Good afternoon, everyone. Welcome to Wharf REIC 's interim results presentation. I am Angela Ng from the IR team. You can download the PowerPoint presentation from the QR code displayed on the LED wall. And as you can see from this colorful backdrop, it is actually the first-ever Hong Kong City Sign at Harbour City, which is designed by a famous French artist, Camille Walala. This captivating landmark has found a permanent home atop the Ocean Terminal Extension. So next time when you visit, be sure to capture this check-in spot and also enjoy the stunning view, as it is actually one of the best spots to view sunset and harbor view in Hong Kong. And you are also welcome to check out the dining options at the Ocean Terminal Extension. Now, let's move back to the result presentation. So our management today includes Mr. Stephen Ng, Chairman and Managing Director, and Mr. Horace Lee, Director. Before the PowerPoint presentation and the Q&A section, may I now invite Mr. Ng on the stage, please? Thank you. Thank you. I just wanted to say a few quick words. As we all know, Hong Kong reopened at the beginning of last year. And on a personal basis, life is back to normal. All of us can travel freely and return to Hong Kong without worrying about quarantines. And we're not required to wear masks anymore. And at an investment level, all the cooling measures vis-à-vis purchase of properties have been removed. So on a personal basis, life is basically back to normal. But markets are not. In particular, the economy is not. When Hong Kong first reopened, there was a rush of recovery. But the recovery has been slow. And even today, 18 months later, it is still not nearly as complete as all of us would hope. In particular, a watershed happened probably around March of this year. Up to March, Hong Kong has seen 14 or 15 months of continuous year-on-year growth. But because March of last year was pretty much a high point, particularly for retail consumption, once we came to March of this year, the year-on-year comparison suddenly turned negative. And the negative year-on-year performance continued throughout the second quarter. Now, we don't have July statistics yet, but it's very likely that will continue into July. I don't know how quickly it will turn around. We can discuss that later on. But that pretty much sets the backdrop for Hong Kong as a whole, and certainly for our company in terms of its performance in the first half of this year. I'll be pleased to talk to you some more about it in the Q&A session. But first of all, I'd like to hand back to Angela to take you through the presentation. Angela. Thank you, Mr. Ng. So the theme for the presentation is "Strong Recovery: Depressed Property Values." Under the backdrop of global economic and geopolitical headwinds, Hong Kong is currently navigating through a series of challenges in its post-pandemic recovery phase. Against this challenging backdrop, the group's revenue and operating profit remain flat at HKD 6.5 billion and HKD 4.9 billion, respectively. Group's underlying net profit increased by 2% to HKD 3.1 billion, primarily due to narrow losses from development properties under the group's subsidiary. Due to softer capital values in Hong Kong, a non-cash IP revaluation deficit of HKD 4.4 billion was reported, resulting in a net loss to the group. As at the end of June, net asset value was 16% lower than five years ago at HKD 61.8 per share. Net debt reduction is in line with plan, with borrowing costs stabilizing. Recovery in Hong Kong's retail and tourism sectors has been constrained by some major cyclical factors. First of all, the strength of the Hong Kong dollar against renminbi and other currencies has made Hong Kong uncompetitive to both tourists and local consumers. The high interest rates also led to negative wealth impact and dampened consumption. Moreover, the tight labor market is adding cost pressures. Even the successful players are cautious about expanding their business. Looking back to the first quarter, the first quarter saw a low comparison base for both visitor arrivals and retail sales due to the initial border reopening in early last year. Although there was significant year-on-year growth in visitor arrivals during the first quarter, the total number of visitors only saw 21 million, which was 69% of the 2018 levels. Overall, retail sales turned from post-pandemic recovery to decline in March and deteriorate to a double-digit decline in second quarter. As a result, Hong Kong retail sales dropped by 7% for the first half of the year. Although the market conditions weakened, our mall and office portfolio in Hong Kong managed to maintain stable occupancies, underpinned by location advantages and proven track record. Our Hong Kong IP portfolio reported a 2% increase in revenue to HKD 5.4 billion, supported by a 3% increase in retail revenue. Retail spot rent stabilized. However, turnover rent portion was affected by the weakened Hong Kong retail sales. Smart cost control is in place across our portfolio to protect profit margin. Despite the near-term challenges, global brands maintain confidence in Hong Kong's prospects. Harbour City and Times Square have undergone strategic brand realignment throughout the past few years and secure expansions and new openings of the top-tier tenants from different categories, which helps to enhance the one-stop-shop experience. This year, Harbour City has hosted the vertical expansion of Celine and the new flagship of Fendi, while Times Square will also welcome the return and expansion of LV duplex store in early next year. Now, let's take a look at the financial highlights. Group revenue and operating profit were virtually unchanged. Hong Kong IP and hotels' revenue increased by 2%, and operating profit stayed flat. However, the high-rate environment continues to drag the Core UNP performance. A non-cash and unrealized net IP revaluation deficit was reported, but cap rate remained conservative. Our dividend policy is consistent at 65% of Core UNP, representing an interim dividend of HKD 0.64 per share. The group maintained a premium Moody's A2 rating with stable outlook. Net debt was at the lowest since listing at HKD 35.1 billion, and gearing further improved to 18.3%. Average interest cost was 5.7%. Floating rate debt reduced to 89%. Interest cover improved to 4.7 x. In the following slides, we will walk through the performance of Harbour City, Times Square, and the hotel portfolio. First, Harbour City, which accounts for 76% of our Hong Kong IP revenue. Harbour City saw a 5% increase in revenue, supported by a 7% increase in retail revenue. Operating profit increased by 3%. Mall occupancy was 97%, and office was 88%. Retail rent is stabilizing with continuous expansion of top global brands at our mall. But office rent continues to adjust under the weak market demand. As a one-stop shopping paradise with over 500 shops, Harbour City offers a balanced mix of trades that cater to both locals and tourists. The 16 luxury brands on Canton Road frontage also continue to captivate consumer interest. In the first half, retail rental at Harbour City increased by 6% to HKD 2.6 billion. Leasing demand was relatively steady, with debuts and expansion of global brands in different trade categories. Moving on to Times Square, the mall is navigating the intense competition landscape by refining its tenant mix. The upcoming duplex of LV is set to enrich the luxury cluster. Mall occupancy was 94%, and retail revenue increased by 4%. Office occupancy remained weak at 87% under increased new supply nearby. We will switch to our hotel portfolio, which includes The Murray, our Forbes Five-Star Hotel in Central under Niccolo brand, and the three Marco Polo Hotels on Canton Road. Steep competition is putting pressure on room rates, but our hotels have managed to achieve steady occupancies. However, rising costs and talent shortage are imposing additional challenges to the industry. Moving on to the outlook. In the face of ongoing global uncertainties and a softened local economy, the retail and hospitality sectors in Hong Kong are weathering shifting consumer behaviors. While current demand is falling short of expectation, we remain hopeful that it will rebuild as cyclical factors continue to improve over time. In the last part of the presentation, I will walk through our efforts in ESG. The group has formulated the 2030 environmental target, and progress has been on track. We maintain strong ESG ratings and prioritize sustainable financing. Sustainability-linked loan totaled HKD 9.6 billion as at the end of last year. In recent years, Times Square has earned both LEED Platinum and WELL Health-Safety certifications. Also, energy-saving initiatives are actively adopted and pursued across our IP portfolio and Star Ferry. Youth development is also our key focus, and we are dedicated to various business and community initiatives, including our flagship Project WeCan. Continuous efforts were also made on promoting corporate governance, talent development, and workplace safety. That concludes my presentation. We will now proceed to the Q&A section. A quick housekeeping note before we begin the Q&A. If you have any questions, please raise your hand, and our hotel staff will provide you with a microphone. And please identify yourself and state the organization you represent before asking the question. If I did not do so, you may feel free to ask no more than two questions each time. Hi. Thank you. Two questions. First is if you could quantify your retail tenant sales performance in the first half, and if you can gaze into your crystal ball to see the second half. I guess more specifically, how much if you think the weakness was more due to the leakage of retail sales to, say, Japan, or more to do with underlying weakness in the Chinese economy to the extent if it's leakage now that the yen has appreciated, if you think that would make a big difference. Second is on the debt side, now that the interest rates seem to be coming down finally, do you have any plans to fix more of your debt? And if so, is there sort of optimal floating versus fixed rate that you would try to strive for in the medium term? Thanks. Thank you. Thank you for your questions. I suppose if this gathering had taken place one week earlier, those questions would not have been asked. First of all, retail sales in the first half, generally, our malls performed similarly to the picture in Hong Kong. Among different sectors, there is no particular bias between sectors. Luxury versus general, very similar. Within each sector, there are certainly star performers, and there are also dogs. There is generally no surprise as far as we're concerned. Looking forward at the second half, barring unforeseen circumstances, and what happened in the last few days would certainly qualify as unforeseen circumstances. Barring no further unforeseen circumstances, I think we're assuming we'll have more of the same as the first half. What happened in the last few days is obviously still in a state of flux. And a lot of people, including myself, are still trying to adjust to what potentially may come ahead of us. Things will settle down, hopefully, before too long. If the currencies, well, in particular, if the U.S. dollar weakens against major currencies in the region, the Japanese yen, the renminbi, and then the Southeast Asian currencies, it would help Hong Kong to compete against regional alternatives, certainly. And if interest rate trends down, it would hopefully give people a feel better feeling. But at the same time, I'm also slightly concerned that in case there is a market meltdown, the wealth effect or the lack of it may slow down consumption for those who are sensitive to investment. Hopefully, that would not happen, but there may be a temporary jolt, and hopefully, that would recover quickly if it does happen. So that deals with the retail. Fixed floating strategy. Oh, fixed floating. Getting old, sorry. Again, things are very different today compared to a week ago. We did some fixed in the last few months. We haven't done more recently. We'll be watching, of course. There may still be opportunities for us to do some fixed, but not necessarily long fixed. If we can do short-term fixed to lock in some rates, the future downside may not be as significant. So it is still doable, in my view, but maybe not long fixed. Thank you. May I have the next question from Raymond, HSBC? Good evening, management. Thank you for taking my questions. So two questions here. So the first question actually about your shopping mall business. So we all acknowledge that the macro challenge, the retail challenge so far, it's not easy. But we actually want to know more about your outperformance, your operations under, especially Harbour City, how you actually how to overcome the current situation, how to fight this uphill battle. So what have you done over the past six to 12 months to ensure that your tenant sales could continue to on an uptrend in the next six to 12 months' time, and how to ensure that your retail rental can continue to go up? This is the first question. And the second question is about borrowing cost. So we can see that borrowing cost has trended down a bit. If we base on the prevailing interest rate, should we anticipate that borrowing cost in the second half to be close to 5% or low 5% based on the current situation or current hedging policies? Thank you. Borrowing cost, we only have a small proportion of our debt in fixed, so floating is still the issue. So if the floating rate trends down, definitely would help to contain our borrowing cost. We have been deleveraging during this period, but there's only so much more we can do. We have operating cash flow, which is positive. So that helps us to pay down our debt slowly. But I don't expect our net debt to fall too quickly unless there's a transaction. But I don't see any on the horizon for the remainder of this year. So a lot will depend on the Fed and where Hong Kong follows and how closely Hong Kong follows. Retail, I don't know whether I gave you the wrong impression. We're performing in line with the market. We're not outperforming the market. But within the mall, clearly, there are certain outperformers, but there are also many underperformers. Overall, we are trending in line with the market, and we don't expect, as I was saying, a great deal of surprise in the second half of this year. Thank you. The next question from Karl from JP Morgan. Thank you very much. This is Karl Chan from JP Morgan. So I have one follow-up question about the tenant sales. So just now, Stephen, you mentioned that our tenant sales are quite in line with the Hong Kong average, right? I'm just curious, are you referring to year-on-year change, or are you referring to the recovery versus the pre-COVID level? Because I remember last time you mentioned that last year, our retail tenant sales for Harbour City has recovered around 80% of the pre-COVID level, right? So just wondering for this year, do you have a quick guidance on this one? And then if we are able to break it down by the three major shopping malls, would you have any colors on how the tenant sales are like for the three major shopping malls? So that's my first question. And then for my second question, just curious, if we exclude the impact of the amortization of the rental concession, what would be the year-on-year change in the rental income? Thank you. Let me answer the second question first because it's a short answer. Amortization has become increasingly insignificant as a factor. So I would ignore it completely for the purpose of looking at the numbers. For retail sales, as Angela pointed out, Harbour City accounts for 75% or 76% of Hong Kong IP revenue. Retail sales would be a comparable share. It is the best performing of the three malls. Plaza Hollywood is the smallest. It's less exposed to tourist spending. But on the other hand, some of you may remember we had a tragedy in Plaza Hollywood in June of last year. That was one factor in affecting Plaza Hollywood's sales. We haven't fully recovered from that yet. Another factor is additional competition in the adjacent MTR stations, at the adjacent MTR stations in Kai Tak and in Tai Wai. So in a way, that is where the pressure is coming from for Plaza Hollywood, but it's the smallest of the three. When I said Harbour City is performing in line with the market, I think we should interpret it as being on a year-on-year comparison basis, generally. Thank you. The next question from Sarah Cooper, Bank of America. Thank you. I guess following on from Raymond's question a little bit with regard to strategy. The best companies outperform the market, right? They don't just ride the market. And obviously, the market's going to impact. But we're seeing now Hongkong Land come out, undertake a strategic review, say they're not going to buy any more land, announcing a massive investment into Landmark, and time will tell how that goes. We've seen Hysan start quite early through COVID, redeveloping their portfolio and outsizing some of their retailers. So I just wonder if you can talk a little bit more strategically about where you think this company is going to go beyond just riding the market and providing a market-type return, and maybe at the same time, touch on your thoughts around plans for Times Square. Right. Thank you. I think we do things a little differently from some of our peers. We do premises improvement all the time. And we do them, not we don't aggregate them and say and get 10 tenants or 20 tenants together and say, "Together, we will invest HKD 1 trillion." We don't take that approach. But if you track the capital expenditure we have invested in our properties over the last five years, 10 years, it's on a magnitude which is comparable, relatively, to some of these numbers that our peers are using, particularly if tenants' expenditures are also included. So we take an incremental approach rather than a quantum leap approach. And that we continue to do. Conversion of lower-level office premises into retail, we started that quite some years ago. That's how the total floor area in Harbour City grew over time. We even converted one of the nearly an entire older office block on Canton Road into semi-retail over the years. We just do things a little differently from the way our peers approach it. Sorry, Times Square plans? Times Square? Yeah. About the reinvigoration of that asset? Well, hopefully, with the reopening of an LV store, we'll be able to strengthen that offering. Some of the other luxury brands in Times Square are not doing too badly. Now, of course, there are star brands from time to time and dog brands from time to time. And they're cyclical. And we see the star brands in Times Square doing relatively nearly as well as the Harbour City star brands, the same brands. So it's very brand-dependent rather than sector-dependent. So we do have pretty good trading for some of our tenants in Times Square. And we see retail sales in Times Square picking up again. Retail and rental income at Times Square, retail rental income at Times Square picking up again. So these are good signs which we will strive to continue. Okay. Sorry, I must have been mistaken. I thought that you were going to think about a remixing of that asset. My second question is with regards to the Hongkong Land investments. You must be very pleased to see the retailers showing such a vote of confidence in Hong Kong. Are you worried at all that this will detract sales from your portfolio? Possibly. But historically, our markets don't overlap that much, historically. But it doesn't mean it cannot overlap in the future. So yes, we will obviously have to watch them. But they would be, in my view, a lesser threat to Harbour City and to Times Square than some of the other players out there. Thank you. May I have the next question from Cindy from Citi? Thanks for the opportunity. This is Cindy from Citi. I have questions more on rental reversion. So as you mentioned, the overall retail sales is trending in line with Hong Kong. So in terms of lease negotiation with tenants, how do they respond to that? Are they, say, looking for a change in their rent structure, or are they looking for some, say, rent cut, etc.? Rental negotiation, rental reversion negotiation, is not the easiest at this time. But fortunately, some of the expiring leases were negotiated in even worse time. Generally, we've been able to maintain minor reversion, positive reversion. What is less certain is turnover rent. Because even in the second quarter of this year, we've seen a drop in turnover rent because tenants are not trading as well as they used to. Actually, our base rent has firmed. Our total base rent has firmed. The total turnover rent has dropped. Overall, our retail rent still increased during the first six months of this year. Thank you. Next question from Mark Leung, UBS. Yeah. Thank you, Management, for taking my questions. My first question is regarding on the outlook. I read on your outlook statement is demand for short of supply in all property sectors currently. So I think it's really a quite negative outlook on that one. Just want to check why would you have this kind of comment. And if the recent rate change will reinforce you about your outlook statement, I think that's the first question. And I think for the second question is regarding more on the luxury brands and enterprise competitions. So I think over the weekend, we see some intensifying price competition in Wuhan. Do you think it will spread over to maybe your another sister companies more in mainland as well as in Hong Kong? And we also heard that the brands actually are trying to reinforce or aiming for a higher turnover rent portion in the lease. Now, I think the turnover rents are currently maybe 13% of our two major malls in first half. Last year was maybe 15%-16%. What do you think will be the ideal portion for turnover rents going forward? Excuse me. What? Turnover rent is an art. On the one hand, you like turnover rent to be high because that gives you the upside. But if turnover rent is continuously high for a long period, that means you're leaving too much money on the table, so to speak. And over time, the turnover rent implying sales, good sales, would be factored partly at least into the base rent. So over time, the base rent rises, and hopefully, you'll be able to keep the turnover rent relatively high as well. But that's ideal. The markets don't always go up all the time. So you need to leave a little bit of margin for tenants. At the moment, we're still adjusting the ratio between base rent and turnover rent because we're still only just emerging from the last lease cycle negotiated during the COVID years when during extraordinary times, there were extraordinary deals done. How quickly we can get back to a more normal structure depends a great deal on the market, the basic underlying retail market. At the moment, it's uncertain. And so we're not being too aggressive with the base rent. And hopefully, we'd be in being not overly aggressive with the base rent, we'd be able to read the upside in the turnover rent. So that is the present strategy. The Wuhan situation, I'm not familiar with. What was it? Yeah. So basically, I think it's over the weekend, like SKP, Heartland 66, and then Wushang Mall, they launch a we call it maybe in CMT reading is rebates. So basically, if you buy LV bag, basically, you got a 17% off. That's what happening over the weekend. And then we do see some maybe your mainland luxury mall peers, they are now launching consumption voucher in one of the best-selling Shanghai malls as well. Yeah. Okay. Now, clearly, that's one possible source of competition. Hong Kong is competing with a lot of places: Wuhan, Shanghai, Shenzhen, Beijing, everywhere. So if the other places become more competitive, Hong Kong will be affected as well. But hopefully, with the currency gradually moving in our favor, we'd be able to more than compensate for these other threats from other markets. Oh. It's a factual statement. Demand falls short of supply in all property sectors. And by that, I'm including residential, office, and even retail. The only possible exception is logistics. I should have qualified that. Sorry. Thank you. The next question from Sam Wong. Thank you, Angela. Thank you, Management, for the sharing. I have two questions, if I may. First is on the investment book. So with the prospects of rate cuts, I guess there is not much negative carry investment to sell anymore. So just want to get a sense, going forward, how should we think about the size of the investment book from here given your positive operating cash flow? So that's the first one. And then the second one is on the hotel margin. Hotel margin is down quite a bit. Year-on-year, hotel revenue is actually up. But then the OpEx is actually down over 60%, right? So just want to get a bit more color on that as well. Thank you. Okay. Unless interest rate drops much, I would not expect the investment portfolio to change much. It is currently covering interest cost. We're looking for the upside from post-interest hike. But we're not in a hurry to increase that portfolio or decrease that, for that matter. We're holding it. Hotel margin. Oh, hotel. The problem with the hotel business in Hong Kong right now is occupancy is not bad. Occupancy is actually holding up reasonably well. This year compared to last year, similar. And compared to pre-COVID, slightly down. But pre-COVID, it was probably exceptional. So occupancy is reasonably good. The problem is room rate. Room rate has generally fallen compared to last year by 15%, 20%, and sometimes more. It varies clearly from season to season. And that's where the margin has come off. It's got a magnifying effect once it comes to the operating margin. The hotel team is counting on the summer to hopefully rebuild some business and to catch up on lost ground. But it won't be easy. But of course, now that the currency may change in Hong Kong's slight favor, it may help. Thank you. And the next question from Simon Cheung, Goldman Sachs. Just one quick, two questions. Just on office, I think it's very much a consensus view that things are really bad. I'm not sure whether you have seen any light in the tunnel or any positive. I agree. Okay. Okay. And then the second thing, just back to the Times Square. I remember last couple of times we discussed about how you are thinking of strategically kind of reposition the properties. I also pick up that LVMH is obviously coming in. Other than that, what else are you thinking of doing, if any? I know you took an incremental approach on all your property, but Times Square is seemingly performing a bit worse than the others. Thank you. I'm afraid I don't have anything more to tell you about Times Square today yet. Thank you. In the interest of time, may we have the last question from Jeff Yau, DBS? Thank you, Angela. Thank you for taking my questions. I have three questions. I have a follow-up question on the tenant sales. When you mentioned that Harbour City or your malls have performed in line with the overall market, which dropped probably 6%-7% in sales in the first half. Do you refer to the overall more, or do you refer to your tenants, your luxury tenants performing in line with the luxury tenants in the other part of Hong Kong? Because your mall is geared toward the luxury sector. If it is the case, your tenant sales may be different from the overall retail market, which dropped by 6%-7%. And the second question is regarding the key driver for the retail income growth in the first half. Your turnover rent dropped, but you get a slight increase in the retail income growth. Are the positive rental reversion at the key or the occupancy gain the key driving force behind? The final question is the occupancy cost ratio. If we would like to compare the current occupancy cost ratio with six months ago, are we better now, or are we worse than six months ago? Okay. Thank you. When I say we're performing in line with market, I'm referring to the mall as a whole. But within the mall, or within malls, as I said at the beginning, there's not a great deal of discrepancy or variation between luxury and non-luxury. Everybody's in the same boat. So that is what the current situation is. To your last question, the second question was about. The second question, is it about the retail revenue key driver? What are the key driving force behind the retail rental income growth? Because of the occupancy improvement or because of the positive rental reversion or both? Right. Occupancy hasn't changed that much. So it's mainly because of rental unit rent, average unit rent improving from rental reversion. We're coming out of the COVID cycle into a post-COVID cycle. So gradually, we're getting positive rental reversion. And to your last question about occupancy cost, between the beginning of this year and now, the six months, two things have happened. A, the rent has generally crept up. B, sales has generally declined. That explains occupancy cost has increased, which is not healthy. Clearly, we need to bring it back to a stronger position for tenants and for ourselves. We expect the rental reversion to become less positive going forward? Not at this stage. Yeah. Thank you. Thank you for the last question. May I now conclude the presentation today? The webcast of the event will be uploaded to our corporate website afterwards. Thank you very much for joining today and wish you a nice evening. Thank you.