Dpc Dash Ltd

Good day and welcome to the DPC Dash Ltd first half 2026 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad, and to withdraw your question, please press star then two. Please note today's event is being recorded. I'd now like to turn the conference over to Cathy Zong with Investor Relations. Please go ahead.

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 terminologies 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. Aileen Wang, Executive Director and CEO of DPC Dash. Aileen, please go ahead.

Hello everyone and thank you for joining us today as we discuss DPC Dash Limit's results for the first half of 2026. As the exclusive master franchisee for Domino's Pizza in the Chinese mainland, Hong Kong SAR, and Macau SAR, we continue to operate in the market with substantial growth opportunities. Our global franchisor, Domino's Pizza Inc., remains one of the largest pizza companies in the world with more than 22,500 stores across over 90 markets as of the end of the reporting period. Before we discuss the figures, I want to contextualize our first half performance, which provides a clearer perspective on our current trajectory. Revenue grew 20.8% to RMB 3,133.8 million, driven primarily by a 33.7% year-over-year increase in transaction volume. This growth was feared by both our expanding store network and a 7.1% increase in same-store transactions. However, this half was characterized by two opposing forces, robust demand and network expansion versus pricing pressure from industry-wide aggregator subsidy dynamics. I will now outline how these dynamics diverged across our different types of markets. Let's start with our initial city markets Defined as the markets we entered before 2023, where we have the longest operating history, transaction counts accelerated and same-store transaction growth was 8.5%, actually a healthy number. But same-store sales growth turned negative, marking the first such occurrence in these initial seeding markets in recent years. We did not see evidence of a broad-based demand deterioration in our initial selling markets. Indeed, more customers were visiting us. This shift was primarily attributable to the intensified third-party platforms' subsidy campaigns leading to lower average ticket as they put in a meaningful share of orders onto these lower-priced channels. Now, let's turn to our new seeding markets. The markets we have entered since 2023. SG, while still negative at negative 9.4%, has narrowed consistently for three consecutive halves. We have improved from negative 19.6% to negative 13.2% and now negative 9.4%. This is the normalizing curve we expect to see. When we enter a new city, our first store is open to extraordinary demand, often the strongest sales performance in the entire domino system globally. As that initial launch phase settles and we increase more store density to drive operational efficiency, same store comparisons naturally experience contraction for a period. We made a deliberate choice on managing this transition period, and I would like to outline our strategic rationale behind our decision making. Rather than waiting out the 3pp subsidy wave, we viewed this as a one-of-a-kind meeting window and then accelerated the rollout of delivery services in our new sitting stores ahead of our original plan. As a result, delivery order contribution in these new sitting stores rose to 25% today and in a much faster pace as we observed in our initial sitting markets in the past. We want to point out that, through building delivery penetration, together with launching value and other initiatives, same-store transaction growth in New City markets turned positive at 2.2%, up from negative 19.1% a year ago and negative 7.9% in the second half of last year. However, Embracing aggregated platforms meant accepting a lower realized transaction price in the near term, since 3PP orders carry a lower average ticket than orders through our own channels. But we believe that the customer habits and brand mindshare we are building today in what is an early and formative period for delivery in these new cities like what we did in the initial cities will yield long-term benefits. And importantly, even at the deep point of same-store sales comparison cycle, the underlying economics level at these stores has remained healthy. Our 93 stores opening new markets this half generated an average daily sales of RMB 28,230 with a weighted expected payback period of just 14.8 months. Beyond the network expansion and same-store story, we continue to innovate our products and collaborate with popular IPs to engage with our customers. To name a few of the highlights, we launched a crispy croissant crust, football-filled square-shaped pizza, durian chicken pizza, and energy bowl series, alongside a successful partner with the gaming titled Ark Knights, Mingri Fangzhou, to capture a larger share of the use demographics. On delivery, we maintain a delivery on-time rate of 93.6%, even as volumes grow significantly, which speaks to the quality of our operating system. On digital engagement, our loyalty program grew to 41.9 million members, up from 30.1 million a year ago, with 18.1 million new customers placing their first order over the past 12 months. On our supply chain, our Food Supply Chain Center in Wuhan commenced operations on August 21, 2026, serving over 200 stores around Wuhan areas across the western region. We have also secured sites in Chengdu and Nanjing, targeting opening during the second half of 2027. We believe these investments are necessary to solidify our proud and operation foundation as we keep scaling. Moving forward, our strategy is defined by a distinct approach to our two core business segments. In our initial selling markets, the priority is structural average ticket improvement. Orders placed through our own channels, our application, and WeChat Mini program have consistently carried an ATP, meaning average transaction price, above RMB 90, meaningfully higher than 3pp orders. So our focus is migrating more customers back to these higher value channels through our loyalty program, Humble Mew Innovation, etc. In our new city markets, the priority is still expansion and penetration. continuing to scale up delivery from its current base of around 25% and communicating our iconic value programs while taking similar initiatives to migrate customers to our own channels and elevating ADP. Regarding our network expansion, we remain on track to open approximately 350 net new stores in 2026, have already delivered 235 openings in the first half. To better quantify our long-term growth potential, we're introducing store density as a key performance indicator this period. Currently, China's overall pizza market density stands at 13.9 stores per million population, while our own national footprint is just 1.1. We believe these metrics provide a more precise illustration of the significant unpenetrated demand available to us, highlighting a substantial runway for growth both through new city entry and further densification of our existing markets. With that, I'll hand the call over to Helen to discuss our financial results in more detail.