Hang Lung Group Stock

Good afternoon, ladies and gentlemen. My name is Joyce Kwock, and I'm the General Manager of Investor Relations at Hang Lung. Welcome to the analyst presentation for FY '26 interim results announcement that were made earlier today for both Hang Lung Properties 101.HK; and Hang Lung Group, 10.HK.

We welcome the audience who are at our Hong Kong headquarters and also the audience who are on the live webcast now. Please scan the QR code for our presentation pack. There are versions of English and simplified Chinese here for you to choose from.

So today, our senior management team is all here to join the presentation. They include Mr. Adriel Chan, our Chair; Mr. Weber Lo, our Chief Executive Officer; and Mr. Kenneth Chiu, our Chief Financial Officer.

So our Chair, Adriel, may start with some remarks, and our CEO, Weber; CFO, Kenneth, will also walk through the results, including development projects and our financial management. And after that, we can take the questions from the audience.

So, Adriel, please. Thank you.

Thanks, Joyce. So I think you've all seen the numbers by now. I hope you'll agree that it's a healthy set of first half figures. Consumption in China is continuing to hold. I think first quarter, if you break it down, was better than second quarter, but second quarter was still, all things considered, not bad. But first quarter was strong enough to really lift the whole first half for us. If you talk to some of the partners, I'm sure you've seen the LVMH numbers, the Kering numbers, everybody -- a little bit of a mixed bag. There's a little bit of pressure in Q2. But I think overall, the trajectory for the whole year is still relatively positive, and I think we would probably concur with that.

That being said, sentiment is still somewhat low. If you look at the Chinese government National Bureau of Statistics sentiment score, it's still quite low. But at the same time, this is not the first half nor the first year where we've seen our sales sort of working against sentiment to the upside, of course. So sentiment, as you know, has been bad for quite a few years, but our numbers have sort of outperformed that for some time. So I think the trend in that respect is also holding.

Hong Kong has been okay. I think we've definitely found the bottom. I probably found it a while back, but we're now starting to see the bottom in both office and resi as well. And I think retail continues to be a little bit challenging. But if you dig into our numbers a little bit more, which Weber and Kenneth will do, you'll see that actually despite having a headline negative figure, we're actually like-for-like positive, which I think is also healthy, even though it is low single digit. So we have a lot to talk about. Very interested to hear your questions, what you're focusing on. But maybe I'll pass it on to Weber first to give you a brief overview.

So it will be my last time, and then, bear with me. This will be very enjoyable as well because I wear the same tie as my first interim results. So 8 years, no change, at least I didn't find anything on the tie. But -- just maybe I'll quickly go through the numbers, and then we will discuss more.

Of course, I think a lot of us doesn't want to look at the optics that we have a negative 10%, which because we make a provision, the noncash provision for the DP, actually, specifically in Wuhan, which we will talk about it. But without the underlying net profit provision that impact, our HLP underlying net profit was down by 2% and our group was up by 1%.

Now of course, I will explain later. But if you look at our core business, leasing, revenue up by 5%, operating profit up by 4%. Underlying profit is flat, mainly because the capitalized interest is less. The interest cost was up. But the core interest expenses is down, but it's because of the capitalization. But that is really our core business, accounts for over 100%.

Hotel, we lose less, performing, and then plus 14%, plus 15%, plus 7% in underlying profit. The optics creation is coming from the sales because I think we made $1 billion revenue in both Hong Kong and Mainland, but there is some money-losing sales happened mostly in the second half of 2025 when the market was still unclear at that time.

And that's why we make some transaction with a loss. But actually, it's not loss, but because we do the amalgamation at that time in Amoy, that actually valued up the price. The actual margin is at 26%, 27%. But because of the valuation up, there will be a loss a little bit from The Aperture. But I think the most important thing is we make a $124 million provision in Wuhan serviced apartment that actually skewed the number from negative maybe 50 something to $187 million. That actually made the loss in the underlying. So I'll explain a little bit more later on this one.

So in terms of the revenue mix, most of the time, we do not have DP, right? So therefore, overall maybe 95%, 96% of our leasing business. But this time, with DP over $1 billion, the Mainland rental revenue account for 56% and Hong Kong rental revenue account for 24%. So add together, 80%, hotel account for 3% and the property sales account for 17%.

Rental revenue in Mainland, after negative 4% in 2024, flat in 2025, now in '26, it's up by 3%. But in the 3%, you can see a divergence of story. So retail, very positive 6% up. Office down by 12%, the supply issues, the competition issue continues. Serviced apartment because it's very small numbers in Wuhan, and that actually make a huge numbers. But at the end of the day, it's only RMB 4 million. So altogether, it's 3% in Mainland in terms of renminbi sales.

If you look at the trend, also '24 was negative 3%, '25 was plus 1%. So this first half, plus 6%. And if you look at the plus 6%, almost across the board, except the younger brothers at the bottom. Heartland, we will talk about it. Forum, we will talk about it. But the good news, I would like to also highlight to you that even though it's a negative 18%, but you compare the second half of 2025, it's only negative 3%. So that means we are almost at the bottom now. Hopefully, we can turn back into positive soon. Forum also is a negative single digit.

So I think overall, if you look at the sales across the board, basically, we benefit across from all the trades, not only to mention luxury, but also the non-luxury and also the F&B are doing really well.

Okay. This number, I think, really interesting, right? So when we announced our last year full year result in end of Jan, we see a strong January. We also said if the January is not that bad and the February will be even better because the year-on-year difference in terms of Chinese New Year. So the first quarter was 24% up, very strong. But the second quarter come down, but still plus 9%, I think it is more or less like normalized. So it's still doing well, but not as good as the 24% in first quarter.

So across the board, also, you see, look at the shopping mall, Shanghai, very strong. Center, Olympia, Spring City, Parc, Palace, they are very strong. Again, the 2 younger brothers at the bottom and Westlake is new. So that's why there's no comparison.

And worth to mention, out of the 10 operating mall, excluding Westlake because Westlake is a new mall, 7 of them record high sales, 7 out of 10, right? So I think this is really not only a one trade or 2 doing well. It's across the board that we managed to get the traffic up. We managed to get the occupancy up, and we also managed to get across the board sales increase in 7 out of 10 record sales in Mainland.

This is not new, but I think very positive. We got more valid customers. Valid customer means they were active in the last 3 months, up by 25%. New members, up by 41%. Member sales up by 18% compared to the 17% sales up, which is very important because the penetration is 71% to our overall mall. So that means the member sales still carrying and also driving the sales for our shopping mall. And the penetration basically keep more or less the same level. That means we engage the customer at least 70% of our customers in our shopping center.

As I mentioned, record high foot traffic. We just plot the chart without Westlake 66, you see that we are now higher than 2024, higher than 2025 in terms of traffic. And look at also the mall occupancy. Most of them are above 90%, except Westlake 66 because new, only 2 months old, and also Forum because 88%. I think otherwise, every mall are at 90% or above. And worth to mention the net LFA change. We have some decrease in luxury is because there are some close in Heartland and Forum. But lifestyle, maybe you will ask me what lifestyle means, like the gadgets, like Huawei, like Xiaomi, like DJI and some of those or MINISO or POP MART or MUJI, some of those actually increased a lot, which help us to differentiate and provide or offer experiential experience to the customers.

F&B increased by 4% and jewelry and watches increased by 8%. And the number of first in town, I think this is something we are very proud of. First half already doing more than the last year 6 months, 2-year 6 months, right? So we achieved 103 already. We will be able to achieve over 200 in 2026.

So opening of Westlake 66, we will welcome you to join us in October, right? In our roadshow. This is something we would like to present to you all. But I think it's important to look at we achieved very high traffic in this new mall. So in the May Golden Week, on average, 120,000 daily footfall in the mall, which our mall is not the biggest in our portfolio, but we can be able to attract over 120,000. Now even stabilized, they are at 40,000, 50,000 level.

The good news is if you look at the occupancy rate as of end of June, it's 89%, but the commitment rate is already 98%. So some of the stores they took over, but they take longer time to renovate and/or do the fit-out. So the 98% already there. And number of store, 250, first to the market is 100 of them.

In terms of office, we lease the B and E first. The B and E occupancy rate already 47%, so we just hand over the C and D. And if you look at the total number, excluding the A, we are already 45% commitment in B, C, D, E. And if you look at even together with the Tower A and E, we are already at 22%. So I just look at the numbers compared to our Heartland office, our Spring City office, they are more or less the same pace even in an even tougher environment today. So we believe that by the time of end of 2027, we will be able to achieve 70% of occupancy in the office in the Westlake.

So this one, I think, is important. We talk about pavilion. This is only one of the puzzle. What we are trying to do is upgrade Plaza 66 again. So this year is our 25th anniversary. If you recall 7 or 8 years ago, we do the renovation, and now we will do it redefine luxury once again. We will add a pavilion in the second half, which add another 4,300 square meter and 1,725 square meter pavilion outdoor area and the rooftop garden that we will add different trades and make it very vibrant. And we will launch a brand-new VIC lounge on the fifth floor and also to elevate the customer experience as well as we are now adding a lot more F&B in Plaza 66 in order to really provide not only a luxury for a thing, but a luxury for an experience. So this is really something we want to keep the customer longer to keep the customer with a, I would say, more stickiness and therefore, they will be spending more time with our shopping center.

Key opening in the next 18 months for our hotel. Our Curio Collection by Hilton in Wuxi will be opened, I think, in the next 45 days. So we just got the license. They have to go through some of the final touch. So hopefully, we will be able to launch it early September.

Mandarin Oriental, our target is still in Q1 2027. The fit-out will be complete by Q4, and then we will get the OP by Q4. And hopefully, everything will be ready to launch in Q1.

Kimpton Xujiahui, the renovation continues, is on track. And hopefully, we will continue to be targeting this second half 2027.

V.3, not much update, except at Nanjing Xi Lu, the internal fit-out and the upgrade are already happening. If you pass by Nanjing Xi Lu today, the whole thing is already on and internal construction is already doing. So I think this one is 100% responsible by the landlord. So we don't need to do anything. They are really making ready for us. Then we are doing the design. We are actually just formed the JV company with the partner already.

Center 66, we are doing the design and also form the JV company and the Westlake 66 expansion, we are doing the design because this will be 100% with us. So that there is no JV partner company to form.

Okay, office. This is really a top challenge. If you see from a plus 5% in 2023 and suddenly turned into very chill weather and now into a very cold weather, negative 12% in first half of 2026. So you see across -- I will not mention particular cities, but in Shanghai, the competition is very, very keen, right? So the reason why I say, we are the existing buildings having all the top clients. Everyone try to steal your tenant and offer them 1/2 of the price with the fit-out. So it's not a -- it's a news now, is in public domain. LV will go to CR Land building, but we keep all the other LVMH brands staying with us. But the LV brand will go there because they subsidize everything. They give them a rooftop, they give them a garden. So -- and then they pay only 40% of the price.

So I think this is the market today. And that's why the good news is our occupancy is almost everyone over 80%. We are doing our best to retain the best tenant. The good news is we lose LV, but we get Tiffany. We lose some, but we got Patek Philippe. So we are trying our best to retain the best tenant in our mix. But the market is very tough. Like in Wuxi, you cannot believe someone offered $1. We are charging $2.8. Someone offered $1, we fit-out. So I think the market is brutal, but I think the team are trying very hard to retain the best tenant, but at the same time, offering the best service to them.

Just if I can just cut in very quickly on that. If you look at our occupancy for the offices, I think it's actually still very decent. So we've been forced to reduce prices because the market is the market. But the fact that we're able to keep our occupancy at a high-level means that we still are competitive in the market, and we're doing everything that we can. So I think that is something that's worth mentioning.

Hong Kong from a negative 9% in 2024, negative 2% last year, now to flat. So I don't want to repeat, but it seems like we find the bottom of offices, we show 1% up. Residential is going strong. Retail, negative 2% is because of a huge brand leaving in Causeway Bay and now we are swapping in. We are doing landlord provision now. It takes a few months. That's why it's a void for 3, 4 months. And hopefully, with the new tenant coming in, we already identified, we already confirmed when they come in, the negative will become positive.

I just want to exclude -- if we exclude that particular hole, our rest of the business is plus 1%. So that means the others are okay, except that one, but that one hopefully will be done in Q4.

Our sales is up by 3%. So that's why we do not have luxury in Hong Kong. So we are more or less a neighborhood mall. The good news is Amoy is doing well. Kornhill is doing well. Amoy will do better, hopefully, because we just completed a bridge to link with the Kowloon ECC. That will help people to walk without the rain and with the cover from the MTR station, go back straight to Amoy. That will help us to improve traffic, that will help us to improve the leasing progress as well. And also, hopefully, that will have positive rental reversion to us.

Same thing in Kornhill, we make a decision to swap out the cinema and change into a kids area called Adventures. So very good. The business is doing well. We have sales trends and then we turn into experiential. So I think some of those, we just need to add fast and then try to meet the customer need, especially now finally, we heard from some verbatim, "Oh, now I don't need to go to Shenzhen, you have something similar. I can stay in Kowloon, Hong Kong East to enjoy some of the kids activities, especially in the summer."

Property sales, maybe I'll pass to Kenneth to have a few words on that.

Thank you, Weber. I think this first half was a very fruitful 6 months for our property sales. If you look at this chart, upper part, actually, it represents the sales revenue that we have booked. We have hand over quite a lot of units at The Aperture as well as one house at Blue Pool Road. So I think substantially, this $1 billion revenue book came from our Hong Kong property sales.

If you look at the lower part, it summarize the contract sales that we have achieved in the first 6 months. Total contract sales, if we include the sales of Summit, which is an investment property, the total sales proceeds account for $1.5 billion. If you look at our whole-year contract sales last year, it was around $1.6 billion. So this 6 months, I would say it was a fruitful period. I think we took the advantage of this time window when the market is good, we speed up the property sales.

For information, only in July, we have further sales in Summit, 3 units. So which is not -- which are not included in the first half result, but those sales will be recorded. One is -- will be recorded in the second half and the other 2 will be recorded in the earlier next year.

Yes. For financial management, I think the key highlight is that our debt portfolio right now, as you can see, around 1/2 of our debt is renminbi-denominated. And the average debt maturity is around 3 years. We have sufficient available facilities unused, around $18 billion.

If you look at the bottom right-hand corner, you can see that for those debt mature more than 2 years account for 69%, which has lengthened compared to the previous period. And I think I show this page as well. For the net gearing, you can see that it came down from 33% in first half last year to 31.6% by end of June this year. Our average borrowing cost further came down to 3.7%. We benefit from a relatively low HIBOR in the first half this year. And also my treasury team managed to get better refinancing terms in the past 6 months. So overall, we have achieved savings.

I think as you may know, we have already completed a lot of projects. The biggest one is Westlake 66, and we have already opened on 28th of April. Because of this, the capitalization ratio of our finance costs came down from around 50% last year to this first half, 40%. Going forward, we believe this capitalization ratio will continue to go down. We expect overall for 2026, the capitalization ratio will be around 30%.

Okay. Next page. Okay. I'll pass it to Weber to share with you guys.

I think, just a lot of things going on for ESG. We published the Bending the Curve report to really set the -- sorry. I forgot. I have 2 things. To really set the tone and also set our goal for 2030. Renewable energy, very proud to present 10 out of 11 of our Mainland projects are powered by renewable energy. The last one will be Tianjin, and then we are working very hard to get this 100% renewable energy breakthrough. So the public engagement as well as the community engagement continues and ESG benchmark rating and everything improved over the year, and that helps our finance costs, that helps our other achievements. So I think overall, I think we have a very fruitful year for the sustainability as well.

So I will stop it here and then maybe go for Q&A.

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

Oh, okay.

Shouson Hill.

So maybe we just quickly talk about Shouson Hill. We finally get the green light from the government. So we will get more area by paying a little bit more, 50% more area, so we can build more houses. Instead from the 5, we can get more houses. We can really do a much better product for our customers. All right?

Okay. Cool. So thank you very much, Adriel, Weber, Kenneth for the presentation. We now start the Q&A. [Operator Instructions] So from the floor, I see Karl from JPMorgan, please.

First of all, I just want to take this opportunity to thank Weber for the past 8 years. Happy retirement, and we will stay in touch. Okay. So I guess my first question is about the CEO, right? Because today, we had the announcement -- we saw the announcement, but then we saw there's no name from the announcement. So just curious, can you give us like a sneak peek on how the new CEO is like? For example, what made him a tick? What make him -- what make you feel like very impressed by this new CEO? And maybe like a bit of a background on the new CEO. So maybe that's the first question.

And the second question is on Mainland China retail. So for the first half, I think we saw pretty outstanding results. But then for this, like, starting in around May or June, I think there have been more commentaries about how tenant sales or retail sales in China further slowed down. So just curious, can you give us, like, a breakdown on the tenant sales trend by month roughly, say, for June and July so far, how is it compared to April and May? And then for the second half of this year, what's your expectations for tenant sales in Mainland China? So that would be my second question.

Thanks. I think more details on the new CEO will come in due course. So you won't have to wait too long, don't worry. It's probably a week or 2, a couple of weeks. And it's -- we just want to be as transparent as possible. The Weber's retirement was announced quite some time ago. And I think that the least we could do is explain that we have actually found somebody with a name to be announced.

On the second question, which I think is much more interesting. The retail -- I alluded to this earlier in my opening comments. I think that second half is shaping up decently. So we're all relatively optimistic, cautiously optimistic. As you've seen, there's a little bit of a divergence in some of what the brands are reporting and some of what we have just reported. And that's -- for many reasons, partly, we've been increasing our exposure to luxury, but also as the luxury brands close stores, it's not closing per se, it's consolidating. So their GFA might be increased, but the number of stores may have decreased, which means that the existing stores have either gotten bigger, which it has in some cases for us. And that also means that sales are consolidating into those fewer number of stores. And so we've seen a little bit of beneficiary -- we've been a bit of a beneficiary from that, although it cuts both ways. So in some cases, we've been on the opposite side. But net-net, it's balanced out in the positive for us.

And so I think the brands are still conservative. There is concern over sentiment, but there's been concern over sentiment for like the past several years. So at some point, I think that will go one way or the other. For the time being, sales are still strong. And so we feel quite comfortable with the direction that, that's moving in.

If you look at Westlake in Hangzhou for -- as a proxy, I mean, it's been quite some time since the new project has opened with so much fanfare. I mean, foot traffic of over 120,000 a day is really quite extreme, especially since it's not such a big project. And that really shows the vibrancy and the hunger for Chinese consumers for compelling spaces for good malls, for good offerings, and that's what we've provided. So I actually feel quite comfortable with the direction that retail sales in China are moving in, even though sentiment and when you -- what you hear on the street may not sound as positive.

I think to answer strictly your question about bimonthly, maybe I will not do it bimonthly, but biquarterly. Q1, I think if you really zoom in, everyone benefit, doing really well. But the gold rush make a difference, which I'm sure you all know. Second quarter, without the gold rush. Also the luxury brands somehow weakening a little bit, but we still achieved 9%. That means the F&B, the non-luxury are doing really well. So in the future, I think I would suggest, yes, we are one of the proxy for luxury. It doesn't mean that we are only doing luxury. So you should also take into account of ANTA how they are doing, POP MART how they are doing because we are a lot of friends with them as well.

So I think overall, if I look at the numbers in first half, luxury, including the top gold one, are growing at 15%, but the general are growing at 20%. So we are a lot more diversified compared to the past because of the higher traffic, because of higher occupancy, our F&B grew 16%. So 16% compared to the 17% means they are more or less the same.

Our non-luxury F&A, the fashion and accessories up by 25%. So those athleisure of those other brands are doing pretty well. Also, the non-luxury jewelry and watches are up by 30-something percent. So that means first half across the board is doing well. Second quarter, non-luxury continues to do well, but the gold rush and luxury is a little bit slowdown. So that don't mean -- that doesn't mean that the whole engine has gone, right? -- because F&B, the people still need to come out to eat. They still need to come out to hang out. So that's why I would say we are still believing in the second half, it will be high single-digit up in terms of sales. So this is really our expectation based on what we see.

But the good thing is the luxury brand seems like the tone and is a little bit more positive now, but they are still very cautious. So that's why I will not say suddenly, they will change their strategy by opening a lot more store. Rather, I think in our shopping center, in our retail business, we need all trades to do well. If we can do that, hopefully, that diversify the concentration risk.

Cindy from Citi.

I have 2 questions. The first is on the dividend. So it's great to see a resumption of the cash dividend. I think it might be still early, but what metrics will guide the potential dividend uplift in the future? Do we need to actually wait for the Hangzhou Mall Phase 2 to open? Or is there any other operational trigger that you might be able to flag?

And second is more specifically on Westlake 66. You mentioned foot traffic is amazing, but how about tenant sales performance? How is it tracking, say, against your internal target? And what are some key improvements that might be planned in the, say, coming 12 months to further lift the malls competitiveness ahead of the Phase 2 opening? And are you planning to bring in more luxury concept in the mall? Or how do you see the mall's overall tenant mix in the near future?

The first question, we do not have a policy to say by hitting whatever percentage because we are paying at a very high payout now. What we believe that when all the headwinds behind us, for example, the capitalized interest, which we know before we opened Hangzhou, some of the provision that we made, if some of those are behind us, it is purely organic by looking at some of our business organically growing. We believe that this will not be too far away. We need to let Hangzhou to grow. But based on what we see, the mall should be itself breakeven in Q4. Office will be a little bit longer by end of 2027 because of the high RET. But otherwise, they track according to what we set for ourselves.

In terms of sales, it was a surprise. It exceeds all our budget. I asked the team why we exceed our budget because maybe we set the budget too low. But we still believe that more to come because we will have luxury brands coming in, in Q4. We will have 3, 4 luxury brands comes in. We, hopefully, will welcome more and more. And with the Phase 2 coming in, we can accommodate everyone because that will be increasing our GFA to 150,000, which is exactly like Grand Gateway size. So hopefully, then we could be able to attract everyone, not missing out anyone.

So I think it's a journey. Of course, it's not as quick as other malls. But I just want to remind also internally, I remind everyone that we open Heartland the best way with all the brands comes in on day 1. But today, of course, I don't want to repeat. So opening well in the first 12 months doesn't mean that you will end up well. We just need to get the best out of whatever you have today.

The market today is that you get the traffic, you get the people used to come to your mall, you upgrade yourself gradually. Maybe that will be more sustainable way than competing with all your competition with the pricing. Because when you get and steal the tenant from opposite side, the only thing they will do is to cut the price. Then you have to cut the price too, and then it will not be benefit to anyone.

So I think maybe this is the better way. I don't know. Time will tell. But we look at Westlake. We did not -- it did not disappoint us from the matrix wise. But of course, we would like to open some of the brand earlier. Therefore, we can really set the stage and really firm up our positioning. So I think that takes a bit of 1 year or 2. Hopefully, we can do that and show it to the market.

This is [ Vera ] from UBS. And I have 2 questions. First is to just follow up on the previous question. You mentioned that for the second half, you expect high single digit for the sales. Does that exclude Hangzhou or include Hangzhou Westlake 66?

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

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

No, I think there is not -- okay, you can do the math this way to get the rough numbers. But when your trading and your opening rates going up, that will have a multiplier effect. Some brands will sell more, and then therefore, they can afford to pay more rent. So I think -- and also every lease will be renewed in 3 years. So it will give us opportunities to revise up. So I don't do a -- okay, in the bank, I always do this way. Divided by 2 weeks times 52 weeks, then I can know what is the number. But unfortunately, our business is not that way. It will take a bit of the pacing up. But hopefully, this will be definitely more than $200 million that would be discussed in the long run.

Okay. Okay. And also the second question is on our rental margin. We noticed that the rental margin have declined a bit for both our China and Hong Kong side. So can you elaborate more on this?

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

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

I think the -- I'll answer the first question first because it's more technical. If you look at our capitalized interest, my answer is yes or no. When -- I think the Board discuss the dividend payout, I think we -- as mentioned by Weber, we don't keep a fixed ratio, right? We hope that we can adopt a progressive dividend policies. If you do your own math, if you add up the -- if you look at our leasing profit, including the hotel part, less the interest capitalized, basically, our payout is 102%, okay? Last year was the same. So that means if we assume all the interest expense go to P&L, I have already paid out all the profit.

So the question is, going forward, when we have further growth, particularly for those younger projects, if we have more profit, what will be the payout? I think it is subject to the Board to further discuss. But I think at the meantime -- in the meantime, we have already tried our best to pay as much as we can. But of course, we also look at the underlying profit, particularly the recurring part. So I hope that I answered your questions about the capitalized interest.

About the dividend policy, maybe I'll let Adriel to make some comments.

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

And just one point to supplement. I think we had 5 scrip dividend arrangement before. And from time to time, analysts, investors keep asking us, can you commit not to have another round. Again, it's not subject to management decision. It's subject to the Board decisions. But I think right now, we -- the Board decided to -- not to arrange a scrip dividend for the dividend payment. I think this is a good signal that I think we are confident that we can maintain the current level of dividend, okay, unless there is some other things which are out of our expectation. So this is something I would like to highlight.

And also the reason why we are accelerating the IDP sales, also part of that, unfortunately, last year, we made some loss. But think about it, if we can continue this momentum, but selling more DP that will go into the bottom line. I think that will allow us to get a little bit headroom or get a little bit buffer for the payout.

So I think overall, on one hand, yes, we are almost at 100%, but it doesn't mean that we cannot continue because a lot of other competitors, we always look at the numbers. I don't name them. A lot of them already overpay 100%. A lot of them only at 60%, a lot of them at 45%. So therefore, the time for them to progressively increase is always high. But the key is whatever it is, it is, right? So we cut 1/3 2.5 years ago. Now I think -- and we do scrip dividend for 5x, and now we stop. Hopefully, that will also send you a signal that at least how confident not only 3 of us, but the Board about the future.

Simon from Goldman.

Sorry, I have 2 questions. Just back to Westlake. I think there's a lot of comments basically saying that your mall positioning is geared towards a bit more lifestyle and maybe not so much luxurious. Wondering whether you have any thought about maybe 2, 3 years down the road, the positioning of the mall? And then recently, what sort of competition are you seeing in the -- on the adjacent mall, if any? That's the first one.

And then the second one is back to the provisions. Would you be able to give us some more maybe comment about the provisions, whether there are going to be more to come? I think on your book, there's a salable resources number, which obviously is one thing that you can pay for dividend. But if you can maybe -- can you break it down into Hong Kong and China, so we get a sense.

First, we will have 4 brands, which I think I can talk about it because they are holding already. Moncler, D&G, and Brunello Cucinelli and some more will open in the next -- actually in September. Of course, some big names, we are working on it. Some will start with us with the pop-up. Some will still sitting on the fence and wait about the whole market, how it turns. Of course, our belief and also our objective is to do with luxury because we build the mall with that DNA. So happen, the market doesn't allow us to get them on day 1. It doesn't mean that we don't continue.

This is exactly like what we have launched Wuxi. We do not -- we did not have luxury to start with, and then now we own the market. It's exactly like Dalian. When we launched it, we did not have any luxury and then now we have luxury. Exactly like Grand Gateway, when we launched it, we did not have luxury, now we have luxury.

So I think this is really our belief and also our goal, right? Whether we see the competition exactly because we are not doing exactly the same as them, they are not targeting us, right? So this is exactly what I just said. When we launched Wuhan by saying that I need to eat your lunch, then of course, we attract competition. But today, we are doing on our own. We are creating something they don't -- they cannot offer, how they can compete.

So I think this is something we are working on. We will have a hotel. They have a hotel, but our hotel is a lot better. We will have relics. We will have historical building, they don't have any. We will have a very good VIC lounge. We will have a lot of other experiential stuff they do not have. So I think overall, it's not exactly like discount come and queue you, that kind of competition.

I think on the -- maybe SA part, I pass it on to Kenneth to talk about.

For the provisions, actually, it only comes from SA3 at Wuhan. In Hong Kong, as you may know, the Hong Kong residential market is in recovery. All the remaining inventory actually, based on the recent sales are well above the book cost. So I don't see any indications for impairment, okay? For those who came from all the background, understand every balance sheet day, we need to do NRV assessment on all the inventory. And for Wuhan, because in view of the slow-moving situations, we take a prudent approach to look at the projected cash flow of the projects and then see based on the price mix, what would be the NRV of the asset.

I'll just give you one more data point, which is easier for you. Part of the SA, I think this building has been leased out through Fraser. And we have very, very good tenants, diplomats, senior management of MNC. Previously, when we transferred those inventory into investment property, the unit price was around $23,000 per square meter. Right now, when we mark down the inventory part, that means the property for sales part is at the same level. So this is coincidentally, the unit price is similar. I think for the other 2 assets in Kunming and in Wuxi, the selling price are also well above the book value. So I don't see any high risk for impairment.

And one final point on Wuhan. We are marking down because of this NRV assessment exercise. It doesn't mean we are cutting the price. In fact, our products are still very, very unique and on the high end in the market. So this is only an accounting treatment for prudent sake.

I think the reason why we explained in that detail is part of it is not about whether if you want to cut the price, you can sell faster. In China today, unlike Hong Kong, when you drop the price by 5%, you can sell much faster in Hong Kong. But unfortunately, in Mainland, if you drop the price, you will attract all the problem. The existing one will call you and say, why you don't cut the price for me. And then the new one, you might not be able to sell. So it's not about the price. But because we take a very prudent approach, let's say, if we need to take a few more years to sell and then go back to the present value, what will be the price that we should book today. I think that is the approach we have done.

The good news is the price that we adjust now is exactly like the leasing price from the income approach. So that means in the future, what if the worst come to worst, I can lease them out. I don't need to do any adjustment anymore, right? So therefore, I can attack and defense any time when the market change. But if I need to do more leasing in the future, I need to do provision, right? But now I don't need to do anymore because they are more or less the same price.

So SA1 and SA2 is different. I want to be very clear because it's only bare shell. So we have a cost of the bare shell. If we can be able to manage by fitting out of them and having the same price as today markdown price, then we don't need to do provision also, right? So this is really the way how we look at the numbers. We are not playing a game here. We want to be as prudent as possible.

I understand your point. I don't want to be cut, cut, cut for 5 more times. If you cut, cut one time, hopefully, that is our way. That is what we are trying to do. But of course, market is market, we can't dictate that. But this is trying -- we are trying our best to project the market and also understand our balance sheet and try to do whatever we can to protect and where we present our financial to the investor.

Wait, are you talking about provision or dividends?

Provision.

I know I'm joking. But it is exactly the same story with the dividends.

We take the last questions before we finish the briefing. Okay. If there's no one from the floor, I'll take the last one from the webcast. So what's your perspective on Hong Kong retail in terms of liquidity yield and value and outlook? Is it simply going through one of the cycles or beyond that? Is it also through the structural change due to the leakage to online sales, Northbound consumption, and consumption downgrade, et cetera?

I cannot say too much about overall Hong Kong, but I'm very positive about our portfolio. Retail, we see even today with a very long void period of our Causeway Bay, we are still registered 3% growth. So once we get occupied with our portfolio and also our work on reshuffling the trade mix, I have a high hope that we will be able to do better sales in our CBD area.

Our neighborhood mall are very stable and very proactive. So we are doing a lot more than some other competitors by changing the mix, by making sure that they are relevant and hopefully, we can retain as many people as much as what we can in order not to go to North and stay in Hong Kong.

So I think -- going to North is already been around for quite a while. I cannot say that the people will not go to North anymore. They will continue to go if they need to go. But I think it's not new anymore. I just hope that we can improve our attraction in Hong Kong by retaining more sales in Hong Kong. So I think that is your first question.

Yes, that's the only question.

That is the only question, right?

Yes. I'll just add a few comments. I think, broadly speaking, thank goodness that we're at a low base today because everything still looks good. But if I were to -- my own observations would probably be that there are some structural elements. So are we going to go back to whatever the heady days of 2018? It may take some time. It may take more time than we like. I'm not saying we won't get there, but it may take some time. So probably across all the sectors.

Even though it looks good today, we feel good about the resi sales. We feel much better about office in Hong Kong, but I think there are some structural issues which are going to manage the pace of this recovery and also may even manage the top of this recovery. So those are just some observations and comments.

One more thing that I do want to say is on Mainland China resi. It's obviously not very sexy right now. It's not been sexy for many, many years and probably will not be sexy for the next few years. However, there's an interesting set of numbers, which I think are publicly available on the completions -- on new completion -- sorry, on new starts for China residential and completions on China residential. And then if you kind of look at the number, it's dropped dramatically because nobody has been building for the past few years.

And there's a question in my head, which is that what is the base load? What is the base demand, replacement demand in Mainland China? And is that above or below today's rates of completion and new starts or in particular, new starts. And in 2 or 3 years' time, when these hit the market and if sentiment doesn't get worse, what will that match or mismatch be? And even though that's not really the market in which we play, it will have some knock-on effect to the broader economy, including the wealth effect, including perhaps I would love to have sold out all of our SAs, serviced apartments by then, but we may not have. And if we haven't, then who knows. There may be a window in a few years' time. But I know that's far beyond any time line that any of you are looking at, but it may be a few years, but I think it's interesting to keep an eye on that.

And also, I think just last point, history repeat itself that 2 years ago, when we are sitting in the same room, everyone worrying about the office market in Hong Kong. Look at today. And now everyone is saying that all asset management company, everyone coming in Hong Kong. Now okay, I hope they come. That means the rental will go up, spending should go up. That is only 2 years ago. And basically, everyone is saying that Central is dying, but now it's recovering quite well.

So I will say market like property development is a little bit funny. Sometimes it's countercyclical. And I hope I'm right and most of the people wrong is that if the wealth effect, especially asset management, I was told, I'm sure you guys know, right, the private equity guys, they don't need to pay tax for the carry. Wow, then our house should be very good, right?

The IPO guy, when they come, they have a lot of money. So they should not put in the bank, buy a house, right? So I'm very positive about high-end residential. But at the same time, those guys need to spend. I don't think they will all go back to Shenzhen. So some of them will stay. Some of them will buy good wine because wine is cheaper here and there will be lock-on effect.

So I think Hong Kong is so dynamic, never say never. Mainland, I would say, SA need to take some time, but we all know when no developer developing anything and suddenly, it will become a shortage. So there will be a moment. But of course, we don't know when because there's still a lot of supply in the market.

I'm still waiting for that question on the office, when the oversupply will be diminished. So whenever the multinational come back to China, hopefully, they will take up some of the occupancy. But as of today, we can't see it. So -- and at the same time, luxury also, today's cold and chill, but same as 2015, '16 when the anti-bribery hit us. But no one knows after the anti-bribery suddenly, we enjoy almost 8 years of very rosy luxury growth.

So that's why I would say the market is always in a cycle, but we just need to do what we believe is right for the company, for the customers, then hopefully, we will be rewarded by the things we have done.

Okay. So this wraps up the analyst presentation for our FY '26 interim results. This is going to be the last time Weber do the presentation here. We wish him the best.

Thank you very much for the participation, and we'll see you next time. Thank you.

Okay. So good afternoon, ladies and gentlemen. My name is Joyce Kwock, and I'm the General Manager of Investor Relations at Hang Lung. Welcome to the analyst presentation for FY '25 results announcement that were made earlier today for both Hang Lung Properties 101.HK and Hang Lung Group 10.HK. We welcome the audience who are at our Hong Kong headquarter and also the audience who are at our live webcast now. Our presentation pack is now available on our corporate website or through the QR codes. There are English versions and simplified Chinese version for you to choose.

Today, our senior management team is all here present to join the presentation. They include Mr. Adriel Chan, our Chair; Mr. Weber Lo, our CEO; and Mr. Kenneth Chiu, our CFO. This time, we would like to start the briefing with a quick video that visualizes the update on our latest strategic growth footprint, blueprint breifly.

[Presentation]

Hope you enjoyed the video. So now our Chair, Adriel, may start with a few words, and then our CEO, Weber, will also like to walk through some slides on the result highlights. And then our CFO, Kenneth, is going to go through our financial management and other slides as well. And then after that, we will address the questions from the audience from both the floor and the webcast. So Adriel, your turn now.

Thanks, Joyce. Thanks for coming, everybody, and joining on the webcast for those of you who are joining online. The reason why we showed V.3 is because I think a lot of people understand sort of intellectually what this entails, but can't visualize it. And so this just helps fill in -- put some meat on the bones. What I would say about V.3 in particular, which is one of my key talking points today is that it really is a new page for us. It doesn't mean we're throwing out the old. We continue to invest in our existing properties. We still think that, that strategy works, but it will be with a different pace and a different scale going forward, whereas V.3 is a way for us to scale with a lot less CapEx. So it's doing what we do best without the capital outlay.

And of course, one of my favorite parts about V.3 is the speed. So it's a lot faster when it comes to bringing a project from imagination to fruition. The hope is we can do it within just a couple of years. I think we can achieve that. Whereas if you remember, some of our asset-heavy projects under V.2, they took up to 10 years to go from buying the land, i.e., the first dollar out until the first dollar in. So you think about the cost of capital for 10 years, even though we have a very healthy cost of capital, which Kenneth will talk about a little bit later, but it's still a very long time.

So what I'm really keen on is that additional GFA, the additional scale, and that's not just leasable area, that's also frontage, that's connection, that's a stronger community, that's a bigger footprint in every aspect, both physical but also in mind share of these cities. It's in our strongest cities. So we have Shanghai, Hangzhou, Wuxi and Kunming, which are among the four best performing cities. So increasing that mind share and increasing that market share is very meaningful for us. But of course, we're leveraging the teams that we already have. So not only is there a minimal CapEx, there's also minimal OpEx because the teams, the leasing team, the government relationships, the banking relationships, everything is already in place. And so this is a way for us to go with super speed into increasing our -- everything from ROI and ROE. So V.3 is, I think it's not an understatement to say it's very exciting, and it's very meaningful for the company. And it should be meaningful on a time frame, which is much shorter than what you're used to.

The second point I would talk about, maybe just very briefly, some views on Hong Kong and Mainland Chinese markets. I know Weber and Kenneth will talk about this later, so I'll just gloss over it. But there's a series of corrections taking place in the market, both in Hong Kong and in the Mainland across resi, office, retail. Some of them are structural. So those are the ones that we're very careful about. And some of them are cyclical. The question is, where do you think there's a structural shift and where do you think there's a cyclical shift? We can jump into that in a little bit. The third point is that when you see our numbers that Weber will -- or actually, maybe we should talk about this after Weber goes through the presentation. I think it will be more meaningful. So I'll leave the rest for a discussion a little bit later, and I'll let Weber take it away.

Thank you. So I don't repeat the numbers here. First of all, in terms of our core business, the leasing, you can see that the revenue, although down by 1%, mainly because there's still some depreciation of renminbi impact into 2025. But overall, operating profit and losses, we are up by plus 1% versus 2024 and underlying improved by 3%. So both the HLP and HLG, we delivered the same dividend, same HKD 0.52 and HKD 0.86 for HLG. Next one.

Okay. I will focus more on the leasing revenue this time because this accounts for 94% of our revenue in 2025. So if you look at the Mainland revenue, especially for the rental revenue is at HKD 5.878 million, which is about 68% of our total rental, flat in terms of renminbi, minus 1% in terms of year-on-year on Hong Kong dollars, as I mentioned about the depreciation of the renminbi. However, if you look at Hong Kong, we managed to get down by 2%. If you remember in the first half, it was down by 4%. Now the overall down by 2%. That means we have done something okay in the second half to mitigate the overall year down by 2%. Property because of the less booking compared to 2024 in Aperture, but we will talk about the overall -- what we have done in 2025 to bring in more capital. Next one.

Rental revenue in Mainland China, if you look at revenue total year-on-year flat. Focus, I would like to draw everyone's attention is on the plus 1% on retail. Office, we see the headwind. The headwind is not easy. I'm sure everyone knows that. We will explain a little bit more about what's going on, but we believe that this headwind will continue at least for 18 to 24 months. Overall, we believe that the good news is we were up by 1% in 2022, up by 7% in 2023 and '23 was our peak, and then it was down by minus 4% last year and is flat this year. So hopefully, we can stabilize and go again. Next page.

So retail, I think this is really our core that account for 83% of our Mainland because office account for only 17%. So you see that first half, we were flat to 2024, but we see a plus 3% year-on-year in the second half and generate 1% overall in 2025. In a very tough year when you hear about the luxury goods having a soft year, but at the same time, we managed to get our revenue up by 1%. You see across the board, we managed to increase except 3. And Heartland and Forum will talk about it later, but we see still a headwind. But overall, all the other markets, we see a pretty good revenue growth in a very tough market. Next page.

So I think this page, I think a lot of people ask in details. I think we show every details. When we were at the same place last year, we see already say, minus 18% back to minus 11% in fourth quarter last year. But we told all of you that we see a little bit improvement. So when we meet each other in end of July, we said, hopefully, we see positive in second half to make the overall year become breakeven. But actually, this is better than what we expect. So plus 4% because we have 10% increase in Q3 and 18% in Q4. And by the way, to just give you a dimension, 18% year-on-year Q4, Q4 sales in our history is the record high. Because when you look at the Q4 in 2024, it was down by the record high of 2023 by 11%, but it's now more than offset the 11% and up by 18% in Q4. So across the board, you can see except the 2, you can see the sales are in a good growth, especially from the second half. Next one.

So what we have done, I think a lot of the work behind the scene are coming from the active management with the tenant. So you can see that across the board, mostly all of our properties with the higher occupancy. The one that you might ask about why Plaza 66 was down because we need to build the rooftop, we have to build the tunnel -- sorry, the basement to the pavilion and we have to close some of the shops. Otherwise, it will not be 96%. But otherwise, if you see across the board, we managed to increase occupancy. So not only by managing the number increase, but also we increased the new letting. New letting increased by 15% and renewal increased by 5%. So a lot of work behind the scene to make this happen. And in the middle of it, you'll find that 200 of them are new to the Citi brands. So we continue our tradition by bringing first in the market kind of brands into respective cities. And at the bottom of the chart, you can see that also there will be some LFA changes in terms of category. So luxury remain the same. But if you see the personal care and beauty improved by 4%, even though you may hear from the market that this is a tough market, but we see we increased by 4%, the sales increased by 8%. And F&B increased by 3% and also the sales also increased as well as the others, including some of the service trade, experiential trade and all that. So I think this is the action behind the sales growth, especially we see from the 2025 starting from the first half, which getting some fruition in the second half. Next one.

Happy to also report that this is in our history, the record high footfall. Together with our 65th anniversary, we run a lot of signature events, celebration events, IP events. So I think this is something working well. And especially last time when we talked about it, we discussed in a weekend when we have events, no problem. In a weekday without events, there's a problem. Now we get the tenant to improve. Once the tenant improve with more F&B with a full price range, we can also help the increase of footfall in the weekday as well. So I think that's helping. It used to be in Hang Lung discussion, everyone asking about luxury, but 2025 was led by a long luxury sales increase and long luxury effort that we have done over the years. So 2026, we look forward to celebrate our 66th anniversary. So it's very seldom to have a company to celebrate in consecutive years, 65th and the 66th, but because 66 means something to us, and that's why we will celebrate a lot this time more a B2C, last year, more a B2B, right? So we will celebrate a lot more activities, especially what we see, we have done a lot of things working in 2025. We believe that when we put together something meaningful and interesting and experiential customer will come. Next page.

All right. This is the usual page, but all numbers at least looks healthy. Valid members -- valid members means members with spending. So increased by 24. New members increased by 10. Member sales increased by 7%. So even valid member increased, sales decreased -- increased, but in a lower magnitude because the average spend per customer decreased, right? I'm sure you understand the market dynamics of China. But overall, I think it's healthy. We managed to get more customers through the door, more active customer and therefore, the member sales increase. And the penetration also increased by 4 points. Next page.

Okay. This is the tough part, which we have to tell all of you. The office, especially in the Mainland, we experienced 8% down. First half, 5, and second half get a bit worse to 12%, partly because of a big tenant in Shanghai that we have to restructure with them to retain them for a longer period, right? So I don't want to name them, but at least that help us to maintain the occupancy, that help us to retain them. Otherwise, you may see even worse numbers when the contract expire. So in Mainland today, customers might have a better bargaining power today because they have a lot of supply in the market. So they may come to you and say, even though I have 2 more years with you, if you don't reduce the price, I will leave. And at the same time, I promise you, I will not renew. So you have to talk to them and negotiate and make sure that they will stay hopefully above the market price, but actually stay with us and therefore, they don't need to move. So I think that will have some impact. Someone asked me, how long do you think it will last? I think at least 18 more months to 24 months because we see the supply continue to pop up in the main city, especially like Shanghai. But for some other cities like Kunming, like Shenyang, when you are having a much dominant leader position, you might have lesser impact, but you still need to negotiate with the customers when the customers having a lot more options. For example, domestic players, most of them, they have their own office in the past. But because of our better office facilities as well as more, they would like to rent with us when their business is doing well. But now the business is tough. They want to go back to their own properties. So there's a lot of discussion like this. So that's why I will see this negative drag might being around for another 18 months to 24. But as we discussed in the earlier section, everyone talked about very bearish in Central a year ago. But now it seems like it's stabilized. So this is really something we need to look forward to, especially when the foreign investment will come back. I mentioned to the media, I see at least a few minister, Prime Minister from the other country visit China. And I hope a little bit of the movement going back into China and invest into China. And hopefully, with this kind of more collaboration, bilateral kind of agreement, more company will go back into China. So this is something we hope for, but at least we have to prepare this kind of trend. And hopefully, we can retain most of our existing tenant. Next one.

Hong Kong, good news is we mitigate from a negative 9 to negative 2% in 2025. And the retail side, the reason why we have that is because of one single tenant in Causeway Bay expired at very high rent into a new market normal rent. That is the impact. Otherwise, retail is more or less quite stable. If you look at the second half, almost flat. So office, I think minus 1%, which is because we don't have much office in our portfolio. So that's why quite stable. For example, the Standard Chartered Bank Building, we have over 90% of occupancy. So I think we are quite comfortable with our existing one. And the residential service and apartment is the really bright spot. I'm sure you heard about the rental market increase and improved over the years, and that will reap the benefit as well. So you can see that overall, we are minus 2% in Hong Kong.

Okay. So I think this one is important. I want to highlight the difference. So total, 2025, the proceed that we get back from our properties is HKD 1.6 billion. I think this is really highest in the last 8 years. Out of that, we booked HKD 264 million in revenue and the remaining will be booked in basically 2026. So out of that HKD 1.2 billion and then HKD 700 million will be in Hong Kong and HKD 500 million will be in Mainland. And also, there will be disposal from the Summit as well as Blue Pool Road. The good news is the momentum seems like gather. So we sold another Blue Pool Road in January. So I think the good news is when the market improves, some of the property we can actually sell with positive margin, I think it's a great way for us to accelerate the sales proceeds. And hopefully, we can lower down our gearing continuously. Next one.

All right. Not much news on this page. Residential, I think not much news. We continue to sell down the Blue Pool Road. Good news is this is on -- Blue Pool Road, we have 5 and sold. Now it's 4 and sold, right, because we sold another one in January. Wilson Road, we got most of the approval already. So demolition will start in very, very soon. Hopefully, we can finalize everything. Shouson Hill, we're still waiting for some planning and final approval. And hopefully, we look for a premium from the land department. And hopefully, we can get it as soon as possible. Aperture, now we only have 90-something left for sales from 294. So we sold already over 200 units in the past 2 years. Mainland, Heartland and Grand Hyatt Residence in Kunming continue to be slow, but we believe that today, even though you drop the price, it may not help. So we continue to sell at the right price and hopefully, market improve, but we see a great traction in center residence. So we already sold 50-plus units at a very good price, the highest in Wuxi, above 40,000 per square meter. So I think this is really encouraging. I think that actually reflects the strength of our mall and our district. This is really the core center city center. And hopefully, we will continue to sell down these properties. So I will pass on to Kenneth on the financial management numbers.

Thank you, Weber. In the coming two slides, I would like to share with you our financial management. I think the key points I would like to highlight is the net gearing ratio. By end of last year, it was 32.7%, lower than the gearing by end of 2024. I think the dividend adjustment and also the scrip dividend arrangement help us a bit. But I think more importantly, for CapEx, I think as we communicated earlier, we have already passed the peak of our CapEx cycle, which help us to further reduce our debt. Overall finance costs actually declined by 8% because of lower borrowing costs both the benchmark rate, for instance, HIBOR and Mainland LPL declined last year, but also on the margin, my team have worked very hard to get a very competitive pricing on our financing. And the net cost -- net finance cost increased a little bit by 3% is mainly because of a lower capitalization ratio, which result into higher net interest expense. Nonetheless, I think if you look at the interest cover, it has been improving last year to 3.1x. And for our overall debt profile, I think around 47%, if you look at the left-hand side of our debt, 47% are renminbi denominated debt. So I think in the long run, of course, there are still room for increase, but I think the current ratio, I would say, is optimal.

In terms of debt maturity profile, only 9% of debt will be due within 1 year. And my team and I are working on various refinancing 1 year ahead. And so far, the progress is very encouraging and smooth. If you remember last year, we have done a HKD 10 billion syndicated loan in the Hong Kong market, which help us to increase our dry powder and also help us to build our war chest. For next, I pass it to Weber.

Yes. I think just I think, have a lot of score put up here. You see that on the left-hand side, ongoing effort, a lot of improvement in terms of the score, in terms of rating, very glad to mention we delivered our 2025 goals on ESG, which I think this is something we are very proud of. And now we are setting our journey into 2030, and then we are very committed to do well on this part, even though Western world now might not focus a lot, but we believe that we have to do the right thing. And China is leading the way to achieve this kind of sustainability target. On the right-hand side, decarbonization. Great to talk about our journey to net zero. This is really the first time. I think not many companies really having this kind of discussion. We issued our paper in March 2025, and the low carbon emission and procurement, the two projects that we mentioned, Westlake and Plaza 66 Pavilion, our carbon emission actually was down by 42%. And one thing I also want to mention, very proud, 8 out of our Mainland operating properties powered by renewable energy. It's not only about really the achievement in the ESG, but it's saving costs because the cost in this renewable energy is cheaper than the traditional one.

Okay. I think we talked a lot about V.3, but I just want to capture not only the video, but this is really a strategic move that we would like to accelerate, involving much less capital, but more efficient and more strategic in terms of expanding our leadership. So other than other company talking about so-called asset-light, we focus on only the core city where we believe that we will either already command a leadership position or we will be the leader in the market. So with Shanghai, Hangzhou, Wuxi and Kunming. And from a customer perspective, we see that not only the area will be improved, but also the facade, the street level in terms of visibility will be improved. So you can see that from Hangzhou will be triple, from Shanghai will be plus 53% and from Wuxi will be plus 30%. And I think most importantly, which we disclosed this time, all these 4 projects, we will spend around RMB 1 billion only, right? Of course, not only. This is compared to the scale of what we used to be in will be much less. But that gives us the additional GFA that give us opportunities to command the leadership. And that gives us leveraging on our existing resources, not only people, but also the existing team, as we mentioned, existing relationship with the government as well as the existing leadership already, which we command over the years. So if you have a chance to go to Kunming, it's a simple way, just I think other property developers have done in Causeway Bay, for example, outside of their mall, you just make the street more meaningful, more interesting and people will come through that into your mall, right? So we have done exactly the same at that.

Plaza 66, which we are very efficient now. We are getting OP. And hopefully, we will be ready by Q2, and then we will launch and getting the first dollar, as Adriel mentioned in Q3. This will increase our Plaza 66 LFA by 13%. On the right-hand side, I stay with Nanjing Xilu, right? So 13% in the Pavilion. But if you include this project, this will increase our retail by another 67%. So 67% plus 13%, the Nanjing Xilu retail area will be increased by 80%. Not only that, we will have office, we will have hotel in this building. And the good news is this is a joint venture that we will own 60% of that. And then we will -- and the landlord will be responsible for the CapEx to improve the building. And then we are responsible 60% of that into our interior design as well as the internal fit-out. So I think that is the project. Same thing apply in the Wuxi. We will increase our facade, and we will have 40% close to retail space increase in Wuxi, which we are already undisputed leader in Wuxi. We want to be even stronger. And if you have a chance to go to Wuxi, used to be we are on the right side. So we are not in the crossroad between the main road. And once we have that, we have the best facade. We can put on LED, we can really illustrate a lot of brands with a high visibility. And the Westlake, a lot of people say, okay, this is the one that you have not done yet. Why you already expand before you do the first one. But I can tell you that we all know when we bought this land, we need a Phase 2. But this time, we don't need Phase 2 anymore with this expansion because we get the best angle and best corner of this particular juncture. So I think once we have this expansion, we will increase our facade triple and also increase the GFA by 40% for the retail.

Okay. This one, I'm sure everyone will ask Office, we have 5 towers because the Tower A is not ready because we are still doing the internal fit-out. We only have B, C, D and E and E already we delivered to one tenant in November last year. And then if you only look at B C D E, our leasing progress, pre-leasing is 38% -- right, 34% because Tower A account for 50% of the total GFA of office. So because that is not available. But as of today, we already increased to 40%, right? So once the Tower A will be ready for us to lease and then hopefully, we can ramp up. But again, at the backdrop of tough office market, we don't want to be rushed. But at the same time, we also want to make sure that we can lease at a reasonable price. So the team working very hard on this one. On the retail side, last time I recall, we're talking about 80-something percent re-leasing. As of today, we are 91%. So when we open in Q2, we will be ready with 80% opening rate and 90% by Q3. So this will be a one-stop shop and together with the expansion, hopefully, will be with luxury, with the retail, long luxury and with the F&B and with the culture as well as with the and with the museum below the ground. And together with the hotel on the left-hand side, the Mandarin Oriental, this will be opened in early 2027. That's all I have. And now open for discussion and questions.

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[Operator Instructions] I've got some questions on the webcast, but Karl from JPMorgan, would you like to have your first question?

So my first question is about the CEO succession. So I guess the first part of the question is more for Weber because when we saw the announcement back in December, we were a bit -- a bit surprised, right? So just curious what's your thoughts behind your retirement because you're still very young, very energetic. So just curious your thoughts behind that. That's the first part of the question. And the second question is to Adriel. So I guess now we are in the stage of identifying the new CEO. From your perspective, what kind of qualities are you looking for in the new CEO? Are you going to find someone externally? Or are you going to promote someone internally? What's the direction? And is there any time line on when we will be able to appoint a new CEO? So that's the first question on CEO. And the second question is on the Mainland China retail. So last year, I remember that in the results briefing, you mentioned that your outlook for second half is cautiously optimistic, right? So looking ahead into 2026, just curious what's your general outlook? Do we expect tenant sales to still see a pretty good positive growth? And I guess, maybe if you have any colors on January so far? So that's my two questions.

Okay. I maybe answered 100 times already. I will repeat again. Hopefully, if this is not too boring to you. This is always my personal goal even when I was 35. I would like to retire by 55. So don't discriminate the age. I have been in the role for 8-plus years by the time when I leave my office. When -- of course, when I joined Hang Lung, I would not say I will retire by 55. But this is really always my goal to do that. In the media section, I already mentioned -- actually, Adriel mentioned already. My next job, which has been confirmed is my daughter's So I upgrade myself from a to KEI because my daughter is a competitive golfer and I want to spend more time with her, not because I can earn any money from her, but I think if I can afford it, I think family time for me is very important, especially before she move to overseas for university. I think by then, I will be redundant anyway. So I would like to spend more time with them. And also my parents also, they are old enough, and I just don't want to leave them alone by focusing only as a CEO role. So I have a son role, I have a husband role, I have my father's role, and then I would like to balance for that. So this is really not a tough decision for myself. I informed the Board and informed Adriel and Ronnie in January last year, but we can only announce by December. So I think in terms of the shock, maybe a shock to you, but not shock to the company and to the Board because they were informed 1 year ahead. I think I hope it will not create so much inconvenience. I work for a U.S. company for a long time. Everyone can be replaced. I don't believe that no one cannot be replaced. So I truly believe that Hang Lung will be able to find one person or my successor to understand the business and then to do well. So I will stay on, and I'm sure Adriel can talk about my role after my retirement. So -- but I'm happy to answer any question if I have not answered. So I have answered a few times. I hope that if you still say, okay, maybe you have a role. First of all, I want to clear some of the rumor. If someone spread the rumor irresponsibly, I have to say, I have no job. I will not go to another place for CEO role. And then if anyone believe that, I will put money on the table and bet with you. But overall, I'm happily to be the retirement retiring.

So first of all, I do want to thank Weber here for his 8-plus years of contributions. And if you think about our previous CEO, Philip, he was on for about 8 years as well. So I don't think this should come as a surprise, frankly. And it's -- as he said, it's very common for companies to have to go through this. Everybody has their life plans. I think Weber's life plan facilitated by the both emotional, mental and financial freedom to do what he likes and to choose his path is very empowering, and I support that wholeheartedly. So as a company, obviously, that leaves us in a position where we have to find a CEO. Although as he mentioned, it's not a surprise. So we have been looking for some time. When we have something to announce, we will announce it. But for the time being, I don't have anything to announce. What I can say, though, is that the Boards have approved an advisory role for Weber, which will be similar to previous practice. And so there is absolutely no bad blood and absolutely nothing worth flagging in this transition. And so that will all be announced in due course as well, although it has already been approved by the Board.

So I think on the succession, it's pretty standard. We'll work with what we have. On this China retail outlook, it's -- last year, we were cautiously -- not quite cautiously optimistic, but we were cautiously hopeful that the second half would bring us back to parity, and it's done that and more, as Weber just mentioned. And the Q4 for us was record-breaking on multiple levels, both total retail sales, foot traffic, occupancy or technically, maybe we were at a higher occupancy when we only had the 2 Shanghai malls, but that was sort of like 15 years ago. So we're at a record high occupancy, foot traffic and sales. So I think it's really a great way to start our 66th year. And with that 66th anniversary, obviously, we'll be pushing really hard into the consumer, the B2C side of that marketing. So what you saw in the V3 video is our 66th anniversary logo, which we'll be pushing to consumers. But even though we've had a strong fourth quarter, I am still -- I still want to remain conservative and a little bit cautious, partly is because the luxury brands have not had a big uplift yet. They've been doing okay. By okay, that's, in some cases, maybe down low double digit or high single digit. In some cases, in our malls, maybe a little bit better than that. So maybe down single digit plus up single digit. And that is not where the growth in Q4 has come from. The growth in Q4, which I think is very gratifying, has come from non-luxury has come from F&B, has come from jewelry, and that is what we've been trying to focus on for several years now to build a really compelling non-luxury offering in our malls, which means experience, it means entertainment, service, F&B. And so that's what we've done. And I think this is the pudding or rather we're eating the pudding now. So I am still cautious. If you look at LV's numbers, which just came out, obviously, they're down for the whole year, but Q4 again was also up like 1% for them. And so that sort of tracks for us as Well. But it is not so confidence inspiring that I'm willing to say 2026, big numbers, luxury and non-luxury, I'm not ready to say that yet. But I think it's a great start. And I think that if we are able to execute all these things that we've been planning, including V.3, you might not see most of V.3's impact in '26, that will be in later years. But I think the signal, the canary in the coal mine is what we've done in Kunming, which is a simple 67-meter long section of the shop fronts across from our mall. That has brought significant increase in foot traffic from -- at least from that entrance. It has brought a lot of life back into the district -- and it has created a new buzz on social media and within government and within the community on what is happening around our mall. And that is really what we're leaning into as well. So retail, although I'm not yet willing to put my hand up and say back in a really big way, I am willing to say that it is confidence inspiring, and we need to work hard to make sure we capture that.

Am willing to say that it is confidence inspiring, and we need to work hard to make sure we capture that.

Just to answer you about January, our numbers, if you look at the first 28 days, more or less the same as last year. But the good news, this is a good news. The reason why it was Chinese New Year was in January last year. So this year will be in 17th of February. Last year was in January '27, right? So you can get my point, right? So if you have the similar sales of last year's CNY, then I'm pretty confident the 2 months will be good, right? So I think this is what I can share as of now. Whether that fully reflects the recovery, don't know yet. But I think I'm not saying that we were forward-looking enough. The reason why when we dropped so-called our luxury definition and non-luxury mall definition, a lot of people at that time say we worry about luxury and you are retreating from luxury. No. We already see the behavior change of customers. And that's why we don't want to label that particular mall as a luxury mall with only 15% LFA for luxury. We want to open it up and make sure everyone should come. That change of mindset, see our occupancy increase, our footfall increase, our luxury doing well, not because we just changed the definition. It's just because the behavior has changed. So that's why I want to correct some of the people say, oh, because we worry about luxury, no. We continue to rely on both luxury and non-luxury. But so happened in 2025 was driven by the long luxury growth, which we were spot on in 2025. So there's a lot of continuous refinement. There's a lot of way that we need to engage with our customers. But when you look at our LFA of luxury, we did not reduce. We are more or less the same, but we focus on reshuffling the luxury to capture the growth opportunities for our mall.

Maybe I'll take the opportunity just to expand that into Hong Kong. So when I look at China retail properties, I think what I'm seeing so far is that it's cyclical. If the economy comes back, which we expect it to do, if not immediately, at least in the medium term to long term, we're still bullish on China, then I think retail sales can come back and will come back. So I think that, that is a cycle. On the other hand, here in Hong Kong, as I'm sure we all know, retail has been hit very hard by people traveling to the Mainland, by the lowering in standards of service, the offerings. And so I think in Hong Kong, combined with the broader economic environment, I think Hong Kong is a little bit more structural when it comes to the retail landscape for landlords. And so in Hong Kong, I think we've done quite well considering all things considered. As Weber mentioned, there was sort of a one-off hit in Causeway Bay. But if not for that, then we would have been pretty much flat. So we seem to have found the bottom in Hong Kong retail. The question is how quickly will it return? And I'm not yet confident to say that it's going to come back very quickly. So I'm not holding my breath. So I think Hong Kong is a little bit more structural while the Mainland retail is more cyclical.

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May I clear some questions from the webcast. There are some questions on the financial management. So what's been driving down the net gearing ratio? This is the first question. The second question is, what is the CapEx guidance for the next few years?

Let me give you some high-level figures for the CapEx first. So for this year, 2026, the CapEx will be around JPY 3.1 billion and 2027 would be around TWD 2.6 billion. And subsequent year, it will go down continuously. The figures I show you have already included the HKD 1 billion attributable CapEx that we have to spend going forward in the V.3 strategies. But substantially, those CapEx will be incurred, I think, from 2027 onwards.

And sorry, just timer. And so for those of you who have watched us for a long time, you remember that for many, many, many years, our CapEx was like TWD 4 billion to TWD 5 billion per year. And so this is a meaningful reduction.

That's right. And for the gearing, the question is what are the factors which help us to bring down the CapEx -- sorry, the gearing. So as I mentioned, the scrip dividend arrangement in the past 2 years has helped a bit because the cash outlay was much less in terms of cash dividend. As you may know, our major shareholders, HLG elected opt for scrip dividend so that HLP can preserve more cash. I think more importantly, we spend less CapEx. And as highlighted by Weber, for contract sales, actually, even though you look at the P&L, the revenue recorded is not substantial. But actually, starting from Q4 2025, we had much more disposal in residential, particularly in Hong Kong. So we have already sold, I think, around 16 units in 1 quarter. And also, we have some disposal in Blue Pool Road as well. So I think the recovery of the Hong Kong residential market provide us a good window to accelerate this disposal. So hopefully, if the momentum continue, we should have more disposal for at least Hong Kong resi in the coming year.

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Okay. There are 2 more questions related to dividend. The first question is about scrip dividend. Is it going to be the last time we are having a scrip dividend scheme. The second question is, will the management consider a special dividend for the 66th anniversary.

So it's hard to say if this will be the last or not. That depends on the numbers when it come to midyear and end of year. But I think what we have been relatively consistent in saying is that this is not something that we necessarily want to do long term. The question is what's the right timing. And as we have new projects coming online in Hangzhou's opening, hopefully, April, midyear this year, then the hope is that there will be less pressure on the financial side. And therefore, we would not need to issue script or offer scrip dividends as a way to ease our interest payments. Our gearing. So there's a broad intention not for this to last too long, but specifics will have to be up to the Board when interim comes around. And on the special dividend, yes, maybe if you're in one of my Weixinun, then there will be a lot of red packets going around. But in terms of special dividends, I'm not sure that, that's something the Board is really thinking about.

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Cindy from Citi.

This is Cindy from Citi. I have three questions. First is a follow-up on China retail. So we mentioned non-luxury outperformed. Last year, we added a lot of lifestyle and beauty. So I'm just trying to think of what will be your leasing strategy into 2026. Will you continue to add on, experiential non-luxury space? And how do you think of the, say, temporary underperformance of luxury? Will you like say, I think Shanghai Mall retail sales kind of underperform that of Wuxi and Dalian. So is it because of the difference in the luxury positioning? Or what are the reasons behind? Second question is more on the underperformance of Wuhan and Shenyang. So those obviously has been undergoing the repositioning. I'm just wondering if the whole process is, say, aligned to your expectation? And when will we see the stabilization in the performance? Is it '26 or even '27? And what would be the shopping malls after the repositioning? Then the third question is actually also on dividend. So I'm just trying to think with gearing lower, with CapEx lower, with more rental incomes ahead, when would you start to consider maybe even increase dividend? Under what scenario when earnings back to what level we will start to consider that?

I think I believe which also get some information from the luxury tenant. Adriel and I went to Paris in December. Some sort of not brainstorming, but getting some feedback from the tenants. I think in general, overall, everyone is cautious, but they still look for mid-single-digit recovery from a tough year of 2025. So I believe that there's a lot of consolidation happening because a lot of maybe some brands, they overexpand themselves. So in terms of consolidation is happening. So lucky enough that they don't consolidate ours, but they consolidate the business to ours. And therefore, there will be hopefully some opportunities for us. So I think this is more about luxury. But the luxury side, I think the momentum continues. The athleisure, I'm sure everyone talked about. The good news now is that it's not only one brand. They have a lot of brands doing pretty well. So I think it's quite across the board. Not only athleisure, but if you look at POP MART, for example, some of the IP, Jelly Kat, they are doing pretty well. So I think we need to look for what today is what customers really want. F&B, we find out in a very tough market 2025 is that we have to offer various price range. We can't offer only Michelin 3-star and stop there. We have to offer something very cheap in order to attract tenant/customers as well as footfall. So I think I will not believe when the clock click from 2025 to '26, things will improve or change dramatically. The momentum will continue. The footfall is continuing. So I think we believe we still look for a single-digit increase on sales, which I think should be doable based on what I just mentioned, the first 2 months, if we hang on for January, but get an upside on February, at least we should have a good start. So I think this is first part of your question.

Second part, about the I will not say struggling, but the repositioning one because of the competition. For Shenyang first, we are building a sports park next to Shenyang using the sites that we stopped constructing, but turn that into an urban park. We want to really leverage on the park facilities to make this become an urban hub for sports, for athleisure, for F&B, for some other places. So I think this is ongoing and then the park will be opened by Q3 next year -- this year, sorry, Q3 this year. And hopefully, with the park with a lot of interesting, you can name it, pickleball, basketball, whatever venue that we can offer. So pet kind of facilities, we can attract different traffic into the mall, and that will facilitate more footfall into the shopping mall and speed up the trade mix improvement.

Heartland, I can see -- you can see the second half already improved, partly because of one of the big competitor opened in 2024 July. So when you normalize it, the drop should be less. But nonetheless, we have to work very hard to improve our occupancy. So you can see we have 5 points jump in terms of occupancy. We are improving a lot more F&B offers. I can tell you the challenge in Heartland is not luxury. The challenge in Heartland is the luxury because the one next to us suffocate us not allowing anyone to open with us. So the key for us is to how to break through to get the L luxury going. So we have some strategy. I cannot disclose to you. And hopefully, by the middle of the year, you can see we have some breakthrough. So when we get the L luxury going, you will have a footfall. Once you have a footfall, everything will be improved. So I think it takes time. Of course, I don't want to always go back to those little brother need helps. But the good news is out of the 10, we have 7 good way, good ones. We have 2 a little bit struggle. We have one actually on the good foot with a high occupancy, and we just need to make sure that the reshuffling on tenant mix will be relevant to the customers. We have to be on top. on what's going on in the market and make sure that the tenant mix will be relevant. I think that is the key.

The last one is the dividend. Yes -- again, I don't want to give a false hope. If you look at our gross and the net interest, we still have a bit of capitalized interest will be realized to be a real interest. That will drag us a bit even though if we have revenue increase. So I hope that maybe hopefully, we still need to go through the next 24 months. And once we get through that capital interest and then when we see the earning improvement, and then I'm sure we are more than happy to improve. So this is not really -- this is what we can mandate the team to do, but this is what the earning will tell the story. And then we are already paying up to 81% of our earnings. So I think if you look at even with the capitalized interest, we are more or less deliver almost all. So I think you can calculate your own mathematics. So I think we are trying our very best to maintain it. So again, go back to the tough decision that we have made by reducing dividend last time. So I think that a lot of you even asked me, should you cut more? I remember that you cut -- why do you cut to 0. And of course, we have to strike the balance. We have to make sure that we find the place that we'll be making the shareholders as well as the company, both can be a win-win. And hopefully, we can sail through the tough time. And we see a little bit of the KPI going into the right direction, the gearing now coming down, the borrowing coming down. The CapEx already peaked. So I think a few years ago, when we talked about we have to lower down the gearing, get the cycle -- recycle back, we are working it. We are doing really hard on that. And hopefully, you can see that.

I would just add that we've previously said that the first priority was to deleverage. It still is. And so we do want to reduce our gearing and interest costs. But do we necessarily have to get to 0 borrowing before we start increasing -- thinking about increasing dividends? Not necessarily. So it may not be that long. It will be somewhere in between, and it will be a discussion. And obviously, it will depend on the trajectory that we see the business taking, especially in the Mainland.

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Mark, from UBS.

I got about three questions. I think the first question is regarding on some -- maybe the 2 Shanghai malls, we got excellent tenant sales. When do management expect that should be reflected in the rental income? Or should we expect the non-luxury sales growth will be more base rent focused -- it should reflected maybe 3 years later? I think that's the first question. The second question, I think it will be more on the net gearing side. So we definitely want to fasten the disposal for the Hong Kong DP, right? But how about for the China, do we expect maybe dispose of China office like the CREIT or more innovative lower funding cost method, for example, like issuing CV, et cetera? That's the second question. And the third question will be more on Adriel. Do we see the current structure for HLP and HLG is optimal? Or do we have any plan to -- any change for the corporate structure?

When will sales turn into rent?

I think in Plaza 66, it's quite optimal, I would say, because when you see the sales increase, you get the rent increase, which is more or less, I would say, when sales come up, you will get the impact of it. In Grand Gateway, it used to be always our fixed rent is much higher than the turnover rent, right? So in the down cycle, we're happy with the high fixed rent. But in the off cycle, we may not be able to capture all the upside. So I would say if our sales and footfall continue to improve, you can see the fixed rent will be improved, right? So if you really dig into the details of our Mainland this year, even with a very tough luxury sales, our fixed rent increased by 2%, right? Our sales rent basically flat, right? That's why our total increased almost by 1, right? So I would say, in a very tough time, we still managed to get the fixed rent increase because we always believe more at the fix will be beneficial to the landlord rather than leave everything on the variable, right? Now of course, on the other side, when the sales go up very, very quick, then you say, why don't you have more sales rent? I can't basically have both, right? It really depends on the nature of the properties as well as the competition next to you. I don't want to mention in Shanghai, the competition is very keen. That's why to us is that we have to make sure that we get the best offer for the customers. We have to get -- make sure that the occupancy cost will be reasonable. Yes, you can drill and get and the car to the max, but you might push the tenant to the next door. So that's why we are very cautious about doing that, right? I'm sure you understand what I'm talking about, right? That's why, on one hand, we want to be more energetic in terms of more footfall in the market. But at the same time, we want to be reasonable, and therefore, we can get the best tenant mix. Once you have best tenant mix with the best footfall, this is the best defense for any competition. So the second, I'll pass to.

Maybe I have to answer your second question about gearing and you mentioned about CREIT. First of all, don't speculate Hang Lung is working on any CREIT. Some of you write paper like this, which was misleading, okay? But definitely, we -- my team keep monitoring the latest development of the CREIT market. As far as I know, last year, there were 11 CREIT listed in Mainland. Most of them are either those mass market outlet mall and some of them are community malls and so forth. So this is interesting, and I've noticed the yield has compressed from the IPO price. But nonetheless, for us, we are still -- the key challenges that we have observed is even the CSRC and the two exchange in Mainland, they spend a lot of effort to promote the CREIT product. The -- we have not yet seen a very clear or clarity on the capital flow from offshore -- from onshore to offshore, very little clarity. And I think as a Hong Kong-based listed developers, it's very difficult for us to do something without a clarity, not mention the tax implication all this. So I think for us, we will keep learning and monitoring the market. And of course, you mentioned office, if there is a very active -- now they call commercial REIT because previously, they call consumption REIT, right? If there are investors who are interested in Mainland office, we are happy to explore. But as far as I know, the regulators, they encourage the sponsors to do retail-related REIT. Of course, you can have some office element or even hotel, but the majority are still retail related as far as I know. So I think give us some time to study and feel free to share with us if you have any insight on it.

Yes. And I think tying into that, with our priorities still firstly, to deleverage, to degear. We will naturally look at opportunities to sell down. We'd prefer to start with noncore. As we have said many times before, noncore property disposals are something we look at on a regular basis. But of course, when push comes to shove, the prices are never great. So we've not been able to move maybe as quickly as we would have liked on some of them. But as our gearing starts to come down, as our interest expenses start to come down, the pressure to do so is a little lower. And at the same time, the market seems to be returning at least a little bit. And so the opportunities may increase. So it's always a balance, how much do you need to sell. And frankly, we don't need to sell. It's just a matter of preference. But then also how does the market look that we're trying to sell into. We've been able to move residential relatively well, I think, over the past 12 months, and we'll be able to book a lot of that this year and not rather than last year when they were contracted, and we hope to continue that. So we're still looking at all options, but hopefully, the market comes back and works in our favor. On the structure, it's something that we look at, again, on a regular basis, what is the optimal structure? Obviously, we have a lot of -- not a lot, but several peers who have been making adjustments and tweaking. Some of them have done quite well in adjusting their approach to the governance and the holding structures. And so it's worthwhile for us to look -- to watch and learn, but we don't have anything to talk about specifically.

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Okay. So let me clear one question from webcast regarding Westlake 66. It's a positive sign, a positive number to see 91% of commitment rate. So the opening should be 3 months from now. So how is the opening strategy as is it going to be event driven? Or is it going to be CRM driven, especially on the VIP segment? And also on the tenant profile, anyone to highlight here?

I think you name them all. We have to do events. We have to do good tenants. We have to push on sales. So we already recruit quite a decent number of members already around the areas. So the preheat has been done since the middle of last year. I think we are working very hard now. We hand over 90% of the space to our tenant, and then they are submitting drawing, start to renovate. And then this is really the last mile every single mall when we open, we need to push and making sure that they open on time. So we will come up with some incentive. Hopefully, everyone will be according to our timing. So I think overall, to start with, I think this mall will be a one-stop shop, including luxury, including long luxury, including culture with a beautiful fourth floor as a garden. We call it Oasis and then with the on the B2 to really have a museum down there. And then we will have arts. We will have hotel. And then with the expansion, we have a lot more space. So I think it will not be different from what we have done in Kunming and what we have done in Wuxi and most likely similar to Grand Gateway to start with, right? Because at the end of the day, there's no more Plaza 66. You can't only do luxury because Plaza is the one that we really first in the market, and then this is special. This is home to luxury. But on the other hand, I think with the space and with the expansion that in a few years' time, I think we will be able to do one-stop shop in that area. So I think overall, I think we are pushing very hard on every step on promotion, on even have artist coming at the launch, everything, right? So hopefully, we can invite you to come in 2026 second half.

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May I take one more question from webcast and I send the last question to Karl from Bank of America. So there's a question from webcast, which congratulate us on a strong year of contracted sales in 2025. So any guidance for '26 in terms of the sales, whether it's from the DP or from our IP disposal?

Well, I mean, if you look at our inventory, we don't have that much left to sell. So I mean we have a little in China -- sorry, so in the Mainland of China, we have a reasonable stock. I don't expect that all to sell like hot cakes. Some cities, as you've seen, are much stronger than others. Wuxi is doing particularly well. Wuhan is doing a lot less well, and that's a function of the various economies and the regional economies. In Hong Kong, obviously, we do have a couple -- we have Jardine Lookout, we have Shuen Hill. And then, of course, we have the remainder of Aperture. And those are all things that we're going to work on. But in terms of total number, it's relatively limited.

I think our imagination, we have some IP to dispose. We just disposed one in a very top building. Hopefully, we can dispose more. That we have 50-something units. So I think with the market improvement, I hope and I wish we can dispose more. We have 4 more Blue Pool out of 18. So if we can sell 4 more, that will be great. And the Wilson Road as well as the Souzen Hill, we will work hard at least to get all the master layout plan done first. So if someone want to take it, take it. So I think there's a lot of way we can speed up. But of course, I want to also strike the balance between the shareholder return, right? If, of course, we need the money for survival, of course, we can sell at cost. But if we have some briefing space, I want to make good money for the shareholders. So I think overall, in Mainland, again, Wuxi doing pretty well. We want to continue to do that. And then Wuhan and Kunming are a little bit tougher because the market is not up there to the price and then we are really premium in the market. We just need to wait a little bit until the sentiment improve. So overall, I think, of course, if there is any long call available, which the price is attractive, of course, we will look at it. So I think overall, there are some, but there will not be a lot. And also, we have 94 Aperture left, and then we would like to dispose as much as we can. If we can ride on the momentum of 60 in the last quarter of 2024 -- sorry, 2025. I think if I just do the straight line, we should be able to sell 94 in 2026, easier for me to say when I retire, right? So I think overall -- I think if the market continue to improve like what everyone said, I think we have good chance to dispose a lot more. But of course, we don't have a guidance because I don't want to give you a false hope. I just want to sell at the right price. If the price is right, we want to sell as quick as possible.

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Karl from Bank of America.

Yes. Actually, one of my questions was going to be about the Summit. And given the very hot luxury residential sales market, are we having some discussions there? Is it just a matter of just pricing? And that sounds like we are willing to sell if the price is right. And second question is, we touched on Hong Kong retail a little bit, but can you give us a little bit more color on the rental income outlook for Hong Kong, presumably still relatively stable. Just want to give you -- give -- ask a little bit about Hong Kong.

Maybe I help to answer the submit first. I think, first of all, other than the disposal that we have announced last year at HKD 160 million, something like that for unit. We have also leased out one unit at a very good price. I think if you look at the news, it's HKD 300,000 per month. So again, I would like to emphasize, it is still an investment property. At the right price, if you are interested, no matter lease or buy, please come to me. Okay. But please don't know me, okay? You know where I come from, I come from investment background. So I am quite demanding on the price. But nonetheless, my team and I are working hard to strategize overall how to put the asset into the market. The second question is on the...

Hong Kong, I think as Adriel just mentioned, I think we are cautious. If this is structural, I think we need to wait and see whether the behavior of customer will come back a little bit more back to Hong Kong because last year, I'm sure everyone talked about everyone goes to Shenzhen, right? It seems like it dialed down a little bit now. For our neighborhood mall, the impact is minimal. Now we see a little bit more tourists coming back. So that should be beneficial to our commercial district. So I think we will have some reshuffling of tenant mix in Causeway Bay. That will have some why period, and that hopefully will be very short. That hopefully also give an uplift of the tenant mix for Causeway Bay and hopefully, that will bring the sales increase and bring excitement to our Fashion Walk. So I think overall, we are cautious. I can't say cautious, optimistic because whether this is structural or not, we still need to wait and see. But hopefully, really the peak of people leaving Hong Kong and go to the north a little bit, I would say, the peak has been passed. Whether it will dial down back, everyone come back and shop here, wait and see.

Just one supplemental question. Actually, we have seen a very good improvement on the footfall in Hong Kong. So if you go to Causeway Bay, go to the Peak, Hong Kong, very crowded. So I think the challenge to not only Hang Lung, but all the landlord, how to translate the footfall into the sales is key. And as mentioned by Weber and Adriel, actually, we are working on very hard to reshuffle some of the tenant, particularly in Causeway Bay and the So please give us some time. We are working on this.

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So ladies and gentlemen, this wraps up the analyst presentation for our FY '25 final results. Thank you very much for your participation. We'll see you next time.

Thank you.