CLPS Inc (CLPS) 2023 Q2 法說會逐字稿

Hello, everyone. Welcome to the First Half of Fiscal Year 2023 Earnings Conference Call for CLPS Incorporation. Please note that today's conference is being recorded. At this time, I would like to turn the call over to Mr. Rhon Galicha from CLPS Investor Relations for opening remarks and introductions. Please go ahead.

大家好。歡迎參加 CLPS Incorporated 2023 財政年度上半年收益電話會議。請注意，今天的會議正在錄製中。現在，我想把電話轉給 CLPS 投資者關係部的 Rhon Galicha 先生做開場白和介紹。請繼續。

Thank you, operator. Hello, everyone, and welcome to CLPS Incorporation First Half of Fiscal Year 2023 Earnings Conference Call. CLPS Incorporation announced its first half of fiscal 2023 financial results this morning. The earnings release is now available on the company's IR website at ir.clpsglobal.com and across the finance website. Before we continue, please note that our discussions today may include forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve a number of risks and uncertainties. As such, our results may be materially different from the views expressed today. Further information regarding these risks, uncertainties, assumptions and other factors that could affect our financial results is included in our Form 20-F filed with the U.S. Securities and Exchange Commission and other documents filed with the U.S. SEC.

謝謝你，接線生。大家好，歡迎參加 CLPS Incorporation 2023 財年上半年財報電話會議。 CLPS Incorporation 今天早上公佈了 2023 財年上半年財務業績。該財報現已在該公司的投資者關係網站 ir.clpsglobal.com 和整個財務網站上發布。在繼續之前，請注意，我們今天的討論可能包括根據 1995 年美國私人證券訴訟改革法案的安全港條款做出的前瞻性陳述。因此，我們的結果可能與今天表達的觀點有重大差異。有關這些風險、不確定性、假設和其他可能影響我們財務表現的因素的更多資​​訊包含在我們向美國證券交易委員會提交的 20-F 表格以及向美國證券交易委員會提交的其他文件中。

In that respect, I would like to read the following disclaimer applicable to such statements. [Some] of the statements made in this discussion are forward-looking statements within the meaning and protections of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended. Forward-looking statements include statements with respect to the company's beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions of future performance and involve known and unknown risks, uncertainties and other factors, which may be in the company's control and which may cause the actual results, performance capital, ownership or achievements of the company to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements.

在這方面，我想閱讀以下適用於此類聲明的免責聲明。本討論中的[一些]陳述屬於前瞻性陳述，其含義和保護符合 1933 年《證券法》修訂案第 27A 條和 1934 年《證券交易法》修訂案第 21E 條的含義和保護。前瞻性陳述包括有關公司信念、計劃、目的、目標、預期、預期、假設、估計、未來業績意圖的陳述，並涉及公司可能控制的已知和未知風險、不確定性和其他因素這可能導致公司的實際結果、績效資本、所有權或成就與此類前瞻性陳述明示或暗示的未來結果、績效或成就有重大差異。

All such statements attributable to other expressly qualified in their entirety by this cautionary notice including, without limitation, those risks and uncertainties related to the company's financial and operational performance in the first half of fiscal 2023, its expectations of the company's future performance, its preliminary outlook and guidance offered in this presentation as well as the risks and uncertainties described in the company's most recently filed SEC reports and filings.

所有此類陳述可歸因於本警告通知完全明確限定的其他陳述，包括但不限於與公司2023 財年上半年的財務和營運業績相關的風險和不確定性、對公司未來業績的預期、公司的初步業績本簡報中提供的前景和指導，以及公司最近提交的 SEC 報告和文件中描述的風險和不確定性。

Such reports are available upon request from the company or from the Securities and Exchange Commission, including through the SEC's Internet website, www.sec.com. We have no obligation and do not undertake to update or revise or correct any of the forward-looking statements after the date hereof or after their respective dates on any such statements otherwise are made. All information provided today is as of the date of this call, and CLPS does not undertake any obligation to update any forward-looking statements except as required under applicable law.

此類報告可根據公司或證券交易委員會的要求提供，包括透過 SEC 的網站 www.sec.com 取得。我們沒有義務也不承諾在本協議日期之後或在任何此類聲明各自的日期之後更新、修改或更正任何前瞻性聲明。今天提供的所有資訊均截至本次電話會議之日，CLPS 不承擔任何更新任何前瞻性陳述的義務，除非適用法律要求。

With respect to any non-GAAP measures discussed during today's call, the company's reconciliation information related to those [metrics] can be found in the earnings release issued earlier today.

對於今天電話會議中討論的任何非公認會計原則措施，該公司與這些[指標]相關的對帳資訊可以在今天早些時候發布的收益報告中找到。

Now allow me to introduce the management team on the call today. Mr. Henry Li, Chief Operating Officer of CLPS, who will start up the call with a review of recent company developments and operating results; followed by Ms. Rita Yang, Chief Financial Officer of CLPS who will discuss financial results in more detail. (Operator Instructions) Mr. Wilson Wong, Executive Vice President of CLPS, will also join the Q&A session. Mr. Raymond Lin, the company's Chief Executive Officer and Director, is currently attending an important business engagement in Japan and could not to join us today.

現在請容許我介紹一下今天電話會議的管理團隊。 CLPS營運長李亨利先生將先回顧公司近期發展與經營績效；隨後，CLPS 財務長 Rita Yang 女士將更詳細地討論財務表現。 （操作員說明）CLPS執行副總裁Wilson Wong先生也將參加問答環節。該公司執行長兼董事 Raymond Lin 先生目前正在日本參加一個重要的商務活動，今天無法參加我們的活動。

With that said, I would now like to turn the call over to Henry. Henry, please go ahead.

話雖如此，我現在想把電話轉給亨利。亨利，請繼續。

Thank you, Rhon. Thank you, operator. Thank you all for joining the call today. I would like to take -- start with an overview of our first half of fiscal year 2023 performance. 2022 was a challenging year with full of uncertainty. During this period, we maintained continuous revenue growth despite [headwinds] such as macroeconomy effects and the impact of exchange rate fluctuations. We remain strong across our key markets. Thanks to the trust and the satisfaction of our clients place in us. In particular, we achieved a (inaudible) growth in overseas markets. In addition to retaining our long-term clients, we won new clients during this period as well. We are confident that we are well positioned to continue executing our strategy to deliver solid financial performance for the rest of the fiscal year and beyond. First of all, we cut our focus and deliver results on the 4 key operational areas in banking, wealth management, e-commerce and automotive. We sustained our competitive position in banking and wealth management area during this period. This area (inaudible) revenue source for us going forward. More importantly, we continue to put our vast [wealth] management experience to work and achieved positive results. It's an area that remains lucrative in the financial industry, and the several international banks have begun to navigate.

謝謝你，羅恩。謝謝你，接線生。感謝大家今天加入電話會議。我想先概述我們 2023 財年上半年的業績。 2022年是充滿挑戰、充滿不確定性的一年。在此期間，儘管受到宏觀經濟影響、匯率波動等影響，我們仍維持了收入的持續成長。我們在主要市場保持強勁。感謝客戶對我們的信任與滿意。特別是，我們在海外市場實現了（聽不清楚）成長。除了保留我們的長期客戶外，我們在此期間還贏得了新客戶。我們相信，我們有能力繼續執行我們的策略，在本財年剩餘時間及以後提供穩健的財務表現。首先，我們在銀行、財富管理、電商、汽車四大重點業務領域切入實效。在此期間，我們在銀行及財富管理領域維持了競爭地位。這個領域（聽不清楚）是我們未來的收入來源。更重要的是，我們不斷將豐富的財富管理經驗運用到實務中，並且取得了積極成效。這是一個在金融業仍然利潤豐厚的領域，幾家國際銀行已經開始涉足。

Our revenue from the wealth management area increased by approximately 24% to $19 million during this period. With expected effects of currency fluctuations, our revenue from the wealth management area increased by 35% year-over-year in RMB terms. Our (inaudible) business experience and the technical (inaudible) in financial mobile payment allowed us to provide efficient IT services support to our e-commerce clients. With expected effect of currency fluctuations, our revenue from the e-commerce area increased by approximately 3% year-over-year in RMB term. Automotive has always been one of our key target markets. Climate action initiatives, particularly the reflection of greenhouse gases that contribute to the global climate change. We will drive the demand for IT services related to [intelligent] integrated electric drive system in the growing global automotive market.

在此期間，我們來自財富管理領域的收入成長了約 24%，達到 1,900 萬美元。在匯率波動的預期影響下，財富管理領域人民幣收入較去年同期成長35%。我們在金融行動支付方面的（聽不清楚）業務經驗和技術（聽不清楚）使我們能夠為電子商務客戶提供高效的IT服務支援。考慮到匯率波動的預期影響，我們來自電子商務領域的營收以人民幣計算年增約3%。汽車一直是我們的主要目標市場之一。氣候行動倡議，特別是反映導致全球氣候變遷的溫室氣體。我們將推動不斷成長的全球汽車市場對[智慧]整合電力驅動系統相關IT服務的需求。

Our expertise in automotive area makes CLPS a reliable partner of our clients. The revenue from automotive area increased by approximately 30% to $7 million during this period. With expected effect of currency fluctuation, our revenue from the automotive area increased by 41% year-over-year in RMB term. More importantly, we continue to implement our global expansion strategy. We put our focus in the U.S. and the Japan market this half year which resulted in significant progress. In the U.S. market, our business achieved substantial growth with revenue increased by 72% and it continues its positive momentum. And the leadership of our plant at [CO] of CLPS California, Mr. (inaudible). Meanwhile, in the Japan market, our partnership with NTT Data MCI, a Japan strategy and management consulting firm enabled us to rapidly extend our market reach in the region.

我們在汽車領域的專業知識使 CLPS 成為客戶可靠的合作夥伴。在此期間，汽車領域的收入成長了約30%，達到700萬美元。考慮到匯率波動的預期影響，我們來自汽車領域的收入按人民幣計算年增41%。更重要的是，我們持續實施全球擴張策略。這半年我們重點關注美國和日本市場，並取得了顯著的進展。在美國市場，我們的業務實現了大幅成長，收入成長了72%，並延續了良好的勢頭。還有我們加州 CLPS 工廠 [CO] 的領導，先生（聽不清楚）。同時，在日本市場，我們與日本策略和管理顧問公司NTT Data MCI的合作使我們能夠迅速擴大我們在該地區的市場覆蓋範圍。

In the first half of fiscal year 2023, our revenue in Japan increased by 156%. But adhering to the global expansion strategy, which is based off our [view engine] strategy, we believe that these 2 markets will be a key source of growth for CLPS going forward. To support our international business, our overseas staff grew by 9% in the first half of fiscal 2023. Second, CLPS made a series of achievements in (inaudible). The (inaudible) society is gaining momentum, which drove us to divest and launch a scenario-based digital currency application solution to assist financial institution, accelerates the adoption and the (inaudible) of digital currency. In partnership with our client, we are thrilled to announce that this IT solution was successfully implemented and has proven to be beneficial, economically and socially.

2023財年上半年，我們在日本的營收成長了156%。但堅持基於我們的[查看引擎]策略的全球擴張策略，我們相信這兩個市場將成為CLPS未來成長的關鍵來源。為了支持我們的國際業務，我們的海外員工在 2023 財年上半年成長了 9%。 （聽不清楚）社會發展勢頭強勁，這促使我們剝離並推出基於場景的數位貨幣應用解決方案來協助金融機構，加速數位貨幣的採用和（聽不清楚）。透過與我們的客戶合作，我們很高興地宣布該 IT 解決方案已成功實施，並已證明在經濟和社會方面都是有益的。

This solution will also allow international financial institution to build an ecosystem around digital currency that includes services such as system development, [cis] operations and maintenance, digital marketing and the merchant expansion. We are looking forward to working with our global partner to explore scenario-based digital currency application scenarios and offer also a secure commitment and a seamless financial services experience.

該解決方案還將允許國際金融機構圍繞數位貨幣建立一個生態系統，其中包括系統開發、[cis]營運和維護、數位行銷和商家擴張等服務。我們期待與全球合作夥伴一起探索基於場景的數位貨幣應用場景，並提供安全的承諾和無縫的金融服務體驗。

In the first half of 2023, CLPS continued to improve CAKU 2.0, the upgrade (inaudible) generation of credit card system product of CLPS. Meanwhile, the new generation of low system product has completed the expectation process tailored to the specific requirement of overseas markets. These sources will provide strong support in the demand for digital transformation on credit card position of CLPS overseas client and will enable us to help our clients [get] satisfy the [customer,] improve online lending experiences and integrate its digital platforms that are customer-centric will attribute streamline workflow.

2023年上半年，CLPS繼續完善CLPS信用卡系統產品升級（聽不清楚）一代CAKU 2.0。同時，新一代低系統產品也完成了針對海外市場具體需求的預期過程。這些資源將為CLPS海外客戶的信用卡部位數位轉型需求提供強力支撐，幫助我們的客戶滿足客戶，改善線上借貸體驗，整合客戶數位化平台。

We also started a new project on the new generation of loan system. We are currently developing a loan management system. We will combine our mature product with innovative technology. We successfully implemented facial recognition and optical character recognition or OCR into the system for loan application identity verification. We are in the process of development, the integration of natural language processing or NLP and the robotic process automation or RPA, are already on the pipeline. The goal of this development is to achieve a more comprehensive and streamlined loan process flow, including mortgage application, fast customer credit checking, convenience and secured loan [drop,] among others, ensuring the [private] and the security of information transmission will effectively shorten the process in time. As a result, customer can pay for loans coming easily anytime, anywhere, reducing banking and business operating costs and gaining a wider range of new business opportunities.

我們也啟動了一個關於新一代貸款系統的新專案。我們目前正在開發貸款管理系統。我們將把成熟的產品與創新技術結合。我們成功地將臉部辨識和光學字元辨識或 OCR 整合到系統中以進行貸款申請身份驗證。我們正在開發過程中，自然語言處理（NLP）和機器人流程自動化（RPA）的整合已經在醞釀中。此次開發的目標是實現更全面、更精簡的貸款流程，包括抵押貸款申請、快速客戶徵信、便利性和擔保貸款等，有效保證資訊傳輸的隱私和安全性。客戶可以隨時隨地輕鬆支付貸款，降低銀行和企業營運成本，獲得更廣泛的新商機。

Meanwhile, our (inaudible) approach, which is moving credit card and the loan system out of the core banking system, improves business efficiency and the lowers operational costs in banking. Several of our clients in the banking area have already recognized it as a valuable resources for them. Lastly, let's talk about the talent development. For almost 2 decades, CLPS has been available partner in developing and providing world-class highly skilled IT talent for its clients. To maintain cost competitiveness, we continuously provide our clients with qualified and high quality IT professionals, along with other added value services such as technical training under career development. (inaudible) on these contribution.

同時，我們的（聽不清楚）方法，將信用卡和貸款系統移出核心銀行系統，提高了業務效率並降低了銀行業的營運成本。我們的一些銀行領域客戶已經認識到它是他們的寶貴資源。最後，我們來談談人才培育。近 20 年來，CLPS 一直是為其客戶開發和提供世界一流高技能 IT 人才的合作夥伴。為了保持成本競爭力，我們持續為客戶提供合格和高素質的IT專業人員，以及職業發展中的技術培訓等其他增值服務。 （聽不清楚）這些貢獻。

During this period, we sent partnership agreement to oversea educational institutions which are Australian National University, a renowned public researches located in Canberra, Australia. Under (inaudible) global economy, (inaudible) limited, private educational (inaudible) in Singapore to further broaden the scope of our Thailand creation program and the overseas business footprint. We are also excited to announce that we'll soon be collaborating with the (inaudible) City University of Hong Kong for the co-banking technology training costs. The cost is certified by the (inaudible) retraining (inaudible) or ERV, a statutory board in Hong Kong to foster sustainable development of Chinese into IT and the banking industries. Digital transformation initiatives are at the forefront of our core market strategy in this era of challenges and opportunities.

在此期間，我們向海外教育機構發出了合作協議，其中包括位於澳洲坎培拉的著名公立研究型大學澳洲國立大學。在（聽不清楚）全球經濟下，（聽不清楚）新加坡的私立教育（聽不清楚）進一步擴大了我們泰國創造計畫的範圍和海外業務足跡。我們也很高興地宣布，我們很快就會與（聽不清楚）香港城市大學合作支付聯合銀行技術培訓費用。該費用由（聽不清楚）再培訓（聽不清楚）或 ERV 認證，ERV 是香港的一個法定委員會，旨在促進中國人進入 IT 和銀行業的可持續發展。在這個充滿挑戰和機會的時代，數位轉型措施是我們核心市場策略的最前線。

Alongside, as CLPS continue to transform itself, we are also ready to have more clients to accelerate their business integration and operations. Our strategy also aligns with our commitment to delivering innovative products suited to the needs of our clients to offer them a full range of integrated services for their credit card, credit loan and other fintech business segments as well as building a CLPS exclusive financial ecosystem that will enable our clients within financial industry to take digital transformation forward and achieve (inaudible) management. Now I would like to turn the call over to our CFO, Rita Yang, to discuss the first half of fiscal year 2023 financial results. Rita, please go ahead.

同時，隨著華神電力不斷轉型，我們也準備好讓更多的客戶加速業務整合和營運。我們的策略也符合我們的承諾，即提供適合客戶需求的創新產品，為他們的信用卡、信用貸款和其他金融科技業務領域提供全方位的綜合服務，並建立CLPS專屬的金融生態系統，使我們的金融業客戶能夠推動數位轉型並實現（聽不清楚）管理。現在我想將電話轉給我們的財務長 Rita Yang，討論 2023 財年上半年的財務表現。麗塔，請繼續。

Thank you, Henry. Firstly, I'm pleased to announce that we declared our very first special cash dividend last December 2022, and it has been paid out to our shareholders. We also intend to declare dividends in the future, depending on the company's financial performance and the results of operations. Now I will provide an update on our financial performance for the first half of fiscal year 2023. Please note that our numbers provided are in U.S. dollar terms and that our comparisons are made on a year-over-year basis. In the first half of fiscal 2023, our revenue increased by $0.9 million, or 1.1% to $76.8 million from $75.9 million. This increase in revenue was mainly due to an increase in revenue from IT consulting services. In particular, revenue from IT consulting services increased by $0.8 million, or 1.2% to $72.8 million from $72 million. This increase was due to the increased demand from existing and new clients and our improved service delivery capability. Revenues from customized IT solutions services decreased by $0.1 million, or 2.3% to $3.2 million from $3.3 million. This decrease was primarily due to the effect of currency fluctuations in RMB against the U.S. dollar. Revenue from other services increased by $0.1 million, or 11.4% to $0.8 million from $0.7 million. The increase was primarily due to the increased demand for other services including non-IT consulting services. Gross profit was $18.5 million compared to $22.3 million.

謝謝你，亨利。首先，我很高興地宣布，我們在去年 2022 年 12 月宣布了首次特別現金股息，並且已支付給我們的股東。我們也打算在未來宣布股息，具體取決於公司的財務表現和經營績效。現在，我將提供 2023 財年上半年財務業績的最新資訊。 2023 財年上半年，我們的營收增加了 90 萬美元，即 1.1%，從 7,590 萬美元增加到 7,680 萬美元。收入成長主要是由於IT諮詢服務收入的成長。其中，IT 諮詢服務收入從 7,200 萬美元增至 7,280 萬美元，成長 80 萬美元，成長 1.2%。這一增長是由於現有和新客戶的需求增加以及我們服務交付能力的提高。客製化 IT 解決方案服務收入從 330 萬美元減少至 320 萬美元，減少 10 萬美元，即 2.3%。此下降主要是由於人民幣兌美元匯率波動的影響。其他服務收入增加 10 萬美元，或 11.4%，從 70 萬美元增加到 80 萬美元。這一增長主要是由於對包括非 IT 諮詢服務在內的其他服務的需求增加。毛利為 1,850 萬美元，去年同期為 2,230 萬美元。

As for operating expenses, selling and marketing expenses increased by $0.4 million, or 17.5% to $2.7 million from $2.3 million. As a percentage of total revenue, selling and marketing expenses increased to 3.5% from 3%. The increase was primarily due to the sales and marketing personnel-related expenses. Research and development expenses increased by $0.2 million, or 4.4% to $4.4 million from $4.2 million. As a percentage of total revenue, research and development expenses increased to 5.7% from 5.5%. The increase was primarily due to the increased research and development personnel-related expenses which enabled the company's continued research and development efforts in new projects, such as CAKU 2.0 and new generation of loan system.

至於營運費用，銷售和行銷費用增加了 40 萬美元，即 17.5%，從 230 萬美元增加到 270 萬美元。銷售和行銷費用佔總收入的比例從 3% 增加到 3.5%。增加的主要原因是銷售和行銷人員相關費用。研發費用增加 20 萬美元，成長 4.4%，從 420 萬美元增加到 440 萬美元。研發費用佔總收入的比例從5.5%增至5.7%。這一增長主要是由於研發人員相關費用的增加使得公司能夠繼續在新項目上進行研發，例如CAKU 2.0和新一代貸款系統。

General and administrative expenses increased by $1.5 million or 16.6% to $10.7 million from $9.2 million. As a percentage of total revenues, general and administrative expenses increased to 13.9% from 12.1%. The increase was primarily due to hiring of management-level employees to further drive our growth in the overseas market. The year-over-year increase in employee salary and increased in the depreciation and amortization resulting from the acquisition of fixed assets in Hong Kong and Singapore.

一般及行政費用增加 150 萬美元，或 16.6%，從 920 萬美元增至 1,070 萬美元。一般及管理費用佔總收入的比例從 12.1% 增加至 13.9%。這一增長主要是由於聘用了管理層員工以進一步推動我們在海外市場的成長。員工薪資較去年成長，以及香港、新加坡購置固定資產帶來的折舊及攤提增加。

Operating income was $1.3 million compared to $7.6 million. Total other income net of other expense was $0.2 million compared to $0.2 million total other expense net of other income in the prior year period. Provision for income taxes decreased by $0.7 million to $0.2 million from 0.9 million, mainly due to the decrease in income before taxes. Net income was $1.4 million compared to $6.5 million. Net income attributable to CLPS Incorporation shareholders was $1.3 million compared to $6.3 million. Net cash provided by operating activities increased by 29.9% to $17.2 million from $13.2 million. As of December 31, 2022, we had cash and cash equivalents of $37.6 million compared to $18.4 million as of June 30, 2022. As of December 31, 2022, we had a total number of employees of 3,714, up 1.3% year-over-year.

營業收入為 130 萬美元，去年同期為 760 萬美元。扣除其他費用後的其他收入總額為 20 萬美元，而去年同期扣除其他收入後的其他費用總額為 20 萬美元。所得稅撥備從 90 萬美元減少到 20 萬美元，主要是因為稅前收入減少。淨利為 140 萬美元，去年同期為 650 萬美元。歸屬於 CLPS Incorporation 股東的淨利潤為 130 萬美元，去年同期為 630 萬美元。經營活動提供的淨現金增加 29.9%，從 1,320 萬美元增至 1,720 萬美元。截至2022年12月31日，我們的現金及現金等價物為3,760萬美元，而截至2022年6月30日為1,840萬美元。 1.3% -年。

Undeterred by the short-term challenges, as we mentioned in our earnings release, we remain confident about our long-term business growth looking forward for fiscal year 2023. Total sales growth was adjusted in the range of approximately 5% to 10% and net income growth in the range of approximately 7% to 12%, compared to fiscal year 2022 financial results. This concludes our prepared remarks. Operator, we are now ready for questions.

正如我們在財報中提到的，我們並沒有被短期挑戰嚇倒，我們對2023 財年的長期業務增長仍然充滿信心。成長在與 2022 財年財務表現相比，營收成長約 7% 至 12%。我們準備好的演講到此結束。接線員，我們現在準備好提問了。

(Operator Instructions) Our first question is from the line of [Lucy Wan] with PH Investors.

（操作員說明）我們的第一個問題來自 PH Investors 的 [Lucy Wan]。

Congratulations on results. Can you tell us about the expectations for the audit issues that are there unresolved and the potential for delisting? And my second question is, could you please give more color on why your net income decreased during this period?

祝賀結果。您能否告訴我們尚未解決的審計問題以及退市可能性的期望？我的第二個問題是，您能否詳細說明您在此期間淨利潤下降的原因？

(inaudible) thank you for your question, let me take your questions. We are closely working with our U.S. council and independent auditors to ensure compliance with the U.S. regulatory boards like SEC and the PCLB. We are keeping China loss in line with [CSIC] and PCLB plans agreement to access all [original] works. Giving you an overview of the progress on August 26, 2022, the CSIC Ministry of Finance of the People's Republic of China and the PCLB [send] an agreement for all the oversight cooperation to bring the inspection and investigation of accounting firms and bilateral cooperation framework. And in December 15, 2022, the PCLB said in the announcement that it has successfully (inaudible) the uncensored access to investigate audit funds in Mainland China and Hong Kong for the first time in history.

（聽不清楚）謝謝您的提問，讓我回答您的問題。我們正在與美國委員會和獨立審計師密切合作，以確保遵守 SEC 和 PCLB 等美國監管委員會的規定。我們正在使中國的損失與 [CSIC] 保持一致，並且 PCLB 計劃同意訪問所有 [原始] 作品。跟大家介紹一下進展情況，2022年8月26日，中船重工中華人民共和國財政部與PCLB【送】關於對會計師事務所進行檢查調查的全部監督合作協議及雙邊合作框架。 2022 年 12 月 15 日，PCLB 在公告中表示，歷史上首次成功（聽不清楚）對中國大陸和香港的審計資金進行未經審查的調查。

With this development, we are optimistic that our listing will stay intact, allowing us to provide shareholder value. We are waiting for definitive results. We are focused on our growth strategy to achieve our business growth. And to answer your second question, as we mentioned in our earnings release, with low pace movement of global economic growth partly caused by COVID-19 had impacted our trends in core markets such as banking and e-commerce. Our plans in these areas (inaudible) their budgets in the short term, which excludes our gross margin. Also, as a result of rapid industry development and economic structure change, IT professionals will stay more in demand and pushed up compensation costs. Furthermore, COVID-19 situation led to an increase in cost. We expected to experience short-term challenges. But in the long run, China's policy regarding to COVID-19 has dramatically changed. So we are opportunistic to recover and generated increase in the net income going forward. That's my answer. Thank you.

隨著這一發展，我們樂觀地認為我們的上市將保持完整，使我們能夠為股東提供價值。我們正在等待最終結果。我們專注於我們的成長策略以實現我們的業務成長。回答你的第二個問題，正如我們在財報中提到的，全球經濟成長緩慢，部分原因是 COVID-19，影響了我們在銀行和電子商務等核心市場的趨勢。我們在這些領域的計劃（聽不清楚）是短期內的預算，其中不包括我們的毛利率。此外，由於產業的快速發展和經濟結構的變化，IT人才的需求將持續增加，從而推高薪資成本。此外，COVID-19 情況導致成本增加。我們預計會遇到短期挑戰。但從長遠來看，中國針對COVID-19的政策發生了巨大變化。因此，我們有機會恢復並增加未來的淨利潤。這就是我的答案。謝謝。

The next question is from the line of Thomas Fernandes, Private Investor.

下一個問題來自私人投資者托馬斯費爾南德斯 (Thomas Fernandes)。

Yes. Congratulations on the results and very happy to see the guidance going forward. I had a question on any updates on the [GRT IPO].

是的。祝賀結果，並很高興看到未來的指導。我對 [GRT IPO] 的任何更新有疑問。

Yes. Let me take your question. First of all, thank you for your question. So far, the listing material of [GRT], which is a major (inaudible) subsidiary of (inaudible), (inaudible) based on the requirements of the regulatory authority. And we believe that this competitive advantage as an IT services provider, particularly in the automotive area will bring value to shareholders. As we discussed earlier, our revenue from automotive area increased about 30%, and we expect that demand for IT services will continue to rise as the trend for smart electric (inaudible) continues. We will keep the public informed for any development or charges IPO.

是的。讓我回答你的問題。首先，感謝您的提問。截至目前，[GRT]（聽不清楚）的主要（聽不清楚）子公司的上市資料已根據監管機構的要求發布。我們相信，作為 IT​​ 服務提供者的這種競爭優勢，特別是在汽車領域，將為股東帶來價值。正如我們之前討論的，我們來自汽車領域的收入增長了約 30%，我們預計隨著智能電動（聽不清楚）趨勢的持續，對 IT 服務的需求將繼續增長。我們將隨時向公眾通報任何進展或 IPO 費用。

At this time, I will turn the floor back to management for any closing remarks.

此時，我將把發言權交還給管理階層，讓他們發表結束語。

There are no additional questions at this time. I will turn the floor back to management for closing remarks.

目前沒有其他問題。我將請管理層發表結束語。

Okay. Thank you again for joining us on today's call, and we appreciate the ongoing support. We look forward to updating you on our progress in the weeks and the months ahead. Have a good day. Thank you.

好的。再次感謝您參加今天的電話會議，我們感謝您一直以來的支持。我們期待向您通報我們在未來幾週和幾個月內的最新進展。祝你有美好的一天。謝謝。

This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.

今天的會議到此結束。此時您可以斷開線路。感謝您的參與。