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Portfolio Facing Headwind
The Wharf (Holdings) Limited
2019 Interim Results
8 Aug 2019
1
Overview
- Mainland China Assets
• Over RMB100B/ About 70% of Group Business Assets
• Contribute ~80% of Group Profit
- The Roller-coaster Sino-US Conflict - Profound Impact on both Economies & HK’s
- RMB -0.4% vs HKD in 1H19 & Faces Continued Uncertainty
- In HK, Weak Demand has been Further Weakened by Travel Advisories, Economic Slowdown, Contracting
Exports/Re-exports, Falling Retail Sales, Stock Market Jitters & the Threat to Employment
- Profit Attributable to Equity Shareholders for 1H19 -14%
- FY Outlook Uncertain
2
Highlights
Overview
3
A Property-focused Company
China DP 38%
HK Properties
1%
China IP 24%
Others 37%
$8,064 M
+3%
China DP 46%
HK Properties
5%
China IP 33%
Others 16%
$2,236 M
-12%
China DP 37%
HK Properties
22%
China IP 31%
Others 10%
$180B
-1%
Total Revenue Underlying Net Profit Business Assets
Overview
- NAV $143B ($46.77/ Share)
- DPS $0.25/ Share
- Listed Equities (as at 30 Jun 2019) ^
• Mkt Value $33.6B; Unrealized Surplus $3B
• ~60% CME2 & Balance HK Blue Chips (Mainly
Properties)
• Insignificant Additions to Position & No Disposal in
1H19
4
Financial Highlights
HKD Million 1H19 1H18 %Chg
Group Revenue 8,064 7,823 +3%
Operating Profit 3,701 2,768 +34%
Underlying Net Profit (UNP)* 2,236 2,527 -12%
Profit Attributable to Equity Shareholders 2,450 2,860 -14%
Earnings Per Share (HK$)
- Attributable to Equity Shareholders
- Underlying*
0.80
0.73
0.94
0.83
-15%
-12%
Dividend Per Share (HK$) 0.25 0.25 -
* Underlying Net Profit - Excl. IP Revaluation Surplus & Exceptional Items
^ Excl. the 25% interest in Greentown China Holdings Limited
Asset Turns
Recurring Income
Services
Financial Management
5
Asset Turns
Return-enhancing Strategy
HKDP
- Luxury-focused
- Landbank ~3M s.f *
China DP
- Key Cities: Hangzhou, Beijing,
Shanghai & Suzhou
- Landbank 3.6M s.m
6
Selective Landbanking
* Incl. IPs in HK
Hong Kong
Shanghai
Suzhou
Hangzhou
Beijing
Asset Turns
- Prestigious Peak Project
- Symbol of Luxury & Scarcity
- Among the Most Valuable in Asia
7
Quality Projects – Mount Nicholson
Asset Turns
- 10 Projects: ~80% of Total Sales
- Sound Reputation & Good Demand
- 3 New Projects Launched in 1H19
8
Quality Projects – China
Shanghai One Jingan
Asset Turns
- Steady Demand for Luxury Homes,
Sales Tempo Differs from Mass Market
- Contracted Sales $3.6B (Gross Basis)
- Booking Impacted by Recognition
Timing
9
HKDP - Mount Nicholson
1H19 Sales
4 Houses 2 Apartments
$92,000 psf
(Average)
$99,000 psf
(Average)
Total Contracted Sales $3.6B (Gross Basis)
Asset Turns
- Firm Underlying Demand
- ~80% of Total Sales
• 4 Cities (Hangzhou, Beijing, Shanghai &
Suzhou)
• 10 Projects
- Stricter ASP Control Seriously Affects
Future Project Profitability
10
China DP – Policy-driven Market
1H19 Contracted Sales
Sales RMB6.5B -10%
GFA 0.2M s.m -33%
ASP RMB31,600 psm +34%
2019 Sales Target RMB18B
96% Accumulated Sell-through Rate
2019 Sellable Resources 0.8M s.m
Asset Turns
- OP Margin at 35%
- Net Order Book RMB23.5B or 0.8M s.m
- FY Target Completion 0.5M s.m
11
China DP – Quality Properties
1H19 Operating Matrix
Revenue $5,232M -10%
Operating Profit $1,828M -1%
Operating Margin 35% +3 ppts
Completed GFA 104,400 s.m +8%
Recognized GFA 105,200 s.m -42%
Asset Turns
Recurring Income
Services
Financial Management
12
Recurring Income
- 1H19 Revenue $2.0B (+22%)
- Driving Forces
• CDIFS* (2014)
• Newly-opened CSIFS (2018)
- Office Over-supply in Most Cities May
Increase in Coming Years
13
China IP – Growing Steady Income Stream
0.5 0.6 0.5 0.8 1.0
1.3
2.0 2.3 2.4
2.6
3.4
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
China IP Revenue (HKD billion)
First IFS –
CDIFS Opened
in Jan14
6.7x
* 4-year Revenue CAGR: CDIFS 22%
Recurring Income
- Retail Sales RMB3.3B (+13%)
- 1H19 Rental Reversion Over 20%
- Office 80% Committed
- Total Revenue Double-digit YoY Growth
Since Opening
14
CDIFS – Flagship in Western China
1H19 CDIFS Mall
Net Revenue (Net of Tax) RMB488M (+13%)
Average Monthly Sales (psm) Over RMB5,800
Foot Traffic Growth +9%
Turnover Rent Portion 30%
Occupancy Cost* 13%
* Occupancy Cost = Retail Rental/ Retail Sales
Recurring Income
- First Full Year Operation
- New Iconic Landmark
- Retail Sales Over RMB2B
15
CSIFS – One-stop Destination
1H19 CSIFS Mall
Net Revenue (Net of Tax) RMB270M
Average Monthly Sales (psm) Over RMB3,500
Turnover Rent Portion 31%
Occupancy Cost* 10%
* Occupancy Cost = Retail Rental/ Retail Sales
Recurring Income
Marco Polo
Since 1986
Classic Brand
Provides Upscale Full-service
13 Owned & Managed in HK, China & the Philippines
16
Wharf Hotels – Enriched Portfolio
Niccolo
Since 2015
Award-winning, Contemporary Chic
Inspired by Luxury Fashion
4 in HK & China
Brand Enhancement
Recurring Income
17
Hotels Management
1H19 Managed Hotels Operation Matrix
Total No. of Rooms 5,750 +4%
Total Revenue $1,457M +9%
Total GOP $439M +11%
Total No. of Staff 6,424 +7%
Recurring Income
18
Niccolo – Internationally-acclaimed
Performance Against Competitive Set (Ranking)
Chengdu Chongqing Changsha
Room Yield 1st 3rd 3rd
Room Rate 1st 2nd 2nd
Changsha Chongqing
1H19 YoY Change
Chengdu Chongqing Changsha*
Room Yield +14% +31% NA
Room Rate +12% +6% NA
* Opened in Oct-18
Chengdu
Asset Turns
Recurring Income
Services
Financial Management
19
Services
- Macro Headwind & Regional Competition
- HK Throughput -8%
- HK Seaport Alliance (Since 1 Apr 2019)
• Improve Operation Efficiency
• Save Time & Cost
• Rebuild HK Competitiveness
20
Logistics – Abound with Uncertainties
Modern Terminals
Revenue $1,247M (Flat) Operating Profit $218M (-10%)
Throughput (million TEUs)
HK 2.5 -8%
DCB^ 0.6* Flat
SCT^ 2.9* +4%
Total 6.0 Flat
Hong Kong Air Cargo Terminals Ltd (HACTL)^
Total Throughput 0.7M Tonnes (-6%)
*Total Throughput (Instead of Attributable)
Market Throughput: Kwai Tsing: -8%; Shenzhen: +2%
^DCB: 65%-owned; SCT: 20%-owned; HACTL: 20.8%-owned
Asset Turns
Recurring Income
Services
Financial Management
21
Financial Management
- Net Debt: $24.6B
- Gearing: 16.9%
- Average Interest Cost: 3.3%
- Interest Cover: 6.3x
- Floating Rate Debt: 70%
22
Prudent Financial Management
9.5 8.7 7.9
3.1
11.8
2.6
Debt Maturity (HKD billion) (As at 30 Jun 2019)
Outlook
23
Outlook
24
Cautious Outlook
- Sino-US Trade Disputes
- European Political Instability/ Brexit
- Global Currency & Interest Rate Movements
- Weak Global Demand
Sustainability
25
Sustainability
26
- Published the 5th standalone
Sustainability Report in accordance
with Core Option of GRI Standards and
HKEX ESG Guide.
- Aligned our operations with 11 of the 17
UNSDGs; our key initiatives
contributing to UNSDGs are reported in
the Sustainability Report.
Performance Highlights
8,700 talent
Zero work-related
fatality
122,475 Training hours*
Supported 66+ events and activities*
Recycled waste*
4,230+ tonnes
Green Certifications#
LEED & EarthCheck
Donations totalling
HK$ 7 millions
Business units of WHL
are partnering with 2
WeCan schools to
provide support
# Please refer to WHL’s Sustainability Report 2018 for details. https://www.wharfholdings.com/en/sustainability/reports
* Reporting scope covers operations as identified in WHL’s Sustainability Report 2018.
Supported
Sustainability
27
- Constituent member of Hang Seng
Corporate Sustainability Index
- CSR Index Plus
- 5 Years+ Caring Company Logo
- Has raised its first Green Loan Facility
in the amount of HK$2 billion to
refinance Chengdu IFS, the Group’s
first IFS flagship project in China.
28
Portfolio Facing Headwind
Thank You
29
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.