Swire Properties Limited · HKEX:1972
Swire Properties — H1 2023 Earnings Presentation
59 slides from Swire Properties's earnings presentation, Aug 10, 2023
Slide 1: 2023 Interim Results | Analyst Briefing
2023 INTERIM RESULTS | ANALYST BRIEFING 10TH AUGUST 2023
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 the information contained herein has not been independently verified. No representation or warranty, express or implied, is
Slide 3: Agenda
AGENDA 1. Strategy and Results Highlights 2. Investment Portfolio Tim Blackburn, 3. Trading Portfolio Chief Executive 4. Hotel Portfolio 5. Financial Highlights Fanny Lung, 6. ESG Updates Finance Director 7. Digital 8. Outlook 9. Q&A 3
Slide 4: 2023 Interim Results Highlights
2023 INTERIM RESULTS HIGHLIGHTS DELIVER SUSTAINABLE GROWTH 6% y-y ▪ Strong recovery in Hong Kong and the Chinese Mainland Recurring 3% retail and hotels y-y Underlying Profit Dividend per HK$ 3,892 M Share (1st interim) ▪ Hong Kong office resilient despite weak market conditions HK$ 0.33 ▪ HK$100 bi
Slide 5: Investing in Long-Term Growth
INVESTING IN LONG-TERM GROWTH GOOD PROGRESS ON HK$100BN INVESTMENT PLAN ▪ Taikoo Li Xi’an Chinese Mainland > HK$ 50 Chinese Bn Mainland ▪ Sanya Retail Project ▪ Increased stake at Taikoo Li Chengdu (1) HK$ 17 Bn HK$ 100 Bn development pipeline > HK$ 30 Bn Hong Kong ▪ Increased stake at Citygate ▪ 10
Slide 6: Making Good Progress in All Strategic Areas
MAKING GOOD PROGRESS IN ALL STRATEGIC AREAS Hong Kong Chinese Mainland Wah Ha Factory Building and Zung Fu Industrial Building Obtained 100% ownership for potential office redevelopment. EIGHT STAR STREET 33 out of 37 units sold (1). Artist Impression Taikoo Li Chengdu (3) Completed acquisition of r
Slide 7: Upcoming Projects
UPCOMING PROJECTS 8.2 M sq ft STRONG PIPELINES SUPPORTING CONTINUOUS GROWTH Expected Attri. GFA to be Completed from 2023 2023 2024 2025 2026 onwards Attri. GFA sq ft (7) ▪ Residential projects ▪ Residential and office HK ▪ Six Pacific Place ▪ LA MONTAGNE (1) in Chai Wan and developments in Quarry B
Slide 8: Investment Portfolio
INVESTMENT PORTFOLIO Taikoo Li Qiantan, Shanghai
Slide 9: Hong Kong Office
HONG KONG OFFICE STAYING RESILIENT WITH SOLID OCCUPANCY 6.7 M sq ft One Island East & One Taikoo Place GFA (3) (4) Occupancy (1) 97% Rental Reversion (5) -3% Latest Rentals (HK$ psf) mid 50s – low 70s Two Taikoo Place Occupancy (1) 56% Rental Reversion (5) n.a. Latest Rentals (HK$ psf) mid 50s – hig
Slide 10: Placemaking at Taikoo Place – Global Business District
PLACEMAKING AT TAIKOO PLACE – “GLOBAL BUSINESS DISTRICT” King’s Road Quarry Bay Station Quarry Bay Park 3 9-39 Hoi Wan Street & 33-41 Tong Chong Street Lincoln Under compulsory Berkshire Taikoo Shing Residential Developments sale application Tong Chong Street One Taikoo EAST Place Resid. Devon Dorse
Slide 11: Hong Kong Retail
HONG KONG RETAIL STRONG REBOUND IN 1H 2023 0.7 1.1 0.8 M sq ft M sq ft M sq ft GFA GFA GFA (3) The Mall, Pacific Place Cityplaza Citygate Outlets Occupancy (1) 97% 100% 100% Retail Sales (2) 60% 12% 62% Attributable 1% Valuation HK$ 45.9 bn (1) Occupancy as at 30th June 2023. (vs Dec 2022) (2) Retai
Slide 12: Chinese Mainland Portfolio
CHINESE MAINLAND PORTFOLIO KEY CONTRIBUTOR TO REVENUE GROWTH ▪ Chinese Mainland overall portfolio contributed 40% attributable gross rental income in 1H 2023. (1) ▪ Chinese Mainland retail is the second largest rental contributor. ▪ Chinese Mainland retail is further enlarged after 100% ownership of
Slide 13: Chinese Mainland Retail
CHINESE MAINLAND RETAIL STRONG RETAIL SALES EXCEEDED PRE-PANDEMIC LEVELS FOR MANY OF OUR MALLS 1.6 0.9 1.5 1.4 M sq ft M sq ft M sq ft M sq ft GFA GFA (3) GFA (3) GFA Taikoo Li Sanlitun, Beijing INDIGO, Beijing Taikoo Hui, Guangzhou Taikoo Li Chengdu (4) Occupancy (1) 97% 100% 100% 96% Retail Sales
Slide 14: Chinese Mainland Office
CHINESE MAINLAND OFFICE STABLE PERFORMANCE 1.7 0.6 1.9 M sq ft M sq ft M sq ft GFA (2) GFA (2) GFA (2) Taikoo Hui, Guangzhou INDIGO, Beijing HKRI Taikoo Hui, Shanghai Occupancy (1) 90% 92% 98% Latest Rentals (RMB psm) mid 100s – low 200s mid 200s – mid 300s mid 300s – mid 400s Attributable (1) Occup
Slide 15: Dual Growth Engines
DUAL GROWTH ENGINES BALANCED PORTFOLIO Expected Attributable GFA of Completed Commercial Property Portfolio (incl. Hotels) (‘000 sq ft) Hong Kong Portfolio 7% Chinese Mainland Portfolio 48% (vs 2022) (vs 2022) 15,000 14,451 (1) 15,000 14,802 13,672 13,672 14,164 13,449 779 1,655 91 91 223 91 223 91
Slide 16: Miami Retail
MIAMI RETAIL GROWING RETAIL SALES 0.5 90% M sq ft GFA (4) Occupancy (1) (2) 7% Retail sales (3) (1) Occupancy as at 30th June 2023. (2) Including space allocated to prospective tenants who have signed letters of intent. (3) Retail sales (excluding sales by vehicle retailers) year-on-year growth. 16
Slide 17: Trading Portfolio
TRADING PORTFOLIO EIGHT STAR STREET, Hong Kong
Slide 18: Hong Kong Trading Portfolio
HONG KONG TRADING PORTFOLIO STRONG PIPELINE Completed / Expected Residential GFA Completions in Hong Kong EIGHT STAR STREET (100% Basis) GFA (‘000 sq ft) 37 Residential units 33 Sold (1) 103 1,067,000 sq ft (Attributable basis) Completed (2022) ~ HK$39,000 psf (1) Average selling price 638 692 440 3
Slide 19: South East Asia Trading Portfolio
SOUTH EAST ASIA TRADING PORTFOLIO EXPANDING WITH FIRST PROJECT IN BANGKOK ADDED Ho Chi Minh City, Vietnam Jakarta, Indonesia The River Savyavasa 20% Interest 50% Interest 525 Luxury apartments ~ 400 Residential units Handover in progress Launch for pre-sale in March 2022 ~ 94% Sold (1) Exp. Completi
Slide 20: Hotel Portfolio
HOTEL PORTFOLIO The Opposite House, Beijing
Slide 21: Hotel Portfolio
HOTEL PORTFOLIO GOOD RECOVERY IN THE 1H 2023 ▪ Recorded EBITDA profit (1) of HK$59M at managed hotels in 1H 2023 (vs EBITDA loss (1) of HK$74M in 1H 2022). ▪ Businesses in Hong Kong and the Chinese Mainland recovered strongly following the lifting of COVID-19 measures and reopening of the border. ▪
Slide 22: Financial Highlights
FINANCIAL HIGHLIGHTS Taikoo Li Sanlitun, Beijing
Slide 23: Underlying Profit
UNDERLYING PROFIT GOOD PERFORMANCE DRIVEN BY RECOVERY IN RETAIL AND HOTELS Underlying Profit HK$M Non-recurring ▪ Recurring underlying profit from property investment increased in 1H 2023. This Recurring mainly reflected higher retail rental income from Hong Kong and the Chinese 9,532 Mainland, part
Slide 24: Rental Income
RENTAL INCOME BALANCED PORTFOLIO WITH STRONG RETAIL RECOVERY Attributable Gross Rental Income (1) HK$M 14,571 HK Office ▪ Generally resilient despite increased availability in the market. 14,121 2% ▪ Demand was weak, reflecting continued economic uncertainty. HK Retail ▪ Recovered remarkably due to
Slide 25: Dividend Return
DIVIDEND RETURN AIM TO DELIVER MID-SINGLE-DIGIT ANNUAL GROWTH Dividend Per Share HK$ / Share ▪ Aiming to deliver mid-single-digit annual growth in dividends and to pay out approximately half of our underlying profit in ordinary dividends over time, with the benefit of our planned investments. 1.00 0
Slide 26: Investment Properties Valuation
INVESTMENT PROPERTIES VALUATION (1) REFLECTING CONSOLIDATION OF TAIKOO LI CHENGDU Movement in Investment Properties Valuation (2) ▪ The increase in valuation of investment property (excl. hotels and investment properties held under JVCs) primarily reflecting the acquisition of subsidiary HK$M compan
Slide 27: Net Debt and Gearing
NET DEBT AND GEARING HEALTHY BALANCE SHEET Net Debt Reconciliation (HK$M) Financial Ratios (1) 2019 2020 (2) 2021 (2) 2022 Jun 2023 Net debt at 31st December 2022 (18,947) Total equity (HK$M) 288,911 290,144 293,610 292,258 288,399 Net rental, fee receipts and proceeds 5,266 Net debt (HK$M) 15,292 6
Slide 28: Maturity Profile and Liquidity
MATURITY PROFILE AND LIQUIDITY MATURITY PROFILE WELL SPREAD AND SUFFICIENT LIQUIDITY HEADROOM Maturity Profile of Available Committed Facilities (at 30th Jun 2023) HK$M Dec 2022 Jun 2023 HK$M Available committed facilities 32,870 41,525 Bonds 2,140 Drawn - committed (22,980) (33,275) RCL / Term Loan
Slide 29: Capital Commitments
CAPITAL COMMITMENTS Profile of Capital Commitments for Investment Properties and Hotels – at 30th Jun 2023 HK$M Expenditure Forecast Expenditure Total Commitments Commitments (1) relating to JVCs (2) Six months Six months 2024 2025 2026 & At 30th Jun 2023 At 30th Jun 2023 ended 30th ending 31st late
Slide 30: Active Capital Recycling
ACTIVE CAPITAL RECYCLING Disposal Proceeds (Investment Properties & Hotels) Asset Disposal Disposal Proceeds Total HK$ Bn Before 2019 2020 2021 2022 2023 2019 Cityplaza One - - 8.2 0.8 - 0.5 (1) 9.5 Cityplaza Three & Four (2) 3.0 12.0 - - - - 15.0 625 King’s Road Office Building (50% basis) - 2.4 -
Slide 31: ESG Updates
ESG UPDATES Sustainable Development Report 2022
Slide 32: Global Leadership in Sustainability
GLOBAL LEADERSHIP IN SUSTAINABILITY ADVANCING TO NET ZERO THROUGH CONTINUED PARTNERSHIP AND INNOVATION Sustainability Indices & Benchmarks Tsinghua University – Swire Properties Joint Research Centre for Building Energy Efficiency and Sustainability Third Contract Renewal Ceremony * Disclaimer: www.
Slide 33: Accelerating Actions to Achieve Net Zero
ACCELERATING ACTIONS TO ACHIEVE NET ZERO MAKING STEADY PROGRESS TOWARDS 1.5°C-ALIGNED SBT Advancing Net Zero Design Initiatives Energy / Carbon Reduction Initiatives for New Developments Continual Rollout of Energy Saving Measures Geothermal energy providing 60% of heating Hybrid Cloud-Based Smart E
Slide 34: Bespoke Tenant Engagement Programmes
BESPOKE TENANT ENGAGEMENT PROGRAMMES ADVANCING ENVIRONMENTAL PERFORMANCE THROUGH COLLECTIVE EFFORTS Green Performance Pledge (GPP) GPP Award Ceremony 2023 Results Highlights Commit Share data and Take action Recognise to collaborate review baseline to meet agreed tenants’ good on sustainability perf
Slide 35: Green Financing and Board Gender Balance
SECURING NEW SUSTAINABILITY-LINKED LOAN FACILITIES AND GREEN BONDS INCREASING GENDER BALANCE ON BOARD Green Financing Board Diversity of our current bond and loan female representation ~65% (as at 10th August 2023) facilities come from green financing 38.5% (as at 30th June 2023) on Board +7.7% comp
Slide 36: Digital
DIGITAL Two Taikoo Place, Hong Kong Artist Impression
Slide 37: Digital Highlights
DIGITAL HIGHLIGHTS MARKET-LEADING SOLUTIONS FOR OUR CUSTOMERS & PARTNERS Empowering our tenants Venture Corporate Enabling our staff Engaging our Customers Capital Programme Launch of Tenant Portal A frontline workplace Leveraging third-party Launch of WeChat Mini- Launch of our market sustainabilit
Slide 38: Leading in Digital
LEADING IN DIGITAL INVESTING IN AND ADOPTING NEW TECHNOLOGIES Corporate CorporateVenture Venture Capital Fund Investment & Adoption Capital Programme US$50M venture capital fund 76% capital committed 14 start-ups & funds Venture capital arm of US- China-based co-creation based general contractor ret
Slide 39: Outlook
OUTLOOK Taikoo Li Sanlitun, Beijing
Slide 40: Outlook
OUTLOOK RECOVERING POST COVID-19 AND COMPELLING GROWTH STRATEGY Hong Kong office Resilient Hong Kong retail Improving Chinese Mainland retail Steady growth South East Asia Opportunistic • A balanced and diversified portfolio with strong fundamentals • Actively implementing HK$100 billion investment
Slide 41: End of Presentation
END OF PRESENTATION Taikoo Hui, Guangzhou
Slide 42: Q&A Appendix
Q&A APPENDIX Taikoo Li Qiantan, Shanghai
Slide 43: 2023 Interim Results Summary
2023 INTERIM RESULTS SUMMARY SOLID FINANCIAL RESULTS HK$M 1H 2022 (1) 1H 2023 Change Revenue 6,910 7,297 6% Valuation gains/(losses) on investment properties 701 (1,332) n.a. Operating profit 4,894 2,873 41% Underlying profit 4,169 3,901 6% Recurring underlying profit 3,672 3,892 6% Reported profit
Slide 44: Property Portfolio at a Glance
PROPERTY PORTFOLIO AT A GLANCE A LEADING PROPERTY DEVELOPER, OWNER AND OPERATOR Investment Props / Hotels Office Retail Hotels (1) Residential / Under Total Attributable Investment Props / Attributable GFA (M sq ft) Serv. Apts Planning Hotels by Region (GFA M sq ft) Completed Hong Kong 9.5 2.6 0.8 0
Slide 45: Key Business Strategies
KEY BUSINESS STRATEGIES ▪ Hong Kong Portfolio Map SUSTAINABLE GROWTH IN SHAREHOLDER VALUE IN THE LONG-TERM 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 o
Slide 46: Geographical Analysis
GEOGRAPHICAL ANALYSIS TOWARDS A MORE BALANCED PORTFOLIO Attributable Gross Rental Income by Region (1) Net Assets Employed Hong Kong Chinese Mainland Miami Hong Kong Chinese Mainland Miami and South East Asia 1H 2023 58% 40% 2% Jun 2023 77% 20% 3% FY 2022 61% 37% 2% Dec 2022 79% 19% 2% Completed Inv
Slide 47: Tenant Mix
TENANT MIX A BALANCED TENANT PROFILE Jewellery & Watches 1.9% Others 19.8% Food & Fashion & Beverages Accessories 19.9% 28.3% Fashion & Jewellery & Accessories Watches 3.1% Chinese 42.4% HK Retail Supermarkets Mainland Supermarkets 5.2% Retail Department 5.1% Cinemas Stores 5.3% Cinemas 14.6% 4.2% I
Slide 48: Lease Expiry Profile
LEASE EXPIRY PROFILE OPTIMISING LEASE RENEWALS AND NEGOTIATIONS FOR LONG-TERM STABILITY ▪ Hong Kong Office ▪ Hong Kong Retail ▪ Chinese Mainland Retail ▪ Chinese Mainland Office ▪ Top ten office tenants occupied ▪ Top ten retail tenants occupied ▪ Top ten retail tenants occupied ▪ Top ten office ten
Slide 49: Hong Kong Projects
HONG KONG PROJECTS REINFORCING THE TWO GLOBAL BUSINESS DISTRICTS Quarry Bay Hong Kong Portfolio Map Admiralty Wah Ha / Zung Fu Six Pacific Place redevelopment ▪ ~ 779,000 sq ft GFA ▪ Pacific Place office extension ▪ 100% owned ▪ ~ 223,000 sq ft GFA ▪ Full ownership for Zung Fu obtained in ▪ 100% own
Slide 50: Chinese Mainland Projects
CHINESE MAINLAND PROJECTS SCALING UP INVESTMENT AND ASSET REINFORCEMENT Sanya Hong Kong Portfolio Map Xi’an Beijing Shanghai Artist Impression Artist Impression Artist Impression Sanya Retail Project Taikoo Li Xi’an INDIGO Phase Two ZHANGYUAN Revitalisation ▪ Premium, resort-style, retail-led ▪ Seve
Slide 51: Hong Kong Portfolio Map
HONG KONG PORTFOLIO MAP Completed Investment Props (incl. Investment Props under Development Hotels) (100% basis) (100% basis) 5.47 M sq ft GFA 0.22 M sq ft GFA Pacific Place Six Pacific Place 4.1 M (Attri. basis) 10,953 sf* Completed Investment Props Five Pacific Place (incl. Hotels) (100% basis) (
Slide 52: Hong Kong Portfolio Map
HONG KONG PORTFOLIO MAP Hong Kong Portfolio Map Completed Investment Props (incl. Hotels) (100% basis) 1.33 M sq ft GFA Citygate 0.36 M (Attri. basis) 52
Slide 53: Chinese Mainland – Guangzhou & Chengdu Portfolio
CHINESE MAINLAND – GUANGZHOU & CHENGDU PORTFOLIO Hong Kong Portfolio Completed Investment Props (incl. Hotel) (100% basis) 3.78 M sq ft GFA Map Taikoo Hui, Taikoo Li Chengdu (1) Guangzhou The Temple House Retail Occupancy 96% 3.67 M (97% basis) Completed Investment Props (incl. Hotel) (100% basis) T
Slide 54: Chinese Mainland – Beijing Portfolio
CHINESE MAINLAND – BEIJING PORTFOLIO Hong Kong Portfolio Map Completed Investment Props (incl. Hotel) (100% basis) INDIGO Mall ONE INDIGO 1.79 M sq ft GFA EAST Beijing Retail occupancy 100% Taikoo Li Sanlitun INDIGO Phase Two (under development) Office occupancy 92% Completed Investment Props (incl.
Slide 55: Chinese Mainland – Shanghai Portfolio
CHINESE MAINLAND – SHANGHAI PORTFOLIO Hong Kong Portfolio Completed Investment Props (incl. Hotels) (100% basis) 3.73 M sq ft GFA Map HKRI Taikoo Hui, Taikoo Li Qiantan Retail Occupancy 95% Shanghai 1.87 M (50% basis) Completed Investment Props HKRI Taikoo Hui Mall (100% basis) HKRI Centre 1&2 The M
Slide 56: Miami Portfolio
MIAMI PORTFOLIO Completed Investment Props (incl. Hotels) (100% basis) 0.5 M sq ft GFA Brickell City Centre 0.31 M (Attri. Basis) Shopping Mall Retail occupancy (1) 90% Under planning (100% basis) 1.51 M sq ft GFA One Brickell City Centre (1) Including space allocated to prospective tenants who have
Slide 57: Hotel Portfolio
HOTEL PORTFOLIO Managed Hotels No. of Rooms Interest Owned but Non-managed Hotels No. of Rooms Interest (100% basis) (100% basis) Hong Kong The Upper House 117 100% Hong Kong Island Shangri-La Hong Kong 557 20% EAST, Hong Kong 331 100% JW Marriott Hotel Hong Kong 608 20% Headland Hotel (1) 501 0% Co
Slide 58: Business Outlook
BUSINESS OUTLOOK HK ▪ Resilient office portfolio, despite weak market and CM ▪ To double gross floor area in the Chinese Mainland over the next Office increased competition from Central and Kowloon East. Retail decade. ▪ Taikoo Place benefiting from flight-to-quality. ▪ Focus on growing Taikoo Li an
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