SUPER HI INTERNATIONAL HOLDING LTD.

Thank you for attending Super High International's Q3 2025 earnings call. Today, the company's executives present on the call are Ms. Young-Li Jun, Executive Director and CEO, and Ms. Choo Chul, CFO and Board Secretary. Today's conference call may include forward-looking statements such as the company's strategies, business plans, and performance outlook. The content of this earnings call, along with management's comments and Q&A, reflect their views as of today. Please consult the latest Safe Harbor statement in the earnings press release, which is applicable to this call. This session will be conducted in Chinese with simultaneous English translation provided by an external agency. If there is any discrepancy, the Chinese version shall take precedence. The presentation materials will be uploaded to the company's IR page for your review. Ms. Yang Lijuan, CEO and Executive Director of Superhigh International, please. Thank you. The investors and analysts, hello, everyone. I am Yang Lijuan, CEO and Executive Director of Superhigh International. Coming up, I will be highlighting the main development of Super High International's Q3 2025 performance. This year, thanks to our ongoing investment in customer and employee benefits and our strategy of prioritizing customer satisfaction, we are pleased to see significant progress in store management quality and restaurant operating results this quarter. Our overall table turnover rate in Q3 was 3.9 times, and our same-store table turnover rate was 4.5. both increasing by 0.1 times compared to last year. Q3 revenue reached $214 million, a year-over-year increase of 7.8%. And our Haidilao restaurant, same sort, revenue grew by 2.3%. As we continue to implement the customer and employee benefit policies and share benefit policy introduced in the first half of the year, we achieve an operating profit of $12.5 0.64 million US dollars this quarter, a decrease of 2.3 million US dollars or 15.4% compared to the same period last year. The operating profit margin was 5.9% down 1.6 percentage points year over year. However, we were able to balance benefits for customers with operational improvement, adjusted some ineffective strategies and enhanced efficiency in areas such as product output and staff scheduling as a result. Our operating profit increased by 8.9 million U.S. dollars, or 240.5% compared to Q2. And also, the OP profit margin rose by 4 percentage points from Q2, demonstrating significant quarter-over-quarter growth. Additional year-on-year gap in the third quarter has also been notably narrowed year-over-year. Let's review Q3's key initiatives. First of all, we focus on store operation. This quarter, we continue to reduce headquarters oversight of stores and eliminate performance rankings for individual tasks. Our focus shifted to support guidance and improved communication, allowing frontline stores and regional offices to better concentrate on the market customers and employees. During this process, our regional offices and stores actually generated many excellent service cases and management practices. At the same time, we have around 90 potential key personnel, building strong talent pools for our overseas management and development. Second, this quarter, in creating a different high-deal law, we concentrated on the fresh-cut scene or scenario. Fresh-cut meat is relatively fresh and new for overseas consumers and offers a better consumption upgrade experience. Currently, over 60% of all stores have launched these products, and overall, the take rate while the adoption rate has been increasing month by month, now surpassing 11%, which led to higher per-table consumption. Overall feedback has been very positive. Additionally, some stores in Southeast Asia have completed the nightclub-style scene renovation, and compared to stores in other regions, the table turnover rate during late-night hours has increased more significantly. Moving forward, we will continue to expand this scenario, aiming to provide customers with richer and more unique dining experiences. Third, regarding the store network expansion, we opened two new Haidilao stores this quarter located in Malaysia and Indonesia. Also, we discontinued a Singapore Haidilao restaurant. Also, we are going to adjust one store in Thailand to a secondary brand based on changes in the surrounding business district and customer base. As of the end of Q3, we operated a total of 126 Haidilao restaurants overseas, with 10 new restaurants open and six stores discontinued this year. We have signed contracts for more than 10 Haidilao stores that are not yet open. Given the ongoing construction and timeline, we're anticipating opening a few stores in the fourth quarter, which will result in a total of over 10 new stores open this year. Fourth, under the Ponegrede plan, our second international brand is steadily advancing in Q3. Our Malatang brand, Hybol, launched in Canada and quickly became profitable at the store level. The next step, you know, we're going to work on refining customer flow, products, and operations. We're exploring the strategy internally. Currently, we aim to use information technology and a smart middle office system to support management, which will make it easier to expand and roll it out to different regions gradually, avoiding overextension. Additionally, other opportunities in various sectors identified earlier are also underway. In November, we opened a Spakora BBQ store in Indonesia and also and Izakaya in Japan, both showing consistent growth and ramping up through ongoing adjustments and innovations. We have gained greater confidence in tackling challenges in the global market. We will persist in our management philosophy of connecting interests and securing management, making necessary adjustments to incentive policies and fully leveraging the mentorship system to attract and retain employees from various countries. Additionally, we aim to pass on and develop Haidilao's culture and management practices. We will focus on advancing the Pano Grenade plan and also implement the woodpecker plan for stores that underperform. Moreover, we'll actively adopt new technologies and integrate AI to boost organizational efficiency. That concludes my overview of the business performance this quarter. Now, Ms. Xu Cong will present the financial performance. Thank you, Ms. Young. Hi, everyone. I am the CFO of the company. My name is Ju Chong. Next, I'll introduce the Q3 financial performance. In Q3, the company generated a total of $214 million in revenue, a 7.8% increase from last year, the same period. Hy-Di-La restaurant operating revenue was $201 million, up 5.1% year-over-year due to ongoing business expansion, including a net addition of five Hy-Di-La restaurants year-over-year. Additionally, increased customer traffic led to more table turnover rate year-over-year. With our focus on takeaway business resulting, we saw increased multiple stores launching actually takeaway menu items we are able to generate better results. Takeaway revenue reached 4.4 million U.S. dollars, 69.2% rise from the previous year. Other business revenues stood at 8.9 million U.S. dollars, 74.5% increase. Regarding costs and expenses, raw material cost total 71.2 million U.S. dollars with a gross profit margin of 66.7%. down 0.3 percentage points year-over-year. Employee costs were $71 million, representing 33.2% of revenue, increase of 0.1 percentage point year-over-year. Since applying the discount strategy this year, these primary cost items have been optimized this quarter. Customer traffic driven by previous investment has continued to expand our revenue while ongoing management efficiency improvement during strategy implementation. Compared to last year, our employee cost ratio remained similar. Efficiency gains and supply chain enhancement have partially offset the gross profit margin impact from customer discount. Rent and related expenses reached $612 million, 2.9% of revenue, up 0.2 percentage points year-over-year. Our depreciation and amortization totaled $21 million, about 10% of revenue, a decline of 0.3 percentage points from last year. Our utility expense were $778 million, 3.6% of revenue, 0.2 percentage points decrease year over year. Operating expenses, including travel and other costs, was $23.7 million, up 11.1%. an increase of 1.7 percentage points year-over-year. Among the operating expense mentioned earlier, we follow the same trend as last quarter. The other expenses show the largest increase in revenue compared to last year. This includes customer – sorry, higher outsourcing service fees, professional consulting fees, and brand marketing costs in some countries. And the Promo Grenier project and brand building resulting in higher expense year over year. The second largest increase was rental costs amounting for 2.9% of revenue. It was mainly due to companies' increased number of leased properties this year, including Heidi Lau and second brand stores under renovation, as well as short-term warehouse leases. In the third quarter, the company's operating profit was $12.6 million, down $2.29 million from last year. the same period last year. The operating profit margin was 5.9%, dropping 1.6 percentage points from 7.5% last year. This aligns with our expectations for the profit sharing strategy, but indicates room for improvement in our management during dynamic operations. In the third quarter, net profit after tax was 3.59 million US dollars, a sharp decline from 37.6 million US dollars that year. Last year, this was because of the exchange rate fluctuation of the Japanese yen, Singapore dollar, and British pounds against U.S. dollars, causing a foreign exchange loss of $5.8 million U.S. dollars after re-evaluation compared to a gain of $25.8 million of gain U.S. dollars in the same period last year. Regarding the operating cash flow, Q3 was $34.1 million U.S. US dollars down 6.5 million US dollars from last year. It was because of the cyclical fluctuation in operating receivables affecting by holidays and weekends. The fact that operating profit was lower than last year's same period and also because of our profit sharing scheme. Regarding restaurant key performance, in Q3, we serve approximately 8.1 million customers represented in the 9.5% rise year over year. Heidi Lau has a daily table turnover rate of 3.9 rounds, which is 0.1 rounds higher than last year. Our average order value was 24.6 US dollars, down 1.2 dollar from 25.8 last year because of strategic adjustment in menu pricing and marketing. The average daily revenue per restaurant, which 18,000, made $300 increase from last year, driven by a higher number of diners per table. Our four regions show a slight improvement year over year. East Asia remained the top performer, serving 1.2 million customers, 50% increase from last year. This basically was a 0.6 round in rise. increase in the table turnover rate, reaching 4.9. And the average spending per person in East Asia was 28.9 U.S. dollars. The average daily revenue per restaurant was 20,300 U.S. dollars, 14.7% increase. North America, the table turnover rate was four rounds, up by 0.1 from last year. The average transaction value decreased by $4.4 compared to last year, but higher restaurant traffic and more customer per table, resulting in a 2.8% increase in average daily revenue per restaurant, which was $22,100. Southeast Asia's table turnover rate was 3.7, increased by 0.1. mainly due to increased investment in customer rewards and offering more cost-effective products. Other regions show a 3.7 round average table turnover rate. It was mainly because of new stores in the UAE that are still ramping up. Our same store revenue grew by 2.7%. The average table turnover rate across 107 stores was four rounds daily, an increase of 0.1 year-over-year. The average turnover Transaction value per customer, average spending per customer decreased by $1.1. Regional performance trends within the same stores basically aligned with the overall results that I mentioned before, so I will not repeat. That's all for our performance review. We're now ready for your questions. Please feel free to ask questions. Thank you. Please press star 11 for your questions. If you need to cancel your questions, please press star one, one again. The first question comes from Song Jin with Kuatai Securities.

Please go ahead.

So my first question is that what are the strategic plans for operations and expansion in each region next year? What will be the focus and pace of operation in different regions? And the second question is that I understand that business development takes time, but how should we project profit margins and what kind of metrics can indicate a tipping point or an inflection point before starting full-scale acceleration? That's all for my two questions. Thank you. Great. Thank you, Ms. Sung, from Huatai, for your questions. Let me try to address your first question. Basically, different regions have distinct development strategies based on their unique environment and situations. As mentioned earlier, Southeast Asia and East Asia now shows strong overall growth. We aim to increase local customer base by opening more high-quality stores. We also trust regional managers' judgment to develop new business formats tailored to local preferences. For example, a Japanese izakaya store has already opened in Japan, and South Korea is planning to launch its own Korean BBQ restaurant as well. North America is a large market, especially in the U.S. We focus on internal improvement, management enhancement, and developing leadership talent. At the same time, we're actively expanding into the market. Many upcoming projects right now are in North America, So management, you know, and talent development are definitely a priority. Southeast Asia, you know, comprises many countries with very diverse conditions. Indonesia has experienced relatively stable growth, and we're applying a similar strategy to East Asia by expanding new stores and exploring new business models. On the other hand, Thailand needs to improve its management, focusing on internal development, including product quality, service, and customer experience. Internationally, each country has their unique condition that require us to adapt. We emphasize customer and employee focus while embracing technological advancement and AI to gradually strengthen our mid-platform or middle office kind of management, easing the pressure on frontline staff. That's the first part of your question. And the second question is that First of all, we do not set short-term profit targets for each store. I think relying on numerical goals for operation can lead to deviations and potentially harm customers and employees, outcomes that we aim to avoid. So instead, we prioritize the efforts of managers at each country and store level, along with the health of their management practices. Our evaluation criteria are multi-level and multi-faceted, taking into account customer satisfaction, employee efforts, and reasonableness of the store performance figures. Sometimes this requires offering discounts, other times focusing on internal enhancement, and ultimately good table turnover and profit margins will follow naturally. All of our store openings, whether under the Heidi Lau brand or you know, pomegranate project are driven from bottom up. We don't rush the process. We emphasize the quality of each sora we launch. I hope I answered your question. Great. Thank you, Mr. Thank you for the question and answer. We're waiting for the next question. The next question comes from Zhong Yecheng with Zhejiang Securities. Thank you for the two questions. The first question is about the profit forecast for 2025 full year and the upcoming three years. In 2025, the company's total revenue reached $610 million with an operating profit of $24.45 million resulting in an operating profit margin of 4%. you know, from January to September. And Q3 is typically the peak season. Usually, the operating margin will be slightly higher, but we are waiting for the end of the year before we can announce the official figures. You know, as of the operating profit margin over the next three years, this involves projections, and it's very difficult to project Nonetheless, the company will continue efforts to enhance store management, open high-quality new stores, and also explore innovative business models for our pomegranate initiatives. Regarding localization, I think we have been increasing the localization rate. I mean, but the different regions, things are different. For example, internally, You know, we have done the calculation. For example, in Asia and South Korea, Indonesia, and Vietnam have a localization rate above 90%. While in North America, the United States, Canada, and UK, the rates are around 40% to 50%. Other countries are in between. But Singapore is a unique case because its dominant kind of ethnicity is Chinese immigrants, making it very hard to define what local means. So that's basically an overview. of the localization rates.