Shimao Property Holdings Limited 2018 Interim Results (Stock Code: 813) www.shimaoproperty.com 28 August 2018 Results Highlights Financial Highlights Content Business Review Future Outlook Conclusions Appendix Results Highlights Effective Strategies Lead to Substantial Growth in Results 60% Surge in Sales in 1H2018, Robust Growth in 1 Business Performance Maintained Quality Business Development and 2 Industry-leading Profitability Continuously Deepened Regional Development with 3 Sufficient and Ample Reserve of Saleable Resources 4 1 Strong Growth of Contracted Sales R 1H2017 1H2018 Contracted y-o-y Growth of Contracted Sales Sales RMB 45.12 60.3% RMB 72.32 billion billion Achieving 51.7% of the full- year sales target of RMB140 billion Contracted Rose from 16th in 2017 to Sales th Ranking 14 in Improved by 2 1H2018 Places 1H2017 1H2018 Contracted y-o-y Growth of Contracted GFA GFA 2,708,767 66.5% 4,509,043 sq. m sq. m 5 2 Steady Increase in Revenue, Gross Profit and GPM R Gross profit margin increased significantly by 1.4 p.p. y-o-y Growth of 18.8% RMB13.21 billion Revenue 14 Revenue RMB10.59 billion 13 31.0% 12 RMB 35.82 billion RMB 42.57 billion 11 29.6% 11 10 10 9 9 1H2017 1H2018 8 8 7 7 6 6 Income from hotels, rentals and investment 5 5 properties rose 14.7% y-o-y. 4 4 3 3 Income from Hotels, Rentals and Investment Properties 2 2 1 1 RMB1.90 billion RMB1.66 billion 0 0 1H2017 1H2018 Gross profit markedly 1H2017 1H2018 increased by 24.7% y-o-y 6 3 Substantial Growth in Core Profit Attributable to RShareholders with Outstanding Profit Margin Operating Profit Core Profit Attributable to Shareholder RMB y-o-y 11.94 Growth of billion 36.3% RMB y-o-y 4.40 Growth of billion 20.2% Profit Attributable to Shareholders RMB y-o-y 4.27 Growth of billion 10.1% Core Net Profit Margin y-o-y Earnings Per Share Growth of 14.3% y-o-y 0.9 p.p. RMB Growth of 1.266 10.2% 7 4 Steady Increase in Dividend R 1H2018 1H2017 y-o-y HK40 cents HK50 cents Growth of per share per share 25% 8 5 Continuously Deepened Regional Development with Sufficient Rand Ample Reserve of Saleable Resources Total land bank was approximately 51.62 million sq. m., 1H2018 attributable new with average land cost land acquisitions of RMB5,325/ sq. m. amounted to RMB29.6 billion, including strategic land parcels such as Shenzhen Pingshan. Active participation in the development of Guangdong-Hong Kong-Macao Greater Bay Area, Hangzhou Bay Area, Taiwan Straits Economic Zone and the Belt and Road Initiative. 9 6 Steady Growth in Revenue of Shanghai Shimao R In 1H2018, contracted sales of Shanghai Shimao grew 60% by 60% y-o-y to RMB16.00 billion 20% In 1H2018, revenue of 3% Shanghai Shimao rose sharply by 20% y-o-y to RMB12.15 billion In 1H2018, profit attributable to Shanghai Shimao’s shareholders increased by 3% y-o-y to RMB1.44 billion Note: 1. All the data above are excerpted from Shanghai Shimao’s results announcement prepared according to PRC GAAP. 2. The Group holds 58.92% equity interest in Shanghai Shimao. 10 Financial Highlights Prudent Financial Management with Outstanding Financial Metrics Increase in Cash Collection, Sufficient Capital 1 on Hand Maintaining Solid Capital Structure through 2 Prudent Financial Policy 3 Stable Gearing Ratio and Credit Ratings Responding to the Changing Environment Via 4 Multiple Financing Channels 12 1 Increase in Cash Collection, Sufficient Capital on Hand R RMB55.0 billion Management of Cash Collection RMB36.0 Cash Contracted sales in June was approximately billion Collection RMB20.74 billion, hitting single-month historical up 52.8% high. Cash collection will be reflected in 2H2018. y-o-y The Group improved cash collection through enhancing the management of cash collection by regional companies and actively assessing receivables to ensure sufficient capital for 1H2017 1H2018 Cash Collection Cash Collection stable development. Ratio 80% Ratio 76% Capital Reserve as at 30 June 2018 Unutilized Bank Credit Facility approximately RMB20.0 billion Cash on Hand RMB36.0 billion up Sufficient capital lays a solid foundation by compared 9.2% for the Group’s sustainable and stable to the end of 2017 business development in the future. 13 2 Solid Debt Structure R RMB29.2 billion short-term borrowings, accounting for 30% of total RMB 98.5 RMB billion 30% 87.5 billion Balance of Borrowings The structure of 12.5% short- and long-term Up borrowings has remained healthy 70% RMB69.3 billion long-term End-2017 End-June 2018 borrowings, accounting for 70% of total 14 3 Stable Net Gearing Ratio R 100% 90% Net gearing ratio was 62.7%, 3.8 p.p. 80% higher than at the end of 2017. 3.8 p.p. 70% The Group has entered a rapid 62.7% development phase as it secured 58.9% 60% premium land parcels in strategic locations. To support the Group’s quality 50% development, net gearing ratio increased 40% accordingly. 30% Net gearing ratio remained at a relatively healthy level, laying a solid foundation for 20% sustainable development of the Group amidst a complicated economic and 10% changing financial environment. 0 End-2017 End-June 2018 Note 1: Net gearing ratio = Net debt (Total borrowings – Total cash and cash equivalents (including restricted cash)) / Total equity (excluding perpetual capital instruments). Note 2: If total equity includes revaluation increment of hotels, adjusted net gearing ratio should be 54.2%, 3.7 p.p. higher than end-2017. 15 4 Increased Scale of Assets R Total Assets Fixed Assets* Total Equity RMB’ billion RMB’ billion RMB’ billion 333.6 307.6 103.6 96.7 56.8 55.7 End-2017 End-June End-2017 End-June End-2017 End-June 2018 2018 2018 * Fixed assets = property and equipment + land use rights + investment properties. Through professional valuation, the market value of major investment properties and hotels reached RMB71.6 billion (end-2017: RMB68.9 billion) 16 5 Responding to the Changing Environment Via Multiple RFinancing Channels Issue of US$500 Million Senior Notes in January 2018 Issue of China’s First Housing Lease Shelf Rental ABS in July 2018 Issued US$500 million senior notes in January 2018 before market fluctuations; In July 2018, the “Shimao-Huaneng-Kaiyuan Coupon rate: 5.2% Housing Lease Trust Beneficiary Rights Asset- Multiple backed Project” was issued on Shanghai Stock Issue of RMB950 Million “Dim Financing Channels Exchange; Sum Bonds” in March 2018 to Avoid Financial China’s first housing lease shelf rental ABS; Risks Issued “dim sum bonds” for the first time. The Shelf size: RMB1 billion; First issue: RMB500 good response reflected the confidence of the million; Maturity: 20 years. Coupon rate: 5.6% capital market in the Group’s business performance and future prospects; Coupon rate: 5.75%; Increased RMB debt to avoid foreign exchange exposure. Issue of RMB1.2 Billion “Dim Sum Early Redemption of High-yield Bonds” in June 2018 Senior Notes in January 2018 Tap-issued RMB1.2 billion “dim sum bonds” in June 2018; US$600 million senior nots were redeemed early Combined with the RMB950 milion “dim sum bonds” issued in in January 2018; March, and formed a single series; Early redemption of high-yield senior notes to Coupon rate: 5.75%; further lower average financing cost. Increased RMB debt to avoid foreign exchange exposure. Multiple financing cost control measures help the Group maintain stable financing costs. Blended financing cost was 5.6% in 1H2018. 17 6 Stable Credit Ratings R Issuer Ratings of Shimao Property – Offshore Issuer Ratings of Shimao Property – Onshore BB+ Stable AAA Ba2 Stable BBB- Stable AAA (I.G.) Issuer Ratings of Shimao Jianshe – Onshore Issuer Ratings of Shanghai Shimao – Onshore AAA AAA AAA 18 Business Review 1 Revenue Breakdown R Revenue Breakdown Recognized Sales by City* – RMB40.67 billion RMB’ million 45,000 42,571 632 386 880 Yinchuan 6.0% Qingdao 6.0% 40,000 40,673 467 Shanghai 4.8% 35,822 377 Xiamen 6.4% 35,000 811 Jinan 4.2% 34,167 Pingtan 3.3% 30,000 Fuzhou 6.9% Suzhou 3.0% 25,000 Zhangjiagang 3.0% 20,000 Tianjin 2.9% Wuhan 7.1% 15,000 Nanjing 2.7% Chengdu 2.4% 10,000 Chongqing 2.3% 5,000 Quanzhou 22.6% 0 1H2018 1H2017 Other 21 cities 16.4% Property sales Rental income Income from hotel operation Others * Excluding attributable revenue from joint ventures & associated companies 20 Breakdown of Income from Hotel Operation and 2 RInvestment Properties For the 6 Months Ended 30 June Turnover from Hotel Operation and Investment Properties RMB’ million RMB’ million 2018 2017 Change(%) 2,000 1,898 1,800 1,655 Income from hotel operation 880 811 +8.5% 1,600 33% 1,400 28% Rental income 386 377 +2.4% 1,200 21% 1,000 23% Others 632 467 +35.3% 800 600 Total 1,898 1,655 +14.7% 46% 400 49% 200 Excluding the impact of 0 Shanghai International Plaza 1,745 1,445 +20.7% 1H2018 1H2017 and Le Royal Méridien Hotel Income from Rental income Others hotel operation Income from hotel operation, rentals and others rose by 14.7% y-o-y. As Shanghai Shimao International Plaza was suspended for renovation, rental income from Shanghai Shimao International Plaza and the adjacent Le Royal Méridien Hotel showed a slight decrease y-o-y. If such impact is excluded, income from hotel operation, rentals and others rose by 20.7% y-o-y.