Wharf (Holdings) Ltd. · HKEX:4
Wharf (Holdings) — The Wharf (Holdings) — FY2019 Earnings Presentation
44 slides from Wharf (Holdings)'s earnings presentation, Mar 10, 2020
Slide 1: On Plan in 2019 but Virus in 2020
On Plan in 2019 but Virus in 2020 The Wharf (Holdings) Limited 2019 Final Results - 10 Mar 2020
Slide 2: 2019 Group UNP -58%
2019 Group UNP -58% • DP -85% – Met Operating Plans – Strict Government Controls on Selling Price Prompted Provisions • IP +44% – On Plan • Logistics -17% – Despite Formation of Hong Kong Seaport Alliance to Compete with Regional Ports Overview | Recurrent Income | Asset Turns | Financial Management
Slide 3: 2020 Unprecedented Downturn in Economic Activities
2020 Unprecedented Downturn in Economic Activities Virus Outbreak & Nationwide Control Measures • Substantial Sales & Construction Halted DP Progress • Gov’t-instructed Closures plus Rental Reliefs to Tenants Hurting IP Performance • Hotel Occupancy Rate Falls to Low SD with 98% Revenue Loss YoY • P
Slide 4: A Property-focused Company
A Property-focused Company Total Assets (Ex-Cash & Investments) Properties 91% Mainland China 71% $184B Logistics 8% HK 29% Others 1% Properties Mainland China 91% 71% Overview | Recurrent Income | Asset Turns | Financial Management The Wharf (Holdings) Limited – 2019 Final Results | 4
Slide 5: Mainland IP Contribution on the Rise
Mainland IP Contribution on the Rise Mainland IP UNP* Contribution in Recurrent Income 2019 79% 21% • Expanding Recurrent Income Base • Virus Outbreak Causing Disruption 2018 65% 35% • Opportunities in Consumption-led Economy 2017 58% 42% (Ex-WREIC) * Underlying Net Profit - Excl. IP Revaluation Sur
Slide 6: Financial Highlights
Financial Highlights HKD Million 2019 2018 %Chg Group Revenue 16,874 21,055 -20% • Sound Balance Sheet Operating Profit 7,869 8,752 -10% • NAV $142.9B ($46.86/ Share) Underlying Net Profit (UNP)* 2,710 6,511 -58% • IP Book Value $74.8B & Properties for Profit Attributable to Equity Shareholders 3,38
Slide 7: Agenda: Recurrent Income
Agenda Overview Recurrent Income Asset Turns Financial Management The Wharf (Holdings) Limited – 2019 Final Results | 7
Slide 8: Mainland IP – Impetus for Growth
Mainland IP – Impetus for Growth Mainland IP Revenue (HKD billion) 2019 3.9 2018 3.4 CSIFS Opened • Mainland IP Revenue +14% in 2019 2017 2.6 in May18 – Driven by CDIFS & CSIFS 2016 2.4 2015 2.3 • Solid Sales Productivity Supports Malls’ Growth 2014 2.0 CDIFS Opened in Jan14 • Office – Occupancy Imp
Slide 9: CDIFS – Top Mall in Western China
CDIFS – Top Mall in Western China 2019 CDIFS Mall • Retail Sales RMB6.8B (+14%) Net Revenue (Net of Tax) RMB1,002M (+14%) – Among Top 10 Shopping Centres in Entire Mainland Average Monthly Sales (psm) Over RMB6,000 • Immense Efforts in Marketing & VIP Recruitment Foot Traffic Growth +11% • Double-di
Slide 10: CSIFS – Top Mall in Central China
CSIFS – Top Mall in Central China • First Full Year of Business 2019 CSIFS Mall • Community Hub for the City & Province Net Revenue (Net of Tax) RMB573M • Retail Diversity – 370+ Retail Shops Average Monthly Sales (psm) ~RMB3,900 • Retail Sales RMB4.7B Turnover Rent Portion 34% Occupancy Cost* 10% –
Slide 11: Wharf Hotels – Established Presence
Wharf Hotels – Established Presence Niccolo (Since 2015) Hong Kong Mainland The Murray, Hong Kong, a Niccolo Niccolo Chengdu Hotel^ Niccolo Changsha Niccolo Chongqing# Award-winning Niccolo Suzhou (Opening in 2021)^ Contemporary Chic Marco Polo (Since 1986) Hong Kong Mainland Philippines
Slide 12: Niccolo – Market Leader
Niccolo – Market Leader RGI vs. Competitive Set & Absolute RevPAR Chengdu* Chongqing* Changsha* RGI# 179 121 131 RevPAR^ USD190 USD123 USD121 Changsha 2019 YoY Change Chengdu* Chongqing* Changsha* Chengdu RGI# +11 +25 NA Chongqing RevPAR^ +USD16 +USD24 NA * Opening date: Chengdu Apr-15, Chongqing Se
Slide 13: Niccolo – Award-Winning
Niccolo – Award-Winning Key Awards The Murray, Hong Kong, Chengdu Chongqing Changsha a Niccolo Hotel Conde Nast Traveler Business Traveller Asia-Pacific Voyage Magazine TTG China Travel Awards Readers’ Choice Awards 2019 Best Business Hotel in Chengdu Best Hotel & Resort Value Awards Best Business H
Slide 14: Logistics – Persisting through Challenges
Logistics – Persisting through Challenges Modern Terminals (2019) Revenue $2,584M (-1%) Operating Profit $500M (-15%) Throughput (million TEUs) • Macro Challenges & Regional Competition HK 5.0 -10% • HK Throughput -10% DCB^ 1.3* +3% • HK Seaport Alliance (since 1 Apr 2019) SCT^ 5.7* +1% Total 12.0 -
Slide 15: Agenda: Asset Turns
Agenda Overview Recurrent Income Asset Turns Financial Management The Wharf (Holdings) Limited – 2019 Final Results | 15
Slide 16: Quality Landbank
Quality Landbank HKDP Mainland DP Landbank* 3.3M s.f Landbank 3.5M s.m Luxury-focused Key Cities Beijing Suzhou Shanghai Beijing Shanghai Hangzhou Hong Kong Suzhou Hangzhou * Incl. IPs in HK Overview | Recurrent Income | Asset Turns | Financial Management The Wharf (Holdings) Limited – 2019 Final Re
Slide 17: New Land Sites
New Land Sites Kai Tak Site Hangzhou Project (雍景山) Acquisition Date Nov 2019 Acquisition Date Dec 2019 Site Location Kai Tak Runway Tip Site Location Fuyang District Villas, Townhouses, Product Type Luxury Residential Product Type Duplexes & Apartments Total GFA 1.2M s.f Total GFA 328,000 s.m Wharf’
Slide 18: HKDP – Mount Nicholson
HKDP – Mount Nicholson 2019 Sales • Resilient Luxury Residential Market 4 Houses 3 Apartments • Contracted Sales $4.2B (Gross Basis) $92,000 psf $104,000 psf • Attributable Profit Booked in 2019 $0.6B (Average) (Average) • 4 Houses/ Apts. to be Recognized in 2020 Total Contracted Sales $4.2B (Gross
Slide 19: Mainland DP – Exceeding Target
Mainland DP – Exceeding Target 2019 Contracted Sales • Solid Underlying Market Demand Sales RMB19.9B -13% • 67% of Total Sales GFA 0.6M s.m -18% – 10 Projects ASP RMB33,200 psm +6% – 4 Cities (Hangzhou, Beijing, Shanghai & Suzhou) 2020 Sales Target • Profitability Challenged by Pricing Control 2020
Slide 20: Mainland DP – Margin-oriented
Mainland DP – Margin-oriented 2019 Operating Matrix Revenue $14,806M -33% • Profitability Warped by Price Control Operating Profit $4,927M -38% • Net Order Book RMB27.4B or 0.9M s.m Operating Margin 33% -3 ppts • 2020 Target Completion 1.2M s.m Completed GFA 0.4M s.m -53% Recognized GFA 0.4M s.m -49
Slide 21: Agenda: Financial Management
Agenda Overview Recurrent Income Asset Turns Financial Management The Wharf (Holdings) Limited – 2019 Final Results | 21
Slide 22: Prudent Financial Management
Prudent Financial Management Debt Maturity (HKD billion) (As at 31 Dec 2019) • Net Debt: $19.0B 2020 10.6 • Gearing: 13.0% 2021 8.5 • Average Interest Cost: 3.6% 2022 4.0 • Interest Cover: 5.1x 2023 12.7 • Floating Rate Debt: 80% 2024 8.2 2025 & After 2.3 Total: $46.3B Overview | Recurrent Income |
Slide 23: Agenda: Outlook
Agenda Outlook The Wharf (Holdings) Limited – 2019 Final Results | 23
Slide 24: Outlook
Outlook Macro Headwinds 1Q20 Consigned to a Washout* • Pre-occupied with Virus Outbreak • Retail: Material Rent Relief & Marketing Aid • High Sino-US Tensions • Hotel: Revenues <5% of Same Time 2019 • Global Economy is Nervous • DP: Construction & Sales Ground to a Halt • Would not Look for Stabiliz
Slide 25: Agenda: Coming Attractions
Agenda Coming Attractions The Wharf (Holdings) Limited – 2019 Final Results | 25
Slide 26: Coming Attractions
Coming Attractions HK Property Kowloon Tong & Kai Tak Land Sites Hotel Niccolo Suzhou Mainland DP 3 Upcoming Projects for Sale Mainland IP CDIFS & CSIFS Remain Bright Spots Logistics HK Seaport Alliance Efficiency Gain to Reveal The Wharf (Holdings) Limited – 2019 Final Results | 26
Slide 27: Agenda: Sustainability
Agenda Sustainability The Wharf (Holdings) Limited – 2019 Final Results | 27
Slide 28: 2019 Key Achievements
2019 Key Achievements • Published standalone Sustainability Report in • Hang Seng Corporate Sustainability Index accordance with the core option of GRI Series Member 2019-2020 Standards • Accredited Hong Kong Quality Assurance • Has raised its first Green Loan Facility in the Agency’s CSR Index Plus
Slide 29: Green Building Design
Green Building Design • Incorporated green features and used locally sourced materials in property design • Consider energy efficiency, indoor air quality, emissions reduction and the like • LEED Platinum – Changsha IFS, Chengdu IFS LEED Gold – Shanghai Wheelock Square, Wuxi IFS The Wharf (Holdings)
Slide 30: Project WeCan
Project WeCan • Launched in 2011, to provide secondary school students who are disadvantaged in learning with opportunities and care • To date, the no. of partner schools reached 76, over 70,000 students benefitted • Our Business Units are now partnering 5 WeCan schools to provide support. The Wharf
Slide 31: Agenda: Appendix
Agenda Appendix The Wharf (Holdings) Limited – 2019 Final Results | 31
Slide 32: Summary of HK Properties
Summary of HK Properties Portfolio Usage Status Locations Attributable GFA (s.f.) 1. Peak Portfolio Residential Sales Mount Nicholson (50%-JV) 42,000 Lease Chelsea Court 43,000 Strawberry Hill 13,000 Redevelopment 1 Plantation Road 91,000 11 Plantation Road 46,300 77 Peak Road 42,200 Sub-total 277,5
Slide 33: Mainland Contracted Sales Breakdown by City
Mainland Contracted Sales Breakdown by City Region City Contracted Sales (%) GFA Sold (%) Eastern China Shanghai 11% 3% Suzhou 31% 35% Wuxi 1% 2% Ningbo 0% 0% Hangzhou 26% 26% Eastern China Sub-Total: 69% 66% Western China Chengdu 3% 8% Chongqing 3% 5% Western China Sub-Total 6% 13% Southern China F
Slide 34: Projects Launched in 2019
11 Projects Launched in 2019 Attributable Proceeds Attributable GFA Average Price Projects City New Launch (RMB M) sold (s.m) (RMB psm) Central Manor Guangzhou Mar 124 2,700 46,600 Jinshanlu Site Suzhou Apr 925 19,700 47,000 Guiyu Chaoyang Hangzhou May 2,269 72,800 29,800 Yangcheng Lake (Site 27) Su
Slide 35: Mainland Key Projects on Sales in 2019
Mainland Key Projects on Sales in 2019 Attributable Attributable Average Price Projects City Proceeds Ownership GFA sold (s.m) (RMB psm) (RMB M) West Manor Beijing 2,624 36,200 72,500 80% Guiyu Chaoyang Hangzhou 2,269 72,800 29,800 50% Xingtang Street East Suzhou 1,339 37,500 35,700 30% Villa One Su
Slide 36: Mainland DP – 2019 New Land Acquisition
Mainland DP – 2019 New Land Acquisition City Date Attributable GFA (s.m) Attributable Consideration Ownership Suzhou Jan 23,700 RMB0.65B 30% Hangzhou Dec 328,000 HK$1.36B 100% The Wharf (Holdings) Limited – 2019 Final Results | 36
Slide 37: Mainland DP Land Bank Breakdown by City
Mainland DP Land Bank Breakdown by City Region City GFA million (s.m) % Total Eastern China Shanghai 0.1 3% Suzhou 0.8 23% Wuxi 0.0 0% Hangzhou 0.6 17% Eastern China Sub-Total: 1.5 43% Western China Chengdu 0.9 26% Chongqing 0.2 6% Western China Sub-Total: 1.1 32% Southern China Foshan & Guangzhou 0
Slide 38: Mainland Key Properties Completion
Mainland Key Properties Completion Projects Key Completion in 2019 Attributable GFA (s.m) Chongqing The Thorne 101,400 Wuxi River Pitti 82,400 Hangzhou Junting 68,100 Foshan Rosy Mansion 40,600 Foshan Glory Garden 30,800 Hangzhou The Osmanthus Grace 25,400 Projected Key Completion in 2020 Suzhou Yan
Slide 39: Mainland China New Projects for Sales in 2020
Mainland China New Projects for Sales in 2020 Projects City Ownership Wuzhong Lot #24 Suzhou 100% Imperial Park Hangzhou 100% Parc Royale (Qinglong Site 84) Hangzhou 100% The Wharf (Holdings) Limited – 2019 Final Results | 39
Slide 40: Mainland IP – Different Series
Mainland IP – Different Series Times Square IFS & Times Outlets Total GFA * Year of Total GFA * Year of Property Project Nature Property Project Nature (s.m.) Completion (s.m.) Completion Times Square Mixed-use IFS Complexes Chongqing ** O/R 55,000 2004 Chengdu R/O/S.A/ H 603,000 2013-2016 Dalian**
Slide 41: Commercial Properties Pipeline
Commercial Properties Pipeline Commercial Properties Completion Schedule (’000 s.m) 3.4x Changsha IFS 987 905 Wuxi IFS 251 251 251 249 Chongqing IFS* 427 541 541 439 214 214 186 186 Chengdu IFS 752 752 752 752 604 687 362 Other China Commercial Prop. 486 486 486 558 558 558 558 Total Development Are
Slide 42: Overview of Application of Funds
Overview of Application of Funds Major Capital & Development Expenditure 2019 2020 HKD (Actual) (Projected) Hong Kong Properties 5.4B 1.5B Mainland China IP 0.1B 0.2B Mainland China DP 8.8B 9.5B Others 0.1B 3.0B Total 14.4B 14.2B The Wharf (Holdings) Limited – 2019 Final Results | 42
Slide 43: Thank You
On Plan in 2019 but Virus in 2020 Thank You The Wharf (Holdings) Limited – 2019 Final Results | 43
Slide 44: End of Presentation
End of Presentation The Wharf (Holdings) Limited [HKEx Stock Code: 0004.HK] Disclaimer 1) All information and data are provided for information purposes only. All opinions included herein constitute Wharf’s judgment as of the date hereof and are subject to change without notice. The Group, its subsi