Swire Pacific Limited Class A Aktie

Good evening, everybody, and thank you for joining us. Let's get straight in, and I'll start with the strategic highlights. I think you can see that we've basically been delivering across the business on our growth strategy in each of the different core businesses under the Swire Pacific name.

On property, we've got a very healthy pipeline of new projects on the way. We continue to do effective capital recycling of noncore assets. Importantly, for us, we're continuing to invest in the Greater Bay Area, which is a stated objective of the property team. And we're very pleased last year to launch our first residential project successfully, I would say, in Shanghai in the Chinese Mainland. So property is very much on strategy and continuing to deliver good growth.

Beverages, it's been a tough year in 2025 in terms of the environment. But I think you can see the resilience of the beverage business for us. We continue to invest through the cycle here, and that investment has been in new plants and new equipment in both the Chinese Mainland and in Vietnam so far. And we continue to try to integrate the new Southeast Asian franchises that we've successfully acquired over the last few years, specifically Vietnam and Thailand.

On the aviation front, the story has been very good. HAECO completed the sale in November last year of its U.S.A. business. So now the strategy is to focus the business on Hong Kong, the Chinese Mainland and future opportunities in Southeast Asia. So we're very focused at HAECO. And as you heard yesterday, the Cathay Group is investing in more than 100 new generation aircraft and improving its products with a capital program there. So very good results on the aviation side.

Talking numbers briefly here. The underlying profit, very pleased to see it was up 9% to HKD 11.4 billion, driven mostly by capital recycling. And as I mentioned, strong recurring profit in aviation. That translates for us into a 13% increase in the ordinary dividend, which I think is very healthy. And you can see our financial health is strong with a good deal of available liquidity and a gearing ratio of 20.6%.

Just looking at the recurring underlying profit of HKD 9.8 billion. It's 5% up on last year, driven by high demand for air travel and a very resilient performance, as you've seen from both the Property and Beverages divisions. The Hong Kong office market, which has been a very core component of the property business, saw a very steady occupancy in 2025. And I think what we've seen in the soft cycle that it's at is a continued flight to quality and the new buildings that Swire Properties has been investing in are benefiting from that flight to quality trend.

I think we can see signs of a retail pickup, both in Hong Kong and in the Chinese Mainland and residential projects. Obviously, in Shanghai is nearly fully sold, but I think the sentiment in the Hong Kong residential market is also starting to pick up.

On the beverage side, 2025 was a solid performance, fairly flat delivery of recurring underlying profit, but we do feel conditions are set to improve. Aviation up 19% at the IUP level. HAECO Group achieved a 73% growth in recurring profit due to demand for base maintenance and engine overhaul services. And Cathay, as you know, has a third consecutive year of profit driven by very robust demand for travel and strong cargo performance.

I think I'll pass over to Martin now for a little detailed look at the financials. Martin?

Thank you. Thanks, Chairman. Yes. So again, just to highlight, we think they are very strong good results. The strong underlying profit driven by the underlying profit growth in Swire Properties.

In the aviation side, it's more on the recurring profit level, continued 3 years of really strong recurring profit from aviation and solid beverage results. The statutory profit adjusts for the fair revaluation losses of the investment properties to fair value.

You can see the strong cash generated from operations, which comes from the -- particularly the sale in Miami and also the full year of the Thailand subsidiary. And these strong results have enabled us to continue our progressive dividend, which the dividend up 13%. And this slide basically highlights the strong underlying profit per division.

So you can see there the 2 blues are the things that are driving that. So the big one is the 27% increase in Swire Properties underlying profit. Aviation has been driven, as I said, by a strong recurring profit. And the 2 red boxes are really the offset, which is the absence of revaluation gains that we talked about last year in Beverages and T&I.

This slide is the same, but it breaks it down by category. So in terms of the nonrecurring items, we had the gain on disposals of the investment properties, which was driving the strong underlying profit from Swire Properties, which was the sale of the Brickell City Center in Miami, the Tsing Yi Industrial Estate, the 43rd floor of One Island East and more Taikoo Shing car parks that have been going for a number of years now.

We have the gain and losses on disposal of property, plant and equipment. This, again, driven by the loss on disposal of HAECO America, partly offset by a gain in the sale of the ITM business. We've got exchange losses in Thailand and the fair value loss of Cadeler and the reversal of some impairments in the CX subsidiaries. And then you've got the fair value loss on the Hong Kong offices getting you back to the statutory profit.

This slide, I've just shown you the 5 years of underlying profit because it really kind of highlights, one, the post-COVID 3 strong years of recurring profit driven by the good results from aviation. And over that 5-year period, it really sort of highlights the strategy of recycling noncore assets and exiting businesses. So back in 2021, we exited the marine side of things.

You can see over the period, we've focused our strategy on Greater China and Southeast Asia. So we've exited our noncore U.S. businesses, which in 2023 was Coca-Cola USA. and then, of course, HAECO Americas this year. And we've tidied up some of the underperforming assets over that period. So we really have 3 very strong divisions currently.

To liquidity and maturity profile, a very healthy liquidity base at December '25. Group liquidity at HKD 64 billion and bank balances at HKD 23 billion and a healthy maturity profile with the average term of debt of 3.5 years.

In terms of financial position, our net debt is HKD 65 billion, which is down 8% weighted average cost of debt, 3.6%, down from 4%. The 72% of our debt is fixed and the gearing is down to 20.6%.

This slide really looks about how we do our capital allocation, which, again, we take a medium-term view on that piece, so we can ride economic cycles. So our strong balance sheet is the core of our ability to have our capital allocation. So healthy gearing, low cost of debt and fixed borrowings on that side.

Our first priority is looking at long-term strategic investments in our core markets, whether they be assets within the HKD 100 billion plan within Swire Properties, the new franchise as we roll out in Southeast Asia and Swire Beverages and HAECO moving its Xiamen investment. Then we look at trying to improve the return on investments from each of the operating companies. So each of the operating companies target efficiencies and improved margins.

Swire Properties are doing more residential trading than they had previously as part of the portfolio to improve their returns. And then finally, that drives the ability to have a sustainable dividend policy. And as we've done in the past, we have the possibility of share buybacks as part of the armory that we have.

Again, another -- like the Swire Properties one, they've had 9 years of consecutive increasing in dividend. We changed our dividend policy 5 years ago. So we pay out not less than half our recurring underlying profit, excluding our share in Cathay, but pass-through of all dividends received from Cathay over time. And that's allowed us to also have a progressive dividend policy, which, as you see, was up 13% from last year.

We're very proud of our sustainability progress throughout the group. We've rebranded it SD 2050, and again, it's under the pillars mainly following what the regulatory is going, so under climate nature, which is water and waste and social people and communities. We're doing really well towards our 2030 targets that are on the left there. So we're already at 46%, reducing our Scope 1 and 2 to our 50% target by 2030. 64% waste is diverted from the 65% target for 2030, 27% reduction in water withdrawal compared to the 30% reduction. We've achieved our 30% females on the Board. And again, we make a positive impact to the communities, and we've made over HKD 120 million of donations from Swire Trust.

Thanks, Martin. On the property side, I'll just do a quick review of that, given the fact that Swire Properties have just spent an hour talking about that in detail.

At an overview level, the underlying profit increased by 27%, which, as you know, is primarily driven by the gains of the disposal of noncore assets. At the recurring underlying profit level is a small decrease, which is mainly due to the loss of rental income from the sale of Brickell City Centre retail mall and lower office rental income in Hong Kong.

Very good story on the Chinese Mainland. Over the 10 years, attributable gross rental income has grown at a CAGR of 10%. And we anticipate with all the new construction projects that are underway that we will double our GFA in the near term. And that's an incredible performance, I think, when you take a look at the last few years. So very happy about the direction that we're heading in the Chinese Mainland.

In Hong Kong, which -- where we've had a tough time with the cycle, we have a very strong defensive position. I think here in Hong Kong office, the occupancy levels are very high, and we look very well positioned, I think, to capture the recovery in demand when it does come. On the retail side, our malls are 100% let and the retail sales are outperforming the market at the moment. So small signs of retail recovery, I think, in Hong Kong.

We've talked a lot about the HKD 100 billion commitments for Swire Properties that was set in 2022. As you heard Tim say a few minutes ago, we're now about 2/3 committed on that, and most of the Chinese Mainland commitment has already been made. So very good progress along that investment plan.

Finally, on strategic updates. The focus remains the disciplined execution of that HKD 100 billion investment plan across the core markets of Swire Properties. In the Chinese Mainland, 5 new developments will start to open from later this year. And I think I'd just like to highlight the very successful sale of 6 Deep Water Bay Road, which was completed early this year. The sale was booked this year, but made at the end of last year at a very, very attractive price. And that is not only a good example of the way that we are able to fetch those sort of very high levels of residential pricing, but also the way that we're able to turn our capital around. And I think that's been really successful and reflects the upturn, I think, in the level of interest in Hong Kong residential. So we're very pleased about that.

Finally, just in terms of the new projects, you can see from this chart that there's a very balanced geographical mix, a very balanced sectoral mix. And overall, we're hoping to add 12.4 million square feet to the portfolio over the next sort of 3 or 4 years, which I think is a great story. It reflects the pipeline that we've got. And I can sit here and say there's more to come on that. So very encouraging performance, I think, for Swire Properties in what's quite a tough consumer market, both in Hong Kong and the Chinese Mainland, but we do see signs of that improving.

I'll switch over to Coca-Cola now and ask Karen to take us through where that business is.

Thank you, and good afternoon, everyone. I will walk through Swire Coca-Cola's performance in 2025 and our strategic update. It was a challenging year. Our priority were clear: deliver sustainable earnings, maintain cost discipline and continue to invest where we see long-term value.

So let me turn to our financial results for the year. In 2025, Swire Coca-Cola delivered a recurring attributable profit of HKD 1.39 billion, broadly in line with our performance last year. This result was achieved against a very challenging operating environment across the region. The impact of those factors on underlying performance was offset by the full year contribution from ThaiNamthip, which has become a subsidiary on the 30th September 2024 and also by our continued discipline in central cost control.

So let me walk you through performance by market. In the Chinese Mainland, performance remained resilient. Recurring profit increased by 1%, with revenue also up by 1% in local currency despite a very significant disruption to the ready-to-drink beverage industry, driven by the aggressive subsidy from the food delivery platform over the summer months. Our management has responded swiftly, rolling out targeted consumer commercial initiative to strengthen the route-to-market model and enhancing our execution across the emerging online channel.

In Hong Kong, the performance strengthened with recurring profit up by 14%, supported by higher revenue. So this reflects our strong commercial execution, effective marketing campaigns and a favorable product mix with sparkling juice and coffee all delivering year-on-year revenue growth.

The recurring profit for Taiwan has decreased by 6%. Revenue in local currency terms was flat compared to last year. The results were mainly affected by a higher cost associated with the capacity enhancement project at our Taoyuan plant.

The attributable recurring profit from Vietnam and Cambodia in 2025 was HKD 152 million, which is a decrease of 35% from last year, principally due to the very difficult operating environment. Revenue decreased by 11% in Hong Kong dollar term, which is mainly impacted by the unfavorable exchange rate with the depreciation of the Vietnamese Dong and the intense competition amid an overall contraction across the beverage industry. So against this backdrop, our sparkling category saw a decline in revenue and volume term.

The results were also adversely affected by a onetime expenses related to the relocation of our Ho Chi Minh plant to a new plant in Thanh H a province. In Thailand, performance was affected by the economic softness, primarily driven by the significant decline in the tourism industry. So I've mentioned the recurring profit of each region, and now I would like to cover our volume performance.

In the Chinese Mainland, despite the market disruption, our overall volume remained flat with sparkling category also stable. Meanwhile, I would like to mention our energy category is the star performer, which continued to show strong momentum, increasing by 53% year-on-year. For Hong Kong, although the volume declined by 3%, our overall revenue increased by 2%, reflecting the favorable mix and the effective pricing management. For Vietnam and Cambodia, total volume decreased by 7%, which is in line with the overall industry competition.

Our EBITDA margin performance remained resilient overall. In the Chinese Mainland, EBITDA margin improved to 11.7%, despite the very challenging market conditions noted across the peak summer seasons. The strong revenue growth and supply chain optimization initiative in Hong Kong translate to an uplift of its EBITDA margin from 16.6% to 18%. Taiwan was adversely affected by the additional operating costs incurred for the onetime Taoyuan plant redevelopment project. Our Southeast Asia market were affected by the intense competition in a very difficult operating environment.

So turning to the strategy. We continue to invest decisively to support our long-term growth in the Chinese Mainland. As announced in 2023, Swire Coca-Cola plans to invest over RMB 12 billion over the next decade in production facility and logistics infrastructure. This has included a new production facility in Zhengzhou, Kunshan, which is near Shanghai, Guangzhou and most recently in Hainan. The Zhengzhou facility commenced operation in October last year. New plants in Kunshan, Guangzhou are expected to begin operation in May this year, while construction of our Hainan facility is underway and scheduled to be in operational by 2028.

So beyond capacity expansion, all these new facilities are designed to set a new benchmark for scale, sustainability and innovation, supported by unified digital foundation that enhance safety, efficiency and operational resilience across our manufacturing network. So taken as a whole, this investment will further strengthen our manufacturing footprint, enhancing our supply chain resilience and further support our business growth in our market.

In Southeast Asia, in July last year, Swire Coca-Cola inaugurated a new USD 136 million flagship manufacturing plant, which is the largest of our 3 production sites in Vietnam. This is the first food and beverage plant in Vietnam to achieve LEED Gold Green Building certification and reflecting Swire Coca-Cola's commitment to innovation and sustainability. So this investment underscore our commitment to the market and support job description and also strengthen our foundation for sustainable development.

In February this year, we also completed the sale of 30% interest in the Vietnam franchise to ThaiNamthip, further strengthening the regional alignment. At a headquarter level, we have moved to a simplified regional management structure, and the appointment of the Chief Operating Officer in December last year will further accelerate our decision-making and response to the market changes. So overall, this reinforces our focus on disciplined execution in the near term and our continued investment behind our long-term growth drivers and steady progress in our building of our sustainable value.

So now I would like to turn to Martin for Cathay Pacific update.

Thank you. So yes, so on to aviation, which really has been the driver of the improvement of our recurring profit over the last 3 years, post-COVID. Obviously, the Cathay Pacific Group has been an outstanding performer. But also HAECO this year, it's great to see -- you can see on the recurring profit of nearly HKD 1.2 billion from HAECO. And now they've exited the U.S. and ITM, they really are into the -- that recurring profit should be a solid number going forward. And again, outstanding results from Cathay Pacific 3 years in a row.

In HAECO, the pleasing bit is across all 3 of the core businesses, as you see on the left-hand side there. So the improvement in aviation post-COVID is finally coming through in HAECO as it's cleaned up its noncore assets. And again, it's exciting times in HAECO with the opening of the new Xiamen facility, which is best-in-class and looks outstanding, creating a lot of excitement. We've exited the U.S., as I mentioned, and the focus is also growing their business in Southeast Asia and Vietnam.

Cathay, again, they had their announcements yesterday. Another set of great results on the passenger side, driven by the ASK growth, which is up 26%. Had record revenue. So yield comes down as you increase your ASKs, but the load factor remained positive, which is a great sign.

Cathay Cargo continued to remain strong as well, again, with high -- an increase, nearly double-digit 8.3% increase in freight ton kilometers, flattish load factor. And then similarly, the yield comes down with the higher capacity.

It's very exciting times. They've got HKD 100 billion investment plans announced last year. They've cleaned up their balance sheet by buying back the 50% of the preference shares, repurchasing 68% of the convertible bond, buying back the Qatar share of 9.56%, leaving our share up to 47.6%.

In health care, we sort of stepped back a little bit as we wait for the valuation of health care investments to come off highs. And at the same time, we're learning a lot with the investments we've made. So DeltaHealth has become the first foreign owned and got its Class III status for cardiovascular hospital in the Chinese Mainland. We've got a new professor in cardiology. So we expect that business to improve over the next few months. And then in Indonesia, that's our investment, our minority shareholder in there, which is a profitable investment that we made back in 2024.

With that, I'll pass back to Chairman for the outlook.

Thank you. So final slide here on the outlook. Global uncertainty, notwithstanding, we do think our core divisions will continue to perform well this year. On the property side, we have an exciting pipeline of new developments across all our markets. The consumer sentiment, as I mentioned earlier, we do think will continue to pick up in both the Chinese Mainland and Hong Kong.

Early signs of new momentum in the Hong Kong office market. And we do think that there will be a positive contribution going forward from our residential projects that are being built. Beverages, that same consumer sentiment pickup in the Chinese Mainland should impact our biggest territory for Coca-Cola. But I would say that the challenging competitive situation in Southeast Asia, particularly in Thailand and the economic weakness in that region is expected to remain in the near term.

On the aviation side, we're very excited to open a new Xiamen facility later in 2026, this year, which will enhance the HAECO Xiamen operational efficiency, and they continue to explore investment opportunities in Southeast Asia.

On the Cathay side, both the passenger and the cargo capacity are expected to grow in 2026, although the situation in the Middle East is obviously introducing quite a bit of uncertainty for the global economy, and that may impact Cathay at some point. The strategy, though, is to continue adding frequency and destinations to take advantage of the new runway at Hong Kong International Airport. So with that, I'll leave the presentation, and we'll be very happy to take questions. Thank you.

Thank you, Guy, Martin and Karen. Let's take questions. We'll take questions in English. Please state your name and organization with no more than 2 questions at a time. So gentleman in front, please. Kenneth Ngai?

Congratulations with the good result. This is Raymond Liu from HSBC. So I got 2 questions. The first question is related to shareholders' return, like the slide on page -- Slide 15. So as you mentioned, like investors are very pleased to have like 13% DPS growth. Just wonder like how should we think of the progressive dividend policy down the road? Like should we think of like the growing free cash flow payout ratio? Or how should we think of the growth down the road?

And the same, like, at the same slide, you mentioned about the share buyback. Can management share any color about a new potential new share buyback program? So that's the first question. And the second question is about beverage business. So the management mentioned that, like, the 2026 business is set to improve. So can management provide some more color on the key drivers for the improvement in 2026? And would there be any update about the spin-off of the Southeast Asia business?

Thank you. So on the dividend front, as I said, we changed the dividend policy 5 years ago to make it a bit more certain given the uncertainty of being in aviation. We have a slightly different dividend policy from Swire Properties.

Swire Properties pay out approximately 50% of the underlying profit. We pay out at least 50% of our recurring profit because the successful strategy of Swire Properties and doing that underlying profit and the part of their strategy to keep recycling noncore pieces, and with the strength of the aviation business and the way that the whole cost side has been addressed during COVID, then we're very confident that, that progressive dividend policy will be in place for some time to come, barring another COVID-type event. So that -- and then probably the easiest way to look at it is, again, similar to properties, expect a mid-single-digit constant improvement.

In terms of share buyback, we always say, look, we have a very simple strategy. We have -- where we operate, the chances to get places like Xi'an and Sanya are -- take a long time. So the strategic investments for a medium-term strategy is always key. Franchises in Southeast Asia come up only at those point in time. So they're always the priority. Then in terms of improving the operating companies' returns as the slide showed, then it's all about the dividend first. The share buyback is something that's up our sleeve and that bit. We know that the market likes it. We can't do a very big one in any event, given the liquidity of the stock. So it's always available to us. We can't -- as you know, we can't exercise a share buyback program while we may have price-sensitive information on that bit. So it's not going to be there all the time, but it's certainly part of our strategy.

Thank you, Raymond, for your question. I would like to answer your question by the perspective in Chinese Mainland market and also our Southeast Asia. So what we have seen is the consumer sentiment and the overall economic situation has shown an improvement and pickup in -- particularly in quarter 4 of last year. And we're expecting this improvement in the consumer sentiment and overall economic situation will continue into 2026.

And what we have also seen in China last year is that there is a structural change in the purchasing channel from moving from traditional channel to a convenient online channel. And with that, we have invest, and we have pivot our route-to-market model and invest on our commercial strategy to capture the growth in those channels. And we believe we are much more equipped in capture the fast-growing channel in those emerging online channel. And plus the digitization will help us in capturing more operating efficiency and also capturing consumer consumption. So I think we are very optimistic about our prospect in Chinese Mainland.

So moving to Southeast Asia, there are a number of short-term factors that has impacted our business performance last year. Like, in Vietnam, we are facing extreme weather and their government tax policy that has a short-term impact on our business. And we believe those factors will be moderated as we move in 2026. And overall, expecting the GDP to have an improvement on this. And plus the Southeast Asia market is young, vibrant, low per capita consumption. So we are very confident on the long-term prospect of this market.

Gentleman in the middle.

So this is John Lam from UBS. Two questions here. One is regarding on -- probably a follow-up question regarding the dividend. First of all, we're glad to see about 13% dividend growth. And I'm not sure if we could interpret it because last year, the group, I mean, including Swire Properties and also Swire Pacific has been successfully recycled some of the capital. And therefore, the dividend growth is partly driven by more capital recycled. Not sure if we could think about this way. Or maybe if, let's say, in 2026, we have another similar size of capital recycling, then we could expect another 13% dividend growth for 2026. Not sure we could think about this way.

Second one is about the NAV discount questions. So actually, I just come back from the Swire Properties analyst briefing. And I think the CFO also mentioned about to narrow the NAV discount. And I think this is also a similar question probably to Swire Pacific. So not sure how -- first of all, I'm not sure how the good things about the NAV discount for property business and also for Swire Pacific.

Yes. Thank you. So yes, look, on the dividend front, yes, it always helps when Swire Properties are paying underlying on that front. But our payout ratio is 50% on that piece, and our policy at least that. And so the strong growth of aviation and the dividend pass-through that we get from them makes me very confident that we can continue the progressive dividend policy on the basis that we know the sort of strategies that the operating companies are following.

So again, I'll go back to my earlier point, I think -- and of course, we can always pay out special dividends if there was an exceptional underlying profit piece. The second question was relating to the

NAV.

The NAV. Fanny's still there. Yes, Well done, Fanny. Look, similar to Fanny, I mean, it's Swire Pacific's at a double discount on that bit. So Swire Properties at a discount, we're at a double that bit. It has improved. It is improving. It's something that we do focus on. I think there are a lot of -- as property companies that are now doing more recycling of assets, you'll see that narrow. But yes, that's just part of the Hong Kong property cycle.

Gentleman in the third row, please.

I got 3 questions. Just one on the Middle East disruptions, oil price, heightened oil price, I think the obvious impact would be on the Cathay Pacific. Would you be able to share with us, other than Cathay Pacific, anything else that you think would have a bit of a disruption on your group business? That's the first one.

And then the second one, just on the investments. Over the last couple of years, a lot of capital recycled. And one of the things that you've been talking about is the health care business. Wondering whether you can give us some more updates. I hear that the valuation remain to be quite high. What are you waiting for over there? Do you have any hurdle rate that you are thinking of?

And then the last one is the slide on the beverage EBITDA margins across the country was very helpful. We can visualize how the margins differences among the market. Would you be able to share with us, Vietnam market, obviously, or ASEAN market is lower. How should we think in the medium or longer run, the margin profile of -- in each individual market?

Can we have your name and organization as well?

Sorry. Simon Cheung from Goldman Sachs.

Thanks. I'll take the first question, which was on the Middle East. And as you heard, the impact on -- for us is primarily through Cathay Pacific initially and the fuel price. It's very early to tell where else there might be some impact, but we're not expecting too much impact, at this point at this early stage in other parts of the group. Martin, do you want to cover the health care question?

Yes. Well, health care is we've made almost $3 billion investment so far in health care. And obviously, COVID came along and it had its challenges. We like the fundamentals of it, and we're learning a lot. We managed to get the DeltaHealth as a subsidiary. So we now run that. Even though we have a minority in Indonesia, we run those. We have the management contract. We're learning all the time on that piece.

Our -- we're a long-term holder in what we think is a fantastic business. Obviously, with wellness and sustainability, a lot of the venture capital companies went in and they have got a different model. They want to exit on that piece. So we have a different valuation. We have to look at operating that company for the long term and making sure that our discounted cash flows and our investment models make sense to us because we can't just commit, buy it, can't just hurry and sell it at a high price. So we think the market is -- well, we've been watching it now for a while. And the longer you watch it, the more you can see that the companies are underperforming to what they were trying to sell you at in the first place. So we think patience is the right strategy, but we do like the fundamentals of that industry.

Thank you for your question. I will take the question on the EBITDA margin. Okay. Yes, we certainly see there is a potential to improve our EBITDA margin by market, especially in the Chinese Mainland. As I mentioned just now, the Chinese Mainland last year was disrupted by the structural channel shift and also a very aggressive pricing subsidy from the food delivery platform, which has impacted the beverage industry.

We don't see that as sustainable, and we're expecting the market will be returning more to the normal. And we will endeavor to improve our EBITDA margin by our revenue growth management initiative, channel-specific packaging and also our pricing management strategy. In the Southeast Asia market as well, we will endeavor to improve our margin, and we see a huge potential by further growing our sparkling category, which is the most profitable category that we are having, and also continues our efforts in revenue growth management and launching specific packaging in capturing consumer occasions.

Thank you. I think we have time for one more question. Everybody happy? Wonderful. Then that's a wrap for today's session. Thank you so much for joining us. Have a great evening.

Good afternoon, ladies and gentlemen. Welcome to Swire Pacific 2025 Interim Results Analyst Briefing. Joining us today at the briefing are Mr. Guy Bradley, Chairman of Swire Pacific; Mr. Martin Murray, Finance Director of Swire Pacific; and Ms. Karen So, Chief Executive Officer of Swire Coca-Cola.

Before we take a detailed look at our interim results for 2025, we would love to share with you a short video highlighting the key developments and achievements of Swire Pacific in the first half of 2025. Please enjoy the video.

[Presentation]

We hope you enjoyed the video. May we now invite Guy, Martin and Karen to take us through the details of the interim results of 2025.

Good evening, and thank you for joining us. I'll start with the group corporate overview. And I would say at the strategic level, number one, we have very strong underlying profit from the Property division boosted, as you heard earlier, by the excellent disposal of the retail at BTC in Miami and a couple of the other Miami adjacency pieces of land, which we've also managed to dispose. So that's really helped the underlying profit on Property. That puts the Property division 67% committed down their plan of investing HKD 100 billion over the next 10 years. We're only 3 years into that. So that's a very sort of accelerated performance, I think, in terms of commitment.

And I would say that they've got 7 major projects under construction at this point in the Chinese Mainland. I don't think we've ever had as many projects under construction, reflecting that investment and commitment. So there's a lot of work going on on the Property side. The other major milestone strategically, I think, 4 properties in the first half was the successful sale of the first residences that we've built in the Chinese Mainland and that's in Lujiazui Taikoo Yuan, which is on the bank of the river in Shanghai, great product. We've sold 2 batches already, and they're nearly completely sold out. They were sold out within the hour for each batch. So had a great response there. But it's the first time Swire Properties has put its brand on the residential sector in the Chinese Mainland. So quite a landmark milestone there for Swire Properties.

In Beverages, I would call it, a solid performance. There have been challenges in Southeast Asia, no doubt, and I'll come on to some of those later. But the investment that we're making in the Beverage business continues, and we're currently have 4 new production plants under construction in the Chinese Mainland and the new plant in Vietnam was inaugurated in July this year. So we continue to invest in production capacity to cater for the growth in the region.

On Aviation, the sector continues to perform well for us, as you heard yesterday, and we're very happy that Cathay and HAECO look like having another strong year. Financially, both underlying profit and recurring underlying profit are basically close to prior year, generating $5.5 billion and $4.7 billion profit, respectively. So good set of numbers, I think, given the climate that we're operating in. We've decided to pay a 4% increase in ordinary dividend per A Share to HKD 130. Martin can cover that in a bit more detail in a second.

And then in terms of the business level of the company, Property, I'd say the retail market is performing well in the Chinese Mainland, which somewhat offsets the softness that we're all very familiar with in Hong Kong office, and those are our 2 main contributors in the Property business. So one is going reasonably well, one is still soft.

EBITDA growth in the Chinese Mainland beverages has been positive, and that has offset some of the challenges in Southeast Asia, which I mentioned earlier. Those challenges range from the relocation of the Ho Chi Minh City plant, the depreciation of the Vietnam Dong and the competitive environment in Thailand, which has been partly offset by a higher contribution from the increased shareholding that we've taken in Thailand and Laos. Aviation, as I said, continues to perform well based on strong capacity growth and increased demand from maintenance on the HAECO side, with HAECO achieving a 40% growth in recurring profit in the first half. So good performance there by HAECO.

Martin?

Thank you, Chairman. Good evening. As the Chairman said, we believe these are very solid results in this time of uncertainty. And so we'll start with the underlying profit of HKD 5.5 billion and recurring underlying profit of HKD 4.7 billion being pretty similar to the prior year. Once you adjust for the change in value of the investment properties, the statutory profit is down at HKD 815 million. Very strong cash generated from operations, a lot better results from HAECO, and that includes the land sale of USD 211 billion in the Brickell Key land, which we'll talk about in later slides. And as the Chairman mentioned, we have a progressive dividend policy. So we continue to pay that at HKD 1.30 per share.

In terms of the underlying profit between the underlying profit and the recurring underlying profit, the nonrecurring items are very similar to last year. In 2025, it's basically all made up of the Brick Key retail and car park sale, that 833 million nonrecurring and you see on the left-hand side. The prior year, you had the Taikoo Shing car parks and the other 2 were noncore assets relating to Cadeler, the disposal of Cadeler and a fair value gain in Cadeler. This then is a good description of describing our underlying profit. So you can see clearly there the strong underlying profit in Swire Properties, the good results from aviation, the solid results from Beverages despite the challenges that the Chairman mentioned in Southeast Asia.

And you'll see the head office, the others there is a little bit higher interest rates, but also the nonrecurring items in Cadeler last year that we just mentioned. In terms of our recurring profit on the right-hand side there, again, it's the same. It highlights there on the right-hand side, the strong results from -- on the recurring basis of the HAECO Group and in Cathay Pacific and Properties and Beverages being marginally down.

Balance sheet remains strong, gearing at 23% weighted average cost of debt 3.7%, fixed to floating 66% net debt of HKD 71.3 billion. And again, very high liquidity of HKD 64 billion and a solid maturity profile. In terms of sustainability, we very much focus on carbon waste, water, people and communities. We're very proud of all of our core divisions in terms of how they lead in sustainability. As you saw on the video there, Swire Properties up at 60% of renewable energy and Swire Beverages up 55%. And that makes up 88% of our Scope 1 and 2, those 2 divisions. And so we're well on track for our 2030 commitments. Thank you.

Just going into more detail on the business review. Property, the first half was very much one of the progress we made in capital recycling and some various upgrades that we're making to the existing portfolio. I mentioned the sales of Taikoo Yuan residences. And of course, we like that because you get the cash in early and you're able to turn the capital around relatively quickly on the trading side. So that's gone very well so far. And you heard Tim say that we are hoping to launch the third batch later in the year. The big story on capital recycling, though has been in Miami. Brickell City Center land land was sold for USD 211 million. That was completed in May. There was a small area of land called North Square, which we just completed the sale in July for USD 45 million. And then there was the big deal with Simon Properties where we disposed of the Brickell City Centre retail and the car parking spaces for approximately USD 550 million. So all in all, good disposal track record for this year.

Which will allow us to put some of those funds into the big project in Miami, which is the remaining residential projects on Brickell Key, where we're selling the residences and then building a new Mandarin Oriental hotel in a 2-tower developments, and we've already commenced presales on that. So things are going well over there.

In terms of the numbers, the underlying profit grew 15%, reflecting those higher disposal gains in the U.S.A. and that was partly offset by a reduction in rental income from Hong Kong office portfolios, which have been soft, as we said and high losses from property trading. On a recurring basis, I think we're down 4%.

This is a now familiar chart, I think, having used this several times already. It basically tracks our progress against the HKD 100 billion investment plan. And there you can see, we're now 67% committed. Most of that commitment of the HKD 50 billion is in the Chinese mainland, we're at [ $46 ] million. We're about half committed on our trading in Southeast Asia targets and about 1/3 in Hong Kong.

In terms of upcoming projects, we've got a strong pipeline and a balanced pipeline of developments across markets. This chart just shows -- you can see there's plenty going on in the Chinese Mainland in 2026 and 2027. I've referred to those projects under construction. I mean Hong Kong, 3 residential projects, the Headland residences this year, next year, there will be projects residentially in Wan Chai. And then we have some residential and office developments coming online in 2028 in Quarry Bay.

And in Southeast Asia, we're still selling our luxury project down in South Jakarta, called Savyavasa, whilst the exciting new project in Bangkok should be ready in 2028, and there's another project or 2 under discussion in Ho Chi Minh City. So lots going on, on the trading side in Southeast Asia.

The Hong Kong portfolio, I mean we think that the office stock that we have is very well positioned to benefit from a recovery in demand when that demand does start to recover. We're benefiting at the moment from a flight to quality, meaning that in a sort of semi-soft environment at the moment, our occupancy levels are above market, and we're sitting at 91% across Pacific Place and Taikoo Place.

On the retail side, our occupancy levels are at 100%, and we're starting to see a small pickup in the results in the last couple of months on retail, particularly at Pacific Place.

In the Chinese Mainland, we've had a very healthy CAGR of 11% in terms of attributable gross rental income in the middle chart there between 2016 and 2020. The right-hand chart shows that we expect to double our GFA in the Chinese Mainland by -- in the next -- well, between 2020 and 2030, I would say. And very significantly for the first time. On the left-hand side, you can see that the contribution of gross rental income from Chinese Mainland retail has just overtaken Hong Kong office, which for a long, long time was our biggest contributor.

Karen?

Thank you, Chairman. So on to the Swire Coca-Cola business in Greater China, we announced in 2023, that's why Coca-Cola's total investment in the Chinese Mainland would exceed RMB 12 billion over the next decade. The RMB 12 billion investment plan included new production facility in Zengzhou , Shanghai, Guangzhou. And more recently, we announced a new production plant to be built in Hainan. So our new production facility in Zhengzhou and Shanghai are expected to commence operation gradually in the phase from quarter 4 this year, while the facility in Guangzhou is set to be operational by quarter 2 of next year.

In June this year, we announced plan to establish a beverage production base in HAECO high-tech industrial development zone with the construction schedule to be beginning within this year. The project aims to expand our production capacity and efficiency and meeting the consumer demand in Hainan.

In terms of the financial results, revenue from Chinese Mainland increased by 3% in local currency, with EBITDA margin improving to 12.8%. So over to the Southeast Asia side, in July this year, we inaugurated a new USD 136 million flagship manufacturing plant in Vietnam, Da Nang province, which is 1.5 hours closed next to Ho Chi Minh City. This is the largest of our 3 production sites in Vietnam. And the facility is the first food and beverages plant in Vietnam to achieve lead gold green building certificate, reflecting our commitment to innovation and sustainability. And this investment will reinforce our long-term commitment to Vietnam, supporting our sustainable growth, our generating significant employment and is expected to help our business to continue to grow the market share in the country.

So Swire Coca-Cola recorded an EBITDA of HKD 2.8 billion in the first half of 2025. The increase is mainly due to the higher contribution from the franchise business in Thailand and Laos, with our increase in attributable interest since October last year. The result in Chinese Mainland remained resilient with our EBITDA increasing by 6%, contributed by a 3% revenue growth despite operating in an environment where consumer demand was subdued.

In Vietnam and Cambodia, the EBITDA decreased by 28%, while revenue declined underlying results were adversely impacted by the depreciation of the Vietnamese dong Reduction of our effective shareholding in the Cambodia franchise and also the expenses on the relocation of the Ho Chi Minh plant to the new Da Nang plant that we just inaugurated. In Thailand and Laos, EBITDA increased with our increase in attributable profit interest. And the business were, however, adversely affected by economic uncertainty and the very intense competition and the implementation of the Phase 4 of the Sugar Tax Legislation.

Recurring attributable profit is similar to last year. Chinese Mainland grew by 8%, with result for the first half year -- from first half years of 2025 was affected by softer consumer momentum and also incremental expenses on the capacity enhancement project in Vietnam and Taiwan. On the category mix, Sparkling remains our largest driver among our portfolio at 73%. Juice comes next at 12%. Swire Coca-Cola is committed to continue growing our sparkling business while also offering a future-oriented portfolio of market-leading brands in other key categories. On the revenue resources, our revenue source mainly comes from Chinese Mainland, followed by Thailand and Laos. And you will see on the financial data at the bottom right-hand side, revenue increased by 25% with full period contribution from Thailand and Laos. EBITDA margin remained almost flat at 12.8%.

As mentioned earlier, overall EBITDA margin maintained almost flat at 12.8%, with Greater China market remained resilient, while Southeast Asia market faced challenges. In terms of revenue by region, there were revenue growth in Chinese Mainland and Hong Kong. However, revenue declined slightly in Taiwan in local currency and there was a drop in Vietnam and Cambodia due to very difficult market situation and intense competition. EBITDA margin continued to improve for our Chinese Mainland business. However, Taiwan and Vietnam were particularly impacted by the additional operating costs incurred for the Taiwan site redevelopment project and also the relocation of our Ho Chi Minh City plant to the new site.

So with that, I will hand it over back to the Chairman.

Thank you. Moving to Aviation. You'll see the numbers on the right-hand side there. So -- we said that the Aviation division continues to perform well. The recurring profit of HAECO up 40% on that basis. And then the Cathay Pacific Airways Limited, which is a big number there, is up 1%, which is the continued strong performance of the Cathay Pacific over the last 3 years. So you can see there that Cathy yesterday at their announcement, they described their performance is solid. So driven by increase in passenger volumes, a very consistent cargo performance and lower fuel price.

You'll see the liquidity there, HKD 11.2 billion in operating cash flow maintains they're gearing at healthy levels of [ 0.87 ]. Covenants are up at [ 2 ], so a healthier in that sense. They continue to add more passenger flights. They've got 87 new planes in order and they announced yesterday, the 14 new Boeing 777-9s, the new destinations were on the slide. As they've grown their ASK, so passenger revenue was up 14%, ASK up 26% and yield was down 12%. So with more ASK putting pressure on the yield.

And with cargo, the cargo capacity grew, particularly on the passenger bellies. So the 50% of the cargo is carried in the passenger belly, so the cargo was up 8.1% and yields marginally down by 3%. The outlook, again, the demand in the 3 really strong years, the second half. We expect it to continue to be relatively strong. The passenger demand is robust. Again, the cargo side slightly uncertain. There will be yields continue to normalize, but there is still capacity growing in that sense.

So the outlook for the second half will be pretty solid. At HAECO, they had a strong year, a lot more base maintenance man hours and a strong demand for engine overhaul at Hazel and HAECO engine services in German. So the main business is performing very well. And again, we expect that to continue into the second half.

Finally, we just touch on health care. Again, this is, as I mentioned at the press briefing, this is very early stages of our development. There's 2 of those investments that we actually manage, which is DeltaHealth. That -- the exciting news with Delta Health, this is one where we now manage. So we're learning a lot through that. becoming a Class C standard cardiovascular specialty hospital is a huge step forward. Our cardiology lags our cardiac operations, which is -- should be in the reverse side. And so being Class C allows much more patient referrals, BMI reimbursements and it really enhances the reputation of the hospital. So we expect this to be a significant change in the fortunes of DeltaHealth.

And our business in Indonesia continues to be profitable. And we've just opened the Bali International Hospital. If you want to do your health check holiday in Bali, then it's newly opened.

I pass back to you, Chairman, for the outlook.

Thank you. Finally, in terms of outlook, we expect the uncertainty across our core markets that we've mentioned for the first half to will most likely continue in the second. In terms of Hong Kong office, you'll continue to see this flat quality trend. And we hope and expect that the retail performance will remain relatively resilient in the second half.

The retail market is expected to gradually gain pace in the Chinese Mainland, but office occupancy will be impacted by oversupply in that market. On the Beverage side, again, there'll be some subdued domestic spending, I think, in the Chinese Mainland, which will prevent -- present some challenges to revenue growth and deteriorating economic conditions, reduced tourism activity and the implementation of a sugar tax are expected to adversely affect the Thailand business in the second half.

On Aviation, we think travel demand will remain robust while the market environment for cargo remains somewhat uncertain given the current sort of tariff issues out there. On HAECO, I expect a stable demand for base maintenance and continuing growth of line maintenance work and stable demand for engine overhaul services. So they should end up having a fairly good year.

And with that, we can take questions.

[Operator Instructions]

My name is Fan from Bank of America. I have 2 questions, if I may. First one on the Beverage. I saw that in the first half, we still achieved some ASP growth in Mainland China, which is quite impressive given the -- quite impressive given the pretty competitive environment and somewhat deflationary market. So can you elaborate more what actually you have done? But in the outlook slide, you mentioned you are still quite conservative about the outlook in China. So can I get more , I mean direction, do you expect ASP to still achieve positive growth for the rest of the year? Or are you expecting the trend to deteriorate?

And also secondly, on the Southeast Asia, I understand that it's pretty challenging. So when should we expect a turnaround? And my second question is on the share buyback. If you can provide more color about whether we will resume that.

Okay. Thank you for the question. So our business in Chinese Mainland remains strong. We grew our revenue by 3% and profit by 8%. This is largely due to our initiative in pricing activities, although the pace of our pricing activity is slower than what we want to be, but we continue our effort in pricing. So in the first half, we achieved a positive Sparkling [indiscernible] Rate growth by 2.7%, and our Juice category increased by 1.5%. I think this is the main driver in driving our revenue and also our profit growth.

So in collaboration with the Coca-Cola Company, we maintain a very healthy and balanced product portfolio. And at the same time, we remain our organization to be very agile in order to capture the new consumer trend and further diversifying our package by channel and continue to invest the cold drink equipment to capture the consumer consumption. I think these are all the very important long-term strategic initiative to help us to continue to grow in a market environment that consumer demand is subdued and we'll continue that effort in the second half of the year.

Yes. On the share buyback program, we completed our second program, HKD 6 billion, of which HKD 5.8 billion was exercised. So we got to get it right on that sense. It's always seen as a very short-term solution in that business. We've always stressed that in terms of priority, we always look at our long-term strategic investments first. We're much more focused on the progressive dividend. But again, the share buyback is an option to us that we consider.

When we consider it, we look at the current share price, the gearing, the credit metrics, the -- and if we're holding any price-sensitive information, we can't exercise one too. So it's something that we will follow, we've let a lot in the last 2 programs. And so it's something that's still there in part of our armory of what we want to do. But again, we in terms of the shareholding return, very much focus on the progressive dividend.

Yes, gentlemen in front in the red tie.

This is John Lam from UBS. I have 2 questions. The first one probably is for Guy, more for strategic type of corrections. So how do we look at Swire Pacific if we think about in the next, let's say, 3 to 5 years, is there any metric that we focus? I see that actually in department slide, there is an appendix regarding ROE. Should we also think about to improve the ROE from this perspective? If yes, anything that we could do to improve the the ROE here?

And then the second one is about-- apart the current portfolio. I'm not sure if you're happy with the current business portfolio, any new business that you're looking for, for the investment?

Well, yes, in the next 3 to 5 years, we -- the core divisions that we have, have all got a very exciting pipeline program of investments, most of which have been disclosed. But the pipeline is just that. We also have investments that haven't yet being disclosed that we're working on, but perhaps because the deals haven't been consummated. But certainly in terms -- in terms of Aviation, you've seen Cathay continue to place very heavy investments in fleet growth. And on the side, again, you've heard the tremendous pipeline growth that we're putting Swire Properties through and all the construction that's going on in the Chinese Mainland and we expect that to continue and new projects will be provide land bank for the future growth. So there's a good story going on in the Property side.

And again, we're about to release trading projects onto the market over the next 3 to 5 years. So there will be some trading income coming through there. And then in the health care space, it's an early start for us. We've set ourselves a 10-year vision and we've invested $3 billion so far of the, $10 billion, $20 billion that we've sort of allocated loosely towards this. And the reason we want to start slow is that we have a learning curve here, and we've made some good investments so far, I think, in Indonesia, which is a profitable investment, which will we're very excited about.

And in this DeltaHealth Hospital in Shanghai, we're focused very much on those 2 investments at this point before we go any further. We feel that there are opportunities to grow in -- especially in the Chinese Mainland, but the current valuations are too high, and so we're happy to wait for valuations to look a bit more realistic and in the meantime, focus on getting Delta and the Indonesian business into shape.

Thank you. Any next question? Wonderful. Yes, that's the wrap. Thank you so much.

Thank you.

Thank you for attending, and have a great evening.