Earnings Call: H1 2020

Aug 26, 2020

Good afternoon, the analysts and the investors. So this is Sarah Sperland. We are reporting you on the interim reports of 2020. So because of the pandemic, is a pity that we cannot meet you face to face and report to you about our performance. Therefore, we're holding this virtual meeting. But we think that we can still have a very good communication. Now first of all, let me introduce the management with us today. Mr. Li Xin, our President Good afternoon. Vice President, Mr. Cheung Thawe, Senior Vice President Mr. Shetty Senior Vice President Mr. Olin Chan, CFO, Mr. Gorshitting. So at the meeting today, there will be 2 parts. First, the management will walk you through their business performance. After that, we will open the floor for questions. So you are most welcome to join us via online to raise your question and please press star 1 to wait. And at the website, you can also enter enter your questions in the comment area so that we will take them afterwards. 1st of all, Mr. Goshating our CFO will walk us through the business performance. 30 analysts and the investors. Good afternoon. I would like to take this opportunity and a report to you about our interim results of 2020. In the first half, the overall environment has been very challenging and, there has been an increase in the returns to shareholders as well as a dividend by 3.2 percent up to by 2 to 840 84 it's 8,400,000 and the interim dividend also grew by 16.3 percent to 0.15 percent. You can see the net profit attributable to the shareholders down by 3.5% to 1000000 to 115000000. And because of the time pandemic, the fair value of investment property was down to about about 4,500,000,000 And when the stabilization occurred after the pandemic, everything will be back to the normal. We estimate that the accumulated completed sales was 1,000,000,000, up by 0.5% by the end of Q7 by the end of July. Because of the pandemic, there has been a slight decrease in their settlements as well as the rental income. However, through our combined efforts, as well as the implementation of a 2 plus X strategy, there had been a steady increase in the investment property as well as the net as well as the profit ratio at the end of the first half. The core net profit was 18.6 percent and up by 0.9% and the net profit attributable to shareholders was 25.7 percent, still higher in the industry. There has been a slight drop of sales for the investment property, down by 1.7% to 36,000,000,000 because of the resumption, restoration of work, as less the structural adjustment in some cities in terms of a settlement. Therefore, in the Tier 1 Cities, the unit price also dropped. Therefore, the settlement unit price was down to JPY 12,289,000 and the unit costs are down by JPY 8 1372,000,000. In the first half, the investment property also down was also went down by 12.5%. In terms of rental income. And the shopping malls, the income, down by 8.9% And as for the office buildings, because of the sales promotion, the revenue up went up by 5.8%. Retail's hotels were also impacted by the pandemic the business revenue down by 51%. So we have, for example, for the fair value changes in Shanghai, hangzhou, salmon, Guilin, Chongqing, at Shanghai, the Thomas Square, So you can see all these figures in the report. So we stick to our prudential policy and keep improving the utilization of cash. So therefore, you can see we actively repaid the JPY 10,000,000,000 per petrol debt earlier and this early redemption We also actively managed the cash balance, which was only down by 4.4% then the the end of last year, interest bearing debt was some 15.6 percentage higher, And now it is 45.9%, but still within the reasonable leverage area, in the first half, our structure continued to improve. So the cash the cash utilization was still low As we said that we must maintain the adequate cash in hand in order to avoid the double high situation Meanwhile, we can also improve the overall capital volume and improve the capital turnover in the first half through our combined efforts in optimizing the debt structure as well as the early redemption of a perpetual debt. They were also issued the midterm note at a lower cost as RMB4 billion. Weighted average cost was only 2.77% Therefore, bringing the overall financing costs down to 4.26%. The foreign currency exposure further down to 6.6%. So there are less risks in terms of our refinancing in their upcoming 3 years. Our overseas over debt distribution was very well. Now let's look at our business performance. In the first half, we realized that the 1,000,000,000 sales target because of the pandemic. As well as the sales were lower, it was smaller than the first half. The contract sales was down by 6.7% to 1000000000 by the end of July. The overall contract sales was down by 2.5%. In Tier 1 And Tier 2 Cities, they contributed 80% of our sales. Top 5 Cities covers 4 Cities in Tier One Cities and top 5 cities already contribute over RMB5 billion in total sales. So we have providing hedging providing support and the guarantee to our sustainable growth. So shopping malls, as I said, because of the impacts of our pandemic, as we said, during March, our results report, We are confirming the difficulties together with the, with the tenants. And in the first half, the overall rental income was down by JPY 7 point 5% to $3,970,000,000. And the rental situation was basically a maintenance level Through online and offline activities, the overall tenants increased by 15% at the end of last year to 1 to CHF 12,600,000 and the gross margin further improved to 8.4%. After the pandemic, the things got stabilized. And the business was also resumed very quickly in major natural light, the rating volume increased by 26%, 14% and 29%. And the same store growth also went up by 70%, 7% or 21%. Rental income also increased by 18%, 15% and 22%. Rental income at the same store increased by 8% 6% 16%. And we are holding 42 shopping malls. So we hope that the end of August the our business were turned from a loss to profit. So for those best performers, in March, July ended May, June July, in the 7, the luxury shopping malls, the increase was also 6. 36%, 29% 44%. Now let's look at bank's reserve. So through the adjustment of our structure pace and the deployment, we further improved the land bank structure. Now we added 4,950,000 square meters in our land bank and which is adequate which is equivalent to the saleable resources of RMB 120,000,000,000. So Over over 60% of the equity lines located in the top 3 city clusters. And meanwhile, we captured the opportunity in February March and acquired more land during that time. In the second half, we continue acquiring more land in order to support future growth. In the first half, through our advantages in developing and running the city complexes, we acquired 3 shopping malls, So which means GFA by 300,000 square meters. So two projects were acquired at the bottom price, one with the premium price of only 0.5 percent. The parent company further injected capital to us And in July, we are we there are 4 injections of in 4 projects. And At the end of the reporting period, our total development land reserve has being holding 6.60.46000000 Square Meters. And, in Tier 1, Tier 2 Cities, the 70 67% of the lands are located there. And in terms of investment property, we are holding 10,620,000 square meters. In which 46% are shopping malls and they are in Tier 1 And Tier 2 Cities, mostly, which is over 80% in the Easter China, South China and North China. By the end of June, we have entered into 62 Cities And we basically have completed the national deployment. And in 25 key cities, we have over 1 shopping malls In the reporting period, we continue with the city municipal upgrading system. In the first half, we've got 1 more project in Changshan, Now we are following a mounting projects, which is, the 16.3 square kilometres or the equity square meter, it's just 800,000,000 square meters. Now let's look at the X business. The X business is a very important part in the 2 plus X strategy in the company There are 3 parts: the synergy type, the light asset part as well as the innovation and cultivation part. Synergy part mainly focuses on the municipal operating, operating under construction as well as the building business building the building business. The second part is about light assets, including the light assets, commercial running, propriety management and intersegmented culture And for the third one, it's about innovation, which includes the long term renting, the senior carrying business, as well as the city mix City projects. In the recent years, we have been developing this business in a sustainable manner. And by using by developing high quality, in our brand, we are able to win the very good reputation in the market. In maybe today, during the lunchtime, you have already heard about the our announcement of our voluntary disclosure on the spending and listing. And through our strategy, you can see our property management of CRS Land as the commercial operation services may be explained, got listed. If they are completed, then we will be able to support our future growth better. And we will also guarantee that according to the listing rules, we will allocate the quota of a sharing purchase to our to our holders first. If there's any further information, we'll be allowed to now. Now let's look at the future our future business sales growth and business performance. In the second half, saleable resources, we have 412,200,000,000 and 83% in Tier 1 T2 Cities. 73 are residential. Now 6% of the receivable and message will be launched and figure of high quality, construction and dis simplification has been following the schedule, and we can guarantee the supply In the second half, there will be JPY 250,000,000 for new resources in Tier 3, Tier 4, 40% or 6%. We have confidence that we can hit the target of 1,000,000,000 of sales. In the upcoming 3 years, we have the unsettled sales revenue about 2 30,400,000,000 in which 107,000,000,000 will be settled in the second half this year, meanwhile, in the next 3 years, we will expect it to have a 15% of our CAGR growth in our investment property. So in 2020, our investment property will contribute 12,000,000,000. And in 20 2025. We have about over 24 percent JPY 24,000,000,000 from 21 to 25. So from in 2025, we have about JPY 15,000,000,000 in the investment property. In the shopping mall launching plan from JPY 21 to JPY 20 2, we're going to open 12 more shopping malls, that is purely a good foundation of rental income in the future. Currently, we have got land to reserve. In the future, we will have 120 shopping malls in which 92 will be held of ourselves. Light assets will be supported by 28, and we will continue deploying our strategy in the shopping mall business. And to go deeper and go broader. So in the PowerPoint, you can see more details in the appendix, and I won't elaborate too much. So this is the end of the interim report. Thank you very much. Thank you very much, Mr. Guo, for your very detailed presentation. Now I would like open the full question open the floor for questions. Last time, some analysis that we didn't have time enough for the questions. So at this time, we're going to leave more time for the investors for you to raise your questions. Now I'd like to invite the first question. So just a reminder, if you wish to join us via via the online, you can press star 1 to wait. Some maximum two questions for each investor. The first question, please. CIC's Eric, Mr. Zhang. Thank you. Thank you for giving me the first opportunity. So can you hear me, right? Clearly. I have two questions for you. First of all, thank you very much and congratulations. Very solid and a very stable business performance in the first half. Two questions about growth. In March, In terms of a growth, you didn't talk too much and everything very quantitative a very qualitative town. Now the pandemic is almost over and the business is resuming. Can you please elaborate a little bit more about the growth in the PowerPoint? There are two slides which talk about sales. For example, in sales, I did a math. In the second half, Luxury Resources, 36% sales, we'll be able to first hit the annual sales target. So just want to know that If you look at the figures, there's a chance that you can sell more than your target, right? So this is about sales. Another slide in the PowerPoint is from, 2020 to 2022, your expectation. So the saleable resources, I did the math as well, about 32% of the settlerable Resources, also a growth So that means that in 2021, 2022 net profit will grow dramatically. So this question is about growth. The second question is about the spinning spinning the laser. We already read the announcement. In the in their slide is that it is property management plus the commercial operations. In my understanding, it is beyond the property management. Can please explain a little bit what it is. So I also noticed that in the presentation, you will provide the priority to the CRS Land shareholders for the new listing. So because we don't know more details about it, we just can please elaborate a little bit more. Thank you. Thank you, Eric. Two questions. One is about our business performance as well as the growth expectation, the second one is about spending. Now let me take your second question first. About our business growth expectation, I would like to leave it to Mr. Sheih, our Senior Vice President, to take it. About spending, Spending and the listing, I do that the capital market can send about it for CRS Land after their restructuring in 2008, until 2002 after 18 years of growth, CRS Land has grown itself from a pure developer to in 2015 a comprehensive development real estate development developer. So with 2 wells of our strategy, So it has been about 10 years of growth already. Until now, So along with the Taotong project and the Tianjin 1 project, these 2 completed projects, we are a developer as well as operator of such properties where you can see this is a value increase in every step of our business in the years. So that's why when we consider about the spending and listen, we just want to release the whole potential of our business through listing and the value is accumulation of our 20 years of growth. We don't have any specific timetable for the listing and we've got PN15 application already on the 15th August. In addition to assess land releasing our value, this is only one of the goals This is another goal is that through the listing, we have been supported and trusted by investors and we really value the interest of our shareholders, particularly those long term long term shareholders. We hope to increase their value So therefore, when we're spending under listing, when we do for go for IPO, We will guarantee the priority and quota to our existing shareholders. As for the specific information. Perhaps he will have to wait a little bit, and please we'll keep a close eye on our further information. Now Mr. Sheer, my colleague, we'll take your first question. Okay. Regarding the contract sales this year, so we estimate that we can maintain this JPY 26,000,000,000 figure. So this figure can be guaranteed because every month, We look at ourselves. We look at our supply. We also look at their trend as well as the changes in the market. This is a dynamic market. Therefore, we have to adjust that and keep up with the market. So this goal can be guaranteed as Eric asked I feel that our ourselves, this 292 1,000,000,000, perhaps we can oversell, yeah, in the upcoming 4 months, we will launch the cellular resources and really depends on our pace. So we will launch these products 1 by 1. And somehow, there will be difference between one city to another. So for example, JPY 292,000,000,000 On the one hand, this goal can be guaranteed. And on the other hand, it is quite a neutral expectation. As for the contract sales, in different regions, the major contributors are Beijing, Shenzhen, Shanghai, Guangzhou, Hangzhou, Shenyang Nanjing, Wuhan, Changzhou, Changshan, etcetera. Basically, T1 Cities and a strong Tier 2 Cities. So these are the major contributors. As for the settlement amount, Mr. Guo will answer this part. Okay. So Slide 29, the presentation, this is the set of level resource. So in 2020, you can see in 2021, 2022, there will be big increase because in some high energy cities, in the past that the settlement was down very early and because of the margin because the settlement in terms of volume and settlement in terms of in terms of a gross area, these 2 do not go together. And the gross margin was also going down. So in terms of our profit, it will be may not grow at the same proportion as the settled gross iriety. Okay. Thank you, management. Now should I take the second question? Jason from JP? Good afternoon, Mr. Lee, good afternoon, management. I'm a good friend from Citibank. Two questions for you. The first one, So this year is the 1st year when we prepare the another new 5 year plan. So for CRS Land, you may just your strategy. So under this macro economy, so how can you guarantee yourselves and your performance how to maintain your the double digit growth? This is the first question. The second question is that in the reports, most of that in May, In May, June, July, the business was resuming in the second half. So under this internal secular economy, what will be the growth in the second half? Just now you mentioned about some investment properties, shopping malls, and there will be more investments in this area. So also you mentioned about the your financials. Actually, we didn't look at a very clear picture about these shopping malls as well as the euro returns. Can you please elaborate a little bit more? Okay. Thank you, Griffin. My understanding, you asked the 3 questions. The first one is about the 14 5 year plan. What is our own plan? Second question is about the our business performance. So based on the solid performance in major natural eye, what will be our annual expectation? And third question is about overall investment properties. What will be the growth picture? So you want our CFO to give you a clearer picture, right? Three questions. Okay. So let me take your first question. How about the 14th 5 year plan first? For the business growth, Mr. Yiding Khan, our Senior Vice President, we'll take it. The 14 5 year plan, this national strategy, our we in Cieland is also preparing our own plan. And this plan is not finalized yet. However, we do have that is a lot of deliberation, a lot of discussion. And we can also share with you some of the the highlights in our discussions. 1st, from the macro picture, our economy, the whole industry. We think that the property market in China is a huge one still. It is now into a very big consumption market as well, which is going through a transmission transformation right now. There are two areas where you try to understand what is the consumption market. 1, it's about the residential side. We launched new products. Consumers are recurring more houses or rooms or apartments. So this is for sure. Another area is about the upgrading of shopping malls. We have a very deep experience and an affiliate on it, be it in Tier 1 City, Tier 2 Cities and Tier 3 Cities. So asada is a very good shopping mall, you have good products, you have good services. Consumers will be very willing to go And this is very obvious and that they would love to go. So I'm not accelerating, and I'm just describing. So from the demand side, it is a very healthy market still. China's economy, you may have heard a lot about China's economy recently in different discussions in the Circular Or International, what do you call it? It's the external and internal Circular Economy. So whatsoever, if you look at China's own economy, the domestic one in the future, what is the potential? It is still a huge consumption market. And this is a huge amount of demand in the local market. So in the next 5 years, China's economy, we still have various stable, prudent, orderly, and steady growth. And another one, another area is about the property market, about JPY 16,000,000,000 for market size. So we think The existing trillion of market size is already formed So this is a huge market. So whether it will continue to grow, however, we may not think will definitely happen, there may be opportunity that it will maintain growth without a much drop So this market will it is it is above 10,000,000,000,000 above 10,000,000,000,000, it is huge already. So it will maintain this size for a while. So under such substances, what we should think about is how to avoid how to survive and assess how to compete in this fierce market. The market is huge the competition is also fierce. So basically this is our Understanding of the macro economy and the market. For serious land, when I answered the first question, I said, that CRS land from 2002 after the restructuring of the company till in 2005, we launched the 1st MiX City in Law Ho Shenzhen. It was the first transformation from pure developer to a the city complex developer and operator. So basically it's, what we call the 2 way strategy, the Resin'.ERS Plus Commercial. So we have been following this strategy for over 10 years. So the transmission succeeded And today for CRS Land, the dividend see our business growth is based on this successful transmission in 2005. In 2018, so along with the completion of a tap on project and the Shenzhen Bay project, Sarah's China further transformed itself from a comprehensive developer to a city complex investor developer and operator. So it is about the municipal complexes. It develops and it manages. So it can it manages comprehensively. We have business we have a development. We have a commercial property. We have a leasing. We have education. We have senior caring. So our investments is about the municipal upgrading, so in property environment, in consumption upgrading, so forth. We have set up, we have built up our own core capability. So this is the 2nd successful transformation in serious land. So 18 years of growth till now, we are looking at the future, the 14th, 5 year plan. So that's why when we discussed about it, when we look at look back and look into the future, we think that, our success in the past is because we have had a good strategy. We have a right strategy. We implemented a strategy firmly. So that's why We have one recommendation in the capital market, not change our strategy grid a lot, we will firmly stick to our strategy of investing maintaining our business position strategic position in the municipal investment development and operations. So as I said that, we are the City complex developer operator and investor. We have already built up our own core capabilities. So we have the capabilities to realize the further scale growth and operations of our properties. So if you look at our CAGR growth after 18 years, what is the story behind is that we have the core capabilities. We have very good foundation And in the future, how can we improve our capabilities even better? So this will be what we have to think about. As for the city landmark investments and operations, such as city mix, city mix, wild, so on and so forth, So these are the major city complexes. During the 13th 5 year plan, Our business growth enjoyed a greater lot of benefits from this landmark projects. So the next one is about the Municipal upgrading and renovation projects. So it also involves investments, developments and operations. We did the Taotong project. It was a renovation project. The biggest one in China So this is a brand new city. This is a wholly new city. It just started a new chapter to us. For the renovation total area is about 16,000,000,000 square meters already. And equity area is about 8,000,000 square meters already. So we have been able to acquire those projects And through recently, our senior management visited different cities and provinces when talking about renovation projects, when talking about our experience in sector renovation projects, we have won high recognition from our partners and the peers. A lot of a lot of governments send out their delegations to that on to Nanshan, trying to understand what are our best processes and our experience? So in terms of our renovation, I believe that there will be more growth opportunities for CRS Land. The 4th capability In my opinion, it's a very unique one. That is the such as the gymnasium, the stadium and the exploration galleries and the support. This is what CRS can do to invest to operate. So from the 1st the stadium for the university, that was our first project. Now we have developed and operating 7 such baked stadiums. So they are all of high quality, built up very quickly, running very well. So in Atlanta, So we have already formed our own capabilities of investing, developing and operating such major stadiums. In different provinces and cities, local governments asked for us to do it for them and there are more and more such opportunities. I believe that this capability can also provide more chances for us to acquire quality resources. The next one is about IT Business. It is based on the overall our operations to build up an ecosystem. For example, long term leasing, senior caring, industrial as well as education. So these are the supplementary or supporting functions so that we can improve our overall development and operations capabilities. So based on the 13th 5 year plan and looking to the 14th 5 year plan, We will focus ourselves on the 5 areas. Number 1, we will continue focusing on the 3 core business in City Complex Development Operations to grow even better and improve the quality to a higher level in terms of our development, the complex development, shopping mall development, as well as the stadium development and operations. So this is the 1st area we will focus on. The second one is that we will continue strengthening our capabilities, as I mentioned before, And number 3 is that we will go even deeper to the general business goals or business clusters to go even deeper in our existing deployment. Next one is that I'll stick to the bottom line our financial bottom line so that we can guarantee the secured operations as well as healthy growth. Number 5, as the investment, we look for the balance investment in the returns and in growth. So that we can guarantee that we can access the right resource. So overall, these are our there are some highlights regarding the 14 5 year plan. So after September, the 14th 5 year plan will be amended and finalized. So I believe that we will follow these directions to start a new chapter in the company. So overall, the during the 14 5 year plan, the management has full confidence to manage the company well and to continue to be the best performer in the industry. So Mr. Yu will take your question about the business growth, okay? Good afternoon. Investors. Remember that in March, we shared with you about our business growth and the business plan, I'm very happy today to share with you more information, particularly about the past few months. In March when we talked about our forecast this year, it seems that we have already our performance is better than expected. You have already heard about the figures from May. We already restored our business for example, the the sales, the same store sales, basically in May, our performance was, at the same level as last July, And in July this year, our overall business performance was similar to what it was in last July. So in July, the impact during the pandemic period has been made up has been catch up and Our performance is better than expected. So if the SNN is 2nd wave or 3rd wave, we have confidence that we can maintain such a growth momentum from August to December. Our covenants comes from 4 areas. So number 1, the measures countermeasures during the codem pandemic period. We have accumulated very good operation system in the past 18 years, we have also prepared contingency plans and all our employees are trained, how to react, how to respond. Our tenants are also managed while So over 70,000 people from the first day when the academic out broke, there was no infection, there was no there was no confirmed case. So this shows how well we have been managing our staff, our tenants. So this gives more confidence to our consumers and our partners. So this is, about our team's capability The second one is that our medium to high end positioning of the company during the account measures during the pandemic period we have been able to strengthen our capability to respond to such pandemic situations. So in those luxury brands featured shopping malls, we own the, most of the number of such luxury brands, commercially, we are working together over 90 international brands. And running over 2000 stores in our shopping malls. So these figures are the most. That this COVID-nineteen situation brought actually an opportunity to us. A lot of, buyers who would like to go by in the overseas markets, now they are buying locally, as Mr. Goa said, the international brands, those high end brands in the shopping malls, our sales increased much, much more than other shopping malls In July, there was a 44% of our growth. So this also gives us not only growth in business, but more confidence. Of course, this increase was very high during the pandemic period, but it won't be gone after the pandemic. A lot of consumers they came to us, they knew about our services, they knew they were connected to our membership programs. I believe that most of the consumers will stay with us in our stores. The third one is that We have been building up our own membership system. So among all the shopping malls in China, we are perhaps the first to set up such a membership system. Till now, we have over 10,000,000 So remember, we have 100 and 12,600,000 members already. During the pandemic period, our member system did help us create a lot. With the membership system, we were able to communicate to our consumers directly. According to the statistics, the consumption from existing members increased a lot. So comparing with the same period last year, there was a 10% of an increase among the consumers membership member consumers. So this is perhaps a very big advantage we have. Every year, we are expanding our membership system by allocating more in resources for maintenance of such a system. Even though this pandemic has brought great impact. However, our leasing rate has not been impacted that much. Maybe just the one percentage point So this is because for all this years, we have been treating our tenants as partners but not pure landlord and attendant relationship. In the past 10 years over 10 years, we have been setting up such a good relationship with our tenants. During their pandemic, we also did something to have them, for example, the rental concession to the tenants. So we are helping each other and our relationship It's even closer. We trust each other better. And our leasing rate has been maintained, which will be helpful for us to further improve ourselves. So based on what I said before, In the second half, we will have more confidence in delivering a better performance in our business growth. So when we communicated in March, I said that we would try our best to maintain the same level of business, but now we are expecting a single digit growth. I hope that we can hit 5% of our growth in our sales and in our business revenue. Through budget management in the company, we hope to reduce our cost and improve efficiency accordingly. And in terms of gross margin, we can also maintain a high gross margin performance so that our profit can also keep improving. So this, the points I want to share with you. Just now, when we talk about the prospect, I was a little bit quick, we'll now talk about the financials. Let me repeat. Currently based on our calculation, In 2020, our office buildings and the hotels and so forth the rental revenue will be 1,000,000,000. I calculated that if it is a 15% of our growth by 2025, we will have 21,100,000,000. If it is 20% for growth, in 2021, the rental revenue will be will be JPY 30,000,000,000. So why why that? Because we hope that we can mentioned 15% of growth, but 20% is also possible. So because we are opening more shopping malls, in the following 5 to 6 years, they will be ready to operate. So as for the office buildings, So the, we have a lot of office buildings. For the hotels, we have over 20 new hotels to be launched. So in the future, the rental income, we expect that there will be high growth of growth. For the shopping malls and office buildings. So the revenue growth will be conservatively speaking 15%. So by 2025, if it is 20% growth. And then that will be 1,000,000. And if the gross margin is 50% and then we'll be for JPY 15,000,000,000 of gross profit. So we are expecting about JPY 15,000,000,000 to JPY 20,000,000,000 of, of a gross margin So this growth will be very stable. During the 14 5 year plan, we can estimate in this way, plus the same store growth for the self holding properties, we have very good expectation on this segment. It's very stable. Okay. Thank you. Thank you very much. A lot of information. Thank you for taking the question. Next question, is from her TBS, Carol. Good afternoon, Annie. Good afternoon, Mr. Lee, good afternoon, management. I have two questions for you. The first one is about the land reserve, what are the channels of land acquisition? So in the public market, in the first half, you spent about 1,000,000,000 on land acquisition. About 30% of our total spending. What about the non public market? So what will be the gross margin for those non public market and land acquisition? I also noticed that you have 19 renovation projects ongoing. Monday in Guangdong, 16 of them are in Guangdong province. Mr. Lee said, Because you are very successful in the municipal renovation projects in different cities, And now other government, you're focusing on Guangdong because you've got advantages here. You've got experience here. All are you going to expand to your expertise to cover other provinces and the cities as well? The second question is, very simple one, is about the dividend payout dividend policy. Even though your core profit margin didn't grow, but didn't go a lot, but your dividend policy what will be the different policy this year? Thank you. Thank you, Tara. Let me take your two questions. The first one is about Land Reserve. The first of all, investment for a developer, investment is one of the core capabilities. So if you look at the ranking, perhaps it will be the most important one or the and most important one. So investment capability. It's true that from the very beginning until now, if you look at the industry, gross margin, the land prices going up And the selling price versus land price, this ratio has been declining. So this declining trend comparing with 2, 3 years ago or even 4 years ago, this ongoing trend is basically will be a normal. So this is very obvious in our adjustment From an investment point of view, you have to diversify your channels, including the Land acquisition, We go to the public market for land acquisition in the targeted cities, psoriasis, it fits for our philosophy. Of a quick turnover, if it is in the mainstream market, we have to participate in the project. For land acquisition. In terms of diversified land acquisition channels, we do have our own advantages including the renovation projects, including the stadium construction and and operations in the past. We are able to acquire land for those purposes versus successful. And this capability will also be utilized in the future projects in new renovation projects And we can also mobilize our resources to create such opportunities as including the POD So the land acquisition will bring more unique opportunities for us to access the special resources. In the first half, The gross margin for land acquisition is high was high. So overall gross margin Mr. Gu already calculated. It is not the final figure yet. It's just a rough figure. Overall, our the land acquisition gross margin, because this is a 0 premium price, of course, the price is much better than the then in the auction plan. Then in the auction market, in the first half, The total land acquisition number is 38,800,000,000 by the end of June. The equity equity land Just a minute. So Mr. Sheer, can you talk about the land acquisition of the debate? In the first half, The total the total land acquisition is point 9,000,000,000, including the equity land acquisition in the first half in the first quarter when the pandemic was very serious, We saw it as a very good window time, and we wanted to capture this good timing. San Beijing, Shenyang, Sujou, Effilas, other cities, we saw good opportunities of land acquisition and very good resources. In Q2, so there was a warming up in some cities. In the land market. Gross margin net margin was down at that time. We didn't simply follow the market, but just to be selective, So we stick to our principle for our eye orientation. Currently, in the first half, Q1 then the Q2, the, so including what mistakes this insert through diversified channels, from last half to the first half this year, we mobilized the different resources and diversified our channels of a land acquisition in Shenyang Project. It is now It is now undergoing. Now let me share with you a little bit more about the land acquisition. So JPY 58,900,000,000, number 6 in the city, in the industry, number 9, by the Equity Land acquisition, Q1 was the best season and best timing for us because of the pandemic. We saw a very period time, but for good timing, good one down there in Beijing, sohu and Shenyang in some core cities, we acquired a very good high quality land resources the will be expected to trend into sales in Q2 in some hot cities, the land price went up very quickly. And the land market was very hot. So during the second quarter, we didn't get involved a lot. But instead, we're sticking to our own ROI strategy. And we were very prudent in acquiring land resources in Q2. On 20th August, we have already acquired 40 projects. The contract sales contract price was 73,200,000,000 With the total floor area, GFA is 6,570,000 meters. And the average land cost was 99661 basically in Tier 1 And Tier 2 Cities. So over 80% of such resources are in Tier 1 And the Tier 2 Cities. So this basically fits for our the 3 guiding lines, as we said, in the beginning of the year, in Q3 and this Q4, We believe that it will be possible that we see more windows and more opportunities of M And A. So based on what we have acquired in the first half, the overall gross margin will be higher. The Alert acquisition is about 40% Is that about dividend? So I believe that this is a common concern for our shareholders and investors. So each year, we talk about a dividend policy. Sierra's land has been returning to our shareholders very seriously. In the past 5 years, you can see along with our business growth, CRS has been improving while dividend policy proved prudently each year from 2014 till now from 27% to last year, 35% So where you can see the CIs Land Management has been taking their reward to our investors and the shareholders very seriously. So this year, our business has been growing steadily and healthily. And our or the expectation of our business performance, however, we have confidence to deliver our targets. So therefore, we have decided to adjust our dividend policy as approved by the board. This year, there will be 2 percentage points higher as a third 7% dividend as dividend policy to reward our shareholders particularly those long term shareholders. Thank you very much for your support. Thank you very much, Mr. Lee. Next question. Ron from JP Morgan. Good afternoon, management. I'm Madron from JP Morgan. Two questions. First one is about development projects property. In March, we looked at your strategy in the development property. So at that time, the fee, efficiency is not very high just want to know, what is the situation now? What measures are you taking that to improve your performance in the existing cities? In the first half, even though the business performance was not bad, it's satisfying However, if you look at the top 10 developers and your saleable resources versus what you have sold, and they're quite similar. So from KPI point of view, from land acquisition point of view, your risk strategy How what can you do to improve your market share in the existing cities? 2nd one, came, please share with us about your shopping malls, the, the retailing revenue among these rating revenue, so how much is from the Luxury Brands? As Mr. You said, the Nante brands over two hundred stores, what is the contribution from them? Because we have already felt that CRS Land has got a lot of luxury brands, but we don't know how much they contribute in the retailing volume, the sales volume or sales revenue. Just now, you also mentioned your profit expectation. At the beginning of the year, you talked about is that is the low 2 digits growth? And now for the rental, you're expecting 15% to 20% of our CAGR growth. For the development business, the management said that that it will be 10% of our CAGR growth. So, combined with these two together, It means that there will be 13% to 15% of our take a growth. So will this be a indicator in your 14th 5 year plan? Thank you. Thank you. Your first question is about development property, the land acquisition strategy. I will take this part. Mr. Changdawi, Vice President, will add later. 2nd question about leasing business, Mr. Yiminka, where take it? For the development property, Just as Ryan said, CIS learned, we are entered we have entered into 85 Cities under 700s of our projects, ensure that the contribution from each project may not be that high. So we don't have any outstanding cities among all of them. So we have already expected to be so And we have also realized that your number of city development is too scattered, not deepened enough. Therefore, at the beginning of the year, we set up is overall strategy to focus on strengthening including the land acquisition. So actually it covers 2 things The first one is, in order to promote it depending, at this time, it is a process. We have realized that this problem and we have, we have to take, we have to act right away. This is still time. Because, after all, we have a very good city deployment base. Which is very helpful for our future growth secondly in terms of investment and deployment, we have to focus on the core cities and high energy cities. In order to deploy our developments. So from the beginning of the year, here now, If you look at our investment city now, you can see very clearly that we are shifting more and more to the core cities to the strategic cities. No matter whether it is a development or property or investment property, We are moving more and more to the core cities. In the future, in terms of our management structure, but we'll also adjust and reform our existing system so that We can optimize these cities so that we can boost the output from one single city. Each one of the single city each one of the cities. So no matter how many resources you have, as the market so big and you still have a limited resources. For the 14th 5 year plan, we will focus on the deepening and strengthening. So these shows we are product we are problem results are related and the process and the deliverables are related. So thank you very much. Let me add a little bit So as I said, that we are adjusting our deployment and structure. We will focus more on the high energy cities or the power cities, particularly the 3 city clusters in China, the core cities. You can see that from the beginning of the year, tier now, our land acquisition has been following this strategy. Secondly, from the cities themselves, There are 3 city clusters in China. And to some extent, we're also looking to the Bolton show of each of these clusters. Meanwhile, we're also strengthening the capabilities in some selected core cities. The third one, in those the core cities, we will make more efforts in development may wire in terms of investment, where we also cast a more importance to this and make more efforts. In investment. We will deploy more shopping malls. For example, in some core cities, Tier 1 Cities, we can deploy more the hot shopping malls in some of the high energy cities or the power cities. We will also allocate more resources. From project investment point of view, we will continue adjusting our own strategy and the developments, okay, about leasing properties, Mr. Li, please? Ron asked about the international brands and their sales. Actually, we didn't have we didn't calculate how much they contribute in the ourselves, but basically around 40% I can assure you. So because we are in our positioning, we focus on those the luxury brands in the mixed cities. So they contributed in our 8 mixed cities, they contributed about 40% or above. In each of their mixed cities, So those brands also contribute about 40% of the sales revenue. So the significance is not only in its own cells, but also it will bring along the traffic in their shopping mall as well as the overall sales in the shopping mall. We have seen developers in Mainland China, they have commercial buildings, they have shopping malls. They are also operators. So no doubt So in this market segment, we are the leader. So therefore, we will focus on two areas. So for those shopping malls, which you can see we have fulfilled our positioning, we will try to enrich such brand portfolio. And secondly, since we have new projects to be launched 1 by 1 in the future, We will continue cooperating with our partners for the new shopping malls. We hope that we continue to be the leader in this market segment so that we can attract more a greater number of such luxury brands. When I talk about growth, growth is also a very important consideration for us. We have confidence that after 2021, we can restore to the 2 digit growth in this market segment. 16 15% of growth in sales revenue and the sales volume. Thank you. Thank you, management. Even though we have prepared more time, for K and A, but Tom, just the flies. Now I would like to take the last question online. UBS, John, please? Thank you, Amy. Thank you, management. Two questions. The first one, your commercial operations capability, I don't see any competitor in China for you. And so that's why you have a very good peer, the negotiation capability. We talk about corporation with partners online and offline. To talk about this, Tencent set up a year community retailing So there will be maybe in the future, there will be more such corporations. So just the one for now, the second one is about the shareholding, including the IPO, will there be more corporations And your last question about the dividend. Messaging says that you're going to increase the dividend payout ratio by 2% So it's because your rental income increased. If If you can realize the 30,000,000 rental income in in by 2025 with a beta of the 15,000,000,000 So is it possible that your dividend payout ratio will also continue to grow? Thank you. Thank you for your questions. About onlineoffline. 1st, from the industrial trend point of view, the real estate technology or technology empowered real estate, this is a trend. The shopping malls, if you look at the consumers, the post-80s and post-90s, very often we discussed about this phenomenon, So after the stores are closing after 9 o'clock, 10 o'clock in the evening at night, what activities do they do? Very often you can see people see them that there was the hike of online sales at 11 o'clock or 12 o'clock midnight. So for us, for the commercial set, so we have to think about the combination of online and offline So this is a strategic consideration, no concrete action yet, but for the 14 5 year plan, we expecting to take some actions in this regard. And therefore, in terms of retailing corporation. There can be some equity cooperation, but so far, there isn't any arrangement for that. From a serious land point of view, be it a development project or the commercial project during the 14th 5 year plan, the real estate technology, the improvement for management, as well as the value improvement, definitely we will continue to think about it and prepare actions for it. So this is about your first question. The second question is about dividend. So the covenants, why we are paying more? Actually, we didn't think it in this way, as you said, to calculate as a 2 percentage point, where is it from? So to be honest, this 2 more percentage points is from our prudent and stable business performance. So far as well as our confidence of our future business growth. So that's why we increase it from 35% or 37%. I believe that in the future, this will be our strategy. This will be our policy for our dividend payout. At different times different stages of a business, will we consider review and consider the dividend policy, you know, the 2 reward our serious land shareholders, particularly those long term shareholders for their support and confidence. Since this is the last question, I just want to make one more comment. It's true that this year, the situation has been very, very special and nobody would nobody had expected such a pandemic at the beginning of the year And it is also true that the whole world was in the shock. For the industry, it is in shops as well. So it has been a very hard time for all of us. If you look at the total sales in China, it's been going down and the retailing volume is also going down. So that's why I agree that everybody has been working very hard and the CRS Land is also working very hard. It's only that perhaps we are a little bit better than others. In the future, such uncertainties will continue to exist and the pandemic is not fully over. There are still a lot of changes in the world economy. So in the future, So uncertainties will bring new pressure and challenges to our management. But I just want to ask all our analysts and investors to trust the SAS Land Management So we always prepare ourselves well to respond to the market. We hope the enlightenment mentality and, we hope that this year, we can reward our shareholders and those who trust us with better performance. Thank you. One second. Thank you very much management for your very detailed and informative communications. It's another that there are other results announcements by other companies and our friends may be in a rush to another. So this is the end of our results announcement. Once again, thank you very much for your time. We hope the pandemic can be over very soon. So that we can switch facing face and talk to each other facing face. Thank you.