Lenovo Group (SEHK:00992) Q3 2026 Earnings call February 12, 2026 02:00 AM ET Speaker2Good morning, good afternoon, and good evening. Welcome to Lenovo's Earnings Investor Webcast. This is Lisa Yuan, Director of Investor Relations at Lenovo. Thanks everyone for joining us. Before we start, let me introduce our management team joining the call today. Yuanqing Yang, Lenovo's Chairman and CEO. Winston Cheng, Group CFO. Luca Rossi, President of Intelligent Devices Group. Ashley Gorakhpurwalla, President of Infr ...

Financial Data and Key Metrics Changes - In the full year 2025, total volumes decreased by 6% and net revenue declined by 6.1% [6][12] - Normalized EBITDA decreased by 9.8%, with a normalized EBITDA margin contraction of 113 basis points [6] - In Q4 2025, total volumes decreased by 0.7%, with revenue and revenue per hectoliter decreasing by 4.2% and 3.5%, respectively [6] Business Line Data and Key Metrics Changes - In APAC West, volumes decreased by 6.7%, with revenue and revenue per hectoliter decreasing by 8.2% and 1.5%, respectively [7] - In China, volumes decreased by 3.9% in Q4, with revenue per hectoliter decreasing by 7.7%, resulting in an 11.4% revenue decline [7] - In India, strong double-digit revenue growth was delivered, with the Premium and Super Premium portfolio representing over two-thirds of total revenue [10] Market Data and Key Metrics Changes - In APAC East, volumes decreased by 1.3%, while revenue and revenue per hectoliter increased by 1.3% and 2.5%, respectively [10] - In South Korea, volumes decreased by low single digits, but revenue remained flat due to ongoing revenue management initiatives [11] Company Strategy and Development Direction - The company is focusing on enhancing in-home go-to-market strategies, enriching its portfolio, and innovating behind mega brands to rebuild momentum and reignite growth [4] - Strategic priorities for 2026 include increasing commercial investments in China to prioritize top-line growth over profitability [31] Management's Comments on Operating Environment and Future Outlook - Management noted that the performance in China was below potential, but there are signs of stabilization in the industry [4][15] - The company is optimistic about the upcoming World Cup as a potential boost for industry demand [28] Other Important Information - The company maintained a strong balance sheet with a net cash position above $2.8 billion and recommended a dividend of $750 million for 2025 [12] - The company is actively managing inventory levels, which are lower than the previous year, to ensure a healthy route to market [65] Q&A Session Questions and Answers Question: What are the latest demand trends in China? - Management indicated that the industry shows signs of stabilization, but on-trade recovery has not yet been significant [15] Question: Will the shareholder reward policy be reviewed with a new CEO? - Management confirmed that the rigorous review process for dividends will remain intact, and it is too early to discuss changes to the policy [20] Question: What will be done differently in 2026 to turn around the business in China? - The focus will be on reigniting growth and rebuilding volume momentum, with significant emphasis on commercial investments [25][31] Question: How is the company managing inventory levels in China? - The company has proactively adjusted inventory levels, which are now lower than the previous year, ensuring a better position going into the Chinese New Year [65] Question: What is the pricing trend in China for 2026? - The company aims to maintain pricing discipline while investing to lead and grow the category, with a favorable brand mix contributing to revenue [72]

Financial Data and Key Metrics Changes - In the full year 2025, total volumes decreased by 6% and net revenue declined by 6.1% [6][12] - Normalized EBITDA decreased by 9.8% with a margin contraction of 113 basis points [6] - In Q4 2025, total volumes decreased by 0.7%, with revenue and revenue per hectoliter decreasing by 4.2% and 3.5% respectively [6] Business Line Data and Key Metrics Changes - In APAC West, volumes decreased by 6.7%, with revenue and revenue per hectoliter decreasing by 8.2% and 1.5% respectively [7] - In China, volumes decreased by 3.9% in Q4, with revenue per hectoliter down by 7.7%, leading to an 11.4% revenue decline [7] - In India, strong double-digit revenue growth was achieved, with the Premium and Super Premium portfolio representing over two-thirds of total revenue [10] Market Data and Key Metrics Changes - In APAC East, volumes decreased by 1.3%, while revenue and revenue per hectoliter increased by 1.3% and 2.5% respectively [10] - In South Korea, volumes decreased by low single digits, but revenue remained flat due to ongoing revenue management initiatives [11] Company Strategy and Development Direction - The company aims to enhance its in-home go-to-market strategy, enrich its portfolio, and innovate behind its mega brands to reignite growth [4] - Focus on expanding market share in India and South Korea while addressing challenges in China [4] - The company plans to increase commercial investments in China to prioritize top-line growth over profitability in 2026 [32] Management's Comments on Operating Environment and Future Outlook - Management noted that the performance in China was below potential, but there are signs of stabilization and initial improvement in Q4 2025 [15][17] - The company is optimistic about leveraging the World Cup as a platform for growth in 2026 [29] - Management emphasized the importance of maintaining a strong balance sheet and disciplined financial practices [12] Other Important Information - The company maintained a net cash position above $2.8 billion and recommended a dividend of $750 million for 2025, consistent with the previous year [12] - The company is focusing on premiumization and expanding its presence in the instant retail channel [39][40] Q&A Session Questions and Answers Question: What is the latest demand trend in China and any updates on Chinese New Year preparation? - Management indicated that the industry shows signs of stabilization, but on-trade demand recovery has not been significant yet [15][17] Question: Will the shareholder reward policy be reviewed with a new CEO? - Management confirmed that the rigorous review process for dividends will remain intact, and it is too early to discuss changes to the dividend policy [20] Question: What will be done differently in 2026 to turn around the business in China? - The priority remains to reignite growth and rebuild volume momentum, with a focus on enhancing execution in key channels [25][26] Question: How is the current level of channel inventory in China? - Management stated that inventory levels are lower than the previous year, and they expect to enter the Chinese New Year in a better position [66] Question: How will pricing trends look in China for 2026? - Management emphasized maintaining pricing discipline while continuing to invest in leading and growing the category [72]

Financial Data and Key Metrics Changes - In full year 2025, total volumes decreased by 6% and net revenue declined by 6.1% [5][6] - Normalized EBITDA decreased by 9.8% with a margin contraction of 113 basis points [5] - In Q4 2025, total volumes decreased by 0.7%, with revenue declining by 4.2% and revenue per hectoliter down by 3.5% [5][6] - Normalized EBITDA for Q4 decreased by 24.7%, with a margin contraction of 425 basis points [5] Business Line Data and Key Metrics Changes - In APAC West, volumes decreased by 6.7%, with revenue and revenue per hectoliter down by 8.2% and 1.5% respectively [6] - In China, Q4 volumes decreased by 3.9% and revenue per hectoliter decreased by 7.7%, leading to an 11.4% revenue decline [7] - In India, strong double-digit revenue growth was achieved, with the Premium and Super Premium portfolio representing over two-thirds of total revenue [10] - In APAC East, volumes decreased by 1.3%, while revenue and revenue per hectoliter increased by 1.3% and 2.5% respectively [10] Market Data and Key Metrics Changes - In South Korea, volumes decreased by low single digits, but revenue remained flat due to ongoing revenue management initiatives [11] - The non-alcoholic beer and flavored beer segments are performing well in South Korea, indicating a shift in consumer preferences [58] Company Strategy and Development Direction - The company aims to enhance its in-home go-to-market strategy, enrich its portfolio, and innovate behind its mega brands to reignite growth [4] - Focus on expanding the in-home and O2O channels, with significant investments in marketing campaigns and innovations [8][9] - The company plans to prioritize top-line growth in China, potentially increasing commercial investments at the expense of short-term profitability [31][32] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that performance in China was below potential, but sees signs of stabilization and initial improvement in Q4 2025 [16][18] - The company is optimistic about the impact of the World Cup on industry demand and plans to leverage this event for brand activation [28] - Management emphasizes the importance of maintaining a strong balance sheet and disciplined financial practices, with a dividend recommendation of $750 million for 2025 [12] Other Important Information - The company continues to invest in its mega brands and has launched several innovative marketing initiatives, including collaborations with popular cultural events [11][12] - The net cash position at the end of 2025 was above $2.8 billion, reflecting a decrease of $39 million from the previous year [12] Q&A Session Summary Question: What is the latest demand trend in China and any updates on Chinese New Year preparations? - Management noted that the industry shows signs of stabilization, but on-trade demand recovery has not been significant yet [16][18] Question: Will the shareholder reward policy be reviewed with the new CEO? - Management confirmed that the rigorous review process for dividends will remain intact, and it is too early to discuss changes to the policy [20] Question: What will be done differently in 2026 to turn around the business in China? - The focus will be on reigniting growth and enhancing execution in key channels, with a strong emphasis on innovations and marketing campaigns [25][26] Question: How will the company manage inventory levels in China? - Management stated that inventory levels are lower than the previous year, and they will continue to manage inventories attentively [65] Question: What is the pricing trend expected in China for 2026? - The company aims to maintain pricing discipline while investing in brand growth, with a favorable brand mix contributing positively to revenue [70][71]

Financial Data and Key Metrics Changes - In Q4 2025, revenue was $2,489 million, up 4.5% sequentially; gross margin was 19.2%, down 2.8 percentage points sequentially; profit from operations was $299 million; EBITDA was $1,405 million with an EBITDA margin of 56.5%; profit attributable to the company was $173 million [7] - For the full year 2025, revenue was $9,327 million, up 16.2% year over year; gross margin was 21%, up 3 percentage points year over year; profit from operations was $1,110 million; EBITDA was $5,256 million with an EBITDA margin of 56.4%; profit attributable to the company was $685 million; capital expenditures were $8.1 billion [8] Business Line Data and Key Metrics Changes - In Q4 2025, wafer revenue increased by 1.5% sequentially, while other revenue surged by 64% sequentially, mainly due to bulk shipments of MAX [16] - The overall 12-inch wafer utilization rate was nearly fully loaded, while the 8-inch utilization rate exceeded 100% [16] - For 2025, wafer revenue from 12-inch and 8-inch accounted for 77% and 23% respectively, with both segments increasing by 17% and 18% year over year [18] Market Data and Key Metrics Changes - Revenue from Chinese customers increased by 18% year over year, while revenue from overseas customers rose by 9% year over year [18] - By application, wafer revenue percentages were 23% for smartphones, 15% for computers and tablets, 43% for consumer electronics, 8% for connectivity and IoT, and 11% for industrial and automotive [19] - Absolute wafer revenue from industrial and automotive increased by more than 60% year over year, while consumer electronics revenue grew by more than 30% year over year [19] Company Strategy and Development Direction - The company aims to leverage technological reserves and advantages in segmented markets such as BCD, analog, memory, MCU, and mid to high-end display drivers to drive revenue growth [23] - The company plans to maintain high levels of investment to seize local manufacturing opportunities, which has driven rapid revenue growth but also increased depreciation pressure on gross margins [27] - The company is focused on optimizing internal operations to maintain high utilization and improve cost efficiency [27] Management's Comments on Operating Environment and Future Outlook - The management noted that the semiconductor industry is shifting towards localization, with domestic fabless companies gaining market share [17] - For Q1 2026, revenue is expected to be flat sequentially, with gross margin projected to be in the range of 18% to 20% [11] - The company anticipates that revenue growth in 2026 will be higher than the industry average, with capital expenditures expected to remain roughly flat compared to 2025 [24] Other Important Information - The company had total assets of $52.3 billion at the end of 2025, with total cash on hand of $11.9 billion and total liabilities of $17.3 billion [9] - The net cash generated from operating activities in 2025 was $3,194 million, while net cash used in investing activities was $6,495 million [10] Q&A Session Summary Question: Insights on AI and supply chain challenges - Management discussed the impact of AI on memory chip demand and the resulting supply constraints affecting mid to low-end markets [31] Question: Capital expenditure plans for 2026 - Management confirmed that capital expenditures for 2026 are expected to be around $8 billion, with a focus on maintaining high capacity utilization [33]

Financial Data and Key Metrics Changes - In Q4 2025, the company's revenue was $2,489 million, representing a sequential increase of 4.5% [8] - For the full year 2025, revenue reached $9,327 million, up 16.2% year over year, with a gross margin of 21%, an increase of 3 percentage points year over year [9][19] - The profit from operations for Q4 2025 was $299 million, while EBITDA was $1,405 million with an EBITDA margin of 56.5% [8] - The company reported a profit attributable to the company of $173 million in Q4 2025 [8] - Total assets at the end of 2025 were $52.3 billion, with total cash on hand of $11.9 billion and total liabilities of $17.3 billion [10] Business Line Data and Key Metrics Changes - Wafer revenue in Q4 2025 increased by 1.5% sequentially, with overall wafer shipments and blended ASP slightly increasing [17] - Other revenue surged by 64% sequentially, primarily due to bulk shipments of MAX at the end of the year [17] - The company maintained a utilization rate of 95.7% for 12-inch wafers, with the overall 8-inch utilization rate exceeding 100% [17] Market Data and Key Metrics Changes - Revenue from Chinese customers increased by 18% year over year, while revenue from overseas customers rose by 9% year over year [19] - By application, wafer revenue percentages were 23% for smartphones, 15% for computers and tablets, 43% for consumer electronics, 8% for connectivity and IoT, and 11% for industrial and automotive [20] - The absolute wafer revenue from industrial and automotive increased by more than 60% year over year, driven by the reshuffling of the automotive supply chain [20] Company Strategy and Development Direction - The company is focusing on local manufacturing opportunities and has maintained high levels of investment to drive rapid revenue growth [28] - The strategy includes addressing urgent market demands and leveraging technological reserves in segmented markets such as BCD, analog, memory, and MCU [24] - The company aims to optimize internal operations to maintain high utilization and improve cost efficiency amidst rising depreciation pressures [28] Management's Comments on Operating Environment and Future Outlook - Management noted that the semiconductor industry is shifting towards localization, with domestic fabless companies gaining market share [18] - The company expects sustained incremental growth opportunities in 2026, despite challenges from the memory macro cycle affecting the foundry sector [23] - For Q1 2026, revenue is expected to be flat sequentially, with gross margin guidance in the range of 18% to 20% [12][25] Other Important Information - Capital expenditures for 2025 were $8.1 billion, higher than initially projected, driven by robust customer demand and changes in the external environment [22] - The company added around 50,000 12-inch capacity in 2025 and continues to expand capacity in 2026 [26] Q&A Session Summary Question: Insights on AI and supply chain bottlenecks - Management discussed the impact of AI on memory chip demand and the resulting supply constraints in mid to low-end markets [32] Question: Future capital expenditure plans - Management indicated that capital expenditures for 2026 are expected to be roughly flat compared to 2025, with ongoing investments to seize local manufacturing opportunities [34] Question: Utilization rates and production capacity - Management confirmed that the utilization rates remain high, with expectations for continued capacity expansion despite external challenges [35] Question: Market demand and pricing pressures - Management acknowledged the pressure from rising prices for memory chips and the potential decline in demand for end products as a result [24]

Financial Data and Key Metrics Changes - In Q4 2025, revenue was $2,489 million, up 4.5% sequentially; gross margin was 19.2%, down 2.8 percentage points sequentially; profit from operations was $299 million; EBITDA was $1,405 million, with an EBITDA margin of 56.5%; profit attributable to the company was $173 million [6][15] - For the full year 2025, revenue was $9,327 million, up 16.2% year over year; gross margin was 21%, up 3 percentage points year over year; profit from operations was $1,110 million; EBITDA was $5,256 million, with an EBITDA margin of 56.4%; profit attributable to the company was $685 million [8][18] Business Line Data and Key Metrics Changes - In Q4 2025, wafer revenue increased by 1.5% sequentially, while overall wafer shipments and blended ASP slightly increased; other revenue surged by 64% sequentially due to bulk shipments of MAX [15] - For 2025, wafer revenue from 12-inch and 8-inch accounted for 77% and 23% respectively, with both segments increasing by 17% and 18% year over year [18] Market Data and Key Metrics Changes - Revenue from Chinese customers increased by 18% year over year, while revenue from overseas customers rose by 9% year over year; revenue percentages from China, America, and Eurasia were 85%, 12%, and 3% respectively, remaining flat compared to the previous year [18] - The overall 8-inch utilization rate exceeded 100%, and the overall 12-inch was nearly fully loaded, reflecting strong demand and industry reshuffling [16] Company Strategy and Development Direction - The company is focusing on local manufacturing opportunities and maintaining high levels of investment to drive revenue growth, while also addressing high depreciation pressure on gross margins due to new fabs ramping up [21][23] - The company aims to leverage its technological reserves and advantages in segmented markets such as BCD, analog, memory, and MCU to navigate the current industry development cycle [21] Management Comments on Operating Environment and Future Outlook - Management noted that the semiconductor industry is experiencing a shift towards localization, with domestic fabless companies gaining market share; the company expects sustained incremental growth opportunities in 2026 [17][21] - The guidance for Q1 2026 indicates flat revenue sequentially, with gross margin expected to be in the range of 18% to 20% [11][22] Other Important Information - Capital expenditures for 2025 were $8.1 billion, driven by robust customer demand and changes in the external environment; monthly capacity reached 1,059,000 standard Logic 8-inch equivalent wafers by year-end [19] - The company’s total assets at the end of 2025 were $52.3 billion, with total cash on hand of $11.9 billion and total liabilities of $17.3 billion [9] Q&A Session Summary Question: What are the expectations for the AI and memory chip markets? - Management discussed the robust demand for memory chips driven by AI, which has created supply constraints in other application sectors, particularly affecting mid to low-end markets [21] Question: How is the company addressing the depreciation pressure on gross margins? - The company plans to focus on internal optimization to maintain high utilization and improve cost efficiency through operational enhancements [23] Question: What is the outlook for capital expenditures in 2026? - Capital expenditures are expected to be roughly flat compared to 2025, with continued capacity expansion planned [22]

Financial Data and Key Metrics Changes - Revenue from leasing decreased by 1% year-on-year, primarily due to the depreciation of the renminbi, while operating profit increased by 1% and underlying profit improved by 3% [9][10] - The net gearing ratio decreased to 32.7%, lower than the previous year, aided by a scrip dividend arrangement and reduced capital expenditures [30][66] Business Line Data and Key Metrics Changes - Mainland rental revenue remained flat year-on-year, with retail revenue up by 1% while office revenue faced headwinds, down by 8% overall [11][20] - In Hong Kong, rental revenue decreased by 2%, an improvement from a 4% decline in the first half of the year [10][24] - New letting increased by 15% and renewals by 5%, indicating effective tenant management [17] Market Data and Key Metrics Changes - The retail sector in Mainland China showed resilience, with a 3% increase in the second half of the year, while the office market continues to face challenges due to oversupply [11][20] - Hong Kong's retail market is stabilizing, with a notable improvement from a -9% to -2% decline in 2025 [23][24] Company Strategy and Development Direction - The company is focusing on its V3 strategy, which aims to expand with minimal capital expenditure and faster project execution, leveraging existing resources and relationships [4][7][36] - The company plans to enhance its presence in key cities like Shanghai, Hangzhou, Wuxi, and Kunming, aiming for increased market share and community engagement [5][36] Management's Comments on Operating Environment and Future Outlook - Management noted a mix of structural and cyclical corrections in the Hong Kong and Mainland markets, with cautious optimism for recovery in retail sales, particularly in non-luxury segments [8][56] - The company anticipates continued challenges in the office market for the next 18-24 months due to high supply levels [21][22] Other Important Information - The company achieved record-high footfall and sales in Q4, driven by effective tenant management and promotional events [18][19] - The company is preparing for its 66th anniversary with a focus on consumer engagement and experiential marketing [55] Q&A Session Summary Question: CEO's succession and qualities sought in a new CEO - The current CEO expressed a personal goal to retire at 55, emphasizing the importance of family time and confirming that the board has been informed well in advance [45][47] - The company is actively searching for a successor, with no specific timeline announced yet [46][52] Question: Outlook for Mainland China retail and tenant sales - Management remains cautiously optimistic about tenant sales growth, noting strong performance in non-luxury segments and a record-breaking Q4 [53][56] - January sales figures are expected to be comparable to last year, with the Chinese New Year falling later this year, which may positively impact sales [59]

Financial Data and Key Metrics Changes - The leasing revenue decreased by 1% year-on-year, primarily due to the depreciation of the renminbi, while operating profit increased by 1% and underlying profit improved by 3% [8][9] - The net gearing ratio decreased to 32.7%, lower than the previous year, aided by a scrip dividend arrangement and reduced capital expenditures [29][66] - Overall finance costs declined by 8% due to lower borrowing costs, while net finance costs increased by 3% due to a lower capitalization ratio [30] Business Line Data and Key Metrics Changes - Mainland rental revenue remained flat year-on-year, with retail revenue up by 1% and office revenue facing headwinds, down by 8% [9][19] - In Hong Kong, retail revenue decreased by 2%, but the company managed to mitigate a larger decline from 4% in the first half [9][24] - New letting increased by 15% and renewals by 5%, indicating active management efforts [14] Market Data and Key Metrics Changes - The company reported a record high footfall and occupancy rates, with significant growth in non-luxury segments, particularly in F&B and experiential offerings [16][54] - The mainland office market is expected to face challenges for another 18 to 24 months due to high supply and tenant bargaining power [20][22] - Hong Kong's retail landscape is seen as more structural, with a slower recovery expected compared to the cyclical nature of mainland retail [62] Company Strategy and Development Direction - The company introduced its V.3 strategy, focusing on faster project execution with minimal capital expenditure, leveraging existing resources and relationships [3][5] - The strategy aims to enhance market share in key cities like Shanghai, Hangzhou, Wuxi, and Kunming, with a focus on community and physical footprint [5][36] - The company plans to continue its emphasis on both luxury and non-luxury segments, adapting to changing consumer behaviors [59][60] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing corrections in both Hong Kong and mainland markets, with a cautious outlook for luxury retail but optimism for non-luxury segments [6][53] - The company expects to stabilize its performance in 2026, with a focus on enhancing customer engagement and capturing growth opportunities [55][61] - The management remains cautious about the luxury market's recovery, despite a strong fourth quarter performance [54][55] Other Important Information - The company plans to celebrate its 66th anniversary with increased consumer-focused marketing efforts [17] - The CapEx guidance for 2026 is around HKD 3.1 billion, decreasing in subsequent years as the company moves past its peak CapEx cycle [63][65] Q&A Session Summary Question: CEO succession plans and qualities sought in a new CEO - The outgoing CEO expressed a personal goal to retire at 55, emphasizing family time and the board was informed a year in advance about his decision [43][45][46] - The chairman indicated that the search for a new CEO is ongoing, with no specific timeline announced yet [51] Question: Outlook for Mainland China retail and tenant sales - Management remains cautiously optimistic about tenant sales growth, with a strong performance in non-luxury segments noted [44][52] - January sales figures are expected to be comparable to last year, with the timing of Chinese New Year impacting results [58] Question: Performance of Wuhan and Shenyang malls post-repositioning - The company is monitoring the repositioning process in these markets, with expectations for stabilization in performance by 2026 or 2027 [72]

Financial Data and Key Metrics Changes - Revenue from core leasing business decreased by 1% due to depreciation of the renminbi, while operating profit increased by 1% and underlying profit improved by 3% compared to 2024 [8][9] - Overall proceeds from properties reached HKD 1.6 billion, the highest in the last eight years, with HKD 264 million booked in revenue [24][25] - Net gearing ratio decreased to 32.7%, lower than the previous year, aided by a scrip dividend arrangement and reduced CapEx [31][67] Business Line Data and Key Metrics Changes - Mainland rental revenue remained flat year-on-year, with retail revenue up by 1% and office revenue facing headwinds, down by 8% [10][19] - In Hong Kong, overall revenue decreased by 2%, with retail impacted by a single tenant's lease expiration [22][23] - New letting increased by 15% and renewal increased by 5%, indicating effective tenant management [15] Market Data and Key Metrics Changes - The mainland office market is expected to face challenges for another 18-24 months due to high supply and tenant bargaining power [20][21] - Hong Kong retail is seen as more structural, with a slower recovery expected compared to the cyclical nature of mainland retail [64][66] - Footfall and occupancy rates reached record highs, particularly in Q4, indicating a positive trend despite overall cautious outlook [57][59] Company Strategy and Development Direction - The company is focusing on its V3 strategy, which aims to expand with minimal capital expenditure and faster project execution [4][6] - Emphasis on enhancing existing properties and leveraging established teams and relationships to increase market share in key cities like Shanghai, Hangzhou, Wuxi, and Kunming [5][6] - The company plans to continue diversifying its retail offerings, focusing on non-luxury segments to capture growth opportunities [57][62] Management's Comments on Operating Environment and Future Outlook - Management acknowledges ongoing corrections in both Hong Kong and mainland markets, with a mix of structural and cyclical shifts [7] - There is cautious optimism for 2026, with expectations for tenant sales to improve, particularly in non-luxury segments [47][55] - The company is preparing for potential foreign investment returns to China, which could positively impact the market [22] Other Important Information - The company is committed to sustainability, achieving its 25/25 ESG goals and aiming for net-zero emissions by 2030 [35][36] - The company is planning significant expansions in key locations, with a projected RMB 1 billion investment for V3 projects [38][39] Q&A Session Summary Question: CEO succession plans and qualities sought in a new CEO - The current CEO plans to retire at 55, emphasizing personal goals and family time, with the board already informed a year in advance [48][50] - The board is actively seeking a successor, with no specific timeline announced yet [54] Question: Outlook for Mainland China retail in 2026 - Management remains cautiously optimistic, noting strong Q4 performance but still cautious about luxury brand recovery [55][56] - January sales are expected to be stable, with potential for good performance due to the timing of Chinese New Year [61] Question: Leasing strategy for 2026 and performance stabilization in Wuhan and Shenyang - The company plans to continue adding experiential, non-luxury spaces while monitoring luxury performance [76] - Stabilization in underperforming markets is anticipated by 2026 or 2027, with ongoing repositioning efforts [76] Question: Dividend considerations with lower gearing and CapEx - Future dividend increases will depend on earnings recovery, with no specific scenarios outlined yet [76]