First Pacific Company Limited (142) Earnings Call Transcript & Summary

[Audio Gap] First Pacific 2020 full year financial and operating results. The results presentation is available on First Pacific's website, www.firstpacific.com. These results briefing is being recorded, and the replay will be available on First Pacific's website in the Investor Relations section, Presentations page. For participants from the media, please note the Q&A session is open for investors and analysts only. If you would like to raise questions, please contact us when the briefing finished. Today, we have Mr. Chris Young, our Executive Director and Chief Financial Officer; Mr. Joseph Ng and Mr. John Ryan, our Associate Directors; and other senior executives from the First Pacific head office in Hong Kong. Our Chief Executive Officer, Mr. Pangilinan, sends his apologies for being unable to join us today. At this point, I would like to turn to John for his presentation.

Thank you, Sara. If you can't hear me, signal us in the chat, and then we'll fix if there's a problem. I'm going to run through briefly our investor presentation that hopefully you've looked at on our website. And looking at Page 2, there's the familiar list of the companies that we are invested in either directly or through our directly held operating companies. There is one item to note, please, Global Business Power under the Metro Pacific section of this page is in the midst of being sold to Meralco, such that the 26.9% economic interest First Pacific shows as of today is going to move to 19.6%, the same as our interest in Meralco. Now let's move on to Slide 3 with a recap of our performance in 2020. Looking at the recurring profit column chart, you can see that strong performances by PLDT, Indofood and sharply lower cost at head office drove very strong growth in our recurring profit, 11% of our core holdings, Indofood, PLDT and MPIC. It's only MPIC that suffered badly from the consequences of the COVID-19 pandemic. We'll discuss more of that a little bit later. Contribution overall was up 4% to just over $400 million. The interest expense was down quite a bit by 22% to USD 60 million last year, down from $76.5 million in 2019. Our Head of Treasury, Joseph Ng, can discuss that performance when it comes time to talk about our cash flows and balance sheet. Now speaking of cash flows, you can see the single biggest item in our cash flow last year was a net repayment of $234 million, and that is -- the bulk of that is the retirement of a bond last September, which was at the time our single most expensive borrowing with a coupon of 6 3/8%. Head office costs themselves were lower. And we ended up reporting net profit of just under $202 million versus a net loss of about $254 million in 2019. Nonrecurring losses were far, far smaller. Also important, today, we announced a 3-year share repurchase program amounting to $100 million budget. This is to reflect management's commitment in the past to launch a share repurchase program as soon as our balance sheet and cash flow is permitted, and our Board of Directors decided earlier today that now was the time. Looking ahead, we see economic growth in our markets, lifting the earnings of our operating companies. And we regard the outlook for First Pacific as very strong. This indeed was signaled by the increase in our distribution to shareholders by HKD 0.01 to HKD 0.145 per share for full year of 2020. Now a quick look on Page 4 at our borrowing profile, our maturity profile there at the bottom of the page. As you can see, it's a mixture of bank loans and bonds. Nothing is secured. And the reputation of First Pacific in the credit market is reflected, I think it's fair to say, by the blue box in the top right of this page, which shows you data from earlier today saying -- portraying the prices of our 3 current bonds outstanding. As you can see, there are no borrowings to be repaid this year. There are some bank loans coming due in 2022 amounting to $300 million, which Joseph and his treasury team are eyeing right now and you can discuss this with them later. And then as you can see it extending out, we've got a pretty balanced, even maturity profile there. As you can see, Joseph likes to keep the amount due in any given year to be well under $400 million. And he likes a smooth profile as well. As you can see, our blended interest cost is quite low at about 3.5%, and the average maturity is just a bit under 4 years. Now a brief note on Page 5 about where we think we are today. We've got 3 strong core assets in Indofood, the biggest listed food company in Indonesia; PLDT, the biggest telecommunications company in the Philippines; and MPIC, the leading infrastructure holding company, again, in the Philippines. Through these companies, our aim is to increase distributable earnings, which we've managed to do in 2020; narrow the valuation discounts, which is a major goal of our share repurchase program; and nurture these core holdings so that they can grow for all shareholders, including ourselves. Now just a few notes here about the repurchase program I mentioned 2 pages back. Those repurchased shares are canceled and thereby immediately increasing NAV per share, earnings per share and, of course, dividend per share. Now a quick look on Page 6 of our gross asset value. This pie chart here is as of about a week ago, March 24, and they show the value of our 50.5% stake in Indofood; our, I believe, it's 43% stake in MPIC; and our 26% of PLDT. As you can see, this amounts to a gross asset value of a bit less than $5 billion. Now while we've got a share repurchase program, signaling our dissatisfaction with the discount to net asset value, it's also perhaps worth pointing out that if you consider the share price targets that analysts have for these core investments. If they were to climb to the consensus prices, for example, Indofood, the consensus we saw earlier today is IDR 8,750 compared with a share price today of IDR 6,700. And you go to MPIC and PLDT, you see that these consensus targets from the analysts are 36%, 51% and 31%, above today's closing prices. Now if these companies were to reach those consensus target share prices, it would provide a significant boost to our gross asset value. My math says it would rise to $6.5 billion. And with an unchanged discount, this all alone would indicate a sharp increase in our share price. So I have to say we had a good first step today. Now the last word about head office is on Page 7. We devote one page in our presentation to sustainability matters, and I wouldn't be surprised if soon we extended that to 2 pages because it is increasingly important to our shareholder base and the wider investor and stakeholder universes. As you can see last year, we made some significant accomplishments, not least signing up to the United Nations Global Compact, the International Labor Organization's 8 fundamental conventions and our shadowing of the UNPRI. More on this can be seen in our ESG reports. Our 2019 report remains our most current one, and we are hopeful of publishing our 2020 report in the next month or so. Just a quick note on the right-hand side of the page. We are a member of the Hang Seng Corporate Sustainability Benchmark Index. We've got a top decile rating of AA-. We've got a perfect governance quality score from ISS and so on and so forth. I won't read that entire table. Now let's move on to the operating companies with Indofood on Page 9. Our single biggest holding of Indofood saw strong sales growth, led by the Consumer Branded Products division, which itself grew 10%, and that was driven to a great extent by the acquisition in late August last year of Pinehill, a noodle manufacturer based in Africa, the Middle East and Southeastern Europe. We can discuss this later in the Q&A section of this presentation. So the core income had very strong growth at Indofood. We expect continuing growth looking ahead, not least because it will have in 2021, a full 12 months of contribution from Pinehill. And our past year's experience with this pandemic shows that the appetite for the high-quality but low-cost noodles that form the bulk of Indofood sales remain in very high, in fact, growing demand moving forward. Now I will skip ahead now to PLDT, which, like Indofood, this reported record-high turnover in 2020. Service revenues rose 8% that year, going down to a telco core income increase of 4% to just over PHP 28 billion. The chart on the bottom right of the page tells you the tale. The biggest green column increases showing revenue rising are all with respect to data, which now makes up well over 70% of all revenues and continues in the early months of 2021 to grow quite strongly. PLDT's confidence is such that they are already beginning to suggest that their habitual payout of 60% of core profit to shareholders could well be boosted for 2021 earnings by a further 5% as a special bonus, bonus payment to shareholders. This comes even as the CapEx spending remains quite high. In recent years, it's averaged around USD 1.5 billion. This year, they are forecasting a figure closer to $2 billion. Now let's move to Metro Pacific investments on Page 15, the one of our 3 core holdings that saw its earnings decline in 2020. And the reason simply is on the toll roads here in the left-hand column. There was far less traffic given community quarantine measures undertaken by the government in the Philippines. In the electricity business, demand shifted sharply from commercial and industrial consumers over to residential. Residential consumers pay slightly lower tariffs. So that meant a blow to the bottom line of the electricity business. And there is a similar story with our water business at Maynilad, the biggest water company in the country, where, again, there was a shift from commercial and industrial consumption to residential water consumption. The hospitals business had a difficult pandemic, even as the health care workers moved heroically to respond to it. Revenues were down quite sharply as, I've forgotten the word, as surgical procedures declined because people just were not going to the hospital anymore. Now a quick look at the change in contribution on Page 16 for Metro Pacific. You see that the biggest factor in the decline in contribution was a fall in the Toll Roads business, where traffic plunged quite sharply during the latter 9 months of 2020. And as you can see, every single business saw a negative change in their contribution apart from logistics and others at the end. Now I'll move to a brief word about Philex Mining on Page 19. Philex saw their contribution to First Pacific rise from about $1 million in 2019 to $8 million to us in 2020, largely as a result of higher metal prices. Revenues were up by a double-digit figure. And they managed also to procure more metal during the course of 2020. Now looking ahead, Philex is working on finding a partner for its Silangan Project down in the south in the big island of Mindanao. And they are also exploring the extension of Padcal Mine life, which is currently scheduled to end at the end of 2022. Now this presentation has some columns -- some tables rather at the back of it, snapshotting our cash flow, our net debt and gearing contribution and profit. I presume you have all examined those matters, but I think I've probably talked enough and we might now go towards Q&A. Thank you. Sara?

[Operator Instructions]

It's Tony Watson. Is this the proper channel to ask questions?

Please go ahead, Tony. Where are you from?

Yes, I'm from Far East Investment Management in Hong Kong or a family office. I have 2 questions kind of unrelated. First relates to Slide #4, particularly around the debt management policies. You've laid out, I think, some of the key ones there. But if you could just walk through the key policies you have in terms of managing your debt profile in terms of debt-to-EBITDA, debt to capital, currency mix, that type of thing, that would be great. That's question one. Question two is around the Pinehill acquisition, I refer you to Slides 5 and 11 there. Obviously, when you acquired Pinehill, you saw some synergies there. Could you just sort of talk us through how that whole trade is playing out? And specifically, in terms of what synergies have been realized and maybe some things that haven't come quite as planned or are a bit behind schedule. Those are my 2 questions. Number one on the management -- debt management policies and number two on Pinehill acquisition.

Joseph, if you want to take...

It's Joseph here, Tony. Maybe I'll address the first one about the debt management policy. At our level, we focus the [ audits ] that currently grows about $1.44 billion, net $1.33 billion. When we see -- they're all in U.S. dollar. So it's all in line with our reporting terms in U.S. dollar as well. So there's no so much so-called currency exposure from the kind of reporting perspective. But we do, of course, have some currency exposure instead of receiving dividends from the major operating units like PLDT in the Philippines and Indofood from Indonesia. As far as the debt currency is concerned, it's all in U.S. dollar. That's the currency point. As far as the right level, I think we basically see ourselves measure against more on the basis of this, what we call, the interest coverage ratio rather than any so-called gearing ratio per se because if you compare our net debt, $1.3 billion, against the gross asset value, as mentioned earlier by John, about $5 billion gross as a value is roughly 26% thereabout. Now unfortunately, the gross as a value is kind of measured on the mark-to-market of old underlying asset like the share price of PLDT, Indofood and then also tied to the foreign exchange rate. So it's going up and down turnover on a daily basis. So what we focus more is actually on the cash and interest servicing basis, what will be the kind of right level of interest coverage ratio? What's the assumption that there will be kind of a steady level of debt at the headquarters level? Now give you some indication. When we issued a bond, for example, the last one was actually the one issued in September 2020. There's a covenant saying that we could not incur any debt if the interest knew that -- if the interest coverage ratio is below 2.5. Now of course, that's extending all the refinancing. So we are actually using that as a benchmark to measure the right level of debt and the cash flow as to servicing the interest cover. Now at the end of 2019, the ratio was at 2 only. And then with all these liability management initiatives that we have been taking in the past couple of years, we managed to improve the 2 at the end of 2019 and improved that to 3, 3.1 at the end of 2020. And then you can see from the interest reduction that actually helps to improve that ratio. Now because of all these liability management initiative we did in 2020, like the redemption of the $252 million bond in September. We bought back some bond from the market. And as a result of all this, we see continued reduction in interest in the course of 2021. So we see that, that ratio will be improving further in the course of 2021. So in terms of the maturity every year, where, as mentioned by John, we don't want to have any single year more than, say, $400 million because that will be quite challenging in one single year. And then we keep monitoring the bond market and the bank market has to decide -- deciding the right mix of bank and bonds to manage the refinancing of all these bonds or bad debt. And you can see that, in 2021, there's nothing due. So now we are focusing on managing the upcoming $300 million in first half 2022. And there's also a call that we may consider to exercise in respect of the 2025 bonds because that one, the $120 million, $121 million, that one is quite expensive. It's carrying a coupon of 5.75%. So if managed to round up resources, then we may consider to perhaps buy back those bonds back. So we are focusing on working the $300 million till next year as well as the possibility of calling back the $121 due in 2025. So I'll stop here whether I've actually addressed the bond you raised, Tony.

Tom (sic) [ Tony ], it's John again. I'll answer your question about Pinehill. Now that transaction closed, I think, on the 27th of August. So the 2020 earnings at Indofood really only have fourth quarter numbers from that company. Indofood hasn't broken out separate Indofood numbers -- sorry, Pinehill numbers but you can look at the foreign sales, the international sales of instant noodles by Indofood. In the fourth quarter of 2019, that figure was IDR 780 billion. And in the fourth quarter of 2020, that figure was IDR 3.1 trillion. And you can imagine that the bulk of that increase would have been from Pinehill. Now you'll remember that when we asked our shareholders to approve that transaction, there was a guaranteed level of earnings that Pinehill would have in the years 2020 and 2021. The commitment was an average audited net profit after-tax figure of $128.5 million. And there's a mechanism there that would reduce the purchase price of Pinehill, such that the maximum debt would be paid by ICBP would be 23x earnings. So that $128.5 million average over those 2 years is 123rd of the value that ICBP paid for Pinehill. And another of our shareholders has pointed out by e-mail to me that it was a fairly close vote, 52% to 48%, I think it was, at the end of the day, in a special general meeting, where only independent shareholders could vote. I personally expect that Pinehill will deliver and even over-deliver the benefit of the transaction over the course of the next 1.5 years or so as we head to the end of that 2-year period for the profit guarantee. They're hitting it in 2020, they have told us. I've given you an idea of the increase in noodle sales. Now the longer-term integration of Pinehill into the wider ICBP business, which includes -- so much more it includes dairy and snacks and beverages and so on, that is probably going a little slower than planned because the shutdown in international travel that has taken place ever since really that transaction has closed. So that might be slowing down a little bit, but the contribution is strong and it's growing. I hope that helps.

I think the next question relates to PLDT CapEx, John, so I might try that one. I think the CapEx number remains fairly high. I think they're guiding for something in the region of $88 billion to $92 billion for the current financial year. That is a fairly aggressive build-out. However, I think if you follow PLDT, you are aware that the market this year will have an increased level of competition as a new wireless operator called DITO and there is a fiber build-out company called Converge, who is offering a broadband service. So I think we -- it's positive that the CapEx remains high. And I think it goes to the analysis on Page 14. If we can just move to it in the presentation, where PLDT is, I think, recognized by all of the third-party observers of network quality, be it Ookla, OpenSignal or umlaut, that they have the best network in terms of both wireless and fixed. And I think in terms of a competitive environment, that is the best defense going forward. So the plan is to add close to 4,000 5G base stations, another 4,000 LTE 4G base stations, expand the number of fiber ports by over 1.7 million and build out another 125,000 kilometers of new fiber. All of these, I think, will enhance the network, namely that PLDT stays a step ahead of the new entrants as well as Globe's principal competitor. In terms of returns, we are expecting the business to continue to grow in terms of profitability. And PLDT has guided for an increase in its telco core to something in the region of $29 billion to $30 billion for 2021, despite the pandemic challenges and despite the enhanced competition. So CapEx is high, but I think it's an important tool in terms of how PLDT is addressing the market.

Chris, do you want to take Jeffrey Kiang's questions about...

What is -- okay.

Please stop moving this so Chris can make it.

There are 2 questions.

What's the thinking behind it?

I think the thinking behind it is that we first raised this, I think, 2 to 3 years ago. But at that time, I think we had some challenges operationally. We had some challenges from a balance sheet and cash flow perspective. So we've worked hard over the last couple of years, I think, with transactions around about Goodman Fielder, work that we've done at PLDT and the like. So we get to a position now that the operating companies are -- the 3 key ones are performing well. The smaller supporting companies such as Philex and PLP are also doing well. Our debt management initiatives have gone well. So the head office cash flow position is stabilized, and in fact, as outlined by Joseph, quite robust. And we see in the medium term that these trends will continue. So I think the principal reason for the share buyback is that these trends are these -- we've taken the underlying steps that we said we would do. The trends that we could see over the next 2 to 3 years are positive. So we would like to signal that we think that the discount to net asset value that we're currently seeing is unwarranted. And we are hoping that the share buyback will signal that management is confident that these improving trends will continue into the next 2 to 3 years. So I think that's the background to it. Any scope flexibility to increase the buybacks? At this stage, no. I think we have affixed $100 million is relative to other buybacks we've seen, a fairly -- potentially a fairly large percentage of the outstanding shares. So for the moment, we will target -- we'll stick to our target of USD 100 million. I would say the next ones, John, are quite more detailed. Maybe you can reply...

Yes, I'll do that. This is from a...

Calculations...

From Anil Mohan. Anil, I'll e-mail some of my replies to you because they involve a little bit of math.

I think one through four, other than two. And I think, Anil, on two is really -- I think that's what I tried to explain in the answer to Jeffrey, that there were things that we needed to do. There were businesses that we needed to take action on. There were things we needed to do to improve the cash flow at the head office and the balance sheet. These things have been done over the past few years and that's why we are beginning the share buyback now.

I just have another question, the share price of First Pacific. Firstly, the volumes are quite low on a daily basis. There is sudden spurts, ups and downs. And it's quite volatile based on the lower volume. Would you like to explain why that is for a company of the size of First Pacific? Is it that the investment bankers are not following it as much as they should? As far as I can see, the only analyst out of Hong Kong is CLSA, but I could be wrong.

Let me take a stab at that. Yes, we are currently covered as far as we know, by just one brokerage, and that is CLSA Analyst, Jeffrey Kiang, who I think is on this call. And we do have sometimes changing volumes, very volatile from time to time. If you would have looked at this, say, 7 years ago, there were more analysts covering us. And our market cap was larger. Our market cap currently is around $1.2 billion, $1.3 billion, or probably higher today, and that has resulted in us being less liquid than we would like to be. So you'll see that volumes do tend to go down with market cap as well. However, don't despair because our experience with our previous budgeted share repurchase program with a time frame back in 2010 to 2012 saw the daily trading volumes increase rather a lot. And seeing as you're taking shares out of circulation, that seems a bit of a contrary observation, but that is, in fact, what we saw. And my personal explanation for this and it is shared by some, not by all, is that when non-holders see that there is, day in and day out, a willing buyer in the market, that sharply reduces their trepidation about putting a toe in the water and acquiring First Pacific because it gives them some confidence that when they decide to sell, there is going to be a buyer out there. Now we haven't yet made our first repurchase under this 3-year program. It is to be hoped, however, that we will see a repeat of what we had in 2010 to 2012. And you never know if this program coincides with a sharp increase in our share price over the course of the next couple of years and a big narrowing of the discount. We might earn ourselves some more analyst coverage, and we could enter a virtuous circle, but that is sheer speculation on my part.

Joseph, how is the share buyback will be financed?

Yes, well, I'll take that. The share buyback program as for now is $100 million over 3 years. So let's just assume that that's kind of average over 3 years, roughly $30-something million a year. And as we disclosed in headquarter cash flow, I think that's Page 24 of the presentation. And 2020, our dividend is close to about $190 million for 2020. And as mentioned by Chris, we are quite comfortable about the performance of the units going forward, 2021, in particular, that will be driven by Indofood and PLDT. So that dividend level will be increasing. So -- and the headquarters overhead and interest expense as explained is kind of under reasonable control. So I think the operating cash flow to sustain this extra roughly $30 million kind of project for buyback per year. So that said, of course, we're still committed to pay the 25% dividend to shareholders. So you can see that we're trying to kind of return quite a bit to the shareholders in form of a dividend, which is roughly $80 million a year, plus roughly $30 million buyback on average. So that's actually quite a bit. If you do the math, it's actually effective 35% return are paid out to the shareholders rather than a 25% payout. That's, of course, a very rough calculation. But that's where the kind of a source of funding for the buyback was it coming from.

The second question, I think, from Patrick regards lessons from the acquisitions in Singapore power plant and Goodman Fielder. I think the -- there are quite a lot of lessons. Some of them are really geographic. I think the scope of Goodman Fielder in Australia, New Zealand, Papua New Guinea, was beyond where First Pacific had traditionally invested. So I think we've had success in Philippines, Indonesia, Thailand, Vietnam and the like. So I think geographic focus is one. The second thing would be that, in case of Goodman Fielder, it was a 50-50 joint venture and that brings challenges that First Pacific has not had in the past. I think we've always tried to be driving the operations. And I think, again, that's something we would like to do going forward. The case of the Singapore power plant, again, Singapore is -- it's in the broad geography but it's in a developed market rather than developing market. And it's not an area where First Pacific itself had a direct experience. So again, I think if we are looking at what has gone well for us, say, in places like Thailand with the Don Muang Tollway or [ BSM ] on water, Indonesia; in terms of toll roads outside the core markets of the Philippines and Indonesia, it's the work with the operating companies themselves, be it Indofood, PLDT or Metro Pacific. So I think as we go forward, that is how we will look at opportunities in these markets, geographically more focused businesses where we have significant influence or control and working together with the operating companies. Graham has a comment on, oh, Mr. Pangilinan's age. I think what's happening, this is a gradual process as you would probably expect from an Asian company. We have seen, for example, at the major operating companies in the Philippines, for example, Meralco, Ray Espinosa take over as CEO. Mr. Pangilinan is currently President and CEO of PLDT, but has indicated that sometime this year, he is likely to move just up to be Chairman there. And I think he's been quite open that the Chief Revenue Officer, Al Panlilio, is the person who's likely to take over from him there. At our level, Axton Salim has joined our Board last year. And I think Axton himself is getting more involved at Indofood. So I think it's gradual. Manny is still very hands-on. He's still working 7 days a week. We still get our regular calls on a Saturday and Sunday. But in terms of the operating companies itself, he is beginning to seat the CEOs there, and I think Mr. Salim is doing the same in Indonesia. Poor performance to do with the 12-day legal tracking agreements. I think it has been challenging for Metro Pacific in terms of how we could deal with these various challenges. But I think what we found is that government, after the initial noise, has been willing to sit down and work with us and other companies in the water and electrical distribution space to find solutions. So if you follow the water situation, I think you'll see that they're close to signing an agreement with Manila Water, and after that is in place, then I think the discussion will move to our own company, which is Maynilad. From what we've seen from the Manila Water negotiations, what is proposed is workable for government, is workable for the consumer and is workable for ourselves as investors. I think you have got to recognize that a lot of this contractual arrangement, it would be nice to say that they are legally set in stone. But a lot of these contracts came out to private -- came in as a result of privatizations in the late 1990s and 2000s. And it's only once you begin to operate these franchises, that you begin to see some of the challenges. So I think it's not something we would like to happen. On the other hand, I think it's part of the growing pains when you go through significant privatizations has happened in the Philippines. On the electrical distribution side and negotiations with ERC are going well, and we would expect that by the time the next regulatory period is in place, there has been a catch-up from the previous discussion. So yes, I would say more growing pains. And -- but we can see how these will be resolved in the short to medium term.

Thank you, Chris. Anil, with respect to the [indiscernible], which I'll write to you about, this afternoon following all of our meetings, I had a look at charts of our share price from Bloomberg. I printed out a 1-year chart and a 5-year chart. And the 5-year chart was interesting because it shows that the high price in the past 5 years was $6.30. That was in 2017. So I dived into our books and I saw what was going on in 2017. The contribution from our 3 core holdings in 2017 amounted to $391 million. Last year, they were $414 million. Our dividend income in 2017 was $185 million. And in 2020, it was $190 million. In 2017, our interest bill was $81 million. Last year, it was $60 million. Our discount at that high share price of $6.30 was 48.3%. It was recently at $65.6 million. The high price we've had in the past 12 months is $2.84, and again in 2017, and we have that high of $6.30. So as you can see through those numbers I've rattled off, we are rather better off now than we were then...

By far. I mean, as just a shareholder, I mean the shares from what you've -- I've just written all the figures that you said, the shares are massively undervalued. I mean, that's an understatement.

Yes, yes. Well, I suggest you, tomorrow, get in touch with your friendly neighborhood CLSA sales executive. He will share the inevitable report from Jeffrey Kiang. And I have to say, I'm personally looking forward to seeing what Jeffrey has to write because, according to a chart I often steal from CLSA, our historical NAV discount was 44% according to their math. In fact, they say so on the front page of a report they wrote yesterday. But their target assumes a 64% discount to NAV. And I'm wondering, Jeffrey, would you be reconsidering that number? We await your report with...

Yes. It -- the mind boggles, why? That would be the case. Outlook for fiscal 2021 and beyond, from what everyone has said from the management, seems it's all systems go. So I don't know why CLSA would say the discount should be at a certain level. That makes -- I'm sorry.

They do have a buy rating on First Pacific. Let us...

Yes, yes. Yes, of course. Yes, yes, yes, they do. But they're saying that the discount should be a certain amount. But I mean, market forces should actually do that. But if you look at all the numbers and from what you've just said, you've just gone through Bloomberg and all that. And from what I see, it's severely undervalued when the situation is a lot better than 3 years ago.

Yes. But to be fair to the Jeffrey, we have had that unreasonably high NAV discount for a good couple of years.

Yes, yes. And I mentioned about 5 years between 55% and 65%.

Yes. So I don't think there are any more questions.

Yes. As there are no more questions, may I have Mr. Young to give his closing remarks, please?

Thank you all for taking the time to join our results call today. I'd just like to recap where we think we are. Despite the difficult business environment everywhere, we increased our recurring profit by 11% to its highest level since 2014. Looking forward at our operating companies see earnings growth over the medium term, which suggests we should see continued growth in the dividend income following a 15% rise in 2020. Our now regular payout of at least 25% of our recurring profit as a distribution to shareholders is in its 11th year. And we increased the distribution in 2020 by HKD 0.01 or 7% to HKD 0.145. We also introduced, as discussed earlier, the share repurchase program with a budget of USD 100 million. Regarding the increase in our share price today after we released our 2020 results at midday, we see a sign, preliminary and tentative at this stage, but still encouraging, that perhaps the market might be reconsidering for a specific discount to net asset value. We look forward to catching up with you all again when we release our 2021 half year results at the end of August. Take care and stay safe.

Thank you. Thanks again for joining today's online briefing.