Lufax Holding - Q4 2023

Transcript

Operator (participant)

Ladies and gentlemen, thank you for standing by, and welcome to Lufax Holding Ltd Fourth Quarter 2023 Earnings Call. At this time, all participants are in listen-only mode. After management's prepared remarks, we will have a Q&A session. Please note, this event is being recorded. Now, I'd like to hand the conference over to your speaker host today, Ms. Liu Xian, the company's Head of Board Office and Capital Markets. Please go ahead, madam.

Xinyan Liu (Head of Board Office and Capital Markets)

Thank you very much. Hello, everyone, and welcome to our fourth quarter 2023 earnings conference call. Our quarterly financial and operating results were released by our Newswire services and are currently available online. Today, you will hear from our Chairman and CEO, Mr. Y.S. Cho, who will provide an update of our latest business strategies, the macroeconomic trend, recent developments of our business, and special dividends. Our Co-CEO, Mr. Greg Gibb, will then go through our fourth quarter results, provide more details on our business priorities and outlook. Afterwards, our CFO, Mr. David Choy, will offer a closer look into our financials before we open up the call for questions. Before we continue, I would like to refer you to our safe harbor statement in our earnings press release, which also applies to this call, as we will be making forward-looking statements.

With that, I'm now pleased to turn over the call to Mr. Y.S. Cho, Chairman and CEO of Lufax. Please.

Yong Suk Cho (Chairman of the Board and CEO)

Thank you. Thanks for joining today's call. During the fourth quarter, the economic environment remained complex, and SBOs continued to come under pressure. Nevertheless, as we prioritize quality over quantity, we have now completed our major de-risking actions and will continue to carry out a prudent strategy. We are confident that the strategic initiatives we have implemented form a solid foundation for longer-term growth and profitability, and believe that the cumulative impact of our strategic upgrades will optimize and recalibrate our risk-return profile to align with the prevailing macro environment in China. Now, let me provide some updates for the quarter. First, the broader macro environment remains challenging for SBOs. This is reflected in the SME Development Index, published by the China Association of Small and Medium Enterprises, which declined slightly to 89.1 in the fourth quarter of 2023.

Furthermore, the SME Business Conditions Index, published by Cheung Kong Graduate School of Business, declined from 49.9 in September to 47.8 in December. This indicates that SBO segment is likely to recover at a somewhat slower pace. Next, let's turn to our business. Throughout 2023, we've made five major de-risking and diversification actions, including four mix changes and one business model adjustment. First, we have changed our segment and product mix. Our heavier concentration in the SBO segment and offerings of SBO business loans generated healthy profit prior to 2022. However, with the change of macroeconomic environment, such concentration drove a deterioration in both our operational and financial results in the past 18 months. To address this, we have strategically adjusted both product offerings and segments.

In terms of product offerings, we've shifted from a predominant focus on SBO business loans to a more balanced offering of business and consumption loans. For our product portfolio, we've expanded our offerings to be more comprehensive, encompassing both installment and revolving payment options. Within the SBO segment, we've refined our focus by targeting customers with better risk profiles, specifically those in the R1 to R3 rating range. Second, we have adjusted our regional mix. Since the second half of 2022, we've observed significant variations in credit performance and resilience across different areas. Accordingly, we have completed the reduction in our footprint and are focusing on higher quality geographies with expected greater economic resilience. Third, we have optimized our channel mix, especially our direct sales channel, which is the most important for our business.

We recognized that our rapid historical expansion had resulted in lower productivity and higher risk with direct sales team, and responded by optimizing the scale of our direct sales team. As a result, the number of direct sales teams reduced from 47,000 at the end of 2022 to around 21,000 at the end of 2023. Fourth, we have adjusted our industry mix, reflecting the relative sustainability of industries under the changing macro environment. In our internal risk assessment, we have assigned greater importance to consideration of each industry's economic cycle stage within our models, and increased KYB and industry factors for enhanced model predictiveness. Finally, we have completed migration of our business model. As discussed previously, the high CGI premium charges by our business partners had negatively impacted our revenue and profit.

We recognize that high third-party reliance reduced our tactical freedom. Therefore, we started negotiations with our funding partners at the end of 2022, and successfully completed transition into a 100% guarantee business model by the end of third quarter 2023. In the fourth quarter of 2023, all the new loans were either granted by our consumer finance subsidiary as on-balance sheet loans, or enabled by our guarantee company under the 100% risk-bearing business model, thus eliminating the drag factor of CGI. On a single account basis, new loans enabled on the 100% guarantee models are expected to realize lifetime profitability. However, may record net accounting loss for the first calendar year, due to higher upfront provisioning, as compared with the loans on the CGI model.

While this strategic shift enables us to capture greater economic value, it has also increased our risk exposures. Therefore, we remain prudent and prioritize quality over quantity throughout 2024. In terms of asset quality, compared with, compared to the third quarter, C-M3 flow rate experienced an increase in the fourth quarter. This was mainly driven by the reduction in our outstanding loan balance and short-term impact from the restructuring of our direct sales team and branches. With the completion of all the restructuring measures, we have seen gradual improvement of the flow rate in the first quarter of 2024. To sum up, during the fourth quarter, with the completion of de-risking initiative, the downsize of our business is under control, and we have stronger visibility of our businesses.

However, the upside, we still need more time due to our prudent strategy and transformation of our business model. Finally, over the past quarters, we have consistently heard our shareholders request for us to improve investor return and capital efficiency. Considering the progress in our business de-risking and business model transformation, as well as our outlook for the growth and capital requirements for the next several years, we believe we have the capability, and now is the right time, to return value to our shareholders through a special dividend, with an estimated dividend size of approximately ¥ 10 billion. Thanks. I will now return the call over to Greg.

Gregory Dean Gibb (Co-CEO and Executive Director)

Thanks, Y.S. I'll now provide more details on our fourth quarter and full year 2023, results and our operational focus for this year. Please note, all figures are in ¥ unless otherwise stated. I'd like to start with an overview of our performance during the fourth quarter. During the fourth quarter of 2022, our performance remained under pressure from the complex macro environment and challenges faced by SBOs. Our overall new loan sales were ¥ 47 billion, representing a year-on-year decline of 39.6%. This was mainly due to subdued demand for high-quality loans from SBOs, coupled with our prudent strategy as we transit to the 100% guarantee model. Among total new sales, approximately 40% was contributed by consumer finance as we transition our portfolio mix.

Fourth quarter revenue was ¥ 6.9 billion, a decrease of 44.3% year-over-year. This was primarily due to the reduction of our outstanding loan balance, which stood at ¥ 315 billion at the end of 2023, a decline of 45% on an annual basis. We recorded a net loss of ¥ 832 million in the fourth quarter. This was mainly driven by elevated credit losses stemming from front-loaded provisions associated with loans enabled under the 100% guarantee model, a heightened risk exposure under the model, and certain one-off non-operating losses. Now, let's delve into our de-risking initiatives that we have made progress on in 2023.

As YS just explained, we have executed on five major de-risking strategies, which included four significant changes to our business mix and transition to the new business model. First, our segment adjustments have fundamentally shifted the new business mix in favor of R1 to R3-rated customers. In 2023, 73% of unsecured loan new customers were rated R1 to R3, compared to 49% in 2022. In addition, strategic adjustments to our product offerings have resulted in a new business mix that reflects our significant de-risking measures. This has prompted a gradual transformation of our existing portfolio mix. In 2023, consumer finance sales accounted for 34% of new loan sales, up from 12% in 2022. Concurrently, the proportion of unsecured loans and secured loans decreased to 44% and 22% respectively, from 64% and 24% in 2022.

As a result, our balance mix has shifted, with consumer finance balance as a percentage of total balance rising to 12% at the end of 2023, compared to 5% at the end of 2022. The proportion of unsecured loans decreased to 66% from 73% as of the end of 2022, while the proportion of secured loans remained flat. During 2024, we anticipated a continued consumer finance diversification, and majority of the unsecured balances will fall under the 100% Guarantee Model by the end of 2024. Next, our regional adjustments have involved the targeted reduction of our footprint in less economically resilient regions, characterized by relatively higher risk.

This strategic shift is reflected in our geographic coverage, which has decreased from over 300 cities at the end of 2022 to 146 cities at the end of 2023. In terms of channel adjustments, we have concluded the restructuring of our direct sales. The number of direct sales team members was reduced from 47,000 at the beginning of the year to 21,000 by the end of the year. In 2023, the direct sales channel contributed to 63% of new sales, up from 57% in the previous year. Turning to our business model, starting in the fourth quarter, we completed a strategic pivot as we fully transitioned to the 100% guarantee model. This move has transformed our portfolio mix and increased our risk bearing as vintages run off and the loans under the new model take shape.

As a result, our risk bearing by balance increased to 39.8% at the end of 2023, up from 23.5% at the end of the previous year. During the fourth quarter, our overall C-M3 increased to 1.2% from 1.1% in the prior quarter. This was primarily due to a reduction in our Puhui business outstanding balance and temporary negative impact from our geographic and direct sales restructuring in the past quarter. Although we have seen improvement in the C-M3 ratio in the first quarter, given our increased risk exposure under the new model, we continue our prudent strategy to prioritize quality over quantity in 2024. Now, let's turn to our outlook for 2024.

We expect new loan sales of 2024 to be in the range of ¥ 190 billion-¥ 220 billion, and the ending balance to be between ¥ 200 billion and ¥ 230 billion. Meanwhile, although we expect loans under the 100% Guarantee Model will be lifetime profitable on a single account basis, it is important to highlight that loans under this model may record accounting loss in the first calendar year due to higher upfront provisions. Under our projected business scale, we believe we have a strong balance sheet to support the business operations, capital, and liquidity requirements. At the end of 2023, the leverage ratio of our guarantee subsidiary was 1.8 times, far below the regulatory limit of 10 times.

Our consumer finance capital adequacy ratio stood at approximately 15.3%, well above the required 10.5%. As for the balance sheet, we hold liquid assets of ¥ 84 billion, with our cash and bank balance outstanding at ¥ 39.6 billion. With a strong capital position and visibility into our business growth in the medium term, we are well positioned to further respond to our shareholders' consistent feedback to increase shareholder returns. And on top of the regular dividend and share buybacks that we have performed over the past three years, our board of directors has approved, subject to shareholders' approval, a special dividend of $2.42 per ADS, or $1.21 per ordinary share, with a total estimated size of approximately ¥ 10 billion.

To offer our shareholders full flexibility, each shareholder may elect to receive the dividend either all in cash or all in scrip. As we are dual listed in the U.S. and Hong Kong stock markets, the shareholders in each market will have to follow the respective procedures for receiving the special dividend. More details will be disclosed in our announcements and the statutory circulars in due course. The special dividend is subject to the approval of shareholders at the annual general meeting, which will be held on May 30th, with a record date of April 9th. I will now turn the call over to David, our CFO, for more details on our financial performance.

Siu Kam Choy (CFO)

Thank you, Greg. I will now provide a closer look into our fourth quarter results. Please note that all numbers are in renminbi terms, and all comparisons are on a year-over-year basis unless otherwise stated. As Y.S. and Greg mentioned before, our performance was impacted by macroeconomic environment in which the small business owner sector has been under pressure throughout the period. Through strategic adjustments to a 100% guarantee model and prioritizing higher quality customer segments and better geographical regions, we sacrificed some of our business scale for better loan quality in the future. This strategic transition inevitably caused our average loan balance and total income to continue to decrease. Whilst the expected credit loss provision is required to be booked upfront in day one, boosting accounting loss in early product life cycle under the new business model.

In the fourth quarter, 2023, our total income was ¥ 6.9 billion, increasing by 44.3%. During the quarter, our technology platform-based income was ¥ 3 billion, representing a decrease of 49%. Our net interest income was ¥ 2.3 billion, a decrease of 47%, and our guarantee income was ¥ 886 million, a decrease of 47%. All are basically in line with the decrease of outstanding loan balance, in which guarantee income decreased by a lesser magnitude due to the offsetting effect of an increase in risk bearing by the company. Turning to our expenses. We remain committed to cost optimization. Our total expenses, excluding credit and asset impairment losses, finance costs, and other losses, decreased by 33.2% year-over-year to ¥ 4.4 billion this quarter, as we continue to enhance operational efficiency.

In the 4th quarter, total expenses decreased by 30.5% to ¥ 7.9 billion, from ¥ 12.9 billion a year ago. This decrease was primarily due to a decrease in credit impairment losses and sales and marketing expenses. Highlighting just a few of the key expense items here. Our total sales and marketing expenses, which mainly include expenses for borrower acquisition costs, as well as general sales and marketing expenses, decreased significantly by 45.9% to ¥ 2 billion in the fourth quarter. The decrease was mainly due to decreased loan-related expenses as a result of the decrease in the new loan sales and decreased retention expenses, as well as referral expenses from the platform service attributable to the decreased transaction volume.

Our credit impairment losses decreased by 43% to ¥ 3.6 billion in the fourth quarter, primarily due to the decrease in provision for loans and receivables as a result of the decrease in the loan balance. Our finance costs decreased by 90.1% to ¥ 50 million in the fourth quarter, from ¥ 501 million in the same period of 2022, mainly due to the decrease of interest expenses as a result of the repayment of Ping An and An Ke convertible promissory notes during the year. As a result, net loss for the fourth quarter was ¥ 832 million, basically flat as compared to ¥ 806 million net loss in the same quarter of 2022.

Meanwhile, our basic and diluted loss per ADS in the fourth quarter were both ¥ 1.48 or $2.21. Turning now to our balance sheet. With abundant cash, we have repaid the outstanding bond of ¥ 2.1 billion and optionally convertible promissory notes of ¥ 8.1 billion through the year 2023. After all these debt repayments, as of December 31, 2023, we have total equity attributable to owners of the company of ¥ 92.1 billion, and a cash balance of ¥ 39.6 billion, and financial assets at fair value through P&L of ¥ 28.9 billion. In terms of capital, as of the end of December 2023, the two main operating entities are well capitalized.

Our guarantee subsidiaries leverage ratio was only 1.8 times, as compared to a maximum regulatory limit of 10 times, and our consumer finance company capital adequacy ratio well stood at approximately 15.3%, well above the required 10.5% regulatory requirement. Overall speaking, we are in a net cash position after taking into account all the external bank debt. All of these factors offer substantial backing for the company to navigate through the challenging macroeconomic environment and the transition period, while providing foundations for us to continually rewarding back to our investors. That concludes our prepared remarks for today. Operator, we are now ready to take questions.

Operator (participant)

Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. In addition, I'd like to remind you to please mute yourself after stating your question. Thank you. Your first question comes from Emma Xu with Bank of America Securities. Please go ahead.

Emma Xu (Vice President and Equity Research Analyst)

Thank you for giving me the opportunity to ask the first question. I think first and foremost, everybody care about this special dividend. So, what's the consideration behind this ¥ 10 billion special dividend? What are the key numbers or information that you rely on to arrive this 10 billion special dividend? And I have another question about your asset quality. So, your flow rate, a leading indicator for the delinquency, continued to rise in the 4th quarter to 1.2%. But I also noticed in your report, you also mentioned that you actually see improvement of the flow rate in first quarter or quarter to date.

So, could you tell us how much improvement you already seen in first quarter, and what's your expectation for the overall asset quality trend in the coming quarters? Thank you.

Yong Suk Cho (Chairman of the Board and CEO)

Okay, thanks for your question. Let me answer. So let me start with why we believe now is the right time for this special dividend. With our successful completion of our five major de-risking initiatives I mentioned, including four exchanges and one business model adjustment, we believe now the risk is under control, and we have a clear visibility of our capital requirements for the coming next 2-3 years. And then our stock has been traded at less than 0.2x PB... And then we have been continuously requested by investors to enhance investor return. Now, you see that our ADS price is, if you compare with our, the cash per ADS, far lower, far lower.

So market has not even reflected the available cash on our book in our valuation. So we hope to unlock hidden value behind our cash on hand by increasing our shareholder value through this dividend. And if I explain why we arrived, how we arrived at this amount, why ¥ 10 billion, right? At this number. Of course, we first, we first studied our future three years development potential, and how much capital we need to support the development. And then we also assumed in this calculation, we also assumed reasonably large buffer to ensure our stable operation in the future. So this is how we arrived at ¥ 10 billion.

And then the size of dividend, it seems maybe, it looks like a very big, compared with our the market cap, but, I want to emphasize, actually it is only just roughly 10% of our net asset. So, this is reasonably good amount, I believe. And then to answer your last question about asset quality. Let me explain first about what's going on with our consumer finance business. Their NPL ratio has been consistent at around 1.5%, 1.4%. And then if I may explain about Puhui side, we said C-M3 net flow ratio for Puhui loan increased from 1.11% in third quarter last year, to 1.25% in the fourth quarter last year, right?

It increases mainly due to reduction of our poorest outstanding loan balance, and then temporary migration impact from our adjustment in our geography and direct sales restructuring. Right, but first quarter, we see improvements in net flow, and then we believe with the completion of all those restructuring measures, we see gradual improvements of flow rates in the coming quarters. And also, you understand, the old portfolio that we booked before 2023 is of worse quality, and that portfolio is now running off. So when you get to the end of 2024, that our legacy portfolio, or in other words, accounts we booked before 2023, will take merely 10% of total portfolio. So in that sense, I think our gradual continuous improvement is of no doubt.

Emma Xu (Vice President and Equity Research Analyst)

Hmm. Thank you. This is very helpful.

Operator (participant)

Thank you. Your next question comes from Richard Xu with Morgan Stanley. Please go ahead.

Richard Xu (Managing Director and Senior Equity Analyst)

Thank you. Thanks for the opportunity for the question. Couple questions from me. First of all, on capital, again. After the special dividend, what do you think the capital need for to support the growth for loans? Will there still be enough buffer, given, you know, obviously, most of the loans will be guaranteed by your own capital at the moment. So on the flip side, given the projection on the reduced loan volume, are there still room to further reduce some of maybe, maybe the capital base and then do more special dividends with the smaller loan balance per So, you know, to-

Gregory Dean Gibb (Co-CEO and Executive Director)

Hey-

Richard Xu (Managing Director and Senior Equity Analyst)

Answer the question.

Gregory Dean Gibb (Co-CEO and Executive Director)

Go ahead, Richard.

Richard Xu (Managing Director and Senior Equity Analyst)

Yep. Yeah, lastly-

Gregory Dean Gibb (Co-CEO and Executive Director)

You were just cutting off there. Could you just repeat the last two sentences?

Richard Xu (Managing Director and Senior Equity Analyst)

Sure. I just wanna say, like, one, are there enough capital to support the loan volume growth after the special dividend? And secondly, if, you know, there are there still, you know, potentially excessive excess capital if the loan volume will be smaller, right? I mean, whether there's opportunity for another special dividend down the road. And then lastly, is the funding cost trends that we're seeing at the moment. So two on the capital, one is on the funding cost. Thanks.

Gregory Dean Gibb (Co-CEO and Executive Director)

Right. Richard, thanks. It's, Greg speaking here. Overall, you know, we have gone through, as, as Y.S. was just laying out, quite a comprehensive process, looking out over the next couple years on expected industry trend, our relative growth trend, capital requirements, liquidity requirements, buffer. We operate multiple licenses. We obviously have the guaranteed license, we have the consumer finance license, and we always keep our mind open for other licenses, in the future. So after going through all that, we arrived at, given our significant cash position, a view on what we could release today, that gives us still very substantial buffer, going forward over the next couple of years. Obviously, our outlook for the market right now is still quite prudent.

We're still focusing on quality over quantity. But, if in a year or two that macro situation were to change and there were more opportunities, we've certainly retained enough capital that we could deploy in our current licenses to meet higher growth. So I think that your question is whether or not there could be additional capital released down the road? We're not considering that for the moment. We wanna keep our flexibility for maybe a more positive market outlook, let's say 12-24 months down the road.

So I think, our strategy here has been to provide the reward, to make it meaningful, to deliver it in a way that allows investors to make a choice on whether they want to take some cash, or do they actually wanna effectively double down with the company in taking shares. You know, to make that a meaningful number today, but while leaving the company flexibility to continue to do the right thing, and capture opportunities going forward with sufficient buffer. So that's, I think, the grounding or the ranging on this. In terms of funding cost, we did see funding costs over the last 12 months continue to come down. There's been two drivers of that.

One has been the overall lower rate environment. The second, though, has been the change in the mix of our new business between guarantee and consumer finance. Consumer finance able to tap the interbank market, multiple funding sources has a lower net funding cost than the facilitation model by working with banks and trust companies. So as we continue to see the mix change so that there is a greater proportion of consumer finance, even though we don't think the rate environment will necessarily drop that much in the foreseeable future, we do think that our mix change will continue to optimize slightly the overall cost of funds in the model.

Operator (participant)

Thank you. Your next question comes from Yada Li with CICC. Please go ahead.

Yada Li (Analyst)

Hello, management. Thank you for taking my question. This is Yada with CICC, and my first question is, by 4Q 2023, the company has completed the transition into 100% guarantee model, but the bottom line was still under pressure. I was wondering, what are the main causes, and how long does it take before profits could be released? What are the main drivers for the profitability recovery? Secondly, for the consumer finance company, how was the profitability? In future development, how we could balance the growth of the SBO and consumer finance segments, and which one could be the strategic focus? Lastly, I was wondering, are we considering additional buybacks? What is the main cause that we choose the special dividend instead of buying back? That's all. Thank you.

Yong Suk Cho (Chairman of the Board and CEO)

Thanks, Yada. So let me pick up your first question. This is Y speaking. And because of our declined new loan volume, the revenue we generate from new book cannot offset the decrease caused by old book shrinkages. So, and under 100% guarantee model, new model, you know that we have to accrue a lot higher upfront provision that delay the profit recognition of our new business. But on a single account basis, new loans that we enable on the 100% guarantee model is delivering lifetime profitability, but just record net accounting loss for the first quarter in the year because of the higher upfront provisioning. So that's the reason of delaying profit recognition.

If I explain about what are the main drivers for profitability recovering, how can we understand this ahead? Then I would say three things, right? The first is actually portfolio credit performance, which we can measure by net flow rates. The second is further optimization of what Greg mentioned, operating costs and also importantly, funding costs. Then lastly, three factors will mostly decide our profitability recovery in coming years. Then if I was to answer your last question, right? It was about why special dividends over buyback? Have you considered buyback? If you compare dividends versus buyback, we believe considering the situation we are in, dividend has several more advantages.

First, our ability to deliver return to shareholder through buyback is quite limited because of low liquidity. The second is, as a dual primary listed companies in U.S. and also in Hong Kong, we need to maintain at least 25% public float by Hong Kong listing rule. And our current public float is only, less than 32% now, so we have very, very limited space for buyback at this moment. And this time, our dividends, you know, that it comes with an option to choose cash or scrip. So, we believe this provides more flexibility than buyback to our shareholders. So that's the reason why we decide to, provide special dividends, over buyback. And then one more question, yeah.

Gregory Dean Gibb (Co-CEO and Executive Director)

Yeah. Greg here. On consumer finance, basically 2023 was the third kind of full year of operation for the company. It has been scaling up from scratch when the license was acquired. 2023 is a profitable year for consumer finance. As the scale of that business continues to increase, its relative efficiency, there's still some room there, as it continues to scale up and we change the overall mix of the portfolio. The question of, you know, how do we balance this, and what is our main strategic focus going forward? I think the way for us to describe this is our main strategic focus, our differentiation in the market remains around serving the small business owner.

This is still our core element. Where we see consumer finance playing an important role is really in two ways. One is that we do believe that there are good consumer finance opportunities to work through multiple channels, to diversify our product offering into providing more smaller ticket shorter term loans that makes us to be more nimble in a dynamic environment. But also providing these capabilities to small business owners as well, because small business owners sometimes act in the capacity of their company needs, which we cover under the Puhui business model, and sometimes they have their individual needs. Of course, we're looking at these customers from a full credit view, right?

But we sometimes find that, small business owners, once they have taken a long-term loan, they may still have smaller interim needs. And so we wanna be in a position to serve these customers kind of on a longer life cycle, with more opportunities to interact with them, and through the interaction, creating more data points, to understand them and their needs. So it is a way, consumer finance is a way to diversify our product offering, to provide some nimbleness in terms of ticket size, to provide some additional data in terms of, behavior, as well as additional touchpoints, to our existing customers, as well as a deeper reach into the market.

So we will continue to have SBO as a core capability, but if you look at the mix between the Puhui model and the consumer finance model, you've seen that mix change quite a bit over the last 12 months, and that transition to a more balanced development, you'll probably see continue in the near to medium term.

Operator (participant)

Thank you. That concludes our question and answer session for today. I'll now turn the call back over to management for closing remarks.

Xinyan Liu (Head of Board Office and Capital Markets)

Thank you. This concludes today's call. Thank you for joining the conference call. If you have more questions, please do not hesitate to contact the company's IR team. Thanks again.

Operator (participant)

Thank you. This conference is now concluded. You may now disconnect.