Slide 1: Sun Hung Kai & Co 2016 Results Announcement
Stock code: 86.HK Sun Hung Kai & Co 2016 Results Announcement 23 March 2017 1
Slide 2: Important - Disclaimer
Important - Disclaimer By attending or viewing this Presentation you are agreeing to be bound by the terms and restrictions set out below. The information contained in this presentation and the accompanying slides and materials (the “Presentation”) is confidential. You must not re-distribute, reprod
Slide 3: 2016 Financial Highlights
2016 Financial Highlights (HK$M) 2016 2015 Change Revenue 3,511 4,174 -16% Attrib Profit 1,110 3,897* -72% - From Continuing Operations 1,110 668 66% Per Share Data EPS (HK cents) 50.3 173.8 -71% Second Interim DPS (HK cents) 14 14 Year Total 26 26 BVPS $8.24 $8.08 2% *Include SHKF sale gain and its
Slide 4: Business Segments
Business Segments Group Consumer Principal Financial Mortgage Management Finance Investments Services Loans and Support • Operated • Equities (public • Investments • 86% owned • Group treasury under 58% and private across financial Sun Hung Kai assets owned UA • Fixed income services Credit • Other
Slide 5: Pre-tax Contribution by Segment (HK$M)
Pre-tax Contribution by Segment (HK$M) 2016 2015 (HK$ Million) Return on Pre-tax YoY Segment YoY Pre-tax Segment Assets* Contribution Change Assets* Change Contribution Assets* Consumer Finance 4.4% 727 19.2% 16,480 -9.3% 610 18,177 Principal Investments 4.4% 473 2.6% 10,845 21.6% 461 8,918 Financia
Slide 6: Consumer Finance
Stock code: 86.HK Consumer Finance 6
Slide 7: Consumer Finance - UAF
Consumer Finance - UAF Segment Results Satisfactory turnaround in Mainland China with much improved credit quality though (HK$ Million) 2016 2015 Change loan book now smaller scale Revenue 3,024.2 3,706.4 -18% Target business mix achieved Operating Costs (1,169.0) (1,373.2) -15% Branch network conso
Slide 8: Trend on Segment Key Metrics (HK$m)
Trend on Segment Key Metrics (HK$m) Net Loans and Revenue Charge Off and Annualized % of Gross Loans Operating Costs Pre-tax Contribution 8
Slide 9: Total Bad Debts and Delinquencies (HK$M)
Total Bad Debts and Delinquencies (HK$M) Aging of amounts past due but not impaired (HK$m) Bad and doubtful debts 15.5%* (HK$ Million) 2015 2016 Amounts written off (1,363.7) (1,065.7) Recoveries 129.5 160.2 12.5%* Charge off (1,234.2) (905.5) As % of average gross loans 11.4% 10.0% Charges to impai
Slide 10: UAF China
UAF China Origination +19%; but loan scale smaller. China Gross Loan Balance (HK$m) Total Return on Loans (on simple avg gross balance) Average Balance per Loan (RMB, at year end) Charge Off ratio (on simple avg gross balance) 10
Slide 11: UAF China
UAF China LESS branches: 51 closed in total 107 Branches across 18 cities in Mainland China MORE customers: 19% growth in number 50 branches in HK Harbin:4 of new loans (88k new loans) Shenyang: 9 Bad debts down significantly Beijing: 4 Dalian:6 Individual consumer loans make up the Tianjin: 3 major
Slide 12: UAF Hong Kong
UAF Hong Kong Phased out of mortgage loans. Higher yield and charge offs because of change in loan mix Hong Kong Gross Loan Balance (HK$m) Total Return on Loans (on avg gross balance) Phasing out mortgage Average Balance Per Loan (HK$, at period end) Charge Off ratio (on avg gross balance) 12
Slide 13: Principal Investments
Stock code: 86.HK Principal Investments 13
Slide 14: Principal Investments
Principal Investments Segment Year End Assets (HK$m) Important part of our growth 10,730 strategy Invests across public and private investments Credit and equity opportunities, real estate Structure now very similar to other asset managers Aim to achieve attractive, risk- adjusted investment returns
Slide 15: Principal Investments
Principal Investments 2016 2015 Year end Average Year end Average (HK$ Million) value3 Value3 Gain Return2 value3 Value3 Gain Return2 Equities 4,392.1 3,734.9 202.1 5.4% 3,322.4 1,582.2 420.9 26.6% Debt and Fixed Income 4,705.1 3,975.2 550.1 13.8% 4,191.7 4,047.9 310.1 7.7% Real Estate 1,632.9 1,562
Slide 16: Principal Investments – Equities
Principal Investments – Equities Overview Both internally managed and external partner funds HK$4,392m at year end, 5.4 % gross return Public (27%) MTM losses Exiting small cap strategy Private (73%) Satisfactory performance Positive on health care, consumer, financials Exited Sinolending {Dianrong.
Slide 17: Principal Investments – Debt and Fixed Income
Principal Investments – Debt and Fixed Income Overview Private Debt Business HK$4,705 m at year end, 13.8% gross return on average value (HK$m) 2016 2015 Public portfolio Loan Book 2,848 3,328 Both internally managed and Interest Income 336 405 external partner funds Bad Debt 36 (104) Private debt p
Slide 18: Principal Investments – Real Estate
Principal Investments – Real Estate HK$1,633 m at year end, 11.5% gross return on average value Hong Kong commercial real estate Minority interest in two residential development projects, in Hong Kong and Australia Special situation investments in the hospitality sector, currently including interest
Slide 19: Financial Services
Stock code: 86.HK Financial Services 19
Slide 20: Financial Services
Financial Services Overview Significant minority stakes in financial Fared better than market services firms Accounting gain Segment assets $2.3b Segment PBT $182m SHKF is most significant component Already profitable in its first year New alliances such as 58.com, Everbright Financial Leasing Exite
Slide 21: Mortgage Loans
Stock code: 86.HK Mortgage Loans 21
Slide 22: Mortgage Loans
Mortgage Loans Overview 86% owned Sun Hung Kai Credit launched in Oct 2015 Profitable in first full year of operation Loan book $613m (Dec 15: $213m) PBT $1.8m Low level of bad debts Already ranked in the top 3 non-bank financial for new loans Expanding into prime market to expand addressable custom
Slide 23: Dec 2016 Balance Sheet Profile (HK$m)
Dec 2016 Balance Sheet Profile (HK$m) BVPS $8.24 Others Others 36m shares repurchased in 2016 Goodwill and Non controlling interest for $168.5m total intangibles (minorities) Net Gearing 20.3% Issued USD 362m 2021 4.75% Other Principal bonds Inv Assets USD115m of the USD350m 2017 Fin Services Shareh
Slide 24: Outlook
Outlook Cautiously optimistic Satisfactory turnaround in China Hong Kong to remain solid SHK Credit expansion should contribute to growth Well positioned investment portfolio though market portion subject to mark to market 24
Slide 25: Enquiries Contact
Enquiries Contact: Nancy Chen, CFA Head of Investor Relations Tel +852 3748 2823 Nancy.chen@shkco.com 25