Sun Hung Kai Properties Limited Stock

Good afternoon, everyone, and welcome to the annual results analyst briefing. Before we dive in, I'd like to take a moment to wish you all of you a very happy metastatic in advance. And as usual, we will start with the group's financial review please note that all the numbers are in Hong Kong dollars unless stated otherwise.

For the year ended June 2026 the group's underlying profit was $22.9 billion, year-on-year increase of the annual results. And this growth mainly in higher profits from property development in Hong Kong and lower finance costs. The group's leasing and other recurring income remained resilient during the year. After factoring in net effect of realized value gains from the sale of investment properties and a net revaluation profit on the investment properties. The reported profit came in at $21.4 billion, an increase of 11.1% year-on-year. The underlying earnings per share was $7.89 while reported earnings per share was $7.39.

As for dividends, the board has recommended a final dividend of $2.93 per share. an increase of 4.6% from $2.80 last year. Together with interim dividend of $0.98, total dividend per share for the full year will be $391 -- to break down the profit by segment. The profit for property development was about $8.3 billion, largely stable year-on-year. increased contribution from Hong Kong offset declines from the Mainland. For Property rental, the group's net rental income increased slightly by 1% at around $18.6 billion which includes a 1% decrease in Hong Kong and a 6% increase on the Mainland. Hotel business saw an operating profit of $728 million. an increase from the $615 million in the last financial year. Profit from our other businesses came in at about $4.6 billion.

Reflecting a 6.5% decrease year-on-year. Altogether, this brings the group's total operating profit for this financial year to $32.2 billion. which remains stable year-on-year. Turning to our financial position. As of 30th June 2026, the group's net debt stood 7.6 billion. Gearing ratio improved to 10.7% from 13.5% in December last year. Interest cover for the period came in at 8.5x compared with 6x a year ago. The group always upholds prudent financial management. Net debt and net gearing ratio has declined further since the peak in December 2023. With a strong financial position, the group is well positioned to capture land acquisition opportunities in Hong Kong. The group also remains our top rates real estate company in Hong Kong.

Due to lower debt and cost of borrowing, the group's net finance costs have gone down by 33% year-on-year. The group's debt mix is outlined in the table we have also achieved a balanced debt maturity profile. Moving on to our Hong Kong Land Bank. As of the end of June 2026, -- the group's total land bank in Hong Kong was about 56.4 million square feet of attributable GFA. The pie chart shows a breakdown of our completed properties and those under development.

During the year, the group added 3 sites to land bank through various channels. They are shown in the table. After the financial year ended the group was awarded the tender for Tin-16station package 2 property development just last week. This package 2 will provide over 5,500 units to be developed and sell in places in an orderly manner located in a mature community in Chunmun South, the project comes with a podium Mall and over excellent transport links.

Let's turn to the property development business in Hong Kong. During the year, the group recognized profit from property development reached $4.6 billion in Hong Kong. -- a significant 44% increase year-on-year. Margins started to improve since the second half of FY 2026, driving the full year level to 1% -- when we include the underlying profit from the sale of Dynetics and Susan Peak, margin was a higher 16%, and we expect the book sales margin to improve gradually. About $22.8 billion of contracted sales has yet to be recognized. That includes around $21 billion to be recognized in FY 2027. During the year, the Hong Kong residential market continues to recover, primary market transactions were active.

The group achieved contracted sales of about $38.1 billion in Hong Kong. Major projects contributing to the sales are shown in the table here. We will launch a diverse mix of projects appeal to potential buyers. Major projects to be launched in the next 10 months are shown on the map. The next section is our Hong Kong rental portfolio. During the year, there was a modest increase in the group's gross rental income. Overall average occupancy remained stable at around 92%. High occupancy rates and new contributions support office rental, retail portfolio held firm Rental rates and occupancy increased for residential leasing. Our Hong Kong retail portfolio achieved an increase in tenant sales. Occupancy reached 95%. The group carries out several strategies to strengthen our performance may are listed on this slide.

The group also adapts quickly to market trends and keep changing the tenant mix. Tenant sales increased, thanks to strong demand for jewelry and watches as inbound rim continue to grow, our most interest area outperformed in the portfolio we enhanced customer loyalty through the program the points. Overall member spending increased by 27% year-on-year. The growth in VIP member spending was even stronger to facility drivers, the group will continue to install more EV fast chargers in these properties. For our office portfolio in Hong Kong, overall occupancy remained stable at 90%. Both IFC and ICC achieved high occupancy, thanks to new leases from big companies and in-house expansion. Even so, the recovery in office market remains uneven with some districts outperforming the overall market.

International Gateway Center IGC, is our latest landmark in West Harlan. 2 pairs of office towers provide super-grade A office space. The towers over grade air plus rail transport length, smart technologies and high-grade standards. The Podium Mall stage IGC is going to open in phases from late 2026. Initially, the more we provide restaurants and shops for all these tenants high-speed rail passengers as well as West Talon visitors. But we have more than IGC and West Talon. Our many projects help to make the district a well-class hub. Art Square tows project, ASC, is under development in the West Holland cultural district. Together with IGC, this new project will join the ICC 2 luxury hotels and more to form a commercial cluster sending 8 million square feet.

They complement each other and create great synergies to strengthening our recurring income, we will focus on ramping up occupancy for new projects. They include IGC in West along, the angle in Hunan and Gilenya in Tai tech. Many projects are on the way, including the more stage IGC and ASC in West Conlon. Turning to our property business on the Chinese mainland. As of the end of June 2026, the group's total land bank on the Mainland was 64.7 million square feet in terms of attributable GFA. Again, the pie charts break down our completed properties and properties under development. Moving on to property development business on the Mainland.

During the year, the group recognized property sales on the mainland increased to about $10 billion due to higher sales volume. Operating profit was $3.7 billion. Over the next 10 months, the group will launch new residential projects across different cities, about $0.8 billion of contracted sales have yet to be recognized. All of them are expected to be recognized in FY 2027. Moving on to our rental business on the Mainland. During the year, the group's gross rental income from the Mainland rental portfolio increased 5.2% to about $6.5 billion. In RMB terms, it went up 1.5% to RMB 5.6 billion, an increase from retail portfolio offset a decrease in office rental. On the Mainland, our integrated projects with great transport assets provide dynamic commercial space. The retail and office component comments each other and create synergies.

At our Landmark ITC project in Shanghai, August TaoBwas completed during the year. It has attracted keen interest from major companies. ITC mall will open in phases from the second half of 2026, starting with the floor connect to Metro station. Hotel and Shanghai ITC held its grand opening in March 2026 the hotel is ramping up its occupancy. The spending portfolio is expected to bring rental income for the group. In FY 2026, the group increased it to fully own the IGC Mall in Guangzhou and Konacranzhou Hotel, bringing additional income. Major projects are in the pipeline. CatCentral Guangzhou South aumo in Guangzhou will open by end of 2026. Another new mall in Hangzhong IFC will open in phases from the second quarter of 2027 let's turn to our hotel business.

During the year, revenue from the hotel portfolio increased 4% year-on-year to $5.5 billion. Operating profit increased 18% year-on-year to $728 million. Luxury hotels in Hong Kong outperformed at the rebranded the Royal Garden Callon is renovations will be completed soon. On the Mainland, the risk Halton Shanghai Pudong achieved record high room rates. Moving on to sustainability. We remain committed to ESG. Please refer to this slide in the appendix for more details. Next, I will summarize the market and business prospects. In Hong Kong, trade and domestic demand will drive steady economic growth. incoming talent and executives will support housing demand. While the city's superconductor role will help support office demand. On the Mainland, -- we expect strong exports and policy measures to support resilient economic growth. Measures for improving quality of homes will foster healthy development of the housing markets.

As for the group's business prospects, with our strong financial position, we can replenish the Hong Kong land bank when opportunities arise. We will maintain prudent financial management, as always. On property development, with our trusted brand, we will drive sales through quality and innovation. With a strong launch pipeline in place, -- we will continue to roll out new residential projects, catering to diverse buyer segments. On property investment, we will adopt proactive strategies to upgrade our existing properties and aim for high occupancy. New projects like IGC and West Kowloon are expected to generate rental income gradually. I will end this presentation by highlighting our quote from the Chairman's statement. The group will continue to invest in the city's future. Through building landmark projects, that foster both economic advancement and social progress.

By Hanting technologies to enhance productivity and competitiveness, the group will deliver quality properties. -- that are modern and customer-centric, meeting the evolving needs of residents and talents. -- guided by its time passed strategies and long-term vision, -- the group will continue to strive for sustainable long-term growth while contributing to further development of the city, it proudly calls home. This is the end of my presentation. Thank you.

Thank you for joining the greeting again. Let me introduce the panel to you. Starting from your left, Mr. [ Henry Wang ], Member of the Executive Committee, Mr. KW Lo, member of the Executive Committee; Mr. Allen Fung, Executive Director; Mr. Christopher Kwok, Executive Director. Mr. Victor Lui, Deputy Managing Director; Mr. Raymond Kwok, Chairman and Managing Director; Mr. Mike Wong, Deputy Managing Director. Mr. Adam Kwok, Executive Director; Mr. [ Eric Chang ], Executive Director; Mr. Frederick Li, Group Chief Accountant. May I now invite our Chairman and Managing Director; Mr. Raymond Kwok to share the key message of today's briefing. Mr. Kwok please.

Good afternoon. Ladies and gentlemen, thank you for joining today's post results briefing. Before we go into the Q&A session, let me highlight some of our key developments. Although the global economic environment remained volatile and uncertain, the group continued to achieve business growth for the year under review. We achieved strong contracted sales in Hong Kong of about $38 billion in attributable terms. Over the next 10 months, we're going to launch more new projects, providing mainly small to medium-sized units. They include a new phase of CRC and new projects in Tongxing, Tiwai to North and CET1 in Chapin. As you already know, we are excited about our successful bid last week for the Timon A16 Station Package 2 property development project.

This large-scale residential project is next to a future MTR station, making it 1 of the few new railway topside projects. located in a very mature community. Together with the package 1 project we won late last year, we are confident that we will build another landmark residential cluster offering comprehensive amenities and exceptional transport connectivity in Hong Kong. With our strong financial position, we will continue to replenish our land bank when good opportunities arise. Meanwhile, the group is moving forward with 8 projects in the Northern metropolis, which will provide some 10,000 U.S. Central units in essential, commercial and transport amenities.

We shall continue to support this strategic development, closely monitor any updates and explore potential opportunities. On property investment, we are furthering the transformation of West Kowloon into unique hub of financial services, wealth and asset management, organ culture retail, leisure and entertainment in Hong Kong. Our IGC office towers are top to high-speed rail station were completed during the year. we've handed over 1 tower to our tenant UPS earlier this year, a number of renowned insurance companies and multinational corporations, including AXA have also committed to leasing space in IGC. The Podium Mall at ITC has been named Stage ITC, and we will open in phases starting from the end of this year. The Art square towers next to music will be completed in 2027. As part of its continued investment into the West Couling commercial cluster -- we also plan to upgrade and renovate 2 luxury hotels, top can station.

These new projects are joining ICC, our 2 luxury hotels and the shopping mall to form a commercial cluster of around 8 million square feet with fewer new supply of super Grade A offices in Hong Kong over the next few years, we expect our ITC and the Artisan Square towers will be able to capture tenants of demand for the upgrade and future expansion. For our retail portfolios in Hong Kong, tenant sales went up and the malls maintained high occupancy. We replanted a mall in Callon East and named it the angle shops are opening gradually.

Our loyalty program, the point achieved a strong growth in terms of member spending. The growth in spending was even stronger for the VIP program, the point gold. For our Mainland properties, the group achieved attributable contracted sales of about $2.2 billion. Tenant sales at major malls grew steadily. In Shanghai, our ITC mall will open in phases from the second half of 2026. The new ITC Tower B is the tallest building in Puxi. This office landmark has started kicking in tenants. In Guangzhou, our group increased is titin the IGC Mall and Conrad Guangzhao Hotel at inhaler to 100%. We will continue to ride on their prime locations and mature operations to further enhance their business performance and overall asset value. Looking ahead, the group has full confidence in the long-term prospects of the nation in Hong Kong.

Under the national 15th 5-year plan, Hong Kong will further strengthen its role as an international financial center. -- as well as its role as a superconductor and a super value adder. And Hong Kong is going to announce its first 5-year plan soon, which we serve as a strategic book paint for the cities comic development we will capitalize on these opportunities and continue to develop landmark projects. providing a modern and user-centric properties and services that not only for the economic advancement, but also build a better community for Hong Kong thank you. SP1

[Operator Instructions] Now lets have the first question, please the gentleman on your left side.

.This is Karl Chan from JPMorgan. First of all, I very much look forward to seeing our new office in at Square next year. Okay. So I have 4 questions. The first 1 is about the Hong Kong residential market. Just curious, right, because we have seen a very good year home prices have been up by 12%, 30% year-to-date, but we do see more potential overhangs or headwinds in the second half. For example, the U.S. interest rate is still quite uncertain whether there may be a hike -- and also, in Mainland China, there could be a bit more tightening in the coarse border investment control. Just curious in this context for Songa -- how should we consider the pricing strategy?

Would we consider doing a bit more price adjustment to stimulate sales? And especially for Qutong project, how would this affect our strategy in to -- and also just generally, what's our general outlook for the Hong Kong home price and volume for this year and maybe next year as well? So that's my first question on the Hong Kong residential market. The second question is about Hong Kong DP concrete sales. Just curious, after existing our target this year, what's our latest Hong Kong DP contract sales target in the next financial year and for the long term, what would be the reasonable long-term normalized sales annual sales level in your opinion? So that would be my second question on the third question is about margin.

So I think our investors are really glad to see that we see a bit more improvement in PDP margin. Just curious, what's our guidance for the next financial year and maybe for the next few years as well. And because we all remember that in the good old days, we used to have more than 30% margin, right? Just curious, do you think a return to more than 30% margin is realistic in the near term or medium term? So that would be my third question on margin.

And my fourth question my final question is about capital allocation. So what's our latest guidance on dividend -- and would management consider revisiting the dividend policy. For example, would you consider shifting to maybe based on rental income or maybe just like for some other companies, they just adopt a progressive absolute DPS. So would that be something management may consider changing in the near future. And finally, do we have any plans to issue new shares, convertible bonds, warrants, to optimize the capital structure in the near term. So that would be my 4 questions.

Yes, I've answered the first 3 questions regarding the market. The Hong Kong, the central market remaining strong momentum in the first half of this year. I think it's quite natural to see that our transaction module in recent months. But when we look back the history of Hong Kong, each party cycles last for a couple of years, and we are only at the very initial stage of recovery and back by the influx of talents and students we have also seen that a vibrant leasing demand even came earlier in this summer.

Actually, our residential vans have exceeded the previous peak in and double trend continues, this will induce more the investor on banked and also renters becoming home buyers. As the demand for retential commendation sustained and notably, the inventory for sale among developers are also shopping that will support the pricing of new projects. I would expect more volume in the coming months due to a couple of new projects. So overall, we would expect that market would continue to perform solidly for the rest of the year and the like. Regarding the tightening of the capital outflows, I think it only hinder market sentiment a bit and won't have been the significant impact in the long run.

As we all know that for mass project, most of the purchases belong to local end users and upgrades. For the luxury sector, especially the top tier segment, -- if the capital are from the main managers, those capitals have been positioned in Hong Kong for quite long and we even set up local company here. Example, have seen that we have a couple of transactions in Victoria Harbour and Poland and Harbor. If those capital from the main lenders, they are actually becoming Hong Kong Peminvesten already. So overall, as long as Hong Kong remain attractive as an international financial center and wealth management sector.

And together with its with the load regime and very limited supply of high-quality development. I think our markets can sustain in a similar strong momentum in the longer run -- on our sales plan, we have a very successful launch of Ranpak in Chile earlier this year, followed by Garden Regency, which is also very well received. In the coming 10 months, we have a couple of projects. Lane, CFC Phase IIs in this month and also the only project Phase Ia lets to mall at the end of the year. In the first quarter of next year, it would be our Taiwan Pesenti project and also the KuthaseI -- in second quarter, it would be our silent project is to the MTR station and also the Tonsan project, Phase Ib. Apart from this, we may also know that we shall continue to dispose our luxury units like cleans and harbor and also Victoria Harbour in the low coastal.

You may also notice that we have created a lot of transaction on premium price of the area. -- we have achieved total sales of $38 billion in last financial year, which is exceeding our target. And for this year, we are setting our target at $33 billion taking into consideration of some uncertainties of B-cell pools. Certainly, we hope we can get all our sales content earlier so that we can put more revenues on sales. On the margin, I think currently, under the current market condition, I think a 30% price margin may not be real estate as low land sales have been very, very competitive. But overall, as I said, for March project, we have we have like Ceras and Tongon project, which we can aim for a quicker as a turnover. And for luxury project, we have Kulun Harbor and Victoria Harbor.

Overall, I think we can achieve good and reasonable margins in the long run. And yes, the last question on Koton, we are going to launch the first phase of the Guten project mix to the season in early next year. Our project is occupying the most permanent location among other peers as being closer to MTR station and also with public transport interchange below. Our problem is we also have a sizable commercial space which provide a very comprehensive amenity, different amenities and also via lifestyle for all our buyers. So we are very confident on the future launch of the project.

For the residential sales market in the Mainland, Adam, do you like to comment on the main residential market, yes. .

I think overall, in the mainland, I think you all are aware that the government has been coming out with more and more supportive policies. -- for good homes hoppy to stabilize the market. On top, there's also use of NPF, the China equipment or sera that they could use and get cheap mortgages and so on. And also there's a relaxation of all the price restrictions basically and all the sales restrictions. Of course, there's a new rule that we can talk about later in August '28.

But I think overall, these since the second quarter, we've seen a strong recovery in -- especially in Tier 1 cities and strong developers. And I think that flight to quality will just continue with buyers gravitating towards reputable and financially strong developers and also in prime locations. Fortunate for us, we are we have been our projects are mostly in Tier 1 cities. In the next 10 months, Victor and the team will launch a few premium projects and 1 is after the success of the clean of Hangzhou, including the residents and including West service apartments, including East on the East side. We'll be launching a brand-new service office and is already selling and it's quite well. We'll also hopefully subject to government presales, we'll be able to launch License Open, which have sold very, very well in previous phases.

Of course, Shanghai Arch have so very well. We've launched some houses. And the new projects we'll launch is Jovo town and Chengdu. And then obviously, our focus is also remaining inventory especially in Guangzhou and Cochin. So we have a strong pipeline coming up, and a lot of that is in the Tier 1 cities.

On your fourth question about dividend policy, has always been our policy to pay 50% 40% to 50% of our earnings per share with rising earnings, we should be paying more dividend if we continue with the dividend policy of 40% to 50% in any case, I think, has been our policy, and we need we retained earnings to so that we can always invest in a timely way when the opportunities arise. And on the issue of new shares of warrants, there's no plan at all because I think our gearing is only 10% of equity. So I think we are very comfortable at this stage here. Thank you. .

May I have the next question, please? The gentlemen in the gray blazer.

Thank you, management. This is Mark Leung from UBS. I've got 4 questions. I think the first question is regarding to our upcoming new office, moving to the IGC next month. So first of all, first question is really related to West Care. So what is the latest leasing and rent update for IGC and Acqua and what is our expected office contribution for rental income in FY and the second and third question I would combine. What is the rental reversion outlook and tenant sales for Hong Kong office and retail, maybe break down by the types of assets and location as well. .

And lastly, the question is about on the capital recycling. So are you planning to acquire any retail asset, for example, MTRC is planning to sell maybe the city link or popcorn -- are we interested in buying that? And also for the dynastic court, are we planning to further divest any IP in Hong Kong or maybe in Mainland China?

Well, there are many questions asked. Maybe KW. Can you answer the question on ITC Yes, Chairman. I'll try to answer the first question about West Carlo IGC. A very warm welcome to you moving into your very exciting home resaled. No other developments in Hong Kong matches in IC and Artur in terms of the unique combination of the gateway connectivity, obviously, train connections to both locally, regionally and also to the international market.

And because of the size, because of the floor plate and the footprint is very scalable, very high-quality grade A office supply over there. And also the entire ebehood, in fact, is the next-generation workplace with flexibility and also the amenities, the greens, outdoor and a lot of things that we are still working on. And perhaps lastly is the industry-leading sustainability. So we got all the accreditations that very discerning end users. I'm sure, including UBS, they are looking for, they are all there. So in short, that will make West Callon, ASC, IGC, the clear choice for corporations that simply demand the best.

So far, tenant's commitment from the financial and wealth management sector has already taken place and is going up -- and also, we have banks, asset management companies, fund insurance company, Mr. Chairman mentioned Xand maybe to name a few more, AIA, SunLife, FWD and so on, they have already committed coming into the project. And -- given the scale of IRD IGC project, we believe for occupancy will be achieved through a sale approach. We were getting there. While FY '27 will mark the initial revenue base, we expect a steady and meaningful ramp up in subsequent years. Now turning to AST, it's on track for completion in 2027.

With anchor tenant Morgan is committing or is real committed to 250,000 square feet in that particular project. And that represents 37% of the office to office and this, without a doubt, is a strong world of confidence in the ASC project.Maybe, Eric, can you...

Some colors on how much in GC Yes. And then maybe, Henry, later, you'll respond to the question about ITC more the stage. I think the more important point to notice because everyone is talking IBC is good quality and a thing UBS and JPMorgan can take of this day. I'm sure that you have statutes pictation and also our quality I think the more to the point is I think mentioned by our Chairman PVCs actually, the Westcon is going to be a very important area, not sort of replacing Central but because of the connection to the Big Bay area.

So it's a unique position for example. I think the reason why all these insurance companies are taking offices there because I mean now they disclaim the times are coming from bigger big areas from Guangdong and everywhere because with our unique connection to China, even to Chansin 3-hours -- so also, I think you possibly noticed we Sanaactually own over 7 million square feet of offices in that area with 2 very prestigious hotels.

And what we're doing to doing the next phase is actually connecting all this our previous portfolios together, specially and also theoretically to -- we are actually building AI of management center in IGC and test center, apart from managing ITC. We will also manage ICC and also the portfolio we sort of in desconthat will be sort of like a regional management center, which not only will make our building more sustainable, more green. And also, it will help our tenants to connect and use each other facilities, which possibly will be a first in Hong Kong.

So we -- actually, we are in the process of building that and then we will possibly be completed by the end of this year, then we will have a big announcement. And then what we are doing in West Cardona how we're going forward and our vision of building not the mix central and other central, which are probably serving different types of plants.

Eric mentioned that IPC is a very unique project in Hong Kong. You cannot see any other comparables actually. It's a day rate collecting to the Hong Kong Mainland and well, he's so sitting on the top of the high-speed chain ization convenient access to the full online as well. is further enhanced by 1.5 kilometers, what we call the Skywalk the collecting the project to the water funds and sending committees. Was 1 of the more.

Is scheduled to be open at the end of this year. And the reason program is well in check. I'm happy to mention that almost all the space in Phase 1 mall is really late now. so that in the first phase, it will provide some victories and other retail options to our office tenants and rise. -- to open -- in addition, in the pace we also opened the pit of organ for so that it further facilitate visits at 2 and from the high-speed chain station and malls as well. in more I think more fashion, lifestyle and TeamMate coming to Phase I, we niche targeted to open in the late 2027 as well?

And also your question on Dynetics, for Talicia, we still have a number of premium units for sale and currently, we don't have any plan to dispose other IP. However, we keep our portfolio in an active review in line with the market condition. So would you like to comment on the retail.

Yes. On the retail, on the ventevrsion for the retail portfolio for last financial year, we've seen that the pressure on inventory reversion has moderated and we expect the trend to continue to improve in the coming year. Riding on the fact that the retail sales at malls have outperformed the market, especially in the last 6 months, with jury and FNB trades showing particularly strong performances, while occupancy also remains high. I think in the coming year, we are cautiously positive because in the Hong Kong market will be supported by mode survivals and such of more main tenants who are planning to stay longer term. in Hong Kong. So we expect that in the coming year, sales will continue to improve and rent will continue to recover beta.

Maybe you can comment on the reversal aspect office market Yes. .

Right now yes the grade A office market has seen meaningful improvement, particularly in core areas, including Weston and central. And our office portfolio continued to benefit from this gradual recovery trend. And for example, potent in trending upwards continuously. And occupancy is now very close to 100%, if not 100. And ICC maintains a very strong tenant base of global investment banks and financial institutions with stable rents and robust occupancy of now at around 92%. And we remain positive on the 12-month outlook, the market definitely has been improving, and we believe it will continue to do so. Current momentum is encouraging.

And while positive rental reversion will take time to materialize, we expect it to gain traction as the recovery broadens across more sectors is not just restricted to the financial services sector, which are very hot at the moment. But certainly, we have also seen recovery in other reps manufacturing and other business sectors across the board. So we believe this will continue and that will improve the overall market situation in the coming months. So that's about the Hong Kong office market.

And on the prospect of buying more retail properties, -- of course, I think we would like to expand some of our clusters, especially customers. Retail clusters that are very successful. But I think we have to follow our financial discipline -- and also, we need to buy when there is an opportunity to upgrade and also to buy at a reasonable price year. That's why I think always we have to keep some dry powder to make sure that when the right opportunity arises, we always have the dry powder to be ready thank you. .

The next question, please. The gentleman here.

This is Griffin Chan from Citi. So I have 4 questions on the Mainland China business. The first is about the residential sales. So give us we just mentioned we have a very feasible pipeline, which is our Mainland DP contract sales target as well as the margin guidance for financial year 2027 and we have a few changes in the T-cell regulation, how would you feel the impact to the mainland market in China and our business Second thing is on the land banking. So the high-end residential probably has been selling very well in Tier 1 cities. So you consider to replenish any land bank in the Tier 1 cities. .

The third 1 is more on the ITC. So can you please share some pre-leasing update for the pre-ITC Power and Powerade move when do you expect them to deliver a meaningful profit contributions? And lastly, it's more on the commercial land lease renewal. So Guangzhou and Shanghai has recent clarify their renewal mechanism for the commercial tenure. So how many of our investment portfolio in the Mainland China is approaching to the Nets expiry? And how do management assess the impact of the land premium payment upon renewal as well as on the asset valuation?

Well, the retainment residential sales, Adam, can you comment.

Yes. I think on your point your first question is on deep margin guidance, right? And given that we have quite some I think it really depends when you buy the rent. Fortunately, good for us that we actually, the last time we bought some land was in 2021. So we haven't chased the market high. And you can see a lot of mainland developers making provisions nowadays usually land bought in the past 2 years and so on. And so think our entry time by large, it's good. And that on the positive side, with the market recovering, we are using this window to sell our inventory more I expect post tax, a healthy double-digit mid-teens margin for our Mainland Devon projects overall. Of course, some of the more premium stuff that we had we'll sell for higher margins like the Suglat, but of course, that's also subject to the government. Hopefully, more and more encouraging signs to relax the price.

In terms of the regulations recently, I think Baila, I think there's a few things we have to notice. First is that it will be painful for many developers. I think that the core is that they are releasing all the presales funds Well, there's no more presales ongoing and the banks are releasing the mortgage and the funding only at completion, right? So this delays and shifts the time line of cash collection by at least 2 years. So the old model of high leverage scale first model will be much slower, and we'll focus more on handover, quality and so on. So I think the survival of the cities is probably the right pace tier, I would say -- and so I think the industry consolidation, which is happening already, which is rapidly increase.

Fortunately, I think for us, -- this means there's a flight to quality. I think it's I call it to a lot of the SOEs that we all know and some specific developers hopefully like us. And so I think bioconfidence and purchasing power as well as actually not so for the availability of bank financing because now all the projects need to find a bank a specific nominated bank to provide financing, right? So I think not only the buyers confidence purchasing, but the bank financing will flow through developers that have -- that they trust. So then the last point I would make is the supply-demand dynamics.

I think with these new laws, I think this will improve the supply-demand dynamics and have better price expectations because obviously, developers will be more cautious in buying land, and they will be probably less aggressive in buying in. So it will be less supply. It will help the whole supply-demand situation. And also we'll give the inventory some time to clear out. So -- and I think most importantly, this will help greater protection for the home buyers, right? I think that's the point of the policy to begin with. And thankfully, the flight to quality will help us. And a lot of the stuff we're selling now actually are already in the completed projects. So we are not that affected by.

On the land lease expiry issue or Eric, can you .

Firstly, a, we don't have any building in China that has an imminent problem of land lease and Sai, I think that is actually it's a recommendation, not yet a policy. So we have caught with a number of friends in both OE and SOE and also pipe sector. I think everyone is adopting a we can see sort of approach to this. And I think also transcon is very proactive. I think Bill sort of examine this, you see the market reaction and then maybe will change in the future. could you comment on the.

So on the ITC, I mean, I can comment on the retail portion. We actually see all announced leasing is progressing in line with our staged print plan. So following the earlier opening of the F&B zone the session, we recently opened the Metro Link fall, which has a variety of IT of it trade train goes on some fashion and some lifestyle options as well. And since the opening of the metro line in which actually connects directly into the office in -- we've seen a fee uptick in the traffic at a wall. You would expect that meaningful profit contribution will come in the later part of 2027 as we open mall, the mall and events begin to stabilize. I think we remain long-term very positive upticking of given its very strong metrification connectivity, even in kind of the opening of NSShanghai hotel and the continuous moving in of of 10 into the DC telap. .

Maybe get your comment. Can you comment on the we see power Yes. Okay. The building obviously is -- in the sell already in Landmark because it's the tallest building in Pusz with 370 meters total. It also benefits from superior transport in activity. Christophe just mentioned opening the connection with the natural station, serving 3 Metroline and line #1 actually is the most part on linking the South and of so the number of passengers is the highest.

And Also, Tobi has the most superior specifications in the market. and that will meet the most stringent technical and quality requirements of discerning tenants and making it ideally suited for the fastest-growing industry, and we believe we include high-tech manufacturing, AI, biotech and et cetera. Of course, financial and professional services, including legal, they all find the project a very decent one. And -- so actually, we are in talk with many of these people at the moment, some already completed and some are, we believe, about to compete with various sizes coming from different directions.

Of course, due to scale the occupancy, we believe will be phased. So I think in short, we can say that the leasing activities gaining traction and we believe that will help the leasing of the project in the coming near future, and we will see a definite improvement in the occupancy with the more which is a big part of the entire ITC project and the traffic connectivity, we believe is, as a whole, is unique in the market -- and of course, Xiao is a historic part of Shanghai with his son not stories, but aware of history about Shanghai, and that make the whole neighborhood very interesting.

And not to mention the opening of our and hotel that already serving the neighborhood, and we have seen many of our tenants future tenants as well, they are using the hotel facilities over there for 1 reason or another. So that hotel actually will serve not just in business tenants also of course other people train to Shanghai and prefer to study in a location where we reach in heritage and enjoy, of course, the design of and hotel and also the entire project. So the gradual opening of different parts of the ITC project set will be very welcomed by the business community as the general community whole you are the Project Director for our ITC project initiated with the audience your vision of.

Yes. I think working a big project in China, you look at a few things. The number 1 is the real district. I think at said Shitaka is 1 of the most important listing in Hong Kong, again, in Shanghai. I think the more important is the local government that this 1 is willing to work with us. I think if you go to Caito, you'll see that actually, they have built a lot in power structures and actually revamping all the existing SOE buildings to make this a new center. I think the whole district upon our completion as well as the renewal of all the older building together with the government in or the infrastructure.

I think it would be 1 of the most attractive area for business in whole Shanghai. That's number one. Number 2 is actually the building quality. I think just like UBS and JV Movantik, our AST and IG project, our first tenant for the Tobii actually Amazon. They are actually having certain laboratories within our premises. -- taking over 100,000 square feet. So the requirement actually is no less than you. So are difficult. And I think if we can accommodate Amazons, laboratories. I think we can accommodate everyone. That's very important, too.

The third one, actually, apart from the metro connection, which is all under 1 roof with seniors connection. And the government actually is planning to do 2 more 2 more lines connecting these huge out grade district. to our. So I think in future, there will be -- in 5 years time, there will be 5 lines. So it will become really a very, very important distorting that third-party in. But so I think it's 1 of the best history for business. And our hotel also open, which is the only sort of Visa hotel in Chico area and running being very good business. So overall, I think we have a vision 10 years ago. I think basically, we have delivered the hardware. And in the next 2, 3 1, 2 years, we will deliver the soften and we deliver the tenants. .

And by the way, the Andes Hotel is the best one, I therefore visited in this hotel. If you haven't visited, you should visit yes, it's a very nice hotel, the best emerge visited SP1 Any other questions? The gentleman on the right-hand side. It's Simon Cheung from Goldman Sachs. I have 3 questions, 2 in Hong Kong, 1 in China, SP251739621 The first 1 is, you mentioned you have 8 projects in Northern Metropolitan, but we noticed that you did not participate in the unsecured projects. What are the key considerations would you have any appetite to maybe bit more projects going forward? That's the first one.

The second one, the development Puro has recently launched 1 rasopilot scheme. What would be your considerations in terms of maybe ramp of your big development projects in Hong Kong. And then the last one, with more on your rental property. Just broadly speaking, how you're seeing the retail sales and the rental reversion trend in China. -- for both retail as well as office. And particularly, I think for some of your office projects like Handing over station projects, what is your outlook over there?.

And maybe I'll deal with 2 questions on opticals and the urban area renew incentive recently pumice by can Firstly, the nothing so I'm sure everybody is knowing that this is a ambition, great initiative pushed by Hong Kong government. And as mentioned, our Chairman, we are undertaking to deliver about 10,000 domestic support with all the supporting commercial and transport facilities. One thing I would like to mention this, all these projects are being built mostly from those panels or leases premium is relatively low. We entered the market in the low market. so that we're expecting despite there might be a challenge on the market for development metropolises when the infrastructure or the community is not fully developed. But the good thing is that we entered the market. Secondly, you mentioned about Homesite we didn't bid for the first project. .

And indeed, we tried hard to buy one, but we couldn't then we choose not to be because we couldn't have some competitive bid. On the urban area, the Deven recently formulated a policy to incentivize for GO and deliberate area in the urban air segment is fix try to give 20% bonus for the land ones. Obviously, we are welcomed the relaxation is policy but we as our land bank, we do not have too much land bank in this regard. But obviously, we are very open-minded and we welcome this policy, and we're looking for projects, which when cases arise. But obviously, we will stick to our financial discipline.

Actually, on the Homes side, we did spend a bit of time in trying to locate a good partner, right Eric, can you care to comment? Yes?

Yes. I think you know the detail of the tender is very different. It's not a very stick sort of land bidding tender, you need to find a partner with Canete a certain type of industry. And we try very hard to locate that and then we talk with a lot of people and somehow the economics on the metrics work, so we decided not to do it. .

I think this brings up a good point because the partner also brings up the development cost for, say, ETlingan metros is not cheap, and they have done take some of that cost, right? And so if the reforms we're talking about in Electrical is happening, which is heart of it is performing the bearing standards and material and having new breakthrough good in code, I think that would overall hopefully help the attractiveness area for an retail comment.

Yes, I think for the Mainland retail market, so if you look at if you just read the headline news, I think the sales momentum is a pretty mixed picture across real cities. But fortunately, our portfolio continues to hold on quite strong. tenant sales in our major malls in Shanghai, Hanjin agencies or PanCancer our Chief decent growth outperforming the market.

And we've seen our occupancy continues to hold up. and there's a mild positive rental reversion. So particularly, I think, for ShahaCmall, which is a most important one, continuous commodity beating market position premium mall in Shanghai and have achieved double-digit growth in sales as well as entry version and the team's high acuity. Of course, I think it's not we're not saying it's an easy market, right? There's a lot of competition. And so I think the teams have to work extra hard in this market. But I think we believe that if we -- on top of leasing, right, we put more resources into strengthening our program, finding a tenant mix and helping working together with the tenants, right, to drive up the sales and organized better events and attract more traffic to the mall, right?

That will help. And at the end of the day, I think when there's oversupply, which is a fact in every single market in China at the end of the day, I think, location, the connectivity right and the presence of integrated elements, right, not just the small office, hotel and the partner that helps bring natural traffic and it's what the tenants can install in this market.

I think what to supplement what Christa will say, right, all our important office projects integrated project with first class hotel with good mall and with excellent railway lengths and also in established locations in Tier 1 city or Tier 2 city. I think our formula of building that sizable integrated projects with a scale and also with our hotel office mall and railway link actually is a proven formula. I think increasingly, I think, over time, I think it would be a proven successful formula. And actually even on top of the hotel, we may consider building some towers of service apartments for rental. .

So therefore, I think the projects that we are we have and we are finishing all those projects that will succeed over the long term,

Thank you. This concludes today's analyst briefing. Thank you all for coming, and I hope you enjoy the presentation. There are some refreshments outside. Please stay and enjoy.

Good afternoon, and welcome, everyone. Before we begin, I would like to extend my warmest wishes to wish everyone a happy year of Horse. Go ahead, [indiscernible]. Now let's start with the group's financial review. Please note that all figures are in Hong Kong dollars unless stated otherwise.

For the 6 months ended December 2025, the group's underlying profit was $12.2 billion, representing a year-on-year increase of 16.7%. This growth was mainly driven by higher profits from sales of trading and investment properties, together with lower finance costs. The group's leasing and other recurring income remained resilient during the period. After factoring in that effect of realized fair value gains from the sale of investment properties and a net revaluation loss on investment properties. The reported profit came in at $10.2 billion, an increase of 36.2% year-on-year. The underlying earnings per share was $4.21, while reported earnings per share was $3.54.

Turning to dividend. The Board has declared an interim dividend of $0.98 per share, an increase of 3.2% from $0.95 last year.

Moving on to the profit breakdown by segment. In property development, the group recorded a profit of about $4.9 billion, representing a substantial increase of 94.9%. This was primarily driven by higher profit recognition from our projects on the Mainland.

Turning to property rental. The group's net rental income remained broadly stable at around $9 billion. As a slight 1.2% decline in Hong Kong was largely offset by a 1% increase from the Mainland portfolio. Hotel business recorded an operating profit of $428 million, an increase from $377 million reported in the same period last year. Profit from other business came in at about $2.3 billion, reflecting an 11.7% year-on-year decrease. Taken together, this brings the group total operating profit for the first half of fiscal year 2026 to $16.5 billion, representing a 14.3% increase year-on-year.

Turning to our financial position. Net debt stood at $83.6 billion as at the end of December 2025 with the gearing ratio improving to 13.5% from 15.1% in June last year. Interest cover for the period came in at 8.7x compared with 5x a year ago. As always, the group upholds prudent financial management. The net debt has been reduced further since its peak in December 2023. Net finance cost for the period decreased by 37% year-on-year, driven by lower bad and average cost of borrowing. The group is in a strong financial position with sufficient resources to seize land opportunities in Hong Kong.

We will also maintain flexibility in a fast-changing operating environment. Details on the group debt mix are outlined in the table here for your reference. Our debt maturity profile was also well balanced. Long-term financial strength is driven by 4 key pillars: First, a sizable and stable recurring income stream. Second, growth from new completions but leverage our reputable brand to drive a premium sales strategy. And fourth, ongoing portfolio reviews to enhance returns and improve asset turnovers.

Now let's turn to our land bank in Hong Kong. As of the end of December last year, the group's total land bank in Hong Kong was about 57.3 million square feet of attributable GFA A detailed breakdown of our completed properties and those under development is shown in the pie charts here on this slide.

Turning to land bank replenishment. The group continued to replenish our whole land bank through various channels at reasonable costs to support our future growth. In this slide, we highlight the 3 sites we acquired through various means including tender, lease modification and land exchange.

Now let's turn to the property development business in Hong Kong. During the period, the group recognized property sales of $26.5 billion in Hong Kong, representing a 65% increase year-on-year. Development profit came in at around $2 billion. Profit margin was 8% due to the booking of Cullinan Sky Phase 1. We expect the book sales margin to recover later. Moreover, if we include around $1.8 billion of underlying profit generated from the sale of Dynasty Court and Shouson Peak, the overall profit margin would have been 13%. Contributed sales [indiscernible] recognized totaled $22.2 billion, of which around $10.8 billion is expected to be recognized in the second half of this financial year.

Turning now to Hong Kong residential. Driven by stronger demand from end user and investors, Hong Kong primary residential market saw higher transaction volumes and a modest price recovery. The group achieved contracted sales of about $17.4 billion in Hong Kong during the period. Since January 2026, strong sales from Sierra C Phase 2 contributed an extra $9 billion. Major contributors to our contracted sales in the first half of this financial year are shown in the table. This map provides an overview of our new projects to be launched in the next 10 months. We have built a strong pipeline, which is diverse to cater to homebuyers across all segments and preferences.

In addition, we will continue to offer unsold units from completed projects as well as selected loan core properties when ready. The next section is our Hong Kong rental portfolio. During the period, the group's gross rental income remained broadly flat year-on-year at about $8.8 billion. Overall average occupancy remained stable at around 92%. The office portfolio held steady while the retail portfolio recorded a slight decline in rental performance. In contrast, residential leasing grew 10% year-on-year, driven by a steady increase in both rents and occupancy. Our retail portfolio continued to perform well, achieving an average occupancy of 94%. Meanwhile, the group malls registered year-on-year growth of tenant sales. The group will continue to leverage the shopping mall loyalty program, The Point, to increase customer stickiness with upgraded design and functions. Our VIP program, The Points Gold was launched, offering exclusive services to premium customers. For our office portfolio, overall occupancy was maintained at a high level of 91%. Notably, occupancy of IFC increased to 98% with support from the finance industry. The group continued to carry out asset upgrades to enhance quality of our office classes.

We are excited to launch IGC, an iconic new office project that will support West Cullinan's transformation into Central 2.0. IGC is still gateway connecting Hong Kong, Mainland and the world, ideal for big corporations to expand into Mainland or to go global. The Landmark is unique in this excellent transport network served by 4 MTR lines and directly connected to Hong Kong's only high-speed rail station. The 2 twin broad towers spent 2.6 million square feet with 1 tower handed over to key tenant UBS in early this year. IGC sets new centers for more than workplace, achieving the world's highest screen centers, while connecting rescale with us terraces and walkways. The residential leasing portfolio for higher rents and occupancy, it helps the group to capture rising demand from incoming tenants and students. [indiscernible] on top of NCR Champotran transformed hotel rooms into [indiscernible] suitable for [indiscernible]. In the next 2 to 3 years, the group's recurring income base will be expanded as new investment property come on stream, including 2 completed malls in Talon as well as IGC and [indiscernible] Square towers project.

Turning to our property business on the Mainland. As at the end of December 2025, the group's total land bank on the Mainland was 64.6 million square feet in terms of attributable GFA. The pie chart on this slide provide a detailed breakdown of our completed properties and properties under development.

As for property development business on the Mainland, the group recognized property sales on the Mainland increased year-on-year to about $5.9 billion, driven by higher residential sales volume. Development profit rose to $2.9 billion with a satisfactory profit margin. About $4.1 billion of contracted sales have yet to be recognized. Some $4 billion is expected to be recognized in the second half of this financial year. During the period, the group achieved contracted sales of over RMB 1.3 billion on the Mainland. Major contributors included the service apartment at Cuerden West located in River West of Hangzhou IFC. Several projects will be launched over the next 10 months. On our Mainland rental portfolio, during the period, the group's gross rental income from the Mainland rental portfolio held steady at about $3.1 billion. In RMB terms, it was down 0.8% to RMB 2.8 billion. An increase in income from retail portfolio after a decrease in office rental.

On the Mainland, our integrated projects feature complementary components and excellent assets to public transport. Our retail portfolio for a proactive approach to boost attractiveness, driving high occupancy and resilient performance. Meanwhile, our office portfolio with its premium quality and comprehensive amenities continue to appeal to multinational companies. Our property investment portfolio will expand further with the completion of 3 ITC in Shanghai in the first half of this year. The completed office tower has attracted a diverse mix of tenants while the recently completed Tab is drawing interest from multinational corporations. Shopping mall ITC Mason will open in phases from first half this year. Hotel and Shanghai ITC will see its grand opening in March this year.

Let's turn to our hotel business. During the period, the group's total portfolio performed well. Revenue increased 3% year-on-year to $2.8 billion. Operating profit increased 14% year-on-year to $428 million. Luxury hotel in Hong Kong recorded a strong increase in RevPAR. The [indiscernible] Shanghai [indiscernible] achieved record high room rates. The Royal Garden [indiscernible] is the rebranded hotel above MTR Changan station with 366 upgraded guestrooms.

Moving on to ESG initiatives. The groups remain committed to sustainability development. For details of these key initiatives and sustainability performance, you may refer to these slides or the appendix at the back.

Next, I will summarize the market and business prospects. In Hong Kong, steady economic growth continues under 4 centers and hot framework despite geopolitical headwinds, robust IPO activities and supportive policies are strengthening its Hong Kong position as international financial and wealth management centers with expected U.S. rate cuts, rising rents and prices. Home purchase demand is also gaining traction. In key Mainland cities, growth will be supported by high tech investments and stronger ASEAN trade cooperation.

Ongoing efforts to advance opening up and domestic consumption should lift consumer confidence. Our favorable mortgage environment and balanced housing measures will further support market stability. As for the group's business prospects, with our strong financial position, we will continue to seize opportunities to replenish our Hong Kong land bank while maintaining prudent financial management. On development front, we will leverage our long-standing reputation to achieve premium pricing and rapid sales. We strengthened our brand through quality and innovation, building premium homes with portal design and modern facilities.

With a strong pipeline in place, we will continue to roll out a residential projects, unsold units and non-core properties as they become ready. On property investment. We will sharpen the competitiveness of our portfolio and drive future recurring income. Besides enhancing our existing properties, New projects such as IGC in Hong Kong and 3 ITC in Shanghai will start to generate additional rental income gradually. I will end this presentation by summering highlights from the Chairman's statement. Regardless of economic ups and downs, the group continued to pursue new investments and add new landmarks to Hong Kong Skyline, with change comes opportunity. and the group is ready to adapt to new circumstances, like the successful cases of IFC and ICC, the group is confident that IGC can help us capture opportunities from economic transformation of Hong Kong. The group will use the latest technologies to deliver high-quality properties and services to enhance the quality of living.

This will fill the growth of the company and Hong Kong alike, building sustainable communities that align with Hong Kong's further integration with national development. This is the end of my presentation. Thank you.

Thank you for joining the briefing session again. Let me first introduce the panel members. Starting from your left, Mr. KW Lo, Member of the Executive Committee; Mr. Allen Fung, Executive Director; Mr. Christopher Kwok, Executive Director; Mr. Victor Lui, Deputy Managing Director; Mr. Raymond Kwok, Chairman and Managing Director; Mr. Mike Wong, Deputy Managing Director; Mr. Adam Kwok, Executive Director, Mr. Frederick Li Group Chief Accountant. May I now invite our Chairman and Managing Director, Mr. Raymond Kwok Cor to share the key message of today's briefing. Mr. Kwok, please.

Good afternoon, ladies and gentlemen. Welcome [indiscernible]. I wish you all a prosperous year of the horse. Thank you for attending today's briefing on our interim results. Let me start with highlights of our key developments for the 6 months ending in December 2025, the group achieved satisfactory results. Thanks to the active residential market in Hong Kong, the group achieved attributable contracted sales of about $17.4 billion in Hong Kong during the period. Major contributors included Cullinan Phase 2, Novo Len, Danisco and Victoria Harbour. In January 2026, the group launched Phase 2A and 2B of [indiscernible]. This project achieved a record high subscription with contracted sales of about $9 billion.

Over the next 10 months, the group plans to launch various new residential projects. These projects include the second phase of Cullinan Harbor, a project near MTR Tsuen Wan West Station and a project at [indiscernible] South in [indiscernible] Ion. The group continues to support the development of the Northern metropolis. During the period, we have completed lease modification procedures for [indiscernible] South. Including this side, the group has, in total, 8 projects under development in the [indiscernible] area, providing over 4.5 million square feet of growth for area.

In addition, we have formed a task force to further explore the development potential of the area, supported by our strong property sales and prudent financial management. The group achieved lower gearing and high liquidity. The healthy financial position allows the group to acquire land should the opportunities arise. On property investment business in Hong Kong, the group's portfolio continued to provide a substantial and stable recurring income. Overall occupancy remained high.

Earlier this year, we celebrated an important milestone with the completion of our international gateway center, the IGC sitting on top of the only high-speed rail station in Hong Kong, our ITC is the group's latest world-class commercial landmark. This project is seamlessly connected to the high-speed rail station. This also 1 of the few high-speed rail stations in the world that sits right in the city center. At the same time, this landmark is conveniently served by the Airport Express and 3 major MTRC lines allows easy access to different districts and the airport, connecting destinations worldwide in all major cities on the Mainland.

With the strategic location and unrivaled connectivity, our IGC is set to become a 2-way gateway linking Hong Kong with the Mainland and the mainland and international markets, it offers an ideal location for wealth management companies and leading corporations to expand into the mainland or for mainland companies to go global. Apart from its great design and premium quality, our IGC is one of the greenest buildings in the world. The project has received lead and well precertification of the highest rating is also the first new construction project in [indiscernible] bay area to achieve an excellent [ green ] rating. One of these towers was handed over to our [indiscernible] tenant UBS, leasing of the remaining towers is progressing smoothly. The group is also developing the artists Square towers project at the West Cullinan Harbor plant. This project is scheduled for completion in 2027. The 2 projects, IGC and our [indiscernible] Square Towers will combine with our ICC in West Carron and existing properties nearby to form a commercial cluster of over 8 million square feet. This will not only help to reshape West Cullinan to become Central 2.0, but also support Hong Kong's development into the world's biggest wealth management center.

Building on the success of our IFC and ICC, the latest IGC can help us capture good opportunities at the onset of market upward trend. On the retail front, we continued to adopt best market practices and upgrade our malls. We also leverage a point on our membership program to strengthen customer loyalty and improve shopper experience.

Moving on to our Mainland business. The group achieved attributable contracted sales of about RMB 1.3 billion, mainly from the service apartment sale at Cullinan West of [indiscernible] IFC for property investment, our integrated projects on the Mainland put up a resilient rental performance. Our 3 ITC in Shanghai will be completed in the first half of this year. The office building Tower B, which is the tallest building in Puxi, Shanghai will provide premium office spaces with excellent transport connectivity our ITC mall, we call ITC Mason will open in phases, from the first half of this year. And our hotel there, the end Shanghai ITC, we have this grand opening in March next month. point full completion of the whole project.

It will become a one-stop destination for commerce, shopping and entertainment. Moving forward, Hong Kong is pursuing further development under the vision of 4 centers and hub confident in the long-term prospects of both Hong Kong and Mainland we shall leverage our brand and experience to embrace new opportunities. We will continue to deliver premium properties and great services. And we share advance hand-in-hand with our home city, Hong Kong. Thank you.

[Operator Instructions]

I now have the first question, please. the gentleman on your right side in the first row, please.

This is Griffin from Citi property team. So Happy New Year, and which you all are happy healthy year of the horse. I have 3 questions, if I can. So the first 1 on residential outlook. What is your view and your outlook for the Hong Kong Property home price? And how much do you expect the home price to increase? And is the price recovery sustainable? And are we happy for it? The second question is on the residential sales. Given the very strong momentum in the Hong Kong residential property market, so we will revise up our financial year 2026 sales target and accelerate some of the new launches. The third question is on the office. So can we have an update on the leasing progress for the IGC as well as on the artist a towers in West Cullinan. And for the ITC, do we have a target occupancy by the end of this year?

Yes, maybe I answer the first 2 questions on the residential first. Yes, we allow that the Hong Kong residential market was entering into a new phase of recovery from second half of last year, primarily transaction reached 20,000, which is a record over the decade. While our sensor wins is also strengthening met the inflows of talents and overseas students. Actually, the rand was speaking in last year already. although the pace of growth has been slowed down a bit in recent months, they may due to seasonal factors.

I think positive [indiscernible] carry will continue to attract a lot of investors and end users, entering into the market, including those vendors. Although the U.S. interest rate remain unchanged recently, I think the low mortgage rate will happen later this year due to the drop of HIBOR and that will also create strong support for the end users. And we also have an improving supply-demand situation due to the slowing on construction and government sales.

Actually, the inventory for sale, whether under construction or completed is dropping. So I think on all the factors, the market will continue to do well for the rest of the year. And since we are only in the first year of recovery, normally in past history, pubicycle, will last for a few years. So I think the strong momentum will continue with sustain further. On our sales target, apart from our sales recently on CRS Phase II in the coming 10 months, which are a number of projects to be launched [indiscernible] Phase 2 of Kulun harbor and our [indiscernible] South project and our treatment residential project links to the [indiscernible] station. In the second half of the year, that would be our [indiscernible] and also our [indiscernible] project linked to the [indiscernible] NPL station. And lastly, the Funing project in Jurong at the end of the year. As I said, both the Saba project and the [indiscernible] residential project are belonging to medium-sized. So we would like to keep our sales target on FY '26 as [indiscernible].

Okay. IGC is a rare project in terms of the scale, connectivity, Chairman mentioned about the fact that the project actually is being served by 4 railway lines and one is serving the mainland. From there, to Shenzhen, Futian, it's only 15 minutes. We've been the CBD of Shenzhen and not to mention connecting to other cities into the Mainland. And also, we have the Airport Express Rail, which is next or seamlessly connected to IGC. They will bring tourists, visitors to the airport in less than 30 minutes. And also, the other to local NPL lines as well that will bring people closely each other to well to home. So with this connectivity, the unique design the build quality and also the sustainability credentials. The project is world class. And that's why we have seen the interest about the project has been going up in the recent months. And we are -- we have just delivered the whole tower, Tower 2B to our [indiscernible] UBS last month. And we have a lot of interest in the pipeline, talking to us about various sizes. And these people, they are mainly from the financial services sector, insurance companies wealth managers, fund managers, things.

We believe that we will be having the leasing progress well on track. Traction has already been taken place. So we are very confident about doing much better to us the next few months into the later part of the year. So year-end, we are very confident about the leasing situation. About ASP, the RT Square project, which is next to the water located inside the West Carlin Cultural District. And this is a very unique proposition. If you look at the fact that it is surrounded by performance, venues, exhibition halls and a lot of cultural stuff. And also it's next to the water, and it's a lot of open spaces. It has already become a very good location in West Cullinan. And we see the beat is going up. More and more people is visiting the West Carlo Cultural District. We have also seen a lot of interest from the commercial sector about AST, given all the credentials that I've just mentioned. It is targeted to be ready by 2027. So we believe the leasing is also taking shape. And also because if you look at the recent activities in the financial market in fact of capital.

And these are all good factors contributing to the office leasing market as a whole. And you may aware that occupancy level in core business districts has gone up. Net take-up of about 1.8 million square feet has been recorded in 2025. That's quite a big contrast to what we have seen in the last few years. So the situation has been improving. More and more activities are going to happen in the pipeline already. So it's short and AST, we see the breezing progress will be doing well in the coming months in this year.

Also the RGC is on top of the high-speed railway, I think the high-speed railway provide even a better alternative or visitors to go to the mainland and the airport. In fact, last year, in December, there were more mainly this use a high-speed railway than using our airport to go back to the main India. So we see a strong growth in traffic between Hong Kong and the Mainland. In fact, the high-speed railway covers all the major cities on the Mainland. So we are very positive towards Hong Kong as a global financial center and asset management center we mean center especially for the Mainland for our -- for the Mainland.

Can I have the next question, please? The gentleman on the right side, the [indiscernible].

This is Karl Chan from JPMorgan. I have 3 questions. The first one is about Hong Kong residential. So as we mentioned before Hong Kong price outlook is getting more and more positive. So just curious what is your latest pricing strategy for your residential projects in Hong Kong. Say, for example, for Sierra C, we saw that you guys the prices. But I would say that the price hike is still not like super aggressive, right? So in the future, would you consider being even more aggressive or would you prefer to do this slowly to achieve the 100% sale rate every launch? And for DP margin for Hong Kong, would you expect any further improvement? What's your outlook for the Hong Kong development margin as a whole? So that's my first question.

My second question is about asset disposal. So we have been disposing of Dynasty Court. Just curious of any other assets you may consider disposing of any other non-core asset disposal? And we'll on actually consider selling some parts of the hotel assets to the student or operators. Because recently, I guess, student dormatory has been a hot topic, right? So yes, so second question is about disposal. The last question is about capital allocation and dividend. So now our net gearing has further improved. So what's our latest capital allocation plan? How do we balance between land acquisitions, dividend and [indiscernible]? And will Sun Hung Kai considering the dividend payout policy. I guess, in the past few years, we have been discussing the possibility of raising the suggestion that may be our dividend policy could be sticking to certain payout ratio based on IP recurring income instead of just earnings. So just curious, any change to the dividend policy. So that's my 3 questions.

So I answer the first question first. On our pricing strategy, we are always adhering to the current market condition. In last month, we have quickly disposed almost 1,500 units in Phase I of [indiscernible] fetching a total sales of over $9 billion. We have a moderate price increase to achieve such a tick up while for our luxury project like those in Kaiteki Kolek, like Cullinan sky, Cullinan Harbour has slightly improved, we have also made adjustment on price increment. So you can see that our pricing strategy is always flexible and efficient. And of course, under the ground to achieve the balance of volume and margin.

Regarding our development margin, as I said, as market improves, we have also some price increment on our luxury project like Victoria Harbour, Cullinan, Sky, Cullinan Harbor. And looking ahead, our 2 projects like [indiscernible] and also the [indiscernible] residential project. They are of relatively lower land costs that can deliver a higher profit margin for us. And as I mentioned earlier, we are allowed in the first year of the public cycle recovery. And I think the strong momentum will extend further. So we are well positioned on a healthy development margin on our projects in the coming future. Regarding asset disposal, apart from our IP Dynasty Court, which we are selling low. For the time being, we don't have other plans to dispose our rental properties.

However, including noncore asset disposal, we will continue to review our portfolio from time to time and also monitor closely the investment market.

On the capital allocation and acquisition, et cetera, right? I think if our current policy to just pay 50% of the -- our profit dividend because we are the global -- there's still a lot of global uncertainty, and we would like to keep our powder dry in case of more opportunities coming up in Hong Kong yes. So in our experience, as Victor said, we're just picking up for 1 year, right? So therefore, there should be more opportunities come, especially in such a volatile world. And on the asset disposal, there's no intention for us to sell any of our hotels, right? Hotels are all in very good location. And in fact, we don't any office projects. office projects ever want to convert to a hotel.

Yes, I want to mention that long, the conversion of student hospital is belonging to those grades commercial properties with low quality, low occupancy and which does not apply to our portfolio. And as you know, our tone service apartment, invest Cullinan is doing well and we are able to attract premium tenants like those talents and also overseas students, especially those post-graduate students

So we are doing well on our [indiscernible] service department, yes. that we are converting the hotel into a Royal Garden hotels. So we are optimistic about nice hotels and service climate sector.

Can I have the next question, the gentleman in blue jacket.

This is Mark Leung from UBS. I've got 3 questions. I think the first one, can I clarify the Chairman, you just mentioned the dividend payout policy is 50%. Should we -- is it -- we change it from 40% to 50% or now from 40% to 50% to now 50%? Or should we stick back to previous this kind of 40% to 50% range? That's the first question for clarification. The second question is more on the office rental outlook. Do we see any -- can we have any rental reversion guidance for IFC, ICC and Cullinan East? Any room to raise the rents because of the strong occupancy and how is the recovery trend beyond Central? I think that's the first question for office. Secondly would be on the retail side, given that the backdrop of the Mainland e-commerce spread and what is our leasing strategy? Are we planning to capitalize the rise of the Chinese brand like maybe Lau Gold. Office, KW?

For office rental, we have been leasing activity accelerated with notable tenant upgrades and expansion mix. And these mainly happen in the core business area of Hong Kong by Central West Cullinan which has already become central 2.0. In this area, we see banks, asset managers, funds and particularly management corporations. I mean they are taking -- they are either considering or already taken more space and that happened, I would say, more than 12 months ago because it took time for them to consider, look at the right options and then you go safer terms, et cetera.

So it'll take a bit of time. And we have seen that happening quite solidly in the last 12 months, and we believe that will continue. Office rents, particularly Central has been fairly stable in the last 12 months. We haven't seen as what we've seen before, continuous drop in the rent. That's about -- the full year is about 0.4% drop. So that's meaning stable. We definitely have seen rental stabilize. And for TimSofor example, it's only down 1%. So literally, there's no change because demand is coming back. So we could anticipate that when is a driving force behind it, but I think it's a bit too early to say. We have to see whether that will sustain into, let's say, the next 12 months or so. As I said earlier, that growing demand for upgrades, prior quality, so that actually has benefited IFC and ICC. I mean, both projects, they are in superb locations. And these trophy buildings. We believe we continue to achieve high occupancy.

For IFC, we are now 98%. And for ICC, it's 91%. And we see these figures will go up. And of course, in 98%, there's not much room to go up before we hit 100. And we have seen 100% and IFC many, many years, for many years already. And we believe that will come back very soon. So -- but for the -- our [ Cullinan ] portfolio, Millennium City, the big cluster there, the situation remains competitive. [indiscernible] is still having a lot of supply. So that situation probably will not change in the short term. But as demand is coming back, we see that will improve in due course. At the moment, our priority is to maintain stable occupancy for the group. So we need to see robust and stable occupancy, driving continuous income stream. But that's our priority at the moment.

To add that actually, we are positive on the colonies because we are the largest landlord in that area, and we will continue to upgrade our buildings. And and also to improve on the connectivity between the stations between the [indiscernible] station, right, to our buildings. So in fact, our target is to follow what [indiscernible] is doing on. Hong Kong [indiscernible], right?

[indiscernible].

[indiscernible] In fact, that's our goal. We will continue to upgrade the district and the area, right, and we have the best office building in Carlos. And regarding our latest ITC has the ESG rating maybe in Hong Kong and maybe even in China, right? So therefore, we believe that some of the tenants would want to move into a new building with very high ESG standard. Yes. Christopher, you could do retail.

Yes. Sure. On the retail side, yes, we are aware that there are more mainland e-commerce operators entering the Hong Kong market, particularly in the delivery and kind of online goods market. And indeed, I think some of the traditional smaller ticket retailers may be affected. I think on the bottom macro side, I think Hong Kong retail market has had a good recovery since the middle of last year, we have observed kind of reversion to positive sales growth. I think the market is about 45% in the second half of last year. And for us, for some case are we have always been above the market since the recovery. And we think that kind of the trend will continue right on factors such as more mega events, more tourists coming to the city and also recovery for the stock market.

And we believe that these positive trends will still be present in 2026. And for our malls, I think the way we deal with this is as always, I think we can about a lot about optimizing the tenant mix and also improving the customer experience. at our shopping malls, right? Some examples include things that are increasing our grab and go options in F&B sector introducing more kind of IP stores or stores that can ride on the event economy and also in terms of continuously enhancing our of experiences, which has newly opened Sky Garden in our Newtown Paso in [indiscernible] and as the Chairman also mentioned in his statement earlier, we also have stepped up our efforts in upgrading our loyalty program.

So we've launched a a VIP go program for the point in the middle of last year. And we're also working to enhance our EV charging service across our properties network to offer better experience for the more affluent driver segment. And so we believe all this will create stickiness for customers coming to our shopping malls. And as for Mainland -- in terms of our Mainland brands, I think we welcome all good tenants of brands regardless where they're based. And I think having a presence in China gives us an edge in terms of being able to get closer to the market and figure out which may be the potential better operators to bring to Hong Kong.

Sort of good news is all the mainland brands, they want to come to Hong Kong, right yes. And also, we already have the tenant in ship on the Mainland, right? Therefore, it should be easier for us to bring them into our mall. And then we also, for office and more the good news is the government is not releasing any more new land for the foreseeable future. So therefore, especially on the mall side, we don't see any new buildings coming up to compete with us, right? Because at the moment now for office and for -- especially for office and special retailer, there are very few new buildings of our size and of our location, yes. Therefore, I think that's we see that there will be opportunity for us to increase our occupancy, right? Yes. Thank you.

Gentlemen in the left side in blue [indiscernible] in this first row.

My name is Simon Cheung from Goldman Sachs. I have 3 questions. One, moving on to China. I kind of help to notice that you actually do achieve very high profit margin on your DP profits. Wondering whether you can check -- share with us what's the outlook for the second half? Do you have any contracted sales targets? And if so, then what sort of projects would be the contributor into second half of the year?

The second question is, I think the market has been anticipating there may be some spin-off of some of the assets into the China reach markets in order to improve the ROE of the company, whether you have any plan for that as well? And then lastly, just back to Hong Kong, I think Chairman, you did mention a lot about capital allocation strategy. vis-a-vis dividend, et cetera. [indiscernible] land banking, obviously, we have seen a lot more activities recently. Do you have any plan? Do you have any targets? And if so, given the current situation, what do you think the profitability and IRR going forward, if you were to beat some land in Hong Kong?

I think for China, most of our bookings this year that the interim year came really from our signature niche projects, right? It really came a lot from -- such our files in there, we call it [indiscernible] Geneva. And for the next coming half interim year or the fiscal year, whether we can continue that those very niche premium demanding product depends on also if we can get the price by the [indiscernible] government and so on. So obviously, we get the price per well continue to release it selectively because it's very, very aware and [indiscernible] and it's -- you don't have that in China anymore. The other ones, Hangzhou, IFC, the Hangzhou Colony [indiscernible] Victor doesn't give the color to name easily to any of projects. So for the Hangzhou service to get the Colonnese West and [indiscernible] East names that hopefully will be a good decent margin for us, too.

For the spin-off of REIT, I think the cost of borrowing is so low in -- on the Mainland. And the banks are so keen to lend that money. So therefore, we will study the weak idea, but it depends on how the new China REIT will be valued here. But at the moment, there's no rush here. We'll just focus on improving the occupancy and also improve on the tenant mix of our malls on the Mainland, yes. And on the capital allocation, I think, I think on the dividend side, we will try to maintain our absolute dividend per share as much as possible, 2 points, right?

We try to stick to the 40% to 50%, and we'll try to keep our dividend at this level or higher, yes. we try our best not to reduce the dividend per share, yes. But the range you can expect will be 40% to 50% yes unless we are in a cash net cash situation.

For the interest of time, we will now have the last question, please. The gentlemen in the second row.

Thank you, [indiscernible] management. This is Raymond Liu from HSBC. So I have the Chinese New Year. So I also got 3 major questions here. So for the first question, which is about Hong Kong retail. Can management provide us like the retail sales and the retail rental reversion outlook for 2026. So when do you expect Hong Kong retail rental income to resume positive growth? And for the later one of the major commercial mall, which is the retail space connecting IGC. So when we officially open and what's the tenant commitment so far? So the second project -- second question will be related to Shanghai ITC -- so what is the latest pre-leasing rate for the office and retail portion of the ITC. So what will be our leasing strategy here? And when we -- when should we expect the full rental contribution from there? The third question will be on the management change. So can me-- we looked at there as a resignation of the Executive Director, which managed the retail business. Can management provide us more ideas about Will there be any changes about the leasing strategies? How should we think of the leasing strategy going forward? That's a pretty major question.

On the office, [indiscernible].

Yes. Thank you for your question. On ITC project in Shanghai. [indiscernible] already achieved over 80% occupancy. And we are seeing that the trend is going strong. I think it's same as Hong Kong. Major space users in Shanghai, they are going after a good quality project. And for ITC, we have very good connectivity. We got 3 metro lines connecting the project. And we have a big sizable mall coming up and we got the Andes hotel going to be officially opened very soon. And we believe all these are positive factors that will contribute to the success of this project, particularly on the office leasing side.

Now [indiscernible] has already been completed in the end of last year. We have already signed up a couple of tenants, and we are still talking to many other tenants, big ones, small ones and profile of these people spending from retail, professional services, financial services and et cetera.

And we have seen the trend actually is coming back. Shanghai being the economic center of China. So it's not a surprise to us to see that, particularly our project is of such a high quality in terms of size as well and in a very special location in [indiscernible], which is both historic and both as a modern as you name it, that neighborhood has it. So we are confident that the leasing will continue to pick up, particularly for Tobi. It's been the tallest building in Puxi area, so we are doing something on the rooftop as well to make sure that we can capture the -- actually the advantage of that particular project in respect to both visitors, whether they are coming just for a local to Shanghai site visit or they are potentially our future tenants.

So we're going to do something on the top floor and the more is upcoming or lead to my colleagues to to go through that. But I think we believe that the project will be successful and we have full confidence in that.

I'll also add to that, right the [indiscernible] talent, right? And then we have the Andes hotel opening up soon, right? The way we have the experience of leasing our ICC, right? It's important to the office -- the first-class office new and the best, and we are also happy that for the ITC in Shanghai, all the neighboring buildings are so old. So -- and we have the latest building and also the best rating, right? So therefore, I think our experience is once we have the hotel and the office and also the seamless connectivity to the subway, right it's going to be a winning formula. In fact, it's the best location as KW said is long. We have been the hub of 3 major Shanghai stations, right yes. So therefore, I think we have the best location and also the best building and also have the best combination of office and a good hotel there, right, yes. So we're confident about the prospect of the ITC office.

I think in terms of the retail for ITC, actually, the initial phase is called ITC dining. It's on the fourth and fifth floor of the return office contract has been open since the end of last year has been doing well. And we expect the mall will continue to open in phases this year, closely matching the movement date for [indiscernible] of the office so probably second half of this year. we'll focus on the second and third levels as well as the MTR level. And we positioned more as a one-stop destination for shopping, dining, [indiscernible] entertainment. I think like Chairman says, I think kind of -- we have the advantage of being a new property, so we will have more outdoor spaces. We also have a very strong connectivity with the MTR network, which will bring natural traffic flow to us and we also have the support from the shot.

So I think that will give us -- that gives us confidence in a lot the potential of the project. And then for back to Hong Kong, I think the -- as I mentioned just now, I think the retail sales has been on a positive factory since the middle of last year, and we see the positive factors we mentioned supporting this trend into 2026. We also observed similar trends in sales improvement at our malls. And as we have been this many times, I think rents usually sales is usually the indicator for rental income.

So we're confident that [indiscernible] that rent reversion will be reflected later this year. For the West Calgon project, I think we've talked about it extensively already. We see it as a -- again, as a hot Central 2.0 hub, and it's an integrated project with office, retail and also sitting on top of the [indiscernible] project. So -- and as well, I think we should also mentioned that it has a very nice 1.5 meter away, which connects all communities of [indiscernible] are all the way to the rest [indiscernible] district. I think we think there's a lot of creativity to make some useful good retail spaces in that area. For the mall, it will be about 600,000 square feet. It's now being under interior fitting out works and we will open it also by basis starting later this year, again, in support of -- primary first to support the moving in of major tenants at projects, and we'll continue to open it by basis. And I think, again, I think we need to emphasize this we -- this project is very unique because it's one of the -- is a new high spec well-connected cluster in Hong Kong, and which I don't think we will see any comparable project of the same sky and scale and positioning in the next 10 years or so. So yes, it gives us confidence in the long term.

Anyway, our strategy would be trying to achieve high occupancy as soon as possible, yes because I think we have gone through several cycles in the past before, yes. So it's important now, of course, to try to achieve high occupancy. On the retirement of [indiscernible], we have said that [indiscernible] has to be tired because of sickness but we have a strong team supporting the company, and we have a strong and experienced team. In fact, it gives more opportunity for our young people to take up the challenge. So therefore, I think in a way, it's quite normal and healthy, right, to have a -- to have -- to pull more people who can -- the people can do well, we get this good chance for them to show that they can do it, yes. But anyway, in for our ITC for TC, right, in Shanghai right? is totally a true area in Puxi, right, and the tallest building, and we have the hotel, connectivity, right, also have up of the 3 railway lines and surrounded by older office buildings, right? And for our -- in fact, actually, I think the reason why we call ITC, if it were not for our existing IFC wood [indiscernible] Shanghai, right, anyway. So we already have a very successful IFC. So therefore, we have to name it differently in the ITC. And for our IGC, right, it's -- we see the West [indiscernible] is a very mature area, right, with the ICC, the elements and the ITC, there's about 8 million square feet of cluster there, right, and has a good harbor fund and as all the elements of success based on our experience on and I think in Hong Kong, I think we're doing better and better in terms of being a wealth management and asset management center, right? We already see a lot of hedge funds or quant funds are all coming to Hong Kong, right? It just shows the confidence. So Hong Kong definitely will be a stronger financial center in the future, and we are very -- with the confidence, thank you.

Ladies and gentlemen, this concludes today's analyst briefing. Thank you for coming again, and hope you enjoy the presentation. Please stay and we have some refreshment outside. Thank you.

Good afternoon, ladies and gentlemen. Welcome to Sun Hung Kai Properties FY 2025 Annual Results Analyst Briefing. It's a pleasure to see you all here today. I'm especially glad that the weather is coordinating this year. We don't have typhoon or black rain storm to interrupt. As in previous years, I will begin by sharing a summary of our financial results and business performance, after which our senior management will join the Q&A section.

Let's start with the group's financial review. Please note that all figures are in Hong Kong dollars unless stated otherwise. For the year ended 30th June 2025, the group's underlying profit amounted to about $21.9 billion, which increased by 0.5% year-on-year. The main increase is primarily driven by high underlying profits from sale of trading and investment properties as well as lower finance costs, which partially offset by impairment provisions of development properties. Including the net effect of revaluation loss of around $0.7 billion on investment properties and fair value gains of around $1.8 billion realized on sale of investment properties. The reported profit was $19.3 billion, an increase of 1.2% year-on-year.

The underlying earnings per share was up 0.5% to $7.54 while reported earnings per share was up 1.2% to $6.65. As for dividend, the Board of Directors has recommended a final dividend of $2.80 per share. Together with the interim dividend of $0.95, total dividend per share for the full year will be $3.75.

Moving on to the profit breakdown by segment. The group's property development profit increased by 5.6% to around $8.3 billion, mainly due to higher contribution from the Mainland. On property rental, the group's net rental income decreased by 3.2% to around $18.4 billion, mainly due to a 3.5% drop in net rental income from Hong Kong portfolio and a 3.2% decrease in net rental income from the Mainland portfolio. As for hotel performance, and operating profit of $615 million was recorded from the group's hotel business, down from $650 million in FY 2024. Profits from other businesses rose by 0.7% to around $4.9 billion. So altogether, the group's total operating profit for FY 2025 was down slightly to about $32.2 billion.

On our financial position, as of the end of June this year, the group's net debt was $93.3 billion. The net gearing ratio was 15.1%, a significant improvement from 17.8% as at the end of December last year. Interest coverage for the period was around 6x compared to 4.6x a year ago. The group will continue its prudent financial management. As seen from the graph, we have further reduced our net debt as it comes down from its peak in December 2023. Net finance costs dropped by 24% year-on-year driven by lower debt and borrowing costs.

During the year, Moody's upgraded the group's outlook to stable from negative affirming A1 rating. The group will continue to maintain a stable base of recurring income. We will also make use of our quality brand and products to drive sales. The group has raised sufficient RMB-denominated funding to better align its asset and liabilities denominated in RMB. As at end of June 2025, about 55% of the group's total borrowing were either at fixed rate or tied to RMB floating rates. We also achieved a well-balanced debt maturity profile.

Let's turn our attention to the group's different business segments. In Hong Kong, as of the end of June this year, the group's total land bank was about 57.4 million square feet of attributable GFA. This includes 37.7 million square feet of completed properties and 19.7 million square feet of property under development. Among the completed properties, retail accounts for 33% while offices accounts for 29% of total. For properties under development, about 13.2 million square feet were residential properties under development for sale. During the year, the group added 5 residential sites with attributable GFA of about 1.6 million square feet to its land bank.

After the end of financial year, the group settled the land premium for our redevelopment in Changsha Huang, spanning 460,000 square feet. Regarding land resumption. Landlords in Hung Shui Kiu/Ha Tsuen area were resumed with a compensation of about $3 billion during the year. The corresponding gains have been recognized in FY 2025. Landlords primarily in [ Santen ] and along the [indiscernible] line will also be resumed. Compensation of about $1.2 billion will be recognized in FY 2026.

Next, let's look into property development business in Hong Kong. For the period, the group's recognized property sales in Hong Kong increased 6% year-on-year to $26 billion. Major contributors of operating profit $3.2 billion included YOHO WEST Phase 1, the YOHO Hub 2 and NOVO LAND Phase 3b. Additionally, about $2.2 billion of underlying profit were recorded from the disposal of Dynasty Court, including this, the overall profit margin was 19%. During the year, about 1.5 million square feet of attributable residential GFA was completed. Contracted sales not yet recognized amount to $35.6 billion, of which around $30.1 billion is expected to be recognized in FY 2026.

Hong Kong's residential market showed further signs of stabilization. Sales in the primary market has been active. The group achieved contracted sales of $42.3 billion. The major contributors included [indiscernible] Phase 1 in [indiscernible]. In addition, the sale of premium units at Dynasty Court in mid-level Central continued to receive positive market response.

This map shows our diverse mix of new projects. In the next 10 months, projects to be launched will include [ SISA ] Residence Phase 2A and 2B, the completed units from the second phase of [indiscernible] in [ Caitan ], a project near MTR [indiscernible] West station and the first phase of a large-scale development near MCR [indiscernible] station.

Moving on to our Hong Kong rental portfolio. During the year, the group's rental portfolio in Hong Kong recorded a gross rental income of $17.5 billion, a decrease of 2.3% year-on-year. Overall occupancy remained stable at around 92%. There was a modest decrease in gross rental income from the retail portfolio while office market remains challenging. The group's residential leasing saw a solid increase in revenue, driven by higher rent rates and a full year contribution from TOWNPLACE WEST KOWLOON. Performance of the group's Hong Kong retail portfolio was resilient with a stable occupancy of about 95%. The group proactively strengthens the competitive edge of its malls. This includes exploring new opportunities with pioneering formats and refining tenants and train mix to bring novelty.

We also developed close and long-term relationships with tenants, which helps with their retention. To keep offers a diverse retail portfolio with distinct positioning, which includes flagship and regional malls. To enhance the shopper experience, we refine our tenant mix and shop basis to introduce debut stores and popular shops. More family and pet-friendly facilities and services were introduced to our malls. We also offer innovative retail formats, [indiscernible], our spotting commercial complex is the first of its kind in Hong Kong. The point our integrated loyalty program has introduced a VIP program, the [indiscernible] during the year. There was a steady increase in spending by active members and high-value customers.

The new programs provide members with unique privileges by integrating resources from the group's malls and various businesses, creating synergies. The Pongo members can now enjoy a reservation of superfast EV charging services. Moving on to office rental performance. Despite the challenges, we maintained stable occupancy. Our portfolio benefits from the flight to quality trend. Key strengths include high green building centers, professional property management, excellent transport and comprehensive amenities. The occupancy of our landmark IFC and ICC was about 92%. Our expanding property investment portfolio will strengthen our recurring income base, I highlight is the high-speed rail [indiscernible] development, which comes with high green building spec, a major oriented design and wireless elements.

[indiscernible] office towers called the International Gateway Center IGC, is scheduled for handover starting in early 2026. [indiscernible] is ongoing. Our more underneath IGC will introduce diverse lifestyle and F&B offerings. This project, together with the Artis Square Towers project also under construction, will create strong synergy with the ICC cluster. In the next 2 to 3 years, the group's recurring income base will be further expanded as new investment properties come on stream. In addition to West Kowloon developments, other projects include Cullinan SkyMall in Kai Tak, Scramble Hill in Kwun Tong and a commercial complex in Mong Kok.

Now regarding our property business on the Mainland. As of the end of June this year, the group's land bank on the Mainland was 65.3 million square feet of GFA on an attributable basis. There were 21.1 million square feet of completed properties and 44.2 million square feet of properties under development. Among completed properties, 43% were shopping centers and 38% were premium office. Regarding our property development business on the Mainland. During the year, the group's recognized that property sales on the Mainland rose by 214% year-on-year to about $8.4 billion, mainly due to higher sales volume of residential units. Development margins were robust.

As of the end of June this year, about RMB 8 billion of contracted sales had yet to be recognized. Most of them will be recognized in FY 2026. During the year, the group achieved contracted sales of about RMB 4 billion on the Mainland. Major contributors include the detached houses in [indiscernible] in Suzhou, and new batches at Park Royal and Forest Park in Guangzhou. Over the next 10 months, 4 projects will be launched on the Mainland. You may refer to the table here for details.

Moving to our Mainland rental portfolio. During the year, the group's gross rental income from the Mainland rental portfolio decreased by 2.1% year-on-year to about 6.2 billion. In RMB terms, it was down 1.9%. Incremental contribution from newly completed projects partially offset the drop in turnover rent of retail portfolio and downward pressure on office rents. For the group's integrated projects, they include different components that are complementary to each other. The projects also enjoy convenient assets to transport. An example would be IFC in Shanghai. Thanks to our unique positioning and proactive approach. The retail portfolio saw a resilient performance occupancy for major malls remain high despite competition.

Our office portfolio is known for excellent building standards, great transport and professional management services. All these tenants also enjoy comprehensive amenities offered by the group small end hotels within the same integrated compressors. Our property investment portfolio on the Mainland will be further expanded upon the completion of a landmark project, ITC in Shanghai. The remaining portion of 3 ITC will be completed later this year. Office Tower A, which was completed earlier has ramped up its occupancy to nearly 80%, contributing positively to the results. Shopping mall ITC Mason will opened its first phase in the second half of this year, featuring trend F&B hotel and the Shanghai ITC will further enhance the variety of amenities within the complex. The project will be linked to the surrounding community by pedestrian business and process, enhancing its connectivity.

Let's turn to our hotel business. During the year, the group's hotel portfolio in Hong Kong has seen improvement in room revenue and high occupancies. The change in spending pattern weighed on the revenue from F&B Operating profit of this segment decreased 5.4% year-on-year to $615 million, down from $650 million in the same period last year. As we mentioned earlier, our new hotel and Shanghai ITC will open at 3 ITC late this year.

Moving on to ESG initiatives. The group's commitment to ESG is well recognized by the industry. For example, the group's MSGI ESG rating was upgraded to AA during the year. In other highlight, ITC became the first building in Asia to secure our top [ green sets ]. The group also provided rent-free space for operation of a community living room. [indiscernible] was officially launched earlier this year. It serves as a venue for charity events and also allow families to spend quality time with their kids and pets. Our new destination, [ MAR1186 ]8 has opened to the public.

Our next session is the market and business prospects. On market prospects, globally, the environment is expected to remain volatile and uncertain. Monitoring easing by major economies and higher chances for U.S. interest rate cut will favor economic growth. In Hong Kong, an active financial markets and a growing tourism industry will drive moderate economic growth. With rising home rents and expectations of lower interest rate, biocompetence and transaction volumes in residential markets are expected to continue improving. For the Mainland, the economy is expected to maintain steady growth with proactive fiscal and monetary measures, efforts to drive high-quality development and opening up will build resilience. Supportive policies will help drive consumption.

On our business prospects. The group will build on the solid foundation and continue with prudent financial discipline. It will maintain a sizable and stable base of recurring income from rental and non-property businesses by the following strategies. The group will adopt a proactive leasing approach to strengthen its competitive batch. We will calculate long-term relationship with tenants and customers. Also, we will strive for incremental contributions from newly completed projects.

In Hong Kong, our new projects include Cullinan Sky Mall, Scramble Hill and high-speed rail West Kowloon [indiscernible] development. In Shanghai, we have 3 ITC. With our premium brands and products, the group will aim for high asset turnover in property development business. We will continue to launch new projects for sale-ready. We will review our portfolio regularly to enhance returns and asset turnover.

To conclude my presentation, I would like to highlight this passage, which is a mixed from the Chairman's statement. In navigating through the current economic transformation, the group will build on this solid foundation and extensive experience, while adhering to prudent financial discipline as always. With strong execution capabilities, the group's management and team will put into practice its long-standing principles and time-tested strategies to strive for sustainable growth, while exploring potential application of AI to better understand market trends and further enhance both efficiency and service quality.

Leveraging its strong financial position. The group is able to make investments for its long-term development when opportunities arise. As in the past, the group will continue to support the city's evolving needs and build properties that prioritize quality of life for all. This is the end of my presentation. Thank you.

Thank you for joining today's briefing again. Let me first introduce the panel members. Starting from your left, Mr. KW Lo, Member of the Executive Committee; Ms. Maureen Fung, Executive Director; Mr. Allen Chung, Executive Director; Mr. Christopher Kwok, Executive Director; Mr. Victor Lui, Deputy Managing Director; Mr. Raymond Kwok, Chairman and Managing Director; Mr. Mike Wong, Deputy Managing Director; Mr. Adam Kwok, Executive Director; Mr. Eric Tung, Executive Director; Mr. Frederick Li, Group Chief Accountant.

I would now like to invite Chairman and Managing Director, Mr. Raymond Kwok, to share the key messages from today's results announcement. Mr. Kwok, please.

Thank you. Good afternoon, ladies and gentlemen, thank you for joining today's briefing. Let me highlight our key developments and strategy. During the year, the group maintained stable business performance despite an uncertain global economic environment.

Over the past 6 months, Hong Kong's residential market showed further signs of stabilizing. During the year in attributable terms, the group recorded contracted sales of about $42.3 billion in Hong Kong. This is the highest level over the past 5 financial years. Major contributors include Cullinan Sky Phase 1 in Kai Tak Sierra C Phases 182 and 1B of Sai Sha Residences. Victoria Harbour 2 in North Point, YOHO WEST Parkside [indiscernible] station. In addition, the sale of our luxury units at Dynasty Court in mid-level Central continued to receive a positive market response. As the central market sentiment improves, we will continue to pursue high asset turnover in our property development business.

In July this year, we launched NOVO LAND Phase 3a in Tuen Mun and achieved an encouraging sales performance. Over the past 10 months, the group will launch the completed units from the second phases of Cullinan Sky and Cullinan Harbour in Kai Tak. We shall also launch other new residential projects, including Sai Sha Residences cases 2A and 2B, a project near MTR Tsuen Wan West station in the first phase of a large-scale development near MTR Kwun Tong station. Sai Sha Residences is a prime example, which showcases our strength in delivering large-scale integrated projects landing nature with more than living. The project office wellness, family and pet-friendly features also comes with comprehensive facilities like the sports and commercial complex Go Park Sai Sha nearby.

Sales of CRC was very encouraging, and we achieved a high subscription rate in recent years. This demonstrates the popularity of a cold store lifestyle among our Hong Kong people. For property investment business in Hong Kong, the overall occupancy of our rental portfolio remained satisfactory. Despite the challenging economic environment, our office portfolio achieved a high retention rate and benefited from the flight to quality trend. The average occupancy of our IFC and ICC was 92% during the year. We shall continue to strengthen and expand the commercial hub in West Kowloon as another CBD beyond Central for the 2 projects now under development.

First project that IGC offices are top the high-speed rail West Kowloon terminals will be ready for handover to tenants starting in early 2026. And the second one, construction of the Artist Square Towers project next to the [indiscernible] is underway. These 2 new projects, together with the group's ICC and our hotels on top of Kowloon station will form a prominent commercial hub with a GFA of over 7 million square feet. For our retail portfolio in Hong Kong, our malls maintained high occupancy during the year by refining the tenant mix and embracing innovation. The drop in tenant sales has narrowed in the first half of this year.

A point our mall loyalty program has recorded a steady increase in spending by active members and our high-value customers. Meanwhile, we recently launched the Point Gold VIP program to reward these high-value members to enhance their loyalty. Looking forward, our retail portfolio will be further expanded when new projects come on stream. First one, Scramble Hill, a shopping mall near APM in Kwun Tong will start opening in phases. This new mall will create synergy with both our APM and the group's office clusters in the Kwun Tong area.

The second one would be the Cullinan Sky in Kai Tak that will open in phases starting from the fourth quarter of this year. Moving on to our Mainland business. During the year, our group launched detached houses from Phase 2 of [indiscernible], which quickly was sold out. For the rental portfolio, the group has proactively enhanced the services and tenant mix. Major malls continued to achieve high occupancy while our premium office portfolio maintained its competitive edge to ride on the trend of flight to quality for our tenants.

In the year ahead, the completion of 3 ITC in Shanghai will mark a major milestone for the group's Mainland business. The remaining portion of the project includes the Office Sky Scrapper Tower B, the flagship Mall ITC Mason and the hotel [indiscernible] Shanghai ITC. Construction has come to the final stage and this project will be completed later this year.

Looking ahead, as a Hong Kong economy undergoes transformation and active financial market and a growing tourism industry will drive moderate economic growth in the near term. With the support of the model land and under the framework of 1 country to systems, Hong Kong will continue to attract both talent and capital serving as a springboard for mainland enterprises to go global. The group remains confident in the long-term prospects of the Mainland and Hong Kong with our solid foundation and in line with our prudent financial discipline. The group is well positioned to make investments for long-term growth when opportunities arise. In addition, we shall review our portfolio rapidly to enhance returns and improve our asset turnover.

As always, we should continue to support the city's evolving needs and develop properties that prioritize quality of life for everybody. Thank you.

Thank you, Mr. Kwok. Now we open the floor for questions. [Operator Instructions] So may I have the first question? So the gentleman in a third row in a black blazer.

This is [ Carl Chen ] from JPMorgan. I have 4 questions all about the residential market. So my first question is about your outlook for the Hong Kong residential market. Do you think that the market has bottomed? For the pricing strategy, I think, for the recent launches by Sun Hung Kai. I think that the pricing has still been rather conservative. So just wondering for our upcoming launches, do you think you'll get more aggressive in terms of pricing, especially for Cullinan Sky in Kai Tak? So that's my first question.

Second question is what's your [indiscernible] assets target for Hong Kong DP in the financial year 2026? And do you have any colors on how your launch plan will be for Sai Sha as well as other major Hong Kong residential market projects for 2026? So that's my second question. And my third question is on the upcoming policy address. Do you expect any further policy support measures from the government? I think recently, there has been more speculations on how the government may do the property connect, right? Or maybe easing in the [indiscernible]. So from your perspective, what kind of measures do you think the government might introduce in the policy address? So that's my third question.

And my last question is on land banking. Just curious, right now, what's your land banking appetite, what's your plan, any preferences in terms of geography or sector. So say, for example, are you interested in reinvesting more in commercial or your focus on reinvestment will still be mostly on residential. So that's my 4 questions.

Yes, on the residential market, although the hyperbole recently, I think that the trend of low interest rate will continue backed by the possible interest rate reduction in this month and end of the year. And due to the influx of talent and students, we have seen that the tensions are wise and quite rapidly in the summer, and the trend is continuing. This will induce a lot of renters becoming home buyers.

We have also seen a lot of common cases on positive carries, especially on the new projects as the month -- as the rental collected is exceeding the mortgage payment, they will also attract more investors buying an apartment for rental purpose. Adding to the robust performance of the stock market, I think the central market will continue to do well in the rest of the year. While our inventory level is dropping continuously, we can absorb 1,500 and 2,000 units per month. So all these factors are supporting that the market is now proceeding to a bottom-out situation very soon.

Regarding CRC, you may aware that we have overwhelming sales earlier this year. We have collected a total registration of over 40,000, which is a record in the publicity in Hong Kong. The project is a very unique project, branding nature and beautiful environment and also with comprehensive facilities also with coastal scenery. The prices we achieved for the first phase is good and reasonable. I think we can have some room to increase our price when we market the second phase in the first quarter of next year.

Regarding on the sales, we have a really good take up on NOVO LAND in the past 2 months. And in the next 10 months, we shall have a number of projects to be launched mainly Phase 2 of Cullinan Sky and Cullinan Harbour, both on completed projects. In early next year, that would be CRCP Phase 2. Also with our Tuen Mun retential project, which is closed the West [indiscernible] station. In the middle of the year, that would be our Phase 1 of Pudong project looks to the future station. So you can see we can have quite a number of projects to be launched. We have a good sales in last financial year, over 40 billion, which is exceeding our target.

For this year, we have -- we set our target of $30 billion, mainly due to the fact that there may be some uncertainties of cell concern approvals for some projects. certainly, we hope we can get all our sales consent on time so that we can bolt more revenue on sales later. On the margin, I think every developer has their own sales strategy, considering the land bank position, financial position. For us, we are always trying to quicker turnover on mass project like NOVO LAND, or West and for luxury projects, which are normally difficult to replace, we shall dispose our units at our pace.

Having said that, we have sold quite a number of buildings in Victoria Harbour and Dynasty Court in the past few months. They are a very good margin. In fact, in the coming months, we shall have 2 luxury projects in Kai Tak. That Cullinan Sky and Cullinan Harbour. We are very confident that we can still create a lot of eye-catching transactions like we market these 2 projects in the coming months. On the government policy, I think it is not easy to predict whether there will be any supporting measure on the potential market. But the cost look public connect and also the relaxation of same period discussion will certainly benefit the sensor market.

Recently, the relaxation of [indiscernible] to 4 million did attract the secondary market a lot. If the relaxation can extend to 5 million or even 6 million, I think that would also pay additional transaction to the primary market and also strengthen the popu letter for replacement and also upgrading. On land banking, we are very happy that we can acquire beautiful size in last financial year. Both the [indiscernible] are situated very close to the MTR station and located in a mature community, while the Tung Chung site is putting the close with [indiscernible].

We have also acquired 2 sides through lenexchange and premium negotiation that is the funding of and also the homes side. Both can be redeveloped into small- to medium-sized units, which are very suitable for today's market. As for commercial side, I think, as you know, we have some sizable integrated project on hand still under development. So at this moment, we shall focus ourselves and on the execution of this project.

Thank you, Mr. Lui. So could I have the second question? The gentleman in the third row, second seat.

Thank you. This is Christian. I'm from [ state]. So I have 4 questions. The first one is on investment. So given a lower gearing and as well as the lower interest rates, will you see more room for more active investment this year? How would you prioritize between new investment paying down the debt or the shareholders' returns? So the second question is on dividend. Would you consider to change your different policy, for example, to a more aggressive dividend policy or payout ratio based on the recurring income base? And what is the management build on the buyback on the share buyback?

The first question is on the interest cost. So given the recent HIPO move, how would you adjust your financing strategies? And how much do we expect for the lower interest costs in financial year of 2026? The last one will be on the land investment. So how would you allocate the land investment between government action as well as on the farmland conversion?

Yes. We -- I think we'll just wait for the right opportunity. I think for the moment, as you noticed, we have been paying down our land and improve our liquidity and debt ratio. So at the right time, at the right moment, we'll -- well, I think for the past 12 months, we'll be already buying residential land, right? So I think for the moment, we'll focus on buying recession land, but it has to be the right location and has to be -- the project besides going now.

Yes. Your second question is on the dividend. I think we've always been telling the shareholders that we'll be paying 50% of the underlying profit, right, which we are paying this year, 50%. So we won't consider any buyback because at the moment, I think it's important to keep our dry powder so that we can buy in the right opportunity. For interest costs, I think for [indiscernible], we are paying 3% overall.

Right. Our interest cost has been reduced from 4.4% last year to 3.7% this year. Yes, right.

And 60% are either fixed rate or [ OMB ], right? So I think that seems to be have a good ratio. On the land acquisition, I think we don't really distinguish within buying from auction or buying from private individuals buying from farming conversion. Of course, our holding of the agricultural land we would hope we can convert more to residential. We always want to buy a console and for ultimate development. And -- but if the government really wants to speed up, I think, of course, we will comply with the [indiscernible].

Thank you, Mr. Kwok. So could I have the third question? So the gentleman in the third row, the second seat in a blazer.

This is Mark Leung from UBS. I've got 3 questions. First of all, is regarding on the 2026 earnings. I just wanted to check with management, what is our thoughts on next year earnings? You mentioned we focus on asset turnover and also not sure what kind of capital recycling plan we are targeting in next year? And also what is the long-term growth for Sunday Hung Kai? Yes. I think that's the first question regarding on earnings and capital recycling.

Secondly would be on the Hong Kong retail. So can we check about what -- how sustainable do you see for the resident Hong Kong retail sales recovery? What kind of rent reversion we achieved it in previous months and also our outlook for that one? And also on the leasing strategy side, because we still have some threats coming from cross-border online platform as well as maybe outbound travel. So keen to hear your thoughts about that.

Lastly, maybe on the Mainland side. what is the pre-leasing rate for Shanghai ITC? I think one of our anchor tenants has been moved out. So what is the replacement plan for the ITC? And also on the ITC retail part, any colors on the pre-leasing and also maybe some housekeeping on the IFC tenant sales and reversion?

Yes, I'll answer that question on the retail market first. I think the retail sector has seen make changes and challenges over the past 2 years. But I think the correction in retail sales at our malls has been bearing down. And so is -- and the occupancy cost has remained stable, while the rental reversion is largely in line with the overall market. And as you've said, there's been -- we think there are some signs of improvement. And indeed, over the summer holiday tenant sales at our malls have continued to improve. And from January after June of this calendar year, our malls have performed slightly better than market in terms of retail sales.

In terms of the of the momentum of this improvement. I think there are a few factors that reinforcing this positive trend. One is that the [indiscernible] trend and the stock index and the IPO market is quite strong. Should need that leads to a creation and benefits consumption. And second of all, the resumption of the multiple entry and the virtual business team. I think that has led to we have observed more our Mainland visitors at our shopping malls. And we hope that if the government can expand that to more cities beyond Shenzhen, that will be a big positive for Hong Kong.

Finally, Hong Kong in the past half year, so has played host to an increasing number of successful mega events, which has brought in more tourists. And as I'm sure all of you are aware that over the past 2 months, there has been a meaningful increase into is arrivals and we enter that significantly to the increase in number of bank events. So these are all positive factors to the retail sector in Hong Kong. And for us, I think we continue -- on the operations side, I think we continue to work on refining our tenant mix by refining the -- we're designing our shop sizes and layouts to bring more popular shops, including kind Mainland and Japanese F&B brands, which are first to Hong Kong in our malls. And we also make sure that most of them will have strong track records in Guangzhou and in our mortgage in China -- Mainland China, also leveraging our network in Mainland China.

We also try to continue to improve our customer experiences, for example, by introducing more family and pet-friendly amenities and making better use of the open spaces at our malls. We're also experimenting with newer retail formats, the combined shopping and lifestyle elements such as our new spotting complex, [indiscernible] which opened earlier this year with a strong success and which I encourage all of you to visit when you have the chance.

Yes. And in terms of the Shanghai. For our Mainland portfolio, I think overall consumption sentiment in Shanghai have shown meaningful improvement this summer. And for Shanghai IFC malls, we have seen a strong recovery in sales starting June this year, thanks to introducing our new tenants such as [indiscernible] and also the continued expansion of some of our luxury retail tenants. I think right now, the environment, I think, in Shanghai is that tenants are generally more cautious about expansions, but they are also similar to the office market, there's a flight to quality, right? So they go to shopping malls that are located in prime CB locations with good transfer connectivity. And I also like to stick with landlords who they can trust. And I think we believe that our experience operating malls in Shanghai and also in the Greater Bay Area region have enabled us to gain a trust out of these brands.

So we are able to leverage this relationship, right? As you can see, both in our Shanghai IFC Mall, which actually in the next year or so, plans to convert some of our -- maybe some of our hotel spaces into -- for retail uses, right? That's being discussed closely with our tenants. And also, I think this -- we are also for managing IFC Mall as well that has kind of bringing in [indiscernible] and Shanghai and expanding that to other cities in Mainland China. So we're confident that we can keep up that.

Of course, we have to work hard, right? But I think so far, Mainland China sales have recovered and we've been working hard. And then also, I think -- going forward, I think, again, for -- on the broader macro side, I think retail such in China has also have some positive factors, right? Especially because the central government has been -- has rolled out different measures to advance the opening up of the market to -- for business and also to submit the domestic consumption. So those are to continue, right? I think the trends are of stabilization and growth is there for a minute.

Okay. [indiscernible], would you like to answer on the Shanghai office here?

Yes. Our Shanghai ITC project is progressing in the construction of that. The tallest tower is progressing with full steam, and we will be ready by the end of this year. And you may notice that the tower has already been completed, and we are now at around 80% occupancy. I mean this is a good proof of the resilience of our quality project and its superior quality as well because of the -- if you look at the connectivity, the amenities. And also, we're going to have a hotel and this hotel is going to be open later this year and the big shopping mall. And these all that will underpin the future success of our project.

Now [ Tavy ], as I said, is in full steam and we'll be ready, and we've been talking to a number of big users in particular, who have shown great interest and of the project. And about the departure of one of our tenants there, I'm pleased to say to let you know that we've been already in talks with a couple of SOEs and big corporations. We are looking for either on block or at least a significant portion of the block. So we are confident that the leasing of the space will you take shape, and we'll be welcoming new tenants for that block in the very recent future.

[indiscernible], I think on the ITC towers, right, we would like to just share with you that the 2 towers are just on top of the railway station and the hotel is just adjoining, yes. So it's a very good location, comparable to our IFC Hong Kong, like hotel and 2 office towers on top. It's very good for tenants that require -- that would like to accommodate the staff for easy access, right? We need to walk 15 minutes open area to get to the office, right? So it's a very prime office, and this is the kind of integrated project that we would -- we are building, right?

So hotel plus good access for the staff for [indiscernible], right? And so actually, we are just combining all the -- our experience into this ITC project. And by the way, we were in Shanghai 2 weeks ago, the risk housing was completely full. So I haven't seen so many foreign faces as we scouting. So clearly, the foreigners are coming back. As you know, when the foreigners come back, they can see Shanghai and even Tianjin is a Tier 1 city, right? It's better than a lot of the Western financial centers, right? It's so well developed. Anyway, so once they are in, they will know that China is back. So I'm happy to say, I think the ITC will come out at the right time, yes.

But on the -- on your question about the earnings, I mean, we can't forecast our earnings to publicly. But I could say our recurring income skip on rising because we are building 3 million, 4 million square feet on the IGC project, right, on the office and on the retail. So we can assume that over time, the recurring -- rental income will go up. And also, we will be acquiring land at the right time. Of course, we are waiting for the right time to buy land on residential. So please be assured that on the recurring income side, it will just keep on going up for the development project for sale. We're just looking for the right opportunity to buy.

[indiscernible], would you have something to add on the retail side?

For the retail part, some out there has been in Shanghai for over 20 years with the partners the brands up and down. So don't worry about trend because they are now consolidating income back. We talked to them. We on the ground talk to them on a daily basis about the global development and also the strategy in China. So for our more -- we work in the tenant side for many years. So for this ITC Mason, we just opened about 100,000 square feet. Mainly is again be to serve the population above. We are on the right path to roll out a road map to catch the retail market in China because we do see that in this summer.

Thank you for the central government having lots of initiatives including that of the free Visa and the test we fund, all these initiatives, we do see a lot of the foreigner coming to China and also spend a lot there. So it's a [indiscernible] that being it on the ground proactively at the same time to micro management service in details to provide them -- to embrace them from the bottom is our user credits. So for the coming ITC, may sound to welcome all of you to come there and shop their assay at global landmark in Asia. Thank you.

So the lady in the third row, please.

This is [indiscernible] from Citi. I have strict questions regarding your Mainland China business. So the first one is on the general market comments, how is your view for the Mainland residential market specifically in the cities that you operate? Second question is regarding your Mainland China product and land banking strategy. So we know the luxury residential sales in Mainland China Tier 1 cities are actually doing very well. So do you see this as an opportunity for Sun Hung Kai as you have been known for having -- doing strong high-end residential projects? And what will be your land banking strategy in Mainland China, say, in the near future? Third question is on C rate. What do you think of the red market? Will you consider launching C rate to further capture the onshore opportunities?

Sorry, what was your first question? Sorry.

Your general view on the Mainland China residential market, especially the key cities that you locate.

I think, obviously, you know that we operate in a lot of the major first-tier or second-tier cities. And I think you see a market, especially this year, there's more of a polarization, right, between the Tier 1 and strong Tier 2 cities versus the rest. And thankfully, as you've seen in our contract sales this year, we thankfully in quite a bit of that. Actually, if you -- I think the team has done a very good job in showcasing some of our properties here. And for example, this year, we have sold quite well our Suzhou Lake Villa, and they are independent [indiscernible], right? And that has sold out -- we've won 50 and is sold out. And then obviously, this year, we booked a lot of our Shanghai Arch Phase 3 residents, which gave us a lot of hands on development profit margin. And so I think thankfully win that. And then next coming up, we encourage all of you to see is our Shanghai IFC service apartment. I think also, our team has done a great, great job and this picture here shows it is at the intersection of the [indiscernible]. And so it is a unique location, and this picture doesn't do it justice. If you go up there and look at the view, it is spectacular. And I think it is perfect to capture the [indiscernible] especially the booming tech markets and all the 4, 6, 8 dragons in there and all them -- and all those who work in there.

I think -- so thankfully, when a lot of these first cities, and we'll continue to capture that. Of course, we also have some projects that are minor ones in, say, for [indiscernible], which we partner with our Mainland developers is still churning and doing fine. And so as you said, I think our -- and then that answers your first question, right? And so we'll actively continue to sell. And the last thing we'll sell actually is a has these very beautiful last phase villas, and they're very rare and put on looking at the fund. And so Victor and the team will launch it this year, and it's quite unique in [indiscernible].

And so that answers the first question. I think your second question is on land banking, right? I think as you see, we have a sizable land bank in Mainland already. And a lot of our focus now is on executing -- not only developing it, but leasing it up well, right, as you hear from our colleagues on Shanghai ITC, Hangzhou IFC is also coming online and then Hangzhou, also substation ICCs coming online. So I think a lot of our focus is going to be on just developing and executing that well first. And then also, the last thing we will do is control the timing of our CapEx in China. And for some projects that if the commercial demand or office demand is weaker than we expect, then we will face our projects to that and match the timing. So we could -- we will only build what we can lease up or sell.

Yes. And on the C-REIT side, we are not considering at all. We are just focusing on just letting up all the properties now we are constructing. Frankly, the cost of volume in China is quite cheap only towards 2% or 3%, right, yes? So therefore, we'll just focus on finding good tenants for our properties. Yes. Thank you.

So could I have the next question? So the gentleman on the second row, please?

This is Raymond Liu from HSBC. I have 4 questions, mostly in our Hong Kong business. For the first one is about the Hong Kong residential. So like if you look at the Hong Kong DP margin, I actually has been contracting in for quite a while. So do you see any signs of boating out given the improvement in sales? What's like the resi DP margin outlook here? And in size of like potential rebound or actually, what would like the level of stabilizing or normalized margin down the road? And looking ahead, given by the good delevering process here, which currently prioritize the margin over the volume in the coming few years' time?

And the second question is actually about student accommodations [indiscernible] in Hong Kong. So how's the view on the student accommodation here in Hong Kong? And would you consider converting some like residential units or commercial buildings into the student apartments here? And the third question, it will be about Hong Kong office. So with like very vibrant financial activities here in the cities, how do you see the office leasing demand in your portfolios? Do you see that there is stabilization in the near term? And can management also share with us what's the latest modest rental reversion in the -- for this year? And what's the expectation on next year? So it will be great if you can also provide some hints on the level of Hong Kong rental income for the office portfolio next year because there will be like quite a lot of new completions.

And the last one is actually about our West Cullinan IGC project. Can management share with us like the preleasing status here and your target occupancy rate by the end of 2026? And would there be any update on the retail portion, that would be great.

Yes. Maybe I'll answer the first part on [indiscernible] and KW on the second part. And as I just said, for our sales, we are always trying to strike a balance between our volume and margin for mass project like NOVO LAND and YOHO WEST and even recently, the you normally see for a quicker asset turnover. But having said that, we have sold quite a large ramp of units in Victoria Harbour and Dynasty Court, they're producing high margin. And in the coming months, there are 2 very exciting projects in Kai Tak. The Cullinan Sky and Cullinan Harbour, I think we can produce a lot of eye-catching transaction too.

So overall, I think we can maintain our profit margin quite well in the coming financial year. Regarding the student apartment due to the huge demand on student accommodation. We have seen that a lot of small units close to the NPL station being sought up in the rental market. In our portfolio, we are also benefited, like the TOWNPLACE WEST Kowloon and also the ALVA HOTEL in [indiscernible]. For both properties, we can attract a lot of more affordable students and post-graduates. The government has recently allowed the conversion of office building to student apartment. I think this will only benefit what we call the [ gray ] office building. Usually, they are having a low rental, high vacancy and those better quality office building may not have the incentive to do so.

And at the same time, I think to maintain a qualified conversion, then may also involve a lot of value recent costs and CapEx. So the impact on this is yet to be seen on the office market.

Okay. Just add on the student housing part. I think we have to look at the -- yes, we all know the nonlocal students expanding, but we also have to look at the number of talents coming in. I think the rental market is way more than just student. And if you look at -- actually, our team has made a very good list, maybe they can share some public data of the past 2 years, how many people have come to Hong Kong, right? And this is not just student Visas but the top talent pass, the capital scheme, as you guys know, the ING program, which is graduate staying and on local graduate staying in Hong Kong, getting for job visas and artist each year.

My team has made -- each year, we have already brought in around 135,000 visas approvals. And I would say, quite a few of them come to Hong Kong, right? So I think that data study. And from 2023 to now, so 2.5 years, the total number of Visas approvals among all these themes, students, talent, capital less and all that is 328,000. So the 328,000 has come in. And as Victor was saying, a lot of the -- obviously, the very top-end guys, some they will buy, but some they would run from our very signature residential portfolio, but a lot of them actually rents in our TOWNPLACE collections.

And then -- then on top of that, we see a lot more -- and then on the, say, the students which are more price sensitive. Actually, even students are not -- we cannot classify all of those price center. A lot of them actually. Victor would add have come in and bought apartment already. we've held from the parent, of course, right? And the property connection maybe will even help them further. And then on top of the more price-sensitive ones, you see a lot of competitors doing it, right? You see [indiscernible] among how you see others, but we are also actively converting some of our hotels to more long-stay products, especially those near the universities.

I think the hotels, if you add beds, if you give the students what they like, social elements, convenience, shuttle bus and so on, our hotels will also become very popular, and it will also drive down our operating costs.

On the Hong Kong office with -- KW, would you like to..

Yes, sure. Yes. The recent uptick in financial market activity has spurred a noticeable increase in obviously leasing inquiries. We see this is a very significant indication in the office market. And also Hong Kong's role as a strategic springboard for Mainland corporations expanding overseas. These groups will and should bode well for the Hong Kong overall office market as many of these companies would like to have a presence in Hong Kong. We are already seeing signs of them coming.

In the second quarter of this year, we also have witnessed positive net takeup. So we believe this is also an encouraging sign of which direction the market is going. We also have seen pretty robust occupancy rate in our premier assets like the Two IFC and also ICC. Both all these 3 buildings in occupancy stay at around 92%. On the other side, we also see a demand and expansion demand from financial services companies including some government-related institutions as well.

And also, the flight quality definitely is an ongoing trend we have seen in Hong Kong, also, of course, in other cities around the world. So with all these positive signs, we believe the market is beginning to stabilize the office market. And I think, of course, we have to observe. We will respond to the market changes. But we believe this is happening in Hong Kong now. On rental reversions, negative rental reversion definitely weighed on our office portfolio last financial year. There's no doubt. But we are pleased to let you know that we successfully achieved very high tenant retention as we did in the past.

And I think this resilience is underpinned by the strong core strengths, our portfolio, all right. Excellent accessibility, meticulous property management, high green building standards integrated retail and amenities, including hotels, integrated projects that we have, a couple of them, big ones in Hong Kong. These are enhance tenants' experience when they are in our office buildings. So we believe this is a very strong competence for us, and we will continue to going forward sort of improving our core competencies.

I'll give you an example, we are planning to upgrade our flagship hotels such as Four Seasons and [indiscernible]. These enhancements, when they are completed, we definitely anyway, occupants, visitors and tenants experience as well because that will provide them with even better quality amenities, convenience for their business associates as well as their gas as well. So we are very optimistic about the emerging positive trends we have witnessed and that will, again, bring to broader market stabilization. So we see the future is coming back in a very positive way, of course, gradually. And -- so this is a very good thing for, I think, everyone of us.

Okay. Yes, we are very positive towards the future of the West Kowloon. It's just Central 2.0, right? Where else in the world do you have an office, museum, entertainment, waters, what term what will view [indiscernible] right? So -- and well, it's everything there. In fact, it seems for the tourists, the #1 destination is [indiscernible], right? And therefore, there's a tool museums and oh, there's everything there.

So I think Hong Kong will increase on the role as a wealth management center. And therefore, I think we welcome more of Mainland companies or Mainland people who sell their accounts in Hong Kong. Yes. Thank you. We don't want you to tell our competitors, they're still our tenants. So under very final stage of negotiation. [indiscernible] Management Officer, ICC.

In ICC, yes.Yes.

Fully your fortunately not to most your ICC office, right?

I was in IFC as well, right? So welcome, HSBC. But if I may, one more point about the leasing progress as a whole. Of course, I don't -- I won't mention names, but -- number one, on the completion, I think this is important. I mean, for our already sign up tenants and all those coming to commit. The construction progress has been going on very well, and we are in the final stage of inspections to be done by various government departments even in [indiscernible] services and also building department. We are very close to finishing all this. And I think we can be -- we can affirm that we're going to get the OP before the end of the year. So we're opening the door to tenants.

On the leasing side, some of tenants, they prefer to see the real thing, the building that's completed over now close to completion. So these days, we've been very busy in bringing people to the site. So on one hand, we ensure people going there even on the other hand, we don't want to interrupt any the ongoing final bit of the construction, not to mention the inspection help by the government. But anyway, we see momentum picking up. I mean, to our Chairman comment made earlier, the facility there will definitely be a world-class financial hub, commercial hub and as well as wealth management center, globally, Hong Kong is kind of be said to be #1 in the world in the very near future.

So I think with all this and the facility, the green and everything, we believe the West Kowloon project, IGC, in particular, and also ICC and AST project. We got over 7 million square feet. Commercial space, we got over -- almost 6 million square feet. So that will become the central district of Hong Kong. Well, in fact, that has already been the case. So we are further strengthening it by adding the 2 new members which is IGC and AST in the very near future.

Or in fact, for that location where you are directing to the airport to all the high-speed railway, right? Actually, someone told me they're going to than on only 6 hours by train, and you can still work on the train, and still call your wife or call your boss, say, you are still working.

Statistics already show us that more people [indiscernible] from Hangzhou or even Shanghai, they come to Hong Kong via the high-speed rail is of troughing on the air, which has a lot of uncertainties, delays and so on and so forth. So in fact, the connectivity of the West Kowloon district is superb. If you look at how many trading lines are running through that neighborhood and also the different parts of Hong Kong of course.

And then regionally [indiscernible] or even globally, by taking the Airport Express, which is only less than 30 minutes away from West Kowloon. So with all this, we strongly believe we are confident that the location will become the world class and Hong Kong's or second CBD as the Chairman has said earlier.

So add to the final point. All these IPOs coming to Hong Kong, they are almost all Mainland companies, right? They just want to raise money to go out to the world, right? This is a perfect place because you can go back to China, you can go airport and then you can keep a lot of wealth for investment, keep in Hong Kong, it's a perfect place. And then you can go to the new CME after work.

So let's have the last question. The gentleman in the third row, please.

Three questions. First, regarding North Metropolis, I think the government is ready to sell land towards the end of this year. I just want to ask about the [indiscernible] interest level in Northern Metropolis. And if you do -- if you're interested, do you plan to bid for land or by yourself? Or do you plan to partner? And if your partner, what kind of products would you be looking for? And second, I wanted to ask about China DP. Is it a counter the sales target for fiscal '26? And also I want to drill down a little bit deeper. I think I just want to get an update on the Guangzhou South Station project, ICC there because Guangzhou is one of the weakest probably Tier 1 cities. I just want to see how we're doing there.

And third is going back to China, Mainland China IP, I think it's no secret that the lot of the luxury main retailers have pulled back on the expansion plans, as pointed out before. I mean there's a flight to quality, but when it comes to expanding, they're not quite as willing. Would that come into the initial year on costs that you were planning for some of your new IPs in Mainland China? And also, can you give us some thoughts about the rental income uplift that we can get from the Mainland projects when they're all completed and ramped up?

So your question about luxury retailers. Can you repeat, yes?

In terms of return on your investments, would that cut back on your return -- expected return given the reluctance of the luxury retail stakes add?

Okay. I'll take the question on the market. Indeed, this is a very green visionary project is formulated by government. And indeed, is organic scale is actually spending over 30,000 [indiscernible], which is equivalent to 1/3 of the total land area of Hong Kong is going to be a multi-decade development project. And I'm sure the government is taking the lead to actively go out and to accelerate the project by steering all the major transport infrastructure projects, housing and the emphasizing on the economic projects and paying emphasis on the innovation and technology companies to settle to settle in this region being close to the border.

Obviously, this is, as I understand, is huge amount of the land will be resumed by government to facilitate the implementation of these gigantic new town or new development area. Indeed, we are currently have several projects in diesel location already because it's not completely new. It's actually built on the existing [indiscernible] new towns and other developed areas. We have several projects across the NM including [indiscernible], Kwun Tong and [ fanning ] as well. We have already committed a couple of residential projects already. And while we will still closely monitor and review opportunity arise and we remain very committed to maintain a prudent financial discipline in all these investments.

Adam, would you like to answer the South Station?

Yes. Thank you. I think with South Station, we've recently handed over 100 units for space to our buyers. And I think they -- honestly, you can add them, but they've been very happy with our product. And they actually would say they'd love to refer to friends. I think more importantly, for the project, obviously, I think something different from SHKP or we're unique at is a lot of developers can promise in the presales or can sell and marketing and branding. But we hopefully, we strive at delivering just what we promised or even better. That's our [indiscernible] building home with heart. And I think it's also reflected in substation.

Not only is the hardware good, but we are focused on getting the community to and our more actually ICC mall, around 20,000 square meters and some office will come online next year that will greatly enrich the whole area and the amenities. And then also we're bringing in kindergarten and famous schools [indiscernible], our minister went to and sold the education schools will open next year. And finally, I would like to say big football stadium is opening in our area. I think when it opens next year, it's the biggest in China for now, it's 75,000 seats. It's going to be the Guangzhou football stadium. So actually more than almost 2x of our Kai Tak.

So I think as we headed over with good plays and as the area matures by next year with a lot of infrastructure coming by the government, and I think the government for putting in the infrastructure. And on top, a lot of intercity rails will have -- the last thing is we'll have a similar to Airport Express actually. The new way will open by end of this year, it's called the intercity rail and it will connect South Station to the [indiscernible] Airport in 30 minutes and it will connect South Station to the city center in 15 minutes. And so it's a little bit like our Airport Express [indiscernible]. So hopefully, with all that, the sales momentum will continue to pick up.

Sort of luxury malls, I think -- 2 brands, yes. I think -- again, I think I'll reiterate that the goodwill we've built with a few brands for our Shanghai IFC mall, I think we've been able to leverage and extend that to the large IFC mall. Currently, it's -- the mall occupancy is already over 90% with stabilized sales. And the more itself, I think, has established itself as a new destination, right, for luxury shopping beyond the traditional mall, right, in the tradition area.

And for -- looking forward right now, I think for our ITC projects or other 100 projects, I think generally internally record conservatives is making rental forecast, right? Normally, it's based on -- we always watches on historical numbers, never quite forward-looking rate. So I don't think -- I think in terms of meeting budgets, I think it will not be a big issue. But in terms of adjusting to the market, I think we are always very -- we follow trends very closely, right, of the market. And so I think a few things, right? I'll react to your question. One is that for both the ITC project and the [ Hunter ] project, which are 2 of our biggest IP projects coming up in the next few years, I think they are all located in some of the best locations in the city with multiple very lines connecting and also integrated projects being with office, retail, hotel, apartments or service departments elements nearby or on top of the projects.

So in this market, I think the brands, they are very concerned about traffic, right, if you can generate natural traffic in our site. And we believe these inherent elements in the transportation connectivity in the location of the site and the multiple mixes -- property mixes, right? Those are kind of what we can offer our tenants to give the confidence about our ability to drive traffic, right? And in terms of my point about trend following, right? I think in China, there's a lot of talk about nature, just like an evolution, right? And I think in a way they're moving very fast, right, with -- also with the preferences and tastes of our customers.

And so I think for these new market projects, we will also actively try to bring in new brands and expanded new traits, for example, new entertainment options, right? I mean the cinema industry is not doing very well. So -- but they are also new up and coming entertainment options, right, that are emerging in the market, which we will bring in an experiment for these new projects. And I think we are able to do that because one of our experience to also, I think on the hardware, we're also very thoughtful in the design, meaning maximizing high sealing infrastructure both above and below ground and also ensuring that you have maximized connectivity, right, each 4 will have vehicular and protection access or triple chamber access, right, on each 4. I think this is something that our product teams are very active.

[indiscernible] Okay. Good. Okay.

So thank you. So this concludes today's analyst briefing. So thank you all for coming. We have some refreshments outside. Please stay and enjoy.