Wharf Real Estate Investment Company Limited · HKEX:1997
Wharf Real Estate Investment — Wharf Real Estate Inv — H1 2024 Earnings Presentation
29 slides from Wharf Real Estate Investment's earnings presentation, Aug 6, 2024
Slide 1: Stalled Recovery, Depressed Property Values: 2024 Interim Results
Stalled Recovery Depressed Property Values Wharf Real Estate Investment Company Limited 2024 Interim Results 6 Aug 2024 1
Slide 2: Results Highlights
Results Highlights ▪ Recovery in Revenue & OP Stalled ▪ That Resulted in a 2% Increase in UNP to $3.1B ▪ Group Loss Resulted from $4.4B Non-cash IP Revaluation Deficit ▪ Group NAV ($61.8 Per Share) is 16% Lower than 5 Years Ago ▪ Net Debt Reduction In Line with Plan Wharf Real Estate Investment Comp
Slide 3: Macros Present Challenges
Macros Present Challenges Average of HKDCNY Average of 3-Month HIBOR (%) 0.94 6 0.93 2024 2023 0.92 0.92 ▪ Strong HKD 2023 5 4.82 4.74 2024 – HK Becomes Uncompetitive to Both Locals & Visitors 0.90 4 ▪ Higher-for-longer US Fed Rates 0.88 2018 3 – Negative Wealth Effect & Dampens Consumption 0.86 201
Slide 4: Gradual Post-pandemic Resurgence
Gradual Post-pandemic Resurgence HK Visitor Arrivals HK Retail Sales Million HK$ Billion 2018 7 45 ▪ Slow Visitor Return 2018 6 – YoY Growth in 1Q24 Exaggerated by Low Base 40 5 – Pending Effectiveness of Policies to Reboot Industry 36.5 4 3.8 2023 2023 ▪ Sales Turned from Recovery to Decline 3.1 35
Slide 5: Stable Demand Despite Weak Market
Stable Demand Despite Weak Market HKIP Revenue & Occupancy* 1H24: $5.4B (+2%) HK$ Billion 10 96% 9 92% ▪ Stable Mall & Office Occupancies 8 88% 87% 7 ▪ Retail (70% of HKIP Revenue) Saw Spot Rent Stabilising 6 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 5 1.9 1.8 1.5 1.5 – T/O Rent Affected by HK Retail Sale
Slide 6: Global Brands' Confidence
Global Brands’ Confidence Selected New Brands or Expansions at Harbour City & Times Square: Hermès (HC) Dior (HC) Gucci (HC) Miu Miu (HC) Piaget (HC) Casa Loewe (HC) Jimmy Choo (HC) 2020 2021 2022 2023 2024 & After Ferragamo (HC) Van Cleef & Arpels (HC) De Beers (HC) Girard-Perregaux (TS) Franck Mul
Slide 7: Financial Highlights
Financial Highlights HK$M 1H24 1H23 YoY Chg Group Revenue 6,501 6,473 +0% - HKIP & Hotel 6,071 5,928 +2% ▪ Revenue & OP Stable Operating Profit 4,915 4,940 -1% - HKIP & Hotel 4,644 4,629 +0% Underlying Net Profit (UNP)* 3,123 3,059 +2% ▪ Continued Pressure from High HIBOR - HKIP & Hotel 2,989 3,107
Slide 8: Proactive Debt Management
Proactive Debt Management Net Debt (HK$ Billion) 52.0 47.5 45.2 36.3 35.1 ▪ Moody’s A2 Rating; Stable Outlook Dec 2020 Dec 2021 Dec 2022 Dec 2023 Jun 2024 ▪ Net Debt Down to $35.1B (Lowest since Listing); Gearing 18.3% Gearing: 24.8% 22.5% 23.2% 18.6% 18.3% Total Equity: $209.4B $210.9B $194.9B $195
Slide 9: Harbour City
Harbour City 9 Wharf Real Estate Investment Company Limited | 2024 Interim Results | 9
Slide 10: Unique Drawing Power
Unique Drawing Power HC Revenue Breakdown 1H24: $4.6B (+5%) HK$ Billion 10 97% 9 ▪ Retail Rent Stabilising on Retailers’ Long-term Confidence 8 90% 88% 7 – Continuous Expansion & New Flagships of Top Brands 6 86% S.A. 5 0.1 0.1 0.1 0.1 Hotel 0.1 0.1 0.1 – Local/Tourist Events & Promotion Boost Retai
Slide 11: Unparalleled One-stop Offerings
Unparalleled One-stop Offerings HC Retail Rental Category Breakdown Strategic Expansion & Relocation (Selected Brands) 1H24: $2.6B (+6%) F&B & Ent. New Retail & F&B Entrants 6% Jewellery & Dept. HK/ Kowloon Accs. Store Debuts 5% Sports- wear Beauty Fashion Leather Goods 3% 33% 27% Electronics Kid’s
Slide 12: Times Square
Times Square 12 Wharf Real Estate Investment Company Limited | 2024 Interim Results | 12
Slide 13: Redefining Edge Amid Competition
Redefining Edge Amid Competition TS Revenue Breakdown 1H24: $0.9B (Flat) HK$ Billion 2.0 94% ▪ Stable Retail Occupancy 92% 1.5 87% 91% ▪ Louis Vuitton’s Upcoming Duplex to Enrich Luxury Cluster 1.0 0.3 Office 0.3 0.3 ▪ Weaker Office Occupancy amid Rising New Supply Nearby 0.3 0.3 0.3 0.3 Retail 0.4
Slide 14: Hotels
Hotels 14 Wharf Real Estate Investment Company Limited | 2024 Interim Results | 14
Slide 15: The Murray & Marco Polo Hotels
The Murray & Marco Polo Hotels The Murray, Hong Kong Canton Road Hotels ▪ Occupancy Steady but Room Rates Retreated from 1H23 ▪ Rising Costs & Talent Shortage Add Challenges ▪ Marco Polo Hotels: Prime Location Draws Room Demand – Prince Hotel’s Full Contribution (Fully Reopened Aug 2023) ▪ The Murra
Slide 16: Outlook
Outlook 16 Wharf Real Estate Investment Company Limited | 2024 Interim Results | 16
Slide 17: Gauging Market Trends
Gauging Market Trends ▪ Uncertainties from Global Economic Slowdown & Geopolitical Tensions Continue ▪ Retail & Hotels Bearing the Brunt of Shifting Consumption Patterns ▪ Demand to Hopefully Rebuild when Cyclical Factors (Exchange Rate & Interest Rate) Improve Wharf Real Estate Investment Company L
Slide 18: Sustainability
Sustainability 18 Wharf Real Estate Investment Company Limited | 2024 Interim Results | 18
Slide 19: 2030 Environmental Targets
2030 Environmental Targets Overall GHG Emissions Electricity Intensity To Reduce 30% by 2030 To Reduce 27% at HKIP by 2030 2030 Targets* Water Consumption Waste Diversion To Reduce 18% at HK operations by 2030 To Divert Waste Away from Landfills *Using 2014 as Baseline 2023 Performance Total General
Slide 20: ESG Performances & Recognitions
ESG Performances & Recognitions Hang Seng Corporate Times Square ISO certifications Sustainability Index (AA+ Rating) LEED Platinum - ISO 14001:2015 (v4.1 Operations and Hang Seng ESG 50 Index Maintenance: Existing Buildings) - ISO 45001:2018 - ISO 9001:2015 MSCI ESG Rating WELL Health-Safety Rated
Slide 21: 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 22: Social: Community Contributions
Social: Community Contributions Supports Youth Development via: Donation: • Project WeCan 3rd Top Donor 2022/2023* • The Wharf Art Scholarship Scheme by The Community Chest • Architectural Design Internship Programme Top Fund-raiser What we in Dress Casual Day 2023* Volunteer Activities supported Wi
Slide 23: People: Governance, Talent Development & Workplace Safety
People: Governance, Talent Development & Workplace Safety Composition of Board of Directors (12 Board Members as of 30 Jun 24) 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 24: Appendix
Appendix 24 Wharf Real Estate Investment Company Limited | 2024 Interim Results | 24
Slide 25: HC/TS/PH Performance
HC/TS/PH Performance Harbour City Times Square Plaza Hollywood 1H24 (HK$M) Revenue YoY Chg Revenue YoY Chg Revenue YoY Chg Retail 2,883 +7% 630 +4% 225 -3% Office 1,130 -2% 273 -8% - - Hotels & Club 509 +18% - - - - Serviced Apt. 81 +11% - - - - Total 4,603 +5% 903 Flat 225 -3% Valuation* as of 30 J
Slide 26: Premium Quality Portfolio
Premium Quality Portfolio Revenue Valuation* GFA Harbour City Harbour City Harbour City 74.0% 67.6% 68.5% 1H24 Revenue Valuation GFA $6.2B $235.8B 12.3M s.f Singapore Assets Singapore Times Square Times Square Singapore 2.7% Plaza Assets 19.5% 16.1% Assets Hollywood Central Times Square 2.7% Plaza C
Slide 27: Overview of Application of Funds
Overview of Application of Funds Major Capital & Development Expenditure To be Incurred in Coming Years HK$ Incurred in 1H24 Committed Uncommitted Total HKIP 85M 54M 529M 583M Singapore IP 1M - - - Mainland Properties 37M 163M 363M 526M Hotels & Others 11M 14M - 14M Total 134M 231M 892M 1,123M Wharf
Slide 28: Thank You
Thank You Stalled Recovery Depressed Property Values 28
Slide 29: Disclaimer
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, its subsidiaries and
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