Sun Hung Kai Properties Ltd

HKEX:16

Earnings Call Transcript 2018-Q2

[Brian Sum, executive]

Good afternoon, ladies and gentlemen. I would like to welcome you all to Sun Hung Kai Properties FY 2018 Interim Results Analyst Briefing. I understand all of you are very busy because today you have to cover two major Hong Kong company properties in the same day. So again, thank you very much for coming to our analyst briefing. As in the past, in the next 20 to 25 minutes, I'll walk you through the key aspects about interim results as well as the business update. Then I shall open the floor for Q&A section. Before going through the results, I would like to highlight some key messages to all of you as follows: first of all, we are confident in achieving full year contracted sales target. For your information, since July 2017, our total contracted sales in Hong Kong and Mainland China has already reached HKD 35 billion. Secondly, we have set a medium-term target of HKD 40 billion annual property sales in Hong Kong. In terms of land banking, we continue to see opportunities to replenish our land bank through various channels, including farmland conversion, and our existing land bank is sufficient to meet our development needs in the next 5 to 6 years. Besides, we have a steadily growing rental income stream, which is driven by expanding rental portfolio and a number of asset enhancement initiatives. Moreover, backed by our strong balance sheet and prudent financial management, we are well positioned to see new opportunities and sustain our business development in future. Last but not least, we are committed to creating shareholder values, and we intend to increase dividend when earnings are higher. Let's talk about our financial highlights of the results. And please note that all figures are in Hong Kong dollars, unless stated otherwise. For the 6-months ended 30th December, 2017, the group achieved underlying net profits of around HKD 19.9 billion, representing a year-on-year growth of 37%. The growth was mainly due to the fact that most of the current financial year development projects in Hong Kong were completed in this first half. Underlying earnings per share grew by 37% to HKD 6.90, while reported earnings per share rose by 60% to HKD 11.40. On dividend. The Board has declared an interim dividend of HKD 1.20 per share, representing a year-on-year increase of 9%. This table shows the profit breakdown by segment. Property development profits grew by 67% to HKD 13.9 billion. This was mainly due to front-loaded completion in Hong Kong during the period under review. On the other hand, property development profits from Mainland China dropped 26% to HKD 1.2 billion due to lower recognized property sales on SGFA book. Rental business continue to deliver healthy performance with net rental income up by 7% year-on-year to HKD 8.9 billion. In Hong Kong, net rental income recorded year-on-year growth of 5%, while Mainland China achieved a much higher growth of 21%. Including profit from hotel and on property businesses, the total operating profits grew by 32% to HKD 25.9 billion. Our financial position remains very strong as at the end of December 2017. Net gearing ratio was 8.5%, while interest coverage stay high at over 24x. Shareholders' funds and net book value per share increased to around HKD 527 billion and HKD 182, respectively. Net debt increased to HKD 44.7 billion, the increase was mainly due to the net premium pay for the land use conversion of Shap Sz Heung project. Let's move on to the performance of our properties business in Hong Kong. As at end of December 2017, the group total land bank in Hong Kong was over in 55 million square feet of GFA, including around 31 million square feet of completed investment properties, over 21 million square feet of properties under development, and 2.8 million square foot of completed properties pending for sale. Majority of the completed investment properties, our shopping centers and offices, and 85% of properties under development or around 18 million square feet of GFA are residential properties for sale. On top of that, the group also holds about 29 million square feet of agricultural land in terms of site area. During the period under review, we had 3 projects or nearly 5.3 million square feet of GFA through land use conversion, government tender and old building redevelopment. Details of these projects are shown in this table. In addition, the group subsidiary SUNeVision also acquired an industrial site in Tsuen Wan with about 200,000 square feet of GFA for its business expansion. We should continue to actively seek opportunities for land acquisition to enable a persistently high level of annual project completion in the long run. Of course, we shall make considerable efforts to convert our agricultural lands into buildable lands. The latest example of the farmland conversion is the Shap Sz Heung project. This megaproject is located around 10 minutes drive to MTR Wu Kai Sha Station and will provide around 4.8 million square feet of GFA. This large-scale project will be developed in phases and the development cycle will be relatively long as it's to enforce preliminary works, including road widening and associated infrastructure works. Moving on to property development business in Hong Kong. For the period under review, the group recognized HKD 31.8 billion property sales and generated HKD 12.7 billion development profits in Hong Kong. The strong profits growth was mainly due to the front-loaded completion in this period, encouraging sales response of our project such as Cullinan West and better development margins. As at end December of '17, the group had contracted property sales of over HKD 17 billion not yet recognized. On completion. The group completed 5 projects in Hong Kong, comprising about 3.5 million square feet of attributable GFA, of which, nearly 2.5 million square feet are residential. The remainders are nonresidential premises being kept for long-term investment, including Hotel VIC in North Point, V Walk at MTR Nam Cheong Station and Two Harbour Square in Kwun Tong. In the second half of this financial year, around 200,000 square feet of attributable GFA of residential premises are scheduled for completions.

With regard to contracted sales during the period under review. The group has achieved HKD 26.5 billion contracted sales. Major contributors are shown in this table. And since January 2018, additional HKD 5.7 billion contracted sales were made. This map shows the upcoming launches over the next 10 months. The purple boxes represent new project to put on the market. On top of these new projects, new units at Victoria Harbour in North Point, Babington Hill in Mid-levels West and Cullinan West II in West Kowloon will be put on market at greater pace. Now let's turn to our Hong Kong rental portfolio. Our rental portfolio continue to deliver healthy performance during the period with total gross rental income increasing by 4% year-on-year to HKD 9 billion. We continue to see overall positive rental reversion and high occupancy. Gross rental income from retail portfolio increased by 5% year-on-year to HKD 4.8 billion, representing 54% of total gross rental income in Hong Kong. For the same period, our office portfolio recorded gross rental income of almost HKD 3 billion, up around 3% year-on-year and representing 33% of the total. Covering about 12 million square feet of retail space, the group's retail portfolio continue to enjoy positive rental reversion with occupancy sustaining at high levels during the period. Our consistent and proactive approach in managing shopping malls has enabled us to achieve better retail sales performance as compared to the market. Apart from the ongoing tenant mix and trading mix refinements, the group has also leveraged new technology to enhance shopping experience for our customers. The recent launch of SHKP Malls mobile app is a prime example. This new app will integrate the group's 26 major malls on a single easy-to-use platform, providing information on dining, parking, shopping, promotion as well as integrated membership program to enhance customers' overall shopping experience. We continue to take on asset enhancement initiatives so as to bolster competitiveness of our retail portfolio. Metroplaza in Kwai Fong has been given a facelift with a reconfigured layout and more new brands. The new outdoor thematic piazza offering new features has become a photo hotspot. Besides, a new cinema in New Town Plaza Phase I in Sha Tin will be opened in summer this year, while the renovation of Phase III is progressing as scheduled. Looking forward, two major malls in Hong Kong will open in medium term, namely V Walk at MTR Nam Cheong Station and Harbour North in North Point. V Walk is expected to open in mid-2019. And the first phase of Harbour North is scheduled for opening in late this year. Let's turn to our office portfolio in Hong Kong. During the period, the group's 10 million square feet office portfolio continued to deliver solid performance with healthy rental reversion and high occupancy. The leasing of the newly completed joint venture office building, Two Harbour Square in Kwun Tong, is progressing well with tenants moving in during the first half this year. The group's 98 How Ming Street, which is currently under planning and design, is expected to create synergy with our Millennium City in Kwun Tong. This concludes my presentation on the property business in Hong Kong. Now let's move onto the property business on the Mainland. At the end of December 2017, the group had a total land Bank of around 65 million square feet of attributable GFA in Mainland, China, of which nearly 13 million square feet was completed investment properties and an around 51 million square feet was properties under development. Majority of the completed investment properties were shopping center and office, and around 60% of property under development is residential for sale. During the period, the group recognized HKD 2.8 billion property sales on the Mainland, down 59% year-on-year. The drop was mainly due to much lower GFA book during the period. However, development margin was much higher than last year, mitigating the decrease in development profits. Major contributors include several residential and commercial projects in Shanghai, Guangzhou and Foshan. During the period, we completed about 1.6 million square feet of attributable GFA and HKD 6.2 billion contracted sales have not yet been recognized. In terms of contracted sales, the group recorded about RMB 2 billion contracted sales. Major contribution mainly came from Long King in Foshan, Top Plaza and Forest Hills in Guangzhou and Grand Waterfront in Dongguan. And this table shows the major new launches on the Mainland in the next couple of months. So let's turn to our property rental business in Mainland China. During the period, the gross rental income in Mainland China rose 16% year-on-year to over HKD 2 billion, accounting for 19% of the group's total gross rental income. In RMB terms, the gross rental income reached RMB 1.8 billion, up 13% year-on-year. This meaningful growth was driven by strong positive rental reversion and contribution from new investment properties. The group's two iconic integrated projects in Shanghai, namely Shanghai IFC and Shanghai ICC continue to excel in the city's leasing market. For Shanghai IFC in Pudong, the office towers remained virtually fully leased with notable growth in rental rates on renewal, as shopping malls continue to see remarkable growth in tenant sales and it will become even more accessible after its direct connection to another metro line which is targeted to open in 2020. For Shanghai ICC in Puxi, the One ICC office tower saw positive rental reversions with high occupancy, while Two ICC is now 95% leased. The IAPM Mall also record healthy growth in tenant sales and traffic. ITC, another [indiscernible] project of the group in Shanghai will become the major growth driver of the group rental income upon its full completion. Office tenants of One ITC, which is the first phase of the whole project, have already moved in, while leasing of upscale mall as One ITC is very encouraging and the mall is expected to open in first half 2019. The Phase 2 of ITC, comprising 320,000 square feet of offices and about 43,000 square feet of retail space, is due for completion in the second half of this year. Pre-leasing is currently underway.

For Nanjing IFC, the group's other major integrated project, the construction is progressing as scheduled with one of the office towers having been topped out. The full completion of this project is expected in 2020 with connection to the interchange station of two existing metro lines in Hexi CBD. The Nanjing IFC will enjoy transport convenience. And that's all for the rental business in Mainland China. Next, I'll go through the hotel business. The performance of the group's hotel portfolio in Hong Kong continue to improve, supported by increasing inbound visitors and proactive marketing initiatives and management teams. On the Mainland, the Ritz-Carlton Shanghai in Pudong, also register high occupancy and rising room rate during the period. In the next few years, we shall open a number of new hotels in Hong Kong and Mainland China. In Hong Kong, Hotel VIC in North Point has been recently completed and is scheduled to commence operation in mid-2018. As part of the group's integrated development in North Point waterfront, all the guest room at the Hotel VIC will offer stunning sea views. And a high-quality hotel in Sha Tin is planned to open next year. It is a sister hotel of Royal Park Hotel. On the Mainland, the construction work of Four Seasons Hotel in Suzhou is proceeding as scheduled, and it will be the first Four Seasons Hotel in the city. And that's covered the business update. Now let me share with you our views on the market and then I'll talk about the group's business prospects. In Hong Kong, the residential market is expected to continue to do well on the back of favorable economic conditions, robust labor market and ample liquidity, notwithstanding the anticipated modest rate rise. And we believe the Hong Kong office leasing market will be well supported by favorable market fundamentals and policy initiatives such as Stock Connect. On retail, solid local consumption and improving tourist arrivals is expected to underpin retail sales performance in Hong Kong. In Mainland China, quality office space at prime location will remain highly sought-after by multinationals companies, solid and rising consumer spending, particularly from middle-income class and millennials will continue to support leasing demand for well-managed shopping malls at prime location. On the other hand, regulatory measures will continue to affect first-home sales in Mainland China.

As for the business prospects of the company property development. As I've mentioned at the beginning of the presentation, we are confident to achieve the full year contracted sales target. And we have set a medium-term targets of HKD 40 billion annual property sales in Hong Kong. Besides, we expect to achieve satisfactory development margin. In addition, we have sufficient land bank providing a strong support for development needs in the next 5 to 6 years. And we will continue to replenish land bank through various channels, including land use conversion. And of course, we will stick to our prudent financial approach on land acquisitions. As for the property investment. Our existing, sizable and diversified rental portfolio will continue to generate organic rental income growth and provide strong cash flow to support dividend payments and future business growth. In addition, our rental portfolio is expanding in both Hong Kong and Mainland China. In the next 3 years, a total of about 0.8 million square feet and 3.8 million square feet of rental properties will be completed in Hong Kong and Mainland China, respectively. Then between 2021 and 2023, another 2.1 million square feet and 8.1 million square feet of rental properties will be completed in Hong Kong and Mainland China, respectively. And this new addition will further boost the group's recurring income. I'd like to conclude my presentation with this slide, which shows a recap of our strong fundamentals. And we believe that we are well positioned for long-term success and to create value for shareholders in the long run. Thank you very much for your attention. I think, that will conclude my presentation.

[Unknown Executive]

Before we continue, I would like to introduce the panel to you. From your left, Mr. Brian Sum, whom you've already met; Mr. Christopher Kwok, Executive Director; Mr. Allen Fung, Executive Director; Mr. Victor Lui, Deputy Managing Director; the center is Mr. Raymond Kwok, Chairman and Managing Director; Mr. Mike Wong, Deputy Managing Director; Mr. Adam Kwok, Executive Director; Mr. Eric Tung, Executive Director; and Mr. Frederick Li, Group Chief Accountant. The question-and-answer session will now begin. Please signal for the microphone if you want to ask a question. Please also identify yourself and the name of your company before starting your question. Video of today's briefing will be uploaded on our corporate website. May I now invite the first question, please?

[Justin Kwok, analyst]

Justin Kwok with Goldman. Perhaps two question, one on the land banking side and the other one on office. On the land banking side, I think the company made very good progress in the last calendar year with two substantial farmland conversion. And in the presentation, just now, as I noticed that it's actually mentioned a number of times that in the future land banking, the F&B will also include conversion as well. So I want to get a sense on what the management is expecting in terms of the size, the frequency for these conversion going ahead? And whether we are going to see a more frequent and recurring conversion in the future? And perhaps on the office side, office is very good market. Do you mind to just add more color on what you're seeing in central, and also, for us Kowloon is, in particular where Kowloon is we're seeing a higher vacancy? Does it pull some pressure to your portfolio there?

[Chik-Wing Wong, executive]

Maybe I try to answer the first question on the subject of land banking. You already pointed out that we have successfully secured two dues, major dues one for Tuen Mun and one for Sai Sha during the last financial year. But as you may appreciate the conversion of total land to proper residential commercial land is a very lengthy and tedious process, and it will take years to complete. And we have actually a couple of projects in the pipeline. And we can -- only thing we can tell you, a couple of those are actually in the final stage of their process. And we cannot tell exactly when that process will complete, particularly after the plannings approval we have to get through the premium conversion stage, which is even more difficult to pitch the exact timing for the satisfactory settlement of the appropriate level of land premium for that conversion. This is the status of the land banking on the subject of land conversion.

[Ping-Luen Kwok, executive]

I would add that there have been successful cases for other developers. So the government seems to be more willing to proceed with modification, yes. So the signs are good as far as government sentiment is concerned, yes. On the second question?

[Ting Lui, executive]

Yes. On the leasing market in Kowloon is, we did see some competition among the new buildings. Some of the landlords are adopting a more flexible stance on asking rental. But our buildings in Millennium City are not affected as most of our tenants are belonging to sizable and reliant corporations. They are very stable and have very demanding on landlord, especially on quality, management and facilities. Recently, we have also seen some movements in the area due to cost cutting the location. But high CapEx being a hurdle to most of the corporation and again our buildings in current use are well positioned and having a high occupancy of 96% and a solid rental. Whereas in Central and colocation, market continue to be very buoyant due to tight supply and increasing demand, especially from those financing security companies from the Mainland due to the cross-border investment integration. Most of the great buildings in Central are highly occupied, our 2 flexible developments One and Two IFC are fully let and we have waiting list. I think, rental and in colocation both in Central and Tsim Sha Tsui will continue to be supported by high demand and limited supply. And for ICC across the Harbour, we are doing a premium rent in the whole area, sped up by the robust pickup. So far, we should see colocations to outperform the rest of the market in the coming 1 or 2 years. Whereas, for other submarket, I think, leasing activity will be stable or even will be quiet.

[Ken Yeung, analyst]

Ken Yeung from Citi. So I've two quick questions, one on property development and then another on dividend. I see your property development schedule, which is on the Hong Kong completion volume, which is quite stable at 3 million square feet every -- I mean, on average for the next 3 years. Given that, you have quite a lot of land bank, 18 million square feet, is it possible to increase your development completion volume? Or do you -- your management have short span on this? This is question number one. And secondly is on the dividend policies. Given that a lot of land bank have bought at a very low cost, and I'm sure that management have talked about the target HKD 40 billion, that kind of things, will cover into a decent profit. Do you consider the existing 40% to 50% payout ratio have upside?

[Ping-Luen Kwok, executive]

Yes. We've scheduled to complete about 3 million square feet per annum. Of course, I think we can speed up -- we can speed up the sales. It all depends on the two points, whether we can replace our land bank and secondly, how well are we selling, yes, i.e., if we can sell very well at our -- the price we want and if we can replace our land bank, then we can speed up our completion maybe -- not for the next 2 years, but maybe 3 to 4 years from now, yes. But all subject to how well we sell and how well we can replace our land bank. We have increased the dividend by 9%. We still want to bid in the land market to buy more land. Well, we have a very big investment property program ahead. And we also would like to buy a bit more land in the first tier cities in the Mainland, especially good piece of land with -- that can build an IFC and ICC type. So -- i.e., I think we need to maintain the dividend policy so that we have the financial resilience and resources to keep on buying land, whatever the market condition is.

[Wai Ming Liu, analyst]

This is Raymond Liu from HSBC. Two question from me. The first question is related to the follow questions on the farmland conversion. So what will be the ideal format of partnering to government to develop a site in the NTAs or existing brownfield sites under your reserve from the management's perspective? This the first questions. And the second question is related to the Hong Kong property development business. So the company has been very successful in expanding the market shares in property sales over the past 2 years. So do you expect this trend to continue? If yes, what would be the major driver?

[Ping-Luen Kwok, executive]

Can you repeat your first question, again?

[Wai Ming Liu, analyst]

About ideal format of partnering with the government to convert the farmlands?

[Ping-Luen Kwok, executive]

You mean affordable housing.

[Chik-Wing Wong, executive]

There is a saying that -- in fact our CE has voiced the desire to satisfy the affordable housing needs and suggest the starting home concept. But the idea of this initiative is still being resolved within government departments, how to implement. But I'm sure you're aware that the first one will be the Henderson Hill, which is a government piece of land. And so, selling out right to private developers for private developments that is as part of [indiscernible] to be rental or constructing a starting home. But on the subject of farmland conversion with it, we can pull up some -- what you said, suggest that some PPP, public -- private-public, partnership. This is an idea to be -- I mean, develop and probably the idea is going to be reviewed by the so-called land supply task force. I'm sure they will continue to investigate the opportunity to increase the land supply and I was told they are going to finalize the report summarizing or prioritizing all the subjects where they find opportunities to develop more land, not just for housing, for all kinds of land supply. And they're going to finalize the report by mid-year and going to consult and engage the society -- community to go forward, for consultation and comments. And hope that with something solid will be forthcoming by the end of the year.

[Ping-Luen Kwok, executive]

I'd like to add that, I think, we would like the government to sell more land, of course, right, the more land, the better because I think there's a shortage of housing. And also, we will be bidding for land continuously. And so the more ways the government can release the land the better. And secondly, on your second question on the market share, we would like to maintain our market share about 20%. And our midterm target sales of proceeds for Hong Kong would be about HKD 40 billion. I think whether we can increase our market share depends on how well we can replace our land bank. Of course, if we can replace one of our land bank, then we can also speed-up our sales. We have a very strong sales division under Victor Lui. So in a way, the faster we can replace our land bank, then we can then increase our market share.

[Karl Choi, analyst]

Karl Choi from Merrill Lynch. Three quick questions. First is, on the land bank replenishment front. We've seen that Chinese developers seem to have sort of after a very robust first half of last year in terms of land banking, so it took a step back in the second half. So what's your thought process about the competition from mainland Chinese developers in terms of land banking in Hong Kong? And second, any thoughts on whether there will be any change in government policy in Hong Kong either way? And then lastly on the retail tenant sales, can you give us a little bit more color on how your shopping malls performed in terms of retail tenant sales in both Hong Kong and China?

[Kai-Fai Kwok, executive]

I think maybe let me answer the one on the land competition from mainlanders. Yes, of course, we've seen a slowdown or less participation from the Mainland companies. But we don't have a view of whether that's to continue or they will come back. We do know in the local market, existingly, is very furious competition, even among us, Hong Kong developers, be it big size ones or the mid-to-small ones forming a consortium. And this is why, even without the mainlanders, the market remains very, very competitive. But, of course, we'll work hard and as we said, our sales is strong and so hopefully we can replenish.

[Ping-Luen Kwok, executive]

In fact, that's why we'd like the government to sell more land. In fact, we don't worry about the huge fiscal surplus. There is a demand on the occupier side, yes. On your question about sales -- retail sales. In Hong Kong, we are beating the market, I think in 2017, the market grew by 2.7%; for our retail malls, we grew by over 4% per annum, yes. So we are achieving a better sales than the market. And regarding the Mainland, I think, our sales growth would be between about 15% sales growth, yes, for our major malls in the Mainland, yes.

[Eva Lee, analyst]

I'm Eva Lee from UBS. Just got two questions. First question is on the potential offshore -- noncore disposal. We understand that Sun Kai has the biggest portfolio in terms of commercial assets. And they are all very good locations and generating good income. But on the other hand, there has been very strong demand for capital demand in terms of commercial property. Would management consider offloading -- not offloading but, of course, take advantage of the very strong market and selling some of the noncore assets? My second questions is relating to, actually the land replenishment you mentioned. I mean given that luxury residential has been under a very strong demand, prices you can get. I mean, it's always at sky-high levels, but land replenishment is difficult for luxury -- traditional luxury residential in Hong Kong. Would management consider delaying and postponing some of the completions or selling of these projects, and obviously for better prices in the later years?

[Ting Lui, executive]

Yes, on your first question, we are always reviewing our vendor portfolio for possible disposal that include some residential under leasing, both noncore offices and retail premises, especially for those properties that we cannot create synergy. We buy the properties and those we cannot add value to it. In fact, in the past 2 years, we have sold two office projects already, [indiscernible] Wong Chuk Hang, the other in Kwun Tong, one Harbour Square. And at the same time, we've also disposed two industrial projects, one in Cheung Sha Wan and the other recently in Tsuen Wan. And I think it is -- I think, we shall continue to see more opportunities to offload some of these noncore properties. In fact, apart from our flagship and showpiece developments, which we are keeping for long-term investment, I think it is always sensible that we can dispose some of our noncore properties and reserve more capital for new acquisitions. On the second question, on marketing our projects, we are always sticking to the prevailing market condition. And as you can see from the past record that we can always strike a balance between volume and margin. Generally, we are aiming for quicker asset turnover for mass projects, like in last year, we have -- when we market PARK YOHO phase -- PARK YOHO Genova, we are able to dispose 80%, 90% of units within a short period of time. But for those luxury projects, which are hard to replace like Victoria Harbour, this is a rare project and hard to replace. And so we are disposing the units by small batches. Having said that, we are planning to market more units in next month and you shall see there would be more transaction on this project.

[Ping-Luen Kwok, executive]

So even for the luxury residential, we'll be selling, but we'll just pace ourselves, yes.

[David Ng, analyst]

It's David Ng from Macquarie. Can we just talk a little bit more in details about the ICC office building on Kowloon. Considering that a lot of the net pickup are buying Mainland financial firms and with the upcoming opening of the high-speed rail that will be a very desirable location and maybe even down the road as desirable as the Central location. Has the company thought about the strategy of the tenant mixing? And can you maybe disclose a little bit about the time line of the existing tenant renewal? Or when they will be up for expiry? And what would be the company strategy in terms of how you mix the future tenants at the office building?

[Ping-Luen Kwok, executive]

On the ICC, clearly, there are some information I cannot share with you because of -- maybe we're still negotiating with some of that tenants. But I think, for ICC, because it's called ICC, we want to make sure that they are at least 50% of international and international tenants. That's our criteria. Above that, I think, we are more flexible, yes. I think it's important for us to make sure that we have -- we can find tenants that have good quality, not just tenants that just pay us rental, yes. For example, if some tenants just us pay rental and just occupy the space two days a week, that will not be acceptable to us. So in a way, we want to make sure that it's not just [ hot ] ways, we will also make sure that we select the tenants to make sure that it will be the most premier building in Kowloon, yes.

[Andy So, analyst]

This is Andy So from HTI. Given the fact that our financial health being very, very good. I just would like to ask, is it possible for us to do some share buyback? And I also want to know if the Kwok family have any plan to increase the stake in the company?

[Ping-Luen Kwok, executive]

I think the company is strong financially. Our debt capitalization ratio is less than 10%. I think we would like to bid for land in Hong Kong and also in the major -- in the tier-1 cities in China. We've also explained to you that we have a huge investment properties program ahead. And we'll also go for making use of this opportunity to find good integrated projects in the Mainland. So -- but, however, if we are not successful and if the liquidity keeps on improving, then we may have to consider buyback. But definitely, not for the next 12 months. Your question about the family buying, we've been buying, but not lately. But definitely, I think, at the moment, now our share price is HKD 129 something. The NAV, it would be 180-something, right?

[Unknown Executive]

Yes, right.

[Ping-Luen Kwok, executive]

Correct, right? Yes.

[Unknown Executive]

Yes.

[Ping-Luen Kwok, executive]

So I think it's one of the criteria for the family, whether we would buy back, yes. I think we always -- it's always on our mind, yes. And also at the moment, now we have to increase our dividend too, right, yes. So the dividend yield, based on the current market, I would say, would be, what, 3-something-percent, right?

[Unknown Executive]

Yes, right.

[Ping-Luen Kwok, executive]

Yes. So at the right time, we would be -- we would buy at the right time, yes.

[Unknown Executive]

Thank you, Mr. Kwok. Ladies and gentlemen, thank you for coming. Hope you enjoyed the presentation and find it useful. There are some refreshments outside. Please stay and enjoy. Thank you very much. See you next time.