Good afternoon, everyone. Welcome to the annual results analysts briefing.

Before we dive in, I'd like to take a moment to wish all of you a very happy Mid-Autumn Festival in advance. As usual, we will start with the group's financial review.

Please note that all the numbers are in Hong Kong dollars unless stated otherwise. For the year ended June 2026, the group's underlying profit was $22.9 billion, a year-on-year increase of 4.6%.

This growth was mainly driven by higher profits from property development in Hong Kong and lower finance costs. The group's leasing and other recurrent income remained resilient during the year.

After factoring in net effect of realized value gains from the sale of investment properties and a net revaluation profit on investment properties, the reported profit came in at $21.4 billion, an increase of 11.1% year-on-year. The underlying earnings per share was $7.89, while reported earnings per share was $7.39.

As for dividends, the board has recommend a final dividend of $2.93 per share, an increase of 4.6% from $2.80 last year. Together with interim dividend of 98 cents, total dividend per share for the full year will be $3.91.

To break down the profit by segment, the profit for property development was about $8.3 billion, largely stable year-on-year. Increased contribution from Hong Kong offset decline from the mainland.

For property rental, the group's net rental income increased slightly by 1% at around $18.6 billion, which include a 1% decrease in Hong Kong and a 6% increase on the mainland. Hotel business saw an operating profit of $728 million, an increase from the $615 million in the last financial year.

Profit from our other businesses came in at about $4.6 billion, reflecting a 6.5% decrease year-on-year. All together, this brings the group's total operating profit for this financial year to $32.2 billion, which remains stable year-on-year.

Turning to our financial position, as at 30th June 2026, the group's net debt stood at $67.6 billion. Gearing ratio improved to 10.7% from 13.5% in December last year.

Interest cover for the period came in at 8.5 times compared with 6 times a year ago. The group, as always, upholds prudent financial management.

Net debt and net gearing ratio have declined further since the peak in December 2023. With its strong financial position, the group is well-positioned to capture land acquisition opportunities in Hong Kong.

The group also remains a top-rated real estate company in Hong Kong. Due to lower debt and cost of borrowing, the group's net finance costs have gone down by 33% year-on-year.

The group's debt mix is outlined in the table. We have also achieved a balanced debt maturity profile.

Moving on to our Hong Kong land bank, as at the end of June 2026, the group's total land bank in Hong Kong was about 56.4 million square feet of attributable GFA. The pie chart shows a breakdown of our completed properties and those under development.

During the year, the group added three sites to its land bank through various channels. They are shown in the table.

After the financial year ended, the group was awarded the tender for Tuen Mun A16 Station Package 2 property development just last week. This Package 2 will provide over 5,500 units to be developed and sold in phases in an orderly manner.

Located in a mature community in Tuen Mun South, the project comes with a podium mall and offer excellent transport links. Let's turn to the property development business in Hong Kong.

During the year, the group's recognized profit from property development reached $4.6 billion in Hong Kong, a significant 44% increase year-on-year. Margins started to improve since the second half of FY 2026, driving the full-year level to 11%.

When we include the underlying profit from the sale of Dynasty Court and Susan Peak, margin was a higher 16%, and we expect the booked sales margin to improve gradually. About $22.8 billion of contracted sales has yet to be recognized.

That includes around $21 billion to be recognized in FY 2027. During the year, the Hong Kong residential market continued to recover.

Primary market transactions were active. The group achieved the contracted sales of about $38.1 billion in Hong Kong.

Major projects contributing to the sales are shown in the table here. We will launch a diverse mix of projects to appeal to potential buyers.

Major projects to be launched in the next 10 months are shown on the map. The next section is our Hong Kong rental portfolio.

During the year, there was a modest increase in the group's gross rental income. Overall average occupancy remained stable at around 92%.

High occupancy rates and new contributions support office rental. Retail portfolio held firm.

Rental rates and occupancy increased for residential leasing. Our Hong Kong retail portfolio achieved an increase in tenant sales.

Occupancy reached 95%. The group carries out several strategies to strengthen our performance.

They are listed on this slide. The group also adapts quickly to market trends and keep changing the tenant mix.

Tenant sales increased thanks to strong demand for jewelry and watches. As inbound tourism continued to grow, our most tourist area outperformed in the portfolio.

We enhanced customer loyalty through the program, The Point. Overall member spending increased by 27% year-on-year.

The growth in VIP member spending was even stronger. To facilitate drivers, the group will continue to install more EV fast charger in its properties.

For our office portfolio in Hong Kong, overall occupancy remains stable at 90%. Both IFC and ICC achieved high occupancy thanks to new leases from big companies and in-house expansion.

Even so, the recovery in office market remains uneven, with some sub-districts outperforming the overall markets. International Gateway Centre, IGC, is our latest landmark in West Kowloon.

Two pairs of office towers provide super Grade-A office space. The towers offer great air-plus-rail transport links, smart technologies, and high green standard.

The podium mall, Stage IGC, is going to open in phases from late 2026. Initially, the mall will provide restaurants and shops for office tenants, high-speed rail passengers, as well as West Kowloon visitors.

We have more than IGC in West Kowloon. Our many projects help to make the district a world-class hub.

Artist Square Towers project, AST, is under development in the West Kowloon Cultural District. Together with IGC, this new project will join the ICC, two luxury hotels, and a mall to form a commercial cluster spanning 8 million square feet.

They complement each other and create great synergies. To strengthening our recurrent income, we will focus on ramping up occupancy for new projects.

They include IGC in West Kowloon, The Millennity in Kwun Tong, and Townplace West Kowloon in Kai Tak. Many projects are on the way, including the mall Stage IGC and AST in West Kowloon.

Turning to our property business on the Chinese mainland. As at the end of June 2026, the group's total land bank on the mainland was 64.7 million square feet in terms of attributable GFA.

Again, the pie chart break down our completed properties and properties under development. Moving on to property development business on the mainland.

During the year, the group's recognized property sales on the mainland increased to about $10 billion due to higher sales volume. Operating profit was $3.7 billion.

Over the next 10 months, the group will launch new residential project across different cities. About $0.8 billion of contracted sales have yet to be recognized.

All of them are expected to be recognized in FY 2027. Moving on to our rental business on the mainland.

During the year, the group's gross rental income from the mainland rental portfolio increased 5.2% to about $6.5 billion. In RMB terms, it went up 1.5% to RMB 5.6 billion.

An increase from retail portfolio offset a decrease in office rental. On the mainland, our integrated projects with great transport access provide dynamic commercial space.

The retail and office component complement each other and create synergies. At our landmark ITC projects in Shanghai, Office Tower B was completed during the year.

It has attracted keen interest from major companies. ITC mall will open in phases from the second half of 2026, starting with a floor connect to metro station.

Hotel Andaz Shanghai ITC held its grand opening in March 2026. The hotel is ramping up its occupancy.

The expanding portfolio is expected to bring rental income for the group. In FY 2026, the group increased its stake to fully own the IGC mall in Guangzhou and Conrad Guangzhou hotel, bringing additional income.

Major projects are in the pipeline. Park Central Guangzhou South, a new mall in Guangzhou, will open by end of 2026.

Another new mall in Hangzhou IFC will open in phases from the second quarter of 2027. Let's turn to our hotel business.

During the year, revenue from the hotel portfolio increased 4% year-on-year to $5.5 billion. Operating profit increased 18% year-on-year to $728 million.

Luxury hotels in Hong Kong outperformed. At the rebranded The Royal Garden Kowloon East, renovations will be completed soon.

On the mainland, The Ritz-Carlton, Shanghai Pudong achieved record high room rates. Moving on to sustainability.

We remain committed to ESG. Please refer to this slide and the appendix for more details.

Next, I will summarize the market and business prospects. In Hong Kong, trade and domestic demand will drive steady economic growth.

Incoming talents and executives will support housing demand, while the city's super-connector role will help support office demand. On the mainland, we expect strong exports and policy measures to support resilient economic growth.

Measures for improving quality of homes will foster healthy development of the housing markets. As for the group's business prospects, with our strong financial position, we can replenish the Hong Kong land bank when opportunity arise.

We will maintain prudent financial management as always. On property development, with our trusted brand, we will drive sales through quality and innovation.

With a strong launch pipeline in place, we will continue to roll out new residential projects catering to diverse buyer segments. On property investment, we will adopt proactive strategies to upgrade our existing properties and aim for high occupancy.

New projects like IGC in West Kowloon are expected to generate rental income gradually. I will end this presentation by highlighting a quote from the chairman's statement: "The group will continue to invest in the city's future through building landmark projects that foster both economic advancement and social progress.

By harnessing technologies to enhance productivity and competitiveness, the group will deliver quality properties that are modern and customer-centric, meeting the evolving needs of residents and talents. Guided by time-tested strategies and long-term vision, the group will continue to strive for sustainable long-term group growth while contributing to further development of the city it proudly calls home."

This is the end of my presentation. Thank you.

Thank you for joining the briefing again. Let me introduce the panel to you.

Starting from your left: Mr. Henry Lam, member of the Executive Committee; Mr.

K.W. Lo, member of the Executive Committee; Mr.

Allen Fung, Executive Director; Mr. Christopher Kwok, Executive Director; Mr.

Victor Lui, Deputy Managing Director; Mr. Raymond Kwok, Chairman and Managing Director; Mr.

Mike Wong, Deputy Managing Director; Mr. Adam Kwok, Executive Director; Mr.

Eric Tung, Executive Director; Mr. Factory Lee, Group Chief Accountant.

May I now invite our Chairman and Managing Director, Mr. Raymond Kwok, to share the key message of today's briefing.

Mr. Kwok, please.

Good afternoon, ladies and gentlemen. Thank you for joining today's post-results briefing.

Before we go into the Q&A session, let me highlight some of our key developments. Although the global economic environment remained volatile and uncertain, the group continued to achieve business growth.

For the year under review, we achieved strong contracted sales in Hong Kong of about $38 billion in attributable terms. Over the next 10 months, we're going to launch more new projects providing mainly small to medium-sized units.

They include a new phase of Sierra Sea and new projects in Tung Shing Lei, Tai Wai, Kwu Tung North, and City One in Sha Tin. As you may already know, we're excited about our successful bid last week for the Tuen Mun A16 Station Package 2 property development project.

This large-scale residential project is next to a future MTR station, making it one of the few new railway topside projects located in a very mature community. Together with the Package 1 project we won late last year, we're confident that we will build another landmark residential cluster offering comprehensive amenities and exceptional transport connectivity in Hong Kong.

With our strong financial position, we will continue to replenish our land bank when good opportunities arise. Meanwhile, the group is moving forward with eight projects in the Northern Metropolis, which will provide some 10,000 residential units and essential commercial and transport amenities.

We shall continue to support this strategic development, closely monitor any updates, and explore potential opportunities. On property investment, we are furthering the transformation of West Kowloon into a unique hub of financial services, wealth and asset management, art and culture, retail, leisure and entertainment in Hong Kong.

Our IGC office towers atop the high-speed rail station were completed during the year. We've handed over one tower to our tenant UBS earlier this year.

A number of renowned insurance companies and multinational corporations, including AXA, have also committed to leasing space in IGC. The podium mall at IGC has been named Stage IGC and will open in phases starting from the end of this year.

The Artist Square Towers next to M+ museum will be completed in 2027. As part of its continued investment into the West Kowloon commercial cluster, we also plan to upgrade and renovate two luxury hotels atop the Kowloon station.

These new projects are joining ICC, our two luxury hotels, and a shopping mall to form a commercial cluster of around 8 million square feet. With fewer new supply of super Grade-A offices in Hong Kong over the next few years, we expect our IGC and the Artisan Square Towers will be able to capture tenants' demand for their upgrade and future expansion.

For our retail portfolios in Hong Kong, tenant sales went up and our malls maintained high occupancy. We rebranded a mall in Kowloon East and named it The Millennity.

Shops are opening gradually. Our loyalty program, The Point, achieved a strong growth in terms of member spending.

The growth in spending was even stronger for the VIP program, The Point Gold. For our mainland properties, the group achieved attributable contracted sales of about $2.2 billion.

Tenant sales at major malls grew steadily. In Shanghai, our ITC mall will open in phases from the second half of 2026.

The new ITC Tower B is the tallest building in Puxi. This office landmark has started taking in tenants.

In Guangzhou, our group increased its stake in the IGC mall and Conrad Guangzhou hotel at Tianhe Plaza to 100%. We will continue to ride on their prime locations and mature operations to further enhance their business performance and overall asset value.

Looking ahead, the group has full confidence in the long-term prospects of the nation and Hong Kong. Under the national 15th Five-Year Plan, Hong Kong will further strengthen its role as an international financial centre as well as its role as a super-conductor and a super value-adder.

Hong Kong is going to announce its first Five-Year Plan soon, which will serve as a strategic blueprint for the city's economic development. We will capitalize on these opportunities and continue to develop landmark projects, providing modern and user-centric properties and services that not only foster economic advancement, but also build a better community for Hong Kong.

Thank you.

Thank you, Mr. Kwok.

Without further ado, let's open the floor for questions. Before raising the questions, please identify yourself and the company you represent.

Now let's have the first question, please. The gentleman in the left side.

Thank you. This is Karl Chan from JPMorgan.

Very much look forward to seeing our new office in Artist Square next year. I have four questions.

The first one is about the Hong Kong residential market. Just curious, right, because we have seen a very good year.

Home prices have been up by 12%, 13% year-to-date, but we do see more potential overhangs or headwinds in the second half. For example, the US interest rate is still quite uncertain whether there may be a hike.

Also, in mainland China, there could be a bit more tightening in the cross-border investment control. Just curious in this context for Sun Hung Kai, how should we consider the pricing strategy?

Would we consider doing a bit more price adjustment to stimulate sales? Especially for Kwu Tung project, how would this affect our strategy in Kwu Tung?

Also just generally, what's our general outlook for the Hong Kong home price and volume for this year and maybe next year as well? That's my first question on the Hong Kong residential market.

The second question is about Hong Kong DP contracted sales. Just curious, after exceeding our target this year, what's our latest Hong Kong DP contracted sales target in the next financial year?

For the long term, what would be the reasonable long-term normalized annual sales level in your opinion? That would be my second question on HK DP.

The third question is about margin. I think investors are really glad to see that we see a bit more improvement in HK DP margin.

Just curious what's our guidance for the next financial year and maybe for the next few years as well? Because we all remember that in the good old days, we used to have more than 30% margin, right?

Just curious, do you think a return to more than 30% margin is realistic in the near term or medium term? That would be my third question on margin.

My fourth question, my final question, is about capital allocation. What's our latest guidance on dividend?

Would management consider revisiting the dividend policy? For example, would you consider shifting to maybe based on rental income or maybe just like for some other companies, they may just adopt a progressive absolute DPS?

Would that be something management may consider changing in the near future? Finally, do we have any plans to issue new shares, convertible bonds, warrants to optimize the capital structure in the near term?

That would be my four questions. Thank you very much.

Victor, you can answer the first few.

Sure, yes. I'll answer the first three questions regarding the market.

The Hong Kong residential market remained in strong momentum in first half of this year. I think it's quite natural to see that our transactions moderate a bit in recent months.

When we look back the history of Hong Kong, each property cycle should last for a couple of years, and we are only at the very initial stage of recovery. Backed by the influx of talents and students, we have also seen that a vibrant leasing demand even came earlier in this summer.

Actually, our residential rents have exceeded the previous peak in 2019, and the upward trend continues. This will induce more investor on buy-to-let, and also renters becoming homebuyers as the demand for residential accommodation sustain.

Notably, the inventory for sale among developers are also dropping. That will support the pricing of new projects.

I would expect more volume in the coming months due to a couple of new projects. Overall, we would expect that the market would continue to perform solidly for the rest of the year and the next.

Regarding the tightening of the capital outflows, I think it will only hinder market sentiment a bit and won't have any significant impact in the long run. As we all know that for mass projects, most of the purchasers are belonging to local end users and upgraders.

For the luxury sector, especially the top-tier segment, if the capital are from the mainlanders, those capital have been positioned in Hong Kong for quite long and may even set up local company here. Example are seen that where we have a couple of transactions in Victoria Harbour and Cullinan Harbour.

If those capital from the mainlanders, they are actually becoming Hong Kong permanent resident already. Overall, as long as Hong Kong remain attractive as an international financial centre and wealth management sector, and together with the low tax regime and very limited supply of high-quality development, I think our market can sustain in a similar strong momentum in the longer run.

On our sales plan, we have a very successful launch of [Lanspark?] in Tsuen Wan earlier this year, followed by Garden Regency, which is also very, very well received.

In the coming 10 months, we have a couple of projects, namely the Sierra Sea Phase 2C in this month and also the Tung Shing Lei project Phase 1A next to the Yoho Mall at the end of the year. In the first quarter of next year, it would be our Tai Wai residential project and also the Kwu Tung Phase 1.

In second quarter, it would be our Siu Lek Yuen project next to the MTR station and also the Tung Shing Lei project Phase 1B. Apart from this, you may also know that we shall continue to dispose our luxury units like Cullinan Sky and Harbour, and also Victoria Harbour in the North Point coastal.

You may also notice that we have created a lot of transaction on premium price of the area. We have achieved a total sales of $38 billion in last financial year, which is exceeding our target.

For this year, we are setting our target as $33 billion, taking into consideration of some uncertainties of pre-sale approvals. Certainly, we hope we can get all our sales consent earlier so that we can book more revenues on sales.

On the margin, I think currently, under the current market condition, I think a 30% plus margin may not be realistic as, as land sales have been very, very competitive. Overall, as I said, for mass project, we have like Sierra Sea and Tung Shing Lei project, which we can aim for a quicker asset turnover.

For luxury project, we have Cullinan Harbour and Victoria Harbour. Overall, I think we can achieve a good and reasonable margin in the long run.

Yes, the last question on Kwu Tung, we are going to launch the first phase of the Kwu Tung project next to the station in early next year. Our project is occupying the most prominent location among all the peers as being closest to the MTR station and also with a public transport interchange below.

Apart from this, we also have a sizable commercial space, which provide a very comprehensive living amenities, and also vibrant lifestyle for all our buyers. We are very confident on the future launch of the project.

Thank you.

For the residential sales market in the mainland, Adam, would you like to comment on the mainland residential market, yeah?

I think overall in the mainland, I think you all are aware that the government has been coming out with more and more supportive policies for good homes, [foreign language], and to stabilize the market. On top, there's also use of MPF, the China equivalent of Shebao, that they could use and get cheap mortgages and so on.

Also there's a relaxation of all the price restrictions basically and all the sales restrictions. Of course, there's a new rule that we can talk about later in August 28th, but I think overall since second quarter, we've seen a strong recovery, especially in tier-one cities and in strong developers, and I think that flight to quality will just continue with buyers gravitating towards reputable and financially strong developers and also in prime locations.

Fortunate for us, our projects are mostly in tier-one cities. In the next 10 months, Victor and the team will launch a few premium projects, and one is after the success of the Cullinan of Hangzhou, including the residence and the Cullinan West serviced apartments, Cullinan East on the east side will be launching brand new service office, and it's already selling and it's quite well.

Also hopefully, subject to government pre-sales, we'll be able to launch Lake Geneva, Suzhou, [foreign language], which have sold very, very well in previous phases. Of course, Shanghai Arch, which have sold very well, will launch some houses.

The new projects we'll launch is a Jowo Town in Chengdu. Then obviously, our focus is also remaining inventory especially in Guangzhou and Foshan.

We have a strong pipeline coming up, and a lot of that is in tier-one cities. Thank you.

On your fourth question about dividend policy, it has always been our policy to pay 50%, 40% to 50% of our earnings per share. With rising earnings, we should be paying more dividend when we continue with the dividend policy of 40% to 50%.

In any case, I think has been our policy, and we need the retained earnings to kept with us so that we can always invest in a timely way when opportunities arise, yeah. On the issue of new shares or warrants, there's no plan at all because I think our gearing is now only 10% of equity, yeah.

I think we are very comfortable at this stage, yeah. Thank you.

Thank you. May I have the next question, please?

The gentleman in the grey blazer.

Thank you, management. This is Mark Leung from UBS.

I got four questions. I think the first question is regarding to our upcoming new office.

We are moving to the IGC on next month. First question is related to West Kowloon.

What's the latest leasing and rents updates for IGC and Artist Square, and what is our expected office contribution for rental income in FY 27? The second and third question, I will combine.

What is the rental reversion outlook and tenant sales for Hong Kong office and retail, maybe break down by the types of asset and location as well? Lastly, the question is on the capital recycling.

Are we planning to acquire any retail asset, for example, MTRC is planning to sell maybe their Citylink or PopCorn? Are we interested in buying that?

Also, following the Dynasty Court, are we planning to further divest any IP in Hong Kong or maybe in mainland China? Thank you.

There are many questions asked. Maybe, K.W., can you respond to the question on the IGC, yeah?

Yes, Chairman. I'll try to answer the first question about West Kowloon IGC.

A very warm welcome to you moving into your very exciting home in West Kowloon. No other developments in Hong Kong matches in IGC and Artist Square in terms of the unique combination of the gateway connectivity, obviously train connections to both locally, regionally, and also to the international market.

The scalable because of the size, because of the floor plate and the footprint is very scalable, very high quality Grade-A office supply over there. Also, the entire neighborhood, in fact, is the next-generation workplace, with flexibility and also the amenities, the greens, the outdoor, and a lot of things that we are still working on.

Perhaps lastly is the industry-leading sustainability. We got all the accreditations that very discerning end users, I'm sure including UBS, they are looking for.

They're all there. In short, that will make West Kowloon AST, IGC the clear choice for corporations that simply demand the best.

Far, tenants' commitment from financial and wealth management sector has already taken place and is going up. Also we have banks, asset management companies, funds, insurance company, Mr.

Chairman mentioned AXA and maybe to name a few more, AIA, Sun Life, FWD, and so on. They have already committed coming into the project.

Given the scale of the IGC project, we believe full occupancy will be achieved through a phased approach. We are getting there.

While FY 27 will mark the initial revenue base, we expect a steady and meaningful ramp-up in subsequent years. Now turning to AST, it's on track for completion in 2027.

We've anchor tenant, JPMorgan, is committing or has already committed to 250,000 square feet in that particular project. That represents 37% of the total office GFA of AST.

This, without doubt, is a strong vote of confidence in the AST project.

Maybe, Eric, can you give some colors on how attractive IGC is? Then maybe Henry, later you will respond to the question about the IGC mall, the Stage IGC, yeah.

Eric,

please. Okay.

I think the more important points to notice because everyone's talking IGC, it's good quality and I think with UBS and JPMorgan can take office there, I'm sure that you have studied all our specification and also our quality. I think more to the point is I think mentioned by Chairman previously is actually the West Kowloon is going to be a very important area, not sort of a replacing Central, but because of connection to the Greater Bay Area, it's a unique positioning.

Example, I think the reason why all these insurance companies are taking offices there is because now day the clients are coming from Greater Bay Area, from Guangdong and everywhere because with our unique connection to China, even to Changsha is within 3 hours. Also I think you possibly notice Sun Hung Kai actually own over 7 million square feet of offices in that area with two very prestigious hotel.

What we're doing in the next phase is actually connecting all our previous portfolios together physically and also we are actually building AI building management centre in IGC. That centre, apart from managing ITC, will also manage ICC and also the portfolio we sort of in West Kowloon.

That will be sort of like a regional management centre, which not only will make our building more sustainable, more green, and also it will helps our tenants to connect and use each other's facilities, which possibly will be a first in Hong Kong. We actually are in the process of building that and then it will possibly be completed by the end of this year, and then we will have a big announcement and then what we are doing in West Kowloon and how we're going forward, and our vision of building not the next Central, but another Central, which probably serving different type of clients.

Yes,

as just Eric mentioned, that IGC is a very unique project in Hong Kong. You cannot see any other comparables, actually.

It is a gateway connecting to the Hong Kong, mainland, and, well, it's just sitting on the top of the high-speed train station, convenient access to the four MTR lines as well. It further enhanced by 1.5-kilometer what we call the skywalk, that connecting the project to the waterfront and the surrounding communities.

Phase 1 of the mall is scheduled to be open the end of this year. The leasing progress is well on track.

I'm happy to mention that almost all the space in Phase 1 mall is fully let right now, so that in the first phase, it will provide some eateries and other retail options to our office tenants and visitors. To open in addition, in the Phase 1, we also open the VIP drop-off at the ground floor, so that it will further facilitate the visitor to and from the high-speed train station and mall as well.

More fashion, lifestyle, and premium restaurant will be coming to Phase 2, when it is targeted to open in the late 2027 as well. Thank you.

Also, for Dynasty Court, we still have a number of premium units for sale, and currently, we don't have any plan to dispose other IP. However, we shall keep our portfolio in a active review in line with the market condition.

Thank you.

Christopher, would you like to comment on the prospect of the...

Sure. On on the retail on the rental reversion for the retail portfolio, for last financial year, we've seen that the pressure on the rental reversion has moderated, and we expect the trend to continue to improve in the coming year, riding on the fact that the retail sales at our malls have have outperformed the market, especially in the last 6 months, with jewelry and F&B trades showing particularly strong performances, while our occupancy also remains high.

I think in the coming year, we are we are cautiously positive because in Hong Kong because the market will be supported by more tourist arrivals and influx of more mainland talents who are who are planning to stay longer term in in Hong Kong. We expect that in the coming year, sales will continue to improve, and rent will continue to recover gradually.

K.W., maybe you can comment on the reversal aspect of the office market, right? Of

mainland, yeah? Yeah.

The Grade-A office market has seen meaningful improvement, particularly in core areas, including West Kowloon and Central. Our office portfolio continue to benefit from this gradual recovery trend.

For example, spot rents at IFC been trending upwards continuously, and occupancy is now very close to 100%, if not 100. ICC maintains a very strong tenant base of global investment banks and financial institutions, with stable rents and robust occupancy of now at around 92%.

We remain positive on the 12-month outlook. The market definitely has been improving, and we believe it will continue to do so.

Current momentum is encouraging, and while positive rental reversion will take time to materialize, we expect it to gain traction as the recovery broadens across more sectors. It's not just restricted to the financial services sector, which are very hot at the moment, but we certainly have also seen recovery in other, perhaps manufacturing, in other business sectors across the board.

We believe this will continue, and that will improve the overall market situation in the coming months. That's about the overall Hong Kong office market.

Thank you.

On the prospect of buying more retail properties, of course, I think we would like to expand some of our clusters, especially retail clusters that are very successful. I think we have to follow our financial discipline, and also we need to buy when there is an opportunity to upgrade and also to buy at a reasonable price, yeah.

That's why, I think, always we like to keep some dry powder to make sure that when the right opportunity arises, we always have the dry powder to be ready, yeah. Thank you.

Thank you. The next question, please.

The gentleman here.

Thank you. This is Griffin Chan from Citi.

I have four questions on the mainland China business. The first is about the residential sales.

Given we just mentioned we have a very flexible pipeline, what is our mainland DP contracted sales target as well as the margin guidance for financial year 2027? We have a few changes in the pre-sales regulation.

How would you feel the impact to the mainland market in China and our business? Second thing is on the land banking.

The high-end residential property has been selling very well in tier-one cities. Will you consider to replenish any land bank in the tier-one cities?

The third one is more on the ITC. Can you please share some pre-leasing update for the three ITC Tower B and the ITC mall?

When do you expect them to deliver a meaningful profit contributions? Lastly is more on the commercial land lease renewal.

Guangzhou and Shanghai has recently clarified their renewal mechanism for the commercial land use right. How many of our investment portfolio in the mainland China is approaching to the land lease expiry?

How do management assess the impact of the land premium payment upon renewal as well as on the asset valuation? Thank you.

For the mainland residential sales, Adam, can you comment, yeah?

Sure. Thanks.

I think your first question is on DP margin guidance, right? I think it really depends when you buy the land.

Fortunately, good for us that the last time we bought some land was in 2021. We haven't chased the market high, and you can see a lot of mainland developers making provisions nowadays are usually lands bought in the past 2 years and so on.

Thankfully, our entry time by large is good. On the positive side, with the market recovering, we are using this window to sell our inventory more.

I expect post-tax a healthy double-digit mid-teens margin for our mainland development projects overall. Of course, some of the more premium stuff that we had will sell for higher margins like the Suzhou villa, but of course that's also subject to the government hopefully more and more encouraging signs to relax the price.

In terms of the regulations recently, I think [foreign language], August 28th, I think there's a few things we have to notice. First is that it will be painful for many developers.

I think that the crux is that they are releasing all the pre-sales funds. There's no more pre-sales ongoing, and the banks are releasing the mortgage and the funding only at completion, right?

This delays and shifts the timeline of cash collection by at least 2 years. The old model of high leverage, scale first model will be much slower and will focus more on handover quality and so on.

I think the survival of the fittest is probably the right phase, [foreign language], I would say. I think the industry consolidation, which is happening already, will just rapidly increase.

Fortunately, I think for us, this means there's a flight to quality. I think a flight to quality to a lot of the SOEs that we all know and some specific developers, hopefully like us.

I think buyer confidence and purchasing power as well as actually let's not forget availability of bank financing, because now all the projects needs to find a specific nominated bank to provide financing, right? I think not only the buyers' confidence purchasing, but the banks' financing will flow to developers that they trust.

Then the last point I would make is the supply-demand dynamics. I think with these new laws, this will improve the supply-demand dynamics and have better price expectations, because obviously developers will be more cautious in buying land and they'll be probably less aggressive in buying land.

There'll be less supply, it will help the whole supply-demand situation, and also will give the inventory some time to clear out. I think most importantly, this will help greater protection for the homebuyers, right?

I think that's the point of the policy to begin with, and thankfully, the flight to quality will help us. A lot of the stuff we're selling now actually are already completed projects, we're not that affected by it.

Thanks.

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

Sure. Firstly, actually we don't have any building in China that have an imminent problem of land lease renewal.

Secondly, I think it's a recommendation, not yet a policy. We have talked with a number of friends in both FOE and SOE and also private sector.

I think everyone is adopting a wait-and-see sort of approach to this. I think also Chinese government is very proactive.

I think they will sort of examine this to see the market reaction, and then maybe change in future.

Sure, on the ITC, I can comment on the retail portion. The ITC mall, right now it's leasing is progressing in line with our staged opening plan.

Following the earlier opening of the F&B zone in the office section, we've recently opened the metro-linked floor, which provides a variety of F&B trades, grab-and-go zone, some fashion and some lifestyle options as well. Since the opening of the metro line which actually connects directly into the B level B2, we've seen a clear uptick in the traffic at our mall.

We would expect that a meaningful profit contribution will come later in the later part of 2027 as we open more of the mall and rents begin to stabilize. I think we remain long-term very positive about this shopping mall, given its very strong metro station connectivity, given the opening of Andaz Shanghai Hotel, and the continuous moving in of office tenants into the ITC Tower B.

Maybe K.W., can you comment on the ITC Tower B, right?

Yes. The building, obviously, is in itself already a landmark because it's the tallest building in Puxi with 370 meters tall.

It also benefits from superior transport connectivity. Christopher just mentioned opening the connection with the metro station, which serving three metro lines.

Line number one naturally is the most popular one, linking the south and north. The number of passengers is the highest.

Also Tower B has the most superior specifications in the market and that will meet the most stringent technical and quality requirements of discernment tenants, and making it ideally suited for the fastest growing industry. We believe will include high-tech manufacturing, AI, biotech, etc.

Of course, financial and professional services, including legal, they all find the project a very decent one. Actually, we are in talk with many of these people at the moment.

Some already committed and some are, we believe, about to commit with various sizes coming from different directions. Of course, due to its scale, the occupancy, we believe will be phased.

I think, in short, we can say that the leasing activity is gaining traction. We believe that will help the leasing of the project in the coming near future.

We will see definite improvement in the occupancy with the mall, which is a big part of the entire ITC project, and the traffic connectivity. We believe this as a whole is unique in the market.

Of course, Xujiahui is a historic part of Shanghai with not just stories, but a wealth of history about Shanghai. That make the whole neighborhood very interesting.

Not to mention the opening of our Andaz Hotel that already serving the neighborhood. We have seen many of our tenants, hopefully future tenants as well, they are using the hotel facilities over there for one reason or another.

That hotel actually will serve not just business tenants, but also, of course, other people traveling to Shanghai and prefer to stay in a location where it's very rich in heritage and enjoy, of course, the design of the Andaz Hotel and also the entire project. The gradual opening of different parts of the ITC project definitely will be very welcomed by the business community as the general community as a whole.

Eric, you are the project director for our ITC project. Can you share with the audience your vision of ITC in Shanghai,

yeah? Yeah.

I think working a big project in China, you you look at a few things. The number one is the real district.

I think K.W. said Xujiahui is one of the most important district in Hong Kong in in Shanghai.

I think the more important is the local government. The district is willing to work with us.

I think if you go to Xujiahui today, you'll see that actually they have built a lot of infrastructures and actually revamping all the existing SOE buildings to make this a new center. I think the whole district upon our completion as well as the renewal of all the older building together with the government building all the infrastructure, I think it would be one of the most attractive area for business in the whole of Shanghai.

That's number one. Number two is actually the building quality.

I think just like UBS and JPMorgan taking our AST and IGC project, our first tenant for the Tower B is actually Amazon. They are actually having seven laboratories within our premises taking over 100,000 square feet.

Their requirement actually is no less than than you, too, it's very, very difficult. I think if we can accommodate Amazon's laboratories, I think we can accommodate everyone.

That that's a very important, too. The third one actually apart from the three metro connection, which is it's all under one roof is a seamless connection.

The government actually is planning to do two more building two more lines connecting the Xujiahui district to our building. I think in future, there will be in 5 years' time, there will be five lines.

It will become really a very, very important district. I'm not saying that you surpass Jing'an, but so I think it's one of the the best district for for business.

Our hotel also open, which is the only sort of a five-star hotel in Xujiahui area and running doing very good business. Overall, I think we are we are we have a vision 10 years ago.

I think basically we have delivered the hardware, and then in the next two to three one, two years, we we will deliver the software, we will deliver the tenants.

Thank you. By the way, the Andaz Hotel is the best one I've ever visited, Andaz Hotel.

If you haven't visited, you should visit, yeah. It's a very nice hotel, the best Andaz I've ever visited, yeah.

Thank you.

Thank you. Any other questions?

The gentleman on the right-hand side.

Hi. It's Simon Cheung from Goldman Sachs.

I have three questions, two in Hong Kong, one in China. The first one is you mentioned you have eight projects in Northern Metropolis, but we notice that you did not participate in the Hung Shui Kiu projects.

What are the key considerations? Would you have any appetite to maybe bid more projects going forward?

That's the first one. The second one, the Development Bureau has recently launched a bonus plot ratio pilot scheme.

What would be your considerations in terms of maybe ramp up your redevelopment projects in Hong Kong? Then the last one, which is more on your rental property.

Just broadly speaking, how you're seeing the retail sales and the rental reversion trend in China for both retail as well as office, in particular, I think for some of your office project like Hangzhou IFC, Guangzhou South Station projects, what is your outlook over there? Thank you.

For the Hung Shui Kiu, Mike, yeah.

Maybe I deal with two questions on Northern Metropolis and the urban area renewal incentive recently promulgated by the government. Firstly, the Northern Metropolis, I'm sure everybody's knowing that this is a grand vision, great initiative pushed by Hong Kong government.

As mentioned by our Chairman, we are undertaking to deliver about 10,000 domestic units support with all the supporting commercial and transport facilities. One thing I would like to mention is all these projects are being built mostly from those tenures or leases where the premium is relatively low.

We enter the market in a low market. That we're expecting despite there might be a challenge on the market for the Northern Metropolis when the infrastructure or the community is not fully developed, but the good thing is that we enter the market low.

Secondly, you mentioned about Hung Shui Kiu, why we didn't bid for the first project. Indeed, we tried hard to find one, but we couldn't.

Then we choose not to bid, because we couldn't submit a competitive bid. On the urban area, the Development Bureau recently promulgated a policy to incentivize in the old and dilapidated area in the urban area seven districts, they try to give 20% bonus for the land owners.

Obviously, we are welcome the relaxation of this policy, but as our land bank, we do not have too much land bank in this regard. Obviously, we're very open-minded, and we welcome this policy and we're looking for projects when cases arise, but obviously we will stick to our financial discipline.

Actually, on the Hung Shui Kiu site, we did spend a bit of time in trying to locate a good partner, right? Eric, can you care to comment,

yeah? I think you know the detail of the tender is very different.

It's not a very straightforward sort of a land bidding tender. You need to find a partner with [foreign language], with a certain type of industry.

We try very hard to locate that, and then we talk with a lot of people, and then somehow, we cannot make the mathematics work. We decided not to bid it.

I think this brings up a good point, because the partner also brings up the development costs for say a GNT building in Northern Metropolis is not cheap, and they have to undertake some of that cost, right? If the reforms we're talking about in LegCo is happening, which is part of it is reforming the building standards and material and having breakthrough new building codes, I think that would overall hopefully help the attractiveness of the area.

On the reversionary potential for mainland retail, right?

Christopher,

you have a comment, yeah?

Sure. I think for the mainland retail market, if you just read the headline news, I think the sales momentum is a pretty mixed picture across mainland cities.

Fortunately our portfolio continues to hold on quite strong. Tenant sales in our major malls in Shanghai, Nanjing, Beijing, and Guangzhou as well, all achieve decent growth, outperforming the market.

We've seen our occupancy continues to hold up, and there's a mild positive rental reversion. In particular, I think for Shanghai IFC mall, which is our most important mall, continues to command a leading market position as a premium mall in Shanghai, and it achieved double-digit growth in sales as well as rental reversion and maintains a high occupancy.

Of course, I think we're not saying it's an easy market, right? There's a lot of competition and so I think the teams have to work extra hard in this market.

I think we believe that if we, on top of leasing, right, we put more resources into strengthening our VIP program, refining our tenant mix, and working together with the tenants, right, to drive up their sales and organize better events and attract more traffic to the mall, right, that will help. At the end of the day, I think when there's oversupply, which is a fact in every single market in China, I think at the end of the day, location, the connectivity, and the presence of integrated elements, right, not just the mall, but office, hotel, and apartments, right, that helps bring natural traffic.

It's what the tenants care most about in this market.

To supplement what Christopher said, right, all our important office projects are integrated project with a first-class hotel with good mall and with excellent railway links, and also in established locations in tier-one city or tier-two city. I think our formula of building a sizable integrated project with a scale, and also with a hotel, office, mall, and railway link actually is a proven formula.

I think increasingly, over time, it would be proven successful formula. Actually, even on top of the hotel, we may consider building some towers of serviced apartments for rental.

Therefore, I think the projects that we have and we are finishing are all those projects that will succeed over the long term, yeah. Thank you.

Thank you. This concludes today's analysts briefing.

Thank you all for coming and hope you enjoy the presentation. There are some refreshments outside.

Please stay and enjoy.