H World Group Limited

Good day and thank you for standing by. Welcome to the H-World Q4 and full year 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Please be advised today's conference is being recorded. We'd now like to hand the conference over to your first speaker today, Ivy. Please go ahead.

Thank you. Good morning and good evening, everyone. Thanks for joining us today. Welcome to H-World Group 2025 Fourth Quarter and Four-Year Earnings Conference Call. Joining us today is our founder and executive chairman, Mr. Jiqi, our CEO, Mr. Jinghui, our CFO, Ms. Chenghui. and our CSO, Ms. He Ji Hong. Following their prepared remarks, management will be available to answer your questions. Before we continue, please note that the discussion today will include forward-looking statements made under the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995, forward-looking statements involving inherent risks and uncertainties. As such, our results may be materially different from the views expressed today. A number of potential risks and uncertainties are outlining our public filings with SEC. Edgewood Group does not undertake any obligation to update any forward-looking statements, except as required under applicable laws. On the call today, we will also mention adjusted financial measures during the discussion of our performance. Reconciliation of those measures to comparable gap information can be found in our earnings relief that was distributed early today. As a reminder, this conference call is being recorded. The webcast of this conference call, as well as supplementary slide presentation, is available at ir.ho.com. With that, now I will hand over the call to our CEO, Mr. Jin Hui, to discuss our business performance in the fourth quarter and four year of 2025. Mr. Jin, please.

Hello, investors and analysts. Thank you for participating in the 4th quarter and four year of 2025. First of all, I would like to do a simple sharing of the overall travel market observation. In the year of 2025, the demand for domestic residents to travel has returned from a stage-based recovery to a standardized demand. Data showing that the overall travel demand for railways, airlines, and passengers has maintained a steady growth. The demand for passengers and consumption has steadily increased. The public's longing for a better life continues to grow steadily. As the traffic network is improving, the demand for accommodation is accelerating from the core city to the county and township, and the lower-level market has become a new growth level for civil consumerism. The new industry-style consumerism, such as civil consumerism, exhibition, sports competition, and so on, will drive the demand for accommodation to be diversified and qualitatively upgraded. The current industry is facing low-quality homogenization attacks. Dear investors and analysts, good day.

Thank you for joining Edgeworth's fourth quarter and fourth year of 2025 earnings call. First, I'd like to share some observations on the overall travel market. Demand for travel is gradually shifting from discretionary demand to necessity for Chinese consumers. Data from railway, aviation, and tourism all indicate a steadily growing travel demand in China. The number of trips as well as consumer spending continues rising as people increasingly pursue a better life. As China's transportation network improves, accommodation needs quickly expanded from major cities to county-level markets. making the lower-tier city a new growth engine for tourism consumption. Strong demand for self-pleasure and experiential consumption, together with booming tourism events, exhibitions, and sports competitions, are driving the diversification and quality upgrades of accommodation needs. However, China's hotel industry still faces oversupply of low-quality and homogeneous products. while high-quality, value-for-money supply remains insufficient. Therefore, supply-side reform will remain the main theme of future industry development, and this will undoubtedly bring tremendous growth opportunities for the leading domestic branded hotel groups like H-World.

华族在深耕主业,推动高质量发展的同时, 积极履行社会责任,实现企业价值与社会价值协同发展。 The company has always focused on the economic and national middle-class hotel track, creating high-performance products, providing safe, comfortable and clean accommodation services for a wide range of consumers. With the advantage of brand and supply chain, the company is able to save money and increase the efficiency of city configuration and asset operation. At the same time, it continues to deploy low-end cities and town markets, supplement the low-end market with high-quality short-term accommodation, create a stable employment position, and drive the development of the surrounding industry.

While focusing on our core business and driving high-quality growth, we also actively fulfill our social responsibilities to achieve a coordinated development of corporate value and social value. We focus on the economy and mid-scale segments which serve the mass market. We develop good value for money products to provide consumers with safe, cozy, and affordable accommodation. Leveraging our brand value and supply chain capability, we revitalize idle assets, enhance urban supporting services, and boost asset operation efficiency. In addition, we keep expanding into the lower tier cities and rural areas filling the gap in quality accommodation in those markets. We create stable employment opportunities, drive the development of the surrounding industries, and boost local night economy. Looking ahead, we will continue deepening our roots in the China market, pursuing high-quality growth, and delivering service excellence with a brand-led approach to redo China's hotel industry.

In 2015, Huazhou continued to advance its high-end development under the leadership of the brand. In terms of scale deployment, profit performance, brand construction, and member ecosystem construction, we have achieved stable business results. We are glad to see the continuous improvement of standardized revenue management, comprehensive impact management, and product and service quality. We continue to maintain the OCC's relatively stable foundation to promote ADR and repair.

In 2025, H-World remains committed to brand-led high-quality development, and we deliver solid business results across network expansion, profitability, brand building, and membership ecosystem development. We are pleased to see that, supported by refined revenue management, enhanced sales and marketing capabilities, and ongoing upgrades of our products and services, we kept occupancy rates stable while driving ADR recovery quarter by quarter. For the fourth quarter, we achieved positive year-over-year REVPAR growth for the first time since the second quarter of 2024. Our four-year 2025 ADR remained largely flat year-over-year.

At the same time, Huazhou, with the continuous breakthrough of the regional market and the deep penetration of low-end cities, has achieved an expansion of high-quality networks throughout the year. With the increase of revenue and housing by 16.2%, Group Hotel GMV has increased by 16.4% to RMB1081 billion. With the continuous improvement of the national network layout, Huazhou will continue to upgrade its operating capabilities. By breaking through in new cities and regions and further penetrating in the lower tier cities, we achieved another year of high-quality network expansion.

Driven by a 16.2% year-over-year increase in the number of rooms in operation, our group hotel GMV grew 16.4% year-over-year to RMB 108.1 billion. Meanwhile, along with our network expansion and continuous enhancement of each reward membership program, room-life sold to members rose 21.5% year-over-year, exceeding 245 million in 2025.

各位,重要的是,集团轻资产的加盟业务无论在规模 More importantly, our asset-like managed and franchised business delivers solid growth in its hotel network, revenue, as well as profit.

Our full-year 2025 Group M&S revenue rose 23.1% year-over-year to RMB 11.7 billion. The Group M&S gross operating profit increased by 20.8% year-over-year to RMB 7.6 billion.

In terms of hotel network layout, Huazhou insists on the economy-oriented Chinese-made hotel as the core, deepening the public market, and maintaining the core brand credibility. By upgrading the core brand and optimizing the service system at the customer center, we will continue to improve hotel network operation data and brand influence, and assist the group in achieving long-term stable sustainable development. As of the end of 2025, the new version of the core three limited service brand of Hanting, Quanji and Juzi will be further improved.

In terms of hotel network expansion, we remain steadfast in focusing on economy and mid-scale hotel segments to serve the mass market and strengthening our core brand competitiveness. By continuously upgrading our core products and enhancing our service excellence with a customer-centric principle, we improved operational quality of our hotel portfolio and strengthened our brand value, which helped the group to achieve long-term sustainable growth. By the end of 2025, the proportion of new versions of the three core limited service brands, namely Hanting, Ji, and Orange, has raised further.

为进一步完胜下层市场布局, 存化原有Hanting酒店品牌, 贴合大众出行刚需, 我们推出Hanting快捷品牌。 Hanting快捷主打高性价比与品质平衡, We innovatively launched a multi-person family room and other products, covering family travel, team travel, and other detailed scenes to fill the market blank for economic hotels. At the same time, we combine the smart service such as self-servicing, self-washing, and self-washing to ensure the customer experience and operation efficiency. Hanting Express takes on the important mission of the Hanting brand, to further accelerate the promotion of brands and products, To further expand our footprint in the lower-tier markets, advance Hanting brand purification, and meet the diversified travel needs of consumers, we have launched the Hanting Yin brand,

Han Ting Ying strikes a perfect balance between cost effectiveness and quality. We have rolled out innovative room types such as multi-bedrooms and family rooms, catering the growing scenario such as family trips and group travel, and filling in the missing piece in the economy hotel market. In addition, we have integrated smart services such as self-checking and self-service laundry facility. balancing guest experience, and operational efficiency. Also, Han Ting Ying plays a vital role in Han Ting brand purification, helping accelerate brand and product upgrades to deliver better lodging experience for our guests. Supported by our light, fast, economical, profitable renovation model, Han Ting Ying offers franchisees who operate older Han Ting hotels another great option, which has light refurbishment quick construction, low cost, and a certain profitability.

At the same time, Huazhou's medium-high-end segment persists in its multi-brand development strategy. By clearly positioning its brand in the value chain, it steadily promotes the development of Chenji, Quanji DaGuan, ShuiJing, and Meiji four core brands. Since the end of 2025, the group's medium-high-end brands, ZaiYing and Guandao NeiDian, have broken through 1,639 Meanwhile, for our upper mid-scale segment, we stick to our multi-brand approach.

Backed by clear brand positioning and value propositions, we're steadily pushing forward the development of four key brands in this segment, which are Intercity, Brand G, Crystal, and Mercure. As of end 2025, the number of our upper-mid-scale hotels in operation and in pipeline exceeded 1,639, up 17.6% year-over-year. Among them, our core brand, Intercity, hit the milestones of over 100 operating hotels. With its clear brand positioning, exceptional product quality, and strong operational performance, Intercity has become one of the core growth drivers for our upper mid-scale segment.

In terms of marketing, we have always insisted on Huazhou as the core. The member system and sales capability are key core capabilities that support the long-term sustainable development of our company's business. With Huazhou Hotel's network covering more cities, We always focus on strengthening our direct sales capabilities through each rewards membership program, which are vital to our sustainable long-term business growth.

As we expand our hotel network to cover more cities, our membership base and the room night booked by members both achieve robust growth. Meanwhile, we are also proactively exploring cooperation with new sales and marketing channels such as self-media to boost our presence in the inbound travel market to further broaden customer acquisition scenarios and to enhance membership conversion efficiency.

最后展望2026年 Lastly, looking ahead into 2026,

Hworld will continue to pursue brand-led high-quality growth, keep strengthening our sales and marketing capabilities, and embrace tech innovation with a more open and proactive mindset to leverage technology to power our underground hotel operations. At the same time, we will continue to enhance customer experience and to improve operational efficiency and investment returns for franchisees. steadily working our way to our strategic goal of 2,000 cities, 20,000 hotels.

以上就是华驻中国2025年四季度季全年的业务情况分析。 下面有请CSO何继宏为大家介绍DH2025年四季度季全年的业务情况,有请请后。

All above concludes the 2025 operational update for LEXI Huazhu. Now I will hand over the call to our CSO, Ms. He Jihong, to give an update on LEXI DH.

Thank you, Jinghui. We are very happy to report that in 2025, we've made a successful business turnaround for our LEXI DH business. We achieved a record level of adjusted EBITDA of around 500 million RMB. This is a significant improvement compared to the last situation last year. The strong performance confirms the successful execution of the business transformation plan. Hotel business cannot achieve profitability without a revenue enhancement. Our RESPA continued to grow and achieved 8.2% increase year-on-year in 2025. Despite a challenging market environment, Legacy DH succeeded in stabilizing like-for-like hotel revenues. We adjusted the revenue management strategy for different categories of a hotel and worked relentlessly on property-level sales performance improvement. Through disciplined efficiency programs, we significantly reduced the DH cost base and streamlined the operations. Following a successful restructuring of headquarters and reduction of administrative costs at the end of 2024 and early 2025, the management team continued to implement ongoing cost optimization measures across personnel, external services, and the supply chain throughout the organization. At the same time, with numerous restructuring efforts ongoing, we have been able to maintain organizational and operational stability, ensuring a solid foundation for sustainable future performance. Another important measure we successfully undertook in 2025 was the optimization of our hotel portfolio. We renegotiated lease terms of many hotels, exceeded several loss-making properties, and it transformed a portfolio of lease hotels into asset-light structure. This portfolio restructuring significantly enhanced our profitability and improved resilience of our business. As everyone remembers, H-World acquired Deutsche Hospitality shortly before COVID breakout. Our business was thrown into an unprecedented challenging environment. We did not give up. Instead, we started our transformation journey and brought our expertise globally. This shows the resilience of each world group. Going forward in 2026, we will continue to build on the momentum and enhance our performance. Continuous improvement of commercial and operational effectiveness across brands is our first priority. We're undertaking concrete measures to improve our marketing and sales across different target markets and adjust our revenue management strategy for different segments. At the same time, we will further leverage synergies from integration with each world group. We're working on closer integration from different aspects, such as supply chain, design and construction, technology, and the loyalty program. In 2026, we're expected to see more benefit from these synergies on the operational level. Another strategic initiative we'll continue to undertake in 2026 is to sharpen our brand positioning. For example, we're developing Intercity Next Generation to make it more guest-friendly and operational efficient. With the new brand proposition, we expect to roll out our business model to the market and accelerate growth of our network together with our partners across the region in the years to come. With this, I concluded the discussion in legacy DH business. I will turn to our CFO, Ms. Chen Hui, for financial performance review.

Thank you, Jihong. Good evening and good morning, everyone. Let me walk you through our four-year 2025 financial overview. In 2025, our group revenue grew 5.9% year-over-year to RMB 25.3 billion at the high end of our guidance, of which Lexi Huazhou's revenue rose by 7.9% year-over-year to RMB 20.5 billion. The top-line growth was driven by our high-quality network expansion and stabilized river path performance. Group adjusted EBITDA increased 24.2% year-over-year to $8.5 billion, with margin improved by 4.9 percentage points year-over-year to 33.5%. The strong profit growth and profit margin expansion were mainly attributable to further enlarged profit contribution from our high-margin asset-light business, as well as the operation improvement and the cost savings from LexisDH. Adjusted net income increased by 32.9% year-over-year to RMB 4.9 billion. Looking into our asset-light and franchise business, in 2025, powered by the network expansion of Managed Hotels. Our Managed and Franchised Revenue increased by a robust 23.1% year-over-year to RMB 11.7 billion. And the Managed and Franchised Gross Operating Profit rose by 20.8% year-over-year to RMB 7.6 billion. Profit contribution from our monetized and franchise business rose steadily and reached 69% in 2025, representing a five percentage point year-over-year increase. In the fall year of 2025, we generated RMB 8.4 billion operating cash flow. And at the end of 2025, the group has RMB 15.4 billion cash and cash equivalent and RMB 9.6 billion net cash on the balance sheet. With support of our strong cash flow and a healthy balance sheet, we are glad to declare a US dollar 400 million cash dividend for the second half of 2025. Together with U.S. dollar 250 million interim dividend and around U.S. dollar 110 million share repurchases, our total shareholder return amounted to around U.S. dollar 760 million for the full year of 2025. In 2024, we announced the U.S. dollar 2 billion three-year total shareholder return plan. We have now completed over 75% of this three-year plan, and we are committed to continuously returning to our shareholders. Lastly, our guidance for the full year of 2026, we expect our group revenue to grow 2% to 6% year-over-year, and 5% to 9% if excluding DH. And we expect our managers and franchise revenue to grow 12% to 16% year-over-year. In terms of unit growth, we are expecting to open 2,200 to 2,300 hotels in 2026, and to close 600 to 700 hotels for the same year. This represents a 12% year-over-year hotel network growth. With that, we conclude our financial review for the full year of 2025. Today, I will step down as CFO, and Mr. Arthur Yu will take the CFO role of H-World. I would like to take this opportunity to thank all the investors and analysts for your continuous support for Edgeworld. I will still be serving as the Chief Compliance Officer of the company. And together with our team, we will ensure stable financial management and a smooth transition. We are certain that Arthur, with his expertise and vision, will help drive our financial strategy and support our growth trajectory. Together, the team will lead Edgeworth to its next success. I will now turn the call to Mr. Arthur Yu. Arthur, please.

Thank you, Hui, for the kind introduction. Hello, everyone, and thank you for joining the call today. It is a privilege to step into the role of CFO at such a pivotal moment for each world. I have long admired the company's resilience and its strong market position. As we look ahead, my priorities will be to build a world-class finance function, maintain rigorous control and investment oversight, and ensure transparency and consistent communications with the capital market. I look forward to getting to know many of you individually in the days ahead. And we are now ready to open the floor for questions.

Thank you. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Thank you. Our first question today is from Dan Chee from Morgan Stanley. Please go ahead.

Good evening, everyone. Thank you for giving me the first chance to ask a question. First of all, I would like to congratulate Mr. Yu and the company I just heard Arthur, and I also saw some of Arthur's personal history on the announcement. I would like to ask the manager, can you share with us in advance, so Arthur and this new mission, what are the strategic directions, and what kind of better changes do you hope to bring? Let me translate it. Thank you, management, for the opportunity to ask the first question. I would like to congratulate to others on the new role. And we have seen the list of credentials of others' expertise. So for starters, can management share very briefly the direction of others' new role and what kind of changes shall we expect on our financial and growth strategy? Thank you.

Thank you. I'm Jin Kui. Let me answer this question. First of all, I would like to take this opportunity to thank Chen Hui for accompanying our startup team in the past 20 years. You can see the achievements of Huazhou in the Chinese market in the past 20 years are due to the hard work of Chen Hui and our startup team. At the end of Huazhou's 20-year conference, Huazhou summed up the achievements of the past 20 years. At the same time, we also have a new vision for the future. We hope to become a real world-class hotel group, so that the Chinese hotel industry and Chinese services can go to the world and become the target of Huazhou. So facing the future, on the one hand, we have an ideal of facing the world class. On the other hand, we also hope to face the management of Huazhou at a large scale, and we hope to bring more professional management. Thank you, Dan, for your question.

Firstly, I would like to take this opportunity to thank Ms. Chen Hui for her dedication to the company in the past 20 years. We just had our 20-year anniversary Investor Day last year. We can see that over the 20 years with our founding team, we have built Huazhou into a very successful company. At the conference last year, while we concluded and summarized the achievements that we've made in the past 20 years, we also take the opportunity to look ahead. We had a vision that we want to create H-World into a global company, into a world-class company, and to work into the world and to become a leading company in China and globally. So with this vision, and as Huazhou is growing really into a hyperscale company, we really need world-class management, professional talent, to bring those really diversified and international talents and skills to our management team. So I welcome Arthur to join H-World, and we are certain that Mr. Arthur Yu, with his deep financial management expertise, and together with the team, we will lead H-World to the next stage and to achieve the next success.

Thank you, Dan.

Thank you, Dan.

Thank you. Thank you. We will now take the next question. Next question is from Ronald Leung from Bank of America. Please go ahead.

各位管理層,晚上好。 首先我想謝謝陳慧中多年來對分析師們的支持, 現在也趁這個機會公使Authors這個任命他。 我的问题就是想请教一下这个2026年的这个预期 这个首先2026年这个收入积引的里面隐含的RAFPA的预期是什么 还有管理层可不可以讲一讲就是2026年的总体的供需关系 比如这个供应的增长大概会是怎么样 Let me ask my question in English. So regarding the 2026 revenue guidance, so what is the implied Roth part expectations? And also could management comment on the overall demand supply outlook for 2026? How is the supply growth trend and also how is the overall demand for the business and leisure travel? Thank you very much.

Okay, I will answer this question. In the past three months, we have felt that the trend of the entire hotel industry in China is gradually improving. In terms of demand, In the past few years, the demand for culture and leisure has been steadily growing. The growth of the entry market is also rapidly increasing. The entire demand is still in a state of steady growth. The business market also feels signs of a rebound, especially in the first and second-tier core cities in China. we feel that the trend is bright and positive. So in general, Huazhou has a cautious and optimistic attitude towards the overall RERPA in 2026. We look forward to Huazhou's similar RERPA in 2020 to achieve a small growth. This goal is our management and goal as a group.

Thank you, Rana. So in the past three months, we have observed that the China's hotel industry trend is actually recovering. On the demand side, we have been observing that actually in the past one to two years, the leisure travel has been growing really steadily. And also, the inbound travel is recovering and coming back. So overall, demand is growing for leisure especially. And for business travel demand, we have also seen that business activity and business travel has bottomed and also going on to an upward trend, especially in the Tier 1 and Tier 2 cities. So for 2026, we are cautiously optimistic on the overall red part performance. And for the management and for the company, we do have to target that to deliver a flat to slightly year-over-year increase for the four-year 2026 red part. Thank you.

Thank you. We will now take the next question. This is from Simon Chung from Goldman Sachs. Please go ahead.

Thank you, Mr. Jin, Mr. He and Mr. Chen for sharing. Congratulations, APA. I have a small question. I want to ask about the opening schedule. Last year, you opened more than 2,400 stores. What are your plans for this year? Because you have recently launched some new brands, for example, the brand of the handkerchief. Do you have any plans for this brand this year and how many stores will it open in the next few years? That's the question. I'll translate it in English. The question is in relation to the hotel opening, the pace of hotel opening last year, the company has achieved a whole lot in terms of the growth. Exceeded 2,400 store opening last year. Wondering whether they would have any change in their pace or expectations for this year. In particular, we noticed that they have some new hotel brand, for example, the Hunting Inn brand. I'm wondering whether they would have any target for this brand as well. Thank you.

我来回答一下这个关于发展的问题。 我们在2025年录得了应该华洲历史上开业最多的一年。 我们整个开业门店超过2400家。 In fact, since the beginning of 2023, Huazhou has adjusted our development strategy. We hope that Huazhou's development is based on the quality, priority, and scale of the economic development strategy. So in the past two years, Huazhou has always insisted on a high-quality development path. We expect that under the strategic guidance of economic growth, Huazhou's overall new doorstep the opening stores will still remain in a high position. We have disclosed that the estimated opening numbers of about 2,200 to 2,300 stores are in line with the current market and China-China strategic development strategy. Therefore, in this strategic development strategy, we are very confident that in 2030, we will still maintain

Thank you, Simon, and I will answer your question on the development. So as you can see, in 2025, we achieved a record high in the hotel growth openings, exceeding 2,400 hotels. Actually, in 2023, we already adjusted our overall growth and development strategies of high quality sustainable growth. So what we are pursuing is not just the simple quantity, but also high quality of standard of the hotel network. So in 2026, while under this high quality standard, we still expect to expand our hotel network and maintain the overall openings at a high level. and we guided to open 2,200 to 2,300 new hotels in 2026. This actually reflects our strategy of high-quality sustainable growth. And we are still very confident that to achieve our 2,000-hotel target, this strategic goal by 2030.

At the same time, I would like to say a few words to everyone who is interested in our new Hanting Express. and make a unified sharing. In China's economy, the national market has always been the most dominant market under the Chinese population structure. At the same time, it is also the most fundamental market in the entire business. We have always hoped to achieve a fully and complete market share and high-tech development in the national market.

And so on your question on Han Ting Ying, I would like to share some thoughts on this Han Ting Ying, brand Han Ting Ying product. So we always think that the economic sector is the core in China's consumer market, and this is also the core market for each world. What we want to achieve is that we want to achieve full coverage of high market share in this economy sector.

On the one hand, we see that there are more high-quality industrial enterprises turning into Han Ting hotels. The quality of Han Ting hotels is obviously better than 10 years ago, 20 years ago. At the same time, we see that most Chinese citizens are more concerned about the demand for cost-effectiveness. The Han Ting Express, which we have recently launched, is the first Han Ting hotel brand upgrade and We are seeing more and more high-quality properties that can be built into our hunting brand.

So now you can see that for our hunting branded hotels, the quality of it is much higher, and the standard is also much higher compared to a couple of years ago. So with this, we've introduced Han Ting Ying, which can help us to cover and serve the overall mass market. We want to stress that Han Ting Ying and Han Ting, together they are one brand, and Han Ting will help us to cover the mass market in China. And Han Ting Ying actually takes a very important role in upgrade and replace the older hunting product and to further purify our hunting brand. Thank you.

Thank you. We'll now take the next question. Question is from Xin Chen from UBS. Please go ahead.

Let me translate into English. My question is regarding DH. Could management share further details on the iSatellite transformation strategy and roadmap for DH, as well as the targets for future hotel network expansion and financial performance? Thanks.

Xinxin, I will take your questions. Yes, we achieved a turnaround of DH business in 2025. However, our efforts to improve business does not stop here, right? Reorganization, efficient improvement, cost control will still remain as part of the ongoing management. And we're also looking to our portfolio restructuring as well. We continue our effort in rental reduction, lease renegotiation, look into possibilities to exit loss-making properties and also possibility to negotiate a much, much better portfolio asset, asset portfolio, right? So now that our business is stabilized, we are also indeed starting to look at development to expand our hotel network. We have much more confidence now in managing international hotels, and we believe limited service and selected service hotels have really a lot of potential in overseas markets. So now that we are developing different business models, so we will have efficient, you know, for example, next generation intercity and sleep for the basis of our growth. Of course, we also look into possibilities to expand Shaggingback Hotels as well. Europe will remain our core international market, but at the same time, we'll also explore, for example, Middle East, North Africa, where we already have good basis.

So the legacy of the edge business in a nutshell is expected to remain profitable in the years to come. Thank you. We will now take the next question.

This is from Lin from CICC. Please go ahead.

Thank you, Manager Chen. Congratulations, Mr. Yu. I would like to ask a question about the stock return. Our 25-year stock return is very rich, reaching US$7.6 billion. This is more than 100% of the net profit. We have also completed the US$3.2 billion plan, which is more than 3%. So thank you, management. Our shareholder return in 2025 achieved 760 million USD, exceeding 100% of adjusted net profit, and has completed over 75% of USD 2 billion three-year shareholder return plan. So what's our plan for the shareholder return in the upcoming years? Thank you.

Thank you. This is Chen Hui. I will answer your question on the shareholder return.

So benefiting from our asset-line strategy and our high-quality growth, HVOT, we have generated very strong and stable cash flow. SLF, we have a high-quality and very healthy balance sheet. So going forward, we're committed to continue to return to shareholders through either dividend or share repurchase. Thank you.

Thank you. We'll now take our next question. This is from Lydia Ling from Citi. Please go ahead.

Hello, Mr. Guan. Thank you for giving me the opportunity to ask a question. I would like to follow up on the development of our high-end hotels. Last year, I saw that the company has made progress in high-end hotels, including launching a full-scale brand. I would also like to ask if this year's and future plans for the mid- and high-end units will speed up the layout. Thanks, management. Thanks for taking my questions. And I have questions on the upper mid-scale hotel segment, which we saw lighted the further step of the development in 2025. What's your plan for this year or the longer term? And do you plan to have more aggressive or auxiliary expansion in this segment? Thank you.

Thank you. Thank you. I'll answer. Yes, the mid-high end is one of the key points of Huazhou's current strategic focus. The mid-high end strategy has become Huazhou's very focus market in the past two years and in the future. Huazhou is currently focusing on the development of multi-brands in the first and second-tier cities. This is not the same as other companies. At the same time, we have released four main and core brands in the middle and high-end sectors, namely Quanji, DaGuan, Chengji, ShuiJing and Meiji. You can pay attention to the characteristics of our brands. There are brands that represent the lifestyle of Eastern aesthetics, and there are brands that represent the lifestyle of the West, Germany, and France. We hope that through the development of multiple brands, we can achieve a strategic development and deployment from backward to advanced in China. For this reason, we are constantly developing our brands, improving our products, and improving our service capabilities. 我们也很期待在未来面向2030使得华驻在中高端市场一样成为中国的领导的这样的一个品牌管理公司。 所以为此而在努力。 所以中高端一定是华驻未来的核心的战略之一。 谢谢。 Thank you, Lydia.

I would take your question on the upper mid-skill segment. So the upper and upper mid-scale sector is one of H-World's strategic focus. So we have been focusing on this upper mid-scale market in the past two years, and we will continue to do so going into the future. So our strategy in the upper mid-scale segment is to focus on the Tier 1 and Tier 2 cities, and we will be developing this segment using a multi-brand strategy, which I think is different from the other companies. So we have four key brands in this segment, which are Grand G, Intercity, Crystal, and Mercure. As you can see that these four brands, they actually all have different target market, and they have different specialties, which covers the Grand G, which really presents the oriental aesthetics and we also have the more western design, like the intercity and the French-style Mercure. So using this multi-brand strategy, we really want to chasing ahead in this segment. We will continue to upgrade and enhance our product and services. Our goal and our target is to, in the upper Mexico sector, we also want to become a leading brand by 2030. So upper-mid-scale sector will be one of our core strategic focus on going to the future.

Thank you. 中下,我们确实大家可以关注到成绩已经在过去两年发展成为中国最引人注目的中高端酒店品牌。 无论它的客户体验实现的real part都在行业保持领先。 At the same time, I also look forward to everyone's attention to our full-scale grand opening, which will be officially opened on April 1st. Before that, we are doing a trial run, and we are also officially opening. Our products and experiences should also bring such a product to the entire market. So we are still full of confidence in the development of the future of high-end mid-range products. And Huazhou's high-end mid-range products, our four brands have their own characteristics. I also believe that the four brands will become the first choice in the segmenting field, the segmenting customer group.

Thank you. And also to add on, as you can already see that for the intercity, over the past two years, it has become a very attractive and compelling brand in the upper mid-scale sector, whether it's in terms of its brand value, its product, its service excellence, or its rep part. And we have also introduced a Grand G Hotel, And we really welcome you guys to look into Grand G, which is going to have its grand opening in April 1st. It has a piloting phase already, but it hasn't really officially launched. And we officially opened Grand G in April 1st. We are confident that with our four core branding, the upper mid-scale sector, which all have its different pace and target market, we can become a leading company in the upper mid-scale sector. And we are also confident that each of our four key brands, they will become the leader in their own niche market. Thank you.

Thank you. I will now hand the conference back to the speakers for any closing remarks. Thank you.

Thank you, everyone, for taking your time with us today. And this will conclude today's call, and we look forward to seeing you in upcoming quarters. Bye.

Thank you. This concludes today's conference call. Thank you for participating and you may now disconnect.