Sun Hung Kai Properties Limited · HKEX:16
Sun Hung Kai Properties — FY2018 Earnings Presentation
50 slides from Sun Hung Kai Properties's earnings presentation, Sep 13, 2018
Slide 1: FY2018 Annual Results
FY2018 Annual Results 13 September 12018
Slide 2: Contents
Contents Page Key Messages 4 Financial Review – FY2018 6 Property Business – Hong Kong Land Bank 10 Property Development 14 Property Investment 20 Property Business – Mainland China Land Bank 28 Property Development 30 Property Investment 34 Hotel Business 39 Market and Business Prospect
Slide 3: Disclaimer
Disclaimer 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, recommendation or suggestion by Sun Hung Kai Properties Lim
Slide 4: Key Messages
ICC and ICC ICC, Westand IFC in IFC in Hong Kowloon, Hong ICC / Kong IFC Kong Hong Kong KEY MESSAGES
Slide 5: Key Messages
Key Messages Impressive FY2018 contracted sales in Hong Kong Expect to remain strong in FY2019 Sizeable and growing rental income stream Supported by good performance of existing rental portfolio, proactive AEIs and new investment properties in the pipeline Double-digit growth in dividend
Slide 6: Financial Review - FY2018
ICC and Victoria Harbour IFC in Hong Gateway, Hong Kong Kong FINANCIAL REVIEW - FY2018
Slide 7: Financial Highlights
Financial Highlights FY2018 FY2017 Change Profit attributable to the Company’s shareholders - Underlying* (HK$ mn) 30,398 25,965 +17.1% - Reported (HK$ mn) 49,951 41,782 +19.6% Basic earnings per share - Underlying* (HK$) 10.49 8.97 +16.9% - Reported (HK$) 17.24 14.43 +19.5% Final dividend per share
Slide 8: Earnings Drivers
Earnings Drivers Profit Breakdown by Segment(1) FY2018 FY2017 Change (in HK$ mn) (1) Property sales - Hong Kong 13,936 9,936 - Mainland 2,314 1,950 - Singapore 11 31 Sub-total 16,261 11,917 +36.5% (2) Property rental - Hong Kong 14,549 13,677 - Mainland 3,534 2,952 - Singapore 564 513 Sub-total 18,6
Slide 9: Financial Position
Financial Position 30 Jun 31 Dec 30 Jun As at 2018 2017 2017 Shareholders’ funds (HK$ mn) 539,098 526,547 498,215 - Shareholders’ funds per share (HK$) 186.1 181.8 172.0 Net debt (HK$ mn) 65,339 44,659 36,052 Net gearing ratio(1) 12.1% 8.5% 7.2% FY2018 FY2017 Interest cover(2) 17.6x 14.2x (1) Calcul
Slide 10: Property Business - Hong Kong Land Bank
Cullinan West, West ICC and Kowloon, ICC / IFC in Hong Hong IFC Kong Kong Hong Kong PROPERTY BUSINESS - HONG KONG LAND BANK
Slide 11: Land Bank in Hong Kong
Land Bank in Hong Kong Total land bank as at 30 June 2018: 56.5mn sq.ft.(1) Office 30% Shopping Residential Centre 84% Shopping 35% Centre 4% Hotel 12% Office 5% Hotel Industrial 4% Residential 12% Industrial 11% 3% (2) Completed properties Properties under development Total: 33.8mn sq.ft. Total: 22
Slide 12: Land Acquisitions in Hong Kong
Land Acquisitions in Hong Kong Added 5 projects through different means Location Stake Usage Method of Attributable (%) Acquisition GFA (sq.ft.) Tai Po Town Lot No. 157, Residential/ Conversion of 100 4,788,000 Shap Sz Heung Shopping centre Agricultural Land New Kowloon Inland Lot No. Residential/
Slide 13: Kai Tak Project - A Landmark Residential and Commercial Complex
Kai Tak Project - A Landmark Residential and Commercial Complex To replicate the success of The Cullinan, West Kowloon Strategically located in the core area of Kai Tak, Hong Kong’s alternative CBD Direct access to the future MTR Future MTR Kai Tak Station Station Site Tallest residential bl
Slide 14: Property Business - Hong Kong Property Development
Victoria Harbour, North Point, Hong Kong PROPERTY BUSINESS - HONG KONG PROPERTY DEVELOPMENT
Slide 15: Recognized Property Sales in Hong Kong
Recognized Property Sales in Hong Kong Property Sales(1) FY2018 FY2017 Change (HK$ mn) Revenue 35,725 30,261 18.1% Operating Profit 13,936 9,936 40.3% Margin 39.0% 32.8% 6.2ppt Strong property sales performance driven by Overwhelming sales responses of Cullinan West, Cullinan West II, PARK YOHO
Slide 16: Property Completion in Hong Kong
Property Completion in Hong Kong Completed nearly 3.7mn sq.ft. of attri. GFA About 2.6mn sq.ft. residential properties Remainder being non-residential premises for long-term investment, including o Hotel VIC on North Point waterfront o V Walk, a shopping mall atop MTR Nam Cheong Station Aim
Slide 17: Impressive Contracted Sales of over HK$41bn in Hong Kong
Impressive Contracted Sales of over HK$41bn in Hong Kong Far exceeded full-year target of HK$36bn Stake Attr. Sales Proceeds Project (%) (HK$ bn) Wings at Sea and Wings at Sea II, JV 13.9 Tseung Kwan O (1) Cullinan West II, West Kowloon JV 6.9 (1) PARK YOHO Genova, Yuen Long 100 5.1 St. Barths, Ma
Slide 18: Property Sales since July 2018
Property Sales since July 2018 Achieved contracted sales of about HK$26bn in Hong Kong since July 2018 Mainly from: o Cullinan West II in West Kowloon o St Martin in Tai Po o PARK YOHO Milano and Grand YOHO in Yuen Long o Wings at Sea II in Tseung Kwan O Majority of the units sold are those wi
Slide 19: Upcoming Launches in Next 9 Months
Upcoming Launches in Next 9 Months PARK YOHO Napoli (Stake: 100%) Res. GFA: 543,000 sq.ft. Sha Tin Town Lot 617 (Stake: 100%) Mount Regency Phase 2 Office GFA: 171,000 sq.ft. (Stake: 100%) Res. GFA: 235,000 sq.ft. Pak Tai Street Project (Stake: JV) Res. GFA: 88,000 sq.ft. Babington Hill(1) (Stake: 8
Slide 20: Property Business - Hong Kong Property Investment
in Hong APM, Kwun, ICC / Tong,Kong Hong IFC Kong Hong Kong PROPERTY BUSINESS - HONG KONG PROPERTY INVESTMENT
Slide 21: Steadily Growing Rental Income
Steadily Growing Rental Income Diversified rental portfolio provides sizeable recurring income stream HK$ mn Gross Rental Income by Sector in Hong Kong (1) (3) 20,000 18,506 (+6.1% yoy) 17,439 18,000 16,800 15,675 FY2018 16,000 14,673 6,104 (+4.5% yoy) HK$18,506mn 5,842 14,000 5,619 6.1% yoy 5,161
Slide 22: Healthy Growth of Retail Rental Portfolio
Healthy Growth of Retail Rental Portfolio Quality retail space totaling V City ~12mn sq.ft. A well balanced mix of regional and upscale malls Better-than-market retail sales growth at the Group’s major malls Positive rental revisions and high occupancies achieved APM Reasonable occupancy c
Slide 23: SHKP Malls App
Customer-focused Strategy – SHKP Malls App 23 major malls already linked to this app; 2 other malls to be linked in next 6 months Integrated Loyalty Program to be launched in early 2019 Park E-asy Eat E-asy 220,000 downloads 23
Slide 24: Proactive Asset Enhancement Initiatives
Proactive Asset Enhancement Initiatives New Town Plaza, Metroplaza, Sha Tin Kwai Fong First phase of renovation recently completed Newly added Newly opened Movie Town, the largest cinema organic farm and in the New Territories kids-play-facilities Higher rents after refurbishment was opened
Slide 25: Major Upcoming New Shopping Malls
Major Upcoming New Shopping Malls V Walk, West Kowloon Harbour North, North Point (~300,000 sq.ft.) (~145,000 sq.ft.) Opening in mid 2019 1st phase of 7,000-sq-ft street- Set to benefit from superior level shops opening in early 2019 transport connectivity and rising 2nd phase of 138,000 sq.ft.
Slide 26: Solid Performance for Premium Office Portfolio in Hong Kong
Solid Performance for Premium Office Portfolio in Hong Kong Balanced and diversified office portfolio of 10mn sq.ft. GFA Achieved steady rental income growth and high occupancy Rapid developments in the Greater Bay Area to drive growth further ICC Millennium City Cluster Occupancy: 97% Occupan
Slide 27: Strengthening the Commercial Portfolio
Strengthening the Commercial Portfolio 98 How Ming Street MTR Ngau Tau Kok Station (68.7% owned) Total GFA: ~1.2mn sq.ft. An office-cum-retail MTR Kwun Tong Station project Foundation work commenced 98 How Ming Street 27
Slide 28: Property Business - Mainland China Land Bank
ITC, Shanghai PROPERTY BUSINESS - MAINLAND CHINA LAND BANK
Slide 29: Land Bank in Mainland China
Land Bank in Mainland China Total land bank as at 30 June 2018: 64.5mn sq.ft. Shopping Centre 17% Shopping Centre Residential 52% Office 59% 31% Office 21% Hotel 9% Hotel Residential 3% 8% (1) Completed properties Properties under development Total: 13.8mn sq.ft. Total: 50.7mn sq.ft. Included a co
Slide 30: Property Business - Mainland China Property Development
Grand Waterfront, Dongguan PROPERTY BUSINESS - MAINLAND CHINA PROPERTY DEVELOPMENT
Slide 31: Recognized Property Sales in Mainland China
Recognized Property Sales in Mainland China Property Sales(1) FY2018 FY2017 Change (HK$ mn) Revenue 6,195 8,304 25.4% Operating Profit 2,314 1,950 18.7% Margin 37.4% 23.5% 13.9ppt Major contributors include: Forest Hills Phase 2B in Guangzhou Park Royale Phase 2A in Huadu Top Plaza East Towe
Slide 32: Contracted Sales in Mainland China
Contracted Sales in Mainland China Attr. Sales Stake Project Name Location Proceeds (%) (RMB bn) Oriental Bund Foshan 50 1.4 Top Plaza Guangzhou 33.3 0.6 Grand Waterfront Dongguan 100 0.6 Forest Hills Guangzhou 70 0.3 Others 0.7 (1) Total 3.6 (1) Contracted sales in terms of HKD amounted to about HK
Slide 33: Upcoming Launches in Next 9 Months
Upcoming Launches in Next 9 Months Stake Attr. Res. GFA Project Name Location (%) (sq.ft.) Remaining Block of Dongguan 100 210,000 Grand Waterfront Phase 2A Remaining Block of Shanghai 35 71,000 TODTOWN Phase 1 33
Slide 34: Property Business - Mainland China Property Investment
Shanghai IFC, Shanghai PROPERTY BUSINESS - MAINLAND CHINA PROPERTY INVESTMENT
Slide 35: Strong Rental Growth in Mainland China
Strong Rental Growth in Mainland China Represented ~19% of the Group’s total gross rental income Gross rental income of RMB3,701mn, up 11.4% in RMB terms HK$ mn Gross Rental Income by Sector on the Mainland (1) 5,000 4,457 (+17.6% yoy) FY2018 HK$4,457mn 4,000 3,566 3,789 17.6% yoy 3,319 1,648 (+
Slide 36: Landmark Developments in Shanghai
Landmark Developments in Shanghai Shanghai IFC in Pudong Shanghai ICC in Puxi Office: 1.6mn sq.ft. (Attr. GFA) Office: 1.3mn sq.ft. (GFA) Virtually fully leased High occupancy Strong growth in rental rates on Healthy rental reversions renewals Shanghai IFC Mall: 1.2mn sq.ft. IAPM Mall: 1.3mn
Slide 37: ITC, an Upcoming Landmark in Shanghai
ITC, an Upcoming Landmark in Shanghai ITC: 7.6mn sq.ft. (GFA) One ITC (Phase 1) Completed in 2017 Office space (170,000 sq.ft.): noted MNCs already moved in, including a reputable co-working space provider Upscale mall (340,000 sq.ft): keen interest from luxury brands and popular restaurants;
Slide 38: New Commercial Icon in Nanjing
Nanjing IFC, New Commercial Icon in Nanjing Nanjing IFC: 3.4mn sq.ft. (GFA) Completed superstructure of the first office tower Positive pre-leasing response of 2mn sq.ft. of premium offices and 1.1mn-sq-ft-plus mall Entire project to be completed in 2020 38
Slide 39: Hotel Business
Hotel VIC, North Point, Hong Kong HOTEL BUSINESS
Slide 40: Hotel Business
Hotel Business Hotel Business(1) FY2018 FY2017 Change (HK$ mn) Revenue 5,333 4,896 8.9% Operating Profit 1,470 1,325 10.9% Margin 27.6% 27.1% 0.5ppt Achieved higher average RevPAR Acquired a high-quality hotel site on West Kowloon waterfront with spectacular harbour views in Oct 2017 (1) Includi
Slide 41: New Hotel Additions
New Hotel Additions Hotel VIC (100% owned) • Soft-opened in July 2018 • Further elevate the status of the integrated development as one of the most prestigious neighbourhoods on Island East A premium hotel in Sha Tin (100% owned) • Opening in mid 2019 • 618 rooms • Sister project of Royal Park Hotel
Slide 42: Market and Business Prospects
ICC, West Kowloon, Hong Kong MARKET AND BUSINESS PROSPECTS
Slide 43: Market Prospects
Market Prospects Hong Kong Primary Expected to be relatively active despite headwinds residential including anticipated interest rate hikes market End-user demand remains solid backed by household income gains, wealth accumulation and solid demographic factors Grade-A Tight supply in the core
Slide 44: Market Prospects (Cont'd)
Market Prospects (Cont’d) First-tier / Key Cities in Mainland China Grade-A Proactive policy responses should alleviate economic office leasing downside risks and enable stable economic growth market Quality space at prime locations with good management service will continue to attract keen inte
Slide 45: Business Prospects
Business Prospects Property Development Aim at high Continue to sell residential units from both new asset turnover launches and launched projects Abundant saleable resources Expect encouraging development margin Sufficient land About 19mn sq.ft. (attributable GFA) of residential bank develo
Slide 46: Business Prospects (Cont'd)
Business Prospects (Cont’d) Property Investment Existing Expect satisfactory rental growth in the year ahead portfolio Continue to carry out AEIs to create more value New To drive rental growth further over the short-to-medium investment term properties Short-term: V Walk and Harbour North i
Slide 47: Creating Value for Shareholders
Creating Value for Shareholders Key Inputs Growing DPS HK$ Sufficient 5.0 Growing Land Bank of a Rental 4.65 Relatively Low 4.5 Portfolio Average Cost 4.10 4.0 3.85 Broad Premium 3.5 Market Brand Exposure 3.0 Strong Seasoned 2.5 Balance Management Sheet Team 2.0 FY2016 FY2017 FY2018 47
Slide 48: Q&A
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Slide 49: Appendix
IFC, Central, Hong Kong APPENDIX
Slide 50: Adoption of HKFRS 15
Adoption of HKFRS 15 HKFRS 15 will be effective for FY18/19 replacing existing revenue standard HKAS 18 Recognize revenue upon the transfer of control of goods or services to customers at an amount that reflects the consideration expected to be received Cumulative catch-up method on transition
Sun Hung Kai Properties — FY2018 Earnings Presentation on 6ix