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spk03: Thank you for standing by for Fan Hua's second quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. All lines have been placed on mute to prevent background noise. After the management prepared remarks, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. For your information, this conference call is now broadcast live over the internet. Webcast replays will be available within three hours after the conference is finished. Please visit Fen Hua's IR website at ir.fenhuaholdings.com under the event and webcast section. Today's conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the meeting over to your host for today's conference, Mr. Ace is Chu, Fanhua's Investor Relations Manager. Please go ahead.
spk02: Good morning. Welcome to our second quarter 2023 earnings conference call. The earnings results were released earlier today and are available on our IR website as well as on Newswire. Before we continue, please note that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. The accuracy of this statement may be impacted by a number of business risks and uncertainties that could cause our actual results to differ materially from those projected or anticipated. Such risks and uncertainties include but not limited to those outlined in our filings with the FCC, including our registration statement on Firm 20F. We do not undertake any obligation to update this forelooking information, except as required under applicable law. Joining us today are our co-chairman and chief executive officer, Mr. Yinan Hu, co-chairman and chief strategy officer, Mr. Ben Lin, and chief financial officer, Mr. Peng Ge. Mr. Hu will start the call by sharing his view on recent market trends and our strategy positioning. followed by Ben, who will provide a review of our financial and operational highlights and discuss our business outlook going forward. There will be a Q&A session after the prepared remarks. Now I will turn the call over to Mr. Hu. Ben will translate for Mr. Hu.
spk01: Hello, everyone. Thank you very much for attending today's press conference. Good morning and good evening to everyone on the call. Thank you for joining today's call.
spk06: The Chinese economy is currently undergoing a major transformation. All models of production are disintegrating, while new models of production are developing. This transition is also the root cause of challenges faced by the Chinese economy at present time. However, with its huge and growing market size, China's economy continues to exhibit strong resilience, and great potentials. The fundamentals sustained in China's long-term outlook remains positive and will continue to provide a favorable business environment for all industries and for our company, Fanhua.
spk01: From the insurance industry, the original low-performance sales team is still in the early stages, and the new productivity that can adapt to the market and meet the needs of customers has not become the main force. According to our judgment, in the current market, there are less than 1 million people who can face the professional sales power of the future insurance industry. And to meet the needs of the old and new generations of the Chinese middle class community and the aging population, there are at least 2 million gaps in the current industry. For China's insurance market, the previously mass agent model is gradually phased out, and the new professional-based model
spk06: catering to customer demand have yet to take center stage. Currently, there are fewer than 1 million truly professional trained salespeople in the insurance industry. However, to meet the substantial demand of China's vast middle class population and aging society for effective retirement and legacy planning, we estimate that there exists a shortfall of at least 2 million professional advisors in the market. In recent quarters, we have observed an increasing number of quality agents coming from a diverse range of sectors outside of the insurance industry to join our industry. They are in great need of an enabling platform that can support their ongoing development. This factor is yet to become a substantial driving force for the industry's next phase of growth. We believe that Fanfa's strategy of professionalism, specialization, digitalization, and open platform fits perfectly well to this emerging trend.
spk01: From the performance of Fan Hua in the past few seasons, Fan Hua's strategic implementation in the past two years has worked well. Fan Hua has also shown a new face. Last week, we officially announced Fan Hua's new mission, vision, and core values. It refers to the action plan of the whole Fan Hua people, to guide Fan Hua people, We will work together to promote Fanhua to achieve sustainable high-quality growth. At the same time, we also released the company's new logo, which refers to the brand image of Fanhua, to better reflect Fanhua's new strategy and new vision. Fanhua will uphold the highest moral standards, insist on the values of sincerity, openness, professionalism, and innovation. Our results over the past few quarters, I think it's good evidence that our strategic implementation over the past two years is becoming effective. And Fanhua has taken on a fresh new look.
spk06: As such, last week, we officially announced our new mission statement, vision, and core values, which are intended to solidify the roadmap to guide everyone at Fanhua to work together to propel the company towards achieving sustainable, high-quality growth. Fanhua will uphold the highest ethical standards to promote our core values of integrity, professionalism, openness, and innovation, while striving to become a globally leading technology-driven financial services platform. dedicated to empowering the growth of independent financial advisors and fostering the sustainable value creation for our clients.
spk01: We are confident to continue to create value as shareholders by promoting the established strategy.
spk06: So this September, Fan Hao will celebrate its 25th anniversary. Since our listing in 2007, the company has consistently delivered substantial returns to shareholders through buybacks and dividends. Looking ahead to the next 25 years, guided by a new mission and vision, we're confident that by continuing to push forward our defined strategies, will continue to create value for our shareholders.
spk01: Thank you, Chairman. As many of you know, I joined FANFA in July.
spk06: I spent many years in the industry as a sell-side insurance analyst and a number of years as an investor at a large U.S. equity fund. My position at Faohua is to be in charge of our overseas development and also our capital markets work. I hope to bring the years of experience I've had in analyzing the insurance market across the globe to help Fanhua achieve our objective of becoming a globally leading financial services platform. I will now take everyone through our second quarter results, which we are very, very pleased with. So firstly, in terms of revenue growth, we grew 61% over the quarter. In terms of operating income, the numbers grew by 177%, beating our prior guidance. In terms of our earnings growth, it came in at 192% in terms of adjusted EPS. In terms of our cash position, total cash and cash equivalents stood at 1.6 billion RMB. Basically, it's an illustration that we are basically getting consistent results from the execution of our core strategy. Underpinning these numbers, let me go through in terms of our operational highlights. If you look at the premiums, our premiums grew 55% year-on-year, which is significantly ahead of the industry growth of 23.7%. More importantly, in terms of life insurance first year premium, we grew 153% year on year, while the average of Chinese listed insurers was 89%. So obviously, without doubt, some of our growth in the second quarter came from very strong industry tailwinds, namely the pricing change that took place over the quarter. The most important indicator for us is really the improvement in advisor quality. So the number of MDRTs increased by 228%. What was the premium agent category, which basically agent selling premiums above 100,000 RMB over the quarter grew 163% year-on-year. And agents who basically sold more than 10,000 RMB over the quarter grew 29%. Without a doubt, these are the three categories that we now will continue to focus on. In terms of productivity, our MDRT agents grew their productivity by 21.7% to 1.3 million RMB over the quarter. In terms of contribution from our top tier agents, they now account for 57% of our premium over the quarter versus 37% last year. In terms of our renewal premium, it also had very, very strong results, increased by 28.7% over the quarter. And that's mainly driven by a significant improvement in our persistency ratio. Our 13-month persistency ratio came in at 95.1%, which represented a 3.4 percentage point increase from last year. And our 25-month persistency ratio came in at 88.3%, an increase of 3 percentage points from last year. Our digitalization and open platform strategy continues to deliver in the form of improvement in operational efficiency. So you can see that our digitalization and open platform expenses as a percentage of our revenue now is at 28.9%. and including all the other expenses, you can see that our operating expense ratio decreased by 9.7 percentage points year on year. We continue to make significant investments in IT on a quarterly run rate basis. It amounts to about 20 million RMB a quarter. The contribution from our open platform strategy is becoming more and more evident. You can see that In terms of organic first year premium, it came in at 1 billion RMB, an increase of 90.6%. More importantly though, our open platform first year premium came in at 550 million RMB, an increase of 135% year on year. In terms of contributions now, our open platform and acquisitions we made over the last 12 months now account for 35% of our first year premium. and 32% of our revenue mix. Lastly, in terms of business outlook, we maintain our life insurance first-year premium target of 50% year-on-year growth to 3.7 billion RMB, and we also maintain our adjusted EBITDA growth target of 50% year-on-year for the full year of 2023. Obviously, there's a lot of questions about the outlook for the industry post the pricing change that we saw in the second quarter and the first month of the third quarter. Our take is that this industry has gone through many cycles of pricing rate change over the past decade, and we're confident that the industry will continue to develop through these different stages and cycles. The important thing is that The overall return environment of financial products in China is declining. If you look at world management products out there in the market, the returns are below 3%. So insurance products, which now has a return being capped at 3%, is still very attractive as a form of savings product in the market. And our view is that this industry downturn presents excellent opportunities for market consolidation and expansion. With our significant financial resources and open platform strategy, we think we're well positioned to take advantage of this opportunity to facilitate acquisitions and also invite more third party brokers onto our open platform. Lastly, I want to go through our capital allocation and our overseas expansion plan. So one of the attractions of our business model is that we're very asset-like, we're very capital-like, and as a result, our business is able to generate very attractive operating cash flows every quarter and each year. Over the last 16 years since our listing, Fanhua has generated an accumulated operating cash flow of RMB 4 billion, and our cash reserve is now at 1.6 billion RMB. In the past, we have had a strong track record of steady shareholder return through dividend and share buyback. On an accumulated basis, since our listing, we have returned RMB 2.8 billion to our shareholders in the form of dividend and share buyback. A lot of it actually came through in the last five years. Our consideration and capital allocation strategy now is that, number one, we are temporarily suspending our dividend policy. And this is precisely because we think that we're at a point in time where there is immense consolidation opportunities out there, as well as the opportunity to grow overseas. In terms of our overseas expansion plan, what we want to highlight is that the intermediary sector in Asia remains very small compared to mature markets like the US or Europe. Some of you may know they're basically over 800 brokers in Hong Kong. It's a very fragmented market. A lot of them are subscale. And we think that we are at a point in time where leading technology platforms like Fanhua in China can take some of the expertise and grow overseas. So we are looking at expanding into Hong Kong and potentially in Southeast Asia as well, because these are markets we think is very, very underserved by the broker market, and what they lack is the technology expertise that we could potentially provide. So that sums up the presentation that we have prepared for you, and we now turn to Q&A.
spk02: Hello, Maggie. We are ready to open the floor for questions.
spk03: Thank you. We will now conduct the Q&A session. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by as we compile the Q&A roster. Our first question comes from Coco Gon of Morgan Stanley. Please go ahead.
spk04: Hi. Hi. Because you mentioned that we want to expand to Hong Kong and Southeast Asia. I want to hear if we have any specific plans and specific targets. I don't know if you can share some details with us. And then the other one is that we want to ask about the situation from the front line. Hi, everyone. I'm from , and thanks for management to give me this opportunity to ask the very first question. And first of all, congratulations to the company on very excellent results. The very first question from me would be about the extension to Hong Kong and the Southeast Asia market. Maybe it's more towards then because we want to understand what would be the specific plans that company is thinking about, what goals is the company trying to achieve. Maybe you can share with us a little bit of details on that. And the second would be what is the company seeing from the first line of agents on the economic recovery in China. And that's sort of a question that a lot of investors are very curious about. That's all. Thank you.
spk06: Okay. If you don't mind, from now on the Q&A session, I would like to respond in English. And if I do have to pass the question on to some of my colleagues, I can help them translate. So I'll take the first question and Chairman Hu will take the second question on the Chinese economy. In terms of our overseas expansion plans, we are at the very early stages of crafting out our strategy. But we can tell you this, we have a very clear focus on what we want to do. It's going to be based on technology export and partnership. We're not looking to build frontline teams in big scale by entering Hong Kong or Singapore, etc. That's not what you should expect from us. Having looked at this industry for many, many years, I am a strong believer that the intermediary segment in Asia remains the only greenfield amongst the financial services industry across the region. My view is that this is a very underserved segment in terms of technology. As you understand, there are some insurance companies like Zhong An or Ping An to export some of their insurer tech to Southeast Asia and the rest of the world. But those are basically mainly catered for insurance companies' needs. There's actually no broker company out there that is developing technology to empower offline and online sales for the traditional industry, for the traditional sales industry. And we see significant market potential in the region. As I mentioned earlier, if you look at Hong Kong, you have 850 brokers in Hong Kong. They're all very, very small. They don't have the capacity to invest in technology. While as you look at China, we are really leading the world now in terms of digital sales. of almost everything. So in insurance, you are seeing a growing trend of agents using technology to create their own IP. They do basically lead generation through social media. They basically use their own expertise to create digital IP. And some of the recent trends we're seeing is that there's gonna be a trend of using AI to drive a lot of those tasks And so we think we're at a point where technology can drive consolidation of the brokerage market in Hong Kong and in Southeast Asia. And Fan Huai is very well positioned to take advantage of that, given our expertise. We have 25 years of experience of selling PNC and life insurance products online and offline. And we have proven that in China. We also have the financial resources to invest in this area. I mentioned earlier, each quarter we're basically spending about 20 million RMB on technology. So we are very confident that this is the right path. And so please give us some time to find the right partner to pursue this path outside of China.
spk01: As I mentioned before, the Chinese economy is currently in a major turning point. In this period, the old production method is gradually declining, even gradually withdrawing. And the new production method is currently in the process of promotion.
spk06: As Chairman Hu stated in his opening remark, China right now is going through a transition where old models of production are getting phased out and new models of production are developing.
spk01: So, based on what we have observed, there are four aspects. One aspect is that the startup market is not active and the risk of investors is declining.
spk06: So we can share with you four observations. So, you know, the startup community in China right now is a bit weak, and it's because the risk appetite for investors has declined. The other observation is in terms of consumption. Obviously, consumers in China are cautious coming out of COVID. And there's obviously some evidence that there is a bit of consumption downgrade for daily products.
spk01: In the third aspect, we also see that the whole society is relatively stable. There are no conflicts and disputes in society.
spk06: The first point we can share with you is that social stability is still very evident, although the confidence level across industry is facing some challenges, but we are seeing signs that they are recovering.
spk01: We believe that the current Chinese economy, regardless of trade or business, is actually looking for new production power, looking for new key components. We are all on the path of innovation. We believe that the new power of the Chinese economy is being formed. In the near future, I believe it will be one or two years, the new phenomenon of growth will appear. Of course, the background of this phenomenon is based on the use of new production methods and new production tools, especially the digitalization and the application of artificial intelligence in the industry. These applications may become the main
spk06: In conclusion, every industry in China is going through a period of transition from old models of production to new models of sustainable production. We are looking for new engines of growth. This will take one to two years to develop and become evident. But, you know, what Mr. Hu can share with you all is that, you know, this new production process will also involve a lot of new tools, including artificial intelligence. And we think that, you know, the adoption of new technology and tools will become very apparent over the next two years.
spk01: In today's insurance industry, in the past three years, The insurance industry has been looking for a new direction of growth. All the entities are exploring new production methods, the use of technology, understanding and understanding the changes and movements of customer needs. All the entities are actively exploring these things. Now, I think the entire industry has seen it very clearly. The future needs of customers, product development, the core of the company, the way of growth, and so on. Obviously, it's the traditional, past, manpower-driven, cost-driven growth model. It will become a new high-quality development model driven by smart driving and customer demand. I believe that what we have experienced in this industry and what we have felt in other industries will also be carried out in the same way. Because of this, today, whether it is our method or many of the main elements of our insurance industry, we are not So if you take the insurance industry, for example, the last three years, everybody across the value chain in the insurance industry,
spk06: have been looking for a new way out, looking for new models to develop sustainable growth. And what you've seen is that there's a growing trend of using technology to meet customer needs. It's becoming very visible that traditional mass agent model, that commission-driven sales process would need to change. And we see the adoption of artificial intelligence. We see the adoption of customer demand as the key tools to drive higher quality growth looking ahead. So what we're going through in the insurance industry, we think really applies to other industries in China. Everybody's basically going from a... you know, pretty rough business model or operating model to a more higher quality, sustainable model. You know, we have walked this path over the last three years. And from all indications, you can see that, you know, we are starting to get the results. So we are confident that if we can walk this path, a lot of industries and companies in China can also walk this path as well. So, you know, we remain pretty confident on the outlook of the Chinese economy over the long term.
spk03: Thank you. Just a reminder, to ask a question, please press star 11 on your telephone keypad and wait for your name to be announced. Just one minute for our next question, please. Our next question comes from Yuyu Zhang from CICC. Please go ahead.
spk05: Thank you for giving me this opportunity. First of all, congratulations to the company on achieving a very good performance in the second quarter. I have two small questions here. The first is about product supply and sales momentum. In fact, the product of this industry 3.5 at the end of July is also quite thin. We also want to ask Guan Licheng The second question is about our digital open platform. I would like to ask the manager to give us more details about the future of the digital open platform. What are the opportunities and challenges we will face? I have two questions, and the first one is related to the product supply strategy and your sales momentum. We know that the 3.5% pricing transition no live products, now it's not allowed to sell. And in this case, many insurers and brokers have made changes in their product strategy. So could you share some more details on your product strategy for the second half of this year? And by far in August, how is the sales momentum of your savings and the protection products in your observation? And the second one is about your open platform. Could you share some more detail on how you view the growth prospects of the open platform strategy? What opportunities and challenges we may face And also, what are the agency's most favorite functions and services in our platform? And what updates will you make in the future? Thanks.
spk01: Okay, Ben, let me answer. Okay. Thank you. First of all, the first question is about the supply chain and sales power. It is said that the sales data of the entire market in August will not be very good. This is because the consumption of resources brought by the 3.5 stop-sale needs to be adjusted for a period of time. But we think that if the 3.5 drops to 3.0, this decline is relative to the entire market today. I don't think it will be a disastrous result. I think that in today's ageing period, we know that every year there are more than 20 million people entering the age of 60. In the next decade, there will be 300 million people entering the age of 60. So for such a group of people, in fact, their... Look, just to answer your question, obviously post the pricing change in July, the August sales figures across the industry
spk06: is not looking too great. It will take time for the industry to adjust. But our view is that going from 3.5% to now 3% guaranteed products, in this market environment, these products are still attractive. So this change, from our point of view, it will not bring catastrophic change to the industry in terms of demand. The reality is that every year in China now, you're seeing 20 million people entering the age 60 and above bracket. And over the next few years, if the projections are every year on an accumulated basis, there will be 300 million people entering the age 60 and above category. And this category of elderly population in China, they will still have demand for low-risk savings products. And so we're still pretty confident that we'll go for a short-term adjustment. But the medium-to-long-term outlook in terms of demand for insurance products in China still remains very, very robust.
spk01: But we also see that if this kind of relatively higher reserve interest rate is required for insurance companies, the investment capacity is relatively high. And we see that the future market, in our observation, I think there are mainly three aspects. Maybe the future will be a market of product growth or demand. One is the annual salary. One is the annual salary. The other is the annual health salary. Because even though there are more and more people in their 60s, people in their 60s are still very young. So the second one, I think, is the development of old-age health insurance. The third one is the development of personalized or differentiated insurance products. I think that for the future insurance market, from the product side, there is this kind of So look, obviously we think these guaranteed return products will put pressure on insurers
spk06: investment capability in a declining interest rate environment. As a result, we foresee that we could see some product mix changes going forward as well. For example, we see annuity products as a very attractive product category. We see elderly health insurance as an untapped market. Although we have a large amount of people in China entering 60 years or above category, this is still a pretty young age group, given China's improving life expectancy, and could be a good risk category for insurers to underwrite health insurance. And lastly, we think the industry will also move towards more customized and differentiated products. We think what will be standardized is really these investment products. we also see the opportunity for insurers to offer differentiated products through services. And maybe I'll just add to Mr. Hu's point that obviously there are some voices out there that the regulators should encourage insurers to also develop participating products in a low-rate environment. But obviously the industry concern is mis-selling. Once you go through a period of selling guaranteed products, there's always concern about mis-selling when you move towards non-guaranteed products Our take is that the only way to reduce this risk is through professionalizing the sales force. And this is an area that, you know, we are a very, very strong advocate of.
spk01: This is based on such a background. So in terms of the collaboration of suppliers, we will pay great attention to the suppliers' ability to make money, their capital ability. The second aspect is their ability to invest. The third is their ability to serve, to cooperate with each other. Based on the choice of the customer group and the satisfaction of the customer's needs, we can jointly develop products and serve customers with our strategic cooperation. So in terms of how we work with our suppliers, our upstream, the manufacturers, insurance companies, we are taking a more approach now.
spk06: We want to work with suppliers who have strong solvency margin. good investment capability and service capability. And with those suppliers, our intent is to co-develop differentiated products and services to meet the demands of our clients.
spk01: Okay, the second question is about Fanhua's digital open platform. The background of this question, or the whole thing, is also based on our judgment on the future of this industry. The future development of this industry must be based on digitalization and artificial intelligence. In the past, especially in the intermediary sector, the ability to digitalize and artificial intelligence is very weak. This weakness is limited to capital and also limited to cooperation with insurance companies. These funds do not include some investment in basic facilities. So we see that the market is going to move towards the future. We need to build a digitalized and smart platform. Because of this, someone has to do it. So Fanhua is the first to stand up. We provide an industry-level basic facility digitalization and smart
spk06: So in terms of the challenges facing by our open platform, the challenge is really also the opportunity for us. Right now, the sales process over the last decade, the sales process in China has been driven by the mass agent model. And the focus on digital tools was not very prevalent. It's all about recruiting. And so that has led to a series of problems and challenges that's facing by the industry right now. But we think that these constraints are basically opportunities for us. So for a lot of the brokers, they're constrained by capital, in terms of capital investment into technology. They're also constrained by the fact that in a lot of their commission agreements they have with insurance companies, there is no specific mandate for them to invest in technology. But we think as the industry goes from mass agent to professional agency with a small number of insurers serving still the same size market or growing market, there will be a need for automation of the sales process. And so we think the industry needs to invest in infrastructure to support digital and also artificial intelligent based selling and That's an area where, you know, Fanhua, we think we have the resources and the experience to do this.
spk01: From this year's first and second quarter, our financial data response, our digital open platform launch has received a positive response from the market. This year's second quarter, Q2, the performance we just released, The scale of our business and the contribution of our revenue, the contribution of the open platform accounts for one-third of it. In other words, in financial data, in business data or financial data, it is very obvious that our open platform strategy has achieved a great landing and has been recognized.
spk06: I mean, what we're doing in terms of the open platform is obviously something that's quite new, not only in China, in my view, but across the region. But as you can see from our results over the last two quarters, our execution on our open platform strategy is leading to more and more people recognizing that it is a very viable strategy. It is now one-third of our business in a very very short period of time.
spk01: We plan to hold an open platform conference at Tencent Tower in Shenzhen on September 25th. We will introduce our platform and all its functions to the market.
spk06: So since August, obviously the industry numbers are pretty bad, and we recognize that a lot of our peers are basically facing growth challenges. They're looking for new modes of growth, they're looking for new tools to help them grow. So on the 25th of September, in Shenzhen, at Tencent headquarters, we are going to host Fanhua's Open Platform Day to basically illustrate all our capabilities and what we can bring for them.
spk01: From the results we have achieved over the past period of time, the current market needs for our open platform is relatively strong or satisfied. If you want to be humble, the first is our product price. The second is our digital operation platform. Digital operation includes transaction operation, digital tools, Yeah, yeah, yeah, yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. The fourth is the demand for capital. I believe that the demand for capital will be stronger in the transition period. If the supervision department prescribes the commission, then we will see a stronger tax return. The fifth aspect is that we are upgrading. We are upgrading our smart algorithm. We will gradually turn many of our functions into a smart algorithm through robots. Then we also see that in the next one or two years, the development of technology, especially the development of artificial intelligence, has a very positive effect on the insurance industry. So we are also investing heavily in artificial intelligence. In terms of artificial intelligence, we will invest heavily in the
spk06: Okay, so to answer your question about what value do we bring to these independent brokers from our open platform, we would like to share with you five things. Firstly is obviously the products and services they can get from our platform, insurance products, mutual funds, retirement products, et cetera. And then secondly is digital operation. So we provide them the tools to conduct transaction, digital training, et cetera. And then thirdly is professional training. We basically offer a comprehensive training schedule from risk management to retirement needs as well as family consultation. For a lot of these agents, what we want to do is basically develop a full-time career path for them so that they become competent, not only in selling insurance, but a full range of financial services products. Fourthly is capital support. We think that's going to become increasingly more important. Some of you are probably aware that the regulator has already started changing the commission structure of the bank assurance channel. We think it's likely that they're going to change the commission structure for the broker channel as well. We think that they're likely to reduce the first year commission and put more weighting on renewal commissions. As a result, that's going to bring challenges for a lot of our peers, particularly the smaller ones that lack capital and scale. We think this is an area where we could, with our significant capital resources, could provide support. And then lastly, in terms of future technology and tools, we think that we are at a juncture where artificial intelligence and large data modeling is becoming an essential part of the sales process for our business. And so this is an area where we're gonna continue to invest. Some of you may know, to give an example, we were speaking to some insurance executives from overseas recently who are in China for a tour and we show them digital avatar basically insurance agents posing in front of a camera but turn themselves into a digital person where they can sell insurance through TikTok or Douyin in China and in the past they have to go to a studio to record this And they can probably only sell during a certain period of time. But through artificial intelligence, now we basically can create these contents with speed, and more importantly, with flexibility. So these are the use cases of artificial intelligence that could be adopted in our industry.
spk01: Thank you.
spk03: Thank you. I see no further questions at this time. I will turn the call back to our ASIS CHU. Thank you.
spk02: Thank you for participating in today's conference call. If you have any further questions, please feel free to contact us. Thank you.
spk03: This concludes today's conference call. Thank you all for participating. You may now disconnect.
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