Hysan Development Co., Ltd. · HKEX:14
Hysan Development — FY2018 Earnings Presentation
40 slides from Hysan Development's earnings presentation, Feb 21, 2019
Slide 1: Hysan Development 2018 Annual Results Analyst Briefing
Hysan Development 2018 Annual Results Analyst Briefing 21 February, 2019
Slide 2: Disclaimer
Disclaimer 21 February, 2019 | Page 2 This document has been prepared for general information purposes only, and is not, and should not be construed as an offer to sell, or a solicitation of an offer to buy any securities. Information and estimates contained and opinions expressed herein have been c
Slide 3: Remarks by Ms. Irene Yun Lien LEE, Chairman
21 February, 2019 | Page 3 Remarks by Ms. Irene Yun Lien LEE Chairman
Slide 4: 2018 Annual Results Highlights
2018 Annual Results Highlights 21 February, 2019 | Page 4 Hysan Development’s roots can be traced back to the purchase of East Point Hill, now better known as Lee Gardens, by the founding Lee family in 1923. The ensuing 95 years have seen the transformation of the area from genteel parklands to a vi
Slide 5: 2018 Annual Results Highlights
2018 Annual Results Highlights 21 February, 2019 | Page 5 • “Hysan 95”, www.hysan95.com, is an online celebration of the past, present and future of Causeway Bay and its Lee Gardens with a focus on the people who have brought the area to life. • In 2018, we celebrated Hysan’s long-term link with Lee
Slide 6: 2018 Annual Results Highlights
2018 Annual Results Highlights 21 February, 2019 | Page 6 • Turnover and Recurring Underlying Profit increased by 9.6% and 8.0% respectively year- on-year • Increased Reported Profit reflected changes in fair value of investment properties • Occupancies of Retail and Office portfolios were 98% and 9
Slide 7: Overview: HK Economy & Retail Sales in 2018
Overview 21 February, 2019 | Page 7 HK Economy & Retail Sales in 2018 • Economic growth slowed moderately in 2H 2018 impacted by global macro issues • Residential property market and stock market less bullish in 2H 2018 • Retail sales saw robust growth in 1H 2018, but also slowed down in 2H 2018 Hys
Slide 8: Market Challenges in 2018: Macro
Market Challenges in 2018 21 February, 2019 | Page 8 MACRO Generational Shift Demographic Shift China-US Trade War Interest Rate Hike RMB Depreciation Technology Driving Still Ample Liquidity Change at Increasing Pace
Slide 9: Market Challenges in 2018: Retail
Market Challenges in 2018 21 February, 2019 | Page 9 RETAIL Fast and determined pivot to experiential offers with strong digital journey New Hong Kong New Classic
Slide 10: Market Challenges in 2018: Office
Market Challenges in 2018 21 February, 2019 | Page 10 OFFICE Fast and determined pivot to “Flex” Office Retail Need to power and empower
Slide 11: Lee Garden Three Opening
Lee Garden Three Opening 21 February, 2019 | Page 11 • Officially opened in November 2018 • Focus on health and wellness lifestyle o Retail: including unique food and beverage destinations and children’s products o Office: financial industry tenants and co-working venue
Slide 12: Energising Other Parts of the Portfolio
Energising Other Parts of the Portfolio 21 February, 2019 | Page 12 • Throughout our entire portfolio, new types of office tenants, financial (close to 25% of office GFA) and co-work (now close to 10% of office GFA) have created a new consumer demographic; many are becoming loyal customers of the po
Slide 13: Other Retail and Marketing Initiatives
Other Retail and Marketing Initiatives 21 February, 2019 | Page 13 • Loyalty Clubs o Lee Gardens Plus for general shoppers and Club Avenue for VIPs help enhance spending and staying powers of those visiting the portfolio o Strive to improve in terms of breadth and depth of what we offer Lee Garden
Slide 14: Other Retail and Marketing Initiatives
Other Retail and Marketing Initiatives 21 February, 2019 | Page 14 • Tenant partnership enhancement o Regular town-hall meetings with retail tenants o Special tenant-centric but mutually-beneficial events that can be leveraged to bring more business and attention
Slide 15: Community Contributions
Community Contributions 21 February, 2019 | Page 15 • Lee Gardens area always had an eclectic mix of different characteristics. It is also the real Hong Kong. • Hysan injects even more elements into the community to stimulate stakeholder interactions
Slide 16: Digital Transformation
Digital Transformation 21 February, 2019 | Page 16 • All elements of the portfolio woven together with our ever-strengthening digital offerings o Area-wide high-speed Wi-Fi o Easy-to-use and environmentally friendly e-coupons o Forthcoming improved loyalty apps • Plays an important part in connectin
Slide 17: Hysan's Success Formula
Hysan’s Success Formula 21 February, 2019 | Page 17 Dynamic curation Targeted Burgeoning of tenant mix marketing efforts loyalty clubs Improvement of business Concentrated in the most environment for Tight partnerships Rich community retail tenants vibrant and recognised with tenants elements retail
Slide 18: Outlook
Outlook 21 February, 2019 | Page 18 • Uncertain property and equity markets will be further affected by anticipated headwinds from macro issues in 2019 • Hysan has measures to weather uncertainties and tackle structural changes • Also has comprehensive plan to curate Lee Gardens community with suppo
Slide 19: Presentation by Mr. Roger HAO, Chief Financial Officer
21 February, 2019 | Page 19 Presentation by Mr. Roger HAO Chief Financial Officer
Slide 20: 2018 Annual Results Highlights
2018 Annual Results Highlights 21 February, 2019 | Page 20 2018 2017 HK$'M HK$'M % Turnover 3,890 3,548 9.6% Recurring Underlying Profit 2,536 2,349 8.0% - One-off early surrender compensation income — 142 n/m Underlying Profit 2,536 2,491 1.8% - Fair value gain on investment properties located in ‧
Slide 21: 2018 Performance: By Portfolio Turnover
2018 Performance: By Portfolio 21 February, 2019 | Page 21 Turnover (HK$’M) 3,890 3,548 279 (7.2%) 264 (7.4%) 1,688 1,359 (43.4%) (38.3%) 1,925 1,923 (54.3%) (49.4%) Residential 2017 2018 Office Retail
Slide 22: Strong Financial Position
Strong Financial Position 21 February, 2019 | Page 22 Low Gearing Stable Debt Profile • Total Gross Debt: HK$6,326 million • Fixed Rate Debt: 75.5% of the total gross debt (31 Dec 2017: HK$6,176 million) (31 Dec 2017: 74.9% of the total gross debt) • Net Debt to Equity: 4.7% • Average Debt Maturity:
Slide 23: Indicative Cap Rates
Indicative Cap Rates 21 February, 2019 | Page 23 No Change in Cap Rates for both years 31 Dec 2018 31 Dec 2017 Retail 5% - 5.25% 5% - 5.25% Office 4.25% - 4.75% 4.25% - 4.75% Residential 3.75% 3.75%
Slide 24: Presentation by Mr. Ricky LUI, Chief Operating Officer
21 February, 2019 | Page 24 Presentation by Mr. Ricky LUI Chief Operating Officer
Slide 25: 2018 Performance: Retail Portfolio
2018 Performance: Retail Portfolio 21 February, 2019 | Page 25 Market overview: Hong Kong Retail Sales Jan-Dec 2018 Type of retail outlet (YoY) • 2018: overall increase of 8.8% when compared to the same period of 2017 Jewellery, watches and clocks, +13.7% and valuable gifts • Encouraging retail sale
Slide 26: 2018 Performance: Retail Portfolio
2018 Performance: Retail Portfolio 21 February, 2019 | Page 26 • Retail portfolio turnover was HK$1,923 million, on Retail Portfolio Turnover (HK$’M) par with 2017 • Good contribution from turnover rent of HK$81 1,925 1,923 million • Occupancy: 98% as at 31 Dec 2018 • Overall, neutral rental reversi
Slide 27: 2018 Performance: Retail Portfolio
2018 Performance: Retail Portfolio 21 February, 2019 | Page 27 • Hysan’s estimated Retail Sales Growth was around 16%, outperformed the overall Hong Kong Retail Sales Growth of 8.8% • Total foot traffic increased by around 11%
Slide 28: Retail Portfolio: Trade Mix Enhancement
2018 Performance: Retail Portfolio 21 February, 2019 | Page 28 Trade Mix Enhancement Our commitment to meet and exceed our ever-changing customer need and expectation Lee Garden Three Modern lifestyle, extension of our retail offerings • Home furnishing and appliances: BoConcept, KitchenAid, HOMELES
Slide 29: Retail Portfolio: Other Exciting New Tenants
2018 Performance: Retail Portfolio 21 February, 2019 | Page 29 Other exciting new tenants in our portfolio • Luxury: CHAUMET, Dunhill, The Spa by Valmont, AMOREPACIFIC • Food and beverage: 10 Shanghai, Ta-ke, Haidilao, HEYTEA, Sake Diamond, n.o.t. Specialty Coffee, Futago, Chali • Lifestyle offer: N
Slide 30: Lee Gardens Association
Lee Gardens Association 21 February, 2019 | Page 30 • Neighbourhood business association Hysan helped found in 2016 • Hysan’s ever-improving tenant mix in the area prompted more creative business concepts to be introduced by the Association to local property owners • New businesses joining the area
Slide 31: Retail Portfolio: Marketing
2018 Performance: Retail Portfolio 21 February, 2019 | Page 31 Marketing Number of events and activities: 100+ Collaborated events: • Tenant collaborations: o Louis Vuitton o Brunello Cucinelli o rue Madame o Dior o BVLGARI o Cartier o ST. JOHN o Lancôme o KitchenAid o Piaget o TORY BURCH o eslite o
Slide 32: Retail Portfolio: Shoppers Promotion
2018 Performance: Retail Portfolio 21 February, 2019 | Page 32 Marketing Shoppers promotion • Our signature Leeisure and Shopaholic shoppers’ promotion has generated double digit percentage growth on sales • For Tourists o Reinforced collaboration with HK Tourism Board o Pre-trip communication and o
Slide 33: Retail Portfolio: Marketing CRM and Business Tech
2018 Performance: Retail Portfolio 21 February, 2019 | Page 33 Marketing • Customer Relationship Management (CRM) o Both sales & members of Club Avenue saw double digit percentage growth o Purple card to capture high-quality tourists who visit Hong Kong several times a year o Lee Gardens Plus for ge
Slide 34: Retail Portfolio: Community Events
2018 Performance: Retail Portfolio 21 February, 2019 | Page 34 Community events • Lee Gardens EGGssentially Art! Rugby Edition • HK Ballet’s “ALICE (in wonderland)” street ballet performance • Night Parade with Standard Chartered Bank and Hong Kong Youth Arts Foundation • X’mas “Love is Nearby” conc
Slide 35: 2018 Performance: Office Portfolio
2018 Performance: Office Portfolio 21 February, 2019 | Page 35 • Office portfolio turnover increased by 24.2% to Office Portfolio Turnover (HK$’M) HK$1,688 million • Occupancy: 97% as at 31 Dec 2018 1,688 • Positive rental reversion in renewals, rent 1,359 review and new lettings across the portfoli
Slide 36: Office Portfolio: Lee Garden Three
2018 Performance: Office Portfolio 21 February, 2019 | Page 36 • Official opening of Lee Garden Three in 2018 Lee Garden Three • Our first commercial building with a focus on Others Co-working 1% attracting tenants from the financial industry (58% Space of Lee Garden Three’s space) 20% Banking & Fin
Slide 37: Office Portfolio: Overall Tenant Mix
2018 Performance: Office Portfolio 21 February, 2019 | Page 37 • Still a very balanced tenant mix showing the Overall portfolio’s diversity: Business Centre Marketing - Banking and Finance (24% of portfolio’s space) & Co-working 6% Professional - Professional and Consulting Space & Consulting Consum
Slide 38: 2018 Performance: Residential Portfolio
2018 Performance: Residential Portfolio 21 February, 2019 | Page 38 • Residential portfolio turnover increased by 5.7% Residential Portfolio Turnover (HK$’M) to HK$279 million 279 • Positive rental reversion on renewals, rent review and new lettings 264 • Occupancy: 88% as at 31 Dec 2018 • Still a n
Slide 39: Tai Po Luxury Residential Project
Tai Po Luxury Residential Project 21 February, 2019 | Page 39 • Making good progress • Various statutory submissions are ongoing • Site work has commenced in 2018
Slide 40: Thank you
21 February, 2019 | Page 40 Thank you
Hysan Development Company — FY2018 Earnings Presentation on 6ix