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 2023 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 Vangersteen of Christensen, Green Tree's investor relations firm. Please proceed, Rene.

Thank you, Ashley. 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, Mr. Bill Zhu, Financial Director of the Restaurant Business. Mr. Xu will present the company's performance overview of the first half of 2023. followed by Ms. Wang and Mr. Zhu, who will discuss business operations, and Ms. Yang and Mr. Zhu will then discuss financials and guidance. They will all 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, is amended and is 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, intents, plans, beliefs, estimates, continue, target, is or are likely to, going forward, confidence, 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 filings with the US 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 Hsu. Mr. Xu, please go ahead.

Thanks, Renee. Hello, everyone, and thank you for joining us today. 2023 marked a new start of the post-COVID recovery in the economy across China. Flow-par compared to the same period of 2019 reached more than 120% at the beginning of February, exceeding our expectations as demand for business travel rebounded after the spring festival. During the second quarter, especially during the National Labor Day holiday early in May, it reached more than 115%. And during the summer vacation, it was almost stable at 110% as the tourism further expanded. As we did throughout the pandemic, we continued to execute our long-term strategic growth plan that strives to assist the franchisees in maintaining quality operations, extend our hotel network, deliver stable operating profitability, and maintaining healthy cash flow. Please turn to slide five. Compared with the first half of 2022, hotel raw power was 130 RMB, up 35.8%, and the restaurant ADR, that is average daily sales per store, was 6,213 RMB, up 22.9%. Total revenues were 794.2 million RMB, up 12.1%. The increase was partially due to the recovery in Royal Park, the increase in the number of hotels and the increase in the restaurant average daily sales, partially offset by the closure of the 64 restaurants. Income from operations turned positive at 150.9 million RMB with a margin of 19%. Net income was 177.3 million RMB with a margin of 22.3%. Adjusted EBITDA non-GAAP was 226.9 million RMB, up 137.8%, with a margin of 28.6%. Core net income non-GAAP was 136.1 million RMB, with a margin of 17.1%. Cash provided by operating activities was 313.1 million RMB. Slide six shows detailed numbers for total revenues, income from operations, net income, and adjusted EBITDA. On slide seven, operating performance greatly improved during the first half of 2023. Royal Power was 120 RMB and 141 RMB in the first and second quarter, respectively. At the bottom of the slide, you can see the weekly Royal Power performance in the first half of 2023 compared with 2019. In the first half of 2023, due to the recovery from COVID-19, Royal Power exceeded 124%, of its pre-pandemic levels after Spring Festival. Thanks to the stable recovery in demand and in the economy, Royal Park gradually recovered to more than 120% of its pre-pandemic levels in the Labor Day Golden Week of 2023. While the Royal Park recovery slowed during the Dragon Boat Festival, It resumed a growth and stable development trend again in the summer vacation as travel soared. Slide 8 shows operating performance of the restaurants. ADS had a good trend in the first half of 2023. Now, starting with the slide 10, let's talk about the strategy and the execution of hotels with the further expansion in the mid to upscale segment on the Tier 3 and the lower cities in South China. Besides, we are continuously adding LO hotels in strategic locations. Let's take a look at the slide 11. We have been continuously growing our mid- to upscale segment over the past few years. For an apple-to-apple comparison, we have excluded the Argyle and urban hotels. By the end of the first half of 2023, we had 438 hotels, 10.7% of our total portfolio in the mid to upscale segment, up from only 50 in 2017, and we plan to open more this year. While the mid-scale segment remains the core of our business with the 71.4% of all of our hotels, we continued our expansion into the higher end segments. By the end of the second quarter, mid- to upscale hotels accounted for 10.7 percent of our total portfolio, while the economy segment remained stable at 17.9 percent. 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. In addition, hotels in some lower tier cities are performing well. As we continue to execute our strategic plan, 73.3% of hotels in our current pipelines are in such cities and will further capitalize on the substantial opportunities in such locations. On slide 13, During the first half of 2023, we opened three LO hotels at Chongqing North Railway Station, Chongqing Jiangbei International Airport, and Shenzhen Futian Huaqian North. All of our LO hotels are located around transportation hubs, central business districts, or government centers. By showcasing our brand and operating standards, We believe that these hotels will help us attract more high-quality franchisees, further contributing to growth. Slide 14, our strategy for our restaurant business focuses on increasing profitability with the closing of unprofitable stores and expansion in the proportion of franchised and managed restaurants. and growing the numbers of street stores. On slide 15, during the first half of 2023, we closed 64 restaurants in areas of decreased economic activities and reduced the food traffic, helping improving the overall profitability of our restaurant businesses. On slide 16, you can see the growth in the proportion of franchised and managed restaurants following the acquisition of Dao Nian Companies and Bellagio during the first quarter of 2023. Slide 17 shows that currently most of our restaurants are in the shopping malls. However, we believe there is substantial potential for street stores and we intend to develop more in this format. I want to emphasize that in the new area, we're strategically focusing on growing high-quality hotels and restaurants to build a better and stronger foundation for future growth. Now, let me turn the call over to Megan and Mr. Joe.