Wharf (holdings) Ltd. · HKEX:4
Wharf (holdings) — The Wharf (Holdings) — H1 2015 Earnings Presentation
54 slides from Wharf (holdings)'s earnings presentation, Aug 18, 2015
Slide 1: 2015 Interim Results
IP Momentum Continues as Macro Environment Causes The Wharf (Holdings) Limited Concern 2015 Interim Results 18 August 2015 1
Slide 2: IP Book Value: Quality Landlord New High $307B
IP Book Value (HKD billion) 350 300 Quality Landlord 250 200 New High $307B 150 302 307 232 261 Value Creation Driving Growth 100 184 148 115 50 87 96 98 78 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1H15 * Excluding hotels, except for those still under development in IFSs 2
Slide 3: IP Core Profit +12% to $4.2B
IP Core Profit (HKD billion) 8.0 IP Core Profit 7.0 +12% to $4.2B 6.0 80% of Group Core Profit 5.0 (1H14:75%) 4.0 Core Profit 7.6 +5% to $5.3B 6.5 3.0 5.7 5.9 12.0% HKIP 4.9 4.6 8.0% China IP 2.0 4.2 3.7 8.0% China DP 2.9 1.0 2.1 2.3 Others 72.0% 0.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Slide 4: Total IP Revenue +12% to $7.2B
Total IP Revenue (HKD billion) 16.0 1H15 Total IP (excl. hotel) China HK Revenue +12% to $7.2B 13.4 14.0 Amidst Challenging 12.0 11.1 2.0 Environment 9.9 1.3 10.0 8.8 1.0 Continuous AEIs & New IPs 8.0 7.2 7.5 0.8 7.2 Driving Growth 6.6 0.5 0.6 5.6 1.1 6.0 0.5 4.7 11.4 4.3 0.4 9.9 0.3 4.0 0.3 8.0 8.9
Slide 5: Greentown Ceased to be Classified as Associate For 1H15
HK$ Million 1H15 1H14 % Chg Group Revenue 17,906 16,315 +10% Operating Profit 7,475 7,124 +5% Greentown Ceased to be Core Profit** 5,258 5,019 +5% Classified as Associate Profit Before IP Revaluation 3,793 4,809 -21% For 1H15 Surplus Net IP Revaluation Surplus 3,165 6,892 -54% Zero Contribution to C
Slide 6: Agenda
Agenda HKIP China IP China DP Other Businesses Financial Management Coming Attractions 6
Slide 7: Weak Macro Environment, Huge Challenges
HK Retail Sales (HKD billion) 600.0 494.5 493.2 500.0 127.1 4Q 127.4 400.0 Weak Macro Environment 3Q 114.5 300.0 116.3 Huge Challenges 245.6 1H15 -1.6% 2Q 200.0 123.6 115.0 114.0 100.0 1Q 129.3 134.6 131.6 0.0 2013 2014 2015 7
Slide 8: Confidence in Our Business Policies
HKD billion PH sales +4.9% 35.0 HC 12.0 TS 30.0 9.6 Confidence in Our Business 10.0 9.8 4 Q Policies 9.2 2.8 25.0 8.3 8.0 2.7 2.9 8.6 2.7 3 Consistently Pursuing 20.0 8.1 Q 7.5 1H15 2.2 2.5 1H15 Practices to Weather Downturn 6.4 -7.1% 6.0 6.9 2.3 2.2 2.2 -9.6% 15.0 2 7.5 7.7 7.0 4.0 1.8 2.4 Q Numero
Slide 9: Global Price Harmonization and HKTB Efforts
Promotions by HKTB Global Price Harmonization By International Brands HKTB Stepped Up Efforts to Attract Tourists Solid Local Spending Sentiments 9
Slide 10: Strong Retailers' Demand Continues
3 Malls Retail Revenue (HKD billion) Strong Retailers’ Demand 9.0 Continues 1H 2H Tenants Take Long Term View, Selective Location & 6.0 4.1 Destination 3.5 +7% 3.1 Diversity & Demand within 2.7 “HC Ecosystem” 2.3 3.0 2.0 1.8 1.5 4.0 4.2 Retail Revenue Growth 1.3 3.4 1.1 2.5 2.9 HC $2,993M +7% 1.8 2.
Slide 11: HC Retail Revenue
HC Retail Revenue (HKD billion) 6.0 1H 2H Critical Mass Long Tenant Waiting List 5.0 “Must-have” Address for 2.9 Celebrated Brands 4.0 2.5 +7% New Anchor Tenants 3.0 2.1 F&B Enrichment 1.9 2.0 1.5 OT Renovation 1.4 1.1 End-2015 2.8 3.0 0.9 2.4 1.0 0.8 2.1 0.7 1.4 1.7 4-Storey Extension Building 1.1
Slide 12: TS Retail Revenue
TS Retail Revenue (HKD billion) 8% Lettable Area Under 1H 2H Renovation in 1H15 2.0 On-going Trade Mix Revamp (by End-2015/Early 2016) 1.6 Addition of Sought-after 1.0 International Big Brands (3-4/F) 1.2 0.7 0.8 +9% New Kids Category in 2015 0.7 0.8 0.6 F&B Enrichment 0.5 0.5 0.3 0.4 0.4 1.0 9-10/F
Slide 13: Continued to Attract International Brands
Brands Newly Recruited or Committed Expansion HC TS Continued to Attract International Brands Many Hong Kong/Kowloon Debuts 13
Slide 14: Steady Foot Traffic Growth
HC TS Steady Foot Traffic Growth Collaborated with HKTB to Boost HK Tourism Back-to-back Large Scale Events Proactively Exploring SE Asia Markets 14
Slide 15: Agenda
Agenda HKIP China IP China DP Other Businesses Financial Management Coming Attractions 15
Slide 16: China IP Revenue +34% to $1,121M
China IP Revenue (HKD billion) 2.5 1H 2H 2.0 Revenue +34% to $1,121M Outperformed 10-yr CAGR 1.5 1.2 +34% Operating Profit 1.0 +39% to $589M 0.8 0.5 CDIFS & SWS* 0.5 1.1 0.5 0.3 0.8 Key Contributors 0.2 0.3 0.2 0.5 0.2 0.1 0.5 0.3 0.3 0.2 0.3 0.1 0.2 0.2 0.0 2005 2006 2007 2008 2009 2010 2011 2012 2
Slide 17: Sales +131% to RMB1.6B
1H15 Mall Performance On Track to Meet Target Full Operation in 1H15 RMB 1H15 Retail Sales RMB 1H15 Retail Revenue billion million 54% of 51% of Sales +131% to RMB1.6B 2.5 FY Target RMB3B 600 FY Target RMB600M Beat Expectation 1H 2H 1H 2H 500 2.0 Revenue +85% to RMB304M 400 Foot Traffic +100% 1.5 1.
Slide 18: T1-T3 Leasing Status
T1-T3 Leasing Status T1- T3 81,800 s.m 81,800 s.m Committed in 1.5 Years (30%) (~SWS* in 1.5 Yrs: 85,500 s.m) 152,800 s.m RMB130-170/s.m/month (55%) (Amongst the Highest in CD) 41,400 s.m (15%) Take-up Rates Among the Highest in CD Committed Under Offer/Discussion To Be Leased T2 & T3 150,000 s.m Av
Slide 19: IFSs Mall Opening Schedule & Leasing Status
IFSs Mall Opening Schedule & Leasing Status CSIFS CDIFS 3Q 2017 CDIFS Jan 2014 Serviced Apartment by Just Started 2Q 2016 in Phases Virtually Fully Leasing Leased >30% Under Offer & Discussion CSIFS Most Prime Location Most Comprehensive Mall CQIFS Early-2017 CQIFS >60% Under A Boutique-sized HC Off
Slide 20: Chengdu Times Outlets Retail Sales
Chengdu Times Outlets (CTO) Retail Sales (RMB million) Surging Demand among 1,600 Growing Middle Class 1,400 CTO 1,200 Among Most Productive 1,000 Outlets +22% 800 1,516 1H15 Sales +22% 600 1,253 1H15 Revenue +23% 918 400 838 629 New CS Times Outlets 200 308 Completion by End-2016 0 10 Further Growt
Slide 21: Agenda
Agenda HKIP China IP China DP Other Businesses Financial Management Coming Attractions 21
Slide 22: China DP Contracted Sales
China DP Contracted Sales (RMB billion) 25.0 1H 2H 50 Projects in 14 Cities 20.0 89% Accumulated Sell-through Rate as of 1H15 10.0 12.6 15.0 2015 Sellable Resources 2.8M s.m 7.5 10.0 6.4 Landbank 9.6M s.m 10.9 1H15 5.0 7.1 10.3 8.9 6.3 7.5 Contracted Sales RMB10.3B +16% 1.7 Contracted GFA 626,000 s.
Slide 23: China DP Revenue
China DP Revenue (Excl. JVs & Associates) FY Target Completion (HKD billion) 1.7M s.m 1H 2H 18.0 Net Order Book RMB24B 15.0 GFA 1.6M s.m 12.0 1H15 Operating Matrix 10.2 Revenue* $6,562M +26% 9.0 Revenue** $9,831M +9% 2.7 6.4 +26% Operating Profit* $1,134M +35% 6.0 Operating Margin* 17% +1ppt 5.0 6.9
Slide 24: Prudent & Selective Land Acquisition Strategy
Attributable Attributable Date City Consideration Ownership GFA (s.m) (RMB) Jan15 Beijing 44,700 1.05B 25% Prudent & Selective Land Acquisition Strategy Jan15 Beijing 39,900 1.12B 25% Capture Valuable New Mar15 Foshan 48,600 0.31B 50% Prime Opportunities Jun15 Hangzhou 43,300 0.66B 100% Geographical
Slide 25: Agenda
Agenda HKIP China IP China DP Other Businesses Financial Management Coming Attractions 25
Slide 26: Mount Nicholson and Peninsula East
Mount Nicholson (Peak Property) Launch Date 2H 2015 19 Villas (6,000-10,000 s.f) Broad Range of Projects Product Type 48 Apartments (4,200-4,500 s.f) Prestigious Peak Properties Expected OP 2015 Peninsula East (Kowloon East) 2 Different Products Launch Date Apr 2015 Sale on Demand 256 Units (530-990
Slide 27: Modern Terminals
Throughput (TEU million) Taicang Da Chan Bay Revenue 2.0 1.5 1H 2H 1H 2H $1,382M (1H14: $1,618M) 1.5 Operating Profit 1.0 1.0 $327M (1H14: $508M) 0.7 0.7 1.0 0.7 +11% HK Throughput 0.5 +5% 2.0M TEUs 0.5 0.5 0.4 Sold 50% MTL’s Stake in 0.8 0.9 0.8 0.7 0.6 0.6 Taicang to Ningbo Port Co. Ltd. 0.5 in Ju
Slide 28: Hotels Highlights
Highlights Challenging Environment in HK 1H15 Revenue $718M (1H14: $760M) 1H15 Operating Profit $115M (1H14: $189M) “Sophisticated Urban Chic” 1st Niccolo Hotel Opened in CD Followed by CQ, CS & Suzhou “Best New Hotel Brand- Ultra Luxury” (at 5th China Hotel Awards by “Lifestyle Magazine”) 28
Slide 29: Wharf T&T and i-Cable
Wharf T&T 1H15 Wharf T&T (20th Anniversary) Revenue +5% to $990M Solid Business Performance Notwithstanding a Weakened Operating Profit +5% to $173M Demand i-Cable 1H15 Challenging Revenue Operating Environment -10% to $760M Application for Pay TV License Net Loss $121M Renewal Underway 29
Slide 30: Agenda
Agenda HKIP China IP China DP Other Businesses Financial Management Coming Attractions 30
Slide 31: Net Debt to Total Equity
Net Debt to Total Equity 30.0% 25.6% 25.0% 23.4% 21.1% 21.7% 20.6% 20.4% 19.2% 18.9% 19.6% 20.0% 18.8% 15.8% Net Debt to Total Equity 15.0% 19.6% 10.0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1H15 Own Net Debt Net Debt / (Cash) (HKD billion) 30 Jun 2015 30 Jun 2014 $51.9B Wharf 51.9 47.7 (
Slide 32: Average Interest Cost and Debt Maturity
Average Interest Cost 4.0% 3.2% 3.2% 3.0% 2.8% 2.8% 2.3% 2.0% 2.0% 1.0% 2010 2011 2012 2013 2014 1H15 Average Interest Cost 2.8% Debt Maturity (HKD billion) 24.0 18.0 15.3 13.9 14.0 18.4 12.0 10.3 6.0 7.1 0.0 Jul15-Jun16 Jul16-Jun17 Jul17-Jun18 Jul18-Jun19 Jul19-Jun20 Jul20 & After 32
Slide 33: Diversified & Multiple Sources
Major Capital and Development Expenditure (HKD billion) Diversified & Multiple Sources 40.0 35.5 32.8 31.5 Rental Income from 30.0 26.8 27.7 $5.9B 24.9 Investment Properties Operating Profit 1H15 20.0 (HK & China) 15.5 8.9 10.0 4.5 Logistics, Hotels & $0.5B CME Operating Profit 1H15 0.0 2007 2008 20
Slide 34: Agenda
Agenda HKIP China IP China DP Other Businesses Financial Management Coming Attractions 34
Slide 35: Coming Attractions
OT Renovation and 4-storey Extension Building CDIFS Phase 2 (T2, Niccolo Hotel, Serviced Apartment) CQIFS 35
Slide 36: Corporate Social Responsibility (CSR)
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Slide 37: Major Achievements
Major Achievements Issued a Standalone CSR Report complying to international (GRI) sustainability reporting guidelines To protect the environment and reduce paper consumption, the report is available in e-version on corporate website www.wharfholdings.com Listed on the Hang Seng Corporate Sustainabi
Slide 38: Appendix
Appendix 38
Slide 39: Proactive Retail Management
1H15 IP Revenue: $7,174M 1H15 IP Valuation: $291.5B By Business By Business 3% 9% 26% 34% 57% 71% Proactive Retail Management Retail Office S.A & Others Retail Office S.A & Others 16% 15% 84% 85% HK China HK China 39
Slide 40: Outstanding Performance
Harbour City Times Square Plaza Hollywood 1H15 Revenue % Chg Revenue % Chg Revenue % Chg (HKD million) Retail 2,993 7% 990 9% 263 3% Office 1,145 11% 329 2% - - Hotels & Club 623 -10% - - - - Serviced Apt. 146 -4% - - - - Outstanding Performance Total 4,907 5% 1,319 7% 263 3% Valuation* as of $169.9
Slide 41: Consistent Growth
Retail Valuation HK & China IP Operating Profit (HKD billion) (HKD billion) 210.0 12.5 175.0 10.0 140.0 7.5 Consistent Growth 105.0 10.9 163.5 166.7 5.0 9.3 70.0 138.0 8.2 7.3 114.0 6.2 5.9 80.0 2.5 35.0 65.0 0.0 0.0 2010 2011 2012 2013 2014 1H15 2010 2011 2012 2013 2014 1H15 41
Slide 42: Total Commercial Properties Reaching 53M s.f
Commercial Properties Completion Schedule (Million s.f) 60.0 53M s.f Changsha IFS 50.0 11.0 Suzhou IFS 8.7 Total Commercial Properties in 40.0 4.0 0.75 Changsha Outlets 0.75 2.7 2.7 HK & China Reaching 2.2 6.9 6.9 Wuxi IFS 53M s.f 30.0 2.2 2.0 2.0 by 2017 Chongqing IFS* 6.6 8.2 8.2 8.2 3.9 20.0 Chen
Slide 43: New IFSs: Future Growth Engine
Wuxi IFS Suzhou IFS 250,000 s.m. 368,000 s.m. Grade A offices & Grade A offices, hotel apartments & hotel No Retail No Retail 339m tower 450m tower Taihu Plaza CBD Suzhou new CBD wholly-owned 80:20 JV with Genway New IFSs 2016 2017 Future Growth Engine Chongqing IFS Changsha IFS 645,000 s.m.* 1,026,
Slide 44: Chengdu: Financial Center & Trading Hub
1H15 Tertiary Industry +10% 54% of CD GDP (National: 49.5%) Chengdu Population 14 million 3% +8.0% Financial Center & Trading 1H15 GDP Hub in SW China (national avg.: +7.0%) 1H15 Retail Sales +10.5% 54% Thriving City for Business 1H15 Disposable RMB17,229 43% Income per Capita +8.0% Startup No. of F
Slide 45: Chongqing: China's Western Development
1H15 Tertiary Industry +11% 50% of CQ GDP Chongqing 4% Population 29.9 million China’s Western Development Strategy +11.0% 1H15 GDP (national avg.: +7.0%) 50% Strong Presence of 1H15 Retail Sales +11.8% International Brands 46% 1H15 Disposable RMB14,307 Income per Capita +8.0% Primary Secondary Tert
Slide 46: Outlet Sector Taking Off
Outlet Sector Taking Off No. of Outlets in China 127 Located in Cities’ Outskirts Offering Discounts on Brands 76 Urbanization, Up & Coming Middle Class Support Growth Right Place for Personal Consumption Retailers’ Destocking Channel 1Q14 2017 Source: Retail Property Insights Vol. 21, No.1, 2014 by
Slide 47: Projects on Sale by Region
No. of projects GFA Contracted Region City on sale in Sold Sales (%) 1H15 (%) Eastern China Shanghai 5 21% 10% Suzhou 5 22% 20% Wuxi 4 9% 16% Changzhou 3 4% 9% Ningbo 3 3% 3% Hangzhou 7 19% 11% Eastern China Sub-Total: 27 78% 69% Western China Chengdu 6 4% 8% Chongqing 4 5% 7% Western China Sub-Tota
Slide 48: New Launch Projects
Attributable Attributable Average Projects City New Launch Proceeds GFA Sold Price (RMB’M) (s.m) (RMB psm) Changzhou Feng Changzhou Jan 87 14,900 5,800 Huang Hu South Station Shanghai Apr 496 14,200 34,900 Park Mansion Hangzhou May 97 5,200 18,500 Park Mansion Ningbo Jun 116 8,100 14,300 48
Slide 49: Top Projects by Sales Proceeds
Attributable Average Attributable GFA Projects City Proceeds Price Ownership sold (s.m) (RMB’M) (RMB psm) Suzhou Times City Suzhou 1,193 79,800 14,800 80% Zhoupu Shanghai 866 26,900 32,200 100% Ambassador Villa Suzhou 760 20,900 34,300 100% Palazzo Pitti (Lot C) Hangzhou 673 24,700 26,900 100% Royal
Slide 50: Landbank by Region and City
Region City GFA million (s.m) % Total Eastern China Shanghai 0.7 7% Suzhou 1.1 12% Wuxi 1.1 12% Changzhou 0.7 7% Ningbo 0.2 1% Hangzhou 1.0 11% Eastern China Sub-Total: 4.8 50% Western China Chengdu 2.1 22% Chongqing 1.0 10% Western China Sub-Total: 3.1 32% Southern China Foshan & Guangzhou 0.4 4% O
Slide 51: Key Project Completions
Projects Attributable GFA (s.m) Key completion in 1H15 Suzhou Times City 142,900 Wuxi Times Ctiy 94,000 Wuhan Moon Lake Site B 68,700 Chengdu Le Palais 56,800 Ningbo Petrus Bay 39,000 Projected key completion in 2H15 Hangzhou Palazzo Pitti 152,400 Hangzhou Junting 131,400 Chongqing The Throne 130,00
Slide 52: Projects
Projects City Ownership Shanghai Pudong Huangpujiang Shanghai 100% 52
Slide 53: Thank You
IP Momentum Continues as Thank You Macro Environment Causes Concern 53
Slide 54: 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