2025-08-07 09:45Financial Data and Key Metrics Changes - The company reported an underlying profit of HKD 4.4 billion, an increase of 15% year on year, primarily driven by capital recycling of non-core assets in Miami [4] - Recurring underlying profit decreased by 4% to HKD 3.4 billion, largely due to softness in the Hong Kong office market, offset by resilient rental income from the retail portfolio and contributions from the Chinese Mainland [5][18] - The interim dividend per share was declared at HKD 0.35, a 3% increase from the previous year, marking nine consecutive years of sustainable dividend growth [5][21] - The valuation of the investment properties portfolio stood at HKD 169.4 billion, reflecting a 1% decrease from December 2024, primarily due to fair value losses from office properties in Hong Kong and the Chinese Mainland [22] Business Line Data and Key Metrics Changes - The Hong Kong office sector experienced a 5% decline in attributable gross rental income, with overall occupancy at 91% across the office portfolio [10][19] - The retail portfolio in Hong Kong maintained 100% occupancy, with a slight 2% decrease in attributable gross rental income year on year [11][20] - In the Chinese Mainland, retail rental income increased by 1% in renminbi terms, with a steady CAGR of 11% over the past decade [12][20] - The hotel portfolio showed steady performance, with occupancy and rates improving in the Chinese Mainland [17] Market Data and Key Metrics Changes - The office market in Hong Kong remains challenging due to oversupply, but there are signs of a capital markets-led recovery [9] - Retail sales in the Chinese Mainland grew by 1% year on year, significantly ahead of 2019 levels, with high occupancy rates across the portfolio [14] - The company anticipates a stabilization in the retail market in the Chinese Mainland as consumer sentiment improves [33] Company Strategy and Development Direction - The company is committed to a HKD 100 billion investment plan, with 67% already committed, focusing on retail-led mixed-use projects in Tier one and emerging Tier one cities in the Chinese Mainland [8] - The strategy includes active capital recycling and continuous investment in core markets to deliver sustainable dividend growth [32] - The company aims to maintain a balanced portfolio with a focus on premium residential projects in Hong Kong, Shanghai, and Southeast Asia [9][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience despite the challenging operating environment, supported by a strong balance sheet and quality properties [32] - The outlook for the Hong Kong office sector remains subdued, but there is an increase in inquiries, particularly at Pacific Place [34] - The residential market sentiment in Hong Kong is gradually improving, supported by policy measures [34] Other Important Information - The company has made significant progress in sustainability, achieving top rankings in global sustainability indices and committing to net zero emissions by 2050 [27][28] - The company has a robust liquidity position, with cash on hand increasing to RMB 24.3 billion and a stable gearing ratio of 15.7% [25][24] Q&A Session Summary Question: Future capital recycling plans - Management confirmed ongoing efforts in capital recycling, including the divestment of non-core assets in Hong Kong and Miami [41][42] Question: Share buyback program considerations - Management emphasized that share buybacks are part of a broader capital allocation strategy, prioritizing sustainable dividend growth [43][44] Question: Investment plan and project completions - Management indicated a focus on execution quality for the HKD 100 billion investment plan, with potential for accelerated acquisitions if opportunities arise [49][50] Question: Tenant sales performance in Mainland China - Management noted strong retail sales performance in the Chinese Mainland, attributing it to effective management and continuous upgrades to shopping malls [54] Question: Office inquiries and cap rates - Management reported a 30% increase in inquiries, with interest from various sectors, and explained the rationale behind the reduction in cap rates for certain office properties [60][63] Question: Asset held for disposal and Miami redevelopment - Management clarified that the asset held for disposal relates to the 40 Third Floor of 1 Island East, and they are evaluating options for the Mandarin Oriental site in Miami [67][68]