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 FY26 interim results announcement that were made earlier today for both Hang Lung Properties (101.HK) and Hang Lung Group (10.HK). We welcome the audience who are at our Hong Kong headquarters and also the audience who are at our online worldwide live webcast now.

Please scan the QR code for our presentation pack. There are versions of English and simplified Chinese here for you to choose from.

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

Adriel Chan, our Chair; Mr. Weber Lo, our Chief Executive Officer; and Mr.

Kenneth Chiu, our Chief Financial Officer. Our Chair Adriel may start with some remarks, and our CEO Weber, CFO Kenneth will also walk through the results including development projects and our financial management.

After that, we can take the questions from the audience. Adriel, please.

Thank you.

Thanks, Joyce. I think you've all seen the numbers by now.

I hope you'll agree that it's a healthy set of first-half figures. Consumption in China is continuing to hold.

I think first quarter, if you break it down, was better than second quarter, but second quarter was still, all things considered, not bad. First quarter was strong enough to really lift the whole first half for us.

If you talk to some of the partners, I'm sure you've seen the LVMH numbers, the Kering numbers, everybody a little bit of a mixed bag. There's a little bit of pressure in Q2, but I think overall the trajectory for the whole year is still relatively positive.

I think we would probably concur with that. That being said, sentiment is still somewhat low.

If you look at the Chinese government National Bureau of Statistics sentiment score, it's still quite low. At the same time, this is not the first half nor the first year where we've seen our sales sort of working against sentiment to the upside, of course.

Sentiment, as has been bad for quite a few years, but our numbers have sort of outperformed that for some time. I think the trend in that respect is also holding.

Hong Kong has been okay. I think we've definitely found the bottom.

Probably found it a while back, but we're now starting to see the bottom in both office and resi as well. I think retail continues to be a little bit challenging, but if you dig into our numbers a little bit more, which Weber and Kenneth will do, you'll see that actually despite having a headline negative figure, we're actually like-for-like positive, which I think is also healthy even though it is low single digit.

We have a lot to talk about, very interested to hear your questions, what you're focusing on. Maybe I'll pass it on to Weber first to give you a brief overview.

It will be my last time, and then bear with me. This will be very enjoyable as well because I wear the same tie as my first interim results.

So 8 years, no change, at least I didn't find any stain on the tie. Just maybe I quickly go through the numbers and then we will discuss more.

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

Now of course, I will explain later. If you look at our core business, leasing, revenue up by 5%, operating profit up by 4%, underlying profit is flat mainly because the capitalized interest is less, the interest cost was up, but the core interest expenses is down, but it's because of the capitalization.

That is really our core business, account for over 100%. Hotel, we lose less, performing, and then +14%, +15%, +7% in underlying profit.

The only optics creation is coming from the sales because I think we make 1 billion revenue in both Hong Kong and mainland, but there is some money-losing sales. Happened mostly in the first second half of 2025 when the market was still unclear at that time, and that's why we make some transaction with a loss.

Actually it's not loss, but because we do the amalgamation at that time in Amoy, that actually value up the price. The actual margin is at 26%, 27%, but because of the valuation up, there will be a loss a little bit from the Aperture.

I think the most important thing is we make a 124 million provision in Wuhan service apartment. That actually skew the number from negative maybe 50-something to 187.

That actually make the loss in the underlying. I explain a little bit more later on this one.

In terms of the revenue mix, most of the time we do not have DP, right? Therefore over our maybe 95%, 96% our leasing business.

This time with DP over 1 billion, the mainland rental revenue account for 56% and Hong Kong rental revenue account for 24%, add together 80%. Hotel account for 3%, and the property sales account for 17%.

Rental revenue in mainland after -4% in 2024, flat in 2025, now '26 is up by 3%. In the 3%, you can see a divergence of story.

Retail, very positive, 6% up; office, down by 12%. The supply issues, the competition issue continues.

Service apartment, because it's very small numbers in Wuhan, and that actually make a huge numbers, but at the end of the day, it's only 4 million. All together is 3% in mainland in terms of RMB.

Sales, if you look at the trend also, 2024 -3%, 2025 +1%, this first half +6%. If you look at the +6% almost across the board except the younger brothers at the bottom.

Heartland, we will talk about it; Forum, we will talk about it. The good news I would like to also highlight to you that even though it's a -18%, but you compare the second half of 2025, it's only -3%.

That means we are almost at the bottom now. Hopefully we can turn back into positive soon.

Forum also is a negative single digit. I think overall, if you look at the sales across the board, basically we benefit across from all the trades.

Not only to mention luxury, but also the non-luxury, and also the F&B are doing really well. This number I think really interesting, right?

When we announce our last year full-year result in end of January, we see a strong January. We also said if the January is not that bad, and the February will be even better because the year-on-year difference in terms of Chinese New Year.

The first quarter was 24% up, very strong. The second quarter come down, but still +9%, I think is more or less like normalized.

It's still doing well, but not as good as the 24% in first quarter. Across the board also you see.

Look at the shopping mall, Shanghai very strong, Center, Olympia, Spring City, Parc, Palace, they are very strong. Again, the little three brothers at the bottom, and Westlake is new, so that's why there's no comparison.

Worth to mention, out of the 10 operating malls, excluding Westlake because Westlake is a new mall, 7 of them record-high sales, 7 out of 10, right? I think this is really not only a one trade or two doing well, it's across the board that we manage to get the traffic up, we manage to get the occupancy up, and we also manage to get across-the-board sales increase in 7 out of 10 record sales in mainland.

This is not new, but I think very positive. We got more valid customer.

Valid customer means they were active in the last 3 months, up by 25%. New members up by 41%, member sales up by 18% compared to the 17% sales up, which is very important because the penetration is 71% to our overall mall.

That means the member sales still carrying and also driving the sales for our shopping mall. The penetration basically keep more or less the same level, that means we engage the customer at least 70% of our customers in our shopping center.

As I mentioned, record-high foot traffic. We just plot the chart without Westlake 66, you see that we are now higher than 2024, higher than 2025 in terms of traffic.

Look at also the mall occupancy, most of them are above 90% except Westlake 66 because new, only 2 months old, and also Forum because 88%. I think otherwise, every mall are at 90% or above.

Worth to mention the net LFA change. We have some decrease in luxury.

It's because there's some close in Heartland and Forum, but lifestyle, maybe you will ask me what lifestyle means. Like the gadgets, like Huawei, like Xiaomi, like DJI and some of those, or Miniso, or Pop Mart, or Muji, some of those actually increase a lot, which help us to differentiate and provide or offer experiential experience to the customers.

F&B increased by 4%, and jewelry and watches increased by 8%. The number of first in town, I think this is something we are very proud of.

First half already doing more than the last year 6 months, two years 6 months, right? We achieved 103 already.

We will be able to achieve over 200 in 2026. Opening of Westlake 66, we will welcome you to join us in October, right?

In our reverse roadshow. This is something we would like to present to you all, but I think it's important to look at we achieved very high traffic in this new mall.

In the May Golden Week on average, 120,000 daily footfall in the mall, which our mall is not the biggest in our portfolio, but we can be able to attract over 120,000. Now even stabilized, they're at 40,000, 50,000 level.

The good news is if you look at the occupancy rate as of end of June is 89%, but the commitment rate is already 98%. Some of the store they took over, but they take longer time to renovate and or do the fit-out.

The 98% already there. Number of store 250, first to the market is 100 of them.

In terms of office, we lease the B and E first. The B and E occupancy rate already 47%.

We just hand over the C and D, and if you look at the total number excluding the A, we are already 45% commitment in B, C, D, E. If you look at even together with the Tower A and E, we are already at 22%.

I just looked at the numbers compared to our Heartland office, our Spring City office, they are more or less the same pace even in a even tougher environment today. We believe that by the time of end of 2027, we will be able to achieve 70% of occupancy in the office in the Westlake.

This one I think is important. We talked about pavilion.

This is only one of the puzzle. What we are trying to do is upgrade Plaza 66 again.

This year is our 25th anniversary. If you recall 7 or 8 years ago we do the renovation, and now we will do it redefine luxury once again.

We will add a pavilion in the second half, which add another 4,300 square meter and 100 1,725 square meter a pavilion outdoor area and the rooftop garden that we will add different trades and make it very vibrant. We will launch a brand-new VIC lounge on the fifth floor, and also to elevate the customer experience as well as we are now adding a lot more F&B in Plaza 66 in order to really provide not only a luxury for a thing, but a luxury for an experience.

This is really something we want to keep the customer longer, to keep the customer with a I would say more stickiness, and therefore they will be spending more time with our shopping center. Key opening in the next 18 months for our hotel, our Curio Collection by Hilton in Wuxi will be open I think in the next 45 days.

We just got the license. They have to go through some of the final touch, hopefully we will be able to launch it early September.

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

Kimpton Xujiahui, the renovation continues, is on track, and hopefully we will continue to be targeting this second half 2027. V3, not much update except the Nanjing Xilu.

The internal fit-out and the upgrade already happening. If you pass by Nanjing Xilu today, the hoarding is already on and internal construction is already doing.

I think this one is 100% responsible by the landlord, we don't need to do anything. They are really making ready for us.

Then we are doing the design. We are actually just formed the JV company with the partner already.

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

Office. This is really a tough challenge.

If you see from a +5% in 2023, and suddenly turn into very chill weather, and now into a very cold weather, -12% in first half of 2026. You see across, I will not mention particular cities, but in Shanghai, the competition is very, very keen, right?

The reason why I say we are the existing buildings having all the top clients, everyone try to steal your tenant, and offer them half of the price with the fit-out. It's a news now, it's in public domain.

LV will go to CLN, CLN building, but we keep all the other LVMH brands staying with us. The LV brand will go there because they subsidize everything.

They give them a rooftop, they give them a garden. Then they pay only 40% of the price.

I think this is the market today. That's why the good news is our occupancies is almost everyone over 80%.

We are doing our best to retain the best tenant. The good news is we lose LV, but we get Tiffany.

We lose some, but we got Patek Philippe. We are trying our best to retain the best tenant in our mix.

The market is very tough like in Wuxi, you can not believe someone offer $1. We are charging 2.8.

Someone offer $1 with fit-out. I think the market is brutal, but I think the team are trying very hard to retain the best tenant, but at the same time offering the best service to them.

Just

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

I think that is something that's worth mentioning.

Hong Kong, from a -9% 2024, -2% last year, now to flat. I don't want to repeat, but seems like we find the bottom of offices.

We show 1% up, residential is going strong. Retail -2% is because of a huge brand leaving in Causeway Bay, and now we are swapping in.

We are doing landlord provision now, it takes a few months. That's why it's a void for 3, 4 months.

Hopefully with the new tenant coming in, we already identified, we already confirmed, when they come in, the negative will become positive. If we exclude that particular hole, our rest of the business is +1%.

That means the others are okay except that one, but that one hopefully will be done in Q4. Our sales is up by 3%.

That's why we do not have luxury in Hong Kong, we are more or less a neighborhood mall. The good news is Amoy is doing well.

Kornhill is doing well. Amoy will do better hopefully because we just complete a bridge to link with the Kowloon East CC.

That will help people to walk without the rain with the cover from the MTR station, go back straight to Amoy. That will help us to improve traffic.

That will help us to improve the leasing progress as well. Also hopefully that will have positive rental reversion to us.

Same thing in Kornhill, we make a decision to swap out the cinema and change into a kids area called Adventures. Very good.

The business is doing well, we have sales rents, and then we turn into experiential. I think some of those we just need to adapt and then try to meet the customer need especially now finally we heard from some verbatim, "Oh, now I don't need to go to Shenzhen.

You have something similar. I can stay in Kowloon Hong Kong East to enjoy some of the kids' activities, especially in the summer."

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

Thank you, Weber. I think this first half was a very fruitful 6 months for our property sales.

If you look at this chart, upper part actually it represent the sales revenue that we have booked. We have handover quite a lot of units at the Aperture as well as one house at 23-39 Blue Pool Road.

I think substantially this 1 billion revenue booked come from our Hong Kong property sales. If you look at the lower part, it summarize the contract sales that we have achieved in the first 6 months.

Total contract sales if we include the sales of Summit, which is a investment property, the total sales proceeds account for 1.5 billion. If you look at our whole year contract sales last year, it was around 1.6.

This 6 months, I would say it was a very fruitful period. I think we took the advantage of this time window, when the market is good, we speed up the property sales.

For information, only in July we have further sales in Summit three units, which are not included in the first-half results, but one will be recorded in second half and the other two will be recorded in the earlier next year. Sorry.

Yeah. For financial management, I think the key highlight is that our debt portfolio right now as you can see, around half of our debt are RMB denominated.

The average debt maturity is around 3 years. We have sufficient available facilities unused around 18 billion.

If you look at the bottom right-hand corner, you can see that for those debt mature more than 2 years account for 69%, which has lengthened compared to the previous period. I think I show this page as well for the net gearing, you can see that it came down from 33% in first half last year to 31.6% by end of June this year.

Our average borrowing cost further came down to 3.7%. We benefit from a relatively low HIBOR in the first half this year.

Also my treasury team managed to get better refinancing terms in the past 6 months. Overall, we have achieved savings.

I think as you may know, we have already complete a lot of projects. The biggest one is Westlake 66, and we have already opened on 28th of April.

Because of this, the capitalization ratio of our finance costs came down from around 50% last year to this first half 40%. Going forward, we believe this capitalization ratio will continue to go down.

We expect overall for 2026, the capitalization ratio would be around 30%. Next page.

I pass it to Weber to share with you guys.

Sorry. Forgot.

I have two things. To really set the tone and also set our goal for 2030, renewable energy, very proud to present 10 out of 11 of our mainland projects are powered by renewable energy.

The last one will be Tianjin, and then we are working very hard to get this 100% renewable energy breakthrough. The public engagement as well as the community engagement continues, and ESG benchmark rating and everything improved over the year.

That helps our finance costs, that helps our other achievements. I think overall, we have a very fruitful year for the sustainability as well.

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

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

Oh, okay. Maybe we just quickly talk about the Shouson Hill.

We finally get the green light from the government, we will get more area by paying a little bit more, 25 50% more area so we can build more houses. Instead from the 5, we can get more houses.

We can really do a much better product for our customers, right?

Cool. Thank you very much Adriel, Weber, Kenneth for the presentation.

We now start the Q&A. Please feel free to raise questions by raising a hand here or typing the questions in the box on the webcast page.

From the floor, I see Karl from J.P. Morgan, please.

Thank you. I just want to take this opportunity to thank Weber for the past 8 years.

Happy retirement, and we will stay in touch. I guess my first question is about the CEO, right?

Because today we saw the announcement, but then we saw there is no name from the announcement. Just curious, can you give us a sneak peek on how the new CEO is like?

For example, what make him tick? What make you feel very impressed by this new CEO?

Maybe a bit of a background on the new CEO. Maybe that's the first question.

The second question is on mainland China retail. For the first half, I think we saw pretty outstanding results, but then starting in around May or June, I think there have been more commentaries about how tenant sales or retail sales in China further slowed down.

Just curious, can you give us a breakdown on the tenant sales trend by month roughly, say for June and July so far, how is it compared to April and May? Then for the second half of this year, what's your expectations for tenant sales in mainland China?

That would be my second question. Thank you.

Thanks. I think more details on the new CEO will come in due course.

You won't have to wait too long, don't worry. It's probably a week or two, a couple weeks.

We just want to be as transparent as possible. Weber's retirement was announced quite some time ago, and I think that the least we could do is explain that we have actually found somebody with a name to be announced.

On the second question, which I think is much more interesting, I alluded to this earlier in my opening comments. I think that second half is shaping up decently.

We're all relatively optimistic, cautiously optimistic. As you've seen, there's a little bit of a divergence in some of what the brands are reporting and some of what we have just reported.

That's for many reasons. Partly we've been increasing our exposure to luxury, but also as the luxury brands close stores, it's not closing per se, it's consolidating.

Their GFA might be increased, but the number of stores may have decreased, which means that the existing stores have either gotten bigger, which it has in some cases for us, and that also means that sales are consolidating into those fewer number of stores. We've been a bit of a beneficiary from that.

Although it cuts both ways. In some cases, we've been on the opposite side, but net-net it's balanced out in the positive for us.

I think the brands are still conservative. There is concern over sentiment, but there's been concern over sentiment for the past several years.

At some point, I think that that will go one way or the other. For the time being, sales are still strong, and so we feel quite comfortable with the direction that that's moving in.

If you look at Westlake in Hangzhou as a proxy, it's been quite some time since a new project has opened with so much fanfare. Foot traffic of over 120,000 a day is really quite extreme, especially since it's not such a big project.

That really shows the vibrancy and the hunger for Chinese consumers for compelling spaces, for good malls, for good offerings, and that's what we've provided. I actually feel quite comfortable with the direction that retail sales in China are moving in even though sentiment and what you hear on the street may not sound as positive.

I think

to answer strictly your question about by monthly, maybe I will not doing by monthly, but by quarterly. Q1, I think if you really zoom in, everyone benefit, doing really well.

The gold rush make the difference, which I'm sure you all know. Second quarter, without the gold rush, also the luxury brands somehow weakening a little bit, but we still achieve 9%.

That means the F&B, the non-luxury are doing really well. In the future, I think I would suggest yes, we are one of the proxy for luxury.

Doesn't mean that we are only doing luxury. You should also take into account of Anta, how they are doing; Pop Mart, how they are doing, because we are a lot of friends with them as well.

I think overall, if I look at the numbers in first half, luxury, including the top-tier one, are growing at 15%, but the general are growing at 20%. We are a lot more diversified compared to the past because of the higher traffic, because of higher occupancy.

Our F&B grew 16%. So 16% compared to the 17% means they are more or less the same.

Our non-luxury F&A, the fashion and accessories, up by 25%. Those athleisure, all those other brands are doing pretty well.

Also the non-luxury jewelry and watches are up by 30-something percent. That means first half across the board is doing well.

Second quarter, non-luxury continues to do well, but the gold rush and luxury is a little bit slow down. That doesn't mean that the whole engine has gone, right?

Because F&B, the people still need to come out to eat. They still need to come out to hang out.

That's why I would say we are still believing in the second half, it will be high single digit up in terms of sales. This is really our expectation based on what we see.

The good thing is the luxury brand seems like the tone and it's a little bit more positive now, but they're still very cautious. That's why I would not say suddenly they would change their strategy by opening a lot more store.

Rather, I think in our shopping center, in our retail business, we need all trades to do well. If we can do that, hopefully that diversify the concentration risk.

Cindy from Citi. Thank you.

Thank you. I have two questions.

The first is on dividends, it's great to see a resumption of cash dividend. I think it might be still early, but what metrics will guide a potential dividend uplift in the future?

Do we need to actually wait for the Hangzhou mall Phase 2 to open, or is there any other operational trigger that you might be able to flag? Second is more specifically on Westlake 66.

You mentioned foot traffic is amazing, but how about tenant sales performance? How is it tracking, say, against your internal target?

What's some key improvements that might be planned in the say coming 12 months to further lift the mall's competitiveness ahead of the Phase 2 opening? Are you planning to bring in more luxury concepts in the mall, or how do you see the mall's overall tenant mixing in the mid future?

Thank you.

The first question, we do not have a policy to say by hitting whatever percentage because we are paying at a very high payout now. What we believe that when all the headwind behind us, for example, the capitalized interest, which we know before we open Hangzhou.

Some of the provision that we make, if some of those are behind us, it's purely organic by looking at some of our business organically growing, we believe that this will not be too far away. We need to let Hangzhou to grow, but based on what we see, the mall should be itself break even in Q4.

Office will be a little bit longer by end of 2027 because of the high REIT. Otherwise, they track according to what we set for ourselves.

In terms of sales, it was surprise. It exceed all our budget.

I asked the team why we exceed all our budget, because maybe we set the budget too low. We still believe that more to come because we will have luxury brands coming in in Q4.

We will have three, four luxury brands comes in. We hopefully will welcome more and more.

With the Phase 2 coming in, we can accommodate everyone because that will be increasing our GFA to 150,000, which is exactly like Grand Gateway size. Hopefully then we could be able to attract everyone, not missing out anyone.

I think it's a journey. Of course, it's not as quick as others mall, but I just want to remind also internally, I remind everyone that we open Heartland the best way with all the brands comes in on day one.

Today, of course, I don't want to repeat. Opening well in the first 12 months doesn't mean that you end up well.

We just need to get the best out of whatever you have today. The market today is that you get the traffic, you get the people used to come to your mall, you upgrade yourself gradually.

Maybe that will be more sustainable way than competing with all your competition with the pricing. Because when you get and steal the tenant from opposite side, the only thing they will do is to cut the price.

Then you have to cut the price too, and then it will not be benefit to anyone. I think maybe this is the better way, I don't know.

Time will tell, but we look at Westlake, it did not disappoint us from the matrix wise. Of course, we would like to open some of the brand earlier, therefore we can really set the stage and really firm up our positioning.

I think that takes a bit of one year or two. Hopefully we can do that and show it to the market.

Thank you.

This is Vera from UBS, and I have two questions. First is to just follow up on the previous question.

You mentioned that for the second half, you expect high single digit for the sales. Does that exclude Hangzhou or include Hangzhou Westlake 66?

Exclude or include doesn't make a difference, maybe 1%, 2% difference.

Oh, okay.

It's still a higher than 5%, lower than 10%. Then if you want to be having a single digit wise, maybe 1%, 2% is because of Westlake.

Thank you. Also for the Westlake 66, we already recorded the rental income of RMB37 million.

If we annualize that, it's only around 200-something. Can I do the math in that way, and what is the normalized rental that you expect to achieve for Westlake?

Okay. You can do the math this way to get the rough numbers, but when your trading and your opening rates going up, that will have a multiplier effect.

Some brands will sell more, and then therefore they can afford to pay more rents. I think and also every lease will be renewed in 3 years, it will give us opportunities to wise up.

In the bank, I always do this way. By divided by 2 weeks times 52 weeks, then I can know what is the number.

Unfortunately, our business is not that way. It will take a bit of the pacing up, but hopefully this will be definitely more than 200 million that would you discuss in long run.

Thank you. Also the second question is on our rental margin.

We noticed that the rental margin have declined a bit for both our China and Hong Kong side, can you elaborate more on this?

Hong Kong is 1% down, right? Mainland is two factors.

One is the office. Nothing you can do about it because when the revenue down, goes straight into bottom line because I can't cut the escalator and cut the air con, right?

That one you should understand that. Mostly it's because of the opening effect of Westlake 66.

When you launch a new mall, you need to put marketing money in. That will have a little loss.

What I said to you is that hopefully by Q4, we will break even the mall, and by then you can see a sustainable way. I don't worry about that 1%, 2% margin down because you are opening some new mall.

This is not BAU. With the office, that is a huge pressure, and if you dropping 12% of revenue, that goes straight into the bottom line.

That actually have a huge effect to our margin for the mainland business.

I'll give a chance to the questions raised through the webcast. A few questions related to dividend.

For capitalized interest, isn't it a non-cash issue? Does that have to come into the consideration for future dividend hikes?

Also for the dividend payout, it looks high relative to property leasing. Do we have a risk of another dividend cut?

I'll answer the first question first because it's more technical. If you look at our capitalized interest, my answer is yes or no.

When I think the board discusses the dividend payout, I think as mentioned by Weber, we don't keep a fixed ratio, right? We hope that we can adopt a progressive dividend policies.

If you do your own math, if you look at our leasing profit including the hotel part less the interest capitalized, then basically our payout is 102%, okay? Last year was the same.

That means if we assume all the interest expense go to P&L, I have already paid out all the profit. The question is going forward when we have further growth, particularly for those younger projects, if we have more profit, what will be the payout?

I think it is subject to the board to further discuss, but I think in the meantime, we have already try our best to pay as much as we can. Of course, we also look at the underlying profit, particularly the recurring part.

I hope that I answered your questions about the capitalized interest. About the dividend policy, maybe I let Adriel to make some comments.

Just

a quick one. I cannot always speak for the whole board, and each time we announce our dividend, we have a very robust discussion as we did this morning.

I will say that the risk of a dividend cut in the near future is probably as likely as the risk of a dividend increase. We would not like another dividend cut if it can be avoided, and I speak both for management and the main shareholder.

I

just want to supplement. I think we had five this scrip dividend arrangement before, and from time to time, analysts, investors keep asking us can you commit not to have another round, da da da da?

Again, it's not subject to management decision, it's subject to the board decisions. I think right now the board decided not to arrange scrip dividend for the dividend payment.

I think this is a good signal that I think we are confident that we can maintain the current level of dividend, okay, unless there is some other things which is out of our expectations. This is something I would like to highlight.

Also

the reason why we are accelerating the DP sales, also part of that. Unfortunately, last year we make some loss, but think about it.

If we can continue this momentum, but selling more DP, that will go into the bottom line again. That will allow us to get a little bit headroom or get a little bit buffer for the payout.

I think overall, on one hand, yes, we are almost at the 100%, but doesn't mean that we cannot continue. Because a lot of other competitor, we always look at the numbers.

I don't name them. A lot of them already overpay 100%, a lot of them only at 60%, a lot of them at 45%.

Therefore the time for them to progressively increase is always high. The key is whatever it is, it is, right?

We cut one-third two and a half years ago. Now I think, and we do scrip dividend for five times, and now we stop.

Hopefully that will also send you a signal that at least how confident not only three of us, but the board about the future.

Simon from Goldman. Thank you.

Sorry. I have two questions.

Just back to Westlake. I think there's a lot of comments basically saying that your mall positioning is geared toward a bit more lifestyle and maybe not so much luxuries.

Wondering whether you have any thought about maybe 2, 3 years down the road the positioning of the mall, and then recently what sort of competition are you seeing from the adjacent mall if any? That's the first one.

Then the second one is back to the provisions. Would you be able to give us some more maybe comment about the provisions, whether they're going to be more to come?

I think on your book, there's a saleable resources number, which obviously is a one thing that you can pay for dividend. Can you break it down into Hong Kong and China so we get a sense?

Thank you.

First, we will have four brands, which I think I can talk about it because they have hoarding already: Moncler, D&G, Brunello Cucinelli, and some more will open actually in September. Of course, some big names, we are working on it.

Some will start with us with the pop-up, some will still sitting on the fence and wait about the whole market how it turns. Of course, our belief and also our objective is to do with luxury because we build the mall with that DNA.

Happened the market doesn't allow us to get them on day one doesn't mean that we don't continue. This is exactly like what we have launched Wuxi.

We did not have luxury to start with, and then now we own the market. It's exactly like Dalian.

When we launch it, we did not have any luxury, and then now we have luxury. Exactly like Grand Gateway, when we launch it, we did not have luxury, now we have luxury.

I think this is really our belief and also our goal, right? Whether we see the competition, exactly because we are not doing exactly the same as them, they are not targeting us, right?

This is exactly what I just said. When we launch Wuhan by saying that I need to eat your lunch, then of course we attract competition.

Today, we are doing on our own. We are creating something they cannot offer, how they can compete?

I think this is something we are working on. We will have a hotel.

They have a hotel, but our hotel is a lot better. We will have relics.

We will have historical building, they don't have any. We will have a very good VIC lounge.

We will have a lot other experiential stuff they do not have. I think overall, it's not exactly like discount, come and kill you, that kind of competition.

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

For the provisions, actually is only come from SA3 at Wuhan. In Hong Kong, as you may know, the Hong Kong residential market is in recovery.

All the remaining inventory actually, based on the recent sales figure, are well above the book cost, I don't see any indications for impairment, okay? For those who came from audit background understand every balance sheet date, we need to do NRV assessment on all the inventory.

For Wuhan, because in view of the slow-moving situations, we take a prudent approach to look at the projected cash flow of the projects and then see based on the price list, what would be the NRV of the asset. I just give you one more data point, which is easier for you.

Part of the asset this building has been leased out through Fraser, and we have very, very good tenants, diplomats, senior management of MNC. Previously when we transfer those inventory into investment property, the unit price was around 23,000 per square meter.

Right now when we mark down the inventory part, that means the property for sales part, it's a similar level. Coincidentally, the unit price is similar.

I think for the other two asset in Kunming and in Wuxi, the selling price are also well above the book value. I don't see any high risk for impairment.

One final point on Wuhan, we marked it down because of this NRV assessment exercise. It doesn't mean we are cutting the price.

In fact, our product are still very, very unique and on the high end in the market. This is only an accounting treatment for prudence sake.

I think the reason why we explain in depth details is part of it is not about whether if you want to cut the price, you can sell faster. In China today, unlike Hong Kong, when you drop the price by 5%, you can sell much faster in Hong Kong.

Unfortunately in mainland, if you drop the price, you will attract all the problem. The existing one will call you and say why you don't cut the price for me, and then the new one, you might not be able to sell all.

It's not about the price, but because we take a very prudent approach, let's say if we need to take a few more years to sell and then go back to the present value, what would be the price that we should book today? I think that is the approach we have done.

The good news is the price that we are just now is exactly like the leasing price from the income approach. That means in the future, what if the worst come to worst, I can lease them out.

I don't need to do any adjustment anymore, right? Therefore I can attack and defense anytime when the market change.

If I need to do more leasing, in the future, I need to do provision, right? Now I don't need to do anymore because they are more or less the same price.

SA1 and SA2 is different. I want to be very clear because it's only bare shell.

We have a cost of the bare shell. If we can be able to manage by fitting out of them and having the same price as today markdown price, then we don't need to do provision also, right?

This is really the way how we look at the numbers. We are not playing a game here.

We want to be as prudent as possible. I understand your point, I don't want to be cut cut cut cut cut for five more times.

If you cut, cut one time. Hopefully that is our way.

That is what we are trying to do. Of course, market is market, we can't dictate that.

We are trying our best to project the market, and also understand our balance sheet, and try to do whatever we can to protect and well represent our financial to the investor.

Wait, are you talking about provision or dividends?

Provision.

I know. I'm joking, but it's exactly the same story with the dividends.

We take the last questions before we finish the briefing. If there's no one from the floor, I'll take the last one from the webcast.

What's your perspective on Hong Kong retail in terms of liquidity, yield, and value and outlook? Is it simply going through one of the cycles, or beyond that, is it also through the structural change due to the leakage to online sales, northbound consumptions, and consumption downgrade, etc.?

I cannot say too much about overall Hong Kong, but I'm very positive about our portfolio. Retail, we see even today with a very long void period of our Causeway Bay, we are still register 3% growth.

Once we get occupied with our portfolio and also our work on reshuffling the trade mix, I have a high hope that we will be able to do better sales in our CBD area. Our neighborhood mall are very stable and very proactive.

We are doing a lot more than some other competitors by changing the mix, by making sure that they are relevant, and hopefully we can retain as many people as much as what we can in order not to go to north and stay in Hong Kong. I think going to north is already be around for quite a while.

I cannot say that the people will not go to north anymore. They will continue to go if they need to go, but I think it's not new anymore.

I just hope that we can improve our attraction in Hong Kong by retaining more sales in Hong Kong. I think that is your first question.

That's the only question.

That is the only question, right?

I'll just add a few comments. I think broadly speaking, thank goodness that we're at a low base today because everything still looks good.

My own observations would probably be that there are some structural elements. Are we going to go back to whatever the heady days of 2018?

It may take some time. It may take more time than we like.

I'm not saying we won't get there, but it may take some time. Probably across all the sectors, even though it looks good today, we feel good about the resi sales, we feel much better about office in Hong Kong, but I think there are some structural issues which are going to manage the pace of this recovery and also may even manage the top of this recovery.

Those are just some observations and comments. One more thing that I do want to say is on mainland China resi.

It's obviously not very sexy right now. It's not been sexy for many, many years, and probably will not be sexy for the next few years.

However, there's an interesting set of numbers, which I think are publicly available, on new starts for China residential and completions on China residential. Then if you kind of look at the number, it's dropped dramatically because nobody's been building for the past few years.

There's a question in my head, which is that what is the base load? What is the base demand, replacement demand in mainland China?

Is that above or below today's rates of completion and new starts? Or in particular, new starts.

In 2 or 3 years' time, when these hit the market and if sentiment doesn't get worse, what will that match or mismatch be? Even though that's not really the market in which we play, it will have some knock-on effects to the broader economy, including the wealth effect, including perhaps I would love to have sold out all of our SAs, service apartments, by then, but we may not have.

If we haven't, then who knows? There may be a window in a few years' time.

I know that's far beyond any timeline that any of you are looking at, but it may be a few years. I think it's interesting to keep an eye on that.

Also, I think just with the last point. History repeat itself that 2 years ago when we are sitting in the same room, everyone worrying about the office market in Hong Kong.

Look at today. Now everyone saying that, "Oh, asset management company, everyone coming in Hong Kong."

I hope they come. That means the rental will go up, spending should go up.

That is only 2 years ago, and basically everyone's saying that Central is dying, but now is recovering quite well. I will say market like property development is a little bit funny.

Sometimes is countercyclical, and I hope I'm right, and most of the people wrong is that if the wealth effect, especially like asset management I was told, I'm sure you guys know, right? The private equity guys, they don't need to pay tax for the carry.

Wow, then our house should be very good, right? The IPO guy, when they come, they have a lot of money, they should not put in the bank, buy a house, right?

I'm very positive about high-end residential. At the same time, those guys need to spend.

I don't think they will all go back to Shenzhen. Some of them will stay.

Some of them will buy good wine because wine is cheapest here, and that will be knock-on effect. I think Hong Kong is so dynamic, never say never.

Mainland, I would say SA need to take some time, but we all know when no developer developing anything, and suddenly it will become a shortage. There will be a moment, but of course we don't know when because there's still a lot of supply in the market.

I'm still waiting for that question on the office, when the oversupply will be diminished. Whenever the multinational come back to China, hopefully they will take up some of the occupancy.

As of today, we can't see it. At the same time, luxury also.

Today is cold and chill, but same as 2015, '16 when the anti-bribery hit us. No one knows after the anti-bribery, suddenly we enjoy almost 8 years of very rosy luxury growth.

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

This wraps up the analysts presentation for our FY26 interim results. This is going to be the last time Weber do the presentation here.

We wish him the best. Thank you very much for the participation, and we will see you next time.

Thank you.