SOHO China 2010 June presentation
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Transcript of SOHO China 2010 June presentation
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June 2010June 2010
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“MOST ADMIRED COMPANY”(China FORTUNE, 2006‐2009 )
9 SEPTEMBER 2009
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2007 Successfully listed on the Main Board of the Stock Exchange of Hong Kong
2002 SOHO China is incorporated
1995 SOHO China’s predecessor, Beijing Redstone Industries Co. Ltd., is founded
HKSE: 410Listing date: 8 Oct 2007Outstanding shares: 5,187 million
Market capitalization: US$ 2.7bnManagement’s holding: 64%
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• Develop and sell large‐scale commercial properties in prime city centers
• Sell nation‐wide to High Net Worth investors
• Full after sales service to facilitate leasing, promotion and property management for our investors
Unique High‐return Business Model
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Guanghualu SOHO II
Jianwai SOHOJianwai SOHO SOHO NewtownSOHO Newtown
Chaowai SOHOChaowai SOHO
SOHO ShangduSOHO Shangdu
Sanlitun SOHO
Guanghualu SOHOGuanghualu SOHO
Tiananmen South (Qianmen)
ZhongGuanCun SOHO
Galaxy SOHO
Completed 1.8 million sq.m.Under Development 1.6 million sq.m. (Including The Exchange‐ SOHO in Shanghai)
4th Ring Road
3rd Ring Road
2nd Ring Road
Changan Avenue
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China’s Leading Commercial Developer
Wang Jing Plot B29
SOHO Nexus CentreChaoyangmen SOHO I&IIChaoyangmen SOHO I&II
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Source: Company Data
RMB millions
Investor Profile
Sell to High Net Worth Investors
Zhejiang
Heilongjiang
Hebei
ShandongShanxi
Shaanxi
Taiwan
InnerMongolia
Guangdong
Jilin
Liaoning
SichuanJiangsu
Shanghai
BeijingXinjiang
Tibet
Qinghai
Yunnan
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Accounts for 50% of official tax revenue
Contributes 60% of GDP
Constitutes 75% of urban employment
Small‐and‐Medium Enterprises (SMEs)
Target China’s Dynamic SMEs as Tenants
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9 SEPTEMBER 2009
PERFORMANCE
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SOHO CONTINUES TO BE BEIJING’s NO.1
2009 Beijing Top 10 Developers in Contract Sales
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Source:house.sina.com.cn
RMB billion
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TOP 20 DEVELOPERS BY NET PROFIT
Source:Company Data9
2009 Net Profit
01,0002,0003,0004,0005,0006,0007,0008,000
COLI
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RMB mn
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Historical Performance
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RMB million
13,680
Excluding car parksMore retail space sold in 2008
Including car parks
HISTORICAL PERFORMANCE
13,680
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FINANCIAL SUMMARY (I)
* ASP decreased as more retail properties were sold in 2008.
2009 2008 Growth %Contract sales (RMB mn) 13,680 7,725 77%
ASP (RMB/sqm) 43,252 48,718 ‐11%*
GFA Completion (sqm) 384,010 142,416 170%
Revenue (RMB mn) 7,413 3,121 138%
Net Profit (RMB mn) 3,300 399 727%
Gross Margin (%) 52% 49%
Net Margin (%, excluding revaluation gain) 23% 13%
Dividend per Share (RMB) 0.20 0.10 100%
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FINANCIAL SUMMARY (II)
2009 2008 Growth %
Cash and Bank Deposits (RMB mn) 10,520 10,691 ‐2%
Convertible Bond (RMB mn) 1,958 ‐
Bank Loans (RMB mn) 6,320 4,233 49%
Total Assets (RMB mn) 37,756 26,071 45%
Total Equity to Shareholders (RMB mn) 17,224 13,988 23%
Total Debt over Total Assets (%) 22% 16%
Net Debt over Equity (%) ‐13% ‐46%
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• Maintain high margin: GP margin 52%, NP margin 23%
• High average selling price of contracted sale: RMB 43,252/sqm
• Acquisition of RMB 10.6 billion, up 65% YoY
• First project outside Beijing: The Exchange ‐ SOHO
CONTINUED PERFORMANCE PROGRESS
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FURTHER EXPANSION IN SHANGHAI ON THE WAY
• Purchased at 34,000/sqm in August 2009
• 65% acquisition finance at LIBOR + 1.75%
• 34% sold at over RMB 60,000/sqm
• Client base diversified, 90% new from Yangtze River Delta
• Occupancy rate increased to 82.5% from 30%
Successful Entry Into Shanghai:
The Exchange‐SOHO
Data by the end of March 2010
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DIVERSIFIED CLIENT BASE
The Exchange‐SOHO
Shanghai
SOHO Nexus Center
Beijing
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HIGH DIVIDEND YIELD 5.6%
Source: Bloomberg, closing price as at 9 March 2010
Dividend Yield
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POLICY OVERVIEW
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NEW POLICIES TARGET RESIDENTIAL MARKET
• New policies target speculation in residential market
• The mortgage terms for commercial properties remain intact through several recent policy waves
• Always at least 50% down payment on 1.1 times of prime lending rate for commercial properties
• SOHO China’s target customers are high net worth individuals (HNWI) who arerelatively less sensitive to mortgage rate change
• 50% of SOHO China’s buyers are cash buyers
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A new wave of powerful tightening measures:
LIMITED IMPACT ON SOHO
• First time buyer : down payment >30% if the purchased unit> 90sqm.0% of SOHO buyers are first time buyer
• Second‐home buyers : down payment >50% mortgage rate > 1.1 times of PBOC prime rate
100% of SOHO buyers have been paying 50% down payment and 1.1 times prime rate
• Third‐home buyers: no mortgage for highly speculated area50% of SOHO buyers are cash buyers
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OUTLOOK
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SALES PERFORMANCE
• End of May: Contract sales at RMB 7.5 billion
• 50% of annual presale target achieved
• 2010 consensus earnings forecast: RMB 3,140 million, up 86% YoY
• Earnings locked‐in: 95%
* Contract sales area and average selling price exclude that of car parks in the projects.
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JAN‐MAY 2010 CONTRACT SALES
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Contract Sales in Jan‐May 2010
Project Amount GFA Average selling price
(RMB million) (sq.m.) (RMB/sq.m.)
SOHO Nexus Center 3,146 71,837 43,796
The Exchange‐SOHO 1,712 27,817 61,561
Sanlitun SOHO 1,615 34,939 46,234
Beijing SOHO Residences 416 8,941 46,526
Boao Canal Village 402 18,163 22,130
Others 224 6,430 34,869
Total 7,516 168,127 44,705
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Convertible bond RMB 2.5 bn
Bank loans RMB 6.6 bn
Total RMB 9.1 bn
Cash & Facilities*
Current Financings*
LATEST FINANCING AND 2010 CAPEX
Cash position RMB 13.6bn
Bank facilities unutilized RMB 18+ bn
Total RMB 32 bn
Construction RMB 2.5 bn
Outstanding land Premium RMB 1.5 bn
Total RMB 4.0 bn
2010E CAPEX
* As of end of May 2010.
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RMB 50 BILLION FOR NEXT 3 YEARS’ SALE
• Sales pipeline of RMB 50 billion for next 3 years
• Remain cautious for 2010’s acquisition
• Shanghai will be our focus market
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SALES SCHEDULE
* Formerly Chaoyangmen SOHO Phase III
2010 2011 2012
Sanlitun SOHO Wangjing Plot B29 Wangjing Plot B29
ZhongGuanCun SOHO Galaxy SOHO* Galaxy SOHO*
The Exchange ‐ SOHO Guanghualu SOHO II
SOHO Nexus Centre
Guanghualu SOHO II
Galaxy SOHO*
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COMPLETION SCHEDULE
Project Completion
(sq.m.)
Sanlitun SOHO 242,153 223,300
ZhongGuanCun SOHO 59,060
The Exchange‐SOHO 80,509
Chaoyangmen SOHO II 60,097
Galaxy SOHO 334,000
Guanghualu SOHO II 167,000
Wang Jing Plot B29 170,000 330,000
SOHO Nexus Center 103,340
Tiananmen South(Qianmen) 22,700 32,000
Total 384,010 407,149 199,000 504,000 330,000
2009 2010 2011 2012 2013
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‐15.0%
‐10.0%
‐5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
1‐Mar‐10
8‐Mar‐10
15‐M
ar‐10
22‐M
ar‐10
29‐M
ar‐10
5‐Apr‐10
12‐Apr‐10
19‐Apr‐10
26‐Apr‐10
3‐May‐10
10‐M
ay‐10
17‐M
ay‐10
24‐M
ay‐10
31‐M
ay‐10
7‐Jun‐10
SOHO China HSCEI HSI
SHARE PERFORMANCE
Source: Bloomberg, Priced on 7th June 2010
Results announcement on 11th Mar
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SHARE PRICE UNDERVALUED
2010E P/E
‐
4.0
8.0
12.0
16.0
20.0
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HOHo
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Glor
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Source: Bloomberg, Priced on 4th June 2010
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Thank You
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SANLITUN SOHO
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SANLITUN SOHO
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SANLITUN SOHO
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SANLITUN SOHO
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SANLITUN SOHO
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SANLITUN SOHO
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GUANGHUALU SOHO II
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GUANGHUALU SOHO II
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GUANGHUALU SOHO II
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GUANGHUALU SOHO II
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GUANGHUALU SOHO II
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GUANGHUALU SOHO II
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GALAXY SOHO
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GALAXY SOHO
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GALAXY SOHO
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GALAXY SOHO
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GALAXY SOHO