Kaisa Group Holdings Ltd. · HKEX:1638
Kaisa — H1 2019 Earnings Presentation
45 slides from Kaisa's earnings presentation, August 2019
Slide 1: Interim Results Presentation 2019
Interim Results Presentation 2019 August 2019
Slide 2: Disclaimer
Disclaimer This presentation may contain forward-looking statements. Any such forward-looking statements are based on a number of assumptions about the operations of the Kaisa Group Holdings Limited (the “Company”) and factors beyond the Company's control and are subject to significant risks and unc
Slide 3: Contents
Contents 1. Major Achievements in 1H2019 4 2. Operation Review 9 3. Development Strategies for 2H2019 19 4. Financial Performance 27 5. Appendix 35 3
Slide 4: 1. Major Achievements in 1H2019
1. Major Achievements in 1H2019
Slide 5: Strategies for Development in 1H2019
Strategies for Development in 1H2019 Positioned as a city services provider, Kaisa continues to focus on its core property business with quality development. In addition to reinforcing its mainstay business, the Group also aims to enhance synergy amongst its newly developed and major businesses. Thi
Slide 6: Operation and Competitive advantages
Operation and Competitive advantages Strong Growth in Contracted Sales ✓ Contracted sales achieved RMB34.7 bn, 37% YoY ✓ Contracted GFA reached 1.96 mn sq. m., 38% YoY ✓ URP¹ contributed 33% of total contracted sales ✓ Greater Bay Area accounts for 58%, while Shenzhen accounts for 30% High Quality L
Slide 7: Profitability and Dividend
Profitability and Dividend Growing Revenue ✓ Revenue achieved RMB20.1 bn, 34% YoY ✓ Advanced Proceeds Received from Customers reached RMB45.3 bn, 16% from 2018 year end Healthy Profitability ✓ Gross Profit of RMB6.71 bn, 42% YoY ✓ GP margin reached 33.4%, 1.8 ppts YoY ✓ Net profit of RMB2.78 bn, 24%
Slide 8: Repayment and Refinancing
Repayment and Refinancing Improving Debt Servicing Capability ✓ Net gearing 45 ppts from 2018 year end to 191% ✓ Quick ratio remained at a healthy level of 1.3× ✓ Cash on hand 31% from 2018 year end to RMB30.0 bn ✓ Total equity 24% from 2018 year end to RMB44.9 bn Expanding Funding Channels ✓ Intern
Slide 9: 2. Operation Review
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Slide 10: Strong Presence in T1 & T2 Cities with High Quality Land Bank
Strong Presence in T1 & T2 Cities with High Quality Land Bank ◆ Nearly 26.0 mn sq. m. land bank by GFA with attributable portion of 87% ◆ 76% located in T1 & major T2 cities ◆ 55% located in Greater Bay Area Western China Pan Bohai Rim ◆ GFA of around 7.3 mn sq. m. from URPs, accounting 28% of GFA:
Slide 11: Land Acquisition through Diversified Channels
Land Acquisition through Diversified Channels Newly Acquired Land by Attributable GFA Newly Acquired Land by Attributable Consideration ◆ Land acquisition through bidding M&A and urban renewal Western Pan Bohai Rim China Urban Central 4% ◆ Further penetration into the Greater China 4% Renewal 22% Ba
Slide 12: Continuously Unlock the Value of URPs
旧改项目转为土储 Continuously Unlock the Value of URPs Conversion of UPRs URPs URP Pipeline into Land Bank Development and Sales • Site area of over 32 mn sq. m. URPs is • Recently Converted URPs • URPs accounted for 33% of not yet included in the land bank and ✓ Shenzhen Futian Border the total sales in 1H
Slide 13: Strong Pre-sale Performance of URPs
Strong Pre-sale Performance of URPs Shenzhen Yantian Kaisa City Plaza Shenzhen Kaisa Future City Shenzhen Pinghu Kaisa Plaza • Yantian, Shenzhen • Longgang, Shenzhen • Longgang, Shenzhen • Adjacent to Yantian • Adjacent to Longcheng West • Adjacent to Pinghu Location Station which is under Station w
Slide 14: Ready-to-Presale URPs
Ready-to-Presale URPs Shenzhen Dongmendao Project • Dongmen CBD, Luohu, Shenzhen Location • Adjacent to Shaibu Station on Shenzhen Metro Line No. 3 Type of URP • Distressed assets Conversion time • 2H2018 Saleable GFA (sq. m.) • 30,000 Saleable value (RMB mn) • 1,950 ASP of nearby projects • 65,000
Slide 15: Recently Converted URPs
Recently Converted URPs Shanghai Xuhang Town Project Guangzhou Xiaoping Village Project Shenzhen Futian Border Project • Xuhang Town, Jiading • Western Extension of Baiyun New • At the intersection of Location City in Guangzhou; adjacent to District, Shanghai Honghua Road and Xiaoping Station which
Slide 16: Potential Value of Urban Renewal
Potential Value of Urban Renewal URPs in Land Bank URPs Pipeline GFA: 7.3 mn sq. m. Site Area (before plot ratio): 32.0 mn sq. m. Construction cost for RMB197.6 bn RMB2,000.0 bn resettlement units Huge gap between Book value market value and land cost Huge gap between RMB21.7 bn market Land premium
Slide 17: Expansion of New Businesses to Enhance Synergy
Expansion of New Businesses to Enhance Synergy ◆ Kaisa’s cultural activity and sports group undertook 4 projects, namely the sports complex at the Fenglin College under the Fudan University, the Huang Feihong Memorial Hall in Foshan and the Indoor Tennis Court in Luohu and Liudong Sports Center in L
Slide 18: Social Responsibility in Poverty Alleviation
Social Responsibility in Poverty Alleviation ◆Kaisa fulfills its society responsibility through poverty alleviation ◆Kaisa carried out its work in Longmen, Huizhou for more than 600 days, turning poverty-stricken villages into exemplary rural villages that have been lifted out of poverty. The compan
Slide 19: 3. Development Strategies for 2H2019
3. Development Strategies for 2H2019
Slide 20: Strategies for development in 2H2019
Strategies for development in 2H2019 Steady Growth Structure Improvement Accelerate urban redevelopment Speed up property sales projects conversion Maintain momentum of business Optimize investment in strategically- development focused regions Deleveraging Seize New Opportunities Optimize capital st
Slide 21: Expected Saleable Value in 2H2019
Expected Saleable Value in 2H2019 Saleable Value in 2H2019 Saleable Area in 2H2019 Tier 3 Tier 3 Tier 1 7% 18% 19% Tier 1 49% Tier 2 44% Tier 2 63% RMB120 bn Saleable Value in 2H2019 6.6 mn sq. m. Saleable Area in 2H2019 Hainan Hainan 1% 3% Greater Bay Greater Pan Bohai Rim Bay Area Pan Bohai Rim Ar
Slide 22: URPs to Be Converted in 2H2019
URPs to Be Converted in 2H2019 Shenzhen Futian Dongshan Project Shenzhen Bailingda Project Shenzhen Nanmendun Project • Close to Coco Park, • Hangcheng Street, • Central of Buji Location Binhe Road, Futian Location Bao’an District, transportation hub , Location District, Shenzhen Shenzhen Longgang D
Slide 23: Steady Conversion of URPs into Land Bank
Steady Conversion of URPs into Land Bank URPs converted and to-be-converted into land bank in 2019 ASP of Nearby Expected Saleable Area Project Location Type Projects Saleable Value Stage (’000 sq. m.) (RMB/sq. m.) (RMB mn) Residential & Shanghai Xuhang Town Project Jiading, Shanghai 210 40,000 8,40
Slide 24: Steady Conversion of URPs into Land Bank
Steady Conversion of URPs into Land Bank UPRs to be converted into land bank in mid-term (3-5 years) ASP of Nearby Expected Saleable Area* Project Location Type Projects Saleable Value (‘000 sq. m.) (RMB/sq. m.) (RMB mn) Shenzhen Xiangjiaotang Project Longgang, Shenzhen Residential 580 55,000 31,900
Slide 25: Strategies for Deleveraging in 2H2019
Strategies for Deleveraging in 2H2019 300% 2017.12.31 258% 2018.6.30 236% 2018.12.31 191% 2019.6.30 Cash is king, and expedite cash collection Enhance operation efficiency Optimize capital structure and lower gearing 25
Slide 26: Shenzhen Has Been Destined to Be the Model City for China
Shenzhen Has Been Destined to Be the Model City for China ◆Kaisa is well-positioned to capitalize this favorable government policy as an international model city A new hub – Kaisa’s marine group Building a new image - Kaisa’s has ships that ply the busy routes in cultural activity and sports group t
Slide 27: 4. Financial Performance
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Slide 28: Strong Growth in Contracted Sales
Strong Growth in Contracted Sales Contracted Sales (RMB mn) Contracted GFA ('000 sq. m.) Contracted ASP (RMB/sq. m.） 70,059 18,261 17,880 17,686 3,837 16,048 13,150 44,714 2,786 34,690 2,269 29,843 1,961 25,319 1,416 FY2016 FY2017 FY2018 1H2018 1H2019 FY2016 FY2017 FY2018 1H2018 1H2019 FY2016 FY2017
Slide 29: Contracted Sales
Contracted Sales 1H2018 1H2019 Yangtze Central Yangtze River Delta Central China River Delta China Western 21% 8% 8% 14% China Western China 5% 7% Pan Bohai Pan Bohai Rim Rim 8% 15% Greater Bay Greater Bay Area Area 56% 58% RMB25,319 mn in 1H2018 RMB34,690 mn in 1H2019 1H2018 1H2019 Tier 3 Tier 3 5%
Slide 30: Recognized Sales
Recognized Sales 1H2018 1H2019 Yangtze Western China Central China River Delta 10% Pan Bohai Rim Central 9% 21% 7% China13% Yangtze River Delta 8% Western China Greater Bay 7% Area Pan Bohai Rim 66% 2% Greater Bay Area 57% RMB13,985 mn in 1H2018 RMB18,502 mn in1H 2019 1H2018 1H2019 Tier 2 Tier 3 Tie
Slide 31: Financial Highlights in 1H2019
Financial Highlights in 1H2019 Strong Growth Solid Profitability Improving Credit Revenue Gross Profit Interest Coverage Ratio(1) (RMB mn) (RMB mn) 1.7x 1.7x 1.7x 11,129 38,705 1.2x 32,779 8,934 6,708 20,106 4,736 15,028 FY2017 FY2018 1H2018 1H2019 FY2017 FY2018 1H2018 1H2019 FY2017 FY2018 1H2018 1H
Slide 32: Financial Highlights in 1H2019
Financial Highlights in 1H2019 P&L and Profitability (RMB mn) Balance Sheet and Credit Metrics (RMB bn) 1H2019 1H2018 %Change 1H2019 FY2018 %Change Revenue 20,106 15,028 34% Total assets 259 229 13% 18,502 13,985 Total equity 45 36 25% Recognized revenue 32% from property sales Total borrowings 116
Slide 33: Liability Management and Funding Channel Expansion
Liability Management and Funding Channel Expansion Proactive Liability Management ◆ Issuer Rating: Moody’s B1/S&P B/Fitch B, Outlook Stable ◆ Repurchased USD560 mn senior notes year to date, reducing the outstanding principal amount of notes due in 2019 to USD140 mn ✓ USD250 mn 7.25% senior notes du
Slide 34: Debt Structure and Maturity
Debt Structure and Maturity Debt Structure Debt Maturity Profile Onshore Bank FY2018 1H2019 Borrowings 50% 38% 42.9% Offshore 34.5% Senior ◆ Total Borrowing 40% RMB115.5 bn 31.7% 30.4% Notes 30% 40% ◆ Onshore: 58% 19.4% 22.3% ◆ Offshore: 42% 20% 15.6% Onshore 10% 3.2% Offshore Non-Bank Bank 0% Borro
Slide 35: 5. Appendix
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Slide 36: 1H2019 Earnings
1H2019 Earnings (RMB bn) 1H2019 1H2018 %Change Revenue 20.11 15.03 +33.8% -Sales of properties 18.50 13.98 +32.3% -Rental income 0.19 0.13 +46.2% -Property management services 0.38 0.20 +90.0% -Hotel and catering operations 0.10 0.11 -9.1% -Cinema, department store and cultural center operations 0.1
Slide 37: Balance Sheet
Balance Sheet (RMB bn) 1H2019 FY2018 %Change Total assets 259.0 229.0 +13% Total liabilities 214.1 192.7 +11% Net current asset 65.5 66.7 -2% Total equity 44.9 36.3 +24% Cash and bank deposits 30.0 22.9 +31% Quick ratio(1) 1.3X 1.3X - Leverage ratio(2) 33% 38% -5 ppts Net gearing ratio(3) 191% 236%
Slide 38: Land Acquisition in 1H2019
Land Acquisition in 1H2019 Attributable Attributable Time of Attributable Site Area GFA Way of Location GFA Consideration Type Acquisition Interest (sq. m.) (sq. m.) Acquisition (sq. m.) (RMB mn) Residential 1 Feb-19 Huizhou, Guangzhou 100% 11,199 33,597 33,597 90 M&A Commercial 2 Feb-19 Suzhou, Jia
Slide 39: A Pioneer in Great Bay Area
A Pioneer in Great Bay Area Favorable policies on the development of the Greater Bay Area and Shenzhen Issued in Documents Issued by Effects on the property markets in the region Feb 2019 Outline Development Plan for the Guangdong- Central Committee of CPC, State 1. Facilitating the upgrading and tr
Slide 40: URPs with Low Cost Secure Healthy Margin
URPs with Low Cost Secure Healthy Margin Land Cost of URPs in Land Bank Shenzhen Residential Land Auction in June 2019 (RMB/sq. m.) Land Cost per Saleable GFA (RMB/sq. m.) GFA: 7.3 m sq. m. 67,000 Average Residential ASP in Shenzhen ~RMB50,000/ sq. m. Construction cost of resettlement 56,000 units A
Slide 41: Seize the Opportunities Arisen in Shenzhen Market
Seize the Opportunities Arisen in Shenzhen Market Goals of Shenzhen’s development into a model city Kaisa’s Operational Data in Shenzhen as of June 2019 of socialism with Chinese characteristics ◆ Land bank in Shenzhen accounted for 13% of the Group’s total land bank To become a competitive, ◆ Salea
Slide 42: Abundant Premium Projects in Shenzhen
Abundant Premium Projects in Shenzhen Projects in land bank (21) Major URPs in pipeline Transportation Link(88) in Shenzhen Inno Park Major transportation hubs in Shenzhen 云创谷 Kaisa E Cube 光明区 佳兆业E立方 Guangming District 龙岗区 龙华区 Longgang District Longhua District Pinghu Kaisa Plaza 平湖佳兆业广场 Kaisa Futur
Slide 43: Metro-accessible Projects in Shenzhen
Metro-accessible Projects in Shenzhen ◆ Has 8 metro-accessible projects in Shenzhen, occupying prime locations ◆ Strategic project location reserves great potential for value appreciation Mid to long term planning of railway transit in Shenzhen Niuhu Pinghu (expected to (expected to pen in June open
Slide 44: Track Record of URPs Conversion
Track Record of URPs Conversion ◆ In the past 10 years (2008-2018), converted GFA of approximately 940,000 sq. m. every year ◆ Successfully converted over 12 million sq. m. urban renewal projects since established GFA No. of URPs Year Projects Locations Type converted converted (‘000 sq. m.) 1999 Sh
Slide 45: Shareholding Structure (As of June 2019)
Shareholding Structure (As of 30 June 2019) • Founder and chairman • 20 years of industry experience • Responsible for overall strategy, investment planning and human resources strategy Funde Sino Life Kwok Family Other public investors Insurance Co., Ltd. 25.29% 39.37% 35.34% Hotel and catering Sal