New World Development

Hello, friends of the investment world. Welcome to the All-Year Employee Online Analysis Conference of the New World Economic Year 2023. I am Patrick Chong, the Director of the Investment Relations, the host of today's conference. First, let me introduce the managers of the conference, including the Vice President and Executive President of the New World Economic Year, Mr. Zheng Zhiguang, Adrian. If you have any questions, please type them in the chat box in the webcast. We will pick some questions to answer. Please welcome Adrian.

First of all, I would like to clarify that the market is in a very sensitive state. There are also a lot of outside rumors that have caused a lot of vibrations. There are rumors about the loss of wealth in the market. I suspect that someone has borrowed the opportunity to control the market. We have a three-month blackout period, so we cannot take any actions in the market. and made some false statements. But we immediately made a statement and reported it to the law enforcement agency. So I hope that with this opportunity, we can explain it once and for all. Secondly, we can tell everyone about our future strategies. First of all, the financial strength of the New World is very stable. The reserve of cash is very strong. The first-hand cash can be used for funds up to 910 billion HKD. In addition, in the past six months, the group has received a low-cost bank loan of 3 billion HKD. The interest rate is also at a high of 1.1%. and the total interest rate of the group is 4%. We can see that our financing capacity is quite strong. There are many rumors out there, saying that our bank has cut lines. I can tell you that the group has been doing business with 60 banks for a long time, for almost 50 years. Our relationship with those 60 banks is very good. At this moment, in the next 50 years, we don't have a company that will cut the credit line. So I don't understand why this rumor came out. There is no such possibility in the future. In the future, we will have a very strong commitment to deliver. First, we will speed up our tax reduction. We are preparing to pay back our debt, including our permanent debt. Now, in this high-tech environment, we can also buy at discount rates to increase our profit, reduce our gearing, and provide support to the second-tier markets. Secondly, we have always done a good job in the optimization of CAPEX and OPEX to reduce the cost. Thirdly, the fiscal year of 2023 is a difficult one. There are a lot of challenges, and our gearing is relatively high. However, the good news is that our large-scale investment projects have entered the final stages. For example, Eleven Skies, K-11 in Shenzhen. So in the fiscal year of 2024, our capital investment in CapEx will be greatly reduced. Our goal is to... In the past few years, we have invested a lot of recurring income. Now, we are at the end of the tunnel. We are slowly entering the recovery period to harvest these regular income. Our goal is to reach half of the regular income of the group by 2026. And future companies will continue to use different forms of corporate action to release our value and improve our shareholders' returns. Let me remind everyone, At the end of February, I mentioned that there will be a series of corporate actions to unlock the value of our shareholders. The launch of a new stock is the first step of our corporate action. And the fifth one is, I will say it again, the company absolutely does not need to raise funds. No credit, no compensation. Sixth, we will continue to sell our non-core assets, manage our financial affairs, treasury management, interest rate hedging, increase in RMB loans, etc. We will continue to manage our treasury management and non-core disposal.

Thank you, Adrian. Let me first talk about the financial performance of the company in 2023. As you all know, the global economy is still facing many challenges, such as the price increase and the depreciation of the RMB. This has affected some of our business performance. In terms of financial performance, our revenue and core profits have increased by 40% and 21% respectively this year. This is mainly because In the 1st and 2nd period, we had 1.56 billion Hong Kong dollars, and our K-11 performance was very strong. However, due to the inflation and depreciation of the RMB, the annual interest rate fell by 5%. Since our domestic business is huge, we were also affected by the FX translation of the RMB exchange rate calculation. which led to an increase in debt and a decrease in profit. As for our financial situation, as Adrian said, our company is very stable. Until this fiscal year, we have used a total of HK$940 billion, including HK$5.5 billion in cash. Each share of our stock is HK$3 billion. In addition, each of the mid-term stocks has sent HK$4.6 billion. In addition, each of the new projects has sent HK$1.59 billion. Our entire year's stock will reach HK$2.35 billion. In the year 2023, although the overall environment is still challenging, but there are some significant growth in our business. First, in terms of industrial development, in Hong Kong, we have $15.6 billion invested in the 1st and 2nd period of the housing market this year, which has led to nearly twice the increase in Hong Kong's industrial development revenue. In terms of mainland China, we have been focusing on the core regional strategy of a one-way city, as well as the impact of the brand, our contract sales price reached the target of NT$1.5 billion in the entire year. In terms of business investment, our K11 performance is mainly due to our unique business model in the cultural circle. In terms of capital investment, we have always controlled capital investment, which is always lower than our budget. In the second and third fiscal year, our capital investment, CapEx, was used less than HK$120 billion in the budget, only HK$240 billion. So, compared to the initial budget of HK$360 billion, we have greatly reduced one-third of it. Moreover, we expect that in the second and fourth fiscal year, we will continue to greatly reduce our CapEx to less than HK$150 billion. In addition to the final stage of the large-scale investment project, we believe that the future will greatly reduce the cost of construction. Now, let's talk about property investment. Our overall revenue has increased by 4%. Among them, Hong Kong's property investment revenue has increased by 10% year-on-year. This is mainly due to the improvement of the retail environment and the social media market after the overall opening and cancellation of all epidemic prevention measures. China has been affected by the COVID-19 pandemic in the past six months, as well as the decline in RMB, which has led to a decline in the company's revenue. The performance of K11 is very strong. The revenue and distribution performance have increased by 12% and 16%. K11 in mainland China has been fully restored. In the second half of 2023, sales and revenue growth have increased by more than one-tenth. In the past two to three years, Shanghai's K-11 shopping malls and office rents have remained at more than 90%. Our Group's financial stability and financing capacity are very strong. We have established long-term cooperation with 60 banks, and each bank supports us. so we have sufficient transparency and can enjoy very low financing costs. For example, in terms of Hong Kong financing, from March to June 2023, we received a low-interest loan of HK$3.8 billion. Of this HK$3.8 billion, HK$2.2 billion belongs to re-financing, and HK$8 billion belongs to new loans. In terms of interest rates, We are the same as in the past with the bank and industry hybrid with a value of 1.1 lei. In terms of domestic financing, we have mentioned that we will increase domestic financing. Why? Because RMB loans are lower than overseas costs. We have successfully reduced our financing costs with low interest rates. We have also reduced our risk to RMB. to avoid the risk of the depreciation of RMB to us. Recently, we have received a lot of untaxed loans in the police force, from 2.8% to 3.2%. We have also issued RMB bonds in the police force, including CNBS, Hongmao, and the cost of issuing them is only around HK$3 billion. We have successfully reduced the cost of financing of our entire ship, At the end of June, as I mentioned earlier, our active capital was HK$940 billion, including HK$5.5 billion in cash, and HK$390 billion in bank credit. According to the above factors, even though the HIBOR has increased significantly, the average financing cost of the second and third years has dropped from the predicted 4.9% to the actual 4%. compared to the average cost of financing in the last half of 2023. Compared to our common income, it accounts for 70% or even 80% of our total income. Because we focused more on the development of the industry, our common income was only 20% of our total income five years ago. This is easily affected by the current trend. Therefore, in the past five years, our group has actively transformed to increase our recurring income and ramp up our investment and property combination. We have successfully increased our recurring income in the past few years. However, there have been many unpredictable challenges in the process. For example, in the past few years, due to the impact of the pandemic, there have been continuous increase in the cycle, the decline of RMB and geopolitical problems, and delayed our plans. But don't worry. Our large-scale investment projects are now entering the final stages, including 11Sky and K11Ecoast in Shenzhen. The future capital investment will be greatly reduced. These large-scale investment projects will also be completed at a separate stage next year, which will bring huge and continuous revenue to the Group. We are confident that in 2026, we will increase the proportion of net profit to more than 50% of the total profit. We have made three commitments to investors at the press conference in February. First, to speed up the recovery and strengthen the confidence of investors. Recovery has always been our focus. In the past year, according to the plan, We will talk about the details in detail in the next few pages. In the future, we will continue to implement the project of going public. In addition, in the past few years, our investment in rental properties, the proportion of regular revenue will continue to increase. I am confident that we can speed up the process of going public. Secondly, we have mentioned that the management team will not use public stocks or any type of stock rights to collect capital. As Adrian said, we have fulfilled our promise for the past two to three years. We will continue to stick to it in the future. Thirdly, we have said that we will use corporate action to release the value of different businesses, and improve the shareholding of shareholders. We can also use this opportunity to contribute. As Adrian said, we have received a contract for the acquisition of a new business in our subsidiary. If we succeed, it will help us to focus on our company's strategic focus and release value, and also provide us with cash flow. We will continue to improve the shareholding in different stages at different times through corporate action. In terms of speeding up the supply and demand, we have three major measures. First, to optimize capital expenditure and revenue expenditure. In terms of capital investment, As I mentioned in 2023, our CapEx has decreased by 120 billion, and we only used 240 billion. Compared to the beginning of the year, we provided 3.6 billion, which has significantly decreased by one-third. As we enter the final stage of the project, such as 11Sky, which we spent almost 50 billion HKD on every year, and K11E Coast, which has almost been completed, we can greatly reduce the cost of construction. In addition, in terms of land reserves, we have plenty of land reserves, especially farmland. So we can take advantage of the recent low price of farmland reserves. We do not need to buy land at a very high price in the market, which helps us to significantly reduce CapEx. As you can see in this picture, in fact, in the past three years, the actual capital investment has been less than before. As for our capital investment budget for the fiscal year of 2024, it has been significantly reduced compared to the fiscal year of 2023.

It has been reduced to a level of less than HK$1.5 billion. Let's talk about OPEC. For CapEx, we have used HK$2.4 billion for the fiscal year of 2023. As I said earlier, we have used up all the large-scale infrastructure. We are at the end of the tunnel. We are slowly entering a recovery period. in the next one or two years. It will increase the recurring income. If we look at the OPEX reduction, you can see the graph on the right. You can see that from 2019 to now, the OPEX reduction has saved $350 million. This is OPEX, which is the usual spending. If we look at G&A as a percentage of revenue, in 2022, we had a 10.1% G&A expense over revenue. In fiscal year 2023, we reached 7.2%. What does that mean? It means that from a heavy cap tax perspective, even an OPEX reduction is very good. And if you look at the past few years, the expense of G&A has dropped 4-5% every year. Every year. And OPEC's G&A as a percentage of revenue this year is 7.2%. We are lower than the same industry. Most of the same industry is 10% or more. We are the only one that can be below 8%.

In terms of non-core assets, this is another tool that is very important to us. At the same time, it can also optimize our organizational structure and provide our operating efficiency. As mentioned earlier, we have adopted the contractual acquisition proposed by New Foundry. If we succeed, we will have a higher financial flexibility and focus our capital on our real estate. Also, through the sale of these non-core assets, we have greater flexibility to choose a better time to export. In terms of the new projects that we will be selling in the future, the asset sales of the fiscal year 2023 has reached HK$27.7 billion. In the future, we will continue to sell non-core assets when we are ready to sell them, to recover our funds. The third major step for us is to reset our stocks, to recover our bonds, and better capital allocation. We believe that the capital management of Shenzhen can better deal with the high-income environment, and the capital of Zhejiang can provide higher financial flexibility to businesses. In the mid-term stock market, each stock has sent 6 Hong Kong dollars, and in the full-year stock market, each stock has sent 3 Hong Kong dollars. In addition, after the new project was approved, the number of special stocks was 1.59 per share. We reached 2.35 per share throughout the year. In terms of the number of special stocks, the total growth in fiscal year 2023 was more than 14%, which is higher than the number of 2.06 per share in fiscal year 2022. Our plan is that We used the funds from the settlement to pay off the current bank loans, and to pay off the debt, including the permanent debt. Because these payments can help our cash flow and profit, and can bring many benefits. What are the benefits? Because the market environment is not good now, the debt price of our group is lower than the area. So the group had the opportunity to use lower prices to buy back bonds and permanent bonds, to improve the supply and demand. After buying back bonds, the lower debt can help us save our interest, so that we can have more cash, and further reduce the debt. And the saved interest also increases our profit, and further increases our stock. Remember, in December last year, We have also taken advantage of the current debt market, and repaid about US$4.8 billion worth of debt and permanent debt. This repayment helped us get 2.8 billion HKD in profit. Based on the three major measures mentioned earlier, our government debt rate will remain at a more stable level. In December 2020, our net debt ratio is 46.9%. At the end of June this year, our net debt ratio is 48.7%. If we complete the NWS project and send out special stocks, our debt ratio will drop to around 47%, similar to last year. The main reasons for the increase in the net debt ratio in the past six months are, first, The decline in the value of RMB has led to a decline in the value of non-currency equity. Secondly, if the RMB remains at the same level as in December 2022, our net debt ratio will be around 47%, which is basically equal to the level of December 2022. We will continue to take advantage of the three major measures mentioned earlier in the management phase, and large-scale projects such as EFN Sky and K11 Eco's construction will be completed, which will drive our regular revenue and increase recurring income. The management team is confident that the net debt rate will drop to more than 30% in 2026-2027. In the last mid-term, we promised not to consider public stock or dividend plans. We will continue to keep this promise. Please note that even without the contract proposed by Chow Tai-Fu, the management team will not and will not need to consider public stock and dividend plans in the future. We will continue to use corporate actions to release the value of different businesses, and improve the feedback of shareholders in the future. We also have the opportunity to go public. As Adrian mentioned, in February, we announced that there will be a series of corporate activities this year, and in June, we announced the first one. Our group will continue to conduct comprehensive strategic analysis of each business, examine how to improve the strategic focus and release value of each company under the group, and continue to improve the shareholder feedback in advance through corporate actions at different times, our K-pop will continue to grow. The new project can bring 21.8 billion in cash. With the exception of the special share of 40 billion, the net cash flow will reach 17.8 billion. First, it can strengthen our company's financial status, make our company more financially flexible, and strengthen the development focus of our new global strategy. We can also help our shareholders to bring in timely revenue and release the value of our shareholders. In this chapter, we will talk about the K11 situation in Hong Kong in detail.

In terms of K11, after the opening, in the second half of the fiscal year of 2023, the occupancy of K11 Museums has already reached almost 98% and Art Mall has reached 99%, which is the highest in the same industry. In the second half of fiscal year 2023, the footfall increased by 67% and the out-mortem by 56%. In the second half of fiscal year 2023, the out-mortem by 84% and the out-mortem by 82%. We can see that there are a few things. The first thing is that Tsim Sha Tsui is a good king. I believe many tourists in Hong Kong, especially those from mainland China, will come to the Tsim Sha Tsui, to the K-State Museum to take a card and go there first. The Tsim Sha Tsui will have a very large market consolidation. Secondly, our VIP sales, in the K-State Museum, have already accounted for more than 70% of our total sales. What does that mean? Our K-Dollar, our CRM system, actually controls more than 70% of our sales. And our black card accounts for more than 30% of our sales. And a black card basically costs more than HK$8 million a year. So you can see the viscosity is very strong here. Besides the flow rate, the viscosity is very good. The second thing is our operating margin. Our operating margin has reached a point where it is the same as ours. We have only been open for three to four years. Many large-scale business offices have been open for 17 to 20 years. Our operating margin is already higher than theirs. We made a comparison. We should be in second place. In addition, our rent is almost the same as that of some shops that have been open for 17 or 18 years. So we have been open for 3 or 4 years, which is actually much faster than our competitors. We have increased our profit and loss rates very quickly. So a lot of people think, wow, you're such a great artist, can you go back in time? But let me tell you, I'm faster than them, because they've been around for 17, 18, 20 years. We've been around for 3, 4 years, and we've reached the same level as them in 17, 18 years. Recently, we've also responded to Ye Min Fun. to cultural cities, such as night markets and waterfront markets. It's better than what we expected, because we had an increase of 30% of food for the previous weekend. 15,000 people went to the first weekend. The night market is more crowded. I think we will have to do crowd control today. A lot of people have been asking about what happened. Please don't take the news out there as if the New World is the same as other Chinese internal defense stocks. It has nothing to do with me if other Chinese internal defense stocks explode. our finance is very solid. Secondly, we have a brand. Thirdly, we produce premium products. Fourthly, we are a one-line and a one-and-a-half-line city, especially one-line. More than 90% of our contractor sales are in the Three Kingdoms, Shanghai, Hangzhou, Guangzhou, Shenzhen and Taiwan. So our target is the first tier location. And it's for exchange customers, and people with strength and money. So we're in a triangle pyramid. Our caterer customers are the top tier of the triangle. Other than us, The internal defense stocks that you talk about are talking about the middle and bottom of the triangle. So they are not competitors at all. They are not related to us. They can't be included in the same bracket. I want to clarify something here. That's why we are not sensitive to these things. Now, there is a high-quality brand selling premium, high-quality products. There are no more expensive products, high-ASB products. So in July, August, and September, we sold 5 billion items. For example, Lingnan New World. We cooperated with a brokerage company in Shanghai. They sold 5.3 billion of the property. The total price is more than 100,000 RMB. This is in Shanghai. This also happened in our financial year. So I hope everyone understands that we are a one-way city. And our brand has a very strong effect. So we are basically killing two birds with one stone. Because we don't have any opponents now. We are at the top of the triangle. Secondly, in July to September, Apart from our brand, how can our domestic residents' sales growth increase? It's because the local cities, although they don't have a large scale, but in Taiwan, Shenyang, and Shanghai, they have implemented a lot of so-called non-recognition measures, such as canceling the limit, lowering the handover rate, and loosening the policy. Many people ask, what is the current trend in the mainland? I can tell you that each city has a different policy. It is targeted. We call it a more accurate policy. It is pushed in a certain city. And the force is very strong. Especially, you will see that in the one-way cities in the Greater Bay Area and the Long River Triangle, they... is given a lot of good policies. For example, Guangzhou. Guangzhou has put a lot of effort into its policies. Last week, after the ban was lifted, the number of our customers increased by 241%. That's a lot of people buying. In the past few months, we have sold About NT$4 billion, around NT$3 billion or NT$40 billion. After the release of Shenyang, we bought NT$1 billion. More than 100 sets of rubber were completed. So, in July, August, and September, we have already sold 5 billion contractors. This is from July to September of 2024, the fiscal year of 2024. You need to know that in the fiscal year of 2023, we sold 1.5 billion contractors. In July, August, and September, we sold 5 billion. Right? So, 1.5 billion contractors sold throughout the year for China and the mainland must be no problem. Or more. and more cash will come back. Another thing is that the future of the mainland will continue to loosen up. It will slowly loosen up every month. Every city will loosen up. Guangzhou will loosen up. Shenzhen will loosen up. Pengyu will loosen up. Shanghai will loosen up. It will slowly loosen up. It will loosen up more and more. Let's take a look at the situation in Shenyang and Pengyu after it loosened up. At the top of the pyramid, there are a lot of exchange customers. Why? They may have sold their own company. There are a lot of deposits in the bank. We all know that there are a lot of deposits in the bank. They might as well buy a house and live on their own. And a lot of funds may be from mainland China. When they put the money in the bank, they don't know if it will not be released later. So they rather buy it earlier. So a lot of exchange customers, as well as those who live on the floor, will have a very high demand in this three-storey tower, especially in the first and second-storey buildings. As for Hong Kong, our business development performance is also very good. Hong Kong's distribution performance has increased by 42% in the second half of this year, mainly due to the introduction of the first and second period of the Macau Exhibition. In order to pass the test, we, the Namsung Financial Innovation Centre, have agreed to sell about 6.5 billion units. We have sold more than 80% of the projects so far. In September last year, we sold 51% of Changsha Bank's shares to Singapore's SSG Capital in 31 yuan. Now, our digital assets have achieved the best digital assets development in the euro-money segment. We have found that there are more people buying digital assets these days. Many people want to see the 888 in Changsha And many Chinese institutions want to buy 3, 4, 5, 6 floors to be their headquarters And next year, we are planning to launch... After March, many big companies such as Wong Chok Khan and Wong To will be launched So, in terms of contract sales, there will be a lot of contract sales coming back in March next year. We hope that in March and April next year, we will push more than $3,000. So, we still have time. We still have half a year to look at the situation and how to make a strategy. In the medium-long term, we will supplement our land reserves. As you all know, we have 15 million square feet of farmland, mainly distributed in Yuen Long and Phan Lang. I believe that the Northern Capital Region will be the engine of the future of Hong Kong, and most of our land, 15 million square feet, will be in the Northern Capital Region. We now have about 7 acres of land for land exchange. Our goal is to successfully convert our land into our land bank within 3 to 4 years. We can develop a GFA of 3 million square meters. In the next three to four years, the GFA will be transferred to the land bank. Not only in the fourth year, but every year, the GFA will be transferred to the land bank. This is in the short term. In the medium term, the GFA will be transferred to the land exchange. This is in the medium term, three to four years later. So in total, if we add up the short, medium and long term, we will have 13 million square feet of GFA in our land. Recently, we have used 1 million square feet of GFA in Penang Bay. We have first established a standard land price mechanism. First of all, the price is very reasonable. If you compare the price of the land exchanges that have been announced, we are the cheapest. Second, the plot ratio is 18 times higher than the initial one. Third, the infrastructure, all the infrastructure, can be developed very quickly. We will continue to work on land exchange, but we are currently working on large-scale projects to transform the farmland and release more land value. Let me give you a few examples. We are currently working on Wing Ling Village, Tang Ren Shan Village, and Long Tian Village 5. You can see that the plot ratio is quite good. The land ratio ratio has changed from 3.6 times to 6 times. It can release 4 million GFA, which is more than 7,000 units. So the plot ratio ratio has increased a lot recently. You can see that from 1, 2, 3, it has changed from 0 to 6. It has changed from 3.6 to 6. So, the plot ratio is getting more and more generous. As I said, we have invested in a lot of large rental properties in the past few years. We are now entering a harvesting phase. For example, Eleven Skies. Because Eleven Skies is large, we will open it at different stages. We will open it slowly. Because the area is 3,800,000 square meters. It is expected that in the next one or two years, we will gradually open it. The second is our... It is a 700,000 square feet building project. It will also become the landmark of overseas customers. This 700,000 square meter building will become a retail store. It will be opened in the second half of next year. It will be opened in the second half of the calendar year. This 700,000 square meter building. K11 in Shenzhen will also be At the end of 2024, it will be open in different stages. This is almost 230,000 square meters. It will also be like Victoria Dockside in Shenzhen. After these things are opened, our regular income will increase a lot in the next one or two years.

Thank you, Adrian. The first question is about recent rumors. Recently, there have been many rumors in the market about the financial situation of the new world. We are worried that we will have problems. May I ask if we have any response?

As Adrian said, the market is very vulnerable now. The market is very sensitive. A little bit of rumors and rumors can cause a lot of vibrations. Let's go back to the fact that there was no real talk about the situation in the New World. It's just that the market is circulating. It's because some people suspect that the machine is controlling the market. It's because of the three-month blackout period. because we have a new project in the end of June. In these three months, we cannot take any action in the market, whether it is to contact investors, or to buy back bonds and stocks. Today, I would like to take this opportunity to explain clearly. First of all, the financial strength of the new world is very stable, and the financial capacity is also very strong. Secondly, we will speed up the reduction of debt and prepare for the recovery, including the recovery of debt and permanent debt. Because the current high-tech environment is the best time to recover. Whether it is for the company's profit or to reduce gearing, there is positive help. As mentioned earlier, we are facing a difficult year this year. The demand is high and there are a lot of challenges. But the worst time is over. We are at the end of the tunnel. So now we are heading towards the end. Next year is the start of the recovery period. Our goal is that in 2026, the company's regular revenue and industrial development revenue will be halved. One of the investors asked if the revenue is included in the new project. We assume that the new project is not included in the new project. As Adrian mentioned, we have invested so much in IP investment in the past five years, so it is time to end the project and increase our recurring income. Why do we have a trust fund in 2026? is that we have already exceeded 50% of the net profit of the new project.

I think I'll go back to what I said at the beginning. Our net gearing is high, but we're still deleveraging. And we're going public, and we have a whole plan. If you look at our CapEx, we don't need to use that much anymore. Our CapEx this year is worth more than $1.5 billion. Last year, in the fiscal year of 2023, it was $2.4 billion. Obviously, it's reduced a lot. Secondly, our OPEX is also the lowest in the entire industry, if we subtract our total revenue. We also reduce it by 4-5% every year. So, first of all, it is our commitment to do the deleveraging. Secondly, Our net income does not mean that we will have financial problems. This is something that many people use to attack, or spread false rumors, or some inexplicable terms that are spread on the streets. I have not seen, or recognized, or asked anyone to do this. So, why should we call the police? Secondly, why should we ask the authorities to follow up? Because we suspect that this is a way to manipulate the market. Thirdly, why should we do this? Because we have been blacked out for three months. Who would have tried to black out for so long? This is the best time to do it. So, why should we explain it today? We are financially strong. Secondly, we will accelerate the reduction of debt. We are preparing to recoup the debt, including the national debt. And we are going to You can see that in mainland China, the cash flow is much faster than we expected. The revenue of the properties that are being built now is increasing rapidly. And in Hong Kong, as we said in March, there will be a lot of contractor sales. Even if you make a discount, the cash flow will not decrease.

The next question is about the sale of our newly-invented shares. The Group announced earlier that it would sell the newly-invented shares. How is the progress now? Are you afraid that without the cash exchange, it will have an impact on your future career and compensation?

As I said earlier, in the medium term, we need to release shareholder value through a series of stock market movements. So, selling new stock is the first step of our plan. This is very beneficial to the group. In addition to attracting premiums from day-to-day prices to sell long-term stock, we can get a lot of cash. Some people ask, what if we run out of cash in the future? In fact, it depends on the number of shares that our Group receives from New Founders every year. If the transaction is approved by an independent shareholder, the Group will be able to sell 21.8 billion shares at a time, which is equivalent to a little earlier than the number of shares that we received in the past 16 years. In such a high-tech environment, the Group can use this 17.8 billion in cash to pay back debt, reduce financial expenses, and support the Group's business and related business long-term development. Of course, we also need to create value for our shareholders. So when our shareholders pass through this program, 40 billion will be used to send special stocks to repay our shareholders. The shareholders can get 1.59 per share. Due to the restrictions imposed by the Criminal Procedure Act, we cannot disclose any more details. Please pay attention to our future calls.

During the pandemic, the company has not decreased, but now the economy has started to decrease, and the level is greater than that of some other real estate companies. Is there no confidence in the company's future?

As you all know, the level of tax reduction reflects the current economic situation and the company's operating environment. When the market is challenged, especially with the high level of tax reduction, we need to maintain the momentum and strength. Investors ask, will the tax reduction be a follow-up to the tax policy? This year's tax reduction is one-off.

This year's tax reduction is one-off. We can use it to pay back the debt after we get it done. We can also use it to pay back any debt or PURP. This is our commitment to the whole world. In other words, we cannot buy back, we have a commitment to deliver. But this time, the reduction is only one-time. If our profit continues to rise, the price level will go up. So we don't need to worry about this. The third thing I want to emphasize is that we need to reset now, because the world has changed. The cycle has changed. We must reset and then transform. Our commitment to reset, transform, and move on is very important. So don't worry, this is just a one-off arrangement.

The next question is about our gearing. Does the Group have any guidance on future government debt?

As mentioned earlier, after this year's CapEx control, our responsibility is to maintain a stable level. As mentioned earlier, after this year's CapEx control, our responsibility is to maintain a stable level. As mentioned earlier, after this year's CapEx control, our responsibility is to maintain a stable level. As mentioned earlier, after this year's CapEx control, our responsibility is to maintain a stable level. As mentioned earlier, after this year's CapEx control, our responsibility is to maintain a stable level. As mentioned earlier, after this year's CapEx control, our responsibility is to maintain a stable level. As mentioned earlier, after this year's CapEx control, our responsibility is to maintain a stable level. As mentioned earlier, after this year's CapEx control, our responsibility is to maintain a stable level. As mentioned earlier, after this year's CapEx control, our responsibility is to maintain a stable level. As mentioned earlier, after this year's CapEx control, our responsibility is to maintain a stable level. As mentioned earlier, after this year's CapEx control, our responsibility our recurring income will drop by 40% to more than 30%.

I think in 2024-2025, we will slowly fall below 40%. But it will remain at more than 40%. It will not drop immediately. But when it reaches the mental health level, we continue to reduce CapEx. We don't need so much money at all. When it goes out, you will see the dividend in 2026. Can we show the slide? Dividend. This slide. The slide just now. Dividend slide. Not this slide. The one in 2026. The gearing. You will see that the gearing, we will go down to fiscal year 2026, and slowly to 2027, it will go down to mid to high 30%. So the commitment to deleverage, the commitment to reset, and the commitment to transform, this is what we will do in a few years. But it doesn't mean we don't have profit.

Okay, the next question is about our land price information. Earlier, we said that we have accepted the standard agricultural land price in Penang. We would like to know whether we will accelerate other agricultural land prices or change the land when the price is low, or whether we will continue to invest in land or buy old buildings to build our house.

We will definitely focus on capital preservation. First, why do we choose this land? We think it is the cheapest, so we will do it. There is always a time limit in land conservation. You can't delay it too long. So we accepted land conservation. In the future, whether we need to deploy this kind of money depends on our capital preservation. But now, we have a lot of inventory to sell. Hong Kong and mainland China also have a lot of properties to sell. So in the future, in 2024-2025, there will be some profits to book, and cash flow to book. In 2023, financial year, you can see our core profit. In fact, if we don't need to pick some legacy items, our core profit should rise by 30%. So what does it mean? It means that Regardless of your asset, regardless of your fair value loss and gain, a lot of our team's alpha operating power is increasing by more than 30%. I would like to highlight that our operating team is strong. However, there are some account trimmings and other factors that we cannot control that make our profit decrease by 5%.

The next question is about our contract sales. Just now Adrian mentioned that China will make approximately $1.5 billion in sales. In the fiscal year 2024, what is the target of the contract sales in Hong Kong?

The target of the contract sales in Hong Kong is $1.5 billion. However, the contract sales in Hong Kong and China do not include our corporate actions.

The next question is about our retail business. It is said that it is unlikely that we will be able to pass this test. In addition, the Hong Kong people like to spend a lot of money.

I would like to know if this has any impact on K11's business. In July and August, the sales of KESA Art Mall compared to last year, it is still rising by 50-60%. In the first half of this year, it reached 84% in June. But in July and September, it is still rising by more than 50-60%. As I mentioned earlier, many Hongkongers do not want to come to Hong Kong. But many rich people from mainland China also come to Hong Kong. After they come to Hong Kong, they all come to Tsim Sha Tsui. We are consolidating the market. I can't say that the other areas are not good, but according to my data, Tsim Sha Tsui is the best. And you can ask every brand, whether it is an international brand, our case at the Museum, the first floor, that is the ground floor, the productivity of the international brand, the productivity rate, is the top one in Hong Kong. But we have only opened for three years. The entire fiscal year of 2024, we feel that sales will be very strong. And rental escalation will be faster than I expected. Why? There are some things that I cannot talk about now, but I will tell you later. But I think the rental escalation will be faster.

The next question is about our buyback. I want to know how much we will buy and when we will do it.

As mentioned earlier, our cash and capital are very rich, around NT$940 billion. So we have enough bullets to buyback the market after we finish our job. We will not disclose the size and time, but we will buyback based on our market environment and our business development. Last year, as you can see, our tender was $8.2 billion at the beginning, and then we received $4.8 billion in face value. So we are very confident that if it is a buyback, the market will be very welcome. An investor asked, will you buy Senior or Perp? Because Perp will affect equity achievement. We are open to all opportunities.

The next question is about housing. Recently, there has been a lot of unrest in the housing sector. The New World also holds heavy goods in the mainland. Will the poor performance of the housing market in the mainland affect the company's sales in the mainland or the overall revenue?

We have spent almost 20 minutes talking about it. I have answered this question. If you have seen the video, we have sold 5 billion in July and August. The reason is, as we have said, we are incomparable to the domestic market. Please do not compare me to the domestic market or the developers of the domestic market. First, why do we have a brand? Second, we are foreign to the mainlanders. Third, we have been in the mainland for 40 years. Fourth, we are a one-way city in the mainland. Shanghai, Hangzhou, Taiwan, and some of our products are from Shenyang. The fifth is that the ASP we sell is higher than the triangle at the top of the gold tower. So our customers are different. And the other so-called internal defense, those with problems, are doing it at the bottom of the gold tower or in the bottom market of the two, three, and four lines. Basically, from the product to the company, company background, history, funds, It's all different. So it's none of my business. I only know that we sold 50 billion in July, August and September. I only know that if the policy in Shenzhen is more relaxed, if the policy in Guangzhou is more relaxed, we will take a very large market share of the top three of the gold market. Because there are no opponents in those three. So we do upper, high, and high-end. And you can check it out. In terms of the interior, no other store does this with my background, with this product's quality. and in these cities. Let me give you an example. In last year, we sold US$1 billion in Hangzhou within a week. We sold US$110 billion in a few months in Hangzhou's New World Residence in Wanggang New Town. When was this bought? I want to tell you that it was bought during the COVID-19 pandemic. Who bought it? It was all the rich generation. A lot of them were the rich generation. The rich generation in Hangzhou. They were very young. We are in a different blue ocean. the other so-called domestic stocks are inside a red ocean. Please be clear about that. So, don't drag me into it again. Don't drag me back into your domestic stock bubble. It has nothing to do with me. Okay?

Okay. Since we're running out of time, we will answer the last question. This question is about Hong Kong stock market. However, banks in Hong Kong are gradually adding to the stock market, and there is a slowdown in the price of development. How will the Group look at the future of the stock market? How will the Group's position in selling real estate be?

Do you have any expectations for the coming private sector report? Let's talk about the decline. As I said to the media just now, I think a lot of voices are hoping for the government to cut down The government should be able to reduce the impact of the change in the market. There are many ways to reduce the impact. The government should be able to release the impact in stages, especially to help the citizens reduce the burden of financial burden. For example, if you have a group of people who work from home, or a small family who may have to move out, The third type of people are high-income and specialised. These people need to live for seven years before they can withdraw their special tax. Can the government optimize this policy to attract more people to Hong Kong? It will be beneficial to Hong Kong for the long term. So, these are my views on the reduction. If we can reduce the number of people who are targeted by the change in the market, I think we can release a lot of purchasing power for the citizens. In addition to what you just said, We will sell the property. If we really pre-sell the property, we will start selling it around March or April next year. We still have six months left. Secondly, the property we are selling, we have Huangdu and Huang Zhukhan, which are relatively good quality. There is a subway on top. there are some products with different characteristics and differentiation. Why do I mention this? If I tell you that I am selling products that are more mass-produced, you may really want to reduce the price. But when you are selling some very unique products, such as furniture,地铁上盖, or you have a special characteristic, because our units have some characteristic units, I think these are This group of so-called rich customers are not so sensitive to the price of the building because they want to collect or buy some very special units. So you will hear that some houses are not sold. Some land is sold for tens of billions of dollars. Because now some people are selling very expensive and unique products. Now a lot of people are looking at this. So we are selling in this category. So we are not particularly worried about six months later, etc. Third, we are very confident in the government. They will adapt to the market and make some policy changes.

Finally, I would like to thank all of you for participating in the New World Development 2023 Financial Year All-Year Employee Analyst Conference. If you have any questions, please contact our New World Development and Investment Relations Department. I wish you all a happy Mid-Autumn Festival. Goodbye.