SUPER HI INTERNATIONAL HOLDING LTD.

Hi, ladies and gentlemen, the investors and analysts. Hello. Thank you for attending 2024 Interim Results Call of Superhot International. The company management attending the conference are Ms. Yang Lijuan, Executive Director and CEO of the company, Ms. Qu Cong, Financial Director and Board Secretary. Today's conference call may include a forward-looking statement, which encompasses the company's strategy, business plan, and performance outlook. The content discussed in the earnings conference, along with any comments and responses to your questions, reflects the management's views as of today. Please refer to the latest safe harbor statement in the earnings press release that applies to this conference call. This conference call will be conducted in Mandarin Chinese with an external agency providing simultaneous translation into English. In case of any discrepancies, please refer to the original Chinese content. The presentation materials for the conference call have been uploaded to our IR website. We encourage you to review them at your convenience. Next, we'll invite Ms. Yang Lijuan, Executive Director and CEO of the company, to review our Q3 performance.

Thank you. Hi, everyone.

I am the executive director and CEO of Superhot International. My name is Yami Jent. Allow me to introduce the third quarter business performance of Superhot International. In Q3, our average table turnover rate was 3.8 rounds, an increase of 0.1 rounds year over year. We received a total of 7.4 million customers, an increase of 4.2% year over year. The revenue was 198.6 million US dollars with an increase of 14.6% year-over-year. Our company's operating profit margin was 7.5% year-over-year, 1.8 percentage points. First, we have promoted stores to improve their business from the so-called three spreadsheets, that is the management, table which is about the stores on-site for color coding charge. The operational table really allow the stores to monitor the financial performance. Also, we have the basic spreadsheets that allow our employees and customers to receive better management and also service quality as well. As a result, in the third quarter, more stores have improved their customer experience and also the unit economics as well. In addition to that, we have conducted a more comprehensive and detailed sorting and sterilization of our services and business operation as well. For example, for our members, students on their special occasions such as birthdays, weekends, holidays, we offer customized services which allow us to continue to improve our service quality. Number three, we also implemented the so-called dual management policy with more national managers and excellent store managers managing another store on top of their home store, which allowed them to really replicate good management to more stores. In addition to that, we also began to study how to divide smaller units of management within a store so that more people can be responsible for different parts of the business, and we also allow different parties to have their own spreadsheets for management, which can help us to deeply stimulate the passion of each employee to make sure that the management of the store and also the organization of the management become flatter and easier. Number four, in terms of our headquarter empowerment, we have now integrated the product and marketing departments. We examined the menu structure and also marketing activities of various regions and countries And we have unified the management of the trade business of various countries and regions from the source of procurement to improve our operational efficiency. In August, our product team really optimized a highly acclaimed hot pot dish, Pork Belly Slices in Singapore, and really launched the so-called tender process. pork belly item which has now been ordered with high popularity among our customers with over 10% of increase of selection actually for three consecutive months and number is still rising. And also in August, we also upgraded our flagship hot pot sauce as well, allowing more fresh tomato to upgrade our taste. And during the Olympic Games, we also launched Olympic theme kind of bundle that allow more popularity for different countries as well. Now, number five, we continue to innovate marketing activities. In July, we actually have a crossover event with a really well-known video game, LOL. and we attracted over 600,000 customers to participate in the activity as well. By the end of the event, a total of over 12,000 co-branded dishes were sold, which are deeply loved by our customers. In September, we also launched a series of really fun merchandise for young people, including, for example, hot pot ingredients and other themed toys as well. customers can participate in the role-play activities with the waiters and really enjoy the fun of the immersive experience. Now, when it comes to our operation, first of all, when it comes to the store network, our current base of store number is relatively smaller in terms of store expansion due to construction and also processing preparation. No new stores were opened in the third quarter. In June, we opened a store in Cambodia. And so far, we've opened nine new stores this year in total and another four. Single-digit number of stores will be renovated in December, and the total year estimate for the number of stores newly opened will be double-digit. And after our adjustment, we actually are now able to optimize the utilization of our resources that allow us to improve our operational efficiency. Our country managers are responsible for overseeing store openings as well for the coming year and also beyond. They have already identified several opportunities for expansion, including opening new stores in existing countries and regions and also expanding into countries Lower tier cities and also outside of current countries and footprint as well. The headquarters will assess the suggestions and proposals and oversee the quality of the new stores for stirring a positive cycle of growth from the ground up. In addition to our basic hotpot offerings, we also have initiated the so-called pomegranate project. We have actively explored catering projects in various countries as well. And our headquarter will provide resources such as market research, product development, brand marketing, and design and marketing. other support to empower these initiatives effectively so that we can incubate other types of restaurants such as hot pot, barbecue, fast food, and additional categories as well. Looking beyond, we have established our long-term goal as becoming a leading global integrated restaurant group so that we can continue to improve our operational efficiency. So that's all for my introduction. Coming up, our financial director, Ms. Chu Chung, will continue with the financial performance update. Thank you, Ms. Yang. Hi, everyone. Allow me to give you a brief report of our Q3 financial report. In Q3, we achieved $199 million. million US dollars a year-over-year growth 14.6 percent is because first of all our network continue to expand we continue to also increase our average spending per customer as well and we also contributed a lot when it comes to our increased traffic and also table turnover rate as well among them you know we are operating income Our delivery was 2.6 million US dollars year over year, increased 8.3%. And also, we benefited from our popularity of the hot pot seasoning products and also our sub-brand food among local consumers and retailers as well. When it comes to our costs and expenses, our costs Raw material and also consumable use was optimized by 1.4 percentage points year over year. And as a result, we also are able to improve our gross profit margin as well. Our gross profit margin was optimized because of a number of reasons and factors. Our employee costs were increased by 0.9 percentage points, and it was mainly because of, on the one hand, we increased the number of store employees to ensure customer satisfaction and also the quality of the store's management. On the other hand, some countries also increased the minimum wage per country, so the overall labor cost has increased as well. Rental expenses also increased. decreased and optimized year over year mainly due to the economy of scale generated by the increase in revenue as well. Our water and electricity expenses, our utility bills also were optimized because of The increase of internal revenue base, in addition to that depreciation and amortization also was basically at the same level as last year. For the third quarter, our company level operating profits was approximately $15 million, an increase of 1.8 percentage points. It was mainly because, first of all, the table turnover rate increased and also the average spending per customer increased. In addition to that, we optimized the supply chain and also better control our costs, which allow us to improve the operational efficiency. In the third quarter, our net profit of the tax was also optimized because, you know, basically amounting to 38 million US dollars at the same time. Because of the foreign exchange gains in the third quarter, we also generated extra income where the last year, the same period last year, the foreign exchange lost. was recorded and is mainly due to the exchange rate fluctuation. For the third quarter, we served a total of 4.2% of more customers as well. And the table turnover rate also increased by 0.1 rounds year over year. Our average spending also increased by 2%. 2.1 US dollars per guest. And it was mainly because, first of all, we had made a reasonable adjustment to our menu and marketing activities, providing customers with more choices. In addition, compared to last year, the overall impact of exchange rate fluctuation on customer spending was slightly positive as well, which contributed to the overall increase in customer spending as well. The average daily revenue of per single restaurant also recorded an increase by about 36%. First of all, South Korea continued to lead in the performance and also after our optimization in Japan, including major adjustments in two stores, we were able to actually improve their table turnover rates by 0.5 rounds as well. North America table turnover rates was at the same level as last year. The average spending increased by 2.3 US dollars. per customer as well and it was mainly due to our adjustment in the organic activities and also our provision of better quality and wider range of dish selection that allow us to attract a wider customer base as well. For Southeast Asia, For the third quarter, an increase was also recorded for the same quarter last year. The food traffic has increased significantly, and we have actually benefited from the foreign exchange rate fluctuation. For other regions, the average table turnover rate was 3.8%. slightly slower than the same period last year. The main reason was because of the slowdown of two stores in the UK. We're still ramping up the operational results in the UK. In addition, the operation in Australia and the UAE were normal with an improvement recorded compared to the same period last year. When it comes to same store performance, we have recorded over 106 same store performance as stores that has recorded same store performance within the same region. Same-store performance basically was similar to the overall trend of the same region. We're not going to repeat here. That's all for our very quick review of the third quarter performance. We are now ready for your question. All right. We now have started the Q&A session. The first question comes from Huatai.