Hongkong Land Holdings Limited · SGX:H78
Hongkong Land — FY2022 Earnings Presentation
62 slides from Hongkong Land's earnings presentation, Mar 3, 2023
Slide 1: 2022 Results Presentation
2022 Results Presentation 3 March 2023 Exchange Square, Hong Kong
Slide 2: Agenda
Agenda Speakers Robert Wong, Chief Executive Craig Beattie, Chief Financial Officer 1. Key Market Updates & Results 2. Investment Properties 3. Development Properties 4. Financial Highlights 5. Sustainability 6. Corporate Initiatives 7. Outlook 8. Q&A 2 Central Avenue, Chongqing
Slide 3: Key Market Updates
Key Market Updates Hong Kong and Chinese mainland impacted by anti-pandemic measures; Singapore healthy HONG KONG CHINESE MAINLAND SINGAPORE • Office: Challenging markets – • Residential: Cautious • Office: Leasing momentum demand slowed due to sentiment throughout the year healthy; Positive absorpt
Slide 4: 2022 Results Key Figures and Highlights
2022 Results US$776m US$33.3bn 963 966 • Underlying profit 776 • Shareholders’ funds 35.7 34.6 33.3 -20% YoY -3.8% YoY 2020 2021 2022 Dec 2020 Dec 2021 Dec 2022 Key Figures Highlights • Underlying EPS: US¢34.44 (2021: US ¢ 41.49) • Underlying profit down 20% • Profit / (Loss)1: US$203m (2021: US$(34
Slide 5: 2022 Progress
2022 Progress Copen Grand, Singapore Exchange Square, Hong Kong SUCCESSFUL SALES LAUNCH OF TWO 2030 NEAR-TERM SCIENCE-BASED EXTENSION OF SHARE BUYBACK PROJECTS IN SINGAPORE TARGETS VALIDATED PROGRAMME ANNOUNCED May & October 2022 June 2022 July 2022 Tembusu Grand, Singapore Suzhou Hudong, China West
Slide 6: Investment Properties
Investment Properties 6 Exchange Square, Hong Kong
Slide 7: Hong Kong Portfolio - Office
Hong Kong Portfolio - Office Average Rents & Vacancy Stable performance despite macroeconomic uncertainties 2020 2021 2022 Average net rent 120 117 111 (HK$ psf/month) Period-end vacancy 6.3% 5.2% 4.9% Weighted average lease expiry 4.6 4.2 4.0 (years) Note: On a committed basis, vacancy at the end o
Slide 8: Hong Kong Portfolio - Retail
Hong Kong Portfolio - Retail Average Rents & Vacancy Performance affected by pandemic-related and border restrictions 2020 2021 2022 Average net rent $164 $190 $177 (HK$ psf/month) Period-end vacancy 0.3% 0.3% 0.5% Weighted average lease expiry 1.9 1.8 1.8 (years) Estimated tenant sales growth -32%
Slide 9: Placemaking – BaseHall
Placemaking – BaseHall 2 New multi-concept dining venue to incubate homegrown culinary talents in Hong Kong | Investment Properties | 2022 Results 9
Slide 10: Placemaking – Sotheby's @ Chater House
Placemaking – Sotheby’s @ Chater House A state-of-the-art immersive exhibition and retail space in the making Chater House, Hong Kong Sotheby’s HQ, London Source: Sotheby’s | Investment Properties | 2022 Results 10
Slide 11: Singapore Portfolio - Office
Singapore Portfolio - Office Healthy performance in line with market Average Rents & Vacancy 2020 2021 2022 Average gross rent 9.9 10.3 10.6 (S$ psf/month) Period-end vacancy 2.1% 6.5% 7.5% Weighted average lease expiry 3.8 3.4 3.4 (years) Note: On a committed basis, vacancy at the end of Dec 2022 w
Slide 12: Rest of Investment Properties Portfolio
Rest of Investment Properties Portfolio Retail performance impacted by pandemic-related restrictions CHINESE MAINLAND MACAU SOUTHEAST ASIA Beijing – WF CENTRAL (84%-owned) Macau – ONE CENTRAL Macau (49%- Jakarta – Jakarta Land (50%-owned) • 43,000 sq. m. NFA of retail space owned) • Existing portfol
Slide 13: West Bund
West Bund Minor disruptions from covid-related city-wide lockdowns in 2022; completion remains on schedule in phases 2023-2027 Phase 1: Residential for lease and sale Phase 2: Office for Sale, Hotel, Convention Phase 3: Office and Luxury Retail for & Lifestyle Retail for lease Centre and Cultural Fa
Slide 14: West Bund
West Bund Residential sales launch expected in 2023 | Investment Properties | 2022 Results 14
Slide 15: Development Properties
Development Properties 15 ESSE Sukhumvit 36, Bangkoj
Slide 16: Chinese Mainland Portfolio – Overview
Chinese Mainland Portfolio – Overview 35 projects spread across seven cities; total attributable developable area 7.9 million sq. m. The Ring Landmark LandmarkRiverside Riverside Lakeward Mansion CBD Z3 CBD Z3 Project CHONGQING Four projects WUHAN 14 projects One project BEIJING Total GFA 7.2
Slide 17: Chinese Mainland Portfolio
Chinese Mainland Portfolio Decline in revenue and contracted sales due to weakened market sentiment in 2022 Revenue Recognised*# Contracted Sales# Sold but Unrecognised Sales# US$m US$m US$m 2,800 2,800 $2,648m 3,200 $2,426m $2,853m 2,800 $2,584m 2,400 2,400 $2,135m $1,873m 2,400 $2,087m 2,000 2,000
Slide 18: Singapore Portfolio – Overview
Singapore Portfolio – Overview IMAGE TO BE UPDATED COPEN GRAND PARC ESTA 50% JV with CDL 1,404 units 639 units 108,000 sq. m. GFA 68,000 sq. m. GFA Completion: 2022 Completion: 2025 100% sold 64% pre-sold LEEDON GREEN PICCADILLY GRAND AND TEMBUSU GRAND 50% JV with Yanlord GALLERI
Slide 19: Singapore Portfolio
Singapore Portfolio Higher contracted sales driven by Piccadilly Grand and Galleria and Copen Grand Revenue Recognised# Contracted Sales# Sold but Unrecognised Sales# US$m US$m US$m 700 700 700 US$676m US$631m US$632m US$615m US$589m 600 600 600 US$522m 500 500 500 US$379m 400 400 400 US$362m US$328
Slide 20: New Projects – China
New Projects – China Two new projects with an attributable developable area of 85,425 sq. m. secured in 2022 CENTURY ORIGIN, SHANGHAI SUZHOU HUDONG PROJECT, SUZHOU • 34%-owned • Retail (53%-owned) and Hotel (40%-owned) • JV with CMSK and Shanghai Huicheng • JV with Harmony Group • Residential site •
Slide 21: New Projects – Southeast Asia
New Projects – Southeast Asia Two new development projects with an attributable developable area of 186,900 sq. m. secured in 2022 TEMBUSU GRAND, SINGAPORE LAZULI, INDONESIA • 49%-owned • 50%-owned • JV with CDL • JV with Astra International • 638 units • Landed residential with commercial shophouse
Slide 22: Financial Highlights
Financial Highlights 22 Mandarin Oriental Wangfujing, Beijing
Slide 23: Operating and Underlying Profit
Operating and Underlying Profit Contributions to Underlying Profit Movement in Underlying Profit US$m US$m $966m $966m $963m -$22m +$72m $776m $776m 644 -$240m 524 404 963 973 951 Underlying profit Investment Properties Development Net decrease in Underlying profit 2021 operating profit Properties o
Slide 24: Rental Income
Rental Income Attributable Gross Rental Income* • Office: Primarily lower average rent, negative Hong Kong reversions US$m $1,306m $1,374m $1,354m 3% • Retail: Lower footfall and tenant sales during holiday 85 season 78 73 78 124 134 163 170 173 Singapore • Higher average rents 2% • Lower average va
Slide 25: Operating Profit – Development Properties
Operating Profit – Development Properties Operating Profit – Development Chinese • Fewer planned sales completions Properties Mainland US$m • Lower profit margins $644m 43% 14 100 $524m 14 Singapore • Projects underway at different point of construction 96 $404m than prior period 54 51% • Profits re
Slide 26: Capital Management
Capital Management Payout Ratio, Underlying Profit and Dividend Capital Committed for New Projects (US$bn) per Share 2012- 2017 2018 2019 2020 2021 2022 2016 avg IP 0.1 0.9 - - 1.6 - 0.3 Payout Ratio (%) DP 0.6 2.9 2.4 1.2 1.3 3.0 0.7 50 48 53 53 64 Total 0.7 3.8 2.4 1.2 2.9 3.0 1.0 $1,036 $1,076 $9
Slide 27: Treasury Management
Treasury Management Net Debt and Gearing Net Debt Reconciliation (US$m) FY 2021 FY 2022 % YoY (4,568) Net debt at beginning of period (5,104) +12 17% 15% 792 Net rental income / fee receipts 787 -1 13% 1,674 Proceeds from DP sales 1,071 -36 1.2 (2,010) Capex1 (1,383) -31 2 1.5 (510) Dividends (504)
Slide 28: Treasury Management
Treasury Management Maturity Profile of Debt at 31 Dec 2022 (US$m) Key Debt Metrics 31 Dec 2022 Average tenor of debt (years) 5.8 Average interest cost 3.3% $2,846 Available liquidity US$3,112m Credit Ratings $1,966 S&P’s A Moody’s A3 $846 THB RMB 5% $664 14% $419 $249 Bonds Type of S$ 43% Interest
Slide 29: Sustainability
Sustainability 29
Slide 30: Sustainability
Sustainability Aspiring towards sustainable leadership SUSTAINABILITY FRAMEWORK 2030 GREEN BUILDING CERTIFICATES Launch of new strategy & targets reaffirms 88% of leasing portfolio achieved certification, with commitment to sustainability 51% achieving the highest possible ratings CBD, Singapore | S
Slide 31: Sustainability
Sustainability Aspiring towards sustainable leadership INAUGURAL GREEN FINANCE REPORT SCIENCE-BASED TARGETS APPROVED WF CENTRAL POWERED BY 100% RENEWABLE ENERGY Published in July in accordance with Green Near-term SBTs aligned with 1.5°C pathway Financing Framework Among the first commercial complex
Slide 32: Sustainability
Sustainability Aspiring towards sustainable leadership ESG RATINGS AWARDS 5- Star Rating for 2022: 70/100 Standing Investments Constituent of the Dow Jones Sustainability Asia Pacific Index • Received five awards at Best • Exchange Square, Hong HR Awards 2022 hosted by Kong received the Grand Ctgood
Slide 33: Corporate Initiatives
Corporate Initiatives Sustainability 33 China
Slide 34: Digitalisation
Digitalisation Enhancing customer and stakeholder experience Customer Engagement PropTech LANDMARK 2.0 CENTRICITY App Energy Consumption Hackathon Launched in March 2022 Seamless access to services, spaces, Hackathon focused on privileges and experiences at the driving energy efficiency Supported 10
Slide 35: CSR
CSR Promoting social inclusion, upward mobility of youth and alleviating social issues related to housing challenges via partnership with over 80 NGOs HERE2HELP VOLUNTEER TEAM EMPOWERING YOUTH Over 5,500 hours contributed across the region. 93 Worked with 15 grantees to provide multi-year programmes
Slide 36: Outlook
Outlook 36 ONE CENTRAL Macau, Macau
Slide 37: Outlook
Outlook Steady recovery in 2023 • Improved sentiment due to rapid stabilisation of pandemic conditions in China Landmark, Hong Kong • Office portfolios to remain resilient despite more competitive market conditions in Hong Kong • Improvements in luxury retail sales expected – Hong Kong: sentiment im
Slide 38: Q&A
Q&A Appendix Q&A 38 West Bund, China
Slide 39: Appendix
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Slide 40: Completed Investment Properties Overview
Completed Investment Properties Overview Completed Investment Properties are primarily located in Hong Kong and Singapore TOTAL COMPLETED AREA (HKL’s share) (000’s sq. ft NFA) 57 247 4,893 523 TOTAL TOTAL TOTAL TOTAL HANOI MACAU HONG KONG BEIJING 52 96 4,135 384 5 151 617 143 139 9,376* TOTAL 91 258
Slide 41: Hong Kong Investment Properties Summary
Hong Kong Investment Properties Summary HKL’s SHARE (’000 sq. ft NFA) OFFICE RETAIL HOTEL TOTAL1 One Exchange Square 570 - - 570 Two Exchange Square 509 - - 509 Three Exchange Square 321 - - 321 Exchange Square Podium 2 49 - 51 The Forum 41 - - 41 Jardine House 633 43 - 676 Chater House 422 48 - 470
Slide 42: Singapore Investment Properties Summary
Singapore Investment Properties Summary HKL’s SHARE OFFICE RETAIL TOTAL (’000 sq. ft NFA) One Raffles Link 242 70 312 One Raffles Quay 440 1 441 MBFC 959 60 1,019 Total 1,641 131 1,7721 1 Equivalent to 165,000 sq. m. | Appendix | 2022 Results 42
Slide 43: Other Investment Properties Summary
Other Investment Properties Summary HKL’s SHARE OFFICE RETAIL HOTEL TOTAL (’000 sq. ft NFA) Beijing - 384 139 523 Macau - 96 151 247 Jakarta 1,023 77 - 1,100 Hanoi 52 5 - 57 Bangkok 27 64 - 91 Phnom Penh 199 142 94 435 Others 42 - 216 258 Total 1,343 768 600 27111 1 Equivalent to 252,000 sq. m. | Ap
Slide 44: Tenant Portfolio (Profile by Area)
Tenant Portfolio (Profile by Area) at 31 Dec 2022 HK Office HK Retail Singapore Office 1% 6% 6% 11% 2% 26% 12% 5% 4% 8% 42% 6% 62% 5% 26% 61% 31% Banks & Other Financial Services Strategic Tenants Accounting & Consulting Services Legal Banking and Finance Other retail brands Energy & Natural Resourc
Slide 45: Development Properties Overview
Development Properties Overview HKL’s Development Properties portfolio primarily spans six countries and 15 cities, with a key focus on the Chinese Mainland and in Singapore TOTAL AREA UNDER CONSTRUCTION / TO BE DEVELOPED (HKL’s share) 2,673 (000’s sq. m. GFA) TOTAL CHINESE MAINLAND 240 21 4,911* TO
Slide 46: Chinese Mainland Development Properties Summary (1)
Chinese Mainland Development Properties Summary (1) GFA (HKL’s SHARE) DEVELOPABLE UNDER TO BE YEAR OF SITE AREA CONSTRUCTED PROJECT CITY INTEREST AREA CONSTRUCTION DEVELOPED ACQUISITION (ha) (m sq. m.) (m sq. m.) (m sq. m.) (m sq. m.) CBD Z3 Beijing 30% 2010 1.1 0.04 - - 0.04 Yorkville South Chongqi
Slide 47: Chinese Mainland Development Properties Summary (2)
Chinese Mainland Development Properties Summary (2) GFA (HKL’s SHARE) UNDER TO BE YEAR OF SITE AREA DEVELOPABLE AREA CONSTRUCTED PROJECT CITY INTEREST CONSTRUCTION DEVELOPED ACQUISITION (ha) (m sq. m.) (m sq. m.) (m sq. m.) (m sq. m.) Artistic Bay Chengdu 100% 2021 5.5 0.10 - 0.10 - Creative Land Ch
Slide 48: Chinese Mainland Development Properties Summary (3)
Chinese Mainland Development Properties Summary (3) GFA (HKL’s SHARE) UNDER TO BE YEAR OF SITE AREA DEVELOPABLE AREA CONSTRUCTED PROJECT CITY INTEREST CONSTRUCTION DEVELOPED ACQUISITION (ha) (m sq. m.) (m sq. m.) (m sq. m.) (m sq. m.) Century Land Project Shanghai 34% 2022 2.2 0.02 - 0.02 - Wuhan Dr
Slide 49: West Bund Detailed GFA Breakdown
West Bund Detailed GFA Breakdown ACCOUNTABLE GFA DP (sq. m.) IP (sq. m.) TOTAL (sq. m.) Office for Sale 228,550 - 228,550 Office for Lease - 423,090 423,090 Retail for Lease1 7,910 223,870 231,780 Residential for Sale 24,465 - 24,465 Hotels - 54,937 54,937 Branded Serviced Apartments for Lease - 51,
Slide 50: Chinese Mainland – Completed Sales Gross Margin
Chinese Mainland – Completed Sales Gross Margin Gross Margin % (before LAT) 50% 44% 41% 40% 40% 36% 30% 28% 22% 20% 10% 0% 2017 2018 2019 2020 2021 2022 Note: The above analysis includes share of Joint Ventures & Associates. | Appendix | 2022 Results 50
Slide 51: Chinese Mainland – Attributable Saleable GFA Completions
Chinese Mainland – Attributable Saleable GFA Completions ‘000 sq. m. Forecast 1,000 900 800 699 700 638 600 513 529 500 429 400 300 200 100 - 2021 2022 2023 2024 2025 Chongqing Chengdu Shanghai Nanjing Wuhan Hangzhou Notes: (1) Based on actual and estimated handover dates. (2) Includes existing comm
Slide 52: Strong Retail Portfolio Growth on the Chinese Mainland
Strong Retail Portfolio Growth on the Chinese Mainland Expected attributable NLA of retail portfolio, 2022-2026 (’000 sq. m.) 190% (vs. 2022) 493 466 331 253 170 179 2022 2023 2024 2025 2026 2027 WF CENTRAL, BEIJING Existing Galaxy Midtown JL Central WE City Yue City Central Avenue Hangzhou Bay Eter
Slide 53: Chinese Mainland – Medium-Term Lease Assets
Chinese Mainland – Medium-Term Lease Assets Major Assets in Operation Medium-term Lease Assets 32% Net Investment $2,380M# Landmark Riverside, Chongqing LCM, Shanghai The Ring, Chongqing 68% • Retail NLA: 56,000 sq. m. • Retail NLA: 59,000 sq. m. • Retail NLA: 78,000 sq. m. (HKL’s share: 28,000 sq.
Slide 54: Assets Held for Medium-Term Lease under Development
Chinese Mainland – Assets Held for Medium-Term Lease under Development ESTIMATED NLA ESTIMATED YEAR OF PROJECT CITY INTEREST (HKL’s Share) TYPE COMPLETION ‘000 sq. m. CBD Z3 Beijing 30% 36 Office (94%); Retail (6%) 2026 Central Avenue Chongqing 50% 38 Retail (100%) 2025 Century Land Chongqing 100% 2
Slide 55: Singapore Development Properties Summary
Singapore Development Properties Summary HKL’s SHARE DEVELOPABLE UNDER TO BE YEAR OF SITE AREA CONSTRUCTED PROJECT INTEREST AREA CONSTRUCTION DEVELOPED ACQUISITION (ha) (m sq. m.) (m sq. m.) (m sq. m.) (m sq. m.) Parc Esta 100% 2018 3.5 0.11 0.11 - - Leedon Green 50% 2019 3.0 0.03 - 0.03 - Piccadill
Slide 56: Other Southeast Asia Development Properties Summary (1)
Other Southeast Asia Development Properties Summary (1) HKL’s SHARE SITE DEVELOPABLE UNDER TO BE YEAR OF CONSTRUCTED PROJECT COUNTRY INTEREST AREA AREA CONSTRUCTION DEVELOPED ACQUISITION (m sq. m.) (ha) (m sq. m.) (m sq. m.) (m sq. m.) Nava Park Indonesia 49% 2012 77.0 0.24 0.09 0.03 0.12 Anandamaya
Slide 57: Other Southeast Asia Development Properties Summary (2)
Other Southeast Asia Development Properties Summary (2) HKL’s SHARE DEVELOPABLE UNDER TO BE YEAR OF SITE AREA CONSTRUCTED PROJECT COUNTRY INTEREST AREA CONSTRUCTION DEVELOPED ACQUISITION (ha) (m sq. m.) (m sq. m.) (m sq. m.) (m sq. m.) Two Roxas Triangle The Philippines 40% 1995 0.4 0.04 0.04 - - Ma
Slide 58: Southeast Asia – Projects Launched for Sale
Southeast Asia – Projects Launched for Sale THAILAND INDONESIA THE PHILIPPINES The ESSE Sukhumvit 36 (49%-owned) Nava Park (49%-owned) Mandani Bay (40%-owned) Site area: 0.4 ha; GFA: 38,000 sq. m. Site area: 77 ha; GFA: 489,000 sq. m. Site area: 20 ha; GFA: 1.2 million sq. m. 338 units, 75%
Slide 59: Consolidated Balance Sheet
Consolidated Balance Sheet FY 2021 US$m FY 2022 % YoY Investment Properties 28,600 - Subsidiaries 28,054 -2 5,807 - Joint ventures 5,722 -1 34,407 33,776 -2 Development Properties* 3,516 - Subsidiaries 2,920 -17 6,949 - Joint ventures 7,012 +1 (2,229) - Pre-sale proceeds (1,624) -27 8,236 8,308 +1 (
Slide 60: Gross Assets at 31 Dec 2022
Gross Assets at 31 Dec 2022 By Activity By Location 17% 20% 14% 66% 83% Investment Properties Development Properties Hong Kong Southeast Asia Chinese Mainland and Macau | Appendix | 2022 Results 60
Slide 61: Investment Properties – Basis of Valuation
Investment Properties – Basis of Valuation Capitalisation Rates 2021 1H 2022 2022 Hong Kong Office – Exchange Square 1 & 2 3.00% 3.00% 3.05% Hong Kong Retail – Landmark Atrium 4.50% 4.50% 4.50% Singapore Office – MBFC 3.00% 3.00% 3.00% | Appendix | 2022 Results 61
Slide 62: Treasury Management
Treasury Management Liquidity at 31 Dec 2022 (all figures in US$bn) Liquidity at HK$* S$ US$ RMB THB TOTAL 31 DEC 2021 Committed lines 9.1 6.0 1.0 0.0 1.5 0.4 8.9 Gross debt 6.6 5.1 0.6 0.0 1.0 0.3 7.0 Available lines 2.5 0.9 0.4 0.0 0.5 0.1 1.9 Cash 1.5 0.1 0.5 0.2 0.4 0.0 1.2 Available liquidity 4
Hongkong Land Holdings — FY2022 Earnings Presentation on 6ix