Csi Properties Limited · HKEX:497
Csi Properties — FY2020 Earnings Presentation
60 slides from Csi Properties's earnings presentation, June 2020
Slide 1: Annual Results FY 2020
Strictly confidential FY 2019 Final Results Presentation Jun 2019 Investor Presentation Annual Results FY 2020 June 2020 Sep 2017
Slide 2: Disclaimer
DISCLAIMER The information contained in this presentation is provided by CSI Properties Limited (the "Company") based on information available to it and does not constitute a recommendation regarding the securities of the Company and or its subsidiaries The information contained in this presentation
Slide 3: Table of Contents
TABLE OF CONTENTS Section 1 FY2020 Financial Highlights 3 Section 2 Key Strategies Highlights 16 Appendix 1 Prime Property Portfolio Review 24 Appendix 2 Investment Highlights 45 2
Slide 4: Section 1 FY2020 Financial Highlights
Section 1 FY2020 Financial Highlights
Slide 5: FY 2020 Sales Highlights
Key themes FY 2020 Sales Highlights CSI recorded around HK$5.2 billion of sales (incl. JV/ Associates) this past fiscal year For the year ended 31 March 2020 % HK$'000 Group level Hong Kong residential properties 885,408 Hong Kong commercial properties 2,612,622 Sub-total 3,498,030 Joint Ventures an
Slide 6: FY 2020 and FY21 YTD key disposals
1 Strong recurrent income anchoring EBITDA FY 2020 and FY 2021 YTD key disposals CSI has recognized a few key disposals within FY2020 to ensure good profitability Date completed Projects sold and booked FY2020 Location Sep 2019 Nos. 21-27 Ashley Road redevelopment site Tsim Sha Tsui Aug 2019 – Mar 2
Slide 7: FY 2020 key acquisition
1 Strong recurring income to Anchor EBITDA FY 2020 key acquisition CSI has acquired site Nos. 92, 94&96 Wellington Street in Central for c.HK$666m 92, 94 & 96 Wellington Street, Central • The Group acquired 100% interest in the site during the first half of fiscal year 2020 • The current plan is to
Slide 8: FY 2020 results highlights
Prime Hong Kong properties focused strategy 2 FY 2020 results highlights (Period ended 31st March) FY2020 FY2019 % change (HK$m) (A) (B) (A/B-1) Gross revenue from property business 3,710 3,439 8% Property sale 3,498 3,137 Rental income 212 302 Gross profit 1,497 1,065 41% Profit from property JV/as
Slide 9: FY 2020 results highlights (contd.)
Visible disposal pipeline to further drive EBITDA – 3 annual target to sell c.HK$5-6 billion+ of prime assets FY 2020 results highlights (contd.) Strong balance sheet and liquidity to ensure financial stability FY 2020 FY 2019 (HK$m) 31st Mar 2020 31st Mar 2019 Properties & related assets 21,546 21,
Slide 10: Pro-forma Balance Sheet adjusted for market valuation
Pro-forma Balance Sheet adjusted for market valuation as at 31 Mar 2020 Properties valued at historical cost basis on book with no revaluation surplus. Even after revaluation adjustment, it still represents significant value in terms of a significant discount to pro forma adjusted NAV of HK$1.98 per
Slide 11: FY 2020 key credit metrics
FY 2020 key credit metrics FY 2020 FY 2019 FY 2018 Key credit metrics (HK$m) (HK$m) (HK$m) EBITDA1 / interest expenses2 6.3x 2.9x 4.2x Net debt / total assets (net gearing ratio) 31.6% 34.1% 29.9% Net debt / adjusted total assets3 25.5% 25.6% 23.3% Net debt plus commitment to JVs /adjusted total ass
Slide 12: Consistent profitability and growth
Consistent profitability and growth FY 2019 margins have been affected by a few sizeable and more immediate turnaround transactions Revenue Gross profit and gross profit margin 3,969 4,000 3,710 2,000 50% 307 3,439 40% 212 302 32% 40% 3,000 1,500 31% (HKDm) (HKDm) 1,868 22% 30% 2,000 3,662 1,000 281
Slide 13: FY 2020 credit highlights
FY 2020 credit highlights Debt / EBITDA1 EBITDA1 / net interest expense2 and cash3 / short-term debt 12 14 *FY19 cash+ securities / short term debt is 1.63x 9.7x 6.3x 10 12 8.5x 7.7x 10 8 7.0x 5.8x 8 (x) (x) 6 4.7x 5.0x 3.8x 5.7x 6 4.2x 4 4 3.0x 1.7x 1.9x 2 2 0.7x 2.13x 0 0 Total debt / EBITDA Net d
Slide 14: FY 2020 and FY 2021 asset sales
FY 2020 Asset Totaling c. HK$5.2 billion (SOLD) COO Residence in Tuen Mun – Residential 204 units sold No.2-4 Shelley Street (Redevelopment) – top 13 office floors sold No.38 Wai Yip Street Office Tower in Kowloon Bay (30% stake) – c.54% sold Remaining 42 villas and 96 additional apartments at Queen
Slide 15: Well managed balance sheet with prudent gearing
Well managed balance sheet to grow asset portfolio with prudent gearing Diversified funding sources and well managed bank borrowing • The Group maintained a conservative approach to its bank borrowings with well balanced and staggered maturities • Bank loans are mostly project loans (land plus const
Slide 16: Conservative capital structure backed by prudent financial policies
Conservative capital structure backed by prudent financial policies • Prudent funding and treasury policy with regard to overall business operations Prudent funding and treasury policy • Majority HIBOR-based and effective interest rate ranges from 1.21% to 4.9% for the Group's bank borrowings as at
Slide 17: Portfolio of prime properties in premier locations
Portfolio of prime properties in premier locations (as at 31 Mar 2020) Commercial properties Gross area Market Book 1 1, 2 1 sq.ft. (000s) value value (approx) (HK$m) (HK$m) G/F, 51 carparks of Capital Centre (formerly known as AXA Centre) Wan Chai 17 743 150 Novotel Hotel, No. 348 Nathan Road Jorda
Slide 18: Section 2 Key Strategies Highlights
Section 2 Key Strategies Highlights
Slide 19: Management Strategy Highlights
Management Strategy Highlights 1 Build Strong Recurring Income to Anchor EBITDA 2 Construct High Quality Real Estate Portfolio 3 Manage Disposal Pipeline to Recycle Capital & Crystalise Profit 5 4 Maintain Prudent Financing for Strong Asset Coverage & Liquidity 18
Slide 20: Recurring Income to Anchor EBITDA
1 1. Recurring Income to Anchor EBITDA Rental Income 1 • Current Hong Kong & PRC investment portfolio has generated steady recurring income stream to anchor 400 EBITDA 2 • Commercial rental will further benefit from repositioning of 2 office buildings in Hong Kong (Harbourside HQ and Everest 307 302
Slide 21: High Quality Commercial Portfolio – Central
Visible disposal pipeline to further drive EBITDA – 3 annual target to sell c.HK$5-6 billion+ of prime assets 2 High Quality Commercial Portfolio Core Central 92-96 Wellington St 46-48 Cochrane St c.43k sqft GFA c.32k sqft GFA Comm’l Development Comm’l Development PMQ MTR SoHo Station Tai Kwun Herit
Slide 22: High Quality Commercial Portfolio
2 High Quality Commercial Portfolio • Continued focus on originating & executing value-added & development opportunities in prime locations in top cities • Hong Kong —— Core Central; Core Kowloon (TST/Jordan) and Kowloon East 46-48 Cochrane Harbourside HQ Street , Central Kowloon East c. 32K sqft Ev
Slide 23: High Quality Residential Portfolio
2 High Quality Residential Portfolio • Build brands & market recognition with goal to do more mass market residential projects over time • Hong Kong —— High-end Luxury; Designer Mass-market Dukes Place in Jardine Lookout Luxury units on Peak Road Single House on Barker Road Villa collections on Fan
Slide 24: Disposition Pipeline to Recycle Capital & Crystalize Profit
3 Disposition Pipeline to Recycle Capital & Crystalize Profit • Management prioritizes annual asset sales to recycle capital & crystalize profit • Strict and prudent principle of selling assets first before making new acquisitions • Realized sales in FY 2020: • 2-4 Shelley Street, office-commercial
Slide 25: Prudent Financing with Strong Asset Coverage & Liquidity
4 Prudent Financing with Strong Asset Coverage & Liquidity As of 31 March 2020 Total Debt + Perpetual Notes Cash + Real Estate Assets at Market Value HK$ M 45,000 41,149 40,000 5,0181 35,000 30,000 12,023 HK$ M 25,000 20,000 25,000 20,217 20,000 1,539 15,000 1,924 24,108 15,000 10,000 9,328 10,000 2
Slide 26: Appendix 1 Prime Property Portfolio Review
Appendix 1 Prime Property Portfolio Review
Slide 27: Commercial properties highlights
Commercial properties highlights Key prime commercial assets in Hong Kong and Shanghai helps to anchor the Group’s rental income annually Novotel Hotel – Jordan Everest Building – Jordan Richgate Plaza – Shanghai The Harbourside HQ (previously OCTA Tower) – Kowloon Bay In Point – Shanghai
Slide 28: Central properties highlights
Central properties highlights Prime commercial assets under management in Central at GFA of 400,000+ sq.ft., anchoring Group’s future profit pipeline 92-96 Wellington St. Gage St./ Graham St. Commercial redevelopment site with GFA of • Commercial redevelopment site from URA c.43K sq.ft. tender with
Slide 29: Central properties highlights – Gage St./Graham St. (50% JV)
Central properties highlights – Gage St./ Graham St. (50% JV) URA Tender won for Gage Street and Graham Street site marks a new landmark for the Group • The Group won the tender for Site C of the Peel The Center Street/Graham Street project from the Urban Renewal Authority (“URA”), and our first URA
Slide 30: Central properties highlights – Oriental Crystal Commercial Building
Central properties highlights – Oriental Crystal Commercial Building No. 46 Lynhurst Terrace • The Group was originally acquired with 18 office floors, 2 ground floor shops and rooftop of this office building in Central/SOHO for a consideration of c. HK$700 million for GFA of around 43,000 sq.ft. •
Slide 31: Central properties highlights – SOHO Central
Central properties highlights – SOHO Central 2-4 Shelley Street, Central (Sale in Progress) • Situated in Central’s Soho area, this chic yet contemporary commercial tower has total GFA of over 40,000 sq.ft. (CSI - 100%) • Nestled in the heart of a bustling commercial zone along the famous Mid-Levels
Slide 32: Novotel Hotel Kowloon
Novotel Hotel Kowloon Novotel Hotel Jordan MTR Eaton • 4-star international branded hotel with commercial podium in Express Hotel prime Nathan Road Rail Link • 5-min travelling distance from future Express Rail Link terminus • 389 hotel rooms and prime shopping space in prime Jordan • Consolidated 1
Slide 33: CSI's Major Commercial Property Pipeline – Kowloon East
CSI’s Major Commercial Property Pipeline – Kowloon East 38 Wai Yip Street Office Tower The Harbourside HQ (previously OCTA Tower) • JV with Sino Land and Billion Development, the two • Bought the whole office tower with 3 other JV partners via a big landlords in Kowloon Bay CBD2 (CSI - 30%) at conso
Slide 34: Everest Building
Everest Building Prime commercial/ retail building at the heart of Jordan Everest Building (Grade B office/retail repositioning) • The Group purchased a prime commercial./ retail building at the heart of Jordan at a total cost of c. HK$1.9bn in May 2018 • The property is located at No. 241 and 243 N
Slide 35: Yuen Long Industrial Building Revitalization
Yuen Long Industrial Building Revitalization Yuen Long Industrial Building (Mixed Commercial Use Conversion) • CSI, together with another 50% JV partner, spent HK$1,037 million in late 2017 to acquire this industrial building with GFA of 388K sq. ft. for revitalization • Existing rent well below mar
Slide 36: In-Point Shopping Mall – Jing'an, Shanghai
In-Point Shopping Mall – Premium Retail Project in Jing’an, Shanghai Taikoo Hui Swire-HKRI Dazhongli Project In-Point Shopping Mall • Popular shopping mall located in the heart of Shanghai • GFA of 122,000 sq.ft. now after refurbishment with current market value at approximately HK$1,952 million • N
Slide 37: Richgate Plaza – Premium Retail Project in XinTianDi, Shanghai
Richgate Plaza – Premium Retail Project in XinTianDi, Shanghai Richgate Plaza • The Group purchased a retail shopping mall named Richgate Plaza in prime Xintiandi area for a original total consideration of RMB 1.37 billion with total GFA of 122k sqft in 2017 • Currently with mid-end tenants includin
Slide 38: Dukes Place
Dukes Place WORLD CLASS LUXURY APARTMENTS IN JARDINE’S LOOKOUT • Dukes Place is our world-class trophy landmark apartment project at the Jardine’s Lookout - a quiet ultra high net-worth neighborhood • Dukes Place offers 16 spacious apartments with multiple layouts, with saleable area ranging from ap
Slide 39: Nos. 8-12 Peak Road Project
Nos. 8-12 Peak Road Project Precious Residential Development with Victoria Harbour seaview • Acquired over 60% interest in this old residential building in Peak Road Project Oct 2015 at HK$1.8 billion • 18 apartments and one house with total saleable area Interocean Court OPUS Hong Kong of approxima
Slide 40: COO Residence
COO Residence – (All residential units sold) Luxurious High-Rise in Tuen Mun • Located at Tuen Mun Yan Ching Street, adjacent to V city and the Traditional Tuen Mun Town Centre being the very heart of the city. • Presale started in early Sep 2017 and all of the 204 units presold for a total of appro
Slide 41: Residential site at Yau Tong
Residential site at Yau Tong • The Group acquired with its JV partner Sino Land (80% partner) through MTR tender in May 2018 a residential site at Yau Tong at the total consideration of approximately HK$2.6bn. + • The property is located near the Yau Tong MTR station and can be developed into a sale
Slide 42: Queen's Gate
Queen’s Gate – The Finest Expression of British Elegance • A luxurious villa district in Dahongqiao area, Shanghai named as Queen’s Gate and only 15 minutes driving distance from the new Hong Qiao International Airport • Developed into 224 luxurious villas with additional 96 apartment units • Majori
Slide 43: Beijing Legendale
Beijing Legendale – Luxurious Residential Renovation project in Beijing • The Group purchased in 2016 with a joint venture partner • 114 units and 124 car parking spaces totalling around 396k sqft. at Beijing Legendale, a luxury residential project at JinBao Street. • Surrounding area is one of the
Slide 44: Barker Road Project
• Acquired the heritage site at 45 Barker Road in 2011 Barker Road Project – • A rare address at Barker Road - the ultra premier residential area at the Peak Precious Single Lot House Site • The newly build house will blend in with its historical façade when on the Peak completed 43 • Estimated mark
Slide 45: Fan Kam Road Project
Fan Kam Road Project – Luxurious Manor Site in Kwu Tung South • The site at Lot No. 1909 Fan Kam Road was acquired by CSI Properties in 2015 and is a very rare manor site next to the Hong Kong Golf Club and Beas River Country Club of The Hong Kong Jockey Club. • Other than being adjacent to renowned
Slide 46: Maryknoll Missionary House – Project in Stanley
Maryknoll Missionary House – Project in Stanley • The Group acquired via a 50-50 JV the Maryknoll House in Stanley for a consideration of c. HK$780 million for the site of around 82,300 sq.ft. • The site is located adjacent to Stanley Knoll, a high end residential area in Stanley with stunning seavi
Slide 47: Appendix 2 Investment Highlights
Appendix 2 Investment Highlights
Slide 48: Why invest in CSI properties
Why invest in CSI properties Leading HK-based Mid-Cap Property Investor and Developer 16 Years of Operation Since 2004 US$4Bn+ AUM Generated Average IRR of ~25% c.100 by Applying the Proven Strategy Real Estate Professionals Applied Proven Strategy of “Buy-Fix-Sell” to a Portfolio of ~3MM sq.ft. Pri
Slide 49: Corporate history and key milestone
2020 Net Assets Corporate history and key milestone Over 20 prime commercial and residential projects in Hong Kong and Shanghai (100 million HKD) • Total staff of over 220 people 2016 • The group has • Net asset over HK$12.0 billion successfully issued 250 million USD new bond 2015 in August 2016 12
Slide 50: Our business model
1 Strong recurrent income anchoring EBITDA Our business model Since the inception at 2004, CSI has evolved from an asset trading focused property company to becoming a solid, mid-cap full service real estate investor / developer with 5 major lines of business Commercial properties Couture Homes Comm
Slide 51: Proven track record in profit
Proven track record in profit Proven profitability for our properties with all cash profit only and no revaluation gain with stable profitability Net profit1 4,000 3,000 FY14: 815 FY17: 1,347 FY20: 1,156 (HK$m) FY13: 903 2,000 FY19: 530 FY11: 858 FY16: 1,645 1,000 FY12: 1,754 FY18: 1,010 FY10: 546 F
Slide 52: Proven track record in dividend
Prime Hong Kong properties focused strategy 2 Proven track record in dividend Steady dividend policy at c. 12-15% of net profit Dividend payout 250 HK$115m share buyback 204.0 198.0 200 162.6 150 140.0 131.0 (HK$m) HK$100m HK$99m 106.0 share share buyback buyback 100 82.3 70.6 66.1 50 40.8 15.8 0 Ma
Slide 53: Successful new perpetual capital securities issue
Visible disposal pipeline to further drive EBITDA – 3 annual target to sell c.HK$5-6 billion+ of prime assets Successful new perpetual capital securities issue in 2017 reaffirms debt market as a solid financing avenue • The Group successfully completed the inaugural perpetual capital securities issu
Slide 54: Proven investment and capital recycling track record
Proven investment and capital recycling track record of delivering attractive IRR’s Selected projects and returns Months of Projects holding Cost (HK$m) Selling price (HK$m) IRR (%) 23% 288 234 B/F Ginza Plaza, Macau 3 171 47% 496 11/F – 23/F Henan Building, Wanchai 13 338 70 821 25% 1,029 Nos. 703-
Slide 55: Highly experienced and disciplined management team
Highly experienced and disciplined management team Group senior management • Acquired control in CSI in 2004 as a platform to expand his property investment business • Currently a non-executive director of HKT Limited, HKT Management Limited and HKC (Holdings) Limited and was previously a non-execut
Slide 56: Highly experienced and disciplined management team
Highly experienced and disciplined management team Commercial Property • Joined CSI in 2019 as Managing Director for its commercial property division. • Over 25 years of experience in finance and real estate investments in Asia and the U.S., including leadership roles in Lehman Brothers and Nomura I
Slide 57: Highly experienced and disciplined management team
Highly experienced and disciplined management team Couture Homes ("CH") • Joined CSI in 2011, prior to which he worked as the Director of Savills Hong Kong Limited Execution Director of CSI and Jimmy Fong Managing Director of Sales and • Over 20 years of experience in luxury residential property dev
Slide 58: Strong management team with accolades
Well managed balance sheet to grow asset portfolio with prudent gearing Strong management team with accolades • Chairman Chung was nominated as one of the “Asia’s Business Leaders” by CNBC Asia in 2014 • The Group was also awarded the “Best Mid–cap Company in Hong Kong” for 2018 and “Best Small–cap
Slide 59: Long term sponsorship from the Chairman and institutional register
Long term sponsorship from the Chairman and an institutional investor focused equity register Current shareholding overview1 • Strong commitment of Chairman and controlling shareholder indicating confidence in the future growth prospect of CSI Others 30.3% • Mr. Mico Chung's ownership interest in Co
Slide 60: Q&A
Q&A 20132018 & 2014 Best HK Mid-Cap Company