Wharf Hldg Ltd Unsp Adr

Good afternoon, everyone. A very warm welcome to Wolf Holdings' interim results briefing. I am Angela from the IR team. You can download the PowerPoint presentation using the QR code displayed on this LED backdrop. Today our management team includes Mr. Steven Ng, Chairman and Managing Director, and Mr. Kevin Ho, Director and Company Secretary. Before the PowerPoint presentation and Q&A section with the analysts, may I first share a few things about our backdrop. As some of you may know, we used to feature a different backdrop for each results presentation. This time, we are showcasing the MONAT, our new luxury residential property on the peak in Kowloon. and there is also a special message in the backdrop. This 140 years anniversary backdrop marks an important milestone in the group's history. Founded in 1886, Wolf Holding today stands as the seventh company with the longest history in Hong Kong. So in celebration of this milestone, the board has resolved to declare a special dividend of 20 cents per share, together with the interim dividend of 20 cents, total distribution doubled to 40 cents per share. So let's go back to the PowerPoint presentation. The headline is operating and underlying profits increased by 6%, excluding investments. Since the last quarter of 2025, the group has been unwinding part of the equity portfolio, which results in lower investment income during the reporting period. Excluding the investment income, group revenue increased by 2% while operating profit and underlying net profit both increased by 6%. Despite a challenging operating environment, Mainland IP delivered stable results while the shortfall in Mainland DP sales was covered by stronger contributions from Hong Kong properties. In addition, our logistics business remains resilient despite the ongoing global disruptions. So over the years, we remain focused in premium properties across Hong Kong and Chinese mainland, which are the major contributors to our total assets, revenue and group revenue, I mean underlying net profit. Our earnings are entertained by a substantial recurring income base from investment properties, hotels and logistics, while our Hong Kong residential development pipeline provides growth opportunities. and here shows more details on the financial performance. Reflecting lower dividend income after unwinding part of the equity portfolio underlying net profit decreased by 17%. During the reporting period, Hong Kong DP contribution overtook Mainland DP driven by higher sales recognition while Mainland DP continued to be affected by a weak market condition and net provision Mainland IP remained the largest and stable contributor accounting for 67% of underlying net profit Our listed equity investment amounted to $30 billion after partial disposal. The portfolio continued to preserve capital and generate dividend income. After recognizing a prudent investment property revaluation deficit of $2 billion, group profit amounted to $48 million. So including the special dividend, the total dividend distributions doubled to 40 cents per share. The strong balance sheet remains one of our key strengths, and we have achieved net cash position since the end of 2025. Excluding the debt from modern terminals, net cash increased to $8.6 billion, mainly resulted from the disposal of $3.2 billion equity investment with $0.4 billion of surplus. Average interest rate was 3.1%. In the following slides, we will walk through the performances of our business segments In Hong Kong, overall residential market saw meaningful gains in price and volume, supported by solid local demand and a continued talent and capital flow. Attributable Hong Kong DP revenue increased remarkably to $1.3 billion and operating profit to $166 million. primarily from the self-recognition of House 1 at 1 Plantation Road, which is our ultra luxury project on the peak, and Victoria Voyage, our 30% owned JV project in Kai Teh. Contract sales increased to $1.1 billion. At period end, our Hong Kong residential land bank amounted to 2.7 million square feet with net book value of $56.6 billion. Notably, this increased our valuable peat portfolio in Hong Kong and Kowloon. The more need, our peak project in Kowloon comprising over 400,000 square feet GFA is undergoing preparation for sale launch. Other key projects under development include Mansfield Road project on the peak and Kowloon Bay redevelopment project. Moving on to Mainland Development Properties. Following our significant reduction in exposure since 2019 and the continued weakness in the market, Mainland DP revenue declined to $238 million and operating loss was reported. At period end, unsold stock was 0.7 million square meters and net book value amounted to $15 billion. Our remaining stock is largely concentrated in office and the demand continues to be subdued. Net order bulk amounts to RM428 million including the sales of Cheng Ju IFS apartment units which are being progressively released for sale. And for the mainland investment properties, Mainland Retail Market remains soft in the first half. However, the group's retail revenue remains resilient, supported by the performance of our flagship IFS malls. On the office side, vacancy remains elevated under prolonged oversupply. With a stronger Renminbi providing some support to our reported HKD results, our mainland IP revenue and operating profit both increased by 1% to HKD2.3 billion and HKD1.5 billion respectively. The group continue to optimize talent mix to drive more performances at the IFS. At Chengdu IFS, an arcade area is being converted and is expected to be complete later this year. Introducing a refreshed lineup of brands Excluding the area under conversion, occupancy stood at 97% And at Changsha IFS, more occupancy was 98% Recent highlights include the expansion of Hermes and Brudano Cucinelli into Duplex flagship And Port Mart is also set to open a regional Duplex flagship later this year. Moving on to hotels, Wharf Hotels currently operates 16 hotels under Niccolo, Marco Polo and Marco Brands, mainly in Hong Kong and Chinese mainland. Park Hyatt Changsha is the group's only hotel with outsourced management. Settlement revenue increased by 4% and operating loss narrowed. Turning to our logistic infrastructure. In Hong Kong, Modern Terminal's throughput declined under persistent pressure from overcapacity in South China and regional competition. Modern Terminal's revenue remained stable but operating profit decreased. against this challenging backdrop. The group proactively secure new businesses and they are scheduled to commence in the second half. Looking ahead, let's turn to the general market outlook in Hong Kong and Chinese mainland. While Hong Kong continues to benefit from talent and capital inflows, recovery in the mainland remains relatively uneven, with ongoing challenges in the property sector. At the same time, geopolitical tensions and external uncertainties continue to weigh on the economic outlook. Against this backdrop, We remain focused on maintaining a strong balance sheet and disciplined approach to navigate market volatility. In the last part of the presentation, we will go through our efforts and performance in sustainability. Our sustainability efforts earned us strong ESG ratings and green building certifications, including LEED title. Last year, the group's near-term science-based targets were validated by SPTI, which marked an important milestone for our sustainability journey. As of June this year, sustainable financing made up over half of our financing. More details about our sustainability efforts could be found in the PowerPoint presentation. So that concludes my presentation. We will proceed to the Q&A section with the analysts. A quick housekeeping note before we begin. If you have any questions, please raise your hand. Our hotel staff will give you a microphone. And please introduce yourself and state the organization you represent before asking the question if I did not do so. You may feel free to ask no more than two questions each time. So now may I invite Mr. Ng and Mr. Hui to come to the stage please. Let's have the first question from Carl, Bank of America.

Hi, two questions. First is on Hong Kong DP. Now just curious what you see in the marketplace, especially in the luxury segment after some of the recent imposed action by Beijing in terms of taxation, and has that sort of changed the potential buyer interest, and what does that mean for the timing of launch for your current project? Capital Management Hike & Dividend Payout HK1997 Just wondering, now that you're closer to monetization for Hong Kong DP as well, is there any sort of intention to perhaps pay a special dividend to pay out some of the cash, or step up some of the payout, more time to the IPOs?

Okay, good, thank you. First question, we've seen no sign that Buyers' interest in ultra-luxury properties in Hong Kong has changed. In fact, we've been in discussion with some buyers for some of our ultra-luxury properties on the peak, and hopefully we'll be close to some deals. They continue to be seriously interested in rare and valuable properties in Hong Kong. So that may be an interesting and favorable sign. Capital management. Yes, we do have a net surplus cash. And as I think Angela referred to in her presentation, we're looking at reinvesting it. How and where? Our first preference is Hong Kong. and our other preference is properties. That's what we've been doing for years and years. In fact, you may or may not have noticed that a couple of weeks ago there was an urban renewal project in To Kwa Wan. We submitted one of the bids, one of the seven bids or so on. We didn't win, so maybe that's why it didn't catch a lot of people's attention. but we are bidding for land in Hong Kong and if there are other good opportunities in Hong Kong we would continue to bid I can't guarantee you when we'll win but that would be a good indication of where we would like to see our resources, cash resources invested in the coming future In the meantime, our mainland DP business has been in the wind down mode for some time, as you know. We don't have a lot of unsold stock left in the residential sector. And in the residential, well I should say this, in the residential sector which allow strata sale, We do have some residential stock which is subject to en bloc sale conditions. And that would become an institutional kind of sale rather than retail. As far as retail versus wholesale, as far as retail residential stock is concerned, we don't have a lot. and we don't see immediate opportunity to get back into that end of the market. So in the meantime, we look at Hong Kong properties. The board decided today to, as a token of appreciation and to celebrate our 140th anniversary to pay a special interim dividend. We have not changed our dividend policy. We have not reviewed our dividend policy. This company and Wolf REIC are two different companies. We are brother companies. We have different DNAs. We have different boards. And we make different decisions. I don't think it would be fair to Excuse me. to apply one company's direction to the other or vice versa. Excuse me, thank you.