The Wharf (Holdings) Limited 1
The Wharf (Holdings) Limited
Established 1886
December 2011
Wheelock Square Shanghai
The Wharf (Holdings) Limited 2
Wharf Corporate Profile
Established in 1886 with a distinguished history of “Building for Tomorrow”
Primary focus is in Properties which represented 91% of business assets as at 30.6.11
Strategic differentiation is manifested in the success of Harbour City and Times Square, which represented 64% of operating profit for 1H11
Growth - target to have 50% of Group’s business assets in Mainland China in medium term; 39% at 30.6.11; landbank at 12.4M s.m., with next milestone at 15M s.m.
The Wharf (Holdings) Limited 3
Wharf Corporate Structure
Wheelock and Company Limited(HKEx Stock Code: 0020.HK)
The Wharf (Holdings) Limited(HKEx Stock Code: 0004.HK)
Non PropertyBusinesses*
Hong KongProperties
* Include Modern Terminals, HK Air Cargo Terminals, Marco Polo Hotels, & Communication, Media and Entertainment (CME)
China Properties
The Wharf (Holdings) Limited 4
Corporate Business Structure
Mr. Peter Woo, GBS, JPChairman
Non PropertyHK & China IP
Mr. Stephen NgDeputy Chairman & MD
Mr Douglas WooVice Chairman & MD
Mr. Ricky WongMD
Ms. Doreen LeeSenior MD
Mr. Stephen NgChairman
Mr Andrew ChowChairmanMr TY Ng
Vice Chairman & Senior MD
HK DP China DP
Wharf ChinaDevelopment
Limited
WharfDevelopment
Limited
Wharf ChinaEstates Limited
The Wharf (Holdings) Limited 5
China – Phases of economic development
Experimentation(1978 - 1992)
Execution & Growth(1992 - today)
The Future(today + 20 years)
Special economic zones in coastal cities as China’s nationwide infrastructure support was inadequate
In 1992, Shanghai economy was opened & other cities swiftly followedEconomic growth supported by infrastructure buildup to link up the country
High-speed rail grid will ‘shrink’ the countryDynamic urbanization expected, with domestic demand as key growth engine
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100%
2%
4%
6%
8%
10%
12%
14%
16%
GDPYoY Growth
RMB’B YoY GrowthChina GDP (1992-2010)
0
5,000
10,000
15,000
20,000
25,000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100%
2%
4%
6%
8%
10%
12%
14%
16%
Disposable Incomer per CapitaYoY Growth
Disposable Income Per Capita of Urban Households (1996-2010)RMB YoY Growth
The Wharf (Holdings) Limited 6
China – Rail grid will change lifeHigh speed rail will reduce travelling time between major Chinese cities by 60% to create the one-day living sphere … …
Beijing
Wuhan
Guangzhou
ShanghaiChengdu
Source: CB Richard Ellis
The Wharf (Holdings) Limited 7
China – Expand with metropolitan zones
The nine city clusters account for 52% of population & 74% of GDP*
“There will be 8 mega cities by 2025 as compared with 2 in 2005, housing 41% of China’s higher income class living.
Overall, China is heading towards a dispersed urbanization pattern with midsized and small cities.
These cities, together with megacities, will drive future growth.”
McKinsey research 2009
* Source: CB Richard Ellis
The Wharf (Holdings) Limited 8
Hong Kong – A unique position
A unique city driven by China’s growth and its own characters ......
China HK Economic Partnership continues
HK companies has facilitated China’s economic growth since 1978, initially along the Southern Coastal Provinces before moving to inland Provinces
HK is the servicing & financing platform for China
Foreign direct investments into China.
Chinese companies expanding abroad, tourism, and offshore RMB centre
Other special characters
4 cornerstones - zero import tax, wide merchandize selectivity, genuine & authenticity and confidentiality
A free port, low & simple taxation regime; no inherent tax and no sales tax
Any overhang of political risks from the 1997 sovereignty change have disappeared
The Wharf (Holdings) Limited 9
Hong Kong – Favorable China’s policy
The 12th Five-Year Plan (2011-2015) offer ample opportunities for HK companies…
Key theme is to change the economic development model for China:
Moving up the value chain; reducing reliance on low cost manufacturing
Stimulating domestic demand as a key driver for GDP growth
Expanding contribution of the service sector by 4%-points
Continuing urbanization
Dedicated a chapter in supporting Hong Kong:
CEPA continues (Closer Economic Partnership Arrangement)
Leverage Hong Kong's servicing platforms to facilitate China's economic growth
Develop Hong Kong as the offshore RMB centre and an international asset management centre
The Wharf (Holdings) Limited 10
Hong Kong Properties
The HK investment portfolio represents 8.3% HK’s retail sales ….
Ms Doreen LeeSenior MD
With a combined value of HK$119B at 30.6.11, Harbour
City and Times Square represented 47% of the business
assets of the Group, and generated 64% of operating profit
In 1H11, retail sales at Harbour City and Times Square
accounted for an unmatched 8.3% share of HK’s total retail
sales, up from 7.9% in 1H10
The Wharf (Holdings) Limited 11
Hong Kong Properties – Harbour City
Building for Tomorrow… from a wharf godown to a shopping mall...
NowEarly 80’s
The Wharf (Holdings) Limited 12
A record performance……
Property Value (excl. Hotels) at 30.6.11: HK$87.1B
Attributable GFA (s.f.)
1H11(HK$M)
1H10(HK$M)
% Change
FY10(HK$M)
Retail 1,948,000 1,723 1,437 +20% 2,928Office 4,435,000 787 774 +2% 1,553Serviced Apartments 670,000 145 132 +10% 275Hotel and Club 1,364,000 531 488 +9% 1,056
Total: 8,417,000 3,186 2,831 +13% 5,812
Hong Kong Properties – Harbour City
The Wharf (Holdings) Limited 13
Largest mall in town, representing 75% of retail area of Canton Road
Retail generated 54% of HC’s revenue in 1H11 from only 23% of HC’s area
Retail sales: +35% for 10/2011 YTD, outperformed HK market by 10% points
Continues to provide a captivating “shoppertainment” experience to shoppers through a finely calibrated trade mix and innovative marketing campaigns
Harbour City generated 6.2% of HK retail sales, envy of others……
Hong Kong Properties – Harbour City
The Wharf (Holdings) Limited 14
Occupancy and spot rent trended up strongly during 1H11
Occupancy at 30.6.11: 95%
Lease renewal retention rate: 73%
Occupancy at 30.6.11: 94%
Favorable rental growth
Office Serviced Apartments
Strong performance from other components……
Hong Kong Properties – Harbour City
The Wharf (Holdings) Limited 15
Hong Kong Properties – Times Square
Building for Tomorrow… from a tram depot to a shopping mall...
Late 80’s Now
The Wharf (Holdings) Limited 16
A record performance……Property Value at 30.6.11: HK$32B
Attributable GFA(s.f.)
1H11(HK$M)
1H10(HK$M)
% Change
FY10(HK$M)
Retail 936,000 587 512 +15% 1,076
Office 1,033,000 228 226 +1% 457
Total: 1,969,000 815 738 +10% 1,533
Hong Kong Properties – Times Square
The Wharf (Holdings) Limited 17
Times Square is the most successful vertical shopping mall in HK…...
Full occupancy
Retail generated 72% of TS’s revenue in 1H11 while represents only 48% of area
Tenant mix on the atrium floors fine-tuned to uplift the shopping ambiance
Occupancy at 30.6.11: 96%, strong growth in spot rents in 1H11
Lease renewal retention rate: 28%as some tenants moved to fringe locations
Vacated space rapidly absorbed by new tenants, including relocation from Central / Wanchai
Retail Office
Hong Kong Properties – Times Square
The Wharf (Holdings) Limited 18
Other Hong Kong Properties
Victoria Peak is the most sought after residential address in HK
Mr Ricky WongMD
Mr Douglas WooVC & MD
The Peak Portfolio (400,000 s.f.):
Existing developments – 1H11 occupancy: 90%+, strong rental growth
Mt Nicholson - master layout plan & GBP approved
No. 1 Plantation Road, Mountain Court, Chelsea Court and 77 Peak Road all have redevelopment potential
Other developments:
One Mid-town, Kowloon Godown, Yau Tong Godown, Yau Tong projects, Wharf T&T Square, are at different development stages
The Wharf (Holdings) Limited 19
Other Hong Kong Properties – Mt Nicholson
Mt Nicholson services the top 1-2% of most affluent in Asia…
A unique, rare and high quality development
Private half-mile access road offers ultimate privacy
Rare low density site on HK Island
Ultimate top social status & recognition
World class designers and architects
Buyer types – Upgraders and Villa as status symbol (HK & China), Pied-a-terre (SE Asia & China)
Project details
50:50 JV with Nan Fung; attributable GFA: 162,000 s.f.; completion: Q4 2014
The Wharf (Holdings) Limited 20
China East:ChangzhouWuxiSuzhouShanghaiHangzhouNingbo
Others:DalianTianjinWuhanChangsha
China West:ChengduChongqing
Foshan
China Properties – Building for tomorrow
Wharf China has expanded to 5 regions,13 cities, 40+ projects…
…with a team of over 1000 professionals.
The Wharf (Holdings) Limited 21
China Properties – Building for Tomorrow
PRC assets reached 39% of Group assets at 6/2011... ...
Acquired sites in 1H11 in Changsha, Hangzhou, Suzhou & Foshan (attributable GFA: 2M s.m.) for RMB13BLand bank: +17% to 12.4M s.m. at 6/2011, spanning across 13 cities; on track to next milestone of 15M s.m.The RMB required for o/s land payments has been fully coveredContinue to develop local execution knowhow
ChinaPortfolio
Investment Properties
Development Properties
Wheelock Square completed in 2010 is leasing well Completed IPs were valued at HK$13B at 6/2011Development progress of 5 IFCs as planned
Contracted sales to 10/2011: RMB11.2B, 750,000 s.m. were soldNet order book increased to RMB18.1B for 1.2M s.m.2011 completion target: 550,000 s.m. (1H11: 160,000 s.m.)
The Wharf (Holdings) Limited 22
China Properties – Landbank
Hotel3%
Office15%
Retail8%
Residential74%
Region Attributable GFA s.m.
East 6.3M
West 4.3M
Others 1.8M
TOTAL 12.4M
China landbank on course for the 15M s.m. milestone……
12.4M s.m. landbank split by cities RMB 65.4B cost split by cities
GFA by Land UseGFA by Region
Changzhou8%
Hangzhou7%
Shanghai5%
Suzhou16%
Wuxi15%
Chongqing14%
Chengdu21%
Others14%
Changzhou4%
Hangzhou12%
Shanghai13%
Suzhou12%
Wuxi6%
Chongqing10%
Chengdu20%
Others23%East: 51%
West: 35%
East: 47%
West: 30%
Others: 14% Others: 23%
The Wharf (Holdings) Limited 23
China Development Properties
Mr Andrew ChowChairman
Mr T Y NgVice Chairman
1H11 Turnover: +31% to HK$1,343M (FY10: HK$3.6B)
1H11 Operating Margin: 42%
Contracted Sales to 10/2011: RMB11.2B
2011 completion target: 550,000 s.m. (1H11: 160,000 s.m.)
New Growth Engine… …
The Wharf (Holdings) Limited 24
New projects City Product Attributable GFA sold (sm) ^
Attributable Proceeds
(RMB’M) ^Average Price(RMB psm) ^
Times City Suzhou High-rise 29,000 410 13,900
The U World Chongqing High-rise 32,000 715 22,100
Peaceland Cove Tianjin High-rise 38,000 494 13,100
Magnificent Tianjin High-rise 28,000 402 14,300
Projects previously launched City Product Attributable
GFA sold (sm) ^Attributable
Proceeds(RMB’M) ^
Average Price(RMB psm) ^
Xiyuan Shanghai Medium-rise 17,000 890 52,700
Times Riverside, Times 8 Chengdu High-rise / office 41,000 752 18,500
Times Palace Changzhou High-rise / villas 85,000 696 8,200
Ambassador Villa Suzhou Villas 7,000 337 51,100
Int’l Community Chongqing High-rise 72,000 494 6,900
China Development Properties – Sales
Sales diversity to minimize concentration risk……
^All data for 1H2011
The Wharf (Holdings) Limited 25
4.6
8.815.0*
0
5
10
15
2009 2010 2011
RMB'B
PRC property progress as planned……
China Development Properties
550281
2,100*1,600*
0
500
1000
1500
2000
2500
2010 2011 2012 2013
000's.m.
2010-2013 Project Completions2009-2011 Contracted Sales
*provisional data
The Wharf (Holdings) Limited 26
China Investment Properties
IP portfolio will grow when 5 IFCs will be rolled out (2013-2016)
Suzhou IFC (2016)
Shanghai Wheelock Square
Chengdu IFC (2013)
Chongqing IFC (2015)
Wuxi IFC
Changsha IFC (2016)
Suzhou IFC
The Wharf (Holdings) Limited 27
Recurrent rental earnings boosted by Wheelock Square……
Turnover: +34% to HK$317M (FY10: HK$470M)
Operating profit: +39% to HK$193M
Over 70% office area at Shanghai Wheelock Square leased, with latest monthly rental rates at over RMB400psm
Chongqing TS transformed into a modern & stylish shopping mall in 3Q2011
Dalian TS registered a 38% growth in retail sales p.s.m. with 100% occupancy
Shanghai TS performed satisfactorily with 93% retail and 96% office occupancy
China Investment Properties
1H11 Performance
The Wharf (Holdings) Limited 28
China Investment Properties
Recurrent earning base will substantially increase from 2013……
379 379665
1,100
2,300
379*
0
500
1000
1500
2000
2500
2010
2011
2012
2013
2014 ~
2016
000's.m.
IP Portfolio GFA^ growth over time
^ Includes office / residential areas that may be for sale* Includes Shanghai Wheelock Square, Times Squares in Shanghai, Chongqing and Dalian
Chengdu IFC 2013-15
Chongqing IFC 2014-15
Wuxi IFC By 2015
Suzhou IFC By 2016
Changsha IFC By 2016
Completion timetable
The Wharf (Holdings) Limited 29
Mainland Chengdu Chongqing Wuxi Suzhou Changsha
GDP Growth 10.3% 15.0% 17.1% 13.1% 13.2% 15.5%
Population (’M) 1,341 11 29 6 6 7
Retail sales growth 18.3% 24.0% 18.5% 18.6% 18.7% 19.9%
19,000 21,000 18,000 28,000 33,000 23,000Urban disposable income per capita (RMB)
% change 7.8% 11.7% 11.3% 10.9% 10.9% 12.7%
Investment in fixed asset (RMB’B)
27,814 426 693 299 362 319
2010 Economic Indicators
Untapped potential to be realized……
Source: National Bureau of Statistics (2010 data) , Statistics Bureaus of various cities (2010 data)
The Wharf (Holdings) Limited 30
China Investment Properties – Wheelock Square
Tallest Landmark office tower in Puxi at 270 metres…
Brand new landmark office tower with GFA of 114,000 s.m.
The tallest building in Puxi (270-metre) overlooking Jing’an Park
Currently, over 80% committed; latest monthly rental rates at over RMB400psm.
High floors will command higher rates
Tenants include multinationals and major corporations
Awarded “Best Business Centre” by MIPIM Asia Awards 2011 in 9/2011
The Wharf (Holdings) Limited 31
China Investment Properties – IFC Series
5 IFCs to be rolled out in 2013-2016……Chengdu IFC – GFA 439,000 s.m.*
The Group’s next flagship IP in the busiest pedestrian shopping area of Chengdu.
Comprises retail, Grade A offices, 5-star hotel and luxury residences
Construction of Phase 1 (retail and an office tower) is scheduled for completion in mid 2013
Chongqing IFC – GFA 223,000 s.m.*
50:50 JV with COLI; located in the new CBD of Chongqing
Comprises up-market retail, Grade A offices, 5-star hotel and serviced apartments
Construction is underway; full completion in 2015
* GFA represents plot-ratio GFA and excludes commercial areas below ground
The Wharf (Holdings) Limited 32
Changsha IFC – GFA 700,000 s.m.*Acquired in 1/2011, a prime site in the city centreComprise 3 towers (2 in excess of 300m in height) atop a 250,000 s.m. retail podiumComprises upscale retail, Grade A offices, 5-star hotel & luxury apartments. Construction will start in late 2011.
5 IFCs to be rolled out in 2013-2016……
China Investment Properties – IFC Series
Suzhou IFC - GFA 351,000 s.m.*Tallest skyscraper in Suzhou overlooking Jinji LakeComprises Grade A offices, 5-star hotel and luxury apartments
Wuxi IFC – GFA 280,000 s.m.*Tallest skyscraper in Taihu Plaza, Wuxi’s new CBDComprises Grade A offices, 5-star hotel and luxury residences
* GFA represents plot-ratio GFA and excludes commercial areas below ground
The Wharf (Holdings) Limited 33
Other Non-Property Businesses
Strong recurring income base……
Mr. Stephen NgChairman
MTL
Hotel
CME
The Wharf (Holdings) Limited 34
Marco Polo Hotels
10 operating Marco Polo hotels in Asia Pacific region
1H11 Revenue: +11% to HK$593M (FY10: HK$1.2B)
Awarded “Best International Hotel Management Group of China” by China Hotel Starlight Awards in 3/2011
The managed Marco Polo Foshan in Lingnan Tiandi will open in 2011
From 2012 onwards, new Marco Polo hotels in Changzhou, Chengdu, Chongqing, Manila, Guiyang, Suzhou and Wuxi will come on stream
A solid performer……
The Wharf (Holdings) Limited 35
Modern Terminals
The first container terminal operator in HK, 33% market share today……
1H11 Revenue: +6% to HK$1,620M (FY10: HK$3.3B)
1H11 Throughput
Kwai Tsing (HK): +1% to 2.7M TEUs
Taicang (YRD): +9% to 685K TEUs
DCB (PRD): +19% to 343K TEUs
Leveraging on HK base, expand into Pearl River Delta and Yangtze River Delta, the 2 largest manufacturing hubs in PRC:
PRD: Da Chan Bay (DCB)
YRD: Taicang International Gateway
The Wharf (Holdings) Limited 36
Communication, Media & Entertainment
i-CABLE
CABLE TV is the first multi-channel Pay TV service in HK; subscribers' base exceeds 1.1M
1H11 Revenue: +9% to HK1,051M (FY10: HK$2.0B)
Wharf T&T
Wharf T&T is the second largest fixed line operator and the first and only comprehensive ICT service provider in HK focusing on the business sector
1H11 Revenue: +6% to HK$879M (FY10: HK$1.7B)
Steady results……
The Wharf (Holdings) Limited 37
1H11(HK$M)
1H10(HK$M)
Turnover 9,745 8,622Operating Profit 4,980 4,516
Profit attributable to equity shareholders 14,302 10,892EPS (HK$) 4.84 3.85EPS before Property Revaluation Surplus (HK$) 1.11 1.49
DPS (HK$) 0.36 0.36
As at 30.6.11
As at 31.12.10
Total assets 281,835 242,225
Total business assets 257,070 220,237Net debt 42,494 32,689
Total equity 193,961* 170,649NAV per share (HK$) 61.59 59.22Net debt to total equity 21.9% 19.2%
* Wharf raised HK$10 billion equity through a rights issue in March 2011
Financial Highlights – 1H2011
The Wharf (Holdings) Limited 38
FY10(HK$M)
FY09(HK$M)
Turnover 19,380 17,553Operating Profit 9,372 8,554Profit attributable to equity shareholders 35,750 19,256EPS (HK$) 12.98 6.99EPS before Property Revaluation Surplus (HK$) 2.87 2.84DPS (HK$) 1.00 1.00
As at 31.12.10
As at 31.12.09
Total assets 242,225 190,461Total business assets 220,237 168,576Net debt 32,689* 21,432Total equity 170,649* 135,588NAV per share (HK$) 59.22 46.68Net debt to total equity 19.2% 15.8%
*Wharf raised HK$10billion equity through a rights issue in March 2011
Financial Highlights – FY2010
The Wharf (Holdings) Limited 39
% of Group Operating Profit% of Group Total Business Assets
3%
14%
16%67%
HK Properties (excl. Hotels) China PropertiesLogisticsCME & Others
1%
57%34%
8%
HK$257.1B
* China assets: 39% as at 30.6.11 (Properties: 34%, Logistics: 5%)
HK$5.0B
Financial Highlights
Hong Kong properties remain the driver; China is growing……
The Wharf (Holdings) Limited 40
Net debt 30.6.11 (HK$’M)
31.12.10 (HK$’M)
Wharf (excluding below subsidiaries) 33,503 23,376
MTL 11,054 9,932
HCDL (1,694) (172)
i-CABLE (369) (447)
Total: 42,494 32,689
Gearing (net debt to total equity*) 21.9% 19.2%
*Wharf raised HK$10B equity through a rights issue in 3/2011
Prudent financial management with 21.9% gearing……
Financial Highlights
The Wharf (Holdings) Limited 41
Strong recurring income base
Investment Properties – Harbour City, Times Square, China IPs
Logistics and Hotels
Multiple sources of funding and revenue
Equity - HK$10B rights issue in 3/2011
Debt - HK$6.2B CB in 6/2011
- S$670M bonds (HK$4.1B) in July / October 2011
At 30.6.11, cash balance: HK$20B, undrawn bank facilities: HK$23B
China contracted sales of RMB11.2B (HK$14B) up to 10/2011
Financial Highlights
Multiple sources of income and funding……
The Wharf (Holdings) Limited 42
End of PresentationWheelock and Company Limited [HKEx Stock Code: 0020.HK]The Wharf (Holdings) Limited [HKEx Stock Code: 0004.HK]
Disclaimer
All information and data are provided for information purposes only. All opinions included herein constitute Wharf’s judgment as of the date hereof and are subject to change without notice. The Group, its subsidiaries and affiliates hereby disclaim (i) all express, implied, and statutory warranties of any kind to user and/or any third party including warranties as to accuracy, timeliness, completeness, or fitness for any particular purpose; and (ii) any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the information and data contained herein.
The Wharf (Holdings) Limited 43
US$ 1 = HK$ 7.80* HK$ 1 = US$ 0.128
US$ 1 = RMB 6.365^ RMB 1 = US$ 0.157
1 Sq foot = 0.0929 Sq metre 1 Sq metre = 10.764 Sq feet
* - Under the Linked Exchange Rate System of Hong Kong, HK Dollar is fixed with US Dollar
^ - The mid-rate as announced by The People’s Bank of China on 20.10.11
Conversion Reference
Appendix