HHI 1H07 Analyst Final (Web)€¦ · 5 10,155 11,532 0 2,000 4,000 6,000 8,000 10,000 12,000 1H06 1H07 Aggregate daily revenue Rmb (‘000) + 14% Aggregate average daily toll of the

1Presentation slides are available in www.hopewellhighway.com

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Strong, solid financial positionStrong, solid financial position��

Poised to grow with the Pearl River Delta Poised to grow with the Pearl River Delta economyeconomy� ��

Quality Quality upcoming projects to enhance upcoming projects to enhance shareholder valueshareholder value� � � � � ��

3

��

Aggregate average daily traffic rose 17% to 429K��

HHI’s net cash on hand HK$ 3.3 billion (excluding JV Entity)�� ! " ##$ % &' ( ) �* + , -

6 months ended6 months ended31.12.05 31.12.0631.12.05 31.12.06

+30.4%15.0011.50DPS (HK cents)��

+17.8%22.9919.52EPS (HK cents)��

+20.9%682564Net profit attr. to equity holders of the Co. (HK$’ m)

� �� ( � � � � � )

+16.8%1,004860Net toll revenue (HK$’ m) �� ( � � � � � )

% Change% Change

4

429366

0

100

200

300

400

500

1H06 1H07

Aggregate daily traffic Aggregate daily traffic ��Traffic (‘000)

+ 17%

#��#�� Aggregate average daily traffic of the Group’s 3 toll expressways +17% to 429,000 vehicles. / 0 1 #2 3 4 5 6 � � �� 7 8 � ��

RR RR � � � � � � � � � � � � � � � � � � � � � � � �

8284

0

20

40

60

80

100

1H06 1H07

Traffic (‘000)

- 2 %

Phase I West Phase I West

��

�� I I ��

2722

0

5

10

15

20

25

30

1H06 1H07

Traffic (‘000)

+ 21%

320260

0

100

200

300

400

1H06 1H07

GS GS � � � � � � � � � � � � � � � � � � � � � � � � Traffic (‘000)

+ 23%

Average daily traffic

5

10,15511,532

0

2,000

4,000

6,000

8,000

10,000

12,000

1H06 1H07

Aggregate daily revenue Aggregate daily revenue ��

Rmb (‘000) + 14%

Aggregate average daily toll of the Group’s 3 toll expressways +14% to Rmb11.5 million. / 0 1 #2 3 4 5 6 � � �� 4 3 9 7 8 � �: ; " < = > �%

#��#��

9,9688,668

0

2,000

4,000

6,000

8,000

10,000

12,000

1H06 1H07

GS GS � � � � � � � � � � � � � � � � � � � � � � � �

+ 15%Rmb (‘000)

RR RR � � � � � � � � � � � � � � � � � � � � � � � �

1,1681,160

0

200

400

600

800

1,000

1,200

1,400

1H06 1H07

+ 1 %Rmb (‘000)

Phase I West Phase I West

��

�� I I ��

396327

0

100

200

300

400

500

1H06 1H07

+ 21%

Rmb (‘000)

Average daily toll revenue

6

HK$’M ��( � � �� ) 31.12.05 31.12.06 % Change

Net toll revenue �� 860 1,004 17%Exchange gain �� 97 86

Interest income �� 62 107

Other revenue �� 25 25 Total Revenue �� 1,043 1,222 17% Opex � � � � (122) (123)

Depn & amortn exp � � � � (153) (188)

EBIT � � � � � �� 769 911 18%

Finance costs � � � � (134) (161)

Tax expenses � � � � (61) (56)

Net Profit �� 574 694

Attributable to: Minority interests � � � � � � � � � 10 12 Equity holders of the Co. � � � � � � � � �� 564 682 21%

574 694

Op. margin (excl. exchange gain & interest income)(1)

� � ! � " ( # $ % & ' ( � � � ) ��)(1)89% 90%

EBITDA/Interest (x) � ) * + , (-) 6.9 6.8

6 months ended

"��"��

Note: (1) EBITDA (excl exchange gain & interest inc.)/ net toll revenue

�� / ��

7

361430

564

682

1,128

733

899

0

200

400

600

800

1,000

1,200

FY03/04 FY04/05 FY05/06 FY06/07

HK$Million

Interim Result ended 31-Dec Annual Result ended 30-Jun

$��%��&��'��'��()��*�+$��%��&��'��'��()��*�+

� � � � � � � ��

��21%

8

"��,�-��"��,�-��

88% 74% 75%Total DividendPayout Ratio

10.00 10.25 11.5015.00

12.50 12.7517.00

05

10152025303540

FY03/04 FY04/05 FY05/06 FY06/07

Interim Dividend Final DividendHK cents/sh

Target 75% dividend payout ratio ��

Group DividendGroup Dividend

23.022.5

28.5

9

!�.��$��%��.��!�.��$��%��.��

Approx. Rmb7b (Equity/Debt: 0%/100%)

��

Expansion from current dual 3 to dual 5 lanes

� � � � � ��

GS Expansion ! " # � �

(HHI: 50%)

Approx. Rmb3.6b (Equity/Debt: 35%/65%)

��$ � � � � � � � �� $ ��

Approx. Rmb4.9b (Equity/Debt: 35%/65%)

��% & � � � �� $ ��

Planned Inv.*Planned Inv.* ��**Description Description ��Projects Projects � ��

Zhongshan – Zhuhai expressway of approx. 38km

' ( � ) * ��+ , - ." # , /

Phase III West ) 0 12 2 2 3

(HHI: 50%)

Shunde – Zhongshan expressway of approx. 46km

4 5 � ' ( �% $ , - ." # , /

Phase II West ) 0 12 2 3

(HHI: 50%)

/��%��.��/��%��.��

Depends on scope of project

6 7 8 9 : .; <

Planned Planned Inv.* Inv.* ��**DescriptionDescription � � � � � � � �Projects Projects � �� Proposed 29km bridge linking Hong Kong, Zhuhai & Macau

= > .? & , - @ A B C D E � ) *F G H

HK-Zhuhai-Macau BridgeE ) G @ A

(HHI: planned 50%)

•Present planning, subject to change; excluding finance cost��

10

!�.��%��.��%��!�.��%��.��%��

* Based on exchange rate of Rmb1 = HK$0.9954 as of closing on 31-12-2006

^ Present planning, subject to change; excluding finance cost

# HHI’s interest in GS: 50% Jul 97-Jun 07, 48% Jul 07-Jun 17, 45% Jul 17 - Jun 27

Sufficient funding for new projects from: I J K L M N O P 9 : :

1. net cash of $3.3billion on hand (approx.$1.1 per share) Q R S � M E �33� � (�T E �1.1�)

2. operating cash inflow of over HK$1.3 billion per year U V � M W X T Y Z E �13� �- Annual net cash reserve of approx. HK$390m in the past 3 years on average[ \ 3 Y L M S ] X ^ _ T Y ` a �E �3.9 � �

3. HK$3.6 billion 5-year syndicated bank loan facility - no need to draw for above projectsb c 9 : d e L M fe g h i E ��$ � �.�Y 3j k l m

Projects PlannedInvestment ^

Interest Equityrequired

HHI's PlannedEquity

Portion *^

Rmb'm % % HK$'M FY07 FY08 FY09 FY10

Phase II West��II � 4,900 50% 35% 854 256 341 256

Phase III West��III � 3,600 50% 35% 627 188 251 188

GS expansion��

7,000 50%# 0% -

Total��

15,500 1,481 256 530 507 188

HHI's Planned EquityInjection*^ (HK$'M)

11

��$��*��$��*�� ! " # $� � � � � � ! " # $� � � � � � ! " # $� � � � � � ! " # $� � � � � � ! " # $� � � � � � ! " # $� � � � � � ! " # $� � � � � � ! " # $

Annual net cash reserve of approx. HK$390m in past 3 years on average (after payment of dividend to HHI shareholders & HHI opex)

��3 � � � � � � � � � � � � 3.9 � � ( � � � � � � � � � � � � � � ! � � � � � � " # $ % & )

215

384

572

256

0

100

200

300

400

500

600

700

FY04 FY05 FY06 1H07

HK$M

HHI Net Cash InflowHHI Net Cash Inflow

12

%��-��'��&��%��-��'��&��% & ' ( ) * + , - . /% & ' ( ) * + , - . /% & ' ( ) * + , - . /% & ' ( ) * + , - . /% & ' ( ) * + , - . /% & ' ( ) * + , - . /% & ' ( ) * + , - . /% & ' ( ) * + , - . /

As at 31 Dec 2006

USD loans: 72%

��

RMB loans: 28%

� ��

Revenue in RMB but majority of loans in non-RMB

� � � � � ��

�

Exchange gain HK$86m

� � � � � � $8,600 � �

USD72%

RMB28%

Breakdown of Total Loans Breakdown of Total Loans By CurrencyBy Currency

13

01,2�!3�(4��!�-��01,2�!3�(4��!�-��0 1 2 % & ' 3 4 5 60 1 2 % & ' 3 4 5 60 1 2 % & ' 3 4 5 60 1 2 % & ' 3 4 5 60 1 2 % & ' 3 4 5 60 1 2 % & ' 3 4 5 60 1 2 % & ' 3 4 5 60 1 2 % & ' 3 4 5 6

Source: PBOC

USD:RMB Exchange Rate

0.1160

0.1180

0.1200

0.1220

0.1240

0.1260

0.1280

0.13001-

Jan-

0522

-Mar

-05

1-Ju

n-05

27-J

ul-0

512

-Aug

-05

30-A

ug-0

515

-Sep

-05

9-O

ct-0

525

-Oct

-05

10-N

ov-0

528

-Nov

-05

14-D

ec-0

530

-Dec

-05

19-J

an-0

613

-Feb

-06

1-M

ar-0

617

-Mar

-06

4-A

pr-0

620

-Apr

-06

15-M

ay-0

631

-May

-06

16-J

un-0

64-

Jul-0

620

-Jul

-06

7-A

ug-0

623

-Aug

-06

8-S

ep-0

626

-Sep

-06

19-O

ct-0

66-

Nov

-06

22-N

ov-0

68-

Dec

-06

26-D

ec-0

616

-Jan

-07

USD/RMB1

2% RMB appreciation announcedon 21-7-2005 (USD0.1233/RMB1)

As at 30-6-06 :USD0.12507/RMB1(RMB7.9956/USD1)� +3.51% since 20-7-05

As at 20-7-05 : USD0.12083/RMB1(RMB 8.276/USD1)

As at 31-12-06 :USD0.12806/RMB1(RMB7.8087/USD1)� +5.98% since 20-7-05� +2.39% since 30-6-06



14

Notes: (1) Included pledged bank deposits $282M (31.12.06) and $473M (31.12.05)

(2) Majority of the debt has long maturity of over 5 years

(3) HHI’s proportionate share of joint venture’s debts

(4) Net debt refers to total debt less pledged bank deposits, bank balances and cash

*��3��1��*��3��1��7�89:;

15

Source: CEIC & various car manufacturer associations* Total vehicles incl. passenger & commercial vehicles but excl. motorcycles** Latest data is up to 2003

5��!��6��5��!��6��77 1��!�.��*��1��!�.��*��

1,630,310Canada10

1,834,000**Russia9

1,959,488Spain8

2,484,166Italy7

2,547,911France6

2,828,127U.K.5

3,614,886Germany4

5,757,391China3

5,852,067Japan2

17,296,100U.S.A.1

20052005Total vehicleTotal vehicle

SalesSalesCountryCountryRankingRanking

*��8��5��6��1��!��8��*��8��5��6��1��!��8��

China 2006: 7.2m

China 2006: China 2006: 7.2m7.2m

China 1994: 1.6m

China 1994: China 1994: 1.6m1.6m

(in Unit)

16

1��*��'��"��",%��"1�/��1��*��'��"��",%��"1�/�� ! " # $� � � � � � � � � � � � � � � � ! " # $� � � � � � � � � � � � � � � � ! " # $� � � � � � � � � � � � � � � � ! " # $� � � � � � � � � � � � � � � � ! " # $� � � � � � � � � � � � � � � � ! " # $� � � � � � � � � � � � � � � � ! " # $� � � � � � � � � � � � � � � � ! " # $

0

500

1,000

1,500

2,000

2,50019

94

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

GDP (Rmb'bn)

0

30,000

60,000

90,000

120,000

150,000

180,000

210,000

240,000

270,000Traffic (unit)

Guangdong GDP

Avg. Daily Traffic

Source: GD Statistical Yearbooks and Company data

17

∼∼∼∼∼∼∼∼ %��(��%��(��∼∼∼∼∼∼∼∼

18

1��1��9&��!��:9&��!��:

"1�1��"1�1��

(15��(15��

%��5��%��5��

��%��.��%��.��

19

"1�1��"1�1��;; &-+�,��/��&-+�,��/��

* Chinese New Year in 2007 started on 18 Feb 2007 (2006 started on 29 Jan 2006)

0

40

80

120

160

200

240

280

320

360

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

20072006200520042003200220012000199919981997199619951994

No. of Vehicle (‘000)

1H06 1H07 ChangeAvg. Daily Traffic 260K 320K ↑↑↑↑ 23%

1H06 1H07 ChangeAvg. Daily Traffic 260K 320K ↑↑↑↑ 23%

20

"1�1��"1�1��;; &-+�,��/��-��&-+�,��/��-��

01,0002,0003,000

4,0005,0006,0007,0008,0009,000

10,00011,00012,000


RMB '000

20072006200520042003200220012000199919981997199619951994

1H06 1H07 ChangeAvg Daily Toll Rev 8,668K 9,968K ↑↑↑↑15%

1H06 1H07 ChangeAvg Daily Toll Rev 8,668K 9,968K ↑↑↑↑15%


21

"1�1��"1�1��;; /��'��*��6��/��'��*��6��

63.2% 65.5% 67.1%68.7% 67.5%

13.6% 11.0% 8.7% 7.2% 5.9%

17.9% 18.2% 18.4% 17.7% 17.9%

1.4% 1.5% 1.5% 1.4% 1.9%6.7%4.9%

4.3%3.7%3.9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

FY 2003 FY2004 FY2005 FY2006 1H2007

Class 5

Class 4

Class 3

Class 2

Class 1

22

(15��(15��;; &-+�,��/��&-+�,��/��

0

10

20

30

40

50

60

70

80

90

100


2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1H06 1H07 ChangeAvg Daily Traffic 84K 82K ��2%

1H06 1H07 ChangeAvg Daily Traffic 84K 82K ��2%

No. of vehicle(‘000)


23

(15��(15��;; &-+�,��/��-��&-+�,��/��-��

0100200300400500600700800900

1,0001,1001,2001,300


RMB '000

2007

2006

20052004

2003

2002

2001

2000

19991998

1997

1H06 1H07 ChangeAvg Daily Toll Rev 1,160K 1,168K ↑↑↑↑ 1%

1H06 1H07 ChangeAvg Daily Toll Rev 1,160K 1,168K ↑↑↑↑ 1%


24

(15��(15��;; /��'��*��6��/��'��*��6��

46.1% 45.9% 50.7%55.0% 59.6%

15.6% 15.8%13.5%

11.4%9.4%

27.3% 26.4% 24.8%23.3% 20.7%

3.3% 3.3% 2.9% 2.6% 2.4%7.7% 8.5% 8.1% 7.9%7.6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

FY 2003 FY2004 FY2005 FY2006 1H2007

Class 5

Class 4

Class 3

Class 2

Class 1

25

%��5��%��5��;; &-+�,��/��&-+�,��/��

0

5

10

15

20

25

30

35


2007

2006

2005

2004

No. of vehicle(‘000)

1H06 1H07 ChangeAvg Daily Traffic 22K 27K ↑↑↑↑ 21%

1H06 1H07 ChangeAvg Daily Traffic 22K 27K ↑↑↑↑ 21%


26

%��5��%��5��;; &-+�,��/��-��&-+�,��/��-��

0

50

100

150

200

250

300

350

400

450


2007

2006

2005

2004

1H06 1H07 ChangeAvg Daily Toll Rev 327K 396K ↑↑↑↑ 21%

1H06 1H07 ChangeAvg Daily Toll Rev 327K 396K ↑↑↑↑ 21%

RMB’000


27

%��5��%��5��;; /��'��*��6��/��'��*��6��

52.1% 52.2% 51.5% 51.8%

17.0% 14.1% 12.0% 10.4%

25.1%24.8% 26.4% 26.1%

1.2%1.6% 1.8% 2.0%

4.6% 7.2% 8.3% 9.6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

FY2004 FY2005 FY2006 1H2007

Class 5

Class 4

Class 3

Class 2

Class 1

28

Project DescriptionProject Description

%��

�5��%��

�5��

��%��.��%��.��

Route: Shunde - Zhongshan

Length: approx. 46km

JV Partners: Same as GSSuperhighway

Planned Approx. Rmb 4.9 billionInvestment * (35% equity, HHI & PRC

partner each tocontribute Rmb857.5 million)

Construction: Started in Dec 2005

Completion: Approx. 3 years

* Present planning, subject to change; excluding finance cost

29

%��

�5��9��'.��-�+��-��:%��

�5��9��'.��-�+��-��:

Project DescriptionProject Description

��%��.��%��.��

Route: Zhongshan - Zhuhai

Length: approx. 38km

JV Partners: Same as GSSuperhighway

Planned Approx. Rmb 3.6 billionInvestment * (35% equity, HHI & PRC

partner each tocontribute Rmb 630million)

Note: All subject to govt. approval

* Present planning, subject to change; excluding finance cost

30

∼∼∼∼∼∼∼∼ (��(��∼∼∼∼∼∼∼∼

Documents

HHI 1H07 Analyst Final (Web)€¦ · 5 10,155 11,532 0 2,000 4,000 6,000 8,000 10,000 12,000 1H06 1H07 Aggregate daily revenue Rmb (‘000) + 14% Aggregate average daily toll of the