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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
2016 Fiscal Year Results Review ~
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%
2016 Fiscal Year Results Review ~
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$856 mm
4
2016 Fiscal Year Results Review ~
S E G M E N T R E S U L T S
63% 23% 1.4% 13%
Water Resources Property Investment and Development &
Department Stores
Hotel Operations & Management
Infrastructures
Operating Profit (excluding interest income, investment income & finance costs)
5
2016 Fiscal Year Results Review ~
D I V I D E N D G R O W T H T R E N D
18.0 20.0 23.0 28.0
34.0
42.0
20.0%
11.1% 15.0%
21.7% 21.4%
23.5%
37.3% 36.5% 32.4% 39.7%
54.4%
62.5%
0%
10%
20%
30%
40%
50%
60%
70%
0
5
10
15
20
25
30
35
40
45
2011 2012 2013 2014 2015 2016
Dividend
DividendGrowth Rate
Payout Ratio
(HK$ cents)
6
2008-2016 dividend CAGR of 20%
2016 Fiscal Year Results Review ~
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
2016 Fiscal Year Results Review ~
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$4.8 bn
2016 Fiscal Year Results Review ~
H K W A T E R S U P P L Y R E V E N U E T R E N D
9
2.5 2.5 2.5 2.5 3.0 3.1 3.3 3.5 3.7 4.0 4.2 4.5 4.8
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
(HK$ 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
2016 Fiscal Year Results Review ~
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
2016 Fiscal Year Results Review ~
W A T E R G R O U P H K P R O J E C T S
11
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$63.8 mm)
Successfully bid six new water resources projects in Danzhou, Suixi, Gaozhou, Kaiping, Shanwei, and Fengshun, with total designed water supply capacity of 430,000 tons per day and waste water processing capacity of 195,000 tons per day, and total investment size of approximately RMB1.47 bn
Operational
Project Sewage Treatment (tpd) Water Supply (tpd) Project Sewage Treatment (tpd) Water Supply (tpd)
Wuhua 40,000 – Baoying – 130,000
Jinsheng 70,000 – Gaoyou – 145,000
Daojiao 40,000 – Jianghe – 520,000
Meizhou 100,000 210,000 Yizheng – 150,000
Kaiping 50,000 – Wuzhou 90,000 355,000
Danzhou – 100,000 Zhaoqing – 90,000
Nansha – 400,000 Qingxi – 290,000
Zhanjiang Suixi – 50,000 Xingning 3,000 –
Total 393,000 2,440,000
Under Construction
Hainan Danzhou 80,000 100,000 Gaozhou – 200,000
Zhanjiang Suixi – 20,000 Kaiping 25,000 –
Shanwei 90,000 – Fengshun – 60,000
2016 Fiscal Year Results Review ~
C A P A C I T I Y G R O W T H T R E N D
12
NA NA 280 390 393 200 200
540
2170 2440
0
500
1,000
1,500
2,000
2,500
3,000
2012 2013 2014 2015 2016
Waste WaterTreatment
Urban WaterSupply
Capacity Growth Trend by Type (‘000 tpd)
2016 Fiscal Year Results Review ~
P R O P E R T Y I N V E S T M E N T & D E V E L O P M E N T
13
* Including rentals from department store run by the Group ** Excluding revaluation gain and net interest income
1,056 1,115
1,180 1,186 1,152
735 748 796 789 803
0
200
400
600
800
1000
1200
1400
2012 2013 2014 2015 2016
Revenue
Profitbefore Tax
Teem Plaza Performance Trend
HK$ mm
*
**
2016 Fiscal Year Results Review ~
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
2016 Fiscal Year Results Review ~
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
2016 Fiscal Year Results Review ~
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
2016 Fiscal Year Results Review ~
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
17
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$88 mm (-21.8%)
HOTEL MANAGEMENT
Hotel managed:
42 hotels (2015: 40 hotels)
2016 Fiscal Year Results Review ~
P O W E R G E N E R A T I O N – Z H O N G S H A N P O W E R P L A N T
18
(HK$ 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
2016 Fiscal Year Results Review ~
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%.
2016 Fiscal Year Results Review ~
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$2,588 mm
Part of the G80 Guangzhou-Kunming Expressway that connects Yunnan, Guangxi and Guangdong Provinces
Commenced operation in August 2003 with five toll stations
The main line is 99.6km in length
Three branch line with aggregate length of 52.7km
Operation right of the Xingliu Expressway will expire in September 2032
Xingliu Expressway Overview
2016 Fiscal Year Results Review ~
P P P P R O J E C T
21
June 2016: GDI announced it has entered into the Cooperation Agreement with Xiegang Government in respect of the Dongguan Yingping public roads PPP project . Budgeted development costs of the PPP project is expected to be within RMB4.754 billion
The Project comprises the construction of A-grade highways, connecting roads and municipal roads and the related ancillary support services such as drainage, greening and lighting
Announced Public-Private-Partnership Project
Investment Rationale Aligning with national policy to promote PPP Stable and long term financial return ─ Long term investment which delivers steady, low-risk returns for 10+ years ─ Cap on development costs ensures project is NOT subject to cost overrun risk ─ No construction risk as construction work will be completed by contractors
Project Return Project return: 8% of outstanding amount Management Fee: 2.5% of development costs Maintenance Fee: 1.1% of development costs per annum for the maintenance period of 10
years
2016 Fiscal Year Results Review ~
F I N A N C I A L S U M M A R Y
22
2016 (HK$ 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%
2016 Fiscal Year Results Review ~
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
2016 Fiscal Year Results Review ~
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.
24
2016 Fiscal Year Results Review ~
THANK YOU
25