Kaisa Group Holdings Ltd. · HKEX:1638
Kaisa — FY2019 Earnings Presentation
48 slides from Kaisa's earnings presentation, March 2020
Slide 1: Annual Results Presentation 2019
Annual Results Presentation 2019 March 2020
Slide 2: Disclaimer
Disclaimer This presentation may contain forward-looking statements. Any such forward-looking statements are based on a number of assumptions about the operations of the Kaisa Group Holdings Limited (the “Company”) and factors beyond the Company's control and are subject to significant risks and unc
Slide 3: Contents
Contents 1. Major Achievements in 2019 5 2. Operation Review 8 3. Development Strategies for 2020 15 4. Financial Performance 24 5. Appendix 33 3
Slide 4: 1. Major Achievements in 2019
1. Major Achievements in 2019
Slide 5: Operational and Competitive Advantages
Operational and Competitive Advantages ✓ Contracted sales achieved RMB88.1 bn, +26% YoY, Ranked top 27th Strong Growth in contracted sales, move up 10 spots¹ in Contracted ✓ Contracted GFA reached 4.64 mn sq. m., +21% YoY Sales ✓ 38% contracted sales from URPs (Urban Renewal Projects) ✓ 61% contract
Slide 6: Profitability and Dividend Payout
Profitability and Dividend Payout ✓ Revenue achieved RMB48.0 bn, +24% YoY ✓ Gross profit achieved RMB13.8 bn, +24% YoY Healthy ✓ GP margin maintained at a healthy level of 28.8% Profitability ✓ Net profit reached RMB4.2 bn, +26% YoY ✓ Profit attributable to owners of the Company soared to RMB4.6 bn,
Slide 7: Repayment and Refinancing
Repayment and Refinancing Improving ✓ Net gearing ratio -92 ppts to 144% from 2018 year end Debt Servicing ✓ Quick ratio remained at a healthy level of 1.1× Capability ✓ Cash on hand +61% to RMB37.0 bn from 2018 year end ✓ Total equity +53% to RMB55.7 bn from 2018 year end ✓ Onshore ABS issuance: ob
Slide 8: 2. Operation Review
£35k 52 RBIS ie A PRA KAISA GROUP HOLDINGS LTD. 2. Operation Review
Slide 9: Established Presence in T1 & T2 Cities with High Quality Land Bank
Established Presence in T1 & T2 Cities with High Quality Land Bank ◆ Nearly 27 mn sq. m. land bank by GFA with attributable portion of 76% ◆ 80% located in T1 & major T2 cities Western China Pan Bohai Rim ◆ 51% located in the Greater Bay Area GFA: 3.46 mn sq. m. GFA: 3.88 mn sq. m. % of total by GFA
Slide 10: Urban Renewal Pipeline Supports Future Development
Urban Renewal Pipeline Supports Future Development ◆ Site area¹ of URPs increased 33% to approx. 40 mn sq. m. ◆ Secured 19 new projects, adding the pipeline to 147 projects ◆ RMB2.5 trn worth expected saleable resources of URPs ◆ 99% of the UPRs in the Greater Bay Area, of which 27% in Shenzhen, 36%
Slide 11: Land Acquisition through Diversified Channels
Land Acquisition through Diversified Channels ◆ 53% of the new projects acquired in the Greater Bay Area ◆ 41% of the new projects acquired in T1 cities ◆ Land acquisition through bidding, M&A and urban renewal, of which 16% from urban renewal supply ◆ Newly acquired attributable GFA of 4.12 mn sq.
Slide 12: URPs Become Sales Driver
URPs Become Sales Driver Conversion of URPs in 2019 Estimated Saleable Average price of the GFA saleable No. Project Name Location Type area surrounding projects (‘000 sq. m.) resources (‘000 sq. m.) (RMB/sq. m.) (RMB mn) Jiading District, Residential & 1 Shanghai Xuhang Town Project 214 210 40,000
Slide 13: Expansion of New businesses Deepens Synergy
Expansion of New businesses Deepens Synergy Kaisa Technology Innovation Group Kick-off of Kaisa Airport Science and Technology City in Xiaogan, setting a benchmark for City- Industry Integration in the Greater Wuhan City Kaisa Culture & Kaisa Education Sports Group Group Signed 7 new stadiums; Coope
Slide 14: Corporate Citizenship
Corporate Citizenship Assist targeted poverty Stand together to fight COVID-19 alleviation ◆ Donated RMB120 mn in 2019 for targeted poverty ◆ Donated RMB10 mn to support the front lines of alleviation fighting the epidemic in Wuhan and Xiaogan ◆ Kaisa took root in Longmen, Huizhou for 1,000 days ◆ O
Slide 15: 3. Development Strategies for 2020
3. Development Strategies for 2020
Slide 16: Strategies for Development in 2020
Strategies for Development in 2020 Steady Growth Structural Improvement Accelerate urban redevelopment Speed up property sales projects conversion Maintain momentum of business Optimize investment in strategically- development focused regions Deleveraging Seize New Opportunities Optimize capital str
Slide 17: Resumption of Work in Sales Centers and Construction Sites
Resumption of Work in Sales Centers and Construction Sites Sales Centers Construction Sites ◆ 92% of sales centers resumed operations ◆ 92% of construction sites resumed work ◆ Launched “Kaisa-your dream house”, a proprietary ◆ Materials and plans for epidemic prevention and online platform for dire
Slide 18: Planned Saleable Resources in 2020
Planned Saleable Resources in 2020 Saleable Resources in 2020: RMB180 bn Saleable Area in 2020: 9.7 mn sq. m. Saleable Resources in 2020 by City Saleable Area in 2020 by City Tier 3 Tier 3 11% 20% Tier 1 Tier 1 20% 37% Tier 2 52% Tier 2 55% Saleable Resources in 2020 by Region Saleable Area in 2020
Slide 19: Expansion into Overseas Property Market
Expansion into Overseas Property Market ◆ Focus on land parcels and properties in prime locations and districts with development potential ◆ Diversified land acquisition channels; open to cooperation ◆ Capitalize on the advantage of urban redevelopment in the Greater Bay Area and the geographical sy
Slide 20: Steady Conversion of URPs into Land Bank
Steady Conversion of URPs into Land Bank URPs to be converted into land bank in 2020 ASP of Nearby Expected Saleable Saleable Area* Project Location Type Projects Resources (’000 sq. m.) (RMB/sq. m.) (RMB mn) Hong Kong Sai Wan Project Hong Kong Island, Hong Kong Residential 2¹ 320,000 760 Shenzhen N
Slide 21: Steady Conversion of URPs into Land Bank (Con't)
Steady Conversion of URPs into Land Bank (Con’t) UPRs to be converted into land bank in mid-term (3-5 years) Expected ASP of Nearby Saleable Area* Saleable Project Location Type Projects (’000 sq. m.) Resources (RMB/sq. m.) (RMB mn) Shenzhen Xiangjiaotang Project Longgang, Shenzhen Residential 580 5
Slide 22: Steady Conversion of URPs into Land Bank (Con't)
Steady Conversion of URPs into Land Bank (Con’t) URPs to be converted into land bank in the long term (Over 5 years) Site Area Project Location (’000 sq. m.) Greater Bay Area Shenzhen All Administrative Districts 4,750 Guangzhou Haizhu, Baiyun, Zengcheng, Panyu 10,700 Zhongshan Shaxi, Dachong, Shiqi
Slide 23: Stringent Control of Indebtedness
Stringent Control of Indebtedness ◆Operation: ✓ Reduce capex by joint development ✓ Prudent land acquisition Decreasing Net Gearing ✓ Expedite cash collection 350% 300% 300% 258% ◆Financing: 250% 236% 191% ✓ Expand financing channels, lower 200% 144% funding cost 150% ✓ Offshore dollar bond market:
Slide 24: 4. Financial Performance
£35k 52 RBIS ie A PRA KAISA GROUP HOLDINGS LTD. 4. Financial Performance
Slide 25: Strong Growth in Contracted Sales
Strong Growth in Contracted Sales Contracted Sales (RMB mn) Contracted GFA ('000 sq. m.) Contracted ASP (RMB/sq. m.） 4,642 88,120 18,983 3,837 70,059 18,261 2,786 44,714 16,048 FY2017 FY2018 FY2019 FY2017 FY2018 FY2019 FY2017 FY2018 FY2019 Recognized Sales (RMB mn) Recognized GFA ('000 sq. m.) Recog
Slide 26: Contracted Sales
Contracted Sales Contracted Sales in 2019: RMB88,120 mn Contracted Sales in 2018: RMB70,059 mn Contracted Sales in 2019 by Region Contracted Sales in 2018 by Region Pan Bohai Rim Pan Bohai Rim 13% 10% Western China Western China 7% 8% Central China Central China Greater Bay Greater Bay Area 10% Area
Slide 27: Recognized Sales
Recognized Sales Recognized Sales in 2019: RMB43,849 mn Recognized Sales in 2018: RMB36,081 mn Recognized Sales in 2019 by Region Recognized Sales in 2018 by Region Pan Bohai Rim Pan Bohai Rim 17% Western China 7% Western China 8% 5% Central China Central China Greater Bay 11% Greater Bay 3% Area Ar
Slide 28: Financial Highlights in 2019
Financial Highlights in 2019 Strong Growth Solid Profitability Stable Credit Revenue (RMB mn) Gross Profit (RMB mn) Interest Coverage Ratio(1) 13,830 1.7x 48,022 1.6x 11,129 38,705 1.2x 32,779 8,934 FY2017 FY2018 FY2019 FY2017 FY2018 FY2019 FY2017 FY2018 FY2019 Total Assets (RMB bn) Core Net Profit
Slide 29: Financial Highlights in 2019
Financial Highlights in 2019 P&L and Profitability (RMB mn) Balance Sheet and Credit Metrics (RMB bn) FY2019 FY2018 % Change FY2019 FY2018 % Change Revenue 48,022 38,705 +24% Total assets 271 229 +18% Total equity 56 36 +53% Recognized revenue from 43,849 36,081 +22% property sales Total borrowings
Slide 30: Diversified Financing Channel
Diversified Financing Channel Credit Rating ◆ Offshore issuer credit rating: Moody’s - B1; S&P - B; Fitch - B, Outlook - Stable ◆ Onshore issuer credit rating: China Chengxin Securities Rating (CCX) - AA+ Diversified Financing Channel ◆ Obtained ABS quota of RMB11 bn, issued RMB2.6 bn (RMB mn) Quota
Slide 31: Debt Management
Debt Management ◆ Financing cost reduction: the yields of senor notes matured in 1.5-2.5 years tightened by 1,000 bps ◆ Notes buyback: repurchased 1-2 year tenor paper with aggregate principal amount of US$736 mn, relieve the pressure of short-term debt repayment ◆ Maturity extension: issued 2 tranc
Slide 32: Debt Composition and Maturity Profile
Debt Composition and Maturity Profile Debt Composition Debt Maturity Profile FY2018 FY2019 60% Onshore non- 48.5% bank borrowings, Offshore ◆ Total Borrowing 50% 16% RMB117.2 bn 40% senior notes, 27.2% 31.7% 30.4% 49% ◆ Onshore: 49% 30% 22.2% 22.3% ◆ Offshore: 51% 20% 15.6% 10% 2.0% Offshore bank 0%
Slide 33: 5. Appendix
£35k 52 RBIS ie A PRA KAISA GROUP HOLDINGS LTD. 5. Appendix
Slide 34: 2019 Earnings
2019 Earnings (RMB bn) FY2019 FY2018 %Change Revenue 48.02 38.70 +24% -Sales of properties 43.85 36.08 +22% -Rental income 0.46 0.28 +64% -Property management services 0.91 0.52 +77% -Hotel and catering operations 0.28 0.25 +11% -Cinema, department store and cultural center operations 0.66 0.49 +35%
Slide 35: Balance Sheet
Balance Sheet (RMB bn) As of Dec 2019 As of Dec 2018 % Change Total assets 270.9 229.0 +18% Total liabilities 215.2 192.7 +12% Net current asset 66.8 66.7 +0.2% Total equity 55.7 36.3 +53% Cash and bank deposits 37.0 22.9 +61% Quick ratio(1) 1.1X 1.3X -0.2X Leverage ratio(2) 30% 38% -8 ppts Net gear
Slide 36: Land Acquisition in 2019
Land Acquisition in 2019 Attributable Attributable Time of Attributable Site Area GFA Way of Location GFA Consideration Land Use Acquisition Interest (sq. m.) (sq. m.) Acquisition (sq. m.) (RMB mn) 1 Feb-2019 Suzhou, Jiangsu 100% 32,006 48,008 48,008 891 Residential Bidding 2 Feb-2019 Hangzhou, Zhej
Slide 37: Strong Sales Performance of URPs
Strong Sales Performance of URPs Shenzhen Yantian Kaisa City Plaza Shenzhen Kaisa Future City Shenzhen Pinghu Kaisa Plaza • Yantian, Shenzhen • Longgang, Shenzhen • Longgang, Shenzhen • Adjacent to Yantian Road • Adjacent to Longcheng • Adjacent to Pinghu Station Station which is under West Station
Slide 38: Strong Sale Performance of URPs (Con't)
Strong Sale Performance of URPs (Con’t) Shenzhen Dongmen New World Zhuhai Lakeview Waldorf (Phase 2) Dongguan Le Grand Bleu • Shangsha street, • Enjoy the bonus of • Dongmen CBD, Luohu, Wanzai, Xiangzhou the Nansha Qianhai Shenzhen Location Free Trade Zone with District, Zhuhai, close Location • Adj
Slide 39: Recently Converted URPs
Recently Converted URPs Shanghai Xuhang Town Project Guangzhou Xiaoping Village Project Shenzhen Futian Border Project Location • Xuhang Town, Jiading • Western Extension of Baiyun New City • At the intersection of District, Shanghai Honghua Road and in Guangzhou; adjacent to Xiaoping Location Xiang
Slide 40: Recently Converted URPs (Con't)
Recently Converted URPs (Con’t) Shenzhen Kaisa Yuebanshan Shenzhen Guangming Sanjing Shenzhen Tongda Huixuan Project (Bailingda Project) Project • Hangcheng Street, • Guangming Street, • Intersection of Jianhui Location Bao’an District, Guangming District, Road and Zhicheng Road, Shenzhen Shenzhen L
Slide 41: Recently Converted URPs (Con't)
Recently Converted URPs (Con’t) Shenzhen Dongshan Project (Phase I) Shenzhen Jiayu • Binhe Avenue, Futian District, Shenzhen, • Buji Street, Longgang, Shenzhen Location in proximity of Xinghe COCO Park • Adjacent to Buji Station on • Adjacent to COCO Park Station on Location Shenzhen Metro Line No.3
Slide 42: Low-cost URPs Ensure Healthy Profit Margins
Low-cost URPs Ensure Healthy Profit Margins Land Prices of URPs in Land Bank Shenzhen Residential Land Auction in June 2019 (RMB/sq. m.) Land cost per saleable GFA (RMB/sq. m.) GFA：6.7 mn sq. m. Average selling price of residential property in 67,000 Shenzhen: ~ RMB50,000 per sq. m. Construction cos
Slide 43: Improving Transport Infrastructure in the Greater Bay Area
Improving Transport Infrastructure in the Greater Bay Area ◆ A total track length of 273km is under construction and the total mileage of Shenzhen Metro will reach 580km by 2022 ◆ By 2035, Shenzhen is expected to have 33 metro lines with a total mileage of 1,335km, which is 4.7 times of the current
Slide 44: Benefiting from Positive Housing Policies
Benefiting from Positive Housing Policies Issued Time Documents Core Content Issued by Mar 2020 “Measures on the response to COVID-19 to Propose to increase the supply of residential land; Housing and Construction Bureau support property developer to speed up Adopting the “report and sign” approach
Slide 45: Abundant Premium Projects in Shenzhen
Abundant Premium Projects in Shenzhen Shenzhen projects in land bank (26) URPs in pipeline (95) Nam TaI Inno Park Major transportation hubs in Shenzhen 南太云创谷 Kaisa E Cube 光明区 佳兆业E立方 Guangming District 龙岗区 Sanjing Project 龙华区 Longgang District 三井项目 Longhua District Pinghu Kaisa Plaza Tongda Huixuan 平
Slide 46: Metro-accessible Projects in Shenzhen
Metro-accessible Projects in Shenzhen ◆ 13 metro-accessible projects in Shenzhen, occupying prime locations ◆ Strategic locations imply great potential for value appreciation Planning of railway transit in Shenzhen Guangming Street (expected to open in May Pinghu 2020) (expected to open in June 2020
Slide 47: Proven Track Record of URPs Conversion
Proven Track Record of URPs Conversion ◆ Since 2008, the company has converted GFA of over 1 mn sq. m. on average ◆ Successfully converted approx. 13 mn sq. m. urban renewal projects since established GFA No. of URPs Year Projects Locations Type converted converted (‘000 sq. m.) 1999 Shenzhen Woodla
Slide 48: Shareholding Structure (As of 31 December 2019)
Shareholding Structure (As of 31 December 2019) • Founder and chairman • Over 20 years of industry experience • Responsible for overall strategy, investment planning and human resources strategy Funde Sino Life Kwok Family Other public investors Insurance Co., Ltd. 25.26% 39.33% 35.41% Hotel and cat