Hang Lung Group Aktie

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

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

[Presentation]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Cindy from Citi.

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

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

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

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

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

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

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Mark, from UBS.

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

When will sales turn into rent?

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

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

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

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

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

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

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

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

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Karl from Bank of America.

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

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

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

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

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

Thank you.

Good afternoon, ladies and gentlemen. My name is Joyce Kwock, and I'm the General Manager of Investor Relations at Hang Lung. Welcome to the analyst presentation for FY '25 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 headquarter and also the audience who are at our live webcast right now.

Please scan the QR code for our presentation pack in support of our minimal paper policy. There are English version and simplified Chinese version here for you to choose.

Today, our senior management team is all here to join the presentation. They include Mr. Adriel Chan, our Chair; Mr. Weber Lo, our Chief Executive Officer; and Mr. Kenneth Chiu, our Chief Financial Officer. Our Chair, Adriel, will start with some remarks. And our CEO, Weber, will walk through our results and some of our developments using the slides. Our CFO, Kenneth will also walk through our property sales and financial management. After that, we will address the questions from the audience from both the floor and the webcast.

So Adriel, it's your turn now.

Thanks, Joyce. I wasn't aware I was making remarks. But first of all, I want to draw your attention to the little logo in the bottom right corner of our presentation, the 65. This is our 65th year, and it's not a diamond or whatever jubilee, but it's a milestone. Ronnie just retired, just taken over. It's been an interesting year since the takeover. But let's just say, not only has it been like drinking from a fire hose, but there have been all sorts of really fun, interesting things, which have kept the 3 of us very engaged. And so a somewhat challenging 65th year.

That being said, I think if you look at the results and if you look at the market's reaction to our results, I think this is a solid set of numbers. I think the team has executed very, very well on our strategies, but also really taken advantages of our strengths. We'll dive into some of the details of what we're doing, which is especially interesting this year when we go through the pack.

But overall, I think that we feel the stability is coming and hoping for even a little bit of uplift if the trajectory of the last couple of months can hold. So all in all, I think management are feeling very cautiously optimistic, not cautiously very optimistic, but very cautiously optimistic. And I think that what we have here will help tell that story.

So without further ado, maybe I'll pass it on to Weber.

Afternoon. Very nice to see you all and also just say hello to those on the webcast. I will not repeat all the numbers here, but just want to highlight a few here. First, our core business rental business, still down 3%, but I would say kind of expected when we start off the year and also when we start the year in January, we talked about it, first half will still be tough and hopefully, second half will be better. And then I can show you later on some of the pages that we see sequentially the improvement. Of course, we are not very happy only seeing this. We want to back to positive. So I think there's still way to go. But I think at least we see the trend.

Overall, because of the less property sales and also the hotel business and sales business account for 3% and 3%, total 6%, our core business is still our rental business, which is 94% of our business. So we declare same dividend, both HLP and HLG.

Revenue contribution by segment. At the backdrop of 1.4% depreciation of renminbi, actually, it was also sequential improvement, but it was down by almost 2%, 3% in the first quarter, but actually gradually improved, but still average down by 1.4%. We managed to get our Mainland China rental revenue in renminbi terms, down by 1%, but because of the renminbi depreciation down by 2% in Hong Kong dollars, Hong Kong down 4%. But as I mentioned, this accounts for 94% of our business. So others because of less property sales and also the China hotels because now we put under PP&E, so they are 3% and 3% of our business.

Okay. I think this is really the main part. If we look at the rental revenue in Mainland, so minus 1% in first half from a minus 4% in 2024. On the right-hand side, if you look at the box, retail was flat compared to minus 3% in first half of 2024. Office remained to be really tough, minus 4% and minus 5% continues to be tough. Service apartment because we moved the Grand Gateway service apartment into hotel and then they are under renovation. So therefore, the number is not really significant. So overall, we are minus 1% in first half of 2025, improved from minus 3% in 2024.

Retail business actually improved from the overall is flat to first half of 2024. A lot of you will ask, oh, why you manage flat because the base rent is increasing. I remember last time you asked and questioned us, could you manage to increase base rent? Yes, we did increase the base rent. That offset the drop of the sales rent. So overall, we managed to get the retail revenue flat to 2024 first half. So if you look across, I would say out of 10 projects, 7 are plus, 3 are minus and minus, of course, you would drill why they are minus, but they are minus of the reason because of the competition of the repositioning of the conversion from the positioning from one to the others. So they are in transition. But overall, I would say the Guangzhou in Shanghai, those performing outside Shanghai are delivering positive revenue growth in first half of 2025.

I think this part really showed the optimism that we see. Of course, we still need to cautious, but you look at the numbers, we are minus 12%, minus 14% and minus 18% last year, sequential deceleration, I would say, last year. But since third quarter of 2024, the sales improved from minus 18% to minus 11%, from minus 11% to minus 7% in first quarter and second quarter, minus 1% only, almost flat, right? So therefore, the sales in first half is minus 4% on average, but actually it's improving from minus 7% to minus 1% in second quarter.

And on the right-hand side, they are across different malls. And I just want to highlight Heartland, minus 31%, yes, it's a big drop. But I just want to say the launch of the other mall in Wuhan was in July last year. So when you compare -- these sales compared to the first half of last year, that mall has not opened yet. So therefore, there is an impact of the dilution of one more competitor in the market in Wuhan. Otherwise, Forum is in transition, Riverside and all the others are basically plus or minus, which is not significant.

And also Plaza 66 also seeing a minus 8% only compared to a double-digit down in the last few reports. And also when you compare the numbers from the luxury brands that they report, I think this number actually is better than what you see from most of the other brands.

So why Adriel just mentioned is exciting, interesting, but quite tiring because the retail landscape has changed. And it changed so much that we could not using the old way of looking at it. I can say that some of the athleisure brands, their performance is even better than some of the luxury brands. Some of the experiential brands, for example, POP MART and all that, they are really creating some of the new experience to our customers.

So in terms of evolving retail landscape in Mainland, I think we just need to continue to upgrade our offering across portfolio through events, tenant management as well as the CRM. And right on the 65th anniversary, we would like to launch national program to be more efficient on one hand, but at the same time, to create first in the market kind of news to some of the second-tier city, which generate good footfall, good result from sales, but also actually leverage on our portfolio to get some efficiency. But at the same time, yes, even though you see we run so much program, but our expenses doesn't jump much because we redeploy our expenses from more operational into marketing and hopefully, we can generate more sales from a customer perspective.

So if you look at this number, I think it tells a lot of effort from the team in the first half. New letting, I think this is really something I look at, especially in the tough market, 36% increase, right? So even though you want -- if you want to discount the price in order to get the customers, you still need to attract the tenant to open the store with you. So I think 36% is a new deals. It's a new letting. It's not continuation or renewal. It's a new letting. I think this is something we need to focus on. And also, I think first in town brands, 57% more compared to first half of 2024.

Again, we are not only focusing on quantity, but we need to focus on the quality as well because now if your mall does not have differentiation, people will just stop coming, right? So you just need to bring news, bring new ideas first into the market, and therefore, they will come and continue to visit your shopping center. Prioritizing occupancy without the sentiment improvement of the environment is very difficult. So if you see across the board, our occupancy continue to improve or maintain at a very high level. Even for some of the tougher one, you see we managed to increase the occupancy. Let's say, Wuhan, we increased the occupancy from last year, 83% to 88%. So we are slowly, slowly getting our pace and get back to -- hopefully, we can go for full occupancy.

On the right-hand side, I think just highlight a few. In terms of LFA, luxury, more or less the same. We did not add or we did not reduce. However, we add more personal care and beauty. We add more food and beverages. We add more others, which including athleisure, other pop-up and all that kind of stuff and try to really create new business into the market and therefore, to attract customers. Overall, both renewal and new lease increased by 12%. That shows the case that in a very tough market, we can still make deals and also the number of first in town, which I just mentioned already.

Also, according to the customer demographic change, as you recall, we did quite well at the top. The Emerald and the Sapphire is doing quite well. But if you just rely on the top 10% of the customers, you are not good enough because you just need a lot more people to come. That's why we introduced 1 tier above crystal, try to engage more lower-tier customers and making sure that those customers will come to us more. Those customers called Agate are 10,000 spending or more, right? So we are now doing both end, right, not only at the top that we want to treasure them. Even those more than one coffee but spend 10,000 with us, we want to give them more reward, more engagement, more car park benefit and more reason for them to come back. So I think this actually make us a lot more active base and also can introduce a lot more valid customers and active customers in our base.

Tax refund is something very important and which we are taking the lead. Tax refund now, almost all our malls are now providing tax refund service, especially since April this year when government tried to push this, we now have 222 stores, plus 78% increase versus end of 2024. Now this will only go up, right? Because when customers find out, especially even for all of you, if you come to China now, you can get 9% tax refund. And with the renminbi is still weak, actually, you can buy cheaper than Hong Kong, right? So there's no other reason why you don't go to China to shop, right? So I think there's a lot of things going on. We will continue to push. We will continue to lead this arena.

House 66, again, I don't want to repeat all this. You can look at it. We work with partners. We work with banks. We try to offer valet parking, VIP, hand-free service. As I mentioned, we don't want to go for discount only kind of business promotion, right? We want to give money cannot buy exclusivity to build the relationship, but at the same time, differentiate us from those department store and those others, they always run promotion. Hong Kong, exactly the same thing, but of course, the scale will not be as high as China. So you can see our CRM program, especially on the left-hand side, House 66, as I mentioned, we introduced Agate. Valid member increased by 25%, right? New member increased by 6%. Member sales, although down by 2%, but if you remember, our overall down by 4%. So our members still performed better than the overall base and sales penetration improved. So that means more customers are engaged and they actually spend more with us. These core customers continue to drive loyalty and also to be our core base for our success.

Hong Kong, we optimize our offer. For example, some of the offer that we normally subsidize supermarket and all that, we tighten it up because we don't think if you go to your neighborhood mall to buy something in supermarket, why we need to reward you as the same as before. Therefore, we tightened it up, but we still increased the valid member, but the penetration come down because people find it a little bit more difficult to spend and use our points in our supermarket because this is our intention to tighten it up. But unlike one operator in Hong Kong that they even canceled their CRM program. So we will not. So we will continue to do that, but we will tighten it up.

Office, as I mentioned, continue to be very tight, continue to be very challenging. So we are from minus 6% to minus 5%. If you look at across the board, I think mostly Shanghai is under pressure. In media discussion early on, I just mentioned in a Tier 2 city, when you have an absolute leadership in the city, you have a better bargaining power. And when they -- when the tenant used to come to our top quality office, they were very difficult to move back down to the Grade B.

However, in Shanghai, Shanghai, everyone provide Grade A and the supply is huge. And therefore, there is some impact into our business. But the good thing is we retain most of our existing tenants. So I think that is the key. And then hopefully, we continue to deploy this strategy and hopefully, we can retain the most quality tenant, and therefore, we can continue to build up our occupancy.

Hong Kong, I would draw your attention on the right-hand side of the box first. If you look at the retail, they are minus 7%, minus 7%, both first half. So it seems like there are not much improvement. But if you remember, our big deal in Causeway Bay, we knew last year in April, end of March. So there are some impact of that particular deal, but that deal impact will go away in the second half. So hopefully, this minus 7% will improve. But office, we significantly improve from minus 8% to minus 1%. And also residential service apartment, I'm sure you all know when you read newspaper, now rental are going up, and then we also reap the same benefit. We see plus 11% growth in our residential and service apartment rental. And therefore, we managed to improve from minus 8% to minus 4% in Hong Kong in the first half of 2025. So then you ask me, okay, from minus 9%, you improved to minus 4%, will that continue to improve? My answer to you is that Hong Kong is still very, I would say, complicated.

On one hand, offices still have plenty of supply. At the same time, street level and shopping mall are trying to retain customers as much as we can. Therefore, in a weekend, if they go to the north, hopefully, at least from Monday to Friday, they stay with us and spend more with us. So we are still working hard to find the optimal point. But you can see that our sales in Hong Kong down by only 2% compared to the market down by 4%.

So I will pass to Kenneth to talk about this new page, and then I will come back to talk about ESG.

Thank you, Weber. I would like to share with you on our property sales segment. In the first half this year, we have recorded 19 units of Aperture sold and completed this first half and 1 unit in Wuhan residence. Last year, for the same period, there was 120 units Aperture sold and also 1 Blue Pool Road houses transacted. That's why we have a decline in the property sales in Hong Kong. For Mainland, we have 1 unit Wuhan sold at first half. But in the coming 2 months, we are going to launch the residence in Wuxi. Overall, I think the -- based on the latest response from the team, actually, we think that we may generate a decent sales from these projects. So we will share with you guys on the sales performance in the coming 2 months.

For financial management, I think the key highlight is that the net gearing of HLP stood at 33.5%, only 0.1% growth compared to December last year. I think we previously shared with all of you that we are at the peak of our CapEx cycles. And after the completions of Westlake 66, the CapEx will go down going forward. And overall, the finance cost, gross finance costs before capitalization actually dropped by 7%. There are various factors, but mainly because of lower borrowing costs, which I will share later on. But because the capitalization rate declined from 57% first half last year to 50% this first half. So the net finance costs increased. But if you look at the average borrowing cost for first half, actually, it was 3.9%, around 40 bps decline from full year last year. If you compare with second half last year, it was a 50 bps decline. And I think the HKD 10 billion syndicated loan that we arranged earlier this year can help us to further lengthen the debt maturity profile. So basically, more than 70% of our debt are due more than 2 years.

And if you look at the debt portfolio, you look at the left-hand side, we have increased our exposures on renminbi denominated loan. So if you look at the bar, you add up the top 2 segments, actually, renminbi loans, both onshore and offshore, altogether accounted for 43% of our loans. It can help us to manage our finance costs because renminbi borrowing is quite cheap right now. And also, it can help us to manage the natural hedge on the balance sheet.

So next part, I'll pass it to Weber. Thank you.

Just don't bore with all the information, just a key highlight. Now we have 80% of our project in Mainland powered by renewable energy from a 50% that I think, which is something we are very proud of because not many developers can claim this that now we are moving from 2 projects to 5, 5 projects to 8. So hopefully, 2 more to go, and then we can complete this journey. I think this is huge. Not only we now tick the box by saying this is powered by renewable energy, but we also save costs. We find that actually the renewable energy is sometimes not only giving us a support on the sustainability, but also actually help us to save costs.

Diversity, inclusion, I don't want to bore you with these numbers. And also, I think one thing I think very important, first of the kind that our journey to net zero, we issued this paper, and then we are committed. And hopefully, even though right now, geopolitically, this might not be as fashionable as 2 years ago, but we still believe that this is the right thing to do, and then we will continue this journey.

All right. So the pipeline for the next few years, Westlake, we just got the OP in July 4. We will hand over the first 4 towers of the office in the second half of this year. And then the Tallest Tower, we will hand over in the first half of next year. Center 66 Phase 2, as we mentioned, we will start to do presale in the next 2 months, and hopefully, we can report good result because this asset is a little bit different from the others because they command higher -- longer lease as well as we have schooling and all that kind of support. And hopefully, we can sell a lot more units through here.

Pavilion is on track. It's on time. So we would like to launch in the middle of 2026. Kimpton, according to the schedule will be 2027. And then one more new thing, which we -- I'm sure you guys read, but we did not go out and publicize it because tomorrow is the shareholder voting for our partners. And then hopefully, after tomorrow, we can talk a little bit more about this deal. But this deal, I think we will cover it on the next page.

Okay. The green color is the sites that we own, right? The Orange dotted line is the one that we just announced and then we will lease for 20 years, right? If you have a chance to go to Hangzhou on the left-hand side, you see, yes, we have the fantastic location, but the yellow dotted line own the best and most prominent facade and the visibility of this corner of Wulin, Hangzhou. The objective of this, not only we operate differently, but we can extend our leadership at this place by working with them, and therefore, we can extend our facade from 90 meters to 290 meters, right? So from the white dotted line at the bottom to the yellow and the L-shape, right?

So this is really a visibility, at the same time, accessibility because if you have a chance to go to Hangzhou, that street is the most busy street in Hangzhou. And that will give us connection of MTR, connection on the other side as well as the walk traffic from the highest traffic street.

But at the same time, also, this one will increase our scale. If you have a chance to look at the right-hand side, we have 105,900 square meter in our original retail design. But with the new expansion, we will increase by 40%. So the size will be just a bit bigger than our competitor next door with this extension. Therefore, we will have scale, we will have visibility and we will have accessibility. This is definitely because this is not our own property, that will improve yield because our CapEx will not be significant, right?

Because we -- most of the M&E will be done by the landlord and then we are only responsible for the fit-out. So the fit-out will not be a significant amount. We don't need to pay RET. And therefore, the rental income minus the head lease cost and minus the operating cost will be the net profit. So therefore, the yield will be significantly improved the existing project. So combining the 2, we have scale, we have accessibility, we have visibility and also we have yield enhancing. So that's why we are doing it.

We come up with a new terms. I don't want to use asset-light because we don't do asset-light everywhere. This is asset right. We do the right thing because we can extend our leadership next door by increasing our bargaining power and increasing our leadership position in this project. So I think we can talk a little bit more about the project. And even though at some point, we would like to invite all of you to come, and then we will build the bridge between our mall and this building, and therefore, it will be seamless. And also the MTR station today on the North, they will have one tunnel going into the expansion and one tunnel coming into the Westlake that will improve also our traffic from the north.

At the East side, we will have a much better connection from the highest traffic location. So therefore, hopefully, this project will give us all that I just mentioned. So as we mentioned, offices because we got the OP already, BCDE, we will hand over in second half. Tower A, the tallest building, we will hand over in the first half next year. As of today, BCDE, we already pre-leased 22%. As you may know, office is different from retail, and you need to get the OP, you need to get the fitting before the customer commit to you, right? So the Tower E, we already fully leased and then customer will come in, in September and November. And BCD, we are working on it, and then we are making good progress. Tower A, because of the best -- you can see from our page, sorry about that. Why I cannot go back. Okay.

The Tower A, look at the Tower A and the top zone, you can see the whole Westlake. So we want to make sure that we will give the best view to our best tenant or even turn some of the floor into a restaurant, and therefore, people can enjoy the Westlake view. So we are working on it. For retail, last time we talked to you, maybe we are at 71%. Now we improved to 77%. As of today, we are already at 81% pre-leased for retail. So these are the trade mix expected. And also, we already have a game plan, including the extension, what kind of trade mix we will put there. And therefore, that will -- they will be complementary to each other. For Mandarin Oriental will be second half of next year.

So other project, as I mentioned, Wuxi, this is really something we're looking forward to, and then there will be a hotel, Curio from Hilton. And also Pavilion extension, they are on time. And then we're already topping out in June, will be ready to be opened in the -- hopefully, middle of next year. Service apartment center residents, we will presell in the next 2 months. And then Heartland and Grand Hyatt, the market is quiet, but we will not rush to sell at cheap. And therefore, hopefully, when market improves, we really can sell good quality at the right price.

Hong Kong residence, as Kenneth mentioned, we still have 7 unsold houses in Blue Pool Road out of 18. We now have 2 projects, Wilson Road as well as Shouson Hill. We are working on the project for the Shouson Hill, we are waiting for the premium appeal. And hopefully, we can increase the plot ratio from 0.5 to 0.75 and therefore, we can build more square footage over there. Aperture, we have 153 unsold, and then we will sell at the right price. And then Investment Properties, Summit and Burnside, we just completed the renovation of Summit. We sold one of them. And then we are working with some pipelines. And hopefully, we have more good news to announce. So I will stop here.

Thank you, Adriel, Weber, Kenneth. We now start the Q&A session. [Operator Instructions]. Raymond from HSBC on the floor.

This is Raymond from HSBC. I got 2 questions. So I'm not going to ask the detail about the Hangzhou project, but actually want to understand better about this thinking. So, for example, like going forward, using -- should we think of like Hang Lung Property, we're using more of these type of models to expand your retail business for those cities that you already have presence, say, for example, like Shanghai and Wuxi that you have done very well, and it's not easy to acquire the land nearby. So this is the first question.

And the second question is actually something you mentioned about a very nice slide, which is like the sequential deceleration of tenant sales in Mainland China. So I would love to have your crystal ball. How do you see the tenant sales trend in the second half or sometimes even in the next 12 months' time?

As I mentioned, asset right, you have to be right. You have to be in the right location and also the right reason to do that. I think you are spot on. We will only do when we see there is a demand. We will only do when there is a synergy and holistic impact advantage to our project because this will be a win-win. And I can argue 2 years ago without this slowdown, you will never get this kind of deal. Now there's an opportunity for us to have a hybrid model, just on one hand, by buying it, but it takes time 7 years to build. But at the same time, once you build it together with something you can get the best good location and then decorate the facade a little bit to make it become a holistic project. I think that will not only increase your scale, but also increase your return.

So I think we will continue to look for opportunities. And hopefully, there will be some others to be announced soon. I don't have crystal ball, but second half, I do see opportunities to grow from a negative 7% to negative 1%. Hopefully, third quarter, we will see mild growth and fourth quarter also. Our guideline will be more or less the same if everything according to our plan, maybe we can see a little bit of growth for the full year.

But I don't know. In today's market, 2 months can change a lot of different things. But we can see that now really last year, the bottom was in the third quarter. Yes, third quarter, people will still travel. Summer people are going away. There will be still issue and concern. But it looks like when we see July, it's not as bad as last year. So we hope there will be mild growth in second half.

I'll take one more question from the floor before I move on to the webcast. Karl from JPMorgan.

I think it's very encouraging that we saw a pretty solid improvement in the second quarter of this year, right? But then just curious, why do you think in the second quarter, we saw such an improvement? Because supposedly it's the time when the trade war concern started to emerge, right? So from your perspective, why do you think this happened, the improvement, especially if we look into Grand Gateway, right? In the second quarter, it was up 10% year-on-year. Definitely, it's better than expected. Why is that?

And just now, Weber, you mentioned that for July, it's not as bad as last year. Can you elaborate more about what you mean by that? Are we seeing a positive growth in July already? Or is it like a mild decline for July? Maybe a bit more colors on the July retail sales so far? And then my second question is on dividend. Just curious for the full year, would you still be guiding like a flat dividend for full year?

And one more question, sorry. And so one peer recently issued the convertible bond, right? So -- and people might wonder whether some other companies may do it. So just curious, what's your thoughts on potentially issuing a convertible bond?

I will answer some maybe you guys supplement. Why? First of all, I would like to give effort to ourselves. Occupancy improved, traffic improved, and that provide the foundation. But at the same time, if you look at external factors, stock market improved, both A share and H share. Sentiment on very groomy property sector somehow stabilized. And I think this is really one very important point, which I want to highlight is Japan business down in Q2 by 28%, right? So there are a few things happening, less people traveling to Japan because yen appreciate, people feel a little bit more comfortable because paper money improved, stock improved, everything stabilized seems like. Even though trade war is an ongoing kind of conversation. But people in Mainland, if they can still earn good money, good salary and then if they believe that this is the right way to spend, they will spend it. I can only conclude this way.

I would say, if you look at our different malls have different dynamics. Not only Grand Gateway, I would say Wuxi improved, Kunming improved, Olympia in Dalian improved. So I think there's no one single reason why. So that's why I would say it's not really a so-called magic. You just need to put all stars and line them up, and therefore, hopefully, that will improve. And hopefully, the momentum continues. I was told today, Russia have an earthquake and because of that, tsunami will hit Japan and might hit this part of the world as well. So I don't know.

So travel, hopefully, will be normalized. I'm not saying that less normalized. People will not find extraordinary cheap when you travel. And also, I think there will be something happening also when April, they promote the tax refund, people from Hong Kong, from Taiwan, from Thailand, they all go to China and shop. So all this add together. So I think this is one. Second, dividend. If everything unchanged and this is what according to our plan, we don't want to cut as simple as that, right? Last year was the reset. And I don't want to do the reset all the time, right? So -- but of course, never say never, but this is really our intention. Third, I forgot, CB...

I think a lot of bankers came to me. No matter they really have a very good plan or they rush to ask me because their boss ask them why you couldn't get a deal and you check it out with all the major developers. But there are a few points I would like to share as a CFO. First of all, I'm very mindful on any dilutive instruments, even though the face coupon looks to be cheap, right? But there's always an option value that you need to think about.

In the case that the other developers, they issue CB, I think one of the key points we need to note is that their major shareholders hold a lot of shares, right, 74%. Then they have plenty of room to do things, right? For us, we are okay. Right now, we have -- HLG owns 64-something percent of HLP. But I think our share price is still quite cheap if you look at the book value, 0.3, right? So I keep monitoring, but this is not the -- something that I would consider at the moment.

Thank you. I'll take a question from the webcast. Shenyang Forum 66 and Wuhan Heartland is under transition. Can you share more about how is this progressing? And when do you expect this transition process to bear fruit?

This is a long answer. But first of all, at least we manage our occupancy improvement from 83% to 88% in Heartland. I don't want to go back to why it's difficult because when someone run promotion, but you just have one more credible players and the market is declining, and therefore, everyone dilute each other. So I think this is really something happening in Wuhan. The good thing is we are working back to basic. We're getting the supermarket back. We're getting the F&B back. We are getting some products used to be not our strength compared to next door. We are getting those categories back to at least competitive kind of trade mix.

There's still a lot of things we need to do. But as we look at both traffic as well as the sales, why you see the number is negative so much because the other mall launched in July last year. So when you compare the first half, we are comparing with only 2 mall in Wuhan. But from July onwards, there will be 3 significant mall. So that one is something we need to work very hard. How long it takes for us to get back to normal? I would say at least 2 years, I think. We need to work very hard to get the basic right, get the traffic, bring the good quality F&B, bring all trade mix into attracting customers. But we don't need to repeat what the other competitors do by just replicate what they have. We have to differentiate ourselves from the others. So I think this is what about Heartland.

Forum is more a transition from -- in the past, we have a few strong luxury brand. Now they left and then we need to reposition the whole mall into lifestyle and more suitable for office tenant, nearby tenants and all that. That actually takes a little bit of time for us to do that. But now you see occupancy also maintained at a high level and also going up. And now the traffic is getting better. And hopefully, it also takes maybe 2 years for us to get back to like the place where the Palace, the Riverside that we enjoy.

So I think, yes, it's our weak point, I have to say, but we are having laser focused on this, and hopefully, we can crack that. I can't promise we can get it done in 6 months because it takes time. But I think the team are very committed. We even actually put more resources in these 2 projects and making sure that we give the best support to this project to make this happen.

I would just add also that there's not many developers who have a track record of being able to revive a mall or at least turn around the fortunes. But we've done it with Center. We've done it with Olympia. We've done it with Palace, and we've done it with Riverside. And so I think we have a proven track record.

Cindy from Citi, and I will go back to the webcast.

I have 3 questions. First is also on dividend. Just want to check on your latest thinking for potential returning to a pure cash dividend, maybe sometime next year after the Hangzhou project and how is your thinking?

Second question is on your, say, luxury malls as you have disregarded the differences between luxury and nonluxury. So just wondering what's the rationale behind? And should we worry on the retention for luxury tenants? What will be the key reasons behind their stickiness with us?

And the third question is actually on your positive reversion. So you mentioned we are still in negative retail sales and turnover rent obviously a decline. So what are the drivers for tenants willing to pay a higher base rent given obviously, the market is very competitive. And if we are able to see, like, say, tenant sales turning around somewhere second half this year, so will we be more optimistic on a more positive reversion maybe?

Maybe I comment on the question about the scrip dividend arrangement you mentioned. I think we previously indicated that this is an interim measures, and we may stop it after the Westlake 66 mall start operations. So we target to open Westlake 66 for the retail mall first half next year. So I think subject to the Board discussion, there's still a chance for us to do a scrip dividend for the coming final dividend. But after that, we may stop it.

For the classification that you talk about luxury and non-luxury, you can see we declassified it this time, not because we worry about luxury my [ leave ], no. I just go back to the basic, why the rationale, why we don't want to only so binary to talk about luxury and sub-luxury. And over the last few years, I always talk to Adriel that I feel a little bit bad for those not belongs to luxury. Why do we call them some. They should have a name, right? Because they contribute a lot. They contribute almost 85% of our space. maybe the sales 50%, why we call them something.

So the reason why go back to our strategy, customer centricity, people behavior change. Now I ask the team to give me the top 10 tenant in each of the mall. Even though they don't have luxury or sub-luxury, you can -- you will be surprised. A lot of athleisure, a lot of gold, a lot of other trade are top 10, not the usual luxury. Maybe 1 or 2 luxury are truly luxury, but some others are not, right? So in order to give a real description or something that really tied to what customer behavior is. I think this is something we might be too binary to look at only this dimension, right? I'll just give you an example. We have not decided yet, but we are just thinking about experiential retail, general retail.

Even in the general retail, you have different category. Let's say, for example, I'm sure maybe you will ask, one of the tenant put a [ ship ] in Shanghai. Is it a retail? No. Because only 20% of the space are for retail. Most of them are for exhibition and F&B. Okay. If that is F&B, is it F&B? No, this is a luxury F&B. Okay. Some [indiscernible] athleisure brands. Are they sports? Are they lifestyle or are they luxury? [indiscernible]. Are they luxury or they are jewelry and watches.

So now the tenant move into arena that actually even so blurred, we do not even know how to categorize them. So we believe that it is fair to not only look at 2 dimensions. We believe that even though we look at all our competitors, all our peers, they don't call themselves something and something. So therefore, we decided with the Board together with some study. We believe that maybe to be fair to all the mall, we should not give them a label. Let's say, the downside, of course, maybe you guys may come or maybe you worry about it, no. On the other hand, when we take out this, maybe those people believe that we are too high end, they may come, right? Because in the past, we call this is luxury mall. If I don't buy luxury, I don't come.

So I think there will be a lot of advantage. But I would say maybe next time when we see you guys again, maybe we will have a better description going forward. But we are not trying to hide anything. I can tell you that luxury sales, even in the minus 4%, they're down by 12%. Long luxury sales, they are going up by 8%. So this is the fact that we have to tell because all the luxury brands we report their announcement, we can't hide.

But the key is I'm not saying that we try to deemphasize luxury. We want to give a little bit more color of the customer behavior. And therefore, maybe in the future, we classify them experiential, this and that, we don't know yet because we are still monitoring the behavior of the customers. And I can tell you that Mainland China are very different from Hong Kong, and they change so fast. And therefore, we would like to be a little bit fair to every single category. And therefore, hopefully, we will have a better description on that. But otherwise, we are still doing premium mall. We are still doing the high end, the best service one, but we do not want to buying ourselves only do luxury and sub-luxury.

So the last one, sorry...

[indiscernible].

Okay. Out of 10 more, 7 of them positive reversion, 3 of them, which you know which 3 are negative, right? So again, it really depends on your leadership position in that city. It really depends on your bargaining power and really depends on your business momentum. But as I mentioned, last time we showed to you that in the last 6 years, we managed the base rent increase. We continue to do that, although it's coming down because the reality, the fact that it is coming down, but that offset the sales rent decrease, right? But if the sales come back, then maybe we are in a better place.

So the mix between sales rent and the turnover rent is more or less. There's not much movement. However, we see if the trough really reach and then you see the sales pick up again, hopefully, that will give us a little bit more confidence in the future.

Maybe I'll just make a quick addition to the first comment on the scrip and versus cash dividend. In the past several results announcements, we talked about in Chinese [Foreign Language], so really protecting the core. And we didn't mention that this time, except in this context of referring to last time. And I think that's because things feel like they're stabilizing. And since things feel like they're stabilizing, I think everybody feels a little bit more comfortable with a so-called return to normalcy.

In any case, it was never intended as a long term -- necessarily a long-term move. I think it was really much really with the view of our gearing in mind that we did a series of changes last year.

But at the hindsight, it's good for our gearing. It's good for HLG to acquire at a low cost. So overall, I think this is a temporary measure, as Adriel mentioned but we would like it to. And hopefully, we will get back to normal environment. And hopefully, that special measure did not need to be there. But I think we just focus as we all be very frank to you, we just focus on fundamental.

Some of these measures, that measures are only for short term and hopefully, if every fundamental get back, I think our business is so easy to understand. And basically, everything is about traffic, about sales, about occupancy, hopefully, also macroeconomic environment improve. But things we can't control, and therefore, we need measures, hopefully, to control the impact to our company.

Okay. In view of the time, I'll pick up the last question from webcast and then one more question from Mark. Okay. I'll start with the one on the webcast. Can you update us with the overall CapEx guidance? And specifically, the expansion at Westlake 66, would that increase the CapEx -- the upcoming CapEx significantly? So this is a question from webcast.

Okay. Maybe I share with you for the CapEx projections, I think this year, our overall CapEx would be around HKD 4.9 billion. And next year would come down to, I think, around HKD 3 billion and then keep going down if we don't take any new major acquisitions. For those asset-light projects, actually, the CapEx is not that significant because as what Weber mentioned, the owners, they need to pay most of the CapEx. And for us, we just mainly do the valuation. But it's a case by case, okay? So this is the key figures I can share.

I mean it's really in line with everything like the cash dividend versus scrip with the cut in dividend or the reset, sorry, in dividend last year. I mean all of these things tie in. We knew that this would be the peak in the CapEx. Actually, we kind of told the market many years ago that the peak would be around now. And so in a way, it shouldn't have come as a surprise to the market that we did what we did last year. Yet, of course, many investors are very short term. And so they don't remember what we said previously.

And so now we're coming to the end of that big cycle, CapEx cycle. And so it's natural that we would try to move back towards what we think of as a more normal. But I think we're on very, very sound footing, and I feel very good about where we are and what we've set up for the next couple of years.

Last question from Mark from UBS.

Congratulations for the good results. I have 2 questions. I think the first question is also regarding on Hangzhou and Wuhan, right? So if we reset the Wuhan, the whole project, how are you going -- I think what would you like to change or modify for the upcoming Hangzhou opening plan? And more drill insight is definitely is excited to have the Phase 2 expansion. Just from an intention perspective, right, do you think that we are so confident on the project that we don't have enough space to give our tenants or we want to improve the project connectivity and the scale to enhance the competitive advantages. So maybe that's my first question first.

I think you basically know exactly where we are coming from. If you have a chance to go to Wuhan, one of our weakest link is the accessibility, right? The MTR station is far away. We only have a monorail. With Hangzhou expansion, we solve all the problem. I don't think this is the only one, but also nowadays with the evolving retail landscape, you can't just do what Plaza 66 do. You have to offer everything. And with our site constraint, in the past, we only have 105,000 square meters, right? So therefore, this is an excellent opportunity for us to increase our retail space by 40%.

And also, I think Facade is really one of the key. I was in Hangzhou Saturday, Sunday, last weekend. I look at different angle and take pictures. With this, I can be sure that Hangzhou, our next door can see us very clearly with the much better facade, right? So I think overall, we keep learning. I'm not saying that we did not learn that when we launched Wuhan. I would say Wuhan, when we launched, the trade mix was even better than Spring City in Kunming. But because of the traffic, because -- next door suffocate us by not allowing any tenant to come to us. That tactics somehow suffocate a little bit of us. And then suddenly, with the next big competitor coming in by discounting everyone by 20%, that caught everyone's surprise for the whole market.

I would say Hangzhou, I'm a little bit more confident because the dynamic of the city. My team just sent to me South China Morning Post today, I just have a report saying that Hangzhou is the #1 city in terms of energy and vitality, which it was rated by EIU. So I think I was there in Hangzhou last weekend. It's so amazing. I was in one of our competitor. I could not believe there's how many people there. They are young and they are willing to spend.

So I think overall, the market is right for us. We have the right location. We now even make it bigger by having even a better retail space on top and above with the best office location and the best hotel offering. So I think now make it even more confident for us to have a better result for this project.

So I think the short answer is both. It's not either or it's both. So both -- we're confident and we need more space. And also, we want to improve everything from the connectivity to the facade.

And my second question will be on the asset disposal or maybe we just call it Summit. I think just want to check with management, do we think that our net gearing -- first of all, how comfortable are we at the current net gearing level? Are we very keen to bring it down in a short period of time? And after that, my question is, are we keen to dispose the Summit at what kind of pace we want to dispose fast or we want to prioritize margin?

I think in terms of gearing, I previously talked to you guys that for a company like us with substantial income from rental income rather than relying on DP, we can have a -- we can afford to have a slightly higher gearing, say, near 40%, something like that. But to me, I would try to keep it below 35%. So right now, it's 3.5%, and I do have the confidence that we should be able to keep it below 35%.

Although I think, Mark, you raised a very good question, it all depends on not only our core business, the rental business performance, but also the capital recycling through our DP and maybe certain investment property disposal. In terms of Summit, it is still classified under as IP, okay? We have just 1 unit sold. I will only sell at the right price. And I don't think -- yes, you may generate more sales by cutting the price, but this is not our plan.

Okay. So this wraps up the analyst presentation for our FY '25 interim results. Thank you very much for your participation. We will see you next time.