Swire Properties Limited (1972) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. Welcome to Swire Properties 2022 Final Results Analyst Briefing. Let me first introduce the host of today's briefing, Mr. Tim Blackburn, Chief Executive of Swire Properties; and Ms. Fanny Lung, Finance Director of Swire Properties. Tim and Fanny will walk us through the final results in 2022, then we will proceed to a Q&A session. Before we start the presentation, we would like to show you a video highlighting the company's key developments and milestones in the past year. Enjoy. [Presentation]

Hope you enjoyed the video. May I invite Tim and Fanny to take us through the presentation, please.

Great. Thank you, [ Ann ]. Well, I hope you enjoyed the video. As you can see, it's been a busy year, but it's really nice to see so many smiling faces in the room. So good afternoon. Welcome to the Swire Properties 2022 Final Results Briefing. So I'll take you through the strategy and the results highlights, the key developments, the portfolios, and Fanny will cover the financial highlights, sustainable development and digital before I close with a few comments on the outlook. So 2022 was our 50th anniversary year. And reflecting on the significant challenges presented by the pandemic, especially in Hong Kong and the Chinese Mainland, I'm pleased with a solid set of results for the full year 2022. In terms of recurring profit, the result was flat relative to 2021, while underlying profit was down 8.7%, due primarily to lower disposal gains from the lower sale of car parking spaces in Taikoo Shing. Importantly, the Hong Kong office portfolio has continued to be resilient with 96% overall occupancy; and occupancy at Pacific Place is currently 97%; whilst at Taikoo Place, overall occupancy is 96%. One Island East and One Taikoo Place occupancy is currently 97%; and our newest grade A building, Two Taikoo Place, completed in late September last year, has already achieved an impressive over 56% occupancy. On the retail front, in Hong Kong, we're 100% let at Cityplaza and Citygate Outlets and 96% at The Mall in Pacific Place. And retail sales have been recovering steadily since June. The Chinese Mainland attributable gross rental was down 5% after deducting all rental concessions provided to tenants during the COVID-19 outbreaks. And on a like-for-like basis, attributable sales growth was down 20% due to the preventative measures taken in the Chinese Mainland and the associated disruption in all cities in which we operate. The decline bottomed out at the end of November and early December, and I'm pleased to report we've had -- we've seen very encouraging recovery year-to-date in 2023. Finally, we'll be raising the 2022 full year dividend by 5.3%, and we'll continue to aim for mid-single-digit dividend growth. In March last year, based on our development pipeline, we announced a plan to invest HKD 100 billion over the next decade. This slide includes a breakdown of the allocation of capital by market and the specific projects, which we have successfully secured. We've made good progress with approximately 40% now committed to new projects in our core markets in Hong Kong, the Chinese Mainland and Southeast Asia. I'll cover these in more detail later in the presentation. In Hong Kong, we remain focused on building out our 2 flagship developments in Pacific Place and Taikoo Place while we're incredibly excited about the quality of the fantastic retail-led mixed-use projects we're currently working on in the Chinese Mainland. In addition to the investment property portfolios, we've also allocated HKD 20 billion to trading opportunities, especially in Hong Kong and Southeast Asia. And early this year, we secured our first residential project in Bangkok, and we're keen to identify more high-quality residential trading opportunities in Southeast Asia in the future. In terms of key developments, we're continuing to recycle capital to meet strategic priorities. On the divestment side, we started the year with a -- undeveloped site in Fort Lauderdale. We continued the sales program for car park spaces in Taikoo Shing, and we finished the year with the sale of a noncore industrial building in Tsing Yi. Following an active first half, we've had an even busier second half obtaining occupation permit for Two Taikoo Place, our newest Grade A office building in Taikoo Place, announcing 2 new hotels in Shenzhen and in Tokyo and acquiring our first retail project in Sanya, opening ZHANGYUAN Phase 1, acquiring the remaining 50% stake in Sino-Ocean Taikoo Li, and finally, investing in our first residential project in Bangkok. We now have a strong and well-diversified pipeline, which will contribute to our growth over the next few years. The next few slides provide more detail on our pipeline projects in terms of upcoming projects, approximately 8 million square feet attributable is expected to be completed over the next 5 years across our 3 core markets. Taikoo Li Xi’an was announced in Q2 and as our seventh development and our fourth Taikoo Li in the Chinese Mainland. It's a large-scale retail-led, mixed-use project in a wonderful location in the heart of the city, which will also include a hotel and residences overlooking the Small Wild Goose Pagoda and the UNESCO Heritage and cultural zone. This project will open in phases from late 2025. In the fourth quarter of last year, we announced another retail-led project, a joint venture with the China Tourism Group to develop our first open plan retail project in a tropical location. Haitang Wan ] is developing into a world-class tourism hub, and working closely with our brand partners, we have every confidence in the success of this project as a premium resort-style destination. This project will open in phases from late 2024. We are also delighted to open Phase 1 of the heritage restoration of ZHANGYUAN in November last year. Albeit a relatively small portion of the overall project, the pre-leasing has exceeded expectations, and the project is now attracting considerable interest and footfall in the area. There are over 170 historical buildings providing a very memorable experience, and I encourage all of you to visit this unique neighborhood on Nanjing Xi Lu when you're next in Shanghai. At the end of last year, we announced an agreement to acquire Sino-Ocean's 50% interest in Sino-Ocean Taikoo Li in Chengdu. As one of our flagship projects,and one of the most important retail projects in the Chinese Mainland, we are delighted to have acquired Sino-Ocean's remaining interest, and the project became a wholly-owned subsidiary in February 2023. Despite the myriad COVID-related restrictions, the team did a fantastic job last year, collaborating with brands to open 85 new stores in 2022, including several firsts in China and also first in world concepts. As I mentioned earlier, we recently acquired a 40% stake in a prime site in Bangkok. This is our first project in Bangkok, and we're looking forward to developing this freehold site adjacent to Lumphini Park into high-end luxury residences in the heart of the city's CBD. Now moving to the investment portfolio. Our Hong Kong office performance has remained resilient in a weak market. Despite high occupancy levels, we continue to see negative rental reversions at Pacific Place while we've seen positive rental reversions at One Island East and One Taikoo Place in Taikoo Place. Combining our Taikoo Place and Pacific Place office portfolios, overall occupancy remains high at 96%, whilst attributable gross rental income of HKD 5.9 billion was down 3% on 2021. The attributable valuation of the office portfolio declined by 1% to HKD 170 billion. I think you've all seen this master plan before but I wanted to highlight the progress the team has been making in transforming Taikoo Place into a global business district with all the associated services and amenities. The yellow area is Two Taikoo Place surrounded by large open public spaces, Taikoo Square and Taikoo Garden, which we completed towards the end of this year. The pink areas are buildings under compulsory sale applications for future development. And as we near the end of the current phase of transformation, the exciting Taikoo Place story continues. Moving on to Hong Kong retail. We've seen a steady recovery since mid-2022. The portfolio is almost fully let, thanks to the team's hard work and the committed partnership approach we adopted during the pandemic. In the second half, we saw a strong rebound in local consumption driven by a combination of the government's consumption voucher scheme, the relaxation of social distancing measures and, most recently, the opening of the borders. Attributable gross rental increased 3% year-on-year on a cash concession basis, whilst the attributable valuation for the overall retail portfolio was flat. Looking at the Chinese Mainland. The overall portfolio contributed 37% of attributable gross rental income, retail being the second largest rental contributor of the Hong Kong office. The performance of our retail portfolio in the Chinese Mainland was mixed in 2022 due to the severe restrictions imposed to manage the sporadic COVID-19 outbreaks across the country. I'm pleased, however, to confirm the overall occupancy levels remain high at between 93% and 100%, while attributable gross rental was down 5% year-on-year. The attributable valuation of HKD 51.8 billion was slightly up compared to December 2021. And I believe we're well placed for a strong recovery in 2023. The performance of our Chinese Mainland office portfolio was resilient in 2022. Overall occupancy has continued to improve and is between 94% and 100% whilst gross rental income slightly decreased compared to the same period in 2021. The attributable valuation of HKD 13.1 billion was down, reflecting weaker market demand. This slide illustrates the company's 2 major growth engines in Hong Kong and especially in the Chinese Mainland, where the strong pipeline of investment properties is on track to increase attributable GFA in Hong Kong by 7%; and in the Chinese Mainland, by almost 50% over the next few years compared to the 2022 baseline. A little further afield in Miami. Our retail mall in Brickell City Center has continued to perform well. Occupancy reached 89% while sales were up 24% due to the improved trade mix and increased domestic demand. Turning to the trading portfolio. The residential team has also been busy in our home market here in Hong Kong and also in the 4 cities which we prioritized in Southeast Asia. We continue to build a strong pipeline in Hong Kong. 30 of 37 units have been sold at EIGHT STAR STREET, preparatory works on 269 Queen's Road are well underway, and we're making good progress on several other projects in Chai Wan, in Wong Chuk Hang and in Quarry Bay. The graph in the top right-hand corner illustrates projected completions over the next few years, representing approximately 1.1 million square feet on an attributable basis. In Southeast Asia, we're continuing to explore opportunities in Vietnam, Thailand, Indonesia and Singapore, focusing on high-quality residential projects in great locations. In Ho Chi Minh, 93% of The River has been sold. In Jakarta, sales activity is picking up at Savyavasa. And we're looking forward to getting started on our first luxury residential project in Bangkok. So before I hand over to Fanny, I just wanted to talk a little bit to our hotel portfolio, update you on the progress that Swire Hotel has been making in this area. Operating conditions in 2022 were extremely challenging. However, East Miami has performed well and we're now seeing a steady recovery in Hong Kong and in the Chinese Mainland properties since the border reopening. In 2022, we announced plans with 2 new hotels under The House Collective brand in Shenzhen and in Tokyo, both under third-party management agreements. And The Silveri Hong Kong by MGallery is now open at Citygate. The team is working very hard on several new hotels, which we hope to announce in 2023. At this point, I'll hand over to Fanny to take us through the financial highlights.

Thank you, Tim. Okay. First of all, there was a change in the accounting policy on the accounting treatment relating to rental concessions, which were previously amortized over the remaining lease terms, and then it's changed to be expensed at all at the year of grant. So the profit numbers in 2021 and 2020 have been restated in this table to reflect this change. So the key implication to note is that there is no more unamortized rental concessions to be expensed in 2023 and after. Against the challenging market environment, overall performance was resilient. Underlying profit was HKD 8.7 billion, 9% down from that of last year, primarily due to lower profits from divestments because there were a lower number of car parking space sold in 2022. Recurring underlying profit was HKD 7.176 billion, 1% slightly higher than that of last year. There were higher profit from property trading, reflected profits from the sale of EIGHT STAR STREET in Hong Kong, the retail project in Vietnam and the sale of a property in Fort Lauderdale in the United States. Underlying profit from property investment decreased slightly in 2022. This mainly reflected lower office rental income from Hong Kong and lower retail rental income from the Chinese Mainland. There were increased underlying losses from the hotels, mainly due to the loss of hotel income from East Miami which was sold in 2021 and higher operating losses for the hotels in the Chinese Mainland due to COVID-19. So this table shows the attributable gross rental income after deducting rental concessions granted in that year. A few key points to highlight here. I don't want to repeat what Tim mentioned about. Number one, office portfolio, very resilient even though the market was weak. Overall rental performance only down by 3%. Hong Kong retail portfolio increased by 3%. But 1 thing to note in relation to the Chinese Mainland retail portfolio is that there were 4% renminbi depreciation over the year and also the disruption on the -- of granting rental concession on a case-by-case basis on to specific period to help tenants. So disregarding the rental concessions and the renminbi depreciation, attributable gross rental income basically increased by 4%, mainly contributed by the new -- full year contribution of the new project in relation to [ Qiantan ] Taikoo Li and as well as Taikoo Li Sanlitun West. Same thing happened to the Chinese Mainland office portfolio, if we were to disregard the renminbi depreciation, attributable gross rental income increased by 2%. On the Others category, the Others category included retail rentals for Brickell City Centre in Miami, which had a solid performance in 2022. Service apartments in Hong Kong and the Chinese Mainland were adversely affected by COVID-19 associated restrictions. Also, in 2022, we no longer had the rental contribution from East Miami service apartments, which was sold in 2021, resulting in an overall reduction of 13% under the Others category. Dividend. There is no change in our dividend policy. We aim to deliver mid-single-digit growth in dividends, and we have a good track record in dividend growth over the past 10 years. Second interim dividend declared was HKD 0.68 per share, making the full year dividend per share at HKD 1 per share, which is a 5.3% increase from that of 2021, again fulfilling our objective to deliver mid-single digit dividend growth in 2022. The total investment property values increased by 1.3% to HKD 271.2 billion. There was a net fair value gain of HKD 801 million. This primarily reflected fair value gains on the Chinese Mainland and the U.S.A. investment properties portfolio, which were offset by the fair value losses in the Hong Kong investment properties. The fair value gains in the Chinese Mainland were divided from the fair value gains on certain existing properties in the Chinese Mainland, reflecting a reduction of 25 to 50 basis points in the capitalization rate. There was no change in the capitalization rates in Hong Kong and the United States. Net CapEx, primarily due to Taikoo Place redevelopment and the land acquisition of Taikoo Li Xi’an. Translation differences were primarily in relation to the investment properties in the Chinese Mainland due to renminbi depreciation. Moving on to the net debt and gearing. Total net debt increased to HKD 18.9 billion at the end of 2022 with a low gearing of 6.5%. The increase in net debt primarily due to higher capital and development expenditures in Hong Kong and the Chinese Mainland, including the Taikoo Li Xi’an spend and also 269 Queen's Road East. Net cash outflow in relation to joint ventures and associates amounted to HKD 2.27 billion, mainly for the Sanya project and the -- our first acquisition of the 15% of the Sino-Ocean Taikoo Li Chengdu. So amid the rate high cycle, our weighted average cost of debt maintained a low at 3.2% due to a higher portion of the fixed-rate debt. If you refer to the table on the right, all the financial parameters remain very healthy with our net debt level well below the 2018 level. Key things to highlight on this slide: number one, there is not much maturing debt in 2023 and 2024. So the refinancing requirement is quite low, and then the financing requirement going forward mainly derived from the new projects committed. Number two, fixed rate debt still remains high at 66%, which will continue to mitigate the interest cost increase going forward. Number three, our credit rating remains unchanged at the single A under Fitch and A2 under Moody's. And number four, which is the most important thing, is we have sufficient liquidity headroom to deal with our HKD 100 billion expansion plan going forward. Total capital commitment at the end of 2022 was around HKD 28 billion, which will be spread over the coming 4 to 5 years. The Hong Kong capital commitment mainly reflected CapEx for the development of Zung Fu and Wah Ha buildings and the Six Pacific Place. The Chinese Mainland capital commitment, mainly for Taikoo Li Xi’an, INDIGO Phase Two and the Sanya project. So we also showed the active capital recycling, which is a summary of the previous and the current one. So you can see that in total, we have HKD 45.6 billion generated from the -- our capital recycling program. Moving on to sustainable development. Throughout the year, we continue to integrate sustainable development into every aspect of our business operation. And I would like to take this opportunity to share a few key achievements in the following section. First of all, we ranked #4 globally and #1 in Asia on the Dow Jones Sustainability Index. We continue to maintain quite a lot of leadership in the sustainability index. We are also delighted to be included in the 2023 Bloomberg Gender-Equality Index for the first time, acknowledging the company's commitment to achieving gender equality. In terms of our progress on the 1.5 degree-aligned science-based target, I'm very glad to share that we continue to make remarkable progress. We reduced 28% of our absolute Scope 1 and Scope 2 carbon emission in 2022 against the 2019 baseline. So how can we do this? I think such reduction was attributed to various initiatives, including the adoption of innovative low-carbon technologies, better energy management, procurement of more renewable electricity, although the impact of COVID-19 also lowered the electricity demand. We continue to roll out our cloud-based smart energy management platform to optimize our operation. We have integrated a pioneering machine learning model into the platform that predicts cooling demand around-the-clock. So this model has won a gold award and the grand price in the Global AI Challenge for building electrical and mechanical facilities competition. On renewable energy procurement, in addition to Taikoo Hui, Guangzhou and Sino-Ocean Taikoo Li Chengdu, in 2022, Taikoo Li Sanlitun, Beijing became our third portfolio in the Chinese Mainland to enter into offsite renewable electricity purchase agreement. On innovation fund, we will pilot a groundbreaking integrated direct current microgrid in Taikoo Li Sanlitun, Beijing and Taikoo Hui, Guangzhou to seek to reduce electricity conversion rate loss as well as supporting PV panels and low-carbon fuel cell applications. We estimate to bring about 10% carbon emission reduction compared to conventional energy generation system. On our tenants engagement, our signature program, the Green Performance Pledge, was launched in July 2022. Through the GPP, we work closely with our tenants to measure and identify ways to reduce their energy waste and water consumption. Response has been overwhelmingly positive. We now have 52 of our tenants representing over 35% of our Hong Kong office occupied lettable floor area, are already participating. This pilot program was also rolled out in our Chinese Mainland properties in December last year. We also continue to expand the Green Kitchen Initiative, now with 77 F&B tenants opening green and sustainable kitchens and restaurant in our Hong Kong and Chinese Mainland portfolio. Green financing is a very key part to support our green and sustainable investment. In 2022, 9 sustainability loan facilities totaling HKD 11.8 billion were secured. At the end of the year, green financing accounted for approximately 60% of our current bond and loan facilities. 100% of the net proceeds from our 5 green bonds issued so far have been fully allocated to the eligible green projects. Digital plays a very important role in fulfilling our strategic objective. We continue to invest in best-in-class digital solutions. This year, our efforts have been recognized by 3 of our new digital products, winning awards for digital innovation and several of our office developments achieving top-tier global ratings for their connectivity and Smart Building technology. We have released multiple exciting new products covered over the past years, including new customer experience solutions for our retail and office tenants, to name just a few. To increase our access to leading technology players, we set up a USD 50 million venture fund to invest in Series A and Series C technology start-ups globally. And now we have 40% of the capital invested into 10 start-ups and funds. One example is our investment in a robotic software technology which enables sophisticated architectural design to be executed with increased precision and speed, which we have already been able to apply within the design of our Two Taikoo Place lobbies. So with that, I'm going to pass it back to Tim to cover the outlook.

Great. Thank you very much, Fanny. So yes, just a final slide on the outlook for the year ahead to summarize into the key areas. In Hong Kong, our office portfolio continues to enjoy high occupancy levels, as I mentioned. The flight-to-quality trend will continue in recognition of our successful placemaking efforts and our sustainability strategy. Our malls are seeing a steady recovery since the relaxation of all pandemic-related restrictions and the reopening of the borders. And we will continue to upgrade the trade mix and improve the customer experience, especially on the digital front. In the Chinese Mainland, the recovery in recent months and the increased consumption activity gives us confidence in our plans to expand our successful Taikoo Hui and Taikoo Li footprint in Tier 1 and emerging Tier 1 cities with a specific focus on the Greater Bay Area. On the trading front, we're building a diverse portfolio of residential projects in Hong Kong and increasingly in Southeast Asia, in line with our strategy to allocate HKD 20 billion to residential trading opportunities in the region. In summary, we have a balanced portfolio with strong fundamentals, supported by our active asset management and transformative placemaking strategy. Despite the headwinds in 2022, we have been making good progress on all fronts, especially with our exciting plans to invest HKD 100 billion in new projects over the next 10 years in our 3 core markets in order to deliver sustainable dividend growth. We look forward to the steady -- continuation of the steady recovery in 2023. Thank you very much.

Thank you, Tim and Fanny for the detailed presentation. We now start the Q&A session. As the briefing is currently on webcast, please raise your hand and wait for the mic for your questions. [Operator Instructions] We now take the first question. The gentleman on the second row, please.

Karl Choi from Bank of America. Two questions. First, about Queensway Plaza, the site is going to be tendered out in the next fiscal year. Given the location, obviously it could be very interesting to Swire. But how -- I'm just wondering how you balance against the fact that it seems like there's a lot of Hong Kong office supply coming up even just beyond the next 1 to 2 years? Although with the way things have been going, maybe you can even win it with a very low bid. Second question is regarding dividend policy. Thank you very much for the [ commitment ] to the mid-single-digit growth in dividend. But the interest rate environment is -- it seems to be higher for longer compared when you set the policy last year. And just want to sort of -- if you can talk a bit about your ability to maintain that policy in this environment, especially -- even though your gearing is low. But if you -- especially if you go forward with a lot of the projects that you're looking at with all the MOUs that you have signed in Mainland China or even if you see a scenario where if you do proceed with all these MOUs, do you see any need to raise equity?

Thanks, Karl. Maybe I'll take the first one, Fanny the second one. I think you mentioned the Queensway site, I mean, I think this is -- as you would understand, it's something we've been anticipating for some years. So it's good to have some certainty on the timing, the government's expectation of timing. And we don't know exactly when it will be sometime in the next 12 months, but we certainly look forward to seeing the tender documents, which we'll be reading with considerable interest. I mean, it's a core site. It's clearly in what we refer to as greater [indiscernible] and we see a sort of gradual shift of demand from Old Central to New Central, let's say. And we assume for such a core site that there will be competition and we expect that both local developers and maybe some of the mainland developers will be interested. So we'll be looking at it very carefully. And clearly, it's a very important consideration for us in 2023.

All right. Second question on our capability to maintain the dividend policy. First of all, you may notice that the 39% commitment on our HKD 100 billion plan, part of that has been settled. And then the remaining part of that will only be spent and spread over the next 4 to 5 years, and it won't have an immediate spending impact on the next 1 to 2 years gearing. And number three is that the gearing impact will be mitigated by the fact that we are expecting raising rental income generated from the new projects as well as the organic growth from the existing project. And also, we expect new generation -- new contribution from our trading portfolio starting from 2025. So by building all this sort of pipeline so that we can have future, growing the sustainable profitability in the future, that exactly is generating a good profitability that we can continuously grow our sustainable profit and as well as generating new cash flow to support the dividend growth. So to answer your question, Karl, I think near-term, we may see an increase in the gearing. But due to the extremely low gearing that we are starting with, I don't think that the gearing in even in the next 1 to 2 years will go up to a level which will compromise our capability to deliver mid-single digit dividend growth as well as compromising our HKD 100 billion investment plan, which are all planted within our cash flow and capital allocation.

Thank you. The gentlemen on this side, please, on the second row.

This is Mark from -- Mark Leung from UBS. So I have 2 questions. I think the first one is, when I look on the Taikoo Place side, actually we got several projects under compulsory site application because for the office markets remain a bit weak. So we will consider to change those line into residential and then maybe we can recycle the cash faster. I think that's the first question. And second question is regarding on the Mainland retail. Not sure if you can give us more colors on the year-to-date sales recovery, and what is the details for the expansion plan in Guangzhou and Futian in Shenzhen.

Mark, thank you. Thanks for the question. I mean, you referred to the pink sites in the master plan. I mean, not all of the sites are office, Some of those sites which we have marked are also for development for residential. But I think on the core sites that we've identified, these are long-term projects. So by definition, the site assembly has been over a long period of time and the completion is towards the back end of this decade. So we'll be looking at completion in sort of 2030 of some of these projects. By which time, we're confident that, again, this flight-to-quality is continuing to build critical mass in Taikoo Place, will justify the development of new office supply for Taikoo Place. In terms of retail sales in the Chinese Mainland, I mean it's early days. I think there's some distortion just because of the timing of Chinese New Year generally sort of -- so we have to look at January and February together. But as I said earlier, I think the signs are very encouraging across all our retail-led developments or 6 in the Chinese Mainland. We've seen extremely strong sales in Guangzhou, in Chengdu. We've seen some examples sort of record sales over the Valentine period. And that's been consistent in Shanghai and also in Beijing. And we've seen particularly strong demand for luxury brands and luxury goods. And we believe that will continue, I think. Your final question -- sorry, your last question was Guangzhou and Shenzhen. So yes, so we -- for some time, we've expressed our strong commitment to continue to play our role in the Greater Bay Area. About 80% of our assets are in the Greater Bay between Guangzhou and Hong Kong, and we want to continue to build on that. We have a strong position in Guangzhou with Taikoo Hui, and we have a very interesting opportunity in Julong Wan, which we're working on at the moment, which we think will be very complementary to Taikoo Hui. In Shenzhen, I think maybe a little bit further out but we've been working hard. We have an office we set up a few years ago, a business development office in Shenzhen, specifically to look for retail-led opportunities in Shenzhen. And we signed an agreement with the Futian government last year, working very closely with them on some exciting opportunities. And we think that Taikoo Li or Taikoo Hui would be a fantastic addition to the retail scene in Shenzhen.

Thank you. Turning to the next question. The gentleman in the second row, please.

This is Haitong, Andy So. First of all, I would like to ask about the share buyback. We understand that your parent company, Swire, has been quite proactively buying back shares in the past couple of months. I just would like to know about your thought on going forward -- I mean, on doing share buyback going forward. So this is point one. Point number two is that we'd like to ask about the pre-leasing. Can management give us some update on the pre-leasing of 6 PP in Wan Chai and the Two Taikoo Place.

Fanny, do you want to take the share buyback? And then I'll...

Yes. Okay. I think on the share buyback, first of all, we also noted that our parent company's Swire [ Pac ] share buyback are welcomed by the market as evidenced by the Swire [ Pac ] strong share price performance. On the other hand, we have been making very good progress with our HKD 100 billion investment plan with close to 40% of our commitment made within 1 year since the announcement of the plan. So our priority is to prioritize the capital allocation to implement the investment plan, which will generate a sustainable underlying profit as well as driving the dividend growth going forward then. But that said, we will consider share buyback in our capital allocation along with new investment and also, of course, very mindful about delivering the mid-single-digit dividend growth in the meantime.

No, I think in terms of the pre-leasing, we covered some of the numbers. I'll start with Two Taikoo Place. So pre-leasing commitment was at 50 -- just over 56%. And I think since the turn of the year, we're seeing a lot more RFPs, a lot more inspections, a lot more interest. It's still slow but the momentum is building, and we're confident we'll continue to make good progress in Two Taikoo Place. There are several other elements where, if you're familiar with the area, we're completing the reconnection of the bridge network, the climate control bridge network in Q3 this year. And then these wonderful public space, the park and the Taikoo Garden, we completed towards the end of this year. And I think all of that obviously helps a lot with the inspections. So we're very, very encouraged by progress in Taikoo Place. And it's early days in 6 PP, but I think the pre-leasing is already 23%, and we're working hard on that. But so far so good.

Thank you. In the interest of time, we will take the last question. May I invite another question from the floor? If there is no further question, this concludes our analyst briefing today. Thank you for joining us.