Poly Property (119.HK) 2017 Annual Results Announcement Mar 2018
Contents 1. Financial Highlights 2 2. Business Review 8 3. Land Reserve 12 4. Future Outlook 16 5. Appendix 20 1
1. Financial Highlights 2
Income Highlights HK$ million 2017 2016 Change Revenue 31,703 30,580 3.7% Gross Profit 6,541 4,998 30.9% Gross Profit Margin (%) 20.6% 16.3% 4.3 pts Core Net Profit 1,960 519 277.6% Core Net Profit Margin (%) 6.2% 1.7% 4.5 pts Profit Attributable to Owners 2,462 81 2939.5% of the Company Earnings Per Share (HK cents) 67.24 2.21 2942.5% Note: Core net profit is net profit excluding change of fair value of investment properties and exchange gain or loss. 3
Key Financial Indicator Revenue (HK$ million) GP (HK$ million) and GPM (%) 40,000 30,000 20,000 10,000-24,933 30,580 31,703 8,000 6,000 4,000 2,000 - Gross Profit 11.5% 2,869 Gross Profit Margin 20.6% 16.3% 6,541 4,998 30.0% 20.0% 10.0% 0.0% 2015 2016 2017 2015 2016 2017 NP (HK$ million) and NPM (%) Core NP (HK$ million) and Core NPM (%) Net Profit Net Profit Margin Core Net Profit Core Net Profit Margin 4,000 2,000 - (2,000) (4,000) -11.1% (2,772) 8.1% 0.7% 221 2,567 10.0% 0.0% -10.0% -20.0% 4,000 2,000 - (2,000) (4,000) -11.3% (2,821) 6.2% 1.7% 519 1,960 10.0% 0.0% -10.0% -20.0% 2015 2016 2017 2015 2016 2017 4
Assets and Liabilities HK$ million 2017 2016 Change Total Assets 128,778 122,073 5.5% Total Cash 21,251 18,367 15.8% Total Liabilities 97,962 95,091 3.0% Total Debt 46,825 47,624-1.7% Equity Attributable to Owners of the Company 28,296 24,697 14.6% Net Assets per Share (HK$) 7.73 6.74 14.7% Net Gearing Ratio (%) 90% 118% -28 pts Note: [1] Total Cash = Bank balances, deposits, and cash + Pledged bank deposits [2] Total Debt = Bank and other borrowings + Notes payable [3] Net Gearing Ratio = (Total Debt Total Cash)/ Equity Attributable to Owners of the Company 5
Key Financial Indicator Total Cash and Total Debt (HK$ billion) Total Cash/ Total Assets (%) Total Cash Total Debt 17.0% 60.0 53.2 47.6 46.8 16.0% 16.5% 40.0 20.0-18.3 18.4 21.3 2015 2016 2017 15.0% 14.0% 13.0% 15.0% 14.2% 2015 2016 2017 Net Gearing Ratio (%) Average Funding Cost (%) 150% 8.00% 100% 50% 137% 118% 90% 6.00% 4.00% 2.00% 6.30% 5.55% 5.20% 0% 2015 2016 2017 0.00% 2015 2016 2017 6
Debt Structure As of Dec 31 2017, the Group had a total debt of HK$46.8 billion, among which, onshore debt accounts for 80% and offshore debt accounts for 20%. Breakdown of Total Debt (HK$ billion) by Type by Maturity Notes 19.7 billion 3.9 billion 8% Bank loans 42% 25.0 billion 8.5 billion 10.7billion Trust loans 38% 54% 18% 23% 4.5 billion 3.4 billion 10% 7% 17.9 billion 2018 2019 2020 2021 2022 + 7
2. Business Review 8
Recognized Sales In 2017, the Group recognized a total sales value of RMB26.4 billion and a total GFA of 2.43 million sq. m.. The recognized average selling price was approx. RMB10,865 per sq. m.. The recognized ASP slightly fell 2% compared to last year due to that Yangtze River Delta and Pearl River Delta, which had higher ASP, accounted for 53% of total recognized sales in 2017, representing a decrease of 5 pts compared to last year. Recognized Sales and ASP Breakdown of Recognized Sales by Regions 30 26.2 26.4 15,000 Other Regions Yangtze River Delta 20 10 20.2 8,758 11,111 10,865 10,000 5,000 Recognized ASP: RMB10,357 per sq. m. 27% Recognized ASP: RMB16,636 per sq. m. 36% 0 2015 2016 2017 Recognized Sales (RMB billion) - Southwestern Recognized ASP: RMB6,368 per sq. m. 20% 17% Pearl River Delta Recognized ASP: RMB13,062 per sq. m. Recognized ASP(RMB per sq. m.) 9
Contracted Sales In 2017, the Group recorded a tax-inclusive contracted sales of RMB40.2 billion and a total GFA of 2.64 million sq. m.. The contracted average selling price was RMB15,204 per sq. m.. Excluding the sales of Hong Kong projects, the contracted ASP in the Mainland China market was approx. RMB13,195 per sq. m.. Contracted Sales and ASP Breakdown of Contracted Sales by Regions 50.0 40.0 30.0 20.0 30.0 34.9 12,528 40.2 13,195 13,500 13,000 12,500 12,000 HK & Overseas Contracted ASP: RMB203,732 per sq. m. 14% Yangtze River Delta Contracted ASP: RMB28,668 per sq. m. 22% 10.0 0.0 11,735 2015 2016 2017 11,500 11,000 Other Regions 23% Contracted ASP: RMB11,691 per sq. m. 29% Pearl River Delta 12% Contracted ASP: RMB16,868 per sq. m. Contracted Sales (RMB billion) Contracted ASP (RMB per sq. m.) Southwestern Region Contracted ASP: RMB9,447 per sq. m. 10
Newly Launched Projects Project Vibe Centro Project Ningbo Prosperous Reflection Location Kai Tak, Hong Kong Location Eastern New City Type Residential Type Residential GFA Approx. 70,000 sq. m. Launch Mar 2017 GFA Approx. 480,000 sq. m. Launch Jun 2017 Project Yantai Poly Ocean Luxe Project Jinan Phili House Location Gaoxin District Location Licheng District Type Residential Type Residential GFA Approx. 205,000 sq. m. Launch Aug 2017 GFA Approx. 282,000 sq. m. Launch Dec 2017 11
3. Land Reserve 12
New Land Acquisition In 2017, the Group acquired 13 pieces of land with a total GFA of approx. 3,793,000 sq. m.. The average land cost was approx. RMB6,040 per sq. m.. The total GFA attributable to the Group was approx. 2,519,000 sq. m.. 000 sq. m. Type Site Area Total GFA Interest Attributable GFA Deqing Poly Prime Regency Residential 28 49 100% 49 Nanning Poly Town Phase Ⅱ Residential 307 1,399 100% 1,399 Jinan Phili House Residential 71 282 25% 71 Jinan Hai Zi Wa Project Residential 102 188 60% 113 Suzhou Wei Tang Project Residential 57 150 100% 150 Ningbo Prosperous Reflection Residential 157 480 33% 158 London Cambium Project Residential 13 16 50% 8 Jinan Da Shi Zi Yuan Project Residential 58 155 51% 79 Foshan Chan Cheng Project Residential 28 128 100% 128 Weihai Xiang Gang Road Project Residential 124 334 30% 100 Jinan Zhang Qiu Project Residential 110 287 33% 95 Suzhou Luzhi Project Residential 60 170 40% 68 Zibo Xin Hua Road Project Residential 48 155 65% 101 Total 1,162 3,793 2,519 13
Total Land Bank As of Dec 31 2017, The Group had a total land bank of approx. 20.24 million sq. m. with average land cost of RMB4,007 per sq. m.. The total GFA under construction and held for future development were 8.67 million sq. m. and 11.57 million sq. m. respectively. The total GFA of attributable land bank was approx. 13.11 million sq. m.. Breakdown of Attributable Land Bank by City HK & Overseas 1% Tie 1 Cities Tie 3&4 Cities 23% 8% Tie 2 Cities 68% Other Regions HK & Overseas 1% Yangtze River Delta 23% by Region 48% 15% Southwestern 13% Pearl River Delta Note: The attributable land bank in Nanning and Guiyang account for 44% and 30% of Southwestern Region respectively. 14
Investment Properties As of Dec 31 2017, the total GFA of the investment properties held by the Group was approx. 694,000 sq. m.. The asset values of investment properties and hotels held by the Group were approx. HK$10.9 billion and HK$1.5 billion respectively. City Projects Property Type GFA held ( 000 sq. m.) Interest 2017 avg. occupancy rate Beijing Beijing Poly Plaza (Office) Office 15 75% 100% Shanghai Shanghai Shenzhen Wuhan Guiyang Shanghai Poly Plaza (Partial) Shanghai Stock Exchange Building (Partial) Shenzhen Poly Culture Plaza (Partial) Wuhan Poly Plaza (Partial) Guiyang Poly International Center Office and commercial 34 100% 92% Office 48 100% 90% Commercial 135 100% 100% Office and commercial 97 100% 85% Commercial 52 66.5% 100% Beijing Beijing Poly Plaza (Hotel) Hotel 63 75% 76% Wuhan Wuhan Poly Hotel Hotel 28 100% 72% Guiyang Poly Guiyang Hot Spring Hotel Hotel 39 66.5% 55% 15
4. Future Outlook 16
2017 Review In 2017, the Group embraced the general principle of pursuing steady growth, encouraging structural refinement, and facilitating reform for a new operating landscape, while making good progress in all of the aforementioned aspects The total GFA of inventory held by the Group was approx. 1.24 million sq. m. as at end of 2017, representing a decrease of 20% yoy. The sell through rate achieved 75% for projects in Southwestern Region, representing an increase of 10 pts compared to last year Destocking Optimize Structure Debt control Margin Increase The cost of recognized projects in 2017 decreased 8% yoy, among which, the construction cost decreased 5% yoy. The contracted ASP of projects in Southwestern Region increased 32% yoy to RMB9,447 per sq. m., indicating significant improvement The net gearing ratio decreased to 90% as at end of 2017, representing a decrease of 28 pts. The average funding cost decrease from 5.55% as at end of 2016 to 5.20% as at end of 2017 17
2018 Outlook and Strategy 2018 Outlook Strategy It is expected that China real estate market will continue to be under stable control with more specific regulatory framework for the long term housing mechanism Government may further introduce policies on financial regulation and deleveraging, potentially leading to material impact on real estate financing and sales The land market will become more rational and local governments may increase supply related to rental houses Under the notion of Houses are for living but not for speculating, the Group will focus on the mainland real estate development, steadily increase sales and investments, while actively explore more value-added projects to drive profitability and brand development The Group will improve sales collection and cash flow management; refine debt structure and explore new financing channels; fully dig for the opportunities of deep cooperation between real estate and financial business to realize the rapid integration and collaborative innovation of capital and industry Maintain a quality and cost effective land reserves, with steady replenishment particularly in the booming first and second-tier cities. Proactively explore new business models such as themed real estate, and fast track the establishment of industry fund and overseas investment 18
2018 Target Contracted Sales Newly Commenced Construction Completed Construction (RMB billion) GFA (million sq. m.) GFA (million sq. m.) 40.2 40.0 2.37 2.80 3.07 3.00 2017 2018 2017 2018 2017 2018 2018 Key Cash Flow (RMB billion) Cash Inflows Cash Outflows - Property Sales 28 - Land Premium 10 - Construction Cost 11 - Other Expenses 7 19
5. Appendix 20
Details of Land Bank Project (000' sq. m.) City Tier Area under Construction Held for Future Development Total Land Reserves Interest Attributable GFA Shanghai Jiading Project Tier 1 164-164 100% 164 Shanghai Poly Greenland Plaza Tier 1 208-208 50% 104 Shanghai Shan Jin Poly Plaza Tier 1 121-121 50% 60 Shanghai Xijiao Jinmao Palace Tier 1 216-216 14.9% 32 Suzhou Poly West Bank Villa Tier 2 6-6 100% 6 Suzhou Poly Lake Mansion Tier 2 241 100 340 100% 340 Suzhou Wei Tang Project Tier 2 150-150 100% 150 Suzhou Lu Zhi Project Tier 2-170 170 40% 68 Ningbo Poly City Tier 2 88 299 387 100% 387 Ningbo Poly Wonderland Tier 2 82-82 100% 82 Ningbo Prosperous Reflection Tier 2 223 257 480 33% 158 Yuyao Poly Jordan International Tier 4 13 281 294 100% 294 Deqing Poly Origin Tier 4 24 68 92 100% 92 Deqing Poly Prime Regency Tier 4 49-49 100% 49 Total in Yangtze River Delta 1,586 1,174 2,759 1,987 Guangzhou Poly Gratified West Bay Tier 1 26 446 472 55% 260 Guangzhou Nansha Poly City Tier 1 227 287 514 85% 437 Guangzhou Poly Jade Hills Tier 1 65-65 100% 65 Foshan Poly Central Park Tier 2 255-255 100% 255 Foshan Chan Cheng Project Tier 2-128 128 100% 128 Huizhou Poly Deutch Kultur Tier 3 24-24 80% 19 Huizhou Poly Sunshine Town Tier 3 353 356 709 70% 496 Total in Pearl River Delta 949 1,217 2,166 1,660 Guiyang Poly Spring Street Tier 2 42 180 222 66.5% 148 Guiyang Poly Park 2010 Tier 2 393 687 1,080 100% 1,080 Guiyang Poly The Place of A Lake Tier 2 304 4 308 50% 154 Guiyang Poly Phoenix Bay Tier 2 621 405 1,027 51% 524 Zunyi Poly Metropolis of Future Tier 3 500 2,823 3,324 35% 1,163 Nanning Poly Crescendo Tier 2 172 105 277 100% 277 21
Details of Land Bank Project (000' sq. m.) City Tier Area under Held for Future Total Land Attributable Interest Construction Development Reserves GFA Nanning Poly Dream River Tier 2 210-210 30% 63 Nanning Poly Hearty Tier 2 191-191 100% 191 Nanning Poly Town Tier 2 1,059 665 1,724 46.7% 805 Nanning Poly Town, Phase Ⅱ Tier 2-1,399 1,399 100% 1,399 Liuzhou Poly Merization World Tier 3 216-216 100% 216 Kunming Poly One Family One World Tier 2 365-365 73% 266 Total in Southwestern 4,074 6,268 10,342 6,286 Wuhan Poly City Tier 2 440 459 900 68% 612 Wuhan Yangyuan Project Tier 2 141-141 51% 72 Wuhan Poly Park Tier 2-252 252 55% 138 Wuhan Poly Up Town Tier 2 451 156 608 64.3% 391 Harbin Poly The Water's Fragrant Dike Tier 2 111 140 251 58% 146 Harbin Poly City Tier 2 136 121 256 100% 256 Jinan Poly Hyde Mansion Tier 2 69-69 100% 69 Jinan Poly Center Tier 2 153-153 85% 130 Jinan Poly Elegant Garden Tier 2 128-128 80% 102 Jinan Phili House Tier 2 74 208 282 25% 71 Jinan Hai Zi Wa Project Tier 2-188 188 60% 113 Jinan Da Shi Zi Yuan Project Tier 2-155 155 51% 79 Jinan Zhang Qiu Project Tier 2-287 287 33% 95 Yantai Poly Ocean Luxe Tier 2 121 84 205 70% 144 Weihai Poly Maple Valley Tier 3 129-129 70% 91 Weihai Xiang Gang Road Project Tier 3-334 334 30% 100 Zibo Xin Hua Road Project Tier 3-155 155 65% 101 Hainan Wanning Poly Peninsula No.1 Tier 4-369 369 100% 369 Total in Others 1,954 2,909 4,863 3,078 Hong Kong Kai Tak Vibe Centro Hong Kong 70-70 100% 70 Hong Kong Tuen Mun Project Hong Kong 21-21 100% 21 UK London Cambium Project Overseas 16-16 50% 8 Total in HK & Overseas 108-108 100 Total 8,670 11,568 20,238 13,110 22
Thank you! 23