Slide 1: 2017 Interim Results Announcement
(Stock Code: 86.HK) 2017 Interim Results Announcement 16 Aug 2017
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: First Half 2017 Highlights
First Half 2017 Highlights Attributable Profit Interim EPS HK$780m 2.8x HK$0.36 2.9x Interim DPS BVPS HK$0.12 -- HK$8.55 6% • The two largest contributors, Consumer Finance and Principal Investments, both performed well • UAF restructuring complete and investment platform working well (year-on-year
Slide 4: Pre-tax Profit
Pre-tax Profit Comparison of earnings drivers by segment (HK$m) + 15 Start up - 37 losses in + 420 1H16 Reduced - 99 SHKF accounting gain 5.9% 6-mth return + 436 vs 2.6% 1,116 Bad Debts -67% Op Costs -12% 380 - 1H2016 pre- Consumer Principal Mortgage Financial GMS 1H2017 pre- tax profit finance Inve
Slide 5: Business Segments
Business Segments 6-mth 1H2017 Segment Assets and Contribution (HK$m) Pre-tax pre-tax Assets Profit ROA* • UA Finance (58%) - unsecured lending in HK, 15,700 623 4.0% Consumer Finance China, individual consumers • Market leader in HK • Leverage on our know-how and network 12,195 432 3.5% Principal I
Slide 6: Balance Sheet
Balance Sheet Others 838 Others 1,435 Non • BVPS HK$8.55 (Dec 16: Goodwill and 3,267 3,593 controlling intangibles $8.24) interest (minorities) • Gearing 27.5% (Dec 16: 20.3%) 9,464 Other Principal • HK$2,295m equivalent Inv Assets USD notes maturing in 2H 18,563 Shareholders • Share buybacks $99m F
Slide 7: Consumer Finance
wm Hs BARS SUN HUNG KAI & CO. LIMITED Consumer Finance mmm EXCELLENCE INTEGRITY INNOVATION PRUDENCE PROFESSIONALISM ==
Slide 8: Consumer Finance
Consumer Finance 1H2017 Segment Result Highlights (HK$m) 1H2017 1H2016 Change • 233% pre-tax contribution increase Revenue 1,474.7 1,506.5 -2% from improvement in credit quality Finance Costs 105.0 127.1 -17% and lower costs Total Bad Debts • China restructuring basically Expenses 197.0 600.5 -67% c
Slide 9: Stabilising Credit Quality
Stabilising Credit Quality Charge Off History Composition of Total Bad Debts Expenses 20.0% (HK$ Million) 1H2017 1H2016 683 18.0% Amounts written off (399.8) (648.1) 16.0% Recoveries 75.2 77.7 600 551 571 Charge Off (324.6) (570.4) 14.0% As annualised % of avg gross 7.6% 12.7% 12.0% 13.2% 12.7% loan
Slide 10: Consumer Finance - Hong Kong
Consumer Finance - Hong Kong • 49 branches across HK • Total portfolio declined as UAF continue to phase out of mortgages • Personal loans +4% YoY, 1%YTD. • Market share increase • Benefitted from steady unemployment rate Operation Highlights 1H2017 1H2016 Return on Loans 32.8% 31.3% Charge-off 5.3%
Slide 11: UAF – Mainland China
UAF – Mainland China • Restructuring basically completed, 91 branches in operation Harbin:3 • Loan origination +33% YoY Shenyang: 8 • Loan growth +9% YoY, 2% YTD Beijing: 4 Dalian:6 Tianjin: 3 • China UnionPay Merchant Qingdao: 4 Service “UAF POS Loan” (天天富 Jinan: 2 “亚联财POS贷”) • Internet loan licens
Slide 12: Principal Investments
wm Hs BARS SUN HUNG KAI & CO. LIMITED Principal Investments mmm EXCELLENCE INTEGRITY INNOVATION PRUDENCE PROFESSIONALISM ==
Slide 13: Principal Investments
Principal Investments Period end value (HK$m) 12,195 • Satisfactory build-out of team and infrastructure over the past 10,370 2,014 2 years 10,048 1,633 • 5.9% 6-month return on average 8,740 1,341 value for 1H2017: 1,226 – Equities 8.4% 4,626 – Debt and fixed income 5.3% 4,705 – Real Estate 0.8% 4,
Slide 14: Equities
Equities HK$5,555m (46% of total) 8.4% six-month return Private Equity (69%) Public Equity (31%) • WuXi PharmaTech revalued to • Structure revamped last 2.5x cost; a co-investment year for internally managed brought by partner fund portfolio • HK$374m new investments in • Focus on global mid and 1H2
Slide 15: Private Equity
Private Equity Assets by Sector Financials Healthcare 7% Consumer • WuXu PharmaTech success 1% 11% • New investments in 1H2017(HK$374m) include good Diversified funds Tech/ example s of our competencies in fintech 15% 66% financial services sector • To explore synergies with other businesses Assets
Slide 16: Debt and Fixed Income
Debt and Fixed Income HK$4,626m (38% of total) 5.3% six-month return • Include private debt (structured finance business) and fixed income securities • Private Debt: – Loan book HK$2,731m, 4% decline YTD and 27% decline YoY – Interest income HK$201m (+22%) on more profitable loan mix (~14.7% annuali
Slide 17: Real Estate
Real Estate HK$2,014m (17% of total) 0.8% six-month return • Legacy Hong Kong commercial real estate • Minority interest in two residential development projects (HK, Australia) • Hospitality sector investments • Strategy focused on special situation investments • 1H2017 - HK$340m invested in 2 proje
Slide 18: Mortgage Loans
wm Hs BARS SUN HUNG KAI & CO. LIMITED | Mortgage Loans mmm EXCELLENCE INTEGRITY INNOVATION PRUDENCE PROFESSIONALISM ==
Slide 19: Mortgage Loans
Mortgage Loans First Half Results (HK$m) 1H2017 1H2016 • 86% owned SHK Credit Revenue 48.3 22.2 • Loans +140% YoY, 83% YTD Operating Costs (20.1) (19.2) • Top ranked non-bank 1st Cost to Income (% Rev) 41.6% 86.5% mortgage provider (no. of Finance costs (15.5) (4.0) Bad and doubtful debts (0.4) (1.4
Slide 20: Financial Services
wm Hs BARS SUN HUNG KAI & CO. LIMITED Financial Services mmm EXCELLENCE INTEGRITY INNOVATION PRUDENCE PROFESSIONALISM ==
Slide 21: Financial Services
Financial Services • Segment PBT HK$61.9m (-37%), on lower SHKF stake accounting gains • Solid underlying performance of the two major businesses • Fared much better than market on • Expanded from corporate good AUM growth approaching customers segment to consumers HK$100b • Partnering with 150+ aut
Slide 22: Strategy and Outlook
wm Hs BARS SUN HUNG KAI & CO. LIMITED | Strategy and Outlook mmm EXCELLENCE INTEGRITY INNOVATION PRUDENCE PROFESSIONALISM ==
Slide 23: Network and Expertise
Network and Expertise Shareholders Expertise Unsecure loans Wealth Mgmt Car supply Mortgage Real Estate Guaranteed Brokerage chain finance Loans Hospitality Loans Capital Consumer auto Secured Health care Consumers Markets finance home equity Resources and SME Business Loans …… equipment finance Par
Slide 24: Outlook
Outlook • Improving fundamentals for consumer finance • Principal Investment assets well positioned • 2H large write back from China unlikely
Slide 25: Contact: Nancy Chen, CFA, Head of Investor Relations
Contact: Nancy Chen, CFA Head of Investor Relations +852 3748 2823 nancy.chen@shkco.com