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

Ladies and gentlemen, thank you for standing by for Green Tree's second half and fiscal year 2022 earnings conference call. At this time, all participants are in a 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 Vangestein, of Christensen, Greentree's investor relations firm. Please proceed, René.

Thank you, Andrea. Hello, everyone, and thank you for joining us. We have posted a PowerPoint presentation that accompanies our comments to our IR website at ir.998.com. On the call today from Greentree, I'm Mr. Alex Hu, Chairman and Chief Executive Officer Ms. Celina Yang, Chief Financial Officer, and Ms. Megan Huang, Vice President of Sales and Marketing. Mr. Xu will present the company's performance overview of the second half and the full year of 2022, followed by Ms. Huang, 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 that will follow. 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 made, will, expects, anticipates, 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 a company and its industry, are forward-looking statements. Such statements are based upon management's current expectations and current 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 COVID booking 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 Hsu. Mr. Hsu, please go ahead.

Thanks, Rene. Hello, everyone, and thank you for joining us today. First, I do want to make apology to you because of the delays of the posting of the PPT. The meeting was delayed for the 15 minutes. We thank you for your understanding. So 2022 was a year full of change and the challenges. During the first half, COVID-19 outbreaks in many parts of the country resulted in lockdowns in cities, especially in Shanghai. As we entered the third quarter, transportation restrictions were relaxed and rural power recovered. However, October and November brought a fresh wave of outbreaks, slowing down of our recovery once again, and to our relief thanks to the lifting of the anti-pandemic measures earlier December. Royal Power recovered at the end of the year to more than 95% of its pre-pandemic levels. Regardless of these external environmental changes, we continued to execute our long-term strategic growth plan that strives to assist the franchisees in maintaining quality operations, extending our hotel networks, and delivering stable operating profitabilities and maintaining a healthy cash flow. Please turn to slide five. Compared with the second half of 2021, raw power decreased 4.2 percent to 112 RMB. Total revenues decreased 21.1 percent to 487.8 million RMB. The decrease was partially due to the deconsolidation of argyle since June 2022 and the disposal of our interest in urban on November 25, 2022. Excluding these impacts, organic revenues decreased 15.7% compared to one year ago. Income from operations increased to 20 million RMB, a margin of 4.1%. Excluding these, income from purely operating activities decreased 17.6% to 85 million RMB, with a margin of 17.4%. And the net income was negative 48.3 million RMB, with a margin of negative 9.9%. Adjusted EBITDA, that's non-GAAP, decreased 21.2 percent to 118.3 million, with a margin of 24.3 percent. Cash provided by operating activities were 151 million RMB. Slide six shows detailed numbers for total revenues. operating income, net income, and adjusted EBITDA. On slide seven, operating performances was continuously impacted by COVID outbreaks during the second half of 2022. Raw power was at 80.3% and 80.7% of the 2019 levels in the third and the fourth quarter, respectively, exceeding the industry average. Slide 8 shows the weekly raw power performance in 2022 and the first quarter of 2023 compared with 2019. In the second half of 2022, due to the resurgence of COVID-19, raw power fluctuated in the third quarter and was slowing down once again in October and November. Rural power gradually recovered to more than 95% of its pre-pandemic levels in the last week of 2022. Rural power recovery slowed again during the first half of January due to the rapid involvement of pandemic after pandemic control were lifted in China. However, It recovered to around 90% of its pre-pandemic levels over the Chinese New Year, thanks to family reunions. During this festival, according to the Ministry of Culture and Tourism, the number of tourists recovered to 88.6% and the domestic tourism revenues recovered to 73.1% of the levels in the same period of 2019. Such a recovery continued to increase in February, exceeding the levels of 2019. However, it pulled back a little bit in March due to outbreaks of influenza A in certain cities. Now, starting with slide 10, let's talk about the strategy and the execution with the further expansion in the mid-top scale segment and the tier three and the lower cities in South China, as well as recent development in 2023 Q1 regarding the acquisition of Danyang Dumplings and Bellagio, two leading restaurant chains in China from our controlling shareholder. Let's take a look at slide 11. We have been continuously growing our mid-top skill segment over the past few years. For a like-to-like comparison, we have excluded the Argyle and urban hotels in the past few years. By the end of the second half of 2022, we had 426 hotels. That's 10.5% of our total hotel portfolio in this segment. up from only 50 in 2017, as we plan to open more in this year. Please turn to slide 12. Over the past five years, most of our new hotels have been trying to thrive in Tier 3 and the lower cities. In addition, hotels in some lower tier cities are performing well, and we continue to execute our strict strategic plan, 72.6% of the hotels in our current pipelines are in such locations and will further capitalize on the substantial opportunities in such locations. As a testament to the solidness of this strategy, over the past three years, our business in such cities was much more resilient under the impact of COVID than other cities. However, in the first quarter of 2023, with the resumption of trade shows and the government investment promotions and commissions, the recovery in Tier 1 and Tier 2 cities outpaced the recovery in the lower Tier 3 cities. Q4 of 2020, we have been building flagship LO hotels in strategic locations, especially in central China and the southeast and southwest market. During the first quarter of 2023, we opened four LO hotels in Haikou East High-Speed Rail Station, Chongqing North High-Speed Rail Station, Chongqing Jiangbei International Airport, and the Fuzhou High-Speed Rail Station. Our expansion footprints cover Chongqing as well as Hubei, Jiangxi, Shanghai, and other provinces, all well located around transportation hubs, central business districts, or government centers. By showcasing our brand and operating standards, we believe these hotels will also help us to attract more high-quality franchisees, further accelerating our growth in these areas. On slide 13, let me now say a few words about the acquisition of affiliated food and restaurant business. We completed the acquisition of Da Nang Dumplings and Bellagio during the first quarter of 2023. Da Nang Dumplings is a quick service restaurant chain in China with a restaurant covering 236 locations in 35 cities as of December 31st, 2022. The chain had 99 operated self-operated restaurants, and 137 franchised restaurants. Bellagio is a casual dining restaurant chain with restaurants covering 36 locations in more than 14 cities as of December 31, 2022, including mainland China, Macau, and Southeast Asia. At the end of the last year, the chain had 27 self-operated and a nine-franchised restaurant. For the year of 2022, these two brands generated a combined unaudited revenue of about 509 million RMB. Since demand for such healthy and affordable fast food and casual dining services should be more stable and less dependent on discretionary spending compared with our existing hotel services, We expect this acquisition business to provide a more stable revenue stream that may offset cyclical aspects of our hotel businesses. The restaurant and hotel businesses are also complementary in nature as we witness the increasing demand for food-related services in the local communities, and we expect cross-selling opportunities from the two businesses. We also expect the integration to leverage upon synergies between our respective team within our company's unique ecosystem, sharing common resources, achieving economy of skills, and improving company's overall operating performance as demonstrated by our stable profit margin and the cash flow. With the recovery of the industry, We will focus on improving operating management efficiency, launching products with exquisite decoration and higher operating performance, widely and safely upgrade IT systems, and deploy robotic systems, and ultimately, enhancing the profitability of our franchisees. The road to recovery is full of hope and also full of challenges. But with the support of our shareholders, franchisees, and employees, we are confident we'll bring better products and services and create richer value for all. Now, let me turn the phone calls to Megan.