Swire Properties Limited · HKEX:1972
Swire Properties — H1 2019 Earnings Presentation
51 slides from Swire Properties's earnings presentation, Aug 8, 2019
Slide 1: 2019 Interim Results | Analyst Briefing
One Taikoo Place 2019 INTERIM RESULTS | ANALYST BRIEFING ----- 8TH AUGUST 2019
Slide 2: Disclaimer
DISCLAIMER ----- This presentation has been prepared by Swire Properties Limited (“the “Company”, and together with its subsidiaries, the “Group”) solely for information purposes and certain information has not been independently verified. No representation or warranty, express or implied, is made a
Slide 3: Agenda
AGENDA ----- 1. Results Highlights Guy Bradley, 2. Investment Portfolio Chief Executive 3. Trading Portfolio Fanny Lung, 4. Hotel Portfolio Finance Director 5. Financial Highlights 6. Financing 7. Prospects 8. Q&A 3
Slide 4: 2019 Interim Results Highlights
2019 INTERIM RESULTS HIGHLIGHTS ----- ▪ Active capital recycling efforts boosted underlying profit growth and balance sheet strength. ▪ Solid rental income growth supporting sustainable 199% dividends. y-y 7% ▪ Well-positioned for opportunities with a historical- y-y 2% low gearing since listing. Un
Slide 5: Key Developments
KEY DEVELOPMENTS ----- MAJOR DISPOSALS NEW PROJECTS One Taikoo Place Taikoo Li Qiantan : Artist Impression EDEN Artist Impression Artist Impression Taikoo Place CITYPLAZA THREE/ 625 KING’S ROAD EDEN RESIDENTIAL SUSTAINABILITY- CITYPLAZA FOUR (1) OFFICE BUILDING PROJECT IN JAKARTA LINKED LOAN Sale fo
Slide 6: Project Pipeline with an Enhanced Mix
PROJECT PIPELINE WITH AN ENHANCED MIX ----- Continue to look for new investment opportunities. 2019 2020 2021 2022 2023 & After (5) Citygate Outlets’ new Taikoo Li Sanlitun West Two Taikoo Place (1) 21-31 Wing Fung Street 46-56 Queen’s Road East, extension 1A-11 Landale Street and (formerly known as
Slide 7: Investment Portfolio
INVESTMENT PORTFOLIO DE@ SwikE PROPERTIES
Slide 8: Hong Kong Office
HONG KONG OFFICE A BALANCED AND RESILIENT PORTFOLIO ----- Pacific Place Taikoo Place Office Towers One Island East & 2.2 M sq ft GFA 3.1 M sq ft GFA One Taikoo Place 2.6 M sq ft GFA Rental Reversion (1) Occupancy Rental Reversion (1) Occupancy Rental Reversion(1)(3) Occupancy + 19% 99% + 13% 99% + 1
Slide 9: Hong Kong Retail
HONG KONG RETAIL HIGHER RENTAL INCOME IN THE FIRST HALF OF 2019 ----- The Mall, Pacific Place 0.7 M sq ft GFA Cityplaza 1.1 M sq ft GFA Citygate Outlets (2) 0.5 M sq ft GFA Retail sales Occupancy Retail sales Occupancy Retail sales Occupancy (1) - 4.2% 100% + 0.1% 100% + 0.1% 99% ▪ The Mall, Pacific
Slide 10: Hong Kong Portfolio: Leases Expiring in 2019 Mostly Committed
HONG KONG PORTFOLIO LEASES EXPIRING IN 2019 MOSTLY COMMITTED ----- Lease Expiry Profile (1)(2) HK Portfolio Tenant Mix (3) (2) HK Office ▪ Strong and diverse tenant base. ▪ Well-balanced lease expiry profile. ▪ Top 10 office tenants occupied approx. 21% of office area in HK. HK Retail ▪ Top 10 retai
Slide 11: Citygate Outlets
CITYGATE OUTLETS RETAIL SPACE TO ALMOST DOUBLE ----- ~800,000 sq ft GFA upon opening of new extension. ▪ 98% leased for new extension, shops to open progressively from August 2019. ▪ 150 international brands , over 30 F&B outlets altogether with existing phase. ▪ New Retail Tenants: ▪ Versace, Ermen
Slide 12: Hong Kong Project Pipeline
HONG KONG PROJECT PIPELINE CONTINUING SCALE-UP OF EXISTING CLUSTERS ----- TUNG CHUNG QUARRY BAY WANCHAI Wah Ha Factory Building 46-56 Queen’s Road East, 1A- and Zung Fu Industrial 11 Landale Street, 2A-12 Building (1) Anton Street ~779,000 sq ft GFA ~218,000 sq ft GFA ▪ Compulsory sale applications
Slide 13: Hong Kong Portfolio: A Healthy Project Pipeline
HONG KONG PORTFOLIO A HEALTHY PROJECT PIPELINE ----- Expected Attributable GFA of Completed Property Portfolio in Hong Kong (1)(2) Other GFA +9% (‘000 sq ft) ▪ Wah Ha Factory Building and Zung Fu 14,439 Industrial Building 14,217 14,221 – Compulsory sale applications 13,276 13,217 13,217 submitted i
Slide 14: Mainland China Portfolio
MAINLAND CHINA PORTFOLIO RENTAL GROWTH REMAINING STRONG ----- Attributable Gross Rental Income (1) Attributable gross rental HK$M 3,958 income from Mainland More than China contributed 29% of doubled since 2013 3,311 the Group’s total in 1H 2019. 2,614 2,463 2,153 2,147 14% 1,751 8% PRC Attributable
Slide 15: Mainland China Portfolio
MAINLAND CHINA PORTFOLIO (1) ROBUST RETAIL SALES GROWTH DESPITE A HIGHER BASE ----- Beijing Shanghai Guangzhou & Chengdu –––Li Sanlitun ▪Taikoo HKRI Taikoo Hui Taikoo Hui Retail Sales Occupancy Retail Sales Occupancy Retail Sales Occupancy + 9.0% 100% Retail + 66.8% 98% 99% Retail Office + 14.6% 100
Slide 16: Mainland China Project Pipeline
MAINLAND CHINA PROJECT PIPELINE SIXTH PROJECT UNDER DEVELOPMENT Attributable GFA of PRC Completed ----- Shanghai Beijing ~296,000 sq ft GFA Property Portfolio (1)(2) GFA (‘000 sq ft) 9,726 8,847 9.7 M sq ft Expected Attri. Completed GFA (1) (Investment Props) Artist Impression 4% GFA(3) Artist ~1,25
Slide 17: Brickell City Centre, Miami
BRICKELL CITY CENTRE, MIAMI INCREASING RENTAL CONTRIBUTIONS ----- Shopping BCC, Mall Shopping Centre Offices ▪ ––– Retail sales Occupancy (1) Occupancy + 37.8% 90% 100% RETAIL TENANTS: OFFICE TENANTS: Saks Fifth Avenue, Apple, Zara, CMX The VIP Cinema, WeWork, Akerman, KPMG, McKinsey&Company, La Cen
Slide 18: Trading Portfolio
Photo to be updated Artist Impression South Jakarta Project TRADING PORTFOLIO ––– 18
Slide 19: Trading Portfolio
TRADING PORTFOLIO NEW PROJECTS ADDED IN SINGAPORE AND JAKARTA ----- Existing Upcoming in Singapore and Jakarta Upcoming in Hong Kong Reach EDEN, Singapore 21-31 Wing Fung Street Average Price Units Sold (1) ▪ First residential project in Singapore. ▪ 100% owned. ▪ 100% owned. ▪ Foundation works in p
Slide 20: Hotel Portfolio
The Opposite House HOTEL PORTFOLIO ––– 20
Slide 21: Hotel Portfolio: Improving Results
HOTEL PORTFOLIO IMPROVING RESULTS ----- ▪ Managed Hotels- Operating profit (before depreciation) : +18% to HK$ 122 M in 1H 2019. ▪ Non-managed Hotels- The Silveri Hong Kong – MGallery (1) (206 rooms and suites) at Tung Chung opening in late 2019. The Opposite House East Hong The Middle Kong House Th
Slide 22: Financial Highlights
Taikoo Hui FINANCIAL HIGHLIGHTS ––– 22
Slide 23: Strong Growth in Underlying Profit
STRONG GROWTH IN UNDERLYING PROFIT ––– Underlying Profit Movement in Underlying Profit HK$M 18,606 HK$M + 261 (20) + 76 Recurring 14,557 10,148 Underlying + 761 (1,055) Profit 7,834 + 12,070 6,219 2,487 18,606 3,732 4,049 6,219 2017 2018 1H 2018 1H 2019 Underlying Increase in Increase in Decrease in
Slide 24: Rental Income
RENTAL INCOME CONTINUED GROWTH FROM ALL SEGMENTS ----- ▪ HK Office + 5% Attributable Gross Rental Income(1) – Positive rental reversions and contribution from One Taikoo HK$M Place opened in September 2018. 13,849 12,639 – Partly offset by rental loss from disposals. ▪ HK Retail + 3% – Rental income
Slide 25: Sustainable Growth in Dividends
SUSTAINABLE GROWTH IN DIVIDENDS Dividend Policy Dividend Per Share HK$/sh To deliver sustainable growth in dividends and to pay out 2014-2018 CAGR 6% 0.84 approximately half of our underlying profits in ordinary dividend over time. 0.77 0.71 0.71 0.57 0.57 0.66 0.84 0.48 0.48 0.52 0.44 0.27 0.29 0.2
Slide 26: Movement in Investment Properties
MOVEMENT IN INVESTMENT PROPERTIES ----- Movement in Investment Properties (1) (excl. hotels and investment properties held under JVCs) HK$M 273,263 (180) + 717 (105) (1,039) + 3,837 276,493 The increase in the valuation of the investment property portfolio is mainly due to increases in the valuation
Slide 27: Financing
To be updated Taikoo Li Sanlitun FINANCING ––– 27
Slide 28: Net Debt and Gearing
NET DEBT AND GEARING ----- Net Debt Reconciliation (HK$M) June Financial Ratios (1) 2015 2016 2017 2018 2019 Net debt at 31st December 2018 (29,905) Total equity (HK$M) 217,949 227,225 259,378 281,291 286,714 Net rental and fee receipts 5,360 Proceeds from property trading / development 316 Net debt
Slide 29: Maturity Profile & Liquidity
MATURITY PROFILE & LIQUIDITY ----- Maturity Profile of Available Committed Facilities (at 30th June 2019) Total 40,295 1,252 7,047 6,550 11,808 700 1,100 1,940 4,604 1,390 3,904 HK$M Dec 2018 Jun 2019 Drawn 29,973 805 6,247 1,825 7,958 200 1,100 1,940 4,604 1,390 3,904 Cash 2,094 14,794 HK$M Undrawn
Slide 30: Capital Commitments
CAPITAL COMMITMENTS ----- Profile of Capital Commitments for Investment Properties and Hotels – at 30th June 2019 HK$M Expenditure Forecast Expenditure Commitments* Six months ended Six months ended 2020 2021 2022 & At 30th Jun 2019 30th Jun 2019 31st Dec 2019 later Hong Kong 1,023 1,323 3,928 2,783
Slide 31: Cash Flow from Disposals Mostly Received
CASH FLOW FROM DISPOSALS MOSTLY RECEIVED ----- Disposal Proceeds and Underlying Profit on Disposal Asset Disposal (HK$’bn) Disposal Proceeds Before 2019 1H 2019 2H 2019 Total Cityplaza Three & Cityplaza Four (1) 3.0 12.0 - 15.0 625 King’s Road Office Building (50% basis) - 0.2 2.2 2.4 Kowloon Bay Of
Slide 32: Prospects
One Taikoo Place PROSPECTS ––– 32
Slide 33: Prospects
PROSPECTS ----- HONG KONG ▪ With reduced demand for office space and relocations to other districts, more vacancies and downward pressure on office rents are expected in Central. Strong demand and high occupancy are expected to result in office rents at our Taikoo Place developments being resilient
Slide 34: Sustainable Development 2030 Strategy: 1H2019 Highlights
SUSTAINABLE DEVELOPMENT 2030 STRATEGY: 1H2019 HIGHLIGHTS Green Financing Diversity & Inclusion NGOs/Academics Climate Change Launched HK’s first Launched Staggered Working Extended partnership with Carbon Intensity sustainability-linked loan Hours, as part of the flexible Tsinghua University for ano
Slide 35: Q&A
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Slide 36: Appendix
APPENDIX DE@ SwikE PROPERTIES
Slide 37: Key Business Strategies
KEY BUSINESS STRATEGIES ----- ▪ Continue to create long-term value by conceiving, designing, developing, owning and managing transformational mixed-use and other projects in urban areas. ▪ Maximise the earnings and value of our completed properties through active asset management and by reinforcing
Slide 38: 2019 Interim Results Summary
2019 INTERIM RESULTS SUMMARY ----- HK$M 1H 2018 1H 2019 Change Revenue 7,309 7,510 3% Valuation gains on investment properties 15,535 3,837 75% Operating profit 21,309 9,725 54% Underlying profit 6,219 18,606 199% Recurring underlying profit 3,732 4,049 8% Reported profit 21,205 8,973 58
Slide 39: Revenue Analysis
REVENUE ANALYSIS ----- 1H 2019 Revenue Breakdown by Segment 1H 2019 Revenue Breakdown by Region The turnover increased by 3% principally due to higher rental income from investment properties, partially offset by lower revenue from the sale of 7,510 7,510 residential units. HK$M HK$M Comparison 1H 2
Slide 40: Property Portfolio at 30th June 2019
PROPERTY PORTFOLIO AT 30TH JUNE 2019 ----- Investment Props / Hotels Office Retail Hotels (1) Resid./Serviced apartments Under Planning Total Attributable Investment Props by Region (GFA M sq ft) Attributable GFA (M sq ft) Completed ––– ▪Hong Kong 9.3 2.5 0.8 0.6 - 13.2 U.S.A. 2.7 Mainland China 2.9
Slide 41: Completed Investment Portfolio
COMPLETED INVESTMENT PORTFOLIO ----- Expected Attributable GFA of Completed Investment Portfolio (incl. Hotels) (1)(2) GFA (‘000 sq ft) 23,211 23,318 24,197 25,197 25,201 25,419 26,863 Taikoo Li 46-56 Queen’s One Brickell Sanlitun West Road East, 1A-11 City Centre (4) Citygate Two Taikoo Outlets’new
Slide 42: Hong Kong Portfolio Map
HONG KONG PORTFOLIO MAP ----- East Residences 46-56 Queen’s Road East, 1A-11 Landale Street and 2A-12 Anton Street 42 (1) The simplified maps are not to scale and are for illustrative purpose only. (2) GFA figures are for reference only.
Slide 43: Completed PRC Portfolio – Beijing
COMPLETED PRC PORTFOLIO – BEIJING ----- Taikoo Li Sanlitun 1.47 M sq ft GFA(1) Project Summary (100% Basis) Components TKL Sanlitun South TKL Sanlitun North TKL Sanlitun West The Opposite House (TOH) Interest Retail : 100% TOH : 100% Yr of Opening 2008 (TKL South) 2008 (TOH) 2010 (TKL North) Expecte
Slide 44: Completed PRC Portfolio – Guangzhou and Chengdu
COMPLETED PRC PORTFOLIO – GUANGZHOU AND CHENGDU ----- Taikoo Hui, Guangzhou 3.84 M sq ft GFA Project Summary (100% Basis) Components Retail Taikoo Hui Towers 1&2 ▪ ––– Mandarin Oriental GZ Interest 97% Yr of Opening 2011 / 2012 / 2013 Retail Sales Occupancy + 14.6% 100% 99% Retail Office Sino-Ocean
Slide 45: Completed PRC Portfolio – Shanghai
COMPLETED PRC PORTFOLIO – SHANGHAI ----- HKRI Taikoo Hui 3.54 M sq ft GFA Project Summary (100% Basis) Components Retail HKRI Centre 1 & Centre 2 The Middle House and The Sukhothai Shanghai The Middle House Residences Interest 50% Yr of Opening 2016 / 2017 / 2018 Retail Sales Occupancy + 66.8% 98% 9
Slide 46: PRC Portfolio Retail Tenant Mix
PRC PORTFOLIO RETAIL TENANT MIX (1)T MIX ----- Well-balanced tenant mix. PRC Portfolio Retail Tenant Mix (2) PRC Retail Taikoo Li Sanlitun The Temple House Sino-Ocean Taikoo Li 46 (1) Based on the percentage of area at 30th June 2019.
Slide 47: U.S.A. Portfolio – Miami
U.S.A. PORTFOLIO – MIAMI ----- Brickell City Centre BCC: 1.30 M sq ft GFA OBCC: 1.97 M sq ft GFA Project Summary (100% Basis) Components Retail Two and Three Brickell City Centre EAST Miami (w Serv Apmt) 2 Condo Towers (Reach / Rise) One BCC and a Condo Tower (under planning) Interest Retail: 62.93%
Slide 48: Completed Trading Portfolio
COMPLETED TRADING PORTFOLIO ----- Trading Properties Total Units Actual Actual Handover Units for which Profit Recognised or Interest (At 29th July 2019) Units Sold Completion from Expected to be Recognised (Year) ▪ ––– Miami, Florida, U.S.A. 347(2016), 12(2017), 2(2018), Reach, Brickell City Centre
Slide 49: Hotel Portfolio
HOTEL PORTFOLIO ----- No. of No. of Managed Hotels Interest Owned but Non-managed Hotels Interest Rooms Rooms Completed (100% basis) Completed (100% basis) 2,138 Hong Kong The Upper House 117 100% Hong Kong Island Shangri-La HK 565 20% EAST, Hong Kong 345 100% JW Marriott Hotel HK 602 20% Headland H
Slide 50: Valuation of Completed Investment Properties
VALUATION OF COMPLETED INVESTMENT PROPERTIES ----- 2008 – June 2019 Valuation of Completed Investment Properties (excl. Hotels) HK$M 276,493 267,292 272,927 Valuation of investment 106% properties portfolio more than doubled since 2008 Consistent value creation through continuous property investment
Slide 51: © Swire Properties Limited
DI SwirRE PROPERTIES © Swire Properties Limited