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Upbest Group Limited Capitalizing on Macau Property Expertise.

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Presentation on theme: "Upbest Group Limited Capitalizing on Macau Property Expertise."— Presentation transcript:

1 Upbest Group Limited Capitalizing on Macau Property Expertise

2 FORWARD LOOKING STATEMENTS DISCLAIMER This material is for information purposes only. This presentation may contain forward-looking statements based on current assumptions and forecasts made by the Upbest Group Limiteds management. 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.

3 Capitalizing on Macau Property Expertise Dr. Wong King Keung, Peter (BBS, JP) Chairman of Upbest Group Limited

4 Key messages today Profit up from 38.1mn to 83.5mn (119%) Dividend of 2.5 cents per share Company has diversified into Macau Property Investment and Development Company purchased 3 properties in Macau, 1 Shopping Centre and 2 Green Fields for development Macau property plays an important role in the companys future growth Acquisition of Gold-Face Finance Stronger financial position

5 New Directions Property Investment and Development in Macau –Purchase Land and Develop mainly Residential Buildings with some Commercial Space –Purchase completed buildings for investment purpose –Joint projects with JV partners with other developers or investors Grow and strengthen financial services businesses organically and through opportunistic acquisitions

6 Why Macau? (part 1) The Group has capabilities within Macau –Relationships with developers and land bank owners –Directors experience with Macau property transactions

7 Why Macau? (part 2) Supply & demand drivers Major Economic Developments, Including: 28% GDP Growth (2004) Gaming Industry Expansion –MOP billion planned investment Tourism Expansion –Visitor arrivals up 40% to 16.7mn visitors

8 Why Macau? (part 3) Supply & demand drivers Workforce Developments, Including: Requirement For New Manpower –Driven from 15 new casino resorts and 17 new hotels Foreign Workers Influx –Unemployment at 10 year low (4.1%) –Ancillary professional services Immigration Laws encouraging foreign ownership Disposable Income Increasing and consumption up by 8.3%

9 Why Macau? (part 4) Supply & demand drivers Property Developments, Including: Demand for Retail Property Up –Retail sales up 20% (2004) Demand for Residential Property Up –Transaction volume up 60% –10,000 (2003), 16,000 (2004), 5,000 (1Q05) Limited Residential Property Supply –7% growth expected in stock in 2006 (1,200 units)

10 What the others say Deutsche Bank Equity Research Strong demand; limited supply with the opening of the gaming industry to competition, Macau's economy has rebounded strongly in the past few years Limited supply is likely in the near term, and strong demand should be positive for transaction volume and prices

11 What the others say Merrill Lynch: We see at least another 128% upside to Macaus housing prices over the next 3 years, and that will not imply a bubble

12 What the others say Midland Realty: Home prices to rise more than 20% next year Ronald Cheung, Director

13 What the others say Goldman Sachs: Macau retail property market has significant Long-Term growth potential

14 What the others say Savills: highlighted that Macau is still very immature as a retail destination for Mainland tourists and therefore has significant growth potential

15 What the others say Jones Lane LaSalle: Enormous sums of investment are and will be, flowing into Macao in the coming years

16 Importance of Macau property to Upbest Net property assets form over 68% of the Groups net assets Property related profits represent 60% of total pre-tax profit Macau Property Investment and Development will become an even stronger component of Upbests business going forward

17 2005 Highlights Acquisition of green field land in Macau Peninsula for residential development at HK$29mn on 3 rd Jan 2005 Acquisition of brown field land in Taipa Island, for purpose of residential development at HK$27mn on 3 rd Jan 2005 Top-up placement of $153mn on 18 th Jan 2005 at $1.42 per share Acquisition of Chino Plaza, a shopping centre in Macau Peninsula at HK$128mn, on 25th January 2005 Acquisition of Gold-Face Finance Ltd. for HK$28mn Appointment of new Chairman Peter K.K. Wong on 24 th Jan 2005

18 Property 1 Location in West-side Macau Property 1

19 Property 1 - Greenfield Overlooking the Marina, the site is a five-minutes walk from Ponte 16 on the West-side of the Macau peninsula Land area 5,371sf Land cost HK$28.5mn Last valuation HK$44mn (Jan/05) Discount of 35% Anticipated total CAPEX HK$89mn 20 Storey Building with approx. –Ground Floor Commercial 4,800 sf –Upper Residential 96,000 sf –30 Car parks New properties in this area currently sell for between 1,500-2,000 psf Terreno Situado Perto DA AV. DO Almirante, Macau

20 Property 2 : Location Spectacular Views of the Cotai Strip Cotai Strip

21 Property 2 - Brownfield Located in the centre of Taipa Island, opposite the popular property Kingsville The site is only minutes from the Macau-Taipa Bridge, with spectacular views of the Cotai Strip Land area 7,201 sf Latest valuation HK$57mn (Jan/05) Land cost HK$27mn, Discount of 53% Anticipated total CAPEX HK$95mn High-rise Building with approximately: –Ground Floor Commercial 5,000 –Upper Residential 108,000 sf –30 Car parks New properties in this area currently sell for between 1,500-3,000 psf Companihia de Desenvolvimento e Fomento, Taipa, Macau

22 Property 3 Location in West-side Macau Property 3

23 Property 3: Chino Plaza Shopping Centre on G/F & 1/F + 51 car parks Mostly rented CAPEX $127.5mn Marketable area over 100,000 sf Latest valuation HK$170mn (Mar/05)

24 Gold-Face Finance Agreement to acquire Gold-Face Finance Ltd. Acquisition cost HK$28mn Gold-Face is a finance company with loan portfolio of around HK$110mn Portfolio comprises mainly of second mortgage loans, and also contains some unsecured personal loans Long Stop date extended until 31 Aug 2005 as certain conditions are still to be fulfilled Assuming successful closing of transaction, this acquisition will bring recurring revenues to the company and will be a contributor to 2006 profit

25 Financial Highlights Profit up 119% to $83.5mn Dividend HK$2.5 cts/share (up 150%) with a scrip option. Dividend payout ratio is 37% Charles Cheng, the controlling shareholder, to take all his dividend in the form of stock to allow the company to use these funds for further opportunities Top-up placement raised HK$153mn at $1.42/share in Jan/05 Currently no borrowing for the purpose of the property acquisitions Very low write-off on bad debts of 200k

26 Summary of Profit & Loss Financial Highlights Change Turnover-22% 58,175 74,185 50,790 Macau Property Income + 54, Profit from Operations88% 92,937 49,500 19,200 Profit before Taxation94% 90,039 46,441 16,005 Net Profit119% 83,488 38,144 13,123 Dividend per share (cts)150% EPS (cts)115%

27 2005 Profit Drivers (pre-tax basis)

28 Summary of Balance Sheet Financial Highlights Change Non-current Assets1422% 180,648 11,867 12,753 33,687 Current Assets20% 570, , , ,303 Current Liabilities13% 352, , , ,771 Net Current Assets35% 218, , , ,532 Equity129% 398, , , ,219

29 Asset Growth

30 Financial Ratios ROE 21% Current P/E 15.3 Overall gearing down from 90% to 38% No gearing on property business Interest covered over 11 times Market Cap HK$1.28bn Outstanding Shares 1.229bn Dividend Payout Ratio 37% Financial Highlights


32 Future Direction Bullish property market in Macau -> further investment opportunities for short term and medium term profit Further opportunities for medium term (18-36 months) development opportunities Macau is a hot market for investors and the company is pursuing JV opportunities with investors for development and investment opportunities Organic growth of financial services business Opportunistic approach re. acquisitions of possible assets in the financing business

33 Thank you! Q & A Session

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