Lexinfintech Holdings Ltd (LX) 2023 Q1 法說會逐字稿

Good day, and thank you for standing by. Welcome to LexinFintech First Quarter 2023 Earnings Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded.

I'd now like to hand the conference over to Ms. Jamie Wang, IR Manager. Please go ahead, ma'am.

Thank you. Hello, everyone. Welcome to Lexin's first quarter 2023 earnings conference call. With us today on the line today are CEO, Jay Xiao; President, Jared Wu; and CFO, James Zheng. Before we get started, I'd like to remind you that the call and presentation containing business outlook and forward-looking statements, which are based on assumptions as of today. The actual results might differ materially, and we undertake no obligation to update any forward-looking statements. Jay will first provide an update on our overall performance. James will cover the financial results in more detail. And lastly, Jared will then discuss risk management.

I'll now turn the call over to Jay. His remarks will be in Chinese and the English translation will follow. Jay, please.

[Interpreted] Good morning and evening, everyone. It's my pleasure to speak with all of you again. In the first quarter, with the gradual recovery of consumption post-pandemic and the continued improvement of the overall macro environment, consumer finance started its moderate growth [as this] maintains growth through a 2-wheel drive strategy, risk upgrading and data-driven optimization, we achieved another quarter of strong results.

RMB 60.9 billion in loan originations volume, up 41.2% year-over-year. Total outstanding balance at RMB 107 billion, up 28.0% (sic) [27.7%] year-over-year. Revenue at RMB 2,980 million (sic) [RMB 2,983 million], up 74.0% (sic) [74.2%] year-over-year. Net profit of RMB 327 million, an increase of 302.0% year-over-year. As demonstrated by the first quarter results, our profitability has continued to improve, with net profit margin rising to 11.0% from 4.8% in the first quarter of last year and has grown steadily for the fourth consecutive quarter and various operating indicators are moving in the positive direction.

Let me elaborate in more detail. There were 3 major operational highlights in the first quarter. First, as we enhanced our user risk assessment capabilities, we accelerated our pace in reducing high-risk user segments and therefore, improved the overall asset quality. Second, we continue to refine operations and further optimized operational efficiency. Third, we have been implementing cost efficiency initiatives, as a result, our profitability has been steadily rebounding.

First, in terms of asset quality, we further pushed ahead on overhauling our risk management system, focused on maintenance and operation of high-quality existing customers and gradually eliminated more high-risk users. We have iterated and upgraded the user assessment system, the risk [branding] model, which automatically integrates a variety of risk models, along with the combination of multidimensional risk factors into an overall risk -- user risk assessment scheme. These upgrades help us to conduct more comprehensive risk assessments and therefore, make more accurate decisions on users. After being put into use, the new loan volume in the first quarter contributed by prime users increased to 88.0% from 77.0% a year ago.

Second, in terms of operational optimization, we upgraded our marketing system and segmented our user into more detailed and various categories. Based on the underlying customer tagging system and over 10 evaluation models of users' borrowing willingness, marketing preferences, responsiveness, offer satisfaction and et cetera. For some certain customer groups, the application of this new detailed separation of user segment models pushed up the operating profit of that specific customer group by 70.0%. On this basis, we sorted out a marketing strategy, decision tree structure and launched marketing strategies accordingly, which significantly boosted users' activities.

Under this new optimized operational system, in the first quarter, our [telemarketing] capabilities have been significantly strengthened. And the loan volume contributed by the telemarketing channel grew by 92.0% sequentially. At the same time, the cost significantly decreased in the quarter with telemarketing cost per sale fell 49% year-over-year, we expect it to save 23.0% of the original annual telemarketing cost.

On front of reactivating paid off customers, the conversion rate increased [16.0%] quarter-over-quarter. Loan volume from those converted customers grew [15.0%] quarter-over-quarter. Additionally, these results were achieved with half of the marketing costs.

Third, we have enhanced our profitability attributing to our continuous efforts in cost optimization initiatives and a further reduction in financing costs. In the first quarter of 2023, G&A expenses stood at CNY 97 million, a 17.0% (sic) [17.1%] decrease from a year ago. This is a clear indication of our improved operational efficiency.

Funding costs further dropped to 6.6%, which is 0.2 percentage points lower than last quarter and 1.6 percentage points lower from a year ago. It's worth noting that this is a historic low of funding costs during the past 3 years. In April, we successfully resumed our Annual Financial Partners Conference, which was suspended during the 3-year pandemic period. In the conference, we were very honored to have over 100 financial institutional partners with whom we will surely strengthen our business cooperation in the future.

We remain committed to investments in research and development as we firmly believe in technology is the core engine of our business growth. In the first quarter of 2023, research and development investment reached CNY 130 million, maintaining one of the highest technology input levels amongst our peers.

On the data front, we have put tremendous effort in data mining and analysis of our entire data. Accordingly, we are able to find links and correlations amongst various data sets. And links between low-level fundamental data sets and business models (technical difficulty) foundation of Lexin's data-driven and intelligent decision-making approach. Furthermore, we developed simulation predicting model, attribution model of abnormalities, AB testing platform and et cetera, all of which empowers management to steer business in a more data-driven and intelligent manner.

We have been continuously exploring the utilization of new technologies in optimizing operation efficiencies and users' experience. In the first quarter of 2023, we expanded the application of our AI large language model in our business at a faster pace. We saw a noticeable improvement in efficiency among the application areas, including coding assistant tools, initiatives of designs, telemarketing and smart customer services. For example, the application of this AI model in our telemarketing scenario pushed up credit line approval rate by 70% versus the technology service supplied by vendors and also boosting order placing rate on the exact date that borrowers are granted with credit lines by 10%.

Looking ahead, we'll also comprehensively apply the model to the areas of risk management, antifraud and et cetera. In addition, we further enhanced our existing unique Lexin ecosystem. First, e-commerce business reached CNY 1.13 billion GMV, an increase of 69.0% (sic) [68.8%] from last year. Cumulative customers grew by 71.0% compared to last year. The robust growth of GMV and users in e-commerce business effectively fuel the engine of Lexin consumption ecosystem.

Second, the technology-empowerment SaaS business achieved tangible progress, therefore, won the recognition from various financial partners, including local commercial banks with AUM over RMB 1 trillion, regional urban and rural banks. The technology-empowerment service facilitates our cooperation with financial partners and deepens our business relations.

Third, we plan to expand our offline sales team and leverage our expertise in direct sales channels in light of the gradual recovery of China's economic activity. Our offline acquisition channels bring more firsthand user information, hence more accurate credit assessment and eventually creating a unique competitive advantage. The strong results in the first quarter were mainly attributable to our risk management capabilities upgrading and customer risk assessment and therefore, the improvement in customer and asset quality. It is also due to our continued refining of operations and cost reduction initiatives. As of the second -- as for the second quarter, we understand the economic recovery and resuming consumption is a long process. We will continue to undertake a more prudent approach. Based on our preliminary estimations, loan volume in the second quarter is expected to reach RMB 63 billion to RMB 63.5 billion, a 28% to 29% growth year-over-year.

Next, I'll hand over the call to our CFO, James, to share more detailed financials. Thank you.

Thank you, Jay. I will now provide more details on our financial results. Please note that all numbers are in RMB unless otherwise stated. In the first quarter, we continued our fourth consecutive quarters of recovery, both in our overall business and in our financial numbers. We expect this trajectory of turnaround to continue in light of the rebound of China's economy and our dedicated efforts in optimizing operations. The strong performance in the first quarter was a result of the management's continuous efforts in overhauling our risk management, focusing on better quality user segments, upgrading our technology and operational capabilities, as well as our new cost restructuring initiatives.

First, please let me explain at a high level what happened in the quarter as compared with the same quarter of 2022. The loan originations for the quarter reached CNY 60.9 billion, an increase of 41% (sic) [41.2%] year-over-year, beating Q1 guidance we gave earlier. Revenue grew by 74.2% year-over-year to reach around CNY 3.0 billion for the quarter, which was mainly driven by the GMV growth and an increased loan balance, which reached CNY 107 billion.

The weighted average APR stood at approximately a little over 24% for the fifth quarter, close to around 1% points lower than a year ago. Loans with APR under 24% now make up more than 80% of all loans. Partially offsetting the negative impact from the lower APRs on our loans was a decrease in our cost of funding from 8.2% a year ago to 6.6% in Q1. It's worth noting that this is a historical low of funding cost during the past 3 years.

Loan tenders increased to 15.1 months versus 12.3 months a year ago. As we emphasized last quarter, overhauling risk management remains our top strategy for the year. We continue to focus on upgrading to better credit user segments and rebuilding the risk team, the systems and the process and the infrastructure. Jared will elaborate more on this shortly. The improved results from our efforts can be partially seen in our 30-day plus delinquency rate, which improved to 4.57% in the first quarter as compared to 4.62% in the fourth quarter of last year.

The 90-day plus delinquency rate stood at 2.53%, basically remaining stable as compared to the previous quarter. This was due to 90-day plus delinquency rate metric is a more lagging indicator than 30-day plus metric. In Q1, we have been pushing ahead a series of cost restructuring initiatives that we launched last year. We have seen some further improvements to operating expenses. Total operating related costs and op expenses, including processing and [servicing] costs, sales and marketing, R&D and G&A as a percentage of average loan balance stood at 1.16% versus 1.28% in Q1 of last year. This cost optimization happened despite of a slight pickup of sales and marketing expenses, while G&A, R&D and the processing and servicing cost all came down.

We will remain committed to undertaking these cost restructuring initiatives and expect our efforts to bear more fruit in the long run. As a result of the aforementioned, we are able to report net income of CNY 327 million, an increase of 302% year-over-year. The net margin improved to 11% versus 4.8% in Q1 last year. This clearly presents a steady upward trajectory of our operation results with each quarter improving over a year ago. Apart from the above year-over-year analysis, I would also like to elaborate a little bit more on the progress achieved through quarterly comparisons.

Total GMV was CNY 60.9 billion, an increase of 8.7% quarter-over-quarter as we grew the business with prudent approach and put risk management as a top priority. In the first quarter, we saw the GMV on our e-commerce platform came down slightly from boosted high level during Singles' Day shopping festival in Q4 last year. If we carve out the revenue from e-commerce business, total Q1 revenue grew by 4.5% quarter-over-quarter.

Considering the impact of e-commerce business seasonality, total revenue for the whole group stayed at about CNY 3 billion, almost flat on a quarter-over-quarter basis. Take rate fell slightly to 2.5% from 2.6% last quarter. The minor fluctuation in take rate is a blended result of the more booking of provision due to longer tenure loans and the continuous improvement in asset quality and the reduction in funding costs. Operating expenses stayed almost flat by a minor 1.6% increase quarter-over-quarter, attributing to pickup of sales and marketing-related costs and user growth. As a result of aforementioned, we achieved a sequential growth in the net income of 8.7% and have boosted net margin to 11% from 9.9% in last quarter.

To summarize, we have delivered a noticeable improvement during the first quarter from both a year-over-year and a quarter-over-quarter perspective. This marks the fourth consecutive quarter of V-shaped recovery, both in top line and bottom line since we hit the lowest point of operational results in Q1 last year. As we mentioned last quarter, although we are fully aware, we have a long way ahead in our turnaround, the year of 2023 unfolds with a good start indicating we are well on track.

Next, let's take a detailed look at the financials. As mentioned, our total operating revenue for the first quarter was CNY 3 billion, representing a decrease of 2.2% quarter-over-quarter due to seasonality of e-commerce business and an increase of 74.2% year-over-year, mainly driven by the credit facilitation services and the e-commerce business. Revenue from credit facilitation service was approximately CNY 2.1 billion, representing a 7.8% increase quarter-over-quarter and a 136% increase year-over-year, which is driven by the GMV growth.

Revenue from tech-empowerment service was CNY 368 million, representing 10.9% decrease quarter-over-quarter and a 26% decrease year-over-year, which was primarily due to the change of product mix among various tech-empowerment services. Revenue from installment e-commerce platform service was CNY 499 million, representing a decrease of 25.9% from the last quarter and an increase of 56.6% year-over-year, which is due to seasonality of e-commerce business.

Moving on to the expense side of the quarter. Sales and marketing expense increased by 4% quarter-over-quarter, which was mainly due to our stepped-up investment in acquiring better quality users. Our goal is to upgrade to better quality customer groups and obtain higher LTV. While we are taking a prudent new acquisition strategy now, we will keep on closely monitoring macro data as China's economy is gradually recovering and seize the growth opportunity when the right timing comes.

Research and development expenses decreased by 4.5% quarter-over-quarter and decreased 15.1% year-over-year to CNY 129 million (sic) [CNY 130 million] due to efficiencies. G&A expense stayed almost flat on a quarterly basis and a decrease of 17% year-over-year to CNY 97 million. It's a noticeable cost efficiency achievement that G&A expense remained at almost the same level on a quarter-over-quarter basis, while our top line GMV maintained an upward momentum due to a series of cost initiatives.

Going forward, we plan to step up efforts in this regard. Net profit was approximately CNY 327 million in the first quarter, an 8.7% increase quarter-over-quarter and a 302% increase year-over-year, which beat the high end of our initial expectations. At the end of the first quarter, the company had a cash position of around CNY 6.5 billion on hand and a net equity position of CNY 9 billion.

Finally, I would like to discuss our outlook for the second quarter of 2023. As we know, economic and consumption recovery usually will take time, as evidenced by the ongoing current quarter's modest growth. Therefore, we remain cautious and are monitoring closely on the overall macro and consumption outlook. Based on the company's preliminary assessment of the current market conditions, total loan originations for the second quarter of 2023 are expected to be around CNY 63 billion to CNY 63.5 billion, representing an increase of 28% to 29% on a year-over-year basis.

These estimates reflect the company's current expectations, which is subject to change. The strong results of first quarter demonstrates clearly that our turnaround is well underway. In the long run, our dedicated efforts in risk management, cost initiatives, as well as new user acquisitions will establish solid foundations for our long-term goal of sustainable growth.

With that, I would like to turn the call over to our President, Jared Wu, who will discuss our risk management. Jared, please go ahead.

[Interpreted] Thank you, James. Good morning, and good evening, everyone. It's my pleasure to speak with all of you again. I'd like to elaborate a bit more regarding on our risk management measures and improvements for the [past] quarter. Ever since the beginning of the year 2023, we saw a gradual recovery of China's economy. Accordingly, at the company level, we continue to implement our unwavering focus on risk management and the continuation of a prudent risk management and customer acquisition approach.

In addition, we have been allocating more resources and putting more effort to better serve and favor our prime customers. In terms of our risk modeling, we have been continuously iterating our [top 4 models] and enhancing our risk -- user risk assessment capability. In the first quarter of 2023, the day 1 delinquency continues to drop and overall asset quality got improved, with 30-plus day delinquency down 5 bps quarter-over-quarter at 4.57% and 90-plus day delinquency, even more on last indicator, standing unchanged sequentially at 2.53% as of the end of the first quarter.

Currently, as business and daily life of people continue to normalize and consumer confidence being gradually restored, we will continue to hold risk management as one of the top priorities in business operations, and we expect the overall asset quality to continue to maintain a positive upward momentum.

In the first quarter, increasing the proportion of prime customers remain our most crucial objective. Thus, we continue to work on upgrading our risk management system, including the following key initiatives. First, we continue to iterate and upgrade our risk management system under the business strategy of risk driving operations, and improve the granularity and the overall efficiency of risk management, further refining our customer segments and increasing the depth and width of our user identification capabilities, while continuing to review prior year's customers and optimize our asset structure.

Second, we put heavy emphasis on investing in the coverage of PBOC credit data and strengthen the utilization of credit data. In the meantime, we continue to introduce more compliant data sources, combined with a thorough usage of internal transaction behavior data to ensure that we can identify customer credit profile more accurately by further refined customer segmentation accordingly.

Third, we continue to iterate and upgrade model matrix for different customer segments. And our ability to assess customer credit profile has also got further improved, which should be the most essential pillar for us to increase the proportion of prime customers and will be one of the most key projects in which we continue to invest. We believe that in the remainder of 2023, we will make more breakthroughs in our user identification capability.

2023 is a year of economic recovery in China. We are committed to upgrading our core risk management capability and accelerating the strengthening of our refined risk management system. As Jay and James mentioned earlier, we maintain a cautious view of the macroeconomic environment, adhering to the principle of risk-driven, monitor the market externally and build capacity internally. Above all, we firmly believe that with [a verse] vision in mind and a solid infrastructure, we can continuously generate sustainable long-term returns for all shareholders. Thank you.

This concludes our prepared remarks. Operator, we are now ready to take questions.

(Operator Instructions) Our first question comes from the line of Frank Zheng from Credit Suisse.

(foreign language) This is Frank from Credit Suisse. My first question is regarding the supply and demand dynamics most recently. In the first quarter and second quarter to-date, how would you describe the recovery of credit demand? And on the supply side, is there any change in terms of risk appetite? On the other hand, could the management provide some more color on the strategic or operational focus for the rest of the year?

(foreign language)

Okay. So I'll do the translation. Thank you, Frank. In terms of demand side, as you can see from our first quarter's results, our overall loan volume have increased and we are -- we actually saw the rebound of the overall demand in the first quarter. It was mainly attributed by a couple of factors. The first one with the COVID and the lockdown quarantine being over, there was a spike in consumption needs and also the overall recovery.

Second, it was mainly due to our refined operations, as well as the capabilities in risk assessment being increased, we were able to better recognize customers to better serve the right customers and the good existing customers. This is that most of you already knew that we have a very large existing customer pool. With our improved risk assessment capabilities, we are able to better pick them out and better explore their value from the existing customers. And as of right now in the second quarter of 2023, we are -- as we can see the data right now, the trend is still stable.

But as the spring breaks by path, the demand has been slowing down a little bit, but the trend of increasing is still remaining relatively strong. And in that sense, we also have different products at our own ecosystem. We have the e-commerce, a very special consumption scenario. When the lending need is relatively not as strong as the previous quarter, we have another option to create demand, which is the product -- discount on products to attract our customers, whether it's new, whether it's the existing ones to make consumptions and to create demand.

So the second quarter as of right now, we are preparing to 618 festival, which would be a great opportunity to generate more demand, thanks to our unique ecosystem. When it comes to the funding cost side, I'd say the supply is still relatively strong and sufficient right now. Based on the current national situation right now from our funding partners, they have limited options to really invest in. And after 10 years, our risk level and our capabilities in risk management are recognized and approved by them. And also as you might know already, we had this [Cooperation] Conference Day with our funding partners, and all of them showed the willingness to make the cooperation deeper. And also as you can see, our funding cost actually lowered in the first quarter, and the overall supply is still relatively strong. I hope that answers your question, Frank.

(foreign language)

Okay. In terms of our key strategies, there are 4 main ones. The first one is the risk management capability upgrading. We have been undergoing -- undergoing certain strategies to upgrade our asset structure and to lower risk level, we are preparing the risk management 2.0 system and when it's ready, it will be -- we will get the upgrade in capabilities in risk management. Hence, we are actually doing it step by step to adjust and to operate. When it's ready, our capabilities in risk management and identifying user risk will be significantly upgraded. And also we continue to do the elimination of high-risk users, and we are in the progress of making it a common operational thing to do the routine elimination of the high-risk users.

Secondly, we'll try to continue to differentiate ourselves from others in customer acquisitions. Like I said earlier, we have different scenarios like e-commerce scenario and we have a very strong offline [Puhui] team. These are the advantages that will help us to strengthen our own capabilities. And third, we'll continue to do the refined operations to further increase the customers' LTV as well as the operational efficiency. Fourth, we'll continue to go through -- undergo the cost efficiency initiative. As you can see, in the first quarter, it shows some prominent results. The percentage of our operational costs has over the outstanding loan balance actually decreased and our net margin increased to 11%. And for the rest of the year, we aim to continue to increase our own profitability. Hope that answers your question, Frank.

Our next question comes from the line of Alex Ye from UBS.

(foreign language) So I'll translate for my question. First is on the loan volume run rate in April and May. Could you share with us how has the sequential movement seen so far? And how does the growth you have seen now compared to your previous expectations? Second question is on your asset quality trend. Could you share with us some of the early asset quality indicators, the trend in April and May? And do we expect further improvement from here?

(foreign language)

So as you heard already, for the second quarter, our guidance for the loan volume was CNY 63 billion to CNY 63.5 billion. But I could share some month over month in the first quarter results with you. The numbers of application wise, there was a minor peak in volume after the Chinese New Year. In the month of February, it showed an 8.0% increase quarter-over-quarter. For the month of March, it showed 2% month over month. And as of now, May, we are seeing a minor decrease in the amount month over month as the COVID passed, the needs spike kind of slowed down a little bit. We're seeing a little bit slowdown in demanding a bit entering the second quarter, but it's still in line with our management team's expectation.

(foreign language)

Okay. In terms of risk, we are seeing the first quarter's risk being stable and [decrease], and for the second quarter as of right now, certain early indicators, it's stable right now. But from the new loan perspective, the structure, the overall structure is actually better, whether it's the [R1 to 3] -- the percentage of R1 to 3 is being increased, the [R6 to 8] percentage is being decreased from the new loan perspective, they are overall better. And with the monthly new loan structure being continually improved, our overall risk level will be improved in the future with -- and there are still some optimization rooms when it comes to the overall risk level. Hope that answers your question, Alex.

Our next question comes from the line of Yada Li from CICC.

(foreign language) Then I'll do my translation. This is Yada from CICC. And my first question is regarding the choice of the lending model. And could you please give us more color on the trend of the credit facilitation and the risk sharing model or tech-empowerment services in the future? And would there be any plans to increase the on-balance facilitation? Secondly, I was wondering about the recent updates and outlook of (inaudible) and other new consumption business? That's all.

So I would take a crack at the first part of the question, and Jay will answer the second part of your question. The first part of the question is related to risk taking and profitability. Obviously, at the company level, we always try to achieve the balance. Obviously, it makes sense that if risk improves, then I want to do a little bit more so that I increase the profitability. If somehow the risk is worsening, obviously, I don't want to do more, right, I want to do less, so that I can retain my profitability. So that has been our kind of attitude.

Resulted out of this basically is reflected here in terms of the proportion of the business, where we take risks that is in the loan facilitation business and in RevShare business reflected in our tech-empowerment part of the business. Right now, the RevShare business, basically, we don't take much risks in this part. It accounts for roughly 26% or so. And in the last year, several quarters has been hovering between, say, 20% to 30% also. So we are watching very closely of the overall macroeconomic data and our overall risk indicators.

If the overall macro data continue to improve and our asset quality continue to improve, obviously, the overall credit situation is improving, then it doesn't preclude us from really taking a little bit more risks, so that we increase the overall profitability for the company. So basically, that's our kind of thinking, if you will, to run the business. Now, Jay, for the second part of the question.

(foreign language)

Okay. So as you know, we have our own Lexin ecosystem. E-commerce wise, the overall increase has been very strong, especially with other e-commerce peers or others in the industry being in the very heavy competition. As you can -- as I shared already in the first quarter, not only the volume in GMV increased year-over-year, but also the revenue, as well as the customer cumulative trading customers. They are only larger than our main business or other business within the company, they are exponentially actually larger than the overall increase in speed in the industry. So the customers that we serve in our e-commerce areas are mostly customers with actually credit consumption.

Under the current situation right now, the overall macro economy and environment of the APR requirements seem a little bit higher. These requirements being a little bit higher actually gives the e-commerce sector a bit more opportunity to increase and expand a little. Furthermore, e-commerce could actually help us with the customer acquisition and as well as the customer retention with our main business, which is our loan facilitation business in the future.

Next is our offline Puhui team. Our offline Puhui team mainly realized on the offline BD operations, which right now the economy being resumed, being in recovery. The team actually helps with our customer acquisition cost and as well as risk level. We can see there are a lot of advantages comparatively when the online traffic being more expensive as well as being more rare, the offline Puhui team helps us to evaluate customers with -- to evaluate customers more accurately as well as gave us the capability to understand their willingness as well as to keep them in retention.

Especially with the existing customers' competition, we get to know them better via Puhui team, and we will continue to increase the investment on our offline Puhui team to help us to differentiate when it comes to customer acquisition front to better acquire better customers. And another business I'd like to mention is our tech-empowerment SaaS business. It's pretty much a cumulated experience of 10 years of standardized capabilities. We already got into cooperation with relative sizable volume with 5 or 6 -- 5 to 6 of our banking partners and our funding partners. It's pretty much a monetization of our past experience.

We use them to -- we use our experiences and capabilities to help them, and in return, they strengthen the cooperation in our main business, helping us with a relatively lower funding cost than the current average funding cost. So I think this is a very unique system that Lexin has. We believe the cooperation between aforementioned business will be strengthened and will be more inter-relatable in the future to help us to differentiate ourselves amongst our peers. Hope that answers your question, Yada.

Thank you. I'm showing no further questions. I'd now like to turn the conference back to the management team for closing remarks.

Thank you, again, everyone for joining us. If you have further questions, please contact us via our contact information available on our IR website. Thank you.

(foreign language)

Thank you. That concludes today's conference call. Thank you for participating. You may now disconnect.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]