2018 interim results presentation - aoyuan · 2018-08-21 · interim results presentation aug 2018....

11

2018

Interim Results

PresentationAug 2018

22

Highlights & Outlook1 3

Financial Overview2 7

Business Operations3 14

Strategic Layout4 23

Appendix5 33

Investor Relations6 37

Contents

33

1. Highlights & Outlook

44

• Contracted sales in 1H2018 surged by 143% yoy to approx. RMB40.29bn (attributable: 84%)

• Contracted sales in June 2018 surged by 125% yoy to approx. RMB11.97bn, setting

historical high for single-month sales

• Contracted sales in the first seven months of 2018 maintained a strong growth momentum

and surged by 143% yoy to approx. RMB46.31bn, surpassing 2017 full-year sales of

RMB45.59bn, and achieving 63% of 2018 full-year target of RMB73.00bn

Robust and sustainable contracted

sales growth

• Revenue in 1H2018 increased by 68% yoy to approx. RMB13.67bn

• Gross profit increased by 78% yoy to approx. RMB3.90bn; Gross profit margin was 28.6%

• Net profit increased by 72% yoy to approx. RMB1.47bn; Net profit margin was 10.8%

• Core net profit increased by 67% yoy to RMB1.39bn; Core net profit margin was 10.2%

• Core net profit attributable to shareholders increased by 57% yoy to approx. RMB1.16bn;

Core net profit attributable to shareholders margin was 8.5%

Improving profitability

• In addition to corporate credit rating upgrades from all 3 major international rating agencies,

Fitch, Moody’s and S&P in 2016 and 2017, Aoyuan’s rating outlook has been further

upgraded by Fitch to “Positive” in Aug 2018

• As of 30 Jun 2018, net gearing ratio was 67.5%, which is a reasonable industry-wide level;

Total borrowing cost maintained at 7.3%; Debt structure continued to improve

• Cash collection ratio continued to maintain at 80%+; Total cash amounted to approx.

RMB25.82bn, sufficient to cover short-term debt; Positive net operating cash flow in 1H2018

Healthy financial profile & upgraded

credit ratings

2018 Interim Results Highlights

55

• For 2018YTD, successfully raised adequate funds through diversified channels including

offshore club loans, USD bonds and onshore corporate bonds

• In Jul 2018, successfully tapped US$175mn 6.35% senior notes due Jan 2020; In May and

Jun 2018, successfully issued and tapped a total of US$425mn 7.5% senior notes due May

2021; Redeemed offshore senior notes due May 2018 on time

• In Mar, Apr and Jul 2018, completed three tranches of 3-year club loans totalling HK$3.2bn

with 8 offshore commercial banks, at an interest rate of 3MHIBOR + 3.95%

• In Jul 2018, successfully issued RMB2.4bn onshore private bond placement and redeemed

onshore corporate bond due Jul 2018 on time

Raised adequate funds via onshore & offshore

diversified channels

• Acquired a total of 31 new projects with newly added GFA of approx. 7.27mn sqm (89%

through M&A) and newly added saleable resources of approx. RMB81.2bn. The average

land cost was approx. RMB2,065 per sqm, maintaining reasonable land cost

• As of 30 Jun 2018, total GFA of its land bank was approx. 30.01mn sqm (attributable: 81%)

with saleable resources of approx. RMB327.5bn, sufficient for development needs in the

coming three to four years

• Adhered to the balanced layout of cities. In terms of land costs, Tier 1&2 + surrounding cities

and international cities accounted for 78% of land bank, while Tier 3&4 accounted for 22%

Strategic land bank

replenishment

• 15 redevelopment projects are proactively progressed with planned total GFA of approx.

8.0mn sqm and estimated salable resources of RMB129.0bn

• In 2018-2019, estimated saleable GFA expected to be included in land bank is approx. 1.8mn

sqm, located in Guangzhou, Zhuhai, Dongguan and Hong Kong etc.

• In Aug 2018, Aoyuan officially became the developer of Zhuhai Cuiwei Village redevelopment

project. With more than 700 years of history, Cuiwei Village is the largest village inside the

city. Planned total GFA of the project is approx. 1.1mn sqm

• In Apr 2018, Aoyuan and Henderson signed a cooperation agreement for Nitrogen Fertilizer

Plant project in Panyu, Guangzhou, teaming up to create a signature redevelopment project

Land bank supports from redevelopment

projects

2018 Interim Results Highlights (cont.)

66

Collection (收款):

• Increase sell-through rate

• Strengthen the cash collection

• Accelerate collection of

accounts receivable

2H2018 Outlook

Amid increasing industry concentration and uncertainties in the macro environment, Aoyuan responds flexibly to

market changes and adheres to the policy of “rapid development, sales and cash collection”, accomplishing high

turnover and economies of scale, and continuing to expand diversified onshore and offshore financing channels, and

ensuring capital security and liquidity by implementing prudent investment and financial management

Management (管理)：•Strengthen control over milestones;

•Optimize project co-investment, equity options and other mechanisms to retain talents and stimulate team cohesion;

•One core business orientated, with vertical development and leverage on business synergies

Financing (融资):

• Diversify onshore and offshore financing channels and grasp the market window;

• Prefer projects supported by bank financing

• Improve the efficiency of capital employed

Investment (投资):

•Disciplined land bank replenishment;

•Diversify cooperation models, and mainly based on M&A;

•Focus on project payoff and projects available for sale within the year

投融

收管

77

2. Financial Overview

88

(6 months ended 30 Jun)

(RMB '000) 2018 2017

Turnover 13,666,552 8,154,290

Gross profit 3,902,123 2,191,425

Gross profit margin 28.6% 26.9%

Net profit (1) 1,474,809 858,481

Net profit margin 10.8% 10.5%

Core net profit (2) 1,392,268 832,102

Core net profit margin 10.2% 10.2%

Core net profit attributable to

shareholders1,160,100 740,778

Core net profit attributable to

shareholders margin8.5% 9.1%

Basic earnings per share

(RMB cents)45.37 28.09

Income statement highlights

Note:

(1) In 1H2018, profit attributable to shareholders accounted for 83%, and profit attributable to minority shareholders accounted for 17%

(2) Core net profit excludes non-recurring gains and losses such as fair value gain on investment properties, net exchange gain/loss and

gain/loss on change in fair value of derivative financial instruments, loss on redemption of senior notes and their related tax expenses

(Year ended 31 Dec)

2017

19,115,255

5,111,477

26.7%

1,951,952

10.2%

1,889,067

9.9%

1,613,280

8.4%

61.35

99

907 1,007

1,952

858

1,475

9.5%8.5%

10.2% 10.5% 10.8%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

0

500

1000

1500

2000

2500

3000

3500

2015 2016 2017 1H2017 1H2018

Total revenue

9,57211,827

19,115

8,154

13,667

0

5,000

10,000

15,000

20,000

25,000

2015 2016 2017 1H2017 1H2018

Gross profit & gross profit margin

Net profit & net profit margin

2,6463,277

5,111

2,191

3,902

27.6% 27.7% 26.7% 26.9% 28.6%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

0

3,000

6,000

9,000

2015 2016 2017 1H2017 1H2018

951

1,223

1,889

832

1,392

9.9% 10.3% 9.9% 10.2% 10.2%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

0

500

1000

1500

2000

2500

3000

2015 2016 2017 1H2017 1H2018

Core net profit & core net profit margin

Income statement highlights (cont.)

(RMB mn) (RMB mn)

(RMB mn) (RMB mn)

1010

(RMB '000) At 30 Jun 2018 (2) At 31 Dec 2017 At 30 Jun 2017

Total cash (1) 25,823,281 26,540,063 14,813,986

Total assets 153,258,405 125,805,861 84,757,887

Total liabilities 124,831,959 98,679,571 66,476,518

Net debt (3) 19,191,129 13,829,698 11,511,845

Total equity 28,426,446 27,126,290 18,281,369

Note:

(1) Total cash = Cash and cash equivalents + Restricted bank deposits. Unrestricted cash accounted for 91% of total cash

(2) As of 30 Jun 2018, credit facilities amounted to approx. RMB58.68bn, of which approx. RMB17.80bn were unutilized

(3) Net debt = Total debt - Total cash

(Total debt includes interest-bearing debts such as onshore & offshore bank and other borrowings, onshore corporate bonds and

offshore senior notes etc., please refer to page 12 for more details)

Balance sheet highlights

1111

Net debt (1) / Total equity Net debt / EBITDA (2)

Total debt (3) / Total capitalisation (4) Net debt / Total capitalisation

26.1%

22.5%20.5%

25.8% 26.1%

0%

5%

10%

15%

20%

25%

30%

2015 2016 2017 1H2017 1H2018

Key financial ratios

62.7%

50.7% 51.0%

63.0%67.5%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2015 2016 2017 1H2017 1H2018

3.6x 3.3x

3.5x

4.2x

3.4x

0

1

2

3

4

5

2015 2016 2017 1H2017 1H2018

58.5% 55.7%59.8% 59.0% 61.3%

0%

20%

40%

60%

80%

2015 2016 2017 1H2017 1H2018

Note:

(1) Net debt = Total debt - Total cash

(2) EBITDA = Profit before tax + Finance costs + Depreciation + Amortization

(EBITDA for 30 Jun 2018 is based on the LTM EBITDA up to 30 Jun 2018)

(3) Total debt includes interest-bearing debts such as onshore & offshore bank and other borrowings, onshore corporate bonds and

offshore senior notes etc. (please refer to page 12 for more details)

(4) Total capitalization = Total equity + Total debt

1212

Onshore bank borrowings

46%

Trust loans6%

Onshore corporate

bonds13%

Offshore senior notes

17%

Offshore bank

borrowings18%

1H2018 Debt breakdown by type

Declining borrowing costs

11.4%

10.2%

9.5%

8.1%

7.2% 7.3%

6%

8%

10%

12%

2013 2014 2015 2016 2017 1H2018

• Onshore: 65%

• Offshore: 35%

Note:

(1) As of 30 Jun 2018, total debt amounted to approx. RMB45.01bn. Total cash

amounted to approx. RMB25.82bn, sufficient to cover short-term borrowings of

approx. RMB24.97bn

(2) In Jul and Aug 2018, short-term borrowings of approx. RMB3.63bn were repaid,

alleviating short-term debt stress

Value corporate credibility and redeem onshore and offshore bonds on time

✓ Successfully redeemed RMB2.4bn onshore corporate bond due Jul 2018

✓ Successfully redeemed US$250m offshore senior notes due May 2018

Diversified onshore and offshore financing channels

✓ In Jul 2018, successfully tapped US$175mn 6.35% senior notes due

Jan 2020, with 4.3x oversubscription

✓ In Jul 2018, successfully issued RMB2.4bn three-year onshore private

bond placement with blended borrowing cost of approx. 8.25%

✓ In Mar, Apr and Jul 2018, successfully secured approx. HKD3.2bn

three-year club loan in three tranches with an interest rate of

3MHIBOR+3.95% per annum from Nanyang Commercial Bank, Hang

Seng Bank, Chiyu Bank, China Minsheng Bank Corporation Hong Kong

Branch, ICBC Asia, Wing Lung Bank, Industrial Bank Hong Kong

Branch and Shanghai Pudong Development Bank Hong Kong Branch

✓ In May and Jun 2018, successfully issued and tapped a total of

US$425mn 7.5% senior notes due May 2021

✓ As one of the few PRC developers with access to local bank financing

channels in offshore markets, Sydney projects were supported by four

major Australian banks including Commonwealth Bank of Australia,

Westpac Bank and ANZ Bank; Canadian projects were supported by

five major Canadian banks including Bank of Montreal and HSBC; Hong

Kong project was supported by local banks including Hang Seng Bank

and Nanyang Commercial Bank

Further upgraded rating outlook

✓ Following corporate credit rating upgrades from Fitch (BB-), S&P (B1)

and Moody’s (B+) since 2016 and 2017, Fitch further upgraded credit

rating outlook to “Positive” in Aug 2018

✓ Domestic credit rating was upgraded to “AA+” by United Credit Ratings in

Jun 2017

Debt profile

1313

26.54 25.82

31.19

9.79 2.65 -12.60

-13.46

-2.83 -1.21 -1.45 -1.53 -5.80

-1.99 -3.47

0

10

20

30

40

50

60

70

80

Openin

g c

ash b

ala

nce

(as o

f 1 J

an)

Opera

ting c

ash flo

w

New

bank b

orro

win

gs

Pro

ceeds fro

m s

enio

r note

s/

dom

estic

bonds is

suance

Land a

cquis

ition

Constru

ctio

n e

xpenses

Tax e

xpenses

SG

&A

Inte

rest e

xpenses

Paym

ent to

min

ority

share

hold

ers

Debt re

paym

ent

Redem

ptio

n o

f senio

r note

s

Oth

er c

ash o

utflo

w

Endin

g c

ash b

ala

nce

(as o

f 30 J

un)

32.23

40.29

0

5

10

15

20

25

30

35

40

45

50

Cash collected Contracted sales

Note (1) : As of 30 Jun 2018, the outstanding land premium was approx. RMB5.30bn which is expected to be fully paid within a year

1H2018 Cash flow 1H2018 Cash collection

(RMB bn) (RMB bn)

80%

Cash flow & CAPEX

Aoyuan adheres to a principle of prudent financial management by recycling capital

through rapid presales, and achieved positive operating cash inflow

(1)

1414

3. Business Operations

1515

5,251 10,038 12,223 15,171

25,602

45,590

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

2012 2013 2014 2015 2016 2017 2018 Target

1,1

32

636

880

666

929 1,8

26

1,0

21

1,4

03

1,1

40

1,5

12

1,8

90

2,1

40

1,5

03

707

1,5

46

1,7

32

2,0

73

2,9

67

1,2

25

1,4

33

3,6

31

2,5

05

2,8

86

3,3

93

1,6

88

2,1

04

2,2

66

2,5

11

2,6

30

5,3

20

2,5

31

2,6

55 4,0

81

4,2

80

4,3

22

11,1

96

4,0

50

4,0

55 5,5

05 7,2

09

7,5

01

6,0

21

0

2,000

4,000

6,000

8,000

10,000

12,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2015 2016 2017 2018

Yearly contracted sales

(RMB mn)

(RMB mn)

7M2018 has

surpassed

FY2017

contracted sales

Robust and sustainable contracted sales growth

Monthly contracted sales

First half of the year Second half of the year

11,9

71

73,000 7M2018

completed

63% of

full-year target

1616

Contracted sales and recognized sales

1,563

3,938

1,114

1,646

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

1H2017 1H2018

Contracted GFA sold Recognized GFA sold

16,520

40,290

7,675

12,950

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

1H2017 1H2018

Contracted sales Recognized sales

10,571 10,231

6,893

7,868

0

2,000

4,000

6,000

8,000

10,000

12,000

1H2017 1H2018

Contracted ASP Recognized ASP

Contracted sales and

recognized sales

(Value)(1)(2)(3)


recognized sales

(GFA)


recognized sales

(ASP)

(000's sqm) (RMB mn) (RMB per sqm)

Note:

(1) Attributable contracted sales accounted for 84% of contracted sales in 1H2018, staying at high industry level

(2) Tier 1&2 + surrounding cities and international cities contributed 75% of contracted sales in 1H2018, while Tier 3&4 contributed 25%

(3) As of 30 Jun, 2018, contracted sales that were yet to be recognized as revenue amounted to approx. RMB77.6bn, which will be

gradually recognized in the coming 1-2 years

1717

1H2017 contracted sales: RMB16.52bn 1H2018 contracted sales: RMB40.29bn

By region By region

1H2017 contracted sales: RMB16.52bn

By product

1H2018 contracted sales: RMB40.29bn

By product

Contracted sales breakdown

South China72%

Core region of Central & Western

China16%

East China6%

Bohai Rim3%

Offshore3%

South China54%

Core region of Central &

Western China19%

East China22%

Bohai Rim3%

Offshore2%

Residential properties

68%

Commercial properties

32%


77%


23%

1818

Recognized sales breakdown

1H2017 recognized sales: RMB7.68bn 1H2018 recognized sales: RMB12.95bn

1H2017 recognized sales: RMB7.68bn 1H2018 recognized sales: RMB12.95bn

By region By region

By product By product


73%


27%

South China50%Core region of

Central & Western

China31%

East China14%

Bohai Rim5%

South China77%


Western China15%

East China7%

Bohai Rim1%


75%


25%

1919

Aoyuan maintains flexible CAPEX management and sound cash flows

via managing new starts GFA and completed GFA to adapt to market changes

(000's sqm)

New starts GFA and completed GFA

3,060

6,650

5,233

2,212

3,605

2,038

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2016 2017 1H2018

New starts GFA Completed GFA

Huizhou Aoyuan Yushan Lake

Zhuhai Aoyuan Seaview Mountain

2020

Asset-light operating model of commercial development

Successful Model: Guangzhou Panyu Aoyuan Plaza

• Total GFA: approx. 250,000 sqm (Commercial: 100%)

• Development model: Shopping street/ Apartments(sold) + Shopping mall (owned)

• Guangzhou Panyu Aoyuan Plaza shopping mall was opened in Dec 2012. Occupancy rate is 98%

Successful Replication: Chongqing Aoyuan Panlong Yihao• Total GFA: approx. 460,000 sqm (Residential: 70%, Commercial: 30%)

• Development model: Residential/ Shopping street/ Offices/ Commercial apartments (sold) + Shopping mall (owned)

• Chongqing Panlong Aoyuan Plaza was opened in Dec 2017. Occupancy rate is 100%

Aoyuan maintains its commercial development strategy of “primarily saleable properties and supplemented by investment properties” to diversify income streams and add values to residential properties

• Total GFA: approx. 270,000 sqm (Residential: 29%, Commercial: 71%)

• Development model: Residential/ Shopping street/ Offices (sold) + Shopping mall (owned)

• Zhuhai Aoyuan Plaza shopping mall was opened in Jul 2018. Occupancy rate is 100%

Successful Model: Zhuhai Aoyuan Plaza Successful Model: Guangzhou Luogang Aoyuan Plaza

• Total GFA: approx. 300,000 sqm (Residential: 25%, Commercial: 75%)

• Development model: Residential/ Apartments/ Shopping street (sold) + Shopping mall (owned)

• Guangzhou Luogang Aoyuan Plaza shopping mall is expected to open in Dec 2018

2121

Asset-light operating model of commercial development (cont.)

Project Location StatusProduct

type(1) GFA (sqm)Interest

(%)

1Guangzhou Panyu

Aoyuan Plaza

Panyu,

GuangzhouLeased C, S 80,500 54%

2 Guangzhou AoyuanPanyu,

GuangzhouLeased C, S 8,600 100%

3Shenyang Aoyuan

The Metropolis

Shenyang,

LiaoningLeased H 4,150 100%

4Guangzhou Aoyuan

City Plaza

Panyu,

GuangzhouLeased C, CH 6,610 100%

5Chongqing Panlong

Aoyuan PlazaChongqing Leased C, S 53,700 60%

6 Wuhua Aoyuan PlazaMeizhou,

GuangdongLeased C, S 25,400 100%

7 Jiaoling Aoyuan PlazaMeizhou,


8Chongqing Chayuan

Aoyuan PlazaChongqing Leased C 52,300 51%

9 Zhuhai Aoyuan PlazaZhuhai,


10Guangzhou Luogang

Aoyuan Plaza

Huangpu,

GuangzhouLeasing C 34,400 60%

11Guangzhou Aoyuan

Kangwei Plaza

Zengcheng,

GuangzhouLeasing C, S 60,000 51%

12Chongqing Aoyuan

The MetropolisChongqing Leasing C 19,250 100%

13Shenyang Aoyuan

Convention Plaza

Shenyang,

LiaoningLeasing C, S 114,200 100%

14 Liuyang Aoyuan PlazaChangsha,

HunanLeasing C, S 25,000 100%

15 Bengbu Aoyuan Ginza Bengbu, Anhui Leasing C, S 35,500 100%

16Chengdu Cheunghua

Aoyuan Plaza

Chengdu,

SichuanLeasing C, S 65,000 70%

Note (1): C = Commercial; S = Retail shop; CH = Club house; H = Hotel

Aoyuan maintains its commercial development strategy of “primarily saleable properties and supplemented by investment properties” to diversify income streams and add values to residential properties

Major investment properties Aoyuan’s strategic tenants at a glance

2222

Remarkable development in offshore markets through localization strategies

Local bank financing

Local buyers

Local partners

Local management

team

Local consultants

Localization

Strategy

Toronto North York Newtonbrook Project

Phase 1 of presales was well -received in Jun 2018

One30 Hyde Park Sydney

To be delivered in 1Q2019

(Aoyuan’s 1st offshore project)

Maison 188 Maroubra Sydney


(Aoyuan’s 1st independently

developed offshore project)

Mirabell Turramurra Sydney


Through localization strategies, Aoyuan has established itself as a genuine local developer

It helps to facilitate source of revenue, diversify asset portfolio and operational risks when developing offshore projects

Aoyuan has achieved remarkable performance and established internationalized brand recognition

2323

4. Strategic Layout

2424

15,000 14,638

4,124

2,976 2,941 2,595 2,269

2,147 2,110

2,065 2,042

1,914 1,531 1,207 868 600 532 480 364 338

0

5,000

10,000

15,000

20,000

Beijin

g

Shenzhen

Hubei

Shandong

Guangzhou

Sic

huan

Zhejia

ng

Jia

ngsu

Henan

Chongqin

g

Fujia

n

Hunan

Anhui

Guangxi

Yunnan

Guiz

hou

Shaanxi

Jia

ngxi

Lia

onin

g

Guangdong

(excl. G

uangzhou &

S

henzhen)

RegionProvince/

City

Contribution

(by total

GFA)

Total GFA

(‘000 sqm)

Expected

Saleable

Resources

(RMB bn)

South China

Greater Bay Area 7,374 104.3

Guangdong (excl. GBA) 3,694 24.0

Guangxi (Nanning, Yulin, etc.) 4,349 30.8

Subtotal 51% 15,417 159.1

Core region

of Central &

Western

China

Chongqing 1,322 9.8

Sichuan (Chengdu, etc.) 1,352 14.9

Hunan (Changsha, Zhuzhou, etc) 2,444 17.3

Hubei (Jingzhou) 333 3.6

Shaanxi (Xi’an) 385 4.0

Henan (Zhengzhou) 240 3.2

Jiangxi (Ganzhou) 457 3.0

Guizhou 302 1.2

Yunnan (Kunming) 268 2.8

Subtotal 24% 7,103 59.8

East China

Zhejiang (Ningbo, Jiaxing) 1,119 13.5

Jiangsu (Nanjing, Yangzhou, etc.) 1,746 23.6

Anhui (Bengbu,etc.) 947 12.8

Fujian (Fuzhou, Quanzhou, etc.) 884 9.8

Subtotal 16% 4,696 59.7

Bohai Rim

Liaoning (Shenyang) 1,386 9.0

Beijing 176 4.8

Shandong (Qingdao, etc.) 604 9.1

Subtotal 7% 2,166 22.9

Offshore

Australia (Sydney) 328 9.8

Canada (Toronto, Vancouver) 290 13.1

Macao 8 1.0

Hong Kong 5 2.1

Subtotal 2% 631 26.0

Grand total 100% 30,013 327.5

Average land cost:

RMB2,036 per sqm

Average land cost by region (onshore)

Sufficient and quality land bank

Guangxi Guangdong

JiangxiChongqing

Jiangsu

Hunan

Liaoning

ZhejiangSichuan

Beijing

Hubei

Fujian

Anhui

Based in Guangdong with a main focus on Greater Bay Area, Aoyuan has a strategic layout in

South China, core region of Central & Western China, East China and Bohai Rim

As of 30 Jun 2018, Aoyuan had 164 projects across 60 onshore and offshore cities, with a total GFA of

approx. 30.01mn sqm (attributable: 81%) and total saleable resources of approx. RMB327.5bn,

which is sufficient for development needs in the coming three to four years

Shandong

Shaanxi

Guizhou

Hong Kong

Henan

Yunnan

Macao

2525

Sufficient and quality land bank (cont.)

Land bank breakdown by region

(by land cost)

Land bank breakdown by region

(by saleable resources)

Land bank breakdown by type

(by GFA)

Land bank breakdown by status

(by GFA)

South China52%


Western China19%

East China14%

Bohai Rim8%

Offshore7%

South China49%


Western China18%

East China18%

Bohai Rim7%

Offshore8%

Held for future

development50%

Under development

41%

Completed and held for

sale6%

Completed and sold, but yet to be

delivered/ Auxiliary facilities

3%


75%


20%

Investment properties

3%

Auxilliary facilities

2%

2626

Aoyuan has 15 redevelopment projects at different phases with planned total GFA of approx. 8.0mn sqm and estimated

saleable resources of approx. RMB129.0bn. Redevelopment projects can generate considerable profits

through primary and/or secondary development, and disposal of interest

Project City Type StatusSite area

(‘000 sqm)

Planned total

GFA

(‘000 sqm)

Estimated

saleable GFA

(‘000 sqm)

Estimated

saleable

resources

(RMB mn)

1Guangzhou Panyu Nitrogen

Fertilizer PlantGuangzhou, Guangdong Old factory Redevelopment planning application 150 300 300 15,000

2 Zhuhai Cuiwei Village Zhuhai, Guangdong Old villageApproved as project developer by

government310 1,100 690 24,000

3 Zhuhai Shuiwengkeng Village Zhuhai, Guangdong Old village Redevelopment planning application 80 230 130 5,300

4 Zhuhai Gongbei Lian’an Village Zhuhai, Guangdong Old villageGovernment approval;

Compensation agreement90 380 200 9,000

5Zhuhai Gongbei Guanzha & Gaosha

VillageZhuhai, Guangdong Old village

Government approval;

Compensation agreement120 570 260 11,700

6 Zhuhai Xiaxu Village Zhuhai, Guangdong Old village Redevelopment planning application 140 450 300 10,500

7 Zhuhai Qianshan Anlian Road Zhuhai, Guangdong Old factory Redevelopment planning application 10 80 80 2,300

8 Zhuhai Yafang Building Zhuhai, Guangdong Old factory Redevelopment planning application 10 40 40 1,500

9 Zhuhai Pingsha Aoyuan Plaza Zhuhai, Guangdong Old factory Redevelopment planning application 150 610 460 5,000

10 Dongguan Pailouji Village Dongguan, Guangdong Old village Decision on early-stage partner 70 250 160 3,800

11 Dongguan Shimei Village Dongguan, Guangdong Old village Redevelopment planning application 180 500 340 7,500

12 Nanning Nantang project Nanning, Guangxi Old villageCompleted first phase of

acquisition and demolition280 720 720 8,700

13 Nanning Chendong Village Nanning, Guangxi Old village Redevelopment planning application 1,050 2,370 1,570 20,400

14 Hebei Bazhou Bazhou, Hebei Old village Redevelopment planning application 160 400 300 2,600

15 Hong Kong Robinson Road Mid-levels, Hong Kong Old building Acquired more than half of the units 1 5 5 1,700

Total 2,800 8,000 5,555 129,000

Major redevelopment projects

Cooperation agreementConfirm

redevelopment planRedevelopment planning application

State-owned land ownership certificate

Villagers’ general assembly to decide on redevelopment

Villagers’ general assembly to decide on early-stage

developer

Redevelopment planning application

Government approval;Compensation agreement

State-owned land ownership certificate

1-3 months

Case study 1: Redevelopment and transformation timetable for old factories in Zhuhai

Case study 2: Redevelopment timetable for old villages in Zhuhai

1-3 months 1-3 months 1-3 months

1-3 months 1-3 months 3-6 months 1-3 months6-9 months

2727

Case study 3: Zhuhai Aoyuan Plaza

• Type: Old factory redevelopment

• Total GFA: 271,000 sqm

• Avg. land cost: RMB2,732 per sqm

• Accumulated ASP: RMB20,132 per sqm

• Accumulated contracted sales: approx. RMB4.23bn

• Redevelopment timetable:

✓ Dec 2014: Redevelopment planning applicationsubmitted

✓ Mar 2015: Redevelopment planning application toZhuhai City Planning Commission

✓ Jun 2015: Land transfer contract signed

✓ Jul 2015: Obtained land ownership certificate

✓ Oct 2015: Launched for presales

Case study 4: Guangzhou Luogang Aoyuan Plaza

• Type: Old village + old factory redevelopment

• Total GFA: 334,000 sqm

• Avg. land cost: RMB4,858 per sqm

• Accumulated ASP: RMB16,493 per sqm

• Accumulated contracted sales: approx. RMB4.31bn

• Redevelopment timetable:

✓ Jun 2012: Signed cooperation agreement withvillage

✓ Dec 2012: Redevelopment plan approved

✓ Jun 2013: Phase 1 (old village for open auction)

✓ May 2014: Phase 2 (old factory for open auction)

✓ Jun 2014: Launched for presales

Zhuhai Aoyuan Plaza

(Aoyuan Zhuhai redevelopment project)

Guangzhou Luogang Aoyuan Plaza

(Aoyuan Guangzhou redevelopment project)

Case studies of successful redevelopment projects

2828

ProjectSite area

(‘000 sqm)

Planned total

GFA

(‘000 sqm)

Estimated

saleable GFA

(‘000 sqm)

Estimated

saleable

resources

(RMB mn)

ASP of

projects nearby

(RMB/sqm)

1Guangzhou Panyu Nitrogen

Fertilizer Plant150 300 300 15,000 62,000 - 65,000

2 Zhuhai Cuiwei Village 310 1,100 700 24,000 32,000 - 35,000

3Zhuhai Gongbei

Lian’an Village90 380 200 9,000 42,000 - 45,000

4Zhuhai Gongbei Guanzha &

Gaosha Village120 570 260 11,700 42,000 - 45,000

5 Dongguan Shimei Village 180 500 340 7,800 20,000 - 23,000

6 Hong Kong Robinson Road 1 5 5 2,200 400,000 - 450,000

Total 851 2,855 1,805 69,700 -

Redevelopment projects to be gradually included in land bank in 2018-2019

2929

• Type: Old village redevelopment

• Location: Located in Xiangzhou District of Zhuhai, surrounded by several main roads, close to Mingzhu Station of inter-city

railway, 5min ride from Zhuhai Aoyuan Plaza

• Estimated saleable GFA and resources: approx.700,000 sqm and RMB24bn

• Status: In Aug 2018, Aoyuan officially became the developer of Zhuhai Cuiwei Village redevelopment project. With more

than 700 years of history, Cuiwei Village is the largest village inside the city. Planned total GFA of the project is approx.

1.1mn sqm

• Redevelopment method: Applying the policy of “overall demolition and relocation + partial conservation”, it is planned to

construct a high-end modern living environment including primary schools, kindergartens, a public transportation terminal,

activity centers and other auxiliary facilities. Place emphasis on retaining the heritage of Cuiwei Village, preserving and

revitalizing major buildings in the village

Zhuhai Cuiwei Village Redevelopment Project

Redevelopment projects to be gradually included in land bank in 2018-2019 (cont.)

3030

• Type: Old village redevelopment

• Location: Located in Gongbei district of Zhuhai, close to

the Gongbei Port, Zhuhai Station of the Guangzhou-

Zhuhai Railway, and Hong Kong-Zhuhai-Macao Bridge

• Estimated saleable GFA and resources: approx.

460,000 sqm and RMB20.7bn

• Status: Lian’an, Guanzha and Gaosha Village are the

major redevelopment projects of Zhuhai municipal, which

are under the process of “government approval;

compensation agreement”

Guangzhou Panyu Nitrogen Fertilizer Plant Zhuhai Gongbei Lian’an, Guanzha, Gaosha Village

Redevelopment projects to be gradually included in land bank in 2018-2019 (cont.)

Pearl River

• Type: Old factory redevelopment

• Location: Located in the north of Xinzao Town, Panyu

District of Guangzhou, next to Xinhua Expressway, close

to Guangzhou Higher Education Mega Center

• Estimated saleable GFA and resources: approx.

300,000 sqm and RMB15bn

• Status: In Apr 2018, Aoyuan and Henderson signed a

cooperation agreement for Nitrogen Fertilizer Plant

project in Panyu, Guangzhou, teaming up to create a

signature redevelopment project. The “redevelopment

planning application” has been approved

3131

In 1H2018, Aoyuan acquired 31 projects with newly added GFA of approx. 7.27mn sqm (M&A: 89%) and newly added saleable

resources of approx. RMB81.2bn, sufficient to support higher sales targets in the coming two years at reasonable land cost

Strategic land bank replenishment

Region Province/ City

Avg. land

cost

(RMB/sqm)

Total GFA

(‘000 sqm)

Attributable

GFA

(‘000 sqm)

Attributable

land cost

(RMB mn)

Interest (%)

South

China

Greater Bay Area 4,409 904 819 3,335 91%

Guangdong

(excl. GBA)2,586 538 471 1,200 88%

Guangxi 1,018 1,631 1,118 1,319 69%

Subtotal 2,290 3,073 2,408 5,854 78%

Core

region of

Central &

Western

China

Chongqing 2,131 397 397 847 100%

Sichuan 1,196 558 479 527 86%

Hunan 2,356 526 518 1,214 98%

Shaanxi 604 97 50 30 51%

Henan 2,429 240 204 495 85%

Jiangxi 399 272 272 109 100%

Yunnan 1,867 268 137 255 51%

Subtotal 1,697 2,358 2,057 3,477 87%

East

China

Zhejiang 1,194 569 569 680 100%

Jiangsu 1,728 415 415 717 100%

Anhui 1,064 446 446 475 100%

Fujian 2,809 300 234 550 78%

Subtotal 1,569 1,730 1,664 2,422 96%

Bohai Rim Shandong 4,411 103 82 364 80%

Subtotal 4,411 103 82 364 80%

Offshore Hong Kong 161,500 5 5 808 100%

Subtotal 161,500 5 5 808 100%

Grand total 2,065 7,269 6,216 12,925 86%

Regional distribution (by GFA)

Regional distribution (by land cost)

South China45%


Western China27%

East China19%

Bohai Rim3%

Offshore6%

South China42%


Western China33%

East China24%

Bohai Rim1%

3232

High-quality projects

successfully acquired since IPO

No.

Avg. land

cost

(RMB/sqm)

Total GFA

(sqm)

Total cost

(RMB mn)

2008 2 369 341,483 126

2009 4 876 3,583,868 3,138

2011 7 2,933 1,268,457 3,721

2012 8 2,178 1,874,914 4,084

2013 8 2,245 2,232,579 5,013

2014 8 1,715 2,657,445 4,557

2015 13 2,312 2,491,800 5,761

2016 17 3,170 3,138,700 9,950

2017 58 2,446 12,861,278 31,458

1H2018 31 2,065 7,270,742 15,017

Total 156 2,195 37,721,266 82,825

Strategic land bank replenishment (cont.)

Breakdown of land bank acquired since IPO

(by land cost)

South China52%


Western China21%

East China12%

Bohai Rim9%

Offshore6%

• Adhere to balanced layout, Aoyuan strategically enters into Tier

1 cities, operates Tier 2 cities across cycles, and cherry-pick

Tier 3&4 cities. As of 30 Jun 2018, Tier 1&2 + surrounding cities

and international cities accounted for 78% of land bank, while

Tier 3&4 accounted for 22% in terms of land costs

• Continue to focus on South China and enhance layout in

Greater Bay Area, to accomplish full coverage in “9+2” cities

• Emphasize on M&A, continue to follow public land auction

market, pay attention to the integration of industry and city,

redevelopment and special land acquisition methods such as

cooperation between village and corporations etc. Land bank

through M&A and public land market accounted for 65% and

35%, respectively since IPO

3333

5. Appendix

3434

✓ In Jun 2018, Aoyuan repurchased approx. 3.69mn shares at an average price of approx. HK$5.29 per share, with atotal consideration of HK$19.51mn (approx. 0.14% of the entire issued share capital of Aoyuan)

✓ In Jan-Apr 2018, Chairman Guo Zi Wen acquired 5mn shares at an average price of approx. HK$6.70 per share, with atotal consideration of HK$33.52mn, and his shareholding increased to approx. 54.1%

✓ In Mar 2017, Chairman Guo Zi Wen acquired approx. 53.43mn shares at an average price of approx. HK$2.40 pershare, with a total consideration of HK$128mn, and his shareholding increased to approx. 54%

✓ In Nov 2016, Aoyuan repurchased approx. 112mn shares at an average price of approx. HK$1.68 per share, with atotal consideration of HK$188mn (approx. 4% of the entire issued share capital of Aoyuan)

✓ In Aug 2015, Chairman Guo Zi Wen acquired approx. 55.12mn shares at an average price of approx. HK$1.65 pershare, with a total consideration of HK$91.41mn, and his shareholding increased to approx. 50%

✓ In Jul 2014, Chairman Guo Zi Wen acquired approx. 56.23mn shares at an average price of approx. HK$1.55 pershare, with a total consideration of HK$86.97mn, and his shareholding increased to approx. 48%.

While maintaining a stable dividend policy, Chairman of Aoyuan has demonstrated strong confidence in

Aoyuan’s long term development and prospects through rounds of share purchases and buybacks

Shareholding structure and dividend policy

Guo Zi Wen/Guo Zi Ning*Deemed interests

Approx. 54.1%

Public

Approx. 45.9%

(HK cents per share)(As of 17 Aug 2018)

10.1 11.0 10.5 11.0

31.02.2

6.0

30% 30% 36%46% 41%

0

10

20

30

40

2013 2014 2015 2016 2017

Ordinary dividend Special dividend Payout ratio

17.0

10.1 11.012.7

31.0

(1)

Note (1): Payout ratio = Total dividend / Profit attributable to shareholders

3535

Aoyuan: Breakthrough to Success, Top30 PRC developers

Pioneer

(开创)

Founded in 1996, Aoyuan first introduced the "Sports + Property“ development

concept with its branding philosophy of “Building a Healthy Lifestyle”. As a pioneer in

composite real estate development in China, Aoyuan has successfully developed

composite real estate projects with themes of education, regimen and healthcare,

and commercial, etc.. Aoyuan was listed on the Main Board of SEHK in 2007

Aoyuan received approx. HKD3.2bn in cash and recorded special gains of HKD1.1bn

by successfully exiting 8 Chang’an Ave Beijing project in 2012. Aoyuan was ready to

unleash its potential, and persist with further breakthroughs. In the same year,

Aoyuan successfully issued its first USD senior notes in the international capital

markets. In 2013, contracted sales exceeded RMB10bn and more outstanding

professional managers in the industry were introduced to join Aoyuan

CAGR from 2012 to 2017 was 54%. In 1H2018, Aoyuan achieved contracted sales of

RMB40.3bn with a growth rate of 143% yoy. Monthly contracted sales in Jun 2018

amounted to RMB12.0bn, setting a historical high for single-month sales. 2018 full-

year contracted sales target is RMB73.0bn

Following the corporate credit rating upgrades by 3 major international rating

agencies, namely Fitch, Moody's and Standard & Poor's in 2016 and 2017, Aoyuan’s

rating outlook has been upgraded by Fitch; Domestic credit ratings was also

upgraded by United Credit Ratings. With financing cost optimization and soaring

share price, following the inclusion in the Shenzhen-Hong Kong Stock Connect,

Aoyuan’s shares have been actively traded and is regarded as one of the best

performing PRC property developer, reaffirming its outstanding track records and

financing capabilities in capital markets

Breakthrough

(破茧)

Take-off

(起飞)

Upgrade

(跃飞)

3636

Board of Directors

4 Executive Directors and 3 Independent Non-executive Directors

Audit Committee, Remuneration Committee, and Nomination Committee

Senior Management

Financial

and Fund

Management

Investment

and Fund

Management

Capital Markets,

International

Investment Group

Financial Management, HR& Administration

Management

Operations

Management

Project

Management

Commercial

Group

Design

and R&D

CHEN Zhi Bin

Vice President

CHEN Yong

Vice President

Jacky CHAN

Vice President

ZHONG Ping

CFO

MA Jun

COO

XIAO Yi

Vice President

ZHANG Jun

Vice President

GAO Xiang Dong

Assistant to

President

ZHONG Ping

Executive Director,

CFO

MA Jun

Executive Director,

COO

GUO Zi Ning

Vice Chairman,

CEO

GUO Zi Wen

Chairman,

Group Founder

CHEUNG

Kwok Keung

Independent Non-

executive Director

TSUI King Fai

Independent Non-

executive Director

HU Jiang

Independent Non-

executive Director

Introducing outstanding and experienced talents in the industry to strengthen professional management team,

upholding excellent compliance in corporate governance and maintaining high corporate transparency

to enhance the core competitiveness and ensure balanced and sustainable development

Aoyuan is named among the “Fortune China Top 100 Board of Directors” in 2018

Professional management team and outstanding corporate governance

3737

6. Investor Relations

3838

Mainland China &

Hong Kong 70%

Asia Pacific (excl. Mainland China & Hong

Kong )14%

America8%

Europe7%

Middle East1%

Committed to professional and effective investor relations management, Aoyuan strives to maintain a long-

term interactive relationship with investors. Aoyuan upholds an open and candid attitude to listen to

the capital markets and maintain a high level corporate transparency and corporate governance

Close and two-way communication with investors Investor relations activities in 1H2018

Investment institutions by region Investment institutions by investor type

Management meeting

182 times

Telephone/ video

conference28 times

Investor conference

19 times

Project site visit9 times

Investor roadshow5 times Investor briefing and

press conference2 times

Equity 63%

Bond37%

✓ Organized and participated in a total of 245 investor relations

activities in 1H2018, including 182 management meetings, 28

telephone/ video conferences, 2 investor briefings and press

conferences, 9 site visits, 19 investor conferences and 5

investor roadshows held in Hong Kong, Singapore, Shenzhen,

Shanghai, Beijing, New York and London

✓ Met and communicated with 483 institutional investors from 320

investment institutions in 1H2018 to enhance investor’s

awareness of latest development in business performance,

operating conditions and development strategies, to understand

capital market views and provide timely feedback to top

management

IR management

3939

IR management (cont.)

Results Briefing

Results Briefing

Annual General Meeting

Annual General Meeting

Investor Conference

Reverse Roadshow

Investor Roadshow

Investor RoadshowInvestor Site Visit

Committed to professional and effective investor relations management, Aoyuan strives to maintain a long-

term interactive relationship with investors. Aoyuan upholds an open and candid attitude to listen to

the capital markets and maintain a high level corporate transparency and corporate governance

4040

Company HQAoyuan Mansion, No.108,

Huangpu Avenue West, Tianhe, Guangzhou

HK OfficeUnit 1901-02, 19/F, One Peking,

No.1 Peking Road, T.S.T, Hong Kong

E-mail [email protected]

Jacky Chan

Group Vice President

President of International Investment Group

HK: (852) 2180 9566

China: (86 20) 3868 6666

Email: [email protected]

Anthony Cheng

Financial Controller

HK: (852) 2180 6981

China: (86 20) 3868 6666


Emma Qi

Deputy Head of Corporate Finance and

Investor Relations

HK: (852) 2180 9566

China: (86 20) 3868 6666


Heng Tam

Assistant Investor Relations Manager

HK: (852) 2180 9556

China: (86 20) 3868 6666


IR contacts

Aoyuan WeChat

Official Account

Aoyuan Official WeChat

Subscription Account

Follow us on:

4141

This presentation was prepared by China Aoyuan Property Group Limited (the “Group” or the “Company”) for reference only.

This presentation may not be reproduced or redistributed to any persons without explicit authorization from the Company.

Neither the Company nor any of its respective subsidiaries, directors, employees or advisors, directly or indirectly, gives any

representation or warranty as to the completeness and accuracy of all the information contained in this presentation (including

all forward-looking statements). The information contained in this presentation should be considered in the context of the

circumstances prevailing at the time of presentation and has not been, and will not be, updated to reflect material

developments which may occur after the date of the presentation.

This presentation contains statements that reflect the Company’s beliefs and expectations about the future. These forward-

looking statements are based on a number of assumptions about the Company’s operations and factors which are beyond the

Company’s control, and accordingly, actual results may differ materially from these forward-looking statements. The Company

does not undertake to revise forward-looking statements to reflect future events or circumstances.

The Company expressly disclaims all the liabilities (in negligence or otherwise) for any loss incurred or sustained by the

participants of this presentation, their employers, entities, agents or any of their related parties as a result of using the

information contained in this presentation.

The materials and information in this presentation are for informational purposes only and do not constitute an offer or

solicitation for the purchases or sale of any securities or financial instruments or to provide any investment service or

investment advice.

Disclaimer

2018 interim results presentation - aoyuan · 2018-08-21 · interim results presentation aug 2018....

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