GreenTree Hospitality Group Ltd. American depositary shares, each representing one Class A ordinary share

Hello, ladies and gentlemen. Thank you for standing by for Green Tree's first half 2022 earnings conference call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question and answer session. As a reminder, today's conference call is being recorded. I would now like to turn the meeting over to your host for today's call, Mr. Rene Vangstein of Christensen, Greentree's investor relations firm. Please proceed, Rene.

Thank you, Andrea. Hello, everyone, and thank you for joining us. Greentree's earnings release was distributed earlier today and is available on our IR website at ir.998.com. as well as on PR Newswire services. As a reminder, we also posted a PowerPoint presentation that accompanies our comments to the same IR website. On the call from Green Tree are Mr. Alex Xu, Chairman and Chief Executive Officer, Ms. Celina Yang, Chief Financial Officer, Ms. Megan Huang, Vice President of Sales and Marketing, and Mr. Alan Wang, IR Officer. Mr. Xu will present the company's performance overview of the first half of 2022, followed by Ms. Wang, who will discuss business operations, and Ms. Yang will then discuss financials and guidance. They will be available to answer your questions during the Q&A session, which follows. Before we begin, I'd like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as may, will, expect, anticipate, aims, future, intent, Plans, beliefs, estimates, continue, target, is or are likely to, going forward, confident, outlook, and similar statements. Any statements that are not historical facts, including statements about the company and its industry, are forward-looking statements. Such statements are based upon management's current expectations and current market and operating conditions. and relate to events that involve known and unknown risks, uncertainties, and other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance, or achievements to differ materially from those in the forward-looking statements. You should not place undue reliance on these forward-looking statements. Further information regarding these and other risks uncertainties, or factors is included in the company's findings with the U.S. Securities and Exchange Commission. All information provided, including the forward-looking statements made during this conference call, are current as of today's date. The company does not undertake any obligation to update any forward-looking statement as a result of new information, future events, or otherwise, except as required under applicable law. It is now my pleasure to introduce our Chairman and Chief Executive Officer, Mr. Alex Xu. Mr. Xu, please go ahead.

Thanks, René. Hello, everyone, and thank you for joining us today. The first half of 2022 was extremely challenging as COVID-19 outbreaks in many parts of the country drastically limited the mobility in many regions. Nonetheless, we continued to execute our long-term strategic growth plan to deliver continued operating profitability, maintain healthy and stable cash flow, open LO hotels in new strategic locations, and assist franchisees in maintaining quality operations. With the efforts of staff and the cooperation of the franchisees, we believe that the winter will pass eventually and the spring of the hotel industry's recovery is coming quickly. Please turn to slide five. Compared with the first half of 2021, raw power decreased 20.78% to 92 RMB. Total revenues decreased 22.3% to 457.4 million RMB. Income from operations decreased 403.7 percent to negative 457.7 million RMB, with a margin of negative 100.1 percent. The sharp decrease was due to the other general expenses, which included one-time impairments and provisions for other assets. We took impairment charges for Argyle as a result of disputes with its management as to the performance of relevant transaction documents and or compliance with the guarantees in the agreements and the urban in connection with the sales of our interest in that company. We also took a provision for other assets related to two properties in the Hongqiao Business Center which we intended to buy from Evergrande affiliate for headquarters and the two flagship hotels, as well as for loan receivables related to franchisee loans. Excluding these, income from purely operating activities was 32.9 million RMB with a margin of 7.2%, and the net income was 68.3 million RMB with a margin of 14.9%. Non-GAAP core net income decreased 13.7% to 105.9 million RMB with a margin of 23.2%. And the core net income per ADS, that's basic and diluted, non-GAAP decreased 13.7% to 1.03 RMB Slide six shows detailed numbers for total revenue, operating income, net income, and the core net income. On slide seven, operating performance was seriously impacted in the first half of 2022. Raw power was at 72.6% and 65.5% of the 2019 levels. in the first and second quarter, respectively, and exceeding the industry's average. And in the third quarter, we continued to outperform the industry with the raw power recovering to 80.3% of the 2019 level. Slide eight shows the weekly raw power performance in 2022 compared with 2019. After dropping initially, raw power recovered to 88% over the Chinese New Year, thanks to family reunions and recovery in domestic tourism. However, COVID-19 outbreaks in March and April led to some restrictions in many cities and lockdowns in some major cities, sending raw power all the way down to 56% during golden weeks. As lockdowns ended, dropout rebounded gradually to 92.9% by the last week of June and 91.2% at the beginning of August. October and November brought a fresh wave of outbreaks, slowing down our recovery once again and negatively impacting travel during the National Day holiday, one of the most active travel period in China. During this period, according to the Ministry of Culture and Tourism, the number of tourists dropped to 61.7%, and the domestic tourism revenues dropped to 44.2% of the levels in the same period of 2019. Our raw power dropped to 68%, and as I said again, our performance well exceeded the industry average during the entire period. However, with the flexible anti-pandemic measures released by the government early December, raw power recovered this month to more than 85% of its pre-pandemic levels. Starting with slide 10, let's talk about strategy and execution with the further expansion in the mid to upscale segment and the tier three and the lower cities in Southwest and the Southeast China, as well as the opening of new LO hotels. Let's take a look at the slide 11. We have been continuously growing our mid-upscale segment over the past few years. By the end of the first half of 2022, we had 528 hotels, 11.3% of our total portfolio. In this segment, up from only 50 in 2017. And we plan to open more this year. Please turn to slide 12. Over the past five years, most of our new hotels have been in China's thriving tier three and the lower cities where they have recovered faster than in other cities in most quarters. In addition, hotels in some lower tier cities are performing well. As we continue to execute our strategic plan, 68.4% of our hotels in our current pipeline are in such cities. and will further capitalize on the substantial opportunities in these locations. Let's have a look at slide 13. Since 2021, we have started to build a flagship LO hotels in strategic locations, especially in the Southeast and the Southwest markets. In 2022, Despite the stress from COVID-19, we opened two mid to upscale LO hotels. The remaining four in the pipeline are expected to open in 2023 at Haikou East Railway Station, Chongqing North Railway Station, Chongqing Jiangbei International Airport, and Fuzhou Railway Station. Let me now say a few words about the acquisition of affiliated food and restaurant business. Since our announcement of signing of the SPA in May of 2022, the company has been working on the closing of the food and restaurant acquisition transactions. However, due to the resurgence of COVID-19, we experienced significant delays in the delivery of various documents to various agencies, While China removed many COVID-related restrictions in December, the company is speeding up the closing process. We expect the formal closing will be completed in January 2023, a bit later than we originally planned. We will inform the market when the transaction formally closes. Over the past three years, We have adopted strict cost control measures to enhance operating efficiencies. Our adaptable business strategy as well as insights our team and franchisee have gained from facing COVID-19 have given us the ability to quickly adjust to changes in our industry, setting a solid foundation for future growth. The journey ahead may be difficult, but with the support of our shareholders, franchisees, and staff, we are confident to pull through and embrace a bright future. Now, let me turn the call over to Megan.