Pandemic Left Economies Stranded The Wharf (Holdings) Limited 1H20 Interim Results 3 Aug 2020 The Wharf (Holdings) Limited 1H20 Interim Results 1
Highlights • Port Activities Slowed with no Recovery in Sight Yet • 1Q was a Washout; ML Recovery Only Started in 2Q • MLDP Sales & Recognition were Stalled • $2.9B HKDP Provision Put Group UNP into Loss • MLIP Growth Momentum was Disrupted • Hotel Occupancy Plummeted as Travelers Stayed Home The Wharf (Holdings) Limited 1H20 Interim Results The Wharf (Holdings) Limited 1H20 Interim Results 2 2
Financial Highlights HKD Million 1H20 1H19 Group Revenue 5,551 8,064 • MLDP Dominated YoY Revenue & OP Decline Operating Profit 2,517 3,701 Underlying Net (Loss) / Profit (UNP)* (1,132) 2,236 • HKDP Provision ($2.9B) Broke the Back of UNP (Loss)/ Profit Attributable to Equity (1,741) 2,450 Shareholders • IP Revaluation Deficit ($0.6B) Modest (Loss)/ Earnings Per Share (HK$) - Attributable to Equity Shareholders (0.57) 0.80 • IP Valuation $73.2B; Properties for Sale $40.7B - Underlying* (0.37) 0.73 Dividend Per Share (HK$) 0.20 0.25 * Underlying Net (Loss)/Profit – Excl. IP Revaluation Surplus/(Loss) & Exceptional Items The Wharf (Holdings) Limited 1H20 Interim Results The Wharf (Holdings) Limited 1H20 Interim Results 3 3
Asset Mix: Property-Centric Total Assets (Ex-Cash & Investments) $176B Mainland China Properties 71% 90% HK Others Logistics 29% 1% 9% The Wharf (Holdings) Limited 1H20 Interim Results The Wharf (Holdings) Limited 1H20 Interim Results 4 4
Overview Recurring Income Asset Turns Financial Management The Wharf (Holdings) Limited 1H20 Interim Results The Wharf (Holdings) Limited 1H20 Interim Results 5 5
MLIP - Brisk Post-outbreak Recovery Mainland IP Revenue (HKD billion) 1H 2H • 2Q Tenant Sales Rebound from Effective Sales- 2020 1.9 driving Initiatives • Sales Growth in May & Jun Driven by Luxury 2019 2.0 1.9 3.9 Segment 2018 1.6 1.8 3.4 • Tenant Support Measures Amidst Pandemic Hit 2017 1.2 1.4 2.6 • Revenue Growth Streak Disrupted by Pandemic 2016 1.2 1.2 2.4 The Wharf (Holdings) Limited 1H20 Interim Results The Wharf (Holdings) Limited 1H20 Interim Results 6 6
CDIFS – Testing First Half 1H20 CDIFS Mall • Outstanding Mkt Position Soften Pandemic Blow Net Revenue (Net of Tax) -7% • Double-digit Sales Growth in May & Jun Retail Sales -11% • Double-digit Retail Rental Reversion • Office Among the City’s Highest Rental Rates & Occupancy Cost* 14% 83% Occupied * Incl. Impact on Rental Income Due to COVID-19 Occupancy Cost = Retail Rental/ Retail Sales The Wharf (Holdings) Limited 1H20 Interim Results The Wharf (Holdings) Limited 1H20 Interim Results 7 7
CSIFS – Testing First Half 1H20 CSIFS Mall • Positive Sales Growth & Close to Full Occupancy Net Revenue (Net of Tax) +3% – Despite Mandatory Mall Closure for 11 days Shortly after CNY Retail Sales +6% • Record-breaking Sales in May Occupancy Cost* 11% • Office Occupancy Grew Noticeably * Incl. Impact on Rental Income Due to COVID-19 Occupancy Cost = Retail Rental/ Retail Sales The Wharf (Holdings) Limited 1H20 Interim Results The Wharf (Holdings) Limited 1H20 Interim Results 8 8 8
Wharf Hotels – Sector in Stress • Travels were Sharply Curtailed, particularly Cross-border • Proactive Plan Against Pandemic Since 2015 Since 1970s – Health & Safety Initiatives Award-winning, Business Travel Brand Contemporary Chic – Cost Containment Measures – Concurrently Preparing for Borders Reopening & 4 Owned & Managed 13 Owned & Managed in HK & Mainland in HK, Mainland & Travel Resumption the Philippines The Wharf (Holdings) Limited 1H20 Interim Results The Wharf (Holdings) Limited 1H20 Interim Results 9 9
Niccolo – New Brand, New Frontiers RGI vs. Competitive Set Chengdu* Chongqing* Changsha* • Revenue Yield Per Room Leads Markets Rank 1 st 2 nd 1 st • Rewarding GOP Promptly Achieved Post-Opening RGI # 225 148 203 • Niccolo Suzhou to Open in 1H21 YoY Chg +20 +29 +93 * Opening Date: Chengdu Apr-15, Chongqing Sep-17, Changsha Oct-18 # RGI (Revenue Generating Index) is an Index of RevPARs of All Hotels in the Same Competitive Set. RGI of 225 Means Outperforming the Comp Set Avg. (of 100) by 125% The Wharf (Holdings) Limited 1H20 Interim Results The Wharf (Holdings) Limited 1H20 Interim Results 10 10
Logistics – More Challenges Than Ever Modern Terminals (1H20) Revenue $1,196M (-4%) Operating Profit $190M (-13%) • Cargo Flow Still Hurting from COVID-19 Throughput (million TEUs) HK 2.4 -5% • MTL HK Throughput -5% DCB # 0.6* -11% SCT # 2.5* -12% • Macro Challenges & Regional Competition Total 5.5 -8% • HK Seaport Alliance (Since 1 Apr 2019) Hong Kong Air Cargo Terminals Ltd (HACTL)^ Total Throughput 0.7M Tonnes (+1%) – Rebuilding HK Port Competitiveness * Total Throughput (Instead of Attributable) Market Throughput: Kwai Tsing -5%; Shenzhen -14% # DCB: 65%-owned; SCT: 20%-owned; HACTL: 20.8%-owned The Wharf (Holdings) Limited 1H20 Interim Results The Wharf (Holdings) Limited 1H20 Interim Results 11 11
Overview Recurring Income Asset Turns Financial Management The Wharf (Holdings) Limited 1H20 Interim Results The Wharf (Holdings) Limited 1H20 Interim Results 12 12
MLDP – Pandemic Disruption 1H20 Contracted Sales Sales RMB 8.1B +24% • Distorted Timing of Schedule from Muted GFA 241,500 s.m +26% Activities in 1Q ASP RMB 32,800 psm +4% • Sales Tempo Starts to Resume in 2Q 2020 Sales Target • Impact from ASP Control Continues 2020 Sales Target RMB 15B Sellable Resources 1.3M s.m The Wharf (Holdings) Limited 1H20 Interim Results The Wharf (Holdings) Limited 1H20 Interim Results 13 13
MLDP – Increase in Net Order Book 1H20 Operating Matrix Revenue $4,275M -18% Operating Profit $1,172M -36% • Net Order Book RMB31.4B or 1.0M s.m • 2020 Target Completion 1.2M s.m Operating Margin 27% -8 ppts Completed GFA 133,800 s.m +28% Recognized GFA 182,600 s.m +74% The Wharf (Holdings) Limited 1H20 Interim Results The Wharf (Holdings) Limited 1H20 Interim Results 14 14
MLDP – Prudent & Selective Landbanking • Mainland DP Landbank: 3.3M s.m – No Land Purchase in 1H20 Beijing • Selective Strategy to Sustain Quality & Return Suzhou • Key Cities in Hangzhou, Beijing, Shanghai, Shanghai Hangzhou Suzhou The Wharf (Holdings) Limited 1H20 Interim Results The Wharf (Holdings) Limited 1H20 Interim Results 15 15
HK Properties – Quality Landbank Total Attributable GFA* 3.3M s.f • HK Landbank* 3.3M s.f Kowloon Tong Portfolio 13% • Luxury & Scarcity Kowloon East Portfolio 62% – Peak Portfolio & Kowloon Tong Project # Peak Portfolio 8% • CBD2 Potentials Others 17% – Kowloon East Portfolio * Incl. IPs in HK # Impairment provision made as a matter of prudence The Wharf (Holdings) Limited 1H20 Interim Results The Wharf (Holdings) Limited 1H20 Interim Results 16 16
Mount Nicholson – Most Valuable in Asia 1H20 Contracted Sales $533M 1 Apartment • About 80% Houses & Apartments Sold ($116,000 psf) – Record-breaking Prices in the Region Accumulated Sales* • Attributable Operating Profit $286M 17 Houses $94,000 psf • 1 House & 1 Apt to be Recognised in 2H20 37 Apartments $90,000 psf Accumulated Sales $27.9B (Gross Basis) *Mount Nicholson comprises 19 Houses & 48 Apartments The Wharf (Holdings) Limited 1H20 Interim Results The Wharf (Holdings) Limited 1H20 Interim Results 17 17
Overview Recurring Income Asset Turns Financial Management The Wharf (Holdings) Limited 1H20 Interim Results The Wharf (Holdings) Limited 1H20 Interim Results 18 18
Prudent Financial Management Debt Maturity (HKD billion) (As at 30 Jun 2020) Jul - Jun 2020/21 6.4 • Net Debt: $23.9B; Gearing: 16.7% 2021/22 8.1 • Average Interest Cost: 3.4% 2022/23 5.4 • Interest Cover: 3.8x 2023/24 15.8 • Floating Rate Debt: 79% 2024/25 1.2 Jul 25 & After 5.3 Total: $42.2B The Wharf (Holdings) Limited 1H20 Interim Results The Wharf (Holdings) Limited 1H20 Interim Results 19 19
Outlook The Wharf (Holdings) Limited 1H20 Interim Results The Wharf (Holdings) Limited 1H20 Interim Results 20 20
Outlook • Macro Parameters Ever More Testing – All Eyes on COVID Vaccine & Recovery – Massive QE & Fiscal Relief vs. Economic Contraction Around the World – Paradigm Shift in Sino-US Relations & Unprecedented Tension • Sound Balance Sheet & Prudent Financial Management The Wharf (Holdings) Limited 1H20 Interim Results The Wharf (Holdings) Limited 1H20 Interim Results 21 21
Sustainability The Wharf (Holdings) Limited 1H20 Interim Results The Wharf (Holdings) Limited 1H20 Interim Results 22 22
Key Sustainability Performance • Constituent member of Hang Seng Corporate Sustainability Index • Awarded 10 Years+ Caring Company Logo, CSR Index Plus, Social Capital Builder Logo Award • Published the 6 th standalone Sustainability Report in accordance with Core option of the GRI Standards and HKEX ESG Reporting Guide • Completed a preliminary climate risk mapping exercise with reference to the TCFD framework • Aligned 11 of 17 UNSDGs The Wharf (Holdings) Limited 1H20 Interim Results The Wharf (Holdings) Limited 1H20 Interim Results 23 23
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