Good evening, everyone. Welcome to Wharf REIC interim results presentation. I am Angela Ng from the IR team. You can download the presentation from the QR code on the LED wall. Our management team presenting today includes Mr. Stephen Ng, Chairman and Managing Director, and Mr. Horace Lee, Director. For today's briefing, we will first go through the PowerPoint presentation, and then we will open the floor for the analysts for a Q&A session with the management. The theme for the presentation is "Deleveraging Continues While Asset Value Falls." Now, let's take a look at the results highlights. In view of the persistent weak market condition, our investment property revenue slipped by 3% and operating profit by 4%. However, thanks to the drop in HIBOR, borrowing costs decreased by 27%. We remain committed to deleveraging, with gearing further down to a new low at 17.6%. Underlying net profit was stable and healthy. IP revaluation deficit widened, which is an unrealized and non-cash item. Core underlying net profit from our Hong Kong investment properties and hotels increased by 3%. Our dividend policy remained consistent since IPO, which is 65% of our core underlying net profit. Accordingly, our interim dividend per share increased by 3% to $0.66. Looking at the macro environment in recent years, geopolitical tension, serious disruption to world trade, and uncertainties around interest rates and the economy have continued to weigh heavily on real markets. The retail market in Hong Kong is perhaps in a base-building phase. As shown in the chart, Hong Kong's overall retail sales have retreated to the 2011 level, and Harbour City's retail revenue is at the 2014 level. Despite the weak market, Harbour City has maintained its revenue position relative to peers thanks to its scale, location advantage, and reputation. Our baseline structure also helps to cushion the impact of market volatility. Zooming in on the first half, the first quarter remained challenging, but signs of improvement emerged in the second quarter as the Hong Kong dollar weakened and HIBOR dropped sharply. Visitor arrivals and retail sales in Hong Kong also showed quarter-on-quarter improvement. Growth in inbound visitation rose from 9% to 15%, while retail sales ended a 14-month decline with positive growth in May and June. Our Hong Kong investment properties portfolio reported a mixed performance. Our retail rentals softened, mainly due to a drop in turnover rent, and rental reversion remained challenging. On the other hand, office rentals rose by 2%, driven by higher occupancy, though negative reversion persists. Now, let's take a look at the financial highlights. Core underlying net profit increased by 3%, as mentioned earlier, thanks to the lower borrowing costs, which dropped by nearly $300 million year-on-year. While the non-cash and unrealized IP revaluation deficit led to a grid loss, it is worth noting that cap rates remain unchanged for our Hong Kong investment properties. Our dividend policy has been consistent since IPO. Interim dividend per share increased by 3% to $0.66. While asset value falls, we remain focused on deleveraging and maintaining solid cash flow. Since our IPO, total equity has declined by 11%, mainly due to IP revaluation. However, net debt has increased notably by 21%. Comparing to the peak at the end of 2020, net debt has been reduced significantly by 36%, reaching a record low of $33.3 billion. Over the same period, total equity fell by 10%. Also, our gearing has consistently stayed below 20% except during the COVID years. Looking at the first half, with 79% of debt in floating rate, we benefit from lower HIBOR, reducing average interest costs by 1.3 percentage points to 4.4%. Interest cover remains strong at 6.2 x, and our financial health is affirmed by Moody’s A2 rating, with a stable outlook. In the following slides, I will walk through the performance of our Hong Kong investment properties. To respond to shifting travel and spending patterns, the group enhanced experiential retail to drive engagement and sales. At Harbour City, our strong brand partnership supported the expansion of Louis Vuitton, adding a VIP level to its four-story flagship, which is the largest in Hong Kong. This shopping destination also attracted premium brands launching debuts and concept stores in the first half. At Times Square, we are curating distinctive offerings, including Louis Vuitton's return, Loewe's expansions, and the launch of CR7 Life, the world's first Cristiano Ronaldo merchandise store. Turning to the office sector, while oversupply remains a challenge in the office market, our prime location and mixed-use complex remain a key strength. Both Harbour City and Times Square achieved LEED Platinum certification, reinforcing our commitment to premises improvement. We also focused on tenant retention and in-house expansion to remain resilient. As a result, the group's office portfolio delivered a respectable performance, driven by occupancy improvement. In the first half, overall revenue at Harbour City remained steady. Retail occupancy was 93%. This year, we are pleased to welcome the return of Star Cruises to Ocean Terminal, which will help drive footfall. On the office side, Harbour City's office continues to attract interest from insurance and financial sectors. Occupancy was 90%. As the largest shopping mall in Hong Kong, Harbour City remains focused on balancing trade mix and enhancing offerings for both locals and tourists. Retail rental was $2.5 billion in the first half. In response to the market competition, Times Square has been undergoing active rejuvenation of tenant mix. Mall occupancy rose by 2% year-on-year to 96%. On the office side, occupancy rose by 3 percentage points to 90%, despite new supply within the district. We will switch to our hotel portfolio, which includes the three Marco Polo Hotels on Canton Road and the [Marriott] under Niccolo brand. Hotel occupancies improved, driving the growth in revenue and operating profit. However, cautious consumer sentiment and intense market competition continue to pressure room rate, dining, and events. The sector outlook remains challenging. To stay competitive, capital investment will be required to enhance offerings and drive performance. Moving on to the general outlook. In Hong Kong, renewed momentum in the financial sector and major tourism events may offer support for market recovery. However, geopolitical risks continue to shape the global economic outlook. Against an uncertain macro backdrop, the group will stay agile, maintaining proactive strategies and low leverage to navigate ongoing headwinds. In the last part of the presentation, I will walk through our efforts in sustainability. In June this year, the group's near-term science-based targets were approved by SBTi, which marks an important milestone for our sustainability journey. We aim to cut Scope 1 and 2 emissions by 42% and Scope 3 emissions from downstream lease assets by 25% before 2030, using 2022 as the base year. Our efforts in sustainability have earned us strong ESG ratings, including an A rating from MSCI ESG Assessment. Times Square has achieved both LEED Platinum and WELL Health-Safety certifications, while this year, Harbour City offices also earned LEED Platinum, demonstrating our excellence in sustainable building management. Sustainable financing made up 36% of our financing as of June this year, while an accumulated total of $15.8 billion sustainability-linked loan has been arranged. 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 business in 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 session. A quick housekeeping note for the analysts before we begin. If you have any questions, please raise your hand. Our hotel staff will provide you with a microphone. 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. Now, may I invite Mr. Ng and Mr. Lee to come to the stage, please? Sorry, maybe a lady first. We will have the first question from Cindy from Citi. Thank you. This is Cindy from Citi. Two questions. First is on retail sales performance and footfall performance. Just now, as the slides show us a great quarter-on-quarter improvement in retail sales. How do you see the sentiment going into July and August? What do you think are the key factors driving the improvement, and do you expect that to sustain into the second half? I think we mentioned reversion was retail reversion was kind of challenging. With that challenge, maybe ease into the second half if the retail sentiment continues. The last time we talked, I think you mentioned being not optimistic on the overall outlook in this year. Has there been any change to your tone to that? This is the first question. The second question is actually on your capital investment. I think earlier on the hotel slide, there was mention on capital investment required to enhance competitiveness. Do you have any plan in head already? The timing, the scale for which asset, the required return, etc.? Thank you. [Foreign language] [Audio distortion] Okay. Sound system wasn't as good, or maybe my ears are not as good. In the second quarter, Hong Kong retail sales generally showed a year-on-year improvement in May and June. It's a small improvement, but it's at least a change in direction, which is clearly encouraging. However, bear in mind, the base we were comparing to was a relatively low base. It is rather premature to conclude that we're out of the woods already. In fact, I suspect a lot of retailers will be thinking very much like myself when they are trying to decide whether to invest more in the coming years. Invest more either in the form of expanding their sales presence, upgrading their existing presence, upgrading their stock offerings, merchandise offerings, upgrading their service by hiring better staff, more staff, and so on and so forth. I suspect the retailers will take a few more months to form a clearer view about where the market's going. In the meantime, I'm afraid retail rental will continue to be soft. We are ourselves not expecting a quick turnaround in the second half of the year, partly because a lot of the commitments in the second half have already been entered into before the second half. The lag between a market changing direction, hopefully in the right direction, and that being reflected in the financial performance will be a matter of several quarters. The hotel investment that is required refers primarily to the biggest of our three hotels in Hong Kong, in Canton Road, namely Marco Polo Hong Kong Hotel. It's the oldest of the three, and it's also in the poorest physical state. We've been evaluating what to do with it. There are two main directions we can pursue. One of them is to tear down the entire building and rebuild it, redevelop it. Another one is to do a complete overhaul within the existing framework. The existing framework and structure is dated. If we have to spend billions of dollars, which we will have to, for a complete overhaul, the question is, would it be money well spent? Or should we go all the way and turn it into a brand new property? That's a question which we haven't found the answer to yet. It partly or greatly depends also on what redevelopment plan would be approved by the building authorities. I don't see work starting within this year, certainly not within this year. Possibly within next year. Even if it were within next year, it's likely to be towards the end of next year. There is a lot of planning that we need to do, plans that need to be approved. Typically, plans do not get approved the first time you submit them. We are flagging that the current product is not competitive and will require investment either in the physical hardware, in the physical hardware, and/or on the soft side in service. In the meantime, the Marco Polo Hong Kong Hotel, among our three hotels in Canton Road, is the least performing of the three. Let me put it that way. It has potential to do a lot better. I hope I have answered your questions. Thank you. May we have the next question from Bank of America, Karl Choi? Hi, two questions. First, just to follow up on the Hong Kong retail questions, can you give us a better sense about where occupancy cost stands and if it's sustainable? Given the retail sales pressure that Hong Kong is facing, I think there are investor concerns that expiring rent could be much higher in 2026 and whether you actually see a drop in base rent because Harbour City still saw base rent go up in the first half. Second is to ask about the latest thinking about your Singapore assets. I think, if I'm not mistaken, you own more than 20% of HPL. They recently received an offer to redevelop the Orchard Road properties. If given a chance, would Wharf reconsider taking an active role or you actually look at it as an exit, or you actually be looking for an exit possibility? Okay. First of all, a factual correction. We, within this company, do not own any HPL shares. It was previously owned by, it is owned by the privatized Wheelock and Company Limited. I don't want to mislead you by discussing it because it's not relevant to this particular company in that regard. Occupancy cost at Harbour City, let's use that for discussion because that asset represents over 80% of our group UNP. If Harbour City works, the group works. At Harbour City, the occupancy cost for the mall as a whole is relatively stable at about 20%. Obviously, I'd like to see it lower, but it's been in that range, in that neighborhood ever since COVID ended. If indeed retail sales do recover, there would be room for rental to stay firm or even firmer. If that doesn't, at the moment, we cannot expect rent to go up at the base rent level. If sales improve, then we would get a little bit more turnover rent. Thank you. May we have the next question from Karl Chan, JP Morgan? Thank you very much. This is Karl Chan from JP Morgan. I have two questions. The first question is on the office rental income. I saw from the slide, one of the slides, that for the office rental income, we saw a year-on-year increase, right? I'm just wondering why, because I think it's quite rare nowadays to see an increase in office rental income. That's my first question. The second question is on Times Square, because I guess Times Square retail is still struggling. I'm just curious, are we planning more trade mix upgrades or AEI on Times Square? Thank you. Okay. Now, office rental, rent per square foot is not rising, just to be clear. Total rental income increased solely because of occupancy. We've worked hard to increase the occupancy or to hold it and then to increase it. It's becoming increasingly difficult to do so because of severe competition. New competition arriving both in Tsim Sha Tsui and in Causeway Bay, as well as from outside of our own areas. While we are currently, or we were at least in the first half of this year, enjoying an improvement in office income, we're enjoying it while it lasts. I don't think, let me be more articulate. Unless demand improves significantly, which it can, all right, but I can't, I don't have a crystal ball. Unless demand increases significantly, the supply will catch up with the demand. Both average rent and occupancy may become softer. We'll have to try even harder. In the meantime, what we're doing is to enhance the physical state and the service we provide to our office tenants by upgrading public areas, corridors, lifts, entrances, toilets, air conditioning, and making them greener, all of those things, which require CapEx. Then providing better service to our office tenants. On the one hand, we need to invest. On the other hand, income may come under pressure. The other question? Times Square. Times Square is operating in a softer market than Tsim Sha Tsui and Mongkok. The return of visitors to Hong Kong after COVID has tended to flock to Tsim Sha Tsui and Mongkok, and less to Causeway Bay and Central. We have quite a bit of competition in Causeway Bay. Fortunately for us, we have a reasonably strong balance sheet and good cash flow. Our competitors are giving things away, both to tenants and to shoppers. We may have no choice but to give things, to start to give things away as well. We have a slight advantage in that our cost base is historical. Our main competitor's cost base used to be historical until they invested billions of dollars on a new piece of land. We may have a slight financial advantage. Slight. They are a strong company. I'm not saying they're not strong. All right. Thank you. The next question from Raymond, HSBC. Thank you. Thank you, management. Two questions. The first question is about the retail market. We saw that there's a phrase in the PowerPoint. This is about the retail market is in the base building phase. Can management provide more color about what you're thinking on this one and why you want to share with us on this thinking? This is the first question. The second question is about borrowing costs. As you know, there's a significant decline in the one-on-one HIBOR. We actually looked at the floating debt ratio declined slightly to around 79%. Can management share with us what tactics you have already applied to ensure that you enjoy the lower borrowing costs going forward? How should we expect the company to capitalize this opportunity in the next 12 months' time? Thank you. Okay. The reason why we talk about 2011 and 2014 and so on is both for internal consumption as well as external. If you look at Hong Kong retail sales, there were two peaks in the last 15 years. First peak in 2013-2014 when total Hong Kong retail sales was about $500 billion. Another peak slightly lower in 2018. In the case of Harbour City retail rental, we only saw one peak because we kept on going after 2014, and we peaked in 2018. We need to remind ourselves all the time that 2018 is history. We're not working on the basis that things will get back to 2018 kind of levels anytime soon. We're now back to 2014 for Harbour City retail rental, and hopefully, we'd be able to use that as a new base and rebuild from there. For Hong Kong retail sales as a whole, we're back to 2011. Harbour City rental is 2014. There's no point in pretending that Hong Kong retail sales would get back to $500 billion very soon, or in pretending that Harbour City retail rental would get back to the level it was in 2018. For all planning, internal planning purposes, that's how we're running our plans. Try to establish a new base and rebuild from there. Interest rate. I don't have a crystal ball. Even Donald Trump doesn't have a crystal ball. We're taking advantage of two things. One is hopefully U.S. interest rate having peaked out. Now, it may not fall, or it may not fall very quickly, but hopefully, it will not rise again. At the same time, we're also counting on deleveraging, which we have been doing consistently. Our gearing is currently at its lowest since IPO, and that's notwithstanding the fact that our equity base has shrunk as a result of IP valuation having shrunk. We will continue to deleverage. That will help, hopefully, help us to reduce our borrowing cost further. It would not have gone amiss that we were able to pay a higher dividend for the first half of this year solely as a result of interest cost reduction. Hopefully, we'll be able to repeat that. Thank you. The next question from Mark at UBS. Hello. Thank you, management. This is Mark from UBS. I got two questions. I think the first question is regarding the future Tsim Sha Tsui retail competitive landscape. Because maybe a few minutes walk nearby, one of your major competitors, they have Louis Vuitton, established the largest Asia flagship store over there. You also mentioned that maybe on Marco Polo, we are having some data structures. Aside from Marco Polo, do you see other AEI opportunities in the Harbour City? How are you going to see the competitive landscape after the LV flagship store being opened in Tsim Sha Tsui? I think that's the first question. The second question is, I read on the comments from that seems on the outlook, we are also will continue to be selective to do some investments. Given that our leverage continues to push down, right? If there is some distressed opportunity or really opportunity to emerge in, do you consider to acquire some third-party, maybe en-bloc building, etc.? If that's the case, what kind of yield you are looking for and what's the types of asset you're looking for, for example, in Hong Kong or in Singapore? I think we are at a pretty fantastic leverage position. Thank you. We're not in a hurry to undertake any acquisition. That would go counter to the direction of deleveraging anyway. Unless it's a very attractive opportunity, we're not likely to be looking at any. The opening of LV in K11 Musea, we understand it to be very different from the flagship LV store in Harbour City. We understand it will include a good amount of lifestyle and leisure facilities and so forth, which would help to build the LV brand, certainly. For as long as the LV store in Harbour City remains the flagship for selling purposes, the fact that the LV uses other devices to help promote the brand would be music to our ears. I hope they do more advertising, more marketing, and so on and so forth. Thank you. Thank you. The next question from Simon Cheung, Goldman Sachs. Thanks. Just a very broad question because you mentioned about Marco Polo, Times Square, been a couple of quarters. We were talking about AEI potential, reviewing all these AEI potentials. Just wondering, what do you need to see before you actually pull the trigger? If you decided not to, for example, proceed with a couple of billion CapEx projects with, let's say, Marco Polo projects, what sort of scale or spending should we expect? That's the first question. The second one, we have seen tourism arrival pick up quite significantly recently. I know a lot of [winter], what Daytripper and all those. From your discussion with your tenants, what sort of a retail rental reversion that you're seeing? Perhaps, if you can, can share with us luxury brand and some other brand because, obviously, a lot of the local Chinese brands have been doing quite well locally in China. Thank you. Okay, sure. Now, first of all, let me clarify to avoid misunderstanding. Marco Polo Hong Kong Hotel is owned by our listed subsidiary, Harbour Centre Development Limited, which is a separate credit entity. It's got its own funding capabilities. Harbour Centre Development Limited is currently in a net cash position. It's debt-free, and it's got a small net cash position. If we pursue the direction of a complete overhaul, the CapEx required is likely to be upwards of $2 billion. That includes complete overhaul of the building services, M&E, which is very old. It also includes structural reinforcement and various other things. It will not be a small investment. Redevelopment will cost more. All of that would be well within the capability of Harbour Centre Development Limited to fund without having to look to the parent company for assistance. For retail rental, as I was saying just a few minutes earlier, we're not expecting a positive reversion. We are, in fact, seeing pressure on negative reversion, hopefully in the low single-digit area overall. Clearly, some tenants who are not doing as well as others would want us to give them a deeper reversion discount. Overall, it depends on the nature of the business and the outlook for that particular business and whether or not we may be able to claw back some of the negative reversion through turnover rent and so on and so forth. Hopefully, negative reversion can be seen as an investment, and there'll be return on investment. Thank you. The next question from Jeff Yao, DBS. Hi. I got two questions. The first question is on the Marco Polo Hong Kong. Marco Polo Hong Kong Hotel is part of the Harbour City entertainment development. If eventually you proceed with, say, major AEI or with the development of Marco Polo Hong Kong, would there be any disruption to the retail mall office operation? Yes, no question. How big is the impact? That is what we are also assessing. Because they're apart to two different companies. One is Harbour Centre Development. The other is Wharf REIC. Physical disruption will not see the fact that these are two different listed companies. Physical disruption is physical disruption. Okay. The second question is also related to the retail market. You mentioned before that retail market, the market sales saw some sequential improvement in May, June because of the low base. Can I say that Times Square or Harbour City also saw similar performance in the second quarter, similar to the block market in Hong Kong? Finally, you mentioned the OCR, the occupancy cost ratio is around 20% now. Can you remind me in 2018 when the market still, your revenues at the peak, what was the OCR ratio? From recollection, it was about the same. Recollection is about the same. In the question about retail sales performance for May and June, Harbour City outperformed Hong Kong slightly. Have I answered your question? You're puzzled. Okay, thank you. Thank you. If you have any question, please feel free to raise your hand. Mark from UBS. Sorry, management. I got one more question regarding the redevelopment potentials. I recorded in 2016, actually, many of our buildings have been approved by the Housing Authority to build a taller or maybe bigger office building. Why would we like to execute the Marco Polo Hotel first, for example, not knocking down the Harbour Centre? I recorded we are able to build a 60-story office building. Just want to hear your thought about that, because the disruption is happening anywhere. It's going to impact on the Canton Road anyway. I don't remember the exact year, but it was a lot earlier than 2016. Sorry, do you have another question? No, that's my question. That's the only question. Okay. We have a set of plans approved to redevelop what is known as Ocean Center into a building very similar to ICC, as tall. We have not pressed the button to go ahead with it. The reason why we're not putting that ahead of, at the head of the queue, so to speak, is a physical answer. The Marco Polo Hong Kong Hotel is in a state that will require major physical enhancement or redevelopment, either/or, to be competitive. Whereas Ocean Center is in reasonable shape. If we have to invest, not spend, invest is a better term. If we have to invest $2 billion to do a complete overhaul, should we invest a little more to redevelop it? I think that's the question we're asking ourselves. If we don't need to invest the $2 billion, we won't. Its competitiveness is dropping, and it can be dropping at an accelerated pace if we don't start to invest again. Thank you. In the interest of time, we will receive the last question from Karl Choi, Bank of America. Two quick questions. I just want to go back to Times Square, you know, just your earlier comments about your competition. Is it a matter of, do you still foresee a lot of trade mix changes that you want to make over at Times Square? Is it because your competition is charging much lower rent? That's why you're not able to make those changes? I just want to get more color on your future plans about Times Square. My second question is a quick one. When rental reversion, are you, when you talk about negative low single digit, are you talking about versus last year or versus three years ago? Versus the expiring lease. Okay. Right. Times Square will invest where we need to. If we need to invest in tenants, we will. If we need to invest in shoppers, we will. We're ready to compete. Thank you. May I conclude today's briefing here? The webcast of today's briefing will be uploaded to our website afterwards. Thank you for joining today. Thank you for coming.