Far East Consortium International Limited (35) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to Far East Consortium International Limited 2025-'26 Interim Results Investor Presentation. Before we officially begin, on behalf of our company, I would like to express our deepest condolence to the victims of the fire incident happened this Wednesday. We are profoundly saddened by the loss of lives and the injuries suffered. Our thoughts are with the victims, their families and everyone affected. At this moment, may I invite everyone to please rise and observe a moment of silence in memory of the victims. Thank you. Please be seated. Now we will proceed with today's presentation. Let me introduce the management with us today. They are Ms. Wendy Chiu, Executive Director and Joint Managing Director; Mr. Boswell Cheung, Chief Financial Officer and Company Secretary; and Ms. Winnie Chiu, Executive Director and Joint Managing Director, will be joining us later. Now may I invite Mr. Cheung to start the presentation. Mr. Cheung, please.

Thank you. Ladies and gentlemen, we have announced our interim results of the financial year 2026 last night. And actually, you can go to our website. We posted the results in details in the website as well -- in our company website. So this morning, we have an interim result briefing section. On Page 5, let's highlight the key theme of the first half. Adjusted revenue reached HKD 4.9 billion. Cash profit -- adjusted cash profit, HKD 203 million. The major source of income, the major source of the revenue, property development, which is HKD 3.2 billion, mainly from the settlement of our -- some major projects in U.K., in Australia, the Victoria Riverside in Manchester, we have completed the Tower B and C and Bromley Street as well. And also, we have the sales of the inventory in Melbourne, West Side Place. This is the 4 tower, right? And also the Aspen at Consort Place in London. Also, we have the settlement from the property development sales of our JV projects, including Pavilia Forest in Hong Kong [Foreign Language]. And also the Dorsett Place Waterfront Subang in Malaysia and the Tower 4 of the Queen's Wharf Residences in Brisbane. Other than the settlement, which is -- we can -- you can see from our first half results, also, we have the presale. 640 Bourke Street in Melbourne was launched late March this year. So up to now, it's been like 10, 11 months since launch. We have sold out almost 40%. Total cumulative presale value and the unbooked contracted sales amounted to HKD 9.3 billion. Hotel, up about 10% to HKD 1 billion. I think the major contribution coming from the -- well, this hotel, Dorsett Kai Tak, which opened end of September last year. And in particular, since the opening of the Kai Tak Stadium next door, since March, I think the hotel occupancy room rate improved a lot as well. Hopefully, that will be continuing the growth and performance and reflected in the second half and so on as well. Dorsett Canary Wharf London and HubX Shanghai soft launched in September 2025. Honestly, well, this just opened in our first half, in particular, the HubX Shanghai, which is only opened on 29th of September, only 2, 3 days in the first half. Hopefully, on the second half and also in particular next year, there will be a full year impact and contributing to the cash flow as well. Car park down a bit 10% to HKD 343 million. Gaming, up about 11%, which is HKD 2,018 million (sic) [ HKD 218 million ] as well. That is the revenue. And the net loss attributable to the shareholder, HKD 988 million, although we have cash profit adjusted -- I mean, HKD 203 million. So meaning that there are some noncash adjustment, right, mainly coming from the impairment losses. For example, the HKD 193 million, which is actually on the -- one of our project, 100% owned project in Sai Ying Pun and also the impairment loss recognized for the PPE, which is HKD 88 million, which is in relation to a deposit for the -- for land acquisition, but back to maybe 20, 10, 15 years ago. So that is -- we have compromised -- I mean, we have discussed with the [indiscernible] and we have made the impairment loss this year. Share of the impairment loss by JV and also associate. I think, obviously, that is the -- one of the JV projects in Hong Kong, the Kai Tak, we have made HKD 530 million. So the difference, HKD 110 million is actually coming from the DBC, which is the entertainment resorts in Brisbane. Maybe we may talk about that in more detail later on. Reduction in the net debt improvement in the adjusted net gearing ratio. Well, like I said, we've got quite a few project completion, and we've got some noncore and core disposal. In fact, we have paid down quite a lot on the project loans as well as some unsecured loans as well. So at the end of -- I mean, end of September, the net gearing ratio is talking about 64.9%, down a bit low, about 2.6 -- 2.7 points compared with end of March, meaning that well, during this 6 months, we have achieved down a little bit 2.7 points. I think in the coming -- ongoing in the second half, hopefully, we have more project to complete, getting some cash flow on the core business and also some of them may be, hopefully, noncore disposals as well. Hopefully, the net gearing ratio will further down. Well, the continuously unlocking value. During the first half, we monetized mainly 2 transactions. It's about HKD 1 billion coming from sales of our Hong Kong mortgage book, which is talking about HKD 347 million. Disposal of the BC stake, well, that is another mortgage book, but in Australia and U.K., which is talking about almost HKD 700 million plus. So altogether, it's about HKD 1 billion. Also, we have entered into a nonbinding term sheet to dispose a certain interest of the Ritz-Carlton Perth, just now, I mean, 2 weeks ago, yes. So hopefully, we can -- I think when we come across more maturity stage, we may have some discussion or announcement on that. Hopefully, we can shift it. Also, we have entered into an agreement to dispose car park in Chatswood, London -- I mean, Sydney for like AUD 3.7 million only. In fact, in the past, I think, almost 24 months, Care Park has been doing a good job for selling quite some noncore car park assets in order to have a more like business model, right? And getting back some cash and reduce -- this is actually our objectives as well. Considering to unlock some hotel revaluation surplus, which is talking about HKD 18 billion. That one we have corporate exercise, we may proceed. But at the moment, we can't disclose any, but we have this idea. And hopefully, when the market comes, we may go further and have more disclosure. Restructuring of the investment in Queensland. I think that is when we have on 12 or 13 -- 12th of August this year, we have an announcement talking about the implementation deed for our -- one of our JV project, which is the Queen's Wharf Brisbane project [indiscernible] while we are holding 25%. Hopefully, when we have completed this transaction, we will increase our stake to 50%.

Sorry, regarding the Queen's Wharf Brisbane project, the completion is supposed to be on end of November, but we've just extended due to there's a lot of CPs requirements from the government, but we are very hopeful we will be finished by end of March at the moment.

So on next Page 7, these are some highlights. In fact, I have talked about that in the last 2 pages. One of the key points, I mean, from this page is the adjusted gross profit margin. We have 3.6 points increased, mainly from the sales of property. Also, well, the finance costs come down a little bit. For P&L disclosure, the finance cost is talking about HKD 373 million compared with last financial -- I mean, the interim period, down a bit 25%. I think most of the bank loan, we are actually with the Hong Kong dollar. So if you guys remember the HIBOR come down since March -- I mean, since May, then come back a little bit in August and September. In fact, it helped a lot on our finance cost saving as well. So hopefully, in the second half, when the U.S. rate come down, hopefully, right, Hong Kong will grow in line as well. So that will be a little bit help on our finance cost as well. On Page 8, that's just talking about the gross profit margin. Overall, 34.8% compared with last interim period, 31%, increased a little bit, about 3%, almost 10% in terms of the rate comparison. As you can see, well, the main driver or the contribution is actually from the property sales, property development, which is 31% compared with last year, almost 27%. I think that is a higher gross profit margin recorded from the sales of project -- sales of the properties in Australia and also U.K. U.K., in particular, the Manchester projects. When we talk about the net gearing ratio on Page 9, you may see we have reduced about HKD 1.2 billion debt, although we have some other impact from the impairment losses. The net gearing ratio come down to 64.9%. And if you -- well, we have a pro forma adjusted net gearing ratio before impairment, which is talking about 63%. Hopefully, we will have further improvement in the second half as well. Short-term debt. This page, a lot of commercial banks are very concerned about that. I think -- so that's why I, in particular, set up a separate page to talk about that in detail. Short-term debt, meaning, well, in the coming -- from end of March -- end of September point of view, in the coming 12 months, that will be mature. HKD 10 billion improved a little bit, about HKD 900 million compared with the end of March. Corporate hospitality and car park loans, which is talking about HKD 5.8 billion. In fact, I think most of them are actually in relation to hotel asset. I think the hotel asset, in particular, Hong Kong, Hong Kong is -- from a hotel division, Hong Kong is the main contribution from a cash flow, from a revenue perspective. In particular, if you're talking about the occupancy, the room rate, I think Hong Kong, the first half compared to last year, first half, it improved a lot. So we don't see any -- I think the banks support us very well. The refinancing, I think, is -- hopefully, it's a matter of procedure, right? The project development loans, we're just talking about [ HKD 780 million ]. I think this is talking about our projects, in particular for the presale -- I mean, from a presale perspective. I think most of our projects, when we come to end of the completion, end of the development program is actually, I can say, over 90% or even 100% presale already. I think we are focused on the mass market and focus on the CBD as well across Manchester, the whole Australia, Singapore, even Hong Kong is now -- looks like picking up and more stabilized as well. I think once we have completed all the projects, I mean, get the legal title exchange, get the sales proceeds, pay down the project loans, that is yes, how it works. So this one is -- the most important is when we will complete the project. I think that's [indiscernible]. Other corporate loans, that is most concerned by some banks. This is meaning that this is unsecured loan. In the -- as at end of September, we have HKD 2.7 billion outstanding as at end of September. I think over half of which has been dealing with the bank with the -- I mean, have been refinanced already. Another less than 50% actually, I mean, well, it's not coming to the maturity. So I would say, well, this 50%, we have been dealing with roll it over, refinance it because this maturity within the last 2 months, October and November. So this is a matter of the rollover. So I think, as long as we can prove to the bank cash flow, the business diversification, the risk and also there's good to sell model, sales of property and also our recurring business, I think that is our cash flow. And then I mean, the bank support us. In fact, more than 50% has been rolled over already. Terms -- I mean, the loans with partial repayment terms, this is the repayment schedule where we start the loan, we have a repayment schedule. And as the end of September, we have HKD 640 million on the repayment schedule within the coming 12 months. This is payment. This is expected. The other clause, data point is the liability with the repayment -- repayable on demand clauses. This is very academic. Even though we've got some loans 3 years, 5 years, but there is a clause saying that, well, this is on demand. So according to the accounting standard, we have to classify as a current liability. But in fact, I would say, so far, so many years in the past, at least 15, 20 years, we haven't seen any [indiscernible] because of this clause, right, the demand clause. So it's very academic. So that is how we are dealing with the short-term debts coming. Page 11. I think we have accelerated quite a few project completion of the property development, in particular, Victoria Riverside, like I said, just now, Tower B and C. In fact, this project consists of Tower A, B and C. B, C has been handed over since July. And actually end of September, all the bank loan of this project has been paid off. So meaning that the Tower A is actually unencumbered. And we're expecting the Tower A to be completed in the first half of next financial year. Hopefully, May, June, July, so that we can get back the sales proceed of Tower A. We are expecting the Tower A, like I said, this is 100% presold ready. The Tower A will have a cash flow of about HKD 1 billion. Also actively monetize some inventory, Mount Arcadia in Hong Kong, Aspen in London and West Side Place. I think we pick up the right city. Most of the cities that we have our property development and the sales are actually enjoying the population growth, the hard demand for the housing as well. So we monetized quite a lot in the first half as well. We spent a lot of effort on the monetize existing inventory. As at end of September, it's actually HKD 10 billion outstanding on the book -- I mean, on the book as at end of September, in which almost quartile, HKD 2.7 billion has been contracted. So hopefully, well, typically, when you contract it within 3 months -- 2 months, 3 months, that will be coming into our cash flow and then get the title, get the sales proceed. So HKD 2.7 billion should be coming into the second half as well. Divesting some noncore assets and business. Previously, well, in the last 2 pages, we talked about that as well. We cash out the Hong Kong portfolio -- Hong Kong mortgage portfolio, BC Invest and Chatswood Hotel -- I mean, Chatswood Car Park, which is a smaller one. And also, we have entered into a nonbinding contract with the -- I mean, to sell the certain interest in the Ritz-Carlton Perth as well. And also, we have the hotel portfolio for sustainable growth. Kai Tak just opened last year. And in particular, the benefit of the location, I think looking forward, this cash -- I mean, this is our flagship hotel in Hong Kong, Kai Tak, right? So it's a super star in our portfolio. Some hotels are actually opening. Dorsett Canary Wharf London soft opened in September. That is bringing up the revenue as well. Liquidity. Other than the liquidity level, which as at the end of September, HKD 3.7 billion. Also, we have some undrawn facility. For treasury, corporate use, construction purpose, added all together, it's talking about HKD 5.8 billion. We've got 5 hotels unencumbered totaling about HKD 1.3 billion. For the capital commitment, I think this is stated at [ HKD 938 billion ]. But from my point of view, it's actually less than that because some of them actually supported by banks and some of them actually, we are not in a rush. But yes, hopefully, I mean, the hotel portfolio actually coming into the final stage, we think once we -- I mean, the hotel rooms are big enough, so we may not consider to increase the hotel room as well. So that is the financial part. The remaining the -- I mean, the property development, may I pass to the Wendy.

Thank you, Boswell. Before I begin my presentation, I want to express my deepest condolences to the victims and their families. My father and I were in London when we first learned of this tragedy, and we are deeply saddened by this. We immediately reached out to the Hong Kong government to see what we could do to help and support. Hong Kong is our home and is close to our hearts. As a family together with FEC and Dorsett, we are committed to doing what we can to help and to stand alongside with the community. I will leave the details for Winnie later. Regarding property updates, in the face of market conditions, we continue to accelerate project completions to enable earlier revenue recognitions, optimize cash flow, strategically reduce debt levels and strengthen overall financial performance. We maintain a robust development pipeline of approximately HKD 62 billion, which will support sustainable growth over the next 6 to 8 years. We have actually successfully reduced our gearing ratio from the highest points of 74% down to 63% adjusted gearing ratio before impairment, which is roughly we have reduced HKD 8.3 billion within 2 years. This is a remarkable result with the whole company's teamwork. For interim period for property development revenue from HKD 3.2 billion versus HKD 3.6 billion last year -- half -- last interim period. Profit margin, however, has risen from 31.3% versus 26.8%, which Boswell has also explained due to Australia and also our Manchester project. For this interim period, adjusted property development revenue amounted to HKD 3.2 billion, mainly contributed by Tower B, C in our Manchester project, which is roughly HKD 750 million. Aspen in London, revenue around HKD 270 million and West Side Place Melbourne, revenue around HKD 672 million and Mount Arcadia in Hong Kong, roughly HKD 139 million. In addition, with our joint venture projects, including Pavilia Forest in Hong Kong, 50% revenue of roughly HKD 574 million; Dorsett Place Waterfront Subang in Malaysia, HKD 149 million; and Queen's Wharf Residences Tower 4 in Brisbane, 50% of the revenue, which equates to HKD 460 million. Sales momentum has been picking up in the recent months. As of 30th September 2025, we have secured approximately HKD 9.3 billion in presales and contracted sales, providing a strong visibility of our future revenue. Overall, Manchester is one of the strongest markets we have. We started sales price at around GBP 380 per square feet. And up to today, we are selling over GBP 580 per square feet, which is over 50% growth in the recent years. Victoria Riverside has been a key revenue contributor this half year, located in Red Bank, neighborhood of Victoria North. The project comprises of 3 towers and 38 townhouses. Tower B, C, together with townhouses completed in July 2025 with an expected GDV of about HKD 1.1 billion. Over 90% of units have been presold. Tower A with 275 units and expected GDV of HKD 1 billion is scheduled for completion in the first half year of 2027. Approximately 99% of these units are already presold. We have actually, like what Boswell said, already repaid all our construction loan. This HKD 1 billion is pure cash flow sending back to Hong Kong headquarters. In Manchester, we have sold out all other development inventories. With our track record of delivery of housing in Manchester, Manchester Government are very supportive of our schemes. We have recently received another HKD 900 million new [indiscernible] funding into our development. This will greatly benefit our existing customers and future schemes. Perth Hub, the first phase of Perth City Link was completed last financial year with all units fully settled this half year. Located next to the Perth Arena, it is a mixed-use development comprising of over 300 residential apartments with a total GDV of approximately HKD 816 million. This marks the first project successfully delivered by FEC Construction Australia. The Dorsett Perth also being delivered by FEC Construction is progressing well and is expected to be completed in FY 2027, further enhancing our presence in the city. In London, Aspen at Consort Place has been another key revenue contributor this half year located in the heart of Canary Wharf. It comprises of over 500 apartments with a total GDV of HKD 4.5 billion. Completion has commenced in phases with handover starting in May 2024. In the first half of FY 2026, approximately HKD 270 million was settled. As of 30 September 2025, remaining stocks stood at around HKD 2 billion, of which HKD 163 million has already been secured as contracted sales. Sales and settlement are expected to continue. With the shortage supply of housing in London and large corporations like HSBC deciding to stay in the Canary Wharf and new technology companies are also seen moving into Canary Wharf, we are hopeful this will boost Aspen sales in the near future. For Melbourne, we continue with our existing strategy by actively selling our completed inventory. West Side Place in Melbourne, Australia is another success story. It features a total GDV of approximately HKD 10 billion, over the last 2.5 years, despite market, we've outperformed and sold out 1,400 units, selling 10 units per week. As of today, we only have just over 30 apartments left to sell. This is a success story and a huge credit goes to the project and sales and marketing team. In Hong Kong, we continue to actively selling our completed inventory through targeted campaigns. Mount Arcadia located on Tai Po Road comprises of 62 apartments and 4 houses with a GDV of HKD 1.8 billion. We right now only have 11 units remaining and 4 houses. Pavilia Forest, it actually has been outperforming the whole Kai Tak strip. So really -- I mean, New World has been really trying to push this and really credit goes to the sales and marketing team. We launched the Pavilia Forest in Kai Tak, a 50% joint venture project with a total GDV of HKD 10.4 billion in July 2024. As of 30th September, we have already sold over 700 units with a GDV of over HKD 5 billion out of the 1,300 apartments. This testifies Hong Kong demand on residential apartments. The project was completed and began handover in September this year. In the first half FY 2026, total settlements amounted to over HKD 1.1 billion, of which approximately HKD 570 million attributed to our 50% stake. There's roughly HKD 4.6 billion remaining stocks, which are mostly on the upper floors with the panoramic view. In Brisbane, our joint venture project, Queen's Wharf Residences Tower 4 continued to contribute to adjusted revenue, total GDV of HKD 3 billion. We have totaled 667 units, and we only have 3 units left. Tower 5 were relaunched for sales in August 2025 at a further 15% uplift. As of 30 September, approximately 50% of these relaunched units were presold, reflecting resilient demand at higher price. Tower 5 had a successful relaunched with -- over 75% is presold and completing in end of 2028. For Melbourne, given the success of West Side Place, we have recently launched our mixed-use development project, 640 Bourke Street in February 2025. Located in the heart of CBD right adjacent to West Side Place and Upper West Side, the development will have 68 levels and comprises of over 600 apartment units with a total GDV of approximately HKD 4 billion. This is an ultra-luxury apartment development and is asking for one of the highest residential pricing in Melbourne. The project received a strong market response at launch, and we're able to achieve higher selling price, driving an uplift in overall average pricing and reinforcing the premium position of the development. Over 53% presold and reserved at HKD 17,000 per square meter, completion is expected in FY 2029. Overall, we remain cautiously optimistic that our strategic focus will continue to support sustainable growth and stability for FEC in the years ahead. We have approximately HKD 62 billion in our development pipeline. And by driving early project completion, we aim to contribute meaningfully to that reduction. Thank you very much for your time. We appreciate your continued support and look forward to sharing more to you. Now I would like to hand over to Winnie, would you want to -- for hotel operations.

Thank you. Good morning. Regarding the hotel performance, our total revenue is up 9.5%, making us from HKD 997 million to HKD 1 billion, yes, almost HKD 1 billion. So I think this is a big milestone for us to reach the HKD 1 billion mark. In terms of the occupancy, we have been trading up. Again, I think in terms of geographical location, there are definitely some stronger ones. And I do think that our strategy in kind of diversifying in different city makes a huge difference when times -- in tough times. So I think Malaysia has gone up quite a fair bit. Hong Kong is on a trend up, which is where we're very happy. I think that's kind of what I'd like to share. In terms of the room rate, the Dorsett Group has gone up about 5.2% with Palasino about 1.3%. And again, similarly, the RevPAR will have the same trend, bringing our RevPAR from HKD 542 to HKD 572. I won't go through the detailed kind of performance analysis. I'm sure a lot of our investors can refer themselves. Regarding the new hotel opening, we've also just partially opened Canary Wharf. With the ones -- the units that are open, our occupancy is around 70%. So it's not bad. So it's, of course, phase by phase because we want to get into service as soon as possible. I recently came back from Shanghai, and we've launched our first hostel project, HubX, and it's been very successful. This model actually brings down the cost a lot. If you look at the furniture, it's really very simple. And in terms of the construction, again, I can foresee that this brand, we can do a lot of turnaround. We see a lot of -- at the moment, of course, because the location is right opposite Shanghai University. So there are a lot of students booking, but this is really a youth hostel kind of brand. And again, it's a very fast turnaround. It's -- at the moment, the average stay is about 1.3 days. So that's -- and you can foresee, I think the number of staff, I would believe that this margin eventually will be higher than the 4 stars because you do need much less number of staff. In terms of the booking and all that, we're going all electronic, even the door lock and all that we will be using all electronic. And again, I do foresee that once the success of this brand, we will try to bring it to Hong Kong as well. Similarly to what we've done with Dao. Dao by Dorsett North London has also just opened. This is more service apartment. Our first one was in Singapore. And of course, with the success of Singapore, we also opened London, the first one, the Shepherd's Bush one and now with the North London. I think I spoke with several investors in the last 2 years, we've really tried to pivot into more asset-light model. And thankfully, the market has been quite receptive. In terms of operation, we are still streamlining because, of course, from an owner-operator model to going into an asset-light, it does take a little bit more buildup of basically your SOPs. But with the digitalization, in fact, I think it's much easier to be consistent. So we have had Dorsett Changi City at Singapore. And in fact, this hotel, our investors are so happy because we've bought up, I think in terms of the valuation, it's almost doubled. And at the time that we bought it until now, it's really about 2 years. And I think this -- by this way, we really do deliver, as always, value for investors. The model for some of you may not know, let me update. The model that we have actually used here is that we go in, as in Dorsett go in about 15% equity, majority will be TPG Angela Gordon as well as Atalia, a family office over there. And we basically went in and add value in the way of creating more rooms. So we've created almost 100 extra rooms. So as a lot of you, seasoned investors know, hotels are really valued by how much per key. So of course, there's an immediate effect of uplift once you create more rooms. Dorsett Agora Sakai is one of -- it's our first hotel as a Dorsett into Japan. It's very well received. In fact, the local government is so proud of our product. This year's marathon will be starting in our hotel of Osaka. So please feel free if any of our investors would like to join our marathon. So again, what we have deployed in this hotel, the Sakai is we really look at how to add value to the city because this is kind of a joint venture with the local government. So apart from building the hotel, really enhancing the area. So right next -- actually where our car park is, we bought in aquarium that has like 4 dolphins and there's kind of [indiscernible] in the same area. So really, we look at it as a total package, quite a lot of people go to Japan for a total package. But of course, I mean, given the current sentiment, my forecast for Christmas will be a bit -- definitely, I would feel that it will be less than expected. In terms of management contract, I'm happy to announce that we have now 2 -- the Dorsett Fiji is still going on, but we have signed as of last week into the second phase of Nanyang Technology University, managing their student accommodations as well as Dao, which is -- this Dao product will be in Johor Bahru. And in terms of the pipeline, we do have a Dorsett Perth and Dorsett Brisbane coming along. So in total, this will bring our room count March 31 to over 10,000 rooms. I think at that, I will leave it to -- we can talk more on the Q&A section. But at that, I will leave it to Boswell to carry on the car park.

Thank you. When you -- on Page 35, car park revenue decreased about 10% to HKD 343 million [indiscernible]. We just mentioned this in the first page. Adjusted gross profit margin decreased to 20%. I think the main reason is the holding cost -- the property holding cost due to the government regulation over the Victoria states in Australia. We continuously to phase out some underperforming car parks and divest some mature car parks to unlock the capital for the future investment and debt reduction. So like I said, in the last 24 months, we actually sold out quite a few bit on the noncore car park asset as well. Also, we have entered into agreement to dispose one of the car park in Chatswood, Sydney for AUD 3.7 million. Also the gaming part. This is the Palasino. Well, in terms of the revenue, it reached HKD 218 million, increased by 11%. The adjusted gross profit margin increased to 42%. I think the main -- well, due to the increased visitation following the Austria marketing campaign. Currently, while FEC holds about 72% of Palasino. And hopefully, also we are going to open another new Mikulov casino in Czech Republic. QWB, that is Queen's Wharf Brisbane project. This project was soft opened in end of August last year. Well up to now, it's been over a year. And we have opened the gaming floor, the mass gaming floor, the premium floor as well and also one hotel, Star Grand Hotel and also some of the retail, the F&B as well. On 12th August, we have entered into implementation deed with the 50% owner Star for the asset swap agreement. So we may talk about that later on.

I think just a few notes on this, Queen's Wharf Brisbane, we have just recently celebrated our anniversary, and we actually have calculated over 10 million people has actually went through our precinct. So we're very, very happy with this -- of this foot path. Going forward, of course, there's the Star Grand Hotel, which is over 300 rooms, and we are looking to adding 700 more with Dorsett and also Rosewood Brisbane. As Boswell, and I'm sure everyone is aware that we are actually in the midst of completing our transaction. And also, we are in the midst of looking at international operators, right? At the moment, there are quite a few very international operators at a very competitive price with a much lower management fee, but of course, with a huge awareness of brands as in Asia, right? So we are hopeful for this Brisbane project to fly in the very near future, especially given the Brisbane Olympics coming up. And also, of course, with the monopoly of over 25 years and also a gaming license of a substantial years, we believe that this is a very, very valuable project that we would be looking forward to completing the 50% transaction together. Now I'll pass it back to Boswell on the prospects.

The outlook. Actually, well, this is summarized -- I mean, a summary of what we have discussed just now. Gearing ratio and leverage expected to be further down since this is our first priority to pay down the bank loans and all that, right? And also, we have got some noncore and core business coming in the second half, in particular. Accelerating the completion of the property development. We just mentioned one of the projects, Victoria Riverside, we have done it. And hopefully, in the first half of this next financial year, in particular, with the Tower A when completed, there will be another big cash coming in. Disposal of our noncore asset. We just mentioned, which is about 2 weeks ago, we have entered into a nonbinding term sheet to dispose one of our hotel in Australia. Unlocking the hotel revaluation surplus. Hopefully, we can have a good -- well, present more details in the right timing. For the visibility of the cash flow coming from the property side and also the recurring business, HKD 9.3 billion in the presales and sales contract, in which this is the -- out of which HKD 2.7 billion actually coming from the completed stock sales and also the difference talking about is about HKD 7 billion are actually the sales of projects. Sales of projects, this is in relation to the presale that will be coming into completion within this coming 2 years. Hotel recurring cash flow expected to grow with -- in particular, with some new hotels stabilization. For new hotel coming up in 12 months, car park phase out the underperforming mature car park asset for the purpose to cashing out and get the cash for the debt reduction as well, becoming more towards to asset-light business model. Gaming opened another small -- actually, this is a small casino. And also, we have the restructuring of the QWB projects. This is the end of the presentation.

Thank you, Mr. Cheung. [Operator Instructions].

Online, actually some questions. I may pick one. One of the questions on the online dialogue is the URA project, which is the Sai Ying Pun project, the Pavilia Forest. Do you see any further impairment? Well, that is the impairment we have recognized in the first half. In the second half, I think, hopefully, they are all related to Hong Kong property market. Hopefully, the Hong Kong property market is getting more stabilized, in particular, since a couple of months ago. And in fact, our sales in Pavilia Forest project are actually quite doing well. Hopefully, in the second half, we can achieve what we want to achieve, right? In fact, we are having some kind of different strategy on the sales as well. So hopefully, we will not have any impairment -- material impairment, but it's really subject to the market, to be honest.

Sorry, I mean, from the market at the moment, I can't say I doubt, but I must say I don't foresee there will be a further impairment. Actually, I think this impairment have been quite conservative given the uptick on the market in Hong Kong at the moment, I don't believe so, to be honest.

Any more questions?

Maybe I will talk a little bit about sustainability because I see that it's in the appendix. Just because I see also banks that have supported us in a sustainability loan. So quite -- if you look at our loan book, we are actually converting, especially the hotel side, more and more loans on the sustainability side. I do chair the ESG of the group. Maybe since we have investors here, I will talk about the strategy and in terms of what we're thinking in the sustainability front. Our group's focus has always been more in terms of ESG on the S part, the social part. So if you look at our -- we do have quality scholars. And in fact, and they are really making great impact in the world. I think most notably is our Head of our alumni scholar, Natalie Cheung. She's the first lady that actually went to North Pole, actually really in terms of one of the leader in sustainability in Hong Kong. And of course, earlier, my sister did mention about the Tai Po fire. In fact, the last 2 days, I've been trying to -- well I have been working with the government in seeing how we can relieve the immediate housing. So thankfully, we've kind of working around the clock -- well Dorsett as well as FEC has really been supporting our project. Runway 1331, which is the old Kai Tak project. So at the moment, as of last night, I can -- I think we can deliver about 1,000 housing for the immediate relief for all the residents in Tai Po. They will be coming in phase by phase because, of course, majority of the current residents are still wanting to be near the hospital as well as near their building because this help that we are extending will not be 3 nights. It will be a bit longer -- or at least I would foresee a month or so. Our group have actually had the experience from this -- from actually relieving the victim and the victims family from Grenfell, a couple of years ago, Grenfell, London had a -- there was a big fire and our team was also -- and the Group Dorsett's Shepherds Bush was also the major hotel in supporting the relief. So I think in terms of really our belief and where our heart is, this is really very much into this. What I do hope really in terms of adding value to the ESG in Hong Kong as per se, is to bring more measurements. And I see a lot of investors are here. I really hope that you all share what I preach for is to actually have impact investment because only by this way, we can actually measure each other and push for kind of the uplift of the whole support into this. But for sure, in terms of the relief work currently in Tai Po, please, if there are any investors [Foreign Language].

Are there any further questions from the floor, please? If there are no more questions, we will conclude the Q&A session and see if any topics you would like to raise?

Yes. Quite a few questions actually in relation to the Perth. The question on sort of any plan, any redemption plan, any restructuring plan, any -- what do you think and how to settle the high interest -- I mean, the high coupon rates perpetual bond? I think overall, having a comment on this, I think the first priority is actually on the bank loan reduction. So the good thing is we have over HKD 61 billion on the pipeline, which is all active project. I think HKD 61 billion is actually big enough for us to -- for FEC to develop, to sell the record in the book in the coming 8 years, 10 years, right? So we are not in a rush to increase the land bank, the land replenishment. Of course, we do not rule out that if there is a very attractive in terms of the cost and all that we may also enter into. But we are not in a need. On the other hand, other than this first priority on the bank loan, we are -- actually, we have to keep a very healthy and also safe level from a bank [indiscernible] perspective. I think we have to deal with this first. So we know that this is very expensive, but we are trying out to accelerate our projects, get the bank loan matter before -- definitely before the perpetual.

Thank you. Ladies and gentlemen, this concludes our investor presentation. Thank you once again for joining us today.