Hang Lung: Mainland retail leasing recovery performance to be reflected

Tencent (00700) and other mainland e-commerce companies recently entered the retail store Wanda Commercial, a number of shopping malls in the Mainland, Hang Lung Properties (00101) that the online and offline retail cooperation is expected, the Group also has electricity supplier Contact negotiation.

The only person on the line to come from retail is Mars

Chen Qizong, chairman of Hang Lung, said that although technology has improved, “there must be a physical store online and offline.” If anyone thinks retail can only be online, that person should be from Mars. People need to interact, to be interactive to the store.

Chen Wenbo, Executive Director, said online sales have had some impact on physical stores, but the Group’s sales growth in the shopping mall will increase the number of experiential tenants such as cinemas and stores from online to offline in the future and enhance customer service and experience , Do more multimedia, advertising and marketing.

Chief Executive Chen Nanlu added that Hang Lung has always believed that online and offline are complementary. For example, Apple has 4 stores in Hang Lung Shopping Center, reflecting the need for physical stores to increase revenue for e-commerce. The Group also has contacts with many e-commerce operators.

Chen Kai-tsung admitted that the retail market in the Mainland has recovered significantly last year. In the past six years, the retail market in the Mainland has been in a very difficult period. There was indeed a reduction in rent a few years ago and downward pressure on rents. However, the Group still survived The performance of the mall is satisfactory. More and more luxury brands are willing to shop in Hang Lung Mall. At the same time, the Group introduced more luxury brands with more rentability through renovation of shopping arcades. This is conducive to increasing rent and is therefore confident of the Group’s sales growth in the next 4 years.

Mainland rental income fell 0.9% last year, but still accounted for about 51% of Hang Lung recurring income. Chan Nam Lui pointed out that the decline in mainland rents last year was related to the optimization of some major projects. However, excluding the impact of the renovation project, the rents in the Mainland actually increased by 4% in real terms last year. He expected the rent in the Mainland to stabilize this year, but it will take time to convert it into revenue. It is like “the winter is over but the beginning of the spring is still frozen.” However, the Group is still confident of the future.

In terms of retail sales in Hong Kong, Chan Nam Lu believes some retail outlets located in the tourist areas have not yet fully recovered. However, some shopping centers in Hang Lung are part of the regional shopping malls and therefore have little effect. Excluding the renovation of the Peak Plaza project, rental income in Hong Kong last year also recorded a 4% increase. Brokerage Morgan Stanley believes that the acceleration of economic growth in China and Hong Kong, coupled with the low base effect, the recovery of luxury retail markets will be stronger, Hang Lung in the Mainland second-tier cities such as shopping malls also see a steady performance, such as Hang Lung Plaza. Jinan retail sales rose 12% last year, significantly faster than the 8% in the first half.