Good afternoon, ladies and gentlemen. My name is Joyce Kwock, and I'm the General Manager of Investor Relations at Hang Lung.

Welcome to the analysts' presentation for FY25 results announcement that were made earlier today for both Hang Lung Properties, 101.HK, and Hang Lung Group, 10.HK. We welcome the audience who are at our Hong Kong headquarters, and also the audience who are at our live webcast now.

Our presentation pack is now available on our corporate website or through looking at these QR codes. There are English versions and Simplified Chinese version for you to choose.

Today, our senior management team is all here to join the presentation. They include Mr.

Adriel Chan, our Chair; Mr. Weber Lo, our CEO; and Mr.

Kenneth Chiu, our CFO. This time, we would like to start the briefing with a quick video that visualizes the updates on our latest strategic growth blueprint, V3.

Hope you have enjoyed the video. Now, our Chair Adriel may start with a few words, and then our CEO Weber would also like to walk through some slides on result highlights.

Then our CFO Kenneth is going to go through our financial management and other slides as well. Then after that, we will address the questions from the audience from both the floor and the webcast.

Adriel, your turn now.

Thanks, Joyce. Thanks for coming everybody, and joining on the webcast for those of you who are joining online.

The reason why we showed V3 is because I think a lot of people understand sort of intellectually what this entails, but can't visualize it. This just helps fill in puts some meat on the bones.

What I would say about V3 in particular, which is one of my key talking points today is, that it really is a new page for us. It doesn't mean we're throwing out the old.

We continue to invest in our existing properties. We still think that that strategy works, but it will be with a different pace and a different scale going forward, whereas V3 is a way for us to scale with a lot less CapEx.

It's doing what we do best without the capital outlay. Of course, one one one of my favorite parts about V3 is the speed.

It's a lot faster when it comes to bringing a project from imagination to fruition. The hope is we can do it within just a couple of years.

I think we can achieve that. Whereas if you remember some of our asset-heavy projects in under V2, they took up to 10 years to go from buying the land, i.e., the first dollar out, until the first dollar in.

You think about the cost of capital for 10 years, even though we have a very healthy cost of capital, which Kenneth will talk about a little bit later, but it's still a very long time. What I'm really keen on is that additional GFA, the additional scale, and that's not just leasable area, that's also frontage, that's connection, that's a stronger community, that's a bigger footprint in every aspect, both physical, but also in mindshare of these cities.

It's in our strongest cities, we have Shanghai, Hangzhou, Wuxi, and Kunming, which are, among the the four best performing cities. Increasing that mindshare, increasing that market share is very meaningful for us.

Of course, we're leveraging the teams that we already have. Not only is there minimal CapEx, there's also minimal OpEx because the teams, the leasing team, the government relationships, the banking relationships, everything is already in place.

This is a way for us to go with super, super speed into into increasing our everything from ROI and our ROE. V3 is I think, it's not not an understatement to say it's very exciting and and it's very meaningful for the company, and it should be meaningful on a timeframe which is much shorter than what you're used to.

The second point I would talk about, maybe just very briefly, some views on on Hong Kong and mainland Chinese markets. I I know Weber and Kenneth will talk about this later, I'll just gloss over it.

There's a series of corrections taking place in the market, both in Hong Kong and in the mainland, across resi, office, retail. Some of them are structural, those are the ones that we're we're very careful about, and some of them are cyclical.

The question is, where do you think there's a structural shift, and where do you think there's a cyclical shift? We can jump into that in in a little bit.

Third point, is that when you see our numbers that that Weber will or actually maybe I should talk about this after Weber goes through the presentation. I think it'll be more meaningful.

I'll leave the rest for discussion a little bit later, and I'll let Weber take it away.

Thank you. I don't repeat the numbers here.

Oh, sorry. Yeah.

Sorry about that. In terms of our core business, the leasing, you can see that the revenue, although down by 1%, mainly because there's still some depreciation of RMB impact into 2025, but overall, operating profit and losses, we are up by +1% versus 2024, and underlying improved by 3%.

Both the HLP and HLG, we deliver the same dividend, same 52 cents and 86 cents for HLG. Next one.

Okay. I will focus more on the leasing revenue this time because this account for 94% of our revenue in 2025.

If you look at the mainland revenue, especially for the rental revenue, is at 5.878 million, which is about 68% of our total rental. Flat in terms of RMB, -1 in terms of year-on-year on Hong Kong dollars, as I mentioned about the depreciation of the RMB.

However, if you look at Hong Kong, we managed to get down by 2%. If you remember in the first half, it was down by 4, now the overall down by 2, that means we have done something okay in the second half to mitigate the overall year down by 2.

Property, because of the less booking compared to 2024 in Aperture, but we will talk about the overall what we have done in 2025 to bring in more capital. Next one.

Rental revenue in mainland China, if you look at revenue total, year-on-year flat. Focus I would like to draw everyone attention is on the +1% on retail.

Office, we see the headwind. The headwind is not easy.

I'm sure everyone knows that. We will explain a little bit more about what's going on, but we believe that this headwind will continue at least for 18 to 24 months.

Overall, we believe that the good news is we were up by 1% in 2022, up by 7% in 2023, and '23 was our peak. Then it was down by -4 last year, and is flat this year.

Hopefully, we can stabilize and go again. Next page.

Retail, I think this is really our core that account for 83% of our mainland, because office account for only 17, 1-7. You see that first half, we were flat to 2024, but we see a +3% year-on-year in the second half and generate 1% overall in 2025.

In a very tough year when you hear about the luxury goods are having a soft year, but at the same time, we manage to get our revenue up by 1%. You see across the board we managed to increase, except three.

Heartland and Forum, we will talk about it later, but we still see a headwind. Overall, all the other market we see a pretty good revenue growth in a very tough market.

Next page. I think this page I think a lot of people ask in details.

I think we show every details. When we were at the same place last year, we see already say -18 back to -11 in fourth quarter last year.

We told all of you that we see a little bit improvement. When we meet each other in end of July, we we said hopefully we see positive in second half to make the overall year become break even, but actually this is better than what we expect.

So +4 because we have 10% increase in Q3 and 18% in Q4. By the way, to just give you a dimension, 18% year-on-year Q4, Q4 sales in our history is the record high.

Because when you look at the Q4 in 2024, it was down by the record high of 2023 by 11%, but is now more than offset the 11% and up by 18% in Q4. Across the board, you can see, except the two, you you can see the sales are in a good growth, especially from the second half.

Next one. What we have done, I think a lot of the work behind the scene are coming from the active management with the tenant.

You you can see that across the board mostly, all of our properties with the higher occupancy. The the one that you might ask about why Plaza 66 was down, because we need to build the rooftop, we have to build the tunnel, sorry, the basement to the pavilion, and we have to close some of the shop, otherwise, it will not be 96.

Otherwise, if you see across the board, we managed to increase occupancy. Not only by managing the number increased, but also we increased the new letting.

New letting increased by 15% and renewed increased by 5%. A lot of work behind the scene to make this happen.

In the middle of it, you'll find that 200 of them are new to the city brands. We continue our tradition by bringing first in the market kind of brands into respective cities.

At the bottom of the chart, you can see that also there will be some LFA changes in terms of category. Luxury remain the same, but if you see, the personal care and beauty improved by 4%.

Even though you may hear from the market that this is a tough market, but we see we increase by 4%, the sales increase by 8%. F&B increased by 3%, and also the sales also increase.

As well as the others including some the service trade, experiential trade, and all that. I think this is the action behind the sales growth, especially we see from the 2025 starting from the first half, which getting some fruition in the second half.

Next one. Happy to also report that this is in our history the record high footfall.

Together with our 65th anniversary, we run a lot of signature event, celebration events, IP events, I think this is something working well. Especially last time when we talk about it, we discuss, in the weekend where we have events, no problem; in the weekday without events, there's a problem.

Now we get the tenant to improve. Once the tenant improved with more F&B with a full price range, we can also help the increase of footfall in the weekday as well.

I think that's helping. Used to be in Hang Lung discussion, everyone asking about luxury, but 2025 was led by a non-luxury sales increase and non-luxury effort that we have done over the years.

So 2026, we look forward to celebrate our 66th anniversary. It's very seldom to have a company to celebrate in consecutive years, 65th and the 66th, but because 66 means something to us, and that's why we will celebrate a lot.

This time more a B2C, last year more a B2B, right? We will celebrate a lot more activities, especially what we see we have done a lot of things working.

In 2020 2025, we believe that when we put together something meaningful and interesting and experiential, customer will come. Next page.

Okay. All right.

This is the usual page, but all numbers at least looks healthy. Valid members, valid members means members with spending.

Increased by 24%, new members increased by 10%, member sales increased by 7%. Even valid member increase, sales decrease increase, but in a lower magnitude because the average spend per customer decreased, right?

I I I'm sure you understand the market dynamics of China. Overall, I think it's healthy.

We managed to get more customers through the door, more active customer, and therefore, the member sales increased. The penetration also increased by 4 points.

Next page. Okay.

This is the tough part which we have to tell you all of you. The office, especially in the mid mainland, we experience 8% down.

First half 5, and second half get a bit worse to 12. Partly because of a big tenant in Shanghai that we have to restructure with them to retain them for longer longer period, right?

I don't want to name them, but at least that helped us to maintain the occupancy, that helped us to retain them, otherwise, you may see even worse numbers when the contract expire. In in mainland today, customers might have a better bargaining power today because they have a lot of supply in the market.

They may come to you and say, "Even though I have 2 more years with you, if you don't reduce the price, I will leave, and at the same time, I promise you I will not renew." You have to talk to them, and negotiate, and make sure that they will stay hopefully above the market price, but actually stay with us, and therefore, they don't need to move.

I think that will have some impact. Someone asked me, "How long do you think it will last?"

I think at least 18 more months to 24 months because we see the supply continue to pop up in the main city, especially like Shanghai. For some other cities like Kunming, like Shenyang, when you are having a much dominant leader position, you might have lesser impact, but you still need to negotiate with the customers when the customers having a lot more option.

For example, domestic players, most of them they have their own office in the past, but because of our better office facilities as well as mall, they would like to rent with us when their business is doing well. Now their business is tough, they want to go back to their own properties.

There's a lot of discussion like this. That's why I will see this negative drag might hang around for another 18 months to 24.

As we discussed in the earlier section, everyone talk about very bearish in Central a year ago, but now seems like it's stabilized. This is really something we need to look forward to, especially when the foreign investment will come back.

I mentioned to the media, I see at least a few minister, prime minister from the other country visit China, and I hope a little bit of the movement going back into China, invest into China. Hopefully, with this kind of more collaboration, bilateral kind of agreement, more company will go back into China.

This is something we hope for, but at least we have to prepare this kind of trend, and hopefully, we can retain most of our existing tenant. Next one.

Hong Kong, good news is we mitigate from a -9 to -2 in 2025. The retail side, the reason why we have that is because of one single tenant in in Causeway Bay expired their very high rent into a new market lower rent, that is the impact.

Otherwise, retail is more or less quite stable. If you look at the second half, almost flat.

Office, I think -1, which is because we don't have much office in our portfolio, so that's why quite stable. For example, the Standard Chartered Bank building, we have over 90% of occupancy, I think we are quite comfortable with our existing one.

Residential service and apartment is the really bright spot. I'm sure you heard about the rental market increase and improved over the years, and then we reaped the benefit as well.

You can see that overall we are -2% in Hong Kong. Okay.

I think this one is important. I want to highlight and highlight the difference.

Total 2025, the proceed that we get back from our properties is $1.6 billion. I think this is really highest in the last 8 years.

Out of that, we booked $264 million in the revenue, and the remaining will be booked in basically 2026. Out of that $1.2 billion, and then $700 million will be in Hong Kong, and $500 million will be in mainland.

Also there would be disposal from The Summit, as well as 1 Blue Pool Road. The good news is the momentum seems like gather, we sold another Blue Pool Road in January.

I think the good news is when the market improved, some of the property we can actually sell with positive margin, I think it's a great great way for us to accelerate the sales proceed, and hopefully, we can lower down our gearing continuously. Next one.

Take some time lag. Maybe out of battery.

Okay. You moved too much.

All right. Not much news on this page.

Why don't I do it myself? Okay.

Residential, I think not much news. We continue to settle down the Blue Pool Road.

Good news is this is on

Sorry about it.

Let let me do it. Don't touch everyone.

It worked. Blue Pool Road, we have 5 unsold, now is 4 unsold, right?

Because we sold another one in January. Wilton Road, we we got most of the approval already, demolition will start in in very very soon.

Hopefully, we can finalize everything. Shouson, Shouson Hill, we still waiting for some planning and final approval, and hopefully, we look for a premium from the Lands Department, and hopefully, we can get it as soon as possible.

Aperture, now we only have 90-something left for for sales from a 294, we sold already over 200 units in in the past 2 years. Mainland, Heartland and Grand Hyatt Residences in Kunming continue to be slow.

We believe that today, even though you drop the price, it may not help. We continue to to sell at the right price at and hopefully, market improve.

We see a great traction in Center Residences. We already sold 50+ unit at a very good price.

The highest in Wuxi about 40,000 per square meter. I think this is really encouraging.

I think that actually reflect the strength of our mall and our district. This is really the core Center City city center, and hopefully, we will continue to sell down this properties.

I will pass on to Kenneth on the financial management numbers.

Thank you, Weber. In the coming two slides, I would like to share with you our financial management.

I think the key points I would like to highlight is the net gearing ratio by end of last years it was 32.7%, lower than the gearing by end of 2024. I think the dividend adjustment and also the scrip dividend arrangement help us a bit.

I think more importantly, for CapEx, I think as we communicated earlier, we have already passed the peak of our CapEx cycle, which help us to further reduce our debt. Overall finance cost actually declined by 8% because of lower borrowing cost, both the benchmark rate, for instance HIBOR and mainland LPR, declined last years, but also on the margin.

My team have worked very hard to get a very competitive pricing on our financing. The net finance cost increased a little bit by 3% is mainly because of a lower capitalization ratio, which result into higher net interest expense.

Nonetheless, I think if you look at the interest cover, it has been improving last years to 3.1 times. For our overall debt profile, I think around 47%, if you look at the left-hand side of our debt, 47% are RMB-denominated debt.

I think in the long run, of course there are still room for increase, but I think the current ratio I would say is optimal. In terms of debt maturity profile, only 9% of debt will be deal with within 1 year.

My team and I are working on various refinancing 1 year ahead, and so far the progress is very encouraging and smooth. If you remember last years, we have done a $10 billion Hong Kong syndicated loan in the Hong Kong market, which help us to increase our dry powder and also help us to build up our war chest.

For next, I pass it to Weber.

I think have a lot of score put up here. You see that on the left-hand side, ongoing effort, a lot of improvement in terms of the score, in terms of rating.

Very glad to mention we deliver our 25 by 25 goals on ESG, which I think this is something we are very proud of, and now we are setting our journey into 2030, and then we are very committed to do well on this part, even though Western world now may not focus a lot. We believe that we have to do the right thing, and China is leading the way to achieve this kind of sustainability target.

On the right-hand side, decarbonization. Great to talk about our journey to net zero.

This is really the first time, I think not many company really having this kind of discussion. We issue our paper in March 2025.

The low carbon emission and procurement, the two projects that we mentioned, Westlake and Plaza 66 pavilion, our carbon emission actually was down by 42%. One thing I also want to mention, very proud, eight out of our mainland operating properties powered by renewable energy.

It's not only about really the achievement into the ESG, but it's saving costs, because the cost in this renewable energy is cheaper than the traditional one. I think we talk a lot about V3, but I just want to capture not only the video, but this is really strategic move that we would like to accelerate, involving much less capital, but more efficient and more strategic in terms of expanding our leadership.

Other than other company talking about so-called asset-light, we focus on only the core city where we believe that we will either already command the leadership position, or we will be the leader in the market. With Shanghai, Hangzhou, Wuxi, and Kunming.

From a customer perspective, we see that not only the area will be improved, but also the facade, the street level in terms of visibility will be improved. You can see that from Hangzhou will be triple, from Shengli Jie will be +53%, and from Wuxi will be +30%.

I think most importantly, which we disclose this time, all this four project, we will spend around RMB1 billion only, right? Now, of course not only.

This is compared to the scale of what we used to be in V2 will be much less, but that give us the additional GFA, that give us opportunities to command the leadership, and that give us leveraging on our existing resources, not only people, but also the existing team as we mentioned, existing relationship with the government, as well as the existing leadership already which we command over the years. If you have a chance to go to Kunming, it's a simple way just I think other property developer have done in Causeway Bay, for example, outside of their mall, you just make the street more meaningful, more interesting, and people will come through that into your mall, right?

We have done exactly the same at there. Plaza 66, which we are very efficient now, we are getting OP, and hopefully, we will be ready by Q2, and then we will launch and getting the first dollar as Adriel mentioned in Q3.

This will increase our Plaza 66 LFA by 13%. On the right-hand side, I stay with Nanjing Xi Lu, right?

So 13% in the pavilion, but if you include this project, this will increase our retail by another 67%. So 67 + 13%, the Nanjing Xi Lu retail area will be increased by 80%.

Not only that, we will have office, we will have hotel in this building. The good news is this is a joint venture that we will own 60% of that, and the land lord will be responsible for the CapEx to improve the building, and then we are responsible 60% of that into our interior design as well as the internal fit-out.

I think that is the project. Same thing apply into Wuxi.

We will increase our facade, and we will have 40% close to retail space increase in Wuxi, which we are already undisputed leader in Wuxi. We want to be even stronger, and then if you have a chance to go to Wuxi, used to be we are on the right side, we are not in the十字路口, the crossroad between the main road.

Once we have that, we have the best facade, we can put on LED, we can really illustrate a lot of brands with a high visibility. The Westlake, a lot of people say, "Okay, this is the one that you have not done yet.

Why you already expand before you do the first one?" I can tell you that we all know when we bought this land, we need a Phase 2.

This time we don't need Phase 2 anymore with this expansion, because we get the best angle and best corner of this particular junction. I think once we have this expansion, we will increase our facade triple, and also increase the GFA by 40% for the retail.

Okay. This one I'm sure everyone will ask.

Office, we have five tower, because the Tower A is not ready, because we are still doing the internal fit-out. We only have B, C, D, and E, and E already we deliver to one tenant in November last year.

Then if you only look at B, C, D, E, our pre-leasing is 38%, right? Is 34%, because Tower A account for 50% of the total GFA of office.

Because that is not available, but as of today, we already increased to 40%, right? Once the Tower A will be ready for us to lease, and then hopefully, we can ramp up.

Again, at the backdrop of tough office market, we don't want to be rushed, but at the same time, we also want to make sure that we can lease at the reasonable price, the team working very hard on this one. On the retail side, last time I recall we talking about 80-something percent pre-leasing.

As of today, we are 91%. When we open in Q2, we will be ready with 80% opening rates, and 90% by Q3.

This will be a one-stop shop, and together with the expansion, hopefully we'll be with luxury, with the retail non-luxury, and with the F&B, and with the culture, as well as with the relics, and with the museum below the ground. Together with the hotel on the left-hand side, the Mandarin Oriental, this will be open in early 2027.

That's all I have, and now open for discussion and question.

Thank you. We now start the Q&A.

Feel free to raise your hand for those in our Hong Kong office, or type it by typing questions in the box on the webcast page. I've got some questions on webcast, but Karl from J.P.

Morgan, would you like to have your go first questions? Thank you.

Thank you. My first question is about the CEO succession.

I guess the first part of the question is more for Weber, because when we saw the announcement back in December, we were a bit surprised, right? Just curious what's your thoughts behind the retirement, because you're still very young, very energetic.

Just curious your thoughts behind that. That's the first part of the question.

The second question is to Adriel. I guess now we are in the stage of identifying the new CEO.

From your perspective, what kind of qualities are you looking for in the new CEO? Are you going to find someone externally, or are you going to promote someone internally?

What's the direction? Is there any timeline on when we'll be able to appoint the new CEO?

That's the first question on CEO. The second question is on the mainland China retail.

Last year, I remember that in the results briefing, you mentioned that your outlook for second half is cautiously optimistic, right? Looking ahead into 2026, just curious, what's your general outlook?

Do we expect tenant sales to still see a pretty good positive growth? I guess maybe if you have any colors on January so far?

That's my two questions. Thank you.

I maybe answer 100 times already. I will repeat again, hopefully if this is not too boring to you.

This is always my personal goal. Even when I was 35, I would like to retire by 55.

Don't discriminate the age. I have been in the role for 8+ year by the time when I leave my office.

Of course, when I joined Hang Lung, I would not say I will retire by 55. This is really always my goal to do that.

In the media section, actually Adriel mentioned already, my next job, which has been confirmed, is my daughter's caddie. I upgrade myself from a daddy to caddie because my daughter is a competitive golfer, and I want to spend more time with her, not because I can earn any money from her, but I think if I can afford it, I think family time for me is very important.

Especially before she moved to overseas for university, I think by then, I would be redundant anyway. I would like to spend more time with them, and also my parents also, they're old enough, and I just don't want to leave them alone by focusing only as a CEO role.

I have a son role, I have a husband role, I have my father's role, and then I would like to balance for that. This is really not a tough decision for myself.

I informed the board, and informed Adriel and Ronnie in January last year. We can only announce by December, I think in terms of the shock, maybe a shock to you, but not shock to [laughs] to the company and to the board, because they were informed 1 year ahead.

I hope it will not create so much inconvenience. I worked for U.S.

company for long time. Everyone can be replaced.

I don't believe that no one cannot be replaced. I truly believe that Hang Lung will be able to find one person or my successor to understand the business, and then to do well.

I will stay on, and I'm sure Adriel can talk about my role after my retirement, but I'm happy to answer any question if I have not answered. I have answered a few times, I hope that if you still say, "Okay, maybe you have a role."

I want to clear some of the rumor. If someone spread the rumor irresponsibly, I have to say I have no job.

I will not go to another place for CEO role, and then if anyone believe that, I will put money on the table and bet with you. [laughter] But overall, I'm happily to be the retirement

[laughs] with Irene. I do want to thank Weber here for his 8+ years of contributions.

If you think about our previous CEO, Philip, he was on for about 8 years as well, I don't think this should come as a surprise frankly, and it's, as he said, it's very common for companies to have to go through this. Everybody has their life plans.

I think Weber's life plan facilitated by the both emotional, mental, and financial freedom to do what he likes and to choose his path is very empowering, and I support that wholeheartedly. As a company, obviously that leaves us in a position where we have to find a CEO.

Although as he mentioned, it's not a surprise, we have been looking for some time. When we have something to announce, we will announce it, but for the time being, I don't have anything to announce.

What I can say though is that the boards have approved an advisory role for Weber, which will be similar to previous practice, and so there is absolutely no bad blood and absolutely nothing worth flagging in this transition. That will all be announced in due course as well, although it has already been approved by the boards.

I think on the succession, it's pretty standard. We'll work with what we have.

On the China retail outlook, last year we were cautiously not quite cautiously optimistic, but we were cautiously hopeful that the second half would bring us back to parity, and it's done that and more, as Weber just mentioned. The Q4 for us was record-breaking on multiple levels, both total retail sales, foot traffic, occupancy, or, technically maybe we were at a higher occupancy when we only had the two Shanghai malls, but that was sort of 15 years ago.

We're at a record high occupancy, foot traffic, and sales. I think it's really a great way to start our 66th year.

With that 66th anniversary, obviously we'll be pushing really hard into the consumer, the B2C side of that marketing. What you saw in the V3 video is our 66th anniversary logo, which will be pushing to consumers.

Even though we've had a strong fourth quarter, I still want to remain conservative and a little bit cautious. Partly is because the luxury brands have not had a big uplift yet.

They've been doing okay. By okay, that's in some cases maybe down low double digit or high single digit, in some cases in our malls, maybe a little bit better than that, maybe down single digit plus up single digit.

That is not where the growth in Q4 has come from. The growth in Q4, which I think is very gratifying, has come from non-luxury, it's come from F&B, it's come from jewelry, and that is what we've been trying to focus on for several years now, to build a really compelling non-luxury offering in our malls, which means experience, it means entertainment, service, F&B, and so that's what we've done.

I think this is the pudding, or rather we're eating the pudding now. I am still cautious.

If you look at LV's numbers which just came out, obviously they're down for the whole year, but Q4 again was also up 1% for them. That sort of tracks for us as well.

It is not so confidence-inspiring that I'm willing to say, "You know what, 2026, big numbers, luxury and non-luxury." I'm not ready to say that yet.

I think it's a great start, and I think that if we're able to execute all these things that we've been planning, including V3, you might not see most of V3's impact in '26, that will be in later years. I think the signal, the canary in the coal mine is what we've done in Kunming, which is a simple, 67 meter-long section of the shopfronts across from our mall.

That has brought significant increase in foot traffic, at least from that entrance. It has brought a lot of life back into the district, and it has created a new buzz on social media and within government and within the community on what is happening around our mall.

That is really what we're leaning into as well. Retail, although I'm not yet willing to put my hand up and say back in a really big way, I am willing to say that it is confidence-inspiring, and we need to work hard to make sure we capture that.

Just to answer you about January, our numbers, if you look at the first 28 days, more or less the same as last year. The good news, this is a good news.

The reason why it was Chinese New Year was in January last year. This year will be in 17 of February.

Last year was in January 27, right? You can get my point, right?

If you have the similar sales of last year CNY, then I'm pretty confident the two months will be good, right? I think this is what I can share as of now.

Whether that fully reflect the recovery, don't know yet. I think I'm not saying that we were forward-looking enough.

The reason why when we drop so-called our luxury definition and non-luxury mall definition, a lot of people at that time say, "We worry about luxury, and you are retreating from luxury." No.

We already see the behavior change of customers, and that's why we don't want to label that particular mall as a luxury mall with only 15% LFA for luxury. We want to open it up, and make sure everyone should come.

That change of mindset see our occupancy increase, our footfall increase, our non-luxury doing well, not because we just changed the definition, it's just because the behavior has changed. That's why I want to correct some of the people say, "Oh, because we worry about luxury."

No. We continue to rely on both luxury and non-luxury.

Happened 2020 2025 was driven by the non-luxury growth, which we were spot on in 2025. There's a lot of continuous refinement, there's a lot of way that we need to engage with our customers.

When you look at our LFA of luxury, we did not reduce. We are more or less the same, but we focus on reshuffling the non-luxury to capture the growth opportunities for our mall.

Maybe I'll take the opportunity just to expand that into Hong Kong. When I look at China retail properties, I think what I'm seeing so far is that it's cyclical.

If the economy comes back, which we expect it to do, if not immediately, at least in the medium term to long term, we're still bullish on China, then I think retail sales can come back and will come back. I think that that is a cycle.

On the other hand, here in Hong Kong, as I'm sure we all know, retail has been hit very hard by people traveling to the mainland, by the lowering in standards of service, the offerings, and so I think in Hong Kong combined with the broader economic environment, I think Hong Kong is a little bit more structural when it comes to the retail landscape for landlords. In Hong Kong, I think we've done quite well, all things considered.

As Weber mentioned, there was sort of a one-off hit in Causeway Bay, but if not for that, then we would have been pretty much flat. [coughs] So we seem to have found the bottom in Hong Kong retail.

The question is how quickly will it return, and I'm not yet confident to say that it's going to come back very quickly, I'm not holding my breath. I think Hong Kong is a little bit more structural, while the mainland retail is more cyclical.

May I clear some questions from the webcast? There are some questions on financial management.

What's been driving down the net gearing ratio? This is the first question.

The second question is what is the CapEx guidance for the next few years?

Let me give you some high-level figures for the CapEx first. For this year 2026, the CapEx will be around $3.1 billion, and 2027 will be around $2.6 billion, and subsequent year it will go down continuously.

The figures I show you have already included the $1 billion attributable CapEx that we have to spend going forward in the V3 strategies, but substantially, those CapEx will be incurred I think from 2020 2027 onwards.

Sorry, just to chime in. For those of you who've watched us for a long time, you remember that for many, many, many years, our CapEx out was $4 to $5 billion per year.

This is a meaningful reduction.

That's right. For the gearing, the question is what are the factors which help us to bring down the CapEx?

As well, the gearing. As I mentioned, the scrip dividend arrangement in the past 2 years has helped a bit because the cash outlay was much less in terms of cash dividend.

As you may know, our major shareholders HLG opted for scrip dividend, so that HLP can preserve more cash. I think more importantly, we spend less CapEx.

As highlighted by Weber, for contract sales, actually, even though you look at the P&L, the revenue recorded is not substantial, but actually starting from Q4 2025, we had much more disposal in residential, particularly in Hong Kong. We have already sold, I think around 16 units in 1 quarter, and also we have some disposal in Blue Pool Road as well.

I think the recovery of the Hong Kong residential market provides us a good windows to accelerate this disposal. Hopefully if the momentum continue, we should have more disposal for at least Hong Kong resi in the coming year.

There are two more questions related to dividend. The first question is about scrip dividend.

Is it going to be the last time we are having a scrip dividend scheme? The second question is will the management consider a special dividend for the 66th anniversary?

[laughter]

It's hard to say if this will be the last or not. That depends on the numbers when it comes to midyear and end of year, but I think what we have been relatively consistent in saying is that this is not something that we necessarily want to do long term.

The question is what's the right timing, and as we have new projects coming online, in Hangzhou's opening hopefully April midyear this year, then the hope is that there will be less pressure on the financial side, and therefore we would not need to issue scrip or offer scrip dividends as a way to ease our interest payments. Or our gearing.

There's a broad intention not for this to last too long, but specifics will have to be up to the board when interim comes around. Oh, and on the special dividend, [laughs] yeah, maybe if you're in one of my Weixin qun, then there'll be a lot of red packets going around, but in terms of special dividends, I'm not sure that that's something the board is really thinking about.

Okay. Cindy from Citi.

Thank you. This is Cindy from Citi.

I have three questions. First is a follow-up on China retail.

We mentioned non-luxury outperform, last year we added a lot of lifestyle and beauty. I'm just trying to think of what will be your leasing strategy into 2026?

Will you continue to add on, say, experiential non-luxury space? How do you think of the, say, temporary underperformance of luxury?

I think Shanghai malls retail sales kind of underperformed that of Wuxi and Dalian, is it because of the difference in the luxury positioning, or what are the reasons behind? Second question is more on the underperformance of Wuhan, Shenyang.

Obviously has been undergoing the repositionings. I'm just wondering if the whole process is, say, aligned to expectation, and when will we see the stabilization in their performance?

Is it '26 or even '27? What would be the shopping malls after the repositioning?

Then the third question is actually also on dividend. I'm just trying to think, with gearing lower, with CapEx lower, with more rental incomes ahead, when would you start to consider maybe even increased dividend?

Under what scenario, when earnings back to what level, will you start to consider that? Thank you.

I think I believe which also get some information from the luxury tenant. Adriel and I went to Paris in December.

Some sort of not brainstorming, but getting some feedback from the tenants. I think in general, overall, everyone is cautious, but they still look for mid-single-digit recovery from a tough year of 2020 2025.

I I believe that there's a lot of consolidation happening because a lot of maybe some brands, they overexpand themselves. It in terms of consolidation is happening.

Lucky enough that they don't consolidate ours, but they consolidate the business to ours, and therefore, there will be hopefully some opportunities for us. I think this is more about luxury.

The non-luxury side, I think the momentum continues. The athleisure, I'm sure everyone talk about.

The good news now is that it's not only one brand. They have a lot of brands doing pretty well.

I think it's quite across the board. Not only athleisure, but if you look at Pop Mart, for example, some of the IP, Jellycat, they are doing pretty well.

I think we need to look for what today's what customer really want. F&B, it we find out in a very tough market 2025 is that we have to offer various price range.

We can't offer only Michelin three-star and stop there. We have to offer something very cheap in order to attract tenant customers as well as footfall.

I think I will not believe when the clock click from 2025 to '26, things will improve or change dramatically. The momentum will continue, the footfall is continuing.

I think we believe we still look for a single-digit increase on sales, which I think should be doable based on what I just mentioned the first two months. If if we hang on for January, but get a upside on February, at least we should have a good start.

I think this is first part of your question. Second part about the two I would not say struggling, but the repositioning one because of the competition.

For Shenyang first, we are building a sports park next to Shenyang using the site that we stopped constructing, but turned that into a urban park. We want to really leverage on the park facilities to make this become a urban hub for sports, for athleisure, for F&B, for some other places.

I think this is ongoing, and then the park will be opened by Q3 next year this year, sorry, Q3 this year. Hopefully with the park with a lot of interesting, you can name it, pickleball, basketball, whatever venue that we can offer.

Pet-friendly kind of facilities, we can attract different traffic into the mall, and that will facilitate more footfall into the shopping mall, and speed up the the trade mix improvement. Heartland, I can see you can see the second half already improved.

Partly because of one of the big competitor opened in 2024 July. When you normalize it, the drop should be less.

Nonetheless, we have to work very hard to improve our occupancy. You can see we have 5 points jump in terms of occupancy.

We are improving a lot more F&B, office. I can tell you the challenge in Heartland is not luxury.

The the challenge in Heartland is the non-luxury, because the one next to us suffocate us, not allowing anyone to open with us. The key for us is to how to break through to get the non-luxury going.

We have some strategy I cannot disclose to you, and hopefully by the middle of the year, you can see we have some breakthrough. When we get the non-luxury going, you will have the footfall.

Once you have the footfall, everything will be improved. I think it takes time.

Of course, I don't want to always go back to those little brother need helps, but the good news is out of the 10, we have seven good way good one. We have two a little bit struggle.

We have one actually on the good foot with a high occupancy, we just need to make sure that the reshuffling on tenant mix will be relevant to the customers. We have to be on top on what's going on in the market, and make sure that the tenant mix will be relevant.

I think that is the key. The last one is the dividend.

Yes. Again, I don't want to give a false hope.

You if you look at our growth and the net interest, we still have a bit of capitalized interest will be realized to be a real interest, that will drag us a bit, even though if we have revenue increase. I hope that maybe hopefully we still need to go through the next 24 months, and once we get through that capital interest and then when we see the earning improvement, and then I'm sure we are more than happy to improve.

This is not really this is what we can mandate the team to do, but this is what the earning will tell the story. Then we are already paying up to 81% of our earnings.

I think if you look at even with the capitalized interest, we are more or less deliver almost all. I think you can calculate your own mathematics.

I think we are trying our very best to maintain it. Again, go back to the tough decision that we have made by reducing dividend last time.

I think that a lot of you even ask me, "Should you cut more?" [laughter] I remember that, "Why don't you cut to zero?"

Of course, we have to strike the balance. We have to make sure that we find the place that will be making the shareholders as well as the company both can be a win-win.

Hopefully, we can sail through the tough time. We see a little bit of the KPI going into the right direction.

The gearing now coming down, the borrowing coming down, the CapEx already peaked. I think the few years ago when we talk about we have to lower down the gearing, get the cycle recycle back, we are working it.

We are doing really hard on that, and hopefully, you can see that.

I would just add that we've previously said that the first priority was to deleverage. It still is, and so we do want to reduce our gearing and interest costs.

Do we necessarily have to get to zero borrowing before we start thinking about increasing dividends? Not necessarily.

It may not be that long. It'll be somewhere in between, and it'll be a discussion.

Obviously, it will depend on the trajectory that we see the business taking, especially in the mainland.

Mark from UBS.

Thank you, management. I got about three questions.

I think the first question is regarding on maybe the two Shanghai malls. We've got excellent tenant sales.

When do management expect that should be reflected in the rental income? Or should we expect the non-luxury sales growth will be more base rent focus?

It should reflected maybe 3 years later? I think that's the first questions.

The second questions, I think will be more on the net gearing side. We definitely want to fastens the disposal for the Hong Kong DP, right?

How about for the China? Do we expect maybe disposed of China office like the C-REITs, or more innovative lower funding cost methods, for example like issuing CB, etc.?

That's the second question. The third question will be more on Adriel.

Do we see the current structure for HLP and HLG is optimal, or do we have any plan to any change for the corporate structure? Thank you.

First question

When will sales turn into rent? Is that right?

Sorry. [laughs] About Shanghai.

I think in Plaza 66 is quite optimal, I would say, because when you see the sales increase, you get the rent increase. Which is more or less, I would say, when sales come up, you will get the impact of it.

In Grand Gateway used to be always our fixed rent is much higher than the turnover rent, right? In the down cycle, we're happy with the high fixed rent, but in the up cycle, we may not be able to capture all the upside.

I would say if our sales and footfall continue to improve, you can see the fixed rent will be improved, right? If you really dig into the details of our mainland this year, even with a very tough luxury sales, our fixed rent increased by 2%, right?

Our sales rent basically flat, right? That's why our total increase almost by one, right?

I would say in a very tough time, we still managed to get the fixed rent increased because we always believe more at the fixed will be beneficial to the landlord, rather than leave everything on the variable, right? Now, of course, on the other side when the sales go up very, very quick, then you will say, "Why don't you have more sales rent?"

I can't basically have both, right? It really depends on the nature of the properties, as well as the competition next to you.

I don't want to mention in Shanghai, the competition is very keen. That's why to us is that we have to make sure that we get the best offer for the customers.

We have to make sure that the occupancy cost will be reasonable. Yes, you can drill and milk the cow to the max, but you may push the tenant to the next door.

That's why we're very cautious about doing that, right? I'm sure you understand what I'm talking about, right?

That's why, on one hand, we want to be more energetic in terms of more footfall in the market, but at the same time, we want to be reasonable, and therefore, we can get the best tenant mix. Once you have best tenant mix with the best footfall, this is the best defense for any competition.

The second, I pass to Kenneth.

Maybe I help to answer the your second question about gearing and you mentioned about C-REIT. Don't speculate Hang Lung is working on any C-REIT.

Some of you write a paper like this, which is mis- which was misleading, okay? Definitely, we my team keep monitoring the latest development of the C-REIT market.

As far as I know, last years there were, I find, 11 C-REIT listed in mainland. Most of them are either 大賣場, those mass market outlet mall, and some of them are community malls, and so forth.

This is interesting, and I've noticed the yield has compressed from the IPO price. Nonetheless, for for us, we are still The key challenges that we have observed is even the CSRC and the two exchange in mainland, they spend a lot of effort to promote the C-REIT product.

The we we have not yet seen a very clear or clarity on the fund the capital flow from offshore to on- to from onshore to offshore. Very little clarity, and I think as a Hong Kong-based listed developers, it's very difficult for us to do something without a clarity, not not mention the tax implication, all this.

I think for us, we will keep learning and mo- monitoring the market. Of course, you mentioned office.

If there's a very active C- now they call commercial REIT, because previously they called cons- consumption REIT, right? If there are investors who are interested in mainland office, we are happy, to to explore.

As far as I know, the regulators, they encourage the sponsors to do retail-related REIT. Of course, you can have some office element or even hotel, but the majority are still retail-related, as far as I know.

I think give us some time, to to study, and feel free to share with us if you have any insight on on there. Yeah.

I think tying into that, with our priorities still firstly to deleverage, to de-gear, we will naturally look at opportunities to sell down. We'd prefer to start with non-core, as we have said many times before.

Non-core properties disposals are something we look at on a regular basis. Of course, when push comes to shove, the prices are never great, we've not been able to move maybe as quickly as we would have liked on some of them.

As our gearing starts to come down, as our interest expenses start to come down, the pressure to do so is a bit lower, and at the same time, the market seems to be returning at least a little bit, and so the opportunities may increase. It's always a balance how much do you need to sell, and frankly, we don't need to sell.

It's just a matter of preference. Then also, how does the market look that we're trying to sell into?

We've been able to move residential relatively well, I think, over the past 12 months, and we'll be able to book a lot of that this year, rather than last year when they were contracted. We'll hope to continue that.

We're still looking at all options, but hopefully the market comes back and works in our favor. On the structure, it's something that we look at again on a regular basis.

What is the optimal structure? Obviously, we have several peers who have been making adjustments and tweaking.

Some of them have done quite well in adjusting their approach to the governance and the holding structures. It's worthwhile for us to watch and learn, but we don't have anything to talk about specifically.

Let me clear one question from webcast regarding Westlake 66. It's a positive sign, a positive number to see 91% of commitment rate.

The opening should be 3 months from now. How is the opening strategy as in is it going to be event-driven, or is it going to be CRM-driven, especially on the VIP segment?

Also on the tenant profile, anyone to highlight here? Thank you.

I think you named them all. [laughter] We have to do events, we have to do good tenants, we have to push on sales.

We already recruit quite a decent number of members already around the areas. The pre-heat has been done since the middle of last year.

I think we are working very hard. Now we hand over 90% of the space to our tenant, and then they are submitting drawing, start to renovate it, and then this is really the last mile every single mall when we open, we need to push and making sure that they open on time.

We will come up with some incentive, hopefully everyone will be according to our timing. I think overall to start with, I think this mall will be a one-stop shop including luxury, including non-luxury, including culture with a beautiful fourth floor as a garden, we call it Oasis, and then with the relics on the B2 to really have a museum down there.

Then we'll have a arts, we'll have hotel, and then with the expansion, we have a lot more space. I think it will not be different from what we have done in Kunming, and what we have done in Wuxi, and most likely similar to Grand Gateway to start with, right?

Because at the end of the day, it's no more Plaza 66, you can't only do luxury, because the plaza is the one that we really first in the market, and then this is special. This is home to luxury, but on the other hand, I think with the space and with the expansion that in a few years' time, I think we will be able to do one-stop shop in that area.

I think overall, I think we are pushing very hard on every step on promotion, on even have a artist coming at the launch, everything, right? Hopefully, we can invite you to come in 2026 second half.

May I clear one more question from webcast and saving the last question to Karl Choi from Bank of America? There's a question from webcast which congratulate us on a strong year of contracted sales in 2025.

Any guidance for '26 in terms of the sales, whether it's from the DP or from our IP disposal?

If you look at our inventory, we don't have that much left to sell, [laughter] Well, in the mainland of China, we have a reasonable stock. I don't expect that all to sell like hotcakes.

Some cities, as you've seen, are much stronger than others. Wuxi is doing particularly well.

Wuhan is doing a lot less well. That's a function of the various economies and regional economies.

In Hong Kong, obviously we do have a couple. We have Jardine's Lookout, we have Shouson Hill, and then of course we have the remainder of Aperture.

Those are all things that we're going to work on, but in terms of total number, it's relatively limited. Yeah.

I think out of imagination, we have some IP to dispose. We just dispose one in a very tall building, hopefully we can dispose more.

That we have 50-something units. I think with the market improvement, I hope, and I wish we can dispose more.

We have four more Blue Pool Road house out of 18. If we can sell four more, that will be great.

[laughter] And the Wilton Road as well as the Shouson Hill, we will work hard at least to get all the master layout plan done first. If someone want to take it, take it.

I think there's a lot of way we can speed up, but of course, I want to also strike the balance between the shareholder return, right? If of course, we need the money for survival, of course we can sell at cost, but if we have some breathing space, I want to make good money for the shareholders.

I think overall in mainland, again, Wuxi doing pretty well, we want to continue to do that. Then Wuhan and Kunming a little bit tougher because the market is not up there to the price, and then we are really premium in the market.

We just need to wait a little bit until the sentiment improve. Overall, I think of course, if there is any en bloc available which the price is attractive, of course we will look at it.

I think overall, there's some, but that will not be a lot. Also, we have 90 for Aperture left, and then we would like to dispose as much as we can.

If we can ride on the momentum of 60 in the last quarter of 2000 and 24, sorry, 2025, I think if I just do the straight line, we should be able to sell the 94 in 2026. Easy for me to say when I retire, right?

[laughter] So I think overall, I think if the market continue to improve like what everyone said, I think we have good chance to dispose a lot more. Of course, we don't have a guidance because I don't want to give you a false hope.

I just want to sell at the right price. If the price is right, we want to sell as quick as possible.

Karl from BofA, thank you.

Yes, actually one of my questions was going to be about The Summit, and given the very hot luxury residential sales market, are we having some discussions there? Is it just a matter of pricing?

That sounds like we are willing to sell if the price is right. The second question is we touched on Hong Kong retail a little bit, but can you give us a little bit more color on the rental income outlook for Hong Kong, presumably still relatively stable?

Just want to ask a little bit about Hong Kong.

Maybe I help to answer The Summit first. I think first of all, other than the disposal that we have announced last years at $160 million something like that for a unit, we have also leased out one unit at a very good price.

I think if you look at the news, it's 300,000 per month. Again, I would like to emphasize it's still a investment property.

At the right price, if you are interested, no matter lease or buy, please come to me. Please don't lowball me, okay?

[laughter] You know where I come from, right? I come from investment background, I'm quite demanding on the price.

Nonetheless, my team and I are working hard to strategize overall how to put the asset into the market. The second questions is on the retail.

Hong Kong, I think, as Adriel just mentioned, I think we are cautious. If this is structural, I think we need to wait and see whether the behavior of customer will come back a little bit more back to Hong Kong, because last year, I'm sure everyone talk about everyone goes to Shenzhen, right?

Seems like it dial down a little bit now. For our neighborhood mall, the impact is minimal.

Now we see a little bit more tourists coming back, so that should be beneficial to our commercial district. I think we will have some reshuffling of tenant mix in Causeway Bay.

That will have some void period, and that hopefully will be very short. That hopefully also give a uplift of the tenant mix for Causeway Bay, and hopefully, that will bring the sales increase and bring excitement to our Fashion Walk.

I think overall, we are cautious. I can't say cautious optimistic, because whether this is structural or not, we still need to wait and see.

Hopefully, the peak of people leaving Hong Kong and go to the north a little bit, I would say, the peak has been passed. Whether it will dial down back, everyone come back and shop here, wait and see.

Just one supplemental questions. Actually, we have seen a very good improvement on the footfall in Hong Kong.

If you go to Causeway Bay, go to The Peak, Mong Kok, very crowded. I think the challenge to not only Hang Lung, but all the landlord, how to translate the footfall into the sales is key.

As mentioned by Weber and Adriel, actually we are working very hard to reshuffle some of the tenant, particularly in Causeway Bay and The Peak. Please give us some time.

We are working on this.

Ladies and gentlemen, this wraps up the analysts' presentation for our FY25 final results. Thank you very much for your participation.

We'll see you next time.

Thank you.