Earnings Call: H2 2013

Mar 26, 2014

Investors, friends of the media, ladies and gentlemen, good morning. Welcome to China Mengniu Dairy Company Limited's 2013 annual results announcement. Before we start today's presentation, please refer to this disclaimer. To make sure that all of you will be given a good meeting environment, please switch off your mobile phone or turn it to the silence mode. First of all, I would like to introduce to you members of the management team in attendance today. Ms. Sun Yiping, Executive Director and Chief Executive Officer. Mr. Bai Ying, Executive Director and Senior Vice President. Mr. Wu Jingshui, Vice President in Finance. Mr. Liu Shengli, Vice President in Sales. Mr. Jasper, Vice President in Marketing. Ms. Zhai Mei, Assistant Vice President in Public Relations. Ms. Wu Wannan, CFO. Mr. Thibault, head of Mengniu Danone Fresh Dairy. Mr. Chris Kwok, Financial Controller and Company Secretary. Today's presentation will be divided into two parts, results announcement and Q&A. Ms. Sun Yiping will take you through the 2013 results now. Ms. Sun, please. Honorable investors, friends of the media, good morning. Thank you very much for coming to our 2013 annual results announcement. You can see our team here in attendance. We attach a lot of importance to this meeting because so many of us have come. They are members of our core team, and today there are some new members joining us. As you know that we are now cooperating with Danone, Thibault is the general management responsible for the Danone operation. He's now joining us in our management team. I'm sure every year we will give you a new outlook to investors. If you have any questions, please feel free to ask us. We are presenting results in Hong Kong. This is the fourth time. Well, when I have to meet with investors and the media, I will feel nervous. It's like presenting a report card, and Mengniu is very concerned about investors' reactions. We hope that we can deliver a satisfactory report card to investors. Today, I will represent the company to announce the results. Perhaps you have already read our results on the website. I would like to do an overview. In my presentation, I would like to enable you to understand what we have done behind the results. First of all, our 2013 results. In order to enable investors to see our organic business growth as well as our growth from M&A. Well, of course, we do not only rely on M&A to grow our business, there is also organic growth. These two segments are separately presented. In 2013, comparing with 2012 for our organic business, sales revenue was up by 16.3%. Originally, there were some problems, but we are still able to achieve the 16.3% growth in revenue. After merging with Yashili, actually, we have got this report with five months of results after the merger. Our total sales revenue is CNY 43.3 billion, up by 20% year-on-year. Gross profit from organic business was up by 22% year-on-year. After integrating with Yashili, overall gross profit is CNY 11.7 billion, up by 30.7% year-on-year. Next, EBITDA margin. EBITDA margin from organic business comparing with 2012 was up by 0.28%. After merging with Yashili, we're up by 0.4%. You can see that we keep on changing our product portfolio and we enhance our internal management. As a result, gross profit and EBITDA margin have risen. Net profit from our organic business, CNY 15.3 billion, up by 17.8% year-on-year. Five months after merging with Yashili, our net profit was CNY 1.63 billion, up by 25.2% year-on-year. Net profit margin from organic business, 3.67%, up by 0.06% year-on-year. After integrating with Yashili, we are up by 0.15%. In 2013, there is an adjustment in the accounting standard. For 2012, we have to have certain reillustration or restatement. As a result, some figures have been adjusted. Now, revenue breakdown. Liquid milk total revenue was almost CNY 38 billion, up 17.2% year-on-year. Percentage of revenue was down by 2.2% year-on-year. For ice cream, revenue amounted to CNY 3.023 billion, down 4.7% year-on-year. In 2013, we have repositioned our ice cream business. In relation to SKU brand and distribution model, we have put in place new strategies. In 2013, it is a year of adjustment for our ice cream business. Now, ice cream has a very clear development strategy. In 2013, we have made strategic adjustment for ice cream business. For milk formula, adding the five months of Yashili's business together with our own business, revenue was CNY 2.2 billion, up 393% year-on-year. This is a new business segment. Percentage of revenue was up 3.8% year-on-year. Other dairy products revenue amounted to CNY 253 million. It is a small segment. Liquid milk accounted for a declining share, but other dairy products were up in terms of percentage of revenue. It is going to make bigger contribution to our company. Liquid milk segment. Liquid milk segment is very strong for our company. UHT milk revenue was CNY 22,000 million, up 11.9%. Percentage of liquid milk revenue was down 2.7% year-on-year. In 2013, there is a shortage of milk sources. Within a very short period of time, we promoted products with less reliability on milk source. We developed some new products. If you look at milk beverages, our revenue was CNY 10.4 billion, up 29.7% year-on-year. Its share of the total also rose. For yogurt, we did CNY 5.4 billion. We have not included Danone's business yet. We can only do that in the second half of this year. This yogurt business is our own business. Revenue was up 18.1% year-on-year. Percentage of the total was up 0.1%. For liquid milk, we attach a lot of importance to our own product portfolio. Next, market share. At the end of 2013, for liquid milk, it does not include ice cream and formula milk. It is 25.4%. This is the market share of our company. We are a market leader, but it has slightly declined from 25.7% to 25.4%. For UHT products, it rose from 27.7% to 28.1%. In 2013, the market share of UHT products rose. For chilled products, it came down from 19.7% to 19.4%. You may be worried about our market share. We are working with Danone. We are going to have new products, and in 2014, we will enjoy high efficiency. For chilled products, we are still very confident. If we add Junlebao, we are still leading in terms of market share of chilled products. Monthly market share. This year, in 2013, in the middle of the year and also in the first half, there is a shortage of raw milk sources. In the second half, the trend of our market share is very good. It has continued to go up. The lowest point is 20.4%, and now we are at 26.1%. This is a very good trend. Recently, the shortage of raw milk has been alleviated slightly, but we will still pay attention to the milk source. Next, CapEx and cash flow. Net cash inflow from operating activities has increased. There is an increase by more than CNY 1 billion in 2013. CapEx in 2013. For properties, plants, and equipment CapEx, we attach a lot of importance to that. The CapEx is CNY 2.2 billion. The blue part is for properties, plants, and equipment, and basically, we have invested in Junlebao. We have reduced investment in plants and equipment. In the future, CapEx will mainly be in our star product with high growth profits. Big CapEx will be for acquisition, M&A. For M&A with Yashili and investment in Yuanshengtai and also Modern Dairy. In 2013, you can see that there is quite a big CapEx amount. SG&A expenses. In 2013, the share has risen for a few reasons. One, for our own business, we have changed our pricing arrangement. Here you can see selling and distribution expenses went up. Then we have increased our penetration rates. We have increased our number of salesmen, selling and distribution expenses have risen. In terms of our selling and distribution channels, this is something we must do. We think this is acceptable. After merger with Yashili, their selling and distribution expenses are higher than Mengniu's, the total is higher. General and administrative expenses, there is an increase because of the purchase of shares. As a result, these expenses rose. For our other controllable general and administrative expenses, we have done a good job to control costs. Operating efficiency index. Inventory turnover, receivables turnover, and payables turnover. For inventory turnover and receivables turnover, in 2013 were better than in 2012. For payables turnover at the beginning of the year, because of the increase in price of certain raw material, we made prepayment in order to lock in some low price. Payables turnover is slightly worse than 2012. Yashili also encountered the same thing. At the beginning of 2013, they locked in a lot of low-price raw materials. Comparing with 2012, we are a bit worse than 2012. Now, I think investors will be very professional in analyzing our data, and you have analyzed our industry and other companies as well. In the roadshows in the coming few days, I look forward to having better communication with investors. Now, you may compare our financial data with other company's data. You can give us some good suggestions so that in 2014 we can be more targeted, we can have better strategies to improve our operating efficiency. We attach a lot of importance to our meetings with investors, especially our IR department. You are all shareholders. You do have the right to give us good suggestions. You can suggest some efficient measures or effective measures to improve our results. Part 2, 2013 business overview. Every time, we want to make sure that what we are presenting is consistent. Number two, we want to make sure that our behavior is in line with our strategic plan. This is something we have been doing. Yesterday, we just had a board meeting. The board is of the view that the management's action is really in line with our strategy, and all our plans are very strategic. Now I would like to present to you things that we did in 2013. One, strengthened quality control across entire value chain. Safety must come first. Number 2, promoted key brands with innovative marketing. We want to have a more comprehensive selling system. We want to build a more comprehensive sales system. We expand the platform through strategic cooperation. In 2013, according to our market demand and our own company's development, we have done this because we faced raw milk sourcing challenge. We grew steadily despite challenges in raw milk sourcing. We expanded financing channels with high credit rating. From the first day I met with the media, I proposed this entire value chain from upstream, midstream to downstream. Next month, I have been with Mengniu for 2 years, and when it begins, when this value chain process begins, we have been perfecting a very complete organizational structure from upstream, midstream, and downstream. We have benefited a lot from it. In 2013, we were not complacent. We continued to build the system. If you look at the integrity of the system, execution, and so on, we have achieved good results. We have drawn a conclusion. If you look at quality management and system building, we think that technology is the guarantee of quality. We must have good system, but without good technology, we won't be able to do good quality assurance work. In 2013, we invested in a number of technologies to make sure that we can avoid some man-made problems. We have invested in equipment and technology. In terms of quality assurance, this is going to be our consistent direction. We believe in the power of science and technology. Recently, I am working with IBM to see how data can be automatically extracted. In the future, in terms of quality management, things will be more transparent and on real-time basis. Apart from system and technology, of course, we do have a responsibility system. The person in charge of each unit and department will be the person in charge of the quality. Of course, there is never a destination. We have to continue to improve. Every month, all the departments, in all the quality meetings, we have never been complacent. Besides, we continue to enhance the scale of our ranchers. The scale has gone up by 1%. Now it's at 54%. This year, we will continue to make use of loans or prepayment to continue to help the small to medium-sized ranchers for them to be expanded and upgraded so that we can have a more guaranteed supply. In the past, from 57 brands, we had reorganized 10-odd brands, and they are categorized into star brands, backbone brands, profit contributor brands, and opportunity brands. In 2013, we attach importance to enhance the growth of star brands so that we can have better profitability. We want to invest more in opportunity brands to have more room for development in the future. In 2012 and 2013, here you can see the share of star brands rose from 30.5% to 34.9%. In 2014, we'll continue to do this. For backbone brands, 49.2% down to 44%. These backbone brands have been coming down in contribution. Profit contributor brands, 10.2% to 8.3%. Basically, we won't invest additional expenses into these brands. Opportunity brands, 1.5% up to 3.1%. What are these brands? Naiture, Cotte, Chow-Huan, and so on. For these 2 brands in 2013, we started to launch them. The effects have been very good. For the yogurt, we have seen good performance because we only started in July in the product sales, but looking at the market, they have been performing well. If you look at our working partner, they are very confident in the product. In 2013, because of market changes, now users are younger and digital, and they are very trendy. In 2013, our marketing department changed from a traditional approach to a digital marketing approach. In 2013, we made a number of attempts in terms of expense investment and interaction with customers and consumers. We introduced many innovations, and this is going to continue even faster in 2014. In China, there are changes in users and consumers. In the future, we are going to be consumer-oriented. Wherever users are, we will be there. In 2013, here you can see Cotte 3D music, and our investors and media have tried that, and the effect is quite good. This is the first time that a company is using 3D music in promotion. In 2014, we will continue to do this to interact with consumers. We will use the 2D code innovation. Also, here you can see Steve Jobs to present our no preservative, no additive concept. Here you can see the X Factor. We have made a number of attempts. In terms of innovation and reform, in the future, we will try to make profit from our brand as well as our product. In 2013, many attempts were made. In 2014, we will see a lot of challenges. In 2013, our brand value. We are on the 23rd position, up one position. Then brand contribution rates in China. If you talk about the brand value of all the brands, we are number 2. Baidu is number 1. In 2013, even though our brand value is only up one position, but for overall contribution to the brand, I think people recognize what we have done. In 2013, we built a more comprehensive sales system. Here you can see we continue to do this. We increased the number of point of sales. Last time, you asked whether or not 500,000 points of sales are enough. Well, we continue to increase POS. In the Chinese market, there are still many opportunities, and our coverage is still not enough because there are so many more opportunities. Comparing with Coca-Cola in the past, if you look at each POS, I think there are still a lot of opportunities. We have to continue to increase the number of POS. We boost the penetration of sales channels. In 2013, it is the first time through organization structure, we integrated the three products. In October 2012, we chose the appropriate personnel, and then in 2013, for our 20 regions, we completed the integration. For the first time that was the regional management approach. This year, it is not easy for the sales team. The organization structure is new, the personnel is new, the teams are new, the model is also new. I really need to thank the sales team for what they have done in 2013. In 2014, they will be more experienced. When all these things are integrated, first, we will be closer to the market because we adopt regional management. Our resources and efficiency can be better integrated. Number 3, with CBU, RBU, we build different sales models. In the future, our channel penetration can be better. This only started in 2013. 2014 is also a very important year, and we launched CRM system and SAP. In 2013, on December 31, our CRM 1.0 was launched. Now, at the first instance, we are able to manage the inventory and sales of all the sales distributors. This year, we continue to work on expense control and the CRM system. In 2013, we built two important teams. In the past, our account management teams were not professional enough, and there is no performance appraisal. In 2013, we built our major customer teams. Their professionalism still needs to be enhanced. Comparing with 2012 and before, our team is now more professional. We also built our e-commerce team, or what we call the innovative team. We built a team to look into new selling models, especially e-commerce, WeChat, telephone sales, and so on. These are new selling models, and there is a designated team working with the IT department. In the future, we will use better IT technology to support our selling. In 2013, with Modern Dairy and Arla, Danone, and our merger with Yashili, we really did a lot in 2013. We did not identify these all of a sudden, but all these are based on our five-year plan. We want to develop our chilled product, so that is why we introduced the best yogurt producer in the world. We want to have breakthrough in milk formula, so that is why we acquired Yashili. All these are in line with our five-year plan. In the future, all M&As will have to be in line with our strategy. It will not be the case that we want to achieve short-term business improvement to do M&A. We will analyze future market changes, and we will look at the needs of our own strategy. In 2013, we expanded financial channels with high credit rating. We made this attempt in 2013. This is a challenge and test for our team. If you look at S&P and Moody's, they gave us very good credit rating. Now we are a market leader. We have experienced international management team. If you look at our management team, over one-third of the members belong to our original team, and one-third has experience in Coca-Cola, and more and more of them worked for foreign companies in the past. In fact, this is a management team merging three cultures. In 2013, we worked together well, and we exchanged experience among each other. I think there must be a balance between system and speed. In the past, Mengniu developed very rapidly. Everything was done fast. Many international companies attach importance to systems and planning. Mengniu is of the view that the foreigners are slow, but the foreigners may think that Mengniu is not doing things in a well-planned way. In 2013, we have got used to one another. We recognize the importance of the systems advocated by the foreigners. Now the foreigners also work very fast. They always work overtime. We have maintained our speed concept. At the same time, we use good systems to develop good results. There must be a balance between system and speed. If Chinese enterprises want to be internationalized, they have to face this kind of conflict in culture and work model. In 2013, we made attempts. In 2014, we have a new challenge because we have a new member of management from Belgium. Mengniu is really very good. We are open-minded. In the process, we have good sources of milk. In 2013, we issued a 500 million USD debt. This is the first time we have done that. We went to London for road show and we did road show in Hong Kong. Many investors in London did not know much about Mengniu, and through this issue, we have got this credit rating from the rating agencies. With such credit ratings, we experience more stress. We have to continue to achieve good performance in order to make sure our credit rating won't be downgraded. In the future, we want more people to know Mengniu, and this is going to be more pressure for the management. We will set higher targets. We are lucky that we have been given such good recognition, and this is very good word of mouth for us. In 2013, we grew steadily despite challenges in raw milk. In the interim report, there was a shortage of raw milk and prices went up a lot. Modern Dairy announced results, which were good, and many other listed companies were also well-received by investors. In terms of downstream, we rely a lot on the upstream companies, so there are a lot of challenges and pressure. When there is inadequate milk supply, we reacted very fast. In 2013, we did a lot to ride out the difficulties. We increased holdings in China Modern Dairy. We invested in Yashili. We built self-owned ranches. The management team has been built already. We introduced financial investors into our company. We reacted fast in 2013. We optimized our product mix to improve margin profile. Our decision-making was fast. Every month, all the members of the core management team analyzes all the performance indicators. This has been very effective. When we work together with common goal, this is a good way to make sure that the East and Western culture can integrate with one another. We optimized our selling price. In 2013, sales volume increased. If you look at different products, we also adjusted our selling price. Just now, I did an overview for you concerning things we did in 2013. If you have questions, please raise them later on. I think you will also be interested in what we are going to do in 2014. This is related to our future development. Now, I use this term IPO. I think you are familiar with this term. You'll be excited by it, so I have to come up with a term that is familiar to you and something that you will be interested in. That's why I have come up with this term IPO as the keyword for 2014. First, it's easy to remember. It's focused. It's simple. I means innovation. How can we achieve innovation in 2014? Chinese enterprises need to be transformed. We are in the era of mobile internet, so many consumers have changed their behavior. We want to achieve marketing innovation, system innovation, and product innovation. What is the I item project? In the company, there are 15 cross-system projects. They involve marketing innovation, product innovation, and system innovation. For marketing innovation, we will use more digital media and the share of digital investment will be doubled. We won't only place advertisement on the digital media, but on mobile internet, we will interact more with users so that consumers in the interaction process can experience our product. We want consumers to experience a very happy feeling. Yoyi C, if you look at the label. We've learned from Coca-Cola. For Yoyi C, you can see all these attempts. The marketing department is being pressurized by me every day. I am asking them to shift from traditional to digital mobile internet media. They have to grab the post 90 era generation. In the past, with many suppliers, we used the procurement model. I wanted a lower price and they wanted to increase price. Now we have introduced a new concept. Suppliers and our company set up an innovative team to enhance the value chain. Now we have already got over 10 winning ecosystem projects. These suppliers are all world-class suppliers. They have globalization and globalized resources. They can give a lot of help to us. This is what we mean by the winning ecosystem. We will have our own brand to work online. For product innovation, we will continue our efforts. In the future, good products will be most critical, no matter whether we are talking about marketing or system innovation. We will go for high margin and low sensitivity to raw milk products. Now for our new product, if their gross profit margin is lower than a certain threshold, they can't be launched in the market. We need to offer more choice to consumers. We need to look into the price of milk. Last year, I was at the Japan IDF meeting. I met with many European and New Zealand companies. They did studies not surrounding a certain product. They said they discovered milk value. If you use scientific ways, there are a lot of things, there is a lot of value in milk to human health. This is a direction of our future innovation. We have organic products, and also the banana milk and also the 2D code products and so on. In the future, there will be banana milk ice cream as well. For product innovation, we will do a lot of things. We have introduced a lot of new products. In fact, we did this very fast. But the life cycle of the products is not very long. In 2013, all new product launch is based on our innovation process and cycle. When a new product is launched, there is already a complete plan. For each product, there is very, very good information. In the past, even the senior management didn't know when a new product was launched, but now it's not the case. The second I is integration. Strategic integration. Mengniu and Danone. This is a new team. To set up a JV, it takes a process. In December 2013, we split accounts of Mengniu's chilled product segment. In January 2014, we passed anti-monopoly review. In March, we obtained production certificate. In Q2, there's injection of Danone's chilled product business and assets. In June, there will be the establishment of the JV. What will we do in the coming months? We did deep business coordination with Danone. They have selected five cities to do an attempt. They will use Mengniu's team to do this testing out. The two teams are working together. In all the chilled product factories, good preparation work has been done. In the future, we will continue to improve margin of our chilled products. I am very confident about this. I think Danone's team is really very professional, especially in terms of operation. Our profit margin of future chilled products will be enhanced. In the future, we want to optimize brand and product mix. Mengniu's products and Danone's products will be leveraged, so that there won't be competition among our products, and our profit margin structure will be better. We will capitalize on Danone's operational efficiency to improve our operational efficiency. During one-on-one meetings, I can give you more details about Danone's operational strength. After setting up the JV, we learn how to do prudent operating and CapEx. In the past, in terms of CapEx, we were not really very systematic. Now we're going to improve. With Arla, we have started the imports of organic milk and UHT milk. This year, Arla will make more investment in Chinese brands. They will invest more in its own brand in China. In the past, they only relied on Mengniu. Next, IMF. We offered Arla's resources to Yashili. Yesterday, a contract was signed, so Arla will be to back and endorse the raw milk supply. The products come from Europe, and we will have closer cooperation with Arla. This year, as you know, imported business has a big market share in China, and it's good that we have a good working partner with a rich product line, so we can specialize more in Arla's business. You may be interested in Yashili. Yesterday, Yashili presented results. Their share price came down quite a lot. Perhaps communication has not been clear enough. I need to help out a bit, and I hope in the future you will show more interest in Yashili. Our own results are quite good. In 2014, for Mengniu, we still need to enhance our organic growth. In August, we completed the share arrangement. Now, there are two things that still need to be done. Our board has been reorganized. Yashili's board has been restructured. More professional directors are brought into the board. There is a renewed five-year strategy plan. We are still not happy with the first version. Mengniu will use our experience to help Yashili. This year, what will we do? We'll use our experience to promote Yashili's innovation and transformation. Yashili is a very, very sound company. When we acquired Yashili, we considered very carefully. They are very sound company, and their team is also diligent and practical. But we needed to inject more innovation and transformation into them. For IMF of Yashili, it is a good potential business with a lot of prospect. For Yashili, if you look at their product line and their brand line, they should be rationalized. In the past, they are sales-driven. In the future, they should be more brand-oriented. They should improve their products and communicate better with consumers. In 2014, there should be a more strategic integration with Yashili to help them achieve better innovation and transformation. Later on, you can also ask some questions about Yashili. Next, P, performance. Efficiency and effectiveness. We have to streamline many of our processes, and for our ice cream segment, we have reduced the number of SKUs. We want to do workflow optimization and procedure optimization. In the past, for our performance, we used Word and PPT and now data. P means performance. We have been very effective. O. O means open and transparency. That's the sunshine culture. We are talking about cross-country, cross-system, cross-culture cooperation. We are most worried about system, and we are worried that there will be a lot of bad mouth behind each other. At first I talked about innovation management, and there are a lot of tools. Of course, many companies can help us at the same time, but for our internal culture, it can only be built by ourselves, so we need to be open. There is Oubiao internally. What is it? What does it mean? I form the project name, team members, value built, and so on. There's the P form, performance. Then O form. O form is, in your daily work for all the systems, if you have any questions, please write them all down. When it is presented in written form, the management can discuss point by point. To my right, there are so many members of the management team. They are all-powerful. They can build a very transparent culture. How can we achieve sustainable development? I think culture is a soft power. There are many tools which we can rely on information company, but for internal culture, we can only rely on ourselves. So IPO, I form, P form, and O form. For Mengniu, we are very transparent. In 2013, we have established an internal management system with top 20 senior executives. There are people originally from the Mengniu team. Some of them are also from outside. Then top 100. Mengniu 100. Top 100. Mid management or above. From 150 people, we have selected 100. Then top 100 junior. They are on officer rank. Then Mengniu 100 MT. They have worked for us for 3 to 5 years. Then Mengniu 100 GT, graduate trainees. Every year, we recruit 100 graduates from universities, and they will be placed on the front line in the sales department. They will work with our working partners for 2 years. This is a talent development structure. In 2014, the conclusion is we will focus on quality and safety. Quality and safety will be our top priorities. We will invest in system and technology. We will introduce working partners. When we expand our vision to the global world, we realize that many other companies have many good ways for us to learn from. We will attach more importance to customer experience. If you look at our marketing, our packaging, customer experience, we want to focus more on that in 2014. We will try to achieve healthy development of the industry. In the industry, we must go for healthy development. We cannot only strive for our own interest. The industry's health is very important. In 2013, we did a lot of work to change people's misconception about milk. In 2014, we'll continue to focus on this. Next, our mission and vision. In the past, our vision was to become most professional, most specialized, and best quality company. This has not changed for our vision. Well, in the past, we focused more on ourselves. Now we attach more importance to consumers. We want to be consumer-centric so that we can be very innovative and need-oriented. We can lead the food company to offer health and nutrition. Our mission, grow with our clients, employees, shareholders, and all stakeholders to create a winning ecosystem. We will grow together. The ecosystem, there will be more value arising from our value chain. Future business layout. in 2013, we made new changes, and there are changes in our structure and organization. We have established business. Our own business, our UHT, our chilled products, our ice cream, now they account for over 90% of our total business. We have developmental business, the IMF business from Yashili, and we hope in the future there will be better growth. For the core business, they have to be more sound, and then there will be embryonic business. We have set a JV and then we will do a plant-based business. It started in 2014, this embryonic business. In the future, we will use innovative ways to do the embryonic business to achieve rapid growth. Finally, there is investment business. Our investment in Modern Dairy and Yuanshengtai and Fuyuan Dairy, all these are investments. For these four core segments, we have established business, emerging business, embryonic business, and investment business. Our division of labor will be clearer. In 2013 with our strategic layout, we have achieved some changes, and in the future for each segment, there is a clear strategic direction. Our resources, our talent arrangement, our strategic plan will be clear, and we will be confident in all of them. I have presented to you our 2013 results and what we are going to do for 2014. I think you should also be concerned about our future development, not only about 2014. Every year, we reveal our future business plan for the coming five years. We don't only look at the annual budget. We have already developed a good work habit in 2013. This will continue in 2014. Results of one or two years do not represent everything. We will say that we have achieved stable growth. There is still a lot of room for improvement. Now, we have a new team with multiple language and multiple cultures. They are from different backgrounds. Then we have done a lot about our system. This cannot happen overnight. We have to build things bit by bit, as said in our TV commercial. This year, we will encourage our management and our employees to work with the details bit by bit. We should not be too happy when our results are good, and we should not feel depressed when our results are not good. We have to be clear with our strategy and our business plan. At every moment, we have to do a good job. This is a rationale or mentality that I would like to cultivate in each and every employee. With our hard work, we hope to generate good returns for our investors. Thank you very much.