Ctf Services Limited · HKEX:659
Ctf Services — NWS Holdings — FY2019 Earnings Presentation
47 slides from Ctf Services's earnings presentation, Sep 24, 2019
Slide 1: NWS Holdings Limited FY2019 Annual Results
CONNECTING LIVES BUILDING FUTURES NWS Holdings Limited FY2019 Annual Results NWS Holdings Limited FY201 9 Annual Results Announcement Analyst Presentation 24 September 2019
Slide 2: Table of Contents
Table of Contents NWS Business Overview Section 1 FY2019 Financial Summary Section 2 Business Segment Overview and Update Section 3 NWS Core Competencies Section 4 Appendices Acquisition of FTLife Appendix A Detailed Financial Statements Appendix B Historical Net Gearing Ratio Appendix C 2
Slide 3: Section 1: NWS Business Overview
Section 1 NWS Business Overview Connecting Lives ‧ Building Futures
Slide 4: NWS Corporate Structure
NWS Corporate Structure Chow Tai Fook (Holding) Limited Chow Tai Fook Jewellery Group 17.HK 1929.HK Market Cap: HK$102Bn Market Cap: HK$68Bn 100% 61% 75% 825.HK Market Cap: HK$2.2Bn (“NWS” or the “Group”) 659.HK Market Cap: HK$51Bn Note: Market cap as at 23 Sep 2019 4
Slide 5: NWS Business at a Glance
NWS Business at a Glance Core Business Roads Aviation Construction 15 toll roads in the PRC (total Goshawk Aviation Limited Hip Hing Group provides professional length of c.700 km) provides commercial aircraft construction services in HK leasing and management services Contributes 75% to AOP –
Slide 6: NWS in China
NWS in China Broad Presence Across Greater China Liaoning Xinjiang Beijing Guangzhou Zhaoqing Tianjin Huizhou Hebei Foshan Dongguan Shanxi Shandong ZhongshanShenzhen Jiangmen Hong Kong Jiangsu Zhuhai Shaanxi Henan Shanghai Macau Hubei Zhejiang Sichuan Chongqing Hunan Jiangxi Fujian Major Cities Guan
Slide 7: Optimization of Businesses
Optimization of Businesses Fortify Core Business Disposal of Non-Core Assets Total • Hunan Sui-Yue Expressway consideration: • Hunan Changliu Expressway(1) HK$1.4 billion Hip Seng Group (1) Urban Parking Tianjin (Beijing) Orient Limited Container Terminal • Goshawk acquired Sky Aviation (fleet size
Slide 8: Vision
Vision Nurture a Resilient and Prospering Enterprise with Sustainable Long-Term Growth 8
Slide 9: Section 2: FY2019 Financial Summary
Section 2 FY2019 Financial Summary Connecting Lives ‧ Building Futures
Slide 10: AOP by Segment and Geography
AOP by Segment and Geography AOP Contribution by Segment AOP Contribution by Geography Core Business Others 11% represents 75% of AOP Hong Kong Mainland 39% China 7% 50% 14% FY2018 38% 26% 11% 13% FY2019 Others 12% -9% Roads Aviation Construction Strategic Portfolio Hong Kong Mainland Environment 28
Slide 11: Financial Summary
Financial Summary 2018 2019 YoY For the year ended 30 Jun (HK$MM) (HK$MM) change % • Disposal of Hip Seng Revenue 35,114.8 26,833.5 (24) Group Attributable Operating Profit (AOP)(1) 5,231.9 4,707.4 (10) • In FY2018, partial (2) disposal and One-off exceptional gains / losses 1,425.6 318.8 remeasurem
Slide 12: Performance by Segment
Performance by Segment 2018 2019 YoY For the year ended 30 Jun (HK$MM) (HK$MM) change % • Excl. exchange rate effect AOP +4% Roads 1,947.1 1,805.5 (7) • BCIA reclassification • Mark-to-market (“MTM”) loss on interest Aviation 695.2 500.3 (28) rate swap contracts Core • One-off acquisition expenses o
Slide 13: Optimize Capital Structure Whilst Upholding A Prudent Financial Policy
Optimize Capital Structure Whilst Upholding A Prudent Financial Policy NWS Financial Policy Debt Maturity Profile (as of 30 Jun 2019) • Ample cash on balance sheet with HK$15.1Bn as at 30 Jun 2019 • Prudent financial policy and well managed maturity profile allow NWS to maintain financial 49% flexib
Slide 14: Section 3: Business Segment Overview and Update
Section 3 Business Segment Overview and Update Connecting Lives ‧ Building Futures
Slide 15: Core Business
Roads Aviation Construction Core Business C o n n e c t i n g L i v e s ‧ B u i l d i n g F u t u r e s 15
Slide 16: Core Business – Roads
Core Business – Roads Strategy • Continue to acquire quality roads assets with strong cashflow and upside potential to sustain growth Segment AOP Portfolio of 15 toll roads HK$MM in PRC approximating YoY -7% 700 km 1,947 Guangdong Guangxi Zhejiang Hubei Tianjin Shanxi Hunan 1,806 # of Roads 7 1 1 1
Slide 17: Core Business – Aviation
Core Business – Aviation Strategy • Multiple sourcing channel to propel sustainable growth via sale and leasebacks, aircraft trading, direct OEM orders and asset management • Continue to invest in narrow-body aircraft (82% of portfolio) and young fleet with long remaining lease terms Segment AOP Gos
Slide 18: Core Business – Construction
Core Business – Construction Strategy • Continue to build strong pipeline of projects riding on HK's well supported demand for residential and commercial property market, as well as Government and institutional projects such as hospitals and universities Contracts on hand Type of Projects(1) Segment
Slide 19: Strategic Portfolio
Environment Logistics Strategic Portfolio Transport C o n n e c t i n g L i v e s ‧ B u i l d i n g F u t u r e s 19
Slide 20: Strategic Portfolio – Environment
Strategic Portfolio – Environment • Environment business includes 117 projects spanning 48 cities across the Greater China region through two strategic platforms, SUEZ NWS Limited (“SUEZ NWS”) and Chongqing Derun Environment Co., Ltd. (“Derun Segment AOP Environment”) HK$MM SUEZ NWS Business updates
Slide 21: Strategic Portfolio – Logistics
Strategic Portfolio – Logistics ATL Logistics Centre CUIRC Segment AOP • Located in HK • JV with China State Railway Group, PSA, HK$MM • Largest logistics centre with ramp access in the CIMC and Deutsche Bahn world: Total leasable area: 5.9MM sqft YoY • 12 large-scale rail container terminals in -1%
Slide 22: Strategic Portfolio – Facilities Management
Strategic Portfolio – Facilities Management HKCEC Healthcare Free Duty Shops Segment AOP HK$MM (73) (393) • Includes operation and • GHK Hospital • Retails of duty free tobacco, liquor, management of HKCEC, HK’s – 40% interest perfume, cosmetics, packaged food largest multi-functional facility and g
Slide 23: Strategic Portfolio – Transport
Strategic Portfolio – Transport Segment AOP HK$MM 158 New World First Ferry Citybus (F1 + F2) New World First Bus Fleet Size 20 vessels 1,019 buses 690 buses (10) No. of Routes 5(-) 118( 5) 93 ( 1) FY2018 FY2019 Average Daily Patronage 37,000 622,000 463,000 ( 3%) ( 6%) ( 3%) AOP decreased due to de
Slide 24: Section 4: NWS Core Competencies
Section 4 NWS Core Competencies Connecting Lives ‧ Building Futures
Slide 25: NWS Core Competencies
NWS Core Competencies Sustainable Long Term Growth Focusing in Core Business Resilient Portfolio with Highly Visible Recurring Income Sustainable and Progressive Dividend Policy Prudent Financial Policy Provides a Solid Underpinning for Growth 25
Slide 26: Sustainable Long Term Growth Focusing in Core Business
Sustainable Long Term Growth Focusing in Core Business AOP(HK$MM) Growth drivers for Core Business – Major AOP contributors FTLife(1) • Products are long term in nature with recurring cashflow and income 4,707 • Hunan Sui-Yue Expressway (湖南隨岳高速公路) - Remaining concession period (19 years) 1,806 Roads
Slide 27: Resilient Portfolio with Highly Visible Recurring Income
Resilient Portfolio with Highly Visible Recurring Income Long-term Contracts Highly Visible Concession / Remaining Lease Recurring Income Based Term Roads Core Aviation Business Construction Environment Logistics Strategic Portfolio Facilities Management Transport Total AOP Over 90% c.51% c.50% 27
Slide 28: Sustainable and Progressive Dividend Policy
Sustainable and Progressive Dividend Policy Committed to Deliver a Sustainable and Progressive Dividend Policy Dividend Payout Ratio 50% 51% 100% 50% 56% on Net Profit DPS (HK$) 0.60 0.65 1.45 0.78 0.58 Disposal of Tricor 0.72 Partial disposal and remeasurement Fair value gain Disposal of gain of BC
Slide 29: Prudent Financial Policy Provides a Solid Underpinning for Growth
Prudent Financial Policy Provides a Solid Underpinning for Growth To Acquire Quality Assets Raise Sources of Cash… With Prudent Financial Policy… for Sustainable Growth Well timed and executed fund raising Healthy balance sheet with optimized Immediate cash flow contribution and transactions c
Slide 30: Resilient and Sustainable Long-Term Growth
Resilient and Sustainable Long-Term Growth Core Business Roads Aviation Construction Insurance Strategic Portfolio Environment Logistics Facilities Transport Management 30
Slide 31: Appendix A: Acquisition of FTLife
Appendix A Acquisition of FTLife Connecting Lives ‧ Building Futures
Slide 32: Transaction Update
Transaction Update • Net consideration of HK$21,482MM (subject to further adjustments(1)), representing Valuation – P/BV of 1.5x (vs. 1.6x when acquired by Jiuding in 2015) based on 2018 BV of HK$14,063MM(1) Refer to Page 33 – P/EV of 1.3x (vs. 1.4x when acquired by Jiuding in 2015) based on 2018 EV
Slide 33: Attractive Valuation Compared to Precedent Insurance Deals
Attractive Valuation Compared to Precedent Insurance Deals Price to Book (x) 6.9x Precedent Average: 3.5x 5.9x 3.2x 1.9x 1.9x 1.6x 1.5x Price to Embedded Value (x) 2.9x Precedent Average: 1.7x 1.4x 1.2x 1.4x 1.3x n.a. n.a. Tahoe / Jeneration / RL360 / Yunfeng Pacific Century Jiuding / NWS / Dah Sing
Slide 34: FTLife – High Quality HK Life Insurer
FTLife – High Quality HK Life Insurer Business Highlights Company Overview • Premier HK life insurer with 30+ years of history • Comprehensive product offerings including whole life, term life, endowment, investment-linked, accident and health Network of 2018 total APE ranking: #11 2,800+ tied agent
Slide 35: FTLife – High Quality HK Life Insurer
FTLife – High Quality HK Life Insurer Superior and Sustainable Growth • FTLife has achieved outstanding new business growth, with APE growth outperforming the overall industry from 2016 to 2018. Strong sale of high savings products and health and critical illness products has contributed to the incr
Slide 36: FTLife – High Quality HK Life Insurer
FTLife – High Quality HK Life Insurer Focus on Value Creation • FTLife has been focusing on quality and value growth and achieved expanding margins. VONB achieved a remarkable annual growth rate of 74% from 2017 to 2018 Net Asset Value Embedded Value HK$MM HK$MM ~ 2.0 x 14,063 ~ 2.1 x 16,076 Pre JD
Slide 37: FTLife – High Quality HK Life Insurer
FTLife – High Quality HK Life Insurer Looking Forward • Recruit high-calibre talents to expand the sales teams through various innovative platforms Channel • Continue to focus on key strategic initiatives in areas such as talent development, product Development innovation, sales and distribution man
Slide 38: Robust Long-term Outlook for HK Life Insurance
Robust Long-term Outlook for HK Life Insurance Supported by Strong Growth Fundamentals & Structural Factors High Savings Rate Fast HNW Population Growth Robust Premium Growth Gross Savings Rate (% Gross National Income)(1) 2014-17 CAGR (%) HK Life Sector Total Premiums (HK$Bn) 47.1 PRC customers(3)
Slide 39: Compelling Synergy Opportunities within the New World Group
Compelling Synergy Opportunities within the New World Group • Leverage the New World Group’s extensive and • Collaboration with expanding footprint the New World in the Greater Bay Group’s healthcare Area for greater • Connectivity and wellness regional integration, between FTLife’s portfolio, e.g.
Slide 40: Greater Bay Area Insurance Connect Growth Upside
Greater Bay Area “Insurance Connect” Growth Upside Potential GBA(1) Insurance Connect Represents Substantial Market Demand from GBA Integration Significant Upside to HK-based Insurers Population of GBA and HK, 2017 (MM) 69 70 35 Zhaoqing Guangzhou Huizhou 7 Foshan Dongguan 0 Zhongshan Shenzhen Jiang
Slide 41: Complementing NWS' Diversified Business Portfolio
Complementing NWS’ Diversified Business Portfolio Roads Aviation Logistics Environment Facilities Construction Insurance Transport Management Stable, long-term yielding and diversified Core Business …complemented by Strategic Portfolio of a steady nature with resilient recurring income 41
Slide 42: Appendix B: Detailed Financial Statements
Appendix B Detailed Financial Statements Connecting Lives ‧ Building Futures
Slide 43: Consolidated Income Statement
Consolidated Income Statement (in HK$MM) Fiscal year ended 30 Jun FY2018 FY2019 Revenue 35,114.8 26,833.5 Cost of sales (31,331.6) (23,790.5) Gross profit 3,783.2 3,043.0 Other income/gains (net) 2,809.4 1,029.6 General and administrative expenses (1,466.4) (1,417.7) Operating profit 5,126.2 2,654.9
Slide 44: Consolidated Statement of Financial Position
Consolidated Statement of Financial Position (in HK$MM) (in HK$MM) Fiscal year ended 30 Jun FY2018 FY2019 Fiscal year ended 30 Jun FY2018 FY2019 ASSETS EQUITY Non-current assets Share capital 3,896.5 3,911.1 Investment properties 1,693.3 1,726.5 Reserves 46,053.5 45,134.9 Property, plant and equipme
Slide 45: Appendix C: Historical Net Gearing Ratio
Appendix C Historical Net Gearing Ratio Connecting Lives ‧ Building Futures
Slide 46: Net Gearing Ratio
Net Gearing Ratio 40% 35% 30% 25% 20% 15% 10% 5% 0% FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 46
Slide 47: Disclaimer
Disclaimer NWS Holdings Limited (“NWS”) makes no representation or warranty of any kind, express, implied or statutory regarding the accuracy or completeness of the information contained. It is not the intention to provide, and you may not rely on this presentation as providing, all material informa