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The Wharf (Holdings) Limited
2016 Final Results
9 March 2017
1
Properties Growth Continues
Overview Backdrop
Group Core Profit +25% to $13.8B
Properties’ Share 92% (2015: 88%) due to 31% Growth
IP 6% Growth on Large Base to $8.8B
DP Nearly Tripled on Record Revenue (& Sales)
Wharf T&T Disposal Realized Proceeds of $9.5B
Net Cash Inflow On/Off Balance Sheet $31B (After Dividends but Before Financing Activities &
Acquisition of Wheelock House for $6.2B)
2
Overview Surging Core Profit from Properties
Core Profit from Properties: +31% to
$12.7B
HK Properties: +35% to $10.1B
China Properties: +16% to $2.6B,
Despite a Weaker RMB
Properties: 92% of Group Total
3
73%
19%
8%
$13.8 billion
(+25%)
Others
HK
Properties
China
Properties
Total Core Profit
Overview Solid IP Growth Despite Headwinds
High Occupancy
Favourable Rental Reversion
High Productivity Secures Pricing
Power
Keen Demand from the Trendiest &
Aspirational Brands
4
IP Core Profit (HKD billion)
5.9 6.5
7.6 8.3
8.8
2012 2013 2014 2015 2016
$8.8B (+6%)
Overview Record-High DP Sales & Revenue; Core Profit Tripled
HK & China DP
Core Profit: Nearly 3x to $4B
Record Revenue: $37B
Record Sales: $40B
5
15.2
18.9
23.3
27.4
30.7
2.6
0.1
0.1
0.0
6.4
2012 2013 2014 2015 2016
Total DP Revenue* (HKD billion)
$37.1B (+35%) China HK
* Incl. JVs & Associates on an Attributable Basis
Overview Financial Highlights
Core Profit +25%
IP Revaluation Surplus: $906M*
Fair Value of IP: $303B (2015:
$293B)
6
HKD Million 2016 2015 % Chg
Group Revenue 46,627 40,875 +14%
Operating Profit 17,065 14,853 +15%
Core Profit** 13,754 10,969 +25%
Profit Before IP Revaluation Surplus 20,534 9,793 +110%
Net IP Revaluation Surplus 906 6,231 -85%
Profit After IP Revaluation Surplus 21,440 16,024 +34%
Earnings Per Share (HK$)
- Attributable to Shareholders
- Core**
7.07
4.54
5.29
3.62
+34%
+25%
Dividend Per share (HK$) 2.15 1.90 +13%
**Exclude IP Revaluation Surplus and Exceptional Items
* Mainly Driven by HK Office Rental Reversion; Cap Rates Remained Unchanged
Agenda
Hong Kong Properties
China Properties
Other Businesses
Next
7
Financial Management
Strategic Reviews
Agenda
Hong Kong Properties
China Properties
Other Businesses
Financial Management
8
Strategic Reviews
Next
Challenging Outlook amid Macro Uncertainties
9
Sales & Tourist Arrivals –
Sequentially Stabilizing
Strong HKD; Cloudy Macro
Environment Obscure Outlook
252.9 249.6 245.6 219.7
241.6 243.6 229.6
216.9
2013 2014 2015 2016
HK Retail Sales (HKD billion) Title
1H 2H
494.5 493.2
475.2
436.6 (-8.1%)
HK IP
2016 1Q 2Q 3Q 4Q
Growth -12.5% -8.2% -7.5% -3.7%
Retail Sales Stabilizing
10
16.0 16.8 15.6
13.3
17.8 18.2
15.2
14.4
2013 2014 2015 2016
HC Retail Sales (HKD billion) Title
1H 2H
-9.9%
4.4
5.2 4.7
3.9
5.1
5.3
4.5
4.2
2013 2014 2015 2016
TS Retail Sales (HKD billion)
1H 2H
-11.3%
HK IP
2016 1Q 2Q 3Q 4Q
Growth -18.9% -9.6% -6.4% -3.8%
2016 1Q 2Q 3Q 4Q
Growth -20.0% -10.3% -6.3% -7.0%
Mixed Retail Outlook
Strong HKD; Currency / Interest Rate Movements
Global Economic & Political Uncertainties
Europe Terrorist Threats to Affect Tourist Flow
11
HK IP
Proactive Management Cushions Downside Risks
12
6%
23%
68%
3%
$9.1 billion
(+5%)
HC TS
PH
Others
HC $6,207M +4%
TS $2,137M +6%
PH $546M +3%
Retail Revenue by Segment
Stabilizing Retail Sales Enhances
Rental Visibility
Active AEI Creates Value
Widening Customer Base (Through
Promotions in SE Asia*)
HK – the 1st Travel Destination for
PRC Tourists
HK IP
*South Korea, India and Philippines, etc.
HC – Relentless Value Creation
13
Diversification & Balanced Mix
Mitigating Market Risk
Solid Rental Reversion
OT Extension Building by 2H17
2.1 2.4
2.8 3.0 3.1
2.1
2.5
2.9 2.9
3.1
2012 2013 2014 2015 2016
HC Retail Revenue (HKD billion)
$6.2B (+4%)
1H 2H
HK IP
TS – Unfolding AEI Value
14
Solid Retailers’ Demand (99%
Occupancy)
F&B, Cosmetics & Luxury Clusters
Further Strengthened
0.7 0.7
0.9 1.0
1.1
0.7
0.8
1.0
1.0
1.0
2012 2013 2014 2015 2016
TS Retail Revenue (HKD billion)
$2.1B (+6%) 1H 2H
HK IP
HC & TS – Global Showcase for the Best Brands
15
HC
(Selected Brands)
TS
(Selected Brands)
Expansion
HK Debut
Kowloon Debut NA
Other
Commitments
HK IP
HC & TS – Effective Marketing Initiatives
16
HC TS
HK IP
Office - Steady
17
Occupancy Remained High (97%)
Positive Rental Reversion
1.2 1.2 1.4
1.5 1.6
1.2
1.3
1.5
1.6
1.8
2012 2013 2014 2015 2016
HK Office Revenue (HKD billion)
$3.4B (+9%)
1H 2H
HK IP
Mount Nicholson
18
Ultra-Luxury Residences on the Peak
6 Villas & 16 Apartments Sold for
$9.9B in 2016
Relevant Profits* Recognized in 2016
(3 Apartments & 1 Villa Sold for $1.7B in 2M17)
50%-Owned Mount Nicholson
Launch Date 1Q 2016
Product Type* 19 Villas
48 Apartments
OP Issued
*Villas: 7,000 – 10,000 s.f
Apartments: 4,200 – 4,500 s.f
HK DP
* 5 Villas & 16 Apartments. The Remaining 1 Villa Sold will be Recognized in 2017
Agenda
Hong Kong Properties
China Properties
Other Businesses
Financial Management
19
Strategic Reviews
Next
China IP Underpins Long-term Growth
RMB Devaluation
Encourages PRC Domestic
Consumption & Retail Sales
Location & Critical Mass Create a
Snowball Effect
Revenue +9% YoY in RMB (+2% in
HKD)
CAGR 2012-2016 +24% (in HKD)
20
0.5 0.5
0.8
1.1 1.2
0.5
0.8
1.2
1.2 1.2
2012 2013 2014 2015 2016
China IP Revenue (HKD billion)
$2.4B (+2%) 1H 2H
China IP
CDIFS Mall – Outshines Competition
Beat Expectation
Consistently Remarkable
Performance
Among the Top in Western China in
Both Retail Sales & Foot Traffic
Continued to Gain Popularity
21
2016 CDIFS Mall
Net Revenue (Net of Tax) RMB633M (+11%)
Foot Traffic Growth +19%
Turnover Rent Portion 17%
Occupancy Cost* 14%
* Occupancy Cost = Retail Rent/Retail Sales
CDIFS Retail Sales Growth
2016 RMB3.85B +17%
2017 Expect Double-digit Growth
China IP
CDIFS Office – Finest Premium
22
39.5% Committed or ~110,000 s.m Leased (in 3 Years)
Leasing Progress Comparable to SWS
Rental Rates Achieved among the Highest in CD
Selective Tenants
China IP
New IFS Malls – Progressing at Full Speed
New IPs to Further Strengthen
Recurrent Income Base
CSIFS & CQIFS – Pre-leasing Status
on Track
Replicating the Success of CDIFS &
Harbour City (HK)
Best-positioned to Tap the
Experience-oriented Consumption
Markets
23
Mall CQIFS CSIFS
GFA (s.f) 1.2M* 2.7M
Scheduled for
Opening Sep 2017 4Q17
% of Area Under
Offer/Discussion >90% >85%
* CQIFS is 50%-owned, 1.2M s,f. is Total Retail Area
China IP
Record-breaking Sales
2016 Sales Exceeded Target by 31%
GFA Sold 1.5M s.m (+6%); ASP
RMB19,900/s.m (+11%)
2017 Sales Target RMB24B (2016:
RMB24B)
2017 Sellable Resources 1.6M s.m
(2016: 2.4M s.m)
24
7.5
10.9 8.9
10.3
16.3
7.5
10.0 12.6
15.7
15.1
2012 2013 2014 2015 2016
Contracted Sales (RMB billion)
RMB31.4B (+21%) 1H 2H
• 56 Projects in 14 Cities on Sale in 2016
• 2016 Accumulated Sell-through Rate 93%
China DP
Stronger-than-expected Operating Results
Share of Group Core Profit Increased
to 14%
Improving Operating Margin
Net Order Book RMB27B or 1.2M
s.m
2017 Target Completion 1M s.m
25
2016 Operating Matrix*
Revenue $30,676M +12%
Operating Profit $5,133M +22%
Operating Margin 16.7% +1.4 ppts
Completed GFA 1.7M s.m +3%
Recognized GFA 1.7M s.m +7%
* Incl. JVs & Associates on an Attributable Basis
China DP
Disciplined Landbanking
Selective & Prudent Approach
Focus on 4 Tier 1 Cities, Selective
Top Tier 2 Cities
DP Land Bank 4.2M s.m
26
Date City Attributable
GFA (s.m)
Attributable
Consideration
(RMB)
Ownership
Feb16 Beijing 47,800 2.05B 40%
Jun16 Hangzhou 17,700 0.28B 25%
Dec16 Shenzhen 51,000 1.34B 100%
Total 116,500 3.67B
China DP
Agenda
Hong Kong Properties
China Properties
Other Businesses
Financial Management
27
Strategic Reviews
Next
MTL
28
Revenue $2,635M (-4%)
Operating Profit $710M (+5%)
Market Throughput
South China: -1%
Kwai Tsing: -2%
Throughput (million TEUs)
HK 5.2 +15%
DCB 1.3 +8%
TC 2.2 Flat
Total 8.7 +10%
Other
Businesses
Hotels
29
Revenue $1,587M (+2%); Operating Profit $289M (+4%)
Operating Environment Remains Challenging
CDIFS Niccolo Hotel Emerged as the City’s Market Leader in Room Yield (in Just a Year)
336-Room The Murray – Iconic Luxury Hotel Befitting the Most Prestigious Visitors,
to Open in 4Q17
Other
Businesses
2016 Key Awards
30
Others
Marco Polo Ortigas Manila
Five-Star Rating
2017 Global Star Ratings
(by Forbes Travel Guide)
CDIFS
The 2016 VIVA Best-of-the-
Best Design and
Development Award
(by ICSC)
CDIFS
Grand Award
Quality Building Award 2016
Niccolo Hotels
Best Luxury Hotel Brand of the Year
2016 Asia Hotel Awards
Niccolo Chengdu
Best Business Hotel in Chengdu
25th Annual Business Traveller Awards
Harbour City
2 Gold Awards
- Public Relations & Events
- Sales Promotions/ Traffic Activation
ICSC Asia Pacific Center Awards
Agenda
Hong Kong Properties
China Properties
Strategic Reviews
Financial Management
31
Other Businesses
Next
32
CME
Year-long Review Led the Group to
Exit the Segment
Wharf T&T was Disposed for $9.5B &
a Gain of $7.3B
All Discussions to Dispose i-Cable
have Ended; Funding Commitments
Will Not be Extended on Expiry
IP
Commenced Study for a Separate
Listing by Way of Distribution in
Specie to Wharf Shareholders
Strategic Reviews Strategic
Reviews
Agenda
Hong Kong Properties
China Properties
Financial Management
Strategic Reviews
33
Other Businesses
Next
Prudent Financial Management
34
Net Gearing Further Dropped to 7.3%
Group Net Debt -$23.4B to $23.8B,
Net Cash Inflow: $31B*
Floating Rate Debt: 73% of Total
25.6%
18.8%
15.8%
19.2%
20.6%
21.7%
20.4%
18.9%
14.9%
7.3%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Net Debt to Total Equity
Net Debt /
(Cash)
(HKD B)
Wharf
(Excl.
Subs.)
MTL HCDL i-CABLE Group
Total
Net Debt
to Total
Equity
31 Dec
2016 16.7 8.5 (1.9) 0.5 23.8 7.3%
31 Dec
2015 39.9 8.8 (1.7) 0.2 47.2 14.9%
* On/Off Balance Sheet; After Dividends but Before Financing Activities & Acquisition of
Wheelock House ($6.2B)
Financial
Management
Prudent Financial Management
35
2.8%
3.2% 3.2%
2.8%
3.2%
2012 2013 2014 2015 2016
Average Interest Cost
15.2
10.1
16.8
7.2 5.7
5.8
Jan17-Dec17 Jan18-Dec18 Jan19-Dec19 Jan20-Dec20 Jan21-Dec21 Jan22 & After
Debt Maturity (HKD billion)
Financial
Management
Overview of Application of Funds
36
HKD
FY16
(Actual)
FY17
(Projected)
China DP $12.4B $12.8B
China IP $4.5B $6.0B
HKIP $7.9B $1.5B
Others $2.1B $2.5B
Total $26.9B $22.8B
* China DP $12.8B Self-financed by Sales; China IP Mainly IFSs Under Construction
35.5
32.8 31.5
23.4
26.9
22.8
2012 2013 2014 2015 2016 2017
Major Capital and Development Expenditure
(HKD billion)
Major Capital and Development Expenditure
Financial
Management
New Achievements on Panda Bond Issuance
37
1st Tranche Issued on 12 Oct 2016
RMB4B (Over-subscribed 3x)/RMB20B
Coupon Rate: 3.1%
Financial
Management
Agenda
Hong Kong Properties
China Properties
Strategic Reviews
Next
38
Other Businesses
Financial Management
Next Coming Attractions
39
2017 2018
1Q 2Q 3Q 4Q
OT 4-Storey Extension
CSIFS Mall
& Niccolo
CQIFS Mall
& Niccolo
The Murray OT 4-Storey Extension
40
Corporate Social Responsibility
2016 Key Achievements
41
Published the 2nd
CSR Report Based on GRI G4 Guidelines, with the
Coming CSR Report (Issued in July) Also Complying with the HKEX’s
ESG Disclosure Requirements
Hang Seng Corporate Sustainability Index (top 30)
Accredited the HKQAA’s CSR Index Plus mark
CSR
Business-in-Community (Highlights)
42
CSR
Flagship Business-in-Community Programme
Project WeCan
Key Youth Development Programme
Architectural Design Internship
Project Partners
31 Companies 5 Universities
3 Consulates 3 Organizations
Beneficiary
51 Schools 43,000 Students
Project Partners
2 Universities
Awardees
20 Postgraduates (Architecture)
Countries
Denmark, France, Germany, India. Italy,
Japan, The Netherlands, Spain, Switzerland
and The United Kingdom
Appendix
43
44
IP Portfolio
69%
27%
4%
Office S.A. &
Others
Retail
56%
34% 10%
Office S.A. &
Others
Retail
85%
15%
China
HK
86%
14%
China
HK
2016 IP Revenue: $15,289M
By Business
2016 IP Valuation: $302.6B
By Business
45
HKIP Performance
Harbour City Times Square Plaza Hollywood
2016
(HKD million) Revenue % Chg Revenue % Chg Revenue % Chg
Retail 6,207 +4% 2,137 +6% 546 +3%
Office 2,437 +5% 701 +5% - -
Hotels & Club 1,286 -2% - - - -
Serviced Apt. 316 +5% - - - -
Total 10,246 +4% 2,838 +6% 546 +3%
Valuation* as of
31 Dec 2016 $172.1B $54.5B $9.5B
Retail Sales
Jan-Dec 2016 $27.7B (-9.9%) $8.1B (-11.3%) $2.4B (-8.5%)
2016 Avg. Retail
Passing Rent
(HK$ psf per
Month)
$436 $297 $106
* Incl. Hotels at Valuation as of 31 Dec 2016
46
Commercial Properties Pipeline
14.0 14.2 14.2 14.4 14.7 14.7 14.7
5.7 5.7 5.7 5.7 5.7 5.7 5.7
3.9
6.6 7.4 8.2 8.2 8.2 8.2
2.0 2.0
4.6 6.5 6.5 6.5
2.2 2.2
2.7
2.7 2.7 2.7 0.8
0.8 0.8 0.8
4.1 4.1
8.9
9.4 11.2
2013 2014 2015 2016 2017 2018 2019+
Commercial Properties Completion Schedule (Million s.f)
Changsha IFS
Suzhou IFS
Changsha Outlets
Wuxi IFS
Chongqing IFS*
Chengdu IFS
Other China Commercial Prop.
HK Commercial Prop.
53.9M s.f
Total Development Area, Incl. Basement Area & Carpark
*Gross Basis & Net of Recognized Sales
47
China Commercial Properties Pipeline
604,000 s.m.*
Retail, Grade A Offices &
Hotel
Retail 114,000 s.m
300m Tower
Jiangbei New CBD
50:50 JV with COLI
2017
383,000 s.m
Grade A Offices, Apartments &
Hotel
No Retail
450m Tower
Suzhou New CBD
80:20 JV with Genway
2018
250,000 s.m
Grade A Offices
No Retail
339m Tower
Taihu Plaza CBD
Wholly-owned
2016
1,043,000 s.m
Retail, Grade A Offices &
Hotel
Retail 254,000 s.m
452m Tower
Prime City Center
Wholly-owned
2018
Wuxi IFS Chongqing IFS Suzhou IFS
Total Development Area, Incl. Basement Area & Carpark
* Gross area & Net of Recognized Sales
Changsha IFS
48
Chongqing City Profile
China’s Western
Development Strategy
Strong Presence of
International Brands
The World’s Largest
Municipality by Population &
Area
Transportation Hub – Biggest
Inland River Port
Chongqing
Population 29.9 million
2016 GDP
+10.7%
(National Avg.:
+6.7%)
2016Retail Sales +13.2%
2016 Disposable
Income per Capita
RMB29,610
+8.7%
7%
44%
48%
Tertiary Primary
Secondary
2016 Tertiary Industry +11.0%
48.4% of CQ GDP
49
Changsha City Profile
Hub City in Central China
Beneficiary of China’s “Rise
of Central China” Campaign
Important Entertainment
Center in China – Presence of
Hunan Satellite TV
2016 Tertiary Industry +12.4%
47.6% of CS GDP
Changsha
Population 7.3 million
2016 GDP
+9.4%
(National Avg.:
+6.7%)
2016 Retail Sales +11.6%
2016 Disposable
Income per Capita
RMB43,294
+8.3%
4%
48%
48%
Tertiary
Primary
Secondary
50
China Contracted Sales Breakdown by City
Region City No. of Projects
on Sale in 2016
Contracted
Sales (%)
GFA Sold
(%)
Eastern China Shanghai 6 20% 5%
Suzhou 5 16% 12%
Wuxi 4 9% 14%
Changzhou 3 3% 9%
Ningbo 3 5% 5%
Hangzhou 10 23% 18%
Eastern China Sub-Total: 31 76% 63%
Western China Chengdu 7 6% 12%
Chongqing 3 5% 9%
Western China Sub-Total: 10 11% 21%
Southern China Foshan & Guangzhou 7 4% 7%
Others Beijing 3 2% 2%
Tianjin, Dalian & Wuhan 5 7% 7%
Southern & Others Sub-Total: 15 13% 16%
51
4 New Projects Launched in 2016
Projects City New Launch
Attributable
Proceeds
(RMB’M)
Attributable
GFA Sold
(s.m)
Average Price
(RMB psm)
Crown Land Beijing Feb 201 9,500 21,100
The Exquisite Palace (Longxi) Hangzhou Apr 738 26,200 28,100
The Pearl on the Crown Beijing May 209 10,000 21,000
Hangzhou Binjiang District (The
Willow Shores) Hangzhou Aug 569 12,700 42,700
52
China Key Projects on Sales in 2016
Projects City
Attributable
Proceeds
(RMB’M)
Attributable
GFA sold
(s.m)
Average Price
(RMB psm) Ownership
Shanghai Pudong
Huangpujiang Shanghai 5,635 59,100 95,400 100%
Suzhou Times City Suzhou 2,093 65,400 28,700 80%
Qiantang Bright Moon Hangzhou 1,345 46,200 27,300 50%
River Pitti (Bi Xi) Wuxi 1,334 115,600 11,400 100%
Scenery Bay Tianjin 1,215 42,900 27,600 50%
Bellagio (碧堤雅苑) Suzhou 1,151 55,100 20,900 100%
Greentown Zhijiang No.1 Hangzhou 1,094 51,400 20,200 50%
Palazzo Pitti (Lot C & D) Hangzhou 1,059 28,300 37,500 100%
Bellagio (碧堤半島) Suzhou 948 46,400 20,000 100%
Ambassador Villa Suzhou 825 14,900 54,500 100%
Wuxi Times City Wuxi 821 67,700 11,500 100%
Park Mansion Ningbo 809 49,800 15,800 100%
53
China Land Bank Breakdown by City
Region City GFA million (s.m) % Total
Eastern China Shanghai 0.5 8%
Suzhou 0.8 11%
Wuxi 0.8 12%
Changzhou 0.4 5%
Ningbo 0.1 1%
Hangzhou 0.6 9%
Eastern China Sub-Total: 3.2 46%
Western China Chengdu 1.5 23%
Chongqing 0.7 10%
Western China Sub-Total: 2.2 33%
Southern China Foshan, Shenzhen & Guangzhou 0.2 3%
Others Tianjin 0.1 1%
Changsha 0.8 12%
Beijing, Dalian & Wuhan 0.3 5%
Southern & Others Sub-Total: 1.4 21%
Total: 6.8 100%
54
China key Properties Completion
Projects Attributable GFA (s.m)
Key Completion in 2016
Suzhou Times City 193,900
Changzhou Ambassador Villa 121,800
Ningbo Park Mansion 103,800
Changzhou Feng Huang Hu 102,000
Greentown Wharf Qiantang Bright Moon 94,800
Shanghai Zhoupu 91,300
Projected Key Completion in 2017
Shanghai Pudong Huangpujiang 136,000
Suzhou Times City 123,500
Wuxi River Pitti (Bi Xi) 87,700
Chongqing IFS 86,300
55
China New Projects for Sale in 2017
Projects City Ownership
Hangzhou Site 18 Hangzhou 25%
Jingan Garden Shanghai 55%
Beijing Chaoyang LiangMa Site Beijing 40%
Longxi (Site 12) Hangzhou 100%
Thank You
56
Properties Growth Continues
57
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 subsidiaries and affiliates hereby disclaim (i) all express, implied, and statutory warranties
of any kind to user and/or any third party including warranties as to accuracy, timeliness,
completeness, or fitness for any particular purpose; and (ii) any liability whatsoever for any loss
howsoever arising from or in reliance upon the whole or any part of the information and data
contained herein.
2) The full-year statutory financial information of preceding financial years quoted in this presentation
are derived from statutory annual financial statements for that relevant financial years, each of which
had been delivered to Registrar of Companies in accordance with the prevailing Companies
Ordinance and were reported on by the auditors with relevant auditors’ reports without qualification or
modification.
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