THE HONGKONG AND SHANGHAI HOTELS

Transcription

1 THE HONGKONG AND SHANGHAI HOTELS 2018 APRILINVESTOR 2018 INVESTOR PRESENTATION PRESENTATION

2 DISCLAIMER This presentation ( Presentation ) is made available by The Hongkong and Shanghai Hotels, Limited ( HSH ) for general purposes only. Nothing contained in this Presentation is intended to constitute a public offer under any legislation or an invitation or inducement to engage in any investment activity. No liability will be accepted for any loss or damage howsoever arising from or in reliance upon the contents of this Presentation. HSH makes no recommendation to buy, sell or otherwise deal in shares of HSH or in any other securities or investments whatsoever and you should neither rely nor act upon, directly or indirectly, any information contained in the Presentation as investment advice in respect of any such investment activity. Any person at any time considering in engaging in investment activity should seek appropriate professional, financial or other advice and not rely on the information contained in the Presentation. DISCLAIMER

3 OVERVIEW OF THE BUSINESS COMPOSITION HSH Group operates under three divisions Hotels 10 hotels in operation, 3 hotels under development Commercial Properties 5 commercial property assets spanning residential, office and retail Clubs and Services Peak Tram, golf courses, club management and merchandising 3

4 PENINSULA HOTELS - OVERVIEW Hotels Group s Share of Interest The Peninsula Hong Kong 100% The Peninsula New York 100% The Peninsula Tokyo 100% The Peninsula Chicago 100% The Peninsula Beijing 76.6% The Peninsula Bangkok 50% The Peninsula Manila 77.4% The Peninsula Shanghai 50% The Peninsula Paris 20% The Peninsula Beverly Hills 20% 4

5 COMMERCIAL PROPERTIES - OVERVIEW Commercial Properties Group s Share of Interest The Repulse Bay Complex, Hong Kong 100% The Peak Tower, Hong Kong 100% St. John s Building, Hong Kong 100% 21 avenue Kléber, Paris 100% The Landmark, Vietnam 70% * * As of 1 April 2017, 1-5 Grosvenor Place building was completely vacated and this asset is classified as property under development. 5

6 GROUP OVERVIEW CLUBS & SERVICES Clubs & Services Group s Share of Interest Thai Country Club 50% Quail Lodge & Golf Club, USA 100% The Peak Tram, Hong Kong 100% Tai Pan Laundry, Hong Kong 100% Peninsula Merchandising 100% Peninsula Clubs & Consultancy Services 100% 6

7 FINANCIAL REVIEW 7

8 FY2017 KEY HIGHLIGHTS 3% Revenue - Positive contributions from majority of operations, in particular PBJ - Discontinued operations negated some of PBJ s recovery - Decline in PHK Arcade biggest drag 10% EBITDA - Strong flow-through from most operations - HO cost savings vs 2016 Capital Expenditure - Total capex (normal & special) on existing assets down 40% - Expenditure on new projects & acquisitions HK$1bn Financial Health - Gearing remains low at 13% - Cash interest cover healthy at 11.9x - 65% of interest expenses fixed 8

9 FINANCIAL HIGHLIGHTS PROFIT & LOSS HK$ million Change Revenue 5,782 5,631 3% EBITDA 1,422 1,288 10% EBITDA margin 25% 23% 2pp Increase in fair value of investment properties n/a Share of results of PSH, PBH and PPR (121) (5) n/a Profit attributable to shareholders 1, % Underlying profit % PSH : Include provision for LAT & other transaction costs from reclassification of apartments for lease to apartments for sale 9

10 OUR BALANCE SHEET REMAINS STRONG HK$ million Fixed assets 43,355 40,712 Cash at banks and in hand 1,922 2,087 Total assets 48,520 45,870 Borrowings - Current - Non-current (3,391) (4,052) (2) (6,996) Net assets 38,702 36,574 Significant increase in LT borrowings falling due within 12 months being managed. Mostly due in 2H 2018 NAV per share Adjusted NAV per share

11 CHANGE IN APPROACH TO UNDERLYING PROFIT TO REFLECT COMMERCIAL REALITY OF PSH APARTMENTS SALE 11 apartments sold by the JV in Shanghai; HSH acquired 5 Accounting treatment: - No accounting profit as apartments were sold at appraised book value - Recognised non-cash loss (provision for LAT & other transaction costs) from reclassification from Apartments for lease to Apartments for sale Our underlying profit reversed non-cash loss and adds back previously booked cumulative revaluation gains HSH Underlying Profit (HK$'m) Profit attributable to shareholders 1, Less: IP - Revaluation gain & tax effect (629) (88) Add: (i) PSH apartments for sale - Provision for LAT + transaction costs & PSH arcade revaluation loss (ii) PSH apartments sold Cumulative revaluation gain Underlying profit

12 HOTELS DROVE EARNINGS GROWTH HK$ MILLION Revenue GROUP S SUBSIDIARIES ASSOCIATES AND JV (2) COMBINED TOTAL GROUP S SUBSIDIARIES ASSOCIATES AND JV (2) COMBINED TOTAL 2017 vs 2016 Hotels 4, ,720 4, ,559 4% Commercial Properties % Clubs and Services % 5, ,313 5, ,150 3% EBITDA (1) Hotels % Commercial Properties % Clubs and Services % 1, ,583 1, ,426 11% EBITDA Margin Hotels 17% 30% 19% 16% 27% 17% 2pp Commercial Properties 59% 59% 55% 55% 4pp Clubs and Services 20% 20% 18% 18% 2pp Overall EBITDA Margin 25% 30% 25% 23% 27% 23% 2pp (1) Table includes management fees (2) Effective share 12

13 CASHFLOW & CAPITAL EXPENDITURE HK$ MILLION EBITDA 1,422 1,288 NET CHANGE IN WORKING CAPITAL AND TAX PAYMENTS (206) (112) NET CASH GENERATED FROM OPERATING ACTIVITIES 1,216 1,176 CAPITAL EXPENDITURE ON EXISTING ASSETS (601) (1,000) NET CASH INFLOW AFTER NORMAL CAPEX DIVIDENDS AND NET FINANCING CHARGES (203) (194) ACQUISITION OF ADDITIONAL INTEREST IN 1-5 GROSVENOR PLACE - (1,288) ACQUISITION OF 5 APARTMENT UNITS FROM JOINT VENTURE IN SHANGHAI Shift of capital expenditure from existing assets to new assets underway (423) - CAPITAL EXPENDITURE ON NEW PROJECTS (630) (131) NET CASH INFLOW/(OUTFLOW) FOR THE PERIOD (641) (1,437) 13

14 COST CONTAINMENT WAS A FOCUS IN 2017 Total Expenses + 2.2% + 2.2% -0.1% + 1.3% -0.4% Total Group expenses increased by 0.4% ($17m) Staff costs 49% of total costs Staff costs increased 1.3% whilst constant to revenue at 37% (2016, 2017) Other expenses declined year-on-year Major cost increases from - IT expenses as we invest in Data Analytics and Data Security - Utilities as PBJ and PCH resumed to normal business level 14

15 KEY CREDIT METRICS REMAIN HEALTHY Net Gearing (%) Cash Interest Cover Net Debt to EBITDA (1) EBITDA / cash interest expenses Fixed to Floating 33% 35% 67% 65% Fixed Floating 15

16 PENINSULA HOTELS PERFORMANCE HIGHLIGHTS The Peninsula Hong Kong reported an increase in occupancy and was able to maintain its position in terms of market share with an improved average room rate. The Peninsula Office Tower continues to perform well with 93% occupancy while The Peninsula Arcade revenue declined as a result of the lethargic luxury retail rental market. The Peninsula Shanghai remains the RevPAR market leader with increased average room rates and RevPAR. The Peninsula Beijing completed its extensive renovation in July 2017, transforming the property into an all-suite luxury hotel. The Peninsula Tokyo increased its revenue, occupancy and room rates and a corresponding increase in RevPAR. The Peninsula Bangkok and The Peninsula New York reported a stable 2017 while The Peninsula Manila experienced a challenging 2017 with revenue and rates decreasing. The Peninsula Chicago had a satisfactory year and achieved number one in RevPAR in its competitive set. The Peninsula Beverly Hills remained number one in RevPAR within its competitive set. The Peninsula Paris reported positive results with a 4% increase in revenue and a 9% increase in rates. 16

17 PENINSULA HOTELS FINANCIAL HIGHLIGHTS +78% +8% -9% 100% Basis 17

18 PENINSULA HOTELS REVENUE BREAKDOWN 9% 9% 17% 45% 15% 46% 29% 30% Group s subsidiaries only excluding JV and associates 18

19 OPERATING STATISTICS PENINSULA HOTELS 19

20 COMMERCIAL PROPERTIES PERFORMANCE HIGHLIGHTS The Repulse Bay Complex reported a good year in 2017 with increased revenue in the light of softer demand in the luxury residential leasing market in Hong Kong. The Peak Tower was fully leased for most of the year in 2017 and revenue increased more than 10%. Renovation of 21 avenue Kleber was completed in September 2017 and we have successfully leased the entire office and one of the two retail spaces to tenants commencing

21 COMMERCIAL PROPERTIES FINANCIAL HIGHLIGHTS Vacated during year and transferred to Investment Properties under development -62% 21

22 OPERATING STATISTICS LEASING 22

23 CLUB AND SERVICES PERFORMANCE HIGHLIGHTS The Peak Tram increased its revenue by 7% although patronage declined slightly for the full year To further enhance passengers experience, and reduce waiting time, we are investing in a new ticketing system and planning a full upgrade of the Peak Tram system and facilities subject to receiving the necessary approvals from the Hong Kong government. Revenue at Peninsula Merchandising was 11% higher than the same period last year, driven by higher sales and brand awareness following the launch of the new Peninsula Boutique at Hong Kong International Airport. We has implemented a new strategy of a broader range and seasonal promotions, which is expected to lead to a long-term increase in revenue as well as a broader earning base. 23

24 CLUBS AND SERVICES FINANCIAL HIGHLIGHTS +11% +7% +10% Discontinuation of CX lounges contract +9% -91% +10% 24

25 The Peninsula Beijing: A Transformation Start date: 2015 Completion date: July 2017 Cost: RMB890 million 25

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28 New Hotel Projects 28

29 THE PENINSULA LONDON Location: 1-5 Grosvenor Place in Belgravia, Central London (overlooking Hyde Park Corner and the Wellington Arch) Group s interest: 100% Project construction cost: Approximately 650 million Project detail: Mixed use development with 189-room hotel and 24 to 28 of luxury residential apartments for sale 29

30 THE PENINSULA YANGON Location: Central Yangon, Myanmar Group s interest: 70% Group s share of investment: Approximately US$100 million 30

31 THE PENINSULA ISTANBUL Location: Karakoy area of the Beyoglu district of Istanbul overlooking the Bosphorus Group s interest: 50% Group s share of investment: Approximately 150 million 31

32 OUTLOOK We continue to experience a stable and improving luxury hospitality market as well as solid demand for our luxury residential lettings Some improvements in the luxury retail sector although the overall market continues to adjust from previous boom years We are seeking to increase our market share at our recently renovated properties, The Peninsula Chicago and The Peninsula Beijing Peninsula Chicago s new rooftop bar to open in Summer Progress has been made with respect to containing costs and improving efficiency and we will look to continue these efforts Our balance sheet is well positioned to ride out potential economic turbulence 32

33 THANK YOU Q & A