Hollysys Automation Technologies Ltd (HOLI) 2011 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Hollysys Automation fiscal 2011 fourth quarter and year-ended June 30th, 2011, earning conference call.

(Operator Instructions). Please be advised that this conference is being recorded today, August 16th, 2011.

I would now like to hand the conference over to Ms. Jennifer Zhang, Investor Relations Manager of Hollysys Automation Technologies. Thank you. Please go ahead, Ms. Zhang.

Good day to everyone and thank you for joining us. Our speakers today will be Dr. Changli Wang, CEO and Chairman of Hollysys Automation Technologies, Mr. Peter Li, CFO of Hollysys, and myself, the IR Manager of Hollysys.

Before we get started, I would like to remind everyone that this conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts, including statements relating to the expected growth of Hollysys' future product introductions, the mix of products in future periods and future operating results.

Such forward-looking statements are based on the current beliefs and expectations of Hollysys' management are subject to risks and uncertainties which could actual results to differ from the forward-looking statements. The following factors, among others, could cause actual results to differ from such forward-looking statements -- the conditions in China and in Southeast Asia; continued compliance with government regulations; legislation or regulatory environment, requirements or changes adversely affecting the businesses in which Hollysys is engaged; cessation or changes in government sector programs; potential trade barriers affecting international expansion; fluctuations in customer demand; management of rapid growth and transitions in new markets; intensity of competition from or introduction of new and superior products by other products of automation and control system technology; timing, approval and market acceptance of new product introductions; general economic conditions; geopolitical events and regulatory changes; as well as other relevant risks detailed in Hollysys' filings with the Securities and Exchange Commission.

The information set forth herein should be read in such of light risks. Hollysys does not assume any obligation to update information discussed in this conference or in its filings.

On today's call, the CEO and Chairman of Hollysys, Dr. Changli Wang, will provide a general overview of our business, including some highlights for the year and then the CFO of Hollysys, Mr. Peter Li, will discuss our performance from a financial perspective and the financial outlook for fiscal year 2012. Both Changli and Peter will be available for the QA session afterwards.

Please note that all amounts noted in this conference call will be US dollars, unless otherwise noted.

I'd now like to turn the call over to Dr. Changli Wang. Please go ahead, Dr. Wang.

Okay, thank you, Jennifer, and greetings to everyone.

We are very pleased to report a robust financial performance for fiscal year 2011, which is marked as a milestone year towards furthering our strategic growth objectives, as the following remarks will highlight.

Both revenue and non-GAAP net income delivered unprecedented year-over-year growth, driven by growth from all other major business lines, which is a strong validation of our growth strategy and management execution.

Our Industrial Automation demonstrated a very strong growth momentum with historical record high annual revenue and backlog reported, driven by change of our market positioning from single products offering to total solutions positioning, bolstered by more proprietary products pushed out to the market.

Our High-speed Rail and Subway businesses delivered explosive growth during the, as expected. Our leadership position in high-speed rail signal market in China and strong backlog will ensure our continuous growth going forward.

We laid a solid foundation to further grow our businesses by investing our efforts in research and development to continuously round out our products offering, expanding our sales network and sales force to capitalize on the macro trends unfolding in China's economy and streamlining some of the key operational functions such as supply chain and inventory management.

We made significant progress in internationalizing Hollysys' businesses through acquisition of Concord Corporation in Singapore, through which we have obtained a well-established channel to cross sell our products in the Rail and Industrial Automation segments and a seasoned management team to form the core of our future international team in a highly accretive manner.

We have noticed the short interest on HOLI has reached an historic high in the past few months. Short selling will always be part of the scene for US-listed companies. To safeguard our shareholders' interest, it's wise to our shareholders that you should look into alternatives to prevent your shares being lent out to cause erosion to your economic interests without your full awareness.

In line with this topic, I would like to announce that several members of our management have decided to engage in purchasing our shares under Rule 10b5-1 plans. This action has been approved by our Board of Directors. The management persons, led by our Company Chairman and CEO, have indicated that they will commit up to $7.5 million for their purchases to demonstrate our confidence in Hollysys' strong business fundamentals and prospects and our strong commitment to supporting and protecting our shareholders' value during difficult times.

The Rule 10b5-1 plans will be established and carried out, subject to the Company's securities trading policy. The timing and actual number of shares purchased under this plan will depend on a variety of factors, including regulatory restricts on price, volume, timing, applicable legal requirements and other market conditions. There can be no assurance that any shares may be purchased ever through the plan.

I am attaching a "A Letter to Hollysys Investors" with this earnings release, which I hope will provide more colors on the factors driving this fiscal year's financial numbers and an elaboration of our growth strategy going forward and the foundation and consideration of our growth strategy formulation. I would like to continue to communicate with our shareholders on an annual basis in this manner, to bring them up to speed on the latest strategy, direction and, most importantly, the thinking and the rationale behind it.

Hollysys would also like to continue to hold annual investor days in this October at our Beijing premises, which will be filled with showcasing our whole executive team, insightful presentations from various corporate executives in charge of the functions most interesting to shareholders and a facility tour to further enhance our transparency and investor friendliness. Our shareholders who would like to participate in this annual event, should contact their brokerage firms to arrange this reservation, which is on a limited availability basis.

With that, I would like to turn the call over to our CFO, Peter Li, who will discuss in greater details our financial results. Okay, Peter?

Thank you. Dr. Wang and hello to everyone. In a nutshell, Hollysys financial and operational results for fiscal year ended June 30th, 2011, the Company reported robust financial results.

For the fiscal year 2011, total revenues increased by 51% to $262.8 million from $174.1 million of the prior year. The Company's integrated contract revenue was reported at $248.6 million with the segment breakdown as the following -- Industrial Automation ticking up 52%; High-speed Rail up 28%; Subway at 18%; Nuclear at approximately 2%.

The overall gross margin for fiscal year 2011 was 34.7%, as compared to 34.6% for last year. The gross margin for integrated contracts and product sales were 33.5% and 55.4% for the fiscal 2011, as compared to 32.8% and 63.2% for last year, respectively.

Selling expenses were $20.4 compared to $12.2 million year over year. The increase was mainly due to the Company expanded sales network and increased sales staff. As a percentage of total revenues, selling expenses, selling expenses were 7.8% and 7% for fiscal 2011 and 2010, respectively.

G&A expenses, excluding non-cash stock-based compensation expenses were $16.1 million for the year compared to $13.4 million year over year, representing an increase of $2.7 million or 20.4%. As a percentage of total revenues, G&A expenses were 6.1% and 7.7% for the fiscal year 2011 and 2010, respectively.

R&D expenses were $20.1 million for fiscal year 2011 compared to $13.1 million for last year, increased by $7.1 million or 54%, mainly due to the Company's increased R&D activities. As a result of total revenue, R&D expenses were 7.7% and 7.5% for fiscal year 2011 and 2010, respectively.

The gains on disposal of equity interest in equity investees amounted to $1.4 million for fiscal '11, which was mainly contributed by the gain on disposal of 29% interest in Hollysys Information Technologies, which Hollysys will continue to own 20% after the transaction.

The share of net gains from equity investees were $2.8 million for the year, of which $2.2 million from Beijing Techenergy Ltd., the 50/50 joint venture between Hollysys and China Guangdong Nuclear Power Corp. that mainly engages in providing automation control products and services to China's nuclear industry.

The income tax expenses were $6.4 million for the year, compared to $7.7 million for the prior year. Excluding the withholding tax of $1.1 million related to the dividend declaration for the year, and a one-time tax expense of $4.45 million related to Hollysys Group reorganization recorded in the prior year, the effective tax rate was 11.2% and 9.1% for fiscal year 2011 and 2010, respectively.

For the fiscal year 2011, the non-GAAP net income, excluding non-cash stock compensation costs, was $42 million or $0.76 per diluted share, based on 55 million shares outstanding. This represents an increase of $15.8 million or 60.2% over the $26.2 million or $0.51 per share based on 52 million shares outstanding reported in the prior year period.

The difference between our non-GAAP and GAAP net income is approximately $552,000.

Hollysys' backlog as of June 30th, 2011, was reported at $296.4 million, another record high in Hollysys' history. The last record high backlog balance was set at $288.5 million as of December 31, 2010.

The segment breakdown is as following -- Industrial Automation at 34.5%; High-speed Rail at 35.6%; Subway at 23.7%; and Nuclear at 6.2%. It's worth noting that the segment backlog for both Industrial Automation and Nuclear set another historical high.

The net cash provided by operating activities was $7.4 million for the three months ended June 30th, 2011, mainly due to a decrease of $12 million in inventories. Including investing and financing activities, the total net cash outflow for this quarter was $5.2 million.

For the fiscal year 2011, the total cash outflow was $28.8 million, including investing and financial activities, mainly due to $16.9 million cash prepaid for the acquisition of Concord and $12.1 million repayments of bonds payable, in addition to the Company's cash inflow and outflow during the ordinary course of our business.

As of June 30th, 2011, Hollysys' cash and cash equivalents were $90.7 million compared to $95.9 million on March 31st, 2011.

For the year ended June 30th, 2011, DSO was 124 days as compared to 140 days year over year and inventory turnover was 58 days as compared to 73 days, year over year.

Given our strong backlog currently on hand and sales pipeline additions so far, we project our revenue in the range between $354 million and $356 million and non-GAP net income in the range between $57 million and $58 million on a consolidated basis, including newly closed acquisition, which is based on management's best estimate of our current market and business conditions at this point in time, with a certain level of conservatism in mind.

The management would also like to maintain our earnings per share at or above $1 when it comes to any potential dilution effects caused by financing, incentive share scheme or acquisitions during the year.

Last, but not the least, Hollysys achieved a stellar compounded annual growth rate of Revenue at 29% and net income at 31% for the past three years. During the past three fiscal years of 2009, 2010 and 2011, Hollysys invested $42 million in R&D in aggregate to have continuously enhanced our competitive advantages for our addressable market verticals to further distinguish ourselves from our competitors.

Our strong commitment to excellence and core competency have placed us to the leading positions in our respective end markets. Hollysys is the leading Chinese industrial automation technology and product provider. Hollysys is virtually one of the only two high-speed rail signaling system providers within the capability of providing both on-board control and underground control systems in China. Hollysys is the only automation control technology player capable of providing its proprietary automation and control system to the nuclear industry in China.

Now with our Concord acquisition closed, Hollysys is ready to expand its growth the international market, which will enable our future growth in a more balanced and sustainable way.

With our backlog at a historical high, net cash position and continuously improved operational metrics, Hollysys presents an ever-compelling investment story to investors at the current valuation.

Thank you.

Thank you, Peter. At this time, we'd like to open up the QA session. Please note that for Chinese-speaking participants we can also do the QA in Mandarin and we will provide translation. (Spoken in Mandarin). Operator, please?

Thank you. (Operator Instructions). The first question comes from Mark Tobin from Roth Capital Partners. Please ask your question.

Hi. Dr. Wang. Hi, Peter.

Hello, Mark.

Hi, Mark.

First question, on the guidance, can you help us decompose your assumptions that build up to that guidance, specifically, what kind of growth rate you're expecting for the core business? I know the shareholder letter had said 25% to 30% growth and then what kind of contribution from CCPL, as well as your core rail business?

Right, Mark. I think Dr. Wang mentioned the growth 25% to 30% in his letter to investors, mainly referring to Industrial Automation segment. Did not mean to indicate any growth rate for the total overall businesses, going forward.

In terms of the composition of the guidance for fiscal year 2012, from the management perspective, we mainly estimate overall business growth for the organic portion of our businesses at roughly about 15% for both top line and bottom line and the rest of the guidance comes from the CCPL, which is the newly closed acquisition.

Please note this guidance is based on our internal mid-year budget from overall -- all the business segments and also building in a certain level of our judgment towards the market conditions and business conditions over the next six to nine months. If anything changes from the market conditions, if some of the doubts get clarified in the future, we will update you at that time.

Okay. And I guess, to follow up on the last statement you had made, within High-speed Rail, with 2012, how much of your expectations for rail business are supported by your existing backlog versus requiring new orders?

All of our current estimate for High-speed Rail built into the guidance comes from the current backlog.

Okay. What are your expectations for the -- there's, obviously, a freeze on new contracts at this point, pending the investigation of the accident. What are you hearing within the channel as far as when that should be cleared up?

We haven't heard anything. We are cooperating with the Ministry of Rail in terms of the safety checks in all the products we supply. I think we will hear some definitive versions pending the final investigative report, which is expected to come out some time mid-September.

Okay, that's helpful. I'll jump back in the queue. Thanks.

Thanks, Mark.

Thank you. And your next question comes from [Joseph] (inaudible). Please ask the question.

Hi, Dr. Wang. Hi, Peter.

Hi.

I've got three questions, first on the railway. On the backlog it is still a big chunk of your total backlog. Can you comment on the gross profit margin trend on this line as I guess there will be more stringent requirements, more testing need to be done on these kind of systems? That's the first question.

And secondly, can you comment a bit on the international overseas business? What percentage of the revenue will come from overseas markets for next year?

Hi, Joseph. It's Peter. I think with respect to your second question of our international revenue in the current guidance we provided, as I said earlier, in the current guidance we provide, if you build in 15% for both top line and bottom growth for Hollysys' organic businesses, you can subtract out the business expectation for the newly acquired Concord Corporation. You can get a very good idea of what kind of revenue and net income expected from our Singaporean operation.

With respect to your first question of a gross margin trend for our High-speed Rail business going forward, we don't expect any margin erosion or deterioration from this business.

As you know, our High-speed Railing is a safety and operation critical system which already proved through the tragic accident and yet, from the percentage of the total high-speed rail buildout budget perspective, it takes only a very, very minor portion of the budget compared to construction and passenger trains and all other major items. So, historically, MOR has been not very aggressive in terms of pushing for the gross margin or pushing for price to signaling system providers.

And also, having said that, Hollysys has been improving the internal efficiencies and value chains and also the material procurement, which enables Hollysys to reduce the overall cost of our sales consecutively year over year.

So, with both points said, we are confident to maintain the current gross margin profile for our High-speed Rail business, going forward.

Okay, thank you. My third question is we have the full-year guidance. On the near term, in the September quarter, can you give us some color on the revenue trend and also the margin trend, as well?

Sorry, Joseph, we only provide annual guidance on top line and bottom line and we don't provide detailed quarterly breakdown. We -- hopefully, we can do some quarterly sort of guidance, going forward.

Okay. Okay, thank you.

Thank you. And your next question comes from Jacob Schori from Credit Suisse. Please ask the question.

Yes, hi. I have two or three questions. You mentioned that there are two signaling companies or manufacturers. You are one of them. Can you mention who is the other one? And the rail where the accident occurred, who was the signaling provider?

Yes, Jacob. The other high-speed rail signaling system provider is China Rail and Signaling Communication Corp. So, basically, currently in China's high-speed rail market, it is only Hollysys and China Rail Signaling and Communication Corp. which are able to provide both on-board control and on-ground control systems.

Yes, I'll take -- Peter, I think for the reason of this cause of the accident, we'd rather wait for the investigation results from the investigation group. I think much later that will be released automatically.

So nobody knows who supplied the equipment to this particular rail system?

I think you can -- I think you can see the news.

Okay. The other question I have, now that you've completed the acquisition, how many shares are going to be outstanding after the acquisition?

We will issue roughly about 1 million shares for the acquisition. Currently we are at 55 million, so post-acquisition, there will be approximately 56 million to 56.2 million shares outstanding.

Okay. The last question, you were talking about listening in Hong Kong. Can you talk about that?

Yes, I mean, we announced the Hong Kong dual listing initiative a couple months ago and we are still in the process of engaging different investment banks. We like to take our time to ensure the best interests for Hollysys and shareholders.

So at this point, there has not been -- the process has not begun with the Hong Kong exchange?

The process has begun. We are currently in search and in communication with different investment banks to see the best fit for this strategic initiative of Hollysys.

And can you say how many people are involved in the 10b5-1?

Roughly about three people.

Three people. Okay, thank you very much.

Thank you, Jacob.

Thank you. And your next question comes from Bake Zhang from UOB (inaudible). Please ask the question.

Hello, Peter, Dr. Wang and Jennifer. Thank you for taking my question.

Hi. Blake.

I have two questions about the VAT refund. As I see it, the $10 million was quite big for the Company's total income. My first question is, how do you recognize this income from the VAT refund and has Hollysys already received this money from the government at this point?

And my second question is, for the year's guidance, like how many will come from the VAT refund and the government subsidies? Thank you.

Hi, Blake. Government VAT refunds and government subsidies, in essence here, especially for Hollysys, these types of technology companies in China, in essence, it's R&D tax credits.

As you know, VAT refunds is really a refund of value added sales taxes on the portion of the proprietary software sales included in your total sales contracts revenue. And for the VAT refunds and government subsidies, we recognize for the year either we already received the money or we already received the confirmation receipts from the local tax authorities.

And we expect this type of government refunds, VAT refunds and subsidies, will continue, going forward.

Okay, thank you.

Thanks, Blake.

Thank you. Your next question comes from [Paul Gong] from Citigroup. Please ask the question.

Hello, actually, this is Paul Gong from Citigroup. Hi, Dr. Wang. Hi, Peter. I have several questions.

The first question is regarding your gross margin for this quarter. I noticed the gross margin is relatively low, only 28%, compared with over 40% in previous quarters and you mentioned that one of the reasons for the low margin was due to the recognition of contracts which you recognized some relatively low gross margin contracts. Could you please give us a little bit color, like what types of contracts and, particularly, in which segment generally are like potential to have some like low-margin contracts and how this varies?

Hi, Paul. Well, in terms of the quarterly gross margin, we as we have always communicated with investors, quarterly gross margin can be lumpy quarter to quarter, just like we see a positive lumpiness in March quarter of 2011 up to 40%, like you just pointed out.

And for this quarter, we see a negative lumpiness to come down to 29%. Please don't read too much into this kind of quarterly lumpiness. What I'd like to pay attention to is the annual gross margin. if you look at our annual gross margin, which is at 34.7%, which is very much in line with last year and the year before's gross margin.

As a high-growth business at Hollysys, we like to pay attention to our market share and revenue growth and earnings growth going forward while maintaining the same, similar, gross margins. Quarterly gross margin lumpiness is expected.

In terms of more color on the few contracts or portions of the contracts being recognized to cause this kind of quarterly negative lumpiness, you can really get the idea of it must be from High-speed Rail or Subway businesses, which usually have a large average sales price. With this large volume of individual contracts, if we recognize a portion, specific portion, for a specific contract with higher margin or with lower margin for the quarter, it can sway the quarterly margin profile. So that's basically where it comes from.

Oh, so that's basically from the High-speed Rail and Subway contracts, right, the variation comes from this segment. So, my next question --

That's right. That's right, Paul.

Yes, okay, thank you. My next question is, in the past year your total revenue increased 50% year over year and you guided the next year the revenue growth is 35%. However, your backlog at this moment is only like 20% growth compared with the same period last year. Does this imply, like, shorter (inaudible), like a quicker turnover? Like when you're signing the contract to you finish the contract and recognize the revenue, is this -- do you see a shorter trend or like a quicker trend?

No, we don't see a different conversion cycle for our backlog. We don't. The conversion cycle from our backlog to revenue from different business lines still remains the same.

For our Industrial Automation segment, normally it takes about three to nine months to convert into revenue. For High-speed Rail, normally it takes about three to 12 months. For Subway, which is the longest, it takes roughly about 12 to 24 months and Nuclear, 3 to 12 months.

3 to 12 months for Nuclear?

That's right.

Peter, okay, I would like to just add a few comments. Okay? Because from -- just as I mentioned in my letter, the Industrial Automation now has built up the momentum to grow faster and also be recognized faster than the other businesses. So that, although the backlog increase is not that big, on the whole, on average, the whole business, because of the Industrial Automation building up the fast growth momentum, that makes our total revenue growth higher than the backlog. Okay?

Yes, that makes perfect -- very good sense. Okay. My next question is regarding your Industrial segment. Like you have been spending on the distribution networks during the past year and if I remember correctly, historically your Industrial segment is mainly concentrated in the power plants and the petrochemical. And going forward, do you particularly see any, like, particularly industries you are going to penetrate in? And if yes, your potential customers, do they previously using like other competitors' products or like individual or software or are they not automated at all?

So, just want some additional color on your Industrial segment, the development strategy.

Peter, I would like to --

Go ahead, Dr. Wang.

This is Changli. Okay, thank you for this question because I am very interested in this one.

Okay, now the Industrial business, the growth is a whole strategy. It's not based on one factor. In fact, first of all, we provide the end customers with more integrated solutions.

For example, originally, we only provide the customer with the DCS, which is only part of the automation system and now, with our more proprietary system putting out our own R&D work, for example, like the asset management systems and also the manufacturing execution systems and also the other, like optimization software, et cetera, all this adding the volume on that project compared with before.

And also, in another way, nowadays some of the customers, they ask us to provide a total integrated solution, not only from Hollysys but also from some other parts. Like, for example, some of the customers, they require us to provide the full package of not only the DCS control systems, but also some of the instrumentation, connected together so that the -- for the original customer, the package of the contract is bigger. That's one.

And the second is, we have already, just as I mentioned before, expanded our sales force and the sales network so that we can contact our customers in more detail and we found more and more potential customers that were not our customers before, previously, just as you mentioned.

For example, originally our main customers comes from the power and the chemical process industries and now we have found much more, like, for example, in China now we have a lot of projects for water processing, for new energy and also for the waste heat recycling process and also for the pulp and paper. And these kinds of industries originally they're using PLC rather than DCS and now the customers, many customers, realize that with the DCS they can get a better solution, a more integrated solution to them, so that we can (inaudible) not only our original segment business has grown because we supply a higher integrated solutions, but also we have expanded to a lot of new areas. So that's driven our business growth in the long run.

And by doing this, we find more and more and targeted markets before now. So that's why my colleagues, they are very confident in driving this part of the business with a higher growth in the quite long-term future. Okay? Thank you.

Okay, thank you very much. That's helpful. I will go back to the queue.

Okay, thank you.

Thank you. Your next question comes from Nicholas Allan from Boyer Allan. Please ask the question.

Hi, there. I wonder, can you give us a bit more color on the order outlook, sort of away from the Industrial Automation side? I mean, I guess High-speed Rail, as you said, is sort of on hold for the next month or so until you know what the picture is, but on both the Nuclear and the Subway, how you're seeing order flow or the likelihood of work availability over the next six, 12 months?

Yes. For Industrial Automation, like Dr. Wang already illustrated in his letter, we see a 30% growth rate going forward in this area, even though the -- currently the internal efficiency in MOR has been very slow since February, especially after the accident and we have already signed and announced two contracts since February of this year. One is for $20 million-plus for 200 to 250 kilometer ATP contract. The other one is about $3 million for the Panjin line in northeast China. And we are expecting to -- continuously to sign going forward towards the end of the year.

So -- and also, for the backlog on hand for High-speed Rail, the work in progress has not been halted or stopped in any ways. We still are working on the current projects by MOR, because our High-speed Rail signaling systems are very much back-end-loaded with overwhelming majority of the money already invested for high-speed rail lines, from construction to laying down the tracks, it is really almost the last piece of the equipment for our signaling equipment to be put in before the line turns into a commercial operation.

So the current orders on hand in our High-speed Rail business will continue to generate revenue for Hollysys for the coming fiscal year of 2012.

And on Nuclear and Subway?

Nuclear and Subway -- yes, Nuclear, as you noticed, we reported the historical record high backlog for Nuclear. We continuously deliver our systems to our JV with China Guangdong Nuclear Power Holding Corp., which is the largest nuclear station builder and operator in China and we don't see any robust growth in this area. We'll just continue to do whatever we have been doing in this area.

And for Subway, we expect the current business trend will continue over the next year.

Okay, Peter, I would like to comment more on the Nuclear, okay? So the Nuclear part, our subsidiary company with Guangdong Nuclear, the JV, in that JV, so far at hand we have 14 nuclear power plants under construction. So that's not consolidated in our backlog. That's a very big part of the business and that business needs us to work fully for the next three years to deliver our systems.

And also, with the Chinese energy structure, we are confident that after this disturbance of the Japanese tsunami accident, nuclear power plant emission accident, I mean, plays out, and also, all the safety regulation investigation is performed here in China, I'm sure, later, China will restart the construction of new nuclear plants, issue new nuclear power plants.

But still, as I said, even within the next two years, without any new projects, we still have three years of work, because we have 14 projects, which is the largest number in the world, nowadays, at hand. Thank you.

Very helpful. Thanks.

Thank you, everyone for joining us on the call today. If you haven't got a chance to raise your question, we'll be pleased to answer them through a follow-up contact. We look forward to speaking with you again in the near future. Thank you. (Spoken in Mandarin).

That does conclude our conference for today. Thank you for participating.

Thank you.