Afternoon, ladies and gentlemen. Welcome to the interim result announcement of Hang Lung Properties and Hang Lung Group. We turn the presentation all online this time, including sell side analysts. They actually now attend the webcast. Now we have over 100 investors now joining online. Despite the social distancing, we always strive to maintain very high accessibility and also transparency. I mention the team all out to talk to you and also interact with you later on. Let me introduce our speakers today. Mr. Ronnie Chan, Chairman of Hang Lung Group and Hang Lung Properties. Mr. Weber Lo, Chief Executive Officer. Mr. H.C. Ho, Chief Financial Officer, and Mr. Adriel Chan, Executive Director. Let me first invite Weber to highlight the interim results. Weber?
Again, thank you for over 100 participants joining in for the session. Sorry that we could not see you face-to-face, but we are trying our very best to keep you informed. I think the numbers I will not repeat again, but I just want to highlight a few key takeaway. First of all, our core business, our rental business, our revenue actually more or less flat to last year versus the first half of 2019. If you break down into the business, Hong Kong down by 5%. However, Mainland was very good that can grow by 4%. If you look at the renminbi terms, actually they grew by 9%, lead by, of course, those properties we have strong luxury content. If you look at Shanghai, we grew by 8% and also some other properties that we have better luxury contents. The V-shape rebound starting from April.
Basically, we are seeing from one place to the others, and then they are strong consistently. We hope that with luxury content, this trend will continue. At the same time, for those lifestyle mall without the luxury content, we see the V shape is still there, but the recovery is more gradual than those shopping mall with luxury. Office in Mainland, I would like to highlight. We see some pressure, especially, I am sure you heard that vacancy both in the tier 1 and tier 2 actually are quite high. However, if you look at our own business result, our occupancy, I would say all of them except the new openings, they are all over 90%. Because of our new opening of Wuxi OT2, we got 2% increase on revenue.
Overall, I would say in a very tough situation, I mentioned three of course, in the last six months. First, because of the COVID-19, the outbreak which start in Mainland, and then we feel basically the same impact across the world. The second one, of course, the social unrest starting in the second half of last year, and we still need to continue to manage and help our tenant, and at the same time trying to make sure that they can on one hand, lower down their burden, but at the same time trying to make sure that they can stand on their own feet. The third, of course, is the U.S.-Sino China relationship which may hurt not only from the political perspective, but also in terms of the renminbi depreciation. It depreciate by 4.5% versus first half of 2019.
With all the headwinds I just mentioned, I would say the numbers that we just report are respectable. At the same time, I would like to also highlight the valuation loss in this first half, which is about HKD 4.5 billion, HKD 4.6 billion, which accounts for on average about 2.5% of our total asset. Of course, you can see that in Hong Kong, the numbers are higher when compared to Mainland. If you zoom in in Hong Kong, the drop is more in those touristic areas such as Mong Kok and Causeway Bay. In China, most of those are coming from the area that we see softening of the rental. At the same time, most of those are actually at the north part of China.
At the same time, we also recognize the pressure of the office sector, and therefore, some of those valuation losses are happening in that particular sector. I would say the 2.5% overall of our total asset is not a dramatic number, but because of our asset size, the HKD 4.5 billion basically incurred a loss together with the valuation. That will not affect our cash flow, and that will not affect our dividend ability to pay. I think I just want to stop here, and then, of course, I welcome any question.
Perhaps any remarks by our Chairman, Ronnie?
Well, good seeing everybody online. This morning we had the board meeting, and I told the board members, I said, "The outward environment could not have been worse." The three issues that Weber just described, any one of them is enough to knock anybody off the horse, and we got three of them all together at the same time. Yet the reality is, on the ground in the Mainland of China, it is like a fairy tale. How can you have such very positive numbers? I will just cite you one or two examples to supplement what Weber has just said. Some shopping centers have been closed for anywhere from half a month to over a month. Yet, the April, May, June numbers were so strong that the total six-month revenue could not only be caught up, but actually record a very, very decent advancement.
That shows you that the luxury sector is really, really strong. Looking at it another way, all the major brands, the LVMH, the Kering, the Richemont, and so forth. All those companies are rushing to open in new shopping centers. That tells you something. As I told my colleagues that the report that came out a couple of years ago that says that I reread the report recently, that they expect by 2025 that 50%-55% of the total Chinese sales will be transacted inside Mainland China. Whereas right now it may be 26%, 27%, 28%. That means a lot of repatriation of sales that were taking place outside of Mainland China. Well, ladies and gentlemen, I got news for you. That number is not 55%. That number for the last period of time is 100%. The reason is because nobody can travel.
You cannot get out of the country anymore. All the sales have repatriated. Of course, together with the fact that the Chinese government has done a lot in the last year or two to lower import duties and the like. A lot of the brands have also lower prices, equalize them with the rest of the world, in particular with Europe. All these things put together has caused the high-end luxury mall very, very thriving in the last three months to four months. Here, I would add a couple of points. One is, people do not recognize this, and that is shopping for luxury goods is not shopping, per se. It is pleasure. Whereas you go buy in a grocery store or the regular shopping malls, that is of necessity. One is a pleasure, an entertainment even. The other is just a necessity.
The nature, the psychological condition of the shopper is very, very different. As I tell people, I said, "A 5,000 sq ft luxury home and a 500 sq ft regular home in Hong Kong, they are both residential, but they are extraordinarily different." The one who buy the 5,000 sq ft versus the one who buy the 500 sq ft have totally different needs and considerations. The shopping for luxury versus the shopping for regular, say, a three-star mall, the psychological condition of the person is extremely different. As a result, you may even say that it is a different subspecies. It is not surprising that the luxury mall should perform very differently. Of course, there can be a time when the reverse is also true, but not right now. Look at it another way.
The footfall of the regular malls and the high-end malls, both of them have not recovered to the level of the pre-COVID, in the Mainland of China. I think most of them are probably still at 60%, 70%. Yet the ones who go to the luxury malls, they buy a lot more. Of course, the unit cost is also higher. It is not just the volume, but it is the value. It also tells you that although footfall has not recovered as much, yet sales have been gangbusters. Some of our brands are really doing great business. Let me Sorry, I am being a little long-winded, Sia. In the last year, this year and next year, we are signing probably around 70 lease contracts with the top 20 luxury international brands in our shopping centers, and most of it is outside of Shanghai.
If you were to extend it to another year, you are talking about 80-some leases that will likely be signed. Of the 70 for last year, this year and next year, most of them have already moved in. It is not like pipe dreams. These are shops that have not just signed, but have already moved in and are doing business. You can see that the luxury market is very strong, for which we are very happy. A lot of our shopping centers have already successfully migrated from being a sub-luxury mall to a luxury mall. Just to cite you three. Grand Gateway 66 is one, Wuxi Center 66 is another. Dalian Olympia 66 is another. Then, of course, Spring City 66 in Kunming was born to be such a home to luxury, as we call it.
I foresee that Wuhan Heartland 66, when it opens, well, it will be ready end of this year, but open probably early next year. It will again be another luxury product. I think that in spite of the very difficult situation, none of us are underestimating the force of those three serious negative things. For Mainland China, two of them, COVID and the U.S.-China relations. Yet, we are doing very well on the Mainland.
Thank you, Chairman. There are obviously very strong interests about our China story for Hang Lung. A few questions regarding the momentum of the retail sales in China. How does this sound for July, the retail sales trend so far? Whether we would expect second half of 2020 this year will be better than first half. Particularly whether they were better than 2Q of the first half.
Just give a little bit of, I would say, the sentiment so far. Except I would say out of all our cities, we operate now in nine cities. But except Dalian, I am sure if you read some news, there is some surge of cases in Dalian. Other than that, believe it or not, our July sales number continued to be strong. Some of our luxury shopping center, the sales number actually is even stronger than what we saw in June and May. So we are convicted and believe the trend will continue. Whether it will continue to be going up and up every single month, I cannot tell, but I believe that it will maintain at a very high level. I just want to highlight again, even though Ronnie just mentioned, the footfall is still not yet fully recovered.
But if you look at our numbers, which we disclose all the information, our Grand Gateway 66 in second quarter and in June, the footfall already recovered into the positive arena. Similar thing in Plaza 66. Those outside Shanghai, some of those are still actually coming up. But in terms of the trajectory, actually it is coming up nicely. But again, why I need to have a disclaimer, because we still do not know the evolution or the COVID-19 situation in each of the city. These all subject to any government measures. For example, in Dalian, as we all know, we keep in touch with all our teams member. Some of the district, they now classify as high risk and medium risk, and that will have some impact to our footfall.
But this is all we are working very closely with our local team and making sure that we would do the right thing for the customers and for our tenant and making sure that we will get the best for our stakeholder as well. So I would say overall, second half, we are very confident based on what we see, both from the luxury content mall as well as from the lifestyle mall. But of course, in terms of the recovery pace, really subject to the COVID-19 situation. That is what I can say.
Okay. There is a follow-up question. Do you expect to see a sharp decline in retail sales if international borders open again, when COVID subsides?
I do not think so. First of all, the reason why I would say based on we are all human being and when we actually get a good experience, you will repeat your purchase again. Our whole objective, our belief is that if we can provide the best service and the best customer experience t o our customers when they come into our shopping center. The chance of us having a repeat purchase is higher. Say, for example, we launched our HOUSE 66, our CRM program, two years ago.
Basically we launch in all shopping center except Forum 66, which we will launch in August this year as well. By August, we launch the CRM program for all our shopping mall in Mainland. Now we have a lot more data. Basically, we base on the data. We know exactly the customers, what kind of spending pattern and experience and brands that they have purchased before. We can actually target them and working together with the brands and try to make sure that we can increase their propensity of buy. Right?
There's a lot of data crunching and working together with the team. Therefore, we can target them with much better marketing. Therefore, we can reactivate or actually rejuvenate the sales momentum. The April numbers and June numbers, basically, we can tell you exactly this period. Without the CRM, we have to wait for the brands to tell us how many customer they can bring in. But with a strong CRM database now, we can proactively call out those customers. Therefore, we can tell them exactly what kind of new products they have launched. Therefore, we can bring them in. Therefore, their purchase amount and the ticket size is a lot higher because they have a well-planned journey when they come into our shopping mall.
This, I think is a very powerful software, which we would love to talk about because at the end of the day, yes, the global international travel when they resume, yes, some people will still go out and buy. But really the job is on us, how we can impress them and make sure that when they come, they have a good experience. Also based on what Ronnie just mentioned, because now the price between the international market and domestic market is much closer now. If our experience and we have loyalty points, we have experience that money cannot buy, which we can bring to them. I think the chance of us retaining a lot more of those customers that used to travel to buy instead of staying to buy, to buy more from us, I think the chance will be a lot higher.
Just one good information I want to share. The last four months when everything resume, we acquire a lot more new customers which we have never met before. Those customer, they used to travel internationally to buy luxury products. This time around, we have basically welcomed them with open arms. Because once we can acquire them, they stay with us and then they can purchase with us, we would know more. Therefore, we can satisfy them with a much better experience. I think to answer your question, I'm confident that even though when the border is open, the momentum can continue.
I'll add two points. One is because all the major luxury brands realize that China is by far the biggest market, they begin to stock up the latest, the most complete line of products. In the old days you go to Paris, London, you may have a more complete line of products. Now, no longer. Shanghai and other major cities in China are among the most sophisticated of all shops within those brands. That's one. Another one is U.S.-China relations, as we all know, is not in the best of shape. America is lining up its friends, at least temporary friends, to be against not just China, but the Chinese people. If the Chinese people go to Paris, London or New York, wherever, Los Angeles, they don't feel welcome anymore.
Do you think that they still like to go there as much as they otherwise would? The lack of travel because they don't feel good, they don't feel safe traveling into some of those cities may also be another reason why once those sales are repatriated, domesticated, that it is unlikely that they will leave. I think that I don't like to see U.S.-China relations become so bad today. I really don't like to see that. I've worked very hard for the last 30- some years to better that relationship, but I failed. Well, if you fail, you have to accept the fact and do the best. What can you do? One is make money out of it. Chinese citizens don't want to go out anymore? Come to my shopping centers, stay with us.
As Weber says, all of us are creatures of habit, and once you have a good experience, and today the shopping experience in some in China, in the top malls such as ours, is as good as anywhere in the world. The salespeople are really, really sophisticated. Once you have a good experience and then you got all the points and this and that, HOUSE 66 that Hang Lung has instituted recently, then I think that the chances are very good that number of 100%, meaning almost all purchases right now because of COVID are Domestically spent those money, that it will not drop by too much.
Okay. A question like this. There was a big divergency of sales performance between malls with heavier luxury contents and those with lighter. Do you think e-commerce will take away a bigger share of sales of your malls with lighter luxury contents after the COVID? What will Hang Lung do to help accelerate the sales recovery in second half, especially for those malls like Palace 66, Parc 66 and Riverside 66 and Olympia 66?
First of all, I would say we look at our vacancy drop in those center in a positive way, because it will be a golden opportunities for us to replace those weaker tenant and replace them with a stronger one. Some of those, I'm sure this e-commerce question will come in years to come. But I can tell you that today, some of those trade, for example, F&B, yes, you can do takeaway, but actually you take out the joy and the pleasure, the social animal like human being, gather together. I think today the reason why it hit us, especially those lifestyle shopping mall, more because basically the measure and the scare of all our people around different cities stop them to travel or to go even out of their home. I think this hopefully, I think will be temporary.
But at the same time, if our numbers and also, Ronnie just mentioned the number of leads that we are going to sign with the luxury brands. We are very confident to make. Today we have four luxury content or maybe five. Actually five, including Forum 66. We have five luxury content driven mall to mall. So we would love to improve Olympia 66, Kunming born with luxury content, and we believe that we can do the same for Heartland 66. So more and more, hopefully in the next one year or two, we can prove to you that out of our today nine cities, including Hangzhou, more and more of our mall will be led by luxury content. So this on one hand, because of what we just mentioned about the experience, repatriation of purchase, the price almost equalize globally for those products.
That will be one of the drivers for us to continue to drive sales. But at the same time, hopefully the pandemic will not be here forever. Therefore, of course, we will work with our tenant to bring unique experience to the customers, and therefore, to have a reason for them to come to our shopping center, and therefore, they will find something different, not only at points, but also experience trade mix, pressure of shopping and all that will come. I think, yes, today the recovery is more gradual than those with strong luxury content. But I truly believe that hopefully when the pandemic settle, everything will be back to normal.
Thank you. Can you give an update on the project in Wuhan, Heartland 66, the completion schedule, and also the latest releasing status, please?
The construction is back on track. We had roughly a four-month delay, but we intend to complete construction by the end of this year and opening first half of next year. That represents roughly four months delay. I am pleased that on site, the construction is back to full speed. We have done testing for all of the on-site staff, including contractors. We are confident that it is a safe environment for the workers and our staff alike. Leasing is going well. We have I think what will be a very strong trade mix. I cannot go into too much detail, but we are close to 60% leased at this point. There was a little bit of a dip during COVID-19, but that is to be expected. Frankly, it was not people that we were too sad to see go.
I think that this will still be one of the best projects when we open it. Perhaps even stronger than Kunming, last year, which was already a very strong opening.
Thank you, Adriel. This question must interest many investors. Your dividend has raised one cent last year. How do you see the dividend outlook with a strong China luxury rebound but weak Hong Kong performance? You did mention in the announcement that you would expect a full recovery for Mainland malls by end of 3Q. How does it look like for dividends? Should I ask chairman?
Why don't I first. I'm sure you all know we always mention our policy, the dividend according to our earnings ability to pay. Yes, we are confident about our China recovery. But today we are still five and a half to six months away from the completion of the year. So we will not know about the situation and also subject to the board approval on the dividend payment. But I want to go back to our way of doing things. When we plan about dividend, we always plan for a long term. Of course, we do not want to change. Hopefully, if we change, we change for the upside on the positive way. So I know that you always ask this question, but I hope our China story will be strong enough to offset any slowdown or any uncertainty in Hong Kong business.
But so far, as of today, I can't tell you more than our policy. Again, we don't have crystal ball. If this continue to be strong and much stronger than what we see and offset whatever uncertainty in Hong Kong, of course, we love to continue.
All right. Thank you. Actually, a follow-up question on whether investor can benchmark DPS absolute dollar term rather than a payout ratio. Yes. While we don't have a payout ratio, you can benchmark absolute dollar. We want to make it a stable and steady dividend. Okay. Another question is about our operating margin. They have seen a margin contraction for Mainland and also Hong Kong. Was it due to promotional expenses? How do we see the margin outlook in second half?
First of all, in Hong Kong, I think it's very easy to look at it. When you are enjoying 85% or 86% margin, used to be, any drop in the top line, even though you cut as much as expense as possible, those top line drop will go straight into the bottom line. So I think this is so clear there because our margin in the Hong Kong business is so high. Top line will be the source of the changes in the bottom line, and they are very sensitive. In Mainland, actually, if you break down our numbers, yes, you see a drop, but mainly it's not because of our existing project. Actually, all our existing project, our margin actually improved. The only reason why the overall is dropping, because a lot of the new project they just have been launched in third quarter of last year.
When you just launch, you do not even have a full year impact, there will be a loss incurred. That is why the margin decrease in Mainland basically are all because of the new project. Existing project, all the margin actually improved.
Thank you. Could you comment on the rental reversion for different types of malls in China, for example, luxury malls and also the lifestyle mall. On average, what did you see so far, what is the outlook for second half this year?
Okay. Again, rental reversion subject to case by case, also depends on location. In general, I would say if you look at some of our shopping center, they are having 80% vacancy. Now, if I tell you every renew are positive, I am lying to you because the scenario and situation is tough. At the same time, that cannot have a one-size-fits-all answer because some of the location, if we could find a better tenant and improve the trade mix and all that, some are actually positive and some are negatives. I would say more general speaking, Hong Kong is facing much more headwinds than in Mainland. In Mainland luxury sector, I would say if you are the strongest shopping center in that particular city, I do not see any reason why we will have a rental reversion negative.
Actually, we will see positive one , the sales continue to improve, then we will actually earn even more effective rent. However, for F&B, for cinema, for some of the trade like kids education and all that, it is tough because some of those measures are still on, then they could not open, then we have to help them. If those could not survive, then if we replace by the same trade, you will see a negative reversion. If we replace them by those trade that they are still in demand, that will be positive. There is no strict formula on all, but I hope you can understand that everything is still very fluid. We will not just fill up the vacancy for the sake of doing it, because we know that we have a good base, we want to maintain our positioning.
We want to maintain the highest quality trade mix, and therefore we will do the right thing for the stakeholders and also for the company.
Thank you, Weber. There has been some concerns regarding duty-free, particularly in Hainan province. How do you see the possible impacts to your business from duty-free segment?
First of all, actually, we put a lot of time to understand and discuss among the senior executives in the company. First of all, I would say, I am sure you all know duty-free, what kind of product they are selling. They may not be the highest luxury sector. Even though some of the brands in Hainan today, not all the top luxuries are having outlet over there. At the same time, I know that in Hainan today, they have limitation. For example, CNY 30,000 spend, and they may increase to CNY 100,000, I was told, and all that. But think about it, if you go to a Hermès, CNY 100,000, I am not saying that is too arrogant, but CNY 100,000, you can't buy anything. Therefore, for duty-free business, they focus on the low-ticket items of the luxury. That may not have much impact to the luxury spending domestically.
At the same time, we look at this closely. We also have some other duty-free concept today. For example, we have a duty-free shop in the city in our Dalian shopping mall, which the government allowed those people travel in the last six months, they can come to our shopping malls to buy some products for duty-free. At the same time, now a lot of our shopping malls, the custom put the tax-free redemption center in our shopping mall. For example, Plaza 66, in May, they set up the tax-free redemption center in our mall. That means, hopefully, when more tourists come into Shanghai, if they buy luxury products in Plaza 66, you can reclaim the 9% VAT tax at the shopping center. Therefore, hopefully, can encourage more tourists when they come to China to buy luxury products.
I think all this, I think we all welcome this kind of new initiative. At the same time, I do see a significant impact of so-called Hainan duty-free at the very beginning. But again, we will closely look at it, and then we will try to make sure that at least we are on top of the evolution and also the development.
Investors noticed that a few malls had a little bit of drop in terms of occupancy rates, particularly for the two Shenyang malls, Palace and also Forum. Is it due to the tenants mix reshuffle or any other specific reason for that?
No, again, the pandemic is the main reason. Especially, I think in North China. This time, I would say not because we want to highlight North China, but so far, the government measures in the North are not prudent than the other cities. Maybe because of the case, maybe because some of those they don't want to commit any mistake. They are very harsh on a lot of measures. For Palace, I can say there is one more bad news for us because the road outside our shopping mall, they are under construction. Not only because of the pandemic. Even though without the pandemic, the condition outside our shopping malls are really not very nice for people to walk in easily. That actually have some impact on our footfall.
At the same time, in general, I would say the city is less resilient than those stronger cities, I would say. Overall, they are consistent. They all drop by 14%, around 14%, 15%. The footfall, if you look at the footfall, they all drop by 30% to 40%. I hope the good news is when I look at the May number, June numbers, it is coming up nicely. Of course, it is not as strong as the other shopping malls that I just mentioned with the luxury content, but at least they are gradually coming back. Then I hope the recent Dalian issues will not contagious to Shenyang, and hopefully because of that, we can continue to recover our trajectory.
Okay. A few concerns regarding Hong Kong as expected. Will Hong Kong become a material drag on our overall performance in the next one, two years, given that Hong Kong still account for over 50% of the core profits?
Okay. This is really hard to tell. The only thing, the good news, again, if you look at our result, we dropped by 5%, partly because of our portfolio mix. We have neighborhood mall, for example, Kornhill and Amoy Plaza. Those hardly hit will be like Causeway Bay and Mong Kok. Really that subject to when the border will be open, when the tourists will come back, and when things will be normalized. I do not want to call this as a material drag. I would rather look at it at the bright side that Hang Lung, in the future, really a China story. We want to over-deliver and continue to deliver in Mainland to offset any uncertainty in Hong Kong. If Hong Kong continue to be challenging, we will manage it, but at the same time, hopefully our China will continue to grow to offset it.
Okay, given the sharp drop of Mainland visitors into Hong Kong, would you adjust your marketing and leasing strategy in Causeway Bay and Mong Kok so as to attract different kinds of shoppers in Hong Kong and to give a new prospect for these two portfolio?
Yeah, we are doing it already on a daily basis. I will just pick a very classic example, Peak Galleria. When we launched Peak Galleria, we built some of the trade mix for the tourists. After we opened, the tourists did not come, not because of our content, it is because of social unrest starting from second week of June last year, and followed by the COVID-19. Therefore, we focused a lot on our trade mix and try to not only serve the tourists, but also serve the Hong Kong citizen. I would say, if you recall, during the social unrest time, a lot of people actually spending a lot of time at the Peak.
In our F&B, in some of our outdoor area, we organized even some of the events which some of the top chef spending the three-days weekend and then serving some of the best food in town. In Causeway Bay today, if you look at some of our F&B, we actually make it even more, I would say, exciting. Hopefully to attract more local residents to spend their time with us. I think we will adjust accordingly, and this is really customer-centric and tenant-centric, where we see there is business opportunities, we will adjust accordingly. We don't want to set it very rigid, saying that this is not for tourists anymore, because at the end of the day, Hong Kong is an international city. We believe that we should serve both at the same time.
Thank you, Weber. Perhaps this question could be for H.C. Regarding the Hong Kong leasing, has the rental relief been included or amortized in the revenue or the OPEX line?
The rental relief had been amortized against the revenue line rather than the OPEX line.
Okay, thank you. There's a question regarding Peak Galleria contribution. What would be the Hong Kong rental look like if ex- Peak Galleria, PG's rental income?
That only account for a very small number against our overall Hong Kong portfolio, close to over HKD 2 billion. I would describe it as no material kind of impact from even ex or include Peak Galleria. Thank you.
Okay, there is also a question regarding the IP value. With declining IP value, net gearing will go up further with continued CapEx. Is the management comfortable with higher gearing for one to three years?
Despite the valuation loss, its impact on our gearing situation is only 2 points-3 points. Moving forward, with our continued constructions and completion of the Wuhan project and the Hangzhou project, the gearing level will go up further, but it will be very progressive.
Okay, any change in the cap rates for Hong Kong and Mainland China?
None. They all remain the same for the interim.
One question regarding the service apartments. Any updates on the timeline of the launch and whether we would even further speed it up?
Most of our projects outside of Wuhan have been delayed by roughly one to two months. But the construction of the service apartments, we think we can absorb most of that, so there should be no impact on the sales dates. Everything will be sold as planned. The first ones will be Wuhan, which, if I am not mistaken, will be available for sale in 2021.
Probably the last few questions here. How do you view the future of listing of Hang Lung Group on the stock exchange, whether you have any plans to do a major reorganization for the group? He even put it really specific, whether a possibility of delisting HLG.
Answer is no plans.
Okay. Quick and sharp. All right, that's nearly more about it. Lastly, a question regarding whether we have the capability or we have the interest to help manage shopping malls owned by third-party developers in China, so that your business will not be limited by your balance sheet.
I think we welcome all possibility. I think currently we will look at how to make all our own babies up and running, and race and running very fast. Today, I think we are happy with what we have, but we welcome ideas. We will look at all the possibility. But today, I think we want to maintain the highest quality and standard, and want to execute well. As I mentioned, our strategy is very clear. We want to be sustainable. How to be sustainable is to be customer-centric, to create unique experience for the customers, to embrace technology, to make sure that we execute on time and well, and also to uphold our values. I think that is the possibility, but today, we want to execute all our projects on hand well first.
Okay, that would be the final question. Whether we see any buying opportunities in Hong Kong, and, yeah, very much in Hong Kong and also in Mainland China as well. Given that our balance sheet is only around like 20% gearing.
I mean, we're always looking for opportunities both in Hong Kong and in the Mainland of China. We'll continue to look for these opportunities. But of course, we'll only buy when we feel like the location and the price are right. When the time comes, the market will know. We continue to look and if we find something, then we would love to buy, both in Hong Kong and in Mainland China.
Since Adriel is speaking, perhaps let Adriel also update the two redevelopment projects in Hong Kong.
The two projects continue. Thankfully, the Hong Kong construction progress has not been impacted much at all by COVID. At most, we're talking about a period of a week or two. The Hong Kong projects are expected to be completed. We have the Amoy, the one next to Amoy Plaza, which is going to be a residential project. We have the Electric Road in North Point, which will be an office tower, which may be DP or IP, depending on the market when it comes out.
Okay. With that, we conclude today's presentation, and thank you very much for joining us, and stay safe, and I wish you all good health. Thank you very much.