Hysan Development Co Aktie

Good afternoon. Thank you all for coming to Hysan Development's 2025 Annual Results Announcement Analyst Briefing Session. Let me introduce our panel for this afternoon: our Chairman, Ms. Irene Lee; our Executive Director and COO, Mr. Ricky Lui; our CFO, Mr. Andy Choi.

We will start with the management presentation, and we will follow that to take questions. Now I will invite Irene to start first. Irene, please.

Thank you. Welcome. May the year of the horse bring everyone good health, happiness, big prosperity and of course, happiness to your family. Welcome to the analyst briefing on Hysan's 2025 Annual Results. Hyson's journey is rooted in a legacy that spans more than 1 century. From our founding in the early 20th century, you can see the map to our present day transformation of the Lee Gardens precinct, we have continuously evolved to meet the needs of a dynamically changing city.

As we adapt to generational shifts and societal changes, we continue to focus on creating a sustainable community, generating long-term value for our stakeholders and the city. Hyson delivered solid results that outperformed the market in 2025. Turnover and underlying profit grew by 1.6% and 28.3% year-on-year, respectively. Turnover for our retail, office and residential portfolio all registered positive growth. Recurring underlying profit was down by 1.9%, reflecting increased interest cost and loan drawdowns related to asset enhancement projects.

From vision to results, our journey of transformation continued to bear fruit. The renovated and expanded flagship Maisons of Chanel, Louis Vuitton and Tiffany have opened. And of course, previous year, we opened Dior and Hermes. Now we have 10 flagship Maisons of luxury brands spanning our Lee Gardens hub. This has led to double-digit year-on-year growth in tenant sales for the second half of 2025. At the same time, our office occupancy rate was up by 4% during the year. Lee Gardens Precinct will be fully connected in the second half of this year, including a second street level, which I'll talk a little bit more about, shopping experience brought on by the elevated walkway system. Just imagine having one street and another street above.

The soon to be completed Lee Garden Eight will expand our Lee Gardens Leasable portfolio by about 30%, boosting the precinct's daily captive traffic by 20%. From our strategic pillars, Lee Gardens Shanghai achieved a strong ramp-up with office and retail committed occupancy at over 80% and 70%, respectively. With occupancy at 85%, our Greater Bay Area flex office, IWG has been delivering good profits. For our HKD 8 billion capital recycling program to be achieved by 2030, we have collected HKD 2.1 billion. In other words, 26% of our target.

And additional HKD 1.6 billion sales proceeds has been contracted. So you have to add the 2 together. Sales of Villa Lucca maintained solid momentum. Based on our century-old curation and community business model, Lee Gardens is one of its kind, allowing us to achieve such solid results. The unique essence of Lee Gardens is the coexistence of luxury and trendsetting elements as well as authentic culture and original experiences that meet the needs of both the older and the younger generation. Traffic at Lee Gardens area saw an 11% year-on-year increase. Tenant sales grew by 8% year-on-year with double-digit growth in the second half of last year, demonstrating our strength to outperform the market.

We have now entered my favorite words, the harvest phase of our ongoing transformation journey. The unveiling of the new Lee Gardens marked a significant milestone in this journey with more than 10 newly renovated and expanded flagship maison for luxury brands, all opened for new in-store experiences. Our strategy for Lee Gardens rejuvenation was proven to be timely as financial contributions have been materializing. These are very good pictures. Now this is an interesting and more overall picture. Lee Gardens has been endorsed by luxury brands. With the opening of more than 10 flagship maisons, as mentioned, the Lee Gardens precinct has further solidified its reputation as the city's home of luxury. Now individual brands, Hermes. Hermes celebrated its grand opening with an outdoor party, in fact, a sculpture, held exclusively for Lee Garden VIPs, offering a spectacular evening with performances by artists from Paris.

Dior. Dior created an exquisite luxury art space by presenting a first in Hong Kong Tellure Bar Sculpture display at Lee Garden One Atrium, apparently never been done before. Cartier's grand opening was even better. It was absolutely unforgettable with this festive light show, fireworks, spectacular fireworks and performances with the Hyson Avenue closed, can you believe closing an entire road for them? Chanel. Chanel's expansion and reopening offered one-on-one boutique tours and tailored experiences for VIPs. I recommend to all of you, you must go because you will end up buying things.

Tiffany. Tiffany just opened in December. So their flagship maison was opened in -- at the end of December with -- you see upstairs, it's still not open with this Tiffany Blue Box Cafe, 1 of 5 in the world, we have them committed to that. Nothing further Hong Kong, Macau or China to be open in -- they promised beginning of April. So that will be quite an experience. Louis Vuitton launched thematic displays and a pop-up bar. If you have not been, you must. It's Bar Leone, the #1 ranked bar in the world in 2025. It's still downstairs, not for long, and they opened that bar, paying tribute to our Lee Gardens Hotel. I think you're all too young to remember that. Yum Sing Bar. They pay trip with the traditional old drinks from Yum Sing Bar and theme and look. And in store, they have created 2 VIP rooms, one to reflect Yum Sing Bar for the men and for the ladies, VIP room with the theme of Lee Theater. So this is a very, very wonderful paying tribute to Lee Gardens. As for the retail experience, we showcased the unique character of Hong Kong's culture alongside global trends.

Our campaigns engage and resonate with different generations. Our full range office offerings, which combine traditional office space with flexible co-working solutions offer both stability and agility, ensuring we remain responsive to the changing needs of businesses and tenants. I think all of you know we have a joint venture with IWG in the Greater Bay Area, including Hong Kong. Designed as a model for the next-generation business community in partnership with world-renowned architectural firm, Foster & Partners, Lee Garden Eight sets new benchmarks for building quality, sustainability and connectivity and, of course, class and style.

Amongst these are its advanced green features, a 60,000, can you imagine 60,000 square foot lifestyle park and dedicated spaces for the performing arts and cultural experiences, we will have a black box theater. More than 600 parking spaces at Lee Garden Eight, all equipped with EV chargers. This will further reinforce Lee Gardens as a commercial destination and even extend its appeal to travelers from the Greater Bay Area, particularly now with the southbound traffic. Lee Gardens 8 is equipped with the most advanced green building technologies in Hong Kong. It has been recognized by a number of prestigious international awards and most of the highest green building accreditations, setting a new benchmark for sustainable development.

I think some of you have seen snippets of this, but it's difficult to imagine, isn't it? Without looking at the video. And soon, in August, September, it will be unveiled. And we have a marvelous show suite, which talks about our history and about this and the connectivity. So I'm sure all your banks, all of you, would like to move here, won't you? That's a best community. So the integrated pedestrian walkway system scheduled to be completed in tandem with Lee Garden Eight will seamlessly connect the Lee Gardens Precinct to the Causeway Bay MTR station, making the neighborhood pedestrian-friendly in all weather conditions.

So it's very, very much the walkable community. The elevated walkway will add a second street level. You can see the elevated walk some of it, which connects and extends the retail space to customers and commuters, which creates a vibrant human-centric walkable neighborhood that integrates everything, work, leisure, community, 3 generations. It just integrates life, and you feel you're amongst it all. Next is our strategic pillars. We -- our strategic pillars have contributed to both business and geographic diversification. At Lee Gardens Shanghai, we created a high-quality tenant mix of reputable financial institutions, multinational corporations and retailers, supported by a lifestyle high street podium that creates a rich business social scene. Lee Garden Shanghai is an extension of our Lee Gardens brand into China.

We were encouraged by the performance of our flex office business in our joint venture with the world's leading flex operator, IWG, which continued to grow across the GWA. Along with the growth momentum of New Frontier Group, our health care investment, we are making steady progress scaling up our business across regions and sectors.

Ricky, now I'll pass the floor to you so you can share more about Hysan's business operations in 2025.

Thanks, Irene. Let me share with you more about Hysan business review for 2025. Our group turnover grew by 1.6% year-on-year, supported by solid performance across core business segments. Turnover of our Hong Kong retail portfolio was up by 1.5% to HKD 1.7 billion. Occupancy rate increased to 95%. Rental reversion rate on renewal, rent review and new lettings was predominantly positive. For our Hong Kong office portfolio, turnover declined by 2.3% to HKD 1.44 billion. Average rental reversion rate on renewal rent review and new letting remained negative.

Despite market headwinds, occupancy rate increased to 94% with over 85% retention rate. Our full range office offering, combining traditional office space with flexible co-working solutions provide choices and create balanced tenant mix. Hong Kong luxury residential leasing market showed steady growth in 2025. Our residential leasing portfolio saw a 5% increase in turnover to HKD 229 million. Occupancy rate increased to 87%. Average rental reversion was positive for renewal, rent review and new lettings. The Lee Garden Shanghai continued to benefit from strong occupancy ramp-up and diversified tenant mix, delivering a new stream of recurring earnings for our group.

We talked about the rejuvenation and the pedestrian link system. Significant purpose were made, and we expect all will be done by -- in the second half of this year. About retail, tenant sales of our Hong Kong retail portfolio increased by 8% in 2025. Occupancy increased to 95%. We have been meeting the evolving expectation of customer by elevating our retail portfolio with expanded flagship maison our luxury brands to offer more distinctive customer experience. And continue our iteration to bring unique vibes and offering to the area. We achieved better sales across all trades with particularly strong growth in watches and jewelries.

The turnover of our Hong Kong retail portfolio consistently outperformed Hong Kong retail market sales with our attractive marketing initiatives and effective loyalty programs. We sustained our retail revenue growth throughout the 2020 to 2025. Come to about our loyalty members. We have been receiving long-term support from our loyal members. Member spending at Lee Garden increased by 23%. The number of single transactions over 100,000 saw a 22% increase. The average annual spending of our top TM members surpassed HKD 1.4 million per member.

We achieved a significant breakthrough in our engagement strategy with valued customers by forming strategic partnerships with banks and wealth management firms and attract potential high spender by targeting premier banking clients and prequalifying them for our Club Avenue tiers. As a result of this member acquisition program, we converted over 1,500 individuals into our Club Avenue, expanding our high potential member base and showcasing the effectiveness of our outreach model.

One of the major achievements during 2025 was our introduction of over 15 new brands to the Lee Garden Precinct, which complements our existing portfolio and cater to a wider range of customer preferences. With an even greater variety of well-renowned brands and innovative lifestyle concepts, the Lee Garden Precinct has further strengthened its destination appeal for locals and visitors. This year, we hold more than 180 events to engage the community, also collaborated with more than 100 strategic partners in a series of high-profile pop-ups and immersive marketing campaigns, offering novel and compelling attraction to customers. We keep introducing new fine dining restaurant and trended F&B concept to the area. Now we have over 110 F&B outlets in Lee Garden areas, broadening the culinary options available to our visitors.

In the latest phase of revitalization, Hysan Place introduced new retail and F&B offering along with exciting pop-ups and events that appeal to the younger generation and global audience. This curated approach to our tenant mix and experiential engagement continue to drive robust growth in footfall and tenant sales, reinforcing Hysan Place reputation as a trendsetting destination in Hong Kong. For our office portfolio, tenant retention exceeded 85%.

Occupancy increased to 94%, supported by our ongoing effort to diversify tenant mix by leveraging our unique positioning and offering. Leasing activity in the market was driven by continuous shift in preference towards prime location and well-equipped office building in Lee Gardens. At the same time, we offer flexible rental package that our support early renewal and highlighted our enhanced offering of fully furnished office space for immediate use and sustainable amenities to attract and retain quality tenants. Coming to the capital recycling. As a prudent financial discipline, we have initiated an $8 billion capital recycling program over a 5 year period. Riding on the improving sentiment in luxury residential market, the strategic divestment of noncore assets will allow us to unlock value from mature residential assets, optimize our capital structure through deleveraging and provide capital for strategic needs. 74% of the tour blocks of Bamboo Grove and 63% of Villa Lucca unit have been contracted. Preparation for the presale of Top 12.1 residential project is underway.

We have collected HKD 2.1 billion or 36% of our capital recycling target and additional HKD 1.6 billion has been contracted. We will prioritize deleveraging and be deploying capital towards strategic priorities.

Now I pass it to Andy, who will share with you more about Hysan financial performance.

Thank you, Ricky. So first of all, I think we will go through a few key numbers for shareholders' returns and values. Shareholders' fund was HKD 65.5 billion as of the end of 2025, down 0.8% from last year. And NAV per share was HKD 63.7, down 0.9% from the previous year. This basically reflects the change in recurring underlying profit and also the change in fair value of investment property during the year. And for dividend, we have kept our full year dividend at HKD 1.08. Okay. Next is on our financial and capital management. The company continued to uphold prudent financial management while maximizing our capital productivity.

As you can see, the first key metric is our net gearing ratio. As of the end of 2025, our net gearing ratio was 32.4% improved by 0.5 percentage points from the interim period end, reflecting the results of our capital recycling program. And for effective interest rate, it was 3.7% average for 2025, improved from 4.3% of the previous year, thanks to the decline in HIBOR. And we also maintained a healthy mix of fixed rate debt and floating rate debt. Our fixed rate debt comprised of 54% of our total debt as of the end of 2025. And our average debt maturity was 2.8 years at the moment.

And I think as you noticed from the debt maturity profile, a majority of it will be in 2027. We don't have any significant debt in 2026 maturing. For 2027, that's mainly attributable to the project financing of Lee Gardens Eight. And we are in talk with our friends in banks. And I think so far, we have received very positive response from the banks, and we are confident that such project financing will be refinanced into an operational. And the company also maintained strong liquidity and cash position. We have an undrawn committed facility and cash totaled HKD 14.3 billion as of the end of the year. And that's adequate to cover Hysan's debt maturing over the next 2 years. And also sustainable finance, we have set out a very clear target for it. We are going to maintain 40% or above green that in our profile. And so far, we continue to improve this ratio. And as of the end of 2025, it stands at 44%. So that's the update on the finance side.

I will pass the time back to Irene.

So I'll conclude. Looking ahead, 2026 will continue to face challenges. We are, however, battle proven and ready. We are confident in our ability to navigate changes and seize opportunities and that our shared expertise and spirit will carry us forward. Our rich heritage and commitment to bringing unique experience, innovation and sustainability to the community will position us well for continued growth.

As always, we adhere to our prudent financial management. While carrying out our capital recycling program, we will remain agile, disciplined and purpose-driven to shape the future of Lee Gardens and contribute to Hong Kong's ongoing development as a global city. Thank you.

Thank you, management. It is the Q&A session now. [Operator Instructions]. Yes, the gentleman on the first row from UBS.

This is Ben from UBS. So I actually have two questions here. The first one is on the capital recycling program. So given a good contracted sell-through on Bamboo Grove so far, do you plan to add more blocks from Bamboo Grove for disposal? That's my first question. And the second one is on LG8. Can you give us some updates on the pre-leasing at LG8? And are you seeing more inquiries? Or is there better sentiment in the office market? And if there is more inquiries, mainly which sector are these inquiries from?

I'll start. On Bamboo Grove, it has gone very well and a lot more quickly than we had assumed. So we would like to finish Bamboo Grove Block 74 and 82 first. And hopefully, we'll see that done by middle of this year. Now as far as the other blocks are concerned, we will continue to look at the situation. If the market warrants it and if we see that it does provide the purpose and the needs for us, we will consider.

And we are ready to -- legally, it is ready. For Lee Garden Eight, we still have 2 and a bit quarters, so about 7 months, 8 months before completion. So we are in discussion, very, very active discussion. The market continues to be difficult. However, we feel very, very confident. And we -- in terms of our pipeline, it is good, it's strong. So we will give you more news when the time comes. There is still time.

So [ Ben Choi ] from the first row from BoA.

First of all, happy Chinese New Year. So my first question is the -- our tenant sales during the Chinese New Year or the first 2 months. I know it's still early, but are we seeing an acceleration in terms of growth, say, versus fourth quarter last year? Any color will help. Secondly is on our existing office portfolio, glad to see that the occupancy rate continue to climb.

So can you give us more color whether it is expansion demand from your existing tenants or it is a relocation from same district or other districts? And if you can give us a guidance on the rental reversion outlook, how much spot rent will be lower compared to last year, that would be great.

I'll start and then Andy and Ricky can supplement. For the first 2 months of the year, as you know, we are very, very data-driven and our numbers are very real time. So I'm going to adjust their budget already. So that is the good news. So it's very good news. We're seeing very, very strong tenant sales in the first 2 months. We always blend the 2 months because Chinese New Year can fall into either month. So we always put it together. So we can talk more about that.

But then in terms of our office portfolio, number one, our retention rate is strong. 85% is pretty damn good. And number two, big demand, I'm not seeing big demand, but we're seeing fresh demand. So how do we get a 4% increase, right? So it's retention and filling up with new tenants. So no, we are pretty pleased. I mean, I'd like it to be 100%, but at 94% and be able to have a 4% increase, that momentum. And I do think that the office is the last to be -- to revive. I mean residential has -- residential rent then sales, retail, and I think office, we really -- I want to say I've seen the bottom. Ricky and Andy?

I think just for -- other than the good sales result. We all know that during the Chinese New Year, people said a lot of Hong Kong people outbound stress from. While we -- even during the very few CNY days, we do see very good traffic here, and we're happy to see more tourists than before during those days. So we find the Lee Gardens area become more attractive visit us, those who really want to know about culture, Hong Kong rather than just shopping. So this is quite encouraging about our curation, trying to attract the right kind of high spender or even tourists to our place.

Actually, that is a very interesting point because we map the graph of these few days of Chinese New Year against the previous Chinese New Year. Given the negative migration, if I may call that, you would have expected a bit of a dip, right? We didn't. We were exactly the same, which tells us 2 things. One is the inbound have chosen to come to us and also the locals, even though they are going out, have chosen to spend and be with us.

So that is something that we want to happen and it's very reassuring to see it happen. So we actually mapped and it's absolutely spot on despite the negative delta -- it should have been a negative delta.

And in terms of office demand, just back to your question, I think we are seeing strong demand from wealth management business and also health care. I think that echo what's point. The traffic has been improving quite a lot for the Lee Gardens. And we have seen a lot of Mainland frequent Lee Gardens during the period. And so I think that helped the business for wealth management and health care as well. So we do see a strong demand from those operators.

Those of you with your banks without a wealth office with us, you should. I mean we see tremendous business in the several banks who have the -- apart from HQ wealth office, the other wealth office, which is big is with us. So it's a very, very interesting and popular destination for -- particularly for mainlanders.

And a little kind of observation that I would like to share. At the same time, our occupancy of retail is high. At the same time, retail rent are normal much higher than the office. We still see a lot of our service trade, particular beauty or even hair, spa, blah, blah, blah. They're moving upward to our office from our retail portfolio, and they are doing super good.

And that becomes kind of another attraction for those service trade or semi-retail trade to take up the office space as well. I think that's quite unique for Lee Garden as a place that for the office, the catchment, you always said our catchment is small. Why? And we are much more balanced. So from corporate to this kind of service, I think we can cater all of them.

And for the service trade, there is really no need to be at in the middle of your retail mall on the street. I mean for me, the last thing I want to do is a bumpiness someone out facial, right? So going upstairs, enjoying better rent. I mean the office is always cheaper than being in the prime. All you need is 1 or 2 to start the trend and people then realize it's actually a very good solution for them because it's a very private thing. Hair spa, facial, it's private, right, massage. So going upstairs and some of the very high brands are there, enjoy sea view, completely different experience.

Strong sales, strong sales.

Yes. And we can turn over rent.

Yes.

[indiscernible]

This is Percy from DBS. Happy Lunar New Year as well.

And congratulations on the good results from the retail portfolio. I have a follow-up question on retail. Just wondering what's the current occupancy cost ratio for the retail? And how do you see the reversionary outlook going forward? And secondly, I have a question on the financial capital management side.

I understand we've got a quite decent amount of cash back from the sales of Bamboo Grove. Just wondering what's your priority to use that capital? Will it be mainly on debt reduction or forgoing CapEx needs? Or -- because I saw that you also redeemed a bit of your perks. Just wondering what -- what's the thinking behind? And what's your strategy going forward?

It sounds like Andy question.

First of all, for occupancy cost ratio, of course, we mentioned about tenant sales improving 8% year-on-year. So you could expect occupancy cost ratio is better than last year. So it's still around high teens percentage, but certainly improving. And we are happy to work together with our tenants to further improve it, of course. And for the rental reversion, I think it's kind of related to that tenant sales and occupancy cost ratio as well. We are happy to see base rent go up.

But as we mentioned, a lot of these positive rental reversion are drive by luxury flagships and mean expansions. And apart from that, of course, for the mass -- more mass-oriented retail portfolio, we do see positive rental reversion as well. But for them, I think it's more important for us to curate the right tenant mix to work with them to drive sales.

And at the end, it will turn out to be the turnover rent, and we will start another virtuous cycle again. And so -- and on the capital recycling program, of course, we are happy to see cash coming in fast. And we have mentioned before, we -- certain deleveraging is on our mind. So we have already seen our net gearing ratio coming down half-on-half. So I think that's our priority. And of course, we do have our strategic plan in execution. So we will allocate the right amount of resources for different strategic initiatives as well to support the company's long-term growth.

An interesting point on rental reversion for retail as we move the base rent up, which I think is important because that's where the quality of earnings, that's just stable earning. There's always a lag between that and the turnover rent. So we usually are informed by the turnover rent. Turnover rent is quite healthy, significant, then we'll go to the tenants start to edge up the base. And then it will take a little bit of time for them to try harder again to produce a turnover rent.

So I think the key factor is we work very closely with our tenants. We can see who is struggling, who needs it and who just won't make it. So you just have to be very close to them. And that's something that we're constantly improving with our staff to stay close. We call it tenant operations. You really have to know what are the pain points? What are they worried about? What are they suffering? Are they getting enough merchandise? Have they lost their top sales team to. So we are very, very -- you have to stay close. It's like running your own business.

Due to the time constraint, we will take one question from the online platform. It is from the C Capital. Can the management share more about the performance of the high luxury and retails and also the mass market product in your portfolio, how they behave differently?

Ricky or Andy? Yes.

I think for the luxury market, you see we talked about the strong growth in watch and jewelry. I think that's outstanding. And the Maison, most of them also performed very well. We see very good results over the last 12 months from Christmas to New Year's. And we also see the performance has quite related to the collaboration with Hysan itself.

Our revenue become a very important engine for them to drive the sales as well. So I would say we see the strong partnership now to drive the performance, I can say, particularly for -- within our portfolio. And for the non-luxe market, we emphasize on one thing, curation, okay? It's all very important to find the right tenant. You can see some people not have business, but some people have kill outside the shops.

So it's very important to find the right tenant. And that, as Irene just mentioned, it's also sometimes it's about your competence or about your -- how you spot on that tenant to give them a good package, attract them and trying to harvest through the turnover rent. I think that we -- over the last 10 years, the company has done a lot of work on that part. Now we are more confident about choosing the right tenant to enhance our tenant mix.

Yes. So just on the luxury side, we look at productivity per square foot. Now it's quite a few of our Luxe tenants have doubled their space. And that's very big. So what are the key issues? The key issues are, number one, consolidation. They have to understand that they cannot have 7 stores around Hong Kong anymore. And that's usually in the discussion. When I discuss a renovation or an expansion with them, we always talk about closures. They have to. So that's number one.

So on productivity per square foot, the mode is expanding into private rooms, salon Prive, right? And those are empty rooms. So do you kidnap a client and put them in and pump them until they buy 4 handbags, right? But that is the experience that is required. They really require the high luxury rooms. And that is why for Louis Vuitton to have -- it's wonderful to have a theater room and to have a Lee Theater room and have a Yum Sing Bar room is special.

So how do you actually squeeze productivity out of that square footage. Now I'm very concerned about that, and I always interrogate our tenants. Why do we need 4 of these rooms? What is your occupancy? How much productivity do you get out of it? So that is where they feel we are constantly on their back. So productivity per square foot is really important. Don't just occupy space. For us, we look at our space as a very, very valuable asset.

So if you occupy space, you must produce. So it's not a linear. Actually, it has to be better. It's not 2xyour old productivity, it has to be better, a premium because you get the better experience. So on luxury is -- so we stay very close, and that's a very, very big number. Now we have our data, which shows for Club Avenue members. Am I allowed to say that? 70% to 80% of those people shop at those brands. 70% to 80% of Club Avenue. So how do you nurture, grow and recruit? So I mean, I must also do another explanation on how we recruit. We don't just have Club Avenue. We have hy! Platform.

Hy! membership.

And that is our general public. But within the general public, because of our data, we spot potentials and then they get nurtured and grown into our Club Avenue, which is by invitation only. So we just have a massive recruitment platform, which nobody else has.

Hy! Membership is over 0.5 million in -- and even active is almost 150,000.

And we constantly activate them, dehibernate them. So -- but having that access and also visibility to behavior is really important. So that's something which I think is actually quite special.

Yes, I think that's very important. As you can see in the numbers, of course, we know that Hong Kong retail sales also rebound, and there's a very good improvement in watch and jewelry that's where we spot in the wider Hong Kong market as well. But for Hysan, as you look at Page 24, which is we showed earlier, we have sales improvement across all trades. And also even for F&B, and we are seeing productivity going up in 2025. So I think that's very important. And that's what Club Avenue member and also what high member contribute to help our business and our tenant as well.

F&B is really important because you always hear the negative side on TV. Everyone is closing all the traditional. It's all these sad and sorry stories, right? Our F&B is very, very -- the big performers. But we really curate them. And of course, there are some struggling ones.

The struggling ones really try to help, if not edge out. But again, it's the curation. So you can't just have -- you can't buy handbags or watch. You need to eat, you need to enjoy events. We have nearly 200 events a year. I can imagine playing in the area, so crazy, right? So we have very, very good events. So the whole experience is complete.

Next time we can invite you to enjoy the busking within the herbal tea shop. We just done one in [indiscernible]. We go first in the...

For the most traditional herbal tea -- [indiscernible]. We try to use every bit of our imagination and step into other people's shoes, what would they enjoy. So -- and it's very tiring. It's nonstop. So thank you.

Thank you.

Thank you, management. We can conclude the session today. Wish everyone a happy Chinese New Year and good health.

Good afternoon. Thank you all for coming to Hysan Development's 2025 Interim Results Announcement Analyst briefing session.

Let me introduce our panel for this afternoon. Our Chairman, Ms. Irene Lee; our Executive Director and COO, Mr. Ricky Lui; our CFO, Mr. Andy Choi. We will start with the presentation from Irene, Ricky and Andy and then we will take questions from the on-site first.

Now I would invite Irene to start first. Irene, please.

Thank you. Welcome to the analyst briefing on Hysan's 2025 interim results. Thank you very much for coming in this weather. And I know we have some competing results as well. Thank you.

Hysan has been at the forefront of Hong Kong's development for over a century. Our legacy is built not only on tradition, but also on continued reinvention. It reflects our commitment to anticipating societies, constantly changing needs and responding to generational shifts from Baby boomers to Generation Alpha. Our holistic reimagination of the Lee Gardens precinct, in particular, is a testament to Hysan's forward-looking vision and the continuation of our century old legacy.

For the first half of 2025, Hysan delivered solid results that outperformed the market. Our key metrics registered positive growth including turnover and recurring underlying profits that grew by 2.2% and 1.2% year-on-year, respectively.

Our turnover of the retail, office and residential portfolio increased by 2.1%, 0.8% and 12.4%, respectively. We also saw an increase for our Hong Kong market retail and office occupancy compared to last December, demonstrating the strength of our core portfolio.

Based on our century-long curation and community business model, Lee Gardens is one of its kind, allowing us to achieve such solid results. The unique essence of Lee Gardens is the coexistence of luxury and trend-setting elements, as well as authentic culture and original experiences that meet the needs of both the older and the younger generations.

In the first half of 2025, traffic at Lee Gardens area saw a 19% year-on-year increase, while tenant sales grew by 4% year-on-year, outperforming the market. Hysan's long-term growth is guided by our core and pillars strategy. The core is focused on reinforcing and expanding the Lee Gardens precinct, to maintain its position as a vibrant commercial and cultural destination hub by investing in continuous dynamic curation, which includes place-making, unique experience offerings and asset enhancement, we are committed to meeting the evolving needs of the community.

The pillars underpin our diversified growth model, which complements asset-heavy developments with asset-light investments for our comprehensive business model. This is a model of diversification, which is executed according to prudent financial principles and was reflected in the financial contributions that have begun to materialize.

We have now entered the harvest phase of our ongoing transformation journey. The unveiling of the new Lee Gardens in 2024 marked a significant milestone in this journey.With more than 10 newly renovated and expanded flagship Maisons for luxury brands, including the reopened Hermès, Dior and Cartier, Maisons for new in-store experience. This positive momentum continued into the first half of 2025 as we welcome the renovated Chanel Maison, at Lee Garden One.

The development of other luxury flagships across our Lee Gardens portfolio made good progress, and our precinct was further enhanced by the addition of curated lifestyle brands. We look forward to unveiling more flagships and new retail concepts in the second half of 2025, complementing Lee Gardens leadership as the city's premier luxury destination.

We saw the arrival of strategic additions to the tenant mix at Lee Garden's precept included curated lifestyle brands alongside fine dining restaurants. Notable arrivals included Hong Kong's first Michelin Green Star certified restaurants and renown overseas F&B outlets, making their debut in Hong Kong. These additions complement the luxury flagship stores at Lee Gardens to deliver a holistic high-end retail and culinary experience.

The contrast between the authentic experiences found at Lee Gardens area and our diversified brand mix is highly attractive to the locals and tourists. This is why Lee Garden has become the preferred choice for brands from Mainland China and from overseas opening their first store in Hong Kong.

Among the brands include renowned Japanese lifestyle store, Japanese restaurant with over 90 years of history, popular dining brands from Mainland China and fashion label that is sweeping the Korean fashion scene. These are all first.

They have all chosen to make the Hong Kong debut here at Lee Gardens, a proven recognition of our appeal to the market. The guidance is a favorite of this destination in the heart of commercial Hong Kong, leveraging a number of key strengths. Our full range of offerings, which combine traditional office space with flexible co-working solutions offer both stability and agility, ensuring we remain responsive to the changing needs of businesses and tenants.

Our flagship Lee Garden Eight project, a 1 million square foot premium commercial development is on track for completion in 2026 next year. The project will expand our Lee Gardens leasable portfolio by about 30% and will bring an estimated increase of 20% in daily footfall in our area.

Designed in partnership with the world-renowned architectural firm, Foster + Partners, Lee Garden is distinguished by the largest commercial floor plate in Hong Kong Island, complemented by a green indoor and outdoor concept. Serving as a focal point for community interaction, the 60,000 square foot open green space will embody our vision of a next-generation workplace and retail center piece that promotes a sense of community.

This is an urban oasis. Superstructure works for the project made satisfactory progress out -- is expected to be carried out by the end of this year. Connectivity is central to our vision. Scheduled for company in 2026 also, an integrated pedestrian walkway system will seamlessly connect the Lee Gardens area to the Causeway Bay MTR Station within 5 to 7 minutes, depending on how fast you walk, transforming the Lee Gardens precinct into a walkable neighborhood.

The new pedestrian walkway system will offer expansive retail space beyond the street level and traditional floors. By blending work, leisure, living and entertainment, the Lee Gardens area will set a new standard for placemaking in Hong Kong. It also exemplifies Hysan's ongoing commitment to creating a human-centric community.

Having shared with you our major achievements and progress, I would like to invite you to watch a short video together showing the new integrated pedestrian walkway system unveiled -- to be unveiled in 2026.

[Presentation]

Much better, wasn't it. You will soon be experiencing it by midyear next year. Our strategic pillars contribute to both business and geographic diversification. Our quality assets Lee Garden Shanghai has secured high-quality tenancies, solidifying an office tenant mix that spans reputable financial institutions and multinational corporations.

The project also offers a diversified retail mix to create enhanced experience for tenants and for visitors. The performance of our flex office business in our joint venture with the world's leading flex operator, IWG, continue to yield steady growth across the Greater Bay Area. New Frontier Group, our health care investment, also maintained steady business growth momentum. I'll now pass the floor to Ricky who will share with you more of the Hysan's business operations for the first half. Thank you, Ricky.

Thanks, Irene. Let me share with you more of our Hysan business performance for the first half of the year.

Our interim results. Our group's turnover grew by 2.2% year-on-year, supported by solid performance across core business segments. Turnover of our Hong Kong retail portfolio increased by 0.8% to HKD 831 million. Occupancy rate increased to 94%. Rental reversion rate on renewals, rent review and new lettings was predominantly positive.

For our Hong Kong office portfolio, turnover declined by 2.4% to HKD 703 million. Despite market headwinds, occupancy rate of our Hong Kong office portfolio increased to 92%. Our full range of office offerings, which combine traditional office space with flexible co-working solutions, offer both stability and agility entering we remain responsive to the changing needs of business and tenants.

Hong Kong Luxury's residential leasing market made a steady recovery in the first half of 2025. Our residential leasing portfolio saw a 12.4% increase in turnover to HKD 118 million. Occupancy rate was at 70% and average rental reversion was positive. As for Lee Garden Shanghai, it continued to benefit from strong occupancy ramp-up last year and delivered a new stream of recurring earnings for our group.

About our retail tenant sales of our Hong Kong retail portfolio increased by 8% in the second quarter, with occupancy growing to 94%. We have been addressing the evolving demands of customers by refreshing our brand mix with a variety of exciting new offerings, including some first in Hong Kong brands.

The turnover of our Hong Kong retail portfolio consistently outperformed Hong Kong retail market sales powered by our innovative marketing and our strong loyalty programs. The curated in-store experience from the expanded Maison for luxury brands and the strategic addition of a vibrant mix of new and renowned F&B outlets and the introduction of a series of high-profile of store and events in Hysan Place all attributed to the increase in sales. We also strategically leveraging the digital agent to attract a more diverse customer base.

Talking about our loyalty program. We have been receiving long-term support from our low members. Member spending at Lee Gardens have increased by 20%, while the number of transactions Club Avenue members has increased significantly by 31%. The average annual spending of our top TM member is expected to surpass HKD 1.6 million.

We identified our target customer through AI analytics and adoption of big data from our data lake. Of Hong Kong old and new generation to those who enjoy life and value well-beings, our All-tier Member Base ensure a balanced contribution to enhance our resilience instead of over reliance on those super high spending members.

Customer trend and digital engagement. As our marketing effort, we implement more than 110 campaigns in the first half of the year to engage the community. Driving over 4 million footfall, making Lee Garden a driving destination for locals and tourist.

Partnership is another key for the performance. We collaborate with more than 60 strategic partners in a series of exclusive pop-up stores and joint campaigns to engage the community. These events generated a robust increase in traffic and sales and gained widespread media exposure.

Nowadays industry players need to be creative and delivering more engaging experience that resonates with the customer changing preferences. At Hysan, we have been addressing the evolving demand of customers by refreshing our brand mix to exciting innovative new offering. All this effort has made Lee Gardens the go-to area that attracts quality and repeat visitors, which amount to over 100,000 daily traffic.

Talking about office. For our Hong Kong office portfolio, tenants' retention exist. Occupancy increased to 92% supported by our ongoing effort to diversify tenant mix by leveraging our unique positioning and offering. Our diversified tenant base helped our office portfolio remain resilient. As mentioned, we have full range of office offering, combining traditional office space with co-working solutions so that we can respond quickly to given mix of tenants.

Lastly, I want to report about our capital recycling plan for our noncore asset. As a prudent financial discipline, we have to kick-start the capital recycling plan, covering strategic sales of our noncore mature asset, including 2 blocks of Bamboo Groove and the build-to-sell projects of Villa Lucca and To Kwa Wan residential development.

We target for $8 billion in capital recycling over the next 5 years, which will help us unlock value from mature residential assets, optimize our capital structure through deleveraging and provide capital for strategic needs. I will now pass the floor to Andy, who will share with you more about Hysan financial performance for the first half of 2025.

Thank you, Ricky. As Irene and Ricky both mentioned, prudent financial management remain our top priority. And for the first half, we have delivered a solid improvement in our turnover and also our operating cash flow. And we continue to deliver sustainable return to our shareholders. Hence, we have kept our DPS HKD 0.27 for the first half and shareholders on an NAV this is like the kind of 1.2%, mainly reflecting the RUP improvement of 1.2%, offset by the noncash fair value change of investment property.

And on financial and capital management, as we continue to maintain a very strong liquidity and a strong balance sheet. So for net gearing, as of June 30, the lag gearing was at 33%. There's a slight increase of around 1.5% from last year-end. This is consistent with our own budget and as our capital project continued on track and within budget. The effective interest rate has reduced from 4.3% in 2024 to 3.8% during the period, thanks to a drop in HIBOR in Q2, mainly.

We continue to maintain a healthy mix of fixed rate and floating rate debt. Our fixed rate debt ratio is around 56% as of June. And for average debt maturity is around 3.2 years. So they continue to be very healthy and staggered. And for undrawn committed facility in cash, we continue to keep around HKD 15.3 billion of a joint committed facility and together with cash, and that's more than enough to meet our refinancing over the next 3 years. We have 42% of green finance and that is ahead of our -- the target we set for the group.

So in the first half, we have also completed -- successfully completed the refinancing of USD 750 million support. So that gives us a stability and good access to the that capital market. And we are also actively using different financial instruments to manage our interest rate. And so some of our U.S. dollar notes has been converted into Hong Kong dollar to minimize FX risk and also to optimize the interest exposure.

So that's -- next will be on cap rate. So we have, again, kept cap rates stable. The February change was mainly due to rental change during the period. That's all there is from me. I will pass it back now to Irene.

Thank you. We remain committed to pursuing sustainable growth and value creation. We recognize that the outlook for the remainder of 2025 is shaped by considerable uncertainties in the global economic environment. We are very mindful of these complex market conditions, which require ongoing vigilance and prudent risk management.

Nonetheless, we are confident in Hong Kong's enduring position as the leading global financial center and its vital role as an important hub of activities within the Greater Bay Area. Our continued investment in the Lee Gardens precinct and our diversified growth strategy ensure that we are well prepared to capitalize on emerging opportunities.

Hysan's forward-looking vision is transforming the Lee Gardens neighborhood with an emphasis on inclusivity and sustainability. Our strategic direction is a continuation of Hysan's century old legacy built on trust, harmony and shared values. Our strategy has played a pivotal role in the growth of Causeway Bay as a vibrant hub with the Lee Gardens area serving as a beacon of distinctive offerings and cultural vitality.

Together, these have contributed to Hong Kong's ongoing development as an international city. With a positive outlook for our rejuvenated lead guidance, we are confident in Hysan's ability to continue delivering a rust business performance. Our vision transformation initiatives and proven track record serve as a strong foundation for long-term growth. We will remain steadfast in our commitment to financial discipline and risk management.

Our strong and disciplined execution of our core and pillars strategy will continue to deliver sustainable long-term value for our stakeholders. With optimism determination and a strong competitive edge, we will continue to shape the future of Lee Gardens and contribute to Hong Kong's sustainable development. Thank you.

Thank you, management. It is the Q&A session now. We will take questions from the analysts on site, and then we will take questions from the online platform.

So maybe Fan Tso first, please take the mic.

Fan Tso from Bank of America. Thank you for the capital recycling commitment, I think investors would like it. But my question is more on the retail. So I want to get your sense about retail in July and early August. I think the weather doesn't help last year is still a relatively low base. So just want to see if it is still in the positive territory?

And second, on the turnover rent, I see a decline year-over-year. But this year, we should have more AI space reopened compared to last year. So I wanted to know the reason behind and how would you comment on the performance of those luxury tenants.

And lastly, a question for Andy. I wanted to know your appetite for convertible bond.

Another sales pitch. Andy, maybe you can answer this question.

So first of all, on the retail side, we are seeing very strong -- of course, the market is still very difficult. We understand it, but we have delivered a very solid performance in terms of tenant sales in the first half. We have mentioned about -- around mid-single-digit percentage increase for the first half. And in particular, for Q2, we have recorded 8% increase year-on-year.

So we are seeing a very healthy improvement in particular in the watch and jewelry sector and also the cosmetic and personal care sector as well. So it may be a bit early to talk about the sales rate in August or July because we are still collecting the information from tenants. But we do see an improve member sales spendings. So we think we are on track to that. But of course, the weather doesn't help us. That's true.

So I think all this is -- the backdrop is really consolidations. So the market is difficult, but we want to help our tenants to really perform and have a better business.

And for the -- the second question is on AI, right? On turnover rent, right? On turnover rent, of course, we have reported improved rental level, so that's positive rental reversion. That means a high base brand. So I think it takes time. The sales is growing. But in the meantime, the turnover rent might be affected by these higher thresholds.

And also, the third question is on convertible bond. Again, we have -- of course, there's a lot of -- the market has become more active in the first half. But again, we are mindful of the dilutive impact of such instruments. And so I think we will continue to monitor the situations and balance the interest of different stakeholders.

I might add a few words on the retail atmosphere. No question, it is difficult. But we -- there's so much talk about how dilutive it is to go north and so forth. We actually look at it quite differently. We just want to focus on the attraction of our area, why people should come to us and why they should stay longer and spend more and that is really very important.

Therefore, offering a wider spectrum of experience as well as ways to spend money from F&B all the way to -- we can be on the high end. But all the way, everyone always buys high and low and low and high. So there has to be a very, very broad offering. So you can also see how we look at our memberships as well. We pursue a broader and broader base of membership.

Of course, our high spending members are very, very key to us. And we value our Club Avenue very, very much. But they cannot be our sole reliant. We need to not just broaden the base of diversification purpose. But through the diversification and through our AI, we actually can harvest a lot more effectively and channel them up the value chain as well. So this is what we work on a lot.

So yes, it's very, very difficult. Yes, people don't have to spend in Hong Kong, but I actually think that people do want to spend for the right area for the right things. So we're not saying, retail is dead, not in the slightest.

Now specifically in our area, apart from all the good things we're doing because we're still doing it. You can see that there's a lot of holdings. Hysan Place is almost all wrapped up in the front. So this has to be difficult to attract. But we actually have done quite well. So we focus -- or Hysan Place, we focus on curating very, very powerful events and people don't seem to care about all the holdings and all the costs. They still come in.

So we're not denying, so it's very difficult. But I think Andy's point on an increased lower base will always take away your turnover rent initially. But I think in today's climate is very important to continue to build your assured rent because turnover is turnover. But we also must do our best to help our tenants do well.

This is really our strategy, always help up tenants in every way to do well because if they do well, we do well. So I think our results show resilience. Can it be better? Of course. But I think there are so many factors that can improve, including and finish our rejuvenation and we are entering the final, final stages. That would be quite magnificent.

Lady on the first row.

This is Percy from DBS. Congratulations on the results. My first question will be on the capital recycling initiative. You mentioned that you aim to recycle around HKD 8 billion capital in the next 5 years. Can we have a sense in terms of the pace, whether -- when we will gradually see this HKD 8 billion coming back?

And in terms of the priorities for using this capital, are we prioritizing for debt reduction investments or even what we consider to reward to shareholders like a buyback or even special dividend?

Secondly, would be another follow-up questions in terms of the retail portfolio. Of course, your portfolio definitely outperformed the market. But one of your peers also mentioned that given the outlook among retailers are quite cautious, and they are now talking about negative in the second half. What would be your outlook in the second half as well?

And finally, I will have a question on the office side. Given that the capital market has improved recently, do you see any improvement in terms of the inquiry? And does this translate into stabilization in terms of the spot rates? And how many percentage of the leases are we having to be renewed in the second half? And how many of them has been committed?

A lot of questions. Maybe I'll just answer the order of the recycling. The order recycling is somewhat dictated for instance, To Kwa Wan, by achieving OP. So that is towards the end of the year.

That's pre-sales.

That's pre-sales, the consent. That's towards the end of this year, right?

Yes.

Villa Lucca, in Tai Po has been an ongoing sales process, and we are very happy to see quite an optimistic and the speed of interested buyers coming through in the last 6 months. For Bamboo Groove, it is a new -- it's not a new initiative because we have been planning it for a while, but it will be a new launch. So we will update you when we have the numbers. So maybe Ricky or Andy, you want to talk about the retail environment?

When we talk of the retail environment and as we all are aligned, is that the market is still tough. But at the same time, if we look at the sales of our individual tenants is quite related to the reversion or even attracting on new tenants.

We always try to talk about, let's say, Hysan Place. We -- since we've completed the B1B2 renovations and then the project, we are so actively curating the space. Now you see the frequency, you see the expand is lower, and you can see -- you can find a seat in the food cart during the day or over the weekends.

So I think our formula is a bit different from the general -- our peers is that we got a piece of land that we hold it for 100 years, and we've spent decades to curate it. And when we could talk about half, its not half something we plan 6 months ago. It helped something that we plan in 10 years, 5 years for example, you see the transformation of the -- kind of we call the low-rise area, the Pak Sha Road, Lan Fong Road, from nobody to now, the body stood, see -- like the audit.

So this from a very good base for organic growth to counter a little bit of the overall environment. I think that's the part of our permanent. Of course, we still need to work together with our tenant. Not -- there are always some people who will not perform. But so far, we find the tenants that work together with really a win-win situation. They perform quite well and that support the rental on renewal or even attract new tenants.

Okay. And a bit on the land work, Percy. First of all, for retail rental reversion for the first half, of course, Ricky mentioned about predominantly positive and in terms of percentage level, we are still talking about a high single-digit percentage increase in terms of rental reversion.

But of course, a lot of those is attributed to go to several key anchor tenants opening in the first half. So this is a lot of questions, there's -- some of these major players who's driving the rental reversion. But overall, as Ricky mentioned, with our improved tenant sales, we are seeing improvement in our overall portfolio as well. So I think that's the outlook.

And for office activity, yes, indeed, we are seeing increase increasing viewing activity, more interest on corporate and maybe they're trying to -- of course, from a market angle, we are seeing positive lag ticked up in Q2. So I think there's a lot more activity in terms of office leasing. And also, our occupancy improved from 90% or 92%. And for rental reversion, our office rental reversion is still in mid-teens negative, but it has improved 3 percentage from last year.

And our retention rate is over 70%. And I think that is quite key in our resilience because we have to both retain, you have to defend and attack because there is still an oversupply, and there's still a sluggish demand. So it's -- you just have to be the best. And not by price, I mentioned, yes, that's very important.

And if you look at the portfolio, the financial part or the wealth management actually -- quite clear that we do attract a lot of potential new tenants because we already have that. We have the tenant, we have the HSBC, AIA or this well, even the [indiscernible]. It seems that we have already attracted position about quite a good wealth management center in Hong Kong. So that's why we attract new management center projects.

Yes. So we -- for office, because of the lack of demand and the oversupply, you have to be more creative is one word, but you have to be more agile in attracting other potential tenants for instance, the service trade, the medical trade, and we have a very, very big effort in attracting the wealth space.

I mean, you all come from the banks and every single bank talks about wealth as the growth sector. And we are a very, very attractive place for wealth. And then once we attract the world sector also drive spending and eating. So we have to make sure we drive the ecosystem. And as they succeed, then the retail people succeed. I think it's all about getting the engine revving more policy. So we used to have to focus on not just -- or we must maintain the same type of segments. We were very, very -- were thoughtful about how we can attract other trades.

Okay. We have questions from online platform. It is from [ Stephen of Fortran Investments]. Could the management share more thought about the financing strategy of the debt profile, especially for the 2027 maturity which is peak of the maturity profile given the times of the headline news this day?

Andy?

Thank you for the questions. First of all, Hysan continued to have very strong banking assets. That's why we have a HKD 15.3 billion in joint computer facility. It's right that we have a debt maturing in 2027 in relation to the construction of Lee Garden Eight. And it's common practice for our industry to refinance it as a secured operational, and this is our base case expectation at the moment.

Due to the time constraint, we will take one last question from the online platform. It is from [ Ming Jiang of simple way]. Could the management share the dividend policy for the coming years?

What dividend policy is always dictated by the operating environment, our capital needs, our growth needs and of course, first and foremost, to make sure we look after our shareholders. So we don't give forecast. We don't give guidance.

But you can see we are paying HKD 0.27, again, which is flat, which I think is quite a good indication of our confidence in making sure we maintain a stable environment, which I think is the best gift for our shareholders.

Yes. Sure.

So just a follow-up on the bond maturity and dividend policy. Would you consider launching a scrip dividend in the coming years to proceed your cash and deal with the bond maturity? And also, you have newly issued a new perpetual capital security that carries quite high interest rate is 7.3%, right? So why would you willing to issue such a high interest rate PCs? Is it difficult to get access to the bank borrowing and how would you manage to do the refinancing strategy to lower your net gearing and give more buffer to the bond maturity?

Andy.

Thank you for the questions. I think first on scrip dividend. Again, it's this dilutive impact of potential -- any potential scrip dividend issue. So I think in the meantime, first of all, the group has strong access to committed facilities and we have our debt profile well managed.

So I think we -- we will continue to monitor, but there is no immediate plan on doing any of those. And for perpetuals, again, for financing strategy, I think it's very important that we think long term. So we always focus on building a balanced capital structure, what are different kinds of instruments.

So there are a few factors that we have to really balance. First of all, of course, spending cost is important. Cost of capital is important. But there's also -- it's also so important to maintain long-term access to the bond market as well. So we have to adjust bondholders' expectations and also credit rating agencies we use on our credit situations.

So I think balancing all these factors the potential issue, our biggest benefit of equity treatment. And in terms of the price, is actually on par with -- if we reset the previous instrument, it would be in line at a similar level of cost. So I think the perpetual remains a very strategic part of our capital structure. But as we talked about the capital recycling plan, we have also initiated this HKD 8 billion capital recycling plan of over the next 5 years. So we will continue to optimize our capital structure and refine it over time.

Thank you, management. We can conclude the session today. Thank you all for coming to our session.