2016 FISCAL YEAR RESULTS REVIEW - Guangdong Investment · 2016 Fiscal Year Results Review ~ WATER GROUP HK PROJECTS 11 Water Group HK: revenue and profit before tax for 2016 amounted

2016 Fiscal Year Results Review ~ Stock Code: 0270

2016 FISCAL YEAR RESULTS REVIEW

March 2017

2016 Fiscal Year Results Review ~

O U R B U S I N E S S

Infrastructures Water Resources Property Investment and Development &

Department Stores

Hotel Operations

2

Guangdong Investment Limited


F I N A N C I A L P E R F O R M A N C E S U M M A R Y

3

7,736 7,990 8,426 9,172 10,464

3,414 4,426 4,397 3,905 4,212

0

2,000

4,000

6,000

8,000

10,000

12,000

2012 2013 2014 2015 2016

Revenue

Profit

(HK$ mm)

Dividend (HK$ cents) 1H15: 10/1H16: 12

2015: 34 / 2016 : 42

+20% Revenue (HK$

mm) 2015: 9,172

2016: 10,464

+14.1% Profit (HK$

mm) 2015: 3,905

2016: 4,212

+7.7%

Cash flow from Operations (HK$

mm) 2015: 5,429

2016: 6,099

+12.3% +23.5%


Infrastructures

R E V E N U E P E R F O R M A N C E B Y S E G M E N T

Property & Department Stores

Hotel Operations & Management

2015: HK$1,984 mm

2016: HK$1,848 mm

2015: HK$5,896 mm

2016: HK$6,505 mm 2015: HK$621 mm

2016: HK$1,477 mm

2015: HK$671 mm

2016: HK$634 mm

Water Resources

+HK$609 mm

-HK$136 mm -HK$37 mm

+HK$856 mm

4


S E G M E N T R E S U L T S

63% 23% 1.4% 13%

Water Resources Property Investment and Development &

Department Stores

Hotel Operations & Management

Infrastructures

Operating Profit (excluding interest income, investment income & finance costs)

5


D I V I D E N D G R O W T H T R E N D

18.0 20.0 23.0 28.0

34.0

42.0

20.0%

11.1% 15.0%

21.7% 21.4%

23.5%

37.3% 36.5% 32.4% 39.7%

54.4%

62.5%

0%

10%

20%

30%

40%

50%

60%

70%

0

5

10

15

20

25

30

35

40

45

2011 2012 2013 2014 2015 2016

Dividend

DividendGrowth Rate

Payout Ratio

(HK$ cents)

6

2008-2016 dividend CAGR of 20%


F I N A N C I A L P O S I T I O N

7

Dec 2016 (HK$ mm) Dec 2015 (HK$ mm)

Total Assets 52,130 54,110

Included: Fixed assets and prepaid land lease 6,956 7,378

Investment properties 12,561 12,327

Operating concession rights & receivables under service concession arrangements 14,567 15,666

Cash and bank balances 7,195 9,295

Available-for-sale financial assets 7,628 6,229

Total Liabilities and Minority Interest 19,908 22,638

Included: bank and other borrowings 5,428 7,572

Non-interest bearing receipt in advance 709 827

Non-controlling interests 6,017 5,795

Equity attributable to Equity Holders 32,222 31,472


H O N G K O N G W A T E R S U P P L Y A R R A N G E M E N T

8

Existing Arrangement

2015 – 2017

Volume/Tariff Flexible supply volume based on actual needs

Annual revenue

2015: HK$4.2 bn

2016: HK$4.5 bn

2017: HK$4.8 bn


H K W A T E R S U P P L Y R E V E N U E T R E N D

9

2.5 2.5 2.5 2.5 3.0 3.1 3.3 3.5 3.7 4.0 4.2 4.5 4.8

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

(HK$ bn)

Note*: Subsidy amounted to RMB 652 mm finalized by Guangdong Provincial Government for the period from 2005 to 2008. The subsidy was paid by instalments over four year starting from 2008


D O N G J I A N G ( E A S T R I V E R ) W A T E R S U P P L Y C O N C E S S I O N

30-year concession started in 2000 to supply fresh water to Hong Kong, Shenzhen and Dongguan

Designed annual capacity of 2.4 billion tons

Revenue and Profit before Tax for the year 2016 amounted to HK$5,656 mm (2015: HK$5,489 mm) and HK$3,266 mm (2015: HK$3,129 mm)

10

0.0

0.5

1.0

1.5

2.0

2.5

2012 2013 2014 2015 2016

(billion tons) Annual Water Distribution Volume


W A T E R G R O U P H K P R O J E C T S

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Water Group HK: revenue and profit before tax for 2016 amounted to HK$854.0 mm (2015: HK$406.3 mm) and HK$167.7 mm (2015: HK$63.8 mm)

Successfully bid six new water resources projects in Danzhou, Suixi, Gaozhou, Kaiping, Shanwei, and Fengshun, with total designed water supply capacity of 430,000 tons per day and waste water processing capacity of 195,000 tons per day, and total investment size of approximately RMB1.47 bn

Operational

Project Sewage Treatment (tpd) Water Supply (tpd) Project Sewage Treatment (tpd) Water Supply (tpd)

Wuhua 40,000 – Baoying – 130,000

Jinsheng 70,000 – Gaoyou – 145,000

Daojiao 40,000 – Jianghe – 520,000

Meizhou 100,000 210,000 Yizheng – 150,000

Kaiping 50,000 – Wuzhou 90,000 355,000

Danzhou – 100,000 Zhaoqing – 90,000

Nansha – 400,000 Qingxi – 290,000

Zhanjiang Suixi – 50,000 Xingning 3,000 –

Total 393,000 2,440,000

Under Construction

Hainan Danzhou 80,000 100,000 Gaozhou – 200,000

Zhanjiang Suixi – 20,000 Kaiping 25,000 –

Shanwei 90,000 – Fengshun – 60,000


C A P A C I T I Y G R O W T H T R E N D

12

NA NA 280 390 393 200 200

540

2170 2440

0

500

1,000

1,500

2,000

2,500

3,000

2012 2013 2014 2015 2016

Waste WaterTreatment

Urban WaterSupply

Capacity Growth Trend by Type (‘000 tpd)


P R O P E R T Y I N V E S T M E N T & D E V E L O P M E N T

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* Including rentals from department store run by the Group ** Excluding revaluation gain and net interest income

1,056 1,115

1,180 1,186 1,152

735 748 796 789 803

0

200

400

600

800

1000

1200

1400

2012 2013 2014 2015 2016

Revenue

Profitbefore Tax

Teem Plaza Performance Trend

HK$ mm

*

**


D E P A R T M E N T S T O R E S

14

711 772 784 813

717

224 306 312 337

245

0

20

40

60

80

100

120

140

160

180

200

0

100

200

300

400

500

600

700

800

900

2012 2013 2014 2015 2016

Revenue

Profitbefore Tax

Leased Area

Department Stores Performance Trend

HK$ mm ‘000 m2


G U A N G D O N G L A N D A C Q U I S I T I O N

15

On January 19, the Company entered into an agreement to acquire 73.82% of the issued share capital of Guangdong Land Holdings Limited (“GDL”) from GDH Limited (the “Acquisition”)

The Acquisition

— 73.82% interest in GDL – principal asset is the Buxin Project in Shenzhen and Ruyingju Project in Panyu,

Guangzhou

— The Buxin Project is a property development project located in Buxin, Luohu, Shenzhen with planned total site

area of 66,526 sq.m and planned GFA of 432,051 sq.m

— The Ruyingju Project is a residential property development project located in Panyu, Guangzhou, with 917

residential units and 651 parking spaces; 90.2% of total saleable area sold as of September 30, 2016

— Total payment of RMB 3,358 mn (equivalent to HK$3,780 mn) will be settled with RMB839.5 mn (25%) in cash

and RMB2,518.5 mn (75%) in shares issued at HK$10.39 per share to GDH

The Acquisition was approved by GDI’s Independent Shareholders at the EGM held on March 20, 2017


G D L – O V E R V I E W O F T H E B U X I N P R O J E C T

16

Buxin Project Overview Location Map

Buxin Metro Station: 200m

Shuibei Metro Station: 300m

The Buxin Project has a planned total development site area of c. 66,526 sq. m. with a planned gross floor area of c. 432,051 sq. m.

Phase I is expected to be completed in 2021 with pre-sale commencing in 2018, and Phase II is expected to be completed in 2023

Prime location

— Conveniently connected by public transport system, 200m to the Buxin station of the Shenzhen Metro Line 5 and 300m to the Shuibei station of the Shenzhen Metro Line 3

— 15 minutes to the Luohu control point by car

— Well supported by education and medical facilities in nearby area

— Abundant scenery and park resources. Weilingshan, Donghu, Honghu and Cuizhu parks are within 1.5km

The Buxin Project is a multi-module commercial complex with the jewellery products industry as its main theme, in line with Luohu District Government’s functional design for Shuibei – Buxin Area

The Buxin Project land is situated in a prime location, within extended area of Luohu CBD in Shenzhen


H O T E L O P E R A T I O N S & M A N A G E M E N T

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HOTEL OPERATIONS

Hotel owned or lease

owned: 6 hotels

Average room rate and occupancy rate for star-rated hotels

• Sheraton Guangzhou Hotel: HK$1,198 and 87.3% (2015: HK$1,302 and 87.7%)

• Other 4 star-rated hotels: HK$668 and 77.3% (2015: HK$693 and 79.3%)

OVERALL 2016 RESULTS

Revenue: HK$634 mm (-5.6%) Profit before tax: HK$88 mm (-21.8%)

HOTEL MANAGEMENT

Hotel managed:

42 hotels (2015: 40 hotels)


P O W E R G E N E R A T I O N – Z H O N G S H A N P O W E R P L A N T

18

(HK$ mm)

440 425 400 391

838

105 126 149 157

257

0

100

200

300

400

500

600

700

800

900

2012 2013 2014 2015 2016

Revenue

Profit beforeTax

Revenue Trend


P O W E R G E N E R A T I O N – J I N G H A I P O W E R P L A N T *

19

(HK$ mm)

3,708

8,281 7,635

6,213

4,703

498

1,683 1,709 1,577

643

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

2012 2013 2014 2015 2016

Revenue

Profit beforeTax

Revenue Trend

*The Company’s effective interest in Jinghai Power is 25%.


T O L L R O A D

20

Main Line Branch Line Toll Station

Nanning City

Yulin City

Hengxian

Yunbiao

Xingye

Muge

Guigang

Guigang City

Xingliu Expressway: revenue and profit before tax of Xingliu Expressway for the year 2016 amounted to HK$629.7 mm and HK$366.2 mm, average daily traffic flow for 2016 was 22,429 vehicle trips

Oct 2015: acquired Xingliu Expressway for an aggregate amount of HK$2,588 mm

Part of the G80 Guangzhou-Kunming Expressway that connects Yunnan, Guangxi and Guangdong Provinces

Commenced operation in August 2003 with five toll stations

The main line is 99.6km in length

Three branch line with aggregate length of 52.7km

Operation right of the Xingliu Expressway will expire in September 2032

Xingliu Expressway Overview


P P P P R O J E C T

21

June 2016: GDI announced it has entered into the Cooperation Agreement with Xiegang Government in respect of the Dongguan Yingping public roads PPP project . Budgeted development costs of the PPP project is expected to be within RMB4.754 billion

The Project comprises the construction of A-grade highways, connecting roads and municipal roads and the related ancillary support services such as drainage, greening and lighting

Announced Public-Private-Partnership Project

Investment Rationale Aligning with national policy to promote PPP Stable and long term financial return ─ Long term investment which delivers steady, low-risk returns for 10+ years ─ Cap on development costs ensures project is NOT subject to cost overrun risk ─ No construction risk as construction work will be completed by contractors

Project Return Project return: 8% of outstanding amount Management Fee: 2.5% of development costs Maintenance Fee: 1.1% of development costs per annum for the maintenance period of 10

years


F I N A N C I A L S U M M A R Y

22

2016 (HK$ mm) 2015 (HK$ mm) Y/Y%

REVENUE 10,464 9,172 14.1%

Gross Profit 6,880 6,144 12.0%

Changes in fair value of investment properties 113 132 -14.4%

Administrative expenses (1,398) (1,345) 3.9%

Exchange differences, net (221) (491) -55.0%

PROFIT BEFORE TAX 5,752 5,246 9.6%

Income tax expense (1,100) (957)

PROFIT FOR THE YEAR 4,652 4,289 8.5%

Attributable to: Owners of the Company Non-controlling interest

4,212 440

3,905 384

EPS ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE COMPANY

Basic 67.25 HK cents 62.45 HK cents 7.7%

Diluted 67.20 HK cents 62.35 HK cents 7.8%

Gross margin 65.8% 67.0%

Net margin 44.5% 46.8%


S U M M A R Y

• Review

– Achieved stable growth in the Group’s core business segments in the year 2016

– Successfully bid six new water resources projects in Danzhou, Suixi, Gaozhou, Kaiping, Shanwei, and Fengshun, with total designed water supply capacity of 430,000 tons per day and waste water processing capacity of 195,000 tons per day, and total investment size of approximately RMB1.47 bn

• Keep Focusing

– Seek investment opportunities in the areas of water resources management, property and infrastructure development

– Monitor potential opportunities involving public-private-partnership projects in the water resources and infrastructure sectors

23


L E G A L D I S C L A I M E R

This presentation does not constitute an offer or solicitation to anyone in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it is unlawful to make such offer or solicitation or is unlawful without compliance with any registration, filing or other requirements.

This presentation contains “forward-looking statements” which are statements that refer to expectations and plans for the future and include, without limitation, statements regarding the Company’s future results of operations, financial condition or business prospects as well as other statements based on projections, estimates and assumptions. Words such as "expect," "intend," "plan," "believe," "estimate," "may," "will," "should" and similar expressions are intended to identify such forward-looking statements. These forward-looking statements, which reflect the current expectations and plans of the directors and management of the Company, may not materialize or may change. Many risks, uncertainties and other factors, some of which are unpredictable and beyond the Company’s control, could affect the matters discussed in these forward-looking statements. These factors include, without limitation, economic and business conditions globally and in the countries where we operate, the Company’s ability to predict and respond quickly to market developments, pricing trends and competition; changes in applicable laws and regulations (including applicable tax and tariff rates). Any variance from the expectations or plans on which these forward-looking statements are based could cause the Company’s actual results or actions to differ materially from those expressed or implied in these statements. These statements are not guarantees of future performance and we caution readers not to place undue reliance on these statements. The Company undertakes no obligation to update any forward-looking statements in this presentation, whether as a result of new information or any subsequent change, development or event. All forward-looking statements in this presentation are qualified by reference to this paragraph.

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THANK YOU

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2016 FISCAL YEAR RESULTS REVIEW - Guangdong Investment · 2016 Fiscal Year Results Review ~ WATER GROUP HK PROJECTS 11 Water Group HK: revenue and profit before tax for 2016 amounted