The Wharf (Holdings) Limited
Established 1886
Wheelock Square Shanghai
DecemberThe Wharf 2011 (Holdings) Limited 1 Wharf Corporate Profile
Established in 1886 with a distinguished history of “Building for Tomorrow” Primary focus is in Properties which represented 91% of business assets as at 30.6.11 Strategic differentiation is manifested in the success of Harbour City and Times Square, which represented 64% of operating profit for 1H11 Growth - target to have 50% of Group’s business assets in Mainland China in medium term; 39% at 30.6.11; landbank at 12.4M s.m., with next milestone at 15M s.m.
The Wharf (Holdings) Limited 2 Wharf Corporate Structure
Wheelock and Company Limited (HKEx Stock Code: 0020.HK)
The Wharf (Holdings) Limited (HKEx Stock Code: 0004.HK)
Hong Kong China Non Property Properties Properties Businesses*
* Include Modern Terminals, HK Air Cargo Terminals, Marco Polo Hotels, & Communication, Media and Entertainment (CME)
The Wharf (Holdings) Limited 3 Corporate Business Structure
Mr. Peter Woo, GBS, JP Chairman
Mr. Stephen Ng Deputy Chairman & MD
HK & China IP HK DP China DP Non Property
Mr Douglas Woo Mr Andrew Chow Chairman Ms. Doreen Lee Vice Chairman & MD Mr. Stephen Ng Senior MD Mr TY Ng Chairman Mr. Ricky Wong Vice Chairman & MD Senior MD
Wharf Wharf China Development Development Limited Limited
Wharf China Estates Limited
The Wharf (Holdings) Limited 4 China – Phases of economic development
Experimentation Special economic zones in coastal cities as China’s nationwide infrastructure (1978 - 1992) support was inadequate
Execution & Growth In 1992, Shanghai economy was opened & other cities swiftly followed (1992 - today) Economic growth supported by infrastructure buildup to link up the country
The Future High-speed rail grid will ‘shrink’ the country (today + 20 years) Dynamic urbanization expected, with domestic demand as key growth engine
Disposable Income Per Capita RMB’B China GDP (1992-2010) YoY Growth RMB of Urban Households (1996-2010) YoY Growth
GDP 25,000 45,000 Disposable Incomer per Capita YoY Growth YoY Growth 16% 16% 40,000
20,000 14% 35,000 14%
12% 30,000 12% 15,000 25,000 10% 10%
20,000 8% 8% 10,000
15,000 6% 6% 10,000 5,000 4% 4% 5,000 2% 2% 0 0 0% 0% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 The Wharf (Holdings) Limited 5 China – Rail grid will change life High speed rail will reduce travelling time between major Chinese cities by 60% to create the one-day living sphere … …
Beijing
Wuhan Shanghai Chengdu
Guangzhou
Source: CB Richard Ellis
The Wharf (Holdings) Limited 6 China – Expand with metropolitan zones The nine city clusters account for 52% of population & 74% of GDP*
“There will be 8 mega cities by 2025 as compared with 2 in 2005, housing 41% of China’s higher income class living. Overall, China is heading towards a dispersed urbanization pattern with midsized and small cities. These cities, together with megacities, will drive future growth.”
McKinsey research 2009
* Source: CB Richard Ellis
The Wharf (Holdings) Limited 7 Hong Kong – A unique position A unique city driven by China’s growth and its own characters ......
China HK Economic Partnership continues HK companies has facilitated China’s economic growth since 1978, initially along the Southern Coastal Provinces before moving to inland Provinces HK is the servicing & financing platform for China Foreign direct investments into China. Chinese companies expanding abroad, tourism, and offshore RMB centre Other special characters 4 cornerstones - zero import tax, wide merchandize selectivity, genuine & authenticity and confidentiality A free port, low & simple taxation regime; no inherent tax and no sales tax Any overhang of political risks from the 1997 sovereignty change have disappeared
The Wharf (Holdings) Limited 8 Hong Kong – Favorable China’s policy The 12th Five-Year Plan (2011-2015) offer ample opportunities for HK companies…
Key theme is to change the economic development model for China: Moving up the value chain; reducing reliance on low cost manufacturing Stimulating domestic demand as a key driver for GDP growth Expanding contribution of the service sector by 4%-points Continuing urbanization Dedicated a chapter in supporting Hong Kong: CEPA continues (Closer Economic Partnership Arrangement) Leverage Hong Kong's servicing platforms to facilitate China's economic growth Develop Hong Kong as the offshore RMB centre and an international asset management centre
The Wharf (Holdings) Limited 9 Hong Kong Properties The HK investment portfolio represents 8.3% HK’s retail sales ….
With a combined value of HK$119B at 30.6.11, Harbour City and Times Square represented 47% of the business assets of the Group, and generated 64% of operating profit
In 1H11, retail sales at Harbour City and Times Square
Ms Doreen Lee accounted for an unmatched 8.3% share of HK’s total retail Senior MD sales, up from 7.9% in 1H10
The Wharf (Holdings) Limited 10 Hong Kong Properties – Harbour City Building for Tomorrow… from a wharf godown to a shopping mall...
Early 80’s Now
The Wharf (Holdings) Limited 11 Hong Kong Properties – Harbour City A record performance……
Property Value (excl. Hotels) Attributable 1H11 1H10 % FY10 at 30.6.11: HK$87.1B GFA (s.f.) (HK$M) (HK$M) Change (HK$M) Retail 1,948,000 1,723 1,437 +20% 2,928 Office 4,435,000 787 774 +2% 1,553 Serviced Apartments 670,000 145 132 +10% 275 Hotel and Club 1,364,000 531 488 +9% 1,056 Total: 8,417,000 3,186 2,831 +13% 5,812
The Wharf (Holdings) Limited 12 Hong Kong Properties – Harbour City
Harbour City generated 6.2% of HK retail sales, envy of others……
Largest mall in town, representing 75% of retail area of Canton Road
Retail generated 54% of HC’s revenue in 1H11 from only 23% of HC’s area
Retail sales: +35% for 10/2011 YTD, outperformed HK market by 10% points
Continues to provide a captivating “shoppertainment” experience to shoppers through a finely calibrated trade mix and innovative marketing campaigns
The Wharf (Holdings) Limited 13 Hong Kong Properties – Harbour City
Strong performance from other components……
Office Serviced Apartments Occupancy and spot rent trended up Occupancy at 30.6.11: 94% strongly during 1H11 Favorable rental growth Occupancy at 30.6.11: 95% Lease renewal retention rate: 73%
The Wharf (Holdings) Limited 14 Hong Kong Properties – Times Square Building for Tomorrow… from a tram depot to a shopping mall...
Late 80’s Now
The Wharf (Holdings) Limited 15 Hong Kong Properties – Times Square A record performance……
Property Value at Attributable GFA 1H11 1H10 % FY10 30.6.11: HK$32B (s.f.) (HK$M) (HK$M) Change (HK$M) Retail 936,000 587 512 +15% 1,076 Office 1,033,000 228 226 +1% 457 Total: 1,969,000 815 738 +10% 1,533
The Wharf (Holdings) Limited 16 Hong Kong Properties – Times Square Times Square is the most successful vertical shopping mall in HK…... Retail Office Full occupancy Occupancy at 30.6.11: 96%, strong Retail generated 72% of TS’s growth in spot rents in 1H11 revenue in 1H11 while represents Lease renewal retention rate: 28% only 48% of area as some tenants moved to fringe Tenant mix on the atrium floors locations fine-tuned to uplift the shopping Vacated space rapidly absorbed by ambiance new tenants, including relocation from Central / Wanchai
The Wharf (Holdings) Limited 17 Other Hong Kong Properties
Victoria Peak is the most sought after residential address in HK The Peak Portfolio (400,000 s.f.): Existing developments – 1H11 occupancy: 90%+, strong rental growth Mt Nicholson - master layout plan & GBP approved No. 1 Plantation Road, Mountain Court, Chelsea Court and 77 Mr Douglas Woo Peak Road all have redevelopment potential VC & MD Other developments: One Mid-town, Kowloon Godown, Yau Tong Godown, Yau Tong projects, Wharf T&T Square, are at different development stages
Mr Ricky Wong MD
The Wharf (Holdings) Limited 18 Other Hong Kong Properties – Mt Nicholson Mt Nicholson services the top 1-2% of most affluent in Asia…
A unique, rare and high quality development Private half-mile access road offers ultimate privacy Rare low density site on HK Island Ultimate top social status & recognition World class designers and architects Buyer types – Upgraders and Villa as status symbol (HK & China), Pied-a-terre (SE Asia & China) Project details 50:50 JV with Nan Fung; attributable GFA: 162,000 s.f.; completion: Q4 2014
The Wharf (Holdings) Limited 19 China Properties – Building for tomorrow
Wharf China has expanded to 5 regions,13 cities, 40+ projects…
Others: Dalian Tianjin Wuhan Changsha
China East: Changzhou Wuxi Suzhou Shanghai Hangzhou China West: Ningbo Chengdu Chongqing Foshan …with a team of over 1000 professionals.
The Wharf (Holdings) Limited 20 China Properties – Building for Tomorrow
PRC assets reached 39% of Group assets at 6/2011......
Acquired sites in 1H11 in Changsha, Hangzhou, Suzhou & Foshan (attributable GFA: 2M s.m.) for RMB13B China Land bank: +17% to 12.4M s.m. at 6/2011, spanning across 13 Portfolio cities; on track to next milestone of 15M s.m. The RMB required for o/s land payments has been fully covered Continue to develop local execution knowhow
Contracted sales to 10/2011: RMB11.2B, 750,000 s.m. were sold Development Net order book increased to RMB18.1B for 1.2M s.m. Properties 2011 completion target: 550,000 s.m. (1H11: 160,000 s.m.)
Wheelock Square completed in 2010 is leasing well Investment Completed IPs were valued at HK$13B at 6/2011 Properties Development progress of 5 IFCs as planned
The Wharf (Holdings) Limited 21 China Properties – Landbank
China landbank on course for the 15M s.m. milestone……
GFA by Region GFA by Land Use
Region Attributable GFA s.m. Retail Office 8% East 6.3M 15%
West 4.3M Hotel 3% Others 1.8M
TOTAL 12.4M Residential 74% 12.4M s.m. landbank split by cities RMB 65.4B cost split by cities
Chengdu Chengdu 20% 21% Chongqing 10% Chongqing Suzhou 14% Suzhou 16% 12% Others Wuxi 23% East: 51% Others East: 47% Wuxi 6% 15% 14% West: 35% West: 30% Changzhou Changzhou Hangzhou Shanghai 8% 4% 12% 13% Shanghai Others: 14% Hangzhou 5% Others: 23% 7%
The Wharf (Holdings) Limited 22 China Development Properties
New Growth Engine… …
1H11 Turnover: +31% to HK$1,343M (FY10: HK$3.6B)
1H11 Operating Margin: 42%
Contracted Sales to 10/2011: RMB11.2B Mr Andrew Chow Chairman 2011 completion target: 550,000 s.m. (1H11: 160,000 s.m.)
Mr T Y Ng Vice Chairman
The Wharf (Holdings) Limited 23 China Development Properties – Sales
Sales diversity to minimize concentration risk…… Attributable New projects City Product Attributable Proceeds Average Price GFA sold (sm) ^ (RMB’M) ^ (RMB psm) ^
Times City Suzhou High-rise 29,000 410 13,900
The U World Chongqing High-rise 32,000 715 22,100
Peaceland Cove Tianjin High-rise 38,000 494 13,100
Magnificent Tianjin High-rise 28,000 402 14,300
Attributable Projects previously City Product Attributable Proceeds Average Price launched GFA sold (sm) ^ (RMB’M) ^ (RMB psm) ^
Xiyuan Shanghai Medium-rise 17,000 890 52,700
Times Riverside, Times 8 Chengdu High-rise / office 41,000 752 18,500
Times Palace Changzhou High-rise / villas 85,000 696 8,200
Ambassador Villa Suzhou Villas 7,000 337 51,100
Int’l Community Chongqing High-rise 72,000 494 6,900 ^All data for 1H2011
The Wharf (Holdings) Limited 24 China Development Properties PRC property progress as planned……
2009-2011 Contracted Sales 2010-2013 Project Completions
RMB'B 000's.m.
2,100* 15 2500 1,600* 2000 10 15.0* 1500 1000 8.8 550 5 281 500 4.6 0 0 2010 2011 2012 2013
2009 2010 2011 *provisional data
The Wharf (Holdings) Limited 25 China Investment Properties
IP portfolio will grow when 5 IFCs will be rolled out (2013-2016)
Shanghai Wheelock Square Suzhou IFC Wuxi IFC (2016) Suzhou IFC
Chengdu IFC (2013)
Changsha IFC (2016) Chongqing IFC (2015)
The Wharf (Holdings) Limited 26 China Investment Properties Recurrent rental earnings boosted by Wheelock Square……
1H11 Performance
Turnover: +34% to HK$317M (FY10: HK$470M)
Operating profit: +39% to HK$193M
Over 70% office area at Shanghai Wheelock Square leased, with latest monthly rental rates at over RMB400psm
Chongqing TS transformed into a modern & stylish shopping mall in 3Q2011
Dalian TS registered a 38% growth in retail sales p.s.m. with 100% occupancy
Shanghai TS performed satisfactorily with 93% retail and 96% office occupancy
The Wharf (Holdings) Limited 27 China Investment Properties Recurrent earning base will substantially increase from 2013……
IP Portfolio GFA^ growth over time 2500 000's.m. 2,300 2000 Completion timetable Chengdu IFC 2013-15 1500 Chongqing IFC 2014-15 1,100 Wuxi IFC By 2015 1000 665 Suzhou IFC By 2016 500 379* 379 379 Changsha IFC By 2016 0
0 1 2 3 4 ~ 01 01 01 01 01 2 2 2 2 2 2016
^ Includes office / residential areas that may be for sale * Includes Shanghai Wheelock Square, Times Squares in Shanghai, Chongqing and Dalian
The Wharf (Holdings) Limited 28 2010 Economic Indicators
Untapped potential to be realized……
Mainland Chengdu Chongqing Wuxi Suzhou Changsha
GDP Growth 10.3% 15.0% 17.1% 13.1% 13.2% 15.5%
Population (’M) 1,341 11 29 6 67
Retail sales growth 18.3% 24.0% 18.5% 18.6% 18.7% 19.9%
Urban disposable 19,000 21,000 18,000 28,000 33,000 23,000 income per capita (RMB) % change 7.8% 11.7% 11.3% 10.9% 10.9% 12.7% Investment in fixed asset 27,814 426 693 299 362 319 (RMB’B) Source: National Bureau of Statistics (2010 data) , Statistics Bureaus of various cities (2010 data)
The Wharf (Holdings) Limited 29 China Investment Properties – Wheelock Square
Tallest Landmark office tower in Puxi at 270 metres…
Brand new landmark office tower with GFA of 114,000 s.m.
The tallest building in Puxi (270-metre) overlooking Jing’an Park
Currently, over 80% committed; latest monthly rental rates at over RMB400psm.
High floors will command higher rates
Tenants include multinationals and major corporations
Awarded “Best Business Centre” by MIPIM Asia Awards 2011 in 9/2011
The Wharf (Holdings) Limited 30 China Investment Properties – IFC Series
5 IFCs to be rolled out in 2013-2016…… Chengdu IFC – GFA 439,000 s.m.* The Group’s next flagship IP in the busiest pedestrian shopping area of Chengdu. Comprises retail, Grade A offices, 5-star hotel and luxury residences Construction of Phase 1 (retail and an office tower) is scheduled for completion in mid 2013 Chongqing IFC – GFA 223,000 s.m.* 50:50 JV with COLI; located in the new CBD of Chongqing Comprises up-market retail, Grade A offices, 5-star hotel and serviced apartments Construction is underway; full completion in 2015
* GFA represents plot-ratio GFA and excludes commercial areas below ground
The Wharf (Holdings) Limited 31 China Investment Properties – IFC Series
5 IFCs to be rolled out in 2013-2016……
Suzhou IFC - GFA 351,000 s.m.* Tallest skyscraper in Suzhou overlooking Jinji Lake Comprises Grade A offices, 5-star hotel and luxury apartments
Wuxi IFC – GFA 280,000 s.m.* Tallest skyscraper in Taihu Plaza, Wuxi’s new CBD Comprises Grade A offices, 5-star hotel and luxury residences
Changsha IFC – GFA 700,000 s.m.* Acquired in 1/2011, a prime site in the city centre Comprise 3 towers (2 in excess of 300m in height) atop a 250,000 s.m. retail podium Comprises upscale retail, Grade A offices, 5-star hotel & luxury apartments. Construction will start in late 2011.
* GFA represents plot-ratio GFA and excludes commercial areas below ground
The Wharf (Holdings) Limited 32 Other Non-Property Businesses
Strong recurring income base……
Mr. Stephen Ng Chairman Hotel
MTL CME
The Wharf (Holdings) Limited 33 Marco Polo Hotels
A solid performer……
10 operating Marco Polo hotels in Asia Pacific region
1H11 Revenue: +11% to HK$593M (FY10: HK$1.2B)
Awarded “Best International Hotel Management Group of China” by China Hotel Starlight Awards in 3/2011
The managed Marco Polo Foshan in Lingnan Tiandi will open in 2011
From 2012 onwards, new Marco Polo hotels in Changzhou, Chengdu, Chongqing, Manila, Guiyang, Suzhou and Wuxi will come on stream
The Wharf (Holdings) Limited 34 Modern Terminals
The first container terminal operator in HK, 33% market share today……
1H11 Revenue: +6% to HK$1,620M (FY10: HK$3.3B)
Leveraging on HK base, expand into Pearl River Delta and Yangtze River Delta, the 2 largest manufacturing hubs in PRC: PRD: Da Chan Bay (DCB) YRD: Taicang International Gateway 1H11 Throughput Kwai Tsing (HK): +1% to 2.7M TEUs Taicang (YRD): +9% to 685K TEUs DCB (PRD): +19% to 343K TEUs
The Wharf (Holdings) Limited 35 Communication, Media & Entertainment
Steady results…… i-CABLE
CABLE TV is the first multi-channel Pay TV service in HK; subscribers' base exceeds 1.1M
1H11 Revenue: +9% to HK1,051M (FY10: HK$2.0B)
Wharf T&T
Wharf T&T is the second largest fixed line operator and the first and only comprehensive ICT service provider in HK focusing on the business sector
1H11 Revenue: +6% to HK$879M (FY10: HK$1.7B)
The Wharf (Holdings) Limited 36 Financial Highlights – 1H2011
1H11 1H10 (HK$M) (HK$M) Turnover 9,745 8,622 Operating Profit 4,980 4,516 Profit attributable to equity shareholders 14,302 10,892 EPS (HK$) 4.84 3.85 EPS before Property Revaluation Surplus (HK$) 1.11 1.49 DPS (HK$) 0.36 0.36 As at As at 30.6.11 31.12.10 Total assets 281,835 242,225 Total business assets 257,070 220,237 Net debt 42,494 32,689 Total equity 193,961* 170,649 NAV per share (HK$) 61.59 59.22 Net debt to total equity 21.9% 19.2% * Wharf raised HK$10 billion equity through a rights issue in March 2011
The Wharf (Holdings) Limited 37 Financial Highlights – FY2010
FY10 FY09 (HK$M) (HK$M) Turnover 19,380 17,553 Operating Profit 9,372 8,554 Profit attributable to equity shareholders 35,750 19,256 EPS (HK$) 12.98 6.99 EPS before Property Revaluation Surplus (HK$) 2.87 2.84 DPS (HK$) 1.00 1.00 As at As at 31.12.10 31.12.09 Total assets 242,225 190,461 Total business assets 220,237 168,576 Net debt 32,689* 21,432 Total equity 170,649* 135,588 NAV per share (HK$) 59.22 46.68 Net debt to total equity 19.2% 15.8%
*Wharf raised HK$10billion equity through a rights issue in March 2011
The Wharf (Holdings) Limited 38 Financial Highlights
Hong Kong properties remain the driver; China is growing……
% of Group Total Business Assets % of Group Operating Profit 1% 3% 8% 14%
34% 16% 57% 67%
HK Properties (excl. Hotels) China Properties HK$257.1B Logistics HK$5.0B CME & Others
* China assets: 39% as at 30.6.11 (Properties: 34%, Logistics: 5%)
The Wharf (Holdings) Limited 39 Financial Highlights
Prudent financial management with 21.9% gearing……
30.6.11 31.12.10 Net debt (HK$’M) (HK$’M) Wharf (excluding below subsidiaries) 33,503 23,376
MTL 11,054 9,932
HCDL (1,694) (172)
i-CABLE (369) (447)
Total: 42,494 32,689
Gearing (net debt to total equity*) 21.9% 19.2%
*Wharf raised HK$10B equity through a rights issue in 3/2011
The Wharf (Holdings) Limited 40 Financial Highlights
Multiple sources of income and funding……
Strong recurring income base Investment Properties – Harbour City, Times Square, China IPs Logistics and Hotels
Multiple sources of funding and revenue Equity - HK$10B rights issue in 3/2011 Debt - HK$6.2B CB in 6/2011 - S$670M bonds (HK$4.1B) in July / October 2011 At 30.6.11, cash balance: HK$20B, undrawn bank facilities: HK$23B China contracted sales of RMB11.2B (HK$14B) up to 10/2011
The Wharf (Holdings) Limited 41 End of Presentation
Wheelock and Company Limited [HKEx Stock Code: 0020.HK] The Wharf (Holdings) Limited [HKEx Stock Code: 0004.HK]
Disclaimer All information and data are provided for information purposes only. All opinions included herein constitute Wharf’s judgment as of the date hereof and are subject to change without notice. The Group, its subsidiaries and affiliates hereby disclaim (i) all express, implied, and statutory warranties of any kind to user and/or any third party including warranties as to accuracy, timeliness, completeness, or fitness for any particular purpose; and (ii) any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the information and data contained herein.
The Wharf (Holdings) Limited 42 Appendix
Conversion Reference
US$ 1 = HK$ 7.80* HK$ 1 = US$ 0.128
US$ 1 = RMB 6.365^ RMB 1 = US$ 0.157
1 Sq foot = 0.0929 Sq metre 1 Sq metre = 10.764 Sq feet
* - Under the Linked Exchange Rate System of Hong Kong, HK Dollar is fixed with US Dollar ^ - The mid-rate as announced by The People’s Bank of China on 20.10.11
The Wharf (Holdings) Limited 43