China Index Holdings Limited

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Welcome to the China Index Holdings Limited full year 2022 second fiscal quarter earnings conference call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star 11 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the call over to your first speaker today, Jesse Yang. head of investor relations of China Index Holdings. Thank you. Please go ahead.

Thank you, operator. Hello, everyone, and welcome to China Index Holdings' second quarter 2022 earnings conference call. Joining us today to discuss CIH's results are our CEO, Ms. Yu Huang, and Deputy CFO, Ms. Lily Chen. After the prepared remarks, our management will answer your questions. Before we get started, I would like to remind you that during the course of this conference call, we may make forward-looking statements, statements that are not historical facts, including statements about our beliefs and expectations. Forward-looking statements involve inherent risk and uncertainty. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. CIH assumes no obligation to update the forward-looking statements in this conference call and elsewhere. Potential risk and uncertainties include but are not limited to those outlined in our public filings with the SEC, including our Form F-1. Now I would like to walk you through our second quarter 2022 results, after which Ms. Huang will answer your questions for the Q&A session. CIH reported total revenues of RMB 110.2 million in the second quarter of 2022, a decrease of 27.8% from RMB 152.7 million in the corresponding period of 2021, primarily due to the broad macro environment challenges the industry was facing. Revenues from information and analytics services, SAS, were RMB 63.4 million in the second quarter of 2022, a decrease of 14.4% from RMB 74.1 million in the corresponding period of 2021. Revenues from Marketplace Services were RMB 46.8 million in the second quarter of 2022, a decrease of 40.4% from RMB 78.5 million in the corresponding period of 2021. Cost of revenues was RMB 19.5 million in the second quarter of 2022, a decrease of 31.8% from RMB 28.6 million in the corresponding period of 2021, primarily due to the cost-saving actions CAH has taken in response to the broad macro environment challenges. Operating expenses were RMB 45.7 million in the second quarter of 2022, a decrease of 12.1% from RMB 52 million in the corresponding period of 2021. Selling and marketing expenses were RMB 29.4 million in the second quarter of 2022, a decrease of 8.9% from RMB 32.2 million in the corresponding period of 2021. General and administrative expenses were RMB 16.3 million in the second quarter of 2022, a decrease of 17.2% from RMB 19.7 million in the corresponding period of 2021. Operating income was RMB 45 million in the second quarter of 2022, a decrease of 37.6% from RMB 72.1 million in the corresponding period of 2021. Income tax expenses were RMB 25.3 million in the second quarter of 2022. an increase of 152.4% from RMB 10 million in the corresponding period of 2021. Net income was RMB 21.2 million in the second quarter of 2022, a decrease of 68.6% from RMB 67.3 million in the corresponding period of 2021. In the first half of 2022, CAH reported total revenues of RMB 228.7 million, a decrease of 20.1% from RMB 286.4 million in the corresponding period of 2021, primarily due to the broad macroenvironment challenges the industry was facing. Revenues from Information and Analytic Services staff were RMB 120.1 million in the first half of 2022, a decrease of 12.9% from RMB 137.9 million in the corresponding period of 2021. Revenues from marketplace services were RMB 108.6 million in the first half of 2022, a decrease of 26.8% from RMB 148.5 million in the corresponding period of 2021. Cost of revenues was RMB 41.2 million in the first half of 2022, a decrease of 23.5% from RMB 53.9 million in the corresponding period of 2021. primarily due to the cost-saving actions CIH has taken in response to the broad macro environment challenges. Operating expenses were RMB 97.2 million in the first half of 2022, a decrease of 2.4% from RMB 99.6 million in the corresponding period of 2021. Selling and marketing expenses were RMB 53.9 million in the first half of 2022, a decrease of 8.2% from RMB 58.8 million in the corresponding period of 2021. General and administrative expenses were RMB 43.3 million in the first half of 2022, an increase of 6% from RMB 40.8 million in the corresponding period of 2021. Operating income was RMB 90.3 million in the first half of 2022, a decrease of 32% from RMB 132.9 million in the corresponding period of 2021. Income tax expenses were RMB 32.3 million in the first half of 2022, an increase of 67.9% from RMB 19.2 million in the corresponding period of 2021. Net income was RMB 63.1 million in the first half of 2022, a decrease of 49.1% from RMB $123.9 million in the corresponding period of 2021. Due to current unstable market conditions, management believes CIH's 2022 annual revenue is expected to record a double-digit decrease year over year. These estimates represent management's current and preliminary views, which are subject to change. And I would like to thank you for joining us today, and we are now open for questions. Operator, please go ahead.

Thank you. As a reminder, to ask a question, you will need to press star 1 1 on the telephone.

Please stand by while we compile the Q&A roster.

First question comes from the Lyle Watson Q. Please go ahead.

Hi. Good evening. I have a few questions. One is, why information analytics revenue increased between Q2 and Q1, but marketplace revenues fall? The second question is, what are the key data and indicators that CIH collects to monitor whether the Chinese real estate market is recovering or worsening? And how long do you estimate the downturn to be? The third question I have is the minimum bid price issue. What are the options that CIH can consider to resolve it? And is there any risk of delisting similar to China Mobile? And the final question is, is there any concern about a significant increase in accounts receivable? Thank you very much.

Thank you, Watson. Now I will translate for Ms. Huang, and then we'll get back to you with the answer. Thank you.

Not all of them.

Thank you for your question. Let me answer your first question first. The growth of our data between Q1 and Q2 is mainly due to the fact that when the data changes compared to the market, it is more difficult for our customers. Because the more the market changes, the more people pay attention to the data. From the perspective of the market service, it may be with the changes in the market, once the market is adjusted, its need for this is not so rigid compared to the data. It will happen more with the adjustment of the market. The trend of change is consistent with the adjustment of the market, and the demand for data is more rigid.

Okay, so thank you for your questions. For question one, between the first and second quarter, our data and analytics services has increased, and this is because for our clients, data is a fundamental need, and especially when there are changes in the market, market participants and industry participants need data to monitor what is going on. marketplace services in comparison is less of a basic need than our data services.

We have our own logic to collect data from any project. From any project, from the ground up, we start to collect the data, the price of the land, the main information related to the land, such as its planning area, its property type, etc. Then we use our tools, our SaaS tools, to carry out a series of analysis of the land. Then I will make some analysis reports. There are three tools to produce a report. Then after selling in this area, then enter the new house's sales market. We will track when this project is listed, how many areas are listed, and then the recommended area, what kind of situation is about each set of areas, about its price, the price of its every sale. and the price of the new house. When it enters the second-hand market, we will see a change in the price of the second-hand house of each building. How much is the price of each house? Then what is the price of this transaction? What is the trend of its price change? Basically, any area is a unit from the launch of the area to the tracking of the new house market to the second-hand market, including property management, and then a series of tracking to collect all the relevant data. And then collecting this data, we can also use this data to make a system database. And there are also a series of tools, including some of our models, some algorithms, including the development of a series of from the investment side, from the market marketing side, and then a series of SaaS tools for our clients to use. We may be different from some data companies. They may only have data and do not adapt to the changes in the real estate market, including some SaaS tools that understand the scene of the real estate market. We have both data and tools, and this is one of our products.

Okay, so for your second question, CAH has their own logic for data collection, starting with land sales and auctions. So we monitor land prices and information regarding the land, regarding the slot. So for example, what type of land this is, the size, and the type of property. We have analytic reports, SAS tools, around this information. And after the sale of this lot, we follow the project. So from its development, when it is introduced, the size and price of each sale, and changes in sale price. After these new constructions, we follow the same lot of land in the secondary market. So price changes for each transaction, price trends, et cetera. And looking at the specific lot from land to new development to secondary market sales, we collect the data and we input the data into our own models. And so from the land sales platform, there's also a marketing platform to help sell the agents. And so one reason that we are different from other data services companies is that maybe some of them have data only, but they don't have tools that monitor changes in the broad real estate market. So for us, we have both data and the analytical tools. Thank you. Now for the third question.

In the past, we have used data to monitor the changes in the market and provide customers with the basis for judging and adjusting the market. From the perspective of our monitoring, ah ah China has experienced rapid development and this kind of adjustment is also It is also a necessity. In the next adjustment, the layers will be divided. More layers will be 1st and 2nd layer. The market will be more resilient. The 3rd and 4th layer will be more adjusted. In fact, from the distribution of our own business, we have always been in the main layer of China. For some major companies in the main layer of China,

Okay, so there was a second part to the second question, which was around the decline of the Chinese real estate market. We monitor the Chinese real estate market through data and provide for our clients a basis for market analysis. From our data and from transaction volumes and changes in price, we can see that the real estate market is in an adjustment phase currently. At the same time, we know that the Chinese government and local governments have put out a lot of policies in order to try to stimulate the market. These policies are slowly seeing their effects, and this is present especially in second-tier cities, that this can be seen as being effective, and it's less effective in third- and fourth-tier cities. And after the fast development of the Chinese real estate market in the past, it is normal that they are going through an adjustment phase. And then first and second tier cities are relatively more stable compared to third and fourth tier cities. And our business in particular is present in China's main markets around the country and servicing the main clients that are present in those cities.

Thank you. The third question is about the change in the stock price of the entire CIH, because the stock market in the U.S. is not performing so well. We will also pay close attention to this situation and discuss some plans. We are a market-based company. We are a market-based company. We are a market-based company.

So the third question was regarding, say, Asia's stock price. And in general, Chinese companies that are listed in the U.S. are not performing well. We are monitoring the situation actively. And regarding some of the names that you mentioned, how we are different is that they are Chinese state-owned enterprises, and we are a private company. And in this way, we are fundamentally different from them.

This is the third question, right? The fourth question is actually about the growth of our income. I think there are two aspects. One aspect is that after some changes have been made to the entire market, the period of our transfer of accounts is slightly longer than it used to be, but we still belong to most of the products or belong to the first payment and then service, so it should be to some extent, this one should be from this bad side, there should be no too much risk of this development, there is no too much risk of this development, this is a So for the fourth question regarding accounts receivable,

There are two parts to this question. First is we are experiencing market adjustment in the broad real estate market, and so our collection time is lengthier than before. However, most of our products and services are prepaid, are paid in advance, and so from a bad debt perspective, there is low risk in this area. Secondly, in the broad macro environment, we are working to develop new clients, including new sectors, and we're working continuously to sign new customers.

Thank you. Operator, we can go to the next question.

Certainly. The next question comes from the line of Sam John from Prominence Capital. Please go ahead.

Good evening. Thank you for hosting this call. I have three questions. The first question is, Can you talk about the amounts due from related party of 31.788 million? Can you explain, elaborate on that and when you expect that amount to be repaid? That's number one. The second question relates to your income tax expenses and maybe some more clarity on why income tax expense increased by 152%. And then the third question is a follow-up to the first questioner's question on regaining compliance with the minimum price, bid price requirement. Why doesn't the company, I guess the simplest solution may be to engineer a reverse stock split. So is that being considered? If not, why? Thank you.

Okay, thank you. Let me translate briefly.

Yes, thank you.

The first question is about the 3,1 million yuan. In fact, every quarter, we have a regular amount of money that the housing authority pays us. This amount of money is the total amount of each quarter per year. Okay, so thank you for your question. The first question regarding the 31 million payments.

It is a payment in advance by FON that CIH repaid and this payment is approximately the same amount every year but the timing of the payment may be different and this is why you're seeing this in the financial statements. But it is part of uh normal operations uh

So regarding the income tax expenses,

We are looking after seeing a strong dollar this year. We have decided to exchange into USD in order to prepare for USD expenses potentially in the future. 您提的第三个问题就是说我们合并那个股价的这个事情,这个我们也内部还在讨论当中,我们也还在讨论当中,没有最后进行一个确定,我们也是在考虑。 Regarding the third question on the reverse stock split, we are discussing this issue internally, and we are considering this option among others. Thank you.

As a reminder, if you'd like to ask questions, please press star 1-1.

Once again, to ask question, please press star 11. Thank you. We have a follow-up questions from Watson Teo.

Please go ahead.

Hello. Thank you very much for your clear answer. I have a question, a follow-up question. When you mentioned about how long the downturn lasts, are you saying that because your business is mostly in the first and second tier cities, you will be less affected by the ongoing crisis in China, real estate? The second question I have is I'm a shareholder, retail shareholder, and I don't buy the China Impact Holdings, your tools. So from a retail shareholder perspective, what would you recommend as the data or companies that we can look at to monitor whether the real estate market is improving? And the last question is, based on your understanding of the China policies, do you think that the Chinese government will require state-owned banks and insurers, large ones, to absorb losses from the developers? Thank you very much. That's all I have.

Watson, what was the last question? Can you repeat the last question?

Sorry, Watson, would you mind to press star 11 again?

Thank you. Yes, please go ahead.

Okay, thank you very much, Jesse. Thanks. Yeah, the last question is based on your experience and understanding of the policies in China, the government policies. Do you think that the Chinese government will require state-owned companies like banks and insurers to absorb losses in order to stabilize the market? How do you think, I mean, just based on your experience, the market can be stabilized? Yeah. Thank you.

Got it. Thank you. Okay, let me translate your question, please.

Thank you for your question. I think there are several reasons why we have a relatively small impact on Afghanistan. In one way, it is true that more of our original services, including our customers, are still concentrated in the first and second-tier markets. Because in the first and second-tier markets, China's large real estate market is less affected. This is one reason. Another reason is that you do services. In this market, as long as the entire market is still there, and then there is a batch of enterprises that can't do it, but this market still needs another batch of enterprises, another batch of enterprises will rise. So, in fact, we now have some updates from our customers. We say that our customers are also changing warehouses. So, in the process of changing warehouses, It must be inevitable that the original one, because the faster you change the warehouse, the less you may be affected. Now, in fact, we still have some influence. Because to some extent, the speed of your change is not that fast. But we gradually, if we have a new batch of customers, we change over to some new market customers, gradually use our products, then our market Our service will also be restored to a more normal level. This is one. On the other hand, it is true that some of the new customers mentioned just now, including some local state-owned enterprises, including various financial institutions, they are in this round. Local state-owned enterprises, now the country also needs them to play the role of local state-owned enterprises. These are also some of our new customers. There is another one. It's some of the big financial institutions all over the place. In this regard, he also faces some risks that need to be resolved. His risks also need to use our data to help them make decisions. In the third aspect, there are some problems with China's new housing market. However, our stock market services, including property services and so on, are also relatively stable. After China enters the stock market, there will be more services and they will gradually become our customers. Because our customers are constantly updating their stock, and there is also a part of the new customer increase, which makes our market impact a little smaller.

Thank you for your question. For the first question, relatively speaking, we are less affected by the broader real estate market. And this is because our products and services are concentrated mostly in first and second tier cities. And they are in turn less affected by the broader economic market downturn. In the services industry, since we are in the services industry, As long as the broader market exists and the demand is there, as some companies perhaps fail, other companies will rise and meet the gap in demand. Internally, we say that there is a turnover in our client base and we are still affected as this turnover in client base is relatively slow and our revenues slowly are recovering. And then for regional state-owned enterprises and financial services, for the financial services, they need our data for risk management and decision-making. And so the regional SOEs and financial service industry, they are becoming our new clients. And in the Chinese real estate market, the new developments are facing headwinds, but the existing market and service sector around real estate, they still need our products and services. And so our client base is continually evolving, and the addition of new clients kind of mitigates the effect that the broader real estate market have on our performance.

Then the second question you mentioned is about individual users. We also have products for individual users on the C-end. They are all on our Zongzi cloud. There is a data layer on the Zongzi cloud. That means you buy one data, two data, or buy a set of data, you can pay more attention to it, or you pay special attention to one or two sets, for example, housing prices, including the sales volume of a certain city, etc. This is the latest data at the moment, or some data from the past history. You can press one of the data, press a set of data, and there will be sales. You can also click on it to do some mutual consumption, and then you can see it. At the same time, you need to understand some levels of market change. We also have some reports, and those reports can sell for 10 yuan, 20 yuan, and then this is the people's interest, and then this kind of uh, Okay, so for the second question, for our retail clients,

we actually do have products and services. They are located on what we call the CIH Cloud, and it is a database market. And you can purchase one or two or multiple groups of data markers, and for example, prices or transaction volume in certain cities, as well as historical data. And at the same time, you can monitor changes of the market, real estate market, in specific cities. And you can also purchase reports for 10 or 20 RMB to understand local market changes. And at the same time, if you have a company as a small, medium enterprise, you can register for a trial of our data and tools, and the trial is usually for seven days. 第三个问题的话,其实对于这一轮市场调整当中,

uh, uh, uh, So in this process, let's say some real estate companies may have used the project as a base for the bank and then also have some loans. What about these loans? So the bank may not have its base material. This will also change according to the market and then carry out the corresponding management and so on. In the end um At the same time, the government may play a certain role in this project. It will play a certain stage role in protecting and paying for the building. But in the end, it will also be a project after a project to carry out some corresponding settlement. Then, even if the government gives some funding support to protect the building, it will also carry out a corresponding settlement when the project is settled. So for the third question, we are in the current cycle of market adjustment, and financial services have teamed up with developers in the past

And as a result, some projects due to the market have decreased their sale prices, and there are losses involved as a result. And the developers use the development projects as collateral, and some may have been defaulted, so it's now in the hands of the banks for treatment. And regardless of loss or gain, the main kind emphasis is still on market prices and market operations the central government emphasized the focus on kind of specific projects as a focus for the treatment of bad debt or or financial restructuring and financial responsibility so the government will provide some financial support for the final payment kind of segments and But again, it will be on a project-by-project basis, and we do not see the government bailing out the sector in general. Thank you.

Thank you for the questions. We do have a follow-up question. Just a moment while the line is being opened.

Sam John, your line is now open.

Thank you. Apologies if I've missed it, but has the company responded to the going private proposal from General Atlantic? That was made in November of 2020. If not, is that proposal still under consideration? Thank you.

Thank you. Thank you for your question.

The last GA appointment was almost two years ago. So far, we have not received a new appointment. If there are any changes in the future, we will make an announcement in time and respond as soon as possible.

So thanks for your question. So the last time we received the offer from General Atlantic, it has been almost two years. And we have not received any new offers on this, but if there's any changes, we will actively post, send a press release.

Thank you. Thank you for the questions.

Pull up questions from the line of Watson Teo. Please go ahead.

Hello. Yeah, I just want to say thank you. And I will pull up maybe with Jesse on how to buy the retail data. I don't know where to do. My Chinese is not very good. But thank you.

Thank you, Watson. Yes, I'd be happy to follow up with you on that.

Thank you for the questions.

We have a pull-up question from Sanjom. Please go ahead.

Yes, hi, just a follow-up again on the proposal from General Atlantic. Did the company actually respond, did the board actually respond to the proposal? I don't see a press release. I'm just wondering what the board's evaluation of the proposal was and whether there was an actual response made, and has that offer expired? Thank you.

Thank you.

Yeah, hi, Sam. This is Jessie. So I will respond to your question directly. Basically, at the time we received General Atlantic's offer, the board did have discussions around the offer. However, since then, we did not receive any updates from General Atlantic. So there has been no new developments on this. However, if anything changes, we will make press releases. Thank you.

Thank you for the questions. With that, we have come to the end of the Q&A session. So I'd now like to turn the conference back to the management for closing remarks.

Thank you, operator. And thank you, everyone, for joining China Index Holdings.

This concludes today's conference call. Thank you for participating.

We look forward to speaking with you again for our third quarter 2022 earnings call. Thank you.

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

The conference will begin shortly. To raise your hand during Q&A, you can dial star 1 1. you Thank you. Thank you. Thank you. Thank you. Thank you. you Thank you.

Good day and thank you for standing by.

Welcome to the China Index Holdings Limited full year 2022 second fiscal quarter earnings conference call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you need to press star 11 on your telephone. Please be advised that today's conference is being recorded. I'd now like to hand the call over to your first speaker today, Jesse Yang. head of investor relations of China Index Holdings. Thank you. Please go ahead.

Thank you, operator. Hello, everyone, and welcome to China Index Holdings' second quarter 2022 earnings conference call. Joining us today to discuss CIH's results are our CEO, Ms. Yu Huang, and Deputy CFO, Ms. Lily Chen. After the prepared remarks, our management will answer your questions. Before we get started, I would like to remind you that during the course of this conference call, we may make forward-looking statements, statements that are not historical facts, including statements about our beliefs and expectations. Forward-looking statements involve inherent risk and uncertainty. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. CAH assumes no obligation to update the forward-looking statements in this conference call and elsewhere. Potential risk and uncertainties include but are not limited to those outlined in our public filings with the SEC, including our Form F-1. Now I would like to walk you through our second quarter 2022 results, after which Ms. Huang will answer your questions for the Q&A session. CIH reported total revenues of RMB 110.2 million in the second quarter of 2022, a decrease of 27.8% from RMB 152.7 million in the corresponding period of 2021, primarily due to the broad macro environment challenges the industry was facing. Revenues from information and analytics services, SAS, were RMB 63.4 million in the second quarter of 2022, a decrease of 14.4% from RMB 74.1 million in the corresponding period of 2021. Revenues from Marketplace Services were RMB 46.8 million in the second quarter of 2022, a decrease of 40.4% from RMB 78.5 million in the corresponding period of 2021. Cost of revenues was RMB 19.5 million in the second quarter of 2022, a decrease of 31.8% from RMB 28.6 million in the corresponding period of 2021, primarily due to the cost-saving actions CAH has taken in response to the broad macro environment challenges. Operating expenses were RMB 45.7 million in the second quarter of 2022, a decrease of 12.1% from RMB 52 million in the corresponding period of 2021. Selling and marketing expenses were RMB 29.4 million in the second quarter of 2022, a decrease of 8.9% from RMB 32.2 million in the corresponding period of 2021. General and administrative expenses were RMB 16.3 million in the second quarter of 2022, a decrease of 17.2% from RMB 19.7 million in the corresponding period of 2021. Operating income was RMB 45 million in the second quarter of 2022, a decrease of 37.6% from RMB 72.1 million in the corresponding period of 2021. Income tax expenses were RMB 25.3 million in the second quarter of 2022. an increase of 152.4% from RMB 10 million in the corresponding period of 2021. Net income was RMB 21.2 million in the second quarter of 2022, a decrease of 68.6% from RMB 67.3 million in the corresponding period of 2021. In the first half of 2022, CAH reported total revenues of RMB 228.7 million, a decrease of 20.1% from RMB 286.4 million in the corresponding period of 2021, primarily due to the broad macroenvironment challenges the industry was facing. Revenues from Information and Analytic Services staff were RMB 120.1 million in the first half of 2022, a decrease of 12.9% from RMB 137.9 million in the corresponding period of 2021. Revenues from marketplace services were RMB 108.6 million in the first half of 2022, a decrease of 26.8% from RMB 148.5 million in the corresponding period of 2021. Cost of revenues was RMB 41.2 million in the first half of 2022, a decrease of 23.5% from RMB 53.9 million in the corresponding period of 2021. primarily due to the cost-saving actions CIH has taken in response to the broad macro environment challenges. Operating expenses were RMB 97.2 million in the first half of 2022, a decrease of 2.4% from RMB 99.6 million in the corresponding period of 2021. Selling and marketing expenses were RMB 53.9 million in the first half of 2022, a decrease of 8.2% from RMB 58.8 million in the corresponding period of 2021. General and administrative expenses were RMB 43.3 million in the first half of 2022, an increase of 6% from RMB 40.8 million in the corresponding period of 2021. Operating income was RMB 90.3 million in the first half of 2022, a decrease of 32% from RMB 132.9 million in the corresponding period of 2021. Income tax expenses were RMB 32.3 million in the first half of 2022, an increase of 67.9% from RMB 19.2 million in the corresponding period of 2021. Net income was RMB 63.1 million in the first half of 2022, a decrease of 49.1% from RMB $123.9 million in the corresponding period of 2021. Due to current unstable market conditions, management believes CIH's 2022 annual revenue is expected to record a double-digit decrease year over year. These estimates represent management's current and preliminary views, which are subject to change. And I would like to thank you for joining us today, and we are now open for questions. Operator, please go ahead.

Thank you.

As a reminder, to ask a question, you will need to press star 1 1 on the telephone. Please stand by while we compile the Q&A roster. First question comes from the line of Watson 2. Please go ahead.

Hi. Good evening. I have a few questions. One is why information analytics revenue increased between Q2 and Q1, but marketplace revenues fall? The second question is what are the key data and indicators that CIH collects to monitor whether the Chinese real estate market is recovering or worsening? And how long do you estimate the downturn to be? The third question I have is the minimum bid price issue. What are the options that CIH can consider to resolve it? And is there any risk of delisting similar to China Mobile? And the final question is, is there any concern about a significant increase in accounts receivable? Thank you very much.

Thank you, Watson. Now I will translate from Ms. Huang, and then we'll get back to you with the answer. Thank you.

Thank you for your question. Let me answer your first question first. The growth of our data between Q1 and Q2 is mainly due to the fact that when the data changes compared to the market, it is more vulnerable to our customers. Because the more adjustments there are in the market, the more people pay attention to the data. From the perspective of the market service, it may be with the changes in the market, once the market is adjusted, its need for this is not so rigid compared to the data. It will have more changes in the market with the adjustment of the market. The trend of change and the adjustment of the market are the same, and the demand for data is more rigid.

Okay, so thank you for your questions. For question one, between the first and second quarter, our data and analytics services has increased, and this is because for our clients, data is a fundamental need, and especially when there are changes in the market, market participants and industry participants need data to monitor what is going on. market place services in comparison is less of a basic need than our data services.

The price of the land, the main information related to the land, such as its planning area, its property type, etc. Then we use our tools, our SaaS tools, to carry out a series of analysis of this land. Then I will make some analysis reports. There are three tools to produce one thing report. Then after selling this piece of land, then enter the new house's sales market. We will track when this project will be listed, how many areas will be listed, and then the recommended area, what kind of situation is about each set of areas, about its price, the price of its every sale. and the change in the price of the new house. When it enters the second-hand market, we will see a change in the price of the second-hand house of each building. How much is the price of each house sold? What is the situation? What is the trend of the price change? Basically, it is to use any land as a unit, from the beginning of the land to the new house market, to the house market, to the second-hand market, including property management, and then carry out a series of tracking to collect all the relevant data. And then then collect this data, it can also be used with us. We also use this data to make a system of this kind of database and it is also used to have a series of tools, including some of our models, some algorithms, including the development of some series of this thing, this room, this from the land investment end, from the market marketing end, and then a series of SaaS tools for our clients to use. We may be different from some data companies. They may only have data and do not have the appropriate tools to adapt to the changes in the real estate market, including some SaaS tools that understand the scene of the real estate market. We have both data and tools, and this is one of our products.

Okay, so for your second question, CAH has their own logic for data collection, starting with land sales and auctions. So we monitor land prices and information regarding the land, regarding this lot. So for example, what type of land this is, the size, and the type of property. We have analytic reports, SAS tools, around this information. And after the sale of this lot, we follow the project. So from its development, when it is introduced, the size and price of each sale, and changes in sale price. After these new constructions, we follow the same lot of land in the secondary market. So price changes for each transaction, price trends, et cetera. And looking at the specific lot from land to new development to secondary market sales, we collect the data and we input the data into our own models. And so from the land sales platform, there's also a marketing platform to help sell the agents. And so one reason that we are different from other data services companies is that maybe some of them have data only, but they don't have tools that monitor changes in the broad real estate market. So for us, we have both data and the analytical tools. Thank you. Now for the third question.

As for the term end, we have been using data to monitor the changes in the market, and it provides us with a relevant basis for judging the changes and adjustments in the market. Then from our monitoring of this kind of situation to see ah currently ah from our this ah this market of this kind of sales volume ah from its volume including the change in price ah you can see this ah this housing market is still in adjustment ah is still in adjustment but this kind of it because ah this at the same time the government ah Chinese government related departments ah including local governments have also taken some appropriate measures ah including all kinds of that is for market change, including achieving a steady price and a steady price and a steady price and a steady price and a steady price and a steady price and a steady price and a steady price and a steady price and a steady price and a steady price and a steady price and a steady price and a steady price China China China China It is also a necessity. In the next adjustment, the layers will be divided. There will be more 1st and 2nd layer layers. The market will be more resilient. The 3rd layer layer will be more adjusted. In fact, from our own distribution of business, we have always been in the main layer of China. For some major companies in the main layer of China,

Okay, so there was a second part to the second question, which was around the decline of the Chinese real estate market. We monitor the Chinese real estate market through data and provide for our clients a basis for market analysis. From our data and from transaction volumes and changes in price, we can see that the real estate market is in an adjustment phase currently. At the same time, we know that the Chinese government and local governments have put out a lot of policies in order to try to stimulate the market. These policies are slowly seeing their effects, and this is present especially in second tier cities, that this can be seen as being effective. And it's less effective in third and fourth tier cities. And after the fast development of the Chinese real estate market in the past, it is normal that they are going through an adjustment phase. And then first and second tier cities are relatively more stable compared to third and fourth tier cities. And our business in particular is present in China's main markets around the country and servicing the main clients that are present in those cities.

The third question is about the change in the stock price of the entire CIH. Indeed, the stock market in the U.S. is not performing so well. We will also pay close attention to this situation and discuss some plans. We are a market-oriented company. We are a market-oriented company.

So the third question was regarding, say, Asia's stock price. And in general, Chinese companies that are listed in the U.S. are not performing well. We are monitoring the situation actively. And regarding some of the names that you mentioned, how we are different is that they are Chinese state-owned enterprises and we are a private company. And in this way, we are fundamentally different from them.

This is the third question, right? The fourth question is actually the growth of our income. I think there are two aspects. One aspect is that after some changes in the real estate adjustment, our payment period is slightly longer than it used to be, but we are still a majority of the products are still paid first and then served. So to some extent, this one should be from this external account, there should be no too much risk of this development, there is no too much risk of this development. So for the fourth question regarding accounts receivable,

There are two parts to this question. First is we are experiencing market adjustment in the broad real estate market, and so our collection time is lengthier than before. However, most of our products and services are prepaid, are paid in advance, and so from a bad debt perspective, there is low risk in this area. Secondly, in the broad macro environment, we are working to develop new clients, including new sectors, and we're working continuously to sign new customers. Thank you. Operator, we can go to the next question.

Certainly. The next question comes from the line of Sam John from Prominence Capital. Please go ahead.

Good evening. Thank you for hosting this call. I have three questions. The first question is, can you talk about the amounts due from related party of 31.788 million? Can you explain, elaborate on that and when you expect that amount to be repaid? That's number one. The second question relates to your income tax expenses and Maybe some more clarity on why income tax expense increased by 152%. And then the third question is a follow-up to the first questioner's question on regaining compliance with the minimum price, bid price requirement. Why doesn't the company, I guess the simplest solution may be to engineer a reverse stock split. So is that being considered? If not, why? Thank you.

Okay, thank you. Let me translate briefly.

Okay, thank you. Let me translate briefly. Okay, so thank you for your question. The first question regarding the 31 million payments.

It is a payment in advance by FONG that CIH repaid, and this payment is approximately the same amount every year, but the timing of the payment may be different, and this is why you're seeing this in the financial statements. But it is part of... uh normal operations uh

So regarding the income tax expenses,

We are looking after seeing a strong dollar this year. We have decided to exchange into USD in order to prepare for USD expenses potentially in the future. 您提的第三个问题就是说我们合并那个股价的这个事情,这个我们也内部还在讨论当中,我们也还在讨论当中,没有最后进行一个确定,我们也是在考虑。 Regarding the third question on the reverse stock split, we are discussing this issue internally, and we are considering this option among others. Thank you.

As a reminder, if you'd like to ask questions, please press star 1-1.

Once again, to ask question, please press star 11. Thank you. We have a follow-up questions from Watson Teo.

Please go ahead.

Hello. Thank you very much for your clear answer. I have a question, a follow-up question. When you mentioned about how long will the downturn last, are you saying that because your business is mostly in the first and second tier cities, you will be less affected by the ongoing crisis in China, real estate? The second question I have is I'm a shareholder, a retail shareholder, and I don't buy the China Impact Holdings, your tools. So from a retail shareholder perspective, what would you recommend as the data or companies that we can look at to monitor whether the real estate market is improving? And the last question is, based on your understanding of the China policies, do you think that the Chinese government will require state-owned banks and insurers, large ones, to absorb losses from the developers? Thank you very much. That's all I have.

Watson, what was the last question? Can you repeat the last question?

Sorry, Watson, would you mind to press star 11 again?

Thank you. Yes, please go ahead.

Okay, thank you very much, Jesse. Thanks. Yeah, the last question is based on your experience and understanding of the policies in China, the government policies. Do you think that the Chinese government will require state-owned companies like banks and insurers to absorb losses in order to stabilize the market? How do you think, I mean, just based on your experience, the market can be stabilized? Yeah. Thank you.

Got it. Thank you. Okay, let me translate the question, please.

On the one hand, more of our original services, including our customers, are still concentrated in the first and second-tier markets. Because the first and second-tier markets are smaller than China's large real estate markets. This is one reason. Another reason is that you do services. In this market, as long as the entire market is still there, and there is one batch of enterprises, it won't work. But this market still needs another batch of enterprises. Another batch of enterprises will come up. So actually, our clients are also updating. We say that our clients are also changing warehouses. So in the process of changing warehouses, It is inevitable that the original one, because the faster you change the warehouse, the less you may be affected. Now, in fact, we still have some influence. Because to some extent, the speed of changing the warehouse is not that fast. But we gradually, if we have a new batch of customers, we change to some new market customers, gradually use our products, then our market Our service will also be restored to a more normal level. This is one. On the other hand, it is true that some of the new customers mentioned just now, including some local state-owned enterprises, including various financial institutions, they are in this round. Local state-owned enterprises, now the country also needs them to play the role of local state-owned enterprises. So these are also some of our new customers. There is another one. It's some of the big financial institutions all over the place. In this regard, they also face those risks. It needs to resolve its risks. We also need to use some of our data to help them make decisions. In the third aspect, there are some problems with China's new housing market. However, our stock market services, including property services, etc., are also relatively stable. After China enters the stock market, there will be more service-related enterprises, and they will gradually become our customers. Because our clients are also constantly updating, that is, the changes in the new market are constantly updating, and there is still a part of the new client increase that makes our market impact a little less than before.

Thank you for your question. For the first question, relatively speaking, we are less affected by the broader real estate market, and this is because our products and services are concentrated mostly in first and second tier cities, and they are in turn less affected by the broader economic market downturn. In the services industry, since we are in the services industry, As long as the broader market exists and the demand is there, as some companies perhaps fail, other companies will rise and meet the gap in demand. Internally, we say that there is a turnover in our client base and we are still affected as this turnover in client base is relatively slow and our revenues slowly are recovering. And then for regional state-owned enterprises and financial services, so for the financial services, they need our data for risk management and decision making. And so the regional SOEs and financial service industry, they are becoming our new clients. And in the Chinese real estate market, the new developments are facing headwinds, but the existing market and service sector around real estate, they still need our products and services. And so our client base is continually evolving and the addition of new clients kind of mitigates the effect that the broader real estate market has on our performance.

Then the second question you mentioned is about personal users. We also have a product that faces the C-end of personal users. It's all on our Zongzi cloud. There is a data store on the Zongzi cloud. That means you buy one data, two data, or buy a set of data. You can come and be more concerned. Or you pay special attention to one or two groups, such as housing prices, including the sales volume of a certain city, etc. This is the latest data at the moment Or some data from the past history You can press one data Press a set of data There can be sales You can also click on this You can do some mutual consumption Then you can see At the same time You need to understand some levels Some market changes We also have some reports Those reports can sell 10 yuan 20 yuan Then this is the people's interest Then you don't wait for this uh uh uh Okay, so for the second question, for our retail clients, we actually do have products and services. They are located on what we call the CIH cloud, and it is a database market.

and you can purchase one or two or multiple groups of data markers and, for example, prices or transaction volume in certain cities, as well as historical data. At the same time, you can monitor changes of the market, real estate market, in specific cities. And you can also purchase reports for 10 or 20 RMB to understand local market changes. And at the same time, if you have a company as a small, medium enterprise, you can register for a trial of our data and tools, and the trial is usually for seven days.

Then in this market adjustment, it will fall. Then it may face some losses. Then in this process, let's say some real estate companies, they may have used the project as a base for the bank. Then there are also some loans. What about these loans? Then the bank may not have a base for it. This will also change according to the market and then carry out the corresponding storage and so on. uh uh and take the responsibility of the project. This is a basic principle. The central government and local governments have mentioned this rule. At the same time, the government may have a certain amount of work to do in this area. It will play a certain stage role. But in the end, it will also be one project after another project to carry out some corresponding calculations. Then, even if the government gives some funding support in the stage, some funding support for the maintenance of the building, it will also carry out a corresponding calculation when the project is concluded. So for the third question, we are in the current cycle of market adjustment and financial services have teamed up with developers in the past

And as a result, some projects due to the market have decreased their sale prices, and there are losses involved as a result. And the developers use the development projects as collateral, and some may have been defaulted, so it's now in the hands of the banks for treatment. And regardless of loss or gain, the main kind emphasis is still on market prices and market operations. The central government emphasized the focus on kind of specific projects as a focus for the treatment of bad debt or financial restructuring and financial responsibility. So the government will provide some financial support for the final payment kind of segments. But again, it will be on a project-by-project basis, and we do not see the government bailing out the sector in general. Thank you.

Thank you for the questions. We do have a follow-up question.

Just a moment while the line is being opened.

Sam John, your line is now open.

Thank you. Apologies if I've missed it, but has the company responded to the going private proposal from General Atlantic that was made in November of 2020? If not, is that proposal still under consideration? Thank you.

Thank you. 谢谢您的提问。 然后这个上一次GA的那个邀约应该是已经快两年了。 那么到目前为止我们也没有收到新的这个邀约。 如果后续有一些相应的这种变化,我们也会及时的进行公告,并且会及时的去应对。

So thanks for your question. So the last time we received the offer from General Atlantic, it has been almost two years. And we have not received any new offers on this. But if there's any changes, we will actively post, send a press release.

Thank you. Thank you for the questions.

Pull up questions from the line of Watson Teo. Please go ahead.

Hello. Yeah, I just want to say thank you. And I will pull up maybe with Jesse on how to buy the retail data. I don't know where to do my Chinese. It's not very good. Yeah. But thank you.

Thank you, Watson. Yes, I'd be happy to follow up with you on that.

Thank you for the questions. We have a pull-up question from . Please go ahead.

Yes, hi. Just a follow-up again on the proposal from General Atlantic. Did the company actually respond, did the board actually respond to the proposal? I don't see a press release. I'm just wondering what the board's evaluation of the proposal was and whether there was an actual response made. And has that offer expired? Thank you.

Thank you.

Yeah. Hi, Sam. This is Jessie. So I will respond to your question directly. Basically, at the time we received General Atlantic's offer, the board did have discussions around the offer. However, since then, we did not receive any updates from General Atlantic, so there has been no new developments on this. However, if anything changes, we will make press releases. Thank you.

Thank you for the questions. With that, we have come to the end of the Q&A session. So I'd now like to turn the conference back to the management for closing remarks.

Thank you, operator. And thank you, everyone, for joining China Index Holdings.

This concludes today's conference call. Thank you for participating.

We look forward to speaking with you again for our third quarter 2022 earnings call. Thank you.

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