19 Contracted Sales - Firm Underlying Demand Sales RMB6.5B -10% - ~80% of Total Sales • 4 Cities (Hangzhou, Beijing, Shanghai & GFA 0.2M s.m -33% Suzhou) ASP RMB31,600 psm +34% • 10 Projects - Stricter ASP Control Seriously Affects Future Project Profitability 2019
Slide 11: China DP – Quality Properties
China DP – Quality Properties 1H19 Operating Matrix Revenue $5,232M -10% - OP Margin at 35% Operating Profit $1,828M -1% - Net Order Book RMB23.5B or 0.8M s.m Operating Margin 35% +3 ppts - FY Target Completion 0.5M s.m Completed GFA 104,400 s.m +8% Recognized GFA 105,200 s.m -42% Asset Turns 11
Slide 12: Recurring Income
Asset Turns Recurring Income Services Financial Management 12
Slide 13: China IP – Growing Steady Income Stream
China IP – Growing Steady Income Stream China IP Revenue (HKD billion) 6.7x - 1H19 Revenue $2.0B (+22%) First IFS – - Driving Forces CDIFS Opened in Jan14 • CDIFS* (2014) • Newly-opened CSIFS (2018) 3.4 2.3 2.4 2.6 - Office Over-supply in Most Cities May 1.3 2.0 Increase in Coming Years 0.8 1.0 0.5
Slide 14: CDIFS – Flagship in Western China
CDIFS – Flagship in Western China 1H19 CDIFS Mall - Retail Sales RMB3.3B (+13%) Net Revenue (Net of Tax) RMB488M (+13%) Average Monthly Sales (psm) Over RMB5,800 - 1H19 Rental Reversion Over 20% Foot Traffic Growth +9% - Office 80% Committed Turnover Rent Portion 30% - Total Revenue Double-digit YoY
Slide 15: CSIFS – One-stop Destination
CSIFS – One-stop Destination 1H19 CSIFS Mall Net Revenue (Net of Tax) RMB270M - First Full Year Operation Average Monthly Sales (psm) Over RMB3,500 - New Iconic Landmark Turnover Rent Portion 31% - Retail Sales Over RMB2B Occupancy Cost* 10% Recurring Income * Occupancy Cost = Retail Rental/ Retail
Slide 16: Wharf Hotels – Enriched Portfolio
Wharf Hotels – Enriched Portfolio Brand Enhancement Marco Polo Niccolo Since 1986 Since 2015 Classic Brand Award-winning, Contemporary Chic Provides Upscale Full-service Inspired by Luxury Fashion 13 Owned & Managed in HK, China & the Philippines 4 in HK & China Recurring Income 16
Slide 17: Hotels Management
Hotels Management 1H19 Managed Hotels Operation Matrix Total No. of Rooms 5,750 +4% Total Revenue $1,457M +9% Total GOP $439M +11% Total No. of Staff 6,424 +7% Recurring Income 17
Slide 18: Niccolo – Internationally-acclaimed
Niccolo – Internationally-acclaimed Changsha Chongqing Performance Against Competitive Set (Ranking) Chengdu Chongqing Changsha Room Yield 1st 3rd 3rd Room Rate 1st 2nd 2nd Chengdu 1H19 YoY Change Chengdu Chongqing Changsha* Room Yield +14% +31% NA Room Rate +12% +6% NA Recurring Income * Opened in
Slide 19: Services
Asset Turns Recurring Income Services Financial Management 19
Slide 20: Logistics – Abound with Uncertainties
Logistics – Abound with Uncertainties Modern Terminals Revenue $1,247M (Flat) Operating Profit $218M (-10%) - Macro Headwind & Regional Competition Throughput (million TEUs) - HK Throughput -8% HK 2.5 -8% DCB^ 0.6* Flat - HK Seaport Alliance (Since 1 Apr 2019) SCT^ 2.9* +4% • Improve Operation Effic
Slide 21: Financial Management
Asset Turns Recurring Income Services Financial Management 21
Slide 22: Prudent Financial Management
Prudent Financial Management Debt Maturity (HKD billion) (As at 30 Jun 2019) - Net Debt: $24.6B - Gearing: 16.9% - Average Interest Cost: 3.3% 11.8 - Interest Cover: 6.3x - Floating Rate Debt: 70% 9.5 8.7 7.9 3.1 2.6 Financial Management 22
Slide 23: Outlook
Outlook 23
Slide 24: Cautious Outlook
Cautious Outlook - Sino-US Trade Disputes - European Political Instability/ Brexit - Global Currency & Interest Rate Movements - Weak Global Demand Outlook 24
Slide 25: Sustainability
Sustainability 25
Slide 26: Performance Highlights
Performance Highlights - Published the 5 standalone th Green Certifications# 8,700 talent LEED & EarthCheck Sustainability Report in accordance with Core Option of GRI Standards and Recycled waste* Zero work-related HKEX ESG Guide. 4,230+ tonnes fatality - Aligned our operations with 11 of the 17 Do
Slide 27: Sustainability recognition and green loan
- Constituent member of Hang Seng Corporate Sustainability Index - CSR Index Plus - 5 Years+ Caring Company Logo - Has raised its first Green Loan Facility in the amount of HK$2 billion to refinance Chengdu IFS, the Group’s first IFS flagship project in China. Sustainability 27
Slide 28: Appendix
Appendix 28
Slide 29: Summary of HK Properties
Summary of HK Properties Attributable GFA Portfolio Usage Status Locations (s.f.) 1. Peak Portfolio Residential Sales Mount Nicholson (50%-JV) 49,700 Lease Chelsea Court 43,100 Strawberry Hill 13,300 Redevelopment 1 Plantation Road 90,700 11 Plantation Road 46,300 77 Peak Road 42,200 Sub-total 285,3
Slide 30: China Contracted Sales Breakdown by City
China Contracted Sales Breakdown by City Region City Contracted Sales (%) GFA Sold (%) Eastern China Shanghai 18% 4% Suzhou 7% 6% Wuxi 2% 4% Ningbo 1% 0% Hangzhou 27% 28% Eastern China Sub-Total: 55% 42% Western China Chengdu 7% 22% Chongqing 2% 4% Western China Sub-Total: 9% 26% Southern China Fosh
Slide 31: Projects Launched in 1H19
3 Projects Launched in 1H19 Attributable Attributable Average Price Projects City New Launch Proceeds GFA sold (s.m) (RMB psm) (RMB M) Central Manor Guangzhou Mar 52 1,100 47,300 Jinshanlu Site Suzhou Apr 301 6,300 47,800 Guiyang Qiaoyang Hangzhou May 448 14,400 29,800 31
Slide 32: China Key Projects on Sales in 1H19
China Key Projects on Sales in 1H19 Attributable Attributable Average Price Projects City Proceeds Ownership GFA sold (s.m) (RMB psm) (RMB M) West Manor Beijing 1,050 13,700 76,700 80% Shanghai Pudong Huangpujiang (E18) Shanghai 727 4,500 118,800 100% Longfor Jade Mansion Hangzhou 645 14,800 43,300
Slide 33: China DP – 1H19 New Land Acquisition
China DP – 1H19 New Land Acquisition Attributable Consideration City Date Attributable GFA (s.m) Ownership (RMB) Suzhou Jan 23,700 0.65B 30% 33
Slide 34: China DP Land Bank Breakdown by City
China DP Land Bank Breakdown by City Region City GFA million (s.m) % Total Eastern China Shanghai 0.1 2% Suzhou 0.8 23% Wuxi 0.1 2% Hangzhou 0.5 15% Eastern China Sub-Total: 1.5 42% Western China Chengdu 0.8 23% Chongqing 0.3 8% Western China Sub-Total: 1.1 31% Southern China Foshan & Guangzhou 0.3
Slide 35: China Key Properties Completion
China Key Properties Completion Projects Attributable GFA (s.m) Key Completion in 1H19 Chongqing The Thorne 48,000 Hangzhou The Osmanthus Grace 25,400 Foshan Sunrise Coast 24,700 Beijing Crown Land 6,300 Projected Key Completion in 2H19 Hangzhou Junting 68,100 Wuxi River Pitti 61,800 Suzhou Yuanhe R
Slide 36: China New Projects for Sales in 2H19
China New Projects for Sales in 2H19 Projects City Ownership Yangcheng Lake (Site 27) Suzhou 100% Yuanhe Street (Site 77) Suzhou 100% Huayuan Road (Site 78) Suzhou 100% Huangpu Street (Site 82) Suzhou 49% Xingtang Street East Suzhou 30% Jinshan Road (Site 14) Suzhou 30% Yuanhe Street (Site 4) Suzhou
Slide 37: China DP Price Trend
China DP Price Trend 1H19 New Home Price Growth (YoY) of Major Cities 13.3% 11.9% 12.2% 11.3% 10.5% 9.7% 8.5% 7.7% 6.6% 6.6% 9.1% 6.0% 3.5% 3.9% 3.9% 2.8% 2.9% 3.2% 1.5% 1.7% 2.0% 0.9% 1.5% 1.2% 0.7% 1.2% 1.3% -0.1% 0.5% 0.3% Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Beijing Shanghai Guangzhou Shenz
Slide 38: China IP – Different Series
China IP – Different Series Times Square IFS & Times Outlets Project Total GFA * Year of Project Total GFA * Year of Property Property Nature (s.m.) Completion Nature (s.m.) Completion Times Square Mixed-use IFS Complexes Chongqing ** R 55,000 2004 Chengdu R/O/S.A/ H 603,000 2013-2016 Dalian** R 17,
Slide 39: Commercial Properties Pipeline
Commercial Properties Pipeline Commercial Properties Completion Schedule (’000 s.m) 3.5x 3,146 Changsha IFS 987 1,001 Wuxi IFS 251 251 251 251 Chongqing IFS* 427 541 541 541 214 214 186 186 892 Chengdu IFS 752 752 752 752 604 687 362 Other China Commercial Prop. 530 530 530 602 602 602 602 Total Dev
Slide 40: 1H19 China Retail Sales in Key Cities
1H19 China Retail Sales in Key Cities 1H19 Retail Sales Growth 9.9% 10.0% 8.9% 8.2% 8.4% 8.4% 7.7% 5.4% Beijing Shenzhen Guangzhou Shanghai China Chongqing Changsha Chengdu Source: National & Municipal Bureaus of Statistics 40
Slide 41: Wharf Hotels Management
Wharf Hotels Management Marco Polo Niccolo Hong Kong Marco Polo Hongkong Hotel* Hong Kong The Murray, Hong Kong, a Niccolo Hotel* Gateway Hotel* Prince Hotel* China Niccolo Chengdu China Marco Polo Parkside, Beijing * Marco Polo Shenzhen* Marco Polo Wuhan Niccolo Chongqing^ Marco Polo Xiamen* Marco
Slide 42: Overview of Application of Funds
Overview of Application of Funds Major Capital & Development Expenditure 1H19 2H19 HKD (Actual) (Projected) Hong Kong Properties 0.3B 1.0B China IP 0.0B 1.2B China DP 4.1B 5.5B Others 0.0B 0.3B Total 4.4B 8.0B * China DP Self-financed by Sales; China IP Mainly IFS Under Construction 42
Slide 43: Thank You
Portfolio Facing Headwind Thank You 43
Slide 44: 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