Sun Hung Kai & Co. Limited (86) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome joining Sun Hung Kai's 2024 Interim Results Investor Presentation. The presentation today will be conducted in English and in a hybrid format. For offline participants, Chinese interpretation is available through the provided devices. Online attendees may switch to the Chinese channel and mute the original audio if you need translation. I'm Shirley Zhang, Investor Relations Vice President. The senior executive today here with me are Mr. Brendan McGraw, Executive Director and Group CFO; Mr. Tony Edwards, Deputy CEO. In today's meeting, we will talk you through the company's business performance in the first half, provide an outlook for the second half and share our future plans. Following the presentation, we will open the floor for questions. Offline participants, please raise your hands if you would like to ask a question, and our colleague will hand you a mic promptly. Online participants can submit questions through the Q&A box at the bottom of the panel, and I will read them out. For all questions, please make sure to include your name and affiliation. Before we start, we would like to take the opportunity to remind you that today's discussion will contain forward-looking statements, which are based on assumptions and factors that are beyond the control of the group and are not necessarily indicative of -- or guarantees of the group's future performance. Now I would like to pass to Brendan to start presentation. Brendan, please?

Thank you. Good morning, everybody. I'd like to start by talking about the 3 core pillars of our business. Our core business is built around 3 pillars: credit, investment management and funds management. The credit business mainly conducted through UAF and Sun Hung Kai Credit provides us with recurring and resilient cash flow. Our Investment Management business leverages the group's expertise in global network to seek attractive risk-adjusted returns across diversified asset classes, investment horizons and geographies. Our Funds Management business is fully licensed to manage external capital through fund partnerships, SHK Capital Partners funds, investment solutions as well as family office solutions aiming to diversify our strategies and add new streams of recurring cash flow to the group. I would like to share with you how we will foster the growth of our business and enhance shareholder value. In our consumer finance business, our new product, SIM credit card, which was launched last year, plays a key role in rejuvenating our customer demographics, diversifying our revenue streams and generating cross-selling potential for our personal loans. In light of the current unfavorable economic conditions, we will aim to strike a balance between business growth and risk by tightening loan underwriting criteria in Hong Kong. In Mainland China, we continue to strategically shift our focus from unsecured loans to secured lending. In our mortgage loan business, we are prioritizing capital preservation and operating efficiency over the growth in the cyclical market. The overall return of our Investment Management segment continued to improve and resumed to a positive territory in the first half of 2024. Operationally, we continue to invest in upgrading our technological infrastructure, streamlining business processes, augmenting our investment team and strengthening risk management frameworks. We remain cautious on capital deployment while capitalizing on opportunities arising from financial dislocations. The synergies among our investment management, funds management and credit businesses are becoming increasingly evident. We continue to build out the funds management platform with robust AUM growth, driven by both net capital inflow and solid fund performance in the first half of 2024. Through our multifamily office platform, FOS, we further expanded our client base to high net worth individuals and family offices, providing our clients with customized alternative investment solutions. Recently, we formed a strategic alliance with GAM Investments, aiming at enhancing our client coverage, product offerings and distribution capabilities across Greater China. Our ample liquidity and low gearing have provided strong steam power for our long-term growth. Our consistent dividend policy and continued share buyback demonstrate our commitment to delivering value to shareholders. Since 2007, we have returned a total of HKD 14.1 billion to shareholders through dividends and share buybacks. Next, I'd like to take you through our 2024 interim results. In the first half of 2024, headwinds persisted as sticky inflation in major developed economies continue to drive market volatility. Resulting prolonged restrictive monetary policy exerted further pressure on global economic growth and created financial dislocations. Regionally, the weaker-than-expected economic recovery in Greater China post challenges for our credit business. Despite these challenges, we have delivered a solid set of results for the first half of 2024. We navigated the volatile and uncertain business environment by maintaining a conservative position while proactively managing our investment portfolio and exposure and maintaining a strong balance sheet with ample liquidity. Revenue for the first half of 2024 was HKD 1.9 billion, slightly down by 2.7% year-on-year. Interest income from the credit business was HKD 1.7 billion, remaining the biggest contributor. Pretax contribution rebounded to HKD 307.4 million from HKD 36.5 million a year earlier. The year-on-year improvement was mainly attributed to the stabilization of our investment asset value. After taxation and noncontrolling interests, attributable profit was HKD 75.4 million, a reverse from last year's attributable loss of HKD 287.5 million. The book value per share was HKD 10.7, decreasing 2.7% year-on-year. A set of key metrics improved during the period as well. Net gearing ratio decreased by 530 basis points to 33.3% from the end of 2023, reflecting our efforts in deleveraging and focusing on capital efficiency. The interest coverage ratio increased by 50% to 1.6x over the same period. Cost-to-income ratio improved by 210 basis points to 35.4%. We remain committed to returning value to our shareholders. The Board declared an interim dividend of HKD 0.12 per share, which is consistent with last year. We also maintained our share repurchase policies during the first half of 2024. Now looking at our balance sheet and capital structure. Our balance sheet remains solid, with total assets at HKD 39.5 billion as of the 30th of June 2024. The cash position remained strong at HKD 6.7 billion. We manage our balance sheet by matching the horizon of different assets and liabilities. Investment assets amounted to HKD 14.6 billion primarily funded by shareholders' equity. Total loan assets for HKD 12.7 billion, primarily funded by our borrowings. 59% of total borrowings were notes in paper at fixed rates and 41% were banking and other borrowings at floating rates. In the first half of 2024, we repurchased our MTN totaling USD 27.8 million, making the total repurchase since 2022 amount to USD 147.1 million, reflecting our priority on capital efficiency. Net debt decreased HKD 2, HKD 7 billion from HKD 8.2 billion at the end of 2023 as we reduced bank and other borrowings during the period, particularly in the credit segment to better match with our loan portfolios. Now let's take a closer look at the performance of each business segment. Investment Management segment's total assets stood at HKD 15.5 billion at the end of the first half of 2024, with alternatives, real estate and public markets comprising 70%, 16% and 14%, respectively. The year-on-year decrease was mainly driven by rebalancing in our hedge fund portfolio and distributions and exits recorded from the private equity segment. The pretax loss for this segment narrowed by 58.4% year-on-year. Realized loss on alternatives and real estate portfolios was HKD 149.8 million, mainly reflecting the rebalancing of hedge fund portfolios, partly offset by realized gains from distributions in the private equity segment. The alternatives and Real Estate segments delivered an unrealized gain of HKD 172.2 million for the first half of 2024, reversing from an unrealized loss of HKD 99.5 million for the same period last year as our hedge fund portfolio generated solid returns after being actively adjusted to a more conservative exposure. The net loss on the public markets decreased by 72.1% year-on-year to HKD 55 million, primarily driven by our more active diversification and reduction of exposure. Now looking at the investment assets and return. The overall return of the investment management continued to improve over the past 2 years and recorded a positive gain of 0.4% for the first half of 2024. With subsegments, real estate and alternatives recorded a gain of 2.6% and 0.1%, while the public markets lost 1%. We will now look further into the performance of each asset class in the next few slides. Looking at public markets, corporate holdings. For the first half of 2024, the corporate holdings portfolio recorded a loss of 1%, mainly driven by our strategic health care holdings held since their IPO. These holdings overall have recorded gains over the long term, considering the total positions held by the group. Gains were recorded in our holdings of AI data center-related companies in the U.S. and in Taiwan and in some of our Chinese equity holdings after they had reached extremely low valuations in the first quarter of this year. Looking at our alternatives private equity. The private equity segment's assets stood at HKD 8.1 billion as of the 30th of June 2024. During the period, we continued to actively manage our portfolio and have seen encouraging progress in the improvement of operating metrics at the portfolio companies. Diversification of our portfolio has also been a strength for us. In the U.S., our portfolio's valuation generally stabilized and started to see some increase in liquidity events and distributions, particularly in the healthcare, technology and fintech sectors, allowing us to realize return and record net capital inflow during the period. Our portfolio with exposure to Mainland China mainly consists of buyout and late-stage investments with solid fundamentals. This provides us with the foundation of our future realizations despite the impact on the valuations from continued geopolitical tensions and weak market sentiment. Moving on to hedge funds. Our portfolio rebalancing over the past 2 years has resulted in a more balanced allocation across strategies and a more conservative risk profile, enabling us to generate returns with less market exposure. We achieved broad-based gains across all underlying strategies for the period. Our ongoing funds delivered a strong 6-month return of 5.8% as we saw solid contributions from top-performing external managers, including several we have recently added. And now moving to alternative special situations. The Special Situations segment predominantly includes investments in distressed, aiming to yield strong returns with robust defensive characteristics. The portfolio further expanded our exposure in Western Europe, North America and Asia, adding geographical diversification to the group. Special Situations reported a gain of 2.3% in the first half of 2024, mainly driven by an Asia focused fund invested in diverse sectors, achieving both realizations and fair value gains. Finally, on real estate. The real estate segment recorded a 2.6% gain for the first half of 2024, mainly driven by the sustained recovery of our hospitality investments in the EU and the strong performance of an APAC real estate loan strategy, which offset weakness in Hong Kong. In the high interest rate environment, we remain cautious on new investments but focus on opportunities that generate equity-like returns with strong downside protection. The group recently invested in the preferred equities shares of a large European hotel platform, aiming at pursuing superior risk-adjusted returns while recalibrating our real estate exposure to emphasize downside-protected credit-like opportunities. Next, I will hand over to Tony, who will guide you through the development of our fund management business.

Thank you, Brendan, and good morning, everybody. Our fund management business is structured into 3 business lines: Fund partnerships, SHKCP Funds and Investment Solutions as well as Family Office Solutions or FOS. Our fund partnerships are mainly established with emerging managers, providing them with seeding or acceleration capital. This is reflected in a diversified partnerships to date, ActusRay Partners, Kernel, E15VC and Point King. SHKCP funds are launched and managed by ourselves, including SHK Latitude Alpha, a hedge fund of fund strategy, MCIP, a private credit strategy focusing on APAC region and SHK Private Access, which provides specific alternative investment opportunities for clients. We also work with a select group of partners to distribute their funds, leveraging our strong local presence and distribution network. The build-out of our multifamily office platform, family office solutions continues to make strides in the first half of 2024, expanding our client base by leveraging the group's broader relationship networks and capabilities. This unit provides customized alternative investment solutions for family offices and high net worth individuals with a similar investment approaches and horizons. The alignment of interest that FOS provides is designed to enable successful long-term relationships with our clients. We keep sourcing partnership opportunities that diversify our platform and offer differentiated investment solutions while remaining cautious with significant capital deployment in this challenging cycle. Now let's focus on the segment's key operating metrics and financial performance. As of June 30, 2024, our total AUM reached a new record of USD 1.2 billion since we launched the funds management platform in 2021. The growth was driven by net cash inflow of USD 132 million and market gains of USD 99 million with contributions from almost all strategies. Contribution from external capital increased by 4.4 percentage points to 67.2% from 6 months ago. In the first half of 2024, fee income increased by 23.9% to HKD 17.1 million, excluding the one-off impact from the sale of East Point revenue share rights in the first half of 2023. Total income increased by 26.4%. Operating expenses also increased by 25.6% year-on-year mainly due to the expansion of our team as we continue to build out the platform. The new business initiatives continue to contribute positive pretax results, which is very encouraging for us. Moving on to GAM and the new strategic alliance. We recently established this alliance with GAM Investments, which is a global asset management firm operating in 14 countries. As a part of this alliance, SHK Capital Partners, the licensed subsidiary of SHK & Co. will drive the distribution and servicing of GAM's funds across Greater China. The alliance leverages Sun Hung Kai Co's. and GAM's complementary advantages. As SHK, we have a deep understanding of the Asian market, strong local presence, extensive expertise in network. GAM is well established -- is a well-established asset manager with a Swiss heritage and near 40-year commitment to Greater China. The 2 parties have forged this alliance aiming to drive growth and enhance client coverage and capabilities across the region. Looking ahead, we will collaborate closely with each other to co-develop innovative, alternative and portfolio diversifying product solutions for both local and international clients. Now I pass to Shirley to talk about our credit business.

Thank you, Tony. Our consumer finance business is conducted through UAF in Hong Kong and Mainland China. Since 2017, UAF has consistently ranked the first among all money lenders and maintained the top 5 ranking among all lenders in Hong Kong in terms of outstanding balance of unsecured lending. In the first half, the unfavorable economic conditions constrained loan demand and against such economic backdrop, we also tightened our loan origination criteria and focused on improving operational efficiency. In Mainland China, we continue to shift our focus from unsecured loans to secured lending to mitigate the risks. As such, our total gross loan balance decreased by 2.3% year-over-year to HKD 10.9 billion. Hong Kong Mainland China accounted for 82% and 18%, respectively. Revenue for the period was HKD 1.6 billion, down by 3.7% year-over-year due to our continued efforts in cost rationalization, our cost-to-income ratio improved by 80 basis points year-over-year to 32%. Net impairment losses was HKD 386.3 million, up 32% year-over-year and 1% half-on-half. This mainly reflect our customers' credit profiles negatively impacted by the deterioration of economic conditions as well as our prudent provisioning policy. Our finance costs predominantly benchmarking against hybrid increased 10% year-over-year but decreased by 1.6% compared to the second half of last year with hybrid receding marginally. Despite the challenges, pretax contribution to the group amounted to HKD 400.3 million. In Hong Kong, we remain strong branch network across the city. Gross loan balance decreased by 1% year-over-year to HKD 9 billion at the end of first half as we adopted a cautious approach towards new loan underwriting. The amount and the number of loans originated in the first half increased by 12% and 17% year-over-year, driven by new credit card business as well as unsecured loans, for which we focused on smaller-sized loans with a shorter tenure. Loan yield remained stable at 30% level. And our customers' credit profile was adversely impacted by the weak local economy. Charge-off ratio was 8% compared to 5.2% for the same period of last year. Our new product SIM credit card was successfully launched last year, by end of the first half this year, it has accumulated a transaction volume of HKD 1 billion with outstanding loan balance increasing month by month. In addition, as part of our commitment to ESG, we have launched an ESG Carbon Calculator on the SIM credit card app, aiming to promote customer awareness of environmental protection and encourage sustainable practices. In the Mainland market, our strategic shift to secured lending since last year has resulted in strong credit profile of the loan portfolio, a lower loan yield of 18% compared to the same period of last year was primarily due to the growth in contribution of secured loans. Such decrease was offset by the substantial decline in loan impairment and a reduction in operating expenses. As a result, the bottom-line contribution improved and the capital productivity and operational efficiency we enhanced as well. Moving to our mortgage loans business, which is operated by Sun Hung Kai Credit in Hong Kong since 2015. The high interest rate environment and accumulation of unsold inventories continued to weigh on Hong Kong property market in the first half. We remained prudent in loan origination during the period. Gross loan balance was HKD 2.3 billion, representing a year-over-year decrease of 15%. First mortgage loans accounted for over 90% of the portfolio. Revenue for the period was HKD 124.2 million, decreasing 15% year-over-year. Return on loans increased marginally to 10.2%, reflecting the elevated interest rates. Operating cost decreased 17% year-over-year to HKD 25.3 million, mainly driven by the decrease in marketing expenses as we continued to optimize marketing dollar efficiency. Cost-to-income ratio improved by 50 basis points to 20.4% from the same period of last year. Finance costs decreased by 23% to HKD 40 million as fewer bank facilities were utilized during the period. Net charge on impairment losses was HKD 33.8 million is mainly due to the larger provisions we took. Next, I'll pass to Brendan to give you an update on our risk management, ESG and future plans.

Thank you, Shirley. Our efforts in risk management continued in the first half of 2024. Firstly, we've strengthened our risk control through enhancing our risk reporting protocols. We continue to identify and assess emerging risks, ensuring that our controlled and mitigation strategies are effective. We regularly conducted in-depth discussions on specific risk areas to fully understand potential challenges and refine our mitigation strategies accordingly. We've also streamlined our data collection and report preparation to improve the efficiency and accuracy of our risk analysis. Additionally, we continue to increase our staff awareness and accessibility to risk management information through launching an Internet homepage, fostering a culture of proactive risk control within our organization. Next, I will share with you our continuous efforts in ESG. In response to the Hong Kong exchange update on climate-related disclosure guidelines, we provided ESG training for our Board of Directors and ESG Committee members. The training included updates on new ESG requirements and best practices, ensuring our leadership is well informed on the regulatory changes. To further enhance the integrity and transparency of our ESG reporting, we appointed an independent service provider to conduct additional assurance on our 2024 ESG report. This step underscores our dedication to maintaining standards in our disclosures. Moreover, we've raised our target for UNSDG-aligned investments from 30% to 50% in our 2023 ESG report. Quickly, just to take a look at our business outlook and future plans. Looking into the second half of 2024, we expect multiple headwinds to persist. As interest rates remain at elevated levels, some uncertainty still surrounds China's economic and structural reforms and geopolitical tensions may be further complicated by the U.S. election. We remain cautiously optimistic, but we'll continue to reduce overall market exposures. In the credit segment, we remain vigilant to the economic dynamics and maintain a cautious approach towards loan underwriting before we see clearer signals of economic recovery. We will continue to develop the SIM credit card with several new features slated for rollout in the second half of 2024. In the mortgage loan business, we will explore innovative products to capitalize on opportunities arising from market dislocations to ensure sustainable growth. We believe our cautiousness and capital preservation will position us well to capture the opportunities once the economy recovers in the future. In Investment Management, we will continue to actively manage our portfolio and maintain discipline in selecting new investments. We will continue to focus on opportunities with strong risk-adjusted returns. In funds management, we remain committed to building the platform, diversifying investment solutions and expanding our investment and distribution capabilities to drive AUM growth. We will continue to build out our family office solutions by leveraging the group's long-standing investment expertise and resources to provide tailored investment solutions to like-minded investors. Additionally, we will further collaborate with credit and Investment Management segments to drive the group's transformation into a leading alternative investment platform. Thank you.

Thank you, Brendan. We will now proceed to our Q&A session. [Operator Instructions]. Please also clearly stay your name and company together with your questions.

I'm Howard from [ San Kingsway ]. I would like to know more about your SIM credit card. Can you share with us like the customer profile and how many -- how many cards currently in circulation? And what is the risk profile between the traditional UAF business and the SIM credit card?

Yes. Maybe I will take that question and see if you have any questions to ask. Thank you for your question. Actually, I did bring the SIM credit card to the meeting today. I think for us, we have disclosed the accumulated transaction volume in the results, that's HKD 1 billion. And currently, we don't -- because we only commercially launched in -- at the end of last year. So currently, we don't have other like the number of cards in circulation or the outstanding loan balance to share it because it's very early stage. But to your second question about the risk profiles compared with our unsecured loans, it's very different because SIM credit card is differently branded and to that's a differentiation compared to our unsecured loans. And that's -- we got the early indication that for the credit card users, their age is younger. Because we have been in Hong Kong for 31 years, and then our customer is very loyal to us. And then we do want to penetrate into the younger demographics and the credit card is very helpful for improving that. And also in terms of the credit, basically, the credit profile is better than our traditional unsecured cards -- so unsecured business. So it's very encouraging. It's a very exciting new product for us. Thank you.

This is [ Joyce Kuen ] from Basis Asset Management. Pleased to see the significant improvement in our profits for the interim. I can see that the -- I think the major swings coming from the net gain on financial assets and liabilities. If you could elaborate more on this part and share with us the outlook for this important section.

Sure. I'll take that one. Thanks for the question. Yes, I mean, as we've outlined, that's mainly coming from the investment management segment. And I think why we're seeing that is that obviously, in -- towards the end of 2022 and also in 2023, we saw valuations under pressure with a higher interest rate environment, harder fundraising environment for private equity as well. And that started to improve, I think, towards the end of 2023 and into the first half of 2024, particularly in North America. So we -- because our portfolio is balanced, we've had a benefit from that. That's the main driver. Outlook. Yes, I mean, I think we are starting to see signals from central banks, as you know, the interest rates will come down, including the Fed, hopefully, in September, that should, I think, continue to help. But obviously, it depends on the market as well, how the PE market evolves in terms of exits, being able to monetize their investments. I don't think they're back to the levels they were 2 or 3 years ago on that. So that will probably still take a bit of time to recover.

Brendan, Tony and Shirley. I'm Kate from UOB Kay Hian. And I have 2 questions regarding our balance sheet and our shareholder returns. So first, for our balance sheet, I saw that our net debt level decreased in the first half. And can you share some color on our thoughts on the -- our debt level? And also, do we have any target on our net debt? The second question is regarding our shareholder return. If I'm not mistaken, we used to enhance our shareholder returns through special dividend and continuous share buybacks. And since we turn around our business in the first half, we have any thoughts on enhancing shareholder returns either through more share buyback or special dividend potentially in the short term?

All right. Thank you for the questions. I'll take that one. On the debt, yes, there has been deleveraging in the first half. I think some of that is quite natural in the sense that we've seen the loan books on the credit side go down. So some of the financing to support that has also reduced as a consequence. So I think that's a natural. The other, I would say, which is being a bit more targeted has been that we'll also be buying back our own debt in the market because that has economically made sense when we've looked at it. So they've been the 2 main drivers. I don't think -- I mean, in terms of target, we've tended to stay between, I think, really between -- around about 30% to 50% in terms of the gearing ratio, the higher number being the upper end. I think we will continue to stay within that range with a reasonably conservative approach to gearing. In terms of shareholder return, yes, you're correct. In 2021, we did a special dividend when we had very high profits in that year. I don't think we're back to that territory at this stage. I'll be honest. But the Board will continue to monitor that. And when the opportunity does arise, of course, we will look at how we can do it. For the share buyback, obviously, we have limitations on how much is available given the float. But obviously, any opportunity there as well to return capital to shareholders, we will take.

[Operator Instructions]

More about the consumer finance. Can you show some colors on the impairment? Like are these new customers or are they recurring customers? And what's actually happening? Like what is your outlook for the credit market in Hong Kong for the consumer finance?

Yes. Thank you for your question. I will take that question. Actually, as we have seen the economy locally is not doing very well. And then the high interest cost has constrained the expansion of corporates and also change the behavior or consumption behavior of individuals. So that definitely impair the credit profile of our customers. In terms of -- if it's a new or a recurring customer, basically, for our personal loans, actually, majority of our customers are repeating customers. So we don't need to spend a lot of money to acquire new customers for the segment. So there's not a big differentiation between the new customers or existing customers or repeating customers. So for the outlook, we do think that in the second half because the economy takes time to take off would in the second half with the expectation of rate cards. And also, we have always -- also seen that the number of visitors -- inbound visitors coming to Hong Kong in the first 7 months has been increased by over 50%. So we do see that that's positive factors, but it takes time to fit into the income or to the credit profile of our customers. So in the second half, we would anticipate a similar level to the first half. But no, we don't anticipate a significant increase compared to the first half. But looking into 2025, I mean, those positive factors will probably fit into the economy and also our customers' profiles.

Two questions on the funds management side. First one, we've seen an increasing proportion of external capital contributing to the increase in AUM. So I'd like to -- if you can share with us which funds out of -- the funds you manage have a trend more external capital and the outlook, especially now we're seeing maybe potential change in economic conditions globally and interest rate conditions. And 2, could you share with us more about the benefits you are expecting from your partnership with GAM?

Thank you. Yes, I'll take that question. Yes, we have -- you quite rightly said, we've seen a very good growth in our external capital in the first half. We've seen that across the board. The reason for that is the investment performance across the board has been good, both in the short term and the long term. And we -- in those funds, in particular, haven't been impacted by the recent volatility in the markets, essentially because they are alternative, they are not -- tend to be non-correlated. And from that perspective, their performance is much more consistent and hence, we've seen the funds growth. And that fund growth has been particularly in the market-neutral alternative hedge fund strategies that are quantitatively driven and those quantitative processes have held up and provided returns above expectations, and that's led to more customers flowing capital into those funds. And I expect that is likely to continue, given the nature of the market being volatile, the alternative assets tend to provide some stability in terms of performance in much more volatile markets where it's much more difficult to predict the direction given the factors driving the market. And that's the reason. And answering the second part of your question, one of the reasons for our building a strategic alliance with GAM, we do, I think, together, combine a local presence and much and significant local substance as well as having a global coverage with this alliance. And I think that we can -- our strategy in the funds management business is to develop local talent in investment as well as leverage global investment capabilities to the benefit of family offices and high net worth individuals in Hong Kong and Greater China. And I think with the GAM relationship, the strategy is to leverage that capability. And we've seen some good opportunities to build traction with our client relationships in that perspective, particularly working with GAM on new product development, and that development is, particularly in the alternative side. A good example of that is the recent launch of GAM's Sports fund, sports feeder fund, which will enable our clients in the Greater China region to access sports investments globally to benefit and diversify their portfolios. So there's -- I think there's a lot to build out with the GAM relationship as well as our relationships with our other fund management partners that are continuing to grow and provide good financial metrics, but most importantly, good investment returns.

[indiscernible] from [ BC Capital ]. You still have exposure in the Hong Kong real estate. And what is your view on the trends? And how do you hedge the risk? You also mentioned the U.S. election will affect your investment strategy. So if the Republican is elected, how will you -- what do you think you will change your investment strategy?

Okay. I'll take the first one, that's a bit easier. I don't -- then the second one. But for the real estate in Hong Kong, yes, obviously, we all have here we can see it, it's been difficult, and it's also reflected within our results as well. I think for us, one of the key things has been diversification. So having made investments also in Europe has helped, particularly as those more hospitality-type investments recovered from COVID. So we've had that benefit, and I think we would continue that as a strategy going forward to hedge those kind of risks. And notwithstanding what happens in the U.S. election, I think that would be the same. We would still take that kind of approach that it's not to have all your eggs in one basket.

So if there is no more question, we would like to conclude the Q&A session today and also the presentation. Thank you, everyone, for joining today's earnings conference. If you have any further questions, please feel free to reach out to me or Christensen. We also have prepared some refreshments outside the meeting room. So please enjoy. Thank you.

Thank you.