Hongkong Land Holdings Limited · SGX:H78
Hongkong Land — H1 2022 Earnings Presentation
55 slides from Hongkong Land's earnings presentation, Jul 29, 2022
Slide 1: 2022 Half-Year Results
2022 Half-Year Results Presentation 29 July 2022 West Bund rendering, Shanghai
Slide 2: Agenda
Agenda Speakers: Robert Wong, Chief Executive Craig Beattie, Chief Financial Officer 1. Key Market Updates & Results Highlights 2. Investment Properties 3. Development Properties 4. Financial Highlights 5. Corporate Initiatives 6. Outlook 7. Q&A 2 Edinburgh Tower & York House, HK
Slide 3: Key Market Updates
Key Market Updates Market conditions in Greater China impacted by anti-pandemic measures. Singapore positive HONG KONG CHINESE MAINLAND SINGAPORE • Office: Central outperformed broader • Residential: Market sentiment was • Office: Positive absorption in CBD market; rents stabilising weak due to unce
Slide 4: 2022 Half-Year Results Highlights
2022 Half-Year Results US$425m US$33.6bn 572 • Underlying profit • Shareholders’ funds 34 35 34 394 425 +8% YoY -2% YoY 1H 2021 2H 2021 1H 2022 Jun 2021 Dec 2021 Jun 2022 Key Figures Highlights • Profit / (Loss)1: US$292m (1H 2021: US$(865)m) • Underlying profit up 8% • Net debt: US$6.1bn (Dec 2021:
Slide 5: 2022 Half-Year Highlights
2022 Half-Year Highlights Central, HK Landmark Riverside, Chongqing Xuhui Xietu Project, Shanghai Jalan Tembusu, Singapore RESILIENT INVESTMENT PROPERTIES MIXED RESULTS ON SALES TWO NEW SITES SECURED PERFORMANCE LAUNCHES IN CHINA February & June 2022 1H 2022 1H 2022 2030 Science-Based Share buyback
Slide 6: Swift Response to COVID-19 Challenges
Swift Response to COVID-19 Challenges Tenants & Customers • Rent relief - focusing on retail and F&B tenants • Flexibility in operation hours • Promotional measures to support takeaway and delivery business • Large scale promotion programmes to drive footfall • Property management excellence − CIBSE
Slide 7: Investment Properties
Investment Properties | Investment Properties | 2022 Half-Year Results 7
Slide 8: Hong Kong Portfolio - Office
Hong Kong Portfolio - Office Average Rents & Vacancy Resilient performance underpinned by a flight to quality 1H 2021 2H 2021 1H 2022 Average net rent 118 115 112 (HK$ psf/month) Period-end vacancy 6.4% 5.2% 5.4% Weighted average lease expiry 4.2 4.2 4.0 (years) Note: On a committed basis, vacancy a
Slide 9: Hong Kong Portfolio - Retail
Hong Kong Portfolio - Retail Average Rents & Vacancy Performance affected by pandemic-related restrictions 1H 2021 2H 2021 1H 2022 Average net rent 180 190 168 (HK$ psf/month) Period-end vacancy 0.9% 0.3% 0.9% Weighted average lease expiry 1.8 1.8 1.7 (years) Estimated tenant sales growth 67% 25% 3%
Slide 10: Singapore Portfolio - Office
Singapore Portfolio - Office Average Rents & Vacancy Positive rental reversions 1H 2021 2H 2021 1H 2022 Average gross rent 10.2 10.3 10.5 (S$ psf/month) Period-end vacancy 7.5% 6.5% 4.7% Weighted average lease expiry 3.6 3.4 3.3 (years) Note: On a committed basis, vacancy at the end of June 2022 was
Slide 11: 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%-owned) Jakarta – Jakarta Land (50%-owned) • 43,000 sq. m. NFA of retail space • 18,750 sq. m. NFA
Slide 12: Development Properties
Development Properties Piccadilly Grand, Singapore | Development Properties | 2022 Half-Year Results 12
Slide 13: Chinese Mainland Portfolio – Overview
Chinese Mainland Portfolio – Overview Landmark Riverside Dream Land CBD Z3 Project CHONGQING WUHAN BEIJING ▪ 14 projects ▪ Four projects ▪ Total GFA 7.1 million sq. m. ▪ Total GFA 999,000 sq. m. ▪ One project (HKL’s share: 4.9 million sq. m.) (HKL’s share: 642,000 sq. m.) ▪ Total GFA 123,000 sq. m.
Slide 14: Chinese Mainland Portfolio
Chinese Mainland Portfolio Weak consumer demand Revenue Recognised*# Contracted Sales# Sold but Unrecognised Sales# US$m US$m US$m 2,000 2,000 3,600 $3,367m $1,827m 1,800 1,800 3,200 $2,853m 1,600 1,600 2,800 1,400 1,400 $1,360m $2,425m $1,288m 2,400 1,200 1,200 2,000 1,000 1,000 $735m 1,600 800 800
Slide 15: Singapore Portfolio – Overview
Singapore Portfolio – Overview IMAGE TO BE UPDATED TENGAH GARDEN WALK PARC ESTA ▪ 50% JV with CDL ▪ 1,404 units ▪ 639 units ▪ 98,000 sq. m. GFA ▪ 68,000 sq. m. GFA ▪ Completion: 2022 ▪ Completion: 2025 ▪ 100% pre-sold LEEDON GREEN ▪ 50% JV with Yanlord PICCADILLY GRAND JALAN TEMBUSU ▪ 638 units ▪ 50
Slide 16: Singapore Portfolio
Singapore Portfolio Higher contracted sales driven by Piccadilly Grand Revenue Recognised# Contracted Sales# Sold but Unrecognised Sales# US$m US$m US$m 400 400 600 $533m $325m 500 $306m $449m 300 300 $270m 400 $362m 200 $174m 200 300 $172m $156m 200 100 100 100 0 0 0 1H 2021 2H 2021 1H 2022 1H 2021
Slide 17: New Projects
New Projects Two new development projects with an attributable developable area of 45,700 sq. m. secured in 1H 2022 XUHUI XIETU PROJECT, JALAN TEMBUSU, • 34%-owned SHANGHAI SINGAPORE • 49%-owned • JV with CMSK and Shanghai Huicheng • JV with CDL • Residential site • 638 units • Land premium: RMB4.7b
Slide 18: Strong Retail Portfolio Growth on the Chinese Mainland
Strong Retail Portfolio Growth on the Chinese Mainland Expected attributable NLA of retail portfolio, 2022-2026 (’000 sq. m.) 157% (vs. 2022) 439 355 245 203 171 WF CENTRAL, BEIJING • Fourth anniversary • Welcomed a host of international world- class luxury brands (Cartier, Tiffany & Co.) 2022 2023
Slide 19: Financial Highlights
Financial Highlights One & Two Exchange Square, HK | Financial Highlights | 2022 Half-Year Results 19
Slide 20: Operating and Underlying Profit
Operating and Underlying Profit Contributions to Underlying Profit Movement in Underlying Profit US$m +$81m -$29m US$m $425m $394m -$21m $572m $425m $394m 502 142 223 Underlying profit 1H Investment Properties Development Net increase in Underlying profit 1H 2021 operating profit Properties operatin
Slide 21: Rental Income
Rental Income Attributable Gross Rental Income* Hong Kong • Office: Primarily lower average rent, negative reversions US$m 4% • Retail: Lower tenant sales, rent relief to tenants $681m $693m $668m 46 39 41 Singapore 57 67 • Higher average rents 69 86 84 85 Stable • Lower average vacancies Chinese •
Slide 22: Operating Profit – Development Properties
Operating Profit – Development Properties Operating Profit – Development Chinese • More residential sales completions Properties Mainland US$m • Stable profit margins compared to 1H21 94% $502m 7 46 Singapore • Projects underway at different point of construction than prior period 58% • Profits reco
Slide 23: Capital Management
Capital Management Payout Ratio, Underlying Profit and Dividend Capital Committed for New Projects (US$bn) per Share Payout Ratio (%) 2018 2019 2020 2021 1H 2022 50 48 53 53 2.4 1.2 3.8 3.0 0.6 Notes: (1) Includes HKL’s share of equity and project-level debt (2) Per latest estimates $1,076m $1,036m
Slide 24: Treasury Management
Treasury Management Net Debt and Gearing Net Debt Reconciliation (US$m) FY 2021 1H 2022 1H 2021 % YoY (4,568) Net debt at beginning of period (5,104) (4,568) +12 18% 15% 792 Net rental income / fee receipts 385 398 -3 12% 1,674 Proceeds from DP sales 328 953 -66 0.7 (1,578) Trading capex1 (585) (411
Slide 25: Treasury Management
Treasury Management Maturity Profile of Debt at 30 Jun 2022 Key Debt Metrics 30 Jun 2022 (US$m) Average tenor of debt (years) 6.4 Average interest cost 3.2% $3,081 Available liquidity US$2,612m Credit Ratings S&P’s A $1,645 Moody’s A3 $897 THB RMB 5% $627 14% $324 $234 S$ Bonds Type of Floating Inte
Slide 26: Corporate Initiatives
Corporate Initiatives | Corporate Initiatives | 2022 Half-Year Results 26
Slide 27: Digital Transformation
Digital Transformation Enhancing customer and stakeholder experience Customers Assets Enterprise New Landmark 2.0 Mobile App AI-Optimised Energy Management Platform HKL Mobile App Enhancement E-approvals for procurement Unique Omi-channel Ecosystem to Attract, Retain, Digitisation of all major and G
Slide 28: Sustainability
Sustainability Aspiring towards sustainable leadership SCIENCE-BASED TARGETS APPROVED Near-term SBTs aligned with 1.5°C pathway validated by SBTi SUSTAINABILITY FRAMEWORK 2030 Launch of new strategy & targets reaffirms commitment to sustainability | Corporate Initiatives | 2022 Half-Year Results 28
Slide 29: Sustainability
Sustainability Aspiring towards sustainable leadership Thermal comfort is enhanced whilst driving energy efficiency PILOT GREEN FIT-OUT AND OPERATION RECOGNITION SCHEME >60% Engaging our tenants on sustainability reduction in temperature-related service calls DEPLOYMENT OF “COMFYAPP” AI continuously
Slide 30: CSR
CSR Continued focus on social inclusion by promoting upward mobility of youth and alleviate housing-related social issues EMPOWERING YOUTH HERE2HELP VOLUNTEER TEAM • Collaborating with seven grantees • Continue to serve people in need to provide multi-year education via online volunteer programmes d
Slide 31: Outlook
Outlook Jardine House, HK | Outlook | 2022 Half-Year Results 31
Slide 32: Outlook
Outlook Uncertain market conditions expected in 2H 2022 • FY2022 underlying profits to be significantly lower o Fewer completions compared to 2021 o Some completions deferred to 2023 due to impact of pandemic-related restrictions on sales and construction • Resilient office portfolios despite higher
Slide 33: Q&A
Q&A 33
Slide 34: Appendix
Appendix 34
Slide 35: 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 4,895 523 TOTAL TOTAL TOTAL TOTAL HANOI MACAU HONG KONG BEIJING 52 96 4,135 384 5 151 617 143 139 9,405* TOTAL 91 258
Slide 36: 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 510 - - 510 Three Exchange Square 321 - - 321 Exchange Square Podium 2 49 - 51 The Forum 41 - - 41 Jardine House 634 44 - 678 Chater House 420 48 - 468
Slide 37: Singapore Investment Properties Summary
Singapore Investment Properties Summary HKL’s SHARE OFFICE RETAIL TOTAL (’000 sq. ft NFA) One Raffles Link 242 69 311 One Raffles Quay 440 1 441 MBFC 961 60 1,021 Total 1,643 130 1,7731 1 Equivalent to 165,000 sq. m. | Appendix | 2022 Half-Year Results 37
Slide 38: 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 1,032 94 - 1,126 Hanoi 52 5 - 57 Bangkok 27 64 - 91 Phnom Penh 198 143 94 435 Others 42 - 216 258 Total 1,351 786 600 2,7371 1 Equivalent to 254,000 sq. m. | A
Slide 39: Tenant Portfolio (Profile by Area)
Tenant Portfolio (Profile by Area) at 30 June 2022 HK Office HK Retail Singapore Office 5% 13% 16% 4% 6% 3% 4% 6% 6% 41% 46% 8% 10% 64% 5% 32% 31% Banks & Other Financial Services Fashion & Accessories Banks & Other Financial Services Legal Natural Resources Food & Beverages IT Services & Consultanc
Slide 40: 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) 2,921 (000’s sq. m. GFA) TOTAL CHINESE MAINLAND 331 21 5,190* TO
Slide 41: 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 42: Chinese Mainland Development Properties Summary (2)
Chinese Mainland Development Properties Summary (2) 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.) WE City Chengdu 50% 2010 19.0 0.46 0.35 0.11 - Artisan Bay Chengd
Slide 43: Chinese Mainland Development Properties Summary (3)
Chinese Mainland Development Properties Summary (3) 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.) Dream Land Wuhan 50% 2017 16.4 0.25 0.06 0.09 0.10 Lakeward Mansi
Slide 44: Chinese Mainland – Completed Sales Gross Margin
Chinese Mainland – Completed Sales Gross Margin Gross Margin % (before LAT) 50% 44% 41% 40% 40% 36% 30% 28% 27% 20% 10% 0% 2017 2018 2019 2020 2021 1H 2022 Note: The above analysis includes share of Joint Ventures & Associates. | Appendix | 2022 Half-Year Results 44
Slide 45: Chinese Mainland – Attributable Saleable GFA Completions
Chinese Mainland – Attributable Saleable GFA Completions ‘000 Forecast sq. m. 1,000 900 833 800 699 694 700 600 528 485 500 400 300 200 100 - 2020 2021 2022 2023 2024 Chongqing Chengdu Shanghai Nanjing Wuhan Hangzhou Notes: (1) Based on actual and estimated handover dates. (2) Includes existing comm
Slide 46: Chinese Mainland – Medium-Term Lease Assets
Chinese Mainland – Medium-Term Lease Assets Major Assets in Operation Medium-term Lease Assets 33% Net Investment $2,270M# Landmark Riverside, Chongqing LCM, Shanghai The Ring, Chongqing 67% • 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 47: 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 TYPE (HKL’s Share) COMPLETION ‘000 sq. m. CBD Z3 Beijing 30% 36 Office (97%); Retail (3%) 2026 Central Avenue Chongqing 50% 40 Retail (100%) 2025 Century Land* Chongqing 100%
Slide 48: 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 0.10 - 0.10 - Leedon Green 50% 2019 3.0 0.02 - 0.02 - Piccadill
Slide 49: 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 0.24 0.09 0.03 0.12 Anandamaya
Slide 50: 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 51: 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, 68%
Slide 52: Consolidated Balance Sheet
Consolidated Balance Sheet 1H 2021 US$m 1H 2022 FY 2021 % YoY Investment Properties 28,815 - Subsidiaries 28,278 28,600 -1 5,733 - Joint ventures 5,601 5,807 -4 34,548 33,879 34,407 -2 Development Properties* 2,930 - Subsidiaries 3,667 3,516 +4 6,688 - Joint ventures 7,155 6,949 +3 (2,686) - Pre-sal
Slide 53: Gross Assets at 30 Jun 2022
Gross Assets at 30 Jun 2022 By Activity By Location 18% 21% 13% 66% 82% Investment Properties Development Properties Hong Kong Southeast Asia Chinese Mainland and Macau | Appendix | 2022 Half-Year Results 53
Slide 54: Investment Properties – Basis of Valuation
Investment Properties – Basis of Valuation Capitalisation Rates 1H 2021 2H 2021 1H 2022 Hong Kong Office – Exchange Square 1 & 2 3.00% 3.00% 3.00% Hong Kong Retail – Landmark Atrium 4.50% 4.50% 4.50% Singapore Office – MBFC 3.25% 3.00% 3.00% | Appendix | 2022 Half-Year Results 54
Slide 55: Treasury Management
Treasury Management Liquidity at 30 Jun 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 1.3 0.4 8.7 Gross debt 6.6 4.9 0.6 0.0 1.0 0.3 6.8 Available lines 2.5 1.1 0.4 0.0 0.3 0.1 1.9 Cash 1.5 0.1 0.2 0.1 0.3 0.0 0.7 Available liquidity 4
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