Wharf Real Estate Investment Company Limited · HKEX:1997
Wharf Real Estate Investment — Wharf Real Estate Inv — H1 2022 Earnings Presentation
38 slides from Wharf Real Estate Investment's earnings presentation, Aug 3, 2022
Slide 1: Covid End Game Unknown
Covid End Game Unknown Wharf Real Estate Investment Company Limited 2022 Interim Results|4 Aug 2022
Slide 2: Preserve HK's Unique Position & Advantage
Preserve HK’s Unique Position & Advantage • President Xi Officially Reaffirmed on 1 July 2022 the National Directive to Ensure Solidarity of “One Country, Two Systems”： 1. HK Must Preserve its Unique Position & Advantage (必須保持香港的獨特地位和優勢); and 2. Expand Open, Convenient & Expedient International Conn
Slide 3: Reinvigorate HK as Asia's World City
Reinvigorate HK as Asia’s World City • “One Country, Two Systems” as Bedrock for Stability & Prosperity • Improve Presence as International Financial, Shipping & Trading Center • Reconnection with the World & the Mainland to Bring Promising New Opportunities WREIC – Premier HKIP Play 97% 91% 97% 100
Slide 4: Withstand Macro Challenges
Withstand Macro Challenges • Geopolitical Tension to Dominate Global Agenda • Quantitative Tightening & Interest Rate Hikes to Tame Inflation Risk Tipping Developed Economies into Recession • Structural Diversification & Reshoring of Production to Add Fuel to Inflation Fire • Global Restructuring of
Slide 5: Results Highlights
Results Highlights • Revenue & Operating Profit Hovering around the Covid low • Early Signs of Slowing Down the Sharp Decline Due More to Cost Mgmt. than to Revenue Recovery • However, Capital Values Continued to Decline • Unrealised Deficit of HK$5B+ on Semi-annual IP Revaluation Pushed Group Profi
Slide 6: Proactive Strategies Against Headwinds
Proactive Strategies Against Headwinds HK Retail Sales & Visitor Arrivals HK$ Billion Million 60 -24.3% -2.6% 4 +8.1% 50 First-mover in Shopping Coupon Promotion • 1Q Shrouded by 5th Wave Before Easing Social 3 Distance & Gov’t Consumption Vouchers in 2Q 40 Strategic Addition & Re-alignment of Brand
Slide 7: Innovative Marketing to Capture Locals
Innovative Marketing to Capture Locals Robotic Dinos at HC & TS Foraying into the Metaverse Mall Coupons & Surprise Offers Overview Wharf Real Estate Investment Company Limited | 2022 Interim Results 7
Slide 8: Retail Rental Stabilising
Retail Rental Stabilising 3 Malls Retail Revenue (YoY Chg.) 30% 20% 17% 15% 15% • HC Rapidly Regained Momentum post 5th Wave; 10% 9% 5% 5% 5% TS Facing Fierce Competition in a Weak Market 0% -2% -4% • Market Adjustment Started 3 Years Ago in mid-2019 -8% -10% • Revenue Trend May Finally be Stabilisi
Slide 9: HKIP Revenue
HKIP Revenue HKIP Revenue Breakdown 1H22: $5.2B (-2%) HK$ Billion 8 0.1 0.1 0.1 7 0.1 1.9 • Overall Occupancies Recovering 6 1.8 1.9 1.9 0.1 0.1 0.1 0.1 0.1 5 1.9 • Negative Reversion Still a Concern 1.8 1.7 1.7 1.7 4 • Intelligent Cost Management Drives Margin Resilience 3 5.2 5.2 5.4 4.8 2 4.0 • R
Slide 10: Financial Highlights
Financial Highlights HK$M 1H22 1H21 % Chg. Group Revenue 6,210 7,485 -17% • Group UNP +3%; HKIP & Hotel UNP +5% Operating Profit 4,446 4,428 Flat • Revenue Impacted by Phasing Out of DP Business# Underlying Net Profit (UNP)* 3,373 3,272 +3% • IP Revaluation Deficit (Non-cash & Unrealised) $5B; Net I
Slide 11: Harbour City
Harbour City Times Square Central Harbour City Plaza Hollywood Orchard Road
Slide 12: Resilient Performance Despite 5th Wave
Resilient Performance Despite 5 Wave th HC Revenue Breakdown 1H22: $4.0B (+2%) HK$ Billion 7 0.1 0.1 6 0.1 0.8 0.7 0.1 • Rapid Recovery in Local Consumption Demand 5 0.7 0.5 1.4 Supported by Effective Mall Strategies 1.3 1.4 1.4 0.1 0.2 0.1 0.1 0.1 0.1 4 0.2 0.3 0.2 0.2 1.4 • Intelligent Investment
Slide 13: Enhanced Critical Mass
Enhanced Critical Mass Rental Income Category Breakdown 1H22: $2.2B • Unrivalled Offerings & Comprehensive Mix of 500+ Tenants Fashion 34% Jewellery, Beauty & Accs. 20% • New Flagships Fortifying Canton Road Frontage • Vigorous Tenant Selection Adds Impetus & Controls Risks F&B & Ent. Dept. Store 6%
Slide 14: Iconic Canton Road Frontage
Iconic Canton Road Frontage World-class Portfolio New Flagships Hermès (4Q20) Dior (Aug 22) Piaget (Opening in 2H22) Van Cleef & Arpels (Opening in 2H22) Harbour City Wharf Real Estate Investment Company Limited | 2022 Interim Results 14
Slide 15: More Impetus
More Impetus Other New Shops (Selected) New Retail Entrants Expansions / Strategic Relocations Fashion / Leather Goods (Casa Loewe) Jewellery & Accs. Others New F&Bs 15 Harbour City Wharf Real Estate Investment Company Limited | 2022 Interim Results 15
Slide 16: Canton Road Hotels
Canton Road Hotels High Tariff A Hotel Occupancy 100% 89% 87% • Strict Social Distancing Curbed Staycations, Events & 80% F&Bs in Jan-Apr 61% 60% 54%* 54%* • Attractive Packages for Day-use & Long-stay Guests 40% 36%* • Prince Hotel Soft Reopened after Renovation * 27% 21% – New Restaurant SAVVY Deb
Slide 17: Times Square
Times Square Times Square Central Harbour City Plaza Hollywood Orchard Road
Slide 18: Stand Against Competition
Stand Against Competition TS Revenue Breakdown 1H22: $0.9B (-15%) HK$ Billion 1.6 1.4 • Intense Competition & 5th Wave Added Rental 0.4 0.4 1.2 0.4 Pressure 0.4 1.0 0.3 0.3 0.3 • Seize Chance to Add Aspirational Brands to Broaden 0.8 0.3 0.3 Customer Base 0.6 1.1 1.0 1.1 1.0 0.4 0.8 • Office Tenants
Slide 19: Plaza Hollywood
Plaza Hollywood Times Square Central Harbour City Plaza Hollywood Orchard Road
Slide 20: Local-oriented CBD2
Local-oriented CBD2 Enhanced Geographical Reach Tuen Ma Line Fully Commissioned since Jun 2021 • Regional Mall with Easy Access – Atop Diamond Hill MTR/ Public Transport Interchange PLAZA HOLLYWOOD – On MTR Kwun Tong Line & Tuen Ma Line • Relatively Stable Demand from Kowloon East CBD2 • 1H-end Occu
Slide 21: Central
Central Times Square Central Harbour City Plaza Hollywood Orchard Road
Slide 22: Quality CBD Properties
Quality CBD Properties • Continued Strong Occupancy w/ Diversified Tenants 1H-end Occ. Office Retail Wheelock House 92% 100% Crawford House 98% 100% Wheelock House Crawford House Central Wharf Real Estate Investment Company Limited | 2022 Interim Results 22
Slide 23: The Murray, Hong Kong, a Niccolo Hotel
The Murray, Hong Kong, a Niccolo Hotel Award-winning Hotel Five-Star Award from Forbes Travel Guide 2022 • GOP Recovery Hindered by Omicron Spread • Local Demand Recovering since 2Q22 despite Muted Tourism • Continued Outperformance in Revenue Yield among Comp. Set • Events & Banquets Improving on E
Slide 24: Orchard Road
Orchard Road Times Square Central Harbour City Plaza Hollywood Orchard Road
Slide 25: Singapore Assets
Singapore Assets • Prime CBD Assets in Core Orchard Road Belt • Retail Improving as Daily Lives Normalised • Business Travel Rebound Brings Economic Optimism 1H-end Occ. Retail Office Wheelock Place 96% 95% Scotts Square 89% - Orchard Road Wharf Real Estate Investment Company Limited | 2022 Interim
Slide 26: Financial Management
Financial Management Times Square Central Harbour City Plaza Hollywood Orchard Road
Slide 27: Prudent Financial Management
Prudent Financial Management Debt Maturity (HK$B) Total Debt: $49.0B (As at 30 Jun 2022) HK$ Billion • Net Debt Reduced to $46.8B 16 14.6 14 • Total Asset $266.1B 12 10.3 • Gearing 23.0% 10 9.0 8 • Low Interest Cost 1.4% 6.2 6 5.3 3.6 • Interest Cover 13x 4 2 • Premium Credit Rating 0 Jul – Jun: 202
Slide 28: Outlook
Outlook Times Square Central Harbour City Plaza Hollywood Orchard Road
Slide 29: Riding out the Storm
Riding out the Storm • Reconnection with the World & the Mainland is the Key • Quantitative Tightening, Interest Rate Hikes, Inflation Risk & Geopolitical Tension Give Rise to Uncertainties • Economic & Political Fundamental Paradigm Shift Adds Fuel to Inflation Fire • Immense Challenges Facing Chin
Slide 30: Sustainability
Sustainability Times Square Central Harbour City Plaza Hollywood Orchard Road
Slide 31: ESG Recognitions
ESG Recognitions • Constituent of Hang Seng Corporate Sustainability Index & Maintains a “AA+” Sustainability Rating • Constituent of Hang Seng ESG 50 Index as One of the Top 50 ESG Leaders in Hong Kong • CSR Index Plus Mark • Caring Company Logo • Social Capital Builder Logo Award • Named 2nd Top D
Slide 32: Highlights
Highlights • Reduced Total GHG Emissions* by 17% • Reduced Air Emissions* by 9% • Reduced Amount of Waste to Landfills* by 29% • The "Star" Ferry Launched the 3rd Low-emission Green Ferry, Silver Star • EarthCheck Certified: Marco Polo Hongkong Hotel (Silver), The Murray, Hong Kong (Bronze) • Provid
Slide 33: Appendix
Appendix Times Square Central Harbour City Plaza Hollywood Orchard Road
Slide 34: HC/TS/PH Performance
HC/TS/PH Performance Harbour City Times Square Plaza Hollywood 1H22 (HK$M) Revenue % Chg Revenue % Chg Revenue % Chg Retail 2,485 +1% 571 -22% 222 Flat Office 1,258 +3% 345 Flat - - Hotels & Club 227 +22% - - - - Serviced Apt. 74 -9% - - - - Total 4,044 +2% 916 -15% 222 Flat Valuation* as of 30 Jun
Slide 35: Premium Quality Portfolio
Premium Quality Portfolio Revenue Valuation* GFA Harbour City Harbour City Harbour City 66.7% 68.5% 71.2% 1H22 Revenue Valuation GFA $5.7B $252B 12.3M s.f Singapore Assets Singapore Times Square Singapore Times Square 2.7% Portfolio Plaza Times Square 19.9% Assets 16.1% Central 2.4% Plaza Central Ce
Slide 36: Overview of Application of Funds
Overview of Application of Funds Major Capital & Development Expenditure 1H22 2022 HK$ (Actual) (Projected) HKIP 43M 264M Singapore IP 2M 2M Mainland Properties 9M 473M Hotels & Others 194M 257M Total 248M 996M Appendix Wharf Real Estate Investment Company Limited | 2022 Interim Results 36
Slide 37: Thank You
Covid End Game Unknown Thank You Wharf Real Estate Investment Company Limited | 2022 Interim Results 37
Slide 38: End of Presentation
End of Presentation Wharf Real Estate Investment Company Limited [HKEx Stock Code: 1997.HK] Disclaimer All information and data are provided for information purposes only. All opinions included herein constitute our judgment as of the date hereof and are subject to change without notice. The Group,
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