New World Development Co. Ltd. · HKEX:17
New World Development — FY2023 Earnings Presentation
38 slides from New World Development's earnings presentation
Slide 1: FY2023 Annual Presentation Analyst Briefing
FY2023 ANNUAL PRESENTATION ANALYST BRIEFING
Slide 2: Section I: Delivering on Our Commitments
SECTION I DELIVERING ON OUR COMMITMENTS
Slide 3: Before We Begin…
BEFORE WE BEGIN… Rumours & legal actions Operationally and financially strong with abundant capital resources Commitments to accelerate deleveraging / buyback bonds & perps Reset for next era with increasing recurring income 3
Slide 4: Access to Abundant Capital at Low Funding Costs
ACCESS TO ABUNDANT CAPITAL AT LOW FUNDING COSTS Abundant liquidity as banks continue to show strong support Offshore Borrowings – HKD/USD Onshore Borrowings – RMB ✓ In 2HFY23, secured HK$30b of low- Bank loans done with low interest rate interest loans from banks @ 2.8% to 3.2% Long-standing banking
Slide 5: Recurring Business to Contribute ~50% Profit by 2026
RECURRING BUSINESS TO CONTRIBUTE ~50% PROFIT BY 2026 Improved earnings stability as a result of strong rental income growth from investment properties pipeline Before 2023 2023 2026 ~20% ~30% ~80% ~70% ~50% Ramp up in IP since 2019 Major IPs Recurring core profit Non-recurring core profit 11 SKIES,
Slide 6: Delivering on 1H23 & FY24 Commitments
DELIVERING ON 1H23 & FY24 COMMITMENTS 3 key commitments to shareholders were made at 1H23 Results Announcement 3 Key Commitments at FY23 Status FY24+ 1H23 Results Announcement Accelerate deleveraging On Track No rights issue / equity Remain Delivered issuance committed Explore strategic options On T
Slide 7: Capex and Opex Optimization
1H23 Corporate Deleveraging No Rights Issue Commitments Actions 1. CAPEX AND OPEX OPTIMIZATION Significantly lower capex in FY24 and continuous opex reduction over the years Capex Optimization Opex Reduction Budget 11 Actual 46 44 7 44 Savings from Significantly Recurring Cost Base 12 Lower in FY24
Slide 8: Non-Core + Other Disposals
1H23 Corporate Deleveraging No Rights Issue Commitments Actions 2. NON-CORE + OTHER DISPOSALS Non-core disposals to i) optimize portfolio mix and enhance return; ii) accelerate deleveraging Non-core + other disposals ahead of market Non-core + other disposals rationale HK$b • NWD has been actively d
Slide 9: Dividend Reset with Better Allocation of Capital
1H23 Corporate Deleveraging No Rights Issue Commitments Actions 3. DIVIDEND RESET WITH BETTER ALLOCATION OF CAPITAL… Rationale for dividend reset Dividend (HK$/share) Prudent capital management for prolonged high interest environment 2.35 Reduced regular dividend to improve financial agility 2.06 Ca
Slide 10: Opportunistic Bond Buyback to Achieve Leverage Reduction
1H23 Corporate Deleveraging No Rights Issue Commitments Actions …WITH OPPORTUNISTIC BOND BUYBACK TO ACHIEVE LEVERAGE REDUCTION AND EARNINGS ACCRETION Use dividend reduction to benefit from market dislocation and buy back debt at discount Day 0 Day 1 Day 1 Day 1+ Proactive liability management • Impr
Slide 11: Net Gearing Affected by RMB Depreciation, Stabilizing
1H23 Corporate Deleveraging No Rights Issue Commitments Actions NET GEARING AFFECTED BY RMB DEPRECIATION STABILIZING ON BOTH PROFORMA AND CONSTANT FX BASIS Management remains committed to deleveraging and expects to reach mid-to-high 30s in FY26/27 Holistic deleverage plan 48.7% 1. Capex and opex op
Slide 12: Key Commitment – No Rights Issue / Equity Issuance
1H23 Corporate Deleveraging No Rights Issue Commitments Actions KEY COMMITMENT – NO RIGHTS ISSUE / EQUITY ISSUANCE Key Commitment at FY23 Status FY24+ 1H23 Results Announcement No rights issue / equity Remain Delivered issuance committed Management WILL NOT / DOES NOT NEED TO consider rights or equi
Slide 13: Explore Strategic Options to Unlock Value
1H23 Corporate Deleveraging No Rights Issue Commitments Actions EXPLORE STRATEGIC OPTIONS FOR VARIOUS BUSINESSES TO UNLOCK VALUE AND MAXIMIZE SHAREHOLDER RETURN Healthcare Actively exploring strategic options for various Property Management development services businesses in order to: • Unlock value
Slide 14: Transaction Overview – CTFE's Proposed Offer for NWS
1H23 Corporate Deleveraging No Rights Issue Commitments Actions TRANSACTION OVERVIEW – CTFE’S PROPOSED OFFER FOR NWS Significant corporate action to generate immediate value for investors, reposition NWD around its higher-growth property businesses, and recycle capital Illustrative Transaction Struc
Slide 15: Section II: Business and Financial Review
SECTION II BUSINESS AND FINANCIAL REVIEW
Slide 16: FY23 Financial Summary
SUMMARY FINANCIALS FY23 FINANCIAL SUMMARY Revenue Core Profit (1) Profit for the Year HK$11,011M HK$4,081M HK$95,214M +21% YoY -5% YoY +40% YoY Underlying profit Profit attributable to shareholder HK$6,117M (-14% YoY) HK$901M (-28% YoY) Capital Resources Net Gearing Ratio Dividend Interim: HK$0.46/s
Slide 17: Key Highlights in FY23
KEY HIGHLIGHTS IN FY23 SOLID DP AND K11 RESULTS AMIDST CHALLENGING ENVIRONMENT SUCCESSFULLY OPTIMIZED CAPEX FY23 Financial Highlights • Strong HK DP performance driven by • Resilient Mainland China contracted sales Pavilia Farm I & II booking ✓ Strong presence in 1st tier cities ✓ Brand premium asso
Slide 18: Solid K11 Results Benefitting from Full Border Reopening
INVESTMENT PROPERTIES SOLID K11 RESULTS BENEFITTING FROM FULL BORDER REOPENING IP Revenue by Region Favorable HK policy K11 YoY growth YoY growth 4,824 4,996 +4% +12% 2,796 3,087 +10% +16% SKYCITY: Transformation from a Massive Publicity Campaign Top Talent Pass Scheme “city airport” to an “Airport
Slide 19: K11 Record-High Sales Performance
INVESTMENT PROPERTIES HONG KONG K11 RECORD-HIGH SALES PERFORMANCE K11 MUSEA and K11 Art mall have recorded the highest footfall since their respective openings, with overall sales also hitting an all-time high Management Alpha K11 MUSEA Differentiated Brand value Good tenant mix Strong CRM customer
Slide 20: Night Market by the Sea – Hong Kong's First Cultural Waterfront Market
INVESTMENT PROPERTIES HONG KONG NIGHT MARKET BY THE SEA – HONG KONG'S FIRST CULTURAL WATERFRONT MARKET >15,000 Visitors on the First Weekend | Footfall +30% vs last weekend 20
Slide 21: Mainland China Achieved Contracted Sales Target RMB15B+
DEVELOPMENT PROPERTIES MAINLAND CHINA MAINLAND CHINA ACHIEVED CONTRACTED SALES TARGET RMB15B+ FOR FY23 AND RMB4.1B FOR JUL AND AUG 2023 Robust performance despite challenging environment Contracted sales Key projects launched in FY23 GUANGZHOU Exceeded PARK PARADISE FY23 Target RMB RMB1.7b contracte
Slide 22: Prime Locations Benefit from Favorable Policies
DEVELOPMENT PROPERTIES MAINLAND CHINA WITH HIGH-QUALITY PROJECTS AND STRONG PRESENCE IN PRIME LOCATIONS, NWD BENEFITS FROM FAVORABLE POLICIES STIMULATING UPGRADING DEMAND Robust performance despite the market downtrend Recent favorable policies Key projects launched in Jul – Sept 23 • Sept 20: Relax
Slide 23: HK DP Strong Revenue Growth Driven by Pavilia Farm Bookings
DEVELOPMENT PROPERTIES HONG KONG HK DP STRONG REVENUE GROWTH DRIVEN BY PAVILIA FARM BOOKINGS STRONG OFFICE SALES, FOCUSING ON WEST KOWLOON Residential: The Pavilia Farm I & II Office: Strong sales NCB Innovation Centre (888 LCK Road) Attributable contracted sales ~HK$6,500m floorspace sold 80%+ Offi
Slide 24: Fanling North New Development Areas (Wu Nga Lok Yeung)
DEVELOPMENT PROPERTIES HONG KONG FANLING NORTH NEW DEVELOPMENT AREAS (WU NGA LOK YEUNG) Northern Metropolis Strategy: To create more land resources for residential use and support the development of I&T and other industries Easy access to Ma Sik Road 馬適路 • Road connections in place Previously loaned
Slide 25: Massive Value Re-creation on Agricultural Land
DEVELOPMENT PROPERTIES HONG KONG MASSIVE VALUE RE-CREATION ON AGRICULTURAL LAND ABUNDANT RESOURCES FROM FARMLAND CONVERSION 2. TONG YAN SAN TSUEN MOUNTAIN 3. LUNG TIN TSUEN (PHASE 5) 龍田村五 1. WING NING TSUEN 永寧村 SITES 唐人新村山頭 期 Emerald Green Sewage Pumping PING SHAN Station Ma Tin Village Government,
Slide 26: K11 Pipeline: Entering a Harvesting Phase (11 SKIES)
INVESTMENT PROPERTIES K11 PIPELINE K11 PIPELINE: ENTERING A “HARVESTING PHASE” BEGINNING THE LONGER-TERM PROCESS OF REALIZING RETURNS ON PAST INVESTMENTS 11 SKIES: Newest tourism landmark at the heart of GBA will largely benefit from tourism rebound and flight capacity expansion One-Stop Largest Ent
Slide 27: K11 Pipeline: Kai Tak Sports Park and K11 ECOAST
INVESTMENT PROPERTIES K11 PIPELINE K11 PIPELINE: ENTERING A “HARVESTING PHASE” BEGINNING THE LONGER-TERM PROCESS OF REALIZING RETURNS ON PAST INVESTMENTS Kai Tak Sports Park K11 ECOAST in Shenzhen Prince Bay (深圳太子灣) K11 Office K11 Cultural Retail Space The Largest Sports Venue in Hong Kong 1 Opening
Slide 28: Appendix
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Slide 29: Strong Revenue Growth Driven by Hong Kong Bookings
DEVELOPMENT PROPERTIES STRONG REVENUE GROWTH DRIVEN BY HONG KONG BOOKINGS GBA margins remain robust DP Revenue by Region Revenue increase 27,308 +57% YoY 17,370 16,755 5,843 Major booking in FY23 11,527 10,553 The Pavilia Farm I & II FY22 FY23 GBA projects, e.g. 廣州逸彩 Mainland China HK 庭園、廣州嶺南新世界 DP
Slide 30: Hong Kong Abundant Pipeline Launching in 2024
DEVELOPMENT PROPERTIES HONG KONG HONG KONG ABUNDANT PIPELINE LAUNCHING IN 2024 Why NWD Other Key Projects in 2024 Residential projects Brand premium Strong execution Ecosystem capability Miami Quay Knightsbridge 530-538 Canton Road Kaitak Mansion WONG CHUK HANG PHASE 5 STATE THEATRE PROJECT Project
Slide 31: NWD Farmland Projects Key Beneficiary from Northern Metropolis Strategy (1/2)
DEVELOPMENT PROPERTIES HONG KONG HONG KONG: NWD FARMLAND PROJECTS KEY BENEFICIARY FROM NORTHERN METROPOLIS (NM) STRATEGY (1/2) Northern Metropolis Strategy: To create more land resources for residential use and support the development of I&T and other industries New policy initiatives Benefits to NW
Slide 32: NWD Farmland Projects Key Beneficiary from Northern Metropolis Strategy (2/2)
DEVELOPMENT PROPERTIES HONG KONG HONG KONG: NWD FARMLAND PROJECTS KEY BENEFICIARY FROM NORTHERN METROPOLIS (NM) STRATEGY (2/2) Proposed highway Key land exchange: Short term farmland conversion Proposed rail line Farmland Conversion schedule Attr. GFA (sqft) Total attr. GFA (sqft) Wu Nga Lok Yeung F
Slide 33: Mainland China Unique Urban Renewal Projects Approach
DEVELOPMENT PROPERTIES | MAINLAND CHINA MAINLAND CHINA UNIQUE URBAN RENEWAL PROJECTS (“URP”) APPROACH Focus on URP with less upfront capex, lower land premium and shorter execution process Longgang District 188 Project timeline Industrial Zone Project Limited land supply in 1st tier cities -> More U
Slide 34: Mainland China Abundant Saleable Resources of RMB57B+
DEVELOPMENT PROPERTIES MAINLAND CHINA MAINLAND CHINA ABUNDANT SALEABLE RESOURCES OF RMB57B+ FROM GBA AND YRD IN FY24 & BEYOND Key GBA and YRD projects Shenzhen Longgang 188 Guangzhou Hanxi RMB21b FY25 RMB9b 2HFY23 Saleable resources Pre-sale Saleable resources Pre-sale Guangzhou 白鹅潭 Shenzhen Guangqi
Slide 35: Continuous Pipeline Growth of K11
INVESTMENT PROPERTIES K11 PIPELINE CONTINUOUS PIPELINE GROWTH OF K11 38 K11 projects upon completion with ~3.0M sqm in portfolio K11 projects 1 1 Status Site Type GFA (sqm) Status Site Type GFA (sqm) Hong Kong K11 34,000 3 Shenzhen (Qianhai) K11 ATELIER 100,000 Hong Kong D · PARK 60,000 FY2024 3 She
Slide 36: Strong Hotel Performance with Solid Occupancy
HOTEL STRONG HOTEL PERFORMANCE WITH SOLID OCCUPANCY Strong recovery in all regions after the end of the 3-year global travel restrictions in January 2023 Hong Kong Hotels FY 23 2H FY 23 Hong Kong Revenue 69% YoY 149% YoY Occupancy 19% pts YoY 31% pts YoY Grand Hyatt Hong Kong Renaissance Harbour Vie
Slide 37: ESG Integration – Recent Achievements
ESG INTEGRATION ESG INTEGRATION – RECENT ACHIEVEMENTS Ambitious climate action and engagement ESG integration into investment decision-making Continued to implement Climate Resilience Guideline to further incorporate Responsible Investment Policy was approved and guides how we climate resilience int
Slide 38: Disclaimer
DISCLAIMER Important notice The information contained in these materials is intended for reference and general information purposes only. Neither the information nor any opinion contained in these materials constitutes an offer or advice, or a solicitation, inducement, invitation, recommendation or
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