2012 Interim Results 23 August 2012 Property dual cores ... Wharf... · Top-tier brands: Chanel,...

2012 Interim Results

1

The Wharf (Holdings) Limited

Chengdu IFC


23 August 2012

Property dual cores drove record profit


2

Wharf – Results Highlights

China properties surpassed Hong Kong properties;

Property development surpassed property investment

Others

23% 1H11 1H12

4.2B

43%

4.3B

23%

5.5B

57%

14.0B

77%

Others Properties

+154%

HK

Properties

36%*

China

Properties

41%

Others

23%

Property

Development

50%

Property

Investment

27%*

Group turnover +87% to HK$18.3B

* exclude hotels

HK$


1H11 1H12

0.9B

18% 0.7B,9%

4.1B

82%

7.5B

91%

Others Properties

Group operating profit +65% to HK$8.2B

Core profit +49% to a record of HK$5.4B

3


China properties rose 2.5-fold;

Property development rose 5-fold

+83%

HK

Properties

58%*

China

Properties

33%

Others

9%

Property

Investment

49%*

Property

Development

42%

+2.5-fold

Others

9%

+5-fold HK$

* exclude hotels


4


Property dual cores drove record profit…...

Profit before IP revaluation surplus +115% to HK$7.1B

• Book accounting gain on acquisition of 18.4% equity interest in Greentown China: HK$1.5B

Profit after IP revaluation surplus +65% to HK$23.6B.

• Net IP revaluation surplus: HK$16.5B

Investment properties in HK remain firm (OP+13%); China provides the new impetus (OP+63%)

• Portfolio size to more than double in the next 3-4 years, particularly on completion of the IFCs in Chengdu, Chongqing and Changsha.


5


Development properties bear fruit in HK and China

• Total attributable sales in China (in < 8 months so far) this year already meet FY target of RMB10B and comfortably outpace last year.

Greentown China represented a timely opportunity for some of the said sales proceeds to be re-invested accretively

• It enabled the Group’s attributable China landbank to +50% to 18M sm

Group net debt stabilized at HK$53.2 B(12/2011: HK$43.5B), with net gearing at 22.9% (12/2011: 20.6%).

• Excluding non-recourse debt of non-wholly owned subsidiaries, net debt: HK$45.3B (12/2011: HK$35.3B)

• HK$3B of gross debt (excluding non-wholly owned subsidiaries) out of total of HK$57B mature before the end of 2013

Property dual cores drove record profit…...


6

1H2012 (HK$M)

1H2011 (HK$M)

% Change

Turnover 18,250 9,745 +87%

Operating Profit 8,241 4,980 +65%

Core profit ** 5,425 3,638 +49%

Profit before IP revaluation surplus 7,072 3,283 +115%

IP revaluation surplus (net of Tax & NCI) 16,574 11,019 +50%

Profit after IP revaluation surplus 23,646 14,302 +65%

EPS HK$7.81 HK$4.84 +61%

EPS – Core profit** HK$1.79 HK$1.23 +46%

DPS HK$0.45 HK$0.36 +25%

** exclude IP revaluation surplus and exceptional items

Financial Highlights of 2012 Interim Results


7

Hong Kong Properties – Harbour City

Attributable GFA

(sf)

1H2012

(HK$M)

1H2011

(HK$M)

Change

%

Retail 2,212,000 2,069 1,723 +20%

Office 4,435,000 829 787 +5%

Serviced Apartments 670,000 152 145 +5%

Hotel and Club 1,364,000 588 531 +11%

Total: 8,681,000 3,638 3,186 +14%

Revenue

Gallery by the Harbour

Property Value (excl. Hotels)

at 30.6.2012: HK$114.3B

Exhibition at Gateway II


8


Among the world’s leading shopping destinations of retail space for leading luxury and high street brands

Retail sales +18%, outperformed HK market by 4%-points

Retail represents 25% of HC’s total area but generated 68% of rental revenue

Rejuvenation & conversion works continues:

Creation of flagship Canton Road stores for Fendi (6,000 sf), Giorgio Armani (10,000 sf) in 2012 and an iconic store in 2013

Gap will open a store on Levels 3&4 (16,000 sf)

Top-tier brands: Chanel, Louis Vuitton, Gucci and Dior Homme are undergoing expansion

Fendi (duplex) opened in July 2012 –

converted from Marco Polo Gateway

Hotel lobby

Retail


9


Demand driven by business expansion, new

lettings and decentralization

Occupancy climbed to 99%

Lease renewal retention rate: 58%

Occupancy: 89%

Favorable growth in average rent for

new leases

Office

Serviced Apartments


10

Hong Kong Properties – Times Square

Property Value at

30.6.2012: HK$39.7B

Attributable GFA

(sf)

1H2012

(HK$M)

1H2011

(HK$M)

%

Change

Retail 936,000 664 587 +13%

Office 1,033,000 268 228 +18%

Total: 1,969,000 932 815 +14%

Revenue

Retail podium New shops opened in 1H12


11

Hong Kong Properties – Times Square

The most successful vertical shopping mall in HK…...

Retail sales +17%* (on psf basis); 100%^ occupancy

Retail represents 48% of area but generated 71% of revenue

Cinema relocation refurbishment progressing as planned; 14% (or 70,000 sf lettable) of the

total retail space have been withdrawn from the market

New retail shops and restaurants scheduled to open in mid-2013 and new cinema in 4Q2013

Occupancy at 98%

Lease renewal retention rate: 57%

Retail

Office

^ excluding the areas vacated for refurbishment

* The psf basis is used as a result of the cinema relocation work


12

Outlook – HK Retail

Cautious outlook for HK retail market for the remainder of 2012

With our expertise in retail management, we are building block by block on our competitive trade mix, critical mass and solid customer base

HC/TS is expected to deliver a resilient performance and to be less affected than the street shopping and small retail properties.

Healthy growth in retail sales & revenue at HC/TS is expected.

Sustained demand for luxury products (except high-end J&W)


13

Other Hong Kong Properties

The Peak Portfolio

Redevelopment of No.77 Peak Road, No. 1

Plantation Road and Mountain Court will

start shortly, with all 3 properties vacated at

end-June

Preparation for demolition works in progress

Plaza Hollywood

Turnover: +11% to HK$207M;

Average occupancy: 98%

Steady performance……

Delta House

Commercial development sold for HK$1.3B in 5/2012

No. 1 Plantation Road


14

One Midtown – high rise industrial / loft building with 644,000 GFA; completed in

6/2012, HK$2.2B of turnover and HK$1.0B of operating profit recognized

Mount Nicholson – 50:50 JV with Nan Fung for exclusive luxurious residences

(attributable GFA of 162,000 sf); foundation work underway

Kowloon Godown – redevelopment into a residential & commercial development (GFA:

829,000 sf) approved; lease modification underway

Wharf T&T Square – redevelopment into a high-rise Grade A commercial building

(GFA: 581,000 sf) approved; lease modification premium paid

Yau Tong Godown – Residential & commercial development (GFA:256,000 sf); lease

modification premium paid; foundation works underway

Yau Tong Bay JV Project (15% owned by Wharf) – master layout plan submitted to

Town Planning Board for consideration

HK Development Properties

Profit recognized upon completion of One Midtown……


15

China Properties – Building for Tomorrow

Development properties bear fruit... ... China

Portfolio

26 projects on sale across 11 cities

Land bank of 12.0M sm across 15 cities, including a Beijing site (50:50 JV with CMP) acquired in early 2012.

Greentown China enabled the Group’s attributable landbank to +50% to 18M sm

Development

Properties

Recognized Sales

Turnover +416% YoY ; Operating Profit +326% YoY

349,000 sm of DP were recognized

Contracted Sales

RMB 7.5B, +19% YoY (GFA:654,000 sm); 2Q set a quarterly record with

RMB5B+

Net order book: RMB14.2B (GFA: 1,207,000 sm)

Subsequently, RMB2.5B sold in the first half of 3Q for RMB10B YTD. Already

achieved FY target and comfortably outpaced last year

Investment

Properties

Turnover +51% ; Operating profit +63%

Completed IPs were valued at HK$15.4B

Chengdu IFC: Promising and encouraging retail pre-leasing with over 50% of

retail space either committed or under offer, the mall scheduled to open by end-

2013


East

50%

West

34%

Others

16%

Residential

71%

Office

18%

Retail

8%

Hotel

3%

16

China Properties – Landbank

Region Unsold Attributable GFA (M’sm)

%

East 6.0 50%

West 2.0 17%

Others 4.0 33%

Total 12.0M 100%

China landbank at 12.0M sm……

GFA by Cities

Shanghai

4%

Hangzhou

7%

Changzhou

9%

Wuxi

14%

Suzhou

16%

Chengdu

21%

Chongqing

13%

Others

16%

Residential development in

Beijing (50:50 JV with CMP)

Attributable GFA: 91,000 sm;

AV: RMB13,000 psm

1H12 Acquisition

Landbank Analysis


17

4.6

8.8 12.7 10

2.7

0

5

10

15

2009 2010 2011 2012

RMB'B

Development business growing as planned……

China Development Properties

281

730

1,000*

1,400*

0

500

1000

1500

2010 2011 2012 2013

000's.m. 2009-2012 Contracted Sales 2010-2013 Project Completions

* provisional data

Turnover (subsidiary projects): HK$6,929M (+416% YoY)

Operating profit (subsidiary projects): HK$2,422M (+326% YoY); Operating margin: 35%

Completed GFA^: 374,000 sm, Recognized GFA^: 349,000 sm

Contracted Sales +19% to RMB7.5B (654,000 sm), total attributable sales so far this year already meet the full-year target of RMB10B and comfortably outpace last year.

Net order book: RMB14.2B (1,207,000 sm)

Stretched target of RMB12.7B for FY2012 ^ including JV projects


18

Region City Percentage

East

Shanghai 8%

Suzhou 16%

Wuxi 13%

Changzhou 4%

Hangzhou 2%

Subtotal 43%

West

Chengdu 20%

Chongqing 13%

Subtotal 33%

Others

Tianjin 9%

Foshan 15%

Subtotal 24%

Total: 100%

China Development Properties – Sales

Sales diversity to minimize concentration risk……

RMB7.5B Sales in 1H12

Region City Percentage

East

Shanghai 1%

Suzhou 15%

Wuxi 18%

Changzhou 8%

Hangzhou 1%

Subtotal 43%

West

Chengdu 20%

Chongqing 12%

Subtotal 32%

Others

Tianjin 9%

Foshan 16%

Subtotal 25%

Total: 100%

654,000 sm Sold in 1H12


19

China Development Properties – Sales

Major projects sold in 1H12……

* excluding carpark

New projects City Product Attributable GFA sold (sm) *

Attributable Proceeds (RMB’M)

Average Price (RMB psm) *

Evian Buena Vista Foshan High-rise / townhouse 19,400 143 7,400

Evian Rivera Foshan High-rise 17,900 198 11,100

Projects previously launched City Product Attributable GFA

sold (sm) *

Attributable Proceeds (RMB’M)

Average Price (RMB psm) *

Times City Suzhou High/low rise 90,000 977 10,900

Xiyuan Shanghai Medium-rise 8,700 375 43,200

Times Palace Changzhou High-rise / villas 55,000 351 6,200

Times City Wuxi High/low rise 66,900 509 7,600

Tian Fu Times Square Chengdu High-rise 36,000 649 18,000

Crystal Park Chengdu High-rise / office 70,500 602 8,500

U World Chongqing High-rise / retail 13,000 393 30,000

Evian Town Foshan High-rise / townhouse 39,000 533 13,800

Peaceland Cove Tianjin High-rise 42,700 541 12,400

International Community Chongqing High-rise/ commercial 45,100 361 7,800


20

Outlook - China

China is a policy driven market

(a) Accelerated pace of urbanization and

(b) growing income of eligible home buyers/investors

continues to generate solid demand for quality housing

The surging income of some Chinese middle-class is comparable to HK level.

We will continue to leverage on our local execution expertise and brand name


21

Solid growth in recurrent rental income……

Turnover +51% to HK$479M, Operating profit +63% to HK$314M

91% office area at Shanghai Wheelock Square leased; average spot rent achieved in

1H12 at ~RMB403 psm, among the highest office rental rates in Shanghai

Chongqing Times Square – occupancy: 96%, continuous trade mix refinement underway

Dalian Times Square – occupancy: 100%, Chanel & Dior Homme (expanded) (to open

in 4Q12 & 3Q12 respectively)

Shanghai Times Square’s retail podium – closed for renovation since 5/2012; mall

scheduled to re-open in Q32013

1H12 Performance

China Investment Properties


22

China Investment Properties

China IFCs provides the new impetus……

379* 379 379

665

1,200

2,400

0

500

1000

1500

2000

2500

3000

000's.m.

^ Includes office / residential areas that may be monetized for value accretion

* Includes Shanghai Wheelock Square, Times Squares in Shanghai, Chongqing and Dalian

Growth of IP Portfolio GFA^

Chengdu IFC 2013-14

Chongqing IFC 2014-15

Wuxi IFC 2014-16

Suzhou IFC By 2016

Changsha IFC By 2016

Completion timetable


23

China Investment Properties – Chengdu IFC

Promising & encouraging retail pre-leasing……

GFA of 536,000 sm*, comprises retail, Grade A offices, a 5-

star hotel and luxury residences

Pre-leasing of 200,000 sm^ retail podium with over 50%

committed or under offer; rental rates above budget

One-stop flagship landmark of W. China, with the most

diversified & entertainment anchors; committed brands

include Prada, Dolce & Gabbana, Giorgio Armani, Tod’s,

Fendi, Piaget, Chaumet, Uniqlo, I.T Group, UA Cineplex,

Bowling Lounge, etc.

Hong Xing Road – the replica of Canton Road in HK, to

emerge as the home of duplex stores

Retail podium & 1 office tower (completion in 2H2013);

full completion in 2014; the mall to open by end-2013

* GFA represents plot-ratio GFA and excludes commercial areas below ground

^ include commercial area below ground


24

China Investment Properties – Other IFCs

All developments progressing as planned……

Chongqing IFC – GFA 223,000 sm*

50:50 JV with COLI; located in the new CBD of Chongqing

Comprises up-market retail, Grade A offices and a 5-star hotel

Construction is underway; full completion in 2015


Changsha IFC – GFA 725,000 sm*

Located in city centre; comprises upscale retail, Grade A offices

and a 5-star international hotel; retail podium among the largest in

Changsha (larger than Harbour City in HK)

Construction work is underway; full completion in 2016


25

All developments progressing as planned……

China Investment Properties – Other IFCs


Wuxi IFC – GFA 280,000 sm*

Tallest skyscraper in Taihu Plaza, Wuxi’s new CBD

Comprises Grade A office and a 5-star hotel

Superstructure work is underway; phase 1 completion in 2014

Suzhou IFC - GFA 351,000 sm* (80/20 JV with Genway)

Tallest skyscraper in Suzhou overlooking Jinji Lake

Comprises Grade A offices, a 5-star hotel and luxury apartments

Construction is underway; full completion in 2016


26

Marco Polo Hotels

1H2012 revenue +9% to HK$649M

Operating profit +3% to HK$192M

The 3 HK hotels occupancy at 84%

Average room rate +10% YoY

Prince and Gateway hotels are undergoing room

renovation (scheduled completion: 2012 & 2013)

Marco Polo Lingnan Tiandi (Foshan) and Marco

Polo Suzhou added in 1H2012

13 owned or managed hotels in Asia Pacific; 10

new hotels come on stream by 2016 to further

expand MP’s network

Steady performance; 10 new hotels to expand MP’s network……

Marco Polo HK Hotel


27

Modern Terminals

HK / China performance affected by soft global trade……

Revenue -9% to HK$1,469M

Operating profit -15% to $573M due to

higher operating costs

1H2012 Throughput

Kwai Tsing (HK) at 2.3M TEUs

Taicang (YRD) at 804K TEUs (+17%)

DCB (PRD) at 216K TEUs

1H2012 Performance

Da Chan Bay (Terminal I)

Kwai Tsing


28

Communications, Media & Entertainment

i-CABLE

Revenue decreased marginally to HK1,038M;

net loss of HK$97M

Healthy net cash at HK$184M

Wharf T&T

Revenue +3% to HK$904M

Net profit +17% to HK$99M

Stable net cash inflow maintained

Stable net cash position notwithstanding challenging environment……

Wharf T&T’s advertising campaign

Official Broadcaster of the London 2012 Olympics


67%

22%

11%

59% 37%

4%

29

% of Group core profit % of Group total business assets

HK Properties (excl. Hotels)

China

HK logistics / Others

* China assets: 37% as at 30.6.2012 (Properties: 33%, Logistics: 4%)

HK$310.2B HK$5.4B

Financial Highlights

Mainland contribution increased to 22% of core profit……


30

Net debt / (Cash) 30.6.2012

(HK$’B)

31.12.2011

(HK$’B)

Wharf (excluding below subsidiaries) 45.3 35.3

MTL 11.5 11.2

HCDL (3.4) (2.7)

i-CABLE (0.2) (0.3)

Total: 53.2 43.5

Gearing (net debt to total equity) 22.9% 20.6%

Prudent debt and cash flow management ……


About $3B of own debt (excluding non-recourse debt of non-wholly owned

subsidiaries) out of total gross debt of $57B (i.e. 5% only) will mature before end-2013


31

Strong recurring income base

Investment Properties – Harbour City, Times Square, China

Logistics and Hotels

Multiple sources of funding and revenue

Debt - US$900M bonds (HK$7.0B) in February 2012

At 30.06.12, cash balance: HK$19.0B, undrawn bank facilities: HK$17B

China property sales: RMB7.5B in 1H2012

Sale of non-core assets

One Midtown (HK$2.2B of turnover recognized)

Delta House (HK$1.3B proceeds)


Diversified sources of income and funding……


32

Wharf – Recap

Property dual cores drove record profit……

Hong Kong Property Business HC/TS: remain firm; DP: bear fruit, profit

recognized (One Mid Town / Delta House)

Hong Kong Property Outlook Retail: cautious outlook, office: steady

demand (TST/CWB)

China Property business China IPs provides the new impetus, DP: bear

fruit, YTD sales met FY target

China Property Outlook Policy driven market, urbanization & growing

income solid housing demand

Debt and Cash-flow Management HK$3B out of total HK$57B mature

before end-2013


33 33

End of Presentation 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.


34

Wharf’s core earnings +49% to HK$5,425M……

Appendix

Exceptional items in 1H2012/1H2011 1H12

(HK$’M)

1H11

(HK$’M)

Book accounting gain arising from the acquisition of interests in

Greentown 1,543 -

Mark-to-market gain/(loss) (cross currency / interest rate swap) 104 (355)

Total 1,647 (355)

Core earnings 1H12

(HK$’M)

1H11

(HK$’M)

Profit (before net IP revaluation surplus) 7,072 3,283

Exceptional items in 1H2012 / 1H2011 (1,647) 355

Total 5,425 3,638


35 35

Appendix - Wharf Financial Highlights

Net Debt / Total Equity Interest cover

Net debt / EBITDA Debt maturity (as at 30.06.2012)

Solid credit metrics……

2.2 2.5 2.2

3.1 3.4 3.0

0.0

1.0

2.0

3.0

4.0

2007 2008 2009 2010 2011 1H12*

6.2

47.9

18.1

0

10

20

30

40

50

60

< 1 yr 2-5y rs >5 yrs

25.6%

18.8%

15.8% 19.2%

20.6% 22.9%

0.0%

10.0%

20.0%

30.0%

2007 2008 2009 2010 2011 1H12

10.3 9.8

12.810.8

19.5

25.7

0

5

10

15

20

25

30

2007 2008 2009 2010 2011 1H12

* annualized ratio

2012 Interim Results 23 August 2012 Property dual cores ... Wharf... · Top-tier brands: Chanel,...

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Transcript of 2012 Interim Results 23 August 2012 Property dual cores ... Wharf... · Top-tier brands: Chanel,...