2019 mainland china management presentation · robert wong - chief executive simon dixon - chief...
TRANSCRIPT
23 May 2019
2019 Mainland China Management PresentationChongqing
2019 Mainland China Management Presentation 2
Speakers: Robert Wong - Chief Executive Simon Dixon - Chief Financial Officer Ling Chang Feng - Executive Director, China Property
Agenda
1. Introduction
2. Overview of Mainland China Market
3. HKL’s Mainland China Business
4. Update on Projects Secured in 2017 and 2018
5. Financial Highlights
6. Outlook
7. Site Visits
8. Q&A
2019 Mainland China Management Presentation 3
Introduction to Mainland China Management Team
Ling Chang FengExecutive DirectorChina Property
Ren Xia YiDirectorHead of Finance & Operations
James ZhangAssociate DirectorHead of Business Development
Yang Hua Associate DirectorHead of Chongqing
Eric ChenAssociate DirectorHead of Projects
Billy PangGeneral ManagerAsset Management
Thomas TamDirectorHead of Asset Management
Shirley LamGeneral ManagerWF CENTRAL
2019 Mainland China Management Presentation 4
Key Milestones of HKL’s Journey in Mainland China
First large-scale mixed-use project(Landmark Riverside)
Acquired JL CENTRAL site
Acquired WF CENTRAL and CBD Z3 sites
&Entered Chengdu
(WE City)
Entered mainland China
(Maple Place)
First wholly-owned project(Yorkville South)
2009 201820051997 2010
Entered Chongqing(Bamboo Grove)
2001
First large-scale residential project
(Central Park)
2015
Entered Shanghai(Parkville)
2017
Entered Nanjing, Wuhan and Hangzhou
&Opening of WF CENTRAL
52019 Mainland China Management Presentation
Overview of Mainland China Market
2019 Mainland China Management Presentation 6
Mainland China Macro Trends
Consumption will continue to be a key driver of China’s economy
Consumption Capacity
Strong growth relative to developed countries, although will continue at a slower but sustainable rate
GDP Growth
Tier-1 & leading Tier-2 cities will continue to enjoy a healthy population inflow
Urbanisation
2019 Mainland China Management Presentation 7
Mainland China Property Market
Will continue to outperform lower tier cities due to population, capital and other resource inflows
Market in leading cities will be supported by population inflow, urbanisation and rising middle class
Challenging conditions, success of projects depends on selecting the right locations and execution expertise
Oversupply in decentralised locations in a majority of Tier-2 cities
Residential
Retail
Office
Tier-1 & Leading Tier-2 cities
82019 Mainland China Management Presentation
Overview of HKL’s Mainland China Business
2019 Mainland China Management Presentation 9
NANJING
Hangzhou Bay
Mainland China in Focus – Existing Portfolio
Dream Land Central Park CBD Z3 SiteWF CENTRAL
HANGZHOU
WUHANCHENGDU
WE City Yixinhu Project
JL CENTRAL
River One (formerly “Bamboo Grove Riverside”)
New Bamboo Grove
Yorkville South
Yorkville North
Central Avenue
Landmark Riverside
Harbour Tale (formerly “LijiaLandscape”)
Hillview (formerly “Liangjiang New Project”)
Yuelai Project
CHONGQING
BEIJING
Bamboo Grove
Yue City River and City (formerly “Jiangbei Project”)
Parkville
Caohejing Project
SHANGHAI
2019 Mainland China Management Presentation 10
REGIONAL TEAM
LING CHANG FENGExecutive Director, China Property
Our Mainland China Team Structure
LOCAL TEAM
BusinessDevelopment
Finance
ProjectsLegal
Design
HR & Administration
PropertyManagement
AssetManagement
IT
Chengdu ChongqingBeijing
ShanghaiHangzhou Nanjing
Wuhan
Approximately 700 staff, 40% of the Group’s workforce
2019 Mainland China Management Presentation 11
- Benefit from their local expertise
- Reduce exposure to individual projects
- Referrals to more potential projects
JV Partners & HKL’s Strengths
Longfor
ChinaMerchantsShekou
Yanlord
Joint Venture Partners Benefits of Joint Ventures
ExcellenceGroup KWGJinke
CIFIChina
FortuneProperties
Vanke
CountryGarden
Ping An
Zall
Transfar
HKL’s Strengths
- Strong balance sheet
- Strong reputation for operational excellence
- Experienced design team
- Respected asset management capabilities
- Strong tenant relationships
- Robust corporate governance structure
CICC
Vantone
2019 Mainland China Management Presentation 12
Investment Properties – WF CENTRAL
46%
25%
5%
12%
12%
TOTAL NFA:43,000 sq. m.
Fashion & Accessories
Jewellery & Watches Others
Food & Beverages
TENANT PROFILE BY AREA
Vacant
2019 Mainland China Management Presentation 13
Investment Properties – CBD Z3
8
7
5
3
6
9
21
4
3 CCTVHeadquarters2 China Fortune
Plaza1 World FinancialCenter
4 Beijing KerryCenter 5 CITIC Tower 6 China World
Trade Center
8 Yintai Centre7 CBD Z3
Subway Line 1
Chang’an Ave.
Subway Line 10 East 3rd Road
Core CBD
• Located in the heart of the Beijing CBD• Office: 111,000 sq. m. GFA• Retail: 16,000 sq. m. GFA• Completion: Q4 2023
2019 Mainland China Management Presentation 14
Development Properties – Overview
Residential Retail
Office
75%
14%
8%3%
6,151*TOTAL
Others
Include:- Hotels- Hospital- Community Centres- Schools- Other Ancillary Facilities
Residential Retail Office Others
DEVELOPABLE AREA(‘000 sq. m. GFA)
* HKL’s share
2019 Mainland China Management Presentation 15
Development Properties - How Do We Choose Our Cities?
Beijing
ChengduShanghai
Hangzhou
Nanjing
ChongqingWuhan
Share of total GDP*
Share of total Population*
HKL’S 7 CITIES
Sizable population base or population inflows
Low inventory levels
Existing market relationships
Annual residential transaction value of
over RMB100 bn
*National Bureau of Statistics, Local Bureau of Statistics
Yangtze River Delta Area Chengyu Megalopolis
Jingjinji AreaMiddle Yangtze River Valley
2019 Mainland China Management Presentation 16
KEY CHARACTERISTICS
Development Properties – Residential
Mature & Emerging Residential Hubs
Short Payback Period
Established Transport Links
Best-in-class design and build quality
2019 Mainland China Management Presentation 17
Development Properties – Attributable Saleable GFA Completions
-
100
200
300
400
500
600
700
800
900
2016 2017 2018 2019 2020 2021
Chongqing Nanjing Wuhan Chengdu Shanghai Hangzhou* HKL’s share
355
‘000sq. m.
698
492
663 674
799
Forecast
2019 Mainland China Management Presentation 18
Development Properties – Commercial
Danzishi Old Street
Yorkville North Yue City
WE City
Dream Land
HangzhouBayJL CENTRAL
CaohejingProject
Landmark Riverside Park
Central Avenue
LCM
2020 2022 2023 2024201920182016 2017
Note: Timeline above excludes the medium-term lease assets at River One and a community market at Parkville, which are considered immaterial.
2021
2019 Mainland China Management Presentation 19
Development Properties – Assets Held for Medium-Term Lease
-
50
100
150
200
250
300
350
400
450
500
2016 2017 2018 2019 2020 2021 2022 2023 2024Existing NFA* Additional NFA*
‘000sq. m.
* HKL’s share
432
351
254
154154
7464
1414
202019 Mainland China Management Presentation
Update on Projects Secured in 2017 & 2018
2019 Mainland China Management Presentation 21
Chongqing
River One (100%-owned) Harbour Tale (50%-owned)
• Situated in Dazhulin, Liangjiang New Area adjacent to New Bamboo Grove
• Total GFA: 161,000 sq. m.• Residential: 93%; retail: 6%• Sales launch: Q4 2019 • Completion: Q1 2021
• Pure residential project situated in Lijia, Liangjiang New Area
• Total GFA: 114,000 sq. m.• Sales launch: Q4 2019• Completion: Q3 2020
2019 Mainland China Management Presentation 22
Chongqing (continued)
Hillview (50%-owned) Yuelai Project (100%-owned)
• Situated in Lijia, Liangjiang New Area• Total GFA: 61,000 sq. m.• Residential: 98%; retail: 1%• Sales launch: Q4 2019 • Completion: Q3 2021
• Situated in Yuelai, Liangjiang New Area• Total GFA: 125,000 sq. m.• Residential: 94%; retail: 3%• Sales launch: Q4 2019• Completion: Q4 2021
2019 Mainland China Management Presentation 23
Shanghai & Chengdu
Caohejing Project (26.7%-owned) Yixinhu Project (33%-owned)
• Situated in the Caohejing Hi-tech Park, Xuhui District, Shanghai
• Total GFA: 392,000 sq. m.• Office: 51%; residential: 26%; retail: 19% • Sales launch: Q4 2019• Completion: Q3 2022
• Pure residential project situated in Shuangliu District, Chengdu
• Total GFA: 155,000 sq. m.• Sales launch: Q4 2019• Completion: Q3 2021
2019 Mainland China Management Presentation 24
Wuhan & Hangzhou
Dream Land (50%-owned) Hangzhou Bay (30%-owned)
• Situated in Dongxihu District, Wuhan• Total GFA: 493,000 sq. m.• Residential: 56%; retail: 30%; office: 14%• Sales launch: Q4 2018• Completion: Q1 2024
• Situated in Xiaoshan District, Hangzhou• Total GFA: 776,000 sq. m.• Residential: 65%; retail: 18%; hotel &
convention centre: 7%; hospital: 5%• Hospital operator: International Hospitals Group• Sales launch: Q4 2018• Completion: Q4 2024
2019 Mainland China Management Presentation 25
Nanjing
Yue City (33%-owned) River and City (50%-owned)
• Situated in Qinhuai District• Total GFA: 260,000 sq. m.• Residential: 63%, retail: 33%; hotel: 4%• Hotel operator: Mandarin Oriental• Sales launch: Q3 2019• Completion: Q3 2022
• Pure residential project situated in Jiangbei New Area
• Total GFA: 254,000 sq. m.• Sales launch: Q3 2019• Completion: Q2 2021
2019 Mainland China Management Presentation 26
Nanjing (continued)
JL CENTRAL (50%-owned)
• Situated in Xinjiekou CBD• Total GFA: 255,000 sq. m.• Office: 48%; retail: 35%; commercial-lease
residential: 16%• Sales launch: Q4 2020• Completion: Q4 2023
3
Xinjiekou
Subway Line 2
Zhongshan East Road
Subway Line 1 Zhongshan South Road
2 Deji Plaza
4 ZhongyangShopping Mall
3 JL CENTRAL
5 Bank ofChina Tower
1 IST Mall
6 ChaotianPalace
4
5
12
6
272019 Mainland China Management Presentation
Financial Highlights
2019 Mainland China Management Presentation 28
BY GEOGRAPHY*
Hongkong Land’s Average Annual Investment
BY BUSINESS SEGMENT*
China Singapore Rest of AsiaThailand
2012 - 2016
US$0.6B
2017 - 2018
US$3.0B
Development Properties
2012 - 2016
US$0.6B
2017 - 2018
US$3.0B
Investment Properties
* Investment is defined as the Group’s equity contribution and share of project-level debt
2019 Mainland China Management Presentation 29
76%
10%
3%1%
3%
7%
Capital Employed
VALUE BY GEOGRAPHY
US$41,934MTOTAL* US$4,143m
Hong Kong Southeast Asia Macau
Mainland China Investment Properties
Mainland China Development Properties
Singapore
IN MAINLAND CHINA
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2014 2018
$4,143m
$2,856m
US$m
* Represents total equity plus consolidated net debt
2019 Mainland China Management Presentation 30
104%
11%
(15)%
Funding of Mainland China Business
HKL’s Share Capital Reserves Net cash
DEVELOPMENT PROPERTIES
US$3,066MTOTAL
59%
6%
(2)%
37%
HKL’s Share Capital Minority Interest ReservesNet debt
INVESTMENT PROPERTIES
US$1,077MTOTAL
2019 Mainland China Management Presentation 31
Development Properties – Attributable Contracted and Completed Sales
0
200
400
600
800
1,000
1,200
1,400
1,600
2014 2015 2016 2017 2018Contracted Sales Completed Sales
US$m
$635m $621m
$802m
$1,105m
$676m
$1,347m
$1,112m
$1,578m
* The above analysis includes share of Joint Ventures & Associates, inclusive of VAT
$1,207m
$505m
2019 Mainland China Management Presentation 32
Development Properties – Completed Sales Gross Margin in Mainland China
34% 36%
31%
41% 40%
0%
10%
20%
30%
40%
50%
2014 2015 2016 2017 2018
Gross Margin % (before LAT)
Average: 36%
* The above analysis includes share of Joint Ventures & Associates
2019 Mainland China Management Presentation 33
Development Properties – Operating Profit in Mainland China
• The above analysis includes share of Joint Ventures & Associates• The average effective tax rate (inclusive of Land Appreciation Tax) over the past five years is 45%
$166m $170m $170m
$469m$431m
0
100
200
300
400
500
600
2014 2015 2016 2017 2018
US$m
2019 Mainland China Management Presentation 34
VALUE BY PRODUCT TYPE
Development Properties – Assets for Medium-Term Lease on Completion
69%
21%
10%
US$2.3B*TOTAL
Retail Office Others
23%
6%
4%
29%
27%
11%
Hangzhou Chengdu Wuhan
Nanjing Shanghai Chongqing
US$2.3B*TOTAL
* Attributable CAPEX upon completion
VALUE BY GEOGRAPHY
352019 Mainland China Management Presentation
Outlook
2019 Mainland China Management Presentation 36
Outlook for the China Business
Continue to look for attractive opportunities to develop prime investment properties in Tier-1 cities, particularly in Beijing and Shanghai
Solidify WF CENTRAL’s position as a premium lifestyle retail destination
Higher level of completions expected in 2019
Remain committed to delivering best-in-class developments
The Group remains active in seeking residential-led opportunities in its existing markets
Continue to remain disciplined in assessing opportunities
Pace of new investments may slow relative to prior two years
INVESTMENT PROPERTIES DEVELOPMENT PROPERTIES FINANCIAL
372019 Mainland China Management Presentation
Site Visits
2019 Mainland China Management Presentation 38
To Visit
Site Visits – Landmark Riverside
• Old French Naval Barracks• Sales office & Viewing platform• Landmark Riverside Mall• Danzishi Old Street• Feature Units
2019 Mainland China Management Presentation 39
To Visit
Site Visits – Bamboo Grove
• Sales Office• Villas
2019 Mainland China Management Presentation 40
To Visit
Site Visits – Yorkville North
• Sales Office• Townhouses & Garden Apartments• Feature Units• Renmin Primary School• Shopping Mall Construction Site & Show Gallery
412019 Mainland China Management Presentation
Q & A
422019 Mainland China Management Presentation
Appendix
2019 Mainland China Management Presentation 43
Development Properties – Attributable Saleable GFA Completions
HKL’s SHARE (m sq. m.)
CITY 2016(Actual)
2017(Actual)
2018(Actual)
2019(Forecast)
2020(Forecast)
2021(Forecast)
Chongqing 0.32 0.61 0.45 0.58 0.53 0.44
Nanjing - - - - 0.04 0.14
Wuhan - - - - 0.04 0.10
Chengdu 0.04 0.05 0.04 0.07 0.04 0.05
Shanghai - 0.04 - 0.01 - 0.05
Hangzhou - - - - 0.02 0.02
Total 0.36 0.70 0.49 0.66 0.67 0.80
2019 Mainland China Management Presentation 44
Photo Index
Page Project / Building City
1 Landmark Riverside Chongqing
4
Maple Place BeijingCentral Park BeijingYorkville South ChongqingParkville Shanghai
5 LCM mall and office towers, Parkville Shanghai
6 Danzishi Old Street, Landmark Riverside Chongqing
7 Central Park Beijing
8 Yorkville South Chongqing
9 Various as outlined on the page* n/a
12WF CENTRAL Atrium BeijingWF CENTRAL Atrium BeijingMandarin Oriental Wangfujing, Beijing Beijing
13 Rendering of CBD Z3 Site* Beijing
14Yorkville South ChongqingLCM, Parkville ShanghaiICBC Building, Landmark Riverside Chongqing
Page Project / Building City
16 Bamboo Grove Chongqing
18 Rendering of JL Central* Nanjing
20 Rendering of Hangzhou Bay* Hangzhou
21 –26 Various as outlined on the page* n/a
27 Landmark Riverside Park Chongqing
35 Rendering of River and City* Nanjing
37 Wang Mansion, Danzishi Old Street, Landmark Riverside Chongqing
38
Landmark Riverside ChongqingWang Mansion, Danzishi Old Street, Landmark Riverside Chongqing
Danzishi Old Street, Landmark Riverside Chongqing
39Bamboo Grove ChongqingBamboo Grove ChongqingBamboo Grove Chongqing
40Yorkville North ChongqingRendering of Yorkville retail complex* Chongqing
41 Bamboo Grove Chongqing42 Mandarin Oriental Wangfujing, Beijing Beijing#Order of photos listed from left and then the top of each page.
*Renderings are for reference only, subject to further changes.