Hang Lung Group Limited (10) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. My name is Joyce Kwock, and I'm the General Manager of Investor Relations at Hang Lung. Welcome to the analyst presentation for FY '25 interim results announcement that were made earlier today for both Hang Lung Properties 101.HK and Hang Lung Group 10.HK. We welcome the audience who are at our Hong Kong headquarter and also the audience who are at our live webcast right now. Please scan the QR code for our presentation pack in support of our minimal paper policy. There are English version and simplified Chinese version here for you to choose. Today, our senior management team is all here to join the presentation. They include Mr. Adriel Chan, our Chair; Mr. Weber Lo, our Chief Executive Officer; and Mr. Kenneth Chiu, our Chief Financial Officer. Our Chair, Adriel, will start with some remarks. And our CEO, Weber, will walk through our results and some of our developments using the slides. Our CFO, Kenneth will also walk through our property sales and financial management. After that, we will address the questions from the audience from both the floor and the webcast. So Adriel, it's your turn now.

Thanks, Joyce. I wasn't aware I was making remarks. But first of all, I want to draw your attention to the little logo in the bottom right corner of our presentation, the 65. This is our 65th year, and it's not a diamond or whatever jubilee, but it's a milestone. Ronnie just retired, just taken over. It's been an interesting year since the takeover. But let's just say, not only has it been like drinking from a fire hose, but there have been all sorts of really fun, interesting things, which have kept the 3 of us very engaged. And so a somewhat challenging 65th year. That being said, I think if you look at the results and if you look at the market's reaction to our results, I think this is a solid set of numbers. I think the team has executed very, very well on our strategies, but also really taken advantages of our strengths. We'll dive into some of the details of what we're doing, which is especially interesting this year when we go through the pack. But overall, I think that we feel the stability is coming and hoping for even a little bit of uplift if the trajectory of the last couple of months can hold. So all in all, I think management are feeling very cautiously optimistic, not cautiously very optimistic, but very cautiously optimistic. And I think that what we have here will help tell that story. So without further ado, maybe I'll pass it on to Weber.

Afternoon. Very nice to see you all and also just say hello to those on the webcast. I will not repeat all the numbers here, but just want to highlight a few here. First, our core business rental business, still down 3%, but I would say kind of expected when we start off the year and also when we start the year in January, we talked about it, first half will still be tough and hopefully, second half will be better. And then I can show you later on some of the pages that we see sequentially the improvement. Of course, we are not very happy only seeing this. We want to back to positive. So I think there's still way to go. But I think at least we see the trend. Overall, because of the less property sales and also the hotel business and sales business account for 3% and 3%, total 6%, our core business is still our rental business, which is 94% of our business. So we declare same dividend, both HLP and HLG. Revenue contribution by segment. At the backdrop of 1.4% depreciation of renminbi, actually, it was also sequential improvement, but it was down by almost 2%, 3% in the first quarter, but actually gradually improved, but still average down by 1.4%. We managed to get our Mainland China rental revenue in renminbi terms, down by 1%, but because of the renminbi depreciation down by 2% in Hong Kong dollars, Hong Kong down 4%. But as I mentioned, this accounts for 94% of our business. So others because of less property sales and also the China hotels because now we put under PP&E, so they are 3% and 3% of our business. Okay. I think this is really the main part. If we look at the rental revenue in Mainland, so minus 1% in first half from a minus 4% in 2024. On the right-hand side, if you look at the box, retail was flat compared to minus 3% in first half of 2024. Office remained to be really tough, minus 4% and minus 5% continues to be tough. Service apartment because we moved the Grand Gateway service apartment into hotel and then they are under renovation. So therefore, the number is not really significant. So overall, we are minus 1% in first half of 2025, improved from minus 3% in 2024. Retail business actually improved from the overall is flat to first half of 2024. A lot of you will ask, oh, why you manage flat because the base rent is increasing. I remember last time you asked and questioned us, could you manage to increase base rent? Yes, we did increase the base rent. That offset the drop of the sales rent. So overall, we managed to get the retail revenue flat to 2024 first half. So if you look across, I would say out of 10 projects, 7 are plus, 3 are minus and minus, of course, you would drill why they are minus, but they are minus of the reason because of the competition of the repositioning of the conversion from the positioning from one to the others. So they are in transition. But overall, I would say the Guangzhou in Shanghai, those performing outside Shanghai are delivering positive revenue growth in first half of 2025. I think this part really showed the optimism that we see. Of course, we still need to cautious, but you look at the numbers, we are minus 12%, minus 14% and minus 18% last year, sequential deceleration, I would say, last year. But since third quarter of 2024, the sales improved from minus 18% to minus 11%, from minus 11% to minus 7% in first quarter and second quarter, minus 1% only, almost flat, right? So therefore, the sales in first half is minus 4% on average, but actually it's improving from minus 7% to minus 1% in second quarter. And on the right-hand side, they are across different malls. And I just want to highlight Heartland, minus 31%, yes, it's a big drop. But I just want to say the launch of the other mall in Wuhan was in July last year. So when you compare -- these sales compared to the first half of last year, that mall has not opened yet. So therefore, there is an impact of the dilution of one more competitor in the market in Wuhan. Otherwise, Forum is in transition, Riverside and all the others are basically plus or minus, which is not significant. And also Plaza 66 also seeing a minus 8% only compared to a double-digit down in the last few reports. And also when you compare the numbers from the luxury brands that they report, I think this number actually is better than what you see from most of the other brands. So why Adriel just mentioned is exciting, interesting, but quite tiring because the retail landscape has changed. And it changed so much that we could not using the old way of looking at it. I can say that some of the athleisure brands, their performance is even better than some of the luxury brands. Some of the experiential brands, for example, POP MART and all that, they are really creating some of the new experience to our customers. So in terms of evolving retail landscape in Mainland, I think we just need to continue to upgrade our offering across portfolio through events, tenant management as well as the CRM. And right on the 65th anniversary, we would like to launch national program to be more efficient on one hand, but at the same time, to create first in the market kind of news to some of the second-tier city, which generate good footfall, good result from sales, but also actually leverage on our portfolio to get some efficiency. But at the same time, yes, even though you see we run so much program, but our expenses doesn't jump much because we redeploy our expenses from more operational into marketing and hopefully, we can generate more sales from a customer perspective. So if you look at this number, I think it tells a lot of effort from the team in the first half. New letting, I think this is really something I look at, especially in the tough market, 36% increase, right? So even though you want -- if you want to discount the price in order to get the customers, you still need to attract the tenant to open the store with you. So I think 36% is a new deals. It's a new letting. It's not continuation or renewal. It's a new letting. I think this is something we need to focus on. And also, I think first in town brands, 57% more compared to first half of 2024. Again, we are not only focusing on quantity, but we need to focus on the quality as well because now if your mall does not have differentiation, people will just stop coming, right? So you just need to bring news, bring new ideas first into the market, and therefore, they will come and continue to visit your shopping center. Prioritizing occupancy without the sentiment improvement of the environment is very difficult. So if you see across the board, our occupancy continue to improve or maintain at a very high level. Even for some of the tougher one, you see we managed to increase the occupancy. Let's say, Wuhan, we increased the occupancy from last year, 83% to 88%. So we are slowly, slowly getting our pace and get back to -- hopefully, we can go for full occupancy. On the right-hand side, I think just highlight a few. In terms of LFA, luxury, more or less the same. We did not add or we did not reduce. However, we add more personal care and beauty. We add more food and beverages. We add more others, which including athleisure, other pop-up and all that kind of stuff and try to really create new business into the market and therefore, to attract customers. Overall, both renewal and new lease increased by 12%. That shows the case that in a very tough market, we can still make deals and also the number of first in town, which I just mentioned already. Also, according to the customer demographic change, as you recall, we did quite well at the top. The Emerald and the Sapphire is doing quite well. But if you just rely on the top 10% of the customers, you are not good enough because you just need a lot more people to come. That's why we introduced 1 tier above crystal, try to engage more lower-tier customers and making sure that those customers will come to us more. Those customers called Agate are 10,000 spending or more, right? So we are now doing both end, right, not only at the top that we want to treasure them. Even those more than one coffee but spend 10,000 with us, we want to give them more reward, more engagement, more car park benefit and more reason for them to come back. So I think this actually make us a lot more active base and also can introduce a lot more valid customers and active customers in our base. Tax refund is something very important and which we are taking the lead. Tax refund now, almost all our malls are now providing tax refund service, especially since April this year when government tried to push this, we now have 222 stores, plus 78% increase versus end of 2024. Now this will only go up, right? Because when customers find out, especially even for all of you, if you come to China now, you can get 9% tax refund. And with the renminbi is still weak, actually, you can buy cheaper than Hong Kong, right? So there's no other reason why you don't go to China to shop, right? So I think there's a lot of things going on. We will continue to push. We will continue to lead this arena. House 66, again, I don't want to repeat all this. You can look at it. We work with partners. We work with banks. We try to offer valet parking, VIP, hand-free service. As I mentioned, we don't want to go for discount only kind of business promotion, right? We want to give money cannot buy exclusivity to build the relationship, but at the same time, differentiate us from those department store and those others, they always run promotion. Hong Kong, exactly the same thing, but of course, the scale will not be as high as China. So you can see our CRM program, especially on the left-hand side, House 66, as I mentioned, we introduced Agate. Valid member increased by 25%, right? New member increased by 6%. Member sales, although down by 2%, but if you remember, our overall down by 4%. So our members still performed better than the overall base and sales penetration improved. So that means more customers are engaged and they actually spend more with us. These core customers continue to drive loyalty and also to be our core base for our success. Hong Kong, we optimize our offer. For example, some of the offer that we normally subsidize supermarket and all that, we tighten it up because we don't think if you go to your neighborhood mall to buy something in supermarket, why we need to reward you as the same as before. Therefore, we tightened it up, but we still increased the valid member, but the penetration come down because people find it a little bit more difficult to spend and use our points in our supermarket because this is our intention to tighten it up. But unlike one operator in Hong Kong that they even canceled their CRM program. So we will not. So we will continue to do that, but we will tighten it up. Office, as I mentioned, continue to be very tight, continue to be very challenging. So we are from minus 6% to minus 5%. If you look at across the board, I think mostly Shanghai is under pressure. In media discussion early on, I just mentioned in a Tier 2 city, when you have an absolute leadership in the city, you have a better bargaining power. And when they -- when the tenant used to come to our top quality office, they were very difficult to move back down to the Grade B. However, in Shanghai, Shanghai, everyone provide Grade A and the supply is huge. And therefore, there is some impact into our business. But the good thing is we retain most of our existing tenants. So I think that is the key. And then hopefully, we continue to deploy this strategy and hopefully, we can retain the most quality tenant, and therefore, we can continue to build up our occupancy. Hong Kong, I would draw your attention on the right-hand side of the box first. If you look at the retail, they are minus 7%, minus 7%, both first half. So it seems like there are not much improvement. But if you remember, our big deal in Causeway Bay, we knew last year in April, end of March. So there are some impact of that particular deal, but that deal impact will go away in the second half. So hopefully, this minus 7% will improve. But office, we significantly improve from minus 8% to minus 1%. And also residential service apartment, I'm sure you all know when you read newspaper, now rental are going up, and then we also reap the same benefit. We see plus 11% growth in our residential and service apartment rental. And therefore, we managed to improve from minus 8% to minus 4% in Hong Kong in the first half of 2025. So then you ask me, okay, from minus 9%, you improved to minus 4%, will that continue to improve? My answer to you is that Hong Kong is still very, I would say, complicated. On one hand, offices still have plenty of supply. At the same time, street level and shopping mall are trying to retain customers as much as we can. Therefore, in a weekend, if they go to the north, hopefully, at least from Monday to Friday, they stay with us and spend more with us. So we are still working hard to find the optimal point. But you can see that our sales in Hong Kong down by only 2% compared to the market down by 4%. So I will pass to Kenneth to talk about this new page, and then I will come back to talk about ESG.

Thank you, Weber. I would like to share with you on our property sales segment. In the first half this year, we have recorded 19 units of Aperture sold and completed this first half and 1 unit in Wuhan residence. Last year, for the same period, there was 120 units Aperture sold and also 1 Blue Pool Road houses transacted. That's why we have a decline in the property sales in Hong Kong. For Mainland, we have 1 unit Wuhan sold at first half. But in the coming 2 months, we are going to launch the residence in Wuxi. Overall, I think the -- based on the latest response from the team, actually, we think that we may generate a decent sales from these projects. So we will share with you guys on the sales performance in the coming 2 months. For financial management, I think the key highlight is that the net gearing of HLP stood at 33.5%, only 0.1% growth compared to December last year. I think we previously shared with all of you that we are at the peak of our CapEx cycles. And after the completions of Westlake 66, the CapEx will go down going forward. And overall, the finance cost, gross finance costs before capitalization actually dropped by 7%. There are various factors, but mainly because of lower borrowing costs, which I will share later on. But because the capitalization rate declined from 57% first half last year to 50% this first half. So the net finance costs increased. But if you look at the average borrowing cost for first half, actually, it was 3.9%, around 40 bps decline from full year last year. If you compare with second half last year, it was a 50 bps decline. And I think the HKD 10 billion syndicated loan that we arranged earlier this year can help us to further lengthen the debt maturity profile. So basically, more than 70% of our debt are due more than 2 years. And if you look at the debt portfolio, you look at the left-hand side, we have increased our exposures on renminbi denominated loan. So if you look at the bar, you add up the top 2 segments, actually, renminbi loans, both onshore and offshore, altogether accounted for 43% of our loans. It can help us to manage our finance costs because renminbi borrowing is quite cheap right now. And also, it can help us to manage the natural hedge on the balance sheet. So next part, I'll pass it to Weber. Thank you.

Just don't bore with all the information, just a key highlight. Now we have 80% of our project in Mainland powered by renewable energy from a 50% that I think, which is something we are very proud of because not many developers can claim this that now we are moving from 2 projects to 5, 5 projects to 8. So hopefully, 2 more to go, and then we can complete this journey. I think this is huge. Not only we now tick the box by saying this is powered by renewable energy, but we also save costs. We find that actually the renewable energy is sometimes not only giving us a support on the sustainability, but also actually help us to save costs. Diversity, inclusion, I don't want to bore you with these numbers. And also, I think one thing I think very important, first of the kind that our journey to net zero, we issued this paper, and then we are committed. And hopefully, even though right now, geopolitically, this might not be as fashionable as 2 years ago, but we still believe that this is the right thing to do, and then we will continue this journey. All right. So the pipeline for the next few years, Westlake, we just got the OP in July 4. We will hand over the first 4 towers of the office in the second half of this year. And then the Tallest Tower, we will hand over in the first half of next year. Center 66 Phase 2, as we mentioned, we will start to do presale in the next 2 months, and hopefully, we can report good result because this asset is a little bit different from the others because they command higher -- longer lease as well as we have schooling and all that kind of support. And hopefully, we can sell a lot more units through here. Pavilion is on track. It's on time. So we would like to launch in the middle of 2026. Kimpton, according to the schedule will be 2027. And then one more new thing, which we -- I'm sure you guys read, but we did not go out and publicize it because tomorrow is the shareholder voting for our partners. And then hopefully, after tomorrow, we can talk a little bit more about this deal. But this deal, I think we will cover it on the next page. Okay. The green color is the sites that we own, right? The Orange dotted line is the one that we just announced and then we will lease for 20 years, right? If you have a chance to go to Hangzhou on the left-hand side, you see, yes, we have the fantastic location, but the yellow dotted line own the best and most prominent facade and the visibility of this corner of Wulin, Hangzhou. The objective of this, not only we operate differently, but we can extend our leadership at this place by working with them, and therefore, we can extend our facade from 90 meters to 290 meters, right? So from the white dotted line at the bottom to the yellow and the L-shape, right? So this is really a visibility, at the same time, accessibility because if you have a chance to go to Hangzhou, that street is the most busy street in Hangzhou. And that will give us connection of MTR, connection on the other side as well as the walk traffic from the highest traffic street. But at the same time, also, this one will increase our scale. If you have a chance to look at the right-hand side, we have 105,900 square meter in our original retail design. But with the new expansion, we will increase by 40%. So the size will be just a bit bigger than our competitor next door with this extension. Therefore, we will have scale, we will have visibility and we will have accessibility. This is definitely because this is not our own property, that will improve yield because our CapEx will not be significant, right? Because we -- most of the M&E will be done by the landlord and then we are only responsible for the fit-out. So the fit-out will not be a significant amount. We don't need to pay RET. And therefore, the rental income minus the head lease cost and minus the operating cost will be the net profit. So therefore, the yield will be significantly improved the existing project. So combining the 2, we have scale, we have accessibility, we have visibility and also we have yield enhancing. So that's why we are doing it. We come up with a new terms. I don't want to use asset-light because we don't do asset-light everywhere. This is asset right. We do the right thing because we can extend our leadership next door by increasing our bargaining power and increasing our leadership position in this project. So I think we can talk a little bit more about the project. And even though at some point, we would like to invite all of you to come, and then we will build the bridge between our mall and this building, and therefore, it will be seamless. And also the MTR station today on the North, they will have one tunnel going into the expansion and one tunnel coming into the Westlake that will improve also our traffic from the north. At the East side, we will have a much better connection from the highest traffic location. So therefore, hopefully, this project will give us all that I just mentioned. So as we mentioned, offices because we got the OP already, BCDE, we will hand over in second half. Tower A, the tallest building, we will hand over in the first half next year. As of today, BCDE, we already pre-leased 22%. As you may know, office is different from retail, and you need to get the OP, you need to get the fitting before the customer commit to you, right? So the Tower E, we already fully leased and then customer will come in, in September and November. And BCD, we are working on it, and then we are making good progress. Tower A, because of the best -- you can see from our page, sorry about that. Why I cannot go back. Okay. The Tower A, look at the Tower A and the top zone, you can see the whole Westlake. So we want to make sure that we will give the best view to our best tenant or even turn some of the floor into a restaurant, and therefore, people can enjoy the Westlake view. So we are working on it. For retail, last time we talked to you, maybe we are at 71%. Now we improved to 77%. As of today, we are already at 81% pre-leased for retail. So these are the trade mix expected. And also, we already have a game plan, including the extension, what kind of trade mix we will put there. And therefore, that will -- they will be complementary to each other. For Mandarin Oriental will be second half of next year. So other project, as I mentioned, Wuxi, this is really something we're looking forward to, and then there will be a hotel, Curio from Hilton. And also Pavilion extension, they are on time. And then we're already topping out in June, will be ready to be opened in the -- hopefully, middle of next year. Service apartment center residents, we will presell in the next 2 months. And then Heartland and Grand Hyatt, the market is quiet, but we will not rush to sell at cheap. And therefore, hopefully, when market improves, we really can sell good quality at the right price. Hong Kong residence, as Kenneth mentioned, we still have 7 unsold houses in Blue Pool Road out of 18. We now have 2 projects, Wilson Road as well as Shouson Hill. We are working on the project for the Shouson Hill, we are waiting for the premium appeal. And hopefully, we can increase the plot ratio from 0.5 to 0.75 and therefore, we can build more square footage over there. Aperture, we have 153 unsold, and then we will sell at the right price. And then Investment Properties, Summit and Burnside, we just completed the renovation of Summit. We sold one of them. And then we are working with some pipelines. And hopefully, we have more good news to announce. So I will stop here.

Thank you, Adriel, Weber, Kenneth. We now start the Q&A session. [Operator Instructions]. Raymond from HSBC on the floor.

This is Raymond from HSBC. I got 2 questions. So I'm not going to ask the detail about the Hangzhou project, but actually want to understand better about this thinking. So, for example, like going forward, using -- should we think of like Hang Lung Property, we're using more of these type of models to expand your retail business for those cities that you already have presence, say, for example, like Shanghai and Wuxi that you have done very well, and it's not easy to acquire the land nearby. So this is the first question. And the second question is actually something you mentioned about a very nice slide, which is like the sequential deceleration of tenant sales in Mainland China. So I would love to have your crystal ball. How do you see the tenant sales trend in the second half or sometimes even in the next 12 months' time?

As I mentioned, asset right, you have to be right. You have to be in the right location and also the right reason to do that. I think you are spot on. We will only do when we see there is a demand. We will only do when there is a synergy and holistic impact advantage to our project because this will be a win-win. And I can argue 2 years ago without this slowdown, you will never get this kind of deal. Now there's an opportunity for us to have a hybrid model, just on one hand, by buying it, but it takes time 7 years to build. But at the same time, once you build it together with something you can get the best good location and then decorate the facade a little bit to make it become a holistic project. I think that will not only increase your scale, but also increase your return. So I think we will continue to look for opportunities. And hopefully, there will be some others to be announced soon. I don't have crystal ball, but second half, I do see opportunities to grow from a negative 7% to negative 1%. Hopefully, third quarter, we will see mild growth and fourth quarter also. Our guideline will be more or less the same if everything according to our plan, maybe we can see a little bit of growth for the full year. But I don't know. In today's market, 2 months can change a lot of different things. But we can see that now really last year, the bottom was in the third quarter. Yes, third quarter, people will still travel. Summer people are going away. There will be still issue and concern. But it looks like when we see July, it's not as bad as last year. So we hope there will be mild growth in second half.

I'll take one more question from the floor before I move on to the webcast. Karl from JPMorgan.

I think it's very encouraging that we saw a pretty solid improvement in the second quarter of this year, right? But then just curious, why do you think in the second quarter, we saw such an improvement? Because supposedly it's the time when the trade war concern started to emerge, right? So from your perspective, why do you think this happened, the improvement, especially if we look into Grand Gateway, right? In the second quarter, it was up 10% year-on-year. Definitely, it's better than expected. Why is that? And just now, Weber, you mentioned that for July, it's not as bad as last year. Can you elaborate more about what you mean by that? Are we seeing a positive growth in July already? Or is it like a mild decline for July? Maybe a bit more colors on the July retail sales so far? And then my second question is on dividend. Just curious for the full year, would you still be guiding like a flat dividend for full year? And one more question, sorry. And so one peer recently issued the convertible bond, right? So -- and people might wonder whether some other companies may do it. So just curious, what's your thoughts on potentially issuing a convertible bond?

I will answer some maybe you guys supplement. Why? First of all, I would like to give effort to ourselves. Occupancy improved, traffic improved, and that provide the foundation. But at the same time, if you look at external factors, stock market improved, both A share and H share. Sentiment on very groomy property sector somehow stabilized. And I think this is really one very important point, which I want to highlight is Japan business down in Q2 by 28%, right? So there are a few things happening, less people traveling to Japan because yen appreciate, people feel a little bit more comfortable because paper money improved, stock improved, everything stabilized seems like. Even though trade war is an ongoing kind of conversation. But people in Mainland, if they can still earn good money, good salary and then if they believe that this is the right way to spend, they will spend it. I can only conclude this way. I would say, if you look at our different malls have different dynamics. Not only Grand Gateway, I would say Wuxi improved, Kunming improved, Olympia in Dalian improved. So I think there's no one single reason why. So that's why I would say it's not really a so-called magic. You just need to put all stars and line them up, and therefore, hopefully, that will improve. And hopefully, the momentum continues. I was told today, Russia have an earthquake and because of that, tsunami will hit Japan and might hit this part of the world as well. So I don't know. So travel, hopefully, will be normalized. I'm not saying that less normalized. People will not find extraordinary cheap when you travel. And also, I think there will be something happening also when April, they promote the tax refund, people from Hong Kong, from Taiwan, from Thailand, they all go to China and shop. So all this add together. So I think this is one. Second, dividend. If everything unchanged and this is what according to our plan, we don't want to cut as simple as that, right? Last year was the reset. And I don't want to do the reset all the time, right? So -- but of course, never say never, but this is really our intention. Third, I forgot, CB...

I think a lot of bankers came to me. No matter they really have a very good plan or they rush to ask me because their boss ask them why you couldn't get a deal and you check it out with all the major developers. But there are a few points I would like to share as a CFO. First of all, I'm very mindful on any dilutive instruments, even though the face coupon looks to be cheap, right? But there's always an option value that you need to think about. In the case that the other developers, they issue CB, I think one of the key points we need to note is that their major shareholders hold a lot of shares, right, 74%. Then they have plenty of room to do things, right? For us, we are okay. Right now, we have -- HLG owns 64-something percent of HLP. But I think our share price is still quite cheap if you look at the book value, 0.3, right? So I keep monitoring, but this is not the -- something that I would consider at the moment.

Thank you. I'll take a question from the webcast. Shenyang Forum 66 and Wuhan Heartland is under transition. Can you share more about how is this progressing? And when do you expect this transition process to bear fruit?

This is a long answer. But first of all, at least we manage our occupancy improvement from 83% to 88% in Heartland. I don't want to go back to why it's difficult because when someone run promotion, but you just have one more credible players and the market is declining, and therefore, everyone dilute each other. So I think this is really something happening in Wuhan. The good thing is we are working back to basic. We're getting the supermarket back. We're getting the F&B back. We are getting some products used to be not our strength compared to next door. We are getting those categories back to at least competitive kind of trade mix. There's still a lot of things we need to do. But as we look at both traffic as well as the sales, why you see the number is negative so much because the other mall launched in July last year. So when you compare the first half, we are comparing with only 2 mall in Wuhan. But from July onwards, there will be 3 significant mall. So that one is something we need to work very hard. How long it takes for us to get back to normal? I would say at least 2 years, I think. We need to work very hard to get the basic right, get the traffic, bring the good quality F&B, bring all trade mix into attracting customers. But we don't need to repeat what the other competitors do by just replicate what they have. We have to differentiate ourselves from the others. So I think this is what about Heartland. Forum is more a transition from -- in the past, we have a few strong luxury brand. Now they left and then we need to reposition the whole mall into lifestyle and more suitable for office tenant, nearby tenants and all that. That actually takes a little bit of time for us to do that. But now you see occupancy also maintained at a high level and also going up. And now the traffic is getting better. And hopefully, it also takes maybe 2 years for us to get back to like the place where the Palace, the Riverside that we enjoy. So I think, yes, it's our weak point, I have to say, but we are having laser focused on this, and hopefully, we can crack that. I can't promise we can get it done in 6 months because it takes time. But I think the team are very committed. We even actually put more resources in these 2 projects and making sure that we give the best support to this project to make this happen.

I would just add also that there's not many developers who have a track record of being able to revive a mall or at least turn around the fortunes. But we've done it with Center. We've done it with Olympia. We've done it with Palace, and we've done it with Riverside. And so I think we have a proven track record.

Cindy from Citi, and I will go back to the webcast.

I have 3 questions. First is also on dividend. Just want to check on your latest thinking for potential returning to a pure cash dividend, maybe sometime next year after the Hangzhou project and how is your thinking? Second question is on your, say, luxury malls as you have disregarded the differences between luxury and nonluxury. So just wondering what's the rationale behind? And should we worry on the retention for luxury tenants? What will be the key reasons behind their stickiness with us? And the third question is actually on your positive reversion. So you mentioned we are still in negative retail sales and turnover rent obviously a decline. So what are the drivers for tenants willing to pay a higher base rent given obviously, the market is very competitive. And if we are able to see, like, say, tenant sales turning around somewhere second half this year, so will we be more optimistic on a more positive reversion maybe?