Good evening, ladies and gentlemen. Welcome to SHKP FY16 Interim Result Analyst briefing. It's so great to see all of you here today. Let me take this opportunity to wish you all good health and long-lasting prosperity in the Year of the Monkey. In the next 20- 25 minutes, I would like to present to you the key highlights of the results, the group business reviews, as well as the group's prospects. More importantly, after my presentation, a Q&A session with our senior management will be held. Let me kick start the presentation with key financial number. Please note all figures are in HKD, unless stated otherwise. For the six months ended December 31, 2015, the underlying net profit was HKD 9.3 billion, up by 9.9% year-on-year. The increase in profits was primarily due to higher development profits and rental income.
On the other hand, the reported net profit, which include revaluation gain, was down by 6.2% year-on-year to HKD 14.7 billion. The underlying earnings per share increased by 4.9% to HKD 3.23. While the reported earnings per share declined by 10.5% year-on-year to HKD 5.11. The changes were negatively affected by the increased number of outstanding shares, which resulted from the exercising of bonus warrant. On dividend, I'm pleased to tell you that the board of directors has declared an interim dividend of HKD 1.05, 10.5% increase from last period. Let me go through the profit in more detail by talking about the breakdown by segment. The group's investment property portfolio continued to perform well, with net rental income of over HKD 7.9 billion, up 6.6% year-on-year.
In Hong Kong, net rental income grew by 7.5% year-on-year to around HKD 6.4 billion, which was mainly driven by higher rents for new leases and renewals, as well as new contribution from newly opened investment properties. The net rental income on the mainland rose 7.8% year-on-year to HKD 1.3 billion. In renminbi terms, the growth rate of net rental income from mainland China would be 11.5%. We saw a 13% decline in net rental income from the group's 50%-owned ION Orchard in Singapore, mainly due to depreciation of Singapore dollars, as well as lower margin for this period. Profit from property development for sales grew by 8.3% to around HKD 2.5 billion during this period. In Hong Kong, property development's profit was around HKD 1.7 billion, same as last year, with slightly lower development margin due to different product mix.
On the other hand, the development profit from mainland China rose by 28% to over HKD 760 million, mainly due to the improvements in development margin on booking more projects with high margins. Our hotel operation recorded a 3% decline in profit on lower room revenue. However, the decline was mitigated by higher profits from non-room operations, i.e., F&B, as well as strong performance of Ritz-Carlton Pudong in Shanghai. Profit from other business amounted to HKD 2.2 billion, 3% higher than that of last period. The growth was driven by the strong performance of Transport International Holdings. However, the growth was dragged down by the decline in profits from SmarTone due to lower handset margin. In sum, the group's total operating profit was HKD 13.3 billion, up by around 6% year-on-year for this period. Let look at the group financial position.
The group's financial position remained very strong, with low debt leverage and high interest cover. As at December 31 last year, the group's net gearing ratio remained at a low level of 12.4%, while interest cover for the first half FY16 was 9.7 times compared to 8.4 times for last period. Shareholders funds and net book value per share increased slightly to HKD 456 billion and HKD 157.50 respectively. Net debt stood at HKD 56.6 billion, of which around 10% is denominated in RMB. Let's turn to the group's business review. I will share with you the group's land bank in Hong Kong first. As at December 31, 2015, the group's total land bank in Hong Kong was over 52 million sq ft, including 28.8 million sq ft of completed investment properties and over 23 million sq ft of properties under development.
You can see from the charts on the right that for property under development, 81% GFA is for residential purpose, which is enough for the group's future development needs for at least five years. If you look at the chart on the left of a total rental portfolio, around 37% GFA is retail space and 35% are offices. The rest includes hotels, residential, and industrial buildings. On top of that, the group also hold over 30 million sq ft of agricultural land in terms of site areas. In terms of land acquisition, for this period, the group acquired three sites with a combined gross floor area of 1.7 million sq ft through government's public tenders, as shown in the table here. Please look that the large-scale MTR Yuen Long Station developments comprises about 1.4 million sq ft of residential premises and about 107,000 sq ft of retail space.
We believe this project would create significant synergy with the group's neighboring YOHO residential enclave and the YOHO Mall. Moving on to the property development business in Hong Kong. During this period, the group recognized around HKD 6 billion property sales with satisfactory development margin. The sales mainly came from the Ultima phase I in Ho Man Tin, and Park Vista phase I-A in Yuen Long. On property completion, over 400,000 sq ft of residential GFA was completed from Ultima, and we expect about 2.7 million sq ft of residential GFA will be completed in second half of this financial year. You can find out more detail from the completion schedule we gave you earlier or from our corporate website. Please look that about 80% of the residential GFA completion in this financial year has been sold.
On contracted sales, the group has achieved over HKD 11 billion sales in Hong Kong, mainly from Century Link phase II in Tung Chung, Ultima phase I, Park Vista phase I-A, and King's Hill in Island West. The residential projects either have completed or will be completed in coming two years. In the next few months, we will have different product mix to meet varying needs of home buyers. As shown in the table here, major projects to be launched include Twin Regency, which is about to be launched tonight, Grand YOHO phase I, which is adjacent to MTR Yuen Long Station, a waterfront residential project in Tseung Kwan O, and quality units at [inaudible], Shau Kei Wan, as well as luxury homes in Ultima phase II, and upon Harbour North project phase I, and the developments in Kau To, Sha Tin.
This slide shows you the location of the upcoming major launches in Hong Kong. Let's take a look at our Hong Kong rental portfolio. The group diversified the rental portfolio continues to generate steady rental income growth, with overall occupancy dates at high level of 95%. For this period, the gross rental income grew by 8% to HKD 8.3 billion, of which 54% came from shopping malls, 33% from offices, and the rest from residential, industrial buildings, and car park. By segment, gross rental income from office portfolio grew by 8% to HKD 2.7 billion, while shopping malls gross rental income was up 9% to HKD 4.4 billion. The group's well diversified shopping mall portfolio continues to perform very well, in particular for those regional malls which primarily serve the local residents. We continue to achieve positive rental reversions with reasonable occupancy cost and high occupancy.
The group will refine our tenant mix from time to time and engage in Asset Enhancement Initiatives in order to better cater for changing customer needs. For MOKO, which is atop MTR Mong Kok East Station, is a very successful example of our Asset Enhancement Initiatives in the recent years. After the completion of the whole reconfiguration of MOKO, we saw strong growth in tenant sales and traffic. Other major AEIs include apm in Kwun Tong and Metroplaza in Kwai Fong. For apm, we expect the greening project at Podium Garden to be completed by end of this year, and the conversion of over 150,000 sq ft of office space for retail use is underway. The renovation work at Metroplaza has commenced, and the layout will be reconfigured to enhance its market position.
Looking ahead, the group's retail portfolio will be further boost when new shopping malls open in the future. The opening of YOHO Mall I in September last year marked a significant milestone for the gradual completion of YOHO Mall. Moreover, the final phase of renovation at YOHO Mall II, formerly Sun Yuen Long Centre, is expected to be completed this quarter. These malls, together with the retail portions of Grand YOHO, as well as the retail space at a site above MTR Yuen Long Station, will form a 1.1 million sq ft of YOHO Mall. Upon full completion YOHO Mall will become the largest shopping destination in Northwest New Territories, and its scale is comparable to New Town Plaza in the east. Other future expansions include first phase of PopWalk in Tseung Kwan O, which is scheduled to open in first half this year.
Harbour North in North Point, which will be developed in phases and will house over 140,000 sq ft of retail space. A regional mall of nearly 300,000 sq ft of GFA atop MTR Nam Cheong Station. Next, turning to the group's office portfolio in Hong Kong. The occupancy of Hong Kong International Finance Centre Office Tower was improved further to around 99%, with higher spot rent. Hong Kong International Commerce Centre in West Kowloon recorded strong rental reversion and higher occupancy. Millennium City Cluster in Kowloon East continued to perform well, with sustained high occupancies and positive rental reversion. This slide shows the location of the group's major office in Hong Kong. Let's cover the group's property business in Hong Kong. Let's move on to the group's Mainland property business.
As at the end of last year, the group's Mainland land bank amounted to 70.4 million sq ft of GFA, of which 11.7 million sq ft are completed investment properties and around 59 million sq ft are property under development. You can see from the chart on the left that of the completed investment properties, 55% are shopping malls and another one-third are offices. The other chart shows of the property under development, around 62% will be residential, 20% offices, and 15% shopping centers. For this period, the group has no new land acquisition on the Mainland. On Mainland property developments, the group recognized over HKD 3 billion property sales during this period. The sales mainly came from projects such as Shanghai Arch phase I, Shanghai Kunlun, and Forest Hill phase I-A and I-B in Guangzhou.
The group completed about 700,000 sq ft of attributable GFA, mainly comprised of the residential units of Oriental Bund phase I-A. The group plans to complete a further 900,000 sq ft of attributable GFA in second half FY16, mainly from Hangzhou MIXC phase II-C and International Grand City in Guangzhou. In terms of contracted sales on the Mainland, the group recorded around RMB 2.5 billion for this period, mainly from Shanghai Arch phase I, [Shanghai Kunlun], Park Royale in Guangzhou, and The Woodland in Zhongshan. Major launches in the coming months include the service apartments at Shanghai Arch phase II-A, Forest Hill phase II-B in Guangzhou, Grand Waterfront in Dongguan, Oriental Bund phase I-D in Foshan, and The Arch Chengdu, which is part of the Chengdu ICC. Turning to the group's Mainland investment properties.
Gross rental income from Mainland increased by 8% year-on-year to around HKD 1.8 billion, of which 55% came from shopping malls and 36% from offices. The Mainland rental income has accounted for around 17% of the group's total gross rental income. For the period under review, we continue to see the portfolio as a whole enjoying positive rental reversion with high occupancies. Let me walk you through quickly about updates on the group's two flagship integrated projects in Shanghai.
First of all, Shanghai International Finance Centre in Pudong continued to perform well. Both office towers at International Finance Centre Complex are virtually fully occupied, given their advantageous location in Lujiazui finance and trade zone. The flagship ifc mall continued to enjoy positive rental reversion and higher tenancy sales. Additional connection between Shanghai International Finance Centre and nearby buildings will be completed from 2016 onwards and will provide customers with increased ease of access.
For Shanghai ICC in Puxi, another flagship project of the group, the leasing progress of two ICC office is very encouraging, while one ICC office is fully let. Meanwhile, tenant sales of iapm mall within Shanghai ICC Complex continue to ramp up strongly, while the recent opening of the extension of Shanghai Metro Line 12 will help drawing more traffic. The gross rental income from Mainland China will be further boosted by the upcoming projects, particularly from those in Guangzhou in near term. The 50%-owned Parc Central, located in the traditional Tianhe Road Shopping District in Guangzhou, is expected to be soft opened in first quarter this year. The leasing of this nearly 900,000 sq ft mall has been very encouraging. International Grand City, a 33%-owned shopping mall, is part of the Tianhe Plaza in Zhujiang New Town, Guangzhou. It will be open in second half this year.
As a long-term investment of the group, the 100% owned Xujiahui Centre project in Shanghai will be comparable to the combined site of group Shanghai ICC and Shanghai International Finance Centre upon completion, and is expected to become a major growth driver for the group future rental income. Construction of Xujiahui Centre project is progressing very well. Office space in Lot 1 is expected to be handed over to tenants in the first half of next year, while the shopping mall will open in 2018. Next, let me talk about group's hotel operation. Amid difficult operating environment of hotel sectors in Hong Kong, the group recorded 3% decline in operating profits for the period under review. Although we managed to sustain high occupancy at hotels in Hong Kong, room rates were inevitably under pressure due to the decline in the number of inbound visitors.
Continued growth in F&B, however, helped to offset decline in RevPAR. On the other hand, the Ritz-Carlton in Shanghai, Pudong continue to do well with decent growth in both revenue and profit. Now, I'm going to share with you our views on the markets. The recent consolidation of Hong Kong residential markets is expected to continue in short term. However, end-user demand is underpinned by positive factor such as positive demographics, low interest rate environments, and low household leverage. Grade A office leasing market continues to be supported by low vacancy, while performance of regional shopping mall, which mainly serve the locals, is expected to remain solid. Momentum in residential markets in first-tier cities on the mainland is expected to be robust amid positive supply-demand dynamics, while well-managed prime grade offices and premium shopping malls in key location will outperform the others.
With regard to the group's long-term strategies, the group will continue to aim at a balance in income from property sales and rental business, particular for Hong Kong operations over a long run. Strive for continued delivery of high-quality products and services, observe the discipline of prudent financial management, stick to a selective and focused approach to the investments on the mainland. In this financial year, the group is expected to deliver 3 million sq ft of residential completions in Hong Kong, of which 80% of them has been presold. Over the next few years, the group plans to achieve large volume of residential completion for sale and high asset turnover in Hong Kong. The group will also stick to its prudent financial discipline on land replenishment when good opportunities arise, and continue to launch projects for sales runs ready.
Moreover, the rental portfolio of the groups is expected to generate steady rental income growth amid positive rental reversion and sustained high occupancy. The group's quality office portfolio will continue to benefit from the group's strong brand and leading position amid positive office leasing markets. While the extensive network of the group's regional malls should have less impact from the slowdown in tourist luxury spending. Ongoing Asset Enhancement Initiatives together with new shopping malls in the pipeline will further boost the group's rental income going forward. Last but not the least, the group will continue to review and monitor opportunities for long core asset disposal. That is the end of my presentation. Thank you very much for your attention. Let's wait for a while, before we move on to Q&A session. Thank you.
Before we continue, I would like to introduce the panel to you. From your left, Brian Sum, whom you have already met. Frederick Li, Group Chief Accountant. Allen Fung, Executive Director. Victor Lui, Deputy Managing Director. The center is Raymond Kwok, Chairman and Managing Director. Mike Wong, Deputy Managing Director. Adam Kwok, Executive Director, and Eric Tung, Executive Director. The question and answer session will now begin. Please signal for the microphone if you want to ask a question, and please identify yourself and the name of your company before starting your question. Videos of today's briefing will be uploaded on our corporate website. May I now invite the first question, please?
Hi, it's Kenny from Citi. I have three questions on Hong Kong. The first is on sales, second is on completion, and the third is on the land bank. The Hong Kong contract says only HKD 11 billion versus your previous announced HKD 33 billion for the whole year. Are you going to see quite challenging of achieving your HKD 33 billion for the full year, or basically you have already revised down your full year sales target?
This is on the first on the sale side. Second on the completion side, can you tell us the reason for the delay for the Grand YOHO completions? Basically, are you going to slow down your competition in view of this kind of relatively sluggish market. Lastly, on the land bank, 23 million sq ft in Hong Kong is quite a big number. Maybe already six-year land bank. Are you going to slow down your land acquisition pace, or basically set higher required return for upcoming land available?
Yeah. I answer you the first and the third question. We all know that the residential market have been very robust in the past two years, and a lot of transactions being created in the primary market. We have seen a total of almost 35,000 units being sold in the past two years in the primary market. I think it is reasonable to see some consolidation on sales due to external factors. We do project that our sales will be adjusted a little bit, in the range of 10%-15%, partially due to the likely decrease on transaction in the private market, and partly due to some delay on the construction progress of Grand YOHO. Maybe
Oh, yeah. Actually, Grand YOHO was original schedule for completion by June this year. Because it is a very complicated project, it is a huge project, over 2 million sq ft of residential, and then a huge shopping center. Also, we have a retail bridge connecting the Grand YOHO and the YOHO Midtown. Actually, because of this complexity and we are expecting some very detailed checking from government, so we actually schedule it to a few months later in order to make a very smooth handover to the future tenants. Yeah.
Regarding your third question on acquisition. We are very happy to acquire some rare and potential sites in the past two years, like the two site next to the wetland park and the sizeable site in Pak Shek Kok, and also Tin Wan Station, which are mainly to be redeveloped into small to medium-sized units. Recently, we have also acquired a site from Urban Renewal Authority next to the future MTR station, and another office site next to the Shek Mun Station in Sha Tin. Of course, we are most happy to acquire the Yuen Long site atop the MTR station. This is a very potential and sizeable site, comprise 1.5 million sq ft, and also a portion of retail element that will connect to the future YOHO Mall. For sure, it will create a lot of synergy upon completion of the whole mall.
In fact, in the past decade, we have gained a lot of experience on developing residential and retail projects in the locality. In future, I think the residential units here will be highly marketable. For the YOHO Mall, I think it will be another iconic shopping and entertainment destination in the whole area comparable to the New Town Plaza. Overall, we shall continue to participate in the coming land sales. Like today, we have also submitted our tender on the Ho Man Tin site. Of course, we will also hold a prudent financial discipline and also look for reasonable margin.
Okay. Maybe I also add. Our land bank at the moment now is 22 million sq ft under development. I think for our capacity, we can easily handle 5 million, 6 million sq ft per annum. Yeah. The message therefore is, we would still be very keen to acquire land at the right price, yeah. Furthermore, I think our gearing is our net gearing ratio is only 12%, yeah. Also, the quality of our earnings are very good because a lot of our earnings are actually rental income, yeah, and other recurring income. Therefore, I think we would be keen to acquire more land, given the right location and the right price. On the sales target, Hong Kong target, we have revised the target from HKD 33 billion to HKD 27 billion, yeah. The most dominant reason is the delay of the Grand YOHO by several months.
Grand YOHO is a complicated project, and I think the delay of several months is not a surprise, yeah. But I think, as far as our sales program are concerned, it's our intention always to commence sales as soon as we can get the consent, sales consent, yeah. Thank you.
Thank you, Mr. Kwok. Next question, please. Gentlemen in the second row, please.
Thank you. I'm Eugene from UBS. I got three questions. The first question is, as the company is planning to put out a lot of launches this year under a more uncertain macro backdrop, what is the company's strategy in the project launches in Hong Kong? Will the difference between mass and luxury projects? Second question is on construction cost. What's the trend management seeing recently, and what is the company's strategy to mitigate such impact? Finally, I would like to ask for an update on the Xujiahui project. Is there any update on pre-leasing, and what has been the CapEx spend, and any outstanding CapEx. Thanks.
We do have a number of projects to be launched in the coming 10 months, like the Twin Regency, which we are selling now, and also some other patches in Park Vista. Also Ultima phase II, and together with Tseung Kwan O waterfront project. That is the first half of the year. In second half of the year, that would be Church Lane in Island East and also Babington Hill in Mid-Levels, and Grand YOHO and the [inaudible] in last quarter of the year. I also want to point out that for some sizable projects like the Park Vista and Grand YOHO, we have already phased them carefully so that both projects can be sold between intervals in the coming two years. That won't create any competition. In fact, the two projects are having a different market positioning.
For those luxury projects like Ultima and also the future [inaudible] , they have the location that is not replaceable in the future years. So we are planning to dispose the units of these projects at our measured pace.
On the construction cost trend, I would like to comment on this issue from two perspectives. Firstly is from the Sun Hung Kai corporate perspective. Our primary objective is to deliver products and services with the market needs, customer focus, so that we are actually integrated set up from design, construction and delivery. The team will look at their perspective, and we form a task force to ensure the design requirements specification are to the need of the customer rather from the designer's perspective, so that our construction costs will be kept in the most efficient way. This is the first point. That means we do a lot of value engineering, value management exercise to make sure our design is just good for our customers. Secondly, on the market trend for construction costs.
Probably you are aware with the strong currency, with the raw material commodity pricing coming down, like steel price, copper, metal prices are coming down or the global demand for products are actually Most of the factories, either in mainland or European countries, are over capacity. They are driving down the price for competing jobs. But in the local scene, the labor market is still very tight. On balance, the rapid rise of construction costs, I think, will disappear. The outlook for the construction cost trend will be moderately rising rather than the rapid rise for the past two or three years.
Yeah. For the Xujiahui project, there are four sites. For site one, near Hua Shan Road, we have already completed the structure. Also, we have already started the curtain wall and the interior fitting out. The project will be completed by the end of next year, and the offices will be handed over to the tenants by the early next year. We are already negotiating with major tenants. Actually, the Shanghai office market is quite strong. For example, like our ICC projects, we have completed the second tower early last year, and we already leased 80% of the space already. For site two, which is almost a 90% office tower, we have already completed the structure, and already the structure is up to the ground level.
For sites three and four, which are the two biggest sites, we have already secured all those approvals, and we will award the main contracts by early next year.
I think I would like to add also for the Xujiahui project, the construction costs will be fully financed by a bank loan, which we are going to arrange quite soon, yeah. I believe we are confident that we can secure the construction loan to cover the total construction cost. Yeah. Thank you.
Thank you, Mr. Kwok. Next question, please.
Anthony Wu from Goldman Sachs. Questions on the property sales again. Victor, you mentioned about reasonable margins. Can you give us more concrete guidance on what the reasonable margin is? Also, if the macro environment continue to be volatile, unpredictable, is there a room for Sun Hung Kai to consider slightly lower the margin expectation a little bit and to ensure a faster sales pace? Thank you.
Yes. All along, facing different market condition, we can always identify window to upload our projects. In fact, from our past history, you can always notice that we can always strike a balance between volume and margin. An example is in last year, we have launched Century Link in Q1 of the year. We have disposed over 1,400 units. In Q4, we've been able to pre-sold also another 900 units, a total of 2,400 units within 12 months. I think this is a record for a single project in town. Even for luxury project, we have achieved a premium price like Ultima. Phase I we launched a project in Q4 of the year, and within a few weeks time, we've been able to pre-sold over 110 units. But mind you, these units are having an average price tag of over HKD 40 million per unit.
This is another record for luxury project in Kowloon. With our strong brand name and also our quality handover and services, we are very confident on all our projects we are going to launch in the coming months.
Maybe I'd like to also add, I think in terms of profit margin, as long as we can replenish our land, we would be more prepared to reduce our profit margin. i.e., if we can buy a piece of land to replace the project we are selling, we are more prepared to reduce the profit margin. Second point is, we are now developing about 3 million sq ft per annum. We can easily handle 5 million sq ft per annum. i.e., I think for our existing team, I'm sure even if the margin comes down a bit, as long as we can buy back more land, we can increase the profits over time. Yeah.
Thank you.
May I now invite the next question? The lady in the middle, please.
[inaudible] from HSBC. I have a question on Hong Kong retail leasing. The portfolio continued to deliver very good growth in the first half. Could you please share with us the retail sales that you have seen last year within your Hong Kong retail portfolio and the retail rental reversion that you expect going forward? Thank you.
I think on the Hong Kong retail for 2015, we achieved a growth of our sales. Of course, it's a low single digit compared with the market, and the market has gone down 4%, 5%. For 2015, I think our sales per square foot has gone up slightly. In terms of rent reversion for last year, whenever the average lease comes up, I think last year we were able to achieve a rental reversion of about 20%. Yeah.
Any other question?
Sorry, it's Anthony again. It's good to see you raise the dividend up to five years. I think this is so far the biggest hike in dividend among the developers who have reported results so far. Question is, should we expect the same magnitude of increase in the second half? Presumably, you already basically pre-sold quite a lot of your FY 2016 completions. So you should have a very good idea on the cash inflow. We have been getting a lot of feedback, comments from overseas client, local clients basically telling us Sun Hung Kai has done a good job in the operations, the core operations, property development, property rental. Sun Hung Kai hasn't really done much on capital management. So now it's good to see you finally look at the dividend payout.
Can you give us more color on what effort on capital management team is now looking at? Should we expect more move or effort to be spent on this subject? Thank you.
I think our interim earnings per share has gone up by 5%. I think for the full year, I think we are optimistic. I think the dividend per share for the interim, we have raised by 10%. So we're hopeful that I think we can raise the dividend per share for the full year about 10%. A lot of our projects completed in the second half we have mostly pre-sold already. Regarding your question about our dividend policy, it is still our policy to pay 40%-50% of the total profits. Thank you for your suggestion about capital management. I think at the moment now, our debt to equity ratio is 12.4%. I think we like to be more lowly geared in anticipation of more opportunities to buy land. As you know, a lot of our competitors are very strongly financed too.
I believe that at the right part of the cycle, we need to be able to buy land. But anyway, I think the reason why we are raising our dividend per share is because I think we're hopeful that the earnings per share would go up compared with the previous year.
Thank you.
Thank you, Mr. Kwok. Other question?
Thank you. It's Macquarie, David. The China, the mainland market has been picking up quite nicely last year. Of course, more concentrated towards the top-tier cities. And we continue to see quite obvious relaxation and even, or actually quite stimulus measure by the central government. So the future is quite bright, at least in the next 12- 24 months. Can the company be more aggressive? Let's say even raising the sales target, you know. I think considering that this land bank is quite cheap or the margin is quite lucrative as well. Can we pick up a little bit on the China sales in order to offset the uncertainties in the Hong Kong sales?
Yes, this is very true. We all know that, backed by the relaxing policy of the central government, the residential market in mainland has been very robust last year. The first-tier cities continue to outperform. We have seen a remarkable rebound both on transaction and prices. For the second and third-tier city, I think we are still seeing the process of de-stocking continue, but also seeing that prices gradually firming up. For our projects in the mainland, we have very robust sales as well, like our two projects in Shanghai, namely the Shanghai Arch and Shanghai Arch, and also our Oriental Bund in Foshan.
They are all selling well, and we are going to launch the Forest Hill port in Guangzhou later this year. For our mainland sales target, our previous target is RMB 5 billion, and we are very confident that we can achieve the target within a year.
I think we are too conservative on the China sales. Thank you.
For the interest of time, may I now invite the last two question, please?
Yes. It is Citi, Kenny again. I have a follow-up question on your sales. You mentioned that your contracted sales target has been cut to HKD 27 billion, which versus HKD 11 billion, I guess you just have four months to go for the extra HKD 16 billion. Given that your Grand YOHO is unlikely to launch before June, I see your launch pipeline is a couple of the luxury one, with only the Tseung Kwan O is relatively mass. You have previously mentioned that your luxury one will be selling better margin, so you will not sell quickly. Can you tell us how to achieve this HKD 16 billion in the remaining four months?
Well, actually, I mentioned that in the coming 10 months we have altogether eight projects and namely, the Twin Regency and also the Park Vista and also the Tseung Kwan O waterfront project. These three projects are belonging to a mass project that we are very confident that we can achieve a great number of sales. Of course, for luxury project like Ultima and North Point Harbour North project, we have a very high hope on the future selling price, and we are going to sell the units at our pace.
Other than that, we have also other projects to be launched like the [ianudible] in Mid-Levels and also the [inaudible in Hong Kong East, and they are mostly small to medium size units. Again, we have great confidence to achieve a big number of sales. Overall, I think our adjustment of 10% - 15% is healthy and reasonable, and we are very confident to achieve our target.
The HKD 11.3 billion is only Hong Kong. If you count China, we have achieved HKD 14.4 billion already.
But in the property market, our sales are very lumpy. You can't just prorate seven months and then get the 12 months number. That's not how we operate. Our projects are lumpy.
Thank you, Mr. Kwok. The briefing is coming to a close. 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.