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spk03: Good day, ladies and gentlemen. Thank you for standing by and welcome to the Ehang Fourth Quarter 2021 and Fiscal Year 2021 Earnings Conference Call. As a reminder, we are recording today's call. Now, I will turn the call over to Julia Chen, Managing Director of the Blue Shirt Group Asia, Ehang's IR firm. Ms. Chen, please proceed.
spk04: Hello, everyone. Thank you all for joining us on today's conference call to discuss the company's financial results for the fourth quarter and the fiscal year of 2021. The earnings release is available on our website as well as from Newswire Services. Please note the conference call is being recorded and the audio replay will be posted on the company's IR website. Today, Yihao Management Team, which includes Mr. Hu Huazi, Chief Executive Officer, Mr. Edward Xu, Chief Strategy Officer, Mr. Xin Fang, Chief Operating Officer, and Mr. Richard Liu, Chief Financial Officer, will successfully give prepared remarks. Remarks delivered in Chinese will be followed by English translations. All translation is for convenience purpose only. In the case of any discrepancy, management statements in the original language will be prevailed. A Q&A session will follow afterwards. Before we continue, please note that today's discussion will contain forward-looking statements made in pursuit to the safe harbor provision of the U.S. Private Security Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today. Further information regarding these and other risks and uncertainties is included in the company's public filing with the SEC. The company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Also, please note that all the numbers presented are in RMB and are for the fourth quarter and the fourth year of 2021, unless stated otherwise. With that, Let me now turn the call over to CEO Mr. Hu Huazi. Please go ahead, Mr. Hu.
spk06: 谢谢Julia 大家好 感谢各位今天参加我们的业绩电话会议 我很高兴向大家汇报一航智能2021年四季度和全年的经营概况 以及最近的一些进展 过去一年 虽然面临内部和外部环境的挑战 但一航智能作为一家技术创新型企业 一直专注于开拓城市空中交通的蓝图, 致力于为行业合作伙伴和股东创造价值, 在以下方面取得了突破进展。 首先,在一航216S的试航认证方面, 我们始终将试航项目视为一切工作的重中之重, 在过去一年也取得了重要进展。 中国民航局和我们紧密合作, 制定了一航216S的型号合格审定专用条件, and will be officially approved and released in February this year. This also means that the world's first manned automatic pilot aircraft, the Y-216S, has the standards to be executed. Currently, the Y-216S is undergoing a comprehensive inspection. Thank you very much to the Chinese Civil Aviation Bureau for its strong support for the aviation industry of the Y-216S. In terms of the operation of the air traffic line plan, we are first in line in China, In close cooperation, we have accumulated more than 1,000 pre-sale orders and pre-sale orders for our passenger and self-driving aircraft products for the past few years, and we have established a good foundation for our future performance in terms of new products and technical development. First, VT30, an industry that has accumulated over the past few years, has a large amount of technical reserves in terms of UAM aircraft manufacturing and aircraft control. For VT30-type products, We follow the principle of safety first. No haste, no rush. In the design and research and testing process of this product, we began to establish this kind of pilot test flight system. At present, we have added a larger number of pilot component tests to ensure the complete safety of the aircraft and carry out a larger number of flight tests. Until March 25, the test flight time of VT30 has exceeded 50 hours. Second, in terms of logistics, We have not stopped the development of logistics aircraft in the past few years. The main logistics scene of Yihang is for cross-strait air logistics and long-distance logistics in the mountains and mountains. Currently, there are five different types of logistics aircraft in the fully automatic flight system that has entered the automatic transfer system. The actual test load is from 2 kg to 200 kg. Yihang is conducting a lot of test operation in the sea and island logistics scene in the coastal areas. Hezhou to Guangzhou city's cross-provincial rail logistics line is also about to open. This also means that Yihang will take an important step forward in the operation of cross-provincial rail logistics in the air. In terms of the team, in the past year, our staff size has expanded. The focus is on the technical and research departments. Yihang 216 is established as the audit and control team. At the same time, we have also established an experienced UAM operation team. In addition, I am very happy to introduce Mr. Fang Xin, the Chief Operator who just took office in February this year. Today is also his first time attending our business meeting. Mr. Fang has 20 years of experience in business management, technology product solution and sales, travel project development and operation. I believe Mr. Fang's participation will bring strong support to the next stage of the company's business development. Next, please welcome our Chief Strategic Officer, Mr. Xu, Thank you.
spk05: Below is the translation of Mr. Hu's remarks. Hello, everyone. Thanks for joining our earnings call today. I'm very delighted to share Ehan's operating performance for the fourth quarter and fiscal year of 2021, as well as our recent developments. Despite challenges at home and across the globe in the past year, Ehan has always focused on exploring the vast market of the urban air mobility as an innovative and technology-driven enterprise. We are committed to creating value for our industry, partners, and shareholders while making significant progress in the following key areas. First, obtaining the Airworthiness Certification of the Ehen 216S has always been placed as our top priority, and the past year has seen remarkable progress on this project. we work with the Civil Aviation Administration of China, in short, CAC, to develop the special conditions for the Ehang 216S type certification, the first for passenger-carrying autonomous aerial vehicles in the world, which was formally adopted and issued by the CAC in February this year. And this means that the type certification of Ehang 216S has the certification basis for further implementation. At present, the certification of EHAM 2.1 success is in the compliance review phase, and we are grateful for the CAC's support to EHAM. Next, turning to our 100 air mobility routes initiative, we are the frontrunner of the industry and carried out operational travel flights in China during the certification process. We are developing UN pilot projects in multiple cities in China, to continuously accumulate real flight experience in various scenarios. In the near future, we will disclose the first group of Chinese cities that will have our commercial UAM services and flight routes after we secure the Airbus certification. Moving on to sales and marketing, we are pleased to gradually open up a greater Asian market. Following our significant achievements in South Korea, Japan, Indonesia, and Malaysia, we will continue close cooperation with more partners in Southeast Asian countries. More importantly, the orders and pre-orders of our passenger-grade AAVs in the past few years have cumulatively surpassed 1,000 units, forming a solid foundation for our future revenue growth. Moreover, I'd like to address our product and technological developments. Firstly, about the VT30. Ehang has accumulated years of considerable experience and technical reserves in aircraft manufacturing and aircraft control in the field of EVM. For the product of VT30, we maintain the principle of safety first without impatience or rush ventures. At the beginning of the process of designing R&D as well as testing for this product, we have been establishing its airworthiness system already. So far, we have added a large number of aircraft component tests and conducted a large number of flight tests after ensuring the overall safety of the aircraft. As of March 25, the test flight time of the VT30 has existed 50 hours. Secondly, with regard to aero logistics, in the past few years, we have never stopped research and development of aircraft for logistic uses. Our main target air logistic use cases are for inter-provincial air logistics and long-range air logistics over islands and mountains. Currently, we have developed five air logistic models that can fly autonomously in an automatic dispatching system. These five models have been tested with loads ranging from 2 kg to 200 kg. We are conducting a large number of operational trial flights under island logistics scenarios in coastal areas. It's worth noting that our inter-provincial air logistics route between Kezhou and Guangzhou City is about to open soon, which will be a significant step forward to our future operation for inter-provincial long-range air logistics. Next, let's turn to our team. Our staff has gradually increased in the past year, with a key focus on the expansion of our technical R&D team. We established a special team for the EHAM 216S Airworthiness Certification Project to address our top priority, and also build up and experience the UAM operations team. Additionally, I'm very thrilled that Mr. Hsing-Fang joined our company in February as our Chief Operating Officer. Today is also the first time for him to join our earnings call. Mr. Fang has more than 20 years of experience in corporate management, sales of technology products and solutions, and tourism project development and operations. I believe he will bring us significant strength to our future business growth. I will now turn the call over to our Chief Strategy Officer, Edward Xu, to bring more detailed performance. Thank you.
spk02: Thank you, Mr. Hu. Hello, everyone. I'm Admiral Chief Strategy Officer of EHAM. Now, let me summarize the operational results of the year of 2021. Basically, we followed our strategic positioning as a UAM platform operator and prioritized the airworthiness certification of the EHAM 216S AAVs throughout the year. We invested significant resources in the certification project by working closely with CEAC experts since the beginning of the year. With EHAN's diligent and solid contributions, in December, the CEAC finally published the world's first special conditions for the EHAN 216S type certification, which set the foundation for airworthiness certification for all the AAVs. We believe this is a new milestone not only in the certification project but in the history of human aviation. While the type certification process for the EHON216S is still ongoing, we have added strength in our efforts to obtain the type certificate as soon as possible. On the other hand, we accelerated the test operations of EHON216 AAVs with the aim to fully roll out commercial operations soon after obtaining the type certificate. As we have positioned ourselves as the world's leading UAM platform operator, it defines our innovative business model as a hybrid one of sales plus operation, which is a combination of OEM and AAV operations. As we have highlighted in our previous course, we believe this new model has strategic importance because AAV sales should be boosted by real commercial operations. This is especially true when our self-developed autonomous flight technologies make the hybrid model possible and necessary to ensure absolute safety and maximum market acceptance of our products. Specifically, our ongoing 100 air mobility routes initiative was launched in middle of 2021 under the guidance of CAC. With a focus on the Guangdong, Hong Kong, Macau, Greater Bay Area, we launched line operational spots in cities of Guangzhou, Shenzhen, Hezhou, Zhaoqing, and Shanya, etc. So far, we have completed more than 4,000 trial flights. Notably, we collaborated with the Guangzhou Development District Communication Investment Group in the fourth quarter of 2021 to add a new 5G intelligent air mobility experience center in Guangzhou. Through such activities, we were able to accumulate the necessary data and gain relevant experiences for future UAM operations. On sales and promotion of our products and services, we have expanded our efforts by acquiring new customers and partners. Specifically, since fourth quarter of 2021, we highlighted the partnership with major SOEs including Shenzhen Expressway, the Guangzhou Development District Communication Investment Group, and Guangxi Guigang Qingtang District Urban Construction Investment Group. In the overseas market, we have built new partnerships with Prestige Aviation in Indonesia, the MASC and AirX in Japan, AeroTree Group in Malaysia, etc. We believe the expanded partnerships will help us in our future business operations within the next 6 to 12 months. especially upon receiving the official grant of type certificate from the CAC. Now, let me turn the call to our COO, Mr. Fang, to address the operational plan for 2022. Mr. Fang, please go ahead. Thank you.
spk07: Thank you, Mr. Xu. Hello, everyone. I am Fang Xin from Yihang. I am very happy to receive the invitation of Mr. Fu Fazi, the chairman, to join Yihang Smart Company as the COO. After joining Yihang, I am deeply grateful to the team spirit of Yihang people, the spirit of innovation, and the spirit of struggle. At this time, with the spirit of safety, the effort to innovate technology and R&D for automated driving, We hope to obtain the TC model certification of the Aircraft 216S around 2022 as a solid foundation for commercial use of the Aircraft 216S pilot aircraft. On the other hand, we will speed up the operation and layout of the Aircraft 216 automatic pilot aircraft to ensure that commercialization and operation services will be launched as soon as possible after the certification of the model is obtained. In terms of production, the company has initiated a synchronized promotion of production production line. After acquiring the model qualification certificate, it will quickly meet the highest standards of the aviation industry. At the same time, it will steadily increase mass production and increase product quality. Ensure that it can push the safe, reliable and reasonable products to the market. We estimate that the annual total revenue of 2022 is about RMB1.9 billion to RMB2.1 billion. Most of them are expected to be produced in the second half of the year after the second half of the year after the introduction of the 216S, which will automatically drive the pilot model, and drive the commercialization of the operating service. From an operational point of view, we expect that the input in 2022 will mainly come from the field of air traffic, air travel, fire emergency and air logistics, as well as the field of smart city management. Yihang is currently seeking a strong cooperation between leading enterprises in the industry applications that may be produced based on our existing technology. Through their leading advantages in the original field, combined with the basic flight platform and control center provided by Yihang, for the needs of all industries, we will carry out a collaborative development of flight platforms. Through the industry accumulation of partners, and channel advantages, as well as their credit in the industry, to quickly open up the applications and sales of these industries, and jointly develop the new situation of air business. City air traffic is the core strategic direction of Yihang. Yihang actively seeks related strategic cooperation, such as cooperation with domestic mainstream helicopter carriers, The plan is to develop a flight industry based on the original flight industry of the carrier company, and to use basic facilities such as stop-and-go screens, and to gradually promote low-altitude flight traffic and route operation in China. We also expect to fully push the product to the market in the following three areas. Among them, in the tourism version, the air travel direction will begin to be deeply structured, to actively cooperate with the destination tourism operators to open up the growth point of tourism input under innovative measures. The plan is to cooperate with many tourism agencies in China, not only to expand commercial operations, such as Guangdong Zhaoqing's Yuehu, Guangxi Guigang Qingtang and other cities. After obtaining the TC contract, we will continue to officially open Jingxi Yihang 216 air tour service. We are also cooperating with domestic top-level fire-fighting solutions to actively respond to the needs of the Emergency Management Department in the field of fire-fighting. We are using the existing resources of our partners in the field of fire-fighting to promote high-performance and targeted air-fired fire-fighting solutions. As a long-term enterprise, while considering market promotion, we also take on corresponding social responsibilities and actively return to the people and society. We are also cooperating with some leading logistics enterprises to jointly expand the appropriate application scene for air logistics and build up the rich logistics operating experience of logistics cooperators. With the entire core technology platform of a free-of-charge automatic driver and paper flight transportation system, and thus form an economically efficient air logistics solution and operation model. At the same time, the company plans to rely on the technical advantages of the free transport system platform to further productize, strengthen the promotion and application in the field of urban management applications such as self-waste cities and self-waste traffic, and to train and cultivate a comprehensive environment for the operation of the hybrid operation ecosystem. In the early stages of the autonomous pilot economy and public life, it combines flight and traffic management, allowing flight to be more safe and efficient. While the flight scale in the air is not only growing, it also allows the entire flight design circle to develop healthily. In the training and post-training section, Yihang continues to improve its own training and post-training service system, and cooperates with international and domestic professional institutions. Thank you. Next, our CFO, Mr. Liu, will report on the financial situation of the company. Thank you.
spk05: Below is the translation of Mr. Xinfang's remarks. Thank you, Edward. Hello, everyone. I'm Xinfang. First, I would like to thank Mr. Hu for inviting me to join Yihang as COO. After joining the company, I was deeply impressed by the energy, dedication to innovation, and relentless efforts of everyone at Yihang. Safety and security are at the heart of every member of the Ehang team, and they strive for innovative AAV technology research and development. We expect to obtain the type certificate of the 216S AAV around the middle of 2022, which will lay a solid foundation for its commercial operations. Meanwhile, we are accelerating our arrangement for operating the Ehang 216 AAVs to ensure that our commercial services can be launched gradually after obtaining the TAP certificate. We plan to upgrade the production line at the same time. This way, we can quickly and steadily increase production based on the highest standards of the aviation industry after obtaining the TAP certificate. Close attention to high quality will also be strictly implemented in order to ensure we will deliver safe, reliable, and compliant product to the market. For the fiscal year of 2022, we expect the total revenues to be in the range between 190 million RMB and 210 million RMB. With most of the revenues are expected to be generated in the second half of the year. upon receiving the EH-216 SAV-type certificate and launching commercial operational services. From the perspective of application scenarios, we expect our revenues in 2022 will mainly come from air mobility uses, including aerial sightseeing, aerial firefighting, and aerial logistics, as well as smart city management area, etc. Ehang is now seeking partnerships with leading companies in the industry with the application potentials by leveraging our existing technologies. Through the leading advantage in their original fields and a UEM platform and a command control center provided by Ehang, we will jointly conduct derivative development of AAV platforms to address the specific industry needs. Through our partners' industry expertise, variable channels and reputations, we can quickly open up additional applications and sales for our air mobility businesses. Urban Air Mobility is eHealth's core strategy, and we actively seek related strategic cooperation with partners such as domestic mainstream helicopter general aviation companies. By leveraging their original airlines and assuring infrastructures such as airports, we plan to gradually promote operations of low- and medium-altitude air mobility routes in China. We also expect to bring Yihan's AAVs to the market in the following three areas. First, in the tourism sector, we've started to carry out in-depth aerosizing layouts and actively cooperate with target tourism operators to explore the innovative tourism revenue growth opportunities. we plan to launch the EH216 aerial sightseeing operational services after obtaining the TAP certificate. Through collaborations with multiple domestic tourist attractions and the continuous expansion of commercial operation scenic spots such as the Forest Lake in Zhaoqing City in Guangdong Province and the Qingtang in Guigang City in Guangxi Province. Secondly, we will partner with leading integrated firefighting solution providers in China. For the needs of the emergency management departments in firefighting and emergency response, we will leverage our partners' existing channels to promote efficient and tailored aerial firefighting solutions that address the difficulties and the pain points of the high-rise building firefighting. As an innovative enterprise, it has not only developed our own business, but also undertake our social responsibilities to bring values to the people and the community. Thirdly, we are also communicating with several leading logistic companies to jointly develop proper air logistic use cases. Combining Ehang's self-developed AAVs and a community control platform with the ample operational experiences from our logistic partners, we can create cost-effective, and efficient air logistics solutions and operating models. Meanwhile, we plan to utilize our technological advantages of the self-developed community control system platform for further productization, as well as strengthening its promotion and operation in the urban management fields, such as the smart city and smart transportation. we will gradually establish an operational ecosystem with the integration of the hardware and software that combines fleet management and air traffic management when AVs enter the mass market. As a result, flights will be safer and more efficiently conducted, and the ecosystem will also be evolving in a healthy way with an increasing fleet in the sky. Ehang is continuously improving our trainings and post-sales service system. Moreover, Ehang partners with professional international and domestic institutions to swiftly establish a more sophisticated training and post-sales service system based on our partners' existing system and experience. We firmly believe that with the joint efforts of Ehang and all the authorities' partners concerned with the UAM industry, we will be able to accelerate to provide everyone with a safe, autonomous, and eco-friendly air mobility. I will now turn the call over to our CFO, Richard Liu, for financial results. Richard, please go ahead. Thank you.
spk08: Thank you, Xin, and hello, everyone. Before I go into details, please note that all numbers presented are in RMB. and are for the fourth quarter of 2021, unless stated otherwise. All presented changes are on a quarter-over-quarter basis, unless otherwise specified. Detailed analysis are contained in our earnings price release, which is available on our IR website. I will now highlight some of the key points here. 2021 was a unique year as we initiated a strategic upgrade and transition to implement our strategic positioning as an urban air mobility platform operator and migrate our sales model from a product sales-centric model towards a more operation platform-oriented and integrated model. As discussed earlier, in 2021, we have been focusing on the ongoing certification project and preparation for the 100 air mobility routes initiative in China, and we believe this will lay the essential foundation for our next stage revenue growth. with increased sales and deliveries and operational services after obtaining the certification. As such, in Q4, total revenue was $8.7 million compared with $13 million in Q3. The EH216 series of AAV deliveries in Q4 was 4 units compared with 8 units in Q3. For the fiscal year 2021, total revenues were 56.8 million compared with 180.1 million in 2020. The EH216 series of AV deliveries in 2021 were 30 units compared with 70 units in 2020. Growth margin was 60.1% in Q4, a minor decrease of 1.7 percentage points from 61.8% in Q3. mainly due to the changes in revenue mix. I'm glad that our margin continued to be kept at a relatively high level, demonstrating our solid competitiveness. We even achieved a year-over-year increase of 4.4 percentage points in 2021, a record high gross margin of 63.4%, with a contribution from a command and control system delivered in 2021. In Q4, our adjusted operating expenses, which are operating expenses excluding share-based compensation expenses, increased by 46.2% quarter over quarter to $90.4 million from $61.8 million in Q3. The adjusted operating expenses was $246.6 million in 2021, up 62.6% from $151.6 million in 2020. We continue to maintain significant R&D expenditures for the development of AV models, including the EH216 series, vt 30 and the other new models along with their related operating systems with enhanced functionalities as well as for the growing r d team this reflects our commitment to strengthening our product development and certification efforts in order to drive future sales growth and commercial operations. Continuous and advanced R&D is the cornerstone of our business, and we will remain dedicated to R&D to propel future business growth. Furthermore, there were additional provisions for receivables due to the impacts of the continuous COVID-19 pandemic. and related prevention and control measures in China. As a result, our adjusted operating loss in Q4 was 83.8 million compared with 48.9 million in Q3. Adjusted net loss in Q4 was 82.2 million compared with 47.8 million in Q3. For the fiscal year, adjusted net loss was 192.8 million in 2021. compared with $37.2 million in 2020. Nevertheless, our balance sheet remains healthy. As of the end of Q4, we had $312.1 million of cash, cash equivalents, restricted cash, and short-term investments, compared with $357 million as of the end of Q3, and $189.4 million a year earlier. We will continue to maintain effective operational expense and cost management. That concludes our prepared remarks. Let's now open the call for questions. Operator, please go ahead.
spk03: Thank you. As a reminder to ask a question, you will need to press star 1 on your telephone. To withdraw your question, please press the hash key. Please stand by while we compile the Q&A roster. Your first question comes from the line of Tim Sayle from Morgan Stanley. Please ask your question.
spk09: Hi everyone, thanks for taking my questions. This is Tim from Morgan Stanley. I've got two questions. The first one is about the impact from the recent pandemic in China. In light of the recent tightening COVID control measures in China, especially in the first quarter, have we seen any potential hiccup to our supply chain management, TC certification progress, and also the order delivery, especially in March or into second quarter this year. In the meantime, how do you think about this kind of margin trend this year given the impact from the pandemic and of course the cost of inflation? So that's my first question. And my second question is about the urban air mobility operation. We saw pretty strong progress, but could you please share a little bit more about more like the quantitative updates about business development. It would be great if the management can elaborate a lot more about the fleet size, the flying routes in terms of numbers that have been implemented, and also our current operational situation. Thank you.
spk02: Okay. Thank you, Tim, for your questions. This is Edward Hsu, Chief Strategy Officer of EAM. So let me answer your first question. And I think, yeah, our CFO Richard can elaborate more on the margin trend. So on your first question, basically regarding the ongoing COVID-19 pandemic in China, So far we see not material impact on our supply chain because our supply chain suppliers are mostly distributed in South China in Dongguan area. We noticed that the recent close down of Shenzhen but it didn't have much impact so far. And also we did some preparation by prepare the inventories for our products beforehand. So far, we see our inventories at a satisfactory level, so we don't see any major impact so far. And on this TC certification progress, we think it is still on the right track. And so far, our special team is working very closely with the CAEC experts, which is not disrupted by the pandemic as well. So that's all for this, and Richard can elaborate more on the margin trend. Thank you.
spk08: Okay, Tim, this is Richard. I will take the second part of your first question regarding the margin trend. As Edward just said, we have not seen any material impact from the increased situation of recent pandemic in China. In addition, there are some recent price increases for raw materials due to some, you know, the changes of the world political landscape. We have so far seen some impact from this aspect. As such, we have been trying to stock up some key components and materials as our stock deserves. Along this line, it is expected that our overall gross margin might be brought to the average levels of previous years. roughly in the range from 55% to 60%. Having said that, in our revenues, as you know, there are revenues from selling our proprietary command and control systems on which the price increases of raw materials and supplies would be limited. So therefore, if the percentage of the revenues from this in the total revenues will go up in the year, it will actually help enhance our overall growth margin, as you can see. So basically, in sum, we will continue to pay close attention to the involvement of the cost conditions as a result of the recent development and take proper measures to minimize such impacts on our growth margin.
spk02: Okay, Tim, I would add one point. Yes, on the operational side, you're right. Maybe there are some impact on our operation because we do have a collaboration with a helicopter company in Shenzhen, and also we plan to launch more operational spots in Zhuhai, for example, which was... disrupted by the pandemic at the moment. So on the operational side, we do see some impact, yes. So next, regarding your second question, right? So as updated in our early release, so far under the 100 Air Mobility Routes Initiative, Our UAM operating team has selected and developed the line operation spots in Chinese cities, including Guangzhou, Hezhou, Shenzhen, Zhaoqing, and Shanya, et cetera. So at these nine operational spots, so far we have conducted over 4,000 operational trial flights with our Yihang 206 AAVs in real practical scenarios for the aerospace team. So far, multiple flight routes can be developed at each operational spot. So in the near future, we will be able to release the first group of cities in China as our target to launch our commercial operational services and flight routes at the local operation spots. After we obtain the TC and also the commercial license, from the government, from CEC. Thank you.
spk09: Thank you very much, Richard and Edward. Thanks for the detailed sharing. Thank you. Thank you.
spk03: Thank you. Once again, if you do wish to ask a question, please press star 1 on your telephone. Your next question comes from the line of Diwu from Tangfeng Securities. Please ask your question.
spk10: Hi. Thanks, management team, for taking my question. I have two questions as well. First is geographically speaking, like, can we say China is Yihang's topmost priority regarding obtaining the type certificate and all the licenses? And how should we think about other regions coming down on this? For example, in terms of licenses, where will be EHONS targeting next, like, for example, like Korea or like Europe? And my second question is, in terms of competitive advantages and market share-wise, how does the management team view other competitors, and where does EHONS stand among those competitors, like foreign or domestic? Thank you so much.
spk02: Yeah, thank you for your question. This is Edward again. Let me answer your questions. So first of all, regarding the geographic distribution, we believe that China appears to be our most prioritized market so far, given the following reasons. First, it is our home market where our firm is based. Second, we got the support from the regulator, i.e. the CAC, in respect of airworthiness certification for unmanned aircraft for low altitude passenger carrying urban air mobility operations. And the three, this is a huge market and there was a good potential with the largest population and the prosperous major city clusters such as Pearl River Delta, the Yangtze River Delta and the Bohai Bay areas, et cetera. which means that the huge urban population has potential for this mobility market. And meanwhile, we also keep our focus on the overseas market, such as Asian countries, including Japan, Korea, Indonesia, Malaysia, et cetera. Those countries which we have made a visible progress in client acquisitions, trial flights and a regulator relationship construction etc and finally I would think that you know some Western countries including Europe and the US but those market the regulations could be more conservative so we are taking a more passive you know stance and we focus on China and then we believe that the China any success in China's certification could be a leverage for us to go into those markets. Thank you. And so regarding your second question, so yeah, we have kept a close watch on the global UN market, especially on the development of the peer group as well. And we believe we are a leading player in terms of product design and the real flight record so far. For example, our Yihang 216 AAV is by far the world's leading air vehicle product that is able to complete autonomous flights. We noticed that from the peer group, most of them are still focused on this manned flight. Autonomous flight is definitely something That is, you know, on their next steps. And we have built the world's first decentralized AAV platform to manage multiple AAV operations with cluster management technologies. And so far we have conducted over 20,000 autonomous trial flights in 11 countries. Moreover, we have made the most progress in airworthiness certification with the CEC. who published the world's first set of special conditions for the type certification for autonomous air vehicles like our EHON 216. So that means we are leading in terms of the certification progress as well. As we are targeting around the middle of the year for type certificate grants for our EHON 216 SAABs, we aim to be the first firm to launch commercial operational service in the world, probably in the second half of the year. So given that, we believe that we do have the first mover advantage over our peer group. Thank you.
spk10: Thank you so much.
spk03: Thank you. As there are no further questions and the interest of time, I would now like to hand the conference back to the speakers for any closing remarks.
spk08: Okay. Thank you all for participating on today's call. We will look forward to reporting to you in the next quarter. Thank you very much.
spk03: That does conclude the conference for today. Thank you for participating. You may all disconnect.
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