Earnings Call: H1 2021

Aug 12, 2021

Good afternoon, ladies and gentlemen. Welcome to the live webcast of the Swai Pacific 2021 Interim Results Analyst Briefing. May I first introduce our panel speakers? With us here today are Merlin Swire, Chairman of SWi Pacific Martin Murray, Finance Director of SWI Pacific Guy Bradley, Chief Executive of SWI Properties and Karen Soh, Managing Director of Zwai Coca Cola. The panelists will first take us through a presentation of the interim results for 2021 to be followed by a Q and A session. You are most welcome to submit questions at any time during the briefing. Please be reminded to provide your questions in English and ask no more than 2 questions at a time. Now may I hand over to our Chairman, Merlin Swyer, to start the presentation. Merlin, please. Okay. Well, thank you, Cindy. I'm just going to kick off. Can we get the agenda up here? How do we Okay. Well, we're trying to get the presentation up to you. But in essence, I'm going to start with some remarks on group strategy and how we've been executing on that in recent times. And I'll talk in certain amount of detail about our new dividend policy And then hand over to Martin, and then we'll get to some divisional detail. Hopefully, the presentation will be about 30 minutes. So can we get the presentation up? Or is it up already? I just need to know whether it's up. Okay. It is up. All right. Okay. Got it. Thank you. Well, I'm just going to limit my Comments on strategy to these four areas: our investment focus, capital recycling, the repositioning of our Aviation business and the divestment of non core assets, all of which has been keeping us busy in the last Few years. And I think I mean, the point to note, which is kind of self evident, is that It's been a pretty challenging time. There's been an awful lot going on operationally and in other ways that we've had to be dealing with and I think we've dealt with that well whilst also not allowing it to distract us from pursuing our long term strategic goals. So on investment focus, what we say is that we focus on Asia, principally Greater China Because of its strong growth potential and because it is where the group has long experience, deep knowledge and strong relationships. That's what we say and that's what we've been Doing. And I would add that I think the long experience, deep knowledge and strong relationships have proven to be extremely valuable during these very difficult times. In terms of the focus on Greater China, a lot of the activities on the property side. I would say that Taikoo Li and Taikoo Hui as our core property brands in China have gone from strength to strength in recent years And have really gained traction with luxury retailers and also local governments, and we see lots of opportunity to Deploy more capital behind those brands in expansions in China in the years ahead. In Hong Kong, our focus on the investment property side is very much Saiku Place and Pacific Place and our office portfolio there continuing to invest for growth to strengthen those locations. And you will have noticed from the proppants briefing that our residential trading pipeline is beginning to fill up steadily, and We intend to build that up more substantially over the next several years. Beverages, well, After the refranchising of 3 or 4 years ago now, it's really been all about execution. And we've been investing in capability in those franchises. We'll continue to do so. And I think we're seeing the results now in terms of consistent revenue growth and expanding margins. And on Healthcare, we've taken our first steps, And we do intend to keep investing in that sector, building our knowledge and experience and for it to be a significant business for us by the middle of the decade. Aviation, I'll talk separately on the repositioning in the Aviation division. Okay. So this slide is really just a quick summary of The major projects we've got in progress in Asia and the Chinese mainland, you're familiar with all of these, It's a program of HKD39 billion worth of investment and hopefully more to come. And I've also noted here some of the smaller divestments we've made in our non core businesses outside Asia. So capital recycling. What we say is that we recycle capital Within our core businesses where we see better opportunities and potential. And this slide summarizes for you the Very significant program of non core and aging property assets that we've sold over the last 3 or 4 years. Again, total disposal of €39,000,000,000 I think looking back at this program, we feel very good about it. I think we were disposing of assets at exactly the right time in the cycle. I think we sold at very good valuations. And it's created the war chest that Smart Pacific is now Smart Properties is now redeploying in a more accelerated way into new assets. So on the Aviation business, Well, I mean clearly a lot of the attention has been on the operating performance and the finances of CADE Pacific Rightly and understandably. But I think that could risk obscuring really quite fundamental progress that has been made in changing the underlying business model over the last 2 or 3 years. I mean, first of all, on the cost side, Going back to 2018, CAFE was already well through what was a major transformation program reducing costs, creating shorter reporting lines and making the management of the business more efficient and effective. And obviously, that program was accelerated by the events of COVID-nineteen And the restructuring that we did to the business last year was very significant. And again, this is not just about downsizing in response to the market, But there was also a very fundamental rebasing of costs within Cathay's cost structure that will make it Much more competitive and much more cost efficient when we come out of this. And Again, I would say that Cathay is going to come out looking very different and much fitter for purpose in terms of the shape of the group. So in 2019, we bought Hong Kong Express. We're very happy to have done that. Aggressively in 2020, we had to close Dragonair in response to the COVID crisis. But it does mean that the Cathay Group will come out with a very, very clear 2 brand positioning, a premium carrier in CAFE, a low cost carrier in Hong Kong Express and we'll be able to serve all sectors of the market effectively. And we're continuing to move forward. You will have seen in recent weeks, Cafe Pacific has launched the new Cafe brand, the master brand, which is a new premium travel and lifestyle brand in which we hope to engage our loyal customers in more aspects of their life. And this will be a complementary business stream to the airline operations of Kaka Pacific. So I think it's been a very good piece of work to reposition the airline. The market is still tough, but we are beginning to see some green shoots. On HEICO, all I'd say is that we remain very happy that we privatized the business in 2018. It removed the redundant listing. I think the price at which we privatized it still looks good, taking a medium term view of what is a very cash generative business and a high quality one. Well, divestment of non core assets, just to review what's happened in the last few years, you'll be familiar with all of this. The latest disposal in this category is our share in Hong Kong United Dockyard. We've been in the Dockyard business for 115 years, and it seems like the right time to be moving on to focus more closely on our core divisions. So in terms of the performance, we're obviously very pleased to be back In profit, at a recurring level, a decent swing, and my Chairman's statement explains the drivers of that. A big swing on the underlying profit basis, very considerable reduction in Impairments, and we've also had some gains on sale of some parking spaces in Taikushin. So how to put that in context? Well, you've seen both of these slides before. On the left, well, it's been a bit of a roller coaster, But we're heading in the right direction now. Notwithstanding the profit at a recurring and underlying basis, On a statutory basis, we're still very marginally loss making. And the reason for that is evident in the waterfall chart on the right, And it comes down to the section on property valuations in the 3rd bar there. And We have seen negative valuation movements in our Hong Kong portfolio in property, dollars 2,700,000,000 of which the majority is The large majority is due to a downward revaluation of Pacific Place Offices. It's obviously a tough market. In the context of the market, I'm very satisfied with this very small reduction. We're well positioned defensively and with very good occupancies. Okay. In terms of the balance sheet, well, we continue to be Feeling pretty robust gearing at 12.2%. Underlying cash interest covers improved to 6.6 times. And for these reasons and others, we felt confident to increase the dividend per share by 43%. And I'm going to talk in a bit more detail about this. We all know that in the last 5 years, the Smart Pacific dividend has been very volatile and generally trending downwards. And this has been very unsatisfactory and disappointing for shareholders. And we certainly haven't delivered on our stated goal of sustainable increases in the dividend. I think in an era of extremely volatile earnings, our stated policy has led us down this path. But what it's meant is that the dividend payouts that we've been making have been less and less correlated to The quality of the core cash flows in our business and we need to rectify that. And so we have a new policy that we think will do that and will be helpfully clear for shareholders. So I'm just going to go through this slide in some detail, and we're happy to take questions later. So what our previous policy said was that we would pay out approximately half of our underlying profits in ordinary dividends over time. What our new policy says is that we will pay out Not less than half of our recurring underlying profit, excluding our share of the results of Catalina Pacific Airways, But including all dividends received from that company by way of ordinary dividends over time. So what this does is it introduces a clear minimum dividend payment over the cycle derived from our core subsidiaries. And of course, Our largest subsidiaries are Smart Properties and Swire Beverages, which are businesses for which the earnings trajectory is Relatively more stable and predictable than other parts of our portfolio in the past. It's a policy that removes for shareholders the volatility and uncertainty in the dividend that comes through the earnings of our associate, Cathay Pacific. So as I say, whenever Cathay Pacific pays a dividend in the future, we will pass it straight on to shareholders. It removes the volatility and uncertainty that's caused from time to time by the impairment of underperforming assets, But it doesn't prevent us from paying a special dividend if we make a very significant capital disposal and Feel that we don't have a better use for the money. So that's the policy. I think one other point of guidance is to make the point, a, that it's going to be implemented immediately and b, that it's forward looking from 2021. So in terms of calculating payout ratios over 1 year or 3 years or 5 years. The cycle starts now, and you should ignore what has come before 2021 just to assess where we are and where we're heading. In other words, it's a clean slate. Well, this shows the volatility in recent years. I just wanted to focus on the numbers on the left here, which show for the first half the recurring underlying profit excluding Cathay's earnings, Which was HKD3.9 billion. On a per share basis, that's 2.60 dollars So mathematically, Obviously, half of that 50 percent is $1.30 We're paying out $1 at the interim, partly because we tend to be more cautious at the interim than at the final and also because the operating environment is Still contains some uncertainties. Okay. So in summary, I think we're in good shape in our businesses and well positioned for the recovery. We've streamlined things in such a way that we can focus our investment and time very much on our 3 core Divisions of Property, Beverages and Aviation. Property and Beverages are having a tremendous run, and we feel very optimistic about those businesses. And I think the Aviation division has been well repositioned and is going to be in much better health in the future. In addition, As I said, we've been disposing of non core assets, and we are now in the health care sector and intend to stay there. So I will pause there and hand over to Martin. Thank you, Marilyn. Well, I'll just briefly go through the highlights of the interim accounts, and then we'll go through the divisions in a little bit more detail. Given the difficult economic environment caused by COVID-nineteen, it is very pleasing to see returns of profitability Was that the recurring underlying level and at the underlying profit level, particularly as we predicted in March that we'd be probably making a recurring underlying loss At that time, the next slide goes into detail on the recurring and underlying. So in the statutory loss, we still make a statutory loss That principally adjusts for net asset movements in the investment properties. As Merlin said, in Hong Kong, We did have a net asset loss of RMB3.4 billion, but it was pleasing to see that in the Chinese mainland, the net asset gain was RMB 1,200,000,000. Doubling of our cash generation from operations at RMB 10,600,000,000 And as Marilyn noted, 43% increase in our dividend. Given the change in dividend policy, we have Disclosed the underlying profit and the recurring underlying profit in tabular form. On the underlying profit that adjusts for the nonrecurring items, swim property, we had in 2021, the first half, The sale of some CapEx bases, Taikushin, you'll see the big change in the marine services. We had a 4,300,000,000 Impairment in Swire Pacific Offshore in the first half of twenty twenty. And also in Cathay Pacific, they had Lower impairments in 2021, 11 at the 100% level, 11 aircraft were impaired at 0.5000000000 compared to the first half last year where there were 16 aircraft impaired at 1,200,000,000 and impaired some subsidiaries at 1,200,000,000. At the recurring level, which we put more focus on, it's fantastic to see beverages up 55% at 1,470,000,000 The property is flat, but again, very encouraging on the higher retail rental coming from the Chinese mainland And also the lower losses from Cathie Pacific. As Marilyn said, we have a very strong balance sheet highlights here gearing at the low 12 point 2%. Net debt of DKK39 billion, I mentioned, the cash from operations had doubled to DKK10.7 The other thing to note here, the weighted average cost of debt at 3.1%. We have very significant liquidity. You'll see that the line there, group committed liquidity Has grown. We took out more during COVID and the uncertainty. We're now bringing that back a little bit. We've still got 54,600,000,000 of group committed facilities there. And we've got a good spread of maturity profile. We've pushed some of the loans expiring in 2023 out there to 2025. So very healthy liquidity position. And then finally, on the capital commitment side, Again, as Merlin alluded to, it does show where the focus has been in terms of our core businesses of Property, Aviation And so at Coca Cola, where all the investment has been and divesting out of the Marine Services and the T and I divisions. And with that, I'll pass over to Merlin, Guy and Karen to go through the business units in more detail. Okay. Thank you, Martin. Well, we'll move on to property. I know that most of you have already been at the PROPS Analyst Briefing. So Guy, And how much you want to add to that? Thank you. I'll just keep it brief for those that weren't at the previous meeting. Obviously, in the last 2 or 3 years, the main new projects that we've invested in the Chinese mainland have been in Taikuli, Tian Tan, which Reflects our great confidence in Pudong as a district. And the very large extension to Indigo, should call Indigo Phase 2, which is a $23,000,000,000 project on 100% basis, essentially creating a new decentralized office location near the 4th Ring Road in Northeastern Beijing, potentially sort of future Tycho Place type product. So very exciting and big Scale new developments there. We continue to reinforce the asset base that we do have, Most notably this year with the addition to, Taikuli Sanlitun of what we call Taikuli Sanlitun West, Should be opening later in the Q4. And we've also just signed a cultural and cooperation agreement with the Chaoyang District for a further extension potentially to Taikuli Sanlitun to the north. Moving down to Shanghai. Another exciting piece of news recently was the joint venture agreement that we signed with the Jing'an District Government to Revitalized the historic Jianguan compound, which is pretty much adjacent to our existing asset HKRI And Taika Hui. So some really interesting place making opportunities that we've managed to surfaced in the last couple of weeks. And this has obviously been a product of a lot of conversations and A lot of work and a very good sort of relationship that we have with these districts. Meanwhile, back in Hong Kong, our home base, of course, we do continue to invest Primarily in the 2 clusters at Pacific Place and Taikou Place. We've in the last 3 years invested over HKD20 billion in those two areas, mostly building and reinforcing our Hong Kong office base. But at the same time, we're concentrating on replenishing our residential pipeline with Wangchuk Hang MTR Stage Four investments in a consortium. We have a future project down in Taiwan and another joint venture with Henderson in Quarry Base. So some exciting residential projects in the future. And all of this has been done by a pretty good REIT capital recycling program, which The Chairman has mentioned previously where in the last few years we've managed to raise approximately HKD39 billion to allow us to recycle That capital into new projects. Very quick look at the numbers on the first Half overview, these are on 100 percent property level basis. On an underlying profit basis, we grew to 18% primarily due to the sale and the divestment of the Taikushin car parks. We were pretty flat at a recurring level versus the prior year same period. Just on the right hand side of this chart just shows the movement. The big numbers to look at there A CHF 152,000,000 decrease in property investment that came from the loss of income from the sale of City Plaza 1 primarily, A rather pleasing decrease in losses from our Hotel division as they start to pick up as the pandemic Seems to be easing slightly in various geographies in which we're in. And lastly, You'll see the €746,000,000 number there, which is the Taikushin car park divestment representing an increase in profit from the sale there. Lastly, just on the Chinese mainland, I do want to emphasize that at the moment now it's grown so well I think in the last few years. So it now represents 36% of SRAI Properties attributable to gross rental income for the first half And is actually the 2nd largest rental contributor after our Hong Kong office sector. So really encouraging performance in the Chinese mainland, primarily in the retail sector. And we look forward to continuing that momentum going into the second half. With that, I think it's better it is. Okay. Karen, we'll hand over to you if you want to work the slides. Thank you, Merlin and thank you, Guy. I will talk through our Beverages division's performance. So in 2017, we and our franchise territory in the Chinese mainland and now we are serving in 11 provinces and the municipal city of Shanghai and serving a population of over 600,000,000 population. Since the refranchising, we've grown strongly on our revenue and expand our margin. In this period, our revenue CAGR has grown by 8% and EBITDA margin expansion of 3 percentage points. The Chinese mainland is our biggest fast growing market. The group growth of revenue and the margin expansion is due to our relentless effort in developing a powerful route to market capability and also our execution power on the ground. We have increased both our controlled third party distributor our own distribution center in the Chinese mainland by 50% post franchise expansion. At the same time, Our business in the U. S. Has also gone through franchise expansion. After the franchise expansion, we are serving a population of 30,000,000 consumers and following by a revenue CAGR growth of 9.5%. We are investing on digitization, which is one of our core pillar strategy for Beverages division. Through our very unique digital tools, we are able to connect directly with the retailer, which are typically served by our 3rd party distributor. And our very unique digital program allows us to connect with millions of consumer, driving revenue growth. Divisional EBITDA grew from RMB3.9 billion to RMB5.9 billion, which is showing our Beverages division is a very strong cash generating business. And we are also very excited about our projects for plastic recycling partnership with Arbor Group in the Asia. So this is showing our 2021 first half figures. Attributable profit is RMB 1,471,000,000, which is a 55% growth versus the same period last year. Majority of the growth is driven by the Chinese Midland and the U. S. Market, and our smaller market, Hong Kong and Taiwan, has also delivered incremental profit as well. By looking at the chart on the top right, it's showing our revenue mix by market. The Chinese mainland is our fastest growing market, and right now, it is contributing 59% of our total revenue for beverage division. So looking at the financial data, overall, we are very pleased to see very healthy financial data. What I would want to draw your attention to looking at the high revenue growth. At the same time, we are able to expand our profit EBITDA margin by 0.7 percentage point in the same period. So this is showing our revenue growth by region. So if you can see, the revenue growth by region has all been on double digit. Taiwan is slightly affected by the COVID outbreak in the first half of the year. And I would like to draw your attention to look at the revenue growth is faster than our volume growth, which is showing the result of our revenue growth management initiative. EBITDA margin by region, all of our region except Hong Kong has expanded our EBITDA margin. So I think right now, I will pass it on to Guy for Healthcare's division. Okay. Thank you, Pan. So a quick word on Healthcare here. It's obviously the new kid on the block for us. It's an exciting long term prospect we think for future growth for the company. We're very focused on Healthcare in the major city clusters where we have a presence in the Chinese mainland and specifically as you can see from our 2 First investments, those are going to be in the Greater Bay Area and the Yangtze River Delta at the moment. We've spent with those two investments A total of $1,100,000,000 to date. But I think by the time we get to 2,030, our plan is to have invested at least At least $20,000,000,000 in the sector. Where we focus? Well, primarily on premium specialty hospitals, clinics, Wellness and Elderly Care Homes. So we're not going to take on the entire sector, but those are the areas that we see the greatest opportunity for the strengths that SWIRE brings. Thank you. Okay. Thanks, Guy. I will just briefly talk about Aviation. I'm not going to I covered much on this slide already, but just to focus on the 3rd bullet here on the financial situation of CAFE. Despite the fact that we're kind of 18 months into this crisis and CAFE has carried very few passengers during that time, The liquidity on the balance sheet is very strong. And at the end of June Cathay had almost HK33 1,000,000,000 of liquidity And it's saying that it's targeting to keep its cash burn below RMB1 1,000,000,000 per month for the remainder of the year. So I think it's very well placed Now to navigate its way out of whatever the remains of the COVID crisis would bring. And since the start of this crisis, Cathay has raised HKD 50,000,000,000 of extra capital In the form of rights issue, preference shares from the government, convertible bonds, a loan from the Hong Kong government, U. S. Dollar bond. I mean it's been a tremendous achievement in very difficult circumstances. They raised JPY 50,000,000,000 and of course, Smart Pacific contributed To that to the tune of about RMB5 1,000,000,000 as part of the rights issue last year. Clearly, the business has lots of liquidity to see it through this year and next. Okay. This shows the year on year movements in results of the Aviation division as a whole. I'm just going to speak very briefly on HEICO which are The darker green bars here, you'll see that HEICO's profits declined this year versus last year From 534 to 310. I mean this more than anything reflects the lag effect in aircraft maintenance that came from the collapse in aviation demand last year. I think we're now seeing We're in a situation where line maintenance in Hong Kong Airport is still very weak and has continued to be weak. Our engine overhaul business remained strong for a while last year has softened, but appears to be bottoming out. And our airframe maintenance business, which was weak for a while is showing some signs of recovery. Okay. Just briefly on Marine Services and Trading and Industrial. Well, we've continued to reduce the size of the fleet at Spur's offshore oil and gas business, And we're selling all the boats where we can. And there is signs that the market is beginning to strengthen Certainly to the extent that the fleet that we have left is expected to be EBITDA positive in 2021. As I mentioned earlier, we've sold our 50% stake in HUD. And the wind farm business that we listed as Catalysts traded very, very well. Is well up on the listing price, and we now hold 28% of that business. T and I division, clearly smaller than it was previously. I think all I'd say is that the remaining businesses are Either cash generating or businesses that require very little investment such as Smart Resources, Taikou Motors, Taikou Sugar And those are businesses that give us an interesting window into sectors of economy that we might not otherwise see. Xinyuan remains problematic, but we do see potential upside in that business. Okay. Just briefly on sustainable development. I think we're doing good things in this space, and I think we're communicating it clearly through our Sustainable Development Report, which I hope you've all been able to see. Our Swire Pride strategy focuses on Environmental issues and people issues and communities. And on the environmental issues, we've set ourselves Some very hard targets. And obviously, our 2,050 targets are completely in line with the goals of the Paris Accord, but we've set ourselves some accelerated reduction targets for 2,030 from a 2018 baseline. And we're making good progress towards those targets. We're investing behind what needs to happen. And I think we will continue to do a good job in this space and try to make sure we can explain what is a complex area well to various stakeholders. Well, Trust Tomorrow, I mean, just to say that, as you've probably seen, We've been in Hong Kong for 150 years now. We expect to be here for the long term. And we are stepping up our Corporate citizenship activity at this time of difficulty for the city. And We've contributed HKD 150 million additional to our philanthropic trust, the Soire Trust, to fund the Trust Tomorrow initiative. And this is funding 30 projects in education, in marine conservation and in the arts All with a youth focus and we think they're going to make a real and lasting difference in the areas where They're involved. So we feel good about that. Okay. So I'm going to hand over to Guy, in all sorts of different ways right now, I'm delighted that Guy has taken over from me as Chairman. Guy has been with the group for 34 years in a number of geographies across a number of industries. He has really Great experience and a proven track record. And I think he will lead the business Strongly that the business will have some very exciting times under his leadership. So I'm going to pass over to Guy. And Quite soon will be a question. But why don't you make some remarks? Thank you, Emily. Well, obviously, it's a very exciting time to be taking over. As you can see the balance sheet is in tremendous shape. The recycling of the capital and the sale of the non core assets over the last few years has really allowed us to focus now on the pipeline of growth opportunities for our core businesses, primarily in the Properties and the beverage businesses. Aviation looks positioned now for growth. And the health care sector looks like being a new high potential sector for us for future growth. So I think the strategy is clear. It's going to be there will be some challenges due to the uncertainties like Pandemic, but once we can emerge from those challenges, I think we're in great shape to take the business forward. With that, I might just talk about the outlook for the second half before we go to questions and answers. Would say for the Property division, the outlook for the retail market is strong in the Chinese mainland and remains fairly mixed in Hong Kong. Demand for office space is expected to pick up gradually in Hong Kong, but to improve in the Chinese mainland. The outlook for Hong Kong Hotels remains difficult. But as you saw in the presentation previously, the hotels in the Chinese mainland and the U. S. Are continuing to recover nicely. At Swire Coca Cola, we expect revenue in the Chinese mainland and the U. S. A. To Growth strongly in the second half, whereas Hong Kong is expected to be less affected by COVID-nineteen. On the aviation side, I think dependent on the operational and passenger travel restrictions being lifted, and I emphasize dependent on that, Cathay Pacific hopes to operate up to 30% of its pre COVID passenger capacity by the Q4. Cargo operations are expected to continue to perform strongly in the second half. Whilst at Heiko, demand for base maintenance is expected to be stable. Line maintenance work is expected to recover slowly and demand for engine services in the second half is To increase gradually for HEICO engine services in Xiamen and to be similar to that in the first half of twenty twenty one for Hazel. With that, we'd all be happy to take questions. Thank you, Guy. So we'll now move to the Q and A session. The first question is on dividend. It's from Carl Choi of the Bank of America. Storing its dividend per share to its peak level of $3.90 Is this still a goal under the new dividend policy? If so, is there a time frame? Well, of course, it's still a goal. And we very much hope that the Growth of our recurring profit will allow us to get to that point. I wouldn't want to make a prediction at this point as to when that might take place. Thank you, Marilyn. The next two questions are on the Beverages business from Joy Pan of Food Inc. First question, could you give more color about the growth engine of different categories in Mainland China? And the second question is, given the resurgence of COVID-nineteen in several cities in Mainland China, would that affect the beverage business? And what's your priorities for the second half? Sure. Thank you for the question. So let me talk about the beverage growth in China. Overall, this year, especially in the first half of the year, we're seeing good growth of the beverage category. But of course, it is comparing with a relatively lower growth versus last year, which was adversely affected by the COVID-nineteen. If you look at the category, what is pleasing to see is sparkling category is leading the trend of the growth. And particularly within the Sparkling category, we're seeing the 0 series and the non sugar, no calorie category is leading the trend. And within this growth of the CERO series category, we are enjoying very, very good growth from our brand Coke Zero. So overall, this is the category situation. And apart from the Sparkling category, we are seeing also good growth of the smaller category like energy coffee, which is in the premium segment. So regarding to the second question about the COVID-nineteen situation and how what's our plan in second half. While the COVID-nineteen situation continue to be uncertain, we are seeing based on the outbreak of COVID-nineteen across several of the provinces in China. So we remain cautious on the situation. But at the same time, we think we believe our revenue growth is primarily driven by strong capability in our route to market, on the ground execution and also our continuous investment on the infrastructure. And we will continue to do that and develop our capability and also work very close with the Coca Cola Company to develop portfolio expansion. So assuming the COVID-nineteen situation continue to be stable, We are confident of the growth trend in the second half. Thank you, Karen. The second question is on Healthcare. Can you share how do you want to deploy the €20,000,000,000 investment over time? And what's the expected return or earnings in the initial years and the longer run? Thank you. I did mention the €20,000,000,000 is over the next essentially the next decade. We've started out focusing on specialty hospitals. But I could envisage that the focus will expand to areas such as wellness, More consumer related health care clinics and elderly care facilities. Those are the target subjects. But we don't have a plan at this point for what sort of spread in terms of capital will be allocated across those different subsectors. Thank you, Guy. The next question the question is on non core asset disposal. It's from Sunny Zhuang of Fitch Ratings. What is the remaining scale of non core assets to dispose in the future? Well, we've got the situation you saw in earlier slides the strategy to divest in the non core businesses. What's left in Marine and in the T and I division are all sort of self funding, self sufficient now. So, we don't expect to be taking any more Impairments from those areas. And so, again, the so there'll be we know what our investment focus is going to be and on the Non core issues were in a situation where they're all self sufficient. Thank you, Martin. So we have one last Question here is on Cata Pacific. It's also from Sunny Jeong of Fitch Ratings. Will there be further capital injection to CAFE? Well, as I said earlier, I mean, I think the liquidity position speaks for itself. Cathay has got CHF 32,000,000,000 of liquidity And is expecting to burn less than 1,000,000,000 in cash per month. It's in a very strong position to sustain existing levels of activity For a really decent period of time, of course, if things pick up as we hope they will, we would expect cash burn to reduce further. So there's no sign at this point of CAFE needing to return to its shareholders for more money. Thank you, Marilyn. And with that, we conclude our analyst briefing. Thank you once again for joining us.