Wharf Real Estate Investment Company Limited · HKEX:1997
Wharf Real Estate Investment — Wharf Real Estate Inv — FY2023 Earnings Presentation
30 slides from Wharf Real Estate Investment's earnings presentation, Mar 7, 2024
Slide 1: Core Businesses Stabilise Amidst Doubling of Interest Cost
Core Businesses Stabilise Amidst Doubling of Interest Cost Wharf Real Estate Investment Company Limited 2023 Final Results 7 Mar 2024
Slide 2: Results Highlights
Results Highlights • Full Year Revenue from Core Businesses (IPs & Hotels) +8% & Operating Profit +12% • Segmental UNP -3% due to Doubling of Borrowing Cost • With Profit Stabilisation in 2H, 2023 Second Interim Dividend is Unchanged from 2022 • Total IP Valuation -0.4% to $228B to Account for 93% o
Slide 3: Deep V Recovery or Shallow?
Deep V Recovery or Shallow? HK Retail Sales & Hotel Average Occupancy 2H HK$ Billion Seizing Opportunities Amid HK’s Revival 800 91% +16 ppt YoY 1H 82% Hotel Occ. 77% 600 66% 63% • Proven Track Record & Prime Locations Drive Leasing Demand 485 2023 +16% YoY 431 46% Visitor Arrivals: 407 400 237 326
Slide 4: Regaining Positive Growth
Regaining Positive Growth HK$ Billion HKIP Revenue Breakdown S.A. • Outperforming YoY Retail Sales Growth 2023: $10.6B (+2%) Office 8 0.1 0.1 0.1 0.1 7 Retail 6 1.8 1.9 1.9 0.1 0.1 • Retail Revenue +8% YoY 1.9 0.1 0.1 0.1 0.1 0.1 0.1 5 1.9 2023 4 1.8 1.7 1.7 1.7 1.7 1.6 1.5 Office Revenue: - Spot Re
Slide 5: Financial Highlights
Financial Highlights HK$M 2023 2022 % Chg. • Group Revenue +7%; IPs & Hotels +8% Group Revenue 13,306 12,459 +7% - IP/Hotels 12,477 11,594 +8% Operating Profit 9,993 8,841 +13% • Group OP +13%; IPs & Hotels +12% - IP/Hotels 9,456 8,469 +12% Underlying Net Profit (UNP)* 6,011 6,175 -3% • Group UNP -3
Slide 6: 2H Financial Performance
2H Financial Performance HK$M 2H23 YoY Chg 1H23 YoY Chg Group Revenue 6,833 +9% 6,473 +4% • Group Revenue +9%; IPs & Hotels +8% - IP/Hotels 6,325 +8% 6,152 +7% Operating Profit 5,053 +15% 4,940 +11% - IP/Hotels 4,712 +12% 4,744 +12% • Group OP +15%; IPs & Hotels +12% Underlying Net Profit (UNP)* 2,9
Slide 7: Prudent Treasury Management
Prudent Treasury Management Net Debt (HK$ Billion) Interest Cost 5.4% 1H 4.7%, 2H 6.3% 52.0 47.5 45.2 Moody’s A2 Rating Consistent Div. Policy 42.6 39.4 (Stable Outlook) 65% of HKIP & Hotel UNP 36.3 Dec 2018 Dec 2019 Dec 2020 Dec 2021 Dec 2022 Dec 2023 Gearing: 17.6% 19.3% 24.8% 22.5% 23.2% 18.6% To
Slide 8: Harbour City
Harbour City 8 Wharf Real Estate Investment Company Limited – 2023 Final Results | Harbour City 8
Slide 9: Seizing Opportunities
Seizing Opportunities HC Revenue Breakdown HK$ Billion 2023: $9.0B (+10%) 98 99 10 94 96 97 Retail Occupancy* • Retail: Optimised Tenant Mix & Major Crowd-drawing Events 98 93 96 8 - Key Luxury Brands Expanded or Strategically Relocated 87 88 88 88 Office Occupancy* 0.1 0.1 0.1 6 0.8 0.7 0.1 - High
Slide 10: Dedicated Efforts Boosting Productivity
Dedicated Efforts Boosting Productivity Rebound in Footfall Retail Rental Growth at HC “Disney 100” in Summer “Merry Spacemas” in Christmas HC Retail Rental Category Breakdown 2023: $4.9B (+10%) Weekend Daily Foot Traffic of Weekend Daily Foot Traffic of 200,000 People 280,000 People F&B & Ent. 6% D
Slide 11: Exquisite Collection of Top Luxury Brands
Exquisite Collection of Top Luxury Brands 530-meter Canton Rd Frontage 16 Luxury Brands >HK$10B Sales (2.5% of HK Total) Wharf Real Estate Investment Company Limited – 2023 Final Results | Harbour City 11
Slide 12: Escalating Retail Leasing Demand
Escalating Retail Leasing Demand New Openings on Canton Road (3-storey flagship) (2-storey flagship) Selected Brands & Restaurants Openings Debut Brands Fashion / Jewellery & Accs. Leather Goods Beauty / Lifestyle F&B Beauty Wharf Real Estate Investment Company Limited – 2023 Final Results | Harbour
Slide 13: Times Square
Times Square 13 Wharf Real Estate Investment Company Limited – 2023 Final Results | Times Square 13
Slide 14: Combating Headwinds & Competition
Combating Headwinds & Competition TS Revenue Breakdown 2023: $1.8B (-3%) • Highly Competitive Landscape in Causeway Bay HK$ Billion 2 99 98 97 98 93 94 94 95 Retail Occupancy* • Retail: Refined Luxury Tenant Mix, Improving Leasing Demand 90 90 87 88 Office Occupancy* 0.4 0.4 0.4 0.4 • Office: Weak D
Slide 15: Hotels
Hotels 15 Wharf Real Estate Investment Company Limited – 2023 Final Results | Hotels 15
Slide 16: The Murray & Marco Polo Hotels
The Murray & Marco Polo Hotels The Murray, Hong Kong • Partial Recovery & Turned Around to Operating Profit Forbes Travel Guide Five-Star Award - Notable Uptick for Room Rate, Occupancy & Event Bookings For the Second Year - Yet, Increasing Erosion from Shenzhen Among Budget Conscious Consumers Marc
Slide 17: Outlook
Outlook 17 Wharf Real Estate Investment Company Limited – 2023 Final Results | Outlook 17
Slide 18: Evolving Post-Pandemic Trends
Evolving Post-Pandemic Trends • Positives: Potential Interest Rate Pivot, IVS* Expansion, Further Recovery in Visitor Arrivals • Uncertainties: Geopolitical & Economic Uncertainties, U.S. Presidential Election • Retail & Hotel: Evolving Behaviours & Increasing Regional Competition • Office: Weak Dem
Slide 19: Sustainability
Sustainability 19 Wharf Real Estate Investment Company Limited – 2023 Final Results | Sustainability 19
Slide 20: 2030 Environmental Targets
2030 Environmental Targets 2023 Total General Refuse Purchased Electricity of HK Operations Performance Decreased by Over 15% (2019 Baseline) Decreased by 8% (2019 Baseline) Overall GHG Emissions Electricity Intensity To Reduce 30% by 2030 To Reduce 27% at HKIP by 2030 2030 Targets* Water Consumptio
Slide 21: ESG Performances & Recognitions
ESG Performances & Recognitions Hang Seng Corporate LEED Platinum ISO certifications Sustainability Index (AA+ Rating) (v4.1 Operations and - ISO 14001:2015 Maintenance: Existing Buildings) Hang Seng ESG 50 Index - ISO 45001:2018 Times Square MSCI ESG Rating - ISO 9001:2015 Ratings & Awards (BBB Rat
Slide 22: Environmental: Asset Enhancements & Renewable Energy
Environmental: Asset Enhancements & Renewable Energy • 320 Solar Photovoltaic Panels Installed at HC • Cooling Paint on Condenser Water Pipes to Lower to support RE development & FiT* Scheme Condenser Water Temperature • 100 Sets of Solar Thermal Heater System Installed at • Saving ~52 Tonnes of CO2
Slide 23: Social: Community Contributions
Social: Community Contributions Recognition: Supports Youth Development via: 3rd Top Donor 2022/2023 • Project WeCan by The Community Chest • The Wharf Art Scholarship Scheme *The Wharf Group incl. Wharf REIC & Wharf Holdings • Architectural Design Internship Programme What we Volunteer Activities s
Slide 24: People: Governance, Talent Development & Workplace Safety
People: Governance, Talent Development & Workplace Safety Composition of Board of Directors (12 Board Members as of 31 Dec 23) 2023 Meeting Attendance* Designation Directors with Executive Functions (33%) Independent Non-executive Directors (67%) Age Gender 50-60 (17%) 61-70 (17%) ≥71 (66%) 98% Male
Slide 25: Appendix
Appendix 25 Wharf Real Estate Investment Company Limited – 2023 Final Results | Appendix 25
Slide 26: HC/TS/PH Performance
HC/TS/PH Performance Harbour City Times Square Plaza Hollywood 2023 (HK$M) Revenue YoY Chg Revenue YoY Chg Revenue YoY Chg Retail 5,474 +10% 1,168 +3% 459 +5% Office 2,304 -6% 593 -14% - - Hotels & Club 1,018 +80% - - - - Serviced Apt. 156 +4% - - - - Total 8,952 +10% 1,761 -3% 459 +5% Valuation* as
Slide 27: Premium Quality Portfolio
Premium Quality Portfolio Revenue Valuation* GFA Harbour City Harbour City Harbour City 72.7% 67.5% 68.5% 2023 Revenue Valuation GFA $12.3B $240.7B 12.3M s.f Singapore Assets Singapore Times Square Times Square Singapore 2.7% Plaza Assets 19.7% 16.1% Assets Hollywood Central Times Square 2.7% Plaza
Slide 28: Overview of Application of Funds
Overview of Application of Funds Major Capital & Development Expenditure To be Incurred in Coming Years HK$ Incurred in 2023 Committed Uncommitted Total HKIP 32M 82M 214M 296M Singapore IP 6M - - - Mainland Properties 224M 231M 336M 567M Hotels & Others 34M 16M - 16M Total 296M 329M 550M 879M Wharf
Slide 29: Thank You
Thank You Core Businesses Stabilise Amidst Doubling of Interest Cost Wharf Real Estate Investment Company Limited – 2023 Final Results | Thank You 29
Slide 30: 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,