New World Development

Welcome to New World Development Company Limited's FY2025 Interim Presentation, Online Analyst and Investor's Briefing. I am the IR Director, Patrick Cheung. I am the moderator for this briefing session. First of all, let me introduce to you our management in attendance. They are New World Development Executive Director and CEO, Ms. Echo Huang. New World Development Executive Director, Mr. Sitnam Hoy. New World Development Executive Director and CFO, Mr. Edward Lau. New World China COO, Mr. Benny Chan. If you have any questions, please type your questions into the chat box on webcast. I will read out your questions. I will now pass the floor to Echo. Thank you. First of all, thank you investors and analysts for attending our interim results presentation today. This is the first time for me to preside over the results presentation briefing. Since I took over as CEO of the group at the end of November last year and I deeply feel the responsibility, I would like to express my gratitude to our New World team for their full support as usual. I am confident that we will overcome all difficulties. In fact, the property market is facing a lot of challenges now. Interest rates are still on the high. Our company's debt is still at a relatively high level. The property markets on the mainland and Hong Kong still need time to recover. The combination of these factors is a test for us. In face of various challenges, we need to be more composed. I am a person who is used to fighting winning batteries and I will actively promote business development in the future and strive for better results in order to live up to the trust and support of the board and our investors. Therefore, for a period of time in the past, I, together with the management and all colleagues, have been doing our best to meet challenges in a flexible way. At present, Our work comprises two major directions. First, we will continue to develop and promote our business, focusing on the core property business to ensure normal and stable operations and to speed up return of capital. Secondly, we will improve cash flow of the company. We attach great importance to cash flow. We will actively manage our finances and properly handle our debts. Our topmost responsibility or task is to reduce indebtedness. To be more specific, we will implement seven measures to reduce indebtedness. First, we will actively sell our development projects. In Hong Kong, The State Pavilion in North Point and Parkview and Pavilion Forest in Kai Tak have already commenced sales. We'll continue to sell these projects as soon as possible and launch Wong Chuk Hang Island South Coast Phase 5 and Ah Tin Long Road project in Kowloon City. as soon as possible. On the mainland, we'll continue to sell a number of projects in Tier 1 cities, including Guangzhou Canton View, Guangzhou The Silage, and Hangzhou New World Arts Centre projects. At the same time, We will promote development of urban renewal projects in Guangzhou and Shenzhen so that they can be launched as soon as possible to accelerate return of capital. Secondly, we will continue to sell non-core assets actively. We'll continue to dispose of our non-core assets and business to realize cash flow. We are now deliberating about several projects and will announce the details when they are finalised. In addition to property sales, we aim to achieve a total of HK$26 billion by FY25. Third, we will unlock the value of the group's farmland. Our group has a land bank of more than 14 million square feet in the north metropolis with a lot of good quality land. We are also actively cooperating with the central and state-owned enterprises and will accelerate our effort to develop more projects to unlock value. Fourth, we will improve rental return and increase recurring revenue. Our commercial projects in Hong Kong and the mainland are operating satisfactorily. In particular, leasing of the group's offices has been maintained at a good level. We will continue to work hard to improve rental income in the hope of further expanding recurring revenue. Fifth, we will continue to streamline our costs and reduce capital and operating expenditure in a great way. We are now strictly managing our expenditure and Both CAPEX and OPEX have declined significantly and we will continue to do so in the period to come. Sixth, dividend halt. We'll continue to suspend dividend payments and retain cash. Seventh, proactive treasury management. We'll continue to discuss with major banks on refinancing arrangements and make good use of the interest cuts cycle. that we have entered into in order to reduce interest expenses. Later on, Mr. Lau, CFO, Mr. Sidnam Hoy, Executive Director, and Mr. Benny Chan, COO of New World China, will give more detailed explanation later. The group's day-to-day operations are smooth. I am pleased to share with you that after a series of efficiency enhancement and cost cutting and revenue expansion measures, we have made initial progress in reducing indebtedness. First, the company's cash flow has improved. Second, our overall gross debt continues to decrease, with short-term debts down by $9.4 billion. In terms of property sales, the record-breaking sales result of State Pavilion in North Point was very satisfactory, while the sales of Pavilion Forest was also very stable. property sales on the mainland is even more impressive, with more than 70% of the original target for the whole year accomplished in the first half of the fiscal year, reflecting that the market has stabilized and stopped decline. And it also proves that buyers have full confidence in the New World brand. In the current environment, the support of our customers, investors, business partners, and the community, especially the banks, is very important to our group. I would like to point out that the support of major banks to our business shows that they have confidence in our operations and this is a great encouragement to me. Right now, global economy is still full of uncertainties and we believe that in the future the overall economy and the real estate industry will continue to face many challenges. Our management will certainly rise to the challenges, and we are confident that the group is resilient enough to tide over the difficulties together with the Hong Kong community. New World will continue to give full play to our strengths and contribute to the prosperity of Hong Kong and our country. Now, very quickly, I will share with you our first half FY25 financial performance, specifically for core operating profit in first half FY25, although we recorded good contracted sales in both Hong Kong and mainland China. Due to the impact of the general market in recent years, the profit margins of our property development projects booked were generally lower than that of the same period last year, so core operating profit for first half of the fiscal year was HK$4.4 billion, down 18% year-on-year. While our investment properties continue to perform well, excluding the impact of sold assets on revenue, segment results increased by about 7%. of which segment results of K11 also increased by 5% for loss, In first half FY25, loss attributable to shareholders amounted to HK$6.6 billion, mainly due to someone of losses, including HK$1.6 billion on fair value changes on investment properties. And recently, because of market downturn, there was a HK$3.4 billion impairment on development properties besides. We have sold non-core assets and business portfolio and we recorded a HK$1 billion one-off loss. For expenses, G&A expenses were HK$1.8 billion, down 9% year-on-year, mainly due to the continued optimisation of our organisational structure, enhancement of management efficiency and drastic cost-cutting effort to reduce internal operating costs. For CAPEX, It's HK$4.9 billion, a significant drop of 35% from the same period last year. And we have lowered our FY25 CAPEX guidance of less than HK$15 billion to less than HK$13 billion, mainly because we will continue to exercise stringent control over CAPEX. So this demonstrates our determination to reduce indebtedness for our debts. Our gross debt has continued to fall and As at the end of December 2024, our gross debt has decreased by HK$5.1 billion. Comparing to June 2024, for short-term debt, it decreased by HK$9.4 billion. Comparing with December 2023, that is over the past one year, our total debt has decreased by HK$11.4 billion. Now I would defer to our CFO, Mr Lau, to explain our financial situation. Thank you, Edward. Thank you, Eko. In face of the current uncertainty in the industry, we attach great importance to cash flow. At the same time, While maintaining the normal development of our company's business, reducing debt is our top priority. In first half FY25, we saw significant improvement in cash flow from operations. Net cash flow from operations together with the sale of non-core assets NCD totaled about HK$9.6 billion, which was nearly sufficient to cover our capex of HK$4.9 billion. Net interest expense 3.9 billion and 0.9 billion interest on our perpetual bonds. Our cash was reduced by 6.1 billion Hong Kong dollars in first half FY25, which was largely used to pay down our debt. In August, we issued HK$3.1 billion equivalent of US dollar denominated bonds, and we bought back HK$1.2 billion of bonds and perpetual bonds. For bank loans, our net repayment amounted to HK$7.8 billion. As a result of the above financial arrangements, our total debts during this period was down HK$5.1 billion. For perpetual bonds, it is reduced by HK$0.9 billion. As of the end of December 2024, total debt of HK$146.5 billion, short-term debt amounted to HK$32.2 billion, a decrease of HK$9.4 billion compared to June 2024, mainly due to the refinancing of a portion of our short-term debt into long-term debt. Comparing with December 2023, that is in the past one year, our total debt decreased by HK$11.4 billion. Due to the improvement in our operating cash flow, our net debt in the past half a year has stabilised. In June 2024, it was HK$123.7 billion. It slightly increased by HK$0.9 billion to HK$124.6 billion, mainly due to repurchase of HK$0.9 billion of perpetual bond in August 2024. If this was not done, our net debt is basically flat. It stayed the same. Benefiting from the interest rate cut in Hong Kong and the US, average interest rate in Hong Kong dropped from 4.9% in first half FY24 to 4.7% in first half FY25. Regarding net gearing, in FY25 first half, it increased by 2.5% to 57.5%, mainly due to the non-cash impact of the investment properties and development properties impairments. the buyback of perpetual bonds and depreciation of RMB. Excluding these one-off financial treatments and the impact of foreign exchange, net gearing ratio would have been 2.1% lower than now, at about 55.4%, which is more or less the same as in the previous year. Over to you, Eko. Thank you, Edward. As mentioned above, under the premise of maintaining the company's normal business development, Debt reduction is our top priority. We will implement the seven measures to reduce indebtedness with full strength. I would now explain the points one by one. For Hong Kong property development projects, in 2024, in Hong Kong, after the announcement of relaxation of all the stringent measures, in the second half of the year, interest cut cycle started. Coupled with relaxation of loan to value ratios and other favourable policies, atmosphere of Hong Kong property market has recovered. Due to unnecessary speculations and reports arising from our NCD which affected our work, we have decided to disclose progress of NCD together with DP contracted sales instead of disclosing progress of NCD alone. Taking NCD into account, our contracted sales attributable to Hong Kong in the first half of FY25 amounted to HK$5.2 billion, and our FY25 target is HK$11 billion. In other words, in the first half, we have completed 47% of the target. 31st December 2024, for Pavilion Forest in Kai Tak, we have already sold 514 units, with contracted sales of nearly HK$3.5 billion. and there are many big investors who are foreign buyers and it is the highest selling brand new project in Kitech runway area in the past three years. In North Point for the State Pavilion residential project, it provides a total of 388 residential units and it has been highly sought after by the market and it sells very well since its launch. Since the launch of the project on 11th January, a total of 313 units have been put up for sale in batches, and 279 units have been sold in just one month. Total turnover was nearly HK$3.2 billion. At the same time, States Pavilion has also set three records in 2025. First, it has set a record on the Hong Kong island in terms of highest price per square foot. The highest price reached HK$51,000 per square foot for the penthouse duplex unit. Second, it is the king of tickets for new developments in the urban area this year with over-subscription of about 95 times. Thirdly, it is the first development that was sold out in the first round on the first day this year. This shows buyers love New World Development's brand and our products, and they have confidence in our company. Taking into account the contracted sales of State Pavilion and other projects in January and February this year, our attributable contracted sales in Hong Kong amounted to HK$7.9 billion, which accounted for 72% of our FY25 annual target. In other words, as of now, in Hong Kong, we have already completed 72% of our target. Apart from residential properties, in West Kowloon, sales of our office buildings also performed well, taking 888 Lai Chee Cock Road as an example. As of first half FY25, all projects or all units have been sold out already. Contracted sales in the first half reached HK$1.2 billion. Contracted sales... The office building at 83 Wing Hong Street is our next focus project. And as the last commercial building project to be launched in the region, it is believed that it will continue to be highly sought after by the market. Now I will invite Mr. Benny Chen, COO of New World China, to give a brief account of development of properties on the mainland. Yes, thank you. property development on the mainland, referring to the macro environment, on September 26 last year, the central government explicitly called for the real estate market to stop falling and stabilize, marking a policy inflection point. And in December, the Politburo meeting further emphasized the need to stabilize the property market by 2025, injecting confidence into the market. Under this policy direction set by the central government, various local governments have responded positively with frequency of policy introduction accelerating and covering a wide range of potential measures including optimizing or abolishing the purchase restriction, lowering down payment ratio, lowering mortgage interest rates, optimizing the price restriction policy. In first-year cities, we have seen decline has stopped and property market has stabilized. First-year cities took the lead in stabilizing with Guangzhou, Hangzhou, Shanghai and Shenzhen markets showing improvement in January. Thanks to our forward-looking planning in the early years, our Land reserves are in these core areas in these cities. Through our flexible marketing strategy, we have successfully capitalized on the policy dividend and achieved satisfactory results in a number of projects. In first half FY25, our mainland contracted sales reached 7.5 billion RMB. In view of the current direction of the market, we have raised our full year target from 11 billion RMB to 14 billion RMB. Now I will talk about a few major projects. In the GBA market, as Guangzhou's luxury property benchmark, Guangzhou, a new metropolis mentioned, we have introduced a new phase of its property project. which has already sold 2 billion RMB at the opening, which can be said to have good price and good market. For Guangzhou Distillage, located in CBD of Baingotan, it has been ranked first in terms of number of visitors and transactions for several consecutive months. For Youshengzhuangfu in core area of Changlong, Panyu, it had the highest average transaction price in Panyu from January to November 2024. In the northern market, Shenyang's Parkville has led the market. Cumulative sales in 2024 reached 1.1 billion RMB. It ranked top in Shenyang. For Shanghai, we have Tianhui Sea Project, and it is expected to be delivered by June and will be booked in FY25. For Hangzhou, as a national private economy demonstration city, it has recently continued to deepen its policies. and there is emergence of emerging technology forces represented by artificial intelligence deep-seek. This has directly driven demand for commercial real estate, with the residential and office markets experiencing strong supply and demand. In 2019, we are planning to build a 740,000-square-meter urban complex, Wangjiang Xincheng, so it is a complex known as Hangzhou New World Art Centre. The residential portion of Phase 1 of the project, Jiangming Yuelangyuan, was successfully delivered at the end of last year, while 120,000 square metres of commercial space, including large-sized flat-sized apartments, offices and mini malls, is expected to be delivered from June 25 onwards. Phase 2 of the project has also been topped out and is expected to be fully completed by the end of 25. I would like to highlight the sale of non-core assets. In the first half of the financial year, we completed the sale of Beijing, Xinjing office, Ningbo New World office, Guangzhou, Lingnan New World, Shenyang and other places. We'll continue to sell our non-core assets in the second half of the year to speed up return of capital. That's all from me. Thank you, Benny. In the coming years, the group will continue to launch projects in both Hong Kong and mainland China. for property development. In Hong Kong, within 2025, we will focus on four projects. In addition to State Pavilion in North Point and also Pavilion Forest in Kai Tak, and the remaining units will gradually launch the Wang Chuk Hang Station, Hong Kong Island South Coast Phase 5 project, and Kowloon City Ah Chin Long Road project, which comprise a total of more than 1,800 units. Besides, our JV projects will continue to be put up for sale, such as Tien Long in Kai Tak and Tai Fung in Kowloon Bay. Besides, the Wai Shing Road project in Western Mid-Levels will be launched within this year. Next month, there will be four property development projects in Hong Kong that will commence construction. One of them is a joint project with China Merchants Circle in North Metropolis. The other three are in urban area, including Road Streets in Kowloon Tong, Canton Road in Jordan, and Kun Chong Street in Tsim Sha Tsui, all of which are urban redevelopment projects on old leased land. And the timing for selling the units will be more flexible. It is expected that sale of properties can commence in 2026 to 2027. This will speed up our capital recovery. On the mainland, the market has stabilised, leading to a rise in the popularity of quality land lots in key cities and the emergence of land kings worth $10 billion in first-tier cities. In December last year, China resources land and China Shipping jointly won the land parcel in Yuehai Street, Nanshan District, Shenzhen a floor price of more than 70,000 RMB per square meter, refreshing the top one total price of residential land in Shenzhen, reflecting the developers' confidence in the future of the industry. Our nearby Sili project, which is about 1.5 km away from the Sili high-speed rail hub under construction, has a high-quality location, and it is believed that it can bring considerable revenue and profit. Construction will commence in March, and it will be launched in 2026. The Longgang Project in Shenzhen has also started construction. It will be launched in 2026. In this year and next year, we will continue to launch key projects including Guangzhou, Kaixuan New World, Guangzhou Sealage, Yousheng New World, Hangzhou Wangjiang Sealage and Shenzhen Longgang Sealage projects. With the Group's forward-looking strategy to invest in core first- and second-tier cities and core locations, coupled with our persistent high-quality development and brand appeal, we are confident that we will achieve satisfactory sales results. Next, I would invite our Executive Director, Mr. Sid Nam Hoi, to explain the development of our farmland. Mr. Sid? Okay, thank you, Echo. Regarding farmland, the government is actively developing the North Metropolis in order to promote Hong Kong's future economic development and increase land reserve. New World has abundant farmland resources, including about 14 million square feet of farmland in the North Metropolis. Currently, we have planned projects that will provide a total of about 12 million square feet of attributable GFA of which short to medium term projects can provide about 9 million square feet of GFA and long term projects can provide an additional 3 million square feet of GFA. We hope to accelerate conversion of farmland through our farmland reserve effectively reduce average land cost and related capex, and significantly enhance and unlock value of the land. To complement the government's planning and development of the North Metropolis, we took the lead to sign cooperation agreements with a number of state-owned enterprises from the end of 2023, including China Merchants Circle, China Resources Land and SZ Group, as previously disclosed. In addition, in November last year, we signed a letter of intent for the development of the North Metropolis area led by the SARG and reached an agreement with other industry leaders such as China Overseas and China Railway Construction to jointly develop the North Metropolis. We'll continue to seek cooperation with more SOEs. As for the progress of projects, The land exchange for the Fanling-Masik Road project with China merchants Shekou, well, a land exchange was completed in December 2024. Premium was HK$1,627 per square foot, which is about 35% lower than recent transactions in the same area. The total GFA of the project is 1.12 million square feet. Our group's attributable GFA is 340,000 square feet. Construction is expected to commence next month. As regards the specific timetable for farmland exchange, apart from Fanling-Ma-Sik Road project that land exchange was completed, it is expected that within one to two years, several more projects will see completion of land exchange. They are Yuen Long Lam Hau Chuen and also the Long Tien Chuen Phase 2 and Long Tien Chuen Phase 4, which we work with China Resources Land. So this will add an additional 1 million square feet of GFA to the group. In the coming three to five years, we will make town planning applications and land exchange applications, and this can increase the group's attributable GFA by about 7.2 million square feet. Major projects include Tong Yen Seng Chuen , Wing Kee Chuen , Yuen Long Wing Ning Chuen , Yuen Long Lung Tin Chuen , and She Pek Hung Road. Among them, for Yuen Long Long Tien Chuen Phase 5 and Shepet Heng Road projects in Yuen Long, planning applications were approved by the Town Planning Board in December 2024 and January 2025 respectively. We are also studying different options to provide an additional 4 million square feet of GFA. As for the long run, major projects under planning at present include San Tin Lin Pan Chuen, Ao Tan Mei and Lao Fao Shan, which will provide around 3.2 million square feet of GFA. Next, I will pass the floor back to ECHO. Thank you, Mr. Sit. Regarding Hong Kong investment properties, K11 has attracted many major international brands with its unique cultural business model and positioning. We'll continue to optimize our tenant mix. A number of major international brands have already confirmed that they will move into K11 this year or expand their store. For example, Prada, Rolex, BV, etc. will move into K11 this year. And Balenciaga, YSL, and other existing brands will further expand. Besides, K11 will continue to promote interactive experiences for customers. In July, K11 Musea will open the first C. Ronaldo Museum in Asia. K11 Art Mall will also continue to launch experiential limited edition stores through collaboration with brands to drive food traffic. For office, we have another project in this district that is 83 King Lamb Street, which already started population intake last year as the first twin tower project in West Kowloon and the new landmark in the district, we will use it for long-term rental income. Current occupancy rate is about 40%. With a number of tenants under negotiation right now, I believe occupancy rate will continue to rise. For tenants, local tenants account for about 60%. Other tenants come from Japan, the Middle East and the U.S. For our other office buildings, occupancy rate has been satisfactory. Occupancy rate of K11 Italia Victoria Dockside is close to 99%. K11 Italia on Kings Road North Point has an overall occupancy rate of 93%. Occupancy rate of Manning House is about 93%. and after we moved our headquarters out of new world tower occupancy rate increased to about 80 as for 11 skies it will be the largest one-stop retail and entertainment landmark in hong kong providing visitors from all over the world with a top rate experience for mainland investment properties Some of our projects have further enhanced their consumer experience and brand appeal through brand upgrades and business adjustments. With precise market positioning and excellent operational capabilities, overall occupancy rates of our commercial projects remained stable, demonstrating strong competitiveness and market recognition as a benchmark for art businesses. The park by K11 Select Ningbo was opened in September last year, and that was grand opening at the end of December. It was highly recognized by the market. It has become a landmark in Ningbo and even in eastern China. Currently, occupancy rate is over 70%. With more stores moving in, occupancy rates will continue to rise. We have several large-scale investment projects that will open this year on the mainland. They include our first flagship project in mainland China, K11 East Coast. It will open on April 28, 2025, and it will be one of the largest shopping malls in Shenzhen. The second one is K11 Select. in Wan Bo CBD in Chang Long, Guangzhou. It is the first K11 project in GBA and it will also open in the third quarter 2025 for capex. You can see from this chart that in the past few fiscal years our capex has been decreasing year over year. This is mainly due to the following reasons. First, we have strictly controlled our project expenditure and we vigorously upgraded our construction efficiency starting from the design stage number two our property development projects in the mainland are mainly in the form of redevelopment of old areas which gives us an advantage in terms of land cost in the coming period we'll focus on property development projects with a shorter cash flow cycle to accelerate capital recovery in fy25 we'll continue to control capex so that it will fall below 13 billion hong kong dollars Regarding operating costs, thanks to optimization of our corporate structure and processes, we're able to save expenses. And so in first half FY25, G&A amounted to HK$1.8 billion, down 9% year-on-year. And since first half FY2023, there's a decrease of 13% year-on-year. In the future, I will continue to optimize our corporate processes and enhance operating efficiency. In view of our current financial situation, we have decided to continue to suspend dividend payments. In the coming period, we won't pay dividend until we have made concrete progress in reducing indebtedness. Now, I would like to review with you the progress of our financial management. First, the company's cash flow has improved. Second, gross debt has continued to decrease. Short-term debt is down HK$9.4 billion. In the future, I will continue to improve the company's cash flow, actively manage our finances and properly handle our debts. we will discuss about refinancing arrangements with major banks. Finally, I would like to thank all investors once again, especially banks, for their strong support over the past few months to me, which has strengthened our confidence in overcoming the challenges ahead. Once again, thank you all. Thank you, Echo. Now it's Q&A session. Because we have already received many questions, we have already categorized the questions. Because of time, our management will try their best to answer the questions. First question is for Echo. Echo, as the new CEO, are you going to put the group's future development direction to the mainland? Thank you. Real estate is New World's core business and all along the group is rooted in Hong Kong and looking towards overseas. and the mainland. So I guess people ask this question because they are concerned about my mainland background. In the real estate industry, I have experience of almost 30 years. I have worked for New World for 10 years already. I am very familiar with the mainland market. With my experience, well, to be honest, I have never left the Hong Kong market. All along, I have been living in Hong Kong. So for me, well, I have rich real estate experience, so I'm confident that I can navigate both markets. Besides, I can make decisions as soon as possible. As a manager, I believe that with my experience in the real estate business and my very rich mainland management experience and my interpersonal connections regarding sales and also land acquisition, sales and leasing. I have got so many years of experience, so I personally believe that, well, since there are some concerns about my familiarity with the Hong Kong market, I can say for sure and with confidence that looking at the sales of States, Pavilion, well, it has proven that I can master over the market. Will I turn my direction to the mainland? As said in my presentation, next month in March, we will launch four projects. And then in terms of projects for sale, we will accelerate our progress on the mainland in Shenzhen. In Shenzhen, we have two projects and in Hangzhou and Shanghai, we have never stopped our work. So I can answer your question for sure that in the future, in both Hong Kong and the mainland, Our development won't change from that in the past. All right. Thank you, Echo. Next question. Now, some time ago, there was rumor that the group has invited FTI and Linklaters to help your restructuring. And some time ago, there was a press release issued. So can you tell us whether you will consider a debt restructuring? Well, our answer is there is no change. At present, our company has not done or has not discovered about any debt restructuring. Our group has been managing our finances actively. We are lowering our gross debt and we are complying with our debt obligations. So we also comply with all disclosure requirements and we also provide investors with the necessary appropriate information thank you next question some time ago there was report saying that your group has discussed with many banks about a super large-scale refinancing after expiry of some debts and then there are 13 pieces of collateral worth 19.1 billion USD. So when would the work be completed? And concerning this large-scale financing, what is the strategic meaning on your overall debt reduction? As Echo said, our group has been actively managing our finance. So we work to reduce indebtedness with full falls, and we are controlling our financing costs. We have been discussing with banks about refinancing arrangements, and we need to thank them for supporting New World a lot. At present, our major goal is to lower total growth debt and to improve our operating cash flow. We have complied with all disclosure requirements. At the same time, we will release appropriate information to investors in a timely way. Thank you, Edward. Next question is about a recent rumor. For KE11 Art Mall, they're asking when that deal will be completed. So this question is for me. Well, the group from time to time will receive from potential buyers some inquiries about our assets. So this shows that our assets are of good quality and they are attractive in the market. I can only say that at this present moment, we have not signed any legally binding agreements about these assets. Regarding Art Mall, or other modes, to be honest. Well, I will only sell when my desired price is reached. As Benny said, on the mainland in Beijing recently, the Xinjing project was transacted. It was sold to Changjiang Business School at HK$1.4 billion RMB. And we have sold an office building in Ningbo. Regarding the transaction date of Art Mall, well, I can say that if... there is appropriate price or terms, then for sure I will let you know promptly. Right, thank you. The next question is about NCD. So which assets are now being sold by the group and which assets will definitely not be sold? Just now, in our presentation, I said that in the past regarding NCD disclosure, well, many rumors, speculations, and reports have arisen affecting our daily work. So the group has decided that in the future, we will not disclose NCD progress alone. So NCD and DP contracted sales will be disclosed together. In the future, we will actively and strategically dispose of non-core assets so as to achieve recovery of capital. The next question is about Pao Zhong Phase 3. What is the progress and when will sales start? Well, for Phase 3, Pao Zhong, the overall structural work has completed. And for facade and internal decoration some time ago, that had started already, and we will continue to monitor the contractors so that they finish their work as soon as possible. We are now working on the Pavilion Farm progress, so in due course we will announce. Alright, thank you. Next question is about our debt. Does the group have clear debt reduction goal, including the perpetual debt? Well, how low the debt level would reach? As said in the presentation, in face of the uncertainties in the industry, we attach much importance to cash flow. In first half FY25, cash flow from operations has improved significantly. Net cash flow from operations together with NCD is enough, almost enough to cover our capex, net interest expenses and interest from perpetual bond. Total debts are decreasing, especially short-term debt. For short-term debt, there is a decrease by $9.4 billion. so in the period to come we will reduce that and lower leveraging these are our major goals our goal is to lower leveraging ratio to a sustainable level thank you next question is about whether the majority shareholder will inject funds if that will be done in what way apart from selling non-core assets Will that be a rights issue? Or will that be an increase in shareholders' loans? Will you sell 75% shareholder of New World Department Store? Will that be privatized by Chow Tai Fook Holdings? All right, let me answer the question. There's no doubt that in the real estate industry, there are a lot of challenges. But I would like to emphasize once again that I believe that New World Group is very resilient. We have high quality properties and outstanding talents. Our team is united. We work together strongly, and we have achieved good results in our business, no matter in Hong Kong or the mainland. Sales of our developments have been good. Our leasing performance is also satisfactory, as said just now. There are two major directions in our work and there are seven measures to reduce indebtedness. For the group, I believe that this is the right direction. I can say for sure that we will ride out the difficulties and we will actively seek different ways to improve our cash flow so as to lower our debt. That is our topmost goal. And I believe that with the resilience of our team and the proactive attitude, we can definitely ride out various difficulties. All right, thank you. Here's a question about NCD. This time, Why is it that you do not report on NCD independently? Is it true that you are not able to dispose of those assets? Regarding property sales and NCD, how much are they separately? Well, I can stress again, just now I said already that NCD has led to unnecessary speculations and reports affecting our assets. normal operations and work. So we have decided that in the future we won't disclose progress of NCD separately. So NCD and DP contracted sales will be disclosed in a combined way. NCD together with property sales in FY25, we will reach HK$26 billion roughly. Okay, thank you. Next question. For cash on hand, you only have HK$21.9 billion. If your group is talking with banks about HK$60 billion refinancing, and if that can't be realised, how can you repay the HK$32.2 billion short-term debt? Well, let me say that we are actively managing our finance and debts, and we are working hard to reduce indebtedness and financing costs. In first half FY25, cash flow from operations has improved significantly. Net cash flow from operation is almost enough to cover our capex, our net interest expense, and also coupon of perpetual bond. As Eko said many times that we continue our normal operations and business and if you look at property sales, our results are improving and cash flow from many projects will be realized in the second half so this can speed up capital recovery. We will actively sell non-core assets so I have confidence in cash flow. As Eko said just now, we are grateful for the bank's support to us. Our team will continue to work hard. We will improve efficiency and we will work to the best of our ability to reduce indebtedness. Thank you. Next question. Recently, in the recent two results announcements, there was extremely large amounts of provisioning and also revaluation of loss. So in the coming period, you need such reprovision. Well, for our IP and DP valuation, our auditor and valuers have already verified them and they show the latest market situation. Based on our prudent financial management principle in 2021 to 2024, for our ips we have made impairment in 2023 2.3 billion in and then 1.4 billion and then 7.1 billion in the subsequent year so we'll continue to value the fair value and if necessary we will make a necessary adjustment all right thank you one of the company's perpetual bond will see call dates next month are you going to redeem it In handling our debts and perpetual debts, we will give different considerations on various aspects. Let me clarify. Mid-March is the earliest day for us to give notice to notify investors about a call to redeem. So that is the time for our perpetual. And the set-up time of our perpetual is mid-June this year. So we don't need to make a decision in March. We can choose to redeem this perpetual between March to June. At the same time, there won't be additional cost. Okay, because of time, I will read the last question. Management, regarding 2025, overall trend in the mainland property market and also the performance over Chinese New Year, what do you think? Thank you. As I said earlier, in September last year, the central government said that they would like to make sure that the property market would stop decline and start to stabilize. We believe that policy environment is already quite relaxed. And in 2025, there was emergence of deep seek and a lot of vitality is brought to the Chinese economy. It seems that there is a paradigm shift. If the economy is good, then people's confidence in buying properties will be stronger. In FY 2025, in the mainland property market, we believe that it will stabilize and gradually recover. So we will revise our full year target to 14 billion RMB. As I said just now, we have a layout in tier two cities, including Shenzhen, Guangzhou, Hangzhou, Shanghai, and we believe that they will lead the country as a whole. Talking about business in CNY, traditionally, CNY is not a busy property market period. Well, people went to visit their families and relatives and so on, so it was rather quiet. So there was pent-up demand, and there are favorable policies, and there will be the two sessions soon. We believe that the market will recover soon. There might be a... small boom. And in Guangzhou, if you look at the property market, it showed outstanding performance, including ourselves, good quality property companies during CNY. has seen an increase by 71% of subscription of GFA. So it is mainly in the peripheral areas of Guangzhou. So the property purchase restrictions have been relaxed as a result. Turnover has increased. We're talking about Guangzhou. Guangzhou all along has been our focal market. Just now I talked about our... Silage, Panyu, Parksville, and other benchmark luxury projects. Well, they are in prime locations with good management and also our New World brand management. So I think these projects are going to continue to perform well. Thank you, Benny. Finally, once again, thank you very much for joining New World Development's FY 2025 Interim Results Presentation. Thank you.