Hongkong Land Holdings Limited · SGX:H78
Hongkong Land — FY2023 Earnings Presentation
60 slides from Hongkong Land's earnings presentation, Mar 8, 2024
Slide 1: 2023 Results Presentation
2023 Results Presentation 8 March 2024 1 Central Portfolio, Hong Kong
Slide 2: Agenda
Agenda Speakers Robert Wong, Chief Executive Craig Beattie, Chief Financial Officer 1. Key Updates & Results Highlights 2. Investment Properties 3. Development Properties 4. Progress Highlights 5. Financial Highlights 6. Sustainability 7. Corporate Initiatives 8. Outlook 9. Q&A 2 Central Portfolio,
Slide 3: Key Market Updates
Key Market Updates Sentiment across key markets impacted by macroeconomic challenges and subdued capital market activity HONG KONG CHINESE MAINLAND SINGAPORE Office Residential Office • Leasing momentum softened • Sentiment weak throughout the • CBD leasing momentum year moderated • HKL Central Port
Slide 4: Results Highlights
2023 Results US$734m US$32.0bn 966 • Underlying profit 776 • Shareholders’ funds 34.6 33.3 734 32.0 -5% YoY -4% YoY 2021 2022 2023 Dec 2021 Dec 2022 Dec 2023 Key Figures Highlights • Underlying EPS: US¢33.15 (2022: US¢34.44) • Underlying profit down 5% • (Loss) / profit1: US$(582)m (2022: US$203m) •
Slide 5: Investment Properties
Investment Properties 5 WF CENTRAL, Beijing
Slide 6: Hong Kong Portfolio - Office
Hong Kong Portfolio - Office Satisfactory performance despite challenging market Average Rents & Vacancy 2021 2022 2023 Average net rent 117 111 106 (HK$ psf/month) Period-end vacancy 5.2% 4.9% 7.4% Weighted average lease expiry 4.2 4.0 3.8 (years) Note: On a committed basis, vacancy at the end of D
Slide 7: Central Portfolio outperforms market; upcoming supply manageable
Central Portfolio outperforms market; upcoming supply manageable Since 2017 HKL Central Portfolio has outperformed broader market; by 2028, new space will represent 5% of total space in Central HKL Central Portfolio vacancy vs wider market Office space in 2028 12.8% HKL Central Portfolio (committed)
Slide 8: Hong Kong Portfolio - Retail
Hong Kong Portfolio - Retail Average Rents & Vacancy Strong post pandemic recovery 2021 2022 2023 Average net rent $190 $177 $203 (HK$ psf/month) Period-end vacancy 0.3% 0.5% 1.5% Weighted average lease expiry 1.8 1.8 1.6 (years) Tenant sales growth +35% -2% +40% (y-o-y) BESPOKE salon, Hong Kong Bas
Slide 9: Placemaking – Forty Five
Placemaking – Forty Five Multi-concept social destination housing five premium F&B concepts CRISTAL ROOM BY ANNE-SOPHIE PIC, FORTY-FIVE, Cardinal Point, FORTY-FIVE, LADNMARK LADNMARK GLOUCESTER TOWER GLOUCESTER TOWER THE MERCHANTS, FORTY-FIVE, KAEN TEPPANYAKI, FORTY-FIVE, Cardinal Point, FORTY-FIVE,
Slide 10: Singapore Portfolio - Office
Singapore Portfolio - Office Solid performance despite global headwinds Average Rents & Vacancy 2021 2022 2023 Average gross rent 10.3 10.6 10.9 (S$ psf/month) Period-end vacancy 6.5% 7.5% 1.9% Weighted average lease expiry 3.4 3.4 3.1 (years) Note: On a committed basis, vacancy at the end of Dec 20
Slide 11: Other Key Investment Properties
Other Key Investment Properties Good recovery in luxury retail sentiment on the Chinese mainland and Macau CHINESE MAINLAND MACAU Beijing – WF CENTRAL (84%-owned) ONE CENTRAL Macau (49%-owned) • 43,000 sq. m. NFA of retail space • 18,750 sq. m. NFA of retail space • Occupancy: 89% • Occupancy: 95% •
Slide 12: Development Properties
Development Properties 12 River and city, Nanjing
Slide 13: Chinese Mainland Portfolio – Overview
Chinese Mainland Portfolio – Overview 37 projects spread across seven cities; total attributable developable area 8.4 million sq. m. Century Land Dream Land CBD Z3 Project ▪ 15 projects CHONGQING ▪ Four projects WUHAN ▪ Two projects BEIJING ▪ Total GFA 7.5 million sq. m. ▪ 998,000 sq. m. (HKL’s shar
Slide 14: Chinese Mainland Portfolio
Chinese Mainland Portfolio Contracted sales increased 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 2,400 2,400 2,400 $2,031m 2,000 $1,873m 2,000 $2,087m $1,621m $1,530m 2,000 1,600 1,600 $1,300m 1,600 1,200 1,200 1
Slide 15: Singapore Portfolio – Overview
Singapore Portfolio – Overview IMAGE TO BE UPDATED TEMBUSU GRAND COPEN GRAND ▪ 50% JV with CDL ▪ 49% JV with CDL ▪ 639 units ▪ 638 units ▪ 68,000 sq. m. GFA ▪ 60,000 sq. m. GFA ▪ Completion: 2025 ▪ Completion: 2025 ▪ 100% pre-sold ▪ 59% pre-sold PINE GROVE PARCEL B CLEMENTI AVENUE 1 LEEDON GREEN PIC
Slide 16: Singapore Portfolio
Singapore Portfolio 2023 contracted sales driven by sales of Tembusu Grand and Copen Grand Revenue Recognised# Contracted Sales# Sold but Unrecognised Sales# US$m US$m US$m 700 700 800 US$736m US$631m US$615m US$587m 600 600 700 US$589m 600 500 US$443m 500 US$379m 500 400 400 US$328m US$362m 400 300
Slide 17: Business Development – Chinese Mainland
Business Development – Chinese Mainland NEW GUANYINQIAO PROJECT, CHONGQING SHOUGANG PROJECT, BEIJING • 40%-owned • 20%-owned • Residential led mixed-used site (adjacent to a HKL • Residential led mixed-used site CENTRAL series retail mall in development) • JV with Shougang Group and CMSK • JV with C
Slide 18: Business Development - Singapore
Business Development - Singapore CLEMENTI AVENUE 1, SINGAPORE PINE GROVE (PARCEL B), SINGAPORE • 51%-owned • 50%-owned • JV with CSC Land • JV with Sinar Mas Land • Land premium: US$469m • Land premium: US$513m • GFA: 547,000 sq. ft • GFA: 609,000 sq. ft • 501 units • 552 units • Expected Completion
Slide 19: Progress Highlights
Progress Highlights 19 New Guanyinqiao Project, Chongqing
Slide 20: Chinese Mainland retail: recurring earnings growth engine
Chinese Mainland retail: recurring earnings growth engine 5 CENTRAL series malls（1 in operation）| 7 The Ring series malls（1 in operation） Beijing Nanjing Chongqing Suzhou Shanghai 2018 2024* 2026* 2026* 2027* 2018 2021 2024 2025 2026 2027 Chongqing Chengdu Shanghai Nanjing Chongqing Hangzhou Wuhan *
Slide 21: West Bund
West Bund Good progress has been made; scheduled completions on target Phase 2: Office for Sale, Hotel, Convention Phase 1: Residential for lease and sale & retail for lease (c. 230,000 sq. m) Centre and Cultural Facilities (c. 392,000 sq. m) Completion: End of 2023 - 2024 Completion: 2025 - 2026 -5
Slide 22: Financial Highlights
Financial Highlights 22 22 The Forum, Hong Kong
Slide 23: Operating and Underlying Profit
Operating and Underlying Profit Contributions to Underlying Profit Movement in Underlying Profit US$m US$m $33m $966m $776m $56m $734m $776m $734m 644 -$131m 404 273 973 951 984 Underlying profit Investment Development Net decrease in Underlying profit 2022 Properties Properties financing charges, 2
Slide 24: Rental Income
Rental Income Movement in Attributable Gross Rental Income* Gross Rental Income* by segment US$m 2023 2022 4% 5% 9% 4% $ 18 (vs. 2022) 11% $1 6% $ 24 6% $ 14 13% 13% 65% 68% $(6) HK Central Portfolio Singapore Chinese mainland Hotel $1,404 Others $1,354 • Central Portfolio -1%: Negative rent reversi
Slide 25: Operating Profit – Development Properties
Operating Profit – Development Properties Movement in Operating Profit Operating profit by segment US$m 2023 2022 8% 12% 8% 5% 12% 17% 63% 75% 32% (vs. 2022) $2 Chinese mainland Singapore $(129) $(1) $(3) $404 Indonesia Others Includes: 1. Gain of US$72 million on • Chinese mainland –43%: Fewer plan
Slide 26: Balance Sheet Management
Balance Sheet Management NAV movement (US$m) and NAV per share (US$) • NAV per share down 3% 734 • Underlying earnings per share down 4% (489) • $0.16 per share paid for 2022 final dividend and $0.06 per share paid for 2023 interim dividend • Investment Properties valuation reduction due to decline
Slide 27: Capital Management
Capital Management Dividend maintained despite reduced earnings Capital Committed for New Projects (US$bn) Payout Ratio, Underlying Profit and DPS 2012-2016 2017-2021 2022 2023 avg Avg IP 0.1 0.5 0.3 0.0 Payout Ratio (%) 48 53 53 64 66 DP 0.6 2.3 0.7 1.3 $1,076 Total 0.7 2.8 1.0 1.3 $963 $966 Notes:
Slide 28: Treasury Management
Treasury Management Maturity Profile of Debt at 31 Dec 2023 (US$m) 31 Dec 2023 31 Dec 2022 $3,299 Net debt 5.4 5.8 Gearing ratio 17% 17% Average tenor of debt (years) 6.3 5.8 Weighted average borrowing cost 3.9% 3.3% $1,487 Available liquidity US$4,016m US$3,112m Bonds: 46% Bonds: 43% Types of Facil
Slide 29: Sustainability
Sustainability 29 The Ring, Chongqing
Slide 30: Sustainability
Sustainability Aspiring towards sustainable leadership DECARBONISATION EMBODIED CARBON TOOLS TENANT SUSTAINABILITY PARTNERSHIP PROGRAMME Piloted Integrated Facilities Bespoke tools to measure the Launch of Tenant Sustainability Management Control Tower carbon emissions from our Partnership Programme
Slide 31: Sustainability – ESG Ratings
Sustainability – ESG Ratings Aspiring towards sustainable leadership 5- Star Rating for Standing Investments and 2023: 71/100 Development Constituent of the Dow Global Sector Leader Jones Sustainability (Diversified Sector) Asia Pacific Index Climate Change ESG Rating Score: “B” 17.6 (Low Risk) | Su
Slide 32: Corporate Initiatives
Corporate Initiatives 32 Hong Kong
Slide 33: Digitalisation & Innovation
Digitalisation & Innovation Enhancing customer experience and improving operational efficiency Customers Assets Enterprise Deliver Value via Data & Digital Touchpoints Intelligent Facilities Management Control Streamlining Property Management Tower processes • Using data-analytics on customer behavi
Slide 34: CSR
CSR Provided programmes Worked with NGOs to solve Over 400 volunteering to over 20,000 housing-related social programmes were young people issues which benefitted organised in 2023. over 12,000 people TACKLING SOCIAL ISSUES RELATING TO HOUSING HERE2HELP VOLUNTEER TEAM CHALLENGES Launched “Our Common
Slide 35: Outlook
Outlook 35 Cardinal Point, Hong Kong
Slide 36: Outlook
Outlook Challenging market conditions to linger through 2024 • Overall, resilient income from Investment Properties Portfolio - HK Office recovery dependent on capital market activity Hong Kong - SG Office to benefit from positive rental reversions - Luxury retail sentiment expected to remain health
Slide 37: Q&A
Q&A 37 Central Portfolio, Hong Kong
Slide 38: Appendix
Appendix 38 One Central Macau, Macau
Slide 39: 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) 227 4,872 523 TOTAL TOTAL TOTAL MACAU HONG KONG BEIJING 76 4,122 384 151 607 143 139 9,286* TOTAL 92 258 TOTAL TOTAL 434 BAN
Slide 40: Hong Kong Investment Properties Summary
Hong Kong Investment Properties Summary HKL’s SHARE (’000 sq. ft NFA) OFFICE RETAIL HOTEL TOTAL One Exchange Square 569 - - 569 Two Exchange Square 509 - - 509 Three Exchange Square 321 - - 321 Exchange Square Podium 2 49 - 51 The Forum 41 - - 41 Jardine House 632 41 - 673 Chater House 422 48 - 470
Slide 41: Singapore Investment Properties Summary
Singapore Investment Properties Summary HKL’s SHARE (’000 sq. ft NFA) OFFICE RETAIL TOTAL One Raffles Link 242 70 312 One Raffles Quay 440 1 441 MBFC 958 60 1,018 Total 1,640 131 1,7711 . 1 Equivalent to 165,000 sq. m | Appendix | 2023 Results 41
Slide 42: Other Investment Properties Summary
Other Investment Properties Summary HKL’s SHARE OFFICE RETAIL HOTEL TOTAL (’000 sq. ft NFA) Beijing - 384 139 523 Macau - 76 151 227 Jakarta 1,031 78 - 1,109 Bangkok 27 65 - 92 Phnom Penh 198 142 94 434 Others 42 - 216 258 Total 1,298 745 600 2,6431 1 Equivalent to 246,000 sq. m. | Appendix | 2023 R
Slide 43: Tenant Portfolio (Profile by Area)
Tenant Portfolio (Profile by Area) at 31 Dec 2023 HK Office HK Retail Singapore Office 1% 10% 6% 6% 2% 13% 5% 27% 29% 8% 43% 4% 6% 6% 5% 60% 32% 37% Banks & Other Financial Services Strategic Tenants Accounting & Consulting Services Legal Other retail brands Banking and Finance HKL projects Energy &
Slide 44: 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) 2,218 (000’s sq. m. GFA) TOTAL CHINESE MAINLAND 181 21 4,552* TO
Slide 45: Chinese Mainland Development Properties Summary (1)
Chinese Mainland Development Properties Summary (1) 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 - Shougang Beijing 20% 2023 6.8
Slide 46: Chinese Mainland Development Properties Summary (2)
Chinese Mainland Development Properties Summary (2) 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.) WE City Chengdu 100% 2010 19.0 0.92 0.74 0.18 - Artisan Bay Chengdu 33%
Slide 47: Chinese Mainland Development Properties Summary (3)
Chinese Mainland Development Properties Summary (3) 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 Origin Shanghai 34% 2022 2.2 0.02 - 0.02 - Wuhan Dream Land Wuh
Slide 48: West Bund
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 Lease 7,910 223,870 231,780 Residential for Sale 24,465 - 24,465 Hotels - 54,937 54,937 Branded Serviced Apartments for Lease - 51,0
Slide 49: Chinese Mainland – Completed Sales Gross Margin
Chinese Mainland – Completed Sales Gross Margin Gross Margin % (before LAT) 50% 44% 40% 40% 36% 30% 28% 22% 20% 19% 10% 0% 2018 2019 2020 2021 2022 2023 Note: The above analysis includes share of Joint Ventures & Associates. | Appendix | 2023 Results 49
Slide 50: Chinese Mainland – Attributable Saleable GFA Completions
Chinese Mainland – Attributable Saleable GFA Completions ‘000 sq. m. 600 565 Forecast 529 506 500 400 382 353 300 200 100 0 2022 2023 2024 2025 2026 Chongqing Chengdu Shanghai Nanjing Wuhan Hangzhou Notes: (1) Based on actual and estimated handover dates. (2) Includes existing committed projects. |
Slide 51: Chinese Mainland – Medium-Term Lease Assets
Chinese Mainland – Medium-Term Lease Assets Major Assets in Operation Medium-term Lease Assets 31% Net Investment $2,614M# Landmark Riverside, Chongqing LCM, Shanghai The Ring, Chongqing 69% • Retail NLA: 55,000 sq. m. • Retail NLA: 60,000 sq. m. • Retail NLA: 79,000 sq. m. (HKL’s share: 28,000 sq.
Slide 52: Chinese Mainland – 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 (95%); Retail (5%) 2025 Central Avenue Chongqing 50% 39 Retail (100%) 2025 Century Land Chongqing 100% 1
Slide 53: 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.) Leedon Green 50% 2019 3.0 0.03 0.03 - - Piccadilly Grand 50% 2021 0.9 0.02 - 0.02 - Cop
Slide 54: Other Southeast Asia Development Properties Summary (1)
Other Southeast Asia Development Properties Summary (1) 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.) Nava Park Indonesia 49% 2012 77 0.23 0.14 0.02 0.07 Anandamaya I
Slide 55: 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.) Embassy at Wireless Thailand 74% 2019 0.5 0.05 - - 0.05 Two Roxa
Slide 56: Southeast Asia – Projects Launched for Sale
Southeast Asia – Projects Launched for Sale THAILAND THE PHILIPPINES INDONESIA The Esse Sukhumvit 36(49%-owned) Mandani Bay (40%-owned) Nava Park (49%-owned) ▪ Site area: 0.4 ha; GFA: 38,000 sq. m. ▪ Site area: 20 ha; GFA: 1.2 million sq. m. ▪ Site area: 77 ha; GFA: 473,000 sq. m. ▪ 338 units ▪ 4,61
Slide 57: Consolidated Balance Sheet
Consolidated Balance Sheet FY 2022 US$m FY 2023 % YoY Investment Properties 28,054 - Subsidiaries 26,687 -5 5,722 - Joint ventures 5,880 +3 33,776 32,567 -4 Development Properties* 2,920 - Subsidiaries 2,941 +1 7,012 - Joint ventures 7,000 -0 (1,624) - Pre-sale proceeds (1,711) +5 8,308 8,230 -1 (2,
Slide 58: Gross Assets at 31 Dec 2023
Gross Assets at 31 Dec 2023 By Activity By Location 18% 22% 12% 66% 82% Investment Properties Development Properties Hong Kong Southeast Asia Chinese Mainland and Macau | Appendix | 2023 Results 58
Slide 59: Investment Properties – Basis of Valuation
Investment Properties – Basis of Valuation Capitalisation Rates 2022 2023 Hong Kong Office – Exchange Square 1 & 2 3.05% 3.15% Hong Kong Retail – Landmark Atrium 4.50% 4.50% Singapore Office – MBFC 3.00% 3.00% | Appendix | 2023 Results 59
Slide 60: Treasury Management
Treasury Management Liquidity at 31 December 2023 (all figures in US$bn) Liquidity at HK$* S$ US$ RMB THB TOTAL 31 DEC 2022 Committed lines 8.9 6.2 0.9 0.0 1.8 0.5 9.4 Gross debt 7.0 4.6 0.2 0.0 1.5 0.3 6.6 Available lines 1.9 1.6 0.7 0.0 0.3 0.2 2.8 Cash 1.2 0.1 0.2 0.4 0.5 0.0 1.2 Available liquid
Hongkong Land Holdings — FY2023 Earnings Presentation on 6ix