Csi Properties Limited · HKEX:497
Csi Properties — H1 FY2020 Earnings Presentation
53 slides from Csi Properties's earnings presentation, November 2019
Slide 1: 1H FY 2020 Interim Results Presentation
Strictly confidential FY 2019 Final Results Presentation Jun 2019 1H FY 2020 Interim Results Presentation Sep 2017 Nov 2019
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: 1H FY2020 Financial Highlights
Section 1 1H FY2020 Financial Highlights 2
Slide 4: 1H FY 2020 Sales Highlights
1H FY 2020 Sales Highlights CSI made over HK$3.97 billion of sales (incl. JV/ Associates) this interim and has additional HK$1.31 billion of presales to be realized to ensure good cashflow and profits for the fiscal year For the year Unrecognised ended Contracted Sales committed up to 30 Sep 2019 30
Slide 5: 1H FY 2020 key disposals
1H FY 2020 key disposals CSI has recognized a few key disposals within this interim period to ensure good profitability Disposal price Date completed Projects sold and booked 1H FY2019 Location (HK$) Jul/Aug 2019 c. 50% of Wai Yip Street Grade-A office (CSI-30%) Kowloon Bay c.HK$1.3bn 13 upper offic
Slide 6: 1H FY 2020 key acquisitions
1H FY 2020 key acquisitions CSI only made limited acquisition in 1HFY2020 but will continue to conservatively consider appropriate land bank replenishment for continuing growth Purchase price Date acquired Projects acquired YTD Location (HK$m) Apr/ Jul 2019 Site at Nos. 92, 94&96 Wellington Street C
Slide 7: New Acquisition – 92, 94 & 96 Wellington Street, Central
New Acquisition – 92, 94 & 96 Wellington Street, Central 92, 94 & 96 Wellington Street, Central • We bought an old building at 94 and 96 Wellington Street in Central next to the escalator for a total consideration of c.HK$450 million in Apr 2019 • Subsequently, we bought the adjacent old building at
Slide 8: 1H FY 2020 results highlights
1H FY 2020 results highlights (Period ended 30th Sep) 1H FY2020 1H FY2019 % change (HK$m) (A) (B) (A/B-1) Gross revenue from property business 2,722 2,446 11% Property sale 2,610 2,296 Rental income 113 150 Gross profit 1,387 730 90% Profit from property JV/associates 415 39 954% Profit attributable
Slide 9: 1H FY 2020 results highlights (contd.)
1H FY 2020 results highlights (contd.) Strong balance sheet and liquidity to ensure financial stability 1H FY 2020 FY 2019 (HK$m) 30th Sep 2019 31st Mar 2019 Properties & related assets 22,169 21,922 Cash & bank balances (including cash held by securities brokers) 2,500 1,410 Investments 1,913 2,092
Slide 10: Visible disposal and profitability pipeline
Visible disposal and profitability pipeline¹ CSI has a strong visible disposal pipeline in the forthcoming years to ensure good profitability for the Group FY 2020 Asset Type COO Residence in Tuen Mun – Remaining commercial podium only Commercial (*residential all sold) 1/3 of 16 residential units a
Slide 11: Pro-forma Balance Sheet adjusted for market valuation as at 30 Sep 2019
Pro-forma Balance Sheet adjusted for market valuation as at 30 Sep 2019 Properties valued at historical cost basis on book with no revaluation surplus. Even after revaluation adjustment still represents significant value in terms of a significant discount to pro forma adjusted NAV of HK$2.065 per sh
Slide 12: 1HFY 2020 financial highlights
1HFY 2020 financial highlights 1H FY 2020 FY 2019 FY 2018 (HK$m) (HK$m) (HK$m) Revenue 2,722 3,439 3,969 Gross profit 1,567 1,064 859 Margin % 57.6% 31.0% 21.6% EBITDA1 1,930 1,078 1,340 Margin % 70.89% 31.34% 33.8% Interest expenses2 168 363 316 Cash and cash equivalent 2,500 1,410 2,580 Short-term
Slide 13: Consistent profitability and growth
Consistent profitability and growth Revenue Gross profit and gross profit margin 4,000 2,000 80% 307 3,439 3,218 1,666 302 64% 51% 3,000 225 1,387 2,722 1,500 53% 60% 2,578 31% 113 52% 48% 1,172 208 2,201 36% 1,065 (HK$m) (HK$m) 940 22% 226 1,868 2,000 1,000 859 40% 281 3,662 738 32% 2,993 3,137 601
Slide 14: Debt and credit metrics
FY 2019 sales highlights Debt / EBITDA1 EBITDA1 / net interest expense2 and cash3 / short-term debt 12 40 9.6 34.0 10 35 8.3 7.7 30 8 7.2 7.0 5.8 25 (HKD m) (x) 6 4.8 5.1 4.7 20 3.8 4.0 3.8 14.3 4 3.4 15 11.6 11.5 1.8 2.2 8.3 1.5 10 6.3 5.7 2 0.7 4.1 4.0 4.2 3.3 2.2 3.0 0.1 5 1.8 1.7 1.9 0.7 0.7 0 0
Slide 15: 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 • Effective interest rate of c. 3.5% for the Group's bank borrowings as at 30 Sep 2019 treasury policy • Prudent dividend policy (c
Slide 16: Portfolio of prime properties in premier locations
Portfolio of prime properties in premier locations (as at 30 Sep 2019) Commercial properties Current / Gross area Market Book committed 1 1, 2 1 1 Date of sq.ft. (000s) value value annual rent Occupancy Purchase (approx) (HK$m) (HK$m) (HK$m) (%) Aug-06/ G/F, 51 carparks of Capital Centre (formerly A
Slide 17: Why invest in CSI properties
Why invest in CSI properties Since 2004, as the pioneer of real estate asset crystallisation, CSI has unlocked Proven value unlocking value by selling prime assets in Hong Kong and Shanghai and generated capabilities approximately HK$10 billion cash profits via over 50 major transactions Unlike deve
Slide 18: Prime Property Portfolio Review
Section 2 Prime Property Portfolio Review 17
Slide 19: Commercial properties highlights
Commercial properties highlights Key prime commercial assets in Hong Kong and Shanghai helps to anchor c. HK$300+ million rental income annually Novotel Hotel – Jordan Everest Building– Jordan Richgate Plaza – Shanghai The Harbourside HQ (previously OCTA Tower) In Point – Shanghai 18 – Kowloon Bay
Slide 20: 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 Oriental Crystal Building Sites at Wellington St. Gage St./ Graham St. • • Commercial redevelopment site from URA 18 office floors, 2 ground floor sho
Slide 21: 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 Gage St./ Graham St. The Center • The Group won the tender for Site C of the Peel Street/Graham Street project from the Urban Renewal Authority (“URA”
Slide 22: Central properties highlights – Oriental Crystal Commercial Building
Central properties highlights – Oriental Crystal Commercial Building No. 46 Lynhurst Terrace • The Group acquired via 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. • Renovation of th
Slide 23: Central properties highlights – SOHO Central
Central properties highlights – SOHO Central 2-4 Shelley Street, Central (Sale in Progress) 46-48 Cochrane Street, Central • Situated in Central’s Soho area, 25-storeys of chic yet contemporary office space with total GFA over 40,000 sq.ft. • Situated in the core of Central district, adjacent to the
Slide 24: Novotel Hotel Kowloon
Novotel Hotel Kowloon Novotel Hotel Jordan Our Property : • 4-star international branded hotel with commercial podium in Nathan Rd 348 prime Nathan Road • 5-min travelling distance from future Express Rail Link terminus • 389 hotel rooms and prime shopping space in prime Jordan • Consolidated 100% i
Slide 25: CSI’s Major Commercial Property Pipeline – Kowloon East
CSI’s Major Commercial Property Pipeline – Kowloon East Kowloon Bay Office Site The Harbourside HQ (previously OCTA Tower) • Bought the whole office tower with 3 other JV partners via a • JV with Sino Land and Billion Development, the two big landlords consortium arrangement (CSI -25%) in Aug 2018 i
Slide 26: 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 27: Yuen Long Industrial Building Revitalization
Yuen Long Industrial Building Revitalization Yuen Long Industrial Building (Mixed Yuen Commercial Long Industrial UseBuilding Conversion) (Mixed Commercial Use Conversion) Long Ping MTR station ▪ CSI, together with another 50% JV partner, spent HK$1,037 million in late 2017 to acquire this industria
Slide 28: In-Point Shopping Mall
In-Point Shopping Mall Premium Retail Project in Jing’an, Shanghai In-point Shopping Mall Our Property : Wujiang Rd no. 169, Jing’an • Popular shopping mall located in the heart of Shanghai just behind the Four Seasons Hotel on Wujiang Road • GFA of 122,000 sq.ft. with current market value at approx
Slide 29: Richgate Plaza
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 total consideration of RMB 1.37 billion with total GFA of 11.3k sqm in 2017 ▪ Cost amounts to approximately RMB121k psm ▪ Curren
Slide 30: Couture Homes – Luxury Residential Development Projects Highlights
Couture Homes – Luxury Residential Development Projects Highlights Dukes Place 47 Perkins Road – Beijing Legendale Jardine’s Lookout (Refurbishment) –Beijing 8-12 Peak Road (Refurbishment) - The Peak Queen’s Gate - Shanghai
Slide 31: Dukes Place – JV with World-class Luxury Apartments in Jardine’s Lookout
Dukes Place – JV with World-class Luxury Apartments in Jardine’s Lookout • Dukes Place is our world-class luxury apartment project at the Jardine’s Lookout in Hong Kong • Nestled in the heart of a quiet ultra-high net-worth neighborhood, Dukes Place offers 16 spacious apartments with multiple layout
Slide 32: Peak Road Project
Peak Road Project - Precious Residential Development with Victoria Harbour seaview Peak Road Project • Acquired c. 60.3% interest in this old residential building in June 2015 at HK$1.8 billion Interocean Court • 17 apartments and one house with total saleable area of 48,544 sf OPUS Hong Kong • AV a
Slide 33: COO Residence Project
COO Residence Project – (ALL 204 RESIDENTIAL UNITS PRESOLD) Luxurious Highrise Residential Project in Tuen Mun • Located at Tuen Mun Yan Ching Street, the street is adjacent to V City and Tuen Mun Town Plaza, being the very heart of the city. Presale started in early Sep 2017 and all of the 204 resi
Slide 34: First MTR Residential Project- Mass Residential site at Yau Tong
First MTR Residential Project- Mass Residential site at Yau Tong • The Group acquired with its JV partner Sino Land (80% partner) through MTR tender in April 2018 a residential site at Yau Tong at the total consideration of approximately HK$2.62bn. • The property is located near the Yau Tong MTR sta
Slide 35: Queen’s Gate – Sale of Last Batch remains
Queen’s Gate – (Sale of Last Batch remains) 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 additiona
Slide 36: Beijing Legendale Residential Project
Beijing Legendale Residential Project - Luxurious Residential Renovation Project in Beijing Renderings for interiors post renovation • The Group entered into a preliminary purchase agreement in October 2016 in conjunction with a joint venture partner in the acquisition of 118 units totaling around 2
Slide 37: Barker Road Project
Barker Road Project - Precious Single Lot House Site at the Peak Acquired the heritage site at 47 Barker Road in February 2011 at HK$204 million A rare land lot at Barker Road in the ultra premier residential area at the Peak The house will be redesigned and refurbished and will blend in with its hi
Slide 38: 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 clu
Slide 39: 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 83,000 sq.ft. • The site is located adjacent to Stanley Knoll, a high end residential area in Stanley with stunning seavi
Slide 40: Company Background
Section 3 Company Background 39
Slide 41: Why invest in CSI properties
Why invest in CSI properties Leading HK-based Mid-Cap Property Investor and Developer 15 Years of Operation Since 2004 US$4Bn+ AUM Generated Average IRR of ~30% 220+ by Applying the Proven Strategy Real Estate Professionals Applied Proven Strategy of “Buy-Fix-Sell” to a Portfolio of ~3MM sq.ft. Prim
Slide 42: Corporate history and key milestone
Corporate history and key milestone 2019 Over 20 prime commercial and residential projects in Hong Kong and Shanghai Net assets • Total staff of over 220 people • Net asset over HK$12.0 billion (10 million HKD) 2016 • The group has 2015 successfully issued 250 120 • Kau To HIghland awarded as millio
Slide 43: Our business model
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 Greenfield Commercial Strong rental Super luxury
Slide 44: 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 of averaging over HK$1 billion in last few years Net profit1 4,000 3,000 FY14: 815 FY17: 1,347 (HK$m) FY13: 903 1HFY20: 1,474 2,000 FY19: 530 1,000 FY11:
Slide 45: Proven track record in dividend
Proven track record in dividend Steady dividend policy at 12-15% of net profit Dividend payout 250.0 HK$115m share buyback 204.0 198.0 200.0 162.6 150.0 140.0 131.0 (HK$m) HK$99m 106.0 HK$100m share 100.0 share buyback 82.3 buyback 70.6 66.1 50.0 40.8 15.8 0.0 31/3/2009 31/3/2010 31/3/2011 31/3/2012
Slide 46: Successful new perpetual capital securities issue in 2017
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 issue arranged by DBS, HSBC, JP Morgan and UBS etc. to raise US$200 million in September 2017 at an attractive cou
Slide 47: Proven investment and capital recycling track record
Proven investment and capital recycling track record of delivering attractive IRR’s Selected projects and returns Months of Projects holding Cost (HK$m) Selling price (HK$m) IRR 23% 288 234 B/F Ginza Plaza, Macau 3 171% 47% 496 338 11/F – 23/F Henan Building, Wanchai 13 70% 25% 1,029 821 Nos. 703-70
Slide 48: 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 49: 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 50: Highly experienced and disciplined management team
Highly experienced and disciplined management team Couture Homes ("CH") Execution Director of CSI • Joined CSI in 2011, prior to which he worked as the Director of Savills Hong Kong Limited and Managing Director of Jimmy Fong • Over 20 years of experience in luxury residential property development a
Slide 51: Strong management team with accolades
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 Company in Hong Kong” for 2013 and 2014 in Asia's Best Managed Companie
Slide 52: Long term sponsorship from the Chairman and an institutional investor focused equity 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 Others 28.5% future growth prospect of CSI • Mr. Mico Chung's ownership interest in Co
Slide 53: Q&A
Q&A 20132018 & 2014 Best HK Mid-Cap Company 52