Hong Kong Shanghai Alliance Holdings Limited

Stock code: 1001.HK

Corporate Presentation

September 2021

2

2020/21 Achievements

Turnaround from a net loss attributable to

owners of the Company of approximately

HK$90.3 million, to a net profit

attributable to owners of the Company of

approximately HK$1.7 million

Central Park•Pudong and Central

Park•Jing’an enjoyed higher occupancy

rate and leasing price since the last

quarter of the Year

Building & Design Solutions

Business recorded satisfactory

growth despite under the impact of

COVID-19

Achieved an admirable turnaround to profits

Property Investment and Project

Management Business saw rebound

momentum, with successful

acquisition of Central Park•Huangpu

Strong order book and efficiency

enhancement for Construction

Materials Business

Record-high order book and growing

efficiency for its automated rebar processing

and assembly plant in Tsing Yi

Expanding margins for construction

products and surface critical coil distribution

in HK and China

Increasing number of hotel and shopping

mall development and upgrade projects

lead to improving business performance

Scope of Business

Portion of FY20/21 Revenue | FY19/20 Revenue(For the year ended 31 March 2021 | 2020)

Property Investment and

Project Management

A niche player and specialist

in property value

enhancement with successful

track record

Innovative renovation

Accurate market positioning

Tenant upgrade

Participated property projects

include The Point Jing’an

(disposed in March 2014),

Central Park • Putuo

(disposed in March 2017),

Park Lane (disposed in

September 2017), Central

Park • Pudong, Central Park •

Jing’an and Central Park •

Huangpu

4.6% | 4.0%

3

Construction Materials

80.1% | 80.2%

A leading processor and

distributor of infrastructure

products serving Hong Kong

and Macau’s burgeoning

construction market

Leading market share in

Hong Kong (approx. 20%-25%)

Hong Kong’s first government

approved automated rebar

prefabrication yard

Leading distributor of surface

critical steel serving China’s

automotive sector

15.1% | 11.9%

Building & Design Solutions

A distributor of world-

renowned sanitary &

kitchenware brands in

Hong Kong, Mainland China

and Macau

Architectural & Design

Centre serving the needs of

developers in the high-end

consumer market, where

purchases are influenced by

architects and designers

*

*During the Year, the management has grouped the financial result of Engineering Plastics Business segment into unallocated due to the scaling down of its operation.

Property Investment and

Project Management

Business

Shanghai Focused High-end Commercial Property Market

A niche player and specialist in property value enhancement with successful track record

The Buy-Build-Sell Business Model

Project selection Exit strategiesAsset upgrade

Shanghai focused

High demand in high-end

commercial and residential

properties

Strong potential in occupancy rate

and rental upside after

enhancement works

Precise market positioning

Innovative design and renovation

Maximization of leasable space

Proactive leasing strategy

Upgrade of tenant mix

• Rental income significantly

increased by [-]%

• Hold for investment or sell out

Hold for investment

Leasing offices

Tenant mix management

Rental income

Sell

Asset revaluation

5

Participated Projects

The Point Jing’an

(Successful disposal in March 2014)

Central Park• Putuo

(Successful disposal in March 2017)

Park Lane

(successful disposal in September 2017)

Central Park • Pudong (formerly known as

Chuang Yi Tower)

Central Park • Jing’an (formerly known as

Longyu International Plaza)

Central Park • Huangpu (formerly known as

Great Wall Financial Building)

Central Park • Pudong (100% owned)

6

Competitive Edge

Located in the Pudong New District (hub of financial services)

Benefited from the market trend of decentralization from central

business district

LEED gold for sustainable development

Synergies with the HK Land project

Business Strategies

Position as a prime office with a grand reception lobby and spacious

green surrounding

Enhance facilities and surrounding environment

Increase leasable areas through renovation of G/F space

Professional property management service

Central Park • Jing’an (Jointly owned with GIC through JV)

7

Competitive Edge

Located in Jing’an District (central commercial area)

Directly accessible to 3 metro lines

Business Strategies

Position as a prime office with modern reception lobby and façade

Renovate the public area, lift lobbies and office area to give a

completely new look

Manage the tenant mix and uplift its tenant quality

Professional property management service

Central Park • Huangpu (Jointly owned with Apollo through JV)

8

Competitive Edges

Located in the heart of the CBD of Huangpu

Near the intersection of Dapu Road and Xujiahui Road, a 5-minute walk from the metro station

Host to Pullman Shanghai Skyway hotel (5-star hotel managed by Accor Hotel Group)

Host to many office buildings, conference halls, catering and leisure facilities

Business Strategies

Position as a landmark complex building with grade A office and

5-star hotel

Zero distance to conference and catering facilities

Increase leasable office and rental area through thoughtful renovation

Introduction of high-quality tenant

Improvement of property management services

Shanghai Property Market

2021 Shanghai Office Market Overview

9

Grade A Office Market

Supply

• Although COVID-19 pandemic has delayed project completion and

delivery, a total of 7 new office projects were launched in Shanghai in

2021Q1

• In 2021Q1, Shanghai’s office market continued to show healthy signs of

rebound, with continued excellent net absorption performance and a

rapid recovery in market confidence

• 2.23 million sqm of new office supply is estimated to be launched into

the market

2021(Estimate)

2020(Estimate)

Change

New Supply (sqm) 2.23m 1.80m +23.9%

2021 Q1 Rents

QoQ% decrease

Grade-A Office Market 0.36% QoQ

Core CBDs 0.14% QoQ

Rents

• Average rent had declined slightly for Shanghai office market

• Grade-A office market followed similar trends, with average rent

decreased slightly by 0.36% QoQ in 2021Q1

• The average rent of Core CBDs edged down by a modest 0.14%,

to RMB10.81 per sqm per day

• However, the rents for some Emerging Business Districts have increased

significantly

2021Q1 2020Q1 Change

New Supply (sqm) 0.97m 0.49m +98.0%

Transaction

Volume (sqm)

3.2m 0.96m +233.3%

Average Selling

Price (RMB / sqm)

55,800 55,770 +0.05%

2021 Shanghai Residential Market Overview

Head Start for Residential Market, Commercial Potentially Follow Suit

• With residential market taking a more significant hit from the initial stage

of the pandemic, it enjoyed a sooner-than-market rebound, with

supply, transaction volume, as well as average selling price all showing

a recovery

• The “Opinions on accelerating the construction of Shanghai as an

international financial center and the integrated development of the

Yangtze River Delta” was announced

• It is expected that Shanghai would welcome more financial

corporations and firms from emerging segments, establishing their

foothold as the major financial hubSources: Savills, Knight Frank, Colliers, Jones Lang LaSalle

Growth Strategy

Identify property projects with room for asset

upgrade so as to improve occupancy rate /

rental rate / tenant mix

Provide one-stop solutions for revitalizing

under-performing commercial buildings to

valuable assets

Look for local and international quality

partners for setting up joint venture and/or

fund partnership for business expansion,

cultivating relationships and fully realising

value

Co-investment venture with Reco Wisteria Private Limited*

Date of Establishment June 2018

Effective Equity Interest 9.3%

Investment US$32,550,000

Investment Target Central Park • Jing’an

10

*An investment arm of the Minister for Finance of the Government of Singapore

Provide asset management services to

generate more benefits and income from

transaction

Joint Venture with Apollo Skyline Holding Limited

Date of Establishment November 2019

Effective Equity Interest 5.0%

Investment US$10,000,000

Investment Target Central Park • Huangpu

Strategy for long-term growth

Construction Materials Business

Value-Added Processing and Tailor-made Solutions

VSC Steel Company Limited is a leading construction steel distributor in Hong Kong

VSC Construction Steel Solutions Limited is the first government-approved automation

prefabrication yard

Regional player serving Hong Kong and Macau

Established Hong Kong’s First Automated Rebar Processing and Assembly Plant

Location :Tsing Yi, Hong Kong

with pier access

Total site

area: 30,000 square meters

Highly Automated Cut & Bend Equipment Rebar Processing

TraceabilitySafety On-time CompletionProcessing Efficiency

Competitive Edges

12

Strong Order Book Driven by Major Construction Projects

13

Cut and Bend

Tseung Kwan O - Lam Tin Tunnel Shek Wu Hui Effluent Polishing

Plant

Tin Win Stop Residential

Development

Hong Kong Airport 3rd Runway Hong Kong Airport Terminal 2 Extension

Steel Distribution

Skycity – 11 Skies Mega Complex

Water Supplies Department &

Correctional Services Department

Headquarters Building in Chai Wan

Redevelopment of

Mariners’ Club at

Tsim Sha Tsui

Hotel Development

at Cheung Sha Wan

Promising Prospect of the Hong Kong Construction Market

Stable Demand from Local Market

The Government is expected to maintain the annual capital works investment at around HK$100 billion in

the next few years, encompassing public housing, hospital redevelopment, government office buildings and

expansion of new towns

Ongoing promotion in adopting technologies and innovative methods in the construction industry

Recognition of off-site prefabrication

The Group is eligible and in the process of applying the HK$1 billion “Construction Innovation and

Technology Fund” (2018/19 – 2022/23)

Encourage contractors to use rebar products made by the large-scale, highly-automated approved

rebar prefabrication yards

Currently there are four major off-site prefabrication yards in Hong Kong with a total production capacity of

about 0.25 million tons per year, which can potentially meet about 15% of Hong Kong’s demand

Market Conditions

Our Competitive Advantages

First Mover AdvantageApproved Steel Rebar

Prefabrication Yard for

Public Work

Visionary ManagementYears of Experience

14

Opportunities with Hong Kong Infrastructure Projects

Ride on the increasing demand of high-quality construction steel, expanding current businesses while consolidating its market position

Our Offer:

Huge potentials in collaborating with multinational corporations to extend the services to other countries

High-quality

steel

High processing

efficiencyHigh traceability

On-time

completion

Strong

emphasis on

safety

15

Hong Kong Government continues to invest in infrastructure projects

Harbourfront Enhancement

The Government has earmarked HK$6.5 billion for implementing a number of harbourfront development initiatives

Making Good Use of Government Land

The Government has taken forward multiple projects under the "single site, multiple use" initiative

Railway Development

Tuen Ma Line is completed and in operation

The Government will progressively implement the new railway projects

In the next few years, the annual capital works expenditure is expected to reach HK$100 billion on average, and the annual total construction output will increase to around HK$300 billion

BSC – Coil Processing

Early Vendor Involvement

(EVI)

Product Design

Product Testing

Inventory Planning

Value Analysis/

Value Engineering (VA/VE)

Processing

Logistics

Inventory Management

Cost & Efficiency

Steel Mills BSC Automotive End Users

Services

Coil Slitting

Cut-to-length Stamping

Development Plan

1

2

3

Geographical expansion – expanding presence in

Shanghai, Liaoning, Shandong, Jiangsu, Guangdong,

Hubei and Henan

Margin expansion – walk away from customers that

have low profit margin or high collection risk in order to

further boost profitability

Management by local – promoting employee stock

ownership plan to senior management in order to

promote efficient management with local expertise

16

Building & Design

Solutions Business

Building & Design Solutions

Extensive client network of the Group’s construction materials and

property businesses brings synergies and accelerates the

development of the Building & Design Solutions Business

Rising market perception of better quality of life, along with

growing emphasis on daily hygiene as a result of COVID-19

Experienced team delivering technical and design services as well

as installation

Software solutions that simplify design and layout efforts for

customers

Brands Represented End-users

Distributor with Value-added Services Distribution Channels

Building & Design Solutions for Sanitary & Kitchenware

Wholesale to sub-dealers

Directly supply to projects

including our

property renovation

Architectural & Design Centre

for retail business and

renovation

1

2

3

Architectural & Design Centre

catering to architects & designers

Product testing

Mock displays

Space for architects &

designers

Software solutions

Establish & manage showrooms

with sub-dealers

Credit payment terms

Property developers

Architects and

designers

Hotels

Interior design

companies

Healthcare and

elderly care

18

New Product Line with Expanding Geographical Coverage

Re-entering Macau Market with TOTO

Entered Macau market with one-stop solutions along with efficient on-site technical support & instant spare parts replacement

Key projects reference and project pipelines include:

New Product Line Catering General Residential Market

Durban is a Germany brand with various OEM possibilities on sanitary-wares, fittings & accessories

Durban is developed for design-oriented customers who look for tailor-made or unique solutions

Aim to offer a complementary product portfolio

Expected contribution of around 3 to 5% of total turnover

19

Projects in Hong Kong

Hong Kong International Airport T1, T2

extension and Runway 3

Hong Kong Sanatorium &

Hospital New Building

Hong Kong Convention & Exhibition

Centre RenovationAIRSIDE, Kai Tak

Central Plaza Renovation 239 Century Hotel Project

Hopewell Center II Island Shangri-la Hotel Renovation

Harbour City Renovation Four Season Hotel Renovation

2 Murray Road Office Development Intercontinental Hotel Renovation

The Quayside Two Taikoo Place Project

Kimpton Hotel The Rosewood Hotel Project

Projects in Macau

Seac Pai Van ResidentialMacau City of Dream

Renovation

City of Dream Phase 2 Galaxy Phase 3 HOH

Galaxy Phase 3C Parisian Hotel 2.3 Bay

W Hotel Macau Nuwa Hotel

Iconic Hotel Macau

Financial Overview

Group Financial Summary

21

For the year ended 31 March

Financial highlights (HK$m) FY20/21 FY19/20 Change

Revenue 2,073.6 2,325.0 -10.8%

Gross profit 253.0 241.6 +4.7%

Operating profit / (loss) 96.0 4.8 +1,895.0%

Profit / (loss) attributable to

owners of the Company1.7 (90.3) Negative to Positive

Basic earnings / (loss) per

ordinary share (HK cent(s))0.26 (14.08) Negative to Positive

Profitability ratios

Gross profit margin 12.2% 10.4% +1.8 p.p.

Operating profit margin 4.6% 0.2% +4.4 p.p.

Net profit / (loss) margin 0.2% (3.8%) +4.0 p.p.

The turnaround is mainly

attributable to the

improvement in

performance of the

Construction Materials

Business, with its profit

before income tax grew

by approximately

396.6% year-on-year

Revenue Analysis

Total revenue

80.1%(80.2%)

15.1%(11.9%)

4.6%(4.0%)

Construction Materials Building & Design Solutions

Property Investment andProject Management

Unallocated

0.2%

(3.9%)

FY20/21 (FY19/20)

Total:

HK$2,073.6 million

(HK$2,325.0 million)

Total revenue by business segment

22

1,864.81,660.8

275.9

313.9

93.5

94.1

90.8

4.9

FY19/20 FY20/21

Construction Materials Building & Design Solutions

Property Investment andProject Management

Unallocated

2,073.6

2,325.0

HK$m

Gross Profit Analysis

23

Gross profit and gross profit margin

HK$m

241.6253.0

10.4%

12.2%

125

175

225

275

325

375

FY19/20 FY20/21

Even though revenue recorded a slight decrease, gross profit for the year rose by 4.7%, mainly attributable to the tightened control on

operating costs, as well as the improvement in operational efficiency and inventories procurement strategy. As a result, gross profit

margin increased from approximately 10.4% to approximately 12.2%.

Net Profit and Key Analysis

24

Net profit/(loss) and dividends Key expenses as % to revenue

HK$m FY20/21 FY19/20 Change

Selling and

distribution

expenses

15.7

(0.8%)

11.8

(0.5%)+0.3 p.p.

General and

administrative

expenses

140.7

(6.8%)

217.8

(9.4%)-2.6 p.p.

Net finance costs62.9

(3.0%)

78.4

(3.4%)-0.4 p.p.

HK$m FY20/21 FY19/20 Change

Profit / (loss)

attributable to

owners of the

Company

1.7 (90.3)Negative

to Positive

Basic earnings /

(loss) per ordinary

share (HK cent(s))0.26 (14.08)

Negative

to Positive

Proposed special

dividend per

ordinary share

(HK cent(s))

1.00 n/a n/a

Dividend payout

ratio383.3% n/a n/a

Working Capital Management

25

HK$m As at 31 March 2021 As at 31 March 2020 Change

Total interest-bearing borrowings 1,454.6 1,415.6 +2.8%

– Long-term borrowings 779.7 855.1 -8.8%

– Short-term borrowings 674.9 560.5 +20.4%

Cash and cash equivalents 119.1 120.0 -0.8%

Pledged bank deposits 54.0 9.1 +491.1%

Net debt 1,281.5 1,286.5 -0.4%

Net gearing ratio Note 1 59.1% 61.5% -2.4 p.p.

FY20/21 FY19/20 Change

Net cash inflow / (outflow) from operating activities (HK$m) 78.6 78.8 -0.3%

Inventory turnover days 89 62 +27 days

A/R turnover days 56 48 +8 days

A/P turnover days 35 21 +14 days

Cash conversion cycle days 110 89 +21 days

Note 1: Net gearing ratio = net debts / (capital and reserves attributable to owners of the Company + net debts )

Capital Allocation Philosophy

26

2

Priority

Acquisition Opportunities Identify potential projects that have strong potential on occupancy and rental upside improvement after

enhancement works

Identify Building & Design Solutions competitors that allow us to expand our geographic coverage and

diversify our brand and product offer

Identify competitors with funds and brands with international appeal but under financial distress

3 Capital Expenditure Automated rebar processing and assembly plant in Tsing Yi and increase its capability to meet the

strong growth in market demand (internal or bank funding)

Existing property upgrade to enhance the properties’ values, occupancy rates and average rent (internal

or bank funding)

4 Dividend Thoughtful consideration of dividend policy as means to return capital to shareholders

5 Share Buyback

1 Ensure Sufficient Working Capital for Normal Business Operations

Appendix

Corporate Milestones

28

￭ Launched Building &

Design Solutions

Business and

became the

distributor of TOTO

Japan sanitary ware

products in HK

￭Obtained

distribution

rights to TOTO

products in

Hubei Province

￭ Jointly acquired

investment

property “The

Point Jing An”

in Shanghai

￭ Listed on the

Main Board of the

Hong Kong Stock

Exchange,

stock code:

1001.HK

￭ Founded as an

importer of

construction steel

￭Disposal of the joint

investment property “The

Point Jing An” in Shanghai

￭ Acquired the deluxe

serviced complex

apartment “Park Lane” in

Shanghai through

investment in a fund

￭ Partnership with NatSteel to

establish an automated

rebar processing and

assembly plant in Tsing Yi

￭ Launched Hong Kong's

first automated rebar

processing and

assembly plant

￭Completed acquisition

of Central Park •

Pudong in Shanghai

￭Opened the largest

TOTO Flagship

Architectural & Design

Centre in HK

￭ Acquired the remaining

33.3% stake of Shanghai

Bao Shun Chang from

Baosteel Group (HKSHA

100% ownership)

￭ Acquired 2nd investment

property “Central Park •

Putuo” in Shanghai

2016

2017

￭ Successful disposal

of Central Park •

Putuo and Park Lane

1961

2008

2013

2014

2011

1994

1997

2018

￭Completed the

formation of a co-

investment venture

with an investment

arm of the Minister for

Finance of the

Government of

Singapore (“GIC JV”)

￭Completed the

acquisition of Central

Park • Jing’an through

GIC JV

2019

￭Completed the

ramp-up of Central

Park • Jing’an, with

the project beginning

to generate profit for

the Group

￭Completed the

acquisition of

Central Park •

Huangpu through

Apollo JV

2020

￭Completed the

formation of a co-

investment venture

with Apollo

(“Apollo JV”)

Shareholding Structure

29

Mr. Andrew Yao (Chairman)

& Associates

44.2%

Public Shareholders

55.8%

No. of issued shares (as of 31 August 2021): 641,232,315 shares

Consolidated Income Statement

30

For the Year ended 31 March

HK$’000 2021 2020

Revenue 2,073,632 2,325,031

Cost of sales (1,820,613) (2,083,428)

Gross profit 253,019 241,603

Selling and distribution expenses (15,728) (11,803)

(Impairment loss) on / reversal of financial

assets - net(293) 3,020

General and administrative expenses (140,703) (217,810)

Other gains / (losses) – net 8,067 (10,110)

Net fair value loss on investment properties (8,362) (88)

Operating profit 96,000 4,812

Finance income 1,110 1,216

Finance costs (64,024) (79,616)

Share of results of investments

accounted for using the equity method(19,724) (12,947)

Profit / (loss) before income tax 13,362 (86,535)

Income tax expense (9,539) (1,616)

Profit / (loss) for the year 3,823 (88,151)

Profit / (loss) attributable to:

- Owners of the Company 1,673 (90,309)

- Non-controlling interests 2,150 2,158

Basic earnings / (loss) per ordinary share (HK cent(s)) 0.26 (14.08)

Proposed special dividend per ordinary share (HK cent(s)) 1.00 --

Consolidated Statement of Financial Position

31

HK$’000 As at 31 March 2021 As at 31 March 2020

Property, plant and equipment 41,682 48,979

Investment properties 1,422,582 1,324,824

Right-of-use assets 13,253 32,090

Intangible assets 710 1,493

Investments accounted for using the equity

method337,430 313,823

Prepayments, deposits and other receivables 12,540 18,038

Deferred income tax assets 49,326 53,104

Financial asset at fair value through

other comprehensive income4,203 62

Total non-current assets 1,881,726 1,792,413

Prepayments, deposits and other receivables 99,052 81,843

Inventories 443,072 354,859

Trade and bill receivables 363,814 358,932

Financial asset at fair value through profit or loss - 15,820

Pledged bank deposits 54,008 9,137

Cash and cash equivalents 119,098 120,045

Total current assets 1,079,044 940,636

Total assets 2,960,770 2,733,049

Consolidated Statement of Financial Position (cont.)

32

HK$’000 As at 31 March 2021 As at 31 March 2020

Trade and bill payables 245,354 166,929

Receipts in advance and deferred revenue 53,537 57,258

Accrued liabilities and other payables 39,220 37,183

Provisions 35,298 4,025

Derivative financial instruments 1,084 -

Current income tax liabilities 11,380 7,371

Borrowings 674,893 560,555

Lease liabilities 4,528 23,693

Total current liabilities 1,065,294 857,014

Accrued liabilities and other payables 11,147 11,144

Deferred income tax liabilities 94,081 89,541

Borrowings 779,749 855,083

Lease liabilities 1,991 3,499

Total non-current liabilities 886,968 959,267

Net assets 1,008,508 916,768

Equity

Equity attributable to owners of the Company

Share capital 64,123 64,123

Reserves 823,598 741,722

887,721 805,845

Non-controlling interests 120,787 110,923

Total equity 1,008,508 916,768

Thank You

DISCLAIMER

This document is confidential and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person, or published, in

whole or in part, for any purpose without prior written approval from Hong Kong Shanghai Alliance Holdings Limited (“HKSHA”).

HKSHA and its subsidiaries (collectively the “Group”) make no representation or warranty (express or implied) as to the accuracy, reliability or

completeness of this document. The Group and its respective directors, employees, advisors, agents and consultants shall have no liability

(including liability to any person by reason of negligence or negligent misstatement) for any statements, opinions, information or matters

(expressed or implied) arising out of, or contained in or derived from, or for any omissions from this document, except liability under statute that

cannot be excluded.

This document may contain forward looking statements concerning the Group. Forward looking statements are not statements of historical fact

and actual events and results may differ materially from those described in the forward looking statements as a result of a variety of risk,

uncertainties, and other factors. Forward looking statements are based on management’s beliefs, opinions and estimates as of the dates the

forward looking statements are made and no obligation is assumed to update forward looking statements if these beliefs, opinions and estimates

should change or to reflect other future developments.

No representation or warranty (expressed or implied) is made by the Group or any of its respective directors, employees, advisors, agents or

consultants that any forecast, projections, intentions, expectations or plans set out in this document will be achieved, either totally or partially, or

that any particular rate of return will be achieved.

This document is not:

(I) an offer of securities for sale in Hong Kong or elsewhere; or

(II) an invitation to enter into an agreement to acquire, dispose of, subscribe for or underwrite securities; or related to the issue of any securities.