Financial Data and Key Metrics Changes - The core rental business revenue decreased by 3%, which was anticipated at the beginning of the year [7][9] - Mainland China rental revenue in renminbi terms decreased by 1%, but due to renminbi depreciation, it fell by 2% in Hong Kong dollars [9][10] - Overall, the company declared the same dividend for both Hang Lung Properties and Hang Lung Group [9] Business Line Data and Key Metrics Changes - The hotel and sales business accounted for 33% of total revenue, down by 6% [9] - Retail business revenue remained flat compared to a 3% decline in 2024, with base rent increases offsetting sales rent drops [12][13] - New letting increased by 36%, with first-in-town brands up by 57% compared to 2024 [18][20] Market Data and Key Metrics Changes - Hong Kong rental revenue decreased by 4%, while residential and service apartment rentals improved by 11% [33] - The office segment saw a decline from -6% to -5%, with significant pressure in Shanghai due to high supply [29][30] - The overall sales in Hong Kong were down by only 2%, compared to the market's 4% decline [33] Company Strategy and Development Direction - The company is focusing on enhancing customer experience and differentiating its offerings in a changing retail landscape [17][20] - Plans to launch a national program to improve efficiency and attract foot traffic in second-tier cities [17] - The company aims to maintain a cautious but optimistic outlook for the second half of the year, hoping for stability and potential growth [6][62] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the stability of the market and potential for growth in the second half of the year [6][62] - The company noted that external factors, such as improved stock market sentiment, contributed to better performance in the second quarter [67] - Management acknowledged the challenges in the office segment but emphasized the retention of quality tenants [30][32] Other Important Information - The company is at the peak of its CapEx cycle, with expectations for a decline in capital expenditures moving forward [36] - The net gearing ratio stood at 33.5%, with a slight increase of 0.1% compared to December [36] - The company is committed to sustainability, with 80% of projects in Mainland China powered by renewable energy [40] Q&A Session Summary Question: Future hybrid property models for retail expansion - Management indicated that hybrid models would be considered only when there is demand and synergy with existing projects [60] Question: Tenant sales trends in the next twelve months - Management anticipates a potential improvement from negative sales to mild growth in the second half of the year [62] Question: Improvement in second quarter despite trade war concerns - Management attributed the improvement to occupancy and traffic increases, as well as external factors stabilizing the market [67] Question: Dividend policy and potential return to cash dividends - Management stated that a return to cash dividends is possible after the Westlake 66 Mall opens, but it will depend on board discussions [83] Question: Rationale behind declassifying luxury and non-luxury tenants - Management explained the decision to avoid binary classifications to better reflect customer behavior and contributions from various tenant categories [85][88] Question: Drivers for tenants willing to pay higher base rent - Management noted that positive reversion is seen in seven out of ten malls, with the potential for improved sales driving higher base rents [92]
HANG LUNG PPT(00101) - 2025 H1 - Earnings Call Transcript