Summary of Inbound Travel Retail in China Industry Overview - The inbound travel retail market in China is projected to grow from **US$14 billion in 2024 to US$60 billion by 2034**, representing a **15% CAGR** [1][10][27] - By 2034, inbound travel retail is expected to account for **25% of China's total travel retail market**, up from **10%** in previous years [10][27] Key Drivers of Growth - **Globally Known Brands**: The presence of well-known brands and competitive pricing is attracting international tourists [4][10] - **Improved Shopping Experience**: The introduction of tax-free shopping (TFS) and instant tax refunds is enhancing the shopping experience for inbound tourists [5][10][31] - **Policy Support**: Recent policy changes are aimed at expanding tax-free shopping and improving infrastructure to support inbound tourism [26][48] Tax-Free Shopping Impact - The tax-free shopping market is expected to grow from **<US$0.5 billion in 2024 to US$20 billion by 2035** [94] - The **instant tax refund system** was expanded nationwide in April 2025, significantly increasing the number of malls offering this service from **2 to 17** among the top 20 malls in China [5][34][98] - Retail sales with tax refunds in cities like Shenzhen and Shanghai have shown remarkable growth, with increases of **160% and 75% YoY**, respectively, in the first half of 2025 [35][103] Competitive Pricing - Chinese brands offer products at **20-50% lower prices** compared to international markets, making them attractive to tourists [4][29] - Imported luxury goods in China are competitively priced, often similar to or lower than prices in key Asian markets [29][74] Market Segmentation - The inbound travel retail market is primarily driven by international tourists, excluding visitors from Hong Kong, Macau, and Taiwan, who are expected to contribute significantly to growth [27][45] - The duty-free market is also gaining traction, with projections of **US$5 billion in spending by inbound tourists by 2035** [36] Implications for Retailers - Retailers, malls, and duty-free operators in China are expected to benefit the most from the growth in inbound tourism [6][40] - Companies like **CR Land, Hang Lung Properties, and CTG Duty Free** are identified as key beneficiaries [43] Risks and Challenges - Potential dilution of the Hong Kong retail market due to increased competition from mainland China [6][40] - The need for improved tax refund services and training for sales staff to facilitate the shopping experience for tourists [39] Conclusion - The inbound travel retail market in China is at a pivotal point, with significant growth potential driven by favorable policies, competitive pricing, and an enhanced shopping experience. Retailers and duty-free operators are well-positioned to capitalize on this trend, although challenges remain in execution and market competition.

Core Viewpoint - CR Mixc's 1H25 revenue increased by 6.5% YoY to RMB8.5 billion, aligning with estimates, despite declines in developer VAS and community VAS revenues [1] - The company demonstrated strong performance in the commercial segment, with gross margin expansion and significant growth in gross profit [1][2] Financial Performance - Core net profit rose by 15% YoY to RMB2 billion, slightly below the estimated 17.7% growth [2] - Interim DPS surged by 89.6% to RMB0.529, with a special dividend of RMB0.352/share, resulting in a payout ratio of 100% of interim core earnings [2] - Gross profit grew by 16.3% YoY, exceeding estimates, despite a 66.5% YoY decline in interest income [1] Segment Performance - The commercial segment saw shopping mall revenue increase by 30% YoY in 1H25, with retail sales growing by 21.1% YoY and SSSG at 9.7% [3] - Retail sales in luxury malls grew by 13.2% YoY, while non-luxury malls increased by 26.4% YoY [3] - The number of malls in operation increased to 125, with 6 new malls obtained through third-party expansion [3] Property Management Expansion - CR Mixc added 14.32 million sqm of contracted area in 1H25, with 71.2% being public projects [4] - Total contracted GFA increased from 450.5 million sqm at the end of 2024 to 452.1 million sqm, while total GFA under management rose from 413.1 million sqm to 420.5 million sqm [4] Valuation and Market Position - The target price is set at HK$42.91, derived from a 23x 2025E P/E, with the stock currently trading at 20.1x 2025E P/E [5] - The company offers a 4.7% 2025E dividend yield, reflecting its competitive position in the commercial segment and industry-leading gross margin [5]

Summary of the Conference Call on China Property Market Industry Overview - The conference call focused on the **China Property** market, specifically analyzing trends and data from July 2025, indicating a continued decline in property sales and prices across various city tiers [1][3][4]. Key Points and Arguments 1. **Decline in Property Sales**: - Property sales in July 2025 worsened, with primary sales volume in 65 cities down **21% year-on-year** compared to **24% in June**. Secondary sales in 33 cities decreased by **14% year-on-year**, worsening from **8% in June** [3]. - Year-to-date growth for primary sales is now at **-10% year-on-year**, while secondary sales show a growth of **+9% year-on-year** for the first seven months of 2025 [3]. 2. **Falling Housing Prices**: - Primary home prices in 70 cities dropped **3.4% year-on-year** and **0.3% month-on-month**. Secondary home prices fell **5.9% year-on-year** and **0.5% month-on-month** [4]. - In top-10 cities, secondary prices decreased by **5.1% year-on-year** and **0.6% month-on-month**, while in top-100 cities, the decline was **7.3% year-on-year** and **0.8% month-on-month** [4]. 3. **Increased Inventory Levels**: - Primary inventory months rose to **24.1x** in July, up from **23.8x** in June, indicating a significant increase in unsold properties across all city tiers [6]. - Tier 1 cities saw inventory levels increase to **14.5x**, tier 2 cities to **24.1x**, and tier 3 cities to **29.8x** [6]. 4. **Weakening Land Sales**: - Land sales in 300 cities decreased by **14.3% year-on-year** in gross floor area (GFA), although the value increased by **8.3% year-on-year** due to changes in city mix [7]. - The land auction failure rate rose to **8.5%**, up from **4.0% in June**, indicating a challenging environment for land sales [7]. 5. **Investment Recommendations**: - The analysis suggests a cautious approach, recommending investors to focus on quality state-owned enterprises (SOEs) with high visibility, such as **CR Land (1109.HK)** and **CR Mixc (1209.HK)**, as well as high-dividend-yield stocks like **C&D (1908.HK)** [2]. Additional Important Insights - The overall sentiment in the property market remains weak, with expectations that this trend will continue in the coming months due to high inventory and declining prices [1][2]. - The report emphasizes the importance of selecting investments carefully in a challenging market environment, highlighting the potential for alpha generation through quality SOEs [1][2]. This summary encapsulates the critical insights from the conference call regarding the current state and outlook of the China property market, providing a comprehensive overview for potential investors and stakeholders.

Summary of the Conference Call on China Property Market Industry Overview - The report focuses on the **China Property** market, specifically analyzing trends in property sales, prices, and inventory levels in the Asia Pacific region [1][9]. Key Points and Arguments 1. **Decline in Property Sales**: - Property sales in June experienced a significant drop, with primary sales volume in 65 cities decreasing by **23% year-on-year** compared to a **12% decline** in May. Secondary sales volume in 33 cities fell by **5% year-on-year**, reversing a **1% increase** in May [3]. - Year-to-date growth for primary sales is now at **-6% year-on-year**, while secondary sales show a **+11% year-on-year** increase for the first half of 2025 [3]. 2. **Falling Housing Prices**: - Primary home prices in 70 cities dropped by **3.7% year-on-year** and **0.3% month-on-month** in June, worsening from a **0.2% month-on-month** decline in May. Secondary home prices fell by **6.1% year-on-year** and **0.6% month-on-month** [4]. - In top-10 cities, secondary prices decreased by **5.3% year-on-year** and **0.6% month-on-month**, while in top-100 cities, the decline was **7.3% year-on-year** and **0.7% month-on-month** [4]. 3. **Increased Inventory Levels**: - Primary inventory months rose to **23.8x** in May, with tier 1 cities at **14.3x**, tier 2 cities at **24.0x**, and tier 3 cities at **29.0x** [6]. 4. **Land Sales Trends**: - Land sales in 300 cities showed a **4.4% year-on-year** decline in gross floor area (GFA) but a **36.9% year-on-year** increase in value, primarily due to changes in city mix. The year-to-date decline in land sales is now **-5.0% year-on-year** in GFA [7]. 5. **Market Sentiment and Future Outlook**: - The weakened resident sentiment and reactive policy measures are expected to exert additional pressure on home prices in the third quarter of 2025. The report suggests maintaining a defensive and selective investment approach, focusing on quality state-owned enterprises (SOEs) with high visibility, such as CR Land [1][2]. Additional Important Insights - **Client Engagement**: Client visits increased by **14% year-on-year** but decreased by **5% month-on-month** [5]. - **Secondary Listing Trends**: Secondary listing prices fell by **8.2% year-on-year** and **0.9% month-on-month**, while new secondary listings remained stable with a **-1% month-on-month** change and a **+13% year-on-year** increase [5]. - **Investment Recommendations**: The report highlights CR Land (1109.HK) and CR Mixc (1209.HK) as consumption beneficiaries, and C&D (1908.HK) and Greentown Management (9979.HK) as high-dividend-yield plays [2]. This summary encapsulates the critical insights from the conference call regarding the current state and future outlook of the China property market, emphasizing the ongoing challenges and strategic recommendations for investors.

Investment Rating - Industry view is rated as In-Line [9] Core Insights - Property sales and home prices are expected to continue declining in the third quarter due to high secondary inventory and weakening resident sentiment [1] - Quality state-owned enterprises (SOEs) with good visibility are recommended for investment, with CR Land identified as a top pick [1][2] Monthly Property Sales - Home sales in 65 cities saw a year-on-year decrease of 11% in primary sales volume and a 5% decrease in secondary sales volume [3] - Year-to-date growth for primary sales is now at 0.1% and 13% for secondary sales as of May 2025 [3] Property Prices - Primary home prices in 70 cities dropped by 4.1% year-on-year and 0.2% month-on-month, while secondary home prices fell by 6.3% year-on-year and 0.5% month-on-month [4] - In top-10 cities, secondary prices decreased by 5.4% year-on-year, and in top-100 cities, they fell by 7.2% year-on-year [4] Secondary Market - Listing volume for secondary properties increased, with new listings up by 6% year-on-year but down 11% month-on-month [5] - Client visits to properties increased by 20% year-on-year and 3% month-on-month [5] Inventory - Primary inventory levels in tracked cities remained stable at 23.4 months, with tier 1 cities decreasing slightly to 14.2 months [6] Land Market - Land sales in 300 cities decreased by 13.8% year-on-year in gross floor area (GFA) but increased by 17.8% in value [7] - The year-to-date decline in land sales is now at 6.4% in GFA [7]

Investment Rating - Industry view is rated as In-Line [9] Core Insights - Property sales and home prices are expected to continue declining in the third quarter due to high secondary inventory and weakening resident sentiment [1][2] - Quality state-owned enterprises (SOEs) with high visibility are recommended for investment, with CR Land identified as a top pick [1][2] Monthly Property Sales - Home sales weakened further, with primary sales volume in 65 cities down 11% year-on-year and secondary sales volume in 33 cities down 5% year-on-year [3] - Year-to-date growth for primary sales is now at +0.1% year-on-year, while secondary sales are at +13% year-on-year for the first five months of 2025 [3] Property Prices - Housing prices are declining at an accelerated rate, with primary home prices in 70 cities dropping 4.1% year-on-year and secondary home prices down 6.3% year-on-year [4] - The decline in secondary prices for the top 10 cities is 5.4% year-on-year, while for the top 100 cities, it is 7.2% year-on-year [4] Secondary Market - Listing volume continues to increase, with secondary listing prices down 8.1% year-on-year [5] - New secondary listings increased by 6% year-on-year but decreased by 11% month-on-month due to seasonality [5] Inventory - Primary inventory levels in tracked cities remained stable at 23.4 months, with tier 1 cities decreasing slightly to 14.2 months [6] Land Market - Land sales in 300 cities decreased by 13.8% year-on-year in gross floor area, while the value increased by 17.8% year-on-year [7] - The year-to-date land sales decline in gross floor area is now at -6.4% year-on-year [7]

Summary of the Conference Call Industry Overview - **Industry**: Real Estate in Mainland China and Hong Kong - **Key Focus**: Property sales trends, market indicators, and investment opportunities Mainland China Insights - **Sales Performance**: - 60-city primary sales registrations down 18% year-over-year (Y/Y) but showed a 17% week-over-week (W/W) increase due to month-end effects [4][6] - Compared to the 4-year average, sales improved from -71% to -60%, still weaker than the average decline of 45-55% in Q1 2025 [4][6] - **Leading Indicators**: - Centaline tier-1 cities' secondary asking price index slightly improved from 21.3 to 21.9, remaining near a 6-month low [4][6] - Centaline manager confidence index dropped from 51.0 to 50.6 [4][6] - Property agency web traffic index decreased by 26% Y/Y and 3% W/W [4][6] - **Market Sentiment**: - The sector experienced a 3% drop last week, underperforming the Hang Seng Index (HSI) which rose by 3% [4][6] - Suggested strategy: "the worse, the better," indicating potential tactical opportunities [4][6] Hong Kong Market Update - **Sales Performance**: - The first batch of Sierra Sea (318 units) sold out completely at launch, attributed to low lump sum and attractive pricing [4][6] - Secondary transactions in top 35 estates rose by 4% W/W [4][6] - Secondary home prices increased marginally by 0.01% W/W [4][6] - **Market Trends**: - HK Property rose by 4% last week, slightly outperforming the HSI [4][6] - Outperformers included Champion REIT and HK Land, both up 14% due to strategic disposals and buyback programs [4][6] - Caution advised on NWD and Wharf REIC, while preference is given to high dividend certainty names like Swire Prop and Link REIT [4][6] Investment Recommendations - **Buy on Dips**: - Focus on quality state-owned enterprises (SOEs) such as CR Land and CR Mixc, and companies with turnaround stories like Longfor and Jinmao [4][6] - **Price Adjustments**: - Expectation of a 5% correction in home prices in 2025 due to anticipated market weaknesses [4][6] Additional Insights - **Sales Data**: - Detailed sales data by tier and region indicates varying performance across different city tiers, with tier-1 cities showing more resilience compared to tier-3/4 cities [4][6] - **Future Launches**: - Upcoming projects and their expected sell-through rates are critical for gauging market recovery and investor sentiment [4][6] This summary encapsulates the key points from the conference call, highlighting the current state of the real estate market in Mainland China and Hong Kong, along with strategic investment insights.

Summary of the Conference Call on Hong Kong and Mainland China Real Estate Industry Overview - **Industry**: Real Estate in Hong Kong and Mainland China - **Date**: 28 February 2025 Key Points and Arguments Hong Kong Real Estate 1. **New World Development**: Released a new price list for 41 units in State Pavilia, priced between HKD 7.8 million to HKD 14.3 million per unit, translating to HKD 21,807 to HKD 32,333 per square foot after discount [5] 2. **Centa-Valuation Index (CVI)**: Declined by 4.37 percentage points week-over-week to 36.89 points, indicating potential downward pressure on property prices if it does not recover above 40 points [6] 3. **Coasto Project**: Wang On Properties reported 1,100 indications of interest for 60 units, resulting in a 17x oversubscription, with unit prices ranging from HKD 3.8 million to HKD 7.2 million [7] 4. **Sun Hung Kai Properties**: Noted signs of business improvement in the first half of the year, including faster property sales and landbank replenishment, suggesting the end of the earnings decline cycle [4] Mainland China Real Estate 1. **Land Sales in Shanghai**: The city plans to sell 13 sites with a total reserve price of RMB 11.3 billion, with significant sites in Minhang and Qingpu districts [8] 2. **CR Land Acquisition**: Acquired a plot in Beijing's Shunyi District for RMB 6 billion, with a plot ratio of 1.0 and an average value of approximately RMB 35,000 per square meter [9] 3. **Logan Group**: Over 80.8% of offshore creditors approved a debt restructuring plan, indicating progress in financial recovery [10] Market Valuation and Performance 1. **Valuation Summary**: Various Hong Kong property developers have target prices significantly above current market prices, indicating potential upside. For example, CK Asset has a target price of HKD 44.60 compared to a current price of HKD 33.90 [12] 2. **Share Price Performance**: The report includes a detailed performance analysis of various companies, showing a mixed performance over different time frames, with some companies like New World Development experiencing significant declines [21] Additional Insights 1. **Rental Pipelines**: Solid rental pipelines are expected to provide visibility on dividend outlooks for companies like Sun Hung Kai Properties [4] 2. **Market Trends**: The report highlights a cumulative decline in the CVI over the past three weeks, suggesting a cautious outlook for property prices in the near term [6] Conclusion The conference call provided a comprehensive overview of the current state of the real estate market in Hong Kong and Mainland China, highlighting both challenges and opportunities. Key players are showing signs of recovery, but market indicators suggest caution moving forward.