2019 Mainland China Management Presentation Chongqing
23 May 2019 Agenda
Speakers: . Robert Wong - Chief Executive . Simon Dixon - Chief Financial Officer . Ling Chang Feng - Executive Director, China Property
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 2 Introduction to Mainland China Management Team
Ling Chang Feng Thomas Tam Ren Xia Yi Eric Chen Executive Director Director Director Associate Director China Property Head of Asset Head of Finance Head of Projects Management & Operations
James Zhang Yang Hua Billy Pang Shirley Lam Associate Director Associate Director General Manager General Manager Head of Business Head of Chongqing Asset Management WF CENTRAL Development
2019 Mainland China Management Presentation 3 Key Milestones of HKL’s Journey in Mainland China
Entered mainland Entered Chongqing First wholly- Entered Shanghai Acquired JL China (Bamboo Grove) owned project (Parkville) CENTRAL site (Maple Place) (Yorkville South)
1997 2001 2005 2009 2010 2015 2017 2018
First large-scale First large-scale Acquired WF CENTRAL Entered Nanjing, Wuhan residential project mixed-use project and CBD Z3 sites and Hangzhou (Central Park) (Landmark Riverside) & & Entered Chengdu Opening of WF CENTRAL (WE City)
2019 Mainland China Management Presentation 4 Overview of Mainland China Market
2019 Mainland China Management Presentation 5 Mainland China Macro Trends
GDP Growth Strong growth relative to developed countries, although will continue at a slower but sustainable rate
Urbanisation Tier-1 & leading Tier-2 cities will continue to enjoy a healthy population inflow
Consumption Capacity Consumption will continue to be a key driver of China’s economy
2019 Mainland China Management Presentation 6 Mainland China Property Market
Tier-1 & Leading Tier-2 cities Will continue to outperform lower tier cities due to population, capital and other resource inflows
Residential Market in leading cities will be supported by population inflow, urbanisation and rising middle class
Retail Challenging conditions, success of projects depends on selecting the right locations and execution expertise
Office Oversupply in decentralised locations in a majority of Tier-2 cities
2019 Mainland China Management Presentation 7 Overview of HKL’s Mainland China Business
2019 Mainland China Management Presentation 8 Mainland China in Focus – Existing Portfolio
CHENGDU WUHAN BEIJING
WE City Yixinhu Project Dream Land Central Park WF CENTRAL CBD Z3 Site
CHONGQING
SHANGHAI
Bamboo Grove Yorkville North Harbour Tale (formerly “Lijia Landscape”) Parkville
New Bamboo Central Avenue Hillview (formerly Grove “Liangjiang New Project”) Caohejing Project
NANJING HANGZHOU Yorkville South Landmark River One Riverside (formerly “Bamboo Grove Riverside”)
Yue City River and City JL CENTRAL Hangzhou Bay (formerly “Jiangbei Project”) Yuelai Project
2019 Mainland China Management Presentation 9 Our Mainland China Team Structure
Approximately 700 LING CHANG FENG staff, 40% of the Executive Director, China Property Group’s workforce
REGIONAL TEAM LOCAL TEAM
Asset Business Design Management Development Beijing Chengdu Chongqing
HR & Finance IT Administration Hangzhou Nanjing Shanghai
Property Legal Projects Management Wuhan
2019 Mainland China Management Presentation 10 JV Partners & HKL’s Strengths
Joint Venture Partners Benefits of Joint Ventures
- Benefit from their local expertise China China Fortune Merchants CICC CIFI - Reduce exposure to individual projects Properties Shekou - Referrals to more potential projects
Country Excellence Jinke KWG HKL’s Strengths Garden Group
- Strong balance sheet
- Strong reputation for operational excellence Longfor Ping An Transfar Vanke - Experienced design team
- Respected asset management capabilities
Vantone Yanlord Zall - Strong tenant relationships
- Robust corporate governance structure
2019 Mainland China Management Presentation 11 Investment Properties – WF CENTRAL
TENANT PROFILE BY AREA
12%
12%
TOTAL NFA: 46%
5% 43,000 sq. m.
25%
Fashion & Accessories Food & Beverages
Jewellery & Watches Others
Vacant
2019 Mainland China Management Presentation 12 Investment Properties – CBD Z3
Subway Line 10 East 3rd Road
1
Core CBD 2 3 4 5
6 7 Subway Line 1
Chang’an Ave. 8 9
World Financial China Fortune CCTV 1 2 3 Center Plaza Headquarters • Located in the heart of the Beijing CBD Beijing Kerry China World • Office: 111,000 sq. m. GFA 4 5 CITIC Tower 6 Center Trade Center • Retail: 16,000 sq. m. GFA 7 CBD Z3 8 Yintai Centre • Completion: Q4 2023
2019 Mainland China Management Presentation 13 Development Properties – Overview
Residential Retail DEVELOPABLE AREA (‘000 sq. m. GFA)
75%
6,151* TOTAL Office Others
Include: 14% - Hotels - Hospital 3% 8% - Community Centres - Schools Residential Retail Office Others
- Other Ancillary Facilities * HKL’s share
2019 Mainland China Management Presentation 14 Development Properties - How Do We Choose Our Cities?
Sizable Annual residential population base transaction value of or population over RMB100 bn inflows
Share of total GDP*
Beijing HKL’S 7 CITIES Nanjing Shanghai Chengdu Wuhan Hangzhou Share of total Chongqing Population*
Low inventory Existing market levels relationships
*National Bureau of Statistics, Local Bureau of Statistics Middle Yangtze River Valley Jingjinji Area
Yangtze River Delta Area Chengyu Megalopolis 2019 Mainland China Management Presentation 15 Development Properties – Residential
KEY CHARACTERISTICS
Mature & Emerging Residential Hubs
Established Transport Links
Best-in-class design and build quality
Short Payback Period
2019 Mainland China Management Presentation 16 Development Properties – Attributable Saleable GFA Completions
‘000 sq. m. Forecast 900 799 800 698 700 663 674
600
492 500
400 355
300
200
100
- 2016 2017 2018 2019 2020 2021 Chongqing Nanjing Wuhan Chengdu Shanghai Hangzhou * HKL’s share
2019 Mainland China Management Presentation 17 Development Properties – Commercial
Hangzhou Landmark Riverside Park JL CENTRAL WE City Bay
2016 2017 2018 2019 2020 2021 2022 2023 2024
LCM Danzishi Yorkville North Central Yue City Caohejing Dream Land Old Street Avenue Project
Note: Timeline above excludes the medium-term lease assets at River One and a community market at Parkville, which are considered immaterial.
2019 Mainland China Management Presentation 18 Development Properties – Assets Held for Medium-Term Lease
‘000 sq. m. 500
450 432
400 351 350
300 254 250
200 154 154 150
100 64 74 50 14 14 - 2016 2017 2018 2019 2020 2021 2022 2023 2024 Existing NFA* Additional NFA*
* HKL’s share
2019 Mainland China Management Presentation 19 Update on Projects Secured in 2017 & 2018
2019 Mainland China Management Presentation 20 Chongqing
River One (100%-owned) Harbour Tale (50%-owned)
• Situated in Dazhulin, Liangjiang New Area • Pure residential project situated in Lijia, adjacent to New Bamboo Grove Liangjiang New Area • Total GFA: 161,000 sq. m. • Total GFA: 114,000 sq. m. • Residential: 93%; retail: 6% • Sales launch: Q4 2019 • Sales launch: Q4 2019 • Completion: Q3 2020 • Completion: Q1 2021
2019 Mainland China Management Presentation 21 Chongqing (continued)
Hillview (50%-owned) Yuelai Project (100%-owned)
• Situated in Lijia, Liangjiang New Area • Situated in Yuelai, Liangjiang New Area • Total GFA: 61,000 sq. m. • Total GFA: 125,000 sq. m. • Residential: 98%; retail: 1% • Residential: 94%; retail: 3% • Sales launch: Q4 2019 • Sales launch: Q4 2019 • Completion: Q3 2021 • Completion: Q4 2021
2019 Mainland China Management Presentation 22 Shanghai & Chengdu
Caohejing Project (26.7%-owned) Yixinhu Project (33%-owned)
• Situated in the Caohejing Hi-tech Park, Xuhui • Pure residential project situated in Shuangliu District, Shanghai District, Chengdu • Total GFA: 392,000 sq. m. • Total GFA: 155,000 sq. m. • Office: 51%; residential: 26%; retail: 19% • Sales launch: Q4 2019 • Sales launch: Q4 2019 • Completion: Q3 2021 • Completion: Q3 2022
2019 Mainland China Management Presentation 23 Wuhan & Hangzhou
Dream Land (50%-owned) Hangzhou Bay (30%-owned)
• Situated in Dongxihu District, Wuhan • Situated in Xiaoshan District, Hangzhou • Total GFA: 493,000 sq. m. • Total GFA: 776,000 sq. m. • Residential: 56%; retail: 30%; office: 14% • Residential: 65%; retail: 18%; hotel & • Sales launch: Q4 2018 convention centre: 7%; hospital: 5% • Completion: Q1 2024 • Hospital operator: International Hospitals Group • Sales launch: Q4 2018 • Completion: Q4 2024
2019 Mainland China Management Presentation 24 Nanjing
Yue City (33%-owned) River and City (50%-owned)
• Situated in Qinhuai District • Pure residential project situated in Jiangbei New • Total GFA: 260,000 sq. m. Area • Residential: 63%, retail: 33%; hotel: 4% • Total GFA: 254,000 sq. m. • Hotel operator: Mandarin Oriental • Sales launch: Q3 2019 • Sales launch: Q3 2019 • Completion: Q2 2021 • Completion: Q3 2022
2019 Mainland China Management Presentation 25 Nanjing (continued)
JL CENTRAL (50%-owned)
Subway Line 1 Zhongshan South Road
Xinjiekou
1 Subway Line 2 2 Zhongshan East Road 3 4
5 6
• Situated in Xinjiekou CBD • Total GFA: 255,000 sq. m. • Office: 48%; retail: 35%; commercial-lease residential: 16% 1 IST Mall 2 Deji Plaza 3 JL CENTRAL • Sales launch: Q4 2020 • Completion: Q4 2023 Zhongyang Bank of Chaotian 4 5 6 Shopping Mall China Tower Palace
2019 Mainland China Management Presentation 26 Financial Highlights
2019 Mainland China Management Presentation 27 Hongkong Land’s Average Annual Investment
BY GEOGRAPHY* BY BUSINESS SEGMENT*
China Singapore Thailand Rest of Asia Investment Properties Development Properties
2017 - 2018 2017 - 2018 US$3.0B US$3.0B
2012 - 2016 2012 - 2016 US$0.6B US$0.6B
* Investment is defined as the Group’s equity contribution and share of project-level debt
2019 Mainland China Management Presentation 28 Capital Employed
VALUE BY GEOGRAPHY IN MAINLAND CHINA
US$m 10% 4,500 $4,143m
4,000 3% 1% 3,500 3% $2,856m US$41,934M 3,000 US$4,143m TOTAL* 7% 2,500
76% 2,000
1,500
1,000
Hong Kong Southeast Asia Macau 500 Singapore Mainland China Investment Properties 0 Mainland China Development Properties 2014 2018 * Represents total equity plus consolidated net debt
2019 Mainland China Management Presentation 29 Funding of Mainland China Business
INVESTMENT PROPERTIES DEVELOPMENT PROPERTIES
104% 6%
59% (2)%
US$1,077M US$3,066M TOTAL TOTAL
37% 11%
(15)%
HKL’s Share Capital Net debt Minority Interest Reserves HKL’s Share Capital Reserves Net cash
2019 Mainland China Management Presentation 30 Development Properties – Attributable Contracted and Completed Sales
US$m 1,600 $1,578m
1,400 $1,347m $1,207m 1,200 $1,105m $1,112m
1,000
$802m 800 $676m $635m $621m 600 $505m
400
200
0 2014 2015 2016 2017 2018 Contracted Sales Completed Sales * The above analysis includes share of Joint Ventures & Associates, inclusive of VAT
2019 Mainland China Management Presentation 31 Development Properties – Completed Sales Gross Margin in Mainland China
50%
41% 40% 40% 34% 36% Average: 36% 31% 30%
20%
10%
0% 2014 2015 2016 2017 2018 Gross Margin % (before LAT)
* The above analysis includes share of Joint Ventures & Associates
2019 Mainland China Management Presentation 32 Development Properties – Operating Profit in Mainland China
US$m
600
500 $469m $431m 400
300
200 $166m $170m $170m
100
0 2014 2015 2016 2017 2018
• 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%
2019 Mainland China Management Presentation 33 Development Properties – Assets for Medium-Term Lease on Completion
VALUE BY GEOGRAPHY VALUE BY PRODUCT TYPE
29% 69% 27%
US$2.3B* US$2.3B* TOTAL TOTAL 4%
21% 6%
11% 23% 10% Hangzhou Chengdu Wuhan Retail Office Others Nanjing Shanghai Chongqing
* Attributable CAPEX upon completion
2019 Mainland China Management Presentation 34 Outlook
2019 Mainland China Management Presentation 35 Outlook for the China Business
INVESTMENT PROPERTIES DEVELOPMENT PROPERTIES FINANCIAL
. Continue to look for attractive . Higher level of completions . Continue to remain disciplined in opportunities to develop prime expected in 2019 assessing opportunities investment properties in Tier-1 cities, particularly in Beijing and Shanghai . Remain committed to delivering . Pace of new investments may best-in-class developments slow relative to prior two years
. Solidify WF CENTRAL’s position as a premium lifestyle retail . The Group remains active in destination seeking residential-led opportunities in its existing markets
2019 Mainland China Management Presentation 36 Site Visits
2019 Mainland China Management Presentation 37 Site Visits – Landmark Riverside
To Visit
• Old French Naval Barracks • Sales office & Viewing platform • Landmark Riverside Mall • Danzishi Old Street • Feature Units
2019 Mainland China Management Presentation 38 Site Visits – Bamboo Grove
To Visit
• Sales Office • Villas
2019 Mainland China Management Presentation 39 Site Visits – Yorkville North
To Visit
• Sales Office • Townhouses & Garden Apartments • Feature Units • Renmin Primary School • Shopping Mall Construction Site & Show Gallery
2019 Mainland China Management Presentation 40 Q & A
2019 Mainland China Management Presentation 41 Appendix
2019 Mainland China Management Presentation 42 Development Properties – Attributable Saleable GFA Completions
HKL’s SHARE (m sq. m.)
2016 2017 2018 2019 2020 2021 CITY (Actual) (Actual) (Actual) (Forecast) (Forecast) (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 43 Photo Index
Page Project / Building City Page Project / Building City
1 Landmark Riverside Chongqing 16 Bamboo Grove Chongqing Maple Place Beijing 18 Rendering of JL Central* Nanjing Central Park Beijing 4 Yorkville South Chongqing 20 Rendering of Hangzhou Bay* Hangzhou Parkville Shanghai 21 – Various as outlined on the page* n/a 5 LCM mall and office towers, Parkville Shanghai 26
6 Danzishi Old Street, Landmark Riverside Chongqing 27 Landmark Riverside Park Chongqing
7 Central Park Beijing 35 Rendering of River and City* Nanjing Wang Mansion, Danzishi Old Street, 37 Chongqing 8 Yorkville South Chongqing Landmark Riverside Landmark Riverside Chongqing 9 Various as outlined on the page* n/a Wang Mansion, Danzishi Old Street, 38 Chongqing WF CENTRAL Atrium Beijing Landmark Riverside 12 WF CENTRAL Atrium Beijing Danzishi Old Street, Landmark Riverside Chongqing Mandarin Oriental Wangfujing, Beijing Beijing Bamboo Grove Chongqing 39 Bamboo Grove Chongqing 13 Rendering of CBD Z3 Site* Beijing Bamboo Grove Chongqing Yorkville South Chongqing Yorkville North Chongqing 40 14 LCM, Parkville Shanghai Rendering of Yorkville retail complex* Chongqing ICBC Building, Landmark Riverside Chongqing 41 Bamboo Grove Chongqing #Order of photos listed from left and then the top of each page. 42 Mandarin Oriental Wangfujing, Beijing Beijing *Renderings are for reference only, subject to further changes. 2019 Mainland China Management Presentation 44