Hysan Development Company Limited (0014.HK) Earnings Call Transcript & Summary

Good afternoon. Thank you all for coming to Hysan Development's 2024 Annual Results Announcement, the analyst briefing session. Let me introduce our panel for this afternoon. Our Chairman, Ms. Irene Lee; our Executive Director and COO, Mr. Ricky Lui; our CFO, Mr. Andy Choi. We will start with the presentation from the management, and we will follow that to take questions. Now I will invite Irene to start first. Irene, please?

Thank you. Good afternoon. I would like to wish everyone a healthy, prosperous and happy year of the snake. I think it will be a good year. Welcome to the analyst briefing on Hysan's 2024 annual results. I love this photo. The year 2024 marked a major historical milestone for Hysan as we embarked on a second century of contributing to Hong Kong's development and shaping the city's growth. As an integral special region of China's long-term economic development, Hong Kong's economic future is secure and strong, underpinning our confidence in the future of Hong Kong. Hysan continued to leverage the strengths of our core businesses and contributions from our strategic pillars during 2024. This is a very good title. It's a good description of where we are at. These 5 years capture important defining milestones for Hysan. As retail and office trends evolve, we are reimagining and refreshing our offerings, starting with the rejuvenation of the Lee Gardens precinct that began more than 2 years ago. We are now seeing the results. It's worth mentioning on the Board, we have been very successful in recruiting outstanding Board members. I think that is very, very important and worthy of a mention. These Board members bring diverse and relevant skill sets. Their expertise enables us to drive business transformation, add long-term value to the organization and effectively navigate structural changes. The achievement of our evolving business strategy was reflected in the financial contributions that began to materialize during this year. In 2024, we began to unveil our new Lee Gardens, welcoming more than 10 newly renovated and expanded Maison Flagships, including the recent reopening of Hermès, Dior and Cartier in Lee Garden One, Two, Three and Five. We look forward to showcasing more flagships and new concepts throughout the portfolio this year. The completion of the rejuvenation will double our luxury portfolio. You will find the latest luxury flagships, a fuller range of cuisine and more diversity in shopping experience at our Lee Gardens. If you haven't been to these, you must try immediately. The second half of 2024 saw the arrival of strategic additions to the tenant mix at Lee Garden One, included curated lifestyle brands alongside fine dining restaurants. Notable arrivals included Hong Kong's first Michelin Green Star certified restaurant and renowned overseas F&B outlets making their debut in Hong Kong. These additions complement Lee Garden One's flagship stores to deliver a holistic, high-end, retail and culinary experience. Further enrichment of luxury offerings at the property is also underway, reinforcing Lee Garden's prestige as the city's Home of Luxury. With the reshaping of Hong Kong's retail landscape, industry players must innovate and deliver a more engaging experience that resonates with consumers' changing preferences. Over the years, we have been curating our low-rise neighborhood with engaging content and activities focused on urban culture. Out of this century-long curation has emerged a vibrant community that provides a unique backdrop to our portfolio with authenticity that is actually very important, authenticity, contrast and diversity. Our seamless physical and digital immersive trendsetting offerings connect to and interact with many generations of locals and tourists. We are the go-to area that attracts quality and repeat visitors, which amount to over 100,000 daily traffic to Lee Gardens. So this is a very important contrast. We talked about the luxury offerings in Lee Gardens. And then we also have our low-rise urban culture. And then we also have our lifestyle trendsetting, younger, Hysan Place, et cetera. So we have the full range of offerings, which have been constantly updated. So as we talk about Hysan Place, it is the center of urban culture. It is being updated in phases to reflect the evolving needs of Hong Kong's youth and visitors. Our first phase renovation of Basement, level 1 and level 2 and first floor to third floor, they were all completed in December 2024. These introduced an exciting and refreshed curation of a wide range of concepts and brands that reinforces Hysan Place's position as a trendsetting destination in Hong Kong. Before we leave this picture, have a look at the atrium. It is very, very beautiful now. It's much warmer with the wood and it's much more updated and airy. By 2026, Lee Gardens will be fully connected by an integrated pedestrian walkway system. It will connect the Lee Gardens area from Caroline Hill. which is called Lee Garden Eight to the MTR station underneath Hyson Place within an 8-minute walk. I was told today it's actually 5 minutes. I'm sure Sarah can do it in 4 with a high heels. Upon completion, it will create seamless working shopping, dining and leisure experience with a pleasant journey for office occupants and shoppers. The Caroline Hill Road development, a strategic move reinforcing our leading position in the Lee Gardens area, was officially named Lee Garden Eight during the year. Serving as pivotal -- as a pivotal piece in our master plan, the project will expand our portfolio by almost 30%. Lee Garden Eight, a 1 million square foot premium commercial development, which includes a 60,000 square foot green open space will set a new benchmark for sustainability and is already gaining the market's endorsement with interest from quality tenants. A 5-year MOU was signed during the year by the joint venture between Hysan and Chinachem with the Extension and Continuing Education for Life, with such a long title, of The Hong Kong Academy of Performing Arts, HKAPA, right, to be the operator of the performing arts and cultural facilities at Lee Garden Eight. Through this strategic partnership, we aim to promote diverse art and cultural experiences in line with the Hong Kong SAR Government's Blueprint for Arts and Culture and Creative Industries Development. It will also enhance the appeal and cultural vitality of Lee Gardens back to our roots, support talent development and meet the city's growing cultural needs. So having shared with you our major achievements and progress, I think you might like to take a break and watch a movie. So I would like to invite you to watch a quick video together showing the new Lee Gardens, which was unveiled late last year. [Presentation]

Thank you. Our strategic pillars continue to make solid contributions to our core operations during the year, particularly with regard to our office portfolio in the Mainland. At Lee Gardens Shanghai, on the left-hand side, we achieved strong ramp-up securing commitments for 70%, 7-0, of this office space by quality tenants. The flex office business performance of our joint venture with the world's leading flex operator, IWG, also achieved steady growth and maintained high occupancy in the Greater Bay Area. New Frontier Group, our health care investment, maintained its growth momentum with business expansion during the year, including a strategic partnership with Hong Kong Investment Corp, HKIC, to drive cross-border medical innovation in the Greater Bay Area. All of these contributions from our strategic pillars highlight our concerted efforts to identify growth opportunities under the new normal. I'll now pass the floor to Ricky, who will share with you more about Hysan's business and operations during 2024.

Thanks, Irene. Let me share with you more about Hysan business performance in 2024. During the year, our group turnover improved year-on-year by 6.2%. The ramp-up of Lee Garden Shanghai contributed to the improvement on financial results, while the structural changes continue to put pressure on the office sector. Turnover of our Hong Kong retail portfolio saw an increase of 9.5% to HKD 1.68 billion. Occupancy rate was 92%. Rental reversion rate on renewal rent review and new lettings was positive during the year. For our Hong Kong office portfolio, turnover declined by 1.5% to HKD 1.44 billion. Despite market headwinds, our Hong Kong office portfolio maintained a stable occupancy rate of 90%. Our residential leasing portfolio saw an increase in both turnover and occupancy. Turnover increased by 6.3% to HKD 218 million, while occupancy increased to 73%, primarily the result of increased demand from new experts coming to Hong Kong and expanding pool of executive professional and graduate entering Hong Kong through various talent schemes. As for Lee Garden Shanghai, we achieved strong ramp-up and start to deliver a new stream of recurring income for our group. As mentioned in the previous slide, our rental reversion rate for Hong Kong portfolio was positive during the year, with turnover increased by 9.5% and occupancy standing at 92% for retail. The positive rental reversion was mainly attributed to our asset enhancement work and ongoing positive results from the Lee Garden Rejuvenations, which help attract and secure tenants with stronger sales potential and higher rental affordability. We strengthened our communication and marketing collaborations with anchor tenants during the year to create better customer experience and sales performance. Lee Garden One and Lee Garden Five also welcomed the reopening of several major luxury anchor tenants. The reopening of the expanded and new Maison reinforce Lee Garden's position as a premier destination for top luxury brands in Hong Kong. The second half of 2024 saw the arrival of strategic addition to the tenant mix at Lee Garden One, including curated lifestyle brands alongside fine dining restaurants. As Irene mentioned earlier, notable arrival include Hong Kong first Michelin Green Star certified restaurant. These additions complement Lee Garden One's luxury flagship store to deliver a holistic high-end retail and culinary experience. Hysan Place underwent a new phase of transformation with renovations extended from the atrium on the first floor to the third floor, where over 30 international and local brands were welcomed. The first phase of transformation received an award in the best shopping experience category at the MIPIM Asia Award 2024, recognizing the refreshed urban living and shopping experience offered at Hysan Place. We have been receiving long-term support from our members, serving multi-generations of old and new Hong Kong. Compared to 2023, there has been a 2% increase in the overall member sales. Member contribution to sales increased by 3%. The average spending of our top-tier members reached HKD 1.6 million per member. With the launch of our new app in the second quarter of 2024, we were able to enhance our customer segmentation and digital engagement. Our new app attracted more than 60,000 members in just 2 weeks (sic) [ 6 weeks ] since its launch, with a 71% increase in the number of Hy's members with spending. As for marketing efforts, during the year, we implemented more than 210 campaigns to engage the community, driving over 3 million footfall and positioning Lee Gardens as a vibrant destination for locals and tourists. Partnerships is a key driver of retail to strengthen our destination appeal. We collaborated with more than 110 strategic partners in a series of exclusive in-store event activations, joint awareness and publicity campaign and outdoor installation to engage the community. For our Hong Kong office portfolio, turnover declined by 1.5%, occupancy remained stable at 90%, supported by ongoing effort to diversify our tenant mix by leveraging our unique position and offering. Our diversified tenant base helped our office portfolio remain resilient. The year saw thriving demand from a wider catchment area with organic expansion from the co-working, wealth management, service and semi-retail sectors. I'll now pass the floor to Andy, who will share with you more about Hysan's financial performance for 2024.

Thank you, Ricky. Okay. On this page, we are going to take a look at some of the key financial metrics. First of all, shareholders' fund and NAV per share, both declined by 1.7% and 1.8%. That -- a good part of that is attributable to the fair value measurement of investment property, which is noncash in nature. And in terms of dividend, our full year dividend for 2024 is HKD 1.08, same as last year. Next page, some of the capital management key metrics. In terms of gearing, we are at 31.4% as of the 2024 year-end, a slight increase from previous year as our strategic CapEx project continue to progress according to our plan and within budget. So the gearing is pretty much healthy and within our plan. And in terms of effective interest rate, it's 4.3% during the year, pretty much similar to the previous year. Of course, interest rate cut cycle has begun. And in the second half, we are seeing a slight drop in terms of effective interest rate, which is around 20 bps in the second half. And for the fixed debt to floating debt ratio, we maintain around 64 -- 61% of fixed rate debt. That's pretty much an optimized level, and we will continue to optimize this debt profile according to the interest rate change. And our average debt maturity is 3.4 years, which is pretty healthy. And also during the year, we have secured a HKD 8 billion syndicated loan participated by 20 leading banks, both international and in Hong Kong. So that gives us a very healthy buffer and ample financial resources in the upcoming refinancing activity over the next 2 to 3 years. And in terms of undrawn committed facility and cash, we have a very healthy HKD 18.9 billion available as of the year-end. And also in terms of green and sustainable finance, it accounts for 40% of our current debt profile, which shows our company's support of sustainability initiatives. Okay. Next is a quick recap on cap rate. Basically it's the same as last year. So there's no change in cap rate.

Let me sum up. At this significant moment in our history as we embarked on the second century of contributing to Hong Kong's development, we are more committed than ever to the future. We recognize that our legacy is more than just the history of our company. It must continue to evolve based on a strong foundation of trust, shared values, culture and unity, underpinned by our long-term vision. We remain committed to financial discipline. Our focus on managing strong liquidity, strengthening the balance sheet and maintaining access to the capital markets was recently underscored by, as Andy mentioned, our HKD 8 billion 4-year syndicated loan, which received great support, and we secured them from 20 leading international and local banks, ensuring ample resources for refinancing and working capital needs as we continue to deliver sustainable long-term value. We are confident that our multifaceted development and enhancement plans will not only future-proof our portfolio, but also open a new chapter in our growth history. Looking ahead with optimism and determination, we will continue to transform the Lee Gardens area where people come to work, live and enjoy now and for many generations to come. Thank you.

[Operator Instructions]

Fan Tso from Bank of America. So I have a couple of questions on Hong Kong retail. So could you comment a little bit about our tenant sales performance in the second half of this year -- last year as well as the Chinese New Year this year, like-for-like? Any positive deltas that we are seeing for this year versus last year? And second, could you also quantify the magnitude of the positive retail rental reversion last year, both with and without the luxury AEI spaces? And lastly, on this year, we have 35% of retail leases expiring. So how much of them have already been locked in? And based on our discussion so far, what types of reversion are we expecting for this year?

Well, I think this is -- Andy must be the most qualified to answer these questions.

Let me give it a try. Okay. So first of all, about the retail sales performance, I think you're all aware that Hong Kong retail sales was down 7% last year. And for Hysan, we are doing a little bit better than Hong Kong, but we are still in the negative territory for 2024. But we have seen a significant improvement in the second half of the year. As you may aware, in the first half of the year, there's a strong U.S. dollar and also strong Hong Kong dollar as well. So there's a lot of impact on luxury sales. But in the second half, the trend has pretty much narrowed, and we are seeing improving sales in the second half. Entering into the first months of 2025, we are seeing a positive mid-single-digit percentage year-on-year improvement in terms of tenant sales. So I think that's quite encouraging.

As well as footfall, I think, in the first 2 months.

Yes. In terms of footfall, it's a mid-single-digit percentage increase year-on-year. Okay. Next is on reversion. As we mentioned, the trend of positive rental reversion continued throughout 2024. It's a little bit hard to just carve out certain shops. But I would say the range is around a high single-digit percentage on average. That's the rental reversion that we are seeing.

Although we did see a slightly stronger first half, Andy, didn't we? And then it sort of tailed off after April as the business has tailed off a bit. And then it picked up again towards the fourth quarter.

Yes, I think we will have to see if the market sentiment improves and footfall sales continue to improve, then I think that will give it some support. But again, the market is still very much uncertain at the moment.

This is Cindy from Citi. So the first question is actually on DPS and gearing. So I think market responded quite positively on the stable DPS. So I just want to hear your thoughts on a forward-looking basis, like last year, we still have quite a chunk of CapEx, have the cash outflow, but we managed to keep the dividend. So how should we think about, like, say, gearing levels and CapEx outflow and the dividend priorities on cash flow in '25 or even '26? Hopefully, I think in '27 after we conclude all the construction, things should get better. But just on the coming 2 years, what are you thinking? This is the first thing. And second thing is I want to touch a little bit on retail occupancy, trying to better understand the 92% occupancy. So you mentioned some strategic adjustments to tenants. Would you mind elaborate a little bit more on, say, which type of tenants are we introducing? Are we seeing, let's say, they are of better affordability, as you mentioned, et cetera? And the third question -- the final question is actually on Lee Garden Eight. So I think we have about a year for it to actually completing. So have you started to negotiating with some anchor tenants? What is the targeted profile of the office tenants, say, which trades, more multinational companies? Or are you looking for, say, relocation from central, from across the city, et cetera? So just trying to better understand that.

I will pick on a few and then my colleagues can chime in. On the -- Andy can talk about the cash flow and the CapEx. I mean, it will tail off. It will narrow as we enter this finishing stage. On DPS, yes, very happy that this year, we delivered a stable set of dividends. As you know, we will always answer in this way, which is the authentic way, and that is we always have shareholders' interest in mind. We have the company's financial health in mind. So cautiously optimistic, and we also know how important it is to our stakeholders, to our shareholders, to deliver a steady dividend. We know how important it is. So if you read between the lines, we want to make sure that we do a good job. But we always say stakeholders' interest, company's interest. We always have to maintain that stance. Now as far as occupancy and how we curate, it really is the new normal. Consumers, be it retail, be it in the office space, actually have very different requirements. Now it's more obvious in retail because you can see how people go for the experience. They don't go for just the expensive items anymore. And the tourists also are spending in a different way. For office, let me talk about the office because that will relate to our Lee Garden Eight curation. Because Lee Garden Eight is a 1 million square foot development, of which about 85% is office. So that is by far the critical number. Now office in the last quite a few years, probably 5, 6 years, we have seen the structural change. So we have instituted a number of diversification strategies, including flex co-work. So over 10% of our portfolio is in co-work now. And in fact, we have -- as you know, we have a joint venture with the world's biggest and best co-work operator, IWG. And that is a very important component in our toolbox and in our strategy. We also have diversified into the service trade. Service trade, meaning medical, meaning, I would call, facial -- the stuff that we all love, beauty, beauty and massage and those are actually -- those brands are very, very -- growing very quickly, and they actually pay very good rent. And they also enjoy going upstairs. So we are mixing those into our portfolio. Education. So we are diversifying into other trades rather than just focusing in the older days on financial services and professionals. The other thing, of course, is wealth management. We have launched a special focus on wealth management. So we have top performing busy, can't even get into the lift if you happen to be in the morning. We have Standard Chartered. We have HSBC. We have a Singaporean brand called WRISE, W-R-I-S-E, and many others who can see the potential here because we're the sort of area that can make it easier, simpler, attractive for these banks to attract their clients. So for that, we have been very, very focused on diversifying. So that is really how I would answer how have we curated our portfolio. And that also leads to how we have curated LG8. Now LG8, we will go along those lines as well for our office. For the retail, it is very much young, young urban [ chic ] young -- so it will be young lux. And it's going to be -- there's going to be some open space, the urban oasis as we always describe it. But youth is where the future is. So there's no question throughout the portfolio, the focus is on youth. Hyson Place is very pumping trendy, and we are constantly refreshing that. So I think, Andy, do you want to talk about anything on cash flow and CapEx because that is really tailing off.

I think as I mentioned before, all of our major CapEx project is progressing on track and within budget. So I think our estimates of CapEx is similar and consistent with our previous estimates. So that basically is HKD 1 billion to HKD 2 billion CapEx outflow during the project period. Of course, a little bit of that could be tailing into 2027 about the back-end payments. Yes.

Because LG8 has another 18 months or so, it's H2, second half of '26. So that is -- and then, of course, you remember our bridges, the connectivity will happen about the same time. So that's our expenditure. Money well spent, I can assure you.

Okay. The gentleman on the second row.

Sam Wong from Jefferies. I have 2 questions, if I may. First is a follow-up on the office point, right? I just wonder, we all know that supply is a bit of an issue right now. So outside of that quasi retail trade that Irene just alluded to, just wonder in terms of genuine kind of office demand, are we seeing any signs of pickup in the near term? And then the second question is in terms of the cap rate, right, given the recent market transactions, do we see any need to adjust the cap rate in the near-term future? And finally, I just want to double check on the point. In terms of the first month, is it the retail sales or the footfall trend up mid-single digit or both?

Okay. Maybe, Andy, why don't you answer the cap rate, and then we can talk about the footfall and the trade.

Thank you for the questions. Cap rate, yes, we have keep it unchanged. And if you look at that compared to our peers, we're still -- I mean, we're still with a reasonable range, and we are more on the conservative side, I would say. So based on our recent discussion with the value, there's no immediate pressure for us to adjust the cap rate is still reasonable. And for the figures, the tenant sales has increased by mid-single-digit percentage in the first month, okay. And the footfall increased by a mid-teens percentage year-on-year.

Now the first question, can you just clarify a little bit on your...

Outside of quasi retail kind of trade being added to the office portfolio, are we also seeing any pickup in the genuine kind of traditional office type of demand?

General office retail?

Office. Office.

I think if we talk about demand, no one will say the office market now is booming, right? But at the same time, we do see a lot of consolidation or relocation demand. And so back to the question about whether this is from Central, We do see this multi-location consolidation rather than just moving from one building to another building. And also the market looking for high standard sustainable building that they can stay for long. And that I would say the premium sustainable standard of Lee Gardens Eight to meet most of the requirements is we are green lease [indiscernible]. At the same time, as Irene mentioned, even for traditional trade -- instead of -- other than service trade, people do enjoy the whole Lee Garden offering from the infrastructure from all kind of traffics, all kind of transportation means, the retail provisions and all the facilities and convenience of our locations. So we do see all the factors appealing to our tenants that we are talking to.

Maybe I want to add a little bit. Again, addressing the structural change. In today's working youth, right, the younger people come to work or don't want to come to work, my favorite subject. Employers have to pay more attention. We talk about wellness, we talk about mental health. We talk about why people should feel happy coming to work. I think, therefore, employers must pay more attention to that because traditionally, the banking and finance are all stationed in Central. I mean there's no real reason why you should all be in Central. If you look at the staff, if you think about those banking and finance people who have moved to Lee Gardens, they are very, very happy because there is no other place which is a city within a city. Transportation is unbelievable. We have every single type of transport, including the Ding Ding, right? So one -- number one, transportation is easy. Number two, it is really important that you have life outside your office. You can have everything from [ wonton ] to pizza to going to the gym to having -- going to an art gallery, which is within our low rise. So the variety is very, very important for the younger generation. They want to have a life, and a life outside their work as well. And I think having nice coffee shops, having the ability to grab a bite is really important. So I think increasingly, employers will look to that and with cost conscious with a cost-conscious economy people are consolidating. People are looking at downsizing, making their offices more productive. We -- for instance, LG8, we have the best -- what do you call that, 93%...

93% efficiency. And our floor plate almost 40,000 square feet. Actually, we compare with like a 15,000 square feet floor plate, if you're a multifloor tenant, let's say, you are, say, -- used to be 100,000 square feet tenant, you can be housed with by 80,000. 20% increase in efficiency can be obtained by big floor plate.

And I have to give another plug. The energy saving is about 30% because of the quality of our building because we have done it to such a green, sustainable, energy-efficient manner.

We are going to -- we are trying to -- in the process of getting the first super low energy building in Hong Kong.

The gentleman on the last row.

This is Karl Chan from JPMorgan. So I have two questions about Hong Kong retail. So the first question is about the comment that you made about the tenant sales growth in January because I guess for us, property analysts, we have been too used to hearing about decline, right? So when you talked about having achieved a mid-single-digit growth in tenant sales, I think it's quite refreshing for us. So thank you very much for that. But then I just want to follow up on that. Number one is, is the tenant sales growth that you mentioned, is it on total basis? Or is it on a same-store basis? That's the first question. And then if we -- because it's an improvement, right? So do you think it's simply because of earlier Chinese New Year this year? Or is there any other reason where you think it's important in contributing to the increase in January? And do you expect this positive tenant sales growth will sustain going into the next few months? That's my first question. And then my second question is, can you comment a bit more about the tenant sales categories by category? So say, for example, do you have a breakdown about the trend between luxury and non-luxury or which trade categories have been doing better in the past few months, which have been a bit lagging?

Karl. Okay. Maybe Ricky can start.

Okay. I think about the January sales and traffic, we do see this is -- there's two factors here. First, we do see the sentiment is a bit better. And then we also see good events and content to attract both local and the tourists from GBA, China. We do see that -- for example, if you look at our -- the new content of Hysan Place, as well as the campaign that we have done, the event we've done during the Chinese New Year. This traffic is very strong. And we also see the traffic moving into our mall as well as stimulating sales for brands. And the question about whether this is luxuries or the non-lux sectors. We do see, for even the luxury brands, for the January sales is quite good. And for the non-lux, when you come to non-lux, it really depends on brand by brand because nowadays, why we have been putting so much effort in curating the place because we really need to make it the right content so that it can sustain because this is very fast moving now for non-lux sectors. You've got to be very appealing, you got to be trendsetting. So we have to feel the power to put in the right content, do the right promotions to maintain the mass market retails.

I think, Karl, it's really where you are tested because everyone does events, everyone gives away coupons. For us, because we are driven from bottom up, every single thing has to have a meaning in life. And for me, meaning in life is generating sales and generating my numbers. So that is my only meaning in life, right? So when we do events, and it's -- we're still measuring that because that's why I drive my team very, very hard to show conversion. For instance, during Christmas, New Year, we had one of the most attractive footfall event, the Squid Game, the Squid Game, right? And who was that mirror style had some mirror person come. And that crossed an -- what was that name? So it caused an absolute -- we had to call the police because it caused an absolute crazy explosion. Now is that going to give me a lot of conversion and where, right. Not too sure that the people come and watch this man and the Squid Game will then go and buy two Chanel handbags. Maybe don't know, right? But that's where I need to track them. Then, of course, Chinese New Year. Again, it's all about your skill set. I think that -- I mean, we can always do better, but I thought this year was pretty promising. We had an area where we closed 3 streets, right, area-wide [ Mahjong ] competition, who does that? Yes. So we do a lot of very unique thoughtful events. But for me, the most important thing is why did we do it? Did it do anything for us? And if not, what have we learned? How can it make my traffic? How can it help me appear more times on [indiscernible]? How can, how can, right? So this is how we look at our business. We are very digital and data-driven. So this is where we really -- these guys, they know every day they have to answer to a number.

Yes. I think maybe 1 or 2 more points that we can share. First, we talk about collaboration many times during the presentation because this is -- we find this is the best way to use our marketing money. And then because it help on say, we share the cost as well as we put in other people best content to do the marketing. So we don't do the marketing using only [indiscernible] money. I think that's very critical for us. And secondly, you see we don't really spend too much money about setup so that you can take Instagram photos because it doesn't really give you the return. But instead, for the event that we just talked about, some of the event is so interesting about creating the moment and the vibes that you will take your photos and the impact is even bigger than you stay in front of a beautiful bedroom and take a photos. So I think this is some theory or principle behind our marketing.

Due to the time constraint, we will take some questions from the online platform. It is from Praveen from Morgan Stanley. He wants to know 2 things. One is about the company's plan on the 4.1% suburbs? And the second question is about, can the company describe the bank covenants? What is the key ratio about?

This has to be Andy.

Okay. On the 4.1% suburb, the company is aware of the timetable. We have the first callable day in June. So we are evaluating different options, and we are planning and we will manage it. And the second point about bank covenant, of course, we have the customary gearing types of covenant there. And what I can say is we have a very ample headroom compared to our current gearing ratio.

Thank you, management. Today's briefing session is completed, and we sincerely invite all of you to come and enjoy in our Lee Garden.