2015 Annual Results Announcement March 24

Transcription

1 2015 Annual Results Announcement March 24

2 1 Company Introduction 2 Financial Highlights 3 Business Updates 4 Future Outlook 5 Q&A 2

3 Company Introduction Established in 1995, the Group is a well-known integrated real estate developer and commercial property operator Focusing on the development in Shenzhen and Pearl River Delta, the Group enjoys a regional advantage among the industry One of the pioneers in urban renewal in Shenzhen with an outstanding advantage in land acquisition The two-wheel driven business model of real estate development and commercial property operation is creating synergies Development History Began to engage in real estate development with roots in construction One of the pioneers in urban renewal Successfully developed Zoll and NEO brands Transformation and Expansion The Group s parent company was established and began to engage in the real estate industry Commenced the development of LVGEM Garden Estate, the first property development project of the Group Started to engage in urban renewal based on the relationship and connection established with villagers Completed popular high-grade real estate projects, such as LVGEM Garden, Lanwan Peninsula Community, Zhongcheng Tianyim, etc Developed NEO urban business complex, as one of the first class office landmark in Shenzhen Developed community shopping centers of Zoll, and successfully replicated the business model in other districts of Shenzhen Commence of the hotel LVGEM Jinjiang Since 2014 The Group is marching towards with refined and standardized management Rooted in the Pearl River Delta, exploring opportunities to expand into Hong Kong and Macao and other overseas markets Developed projects of International Garden (A1), Hongwan Garden, Mangrove Luxury Garden Formed the three business segments operating model 3

4 Shareholder structure after the completion of reverse takeover and new listing The group has completed the reverse takeover and new listing in On 30 November 2015, Hong Kong Stock Exchange approved all new shares with placement to be listed. Successfully introduced cornerstone investors: China Vanke Co., Ltd. (Stock code: 2202) Shenzhen Pingan Dahua Huitong Wealth Management Co., Ltd., a subsidiary of Ping An Insurance (Group) Company of China, Ltd. (Stock code: 2318) Shareholder Major shareholders and related parties Ordinary Shares Current shareholder structure Shareholding proportion Convertible Preference Shares 3,520,187, % 3,413,473,023 Vanke 300,000, % Pingan 300,000, % Other public shareholders 573,395, % Total Circulating Shares 4,693,582, % 4

5 Three Business Segments Property Development and Sales Commercial Property investment and Operations Comprehensive Services Urban boutique residence Hongwan Garden Mangrove Luxury Garden Community lifestyle centers and shopping Zoll Center Large urban complex NEO Urban Commercial Complex Property management services LVGEM Property Management Hotel operation LVGEM Hotel Property Development and Sales Commercial Property Investment and Operations Businesses Comprehensive Services Completed 19 property projects with an aggregate GFA of approximately 2,430,000 sq.m. Developing 2 projects in Shenzhen and 4 projects planned to be redeveloped Total of 8 properties as investment properties with an aggregate LFA of 212,000 sq.m. Successful Operation of Commercial Property Series Under the Zoll and NEO Brands Provides property management services Hotel operation and others 5

6 Core advantages of the Group A Shenzhen-Focused Property Company Following the strategic vision of In-depth development of core cities, focusing on city centers, the Group mainly chooses sites in downtown areas of economically vibrant cities such as Shenzhen, Zhuhai, Hong Kong, and Suzhou for its real estate development projects. Such areas have huge potential for development. Urban Renewal Professionist Dual Assets Class Entered International Capital Market Based on its success in urban renewal over the past 20 years, the Group has built a unique way of acquiring land resources: mergers and acquisitions + redevelopment. This is an efficient way of acquiring lands in prime locations and at controllable costs. It also enhances profitability. The Group s assets mainly include projects which are under development, projects to be developed and commercial properties. Those projects include property development and property management in the urban area of core cities and have high return rates and potential for appreciation. They help to enhance the Group s profitability and financial performance. The Group has an international platform for capital operation after it listed its real estate business on Hong Kong s stock market last year. Through this platform, the listed company can raise fund at low costs by issuing bonds, convertible bonds and shares, placing shares and a rights issue, etc. It can tap the capital markets of both China and Hong Kong flexibly according to the changes in interest rates and exchange rates. 6

7 1 Company Introduction 2 Financial Highlights 3 Business Updates 4 Future Outlook 5 Q&A 7

8 Financial Highlights Significant growth in contracted sales In 2015, contract sales reached RMB3.146 billion, up by 180%. Cash collection rate from contracted sales was at a high level of 97% in Gross Profit Margin remained at a high level Gross profit margin in 2015 was 52.5% (compared with 46.3% of 2014), which was still at a high level in the industry. Healthy rental income growth In 2015, rental income from commercial properties was stable, rental income generated from the commercial properties was RMB413 million, accounting for 34.1% of the Group s total revenue. (2014: RMB343 million). Average occupancy rate is 97.5%. Financial positions remained solid In 2015, a financing and refinancing of RMB billion was realized by the Group. Cash and cash equivalents, and restricted deposits are around RMB billion. Net borrowing ratio is 67.5% and net gearing ratio was 40.3%. Enhanced management capability A lot of work was done in 2015 in areas of financial management, strategic research, organizational control, accountability systems, standardization of technology, and team building, pushing up management ability to a new level. 8

9 Financial Summary (RMB million) Change Revenue 1,210 5, % Gross Profit 635 2, % Fair Value Gains % SG&A Expenses (1) % Net Profit 418 1, % Basic Earning per Share RMB RMB % Proposed Final Dividend per Share HKD 1 cent None N/A (RMB million) Change Cash 2,768 2, % Total Borrowings 8,234 8, % Gearing Ratio 40.3% 42.0% -4% Net Gearing Ratio 67.5% 72.5% -6.9% Total Assets 23,992 21, % Shareholders' Equity 7,973 8, % Net Asset per Share RMB 1.70 yuan RMB 1.72 yuan -1.3% Note: (1)Not including the one-off costs of reverse takeover and new listing that amount to RMB40 million 9

10 Revenue and Gross Profit Analysis Property project development Commercial property development Comprehensive services Revenue Gross Profit Gross Profit Margin Year-on-year change (RMB Million) % Year-on-year change ,687-88% 181 2,056-91% 31% 44% % % 85% 79% % % 46% 43% Total 1,210 5,245-77% 635 2,426-74% 52% 46% Total revenue in 2015 decreased compared to that of 2014 mainly due to the timing of the deliveries. Revenue from real estate development is mainly from the LVGEM International Garden section A1,A2 (accounted for 48%) located at the third tier city Maoming, Huazhou, and it led to the gross profit margin to reduce to 31% compared to the same period in Rental income increased in 2015 due to the start of operation of 1866 Zoll Center, and the acquisition of the SGV Plaza and the Garden Court Plaza. Revenue from the comprehensive services rose in 2015 due to the increase of management fee and management items. 10

11 Operating Ratio Change (percentage point) Gross Profit Margin 52.5% 46.3% 6.2 Administrative expenses (1) / Contracted sales Selling expenses/ Contracted sales 6.7% 15.1% % 4.6% -2.8 SG&A (1) /Contracted sales 8.5% 19.7% Net Profit Margin 35.1% 33.3% Gross Profit Margin 46.3% 52.5% Note: (1)Not including the one-off costs of reverse takeover and new listing that amount to RMB40 million Net Profit Margin 35.1% 33.3%

12 Debt Structure Analysis In 2015, financial performances is healthy. Total borrowings was 8,234 million. Cash and cash equivalents and pledged deposits was RMB 2,768 in total. Net borrowing ratio was 67.5%. Net gearing ratio was 40.3%. Borrowings in 2015 increased by RMB139 million, mainly due to the construction loan used on the construction of Mangrove Luxury Garden. The Group is accessing the international capital market through the listing platform in the future, expending financing channels proactively, optimizing financing method and reducing financing cost. Borrowings(RMB Million) 2015 Proportion Total offshore loans 83 1% Total onshore loans 8,151 99% Total 8, % By duration RMB (Million) Proportion Within 1 year/ as per requirement Onshore Debt Profile 1,580 19% 1-2 years 2,790 34% 2-5 years 1,790 22% More than 5 years 1,990 24% Total 8, % Finance Costs RMB million Interest Expense Capitalized Interest Net Interest Expense Weighted Average finance costs per annum 6.5% 6.53% 12

13 1 Company Introduction 2 Financial Highlights 3 Business Updates 4 Future Outlook 5 Q&A 13

14 Property Development and Sales Contracted Sales Recognised Sales Unrecognised Sales ,146 1,123 (RMB million) (RMB million) , (RMB million) In 2015, contracted property sales rose by 180% to RMB 3,146 million Cash collection rate from contracted sales was at a high level of 97% in 2015 Unrecognised contracted sales of RMB 3,627 million will provide a solid foundation for future recognised revenue 14

15 Property development and sales Following the strategic vision of In-depth development of core cities, focus on city center, the Group s real estate projects is situated mainly in the urban areas of economically developed cities such as Shenzhen, Zhuhai, Hong Kong, and Suzhou. Hongwan Garden LVGEM International Garden(A2) Region: Central business district of Futian District, Shenzhen. Adjacent to the Mei Lin metro station It is planned to include five highrise residential buildings and two apartment buildings in addition to Hongwan Zoll Center Total site area: 32,785 sq.m. GFA: 367,372 sq.m. Completion date: 17 November 2015 Mangrove Luxury Garden Region: Central business district of Futian District, Shenzhen. Located in the southeast corner of the intersection of Shazui Road and Jindiyi Road In addition to Mangrove Luxury Garden Zoll Center, it is planned to include three residential buildings and one integrated building with offices, a hotel and apartments Total site area: 24,424 sq.m. GFA: 305,450 sq.m. Estimated completion date: March 2017 Region: Maoming, Guangdong. Located at the northwest region of Juzhou Park on Hexi Road It is expected to comprise six residential buildings and two commercial buildings Total site area: 55,032 sq.m. GFA: 211,839 sq.m. The land lot is located in a well developed residential area with good natural environment and is within reasonable proximity to Juzhou Park. It is well-served by public transportation and is approximately 10 minutes from the city center by car Completion date: 23 December

16 Commercial property investment and operation Revenue from the investments and operations of commercial properties is approximately RMB413 million accounting for 34.1% of the Group s total revenue Occupancy rate commercial property remain high, of which occupancy rate for the NEO complex was about 98%, and occupancy rate for 1866 Zoll Centre and was Xiangsong Zoll centre were about 96% Rental Income Gross Profit Gross Profit Margin (RMB Million) % 85% % 82% 80% 79% 78% 76% (RMB Million) Percentage Chanson Zoll Center, 1866 Zoll Center Longhua District, Shenzhen Total leasable area of 67,000 square meters Rental rate of 96% With about 160 tenants, it has established a good working relationship with well-known brands, such as Vanguard 16 NEO Urban Commercial Complex is composed of three buildings, i.e. Block A (Grade A office building, one of the highest skyscrapers in Shenzhen), Block B and C, offering office, retail and residential space Total leasable area of over 100,000 square meters As of April 30, 2015, the overall average occupancy rate was about 98%

17 Commercial Property Under Development Three commercial properties under development, namely Hongwan Zoll Centre, Mangrove Luxury Garden Zoll Centre and Suzhou NEO Commercial Property Under Development Commence Operation Lettable Area Hongwan Zoll Centre Planning to open for business in ,481 sq.m. Mangrove Luxury Garden Zoll Centre Planning to open for business in ,500 sq.m. Suzhou NEO To be determine 12,000 sq.m. Hongwan Zoll Centre CBD of Futian District, Shenzhen Superstructure adjacent to Merlin Station of Subway Line 7 Total planned leasable area of 34,000 square meters Expected to begin operation by 2H 2016 Expected to introduce over 100 shops Mangrove Zoll Center CBD of Futian District, Shenzhen Close to Shawei Station of Subway Line 7 Total planned leasable area of 21,000 square meters Expected to begin operation by 2017 Expected to introduce over 100 shops Suzhou NEO East of River Yuelai and West of Ta Yun RoZad, Economic Development Area in Wuzhong District, Suzhou Total site area:14,592 sq.m Construction area: 82,000 sq.m Apartments and office space area: of 45,000 sq.m Saleable area:12,000 sq.m. 17

18 Land Bank One of the pioneers in urban renewal in Shenzhen, through engaging in urban renewal based on the relationship and connection established with villagers, accumulating extensive experience Renewal of urban villages and renewal of old industrial sites was be the main sources of the Group s land acquisition Among 19 completed projects,12 projects were acquired through urban renewal The land for 2 projects under development (namely Mangrove Luxury Garden Zoll Center and Mangrove Luxury Garden) was also acquired through this method Basic flow of urban renewal Contact and express interest Obtain approval from shareholders of the Villagers-representative Company or the property owners to enter into Letter of Intent and/or Master Development Agreement Sign the Letter of Intent and/or Master Development Agreement Obtain approval of the redevelopment plan from the relevant governmental authority Enter into Resettlement and Demolition Plans with the Villagers-representative Company or property owners Obtain confirmation from the relevant government authority that the Group is the designated urban redeveloper Obtain the Land Planning Permits from the relevant governmental authority upon completion of resettlement and demolition work Enter into Land Grant Contract with the relevant governmental authority 18

19 Land Bank Advantage of urban renewal Able to obtain large land plots in the core urban areas in a cost-effective manner Avoid the competitive auction process Compared with the auction process, urban renewal requires less initial investment for land use right acquisition Shenzhen total transaction site area ( 000 sq.m.) 4,802 2,652 2,700 1,520 1,457 1, Shenzhen average price of site area (RMB per sq.m.) 36,334 37,924 5,246 3,229 7,129 7, The number of new land transactions has been decreasing every year since 2010 The average price of site area increased rapidly representing a CAGR of 48.5% since Shenzhen land supply through urban renewal (sq.km.) Shenzhen land area for construction (sq.km.) New Land Renovated Land Constructed Land In 2011, land supply through urban renewal exceeded new land supply in Shenzhen for the first time Urban renewal is expected to be the most important source of land supply in the following five years For an urban renewal project, the land cost consists of land grant fee, compensation for demolition and cost of public ancillary facilities Land grant fees are calculated differently based on different plot ratios The compensation for demolition and cost of public ancillary facilities are approximately between RMB1,100 per sq.m. and RMB2,500 per sq.m. based on GFA 19 The land costs for urban renewal projects are generally lower than those for projects acquired in the open market

20 Land Bank Total area of the Group s land bank is approximately 1,042,000 square meters, including 4 land projects located in Shenzhen and the Pearl River Delta region to be developed in the future. The Company s parent has a potential land bank of over 12,000,000 square meters in Shenzhen and Pearl River Delta, involving several urban renewal projects at early stages. Phase II of Zhonghe Tixiang Famous Garden : Yiyang Meijing Project- Shenzhen Liguang Project: Shenzhen LVGEM International Garden:Maoming Project name(by category) Location Site area (sq.m.) Land Bank for Future Development Expected commencement date Source of land acquisition LVGEM International Garden Maoming 714, Auction Phase II of Zhonghe Tixiang Famous Garden Yiyang 27, Equity Acquisition Meijing Project Shenzhen 13, Urban Renewal Liguang Project Shenzhen 271, Equity Acquisition Subtotal - 1,026, Unnder Development Mangrove Luxury Garden Shenzhen 24, Suzhou NEO Suzhou 14,

21 1 Company Introduction 2 Financial Highlights 3 Business Updates 4 Future Outlook 5 Q&A 21

22 2016 Guidance 2016 Contracted Sales Target Key Project for Sale: Mangrove Luxury Garden Mangrove Luxury Garden 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, ,500 3,410 (RMB Million) Sales Target 2016E 2016 Saleable GFA 103,387 sq.m Delivery GFA 80,000 sq.m. 22

23 2016 Key CAPEX Capital Available (RMB million) 2016E Cash on Hand at Start 2,768 Contracted Sales 4,500 Undrawn Bank Facilities 8,184 Total 15,452 Key CAPEX (RMB million) 2016E M&A 6,000 Construction Cost 2,000 New Land Reserve 3,000 Total 11,000 23

24 Development Strategies Regional strategy Adhere the strategic ideology of Focusing on Core Cities and Cities Core Areas Stellar reputation and actively participate in urban renewal projects in the core regions of these core cities Expand the Group s operations into overseas markets at an appropriate time Business development strategy Leveraging on the success of this model, the Group plans to replicate the Zoll model and create a leading and scalable commercial property brand through brand differentiation of the Zoll brand and the Reorganized the Group s professional team and extensive management experience Entrust brands, and achieve business expansion through asset-light model Business growth strategy Using the residential and commercial projects as medium and taking advantage of the Internet, the Group plans to integrate its commercial property resources, develop post-development services and provide integrated services for communities surrounding the Group s property Projects Through the O2O community integrated service platform developed, the Group plans to continue to integrate the online and offline resources and to create new business models for providing community services Further develop logistic capabilities of the property management service platform Management strategy The Group has continuously refined and standardized the management. A lot of works have been done in areas of financial management, strategic research, organizational control, accountability systems, standardization of technology, and team building 24

25 Thank You! 25

26 1 Company Introduction 2 Financial Highlights 3 Business Updates 4 Future Outlook 5 Q&A 26