MINISO Group Holding Limited

Hello, everyone. Thank you for waiting and welcome to the first half of the second quarter of 2020. Now, all participants are in the listening mode. After the speaker, we will have a Q&A session. Before participating in the Q&A session, please mark your name and organization, and note that this event will be recorded. This phone call will provide English voice transmission. 你可以在Zoom会议中点击传译来选择语言。 我们已于今天早些时候公布了2025年第二季度及上半年业绩, 现在可以在我们的投资者关系网站中查阅。 参加今天会议的有我们的创始人兼首席实行官叶国富先生和首席财务官张静金先生。 Before we continue, I would like to invite everyone to participate in the security statement in our financial news article. This statement will also be applied to this phone call, because we will publish a pre-published statement. Please note that we will discuss non-international financial report standards and financial indicators today. We have also explained these indicators in the documents submitted to the U.S. Attorney General's Office and the Hong Kong Intermediate. and adjust it according to the most comparable index of the international financial report. Unless there is another explanation, the currency units are people's interests. In addition, we have prepared a PPT with financial and business information for today's call meeting. If you are using Zoom meeting, you can see it now. You can also preview it in our investor relations website later. Next, let's invite Mr. Ye Guofu to start speaking.

Hello, everyone. Thank you for waiting and welcome to receive private goods. Hello, everyone. Welcome to participate in the second quarter of the private goods foundation in 2025, which is the first half of the year. In the second quarter, the private goods foundation sales income adjustment, after adjustment, and the adjustment of the EPS will exceed the expectations. The increase in the number of businesses in Taiwan and China or beyond our previous leading range. At the same time, we have achieved significant progress in both the IP strategy and the major power model. Next, we will share with you the performance highlights and key points of this quarter and talk about future strategy planning. In the second quarter, the overall GMV of the company increased by 21%, and the income increased by 23.1%. Since the fourth quarter of the company's power supply, the first positive growth, This has not only exceeded the previous expectations, but also increased the speed of the first quarter. Our two major brands, Mingchao Youping and TopToy, have increased their revenue in the second quarter. Mingchao Youping's brand growth is close to 20%, while TopToy has achieved 87% of its strong revenue growth. In terms of profit and loss, the company's net profit is 44.3%, and the net profit increase is mainly due to The increase in foreign income rates has been optimized in accordance with the interest rate. After the adjustment of this system, the net profit is 8.5 billion, which is 8.5% growth. After the adjustment, the net profit is 17.2%. The trading system has improved significantly. We expect that with the increase in sales in the second half of the year, the net profit will continue to increase. Next, I will cover domestic and overseas. and three major business models to introduce the business situation of this quarter. First of all, the domestic business continues to maintain a high-quality growth. The sales growth is 13.6%. Compared with the past seven years, the total sales of domestic consumer goods has increased by 5.4% and the sales of food products has increased by 6.3%. You can see that the domestic business The increase in domestic business not only surpasses the overall retail market, but also surpasses the increase in online channels, which proves the huge advantage of Mingchang's offline stores. . . . . . . The full-fledged channel upgrade can not only effectively boost the growth of revenue, but also provide a more balanced and high-quality core value for the development of enterprises. In the second quarter, the overseas market grossed more than 1.9 billion yuan, with a 28.6% growth rate. Among them, the U.S. grossed more than 80% of the total growth rate. This growth rate has not only contributed to the increase in power supply, but also to the growth of high-quality new electricity this year. China China 283 of which are not in China, and 10 are not overseas. The effective implementation of the product differentiation strategy has led to continuous improvement in product competitiveness. Tengdian's growth in the second quarter has increased significantly, and Maoliuli has significantly improved. Taobao is also the leader of the Chaohua Corridor, occupying a unique market position. In the future, it will continue to expand its brand stores and Internet, while constantly improving its own brand. and the sales contribution of free IP. Next, I will focus on sharing with you the two strategic movements behind the performance, large-scale strategy and free IP. As of the end of June, Mingchang Youping has already set up 11 micro-computer stores nationwide, covering Shanghai, Beijing, Guangzhou, Chengdu, and the core cities. The average number of micro-computer stores has reached 4 million. Shanghai, Nanjing, Luodian, and global demand stores opened for nine months with a sales of more than 100 million. It broke through the new height of Mingchao's high-end single-storey stores. In June, Nanjing, Deji opened a space store, which is also a long-term product. The product has made a breakthrough into heavy-duty stores. It opened a new space for Mingchao to deploy in high-end stores. Lanliu store has a larger storage space, so as to create different IP theme scenarios. Jinxian, Shambing, and Chengjing's space experience, Lanliu store has realized the modernity and customer value In addition to higher user utilization, Lantian Electronics' single-storied performance not only breaks new heights, but also contributes to the use rate of single-storied electricity with higher than the average level. As a result, Lantian Electronics not only achieves excellent profit performance by itself, but also forms the core strategy of the brand's incubation and creation of the mock-up zone, and continues to provide new growth opportunities for limited-storied and regular-storied electricity. The first new products and limited editions of Ruoyan Electronics were verified by fast data, and they were repackaged into large-capacitated large-capacitated large-capacitated large-capacitated large-capacitated large-capacitated large-capacitated large-capacitated In the last 100 years, we have already opened more than 200 branches in 400 square meters. More than half of them were opened in 2024. These branches are also small and small. The profit is higher than the average water level. You can see that despite the past two seasons, our store has not changed much. But the structure of the channel has been upgraded. We will not simply pursue quantity growth. but to continuously optimize the channels, and to dig up more opportunities through different platforms. Regarding overseas markets and major markets, especially in our largest leading country, the U.S., under the pull of the major market model, the operating situation and brand performance have not only improved, but the new door-to-door electricity cost of the U.S. in 2025 is 1.5 times higher than that of the previous generation, and the average cost is nearly 30% higher, and the rate is also better than that of the previous generation. The core advantage of this product is that it provides a variety of cross-products for different families through large stores, from collection, to cosmetic products, to children's toys and gifts. Since everyone in the family likes fashion toys, large stores can meet the needs of families of all ages, and become the destination for American families to buy fashion goods. So why can only we run into a large store model? I think we can't leave out MINISO's outstanding supply chain and product capability. MINISO has always paid great attention to the development and efficiency of free products. MINISO has more than 90% of its revenue from free products, has thousands of product development and design teams, and has accumulated more than 1,500 global high-quality supply chain resources. Only the absolutely efficient supply chain management capability can support a multi-spec, high-end, high-profile trend of department store large stores. In the future, with the large store model, and the global chain of optimization and demolition. The opening and closing of open space overseas is constantly opening up, and the speed of performance will also make the product more balanced and more stable. Whether in China or overseas, large stores are the core entities of the deepening of the IP stand-alone layout of private goods. The contents of the channels are mutually dependent on each other. Through the continuous innovation of new space experiences, we greatly enrich the IP image. . . . It has reached the highest record of single-storey in the Australian market for the first time in over 500,000 yuan. Another one is the IP strategy. Microsoft has become an unparalleled union leader in the IP field of global acquisition. In the future, we will use the products and capabilities of the past mass-produced products to fully supplement the free IP, which will provide a greater value and potential. Microsoft is an artist and foreign artist IP that has a potential in the global scope. . . . . . We will continue to promote the signing and exhibition of the world's top mid-range mid-range mid-range mid-range mid-range mid-range mid-range mid-range Taiwan China China China China China China China In the global layout, it has a global network of this wide range and quality. In operation, Mingcheng Luxury will also play a full-fledged advantage. From signing artists to design and development, to production, to operation and sales products, each of us is deeply engaged in the function operation and maximizing the potential of AP. This also proves that Mingcheng Luxury is an extremely diversified resource. This is also the reason why to realize the key to the development of cross-border supercars. Microsoft's investment in the free IP field is definitely not a short-term business plan, but a long-term choice based on the trend of the times. In 2020, I first explained the concept of consumer consumption, and the IP is the most important body of consumer consumption. This can successfully implement the IP series, not only bring us better product sales and stronger brand exposure, but also allow us to work globally fully appreciate the potential of IP consumption and the value of the brand. I believe that with the further deepening of IP and large-scale businesses in the future, we will create more marketing and sales mechanisms. At present, the Chinese IP market is also in rapid development, but this is just the beginning. The future development space is still very wide. Looking back at the global development process, from Disney in the United States, HANA, to Japan's WANDAI, 3DU, Ren Tiancheng, In the future, China will also implement its own powerful and practical platform-based IP enterprises. This will be the key system for the rise of a great country, and it will also be an essential cultural asset. In this market full of opportunities, the unique advantage of all-terrain penetration, global deployment, and all-train operation will definitely take the lead in the IP market in China. The goal of the future is to make the IP as strong as possible, not only in China, but also around the world. By deepening the co-operation with global heads to ensure the overall sustainable and stable growth, through the construction of free IP, the differentiation of high-explosive and repeatable sustainable growth, this is the key factor that we are confident in the future growth. Mingtao Youping's new strategic vision is to become the world's leading AP design retail company. According to the channel network, we are currently the world's largest AP product retailer. In 2025, we are expected to generate more than 3.8 billion in sales and more than 2.1 billion in revenue. We are already leading in channel layout, supply chain, product design, and marketing. Next, we will gradually supplement I believe that our vision can be achieved. In the first half of 2025, we have already returned 10.7 billion RMB to shareholders through repurchase and financing. In the first half of the year, the net profit was 84% after adjustment. In the future, the company still insists on reducing the net profit by 50% every year. At the same time, we will continue to carry out repurchase in a dynamic manner to bring back the expected return of shareholders. This is the end of my presentation.

Next, I would like to introduce the financial situation of the second quarter and the first half of the company. Okay, thank you, Mr. Ye. Welcome to today's meeting. Next, I will lead you to review the financial data. First of all, income. Q2, the overall total income of the group reached 49.7 billion yuan, which is 23% of the same increase. This exceeds the upper limit of 18% to 21% of my previous guidance. According to various brands, the income of Mingchuan luxury brands in Q2 is 45.6 billion yuan, which is 20% of the total growth. Mingchuan's income in China is 26.2 billion yuan, which is 14% of the total growth. It was accelerated in the last quarter and exceeded the growth of the low double-digit value that we previously guided. Mingchuan's overseas income is 19.4 billion yuan, which is 29% of the total growth, which is in line with our previous expectations. TopToy's Q2 revenue is 4 billion, with an increase of 87%. It continues to maintain a high-speed growth, exceeding the previous 70% to 80% increase. Looking back at the first half of 2025, the group's overall revenue reached 93.9 billion, with an increase of 21%. In the second half of the year, we are confident that the revenue will continue to accelerate. We don't recommend it. In terms of the structure of the income region, in the first half of 2025, China's domestic income accounted for 62% of the total income. In the same period of 2024, it accounted for 65%. In overseas, it accounted for 38% of the total income. In the same period of 2024, it accounted for 35%. It increased by 3%. In terms of the performance of the same electricity, In Q1 of 2025, the decline of copper electricity is on a much smaller basis than before. In Q2, the performance of domestic famous copper electricity continues to improve. Because last year, Q2 had the high-tech number of Chikawa and Hobao hot sales. Although there is such a high-tech number, we still achieved a positive growth in copper electricity in Q2. In the first half of 2025, the decline of copper electricity sales and the decline of copper electricity sales This performance has been greatly improved and improved. This is due to our continuous channel upgrade, product result optimization, product update, and improvement of operation movements. Since entering Q3, we have seen that the same power supply of domestic private companies has accelerated further in the second quarter. So far, the same power supply of domestic private companies has turned positive from January to August 20th. Looking forward to the second half of the year, we can now tell you very confidently that the same power supply of domestic private companies will definitely achieve positive growth throughout the year. The ability of Mingchuan Oil to quickly achieve the return of copper electricity sales in the competitive Chinese offline market once again proves that our business model has a strong willpower. It also proves that our organization has a strong execution power. Our organization has the energy and learning ability. We have systematized some mature copper electricity growth experience. We started with Q2 and exported part of it to overseas markets. In line with the local In the current situation, overseas markets are fully learning the strategy of China's telecommunications improvement, which has already achieved initial results. In Q2, we saw overseas private telecommunications drop from a medium-high number last quarter to Q2, which is already a low number. Among them, overseas European markets and North American markets' telecommunications have all achieved a medium-high number growth. This has undoubtedly strengthened our confidence in global business growth. In terms of door-to-door growth, our domestic Q2 has turned around the trend of Q1 entry-level stores. In Q2, we achieved a close growth of 30 door-to-door stores. This is more optimistic than what we expected before. We are talking about the progress of brand upgrade channels. Our channel upgrade can be traced to the first big store we opened in Beijing, Guangzhou, in Q3 of Q2. From that time on, we began to discuss how to build a big store and how to operate it. how to improve the door-to-door model, and so on. The iconic event of the upgrade of the channel is that in 2024, Q3, MINISO LAND opened in Donggu, Nanjing, Shanghai. Then in Q2 this year, MINISO SPACE opened in Nanjing, Germany. Our channel upgrade has reached its climax. So far, I am very happy to share with you that the number of our major stores has reached 5% of the number of domestic door-to-door stores. In the first half of the year, has contributed to China's double-digit sales. And this ratio is still rising. For example, in this year's Q2, the top 30 stores are all Minseland and QiJianDian. More importantly, we have already initially formed a seven-storied power station. Mingchao's products will no longer rely on a small store to beat the world, but through the Minseland series, QiJianDian series, ChangguiDian series, and KuaiShanDian, to meet the needs of different business environments. In the whole year of 2025, Mingchang's number of stores in China will continue to grow. Currently, we expect that the number of stores will be between 100 and 150. In terms of structure, we will focus on QiJian and MinSoulLand stores. There will also be regular stores, but regular stores will continue to decline. Mingchang is a single-brand brand. In China, This year, it is expected to achieve a sales volume of more than 160 billion yuan. It is already a very large consumer brand. In 2025, our goal is to achieve double-digit growth year-on-year under the premise that we will not increase the number of stores. This is behind the fact that our Kobi Tongdian will continue to grow healthily, and our new store is of very high quality. There are 94 new overseas Q2 stores, and the store network is steadily expanding. By the end of the first half of the year, the number of overseas stores has increased by 189. The overseas market space is still very large, so we are still planning to add more than 500 stores throughout the year. However, we will be more cautious in evaluating and expanding the branch stores. We previously predicted that about 40% of overseas stores this year would be branch stores. Now we have adjusted to about 35%. This means that in the coming years, we will have a more reasonable capital expenditure and the team will have more energy to focus on the performance improvement of existing stores, and to make full use of the peak of performance in the second half of the year. Next is the interest rate. In terms of interest rate, Q2 increased by 0.4% compared to the same period last year, reaching 44.3%. In the first half of 2025, it was also 44.3%. Compared to the same period last year, it increased by 0.6%. In addition to the increase in overseas revenue of the group that we just mentioned, the effective development of our IP strategy also makes the net profit of overseas business units still increase steadily. The optimization of the product structure of TopToy and TT brands has also stretched the net profit of TT brands. In the future, net profit may be affected by changes in product structure, such as change in product structure, and interference in business organization. However, the increase in overseas revenue and increase in IP sales, We still have room for improvement. Our profit margin is still moving upwards. But we will be more cautious in dealing with profit margin issues. As you know, with our brand's upgrade, the promotion and globalization of our IP strategy, our company's profit margin has increased from 27% in the first half of 2021 to 44% at present. We have also reminded you in the previous phone calls we will pay more attention to balance the price-to-price ratio of our products. On the line of non-IT products, we have to insist on the positioning of the price-to-price ratio of famous products. So, since this year, we have made reasonable adjustments to some categories in domestic and overseas. We have achieved better sales performance and increased the company's profit margin. So, next, we will continue to make similar adjustments under the premise of maintaining a relatively stable overall profit margin. In terms of cost, Q2 total cost increased by 38%, with 43% increase in sales cost and 19% increase in management cost. The sales cost rate is 23%, which is 3% higher than the same period last year. The same increase in sales cost has to do with our investment in Zhiyin Inn. The cost of investment in Zhiyin Inn includes 56.3% increase in labor, rent, and discount sales. Last quarter, the same increase was 71.4%. Therefore, the direct cost of direct cost of direct cost of direct cost of direct cost of direct cost of direct cost of direct cost of direct cost of direct cost As we talked about before, we have more opportunities to invest in direct stores to ensure the success of our future business, especially in strategic overseas markets such as the United States. We believe that the company's early investment in direct stores will release the potential for sales in the second half of this year, and the ability to make a profit will also be at any time. As we talked about before, our investment in Yonghui started to have an impact on our financial statements. Our investment in Yonghui is based on the Settlement Act. Yonghui's impact on our net profit in this quarter is RMB1.19 billion. This project will be excluded from the financial statements for non-international financial statements. The vast majority of it comes from our 29.4% share price ratio, and the Q20 will be in the lowest part. In addition, about RMB 5 million comes from the consumption assessment related to the consumption cost. This part of the consumption cost is expected to be stable at around RMB 5 million in every quarter this year. Regarding profit and loss, we adjusted the profit and loss ratio to 17.2%, which is 0.6% higher than Q1. It dropped by 2.3% compared to last year. Compared to Q1, this drop is narrow and the trend is positive. Let's take a closer look at the reasons behind the drop and why I am confident in the trend of improved profitability. First, let's look at MINISO. Our core domestic joint business has a stable profitability. Some domestic new businesses, such as warehouses, e-commerce, The profit margin of these businesses is lower than that of traditional joint businesses, but the impact is controllable. The decline in the profit margin of overseas businesses is still due to structural changes in income. The income contribution of direct income has been increasing. After the sales boom in the second half of the year, we expect that the impact will weaken and the profit margin will increase. We believe that the profit margin of overseas direct income businesses itself has a lot of room for improvement than our goal. In the future, we want to maintain high growth while maintaining high growth to improve the efficiency of our business. Then there is the TT brand. The profit margin of this quarter has been greatly improved, but we have made some preemptive investments, such as in product development, overseas and IT. This is a very healthy business investment. In the medium term, about 20% of the operating efficiency is what we think is a very reasonable goal for the company. But in the process of growth, we need to give the new business plenty of space and time The net profit of Q2 is 6.9 billion. The net profit rate of Q2 is 13.9%. The EBITDA growth of Q2 is 14.7%. The EBITDA margin of Q2 is 23.1%. In terms of operating capital, our inventory cycle is stable and efficient. Up to 630, the total inventory cycle is 93 days. Last quarter was 102 days. There have been obvious improvements. From the distribution of brands and regions, The technology of Mingchuan overseas and TTE is relatively stable. The number of storage cycles of Mingchuan domestically is significantly shortened. In the supply section, we promote the structural control of SKU, strengthen the standardization of product types, and implement the dynamic storage and water monitoring mechanism to accurately match the supply and demand rhythm. In the storage management section, we established a whole chain of product life cycle tag system. Combining seasonal sales nodes and implementation of differentiated sales strategy, effectively improved the performance of long-term products. This has also set a solid foundation for the improvement of cash flow health and the release of operating capital efficiency. Until the first half of the year, our cash reserves were 74.7 billion, which is still stable. In the first half of the year, our net cash flow was 10.1 billion, of which Q1 was 2.6 billion, and Q2 was 7.5 billion. The cash flow capacity of our business has significantly improved in terms of return on interest. This is due to our improvement in the efficiency of operating capital. 我们的资本分配策略也将继续平衡 我们的快速增长和为我们股东 带来稳定和可预见的回报的承诺 今天我们同步宣布了 2025年中期股息 金额约为人民币6.4亿元 那么大约占了我们上半年调整后 净利润12.8个亿的50% 那么将会在9月份支付给各位股东 我们认为在目前的市场环境下 公司的股价已经严重地 显著第一期内在价值 In the first half of this year, we have repurchased stocks worth RMB 3.4 billion, accounting for nearly 1% of total circulation. This also means that the amount of repurchase in the first half of this year has exceeded the total amount of repurchase last year. This is also the highest amount of repurchase in the first half of the past year. So the repurchase stocks will all be cancelled. In the first half of this year, we have repurchased shares and already paid shares. The repayment of the payment to shareholders has reached RMB 10.7 billion. accounted for 84% of our net profit in the first half of the year, which was 55% in the same period last year. The Board of Directors has also agreed to take advantage of the return of 10% of the total shareholder shares granted at the annual meeting in June this year, and continue to return the shares through Hong Kong in the future, and return the shares to the public market through the 10B5-1 return plan. We believe that the return of shares is the best benefit for our company and shareholders as a whole. Finally, in the third quarter, we remain optimistic about the rapid growth of Yanxun. We expect that the company's income will increase by 25% to 28%, and it will obviously accelerate in the first half of the year. The company's copper chain is expected to increase in the first quarter, and the company's adjusted operating profit is expected to increase in the second quarter. The net profit rate of the new adjustment will continue to improve, and it will continue to shrink compared to the decline. Looking at the whole year of 2025, we expect that the group's revenue will increase by less than 25%, and the growth rate will increase gradually. This is higher than our previous expectation of less than 22.8% for the whole year of 2025. At the same time, we expect that the net profit of the new adjustment in 2025 will be between RMB36.5 billion and RMB38.5 billion. Thank you. That's the end of my presentation.

We can now start the presentation.

Hello, Mr. Ye. Congratulations to the company for having exceeded expectations. My main question is about the US. We can see that in the second quarter, in addition to the sales exceeding expectations, the control of the cost is very good. Mr. Ye, you also mentioned some adjustments to major stores and products. Can you share with us more about the new teams in the U.S. market? What do you think has been done well? What will be the focus of these strategies in the second half of the year in the U.S.? Especially in terms of profit, how can we look at the direction of profit in the second half of the year, this year, and the whole year in the U.S. and the entire value market? And it also has to do with the opening. We just adjusted the opening rhythm a little bit. What is the goal of the U.S. opening this year? It's mainly about the U.S. side. I hope Mr. Ye and Ethan can share more. Thank you. There are several aspects to the U.S.

economic improvement. The first is to pay more attention to the quality of electricity. So we reduce the amount of electricity. The main thing is to open a large-scale strategy. . . . . . . . I also spent a lot of money on the product. I also spent a lot of money on localization. These are the four aspects that led to the improvement of the U.S. economy. In the second half of the year, our focus is still to build not only a single-electric model, but also a single-electric model, especially since the price of electricity has gone up, we must make the single-electric model better. What is the core of building a single-electric model? It is still the product. Especially in the domestic market, This is The third one is economic operation. Because we found a professional team, in the local operation, in the economic operation, it is better than what we did in China in the past. More importantly, this is the focus of the U.S. work. In the next three years, half a year, we will do this. And in the second half of the year, we still, I especially want to talk about the quality of Taiwan. In the United States, the growth is very fast, especially in Tangjiaomao. We are very confident that in the 12th month in the United States, Tangjiaomao will create a new record and a new goal, complete a new goal. So the goal of opening stores all year round in the United States this year is 80 stores, which is less than last year. But our more advanced opening quality is to open large stores. Since this year, some Prada stores have a higher efficiency than the old stores. . . . . . In this area, no matter which plaza you go to, you can see our major stores. I think this is a major store, a major brand, a major industry. Then, the trend of power supply changes in the US market. This is what the doctor will tell you.

Okay, thank you, Michelle. The power supply performance in the US market, as I told you before, the first quarter was a high number last year. The QE in 2024 is 30% of the power supply growth. So, in the first quarter of this year, Our part of the overseas market, especially the U.S., is under pressure. But as we enter the second quarter, especially the third quarter, we see that the power supply is constantly improving and accelerating. So the power supply in the second quarter has already turned to the U.S. What I just talked about is an increase in the number of high-end companies. The third quarter looks like it should still be accelerating. As far as the profit and loss ratio is concerned, we saw that in the first half of the year, the operating profit and loss ratio at the doorstep level of the U.S. market was the same as last year. This is the first half of the year. Thank you, Mr. Ye. Thank you, Mr. Ye. Thank you. Next question is from

Hello.

Hello. Hello. Hello. Taiwan Taiwan Taiwan also embraced an O2O activity. So we can also look forward to the growth of our future. This is my first question. The second question, I would like to ask the overseas side, can you help us guess the ratio of sales in different areas? For example, in the United States, Europe, and Asia, what is the ratio? From this perspective, our future growth and strategy, we just talked about the United States, Thank you.

Hello, Anne.

I'm Ethan.

Mr. Ye answered your first question. How do we improve the power supply in China this year? We have gathered some experience and methodologies.

Okay. Let me talk about the improvement of the power supply in China. The main thing is that we have established a performance growth group in China. It's called the Chief Growth Officer. It has a business center and a future. Through this group, we have established a business, operations, We can greatly improve our execution rate. Because all of them are managed by one person. In the past, it was divided into different departments. In this way, our long-term products can be delivered to our stores very quickly. This is the explosion area. We have built a lot of explosion areas. AP explosion. And then this place is where we, especially some stores have been optimized. Small stores have also changed to large stores. Through the improvement of stores, then the area is bigger. There are more products. . . . We'll talk about it at 2 p.m. Okay, thank you.

I'd like to add to your question. Is it the ASP or the traffic that leads to the problem? First of all, we can see that domestic power supply in the second quarter is growing at a low level. We can see that the main factor is the price of our customers. This is the first aspect. If we look at the price of the power supply in the fourth quarter of the second half of last year, In the fall of the fourth quarter of last year, we saw a very large impact on the traffic flow. This is also a very common problem for Chinese and domestic retailers. There is pressure from the traffic. So if we faced a lot of traffic pressure last year, this year we see that the pressure of traffic is decreasing. So I think, although I saw that in the first half of this year, the growth of our traffic flow seems to be mainly due to the increase in the price of goods. The traffic flow seems to have dropped a little. However, we can see that the trend of the drop in customer volume in the second half of last year is very, very obvious. So I think our customer volume this year, or our conversion rate, is also improving. Yes. Another point is that O2O has contributed to Tongdian. But because in China, in our regular stores, O2O has been in business for several years. Compared to the first half of this year and the first half of last year, the contribution brought by Europe and Europe is not an additional contribution. So this year, we see that the copper power has improved. More of it is coming from us, and it's getting better now. Yes, and then the sales ratio of different regions. I can probably introduce the GMV at the end first. Our overseas GMV in this quarter, our Asian countries, except China, account for about one-third. Our Latin America accounts for about or one-third of it. In addition to Europe and North America, it accounts for about one-third of it. Other places account for less than one-third. This is our GME in the middle. Yes. Your third question is, how is TT different from MINISO overseas? Yes. Mr. Ye, please answer this question.

TT is also a professional corporate brand. Yes, and it's... Yeah. Yeah. The price of Mingchuan in Taiwan is relatively cheaper. I think it's different. And their way of playing is also different.

Their positioning is also different. I understand. Do we still want to have a 100-storey store overseas?

TopToy, right? TopToy, yes. TopToy is expected to achieve 70% to 80% growth this year. But its pace will be consistent with Mingchuan. This year, we will Thank you. Okay, thank you. Okay, next question is from UBS Samuel Wang. Your line is open. Please ask a question.

Thank you very much for the opportunity to ask a question.

I am Samuel from UBS Ruiyin. I have a question about the artist IP that we mentioned. I would like to ask about the current artist IP, including the current sales overall situation, such as the ratio and so on. What are the sales goals for this category in the future? For example, what is the sales ratio of our future plans? And this new category may require us to increase the new business model of IP operations. For this, I don't know if the company has any plans or strategies that they can share with us. This is the first question about the artist IP. Of course, if possible, I would like to know more about it. In the past, the management layer mainly did global large IPs. Now, the transformation behind the artist IP is also why there is such a transformation. The second question is about the overseas market. I also noticed that the Q2 market in the U.S. has turned positive. There may still be some pressure on the overall overseas market. I would like to ask which markets in the overseas market have the highest expectations this year, and which markets have the highest expectations. What are some of the measures we can take to deal with these slightly stressful markets? Thank you.

Okay, 3 seconds. Mr. Ye, you first.

About the IP strategy. In the past, there has been a major change. In the past, we only had one way to go, which was to do international IP authorization. But today, we actually started the deployment half a year ago. We can announce it to you this time. We now announce that IP double-option, that is, part of it is international IP, We can see that the market in China has just risen. The market is developing rapidly. So, Mingtao Goods has a strong development advantage here. We can see that our . . . . . We have product development advantages, marketing advantages, and channel advantages, but what we lack is free IP. But if we start to implement free IP, we think we have a great future. We now have nine artist IPs. Youjiang is the first one. You can see Youjiang. We expect Youjiang to reach about 40 million this year. It will break one billion next year. It must be an over 100 million IP. So from the way to success, I can tell the market that we have mastered the method of running our own IP. Including us, including us, we acquired an IP called Luoming. Last year, the global turnover was 100 million. This year, it can reach 250 million. Next year, it can reach 600 million. So whether it's from Taobao or from Mingshao, our two companies And both of them are doing free IP. One is the artist IP that we signed. It's called Mito. The second one is Taobao. These two IPs have brought us unexpected surprises. And there will be more new IPs coming in. I think after Chinese artists and Chinese GDP exceeds 10,000 US dollars, the rise of China's big country and Chinese culture will be the IP. I think the IP of China has just begun. The market is moving forward. . . . . . This is growing, but I can tell you publicly today that we have succeeded in creating a free IP model. So this is what I told you, we do free IP. So what are the advantages of doing free IP? First, there is one more wing for free IP, which is that it can be differentiated, high burst rate, and repeatable. And let me tell you, I will not only sign a lot of artists' IPs, but also sign these IPs. The cost is not high. I can tell you, you don't have to spend a lot of money. It's not about spending money, it's about spending a lot of money. And these little artists, we can all operate them well and make them big. Currently, in China, those with this platform capability, that is, our two companies, two or three companies with this capability, we have two. One is METAL, the other is TopToy. Thank you, Mr. Ye. Mr. Ye is very excited to talk about free IP.

I think this is something that Mr. Ye has been talking about the most recently. the spirit of a strong entrepreneur's entrepreneurship. I'm very excited. I also welcome everyone to participate in our live broadcast in Hong Kong tomorrow. Mr. Ye will share more thoughts about the IP strategy. Dami, I also asked a question. What are the unexpected expectations of the overseas market this year? I think it should be seen as a fact that Mingchuan now has more than 100 markets in the world. There is business. Then you will always encounter some markets, such as exchange rates, local retail, red-light, including the situation of our local customers themselves. Sometimes it will be very good, sometimes it will be very bad. It is not possible that all markets are all good, and it is not possible that all markets are all bad. So we see that in the first half of this year, for example, our United States, Canada, for example, like our Australian market, you can see that it has a very fast reversal trend. For example, like our Canada, Mr. Ye just mentioned that we have a local team in the U.S. We also have a senior local retail expert leading a professional team in Canada. After it was launched, we can see that it has a very good effect. In recent years, Canadian sales have been increasing triply, even up to 130%. In Australia, we also talked about what we are preparing in the Pre-Perry Market. This year, our local fast-food stores and local stores have achieved very good results. Are there any unexpected developments? Or is the business growth slower than the first half of the year? There are several important markets that we can talk about. The first half of the year, the income of the Latin American market has dropped, but its local retail and GMV have increased. This is mainly due to several reasons. The first reason is that the local customer is a very new customer that we have been cooperating with for a long time. In the first half of this year, he is adjusting the level of his warehouse. Now it has been adjusted. Secondly, there has been a big exchange rate fluctuation in Mexico in the past 12 months. Because it uses US dollars to purchase our products, it will affect the exchange rate even more. But we can see that in the past few years, the performance of the entire Latin American market has been relatively stable. There are also some small markets. If the company's volume is small, there may be some uncertainties. For example, in China and Hong Kong, we can see that Hong Kong's customer flow is going to the mainland, including some of the high-end rents in the retail industry. However, it accounts for a very small proportion. In general, we think that the entire first half of the year, from Q1 to Q2, the overseas market is going up. Then, when it comes to Q3, we see that the overseas market is also accelerating. Thank you.

Next question is for Mr. Shidi from China.

Your line is open. Thank you for the question. I'm Shidi from China. I'd like to ask two questions. One is, the impact of tariffs has dropped since Q2. We also made some adjustments in the U.S. Regarding the adjustment of tariffs in the U.S., are there any new updates in our supply chain? What are the price adjustments that the government has made? Can you give us some details about the impact of sales? The second question is about the domestic market. As mentioned in the previous conference, if we continue to push the IP strategy in high-end cities, low-end cities may be more cost-effective. What is the current implementation strategy in terms of price adjustment? Is there any difference in the performance of high-end and low-end cities? Thank you for these two questions.

Thank you for your question. I will answer your second question first. What is the difference between different cities in different levels of electricity performance in China? In general, we see that in the first half of this year, or as of this year, the electricity performance of high-end cities is better than that of low-end cities. The second question is about the problem of tariffs. Since April of this year, the U.S. tariffs have been a concern for everyone. So let's talk about the results first. We see that tariffs have not significantly affected our U.S. profits. In order to respond to tariffs, we have done several jobs. The first job is that we have already consciously prepared some supplies in advance in the U.S. before the political situation in the U.S. changed last year. The second is that we have used the ability of the public chain management to integrate We started to set up local sanctions in the U.S. a long time ago. So now in the U.S., we have a very large ratio of sanctions. In this way, on the one hand, we can better respond to tariffs. On the other hand, we can also develop and purchase local products. We can better adapt to the needs of local consumers. As for the third one, we are planning to make some reasonable tariffs on tax. So now we see that the entire... Thank you. Okay, thank you very much. Congratulations to the company for improving the image quality.

Thank you. Okay, thank you. Next question is from Chengdanzhong County, Qingyang.

Please go ahead.

Thank you, Director Chen, for giving me the opportunity to ask this question. I am Qin Yang from Changjiang Securities. I have two small questions. One is that I would like to ask about the situation of overseas executive and agent businesses. Currently, about these two What is the trend of business growth? Secondly, I would like to ask, because we have been promoting the pace of IP more recently. I would like to ask about the growth of MinisoLand. What is the current situation of its growth? Is it a trigger for our domestic market growth? Secondly, what is our plan for the subsequent IP slowdown? Yes, these are the two. One is overseas business wealth, and the other is the situation of IP. Thank you.

Excuse me, we have a question about the signal. What is your second question about the private IP? Let me answer the first question first. The gap between overseas employees and agents. In the second quarter, we have 29% of overseas increases. Employees are faster than agents. Employees are faster than agents. In fact, employees and agents are a division of our company's internal management in history. We have one called executive business and one called agent business. But as we accelerate our globalization, we will find that you have me and I have you. In our executive business, BEO, there are some, for example, this kind of joint or agent business. In the agent business, there are also some executive stores. So we now think that these two combinations can't be very well represented. It's a combination of our overseas business. So we are now inside the company. But in general, the overall growth of Zhiyun is faster than expected.

What is your second question?

Yes, about the free IP. And the other question is about the progress of the free IP. And the other question is about the current situation of the IP LAN.

Free IP is now an important factor for us. In the past, we used to walk on one line. China China China China China Shanghai, Nanjing, Lujian, Jiugeyue, Guoyi. This is something I didn't dare to imagine in the past. Recently, we have opened a few soldering shops. Each soldering shop is very successful. So what benefits did the soldering shop bring us? It can attract a lot more Chinese and Western artists to sign contracts with us, to vote, to cooperate with us, to support our cooperation, to fight for cooperation. Because the soldering shop is foreign foreign foreign . . . . . . . Thank you for your participation.

This conference is over. We will see you next time.