Dpc Dash Ltd

to DPC-Limited Interim 2025 Earnings Conference Call. All participants will be in listen-only mode during management's prepared remarks, and there will be a question-and-answer session to follow. Today's conference will be recorded. At this time, I would like to turn the conference over to Cathy Xiong, IR Director, of DPC-DASH who will share the process for today's call and provide some important disclosures. Please go ahead, ma'am.

Thank you, operator. Hello, everyone, and thank you for joining us on today's call. Again, as a reminder, you're all currently on mute. We will open up the floor during Q&A session after management's prepared remarks. We will try to answer as many questions as time allows. Today you will hear from Ms. Eileen Wang, Executive Director and CEO of DPC Dash, Ms. Helen Wu, CFO of DPC Dash, and Mr. Michael Xu, CPO of DPC Dash. Eileen will provide insights into the company's overall performance and share recent developments Helen will go a bit deeper into the first half financial results. The management team will address your questions after their remarks. Before we continue, I'd like to remind you that our earnings call and investor materials contain forward-looking statements about our business that may be considered as forward-looking statements under applicable securities laws, which are based on various assumptions and other factors that are beyond the company's control and are subject to risks, future events, and uncertainties. Accordingly, actual results may differ materially and adversely from those anticipated or implied in the forward-looking statements. You can identify these forward-looking statements because they include terminology such as may, will, expect, estimate, believe, going forward, plan, projection, aim, or other similar expressions. Statements that are not historical facts, including but not limited to the statements about the company's beliefs, plans, and expectations are forward-looking statements. All forward-looking statements should be considered in conjunction with the cautionary statements in our earnings release and the risk factors included in our filings with the Hong Kong Stock Exchange. Also, this call includes discussions of financial information and certain non-IFRS financial measures. Please refer to our results announcements and interim report to be published in accordance with the rules governing the listing of the securities on the Stock Exchange of Hong Kong Limited, which contain a reconciliation of the non-IFRS measures to IFRS measures. All information provided in this earnings call is as of the date of this call, the company, our affiliates, advisors, and representatives undertake no obligation to update any forward-looking statements except as required by law. With that, I will turn the call over to Ms. Eileen Wong, Executive Director and CEO of DPC-DASH. Eileen, please go ahead.

Hello, everyone, and thank you for joining us today as we discuss DPC-DASH limits results. for the first half of year of 2025. As the exclusive master franchisee with Domino's Pizza in mainland China, Hong Kong SAR, and Macau SAR, we continue to see significant growth opportunities and underserved the China pizza market. Our global franchisor, Domino's Pizza Inc., is one of the largest pizza companies worldwide, with more than 21,500 stores across over 90 markets, as of June 30, 2025. This global presence gives us a strong foundation as we execute our 4D strategy, development, delicious pizza value, delivery, and digital. We are pleased to share our robust financial results for the first half of the year of 2025. Our total revenue reached RMB 2.59 billion, marking a solid 27% increase compared to the same period of last year, with 119 net new stores added during the period, bringing our total store count to 1,198 across 48 cities. Once again, we have delivered strong results, achieving close to 30% revenue growth. This consistent performance underscores the effective execution of our growth strategy and highlights the vast potential of China's QSR market. As of June 30, 2025, our market ranked as the third largest international market in the Domino's Pizzas global network in terms of store count. Our profitability has shown strong improvement across all levels. Store level EBITDA reached RMB 502.8 million, up 27.7% year-over-year, with the margin at 19.4% compared to 19.3% last year. Store-level operating profit grew by 28% year-over-year to RMB 379.2 million, with the margin at 14.6% compared to 14.5% a year ago. At the group level, adjusted EBITDA increased 38.3% year-over-year to RMB 322.9 million, with the margin expanding to 12.4% from 11.4% in the prior year. Adjusted net profit rose by 79.6% to RMB 91.4 million, with the margin improving to 3.5% from 2.5% in the same period of 2024. These improvements demonstrate our ability to drive profitability. Let me share more details on the key drivers behind our performance. On development, We maintain our disciplined expansion approach, strategically deepening our presence in existing cities by adding new stores, while broadening our reach into new markets. By entering nine new cities in H1 2025, we now operate across 48 cities, expanding our footprint into more markets in China. As of June 30, 2025, while maintaining a solid 7.2% growth in tier 1 cities, reaching RMB 1.08 billion revenue. Our non-tier one markets delivered remarkable 46.6% revenue growth, reaching RMB 1.51 billion revenue. Non-tier one cities contributed 58.2% of the total revenue, up from 50.4% just a year ago. Our youngest region, the central and western China region, reached 100 stores in just 2.5 years, since the entry in December 2022. This momentum fairly validates our strategic focus of expansion and a vast potential that will continue to offer growth opportunities going forward. After setting so many global sales records over the past couple of years, our first door in Shenyang continues to legend. It not only set a new global record for the first 30-day sales, They also surpassed the previous global annual sales report of RMB 31 million held by Xiamen SM Phase 3 store in just 198 days of operation. Similarly, our first store in Handan, which opened on August 3, 2025, delivered a record-breaking first-day sales, exceeding RMB 540,000 with over 6,000 orders. As of June 30, 2025, we hold 48 of the top 50 positions for the first 30-day sales among Domino's global network. During the first half of the year, the 64 stores we operated across 15 new markets, opening in the end of 2024 and H1 2025, delivered impressive average daily sales of RMB 47,102. By August 15, 2025, 24 of these stores had already achieved a full cash payback within average payback months of within 12 months. More broadly, the stores in the new markets we have opened since December 2022 have maintained strong average daily sales around RMB 17,438, even as we continue to add new stores in these markets. This performance highlights our strong brand recognition, the effectiveness of our site selection, and operational excellence across the markets. Let's switch gears to talk about same-store sales. The same-store sales landed at negative 1% for the first half of year of 2025. We have shared before that for the new markets we entered since December 2022, we have been opening new stores with very strong sales performance. which continuously set new global sales records within Domino's system. As more of these high sales record stores gradually enter the theme store sales cycle, they start to bring negative theme store sales impact to the group theme store sales initially. Calving out the impact of the stores in these new markets, the group's SSG remained positive. And tier one markets' SSG also remained positive, despite a high sales base with the consecutive 31 quarters of positive theme sauce sales accumulated over the past seven years, as we mentioned before. We also believe this showcased the Brazilian's upper results in a context of a challenging environment. On the delicious pizza at value front, we continue to focus on menu innovations with a range of successful new product launches. This includes our popular durian series featuring new Dubai chocolate and lychee flavors, the beef Wellington-style pizza, the Tuscany-inspired salmon pizza, and the cocoa crust and cocoa volcano pizza. Our approach to product development and localization continues to generate exciting products that resonate strongly with the Chinese customers across different markets. Turning to delivery, we hold up to industry-leading service standards by faithfully executing our well-known 30-minute delivery promise. our overall delivery on-time rate further improved to 94% of all the delivery orders. In Tier 1 cities, delivery sales as share of total sales increased from 70.4% to 73.7% during the first half of year of 2025, reflecting growing consumer preference for our efficient delivery service. This is just the beginning of our delivery potential. As we deepen our presence across non-Tier 1 cities, we will systematically roll out delivery services in this market. This measured approach unlocks incremental growth opportunities, enabling us to extend proven tier one service efficiencies to China's emerging markets when capacity allows it. Our digital initiatives deliver outstanding results with loyalty membership growing 55% to 30.1 million members and member revenue contribution increased to 66% from 63.6% a year ago. We have attracted 13.2 million new customers placing the order over the past 12 months from all channels. These results demonstrate the effectiveness of our marketing campaigns and smart consumer engagement in driving growth. Looking ahead, we're continuing our expansion with confidence, with healthy unit economics, and strengthening brand equity from January to as of August 15th. We have opened 233 stores, have 27 stores under construction, and have signed 35 sites. This represents approximately 98% to our goal of opening 300 new stores by 2025. Our strong execution capabilities and operational efficiency enable us to consistently deliver strong results in a dynamic market environment. We're well positioned to further solidify our leadership and drive sustainable growth that creates long-term value for our shareholders. With that, I'll now hand the call over to Helen Wu, our CFO, to discuss the financial details.