SUPER HI INTERNATIONAL HOLDING LTD.

Dear investors and analysts, good morning and good evening. Thank you very much for joining Superhisa's first half 2024 earnings conference call with us today. We have Ms. Yeonhee Jeon, Executive Director and CEO, and Ms. Choo Sung, Chief Financial Officer and Board Secretary. Please note that today's discussion may contain forward-looking statements, including without limitation statements about our strategies and business plans, as well as our expectations about our business prospects, such as the future growth. Please be reminded that during the call, our comments and responses to your questions reflect management's view as of today only. please refer to our latest safe harbor statement in the earnings press release which applies to this call. This call will be conducted in Chinese with simultaneous English interpretation provided by an external agency. In case of any discrepancies, the Chinese version shall prevail. The presentation materials for the meeting have been uploaded to the company's investor and relations webpage. please review them at your convenience. We now invite Ms. Yang Lijuan, Executive Director and CEO of Superhigh International, to review our performance for the first half of 2024. Thank you, host, and good evening, everyone. This is Yang Lijuan, Executive Director and CEO of Superhigh International. This is my first interaction with you all since formally taking up this post at Superhigh. I'm very grateful for your attention and the support given to our company Over the past two months, I've visited super high restaurants across our major markets, and I'd like to share with you three key observations. First, our store management is showing overall improvement. Our employees, store managers, and management teams across all countries are continuously enhancing their efforts in guest acquisition and employee management. Here, I extend my gratitude to all employees for their dedication in the first half of this year. Second, we are seeing diversification and expansion of our guest base. We are establishing more touchpoints with both new and existing guests, whether they are Chinese or local, during peak or off-peak hours, or for special occasions like family dining, late-night snacks, or birthday celebrations. Thirdly, our potential market is substantial. There are numerous opportunities to explore and hot-pot fast food in formal dining segments. For instance, in the U.S. market, we currently operate only 13 stores, while the restaurant industry scale is set to be at $1.1 trillion in the U.S., indicating significant room for expansion and exploration. Serving as the CEO of Superhigh International is both a challenge and an opportunity for me. It is challenging because we face more than 10 different markets and many mature operational tools in China may not be directly applicable. At the same time, it is an opportunity because the market is huge and the underlying logic of management is interconnected. We have extensive time-tested experience and methods in guest acquisition, employee management, and store operation. Now, let me share with you the detailed performance for the first half of 2024 of Super High. In the first half, global economic activities continued its recovery, although significant inflationary pressures persisted, posing challenges to raw material and labor costs. Regardless of external factors, our focus remains on enhancing store management across all locations, including environment, service, product quality, and food safety to consistently improve guest satisfaction. In the first half of 2024, we had 14.5 million guest visits, representing a year-on-year increase of 17.9%. Our average table turnover rate reached 3.8 times per day, an increase of 0.5 times compared to 2023, approaching the peak season level of the second half of 2023. In addition to economic recovery, the improvement in table turnover rate is supported by our management approach. Firstly, performance evaluations and profit sharing for management at all levels are directly or indirectly linked to table turnover rates. We believe that the effective store management and high gas satisfaction naturally lead to improved table turnover rate. Therefore, we leverage KPIs, performance assessments, and operational procedures to motivate all management levels to actively enhance guest satisfaction and table turnover rates. Since beginning of this year, we have categorized and summarized the key management points of our stores into a management tool called Three Tables. including the business table focusing on operating results, the management table addressing management results, and the foundation table outlining management actions. We use these tables to guide store managers in their daily work of managing employees and guest acquisitions. Secondly, we utilize country managers as local management leads, while headquarters providing middle office support through message summaries, Through optimization and data analysis, we identify effective business improvement opportunities and methodologies, which we then replicate and implement company-wide. Therefore, our stores across various locations have made innovative efforts in expanding guest base and capturing diverse consumption scenarios. These include organizing activities around holidays, concerts, tourist seasons, and sporting events. as well as implementing three-kilometer treasure hunt initiatives to target specific scenarios such as family dining, late-night snacks, and birthday celebrations. These approaches enable our stores to reach more local guests and build guest loyalty. In the first half of 2024, we opened eight new stores five in Southeast Asia, two in North America, and one in East Asia, and entered the Philippines market for the first time. We have also closed one long-term underperforming store. As of June 30, 2024, we operated a total of 122 Heidi Lau stores across 13 countries. Regarding new store openings, we maintain our bottom-up strategies without setting specific targets country managers take primary responsibilities for local store openings, with headquarters providing risk control on new store quality and evaluating the rationalization of the store opening pace in each country. Among the eight new stores opened this year, six have already achieved stable profitability, demonstrating a significant improvement in new store quality versus previously. Additionally, We periodically review existing stores. For long-term underperforming stores, we implement measures such as performance improvement coaching, business model transformation, temporary restructuring, or permanent closure in order to enhance the performance or mitigate losses. First half of 2024, our revenue reached 371 million US dollars, a 14.5% increase. Year on year, for the same period in 2023, the growth primarily results from the improvement in table turnover rates we mentioned before and the expansion of our store network. We believe that when our guest acquisition strategies are effective, positive business results naturally follow. In our business management, we maintain a constant focus on guest satisfaction. Since the beginning of this year, we have actually implemented stricter store assessments and management practices. We always remain vigilant, recognizing that as business improves and guest flow increases, any relaxation in implementation in our four-color card evaluation system could potentially alienate more guests, impacting our long-term reputation and operations. Therefore, we remain clear-headed maintain high standards for store environment service and product quality and food safety. Correspondingly, rather than solely pursuing sales and profits, stores are instructed to prioritize adequate staffing and operational capabilities to uphold guest satisfaction. In terms of implementation, we'd adopt a model of assessments and examinations instead of traditional training at both headquarters and regional offices in each country. Through regular and ad hoc inspections and evaluation, we foster inter-store learning and operational improvements. We continue to organize Heidi Law's traditional position-star competition, establishing training and competition for various positions to enhance operational capabilities. Furthermore, we encourage outstanding store managers and above all, to manage two or more stores through dual management and multi-management approaches, facilitating the replication of effective management practices and nurturing a pipeline of reserved talent. Moreover, we recognize that products are the most direct medium of guest experience. Since last year, we have designed country managers as primary responsible parties for product development in their respective markets with headquarters providing resource support. In the first half of 2024, we optimized and launched over 500 new products across various countries, spanning categories such as soup bases, dishes, snacks, and beverages, such as newly launched pepper chicken soup base, golden soup base, sour fish soup base in East Asia, saffron chicken soup base in the UAE, and spicy lamb spine hot pot in the UK have all been well received by local guests. We're also actively exploring the additional seafood steamer and grill options to our existing hot pot restaurants. diversifying consumer choices and experiences across different dining periods. Furthermore, from headquarters to regional levels, we continue to optimize our supply chain, actively seeking local quality suppliers to ensure product quality whilst strengthening cost control and operational efficiency. Regarding our membership system, as of the end of the first half of the year, our overseas membership exceeded 5.22 million headquarters provides tools and methodologies, while individual countries and stores conduct more intensive and proactive operations in social media, private domains, and community engagement locally, enhancing online buzz and guest loyalty. A lot of investors and analysts are keen to understand how the company's business strategy might evolve under my leadership as the CEO. For Superhigh International, our goal of becoming a leading global comprehensive restaurant group remains steadfast. As a result, our development strategy will maintain stability over an extended period, focusing on continuously enhancing the guest dining experience, expanding our restaurant network, improving restaurant performance, actively developing and exploring new business formats, and strengthening headquarters capabilities to empower stores. Heidi Lau Hot Pot restaurants constitute our core business, and our priority is to safeguard and develop this foundation. This involves two main aspects, enhancing internal management and expanding external markets. In terms of internal management, we recognize that hot pot dining is inherently a social experience, typically requiring over an hour for finishing a meal. Following guest acquisitions through various methods, we place a significant emphasis on retention. This requires a building strong connection between employees, stores, and guests, delivering prompt, accurate, and friendly service, and excelling in international management. Only through these efforts can we truly succeed in guest acquisition and repeat customers reflected in improved table turnover rates. In terms of external market expansion, we observe that overseas markets offer substantial potential and demonstrate a high acceptance of hot pot and Chinese cuisine. As we refine our internal management and successfully localize our products and services, we are witnessing an increasing number of local customers becoming our guests. expanding our market reach. Our Beverly Hills store in the United States serves as a good example. With improved internal management, we've attracted a growing local guest base, leading to continued improvements in table turnover rates. This demonstrates the feasibility of a successful guest localization even in the United States market. Beyond our core business, We are focusing on our second brand business. This year, we launched the pomegranate plant, symbolizing that each new business within the group will flourish independently while contributing to our comprehensive restaurant group, just like pomegranate seeds. To support this, we've assembled a team of capable and innovative management personnel across store operations, product development, brand marketing, and other key areas. We are providing resources to support innovation and entrepreneurship, including relevant incentive measures. Concurrently, we are implementing multi-management and dual management approaches, encouraging more high-performing individuals at the country manager level and above to participate. For instance, our HowlNoodle project in the United States is currently under dual management by a U.S. country manager. This approach enables better coordination of local personnel and supplier resources, resulting in rapid improvement in business performance. Looking ahead, we plan to continue recruiting country managers to incubate and compete in fast food and halal hotpot segments, injecting further dynamism into our second brand initiative. As a CEO, my main focus is on improving in-store conditions and making sure that the KPI's and compensation structures for managers at all levels are truly aligned with our customer satisfaction and business goals. Reflecting our management philosophy of aligned interest, disciplined management, drawing from Heidi Lau's 30 years of management experience, we believe that when we correctly align interest, we can achieve optimal results in guest satisfaction, store performance, improvement, new store expansion, and new business incubation. This concludes my overview of our business performance for the first half of this year. I will now invite CFO Chih-Sung to present our financial results. Thank you, Ms. Yeung. Good evening, everyone. I am Chih-Sung, CFO and the Board Secretary of Super High International. I will now present the company's financial results for the first half of 2024. In the first half of 2024, the company achieved a total revenue of US$371 million representing 14.5% increase year-on-year. Haidilao Restaurant operating income contributed $356 million, accounting for 96% of overall revenue, remaining our primary revenue driver. Regarding the geographic distribution, Southeast Asia, $196 million, accounting for 54.9%, continuing to be our largest contributing region. North America, $73.89 million, representing 20.7%. East Asia and other regions contributed 43.24 million, 43.49 million respectively, accounting for 12% of total revenue respectively. In terms of cost and expenses, raw material and consumables amounted to 125 million. Our growth profit margin reached 66.4%, improvement of 0.1%. versus the same period last year, primarily thanks to our ongoing supply chain optimization efforts. Staff cost at $126 million, representing 34% of revenue increase of 8.8% year-on-year, mainly due to two factors. In order to ensure guest satisfaction and maintain quality of our four-color car system, we increased our store staffing. Some countries raised their statutory minimum wage requirements, and in certain instances, we have proactively increased employee wages, hence the increase in the overall labor cost. Rental expenses are $9.1 million, accounting for 2.5% of revenue, an increase of 0.6% year-on-year. This increase was driven by higher property management fees and rent due to new store openings and the store under construction. Second, increased variable rent payments resulting from higher restaurant revenues. Utility expenses amounted to $13.7 million, representing 3.7% of revenue, a decrease of 0.2% year-on-year, primarily due to the expanded revenue base. Depreciation and amortization, $39 million. U.S. dollars accounting for 10.5% of revenue, a decrease of 2.4% year-on-year. This reduction is achieved attributable to the increased revenue base and the conclusion of depreciation for certain fixed assets. Travel cost and operation expenses are $36.3 million, representing 9.8% of revenue and an increase of 0.5% point year-on-year. This increase is primarily due to the expansion of our store network and associated business development needs. In the first half of this year, despite facing inflationary pressures from rising global raw material and labor costs, our restaurant-level operating profit margin reached 8.7%, an increase of 0.4% from 8.3% in the same period last year. We believe this is driven by the increase in table turnover rate, which has led to enhanced business operating efficiencies. Company operating profit first half of this year, 20.87 million. Our operating profit margin for the first half of this year, 5.6%, a decrease about 0.9%. This decrease was mainly due to various countries that reduced pandemic-related government subsidies, resulting in a decrease in our non-operating income of 1.4 million, a 40% decrease versus same period last year. In May this year, we issued ADRs on U.S. Nasdaq Stock Exchange. achieved a dual listing, incurring one-time listing expenses of $2.46 million. First half of this year, companies' after-tax net loss was $4.65 million. This was primarily due to a foreign exchange loss of $19.53 million, resulting from exchange rate fluctuation in the first half of 2024. These fluctuations led to non-cash foreign exchange losses from the valuation and items denominated in currencies other than In terms of operating cash flow, in the first half of 2024, it amounted to $48 million, a decrease of $15.7 million compared to the same period last year. This decrease was mainly due to higher inventory levels at the end of 2023 in anticipation of business growth, resulting in more accounts payable being settled in the first half of 2024. This accounts payable fluctuation led to a cash flow of approximately 12.7 million more compared to the same period of last year. Additionally, the listing expenses of about 2.46 million and the reduction in government subsidies about 1.4 million contributed to the decrease. Overall, companies operating cash flow remains healthy and stable. capable of supporting our daily operations. Capital expenditure for the first half of the year is 17.7 million, primarily used for investing in new store openings. Key restaurant performance indicators, the first half of this year, we had approximately 14.5 million customer visits, an increase of 17.9% versus same period last year. Company's average table turnover rate is 3.8 turns per day, increase of 0.5 turns per day compared to the same period last year. Our average spending per guest was 24.6, a decrease of 0.9 U.S. dollars. Approximately 90% of this decrease was due to continuous appreciation with U.S. dollars this year, resulting in a lower display of lower currency customer spending when converted to U.S. dollars. When viewed in local currencies compared to the same period last year, Most of the countries maintained stable were slightly increasing average spending per guest. However, North America saw a decrease in average spending per guest, mainly due to more diverse and flexible marketing activities implemented since the second half of last year. off-peak periods and specific consumer groups to better stimulate consumer demand. Average daily revenue per restaurant was $17,200, an increase of $1,600 compared to the same period last year. All of our four major regions showed improvements versus the same period last year. East Asia and North America demonstrating more significant improvements for East Asia. Table turnover rate. for the first half of the year was 4.1 times per day, increase of one time per day compared to last year. This was mainly because of the improvement in Korea, initial positive results from management adjustment in Japan, and temporary closure of two underperforming stores in Japan, which reduced their drag on local table turnover rates. North America, for the first half of this year, 4.1 times per day, increase of 0.9 times per day, At the same time, average spending per guest was 42.6 U.S. dollars, a decrease of 6.5 U.S. dollars. This was due to more flexible marketing measures in the U.S. and the Canadian market to attract a more diverse customer base. Southeast Asia, turnover rate 3.7 times per day, increase of 0.4 turns, average spendings Per guest, 19.3 U.S. dollars, a decrease of 1 U.S. dollar, mainly due to new stores being opened, and second, depreciation of local currencies against U.S. dollars. Other regions, table turnover rate in other regions for the first half of this year, 3.9 turns, an increase of 0.4 turns compared to the same period last year. The average unit price per customer increased 1.7 dollars versus same period last year. many due to overall adjustment in stores and introduction of weekend service charges in Australia. First half of 2024, average table turnover rate for our 103 same stores was 3.8 times per day, increase of 0.5 times per day compared to the same period last year. Same-store revenue growth for the first half was 8.2%. Same-store performance by region. Largely, it follows the overall trends, and so I won't repeat the details. This concludes our review of the performance for first half of this year. We now open the floor for questions. Thank you, management team. And I'd like to remind everyone, if you have any questions, please press the star followed by one, and we will invite questions. So we now welcome the first question. So first question comes from CICC. Liu Ningfei, please welcome. Thank you, management team, and I would like to thank Ms. Yang and Ms. Qu. Under your leadership, we have seen such great results. I have two questions here, and one is on the future development strategies and as well as your opening pace as well as in terms of your ideas and philosophies going forward and in terms of going forward and for instance in terms of your new store openings and what are the rooms of further improvement and the strategies as such. Thank you. And can I please ask you to repeat your question? We didn't have a good signal just now. My first question is with respect to your future targets and performance, for instance, for the first next one, two, three years in terms of store opening pace. And second, for your new business format and what are your plans for And my second question is mainly based on observation in the following regions, and what are the activities that you would be undertaking, for instance, in terms of your incentives and in terms of saving costs and improving revenues? Where would these come from? Thank you for your question. So first of all, for your first question, for our strategic target is to become a... leading global comprehensive restaurant group, and this remains steadfast. And this would include, for instance, continue to enhance the guest dining experience, to develop our second brand, and strengthen headquarters' capability to empower stores. Hallyu Lang Haopao restaurants continue to be our core business, and our priority is to safeguard this foundation. involves the two aspects, one internal and the second external. So for internal, we recognize that hot pot dining is inherently a social experience, typically requiring over an hour of finishing a meal, following guest acquisitions through various methods, We place a significant emphasis on retention. This requires building strong connections between employees, stores, and guests, delivering prompt, accurate, and friendly services, and exciting internal management. Only through these efforts can we truly succeed in new guest acquisition and repurchase reflected in improved performance. table turnover rates, and we have three tables this year. This would be our business tables, management table, and foundation table. So if we do well in these three areas, we will be serving our customers better. In terms of the external market, it's actually a huge market. There's a lot of acceptance for hot pot and Chinese cuisine. So we can see that actually more and more local customers are becoming our guests, and there is quite a lot of potential. For instance, Beverly Hills is a store in the U.S. With improved internal management, we have attracted a growing local guest base, and we continue to see improvements in table turnover rates. So this demonstrates the feasibility of a successful business. guest localization even in the U.S. market. Beyond the core business, we are focusing on our second brand initiative. This year, we have launched a pomegranate plant, symbolizing that each business within the group will flourish independently whilst contributing to our comprehensive restaurant group, just like pomegranate seeds. To support this, we've assembled a team of capable and innovative management personnel across the store operations, product development, brand management, marketing and other key areas, we are providing resources to support innovation and entrepreneurship, including relevant incentive measures. Concurrently, we are implementing multi-management and dual management approaches, encouraging more high-performing individuals at the country manager level and above to participate. For instance, our How Noodle project in the United States is currently under dual management, by a U.S. country manager. This approach enables a better coordination of the local personnel and the supplier resources resulting in rapid improvements in business performance. Looking ahead, we plan to continue recruiting country managers to incubate and compete in fast food and halal hot pot segments, injecting more dynamism into our second brand initiative. As CEO, my main focus is on improving in-store conditions and making sure that KPIs and compensation structures for managers at all levels are truly aligned with our customer satisfaction and business goals. Reflecting our management philosophy of aligned interest and disciplined management, drawing from our 30 years of experience, we believe that when we correctly align interest, we can achieve optimal results in gas satisfaction and store performance and new store expansion and new business incubation. Thank you for your question. Thank you for your question. And let's wait for the second question. Second question comes up from Zeng Jun from Huatai Securities, welcome. Can everyone hear me okay? Yes, we can. Thank you, management team, for the opportunity. This is Zeng Jun from Huatai Securities. First of all, I would like to congratulate the company for such a great result. Also, congratulate Ms. Yang on your new post. I have two questions, and one is that we have heard you pay great attention to guest satisfaction and localization. Have you actually calculated or have a statistic for local guests and the membership percentage of local guests, as well as the repeated visits by them? In the meantime, for table turnover rates, we can see that 3.8 times is already quite high. So going forward, what's your forecast for table turnover rates, how to balance the further improvement as well as the flexibility and further improvement of customers' experience? Second question, on store opening, we can see that you have opened eight new stores. In terms of your whole year expansion, are there any changes? And can you please also share with us the stores in your pipeline as well as your plans for opening stores in different regions? We are also delighted to see the pomegranate plant. Generally, when we look at restaurants, a lot of the times when the main brand goes to a certain level, they then go on to incubation of new brands and for Heidi Lau International is actually in the early stages. So what are the considerations for coming up with this strategy and for our main brand Heidi Lau as well as our new brands, what are the synergies between those two? Thank you. Thank you for your question and for your first few questions about the guest base and table turnover rate, and I'll take those, and Ms. Yang will answer the other questions. So for our guest base, for instance, local guests as well as Chinese guests, and this is a question that a lot of people focus on, and we used to talk quite a lot of localization as well as some quite mechanical calculation methods about local And later on, we realized that this is actually not the right way to look at our performance. And so right now, as a result, we have really weakened the KPI of localization and for a if they have put in the effort, we will actually be able to see the increase of the table turnover rate, and we have recently visited the U.S. market. So apart from what Ms. Yang mentioned about Beverly Hills, and we do see a lot of local guests, and the manager of that store is also very hardworking, and through his hardworking, we can also see that the local guests are in the past was not a lot, and now 30 to 40% of the guests are local new guests, and these new guests, they are not necessarily brought by Chinese friends, and they came into our shop on their own. We have another shop in Los Angeles, and before we changed the manager of the store, this was quite weak. The local customer was less than And with a new manager in place, and we have seen that in terms of our staff language capabilities have improved in the local social media. We also see quite a bit of interaction and the local restaurant visits of local customers increased to 20%. So these are not yet 50%, but we do see a significant increase with further room for growth. Looking at the whole global market, and for global customers and Chinese customers, it's, again, still one-to-one. For Southeast Asia and East Asia, these are quite similar to China, and the local customers will be higher, about exceeding 60% to even 80%. If we look at Europe and America, with the U.S. as an example, the local gas sales percentage is below 50%, but with our restaurant managers' efforts and this ratio continues to improve. When you talked about table turnover rate, first half of this year, 3.8 times. Last year, 3.3 times. The second half of last year, it was... Q3 and Q4, 3.8 and 3.9 times. So Q3 and Q4, they are unique in that Q3 is the summer holiday. And so some of the overseas students will leave, but there will also be some tourists. So Q3 is very complicated. Q4, because we are in the northern hemisphere and it will be quite cold and there are a lot of festivals. So Q4 is our peak season. So, of course, we hope that our table turnover rate for each quarter, each month will continue to improve. And looking at July and August, we have made progress versus last year, and Q1 and Q2 this year versus last year. From mid of last year, we have seen a good result in terms of the turnover rate, turnover rate of the table turnover rate. And for Q3 this year, we think that the growth will narrow, but overall speaking, it is still on a growing trajectory. So this is on table turnover rate, and in terms of the membership, as well as repeated purchase or visits. Overall speaking, for overseas customers, it is roughly the same, because for the membership, we have a privacy protection policy in place, so we can't see their nationalities, but overall speaking, we do not see any major changes, or it's hard for us to distinguish simply from looking at the membership numbers. Roughly speaking, the repeated visits will be about four times per year, so this is quite stable. And your third question is about store opening. First half of this year, we opened eight new stores. For this year, actually, on a monthly basis, in terms of our negotiation under contract and construction, and as Ms. Young has mentioned earlier, we have the bottom-up management style, and we do not have any targets set for them, and there are about a dozen currently under plan, and for these restaurants, they will need to meet the local requirements and there will be some emergencies beyond our expectation. In terms of the benefits, it is packed with the bonus and the compensation for the local country managers. Therefore, we do believe that we will see very good results because they are given proper incentives. Those are the answers for your first three questions and your fourth question for our second brand and the pomegranate, as well as the relationship with the main brand. So we'll pass the floor to Ms. Yang. Thank you, Zeng Jun from Huatai, for our pomegranate plant. And you have asked why we are now working on this despite not having a large number of stores overseas. the moment for super high our overall strategy is to become a global leading comprehensive dining company and this is built on the foundation of a multi-brand so for the pomegranate plant is based on this so at the moment working on multi-brand and our main target is from supply chain overseas a lot of these restaurants they are quite spaced out quite further away from each other if we have a multi-brand in terms of the management for instance in the u.s the country manager and they manage both the heidi law as well as how noodle we can see the benefits and the results so the incubation of the multi-brand we have accumulated a lot of experience in china and This year, we're already seeing good results. For instance, in China, Yanqing is going to be further developed. And so from this part, and for instance, barbecue, this is quite similar to a hot pot. And going forward, we'll also try our best to leverage those brands that are very close to our core business. And so in China, Yanqing and Haodilao is the same as the relationship of Haodilao and Hao Noodles in the U.S. So in terms of store expansion and the usage of raw materials and, for instance, beef from various parts of the cow could be used. So we already have some successful experience and we can replicate that to the overseas market. So we do have mature experience in this regard. And in terms of the incubation of the business, combining with the comprehensive capability of our team, and this is what we're working on, we also have Halal hot pot, and we have prepared this for over a year, and we also have other noodle shops and rice shops, snack shops, and spicy snack food, etc. And at the moment, you know, we look at the stores that are more easily to be aligned with our advantaged business core brand at the moment. Going forward, we'll have a multi-management and dual management model because when you manage the second store in terms of the labor cost as well as the management efficiency will be greatly improved. In addition, for our entrepreneurial incentive, if from zero to one they succeed and we will give out staged incentives. So for How Noodle and Yanqing at the moment, and those are thanks to this new model. And for our excellent teams, we can also see that they are very well encouraged. And such passion coming from these management team and experience is very welcoming. And they have been working on this for over a decade. And all of these projects experienced staff coming out to establish this new business from zero to one. We're very positive going forward. We'll continue to solicit new business bids and to continue to contribute to the dynamism and the development of our second brand plan. Thank you very much. Thank you for your question. Our next question comes from Richard Lin from SPDB. Thank you. Thank you, company management, for giving me this opportunity. Three questions here. First is for Ms. Yang. Quite a general topic. And Ms. Yang, since joining from Heidi Lau to Superhigh, and in terms of business development, since joining, what's the biggest challenge? And how have you coped with this? This is a very broad question. Secondly, regarding store openings. For the store locations in Southeast Asia, again, the percentage is very high and the new stores are mainly based in Southeast Asia. So I'd like to know internally how much room there is still for Southeast Asia store opening and for U.S. where north america we only have 13 stores and the u.s is a huge market and going forward is it possible that you might move from southeast asia to north america and 30 for first half of this year for your table turnover rate has increased greatly however the operating leverage has not fully reflected and for instance your labor cost continues to be very high in your revenue. And we have heard that you have put in more incentives as well as adjustment of wages, et cetera. So long-term speaking for our operating margin, what is the further room for growth or internally in the company? Do you have a restaurant margin target that you are benchmarking to that you hope to achieve? Thank you. Thank you for your question, and let me answer your two questions in the latter part. First, you asked about Southeast Asia. We have a lot of stores. Yes, indeed, 70%. Five out of the eight new stores are located in Southeast Asia, and this is mainly that being organized by our country managers for these Southeast Asia countries, and they already have quite a large base, and that's why we have this high percentage. And for various locations, in terms of the support and incentives that we have given them, they are all aligned. In terms of the policies, there is no differentiation to really give any priorities to any locations whatsoever. We have the same policies. globally. And secondly, you asked about the further room for expansion in Southeast Asia. And actually, internally, we have never really defined a certain country or a certain region for the store opening. If we were to discuss about this, whether the number is correct or not, this will actually mislead our team. And this will also limit our team's capability. And with our localization, we believe that we'd be able to receive a better word of mouth and reputation as well as the acceptance of the local guests. So through our hard work, we would be able to grow bigger and bigger. To give you an example, in our new store opened this year, we have the penetrated stores in the lower tier cities in Malaysia. And we have already seen very good results with the sustained probability. And these cities, they do not have a huge population. However, locally in these markets, one is that the staff localization, we have done very well. We can unite them very well. And second, in terms of our product, as well as the flavors of the products, they are quite mature. So that's why they have seen good results in the lower tier cities. So this has given us a lot of confidence in Southeast Asia countries, regardless of whether it is in their capital or in their lower tier cities, we would actually be able to enjoy opportunities. So internally in our company, we would not be discussing about ceilings of the business. And in terms of the improvement of table turn rate and 0.5 times at the restaurant level from last year, 8.3% to 8.7%. It seems only an increase of 0.4%. However, for us, the inflationary pressure, we still face quite a lot, especially coming from labor costs and for raw material at the moment. Raw material globally, as well as commodities, inflationary pressure is coming down, but the In terms of labor, we are running our business in 13 countries. Seven out of these 13 countries, they have asked to increase the minimum wage of the local market. So this is the inflation of labor costs in countries without such requirements. And in terms of the labor market, we can see that there is a lot of competition, and we would... increase their wages on our own initiatives and in addition for our four color system and the evaluation is stricter and more frequently and once the pursuing the table turnover rate and we don't want to go into a go we don't want to make any mistakes such as that perhaps some of our customers may not feel that they have been served well, and therefore we need to increase the staff to ensure guest satisfaction. Therefore, you can see that labor cost has gone up 0.8 percent, but this is worth our investment. With this, can we obtain the guest satisfaction in return? In terms of the future efficiency, The best is to increase our table turnover rate, and only with this we would be able to dilute our costs and expenses. Looking at our 30 years of business and hard work, and for the business operating margin at a 10% to 15% region, this is a reasonable slide. scale and reasonable region of profit margin and if it is lower than this and it would mean that there is actually no sufficient business and so 10 to 15% this is a reasonable range that we have based on our experience. So this is the answer for your specific question and your first question, broad question about the challenges since taking up the post as the CEO for Miss Yang. So we'll pass the floor to Miss Yang. Thank you. Well, I think that for challenges, whether it is in China or overseas, we have challenges because the competition is everywhere. I think the core is really that we work well in our core business and for dining restaurant business and regardless of where you are in the world. And the main issue we face is that countries with different cultures and law requirements. And we have recently opened about our business in overseas for about a decade so far for the past decade the different cultures well actually for the legal perspective as long as you are compliant we have good lawyers and that is not to worry and for cultures we need to respect the local cultures and in the meantime with our good employees and we need to have good employees and to realize the respect for these employees. And in the meantime, we also need to make sure that we can grasp the good environment and the good service. This would apply to any country and any business. So this is based on Heidi Lau. In every country, we currently have our highly long business and we have a very good business and you can also see this from the table turnover rate. So this shows a good adaptability of our business. And if you are saying that to get everyone to go and have a hot pot and this is about people's dining habits, it is very difficult for Europeans and Americans to get used to hot pots. Rome is not built in one day. Even if they were to have it, the frequency won't be as high as the Asians. So that's why we have our multi-brand strategy. As long as we do well in our services, we remain sincere, friendly, as long as we're able to do this, and regardless, which culture we are in, people will accept you. As long as you are sincere, friendly, and provide a good service, you will be well accepted. In terms of environment and the management of hygiene, and a lot of the Chinese restaurants have a bad name in overseas restaurants, in overseas business in history. And really, in terms of the renovation, it's all the same. And what people are concerned about is the hygiene and the health, as well as the cleanliness, et cetera. And we also need to make sure that our renovation is in line with the local taste. And thirdly, it's about reasonable price. And with a multi-brand strategy in place for our pricing, I believe that for Heidi and I, as well as other brands, we'll enjoy more advantages. And I feel that there are big challenges, but you can also look at it as small challenges, depending on how you look at it. I think that as long as we are down to earth and make sure that we do our job steadfast and well-planned, Using our 30 years of experience to replicate this in all the other countries, I don't really see there will be any problems. Thank you for your question. We have Hildy from Morgan Stanley. Hildy Lin, thank you for giving me this opportunity. I have already heard quite a lot of comprehensive questions and two small questions on my end. These are two questions. They are both about Q2, and I can see that for the unit price and from U.S. dollars perspective, there is a slight decrease. And how much of that is caused by U.S. dollars appreciation? And if from a local currency perspective, and what is the trend, especially benchmarking to Q1 for the unit price per guest and what is the trend and my second question which is about arrangements and I can see that for Southeast Asia as well as North America and the table turnover rate Q2 is slightly down and especially in North America because the unit price has already come down and if we look at it quarter on quarter it is down and The table turnover rate is also down, so I'd like to ask, is this something that we need to be concerned about, that because of the economic pressure, then the ability to spend in North America has already weakened? Should we worry about this? And in addition, I also want to ask the management team on your views of the North American market in the future. Thank you for your question. For unit price, the first half of this year, it is down by 0.9 US dollars. 0.8 US dollars were cost by Forex and 0.1 US dollars. And yes, indeed, that is a decrease for most of the countries. Actually, the unit price has increased and some of the countries, they have decided to adjust their price upward. For instance, we are now charging uh service charges and in japan and they have decided to put up the price for certain dishes singapore as well and for north america the unit price are coming down this is a region that is a relatively obvious and so we have a u.s and canada for canada for certain stores that they have off peaks and they provide some uh promotion activities for instance 1.99 canadian dollars you can enjoy the beef and because of the restrictions on the time as well as the amount and it has brought to quite a lot of traffic in the united states we have also seen that for certain stores there are quite a lot of activities targeting at students or the local office workers, et cetera. And these will all bring down the unit price. And however, in terms of the pricing power, and this is delegated to the country manager, and they will be looking at each of the individual stores in that country and to decide whether they have any promotional activities. And in terms of the promotional activities degree, they will decide. And for the headquarters, they only need to control the red line. And one is that in terms of the brand reputation, and the second is on the promotion, it cannot be too big of a discount. So we do give them a lot of freedom. And at the moment, we do see that the operation is quite healthy. In addition, you have also asked about Q2, about North America and whether there is... any weakening in the sales, so overseas in Q1 and Q2. Generally speaking, Q2 will be weaker than Q1 because in Q1 we will have a major festival. So this year we have January New Year and Chinese New Year. In addition, this year we also have a major impact on Singapore, which is that Taylor Swift has already had six concerts in Singapore and Singapore's GDP and tourism has all gone up and this has a major impact in Q1. For Q2 and in terms of festivals that there are fewer so from our perspective this is quite normal and of course looking at the overall economic trend globally and the people pay attention to the U.S. market and looking at our own observation U.S., there is still a lot of consumption power, and we continue to learn about the macroeconomy and looking at the unemployment rate or the reduction in inflation in the United States, including personal income. We feel that overall it's quite stable. We are coming to our own store management, so we feel that for the United States, the It depends on different time segments and guest base, and there are opportunities for all. So despite the changes in the macro environment, because we only have 13 stores, so as long as we work hard and attract more guests, we would be able to develop our business very well, and it will be developing in a very healthy way. Okay, great. Thank you for your question, and we now welcome the last question. Liu Jiwei from Citix. Thank you. This is Liu Jiwei from Citix Securities, and I have one question, and Ms. Yang mentioned many times about country manager, and you have also talked about the country manager as the local lead and taking up the responsibility of the business. So looking at this as a whole for the country manager's background and their resume, what is their background and the KPIs for the country manager? So what are they and how do you provide incentives for these people? Okay, thank you for our country managers and for their resume. And we are selecting them from the best managers from the whole country. And for their KPIs, we look at the three tables that I mentioned earlier, the success rate and whether they are successful or not. And then we will have a playoff between these managers. And for those managers, who fall behind, they will be eliminated. And those who do well in terms of the bonus, we have a tiered bonus dividend payout system. Thank you. Okay, great. Thank you for your question in the interest of time. And this concludes today's earnings call. Thanks to all the analysts and investors for your participation. We'll see you next time. Thank you, everyone. Thank you, and see you next time. Goodbye.