Edited Transcript of 0014.HK earnings conference call or presentation 22-Aug-22 9:00am GMT

Edited Transcript of 0014.HK earnings conference call or presentation 22-Aug-22 9:00am GMT

Half Year 2022 Hysan Development Co Ltd Earnings Presentation Causeway Bay Aug 22, 2022 (Thomson StreetEvents) — Edited Transcript of Hysan Development Co Ltd earnings conference call or presentation Monday, August 22, 2022 at 9:00:00am GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Kon Wai Lui Hysan Development Company Limited – Executive Director & COO * Mark Tung Hysan Development Company Limited – Assistant General Manager of Corporate Communications * Shu Yan Hao Hysan Development Company Limited – CFO & Company Secretary * Yun-Lien Lee Hysan Development Company Limited – Executive Chairman of the Board ================================================================================ Presentation ——————————————————————————– Mark Tung, Hysan Development Company Limited – Assistant General Manager of Corporate Communications [1] ——————————————————————————– Thank you all for joining Hysan Development’s 2022 Interim Results Announcement Webcast session. Now let me introduce our panel for this afternoon. As our Chairman, Ms. Irene Lee; our Executive Director and Chief Operating Officer, Mr. Ricky Lui; and our Chief Financial Officer and Company Secretary, Mr. Roger Hao. We’ll start today’s session with a presentation from Irene, Ricky and Roger, and we will follow that with time to take online questions. And I’ll invite Irene to start. Irene, please? ——————————————————————————– Yun-Lien Lee, Hysan Development Company Limited – Executive Chairman of the Board [2] ——————————————————————————– Thank you, Mark. Hello, everyone. I hope definitely next time, it will be in person. Firstly, let’s talk about Hong Kong now and ahead. Hong Kong celebrates the 25th anniversary of HKSAR and we ushered in new administration for the city. Among the expectations for new administration are to strengthen the momentum of policy developments, which aligns with national strategies and addresses critical and urgent issues of likelihood, housing and youth. We must ensure Hong Kong remains a successful international city. And importantly, we are confirmed that Hong Kong continues with 1 country, 2 systems. COVID-19 fifth wave in the first months of 2022 interrupted Hong Kong’s recovery, which was already seen in 2021, we were recovering quite well. But since the second quarter of 2022, signs of recovery with relative moderation of a pandemic, I mean, there are still cases and gradual relaxation of government measures. Of course, there are still concerns about the outlook. COVID-19 figures slowly rising again, global uncertainties affect economic picture. Hysan’s proactive management of our core business in Lee Gardens helped drive traffic back into our area. We talk a lot about our smart community business model, our curation of tenant mix and experience and the quality of our service throughout our area, malls, properties and even the streets. And we’ve seen, therefore, more than 25% rebound increase of estimated tenant sales during quarter 2 when compared with quarter 1. If you do compare quarter 2 year-on-year with quarter 2 2021, when rebound and COVID cases were very limited, we were still flat. So I think performance is reasonable. You’ve seen this diagram before, this is our core and growth pillar strategy. In the middle, you will see Lee Gardens Hong Kong, which includes all our core activities, our connectivity, our community creation, Lee Gardens rejuvenation and of course, our Caroline Hill project. And alongside that we have built and the key word is built, we have actually now built and they are operating and becoming accretive and going well. So certainly, we’re pleased with the progress. We — these include the GBA Flex business, our partnership with IWG, Lee Gardens Shanghai, our residential development and sales activities and medical and health with our partner, New Frontier. On core, let’s talk about Caroline Hill, our big project. That adds 30% to our core portfolio in Lee Gardens area. Work has commenced. We started early August 2022. For the other rejuvenation activities, you will see Hysan Place will be transformed yet again, although it only turned 10 years old this year. We will be positioning it to be the trend setter of new themes for different zones, and Ricky will give us more details on Hysan Place. As for Lee Gardens, within 2 years, you will see it becoming the home of luxury flagships, quality dining, special events and experiences to yet another level. The walkways, which will connect the entire Lee Gardens, including our new Caroline Hill buildings when it is done, will extend and expand our renowned sustainability minded destinations. And before I leave that slide, I think you will see by the time Caroline Hill is completed, which is 2026, ’27, Lee Gardens will be a very different Lee Gardens. But in fact, by 2024, when the rejuvenation of Hysan Place and Lee Gardens area are completed you will see a very different phase of Lee Gardens. On this slide, you will see our pillars, our strategic growth engine pillars. We are making good progress to deliver a more balanced, diversified and complementary portfolio with different vintages, which particularly include our residential developments to give us more different sources of income at different cycles. So this is really a growth as well as a defense strategy for us. So you’ll see VILLA LUCCA, which was recently launched, a beautiful luxury type of project, and I would welcome all of you to come and visit. Our To Kwa Wan URA residential project, which is a completely different theme, which leverages our community curation and that is affordable, multiple units housing in the middle of (inaudible). Lee Garden Shanghai, again, Ricky will talk about it. It’s going to be the start of, we hope, Lee Gardens, exporting its brand to China in Shanghai in the Jing’an district. GBA Flex business with IWG is going well, in particular, given the structural changes in office usage, I think our entry into the cohort of Flex business area has been well timed. New Frontier, medical and health, we’re very excited about our ability to take part in China’s huge growth and dynamic high-end health care business, which is very much required and supported by policy. So we now are ready, and we have started to export our successful smart community work-life business model, I think we always talk about. We come to Lee Gardens to work to live and to play. So it is really the whole circle of life, the whole ecosystem of families. So the whole work-life business model is — also revolve through our smart community and sustainability. And we are exporting that to other areas within Hong Kong and beyond. So for instance, the To Kwa Wan project and Shanghai, and there will be more to come. Finally, the outlook. With gradual relaxation of restrictions, Hong Kong situation is improving. Other international cities, of course, seeing the economies bounce back very strongly. So really, everyone else is open for business, and we are seeing the demand, and we are seeing the enthusiasm for people to come out and spend and eat and have a good time, claim back the 2 years that they have lost. Hong Kong’s economy will also rebound and will maintain its status as a global financial and trading hub as well as a top tourist destination. We are confident about that. But work will need to be done to further open up Hong Kong. We have done well. We can do more and there is plenty of room for us to reclaim the lost times. We will be strong again. That is from me. Thank you. ——————————————————————————– Mark Tung, Hysan Development Company Limited – Assistant General Manager of Corporate Communications [3] ——————————————————————————– And now I can invite Ricky to talk about the business and operation. ——————————————————————————– Kon Wai Lui, Hysan Development Company Limited – Executive Director & COO [4] ——————————————————————————– Good afternoon. May I introduce some of the highlights of our 2022 interim results. For revenue, our revenue is $1,777 million, down 3.1%. Our recurring underlying profit is $1,169 million, down 0.7%. Dividend per share is $0.27. Look at it by sector, the retail increased by 3.2%, while office down by 8.5%. Our balanced deal engine business model is fluid and dynamic. It allows us to optimize space allocation and tenant mix curation between office and retails. For occupancy, retail is 98%, office 91% and residential 71%. Coming to retail, we are nearly fully occupied. Our occupancy is 98%. During Q1, the COVID-19 fifth wave, the strict government restriction and the lack of incoming visitors leading to a serious impact on footfall. When we come to Q2, the drop in COVID-19 cases with loosening of restrictions and consumption voucher issuance, added far more vibrancy and spending to the market. We believe once the quarantine measures are lifted, the rebound will be significant. Look at it by trade, by categories. With the good performance of the Hysan international high brands of our area, our clothing, footwear and allied products operate the Hong Kong market. But on the other hand, during the COVID time, the food and beverage of Lee Garden area, which is mainly discretionary retail has suffered a bit more than the general market. As Chairman point out, we see a very encouraging uplift — uptick from the — from Q2 to Q1, is we’re up 25%. And we also see the trend continuing in our third quarter. Lee Gardens area is still attracting, appealing to the F&B, beauty, sports and kids’ concept stores. For the first half, we have 25 new tenants housed extension to Lee Garden area. Talk about our marketing initiative and loyalty program. Our online and digital platform, which we have invested over the last few years is impactful and has been engaging a new group of customers. Our well-established loyalty club as you saw, have provided a solid base for our business and have also reinforced our relationship with tenants and customers. Through a strategic partnership with third parties and brands we have successfully leveraged on each other to generate effective business results. Highlight some of the activities. When we look at the spring sensations and other campaigns, where we see both the sales and the new member and recruitment increased. For the power of digital online campaign, we have more than 100 tenants participated. Both Club Avenue and Lee Gardens Club have double-digit spending increase per members. Talk about partnership we have over 100 collaboration with different partners in the first 6 months. Look at the office. We have been very proactive in doing the lease management. Out of all the expiry leases in 2022, we have 63% already committed for the renewal. Lee Gardens area is still appealing to wealth management, flexible workplace and new economic operators. If you look at the pie chart on the right-hand side, you can see the banking, wealth management and finance sector as well as the new economy, which we put co-work, tech and medical and health together, it’s already come on over 55% of the tenants mix. Talk about residential, Hong Kong luxury residential leasing market remained quiet due to the lack of expats arriving in Hong Kong. Bamboo Grove shaping the same market segment is affected too. Trying to retain the occupancy, we have provided more feasible term — lease terms as well as more incentive to the agencies. Talk about our core and pillar updates. The Caroline Hill projects. The foundation work has started in August — just started in August. And the expected completion date for the whole project is late 2026. That’s a recap. This project will add 1.1 million square feet of GFA to the portfolio, which equal to 30% of our existing portfolio. On top, it was 60,000 square feet of green and this is a big features and make a big addition of — to the sustainability features for the portfolio. For Lee Garden Rejuvenation, Hysan Place, as you know, this is a vertical more to — a vertical mall, we hope to provide a seamless vertical present journey of attraction, you will enjoy all the whole journey from the from the B1 MTR entrance up to the top of the restaurant on the 14 floors. Each floor will come with a new and unique thing, which will give you a lot of surprise. But those surprise I need to release later when they design and F&B is more ready. When we come to Lee Gardens, we will reinforce ourselves as a destination for luxury retail flagship. We call ourselves home of luxury retail flagships. Of course, this will come with all the quality dining, special event and experience that will echo with our very strong VIP loyalty clubs to really make Lee Garden a real big clock for these sectors. Our beautiful VILLA LUCCA. This is a splendour of European-style mansion with high quality and privacy. Since we launch it in August we have hundreds of people visit it. A lot of potential buyers as not — and also some experts from architect to industry players. This — we received a very high recognition about the quality of development, which also reflects the quality of Hysan. Externally, we have received a double owners at the Asia Pacific Property Awards for its exceptional architectural design, which is very encouraging to the team. The project composed of 262 units, 160 apartments, 66 special units, 34 houses and 2 signature houses. The size range from 1,010 square feet to 8,030 square feet. It also comes with a fair luxury well designed by David Collins of Clubhouse, which amount to 34,000 square feet. For Lee Garden Shanghai, the acquisition was completed in January this year. Upgrade work has started in July. The first tenant is going — we believe the first tenant will be committed within this year. For IWG joint venture in Flex business in GBA 2 new center has been added during the first 6 months. And this — they are situated at Tower 535 on (inaudible) and #8 Queen row east. Both are very good quality building at fair prime locations. Up to now, we have 34 locations across GBA, and we believe this — the growth will continue because of the high potential of the GBA economy. To Kwa Wan residential projects. This is a joint venture with the reputable partner, Handerson Land and the Empire Group Holdings. With Hysan’s skill set on community business model, we are invited to take care of the commercial portions both from design, development and operation in future. We also take this trend to export our Hysan commodity business model. For To Kwa Wan, we really want to engage the local community to the prosperity brought by the revitalizations. Investment in New Frontier Group. New Frontier Group being the largest leading private health care service provider in China help pricing to give high strategic exposure for Mainland China’s fast-growing health care sector, particularly on the premium part. This year, they just opened the United Family Hospital in May at Shenzhen, which will serve both the Hong Kong as well as the GBA affluent and middle-class family. We’ve mentioned sustainability. We always — we have — we strongly believe a sustainable community is important. For Causeway Bay, we have helped the government by providing value to set up 2 vaccination center, one at Leighton Center and one at the Caroline Hill site. The Caroline Hill site is the largest temporary vaccination center in the public portfolio with the help and the support from our partner, Chinachem, Gammon Constructions and all the consultants. We have this process setup within 20 days, and they serve thousands of people, which received a lots of — with this a lot of compliments from both the public and the government. About To Kwa Wan, obviously, to Kwa Wan, have different needs with Causeway Bay. During the COVID, we helped the local small entrepreneurs by providing them with some air purifier, the RAT kits, food and care package to people in need as well. We also helped elderly to do their drainage checking as well as automation. So it’s a kind of very important measure to protect their health. We always talk — we talk about our smart community model. So the smart is very important. That means technology is very important. We have jointly set up The Community Lab with Hong Kong Science and Technology Park. The Community Lab will be a kind of environment real life environment for those technology startup to test their technology and application in world like case ,we call it the last mile testing. So that their product and application will more fit for use in the real life, in the real commercial market. The platform has caused the committee level is also a platform for them to meet and communicate with the investor and other industry experts. All this will help to structure them to become a more commercially viable company rather than just a tech company. So this is something that our contribution to the Hong Kong tech industrial. So this is what I want to share with you. May I pass it to Roger. ——————————————————————————– Shu Yan Hao, Hysan Development Company Limited – CFO & Company Secretary [5] ——————————————————————————– Thank you, Ricky. And after hearing key remarks from Irene and Ricky, on this strategy and operations, I will be brief so that we can leave more time to Q&A sessions. So let’s line these 3 key numbers you all can see from the announcement, so I’m not going to repeat it. Next, please. This page is actually the highlight — the usual highlight about our liability or capital section. So on the left, one point I want to highlight is there is no any particular big amount of debt that come deals in the next year or so. And as you can see from the right-hand side, Hysan has an undrawn committed facilities of about HKD 10 billion from Bank and that should provide a very good liquidity contingency pool, the situation warrants. And other part is as our continuous support on sustainability. You see that the sustainable finance source now accounts for almost half of our total debt and facilities. And then finally, the next page is the inductive cap rate adopted by our value. Again, as you can see, there’s no change in the cap rate adopted item in valuing our properties. So this concludes my very brief update, and now we can move on to the Q&A session I suppose. Mark? ================================================================================ Questions and Answers ——————————————————————————– Mark Tung, Hysan Development Company Limited – Assistant General Manager of Corporate Communications [1] ——————————————————————————– Absolutely. Thank you, Roger, and thank you, Irene, and Ricky. Now time for questions. And we’ll start with a question from Fan Tso from Bank of America. Could you kindly comment and provide more colors about Hysan’s leasing strategy for B1 and B2 levels of Hysan Place, given news about the tenant downsizing at B1 and a change in tenant at B2? Now in general, how would Hysan strike a balance between taking the advantage of the near term — sorry, the near-term upside from — this is quite separate from the border reopening as a sustainable tenant profile. ——————————————————————————– Yun-Lien Lee, Hysan Development Company Limited – Executive Chairman of the Board [2] ——————————————————————————– Maybe I will start with an overview and Ricky has all the details. On Hysan Place B1 and B2 negotiation and working with T Galleria has given us a win-win situation. I think T Galleria in a one level configuration will, on a per square foot basis do magnificently well. And with the tourists coming back, they were really be firing on all engines. So I think for them, it is the right size for the right time. And for us, releasing the other floor and also the bottom floor from marketplace will enable us actually to completely reposition Hyson place at the ground for the most visible facade street level, which then follows with B1, B2, which then connects with the MTR. That has given us a fantastic opportunity to showcase a completely different Hysan and a completely different Hennessy road. For those of you who haven’t been to Hennessy road recently joined the queue at bakehouse. It’s — the smell, the look is very attractive. And it’s just a crowd pleaser. One of our directors said, we see queues in front of Chanel and Hermes, but we also see queues in front of a lifestyle brand. It’s bread. So it is fantastic. It is very much as this is very much what we want to do for Hong Kong as well. So Ricky, maybe a little bit more color on the rest of the position. ——————————————————————————– Kon Wai Lui, Hysan Development Company Limited – Executive Director & COO [3] ——————————————————————————– I mean Chairman, you have make a fairly good summary already. But one figure I want to share with the analysts. I was told the (inaudible) station have 0.5 million traffic every day, a few years back. With the line extension, I believe there are more now. As Irene said, the productivity of the T Galleria improve by having 1 floor. But at the same time, in view of those traffic, we try to make use of B1, B2 from all the elements that can — how to take advantage of the high traffic to generate popularity as well as high sales. So these are the directions we are moving forward from — in doing our trade mix obviously, some big element will be there as well as some interesting retails that can generate sales. And that will be the starting point for connecting it back to all the vertical attraction all the way up to the 14 for, as I mentioned. ——————————————————————————– Mark Tung, Hysan Development Company Limited – Assistant General Manager of Corporate Communications [4] ——————————————————————————– Jeffrey Mack from Morgan Stanley has 2 questions. The first one, it’s a bit similar to an earlier question. Will you change your upcoming leasing strategy given the border is gradually opening up. Second one is about Tai Po. Should we expect Tai Po residential project to be booked in 2022? ——————————————————————————– Yun-Lien Lee, Hysan Development Company Limited – Executive Chairman of the Board [5] ——————————————————————————– On the opening of the border and our strategy, as our friends here know, we have always been the most established Hong Kong resident — loyal Hong Kong resident generations of Hong Kong resident, which includes new Hong Kong. So we have not heavily relied on tourists. Of course, we welcome them enormously because they come in big numbers and they spend very well. So our strategy will continue to be true to our brand. That is doing things well, curating dynamically and being relevant and staying ahead of the trends. And that is why we are doing what we’re doing for Hysan Place, which is really a near youngster. It’s just 10 years old. And yet we find the Hyson Place needs complete rejuvenation to address the changes in consumer behavior. And then aspirations and what people expect. So Lee Gardens will similarly go through a massive transformation. It’s not more of the same. It is going to be what we do very well, but at another 10 levels higher. So I don’t want to produce too much expectations but do expect to see a very, very different Lee Gardens area with or without the tourists. But no doubt, the tourists will come. I think in my earlier presentation, I do believe Hong Kong will continue to be not just a global financial and trading hub, it will be a serious tourist attraction. People will simply come. They will come. ——————————————————————————– Mark Tung, Hysan Development Company Limited – Assistant General Manager of Corporate Communications [6] ——————————————————————————– And then the second question is about whether Tai Po will be booked for 2022. ——————————————————————————– Shu Yan Hao, Hysan Development Company Limited – CFO & Company Secretary [7] ——————————————————————————– Well, maybe share our (inaudible) Jeffrey. I think the — as Ricky mentioned earlier, the sales for Tai Po project has just been launched. I think it’s kind of a little bit early for us to make a good prediction as to the sales progress. I’m sure along the way, we will give you some updates. And as the booking timing, I think everyone knows there are certain very clear accounting rules as to when the revenue can be booked. Again, I’m sure along the way, we can have a more accurate estimate about the timing. So again, I don’t want to overpromise. But really, if the project goes smoothly, it’s just a matter of time the profit will come into our books, especially when we’re talking about whether that’s the end of the year or early next year. But I’m sure we will keep you guys posted. ——————————————————————————– Mark Tung, Hysan Development Company Limited – Assistant General Manager of Corporate Communications [8] ——————————————————————————– Now let’s take a couple from Ken Yeung from Citi. First one is how’s our tenant sales in June and July of 2022 versus the pre-COVID pre-social rest level. ——————————————————————————– Yun-Lien Lee, Hysan Development Company Limited – Executive Chairman of the Board [9] ——————————————————————————– Want to answer that, Ricky? ——————————————————————————– Kon Wai Lui, Hysan Development Company Limited – Executive Director & COO [10] ——————————————————————————– I think when we looked at the sales for July and June, it goes back to pre-COVID fifth wave — the time already, and the rebound is strong. And I would say we can see this being sustained in July and August from the figures we have collect and as a — although we can — we still see about 7,000, 6,000 cases occasionally. But we — what we found is people already know how to live properly under the COVID time, and they have — and they now also know how to become more structured in using their consumption vouchers from the government. So we will see this wave of consumption culture will have a lengthened support for this second half of this year on retail sales. ——————————————————————————– Shu Yan Hao, Hysan Development Company Limited – CFO & Company Secretary [11] ——————————————————————————– Right. And okay, maybe I can add more — some colors for Ken and the other friends to understand the situation. In terms of our retail portfolio, the occupation — occupancy cost ratio, as you may recall, back in the initial outbreak of the COVID the OCR actually deteriorate quite significantly to like a high 2030 level before a concession help from us. And I’m also happy to share with you that we also see the OCR significantly reduced. Last year, 2021, basically, there’s not much significant outbreak per se. So the OCR has already been back to a much more healthy level of early to mid-20s. So this first 6 months, again, we have 2 quite distinct quarter, Q1, largely affected by the Omicron fifth wave and the OCR jack up, as you will imagine. But Q2, we see the OCR back to a much more healthy level. So all in all, if we look at the first half altogether, the OCR is about low 20 but with Q2 significantly improved from the Q1. So I guess on that background, we do see a relatively okay environment for our retail tenants. And for July, like Ricky just mentioned, based on early submission of the data, we continue to see, first of all, month-on-month increase of tenant sales that is increased from June. At the same time, we also see year-on-year increase comparing to last July in 2021. ——————————————————————————– Mark Tung, Hysan Development Company Limited – Assistant General Manager of Corporate Communications [12] ——————————————————————————– Ken’s second question, obviously, is somewhat related. What will be the rental reversion outlook for Hong Kong office and retail in the second half of 2022 and 2023? ——————————————————————————– Shu Yan Hao, Hysan Development Company Limited – CFO & Company Secretary [13] ——————————————————————————– Okay. Maybe let me try to share some information with Ken and Ricky you can comment from a commercial point of view. In terms of rental reversion, the OCR that I talked about also is relevant in terms of the retail reversions it’s really like how much business they can do. And obviously, that’s largely affected by the overall retail environment. And one more thing about the retail is the rental concession that they might need. Again, the number, the OCR number that I just mentioned earlier is all before any concession from us. So you can see the underlying healthiness of the retail tenant. And as you can see from our announcement, the retail turnover for the first half actually improved both on a year-on-year basis as well as half-on-half compared with the second half of last year. And that is also a result of the reducing concessions that we require. I would say that we are in the tail end of that retail concession we granted in the previous year or so. And of course, going forward, it depends on the retail performance in particular. But as we can see, like back in 2020, there’s a retail concession and then 2021, a further reduced and now we see a further reduction in the concession amount. So just to give you a feel about the magnitude, comparing with the concession we need for 2020 now I think we have seen a more than 50% reduction, 50% reduction in hitting our P&L. And comparing to last year, it will be at least 25% to 30% less so the overall annual performance will depend on the result of the second half of this year. And then on the office side, I think as you can see from our presentations, we had a mid-teen negative rental reversions. And we have done about 65, I think by now close to 70% of the deal we need to handle this year. Based on the forecast this year for the rest of the year, I think the annual rental reversion, probably will stay at that level if not better around mid-teens or maybe in an extreme case to high teens negative. And looking forward to next year 2023, first of all, the amount of these that come to expiry is around 1/5, 20% of our area only. And another thing is the expiring rent. That is the outgoing rental for those 20% lease is, on average, 10% lower than the expiring rent of the lease that we need to do with in 2022. So with all the things being equal, I think numerically, we have a lower hurdle per say, to overcome. But again, the office rental performance will drive the overall reversement situations. ——————————————————————————– Mark Tung, Hysan Development Company Limited – Assistant General Manager of Corporate Communications [14] ——————————————————————————– Thank you, Roger. As we’re running out of time, we will take one more question. I have one here from Mark Leung from UBS. Mark says, can you guide us the CapEx involved for Hysan Place and Lee Gardens rebrand? And also, will the strategy materially impact on the short-term retail occupancy? ——————————————————————————– Kon Wai Lui, Hysan Development Company Limited – Executive Director & COO [15] ——————————————————————————– I think for the overall investment CapEx for the rejuvenation is about over $2 billion, but this will spread over about 5 years until 2026. And it will be a bit back low overall. About the impact on the temporary rental, we have been carefully done the planning so that all the major anchor tenant will have the temp shop open once we have within — once we start the renovation work for — particularly on the G1. So we minimize the impact on the temporary rental — temporary rental loss. Even for Hysan Place, we also have this kind of arrangement so that we don’t have minimize the whole floor or the period of or — off for renovation work. So… ——————————————————————————– Shu Yan Hao, Hysan Development Company Limited – CFO & Company Secretary [16] ——————————————————————————– Thank you, Ricky. Maybe let me supplement on this CapEx things. What Ricky mentioned is the overall grand plan of the AEI. And I have to stress that this uncommitted and based on the best case ideal situations, and we do have the flexibility to us to have a pacing of the amount of the work. As you know, a lot of these works are in our existing building, we will be dynamic and continue to be dynamic in terms of balancing the impact on the operations, the rental before and after the asset enhancement as well as the then operating performance. So that we have — we continue to have a stable and progressive operating cash flow. And on the near term, like the remainder of this year and 2023 I think the CapEx that we definitely will commit are primarily related to the T Galleria field force as well as some of the force in Lee Garden one , which from a magnitude point of view, is no different from the long-term average CapEx we spent over the last 10 years or so. Part of the reason why it will be that way is we want to manage the amount of CapEx required so as not to affect the core cash flow. ——————————————————————————– Mark Tung, Hysan Development Company Limited – Assistant General Manager of Corporate Communications [17] ——————————————————————————– Well, thank you, Irene. Thank you, Ricky and Roger, and thank you, everyone, for participating. And as Irene said, we hope to see you in person when we have our next set of results announcement session. See you then. ——————————————————————————– Shu Yan Hao, Hysan Development Company Limited – CFO & Company Secretary [18] ——————————————————————————– Okay. Thank you. Bye-bye. ——————————————————————————– Yun-Lien Lee, Hysan Development Company Limited – Executive Chairman of the Board [19] ——————————————————————————– Bye-bye. Thank you.

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