Shui On Land Limited (272) Earnings Call Transcript & Summary

Good evening, ladies and gentlemen. Welcome to Shui On Land's 2025 Annual Results Analyst Briefing. Thank you for joining us online this evening. We are pleased to have 5 members of the senior management team with us today: Mr. Vincent Lo, Chairman; Ms. Stephanie Lo, Vice Chairman of Shui On Land; Mr. Douglas Sung, Chief Financial Officer and Chief Investment Officer of Shui On Land; Ms. Jessica Wang, Chief Executive Officer of Shui On Land; and Mr. Allan Zhang, Chief Executive Officer of Shui On Xintiandi. We will start with a presentation by the management, followed by a Q&A session. During the course of the webcast, you may submit your questions via the webcast portal, and they will be conveyed to our management during the Q&A session. Without further ado, may I invite Mr. Lo to start with some opening remarks. Mr. Lo, please?

Good evening, and thank you for attending our briefing. Last year hasn't been easy for any developers on the Mainland due to the persistent geopolitical uncertainties, regional walls and trade tensions and then the muted consumer confidence because of the uncertainty around. And then the funding market was very difficult, liquidity concerns and constraints of the developers and then the prolonged adjustment and correction of the property sector. But for the high-quality assets, there's still resilient demand and the national focus on urban regeneration actually is providing good opportunities for the appropriate developers. I'll just stop there and let my colleagues give you all the details.

Thank you, Chairman. Good evening, everyone. Thanks for joining our analyst briefing. Let me start by giving some highlights of our 2025 results. As you all know, the operating environment for China's property sector remains -- or remained extremely challenging last year. Despite the market volatility, though, our group recorded core earnings of RMB 397 million for the year, demonstrating resilience in our operations. However, primarily due to noncash fair value adjustments on our investment properties and inventory impairment, we reported a loss attributable to shareholders of RMB 1.78 billion. But we continue with our prudent capital management. This remains our top priority. At the end of 2025, our net gearing ratios stood at 52%, supported by cash and bank deposits of RMB 6.5 billion. During the year, we fulfilled all of our financial obligations on time, including the repayment of the USD 490 million senior note due in March 2025. Since 2021, we have repaid a total of RMB 48.6 billion offshore debt, significantly reducing the portion of foreign currency funding from 77% to 19% and lowering our overall cost of debt. Earlier this year, we actually raised USD 300 million bond and retendered for the senior note that's due in June. So I think that basically took care of almost all of our U.S. dollar offerings offshore. On a more positive note, sustained -- we have seen sustained rental growth for the third consecutive year. Total rental and related income grew 2% to RMB 3.6 billion. Our retail portfolio, in particular, showed strong growth with retail sales and shopper traffic growing at 15% and 12%, respectively. We also expanded our number of asset-light projects Yong Xin Li, which is a high-end residential project within Shanghai Greater Xintiandi community. This is essentially Lakeville VII. We acquired the site together with a local government partner as well as other financial investors, pushing our asset-light model forward on a new track. And secondly, we also acquired another urban village renewal project called Sanlin in the Pudong New District in Shanghai. So this further strengthens our future Shanghai land bank. A quick few words on our sustainability. Despite the very challenging operating environment, we continue to maintain our commitment in sustainability, whether it's in decarbonization, increasing our climate resilience across our portfolio as well as increasing our tenant engagement along the sustainability journey. So just a quick few highlights. We've reduced our Scope 1 and 2 emissions by 57% against the 2019 base year. We've also reduced our Scope 3 tenant emissions by 32%. And we got a GRESB 5 Star and HKQAA ESG AA rating. Panlong Xintiandi in Shanghai won the ULI Asia Pacific Award for Excellence. So we're very pleased to share some of these important milestones and hope that this continues to prove our commitment within this sector and further embed sustainability within our operations. In terms of our Xintiandi brand, last year, we made a very important milestone announcement. We unveiled a new Xintiandi community brand in September of '25. The purpose of this actually is to elevate Xintiandi from a retail brand to a community brand. The future urban cities in China, we believe, needs different urban solutions, something that is more mixed use, that is live, work, play, learn that integrates retail, residential office culture as well as green space to create inclusive and sustainable urban solutions for cities of the future. So the future Xintiandi brand has 4 different community models under it. We have the greater Xintiandi, neighborhood as well as urban retreat as well as knowledge communities. And these 4 different community models, we feel give us a lot of room for growth in different Chinese cities in the future. And this also leverages our strength in heritage preservation as well as integrated development and long-term operations across our platforms. Just a few words on the China property market. It obviously remains a very challenging operating environment. It's a very prolonged adjustment and correction. Last year, nationwide sales volume and value has further declined by 8.7% and 12.6% year-on-year, respectively. And the consumer sentiment remains quite subdued with very subdued market activity. However, on a relative basis, the high-end segment, in particular, in Shanghai and other first-tier cities demonstrated more resilience, and this is supported by demand for high-quality products and services and long-term value retention of these assets. I think from a retail point of view, while the occupancy was improving in Shanghai, we did see Shanghai's prime and decentralized rents declined by 4.3% and 6.4%, respectively, last year. And as a result of this increased competition because of increasing supply as well, landlords are starting to prioritize footfall and tenant quality in this very competitive environment. And what we have been seeing is that experiential offerings and cultural-driven spending have really emerged as a driver of retail demand. And this is a new consumption pattern, I think, that will be here to stay. Another bright spot that we can share is that in Shanghai last year, international inbound tourism grew by about 40%. This 40% surge in international travelers actually brought new consumption to a market where consumption has been very challenged. And what a lot of these new travelers are looking for are these integrated more social and/or cultural-led destinations. So actually, our properties like Xintiandi as Panlong Tiandi have been able to benefit from that, and Allan can share more later. From an office segment, this continues to be the perfect storm with an increase in supply and a dampening of demand. With the macro environment being as it is, there is a dampened business sentiment. And so a lot of corporate occupiers remain very, very cost conscious. So Shanghai citywide rents were down by about 11% year-on-year. And this supply overhang, I think, will not be resolved in the short term. But what we're doing to adjust is that we want to make sure that our occupancy stays at a very high level that we can ride through the volatility of this storm. A few words about strategy going forward. Liquidity management and financial safety obviously remain as our very top priority. We are going to leverage on our new community brand or the upgraded Xintiandi brand as well as our luxury residential living brand, Lakeville, continuing to use these brands to expand our land bank through an asset-light strategy. And in the longer term, we do believe that this will lead to a better balance in profit between property development, asset management as well as fee income. So with that, I'll hand over to Douglas.

Thank you, Stephanie. Good afternoon, everyone. Let me give a quick summary of our 2025 annual results. So on this page, you can see the high-level summary. We recorded revenue of just about RMB 4.1 billion. Gross profit is RMB 2.1 billion. Core earnings was approximately RMB 400 million. Property sales revenue of approximately RMB 500 million and total rental income of RMB 3.6 billion. Just a couple of points to note. We saw a relatively large decline in revenue in 2025. That's mainly because of residential. On the residential sales, we basically don't have new completion or handover in 2025. All the sales are from inventory. So that was the main reason behind the drop in revenue. And then total rental income of RMB 3.6 billion represent a 2% increase in overall rental income. So we thought that that was actually a pretty remarkable performance under a very difficult commercial market in 2025. So in terms of the income statement on the next page, just a few highlights. We talked about revenue of RMB 4.1 billion property sales. You can see that rental income recorded a 21% year-on-year decline. This is primarily due to the restructuring of KIC, which we completed at the end of 2024 and beginning of 2025. So the KIC project is no longer consolidated, and it is now a JV and associate project. So that's affected the top line. Gross profit was RMB 2.1 billion, as mentioned earlier. Other income is primarily coming from interest income. The expenses item are pretty regular, but you can see that we did manage to have cost savings in 2025 compared to 2024. I'll talk a little bit more about the IP valuation. So the RMB 643 million of decline in fair value is on the consolidated basis. Other gains and losses of losses of RMB 924 million, this is mainly coming from impairment loss on some of our inventory and unsold stock. And you can see also finance costs of just over RMB 1.5 billion represent a 23% decline from a year ago. So this is a result of, one, we have basically repaid most of our offshore -- more expensive offshore debt; and b, benefiting from a decline in interest rate in PRC, onshore PRC. So overall, we have a loss before tax of just over RMB 2 billion. And then on the next page, attributable to shareholders for the year is a loss of RMB 1.78 billion. So on the next page, you can see the calculation on core earnings. So here is the breakdown on the share of decline in fair value of IP between consolidated basis, net of tax, net of noncontrolling interest, so RMB 562 million. The impairment loss of unsold inventory, as I mentioned earlier, just over RMB 900 million and our share of the impairment loss and also decline in fair value in IP on a joint venture and associate basis. So altogether, the net effect of this is about RMB 2.1 billion. So if we put this back into our last year's operating performance, the core earnings would have been just under RMB 400 million, about 12% decline from a year ago. So this 12% decline is really mainly coming from slowdown in residential sales and booking in 2025 because we don't have any major new completion last year. So next page is on the balance sheet, the key metrics. So you can see total assets is just over RMB 82 billion, total debt just over RMB 26 billion. Shareholders' equity per share is RMB 4.54. We had cash balance of just over RMB 6.4 billion and net debt of RMB 19.8 billion. Gearing ratio was stable at 52% compared to 2024. You can see that total debt and net debt continue to be reduced by 12% and 11%, respectively, from a year ago. Next page. So the movement in asset and debt, you can see net asset at the end of last year was just over RMB 38 billion, the decline from 2024 was mainly because of the reduction in fair values and impairment provisions. And net debt, you can see that just under RMB 20 billion was actually one of the lowest level in the last 4 years. So we continue to work to maintain a very stable and acceptable gearing ratio and debt ratio in the last few years. Next page. Here is the breakdown on IP portfolio. I won't go through it building by building. So overall, our carrying value of the total portfolio was RMB 97.7 billion, at the end of 2025, we took about RMB 2 billion provision, a decrease in fair value. So that represents about 2% of the overall value, overall carrying value. And the decline is primarily coming from the office assets. So if you look through the different assets, you will see that those properties with higher office exposure would have seen a much larger fair value decline compared to the other assets. So overall, it's a 2% markdown, but some of the assets, you can see that is -- we have seen a fair value decline of up to 5%. Next page. So on gearing and net debt movement over the past 10 years or so, this is just for your reference. So overall, you can see that we have worked very hard in the past 8 to 10 years to keep our gearing ratio at about 50% level. So that will continue to be one of our priority going forward to maintain a healthy balance sheet. Next page. So here, on the maturity profile, you can see that since 2023, we have worked our way down to a much lower maturity amount going forward. So from about RMB 14 billion down to this year, we had just under RMB 7 billion of debt maturity. And in the coming 2 years, actually, that ratio -- that amount will be dropped significantly further. So it's fair, I think, to say that the biggest pressure on our refinancing and our debt maturity have passed. And hopefully, we can continue to remain a pretty decent maturity profile going forward. So for this year, in the first half on the right-hand side chart, you can see that we have about [ RMB 5 billion ] of maturity, including [ RMB 2.8 billion ] of our USD 400 million bond maturing in June. As you know, we have already refinanced USD 300 million out of the USD 400 million. So we have about [ RMB 2.5 billion ] or so of maturity left for first half of this year. A majority of that is onshore relating to our projects. Next page. So on the capital management, a couple of things to note. One is our debt profile, we have basically completed pivoting our financing from offshore to onshore. So you can see that now we have less than 20% offshore exposure. As a result, our cost of -- average cost of debt has come down substantially as well to approximately 4.2% at the end of last year, excluding fees and one-off charges. And then the other thing to note is our overall rental income has continued to increase last few years, and our total interest costs have come down. So as a result, you can see that in the first chart, the rental income and interest cost ratio has continued to improve. So this gives us a much better credit profile and hopefully can help us to withstand the current pressure in the capital market much better. Next page. So near-term priority and our close here, providing sufficient and maintaining sufficient liquidity will continue to be our top priority. So this hasn't changed. We will continue to strive to keep our debt low and continue to keep our balance sheet healthy. In terms of our income and our cash flow, Jessica and Allan will talk a lot more about the businesses, but we still have a sizable residential inventory for sale in Shanghai and Wuhan coming up in the next couple of years. We expect our rental income will continue to grow. And also, we are growing our fee income as well. So hopefully, this give us stable income in the next couple of years and continue to work towards a healthy financial condition. On that, I'll pass over to Jessica.

Yes. Thank you, Douglas. So let me take you through our property sales in 2025. For the full year, our contract sales is RMB 7.9 billion. This includes residential sales of RMB 7.2 billion and commercial property sales of RMB 670 million. In addition, we recorded RMB 639 million in subscriber sales, which will convert to contract sales in the coming months. I'd like to highlight 2 projects in particular. The first one is the heritage inspired villas and townhouses at Lakeville VI. Following the record-breaking sales of the super high-rise units, the villas and townhouses are also generated strong interest from high net worth buyers. All units with presales permits have been sold at an average pricing of RMB 311,000 per square meter. The remaining units will proceed to contract signing once presale permits are obtained. The second one is [ La Ville ], the final residential phase of Wuhan Xintiandi. After 2 decades of development, Wuhan Xintiandi has become a true landmark in the city, and its residential projects have always been well received by those high net worth customers in Wuhan. Since its launch in November 2025, sales momentum has been strong. By end of 2025, 72% of total units were sold and subscribed, significantly outperforming other high-end residential projects in the Archie Riverfront area. The project is now approaching sellout. As of end of 2025, our lock-in sales stood at RMB 17.2 billion, which will be delivered to customers and recognized in our financial results in 2026 and beyond. Next. Now let's look at what we have lined up for 2026. We have approximately 133,000 square meters of residential GFA available for sale and presale in 2026, across 6 projects in Shanghai and Wuhan. This includes the remaining heritage inspired villas and townhouses at Lakeville VI pending presale permits at approximately 4,100 square meters with structural completion target for Q2 2027 and handover in Q4 2027. It also includes the remaining units at [ La Ville ], the final residential phase of Wuhan Xintiandi at approximate 14,300 square meters with structural completion target for Q3 2027 and handover in Q4 2027. Next, now I'd like to share some of our observations on the market and the industry. First, on the policy front, the 2026 2 sessions set a new tone for the property market, shifting from last year's stabilizing decline to focusing on stability. This signals that the most difficult phase might be behind us, and the policy is shifting from arresting decline to achieving more sustained market stabilization. At the same time, the government continued to push urban regeneration and the quality homes initiative with coordinate with physical, tax and financial measures, providing meaningful support for our gradual market recovery and towards a new model of real estate development. On the market side, 2025 saw a clear K-shaped divergency. High-tier cities and luxury segment held up relevantly relatively well, underpinned by strong demand for quality living. The broader market remained under pressure. Sales and price in primary housing market continue to adjust, though the rate of decline narrowed versus that of 2024 with early signs of stabilization emerging. The secondary market was largely driven by price for volume dynamic. Now let me further share some observations on Shanghai. Last year, Shanghai also continued to show this K-shaped pattern. In the primary housing quality projects. In the primary housing market, sales volume dipped slightly, but average selling price actually rose driven by high-quality projects. In the secondary housing market, transactions were mainly driven by those units with lower total price. One notable development is the recently 7 policies in Shanghai. These measures target 3 key areas: easing purchase restriction, raising provident fund limits and property tax relief. The market response has been positive with buyers' confidence picking up, especially for those first home buyers and upgrade demand. We will be watching transaction data closely over the coming months to see whether this can be sustained a more steady recovery. Against this backdrop, here are our 3 core business strategies. Firstly, we will continue to focus on top-tier cities with priority in Shanghai. In the current market environment, we will remain disciplined and only consider new investment opportunities on the basis of maintaining financial prudence. Secondly, we will continue to advance our best-in-class product strategy echoed by the Lakeville brand. By leveraging the Xintiandi community brand and our differentiated competitive advantages, we will seize opportunities in the middle to high-end market segment driven by the quality home policy and continuously strengthen our brand influence in core markets. Thirdly, until the market correction runs its course, we will continue to develop with the asset-light model and further expand our strategic partnerships and collaborations with investors to grow our business and drive the company's steady and sustainable development. Next page. Now let me walk you through our asset-light strategy in more details. In simple terms, our asset-light strategy has 3 key components: Firstly, we progressively introduced financial investors to participate in our mature commercial assets, recycling capital strategically. Secondly, we would further broaden our capital source by expanding and diversifying our partnerships. We aim to cultivate a broad base of external capital sources and a robust investment ecosystem to support the next phase growth of the business. Thirdly, by leveraging Shui On's brand strength and core competencies, we will partner with strategically aligned investors and bring complementary strength to pursue new development opportunities through minority stakes. This approach will enable healthy business expansion with a lighter capital footprint. This strategy delivers 3 key benefits. Firstly, unlocking value. It could unlock hidden value of existing asset base and better capitalize on Shui On's brand strength and core competence going forward. Secondly, managing risk. In a highly volatile market, we could expand prudently while keeping capital outlay to a minimum in the short run. Asset-light strategy is the best way to balance growth with risk. Thirdly, expanding recurrent income source. We are actively developing new recurring fee-based income streams to support the company's long-term growth with stable cash flow. But asset-light is a means not an end. Our goal is sustainable growth. Our market position, we aim to lead in selective markets with Shanghai as our home base and further expansion into the Greater Bay Area. On business model, we are finding the right balance between property development and asset management and on group strategic positioning in the changing market, we are evolving from a commercial focused developer into a developer, investor and asset manager. So moving to our 4 asset-light projects currently in progress. Together, they represent approximately 1.22 million square meters of residential GFA and 291,000 square meters of commercial GFA. Starting from Yong Xin Li, we provide a management service to Yongye Group in this project while without any equity stake. The project comprises approximately 105,000 square meters of residential, 50,000 square meters of commercial and office space. Construction will commence in the second half of this year with completion target for 2032. Nanqiao Tiandi is a village renewal project in Fengxian District. In partnership with the district government, we hold a 5% stake and provide full management services across development, sales, marketing, asset management and operations. The project comprises approximately 326,000 square meters of residential, 95,000 square meters of commercial space and other facilities. The project development was commenced in 2025 with completion target for 2031. Yong Xin Li is a 3-way partnership between Shui On and Yongye and Tian An Group, where we will hold an equity stake of 15%. The project comprises approximately 156,000 square meters of residential, 55,000 square meters of commercial space. Both Yong Xin Li and Yong Nian Li will be developed under the Lakeville brand. Relocation is completed with construction starting in the first half of this year and the completion target for 2031. Finally, Shanghai Sanlin is a large-scale urban village renewal project in Pudong, where we hold a 13.26% interest. It's centered on the renewal of Sanlin Old Town preserving the historical character of the ancient town while creating a large-scale mixed-use community that integrates tradition and modern commerce, quality living and a strong ecological environment. This project comprises approximately 633,000 square meters of residential, 91,000 square meters of commercial space. It will be a new landmark for Pudong new area. Completion is targeted for 2035. Now I'd like to highlight another project we are actively advancing Zhaojialou Xintiandi. We hold a 60% stake in this one, which is higher than the asset-light projects I just walked you through. Zhaolou Xintiandi is our second urban retreat project following the success of Panlong Xintiandi. Building on the model, it draws on the nearly 1,000-year history of Zhaojialou ancient town and the distinctive Jiangnan water town heritage to create a Xintiandi community that brings together history in natural and modern living. The project includes approximately 150,000 square meters of residential and approximately 73,000 square meters of commercial and cultural facilities. It covers 3 key zones, a leisure and nature retreat centered on an ecological park and Xiaoyan Lake. Xintiandi cultural and commercial district showcase the area's historical character and a high-quality international residential area. We believe it will be another landmark community for Shanghai. Development is progressing steadily. Public facilities and supporting infrastructure works commenced in July 2025, and we successfully acquired the first residential plot in January 2026. The overall project is targeting an opening as early as 2032. So turning to our residential development land bank and the saleable resources. As of end of 2025, our total saleable resources stand at RMB 36.2 billion with an attributable value of RMB 17.3 billion. By city, RMB 9.3 billion of these are in Shanghai with the remaining RMB 26.9 billion primarily in Wuhan. Next. Beyond the residential, we also have a sizable commercial development pipeline that will drive further growth in rental and recurring income. The total GFA across this portfolio stands at 1.638 million square meters with 57% in office and 43% in retail. So that's all from me, and I will now hand over to Allan. Thank you.

Thank you, Jessica. Good evening, everyone. In this section, I would like to give an overview of our commercial asset management. Let's start with our rental performance, which has delivered sustained growth for the third consecutive year. So as you can see from this chart, our total rental and related income has demonstrated a very strong growth trajectory because of the quality of our assets and also the proactive asset management approach. Between 2022 and 2025, the compounded growth rate reached 9%, growing from RMB 2.8 billion to RMB 3.6 billion. So on the retail side, our average occupancy rate remained stable at 94%. More importantly, we observed a very robust operational momentum. Retail sales grew by 15% year-on-year, while shopper traffic increased by 12% year-on-year. These figures basically reflect the strong appeal of our lifestyle destinations. And additionally, our new opened projects, Xintiandi Dongtaili in Shanghai and also the KIC Park in Wuhan have already started to contribute to our rental income. On the office side, our mature Shanghai office portfolio continued to improve the performance, achieving a very high average occupancy rate of 93% despite a subdued office market environment, our office resilience has been firmly supported by a refined leasing strategy, strong talent relationships and our differentiated community services. And in the past years, we successfully attract leading global tenants to our portfolio. For example, we have seen encouraging leasing progress at the CPIC Xintiandi Commercial Center, welcoming international renowned brands such as Publicis, Victoria's Secret, HSBC and Fraser properties. Let's turn to our commercial portfolio, which is firmly anchored by the prime assets in Shanghai. As of the end of 2025, our completed commercial assets in the city totaled an impressive RMB 79 billion. The prime Shanghai assets includes our flagship developments such as Shanghai Xintiandi, Panlong Xintiandi, Hong Shou Fang, et cetera, as well as our newly opened CPIC Xintiandi Commercial Center. There is another noteworthy figure here in 2025, the total rental and related income from our Shanghai portfolio already reached RMB 2.8 billion, accounting for 78% of our total rental and related income and this portfolio in Shanghai also represent a 3% year-on-year increase in terms of rental. Later on, let's introduce a little bit about our 2 newly opened projects. The first one -- yes, the first one, it's the Shanghai Xintiandi Dongtaili, which is opened in December 2025. As part of the CPIC Xintiandi Commercial Center, Dongtaili basically spans around 84,000 square meters of retail GFA. It is designed as an open street-style all-weather protected destination for shopping, leisure, entertainment and culture. It aims to become a vibrant new hub that will reach the Xintiandi ecosystem and reinforce our position as a leader in creating destination people want to go. Dongtaili is organized around 3 core experience pillars. The first one is the wellness fulfillment featuring sports brands, gym, spa and wellness offerings. The second is the city pulse component, which brings together al fresco dining, nightlife and entertainment, alongside international and trendy fashion and lifestyle concepts. And the last one is culture immersion, including theater, galleries, culture spaces and other heritage elements. The tenant mix reflects our commitment to creating a distinctive experience. We are proud to see that we have already attracted a number of renowned international and local brands to these projects. And next, it's a little bit introduction about the Wuhan KIC Park. This is also a very exciting new opening last year and -- in September last year. With the retail GFA of 48,000 square meter, KIC Park is positioned as Wuhan's first ever park integrated commercial destination and also the Optics Valley area's first pass friendly spaces. The project is designed as a social and entertainment destination that offers a lifestyle in nature experience, bringing retail dining and leisure into a green and open environment. Overall, we have 40% of our tenants are first entry into Wuhan, either in Wuhan or Optics Valley areas. This speaks directly to KIC Park's appeal as a destination for flagship and concept stores. The market response has been overwhelmingly positive. In the first week of opening, we welcomed over 985,000 visitors. This is a remarkable beginning that demonstrates the strong consumer demand for this kind of retail experience. As of end of last year, the project has already achieved a 90% occupancy rate, reflecting the strong leasing momentum and tenant confidence. Well, my last slide is about our key strategic initiative and the near-term focus. And our overarching goal remains very clear and straightforward to strengthen our 3 growth engines in order to achieve sustainable and profitable growth. So these 3 engines are: first, driving steady organic growth in our AUMs; second, ensuring successful opening in every new project we undertake; and third, executing a refined asset-light strategy to optimize our capital deployment and the partnership model. So turning to the operational focus for 2026. We have clear priorities across our 2 core segments. So on the retail side, our focus is sustaining momentum in both the shopper traffic and our talent sales. So to achieve this, we are taking a multipronged approach. First, we are capitalizing on the emerging customer segment, particularly the inbound tourism. At the same time, we are rolling out innovative marketing events and the community content, including our renowned brand IPs like Heritage NOW together to keep our space vibrant and drive repeated visitors. We're also doubling down on what makes us very unique, strengthening the customers' perception of Xintiandi style services and its experiences. And finally, we continuously upgrade our trade mix to make sure that we stay relevant and compelling by bringing in fresh brand and also the concept that resonate with today's customer. On the office side, it is very clear that we will maintain high occupancy rate as our top priority, especially in such a challenging market it's very important to maintain the top priority as the occupancy rate. So to get there, we are focused on a few key areas, including the strengthening of our tenant retention by offering a very flexible leasing strategies and also innovate our offerings, including high-quality spaces plus add value services. And finally, we're enhancing our tenant engagement platform through differentiated community services. So we hopefully, with all these measures, we can maintain our -- both the retail and office at a very healthy operation level. That concludes my part. Thank you.