New World Development Co. Ltd. · HKEX:17
New World Development — H1 FY2024 Earnings Presentation
36 slides from New World Development's earnings presentation, Feb 29, 2024
Slide 1: FY2024 Interim Presentation Analyst Briefing
FY2024 INTERIM PRESENTATION ANALYST BRIEFING 29 February 2024
Slide 2: HK Property Market Expected to Revive
HK PROPERTY MARKET EXPECTED TO REVIVE On the Back of Scrapping ALL Property Cooling Measures IMPROVED SENTIMENT & INTERESTS with increasing sales enquiries & releasing pent-up demand TRANSACTION VOLUME TO INCREASE supported by local end users, investment and incoming talents & professionals’ demand
Slide 3: Delivering Resilient Results in a Challenging Environment
Delivering Resilient Results in a Challenging Environment… …With Lights Seen at the End of the Tunnel MAINTAIN OVERALL STABLE PROFITABILITY from rising core profit margin and improved IP contributions REDUCING DEBT, ENSURING LIQUIDITY & FINANCIAL FLEXIBILITY with capital resources exceeding short-te
Slide 4: Financial Highlights
SECTION I FINANCIAL HIGHLIGHTS
Slide 5: Financial Highlights
FINANCIAL HIGHLIGHTS DELIVERING RESILIENT RESULTS IN A CHALLENGING ENVIRONMENT Core Profit (1) (2) Profit/(loss) for the Period Capital Resources HK$52.0B HK$1,543M (+16% YoY) HK$4,866M From continuing operations (Excl. NWS) f HK$39.0b cash & bank balances HK$502M HK$13.0b +12% YoY Profit attri. to
Slide 6: Our Deleveraging Strategy
SECTION II OUR DELEVERAGING STRATEGY
Slide 7: Deleveraging Strategy
DELEVERAGING STRATEGY ADDRESSING DEBT WHILE ENSURING LIQUIDITY AND FINANCIAL FLEXIBILITY Net Gearing Ratio (1) MEGA IPs TO OPEN Business 1 IP RAMP UP FROM END OF 2024 TO PRICE AS PER 2 ROBUST DP PIPELINE MARKET CONDITIONS Management -3.4% WILL NOT consider rights issue CAPEX 21% (2) YoY 3 CAPEX & OP
Slide 8: Recurring Business to Contribute ~50% Profit by 2026
11. INVESTMENT PROPERTIES RECURRING BUSINESS TO CONTRIBUTE ~50% PROFIT BY 2026 Improved earnings stability as a result of strong rental income growth from IP pipeline 2023 2026 Recurring core profit Non-recurring core profit ~30% ~70% ~50% Existing IPs New IPs Major IPs Victoria Kai Tak Shenzhen K11
Slide 9: Kai Tak Sports Park: The Largest Sports Venue in Hong Kong
11. INVESTMENT PROPERTIES KAI TAK SPORTS PARK: THE LARGEST SPORTS VENUE IN HONG KONG (By alphabetical order) The Largest “Sportainment” Retail Kai Tak Sports Park Experience Landmark Completion in 2024 Completion in 2H 2024 Opening in 2025 (Host the 15th National Games in 2025) GFA No. of stores Mai
Slide 10: HK Budget 2024 Removed All Property Demand Suppression Policies
2 DEVELOPMENT PROPERTIES – HONG KONG HK BUDGET 2024 REMOVED ALL PROPERTY DEMAND SUPPRESSION POLICIES With other property related restrictions relaxed by HKMA, such as mortgage ratios and stress test requirements POTENTIAL BUYERS: • Removal purchase restrictions significantly reduce the transaction c
Slide 11: Robust DP Pipeline Supporting Continuous Growth
22. DEVELOPMENT PROPERTIES ROBUST DP PIPELINE SUPPORTING CONTINUOUS GROWTH FY2024 + (selective projects) …… Hong Kong • Kai Tak 6591 • Kai Tak • WCH Phase 5 • State Theatre • 4A-4P Seymour • JV with CR Land Mansion Road …… China • Guangzhou The Sillage 白鹅潭 • Shenzhen Longgang 188 • Shenzhen • Shenzh
Slide 12: First Northern Metropolis Cooperation Agreement in HK
22. DEVELOPMENT PROPERTIES FIRST NORTHERN METROPOLIS COOPERATION AGREEMENT IN HK Strategic cooperation with China Resources Land Future Pipeline Unlock Value Strategic cooperation agreement signing with CR Land in Dec 2023 Site Area (FT2) Plot Ratio GFA (FT2) ~150,000 ~5x ~720,000 No. of units to bu
Slide 13: Significantly Lower Capex in FY24
3 CAPEX & OPEX OPTIMIZATION SIGNIFICANTLY LOWER CAPEX IN FY24 CAPEX Optimization 37 35 Significantly Lower in FY24 19 2H: 9.4 4 15 2H: 7.5 1H: 9.6 1HFY24: 1H: 7.5 -21% YoY FY21A FY22A FY23A (1) FY24 (1) Note: (1) All figures in HK$b CAPEX Optimization Initiatives More disciplined land acquisition du
Slide 14: Opex Optimization to Reduce G&A
33. CAPEX & OPEX OPTIMIZATION OPEX OPTIMIZATION TO REDUCE G&A A Group-wide Continuous Improvement Program to drive down G&A cost OPEX Optimization 1HFY24 ✓ Corporate function optimization G&A expenses ✓ Restructuring of business units (Excl. NWS) ✓ Stringent hiring policy HK$2.0b -16% YoY ✓ Signific
Slide 15: Non-Core + Other Disposals
4 NCD NON-CORE + OTHER DISPOSALS Non-core disposals to i) optimize portfolio mix; ii) accelerate deleveraging ;iii) increase financial flexibility Non-core + other disposals ahead of market Progress update HK$b NWS ✓ NWD has been actively disposing non-core assets since FY2019 for 27.7 capital recyc
Slide 16: Explore Corporate Actions to Unlock Value
55. CORPORATE ACTIONS EXPLORE CORPORATE ACTIONS FOR VARIOUS BUSINESSES TO UNLOCK VALUE AND MAXIMIZE SHAREHOLDER RETURN Development Properties Actively exploring strategic options for various Farmland Investment businesses in order to: (Hong Properties Kong) ✓ Unlock value of individual business unit
Slide 17: Dividend Adjustment for Better Allocation of Capital
66. DIVIDEND ADJUSTMENT DIVIDEND ADJUSTMENT FOR BETTER ALLOCATION OF CAPITAL Remain committed to returning capital as part of creating long-term shareholder value Dividend (HK$/share) Rationale for dividend adjustment 2.35 ✓ DPS with reference to core profit and profit attributable 2.06 2.06 to shar
Slide 18: Treasury Management: Significant Progress in Debt Reduction
7 TREASURY MANAGEMENT SIGNIFICANT PROGRESS IN OVERALL DEBT REDUCTION; COMMITTED TO FURTHER REDUCTIONS Total capital resources exceeded short-term debt obligations Total Debt Trending Down Capital Resources as of Dec 2023 (HK$b) (HK$b) 185.3 164.2 157.9 8.0 13.0 Short term debt 52.0 52.0 excluding 50
Slide 19: Bond and Perp Repayment & Buyback
7 TREASURY MANAGEMENT BOND AND PERP REPAYMENT & BUYBACK (PRINCIPAL OF HK$11B) TO ACHIEVE LEVERAGE REDUCTION & EARNINGS ACCRETION Repayment of bond due in 1HFY24 ~HK$6.3bn Total bonds & perps = repayment & buyback: Principal HK$11bn Benefit to us Continue to create value for our shareholders Proactiv
Slide 20: Business and Financial Review
SECTION III BUSINESS AND FINANCIAL REVIEW
Slide 21: DP and IP Results Under Challenging Environment
KEY HIGHLIGHTS IN 1HFY24 DP AND IP RESULTS UNDER CHALLENGING ENVIRONMENT HK$m Hong Kong Mainland China A B 896 929 1,745 1,492 1,299 IP 1,094 Revenue: 441 Investment 454 HK$2.7bn (+12.0%) Properties Segment results: HK$1.8bn (+14.3%) Revenue Segment results Revenue Segment results 1HFY23 1HFY24 1HFY
Slide 22: Solid K11 Results Benefitting from City Reopening
A INVESTMENT PROPERTIES HONG KONG SOLID K11 RESULTS BENEFITTING FROM CITY REOPENING & STRATEGY ON COLLABORATION WITH DIFFERENT BRANDS IP Revenue Favorable HK policy YoY K11 growth YoY growth +17% +21% 1,745 Night Market at HK Tourism Development Blueprint 2.0 Flight Tickets Giveaway Hong Kong’s Wate
Slide 23: K11 Pipeline: Entering a Harvesting Phase
A INVESTMENT PROPERTIES HONG KONG K11 PIPELINE: ENTERING A “HARVESTING PHASE” BEGINNING THE LONGER-TERM PROCESS OF REALIZING RETURNS ON PAST INVESTMENTS 11 SKIES & KAI TAK SPORTS PARK: Newest landmarks at the heart of GBA 11 SKIES Kai Tak Sports Park One-Stop Largest Entertainment, Retail and Commer
Slide 24: Resilient K11 Margin from Good Cost Control
B INVESTMENT PROPERTIES MAINLAND CHINA RESILIENT K11 MARGIN RESULTING FROM GOOD COST CONTROL MEASURES IP Revenue Pipeline: K11 ECOAST in Shenzhen Prince Bay (深圳太子灣) K11 YoY YoY growth growth +4% -3% 929 896 1HFY23 1HFY24 IP Segment Results K11 YoY YoY growth growth +3% +12% K11’s inaugural flagship
Slide 25: Hong Kong Steady Pipeline Launching in Coming Years
C DEVELOPMENT PROPERTIES HONG KONG HONG KONG STEADY PIPELINE LAUNCHING IN COMING YEARS Initial Launch (selective projects) Ongoing Projects (selective projects) • Kai Tak 6591 • Kai Tak 6576 Residential Projects Commercial Projects FY24 • 4A-4P Seymour Road • Kai Tak Mansion • The Pavilia Farm I&II
Slide 26: Mainland China Sales Exceeded Target
D DEVELOPMENT PROPERTIES MAINLAND CHINA MAINLAND CHINA SALES EXCEEDED TARGET Abundant saleable resources of RMB57b+ in GBA and YRD tier-one cities Contracted sales Recent key projects launched GUANGZHOU THE 1H EXCEEDED SILLAGE TARGET To be launched in 2024 • Housing purchase restrictions lifted in 1
Slide 27: Mainland China Unique Urban Renewal Projects Approach
D DEVELOPMENT PROPERTIES MAINLAND CHINA MAINLAND CHINA UNIQUE URBAN RENEWAL PROJECTS (“URP”) APPROACH Focus on URP with less upfront capex, lower land premium and shorter execution process Urban Renewal Projects Longgang District 188 Industrial Zone Project Deeply involved in PRC >40 years Project t
Slide 28: Appendix
APPENDIX
Slide 29: Solid K11 Results Benefitting from Iconic Branding
INVESTMENT PROPERTIES HONG KONG SOLID K11 RESULTS BENEFITTING FROM ICONIC BRANDING AND COMPETITIVE MARKET POSITION Management Alpha K11 MUSEA Differentiated Brand value Good tenant mix Cross-selling customer experience 1HFY2024 Mall Sales YoY Footfall YoY Occupancy MUSEA 41% MUSEA 39% MUSEA 98% Art
Slide 30: Continuous Pipeline Growth of K11
INVESTMENT PROPERTIES K11 PIPELINE CONTINUOUS PIPELINE GROWTH OF K11 38 K11 projects upon completion with ~3.0M sqm in portfolio K11 projects 1 1 Status Site Type GFA (sqm) Status Site Type GFA (sqm) Hong Kong K11 34,000 3 Shenzhen (Qianhai) K11 ATELIER 100,000 Hong Kong D · PARK 60,000 FY2024 3 She
Slide 31: Stable DP Results Despite Caution Amongst Buyers
DEVELOPMENT PROPERTIES STABLE RESULTS DESPITE CAUTION AMONGST BUYERS Strong mainland profit compensates for sluggish sales in Hong Kong DP Revenue by Region Revenue decrease 11,278 -40% YoY 5,542 6,741 1,246 Major booking in 1HFY24 5,736 5,495 Mount Pavilia 1HFY23 1HFY24 GBA projects, e.g. 廣州嶺南 Main
Slide 32: NWD Projects Key Beneficiary of Policy Address
DEVELOPMENT PROPERTIES HONG KONG NWD PROJECTS KEY BENEFICIARY OF POLICY ADDRESS Northern Metropolis Strategy: Increased clarity and certainty solidify value of NWD’s farmland resources 4. 藍綠康樂旅遊生態圈 1. High-end professional services and logistics hub As of 31 Dec 2023 2. 創新科技地帶 Blue and green recreat
Slide 33: Fanling North New Development Areas Poised for Rapid Development
DEVELOPMENT PROPERTIES HONG KONG 15 FANLING NORTH NEW DEVELOPMENT AREAS POISED FOR RAPID DEVELOPMENT Farmland holdings will benefit from Northern Metropolis Strategy Easy access to Ma Sik Road 馬適路 • Road connections in place Previously loaned to govt for free to build temporary isolation/quarantine
Slide 34: Massive Value Re-Creation on Agricultural Land
DEVELOPMENT PROPERTIES HONG KONG MASSIVE VALUE RE-CREATION ON AGRICULTURAL LAND Abundant resources from farmland conversion 8 6 恆香 7 永寧村 唐人新村山頭 10 龍田村五期 9 Emerald Green Sewage Pumping Station Ma Tin Village Government, Phase 1 Institution & Community zone (G/IC) ATRIUM HOUSE Residential Open Phase 2
Slide 35: ESG Integration – Recent Achievements
ESG INTEGRATION ESG INTEGRATION – RECENT ACHIEVEMENTS Environment Social Completed preliminary physical climate risk assessments across 100% of Investing in pilot mental health and wellbeing programmes supporting NWD asset portfolio, including property development projects and existing 500+ staff. P
Slide 36: Disclaimer
DISCLAIMER Important notice The information contained in these materials is intended for reference and general information purposes only. Neither the information nor any opinion contained in these materials constitutes an offer or advice, or a solicitation, inducement, invitation, recommendation or
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