Hang Lung Group Ltd S/Adr

Good afternoon ladies and gentlemen. My name is Joyce Kwock and I'm the general manager of investor relations at Han Long. Welcome to the analyst presentation for FY26 interim results announcement that were made earlier today for both Han Long properties 101.hk and Han Long Group 10.hk. We welcome the audience who are at our Hong Kong headquarters and also the audience who are on our live webcast now. Please scan the QR code for our presentation pack. There are versions of English and simplified Chinese here for you to choose from. So today, our senior management team is all here to join the presentation. They include Mr. Adriel Chan, our chair, Mr. Wai Pak Lo, our chief executive officer, and Mr. Kenneth Chiu, our chief financial officer. So our Chair, Adriel, may start with some remarks. And our CEO, Weber, CFO, Kenneth, will also walk through the results, including development projects and our financial management. And after that, we can take the questions from the audience. So Adriel, please, thank you.

Thanks, Joyce. So I think you've all seen the numbers by now. I hope you'll agree that it's a healthy set of first half figures. Yuen Wah Ma, Chuk Fai Kwan, Wai Pak Lo, Wenbwo Chan, Joyce Kwock, Ka Kui Chiu Yuen Wah Ma, Chuk Fai Kwan, Wai Pak Lo, Wenbwo Chan, Joyce Kwock, Ka Kui Chiu Yuen Wah Ma, Chuk Fai Kwan, Wai Pak Lo, Wenbwo Chan, Joyce Kwock, Ka Kui Chiu The trajectory for the whole year is still relatively positive, and I think we would probably concur with that. That being said, sentiment is still somewhat low. If you look at the Chinese Government National Bureau of Statistics sentiment score, it's still quite low. But at the same time, this is not the first and many more. I think we've definitely found the bottom, probably found it a while back, but we're now starting to see the bottom in both office and resi as well. And I think retail continues to be a little bit challenging, but if you dig into our numbers a little bit more, which Webber and Kenneth will do, you'll see that actually, despite having a headline negative figure, we're actually like for like positive, which I think is also healthy, even though it is low single digit. We have a lot to talk about. Very interested to hear your questions, what you're focusing on. But maybe I'll pass it on to Weber first to give you a brief overview.

So it will be my last time and then bear with me. This will be very enjoyable as well because I wear the same tie as my first interim result. So eight years, no change at least. I didn't find any sting on the tie, but just maybe I'll quickly go through the numbers and then we will discuss more. Of course, I think a lot of us doesn't want to look at the optics that we have a negative 10, which because we make a provision, the loan cash provision for the DP, actually specifically in Wuhan, which we will talk about it, but without the underlying net profit provision Our HLP, Underlying Net Profit was down by 2% and our group was up by 1%. I will explain later. But if you look at our core business, leasing, revenue up by five, operating profit up by four, underlying profit is flat, mainly because the capitalised interest is less, the interest cost was up, but the core interest expenses is down, but it's because of the capitalisation. Yuen Wah Ma, Chuk Fai Kwan, Wai Pak Lo, Wenbwo Chan, Joyce Kwock, Ka Kui Chiu Yuen Wah Ma, Chuk Fai Kwan, Wai Pak Lo, Wenbwo Chan, Joyce Kwock, Ka Kui Chiu Yuen Wah Ma, Chuk Fai Kwan, Wai Pak Lo, Wenbwo Chan, Joyce Kwock, Ka Kui Chiu Yuen Wah Ma, Chuk Fai Kwan, Wai Pak Lo, Wenbwo Chan, Joyce Kwock, Ka Kui Chiu In both Hong Kong and mainland but there is some money losing sales happened mostly in the first second half of 2025 when the market was still unclear at that time and that's why we make some transaction with a loss but actually it's not lost but because we we do the amalgamation at that time in Amoy that actually value up the price the actual margin is at 26 27 percent but because of The valuation up, there will be a loss a little bit from the aperture. But I think the most important thing is we make a 124 million provision in Wuhan service apartment that actually skewed the number from negative maybe 50 something to 187. That actually make the loss in the underlying. So I explain a little bit more later on this one. So in terms of the revenue mix, most of the time we do not have DP, right? So therefore, over our maybe 95, 96% of our leasing business. But this time with DP over a billion, the mainland rental revenue account for 56%, and Hong Kong rental revenue account for 24, so add together 80%. Hotel account for three, and the property sales account for 17%. Rental revenue in mainland after negative 4 in 2024 flat in 2025 now 26 is up by 3% but in the 3% you can see a divergence of story so retail very positive 6% up office down by 12 the supply issues the competition issue continues service apartment because it's very small numbers in Wuhan and that actually Make a huge numbers but at the end of the day is only 4 million. So all together is 3% in mainland in terms of RMB. Sales. If you look at the 24 negative 3, 25 plus 1. So this first half, plus 6. And if you look at the plus 6, almost across the board, except the younger brothers at the bottom. Heartland, we will talk about it. Forum, we will talk about it. But the good news, I would like to also highlight to you that even though it's a negative 18, but you compare the second half of 2025, it's only negative 3. So that means we are almost at the bottom now. Hopefully we can turn back into positive soon. Forum also is a negative single digit. So I think overall, if you look at the sales across the board, basically we benefit across from all the trades, not only to mention luxury, but also the luxury and also the F&B are doing really well. Okay this number I think really interesting right so when we announced our last year full year result in end of Jan we see a strong January we also said if the January is not that bad and the February will be even better because the year-on-year difference in terms of Chinese New Year so the first quarter was 24% up Very strong. But the second quarter come down, but still, plus nine, I think it's more or less like normalised. So it's still doing well, but not as good as the 24 in first quarter. So across the board also you see, look at the shopping mall. Shanghai, very strong. Centre, Olympia, Spring City, Park, Palace, they are very strong. Again, 3 brothers at the bottom and Westlake is new so that's why there's no comparison and worth to mention out of the 10 operating mall excluding Westlake because Westlake is a new mall 7 of them record high sales 7 out of 10 right so I think this is really not only a one trade or two doing well it's across the board that We managed to get the traffic up, we managed to get the occupancy up and we also managed to get across the board sales increase in 7 out of 10 record sales in mainland. This is not new, but I think very positive. We got more valid customers. Valid customers means they were active in the last three months, up by 25%. New members, up by 41%. Member sales up by 18% compared to the 17% sales up, which is... Very important because their penetration is 71% to our overall mall. So that means the member sales still carrying and also driving the sales for our shopping mall. And the penetration basically keep more or less the same level. That means we engage the customer at least 70% of our customers in our shopping centre. As I mentioned, record high food traffic. We just plot the chart with Westlake 66. You see that we are now higher than 2024, higher than 2025 in terms of traffic. And look at also the more occupancy. Most of them are above 90, except Westlake 66 because new, only two months old, and also Forum because 88%. I think otherwise every more are at 90 or above. And worth to mention the net LFA change. We have some decrease in luxury is because there are some clothes in Heartland and Forum But lifestyle, maybe you will ask me what lifestyle means Like the gadgets, like Huawei, like Xiaomi, like DJI and some of those or Miniso or PopMart or Mu Ji, some of those actually increased a lot, which helped us to differentiate and provide or offer experiential experience to the customers. F&B increased by four, and jewelry and watches increased by 8%. And the number of firsts in town, I think this is something we are very proud of. Yuen Wah Ma, Chuk Fai Kwan, Yuen Wah Ma, Chuk Fai Kwan, Yuen Wah Ma, Chuk Fai Kwan, Yuen Wah Ma, Chuk Fai Kwan, Yuen Wah Ma, Chuk Fai Kwan, Yuen Wah Ma, Chuk Fai Kwan, Yuen Wah Ma, Chuk Fai Kwan, So opening of Westlake 66, we will welcome you to join us in October, right? In our reverse roadshow. This is something we would like to present to you all, but I think it's important to look at, we achieved very high traffic in this new mall. So in the May Golden Week, on average 120,000 daily footfall in the mall. which are more is not the biggest in our portfolio but we can be able to attract over 120,000 now even stabilized they're at 40,000 50,000 level the good news is if you look at the occupancy rate as of end of June is 89 but the commitment rate is already 98% so some of the store they talk over but they take longer time to renovate and or do the fit out So the 98% already there. And number of store, 250. First to the market is 100 of them. In terms of office, we lease the B and E first. The B and E occupancy rate already 47%. So we just hand over the C and D. And if you look at the total number excluding the A, we are already 45% commitment in B, C, D, E. and if you look at even together with Tower A&E, we are already at 22%. So I just looked at the numbers compared to our Heartland office, our Spring City office, they are more or less the same pace, even in an even tougher environment today. So we believe that by the time of end of 2027, we will be able to achieve 70% of occupancy in the office in the West Lake. So this one I think is important. We talk about pavilion. This is only one of the puzzle. What we are trying to do is upgrade Plaza 66 again. So this year is our 25th anniversary. If you recall seven or eight years ago we do the renovation and now we will do it redefine luxury once again. We will add a pavilion in the second half which add another 4,300 square meter and the Rooftop Garden that we will Yuen Wah Ma, Chuk Fai Kwan, Yuen Wah Ma, Chuk Fai Kwan, Yuen Wah Ma, Chuk Fai Kwan, Yuen Wah Ma, Chuk Fai Kwan, I would say more stickiness and therefore they will be spending more time with our shopping centre Key opening in the next 18 months for our hotel Our curio collection by Hilton in Wuxi will be open I think in the next 45 days So we just got the license They have to go through some of the final touch So hopefully we will be able to launch it early September Mandarin Oriental, our target is still in Q1 2027. The feed-out will be complete by Q4, and then we will get the OP by Q4, and hopefully everything will be ready to launch in Q1. Kim Thun, Shui Jia Hui, the renovation continues, is on track, and hopefully we will continue to be targeting this second half 2027. Yuen Wah Ma, Chuk Fai Kwan, Wai Pak Lo, Wenbwo Chan, Joyce Kwock, Ka Kui Chiu Yuen Wah Ma, Chuk Fai Kwan, Wai Pak Lo, Wenbwo Chan, Joyce Kwock, Ka Kui Chiu Yuen Wah Ma, Chuk Fai Kwan, Wai Pak Lo, Wenbwo Chan, Joyce Kwock, Ka Kui Chiu Sender 66, we are doing the design and also form the JV company and Westlake 66 expansion, we are doing the design because this will be 100% with us so there is no JV partner company to form. Okay, office. This is really a tough challenge. If you see from a plus five in 2023 and suddenly turn into very chill weather and now into a very cold weather. negative 12 in first half of 2026 so you see across I will not mention particular cities but in Shanghai the competition is very very keen right so the reason why I say we are the existing buildings having all the top clients everyone tried to steal your your tenant and offer them half of the price with the fit out So it's not a news now, it's in public domain LV will go to CR Land Building But we keep all the other LVMH brands staying with us But the LV brand will go there because they subsidize everything They give them a rooftop, they give them a garden Yuen Wah Ma, Chuk Fai Kwan, Wai Pak Lo, Wenbwo Chan, Joyce Kwock, Ka Kui Chiu Yuen Wah Ma, Chuk Fai Kwan, Wai Pak Lo, Wenbwo Chan, Joyce Kwock, Ka Kui Chiu Luz LV, but we get Tiffany. We lose some, but we got Pater Phillip. So we are trying our best to retain the best tenant in our mix. But the market is very tough. Like in Wuxi, you cannot believe someone offer one dollar. We are charging 2.8. Someone offer one dollar, we fit out. So I think the market is brutal, but I think the team are trying very hard to retain the best tenant, but at the same time offering the best service to them.

If I can just cut in very quickly on that. If you look at our occupancy for the offices, I think it's actually still very decent. So we've been forced to reduce prices because the market is the market. But the fact that we're able to keep our occupancy Hong Kong, from a negative 9 2024, negative 2 last year, now to flat. So I don't want to repeat, but seems like we find the bottom of

Offices, we show 1% up. Residential is going strong. Retail, negative too, is because of a huge brand leaving in Causeway Bay and now we are swapping in. We are doing landlord provision now. It takes a few months. That's why it's a void for three, four months. And hopefully with the new tenant coming in, we already identified, we already confirmed, when they come in, the negative will become positive. I just want to exclude, if we exclude that particular Kwan, Yuen Wah Ma, Chuk Fai Kwan, Yuen Wah Ma, Joyce Kwock, Ka Kui Chiu So that's why we do not have luxury in Hong Kong. So we are more or less a labour with more. The good news is Armoy is doing well. Cornhill is doing well. Armoy will do better hopefully because we just completed a bridge to link with the Kowloon ECC. That will help people to walk without the rain and with the cover. from the MTR station go back straight to Amoy. That will help us to improve traffic, that will help us to improve the leasing progress as well. And also hopefully that will have positive rental reversion to us. Same thing in Cornhill, we make a decision to swap out the cinema and change into a kids area called Adventures. So very good. The business doing well, we have sales rents and then We turn into experiential. So I think some of those we just need to add fast and then try to meet the customer need. Especially now finally we heard from some rebate, now I don't need to go to Shenzhen, you have something similar. I can stay in Kowloon, Hong Kong East to enjoy some of the kids activities, especially in the summer. Property sales maybe I pass to Kenneth to have a few words on that.

Thank you, Weber. I think this first half was a very fruitful Thank you very much to all of you for joining us today. We have had six months for our public sales. If you look at this chart, upper part actually, it represents the sales revenue that we have bought. We have handover quite a lot of units at the apertures, as well as one house at Poo Poo Row. So I think substantially this one billion revenue bought come from our Hong Kong public sales. The contract sales that we have achieved in the first six months, total contract sales, if we include the sales of SubMed, which is an investment property, the total sales proceeds account for $1.5 billion. If you look at our whole year contract sales last year, it was around $1.6 billion. So this six months, I would say it was a very fruitful period. I think we took advantage of this time window when the market It's good we speed up the public sales. For information, only in July we have further sales in three units, which are not included in the first half result, but those sales will be recorded. One will be recorded in second half, and the other two will be recorded earlier next year.

I think I...

For financial management I think the key highlight is that our debt portfolio right now as you can see around half of our debt will be denominated and the average debt maturity is around three years we have sufficient available facilities unused around 18 billion if you look at the bottom right hand corner You can see that for those that mature more than two years account for 69%, which has lengthened compared to the previous period. And I think I show this page as well. For the net gearing, you can see that it came down from 33% in first half last year to 31.6% by end of June this year. Our average borrowing cost further came down to 3.7%. We benefited from a relatively low high borrow in the first half this year. And also, my Treasury team managed to get better refinancing terms in the past six months. So overall, we have achieved savings. I think as you may know, we have already completed a lot of projects. The biggest one is Westlink 66 and we have already opened it on 28th of April. Because of this, the capitalisation ratio Next page. Okay, I pass it to Weber to share with you guys.

Sorry, I forgot. I have two things. Yuen Wah Ma, Chuk Fai Kwan, Wai Pak Lo, Wenbwo Chan, Joyce Kwock, Ka Kui Chiu Yuen Wah Ma, Chuk Fai Kwan, Wai Pak Lo, Wenbwo Chan, Joyce Kwock, Ka Kui Chiu Renewable Energy Breakthrough So the public engagement as well as the community engagement continues and ESG benchmark rating and everything improved over the year and that helps our finance cost that helps our other achievements So I think overall I think we have a very fruitful year for the sustainability as well So I will stop it here and then maybe go for Q&A

I think there is a slide that somehow was skipped, which is this slide that we have new development.

So maybe we just quickly talk about Shosen Hill. We finally get the green light from the government, so we will get More area by paying a little bit more. 50% more area so we can build more houses. Instead from the five, we can get more houses. We can really do a much better product for our customers. All right.

OK, cool. So thank you very much, Adriel, Weber, Kenneth, for the presentation. We now start the Q&A. Please feel free to raise your questions by raising your hand here or typing the questions in the box on the webcast page. So from the floor, I see a call from JP Morgan, please.

Thank you. First of all, I just want to take this opportunity to thank Weber for the past eight years. Happy retirement. We will stay in touch. Okay, so I guess my first question is about the CEO, right? Because today we had the announcement, we saw the announcement, but then we saw there's no name from the announcement. So just curious, can you give us like a sneak peek on, you know, how the new CEO is like? For example, what make him a tech? You know, what make him, you know, what make you feel like very impressed by this new CEO? And maybe a bit of a background on the new CEO. So maybe that's the first question. And the second question is on mainland China retail. So for the first half, I think we saw pretty outstanding results. But then for these, like starting in around May or June, I think there have been more commentaries about how tenant sales or retail sales in China further slowed down. So just curious, can you give us like a breakdown on the tenant sales trend by month, roughly? Say for June and July so far, how is it compared to April and May? And then for the second half of this year, what's your expectations for tenant sales? Thank you.

I think more details on the new CEO will come in due course. You won't have to wait too long, don't worry. It's probably a week or two, a couple of weeks. We just want to be as transparent as possible. The Weber's retirement was announced quite some time ago and I think that the least we could do is explain that we have actually found somebody with a name to be announced. On the second question, which I think is much more interesting, the retail, I alluded to this earlier in my opening comments, I think that second half is shaping up We're all relatively optimistic, cautiously optimistic. As you've seen, there's a little bit of a divergence in some of what the brands are reporting and some of what we have just reported. And that's for many reasons. Partly we've been increasing our exposure to luxury. But also, as the luxury brands close stores, it's not closing per se, it's consolidating. So their GFA might be increased, but the number of stores may have decreased, which means that the existing stores have either gotten bigger, which it has in some cases for us, and that also means that sales are consolidating into those fewer number of stores. And so we've seen a little bit of beneficiary, we've been a bit of a beneficiary from that. Although it cuts both ways. So in some cases, you know, we've been on the opposite side, but net-net, it's balanced out into positive for us. And so I think the brands are still conservative. There is concern over sentiment, but there's been concern over sentiment for like the past several years. So at some point, I think that that will Thank you very much. and the hunger for Chinese consumers for compelling spaces, for good malls, for good offerings, and that's what we've provided. So I actually feel quite comfortable with the direction that retail sales in China are moving in, even though sentiment and what you hear on the street may not sound as positive.

to answer strictly your question about bi-monthly. Maybe I will not doing bi-monthly, but bi-quarterly. Q1, I think if you really zoom in, everyone benefit, doing really well. But the gold rush make a difference, which I'm sure you all know. Second quarter without the gold rush. Also the luxury brands somehow weakening a little bit. But we still achieved 9% That means the F&B, the non-luxury are doing really well So in the future, I think I would suggest Yes, we are one of the proxy for luxury Doesn't mean that we are only doing luxury So you should also take I think overall if I look at the numbers in first half luxury including the top gold one are growing at 15% but the general are growing at 20% so we are a lot more diversified compared to the past Because of the higher traffic, because of higher occupancy, our F&B grew 16%. So 16% compared to the 17% means they are more or less the same. Our Lawn Luxury F&A, the fashion and accessories, up by 25%. So those F-Lasher or those other brands are doing pretty well. And also the Long Luxury, Jewelry and Watches are up by 30 something percent So that means first half across the board is doing well Second quarter Long Luxury continues to do well But the Gold Rush and Luxury is a little bit slow down So that doesn't mean that the whole engine has gone Because F&B, the people still need to come out to eat They still need to come out to hang out So that's why I would say we are still believing in the second half It will be high single digit up in terms of sales So this is really our expectation based on what we see But the good thing is the luxury brand seems like the tone is a little bit more positive now But they are still very cautious So that's why I will not say Suddenly they would change their strategy by opening a lot more stores. Rather, I think in our shopping centre, in our retail business, we need all trades to do well. If we can do that, hopefully that diversifies the concentration rates.

Cindy from Citi, thank you. Thank you. I have two questions. The first is on dividends. So it's great to see a resumption of full cash dividend. I think it might be still early, but what matrix will guide the potential dividend uplift in the future? Do we need to actually wait for the Hangzhou Mall Phase 2 to open? Or is there any other operational trigger that you might be able to flag? and second is more specifically on Westlake 66 you mentioned food traffic is amazing but how about tenant sales performance how is it tracking say against your internal target and what some key improvements that might be planned in the say coming 12 months to further lift the mouse competitiveness The first question, we do not have a policy to say by hitting whatever percentage because we are paying at a very high payout now. What we believe that when all the headwind

Yuen Wah Ma, Chuk Fai Kwan This will not be too far away. We need to let Hangzhou to grow. But based on what we see, the mall should be itself break even in Q4. Office will be a little bit longer by the end of 2027 because of the high RET. But otherwise, they track according to what we set for ourselves. In terms of sales, it was a surprise. It exceeded all our budget. I asked the team why we exceeded all our budget because maybe we set the budget too low. But we still believe that more to come because we will have luxury brands coming in in Q4. We will have three, four luxury brands come in. We hopefully will welcome more and more. And with the phase two coming in, we can accommodate everyone. I think it's a journey of course it's not as quick as others more but I just want to remind also internally I remind everyone that we open Heartland the best way with all the brands comes in on day one Yuen Wah Ma, Chuk Fai Kwan, Wai Pak Lo Yuen Wah Ma, Chuk Fai Kwan, Yuen Wah Ma, Chuk Fai Kwan, Yuen Wah Ma, Chuk Fai Kwan, Yuen Wah Ma, Chuk Fai Kwan, Yuen Wah Ma, Chuk Fai Kwan, So I think maybe this is the better way, I don't know, time will tell. But we look at Westlake, it did not disappoint us from the matrix wise, but of course we would like to open some of the brand earlier, therefore we can really set the stage and really firm up our positioning. So I think that takes a bit of one year or two, hopefully we can do that and show it to the market.

Thank you.

Thank you. This is Vera from UBS. And I have two questions. First is to just follow up on your previous question. You mentioned that for the second half you expect high single digits for the sales. Does that exclude Hangzhou or include Hangzhou West Lake 66?

Exclude or include doesn't make a difference, maybe 1-2% difference. So it's still higher than 5, lower than 10. So if you want to be having a single digit, digit-wise, maybe 1-2% is because of Westlake.

Okay, thank you. And also for the Westlake 66, so we already recorded the rental income of 37 million RMB. If we annualize that, it's only around 200-something. Can I do the math in that way? And what is the normalized rentals that you expect to achieve for Westlake?

No, I think there is not... Okay, you can do the math this way to get the rough numbers, but when you're... Yuen Wah Ma, Chuk Fai Kwan, Wai Pak Lo, Wenbwo Chan, Joyce Kwock, Ka Kui Chiu Yuen Wah Ma, Chuk Fai Kwan, Wai Pak Lo, Wenbwo Chan, Joyce Kwock, Ka Kui Chiu Chuk Fai Kwan, Wai Pak Lo, Wenbwo Chan, Joyce Kwock, Ka Kui Chiu

Hong Kong is 1% down, right? And and mainland is

Two factors. One is the office. So nothing you can do about it because when the revenue down, go straight into bottom line because I can't cut the escalator and cut the air con. So that one, you should understand that. But mostly it's because of the opening effect of Westlake 66. When you launch a new mall, you need to put marketing money in. That will have a lead to loss. But what I said to you is that hopefully by Q4, we will break even the mall and by then you can see a sustainable way. So I don't worry about that 1-2% margin down because you are opening some new mall. This is not BAU. But with the office, that is a huge pressure. And if you're dropping 12% of revenue, that goes straight into the bottom line. So that actually has a huge effect to our margin for the mainland business.

I'll give a chance to the questions raised through the webcast. A few questions related to dividend. For capitalised interest, isn't it a non-cash issue? So does that have to come into the consideration for future dividend hikes? And also for the dividend payout, it looks high relative to property leasing. Do we have a risk of another dividend cut?

I think I'll answer the first question first because it's more technical. If you look at our capitalised interest, my answer is yes or no. When I think the board discussed the dividend payout, I think we, as mentioned by Weber, we don't keep a fixed ratio. We hope that we can adopt a progressive If you do your own math, if you look at our leasing profit, including the hotel part, less the interest capitalised, basically our payout is 102%. Last year was the same. So that means if we assume all the interest expense go to P&L, I have already paid out all the profit. So the question is, going forward, when we have further growth, particularly for those younger projects, if we have more profit, what will be the payout? I think it is subject to the board to further discuss. But I think in the meantime, we have already tried our best to pay as much as we can. But of course, we also look at the underlying profit, particularly the recurring part. So I hope that I answered your questions about the capitalized interest. About the dividend policy, maybe I'll let Adriel to make some comments.

Just a quick one. I cannot always speak for the whole board and each time we announce our dividend, we have a very robust discussion as we did this morning. But I will say that the risk of a dividend cut in the near future is probably as likely as the risk of a dividend increase. We would not like another dividend cut if it can be avoided. And I speak both for management and the main shareholder.

And I just want to supplement. I think we had five script dividend arrangements before. And from time to time, analysts, investors keep asking us, can you commit not to have another round? Again, it's not subject to management decision, it's subject to board decisions. But I think right now, the board decided not to arrange Thank you very much.

And also the reason why we are accelerating the IDP sales. Also part of that, unfortunately, last year we make some loss. But think about it, if we can continue this momentum, but selling more DP, that will go into the bottom line again. That will allow us to get a little bit headroom or get a little bit buffer. So I think overall, on one hand, yes, we are almost at 100%, but doesn't mean that we cannot continue because a lot of other competitors, we always look at the numbers, I don't name them, a lot of them already overpay 100%, a lot of them only at 60%, a lot of them at 45%, so therefore the time for them to progressively increase is always high. But the key is, whatever it is, it is, right? So we cut one third two and a half years ago. Now I think, and we do scripted dividend for five times and now we stop. Hopefully that will also send you a signal that at least how confident not only three of us but the board about the future.

Simon from Goldman, thank you.

Sorry, I have two questions. Just back to Westlake. I think there's a lot of comments basically saying that your mall positioning is geared toward a bit more lifestyle and maybe not so much luxuries. Wondering whether you have any thought about, you know, maybe two, three years down the road, the positioning of the mall and then recently what sort of competition are you seeing from the adjacent mall, if any? That's the first one. And then the second one is back to the provisions. Would you be able to give us some more maybe comment about the provisions, whether they're going to be more to come? I think on your book, there's a sellable resources number, which obviously is one thing that you can pay for dividend. But if you can, maybe can you break it down into Hong Kong and China so we get a sense? Thank you.

First we will have four brands which I think I can talk about it because they have holding already Moncler, D&G, Bonanno Cucciani and some more will open in the next actually in September of course some big names we are working on it some will start with us with the pop-up some will Still sitting on the fence and wait about the whole market, how it turns. Of course, our belief and also our objective is to do with luxury because we build more with that DNA. So happen the market doesn't allow us to get them on day one, doesn't mean that we don't continue. This is exactly like what we have launched Wuxi. Yuen Wah Ma, Chuk Fai Kwan, Wai Pak Lo, Wenbwo Chan, Joyce Kwock, Ka Kui Chiu Yuen Wah Ma, Chuk Fai Kwan, Wai Pak Lo, Wenbwo Chan, Joyce Kwock, Ka Kui Chiu Yuen Wah Ma, Chuk Fai Kwan, Wai Pak Lo, Wenbwo Chan, Joyce Kwock, Ka Kui Chiu Yuen Wah Ma, Chuk Fai Kwan, Wai Pak Lo, Wenbwo Chan, They are not targeting us. So this is exactly what I just said. When we launch Wuhan by saying that I need to eat your lunch, then of course we attract Yuen Wah Ma, Chuk Fai Kwan, Yuen Wah Ma, Chuk Fai Kwan, Yuen Wah Ma, Chuk Fai Kwan, Yuen Wah Ma, Chuk Fai Kwan, Yuen Wah Ma, Chuk Fai Kwan, We will have a very good VRC lunch. We will have a lot other experiential stuff they do not have. So I think overall it's not exactly like discount, come and kill you, that kind of competition. I think on the maybe essay part I pass it on to Kenneth to talk about.

For the provisions, actually, it only comes from SA3 at Wuhan. In Hong Kong, as you may know, the Hong Kong residential market is in recovery. All the remaining inventory, actually, based on the recent sales figure, are well above. So I don't see any indications for impairment For those who came from audit background understand every balance sheet day we need to do NRV assessment on all the infantry And for Wuhan In view of the slow-moving situations, we take a prudent approach to look at the projected cash flow of the projects and then see, based on the price list, what would be the NRV of the asset. I'll just give you one more data point, which is easier for you. Part of this building has been a lease-out through Fraser. And we have very, very good tenants, you know, , senior management of MNC. Previously, when we transferred those inventory into investment property, the unit price was around $23,000. are all in the same unit price per square meter. Right now when we mark down the inventory part, that means the property for sales part, it's a similar level. So this is, coincidentally, the unit price is similar. I think for the other two asset in Kunming and in Wuxi, the selling price are also well above the book value. Any high risk for impairment. And one final point on Wuhan. We are marking down because of this NIV assessment exercise. It doesn't mean we are cutting the price. In fact, our products are still very, very unique and on the high end in the market. So this is only an accounting treatment for prudence sake.

I think the reason why we explain in that detail is part of it is not about whether if you want to cut the price, you can sell faster. In China today, unlike Hong Kong, when you drop the price by 5%, you can sell much faster in Hong Kong. But unfortunately in mainland, If you drop the price, you will attract all the problems. The existing one will call you and say why you don't cut the price for me, and then the new one you might not be able to sell. So it's not about the price. But because we take a very prudent approach, let's say if we need to take a few more years to sell, and then go back to the present value, what will be the price that we should book today? I think that is the approach we have done. The good news is the price that we adjust now is exactly like the leasing price from the income approach. So that means in the future, what if the worst come to worst? I can lease them out. I don't need to do any adjustment anymore. So therefore I can attack and defense Yuen Wah Ma, Chuk Fai Kwan, Yuen Wah Ma, Chuk Fai Kwan, Yuen Wah Ma, Chuk Fai Kwan, Yuen Wah Ma, Chuk Fai Kwan, Yuen Wah Ma, Chuk Fai Kwan, Yuen Wah Ma, Chuk Fai Kwan, Yuen Wah Ma, Chuk Fai Kwan, Wai Pak Lo, Wenbwo Chan, Joyce Kwock, Ka Kui Chiu Yuen Wah Ma, Chuk Fai Kwan, Wai Pak Lo, Wenbwo Chan, Joyce Kwock, Ka Kui Chiu

We take the last questions before we finish the briefing. If there's no one from the floor, I'll take the last one from the webcast. So what's your perspective on Hong Kong retail in terms of liquidity? Yuen Wah Ma, Kui Chiu

I cannot say too much about overall Hong Kong but I'm very positive about our portfolio. Retail we see even today with a very long void period of our causeway bay, we are still registered 3% growth. So once we get Yuen Wah Ma, Chuk Fai Kwan, Yuen Wah Ma, Chuk Fai Kwan, Yuen Wah Ma, Chuk Fai Kwan, Yuen Wah Ma, Chuk Fai Kwan, and some other competitors by changing the mix, by making sure that they are relevant and hopefully we can retain as many people as much as what we can in order not to go to North and stay in Hong Kong. So I think going to North is already be around for quite a while. I cannot say that the people will not go to North anymore. They will continue to go if they need to go. But I think it's not new anymore. I just hope that we can improve our attraction in Hong Kong by retaining more sales in Hong Kong. So I think that is your first question. That is the only question, right?

I'll just add a few comments. I think, broadly speaking, thank goodness that we're at a low base today. Because everything still looks good. But if I were to, my own observations would probably be that there are some structural elements. So are we going to go back to whatever the heady days of 2018? It may take some time. It may take more time than we like. I'm not saying we won't get there, but it may take some time. So probably across all the sectors. Even though it looks good today, we feel good about the residency sales, we feel much better about office in Hong Kong, but I think there are some structural issues which are going to manage the pace of this recovery and also may even manage the top of this recovery. So those are just some observations and comments. One more thing that I do want to say is on Mainland China Resi, it's obviously not very sexy right now. It's not been sexy for many, many years and probably will not be sexy for the next few years. However, There's an interesting set of numbers which I think are publicly available on new starts for China residential and completions on China residential. And then if you kind of look at the number, it's dropped dramatically because nobody's been building for the past few years. And there's a question in my head, which is that what is the base load? What is the base demand? Yuen Wah Ma, Chuk Fai Kwan, Wai Pak Lo, Wenbwo Chan, Joyce Kwock, Ka Kui Chiu including the wealth effect including perhaps I would love to have sold out all of our essays by service departments by then but we may not have and if we haven't then who knows there may be a window in a few years time but I know that's far beyond any timeline that any of you are looking at but it may be it may be a few years but I think it's interesting to keep an eye on that

And also I think just with last point, history repeat itself that two years ago when we are sitting in the same room, everyone worrying about the office market in Hong Kong. Look at today. And now everyone saying that all asset management company, everyone coming in Hong Kong. Now okay, I hope they come. That means the rental will go up, spending should go up. That is only two years ago. And basically everyone saying that Sancho is dying. But now he is recovering quite well. So I will say market-like property development is a little bit funny. Sometimes it's counter-signical. And I hope I'm right and most of the people wrong is that if the wealth effect, especially low asset management, I was told, I'm sure you guys know, right? The private equity guys, they don't need to pay tax for the carry. Wow. The IPO guy, when they come, they have a lot of money, so they should not put in the bank, buy a house. So I am very positive about high-end residential. But at the same time, those guys need to spend. I don't think they will all go back to Shenzhen. So some of them will stay. Some of them will buy good wine, because wine is cheapest here. And there will be lock-on event. So I think Hong Kong is so dynamic, never say never. Mainland, I would say SA need to take some time, but we all know when no developer developing anything, and suddenly it will become a shortage. So there will be a moment but of course we don't know when because there's still a lot of supply in the market. I'm still waiting for that question on the office when the oversupply will be diminished. So whenever the multinational come back to China hopefully they will Thank you very much. Very rosy luxury growth. So that's why I would say the market always in a cycle, but we just need to do what we believe is right for the company, for the customers, then hopefully we will be rewarded by the things we have done.

Okay, so this wraps up the NS presentation for our FY26 interim results. This is going to be the last time Weber do the presentation here. We wish him the best. Thank you very much for the participation and we will see you next time. Thank you.