Corporate Presentation 21 June 2018
Agenda Page Section 1. Company Overview 3 Section 2. Segment Performance Review 7 Section 3. Financial Review 23 Section 4. Appendix 32 Emperor Group Centre, Beijing A Grade-A office tower with multistorey retail podium was softlaunched in Apr 2017 Credit Research Contact Equity Research Contact Investor Relations Contacts Keith Chan, HSBC Direct line: 852-2822 4522 keithkfchan@hsbc.com.hk Stanley Chan, Emperor Securities Direct line: 852-2836 2763 esl.research@emperorgroup.com Anna Luk, Group IR Director Direct line: 852-2835 6783 annaluk@emperorgroup.com Winnie Kwong, Group IR Manager Direct line: 852-2835 6791 winniekwong@emperorgroup.com 2
1 Company Overview 3
Business Overview 74.7% (163.HK) Property Investment - Attain long-term value appreciation through active asset management e.g. transformation, tenant remix programs - Diversify its rental income streams by enhancing the mix between office and retail; Hong Kong, Mainland China and overseas Property Development - Experienced property developer in Hong Kong, targeting residential composite buildings and luxury houses and apartments - Capable on value creation from redevelopment projects Hotel Operations in Hong Kong - The Emperor Hotel - Inn Hotel Hong Kong - MORI MORI Serviced Apartments - The Unit Serviced Apartments Hospitality (Emperor Hotels Group) - Comprising hotels and serviced apartments across Hong Kong and Macau - Precise market positioning with quality services to attract diverse visitors 65.5% (296.HK) Hotel Operations in Macau - Grand Emperor Hotel - Inn Hotel Macau 4
Our Property Portfolio Long-term Strategy: To be a Key Property Player in Greater China Segment As of 31 Mar 2018 Property Investment Property Development Book Value (HK$ 000) GFA (ft 2 ) Currently For Lease 44,348,000 A 3,018,000 Under Development 4,807,000 A 1,416,000 Sub-total 49,155,000 4,434,000 Pending To Be Launched 5,465,000 B 276,000 Hospitality Currently Under Operation 4,234,000 C 1,058,000 GFA Distribution by Segment Property Investment 76.9% Hospitality 18.3% Property Development 4.8% Total 58,854,000 5,768,000 Notes: A. Carried on balance sheet at fair value B. Carried on balance sheet at costs C. Carried on balance sheet as fixed assets (i.e. net book value) 5
Key Highlights Quality and sizeable investment properties portfolio in iconic locations (@31 March 2018: above 96% occupancy rate with solid tenants demand) Proven track record of attaining long-term value appreciation through value creation exercises Strong growth in recurring rental income with additional GFA of 1.15 million ft 2 in FY2017/18 (+61%), driven by completions of Emperor Group Centre in Beijing, Emperor Nam Van Centre in Macau and acquisition of Ampersand Building in London Positioned as a unique property player for pursuing growth opportunities by selectively sourcing good potential projects (either low-rise houses or luxury residential tower) or asset transformations Experienced management team with sound strategic and execution strengths, a resilient portfolio is built to withstand market volatility A key Hong Kong-based property player with a diversified business portfolio, quality assets, strong recurring income and opportune expansion strategies 6
2 Segment Performance Review a) Property Investment for Rental Income b) Property Development for Sale c) Hospitality 7
Growing Recurrent Cashflow Total GFA (ft 2 ) Under for Lease ~1,740,000 ~ 1,870,000 ~ 3,018,000 ~ 4,434,000 1,155 Rental Income (HK$ million) 730 836 857 1 2 3 Future growth drivers Completion of investment property pipeline Expand by new acquisitions Organic rental increments FY2014/15 FY2015/16 FY2016/17 FY2017/18 afterwards The Pulse Ampersand Building in London Emperor Group Centre in BJ China Huarong Tower No. 22-24 Russell St. Emperor Commercial Centre Emperor Nam Van Centre in Macau Retail Spaces of Fairview Height in HK Redevelopment Project at No. 75-85 Lockhart Rd, Wanchai 8
Our Rental Income Portfolio Enhanced contribution from office (by usage) and Mainland China (by location) FY2015/16 (Rental Income: HK$: 836m) Industrial 6.3% Others 4.4% Office 1.8% Rental Income by Usage FY2016/17 (Rental Income: HK$857m) Industrial 6.5% Others 5.2% Office 12.4% (Rental Income: HK$1,155m) Others 5.5% Industrial 4.4% FY2017/18 Office 31.4% Retail/Commercial 87.5% Retail/Commercial 75.9% Rental Income by Geographical Segments (Rental Income: HK$857m) London 2.0% Macau 4.7% FY2016/17 Mainland China 0.7% Retail/Commercial 58.7% (Rental Income: HK$1,155m) London 6.5% Macau 3.9% FY2017/18 Mainland China 19.5% Hong Kong 92.6% Hong Kong 70.1% 9
New Projects Emperor Group Centre, Beijing A 28-storey (excluding 3-storey car park basement) Grade-A office tower and premier shopping mall with superb cinema Becoming a landmark building along the prominent street of the capital city Gross floor area: 1,062,000 ft 2 Rental income start contributing from May 2017 with tenants gradually moving-in Key tenants from retail & financial sectors 10
New Projects Emperor Nam Van Centre, Macau A 5-storey premium shopping complex at the corner site on Peninsula, which is signified as a prime city-centre shopping spot in the town Gross floor area: 30,000 ft 2 Some of the units have been handed over to tenants for their shop layout designs and interior refurbishment works since Nov 2017 11
Luard Road Luard Road Project Under Development Lockhart Rd, HK Two adjacent buildings were disassembled, which will be redeveloped into a prime office building with a GFA of 96,000 ft 2 Situated at the junction of Lockhart Road and Luard Road, Wanchai, a core commercial district on Hong Kong Island Fully capitalize the huge potential of the commencement of Shatin to Central Link in 2021 Redevelopment is expected to be completed in 2020 In 2016 In 2020 No. 75-79 No. 81-85 No. 75-85 GFA: 26,200 ft 2 GFA: 53,400 ft 2 GFA: 96,000 ft 2 (Increasing by 20% in aggregate size) Lockhart Road Lockhart Road Tentative Building Rendering 12
2 Segment Performance Review a) Property Investment for Rental Income b) Property Development for Sale c) Hospitality 13
Property Development for Sale Project Pipeline As of 31 Mar 2018 Address (All in Hong Kong) GFA (ft 2 ) Site Area (ft 2 ) Costs (HK$ 000) Target Completion Target Market Position 1 2 3 4 Tuen Mun Town Lot No. 436, Kwun Fat Street, Siu Lam, New Territories The Amused - Fuk Wing Street, Sham Shui Po, Kowloon Tuen Mun Town Lot No. 490, Tai Lam, New Territories Rural Building Lot No. 1198, Junction of Shouson Hill Road West and Wong Chuk Hang Path, Shouson Hill** 39,000 97,000 699,000 OP* in 2016 Luxury 54,000 6,000 433,000 2018*** Mass 29,000 22,000 330,000 2019 Luxury 88,000 117,000 3,085,000** 2019 Luxury 5 Nos. 8-10A Mosque Street, Mid-Levels 34,000 4,000 485,000 2019 Luxury 6 Nos. 20-26 Old Bailey Street & No.11 Chancery Lane, Mid-Levels 32,000 3,300 433,000 2021 Luxury Total 276,000 249,300 5,465,000 N/A N/A * OP = Occupation permit was obtained **Co-run with 2 other partners and Emperor International takes 40% stake *** A pre-sale was completed in 1Q2018. Please refer to P,15 for details 14
New Residential Projects Upcoming Soon 14 low-rise detached/semi-detached houses at Tuen Mun Town Lot No. 436, Kwun Fat St., Siu Lam, N.T. The entire construction work was completed and the completed units will be launched to the market in 2H 2018 The Amused - 136 units at Fuk Wing Street, Sham Shui Po, Kowloon An urban redevelopment project of 26- storey composite residential/retail tower Pre-sale has been launched since 3Q2017 and the sales contracts of all the units were committed @31 Mar 2018 Expect to be handed over to owners in late- 2018 Tentative Layout of Main Lobby Tentative Building Rendering 15
Future Residential Projects Low-rise Houses in Unique Spots 8 low-rise detached/semi-detached houses at Tuen Mun Town Lot No. 490, Tai Lam, N.T. Well served by a superb transportation network of Hong Kong Shenzhen Western Corridor as well as the future Tuen Mun Chek Lap Kok Link and Hong Kong Zhuhai Macau Bridge Close to Harrow International School Hong Kong, the Hong Kong branch of the prestigious, UK-based Harrow School 15 low-density luxury houses with comprehensive auxiliary facilities at Rural Building Lot No. 1198, Shouson Hill, Hong Kong Acquired in May 2014 by government bid at a consideration of HK$2,708,080,000, in collaboration with 2 partners Located at the junction of Shouson Hill Road West and Wong Chuk Hang Path Tentative Rendering Tentative Rendering 16
Future Residential Projects Luxury Residential Tower in Upscale Urban Areas A 28-storey with 99 units luxury residential tower at Nos. 8-10A Mosque St., Mid-levels, Hong Kong Adjacent to Soho area and Lan Kwai Fong, it is in close proximity to Central-Mid- Levels Escalator with convenient access to Central commercial district area Redevelopment project at Nos. 24-26A Davis Street, Kennedy Town, Hong Kong With the successful extension of MTR to Kennedy Town, it becomes a popular urban area in Hong Kong Island Redevelopment project at Nos. 20-26 Old Bailey Street & No.11 Chancery Lane, Mid- Levels, Hong Kong Adjacent to Soho area and Lan Kwai Fong, it is in close proximity to Central-Mid-Levels Escalator with convenient access to Central commercial district area Tentative Building Rendering 17
2 Segment Performance Review a) Property Investment for Rental Income b) Property Development for Sale c) Hospitality 18
Hospitality Existing Portfolio As of 31 Mar 2018 Currently Under Operation Name of Hotels GFA (ft 2 ) Site Area (ft 2 ) Net Book Value* (HK$ 000) Storey Height (incl. basement) Guest Rooms (rooms) Hong Kong 1 The Emperor Hotel, Wanchai 115,000 8,000 1,549,000 29 300 2 Inn Hotel Hong Kong, Yau Ma Tei 48,000 4,000 366,000 30 200 3 MORI MORI Serviced Apartments, Wanchai 14,000 3,000 318,000 12 18 4 The Unit Serviced Apartments, Happy Valley 17,000 2,000 296,000 21 68 Macau 5 Grand Emperor Hotel, The Peninsula 655,000 48,000 1,151,000 26 307 6 Inn Hotel Macau, Taipa 209,000 24,000 554,000 17 287 Total 1,058,000 89,000 4,234,000 N/A 1,180 * Carried on balance sheet as fixed assets (i.e. net book value) Hotel Operations in Hong Kong Hotel Operations in Macau The Emperor Hotel Inn Hotel Hong Kong MORI MORI The Unit Grand Emperor Hotel Inn Hotel Macau 19
Recent Hotel Projects The Emperor Hotel, a 4-stars hotel located at No. 373, Queen s Road. East, Wanchai, Hong Kong GFA: ~115,000 ft 2 A 29-storey hotel offering 300 guest rooms as well as leisure, dining and parking facilities, which will be a signature hotel under Emperor Hotels Group Commenced in December 2017 Typical guestroom External facade Lobby Floor 20
Recent Hotel Projects Reception of Golden Valley Golden Valley, a Cantonese & Sichuan cuisine in The Emperor Hotel (previously located in Emperor (Happy Valley) Hotel), was labelled as Michelin 1-star restaurant in the 7th consecutive year Garden terrace Function Room 21
Recent Hotel Projects The Unit - A serviced apartments located at No. 17-19, Yik Yam Street, Happy Valley, Hong Kong GFA: ~17,000 ft 2 A 21-storey serviced apartments with 68 guest rooms, including 2-storey of retail/commercial complex The area is vibrant, conveniently located near Hong Kong s commercial districts and affording easy access to the Hong Kong Jockey Club and Hong Kong Stadium for international sports events, and Hong Kong Sanatorium & Hospital for medical check-ups, helping to ensure solid short-term leasing demand Has been operational since 1Q 2018 22
3 Financial Review a) Emperor International (163.HK) b) Emperor Entertainment Hotel (296.HK) 23
Financial Summary (HK$ 000) FY2015/16 FY2016/17 FY2017/18 Changes Revenue 5,602,894 4,068,467 3,148,894-22.6% Gross Profit 3,098,088 2,844,405 2,302,452-19.1% Revaluation Gain / (Loss) on Properties (3,167,583) 3,228,003 2,868,417-11.1% Profit / (Loss) Attributable to the Owners of the Company - Underlying* 1,074,486 914,836 617,737-32.5% - Reported (2,391,188) 3,483,150 3,371,517-3.2% Basic Earnings / (Loss) Per Share - Underlying* HK$0.29 HK$0.25 HK$0.17-32.0% - Reported HK$(0.65) HK$0.95 HK$0.92-3.2% *Excluding the effect of any fair value changes and write-downs net of deferred taxation Emperor International recommended the payment of a final dividend of HK$0.061 (2016/17: HK$0.058) per share. Together with the interim dividend of HK$0.047 (2016/17: HK$0.045) per share, the total dividends for the Year were HK$0.108 (2016/17: HK$0.103) per share. 24
Segmental Performance Segmental Revenue (HK$ 000) FY2015/16 FY2016/17 FY2017/18 Amount Amount Amount % of total Changes Property Investment 836,074 857,427 1,154,572 36.7% + 34.7% Property Development 2,971,634 1,515,745 395,180 12.5% - 73.9% Hospitality 1,795,186 1,695,295 1,599,142 50.8% - 5.7% Total 5,602,894 4,068,467 3,148,894 100.0% - 22.6% Segmental Profit Excluding Fair Value Changes (HK$ 000) FY2015/16 FY2016/17 FY2017/18 Changes Rental Income 683,053 753,139 1,009,637 + 34.1% Property Sale 807,497 928,101 275,559-70.3% Hospitality 337,062 402,030 301,577-25.0% Total 1,827,612 2,083,270 1,586,773-23.8% 25
Key Financial Indicators (HK$ 000) As at 31 Mar 2016 2017 2018 Total Assets 48,051,959 55,760,118 64,253,834 - Assets under Investment Properties 36,502,772 40,808,858 49,154,763 - Cash, Bank Balance & Bank Deposits 3,833,292 6,623,140 3,850,400 Net Debt (Total Debt Cash & Bank Balance) 16,163,745 16,809,341 22,928,626 Net Asset Value 22,752,712 25,546,530 29,455,373 Net Asset Value Per Share HK$6.19 HK$6.95 HK$8.01 26
Key Credit Metrics (HK$ 000) As at 31 Mar 2016 2017 2018 Total Debt 19,272,036 23,432,481 26,779,026 - Short-term Debt 3,616,950 5,777,931 5,875,590 - Long-term Debt 15,655,086 17,654,550 20,903,436 Bank Borrowings 11,029,088 12,555,008 17,191,112 - Due after 1 Year 8,028,668 9,009,674 12,685,429 - Due within 1 Year 3,000,420 3,545,334 4,505,683 Unsecured Notes 4,566,553 8,768,040 6,776,088 Net Gearing Ratio (Net Debt/Total Assets) 33.6% 30.2% 35.7% 27
3 Financial Review a) Emperor International (163.HK) b) Emperor Entertainment Hotel (296.HK) 28
Financial Summary (HK$ 000) FY2015/16 FY2016/17 FY2017/18 Changes Total Revenue 1,721,042 1,613,180 1,498,351-7.1% Gaming Revenue 1,451,547 1,362,044 1,253,317-8.0% Hotel Revenue 269,495 251,136 245,034-2.4% Gross Profit 1,126,504 1,053,894 958,923-9.0% Gross Profit Margin 65.5% 65.3% 64.0% - 1.3pp EBITDA* 520,587 452,191 414,720-8.3% EBITDA* Margin 30.2% 28.0% 27.7% - 0.3pp Profit Attributable to the Owners of the Company 256,224 346,490 393,574 + 13.6% Basic Earnings Per Share HK$0.20 HK$0.27 HK$0.30 + 11.1% *Such EBITDA representing after M.I. and excluding exchange difference and non-cash items (such as fair value changes of investment properties) Emperor Entertainment Hotel recommended the payment of a final dividend of HK$0.057 (2016/17: HK$0.057) per share. Together with the interim dividend of HK$0.026 (2016/17: HK$0.025) per share, the total dividends for the Year were HK$0.083 (2016/17: HK$0.082) per share. 29
Balance Sheet Position (HK$ 000) As at 31 March 2016 2017 2018 Non-current Assets 2,646,574 2,548,214 2,795,715 Current Assets 3,871,846 4,279,117 4,073,845 Current Liabilities (822,577) (817,602) (881,744) Non-current Liabilities (572,462) (531,154) (111,012) Net Asset Value 3,443,041 3,705,339 3,989,968 Gearing Ratio (Total Borrowings/Total Equity) 12.5% 10.8% 1.8% The management intends to maintain a strong cash position for potential M&A opportunities. 30
Key Performance Indicators (HK$) FY2015/16 FY2016/17 FY2017/18 Changes Gaming Concourse GEH GEH GEH GEH Gross Win 1,593,900,000 1,391,800,000 1,293,100,000-7.1% Average Win Per Table Per Day 65,000 57,000 53,000-7.0% VIP Hall GEH GEH GEH GEH Rolling Amount 22,372,200,000 24,657,000,000 22,361,800,000-9.3% Gross Win 929,400,000 962,900,000 865,100,000-10.2% Average Win Per Table Per Day 253,000 263,000 237,000-9.9% Guest Rooms GEH IHM GEH IHM GEH IHM GEH IHM Occupancy Rate 89% 85% 91% 95% 93% 94% + 2pp - 1pp Average Room Rate Per Day 962 491 820 412 872 476 + 6.3% + 15.5% Legend: GEH = Grand Emperor Hotel IHM = Inn Hotel Macau 31
4 Appendix 32
Key Investment Properties Future Projects Address As of 31 Mar 2018 GFA(ft 2 ) Fair Value (HK$ 000) Type Properties Under Development C: Commercial O: Office Hong Kong No. 75-85 Lockhart Road, Wanchai, Hong Kong (2020) 96,000 2,407,000 C Mainland China Emperor Star City, Huang Pu District, Shanghai 1,300,000 2,119,000 C/O London No.25-27 Oxford Street, London, W1D 2DW (2019) 20,000 281,000 C/O Sub total Under development 1,416,000 4,807,000 33
Commercial/Office Complexes in Hong Kong ( ): Year of Acquisition Level 3, New Town Mansion Shopping Arcade (2013) Sui Wo Court Commercial and Carpark (2017) New Media Tower (2015) Fitfort Shopping Arcade (Pre-2013) No. 45-51 Kwok Shui Road (2015) Emperor Commercial Centre (2016) Emperor Group Centre (Pre-2013) China Huarong Tower (2013) Retail Spaces of Fairview Height (2017) The Pulse (Pre-2013) 75-79 Lockhart Road (2015) 81-85 Lockhart Road (2014) 34
Footprints in United Kingdom No. 111-125, Ampersand Building, Oxford Street (2017) A freehold 8-storey (including basement) composite building comprising retail spaces, office premises and leasehold apartments of about 91,000 ft 2 No. 25-27, Oxford Street (2015) It will be redeveloped into a retail and office complex with GFA of about 20,000 ft 2 for longterm investment purpose No. 181-183, Oxford Street (2014) A 7-storey (including basement) retail and office complex of about 12,700 ft 2 Tottenham Court Road Station Oxford Street 181-183 Oxford Street 111-125 Oxford Street 25-27 Soho Square Gardens Tentative Building Rendering London Palladium ( ): Year of Acquisition 35
Hospitality in Macau Commenced in 2006, it is an award-winning gaming hotel of 26 storeys (excluding basement) with a GFA of 655,000 ft 2 and 307 guest rooms Emperor Palace Casino occupies six floors with 77 gaming tables (67 mass tables & 10 VIP tables) and 172 slot machines Comprehensive non-gaming facilities with over 66,000 ft 2 covering sauna, night clubs and restaurants (Grand Emperor Court & Royal Kitchen), which are well received by customers Several retail spaces at G/F with a GFA of 5,500 ft 2 leasing to prominent watch and jewellery retailer It is owned 60% by Emperor Entertainment Hotel, 20% by SJM, 5% by Mr. Jackie Chan and 15% by other private investor at project level Payback period covered 4.5 years only which ended in September 2010 Lobby laden with 78 bars of 999.9 fine pure gold bars, each weighing 1kg Acquired in March 2014, it is a 17-storey hotel with a GFA of 209,000 ft 2, offering 287 guest rooms, swimming pool, spa and retail spaces. Located at the heart of Taipa Island, it is adjacent to the popular tourist spots with guarantee traffic 36
Disclaimers This material is for information purposes only. This presentation may contain forwardlooking statements and estimates based on current assumptions and forecasts made by the management of both Emperor International Holdings Limited and Emperor Entertainment Hotel Limited. Various known and unknown risks, uncertainties and other factors could lead to substantial differences between the actual future results, financial situation, development or performance of the company and the estimates given here. The company accepts no obligation to continue to report or update these forward-looking statements or adjust them to future events or development. This material may not be reproduced, distributed or transmitted to any other person or incorporated in any way into another document or other material without the prior written consent of Emperor International Holdings Limited and Emperor Entertainment Hotel Limited. For more information, please go to www.emperorint.com & www.emp296.com 37