2012 interim results 23 august 2012 property dual cores ... wharf... · top-tier brands: chanel,...
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2012 Interim Results
1
The Wharf (Holdings) Limited
Chengdu IFC
2012 Interim Results
23 August 2012
Property dual cores drove record profit
2012 Interim Results
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$18.3B
* exclude hotels
HK$
2012 Interim Results
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$5.4B
3
Wharf – Results Highlights
China properties rose 2.5-fold;
Property development rose 5-fold
+83%
HK
Properties
58%*
China
Properties
33%
Others
9%
Property
Investment
49%*
Property
Development
42%
+2.5-fold
Others
9%
+5-fold HK$
* exclude hotels
2012 Interim Results
4
Wharf – Results Highlights
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.
2012 Interim Results
5
Wharf – Results Highlights
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$57B mature before the end of 2013
Property dual cores drove record profit…...
2012 Interim Results
6
1H2012 (HK$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$0.36 +25%
** exclude IP revaluation surplus and exceptional items
Financial Highlights of 2012 Interim Results
2012 Interim Results
7
Hong Kong Properties – Harbour City
Attributable GFA
(sf)
1H2012
(HK$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
2012 Interim Results
8
Hong Kong Properties – Harbour City
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
2012 Interim Results
9
Hong Kong Properties – Harbour City
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
2012 Interim Results
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
2012 Interim Results
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
2012 Interim Results
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)
2012 Interim Results
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
2012 Interim Results
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……
2012 Interim Results
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
2012 Interim Results
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
2012 Interim Results
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
2012 Interim Results
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
2012 Interim Results
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
2012 Interim Results
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
2012 Interim Results
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
2012 Interim Results
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
2012 Interim Results
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
2012 Interim Results
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
* GFA represents plot-ratio GFA and excludes commercial areas below ground
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
2012 Interim Results
25
All developments progressing as planned……
China Investment Properties – Other IFCs
* GFA represents plot-ratio GFA and excludes commercial areas below ground
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
2012 Interim Results
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
2012 Interim Results
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
2012 Interim Results
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
2012 Interim Results
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$5.4B
Financial Highlights
Mainland contribution increased to 22% of core profit……
2012 Interim Results
30
Net debt / (Cash) 30.6.2012
(HK$’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 ……
Financial Highlights
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
2012 Interim Results
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)
Financial Highlights
Diversified sources of income and funding……
2012 Interim Results
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
2012 Interim Results
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.
2012 Interim Results
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
2012 Interim Results
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