Earnings Call: H1 2015

Aug 19, 2015

Go ahead. Good afternoon. Welcome to China Office East Land in a federal limited interim results presentation. We have with us today, our Chairman and CEO, Mr. Haazenin, for chairman and senior VP, Mr. President, Mr. Chen Eve, vice president, chief architect, Mr. Roy Liao. And our CFO, Mr. Horace Smith. First of all, Mr. Ho is going to share with us the interim highlights. Afternoon. I'm happy to meet with you after have released our interim results to share with you some latest updates on the damage changes. Thank you very much for your long concern and support. Today, I'm going to focus on areas. 1st of all, our interim results, and then I will take you through our business review in the past 6 months, and then I will provide some market analysis share with you some of our strategies and finally our guidance for the second half and related plan for projects. So I should say that you already heard of the new disclosed we have already completed the plan for acquisition of different portfolios and share us from our mother company. This is going to foster position as the backbone platform, strengthen our financial capability and effectively risk of certain peer competition issues. First of all, I'm going to provide some explanations to you. Because concerning capital injection and other relevant datas, there may not be interpret breakdown for you because according to some accounting standards, some of these figures have already been incorporated and it may be quite difficult to have a breakdown analysis. So perhaps I should just offer more details here. Of course, all the experts and you look at any data, any figures, and you get it right away. And I'm sure you know exactly what is going where. So allow me to you through our interim results. In the first half, we realized revenue 64.85 1,000,000,000, Hong Kong dollars, an increase of 19.5%. Net profit, 16,300,000,000, up 20%. I won't go through all the details here, just new highlights. So our net profit is up 20 and a new record for our group. We maintain high level of value creation in the first half, gross margin 32.24 percent, and our core net profit 20.3 percent. Next. Look at our segment results. For property development, we re lies revenue of 62,550,000,000 home dollars, taking up 96.4% of the total amount, up 19.2%. Priority development, 19,000,000,000, up of 0.4 percent. Investments, 4,600,000,000, up 18.2%. This chart, well, basically, I'm covering the scenario with the capital injection. We see an increase of our shareholders' equity by 39.9 percent. To 186,000,000,000. By the end of June, we have canceled 70.61000000000 Hong Kong dollars, and the net gearing ratio dropped substantially to 13.4 end. This is a very healthy balance sheet showing financial flexibility. The slide, I'm sure you understand where you're looking at. In July, we successfully issued 6 €100,000,000 bonds. Prescription rates, nearly 1,000,000,000. This is a new attempt facing strong US dollar. According to some latest changes in the more it to show that our direction is very positive and correct. And I'm sure you're going to ask government base exchange rate. So this is, giving you some information in the file. And so the structure of our financial assets and also our debt. Renminbi, cash of 69 percent, home of dollar dollar 30.6 percent with undrawn credit of 9,600,000,000 home dollars. Total asset that we can use, 8 8,200,000,000. This is a very sufficient reserve for our future development. Look at our desk structure, you can see bank loans, 55.46000000000 Hong Kong dollars, long term that 90%. So the structure is very healthy again. The 11th August some reforms to the exchange rate reporting mechanisms. There's a cumulative drop of the exchange rate of RMB by 2.7%. In short term, we're going to optimize our asset management to avoid as far as possible exchange losses. For the medium to longer term, we will actively explore all the financing channels to leverage on our double platforms and use different currencies to do financing so that we can react market fluctuations effectively. Later, I will talk about more concerning our financing strategies. I should that is another area of concern. I'm sure you have some questions in that area. So perhaps I can explain a little 1st. The second part confirms our business review in the first half. We realized 85,400,000,000. In terms of contracted property sales and accumulated corresponding GFA thought, 5,800,000 Otterweight it. During the period, we we managed the collection process to ensure that the cash flow back rate was high. This is the list of projects completed. Consider the project in different regions, that 44 in total, and total GFA here. So I could say it's 7,000,000 points. At the end of June, we have sold 78% of our GFA very satisfactory results. Nothing done. This chart, is about property presales and inventory. Total amount is 6 62,500,000,000 Hong Kong dollars. And for presale, 5 point 51,000,000 square meters. And once completed, the total amount would be 9 22,400,000,000. Next chart shows you land acquisitions in the first half of this year. We have purchased 5 loss, total GFA, 2,260,000 square meters, a premium of 8,260,000,000 rand a day. For the capital injection project, total GFA, is 10,192,000,000 square meters. And it is going to bring to the group land resources covering GFA of 9,000,000. Square meters. We have not purchased too many lots in a more open market because we already have capital injection, and at the same time, we have been looking at possible opportunities. Sometimes when it comes to land acquisition, it's hard to achieve a very even allocation. In the second half, we'll continue to identify suitable opportunities other than the market will also consider M and A opportunities in the market. The next chart is about the land bank situation. By theendofJune, our total reserve GFA, 44,09,000 square meters and 8,900,000 coming from the injection project. After the capital injection, together with 14 Thirtier City covered by HaiHome, we have 51 Cities in our net 1. The next chart the situation for investment property. In terms of our scale, after the project, we have completed 1,500,000 square meters of investment property. And the rental increased to 9 120,000,000 Hong Kong dollars, up 23.4%. The rental situation for mature projects are repositives, Shenyang Nanjing reaching 90% or more for our 3 office buildings in London, the return is also very positive. We will continue to uphold our surface concepts of Coates' in co sharing and win win situation. We will collaborate with different e commerce operator so that our office can provide more convenient services to our commercial client. Let's look at the market and our strategy. These figures are sure you are very familiar because they have been released by the, relevant authorities. In the first half, for commercial property, the sales was up 10%, projects, GFA dropped by 15.8 percent. 8%. We can see that the GFA for acquisition and also commencement. Of construction work has been shrinking. So we continue to be crucially optimistic for the second half of the year. And then the following chart about the Chinese economic outlook, but the macroeconomic situation. I'm sure you already know about these figures, so I won't read keep them one by one. Here, I want to share with you our analysis and judgments. Right now, we see a number of new trends in the Chinese property markets. First of all, after accelerated growth, Chinese economy is entering its new normal and the property sector will enter this new normal with stable growth with people seeing come growing steadily and also urbanization propelling. Keep we believe that long term need can be sustained in the property sector. So we still leave that the property sector in China is a rising sector. Secondly, with less administrative in defension, market mechanism is becoming more effective. So we will, from time to time, see ups and in the market, and we need to rely on very solid operating capability to face a to such challenges. Firstly, the level of concentration will continue to intensify. And we believe that the top 100 players in the market will get the market share of over half of the market, and there will continue to be more M and A activity in the market. So, for you talked about the macro outlooks. Now let's look at corporate strategies With this new normal, we don't just go after scale, but rather we need to focus on competitive advantage and sustainable development. Confident that with such fierce competition, we'll continue to expand our market share. In terms of our development strategies, I am sure you already understand our long term strategies. Then I'm just providing, quick summary here because we have all cuff more or less the same points in the past. 1st of all, I would like to share with you some, strategies for different areas. First of all, on our products. We'll continue to strengthen R&D and launch projects and products that are in line with the demand in the market. We will also focus on efficiency and maintain our leading profitability. In terms of our projects construction, we will continue to perfect our procure and platform and continue to promote green building concepts. In terms of investment, We will focus on operating in cities and fully leverage on our financial resources. When we meet with the right opportunities. We will acquire land not just in the open market, but also consider M and A over opportunities so as to expand our foothold. Management, we are going to enhance efficiency for marketing management and shorten all the management cycles and optimize the flows of our work. I have talked about this at the beginning of the year. And so far, I can tell you we have already achieved some very good results So it is about achieving synergy from different segments. In terms of commercial property, we are going to fully utilize the new changes in the market so that we can make necessary adjustments to our planning and operation model. This chance is about financing. I believe you're all very concerned about this. I should say that recently, we've seen some major fluctuation of the renminbi exchange rate. So you're about overseas financing work. So I have actually provided this chart to show you some new development concerning our group financing strategy. In the past decade, with the reform of the exchange rate, and also the QE initiatives in the United States, we have expanded for financing channels in terms of your dollar and Hong Kong dollars. This year, US dollar has become more expensive with the interest hikes. And other currencies going weak, we have started adjusting our financing strategies. We have made new comes domestically and also overseas. One good example is the euro bond issuance in July. In the future, we we'll move away from offer reliance on US bonds or US debts. We're going to fully utilize our double platforms, explore diversified financing channels, and always consider the rate and exchange rates so as to further dissipate all the risk and improve our debt structure. We're also looking at expansion of domestic or onshore debts. Next, some guidance for the rest of the year. You can see some figures here. So I'm not gonna to resend them 1 by 1. For the entire year, or we can see that we have completed the injection project from the model company, and different segments are deferral paying very smoothly. We are confident that there be stable growth in this new normal of the property sector. Losses. So for the contracted sales target, it's been adjusted to JPY 180,000,000,000. I would like take you through 2 major figures here. That is the available resources for the entire year. It's been adjusted to 280,000,000,000 home owned dollars. In the second half, we're going to launch more than 150,000,000,000 home owned dollars in terms of new flats. And we will continue to make use of all the market opportunities and continue to mode standardized and streamlined management to create greater level of return for our shareholders. So this is the end of my presentation. Thank you very much. Thank you, Mr. Hal. We now move on to Q And A session. Over here the lady? First, you talked about by the end of 2016, there will be new renovation some of the projects. What about cost control? What about pricing? What are your strategies? Would do you think the margin is going to be? 2nd question is about the company's future land acquisition policy. Would you think about first tier city being over, over keep it? Any changes concerning land policies from local governments? And, thirdly, any plan to issue onshore phones or on short desks. Thank you for your questions. When it comes to the renovation package that we offer to our client. We have been making preparation for quite some time. By the end of next year, we are talking about 100% for our projects. So we are fully prepared for that. What about the standards? Well, this is commercial secret, but basically the are 6 sets of standards, in the past years. We can see that they are widely recognized by our clients. So when it comes the renovations standard, I cannot tell you exactly how much we are making because they are many different sets, but I can tell you the profit level is not lower. Then presale projects. Okay? I suppose you understand what I'm trying to say. I didn't tell you how much we're making from the renovation. Okay? Don't write anything about that. So it's not lower than previous profit levels. So when it comes to pricing, I think already answered your question. About our landbank policy, I believe Many of you are concerned about this topic because recently I have been hearing rumors about 5 tier cities. In the past 6 months, it seems that information coming from resources are saying that there are searches in 1st Tier cities. I'm not sure where such information comes from. For different projects, different cities, the situation is always different among these fees. The land premium has gone up quite substantially. So in other words, in the future, among these cities, whether you're able to obtain higher level of return. Well, let's just wait and see. Be honest. 1st tier mainstream cities. I don't want to name them because I don't want to offend anyone. But for mainstream fashion, TS cities, we've seen success stories and also failed is. So it is not true that every single developer, every project in First Tier Cities will give you good return. I suppose you understand what I'm trying to say. Right? Are there opportunities in First Tier Cities or the property sector? It's a rising sector. And a force that will cover the development opportunities in First Tier cities. But which companies, which projects will be such good opportunities, but we have to carry out very detailed analysis. If you say good price back to for all further cities, I think I'm back to Ziva, but I do not disagree that sell through rate may be faster, but what is the price level? If you are running your business lower than the market rate, yes, you can sell a everything very quickly. You are sacrificing your long term development for some short term cash if you are after reasonable return, it really depends on your capability level because product competition and brand competition and also competition in terms of your overall capability, we have very high standards. Not every a project can achieve the same results. I think 3 to 4 years ago, many companies will tell you. First Tier cities, the risk is too high. They are moving to 30 cities instead, but today, I would like to tell you that Tier city is very risky. So let's go back to 1st tier cities. So investment direction and policies and strategies are only changing, and that is a very risky decision to change things all the time. So you are asking about onshore debts in renminbi. Well, things are moving forward. So I cannot give you any concrete answer because issuance of that onshore needs to go through prove approval procedures. It's quite different from the situation in Hong Kong, so I cannot rule disclosed too much today. But I've already heard, we will rely on different currencies, and we have a double platform. For financing. We believe this is our advantage. And our core competitors. Thank you. Can we invite the next question? Here. Good afternoon. I'm Carol from DBS. Also three questions for you. First, Mister Hall, you have talked about professionalized management as one of your strategies. Can you offer more comments what impact do you want to achieve in terms of cost control? Or are you talking about other is that's going to have positive impact on the company? 2nd question. Cutsening Land Acquisition. I haven't heard about M And A for a while. What companies or what projects are you considering? Are you negotiating anything? Thirdly, in terms of investment property, you mentioned that the company will continue to hold high value international projects for rental. In the future, is it possible that you are going to move to other places around the world to purchase office buildings or commercial premises? Thank you. Thank you for the questions. The first question is really a huge topic. If I talk about that all the time be gone. So I really have to be concise. I just focus on the really important points. First of all, when the property sector develops to a certain stage or any sector when we come to a certain stage, when things mature, we need professionalism. If you don't have such capability, I'm afraid you'll come additiveness will be weekend. I've already told you when it comes to the property sector, there are 2 special characteristics. First, you are talking about investment style, a the second one is production style. So by combining these two things together, there are conflicts, for example, culture, management, and management and costs. So if you cannot combine things together, if a you cannot enhance the level of competitiveness when the scale reaches a certain level. What is going to happen? Yeah. We will. Sometimes you have to scale, but no profit. Or you make a good profit, but you like in terms of scale. If you look at some developing companies, it's very obvious. Therefore, I can me say to you something that is the most important if you are really interested, perhaps I can find another opportunity to have a detailed discussion with you about our professionalized management. I'm very interested. If you're not interested, then, of course, let's get it. So I've just talked about the crust of the matter. You asked about land acquisition policies. We have talked about this. There are three ways to grow. We never rule out any of them. M and A is one of them. It is one way to grow. And expand. I can't tell you what projects we are considering. So I guess that's how I'm going to answer this question. First question about investment properties. In the past, Well, we have moved to London. Are we going internationalized? Actually, We have told you that the 3 properties in London better return than those in Hong Kong because how things operate there is quite similar to Hong Kong. When I told you this point, years ago, I told you not to worry about investment risk. If I said something in Hong Kong, you're not going to ask a sim a similar question because you all know about the Hong Kong market. You will not ask us if we have the necessary experience. So in the future, we will continue to follow the same direction of development. But we have no plan to invest all around the world. Thank you. Can we invite the next question? Over here, the gentleman. So I'd just like to check with you. Given the recent moves, in the FX market when the PBOC shortly devalued the UN. So, it's how's this gonna impact the company's full year results and, you know, what what's that hedging policy like going forward? Well, you didn't ask these questions. Up the locals, but we have the next best friend who finally raised the question. Be honest, with you, I will offer more details and tickets, but not reporters because you are the real experts who belong to this industry. But I think I need to make a statement first. Have, interpretation for all of you. When we talk about exchange rate or FX issues, it's a very professional air area. When we make comments, we're not that professional. So why do we need to have exchanges with you? Mainly because of two points first. In terms of operation of the company, what will be the impact What about our future strategies? It is about risk assessments in the past. We very often discussed with you core competitive edge. That is the dual platform for financing, but it seems you no one really cares about that. They only look at, the level of debts or level of financing in Hong Kong. Encount about women besides, but today, I think You finally understand why we have been talking about the dual platform for so long. In the past, we talked about Onshore Financing, we have very good channels. I trust that you have not really listen to that. It was like I never said anything about that, but today, once again, I want to strict with you, our dual platforms. Those platforms are going very well in terms of risk assessments. We are very well prepared. In other words, beginning from last year when you analyze the future transfer renminbi, you have started working on this topic for quite some time, what we wanted to address was the matter of cost. How can we have lower cost? Complete our debt restructuring. So what does that mean in the past? In terms of our operational strategies, we already made a necessary preparation, and therefore, at the press conference, I talked about controllable risk. That's all I said. Nothing else. Why? Because we have been prepared for a very long time. So what is the impact on us? As I explained earlier, if you combine everything, Hong Kong dollar, US dollar debt. Long term debt is the majority. Short term debt only takes up a small proportion. Concerning future development of the Chinese economy. What do you say? If you say that you are pessimistic. Your pessimistic about future development of Chinese economy and and riverbeam don't invest in China. The us that would be a wrong decision. But what do you really say? When it comes to growth of a Chinese economy and future development. What I told you, I believe in plenty of opportunities. So we've talked about urbanization reforms of the SOEs, and infrastructure development, everything is still progressing. So in the past, I have talked about, the move of the Chinese population, urbanization, projects, when things are still happening, it will go on for a long time. If you look at more advanced countries and places, they have all the necessary structure already. In medium or small sized cities, we still have a very long way to go The future growth momentum will be very strong if we have concerns about future development and growth of the Chinese economy. If you are optimistic, then remedy exchange rates, or long term debt of our company, you should have your own conclusion already. If we go into smaller details, we have a total scale of debt of over RMB90 billion. The Well, 40000000 in US dollars 50,000,000,000 in Hong Kong dollars, among me, among other debts. Because you want to look at, the 30th June. So in our hand, cash level is more than 30,000,000,000. And in Hong Kong and Macau, our investments, more than 30,000,000,000. So We'll have more than 60,000,000,000. So we have invested JPY 30,000,000 to JPY 40,000,000 already. In other words, you can do math to my 7% of depreciation. What's the level of risk? I think you know the answer already. If look at any possible launch? It is just a single digit level. Our profitability, our unit is 10,000,000,000. So single digit losses, isn't that well under control, the growth of property prices, if it increases by 1% to 2%, you would think that it's not So turning things around, you should understand that risk is well under control. We have also mentioned When we analyze risk, we have enhanced researching our debt. We rely on different currencies. We have the dual platform for financing. Things have been further expanded and deepened. So, basically, When it comes to our operational strategies, if you have confidence, if you believe in all of us on the stage, don't worry. Because when you go to battle, That is the first name, and we have that. Thank you very much. Can we invite the next question, over here in the first row. Mister Howe, Ryan from Morgan Stanley. I have three questions for you. First of all, about dividend payout. Around interim announcements, I can see that beginning from the 2000, you offer more and more, but this year is an exception. There is no growth in terms of dividend payout. So what about the whole year dividend level? 2nd question, China overseas other than domestic development of residential provinces. You also have, Hong Kong rental premises with very good margin and also some other projects. They have all completed, you can sell them and you get the money back. And the reason is margin has been shrinking for the entire industry. So what will be the whole year margin level. 3rd question, more at the macro in the announcement, I have noticed that you believe that the Chinese government will provide other supporting policies to the industry. So what about the second half other than realization of credit what else will be launched by the government to stimulate the property sector? Alright. Thank you for the questions? Well, when it comes to our dividend payout policy, we have talked about that any times. We want to keep it within the range of 20 to 40%. And every year, you'll see some growth year on How can you say there was some growth this time? Well, there is something ongoing, and I cannot tell you too much, but it's getting approval is in process. Have you forgotten about that? So dividend payout policy there's no change. There's no adjustments. We want to continue to enhance our value our shareholders. So we want to have growth year on year. There is no change to our policy. High margin projects, to be honest. When the industry develops up to a certain stage, things will return to to normal level, but I don't think this sector has entered the era of low margin. Well, I will say such things with the reporters to enhance our capability of management and operation and core competitiveness is the ultimate way to seek higher returns. We have seen some higher profit margin projects. Is that not going to happen in the future? It will happen just not at the same proportion when our core competitiveness continues to improve. As I have said, profit is, of course, the ultimate goal because we want to create more value for our shareholders. In other words, In terms of overall operation, when there are no changes to our policies, we will concede you to insist on cost policies perhaps you see us as one of the leading corporations in the So in other words, we will always go after higher level of margin. And pro it. Local government policies. Well, if you look at a private sector today, the senses is that marketization level is going up. So the market will lead the industry to sustain healthy developments That's just the message coming from our government in the past. Maybe people have been relying too much on the incentive from the government, but those things cannot go on forever. I think the best way forward is to rely on marketisation. We'll be able to promote stable and healthy development of the entire industry. And as company in the industry should continue to strive for better level of competitiveness. Next question over here in the 4th row. I'm Yushin from UBS. I would like to ask you something about Cogou. Very good performance, overseas our China overseas Learning Investment Limited, but about Cobo? What do you think about its future development? What about its shareholding, structure sure. Fucking question. What about cash? How are you going to use your cash? You have rejected yourself target. So whole year cash flow should be very strong, and you have a low level of gearing ratio. So with the same dividend care level. Are you going to consider repurchasing some of the stocks? Well, today is China overseas land investment limited presentation. So I probably shouldn't anything about Cogou. If you want some information, maybe we can have some, exchanges on this slide. You asked about something very sensitive and I cannot really answer. Share holding or anything can happen, but I cannot answer you whether we're moving forward, backward, right, or to the left, because things will happen when it happens. And then you ask the repurchase, well, our financial situation is very healthy, very solid. In our presentation, we have already showed you the figures, how we think about future industry development, what's going to happen in the market. We want to maintain healthy and solid financial position so that when opportunities present so we can grasp such opportunities. Without enough cash on hand, you will miss the opportunity So opportunities are always for those who are well prepared. Next question? Second roll over here. I have two questions. First, how yet it. And completion rate of 1sthalf. Compared to previous years, first half completion rate is higher, especially compared to 2012. It was 20 odd percent only and this time 48%. So This will include the capital injection project. If we take that if I be the figure. You have readjusted your full year contract of sales target, but you have not adjusted the other target at the same time. So If we put aside the injection project what will be the situation for the entire year. And we should be able to see that the love of readjustment, how much of that is because of the capital injection and how much is because of, the positive market outlook. That's first question. 2nd question, in the second half, as impossible that Some new tax arrangements will be implemented. So can you share comments with us, how is that going to affect the industry? Thank you for the questions. You are flush high level. Thank God I did my homework. Otherwise, I will have no idea how to un you. So for the full year target, I've already mentioned something. The injection has been completed because of accounting principles. And it's hard to break things now. So we just forgot we just decided to forget about the, comparison because it's not a fair comparison. So we are still following more or less the same direction. If you look at all the figures, they already incorporate the new project so I cannot take that out because it's simply nearly impossible. Everything has been consulted it already. And you asked about the completion target for the first half. In the past, yes, indeed. Well, perhaps not as low as 20%. Around 40 percent, I think. That's the norm. And then 60% for the second half, that is more or less the, normal and healthy split for the year. We are talking about whole year 12000000 Square Meters for fission. So in terms of a proportion, it's very normal. Very appropriate. No major changes here. Of course, every year, completion rate. I think it's always better to do more. So every year, you and see that the final figure is always not as high as I want it to be. But it is like a long race. You need to reserve some energy for the second half. Other he will collapse halfway through. So what we do is like a long race. According to previous experience, I think you understand very well what is happening. I can only say no major changes here. You also asked about the tax arrangements that is at the national policy level. I understand that, are still to be decided, for example, which type of cost can be calculated, how the tax rates are to be calculated in details, or they have not been confirmed. So is still under discussion, perhaps it's premature for me to comment on how it's going to impact on our business. That we should wait until everything is confirmed and announced, then we can provide a proper analysis on the of impact at the moment because the government is still deciding on the details and for this positive impact or negative impact is simply premature. Thank you. Next question, over here. First of all, there are four questions. Colley is performing very well this year. In Africa, that flex. Are the players having a lot of tough time. So for other developers, what is the biggest challenge or difficulty? Second question is about your financial situation. Net profit, very good. For the tax level. But it is VAT for the land or profit tax, things have been increasing up to 17 or 18 cents. So can you elaborate more? 3rd question in the first half or the 80,000,000,000 thought. 55,300,000,000 already flew back. And can you offer more comments about this rate of cash flow lag? You talked about 4 year target. What about new projects? Are you going to add to the level because the sales condition is so positive. Alright? Concerning your first quest to be honest. I'm really sorry. You know my style, don't you? I really don't want to comment on other people if you say I'm doing well or not so well. Yes. I'm happy to discuss, but I don't want to talk about other people. Especially when you name another player. You should understand we've never named anyone else to comment or criticize them. Why? Because you are the expert who's doing well, who's not doing so well. You know already. If you ask me, you want some proof if that's the case or You just want me to offer my own feelings. Well, you are the experts here. I know the answer already in your mind, so I'm not going to comment on others. Yeah. Yeah. Yeah. Which comes these are good companies. I'm sure you can rely on your professional judgment. You know more than I do. So in front of all of you, for me to comment on other players, I feel like a primary school students, so I'm not going to do that. And then you asked, well, Oscar, I know you check all figures in our report. Some changes to profit factor in VAT. There are actually, two reasons that I can share with you. I know that you're going to talk about that. 1st of all, When it comes to VAT, when you reach a certain level, your profitability is very strong when it goes to a very low level, it means that you're not really making a profit. So it is related to the of profitability of a company, in the past, in the property sector, the margin has been very high. This time, we have incorporated some projects with a margin level that is less high or the projects in Hong Kong, the margins have been fair very high. So I have put in some other projects to make it look nice. So we want to keep the good stuff. Because we have been developing for quite some time. We're looking at very big takers. You all know who are left for the long raise. That's what we want to do. It's a long raise. We want to keep running. And then about cash flow back, in the first half, Normally around June, the figure is quite big. So we need more time for the cash to flow back, especially the project sold to a end of June. It takes time because most of the buyers have only paid the first So cash flow bank is always a bit lower. And I'm sure if you look at our past records, you should be very confident. So there's no need to worry about cash flow back. When it comes to mortgage loans, all for a situation which the veins is well under control situation. It's better than last year. But in 1,000,000 meters for, commencement of construction work. That is very conservative. The different projects, and we make necessary adjustments here and there for you. Can we invite a large question? It's okay. This is not a press con. I always want to wrap up the press con quickly. I'm Frank. I have one question. I can see from the PBT. You want to take 5% of the market share in China, you never offered that in the past. Mr. Hal, you said that scale and profitability always are in conflict for many players in the market. How do they resolve that? How can you be how can you be big and make a lot of money at the same time? That is my question. Yes. I think all the shareholders will be very happy to hear that. I'm talking about 50% of the market share taken up by the top 100 players. I never said we want to take up 5%. Of course, I'm not saying that is not possible, but I don't want to set a limit our future developments, I never said that when we reach this scale, we will stop. So to market share. For some cities, you can take than 20% for some other cities, maybe 3%, 5% is enough. So we are talking about higher level of concentration. That's what I So I never set any upper limits. Scale and profitability. It doesn't matter which industry you are in, because of scale expansion, management capability will be diluted, resources will be diluted, and other areas of strength will be diluted. What we want to do is exactly what you said, large in terms of scale and strong in terms of profitability. So we want to be big and profit making. That is the a goal for us in terms of management and operational strategies we've made adjustments from time to time. Because that is what we t. We want to be big and strong. If you're only big but not strong, it's meaningless. If you just go off to scale, At the end, you will forget about your original intention if you're big, but you don't make any money. Well, because there are simply no more profit to make in the market. If the industry is vague, and it allows you to be profitable. Not. You should pursue that goal. If you can never be strong, but you can only be big. What is the point. If it's all about market share, then what you have sacrificed, the price you have made, you have paid. Is it worth doing? It's the risk to overwhelming. Risk continues to be bigger and bigger, why do you want to be big? I'm sure Manisha holders agree with you. Well, this is a global broadcast or via shareholders, please believe in our we will continue to pursue that. Thank you. Arrangement. Thank you all. This is the end of today's presentation.