2019 mainland china management presentation · robert wong - chief executive simon dixon - chief...

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


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


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


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


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


Overview of HKL’s Mainland China Business


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


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


- 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


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


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


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


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


KEY CHARACTERISTICS

Development Properties – Residential

Mature & Emerging Residential Hubs

Short Payback Period

Established Transport Links

Best-in-class design and build quality


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


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


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


Update on Projects Secured in 2017 & 2018


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


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


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



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


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



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


Financial Highlights


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


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


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


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


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


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


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


Outlook


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


Site Visits


To Visit

Site Visits – Landmark Riverside

• Old French Naval Barracks• Sales office & Viewing platform• Landmark Riverside Mall• Danzishi Old Street• Feature Units


To Visit

Site Visits – Bamboo Grove

• Sales Office• Villas


To Visit

Site Visits – Yorkville North

• Sales Office• Townhouses & Garden Apartments• Feature Units• Renmin Primary School• Shopping Mall Construction Site & Show Gallery


Q & A


Appendix


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


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.

2019 mainland china management presentation · robert wong - chief executive simon dixon - chief...

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