Link Asset Management CEO on Business Strategy

Bloomberg

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00:00Talk us through those earnings and what does it tell you about the broader macro environment

00:04which regionally, globally remains pretty volatile.

00:09Well, good morning. Thanks for having me.

00:12Our results we announced yesterday was very pleasing,

00:18partly because we did manage to report an increase in distribution per unit by 3.7%.

00:26Revenue went up about 4.8%.

00:29With that, however, we also talked about a challenging outlook.

00:36We believe that going into 2025, our tenants continue to be challenged by rising costs

00:47and probably slower business, especially in Hong Kong,

00:50with some cross-border shopping by some of the residents here in Hong Kong.

00:56Australia and Singapore have done reasonably well with our retail properties there.

01:02Valuations have been marked down given that interest rate has been sustained at a high level

01:08that also challenges financing costs for anyone investing in real estate as well.

01:13You mentioned the uncertainties when it comes to Hong Kong.

01:18We've seen rents continue to slip when it comes to average rents over the past year.

01:23Do you expect that this will be a trend that continues?

01:25There is a reset, a structural change, especially for Hong Kong.

01:32We will be facing a lot of new supply as well.

01:36But for the segment that we are in, the community shopping mall, which is more resilient,

01:42we still have to deal with a lot of price competition for people who go to shop in Shenzhen.

01:49Online shopping has also gone up in terms of penetration in Hong Kong,

01:55allowing shoppers to do it in a variety of ways, not just physically at the shopping mall.

02:02So there is a reset.

02:04We are going through all that.

02:06Our tenants are adjusting their offering, improving their services and all that

02:12to try and attract people to remain shopping in the physical retail.

02:20When do you expect rents in China to start to bottom out?

02:26I think the government has put out a lot of stabilizing measures,

02:32encouraging domestic consumption and all that.

02:35I think we are encouraged by that.

02:37We see tenants continue to actually add to their store's numbers.

02:45So that, I guess, is a sign of bottling.

02:50Sales numbers have also slowed in terms of the negative drop so far over the last two years.

03:00I see footfall has increased.

03:03The sort of lowering in terms of the price points, especially in F&B, have also adjusted.

03:12And so we're seeing a lot of stabilizing signs.

03:15So in that sense, it's positive.

03:18And a lot of new entry, new brands that are expanding as well.

03:23And so I think that's a good sign looking at China.

03:27Do you have any plans to acquire or exit any properties in the regions that you operate?

03:37Well, looking at improving the portfolio quality is always something that we do.

03:42In the past year, year and a half, we have acquired 50% of more that we originally owned,

03:51only the first 50%.

03:52And that has done very well.

03:56We also have acquired several properties, shopping mall in Singapore.

04:02We're looking actually to add at this time if the price is right.

04:07But capital recycling is also a discipline that we'll continue to maintain.

04:11And if there's the right sort of pricing, we will want to swap, getting out of certain asset

04:18that we think might have less growth potential.

04:24So that's a discipline that will continue every year.

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