Sun Hung Kai & Co Ltd

Good afternoon, everyone. Welcome to the annual results and this briefing. Before we dive in, I'd like to take a moment to wish you all of your very happy mid-autumn festival in advance. And as usual, we will start with the group's financial review. Please note that all the numbers are in Hong Kong dollars unless stated otherwise. For the year ended June, 2026, The group's underlying profit was $22.9 billion, a year-on-year increase of 4.6%. This growth was mainly driven by higher profits from property development in Hong Kong and lower finance costs. The group's leasing and other recurring income remained resilient during the year. After factoring in net effect of realized value gains from the sale of investment properties and a net devaluation profit on investment properties. The reported profit came in at $21.4 billion, an increase of 11.1% year-on-year. The underlying earnings per share was $7.89, while reported earnings per share was $7.39. As for dividends, The Board has recommended a final dividend of $2.93 per share, an increase of 4.6% from $2.80 last year. Together with interim dividend of $0.98, total dividend per share for the full year will be $3.91. To break down the profit by segment, The profit for property development was about 8.3 billion, largely stable year on year. Increased contribution from Hong Kong offset decline from the mainland. For property rental, the group's net rental income increased slightly by 1% at around 18.6 billion, which includes a 1% decrease in Hong Kong and a 6% increase on the mainland. Hotel business saw an operating profit of $728 million, an increase from the $615 million in the last financial year. Profit from our other businesses came in at about $4.6 billion, reflecting a 6.5% decrease year-on-year. All together, this brings the group's total operating profit for this financial year to $32.2 billion. which remains stable year on year. Turning to our financial position. As of 30th June, 2026, the group's net debt stood at 67.6 billion. Hearing ratio improved to 10.7% from 13.5% in December last year. Interest cover for the period came in at 8.5 times. compared with six times a year ago. The group as always upholds prudent financial management. Net debt and net gearing ratio have declined further since the peak in December 2023. With its strong financial position, the group is well positioned to capture land acquisition opportunities in Hong Kong. The group also remains a top-rated real estate company in Hong Kong. Due to lower debt and cost of borrowing, the group's net finance costs have gone down by 33% year-on-year. The group's debt mix is outlined in the table. We have also achieved a balanced debt maturity profile. Moving on to our Hong Kong land bank, As at the end of June 2026, the group's total land bank in Hong Kong was about 56.4 million square feet of attributable GFA. The pie chart shows a breakdown of our completed properties and those under development. During the year, the group added three sites to its land bank through various channels. They are shown in the table. After the financial year ended, the group was awarded the tender for Tuen Mun A16 Station Package 2 property development just last week. This Package 2 will provide over 5,500 units to be developed and sold in phases in an orderly manner. Located in a mature community in Tuen Mun South, The project comes with a podium more and over excellent transport links. Let's turn to the property development business in Hong Kong. During the year, the groups recognized the profit from property development reached 4.6 billion in Hong Kong, a significant 44% increase year on year. Margins started to improve since the second half of FY2026, driving the full year level to 11%. When we include the underlying profit from the sale of Dynasty Court and Susan Peake, margin was a higher 16% and we expect the book sales margin to improve gradually. About 22.8 billion of contracted sales has yet to be recognized that includes around 21 billion to be recognized in FY2027. During the year, the Hong Kong residential market continued to recover. Primary market transactions were active. The group achieved the contracted sales of about 38.1 billion in Hong Kong. Major projects contributing to the sales are shown in the table here. We will launch a diverse mix of projects to appeal to potential buyers. Major projects to be launched in the next 10 months are shown on the map. The next section is our Hong Kong rental portfolio. During the year, there was a modest increase in the group's gross rental income. Overall average occupancy remained stable at around 92%, High occupancy rates and new contributions support office rental. Retail portfolio held firm. Rental rates and occupancy increased for residential leasing. Our Hong Kong retail portfolio achieved an increase in tenant sales. Occupancy reached 95%. The group carries out several strategies to strengthen our performance. They are listed on this slide. The group also adapts quickly to market trends and keeps changing the tenant mix. Tenant sales increased thanks to strong demand for jewelry and watches. As inbound tourism continues to grow, our most-in-tourist area outperforms in the portfolio. We enhanced customer loyalty through the program The Points. Overall member spending increased by 27% year-on-year. The growth in VIP member spending was even stronger. To facilitate drivers, the group will continue to install more EV fast chargers in its properties. For our office portfolio in Hong Kong, Overall occupancy remains stable at 90%. Both IFC and ICC achieve high occupancy, thanks to new leases from big companies and in-house expansion. Even so, the recovery in office market remains uneven, with some sub-districts outperforming the overall market. International Gateway Centre is our latest landmark in West Kowloon. Two pairs of office towers provide super-grade A office space. The towers offer great A plus rail transport links, smart technologies, and high green standard. The podium mall, Stage IGC, is going to open in phases from late 2026. Initially, the mall will provide restaurants and shops for office tenants High Street Rail passengers, as well as West Kowloon visitors. But we have more than IGC in West Kowloon. Our many projects help to make the district a world-class hub. Artist Square Towns Project AST is under development in the West Kowloon Cultural District. Together with IGC, this new project will join the ICC two luxury hotels, and a mall to form a commercial cluster spanning 8 million square feet. They complement each other and create great synergies. To strengthening our recurring income, we will focus on ramping up occupancy for new projects. They include IGC in West Towloon, The Angle in Kun Tong, and Kulun Sky Mall in Kai Tak. Many projects are on the way, including the Moore Stage IGC and AST in West Kowloon. Turning to our property business on the Chinese mainland. As at the end of June, 2026, the group's total land bank on the mainland was 64.7 million square feet in terms of attributable GFA. Again, the pie charts break down our completed properties and properties under development. Moving on to property development business on the mainland. During the year, the groups recognized that property sales on the mainland increased to about 10 billion due to higher sales volume. Operating profit was 3.7 billion. Over the next 10 months, The groups will launch new residential projects across different cities. About $0.8 billion of contracted sales have yet to be recognized. All of them are expected to be recognized in FY2027. Moving on to our rental business on the mainland. During the year, the group's gross rental income from the mainland rental portfolio increased 5.2% to about 6.5 billion. In RMB terms, it went up 1.5% to RMB 5.6 billion. An increase from retail portfolio offset a decrease in office rental. On the mainland, our integrated projects with great transport efforts provide dynamic commercial space. The retail and office component complement each other and create synergies. At our landmark ITC project in Shanghai, Office Tower B was completed during the year. It has attracted keen interest from major companies. ITC Mall will open in phases from the second half of 2026 starting with a floor connect to Metro Station. Hotel enters Shanghai IPC held its grand opening in March, 2026. The hotel is ramping up its occupancy. The expanding portfolio is expected to bring rental income for the group. In FY2026, the group increased its stake to fully own the IGC Mall in Guangzhou. and Conrad Guangzhou Hotel, bringing additional income. Major projects are in the pipeline. Park Central Guangzhou South, a new mall in Guangzhou, will open by end of 2026. Another new mall in Hangzhou IFC will open in phases from the second quarter of 2027. Let's turn to our hotel business. During the year, revenue from the hotel portfolio increased 4% year-on-year to $5.5 billion. Operating profit increased 18% year-on-year to $728 million. Luxury hotels in Hong Kong outperformed. At the rebranded Royal Garden Kowloon East, renovations will be completed soon. On the mainland, the Ritz-Carlton Shanghai Pudong achieved record high room rates. Moving on to sustainability. We remain committed to ESG. Please refer to this slide and the appendix for more details. Next, I will summarize the market and business prospects. In Hong Kong, Trade and domestic demand will drive steady economic growth. Incoming talents and executives will support housing demand while the city's super connected role will help support office demand. On the mainland, we expect strong exports and policy measures to support resilient economic growth. Measures for improving quality of homes will foster healthy development of the housing markets As for the group's business prospects, with our strong financial position, we can replenish the Hong Kong land bank when opportunity arise. We will maintain prudent financial management as always. On property development, with our trusted brand, we will drive sales through quality and innovation. With a strong launch pipeline in place, we will continue to roll out new residential projects catering to diverse buyer segments. On property investment, we will adopt proactive strategies to upgrade our existing properties and aim for high occupancy. New projects like IGC in West Kowloon are expected to generate rental income gradually. I will end this presentation by highlighting a quote from the Chairman's statement. The group will continue to invest in the city's future through building landmark projects that foster both economic advancement and social progress. By harnessing technologies to enhance productivity and competitiveness, the group will deliver quality properties that are modern and customer-centric, meeting the evolving needs of residents and talents. Guided by its time-tested strategies, and Long-Term Vision. The group will continue to strive for sustainable long-term growth while contributing to further development of the city it proudly calls home. This is the end of my presentation, thank you.

Thank you for joining the briefing again. Let me introduce the panel to you. Starting from your left, Mr. Henry Lam, member of the E-Safety Committee. Mr. K. W. Low, Member of the Executive Committee Mr. Alan Fong, Executive Director Mr. Christopher Cork, Executive Director Mr. Victor Lui, Deputy Managing Director Mr. Raymond Cork, Chairman and Managing Director Mr. Mike Wong, Deputy Managing Director Mr. Adam Kwok, Executive Director Mr. Eric Chung, Executive Director Mr. Frederick Lee, Good Chief Accountant May I now invite our Chairman and Managing Director, Mr. Raymond Kwok, to share the key message of today's briefing. Mr. Kwok, please.

Good afternoon. Ladies and gentlemen, thank you for joining today's polls results briefing. Before we go into the Q&A session, let me highlight some of our key developments. Although the global economic environment remained volatile and uncertain, the group continued to achieve business growth. For the year under review, we achieved strong contracted sales in Hong Kong of about $38 billion in attributable terms. Over the next 10 months, We are going to launch more new projects, providing mainly small to medium-sized units. They include a new phase of Sierra Sea, and new projects in Tung Shing Lei, Tai Wei, Kutong North, and City 1 in Sha Tin. As you may already know, we are excited about our successful bid last week for the Tuen Mun A16 Station Package 2 property development project. This large-scale residential project is next to a future MTR station, making it one of the few new railway topside projects located in a very mature community. Together with the Package 1 project we won late last year, we are confident that we will build another landmark residential cluster Offering comprehensive amenities and exceptional transport connectivity in Hong Kong. With our strong financial position, we will continue to replenish our land bank when good opportunities arise. Meanwhile, the Group is moving forward with eight projects in the Northern Metropolis, which will provide some 10,000 US Central Units in Essential, Commercial and Transport We shall continue to support this strategic development, closely monitor any updates and explore potential opportunities. On property investment, we are furthering the transformation of West Kowloon into a unique hub of financial services, wealth and asset management, art and culture, retail, Leisure and Entertainment in Hong Kong. Our IGC office towers atop the high-speed rail station were completed during the year. We've handed over one tower to our tenant UBS earlier this year. A number of renowned insurance companies and multinational corporations, including AXA, have also committed to leasing space in IGC. The podium mall at ITC has been named Stage ITC and will open in phases starting from the end of this year. The Artist Square Towers next to M Plus Museum will be completed in 2027. As part of its continued investment into the West Kowloon Commercial Cluster, we also plan to upgrade and renovate two luxury hotels These new projects are joining ICC, our two luxury hotels and the shopping mall to form a commercial cluster of around 8 million sqft. With fewer new supply of Super Grade A offices in Hong Kong over the next few years, we expect our IGC and the Artisan Square Towers will be able to capture tenants-at-demand for their upgrade and future expansion. For our retail portfolios in Hong Kong, tenant sales went up and the malls maintained high occupancy. We re-blended a mall in Kowloon East and named it The Angle. Jobs are opening gradually. Our loyalty program, The Point, achieved a strong growth in terms of member spending. The growth in spending was even stronger for the VIP program, The Point Gold. For our mainland properties, the group achieved attributable contracted sales of about $2.2 billion. Tenant sales at major malls grew steadily. In Shanghai, our ITC Mall will open in phases from the second half of 2026. The new ITC Tao Bee is the tallest building in Puxi. This office landmark has started taking in tenants. In Guangzhou, our group increased its stake in the IGC Mall and Conrad Guangzhou Hotel at Tin He Plaza to 100%. We will continue to ride on their prime locations and mature operations to further enhance their business performance and overall asset value. Looking ahead, The group has full confidence in the long-term prospects of the nation and Hong Kong. Under the National 15th Five-Year Plan, Hong Kong will further strengthen its role as an international financial centre, as well as its role as a superconductor and a super value adder. And Hong Kong is going to announce its first Five-Year Plan soon, which will serve as a strategic blueprint for the city's economic development. We will capitalize on these opportunities and continue to develop landmark projects, providing modern and user-centric properties and services that not only foster economic advancement, but also build a better community for Hong Kong. Thank you.