Wharf (Holdings) Ltd. · HKEX:4

Wharf (Holdings) — The Wharf (Holdings) — H1 2017 Earnings Presentation

67 slides from Wharf (Holdings)'s earnings presentation, Aug 9, 2017

  1. Slide 1: IP Demerger in Progress: 2017 Interim Results

    IP Demerger in Progress The Wharf (Holdings) Limited 2017 Interim Results 9 Aug 2017 1

  2. Slide 2: Interim Results and Strategic Review

    1. Interim Results 2. Strategic Review 2

  3. Slide 3: Backdrop: Overview

    Backdrop Overview  Underlying Profit Increased by 22% to $7,271M  Stable IP Performance (66% of Underlying Profit)  DP Core Profit More than Doubled (32% of Underlying Profit)  CME Exit to Complete in Oct 2017  DPS Increased by 10% to $0.64 3

  4. Slide 4: Quality IP Demonstrated Resilience

    Quality IP Demonstrated Resilience Overview IP Core Profit (HKD billion) $4.8B (+3%) 4.2 4.6 4.8 3.2 3.8 1H13 1H14 1H15 1H16 1H17  IP Core Profit +3% to $4.8B Total Core Profit  66% of Group Core Profit China  DP Core Profit +161% to $2.3B Properties $7.3 billion 26% HK 72% Properties (+22%) 2% O

  5. Slide 5: Differentiating IP Driving Growth

    Differentiating IP Driving Growth Overview Total IP Revenue (HKD billion) $7.9B (+4%) HK China 1.2 1.2 1.1  Productive Retail Portfolio 0.8  Stable Office Sector 0.5 6.4 6.7  Positive Rental Reversion 6.1 5.6 4.8 1H13 1H14 1H15 1H16 1H17 5

  6. Slide 6: Financial Highlights

    Financial Highlights Overview HKD Million 1H17 1H16 % Chg Group Revenue 17,063 20,021 -15% Operating Profit 8,553 8,075 +6% Core Profit** 7,271 5,972 +22%  Core profit +25% Profit Before IP Revaluation Surplus 7,270 6,200 +17% Net IP Revaluation Surplus  IP Revaluation Surplus: $906M 1,171 525 +12

  7. Slide 7: Agenda

    Agenda A Hong Kong Properties B China Properties C Other Businesses D Financial Management E Next 7

  8. Slide 8: Agenda

    Agenda A Hong Kong Properties B China Properties C Other Businesses D Financial Management E Next 8

  9. Slide 9: Improving Retail Market

    Improving Retail Market A B C D E HK IP HK Retail Sales (HKD billion) Title 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 YoY -12.5% -8.2% -7.5% -3.7% -1.3% +0.2% 1H 2H 494.5 493.2 475.2 436.6 241.6 243.6 229.6  Sales & Tourist Arrivals On the Mend 216.9  1H17 Total Tourist Arrivals +2.4% 218.4 (-0.6%) (Mainlande

  10. Slide 10: Retail Sales Revival On Track

    Retail Sales Revival On Track A B C D E HK IP HC Retail Sales (HKD billion) Title TS Retail Sales (HKD billion) 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 YOY -18.9% -9.6% -6.4% -3.8% +1.4% +4.4% 1H 2H YoY -20.0% -10.3% -6.3% -7.0% -4.8% -3.7% 1H 2H 18.2 5.3 17.8 15.2 5.1 4.5 14.4 4

  11. Slide 11: Outlook – Stabilizing but Mixed

    Outlook – Stabilizing but Mixed A B C D E HK IP  Global Economic & Political Uncertainties  Foreign Currency Movements & Monetary Policy Divergence  Europe Terrorist Attacks Divert Global Tourism Trend 11

  12. Slide 12: Best-positioned to Build IP Performance

    Best-positioned to Build IP Performance A B C D E HK IP Retail Revenue by Segment Others 2% 69% $4.7 billion 6% PH  Stabilizing Retail Sales Strengthens (+3%) Rental Outlook HC 23% TS  Continuous AEIs & Tenant Mix Refinement HC $3,258M +5%  Positive Rental Reversion TS $1,065M -2% PH $287M +6% 12

  13. Slide 13: HC – AEIs Driving Value Creation

    HC – AEIs Driving Value Creation A B C D E HK IP HC Retail Revenue (HKD billion) $3.3B (+5%) 1H 2H  Sales Productivity Underpins Positive 3.1 2.9 2.9 Rental Growth 2.5  Constant Re-tenanting Further Enhances Retail Experience 2.8 3.0 3.1 3.3  Attracting New Differentiating Retailers 2.4 2013 2014

  14. Slide 14: TS – Redefining Retail Experience

    TS – Redefining Retail Experience A B C D E HK IP TS Retail Revenue (HKD billion) $1.1B (-2%) 1H 2H  Passing Rent p.s.f +1%, Revenue Drop 1.0 1.0 Due to 4% Lettable Area Reduction* 1.0  Tenant Refinement Brings Excitement & 0.8 Freshness  Opening of LEGO Certified Store & 1.1 1.1 0.7 0.9 1.0 Face

  15. Slide 15: TS – New Excitements

    TS – New Excitements A B C D E HK IP LEGO Certified Store – 9/F Facesss – 4/F Lettable Area: 3,385 s.f Lettable Area: 6,459 s.f Opened on 8 Jul 2017 Opened on 21 Jul 2017 15

  16. Slide 16: HC & TS – Attracting the Most Aspiring Brands

    HC & TS – Attracting the Most Aspiring Brands A B C D E HK IP HC TS (Selected Brands) (Selected Brands) Expansion HK/ Kowloon Debut Other Commitments 16

  17. Slide 17: Creative Promotion & Cultural Enrichment Initiatives

    Creative Promotion & Cultural Enrichment Initiatives A B C D E HK IP HC TS 17

  18. Slide 18: Office - Stable

    Office - Stable A B C D E HK IP HK Office Revenue (HKD billion) $1.7B (+4%) 1H 2H 1.8 1.6  High Occupancy (96%-98%) 1.5 1.3  Positive Rental Reversion 1.6 1.7 1.4 1.5 1.2 2013 2014 2015 2016 2017 18

  19. Slide 19: 50%-Owned Mount Nicholson

    50%-Owned Mount Nicholson A B C D E HK DP  Symbol of Luxury & Scarcity  1H 2017: 2 Houses & 6 Apartments House 7 Sold for >$3.1B (Gross basis)  Accumulated Sales: House 1  9 Houses & 22 Apartments House 1 & 7 Ranked  $13.7B (Gross basis) among Top 3 of 2017 Top Luxury Residential Sales * * “Glo

  20. Slide 20: Agenda

    Agenda A Hong Kong Properties B China Properties C Other Businesses D Financial Management E Next 20

  21. Slide 21: China IP – Long-term Value Creation

    China IP – Long-term Value Creation A B C D E China IP China IP Revenue (HKD billion) $1.2B (+4%) 1H 2H 1.2 1.2  Solid Sales & Rental Performance 1.2  New Leading IPs Poised for Growth 0.8  Solid Foundation to Build Future 1.2 Success 1.1 1.2 0.8 0.5 2013 2014 2015 2016 2017 21

  22. Slide 22: Mixed-use CDIFS – City Within A City

    Mixed-use CDIFS – City Within A City A B C D E China IP Award-winning Trendsetting Landmark in China West 8-Level Retail/ Lifestyle Podium Premium Offices Luxurious IFS Residences Niccolo Chengdu Among the Top in Retail Sales & Attracted a Large Concentration of Among the Most Exclusive Footfall in

  23. Slide 23: CDIFS Mall – Stands Out from the Crowd

    CDIFS Mall – Stands Out from the Crowd A B C D E China IP 1H17 CDIFS Mall Net Revenue (Net of Tax) RMB367M (+18%) Foot Traffic Growth +22% Turnover Rent Portion 24%  Promising Performance Continued Occupancy Cost* 14% * Occupancy Cost = Retail Rent/Retail Sales  Unmatched Sales Productivity  Doub

  24. Slide 24: CDIFS Office – Selective Tenant Profile

    CDIFS Office – Selective Tenant Profile A B C D E China IP  Top-notch Workplace – 46% Committed  Over 125,000 s.m Leased in 3.5 Years – Encouraging  Rental Rates Achieved among the Highest in CD 24

  25. Slide 25: DP Sales On Track

    DP Sales On Track A B C D E China DP Contracted Sales (RMB billion) RMB11.9B (-27%) 1H 2H  Sales Achieved: 15.1  GFA Sold 0.5M s.m (-40%) 10.0 15.7  ASP RMB22,500 p.s.m (+21%) 12.6  Restrictive Policies Depict a 16.3 11.9 Challenging Outlook 10.9 10.3 8.9  2017 Sellable Resources 1.6M s.m 2013

  26. Slide 26: Improving Profitability

    Improving Profitability A B C D E China DP 1H17 Operating Matrix* Revenue $9,095M -30%  Lower Completion & Recognition Operating Profit $2,355M +1%  Enhancing Operating Margin Operating Margin 25.9% +8.1 ppts  Net Order Book RMB30B or 1.1M s.m Completed GFA 409,000 s.m -63% Recognized GFA 564,000

  27. Slide 27: Disciplined Landbanking

    Disciplined Landbanking A B C D E China DP  Remains Selective and Opportunistic Attributable Date City Attributable GFA (s.m) Consideration Ownership  Focus on Tier 1 Cities & Top Tier 2 (RMB) Cities Feb17 Hangzhou 32,000 0.46B 23% Total 32,000 0.46B  DP Land Bank 3.4M s.m (Average Cost: RMB5,600

  28. Slide 28: Agenda

    Agenda A Hong Kong Properties B China Properties C Other Businesses D Financial Management E Next 28

  29. Slide 29: MTL

    MTL A B C D E Other Businesses Throughput (million TEUs) HK 2.7 +17% DCB 0.6 -11%  Revenue $1,361M (+10%) TC 1.2 +11%  Operating Profit $349M (+20%) Total 4.5 +11%  Sold Remaining 50% Stake in Taicang Market Throughput in Jun 2017; The Remaining Disposal Gain Booked in 1H17 South China +7% Kwai T

  30. Slide 30: Wharf Hotels

    Wharf Hotels A B C D E Other Businesses  Revenue $774M (+5%); Operating Profit $155M (+49%)  Improving Operating Environment  Niccolo Chengdu at CDIFS was Named One of China’s Best Business Hotels by Condé Nast Traveler in Jun 2017  Niccolo Chongqing, a 252-Room Hotel at CQIFS to Open in 3Q17 

  31. Slide 31: Agenda

    Agenda A Hong Kong Properties B China Properties C Other Businesses D Financial Management E Next 31

  32. Slide 32: Prudent Financial Management

    Prudent Financial Management A B C D E Financial Management Net Debt to Total Equity 21.7% 20.6% 20.4% 18.8% 19.2% 18.9% 15.8% 14.9%  Net Gearing Ratio Remained Low at 7.3% 6.4% 6.4% 2008 2009 2010 2011 2012 2013 2014 2015 2016 1H17  Group Net Debt $21.4B Net Debt / Wharf Group Net Debt  Floating

  33. Slide 33: Prudent Financial Management

    Prudent Financial Management A B C D E Financial Management Average Interest Cost Debt Maturity (HKD billion) 1H17 Increase on Debt Mix Change 16.2 3.3% 3.2% 3.2% 3.2% 11.4 9.9 2.8% 5.5 5.4 2.8 2013 2014 2015 2016 1H17 Jul17-Jun18 Jul18-Jun19 Jul19-Jun20 Jul20-Jun21 Jul21-Jun22 Jul22 & After 33

  34. Slide 34: Overview of Application of Funds

    Overview of Application of Funds A B C D E Financial Management Major Capital and Development Expenditure Major Capital and Development Expenditure (HKD billion) 1H17 FY17 HKD (Actual) (Projected) 32.8 31.5 China DP $5.7B $13.4B 26.9 China IP $2.1B $5.4B 23.4 23.5 HKIP $0.6B $1.9B Others $1.0B $2.8B

  35. Slide 35: Agenda

    Agenda A Hong Kong Properties B China Properties C Other Businesses D Financial Management E Next 35

  36. Slide 36: Coming Attractions

    Coming Attractions A B C D E Next Mount OTE The Murray CQIFS CSIFS Nicholson 4Q17 4Q17 3Q17 2018 3Q17 36

  37. Slide 37: Coming Attractions

    Coming Attractions A B C D E Next Mount OTE The Murray CQIFS CSIFS Nicholson 4Q17 4Q17 3Q17 2018 3Q17 37

  38. Slide 38: 50%-Owned Mount Nicholson

    50%-Owned Mount Nicholson A B C D E Next 3rd Phase (Tower C&D) Expected End-3Q17 38

  39. Slide 39: Coming Attractions

    Coming Attractions A B C D E Next Mount OTE The Murray CQIFS CSIFS Nicholson 4Q17 4Q17 3Q17 2018 3Q17 39

  40. Slide 40: Iconic Ocean Terminal Extension (OTE)

    Iconic Ocean Terminal Extension (“OTE”) A B C D E Next GFA ~100,000 s.f No. of Floors 5 11 F&Bs No. of Tenants 2 Retails Expected Opening Date 4Q17 270-Degree Panorama of Victoria Harbour 40

  41. Slide 41: Coming Attractions

    Coming Attractions A B C D E Next Mount OTE The Murray CQIFS CSIFS Nicholson 4Q17 4Q17 3Q17 2018 3Q17 41

  42. Slide 42: The Murray – The Remaking of an Icon

    The Murray – The Remaking of an Icon A B C D E Next Accommodation 298 Rooms & 38 Suites (25 Floors) • Murray on The Rooftop (Bar & Restaurant) • The Tai Pan (Modern European) Restaurants & Bars • Murray Lane (Lobby Bar) • The Garden Lounge • Guo Fu Lou (國福樓)* Meeting & Event >20,000 s.f Spaces Spa,

  43. Slide 43: Coming Attractions

    Coming Attractions A B C D E Next Mount OTE The Murray CQIFS CSIFS Nicholson 4Q17 4Q17 3Q17 2018 3Q17 43

  44. Slide 44: CQIFS & CSIFS – Mixed-use Developments

    CQIFS & CSIFS – Mixed-use Developments A B C D E Next 50%-Owned CQIFS CSIFS Retail Hotel Hotel Retail 1.2M s.f 30% 0.4M s.f 12% 1.0M s.f 10% 2.7M s.f 35% Total 4.1M s.f Total 7.9M s.f (100% Level) Office* Office 2.5M s.f 4.2M s.f 60% 53% Total Development Area, Excl. Carpark (Total 2,211 Carparks) T

  45. Slide 45: CQ & CSIFS Mall – Encouraging Pre-leasing Status

    CQ & CSIFS Mall – Encouraging Pre-leasing Status A B C D E Next Mall CQIFS CSIFS  To Mirror the Success of Harbour City (HK) & CDIFS GFA (s.f) 1.2M* 2.7M Scheduled for Sep 2017 1Q18  Proven Management & Execution Opening Capabilities % of Area Leased/ >90% >90% Under Offer  Promising Pre-leasing

  46. Slide 46: CQIFS Mall – New Lifestyle Destination

    CQIFS Mall – New Lifestyle Destination A B C D E Next Diversified Tenant Mix (Selected Brands) CQ Debut  To Offer an Exceptional One-Stop Lifestyle Experience Renowned Brands  Over 150 Brands Incl. 80 Int’l Brands & 20 CQ Debuts Sportswear & Anchor Mid to High-end Entertainment & 21% Lifestyle 9%

  47. Slide 47: Corporate Social Responsibility

    CSR CORPORATE SOCIAL RESPONSIBILITY 47

  48. Slide 48: Key CSR Achievements

    Key CSR Achievements CSR  Published CSR Report 2016 in Accordance with GRI G4 Sustainability Reporting Guidelines, and in Alignment with HKEx Environmental, Social and Governance Reporting Guide  Hong Kong Quality Assurance Agency’s CSR Index Plus  Hang Seng Corporate Sustainability Index Constit

  49. Slide 49: 2016 CSR Performance Highlights

    2016 CSR Performance Highlights CSR Total Assets HK$443.8 billion Hang Seng Corporate Sustainability Index Series Member 2016-2017 Reduced >17% GHG Emissions Since 2014* 6,600+ Talent* 102,000+ Training Hours* Supporting 43,000 Students* 1,100+ Volunteers* Donations of HK$36 million The Wharf’s CSR

  50. Slide 50: Interim Results and Strategic Review

    1. Interim Results 2. Strategic Review 50

  51. Slide 51: CME

    CME i-CABLE  All Major Regulatory Hurdles Cleared  Open Offer (Expected Completion: 14 Sep 2017)  Loan Capitalization (Expected Completion: Sep/ Oct 2017)  Distribution in Specie of All i-CABLE Shares to Wharf Shareholders (2 Stages) Scheduled for Completion in Sep/ Oct 2017  These will Complet

  52. Slide 52: IP Demerger (Dividend Neutral)

    IP Demerger (Dividend Neutral) Wharf REIC (Incl. 72% HCDL) Wharf  GFA 11M+s.f; Value $230B+  China IP  Annual Turnover $13B+  China DP  Unique Commercial HKIPs:  Other HK Properties  Harbour City  Logistics (MTL, HACTL)  Times Square  Hotel Management  Plaza Hollywood  Crawford House  W

  53. Slide 53: Appendix

    Appendix >< WHARF

  54. Slide 54: IP Portfolio

    IP Portfolio 1H17 IP Revenue: $7,927M 1H17 IP Valuation: $305.9B By Business By Business Office S.A. & Office S.A. & 26% Others 11% Others 4% 34% 70% 55% Retail Retail China China 16% 14% 84% 86% HK HK 54

  55. Slide 55: HKIP Performance

    HKIP Performance Harbour City Times Square Plaza Hollywood 1H17 Revenue % Chg Revenue % Chg Revenue % Chg (HKD million) Retail 3,258 +5% 1,065 -2% 287 +6% Office 1,235 +2% 350 +1% - - Hotels & Club 616 +4% - - - - Serviced Apt. 163 +4% - - - - Total 5,272 +4% 1,415 -1% 287 +6% Valuation* as of $172.

  56. Slide 56: Commercial Properties Pipeline

    Commercial Properties Pipeline Commercial Properties Completion Schedule (Million s.f) 53.5M s.f Changsha IFS 11.2 Suzhou IFS 9.4 Changsha Outlets 3.9 4.1 0.8 0.8 0.8 0.8 2.7 2.7 2.7 Wuxi IFS 2.7 6.1 6.1 6.1 Chongqing IFS* 2.2 2.2 4.6 2.0 2.0 8.2 8.2 8.2 8.2 Chengdu IFS 6.6 7.4 3.9 Other China Comme

  57. Slide 57: China Commercial Properties Pipeline

    China Commercial Properties Pipeline Wuxi IFS Suzhou IFS Chongqing IFS Changsha IFS 250,000 s.m 383,000 s.m 570,000 s.m* 1,043,000 s.m Grade A Offices Grade A Offices, Apartments & Retail, Grade A Offices & Retail, Grade A Offices & Hotel Hotel Hotel No Retail No Retail Retail 114,000 s.m Retail 254

  58. Slide 58: Chongqing City Profile

    Chongqing City Profile  China’s Western Development Strategy Chongqing 1H17 Tertiary Industry +10.8% 50.4% of CQ GDP  Strong Presence of Population 30.5 million Tertiary Primary International Brands 1H17 GDP +10.5% (National Avg.: 50% 4% +6.9%)  The World’s Largest 1H17Retail Sales +11.7% Municip

  59. Slide 59: Changsha City Profile

    Changsha City Profile Changsha 1H17 Tertiary Industry +10.2%  Hub City in Central China 47.1% of CS GDP Population 7.6 million Tertiary  Beneficiary of China’s “Rise +8.5% 3% Primary 47% of Central China” Campaign 1H17 GDP (National Avg.: +6.9%)  Important Entertainment 1H17 Retail Sales +10.6% C

  60. Slide 60: China Contracted Sales Breakdown by City

    China Contracted Sales Breakdown by City Region City No. of Projects Contracted GFA Sold on Sale in 2016 Sales (%) (%) Eastern China Shanghai 2 12% 2% Suzhou 5 11% 10% Wuxi 4 15% 22% Changzhou 3 1% 1% Ningbo 3 7% 7% Hangzhou 12 21% 21% Eastern China Sub-Total: 29 67% 63% Western China Chengdu 7 3% 4

  61. Slide 61: Projects Launched in 1H17

    2 Projects Launched in 1H17 Attributable Attributable Average Price Projects City New Launch Proceeds GFA Sold (RMB psm) (RMB’M) (s.m) The Osmanthus Grace (Site 18) Hangzhou May 208 6,200 33,800 Longfor Mansion (Site 16) Hangzhou Jun 195 6,100 32,100 61

  62. Slide 62: China Key Projects on Sales in 1H17

    China Key Projects on Sales in 1H17 Attributable Attributable Average Price Projects City Proceeds GFA sold Ownership (RMB psm) (RMB’M) (s.m) Shanghai Pudong Shanghai 1,372 11,800 116,100 100% Huangpujiang Wuxi Glory of Time Wuxi 896 50,300 17,800 100% Greentown Zhijiang No.1 Hangzhou 709 29,500 22,

  63. Slide 63: China Land Bank Breakdown by City

    China Land Bank Breakdown by City Region City GFA million (s.m) % Total Eastern China Shanghai 0.5 9% Suzhou 0.6 11% Wuxi 0.7 12% Changzhou 0.1 1% Ningbo 0.0 1% Hangzhou 0.5 9% Eastern China Sub-Total: 2.4 43% Western China Chengdu 1.5 25% Chongqing 0.6 10% Western China Sub-Total: 2.1 35% Southern

  64. Slide 64: China Key Properties Completion

    China Key Properties Completion Projects Attributable GFA (s.m) Key Completion in 1H17 Suzhou Times City 122,300 Wuxi River Pitti (Bi Xi) 87,700 Chongqing IFS 68,000 Chengdu Times City 56,600 Chengdu Times Town 42,100 Projected Key Completion in 2H17 Shanghai Pudong Huangpujiang 136,000 Suzhou Times

  65. Slide 65: China New Projects for Sales in 2H17

    China New Projects for Sales in 2H17 Projects City Ownership Foshan Site (依雲曦岸) Foshan 40% Longxi (Site 12) Hangzhou 100% 65

  66. Slide 66: Thank You

    IP Demerger in Progress Thank You 66

  67. Slide 67: End of Presentation

    End of Presentation The Wharf (Holdings) Limited [HKEx Stock Code: 0004.HK] Disclaimer 1) All information and data are provided for information purposes only. All opinions included herein constitute Wharf’s judgment as of the date hereof and are subject to change without notice. The Group, its subsi

The Wharf (Holdings) — H1 2017 Earnings Presentation on 6ix