Huize Holding Limited

Ladies and gentlemen, thank you for standing by and welcome to CUSO's holding limited third quarter 2021 earnings conference call. At this time, all participants are in listen-only mode. After management's prepared remarks, we will have a question and answer session. Today's conference call has been recorded and a webcast replay will be available. Please visit CUSO's IR website at ir.cuso.com under the event and webcast session. I would now like to hand the conference over to speaker host, Ms. Harriet Hu, QSO's Investor Relations Director. Please go ahead, Harriet.

Thank you, Operator. Hello, everyone, and welcome to our earnings conference call for the third quarter of 2021. Our financial and operating results were released earlier today and are currently available on both our IR website and the Newswire. Before we continue, I would like to refer you to the safe harbor statement in our earnings press release, which also applies to this call, as we will be making forward-looking statements. Please also note that we will discuss non-GAAP measures today, which are more thoroughly explained in our earnings release and file links with the SEC. Joining us today are our founder and CEO, Mr. Chunjin Ma, COO, Mr. Li Jiang, Co-CFO, Mr. Minghan Xiao, and Co-CFO, Mr. Ronald Tam. Mr. Mark will start a call by providing an overview of the company's performance and operational highlights for the third quarter of 2021. Mr. Tam will then provide details on the financial results for the period before we open up the call for questions. I will now turn the call over to Mr. Mark.

Hello, everyone. Welcome to the third quarter of the conference in 2021. I'm Ma Chengjun. Looking back at the third quarter, in the course of the epidemic, the development of the macroeconomic economy is still facing challenges, and the confidence of consumers is relatively weak. Consumption and demand of insurance has been the driving force for the growth of the industry. However, we are proud of the ability to optimize the digitalized business model, and the ability to continuously create new products and raise the value of users. We have flexibly adjusted the management strategy and the uncertainty of the matching market. In a low-medium industry environment, we have delivered a relatively stable answer sheet. In this category, the platform has generated a total insurance fee of 24%, which has increased to RMB 9.7 billion. The total operating income has reached RMB 3.2 billion.

Hello everyone, and thank you for joining Hui Ze's third quarter 2021 earnings conference call. The lingering effect from the ongoing pandemic, challenging macroeconomic environment, and weakness in consumer confidence has continued to impact the growth momentum in insurance product demand and consumption throughout the industry in the third quarter. We have proactively adjusted our business strategy accordingly in response to the difficult industry dynamics and have benefited from our digital-driven business model, consistent product innovation, and ability to acquire and service a high-quality user base via our omni-channel distribution platform. Despite the overall weak operating environment in the industry, we continue to deliver solid results in the third quarter. Total growth return premiums facilitated on our platform increased by 24% year-over-year to RMB $966 million, while total revenue was RMB $315 million in the third quarter, reflecting steady improvement in our business and validation of our execution strategy.

From the user dimension, in addition to the continuous expansion of user size, our user image presents three major characteristics of young, high value and high connectivity. Among the long-term users of the 3G group of Tuobao, about 65.6% come from cities above the second-tier level, and the average age is 35.2 years old. In the 7th category, we actively adjusted the business policy, and the proportion of the order line is constantly increasing, promoting the further growth of customer orders. According to the calculation of the first-tier health insurance, the health insurance of the long-term health insurance has increased by 74.7% to 6,684 yuan. The health insurance of the temporary health insurance has increased from 25,000 yuan to 35,000 yuan. In terms of the percentage of resupply, in the third quarter, 28.4% of our users who bought long-term health insurance have been insured on the Huize platform. Among the users who bought the temporary health insurance, As we continue to grow our user base, our users' profiles remain young with a high lifetime value and strong thickness. In the third quarter,

Roughly 65.6% of our long-term insurance customers were from higher-tier cities with an average age of 35.2 years old. We have proactively adjusted our business strategy to increase the contribution from savings products and our overall average ticket size. In terms of first-year premiums, The average ticket size of our long-term insurance products increased by 74.6% to RMB 6,684 in the third quarter, while the average ticket size of our savings products increased from RMB 25,000 in the second quarter to RMB 35,000 in the third quarter. The repeat purchase rate of our long-term insurance product and saving product was 28.4% and 29% in the third quarter, respectively. As of August, our persistence ratios for long-term life and health insurance in the 13th and 25th months have sustained at about 95% for 11 months consecutively.

In terms of the structure, in the third quarter, our long-term contribution has accounted for 94% of the total cost, which is higher than 90% in the eight consecutive quarters. The effect of Huchenghe is more stable, and the cost of customized products has reached 49.2%, which continues to release the power of growth. In the seventh category, the total cost of the first year is 42.7% to 5.1 billion yuan, with 52.9% of total insurance fees, which increased by 6.9% in the same period last year. The growth of high-quality businesses under the full-scale deployment of health insurance has continued to be low in the long-term health insurance market. Under the background of the new single, we have strategically deepened the deployment of savings insurance, and launched customized products that are popular in the广受市场, such as Jinman Yizhu Zhenxiang version, which has led to a significant growth in long-term health insurance and Lianjin insurance. Now turning to our product mix. The contribution from our long-term insurance product was 94% of total GDP in the third quarter.

consecutively above 90% over the last eight quarters. The GWP for co-developed insurance products accounted for 49.2% of total GWP in the third quarter, which helps sustain our growth momentum. In the third quarter, first-year premium amounted to RMB 511 million, up 42.7% year-over-year. This accounted for 52.9% of total GDP, up 6.9 percentage points year-over-year, and highlight the quality growth in our business through a diversifying product mix. Against the sluggish market demand for protection products, we strategically focused on growing our savings insurance business and launched new customized products such as Xinman Yizhou Premium, which was well received by the market. As such, first-year premium for long-term life products and annuity products increased significantly to RMB 341 million in the third quarter, demonstrating our strength and capabilities in designing and selling customized long-term insurance products to extend our services for the entire user lifecycle. Moreover, we believe the successful development of savings product line will enrich the product offerings on our open platform as well.

Speaking of performance, I would like to take some time to talk about the strategy of the product and the strategy of the open platform in terms of our vision for the future of HuiZhe. The integration of online and offline will provide users with diversified, personalized products and services. By the end of the third quarter, we have established a stable cooperation relationship with 102 insurance companies, and have deployed offline products in advance. Due to the new rules, the entry conditions for online savings insurance businesses are expected to be more abundant with online insurance products and regular insurance contributions next year. We will cooperate with insurance companies to customize more innovative, high-performance products to stimulate the market demand for insurance products. In addition, For the change of supply and demand products online, we will focus on cooperating with major insurance companies with high service capabilities such as retirement communities to develop customized products and provide online and offline simultaneous management and service capabilities. In order to achieve the seamless connection of business and to meet the high-end insurance needs of platform storage users, since last year, we have continuously completed the opening of multiple branch institutions, Apart from our operating performance for the quarter, I would like to share with you the future vision of Huize's strategies for our products and our open platform strategies.

to provide our users with more diversified and personalized products and services online and offline. At the end of the third quarter, we have cooperated with 102 insurer partners and have accelerated the development of our offline operations, subject to the new entry requirements for the operation of online savings insurance business. Small to medium insurers are likely to focus more on developing protection products online. And as a result, the supply of health insurance and term life insurance products is expected to increase next year. We will co-develop more innovative and cost-effective products with our insurer partners to stimulate market demand for protection products. Meanwhile, in response to the regulatory change On online savings insurance business, we will target to co-develop online savings insurance products with leading insurer partners with value-added services such as retirement communities. And we will improve our service capabilities to facilitate the online and offline operations simultaneously in response to the high-end insurance needs of our users Our continued investment and expansion in our offline branch coverage enables our company to sell both online-only insurance products and meet-to-high-end products via offline channels' compliance.

Three months ago, Huize's open platform officially invested in Shiyun Ying. This interoperability upgrade has brought more possibilities to our business model, which means that Huize will be able to export digital platform's true value. After the first stage of construction, we have gradually completed the construction of the delivery system, opened up the business process at the business end, and launched the business management platform. So far, the hundred-year-old people, the Chinese and British people, and the Chinese and British people have fully completed the connection and successfully entered the open platform. At the user end, we have launched a differentiated iron triangle service. Through the three roles of customer manager, planner, and delivery manager, and provide planned services to users. Thus, the situation of service users is no longer limited to the online market, but can meet the needs of online direct-linked merchants who are self-employed to acquire insurance products, and can also carry out professional services for offline users. In the future, we will further improve precision traffic sharing, operation plan customization, and user life cycle management tools. for insurance companies, intermediaries, and independent agents and other partners to perform a comprehensive digital recovery to increase the link efficiency of both parties.

Huizhe's open platform was officially launched into trial run three months ago. This upgrade should bring about more possibilities for our business model as we export the real value of our digital platform to the industry. We have initially completed the first phase of system development by opening up the business process and management platform to ensure partners as merchants. To date, Aon Life, Aviva, Costco Life Insurance, and General Rally China Life Insurance have successfully signed up as merchants on our open platform. We have also introduced a differentiated service for our users that features an account manager, financial planner, and settlement manager jointly providing insurance planning services. The open platform will allow us to truly meet the needs of users through individual access to online insurance products launched by insurers directly. At the same time, we will provide efficient offline professional services through our local branches. In the future, we will further improve our tools, including precision traffic sharing, operational solution customization, and user lifecycle management to empower the digitalization of our partners, such as insurance companies, intermediaries, and independent agents across all scenarios and improve the efficiency to match demand with supply.

We believe that new rules will bring challenges to the Internet insurance market in the short term. Therefore, we will accelerate the landing of open platforms and the expansion of offline layout. From the whole scene, we will create value for users with all insurance products. On the other hand, We have also started to deliver digital tools and technology capabilities to insurance companies and other customers, and to digitalize and upgrade the value chain of the non-energy industry, and to expand new sources of income in the form of technical service income. At the same time, we will actively implement the reduction of capital and increase the efficiency of enterprises through resource integration, organization optimization, and other measures, and strive to achieve balance between business scale and operating costs. From a long-term perspective,

We believe the new regulatory measures will bring about new headwinds to the online insurance market in the short term. Correspondingly, we will accelerate the launch of our open platform and expand our offline layout, thereby creating value for our users with a full range of insurance products across all scenarios. We are also beginning to export our digital and technology capabilities that we have developed in-house to external customers such as insurance companies and aim to empower the digitalization upgrades of the industry throughout the value chain. and generate new revenue streams in the form of technical service income. At the same time, we will actively implement a cost reduction and operating efficiency enhancement strategy by integrating resources, optimizing organizational processes, and implementing other measures to improve our growth. We strive to strike a balance between scaling the business and managing our operating costs. In the long run, we believe Huize as a platform with proven technology, operational experience, and service capabilities will ultimately benefit from the healthy and sustainable development of the industry.

Next, please introduce the performance and financial data of CFO Rang.

This concludes my prepared remarks for today. I will now turn the call over to our CFO, Mr. Ronald Tam, who will provide an overview of our key financial highlights for the third quarter.

Thank you, Mr. Mai and Harriet. Good evening, everyone. For the purpose of this call, I think I would like to quickly just recap and summarize a few key highlights and takeaways from this quarter's operating results. And for the financial line items discussions, I would like to kindly refer the audience to our uploaded earnings release for full details. Overall, I think we are very pleased to deliver a set of robust operating performance in light of the very challenging macroeconomic and industry environment, and obviously amidst the ongoing tightening regulatory regime for the online insurance industry. For the quarter, we were still able to achieve strong double-digit growth in FYP of 42.7%, which is attributable to our very early anticipation of expected weakness in market demand for traditional protection-type insurance products. And so since the second quarter of this year, we have strategically focused our management resources in scaling up the distribution of savings insurance products to more than compensate for the shortfall in long-term critical illness product demand in the market. Our strong growth in savings products FYP as we have demonstrated since the second quarter, is a direct result of the customer insights that is provided to ourselves by the platform's data analytics and the agility of our platform business model to adapt and respond to changes in the market in industry dynamics. And more importantly, it is also a result of successful product co-development and marketing of long-term endowment life insurance and energy products with our insurer partners in a relatively accelerated timeframe, which again itself is a testament to our product development capability, our deep engagement, and our strong relationship with our insurance partners. Another highlight with respect to our strong growth in savings insurance products this quarter is that it continues to reflect the quality of both our customer acquisition capabilities via our omni-channel distribution platform as well as our existing user base. As mentioned in the opening remarks, the average ticket size of long-term insurance products that we have facilitated in the third quarter reflects a high-quality and young customer demographic, with average FYP per policy of RMB 6,684 in the quarter, representing a substantial increase of 74.7% quarter over quarter. In addition, Repeat purchases accounted for approximately 29% of savings insurance products FYP, which again reflects the high lifetime value potential of our platform's 7 million plus user base. As we continue to deepen our engagement with our users to encourage cross-selling and upselling opportunities by leveraging on our proprietary data insights that we have accumulated from interactions with our platform over the user's life cycle. Another highlight with respect to the LTV potential of our user base is the continued strong performance in persistency metrics for our long-term life and health insurance policy holders, with persistency metrics in the 13th and 25th months being maintained at above 95%, as mentioned earlier. Such strong persistency performance will continue to enable us to work closely with our insurer partners to come up with new iterations of long-term life and health insurance products. particularly under the new regulatory regime, where the regulators are highly focused on the technological, operational, and customer service capabilities, and above all, most importantly, a strong track record of straight regulatory compliance by insurance companies and their platform intermediaries partners, such as ourselves. As a result of the foregoing operational strategies, Operating revenue rebounded from the seasonally weak second quarter and increased by 44.1% quarter-on-quarter. We are continuing to see very strong momentum in our savings insurance product business going into the fourth quarter, which again greatly complements to our FYP and top-line performance and becoming an increasingly important contributor to our diversification in our overall revenue and product portfolio. And accordingly, we are making an upward adjustment to our full year 2021 revenue guidance from our previously stated RMB 1.7 billion to RMB 1.9 to 2 billion, which represents a year-over-year increase of 56% to 64% versus last year. On the other hand, as mentioned earlier in the opening remarks, starting from the fourth quarter of this year, we are also actively implementing a group-wide organizational structure optimization program to further improve our cost structure and operating efficiencies. We are expecting to deliver cost savings over the next few quarters, particularly in our fixed cost base, in a bid to accelerate any improvement in our bottom-line performance. In terms of our financial position, we continue to maintain a strong liquidity position with a combined cash and cash equivalent balance of approximately $16 million. Our outlook reflects the company's current views on the market and operational conditions, which are subject to changes as a result of various market uncertainties, including those related to the ongoing pandemic both globally and in China. And with that, this concludes our prepared remarks for the day. We will now open up the call to Q&A. Thank you, Operator.

Certainly. Participants who wish to ask a question, please press star 1 on your telephone keypad and wait for your name to be announced. To withdraw your question, please press the pound or hash key. For the benefit of all participants on this call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. It's star followed by 1 to ask your question. Thank you. Your first question comes from the line of Michelle Ma from Citi. Please go ahead.

It's a new rule in the Internet of Life. Actually, the changes in it are quite big. From the product side or from the insurance company we will work with in the future, there may be a very big change. There are a lot of unknown numbers here. The industry will also produce relatively large numbers. a change. May I ask Mr. Ma, from your point of view, can you share with us what kind of changes do you think will happen in this industry? What is its position in the process of this change? It may be a big problem, but we would like to know from your point of view, Can you tell us how the industry will change under the new rules in the future? This is my first question. The second question is about the cost. Rong also mentioned that we may do some control over the cost in the new year. I also saw that in the third quarter, uh uh uh uh uh uh My first question is regarding to the coming internet life insurance regulation. While we will see a lot of moving parts regarding to products available, insurance institution partners, we can work together. So from your perspective, how this industry lands landscape could change, and how's the market decision of Hui Zi? And the second question is more about the expense control exercise we mentioned previously. So could you give us any color on the headcount for next year, any guidance? Thank you.

do some answers and then my colleagues do some supplementation. So first of all, from this first question, from this new rule, the impact on the industry is indeed, that is to say, there are some major changes, but from the point of view of Hui Zhe itself, from the point of view of Hui Zhe, if we look at this new rule, we think the opportunity is greater than the challenge. First of all, for the new rule, the supervision itself, due to the insurance itself, is a strong supervision of a It has played a very positive role. So from our point of view, this is what we call the landing of supervision, which is the real formation of the Internet insurance track. So under this clear track, who will be the best player? The future market can also see it more clearly. Especially a financial product with strong supervision like this, its clear track, we think is very important. Taiwan Taiwan Taiwan China China China China So I think this is the opportunity that we will face in the future. At the same time, in terms of the service system of Huize, our cost and efficiency can also support the current amount of commission. The third point we see is that the entire Internet monitoring method has very clearly determined This is a combination of this kind of layout to build this kind of ability. It can make it very good for us to say that resources are used effectively. Then here, I answered the third question indirectly. Then next year, our cost structure of these personnel will get a certain kind of optimization. The efficiency of personnel will be improved because it is equivalent to a clear track. Okay, thank you, Mr. Ma. Let me translate here very quickly for the audience.

So the question is relating to the impact of the recently announced regulatory changes to the online life insurance market and how that would affect our business and also the expected cost control measures or any relevant guidance that we can give to the market. So the response was that obviously the regulatory changes will have a very meaningful impact on the overall industry, ourselves being included. But we obviously have been operating in the insurance industry for 15 years, and insurance itself is a heavily regulated business. And the fact that now the rules and regulations are relatively set in place with very clear regulatory framework for the industry participants it's actually a very beneficial development for industry players to be able to focus the long-term sustainable development of business models going forward, rather than being constantly on the outlook for any new potential changes to the regulations. So the answer is that it's very good to have a very clear pathway to deal with the regulatory changes, and now it's pretty much set in place and therefore we are able to focus our business in the near and middle term going forward. And then with respect to the internet insurance product itself, the upside of this regulatory change recently is that protection products are now being make clear that it's very conducive to online insurance companies to market with a very clear pathway for us to operate in. And having ourselves being a long-term participant in this particular sub-segment of the market, for example, since 2015, we have been very focused on co-developing critical illness products, which itself is very much a necessity production product nowadays with respect to the middle income groups in China where insurance awareness are becoming more and more prevalent as the target customers that we operate in with average age of 35 years old is now getting more and more conversant and knowledgeable about insurance protection. And therefore, although in the regulatory changes, the commission rates offered to the industry players may be somewhat negatively affected. But in the long term, it should mean that consumers will become more and more receptive and also accelerate the online consumption of protection products such as critical illness, long-term health products, as well as term life insurance products. which we have already been having quite some success in the last few years with insurance partners as well. And going on to the third part of the reply, we believe that now that again with the regulatory regime being more set in place, for the industry going forward, we can now more focus our resources deployment internally with respect to how to build a business going forward, merging our online and offline operations. And therefore, going into the next few quarters, as we have alluded to in our opening remarks, that we will be able to optimize our organization structure, and therefore there will be certain headcount optimization in the next few quarters, which will obviously be disclosing to the market as we release our next few quarters of results. Michelle, I hope that answers the question.

Yes, thank you.

Thank you. Your next question comes from the line of GTM Wang from CICT. Please go ahead.

Hey, can you hear me? Yes. Okay. Thank you for giving me the opportunity to ask this question. I'm Wang Zixian, an analyst from Chongqing. I have two small questions. First of all, I would like to ask about the new rule of human rights for the Internet. That is to say, it still has some impact on the supply and demand of this product. Then we see that we now do a lot of storage-type business. I just want to ask about this storage-type product. Will our custom-made cooperation have any impact in the future? That is to focus on storage. Then the second question is that we also announced last quarter that we are only going to collect a current economic company. Just now, the management also mentioned the future. Maybe this is the plan. So I would like to ask, what is the specific strategy for the future of our online and offline development? I will simply translate my question. So first, I want to ask in detail about the new regulation. So will it lead to negative impact for our cooperative insurance companies and especially for the saving type business? And next, what is the process of acquiring the offline brokerage company and what are the online and offline strategies for the company in the future? Thanks.

Thanks for the question. So two questions. The first one relating to the impact on the supply side for, I guess, online savings insurance products as we move into the new regulatory regime starting from next year. I think the short answer here is that we have been cooperating with over 100 insurance companies in the past, and therefore we are able to, you know, co-develop new savings products with insurance partners who are qualified, obviously, under the new regulatory regime with respect to their, for example, cost of currency ratios and other metrics that are required now under the new regulations. So I think that we will be actively looking to cooperate with partners who are qualified under the new rules. And with respect to maybe the existing suppliers of savings insurance products, that we have been working with, I think the model here could be moving towards the offline context where we are still able to leverage on our online platform to generate leads and acquire customers from our omnichannel distribution capabilities and be able to route customers for consultations and also for the settlement through our offline branch network. So I think that's really the genesis of our online and offline business model as we have been building up over the last few quarters and we have been actively deploying capital as well as investments in this area. I think that also answers your question with respect to the second question, which is the online-offline business concept. which again, I think that we are always going to utilize our online platform as a front to service customers. Customers come to our platform for product information, for comparisons, for consultations. Fraser has always been operating on more of a passive marketing model where we provide content. We also work with third-party partners to educate the market as a whole on insurance products. And for customers who are interested in having consultation, they will be able to request for a one-on-one discussion with a consultant. And therefore, it's always been more of a passive approach. And it's also fit into the regulatory requirement for online insurance distribution, as you can understand from reading the regulatory regime documents.

Can we move to the next question, sir? Yes, please. Thank you. Your next question comes from the line of Kang Xu from Huachang Securities. Please go ahead.

Thank you for giving me the opportunity to ask this question. I am Xu Kang, an analyst from Huachang Securities. I have two questions. First, this year has been a particularly difficult year for the entire industry. If we look forward to next year, how do we evaluate the risk on the business? Will our business be better or worse next year? Please tell us more about it. Let's talk about some of the plans and progress of the business network first. The second question is about the company's stock price. In fact, investors are more concerned about it. Currently, there is a clear reduction in the stock price. Will we consider some recovery plans for the corresponding stock price? uh congratulations on the company's achievement for the last three quarter and this year is particularly a year for the industry to uh operate to the business and uh but look let's look forward and how can we assess the risk space that the business likes the year and will the situation be better or also Can you talk about the planning of the offline points of the business development? My second question is about, I think the key concern of the investor is the stock price, and it's obviously undervalued. Is there any plan to buy back? I'm not sure if there is enough cash reserves for the buyback. Thank you.

Thank you for your question. So for your first part about our outlook for next year, I think we will be honest to say that the next few quarters for the whole industry will be an adaptation period or transition period. But again, because of our long-term engagement in the industry, and for our continued success in innovating our business model, our nimbleness in kind of adapting to regulatory changes since all these regulatory changes have been happening in the last few years. We've still been able to maintain our business growth throughout all these challenging periods of time. So I think that what we would say is we are cautiously optimistic. I think that, again, as Mr. Ma alluded to earlier in his response, Now that the regulatory framework is clear, I think that most players in the market would not be able to focus the business development and able to spend the investment dollars wisely in things that would be productive, rather than trying to anticipate various scenarios and therefore, in a resource allocation perspective, some may go into relatively less productive investment areas. So I think in that respect, I think that we are cautiously optimistic because of the fact that we have been operating for 15 years, because we have been investing in the platforms business. We have been investing in our technology stack. We have incurred over 100 million RMB over the last two years. And therefore, we are now proud to say that throughout the online business scenarios, from the front end to the back end, we are very well mature technological companies tools that not only we are enabling our in-house consultants to serve the customers, but now we're also already beginning to export these digital capabilities to outside insurance companies' customers. There are a few leading insurance companies that have already procured these tools from our platform in the past quarter. And as we scale up further on this new technology service income, revenue stream, we will be happy to provide a breakdown to the market as we scale up in volume. With respect to the offline operations, again, I think that our view on the online-offline model has always been leveraging on our strength on the online side. No matter from the user-based perspective, from an online service capabilities perspective, we are able to extract relevant customer labelings on the user set and therefore plugging this relatively higher value customers into the offline context, we are then able to connect these so-called higher value customers with higher value products offline in a compliant way. And so for the next year, I think that we have started from tier one cities in the last few quarters. We are going to expand further into more of a nationwide coverage So we are looking at close to 20 to 30 offline branch network locations in the next 12 months. So the second question on share price performance, I think that this is obviously a combination of many factors, as many investors are well aware of the challenges facing China ADRs. in the last two quarters from a combination of regulatory pressures on different industries, from the ongoing US-China political dynamics, and also from just overall the resurgence of COVID and et cetera. I think that the company has already given an announcement earlier that management has set in place a management buyback program, which has a period of six months. And so we will be continuing to execute on that management buyback program as the time fits and also in a more of a regulatory compliant way. The company itself, we currently do not have plans to repurchase shares on the company's balance sheet. We believe that the capital on the balance sheet is better reserved for business development and to cope with the regulatory changes as we go into the next few quarters.

Okay, thank you, Ran.

Thank you. That was our last question due to time constraint. I will hand it back to Harriet for any closing remarks now. Thank you.

Thank you, operator. So on behalf of Huizhou's management team, we would like to thank you for your participation in today's call. And if you require further information, please feel free to reach out to us. And thank you for joining us today. This concludes the call.

Thank you. Thank you for participating. You may all disconnect.