Earnings Call: H1 2021

Aug 30, 2021

Distinguished investors and media friends, good morning. I would like to welcome you to attend the VENKEE 2021 Interim Result Announcement. We're going to have the online streaming and teleconference for this meeting. So please just go to our official website, yixuanfa, miniappandchengi.com to join us for this meeting. The conference call. Well, right before the interim result announcement starts, please allow me to introduce you our management team representatives. They are our Chairman and CEO, Mr. Zhu Zhou Zhen our Vice Executive President, Mr. Liu Xia our staff, Lou Xiao. And I'm the Board Secretary. My name is Zhu Xi. Well, we are going to have 2 parties of this meeting. First of all, I'm going to on behalf of the company, represent you through the interim results. And later, we're going to welcome our management team to share with you some of the operational highlights and to answer your questions. Well, for this interim result, we have a result to review operation review and future prospects. You can see that all the background information Shen. And the picture is being taken from our rental housing business, the port apartment. And this is our club city Shenzhen and weighs 3 30 rooms. And on this picture, you can also clearly see that this, the community music festival along with the residents of the port apartment project and which can actually provide the human touch to our residents of a port apartment. Please allow me to and to walk you through the operational highlights. And this is also another picture in showing the Quanzhou community we have in Beijing. It is also a port department. It's a 1st market oriented collaborative land to build long term rental apartments in China, which has built 5 single rooms for fitness, Girls, Fats, Soho and Living Broadcast. And these collective land projects being rolled out in Beijing gradually, it can also help to take care of the demand from the market and also help to stabilize rental fees in the market. Please go to Slide 4. On Slide 4, we provide you the result overview. You can see our sales size is RMB335,400,000,000, by 10.6%. Revenue is RMB 167,100,000,000, up by 40.2%. Net profit attributable to 20 Equity Holding is RMB 11,100,000,000, down by 11.7%. It's because of the reduced in the profitability of the property development projects. And you can see that our profitability and before tax was also down by 6%, down with YY 20.90. The contracted sale of the project CellDrop Not Yet Booked. It's JPY 781,900,000,000 up by 12%. Our net gearing ratio is still 20 point 2%. The gearing ratio excluding recipients of the payments is 90 69.7%. Cash to short term debt ratio is 1.67, and our overseas crediting ratings, still the leading one in the market. And in H1 of this year, we have 95 newly developed projects with total GFA of 50 point 6,000,000 square meter, where last year we were ranking 160s in the Fortune 500, up by 48 positions. Well, regarding the non property development business for the retail housing, we have 148,000 stores in operation ranking number 1 in China. Our average occupancy rate is more than 95% and also the consolidated NPS in H1 of this year is already 85%. And you can see our e tron revenue is 10,380,000,000 yen and also logistics and warehouses, the revenue from the managed project is RMB 1,340,000,000, up by 64%, where we are now serving many of the unicorn companies and the tech companies and you can see that our we have already penetrated into more than 21 cities with 31 logistics with 31 projects. And regarding the retail property development operations, we are also developing very robust. For logistics and warehousing, We have a revenue managed project of JPY 1,340,000,000 and up by 64%. And we're also guiding to the medical logistics as well as RD services. This. Regarding the rate of property development and operation and the accumulated GFA is 9,800,000,000 and the Occupancy rate for project more than 3 years is 93.9%. Please go to next slide. This is our Nantou Asian City project the Port Apartment. It was located in Nantou Ancient Town with a history of 1700 years, and it is also a micro renovation project to the old city in cooperation with National District Government. Jointly speaking, it provides a lot of units for the rental services, which can help to change the original ecological system and the Kalki space and the single industry, which were there before. Well, let's come to next slide, Slide 6. We maintain a sound financial policies for a long term period of the time. Our cash on hand is JPY 195,200,000,000, 2.3 times of the short term interest bearing liabilities. And still, You can see that we still have a very good development and our navigation ratio is 20.2%, the remaining 40% for 20 consecutive years and the interest of borrowing liability is JPY 268,700,000,000 accounted for 30.7 the total assets. Interest borrowing and liability due over 1 year has accounted for 68.6%. And still, bank borrowing and bond the major way for the interest bearing liability structures. And 74.6% from the TIC and 25.4 percent from overseas, 58% are floating interest rate and 42% are fixed interest rate. Let's go to Slide 7, where we also maintain a leading credit rating and a low financing cost in the industry continuously. And for Moody, we have the BAA1 rating and S and P Global, we have BBB plus well for CCXI. And you can see that we still maintain a AAA rating and we are all being recommended as stable operation. I think many of you may worry about the so called threshold criteria. We're still ranking at a green entire requirement. And you can see our comprehensive financing cost was 4.27%, down by 32 bps y o y. Coming next, please come to Slide 8. On Slide 8, the backdrop is the Shilu community of a port apartment in Suzhou. It won a lot of international design awards and is also being regarded as the the most beautiful Port of Parliament projects and which inherited the Jiangnan development philosophy and elements and also Create More Cultural Value Into the Old Gousu District for Suzhou City. Coming to Slide 9, I would like to share with you the property development business. And the total sales reached JPY 354,430,000,000, up by JPY 10.6 yoy And the average selling price is RMB 60,171.5 per square meters. And you can see newly commenced construction area reached 70,480,000 square meters, down by 4.8YY, but it actually represents 55.5 percent of the plant at the beginning of the CCE. Completed floor area reached 12,250,000,000 square Meters, up by 40%, represent 34.2% of the plan at the beginning of this year. Well, you can see that we're ranked as the top 3 in 38 cities, ranking 1 in 90 cities, ranking 2 in 70 cities and ranking 3 in 2 cities. So our property development sold but not recognized amount reached RMB 781,910,000,000, Increased by 12% in the beginning of 2021, and we realized a recognized area of 11,150,000 square meters, up by 6.2% and realized a recognized income of JPY 144,300,000,000 up by 11.9%. Slowed but not recognized contracted amount in the consolidated statement was RMB 781,910,000,000, up by 12%. Operating profit margin before tax is 24.9%. We still maintain a rational investment, remaining resources to meet the future needs of the development. Adhering to the rational investment and the new investment, 92% of them are located in the 1st and the second tier cities. Newly acquired GFA is 50,060,000 Square Meters. Planned GFA of the new projects attributable to our Bancia Equity Holdings 11,010,000 Square Meters. Total land primary is 112.3 at 63,000,000,000, average land primary for newly projects is RMB 700,000,000 to 4.80 per square meter. And the total GFA under construction and planning is 160,660,000 square meters, among which under construction is RMB112,830,000. And the JFA for the projects under planning was 47,830,000 square meters, still meeting our future appointment. On the right side, we show you a proportion of the land price, including the southern region Shanghai, Beijing. Please go to Slide 11. Now we're going to report you on the rental housing business. In H1 of this year, and we still maintain 1st in the country in terms of the scales of the centralized apartments. We're penetrating to 33 cities. We're ranking top 3 in 24 Cities and Ranking Top 1 in 9 Cities. And jointly speaking, we have 6,139 units commenced opening in 16 Major Cities. And jointly speaking, in 33 cities, we have totally 192 1,000 units in operation. And the operating income is JPY 1,320,000,000 up by 25.6%. The occupancy rate In operation, it's 95%. And we also actively participate in the formulation of the standard and contribute our voice to the industrial development. We also have a high customer satisfaction. We jointly served 510,000 customers. The NPS reached 85% in H1 of this year and the lease rental renewal rate is 58%. And we built a 24 hour youth innovation and ecological community to empower talent growth, working with the local community. And we also built the port running group, port game community, port and friend volunteers groups. And we also have the public lecture of Hong Kong University, ICB, to empower talents in multiple aspects. And we are also working with community KORs and Port France to organize several activities like reading, yoga and concert to help to build the synergy of our community. Please go to Slide 30. Regarding rental housing business, we also started to work with the government board in order to contribute to the returning the talents with providing them the warm rental life. We have already provided over 30,000 talent rooms. And in Shanghai, Beijing, Shenzhen, Nanning, Nanning, we're working with the local government to help to build the youth station to make sure that more local young people will be able to enjoy good housing and the pool arrangement apartment also won the 2020 to 2021 Annual STRENGTH Benchmark Awards, and we will also be awarded with the Youth Civilization and Shenzhen You's May 5th Medal the Shenzhen Pool Department. We also started to work with 166 well known enterprises, Cobre Industries, the Finance Technology Manufacturing and Constructions and providing 1 stop living service to nearly 35,000 employees. Please go to Slide 14. For rental housing business, it has already Have collective construction land rental community, self owned land construction rental housing, urban village Joint Operation Transformation and Operation and the Government Rental Housing Construction and Management Light Asset, ePC plus 0 Business Model. You can see Beijing Port Apartment, Changsho Temple Community, Shenzhen Port Apartment, Cloud City flagship store Shenzhen Port Apartment, Nantou Asian City and Jinan Port Apartment the Jiayuan Talent Department also greatly established. We also established close relationship with SOE and other big enterprises in Shenzhen, Chengdu, Jinan, Changchun to acquire 6,700 new properties in H1 of this year. Regarding Wanwo, the revenue reached the 10,380,000,000 yen up by 33%. And you can take a look at the brand tree on the right side. We take one step further. We launched a new product named Wanyu Secura Pro. In the middle side, you can also see that in the revenue structure, residential property service still represent 55 percent commercial property and facility service 31%, and which means we have a diversified the Business Mix. Please go to Slide 16. On Slide 16, we show you the Onshore Community Space Service. We jointly the 3,490 projects in 105 Cities, especially Pulin, the real estate brokerage system under Wangwu, record 647 increase in new house sales over the same period of last year. Guangzhou Pulin has already entered into strategic cooperation with Guanxing Properties and also provide brandy and technical support to Guanxing Properties. And WEENKI also started to make sure our service range of property service being further expanded from the after sale stage to the signing stage. We have already certified 887 frontline property service managers to provide the full circle service. And also we provide special actions for beautiful community to cater customer needs. You can see from the picture for some old communities, which has been renewed by our beautiful community special action to provide a high flipping quality to our customer. The Now let's go to Page 17. Also for Wanwo, we focus to Make in-depth integration of technology and property management to facilitate front end operation and remotely. When we refined and settled 30 years of Experience Residential Properties into Business Processes. And we now have 2,000 projects under management are going through online operation. The And on the 1st July 2021, the Wuhan Digital Operations Center building of Wuhan was officially opened for use. Any technology and services to be provided in the future will cover more than 10,000,000 customers. And we will build machine, parts, people, Space Intelligence Solution Capability and promote the structural transformation of on-site services from labor intensive to Mechanization Intelligence. And also, you can see the picture on the right on Page '18. In terms of retail businesses, 1, we released an integration and brand the utilized brand advantage of KUSHMAN Wakefield and Wipe Services. We serve more than 1900 corporate service projects. With more than 15 leading Internet Technology Enterprises and Unicoms, including Alibaba, Tencent, ByteDance, Baidu, jingdong.com.netease, etcetera, among which more than 20 enterprises had a market value of more than US10 $1,000,000,000 out of the 10 Internet Enterprises in China in terms of market value, and 8 of them had become customers of Cushman and Wakefield. New added added ultra high rises projects in the first half of twenty twenty one such as Jinan North South Projects. These were shown as below. Page 19. In terms of the comprehensive governance information in Urban Services, we are We Set Our Food in 21 Cities and Regions. We provide urban service integration service, including Urban Space Management, Community Renewal Operation, Community Collaborative Governance and Ecological Housekeeping Services. And we covered 21 cities, including Beijing, Shenzhen, Guangzhou and Xionguan New Area. In the first half of the year, 11 new projects were acquired and 31 projects were acquired in total. The Fubal Street Office in Shenzhen, served by CD UP. You can see that it was ranked number 1 in the environmental assessment for 3 consecutive months. And the Shatto Street Office was also served by Sidi reached an average ranking of 13 this year from the average ranking of 41 last year. And now let's go to Page 20. And here, I will talk more about retail property development operations. In the first half of this year, we have a 3 shopping center commenced smoothly. You can see the picture on the right hand side, Chengdu in city, Huizhu in city and Shanghai, Zhao, Huizhu in city. And we have an aggregate of about 0.31000000 Square Meter, including 3 shopping malls. The. And also, the revenue from Retail segment Property Business amounted to RMB 3,63,000,000, representing 1 on 1 increase of 19%, While revenue from SCPG retail parts amounted to JPY 2,450,000,000, representing an increase of 21.6 percent, Occupancy rate was stable. The overall occupancy rate of the project in operation was 92.3%. The And average occupancy rate of the top 10 revenue projects in the first half of this year was 98.5%. Digital upgrade and enhancement of operation management levels, the Digital Membership Operations System cover 64 projects and the number of SVPG members reached nearly 12,000,000 the And monthly active members reached 2,000,000 with a 1 on 1 increase of 83%. And also, we strengthened online and off slide interaction. SAKU launched its Insha factory label, made its online debut in XiXi City, Chengdu held the first blue plus blue art space TOGET platform for interaction. Now let's go to Page 21. On this page, I will talk more about the retail business of the age of the shopping malls and area of the shopping malls and the shopping malls that are going to be our plans in the second half of this year. For example, in Hangzhou Aoty, Wenzhou In City Mega, Shanghai Songhian In City, Shanghai in JINJIANBING's new shopping mall, etcetera. The Now let's go to Page 22. In this page, we will talk more about Logistics and Warehousing of the businesses. The And the aggregate GFA of projects in operation is 7,970,000 square meter the and revenue increased to 64% Y on Y. And revenue from management projects, including non consolidated items, amounted to RMB 1,340,000,000,000, RMB representing YOY increase of 64%. And also, we managed a total of 148 projects in 44 Major Cities nationwide serving more than 1100 clients. We have the total JFFL projects in operation was 9 point 97,000,000 square meter and of which the operating area of high standard warehouses is 7.58 million square meter and occupancy rate was 94%. And operating area of cold storage was 400,000 square meter and labor utilization rate was 68%. And also, VX Logistics Properties entered a strategic operational agreement with supply and marketing cooperatives to establish supply chain service capability for agriculture products. Now let's go to Page 23. And here, we're going to talk about the projects in Yizhou, Beijing. The And for these projects, we will use automation design in the warehouse to achieve on land management through transmission shelves. And according to the highest standard of vaccine safety to origin time of DMI. The business team spent only 68 days to transform the property into a vaccine warehouse, which satisfied requirements of a Sinopharm and CFDA's GMP certification. Now let's go to Page 24. The Here we showed what we've done in terms of social responsibility. And we know that in general, there is a big storm and flood there. The Benqi has made a donation of RMB 50,000,000 to Red Cross side of Henan in the 25 on the first 21 July after this disaster. And we try our best to Protect the Safety of our Homeowners and to ensure the project is running smoothly. Now let's go to Page 25. At the same time, we will continue to actively respond to strategic plan to consolidate achievements in property, poverty alleviation rural revitalization. In June 2021, the company participated in Guangdong Province and Zheng City 6:30 Relief Day and offered to donate RMB 200,000,000 to the ethnic minority areas. Also, Benqi created a multi town contiguous village revitalization demonstration belt along the Ruhui Highway with the objective of building the most beautiful corridor for co living. Now let's go to Page 26. The For this page, this is a project in Beijing also from Port apartment in Gaoli Drone Community. It is a collection of a vibrant commercial street, diversified this building and more than 3,300 high quality long term rental apartments. The line of these apartments is collective fund, which is also an upgraded version of Chinchou's Community Port project in Beijing. And now I will talk about our strategy of business for 2021, Page 2 on Page 27. On the second half of this year, our goal is to make steady steps towards long term objectives. Financial discipline is the bottom line and foundation. We will adhere to financial discipline, and we're strictly the compliance with the requirement of 3 red lines and other regulatory policies and continuously stay in a green threshold, Maintain an Industry Leading Credit Ratings, Implement a Sound Financing Strategy, Rationally Control on the Total Amount, Make the Structure More Secure and make and maintain flexibility or tier 2 prudent investment strategy, keeping expansion within the limits of revenue. Now let's go to Page 28. While we are sticking to our discipline, we will clarify our objectives. In terms of the industry, the housing will return to consumption attributes, reducing the burden of people's livelihood the and develop in a balanced manner within the real economy. From the perspective of CD, the requirements for spatial functions have been extended to a series our goals such as urban interface improvement, industrial development, infrastructure improvement, public service improvement and ecological conservation. The announcement. From the prospective customers, the function of real estate carrying has been expanded from a purchase to lease, from reference to consumption, leisure, entertainment, life service, health, elderly care, etcetera. So BANKI's overall business strategy is the In view of the profound changes in the industry, CDN's customers, VENKI will accelerate the transformation from focusing on Real Estate Development to quality emphasize on Real Estate Development, Operation and Services. Each business will must consolidate and enhance its own basic fundamentals. Now let's go to Page 29. And specifically for each businesses, we have different strategy. In terms of our property development business, leveraging overall advantage of the group, organizing professional training and communications, benchmarking with representative products, Integrating Product Standards and Products Realization Capability in More Regions, Achieving High Quality and Stable Mass Production, the presentation. In terms of rental the rental housing. We will assess and review different construction models and different types of rental housing to make and to attend to the changes of industry. And then we will focus on key locations to achieve the projects us in Shenzhen, Xin Chengdu, Changshan, Jinan, etcetera. In terms of Wanwoo, the We will release the integration and the brand advantage of Cushman and Wakefield Services and further the market share of high end commercial properties, fully understands the residential property as a livelihood industry, consolidated the Chetan Securities and Congregulations of a remote plus on-site combination and further improving service quality, packaging rental by sell, Decoration and Home Furniture Businesses. In terms of Logistics and Warehousing Services, we are continuing to improve the warehouse network of high standard warehouse and cold storage in major logistics in all cities across country, a complete breakthrough from our warehouse operations services to overall supply chain solutions in the field of chain catering and supermarket retail. In terms of retail property development operation. We will learn from outstanding peers to improve the project operation management. We view the opening of new projects in the past and deploy the forces to ensure the successful opening of new projects such as Hangzhou Olympic Sports in City, Winter in City Meibas, Shanghai Songhai in City and explore and practice the upgrading and renovation of all projects and complete the renovation of the opening of first phase of Tianjin Koping in Citi. Now let's go to Page 30. Here on this picture, this the new project, Jiuzhou Hui International Port Apartments going to be launched in Chengdu. It is a high end long term rental project. It's located in the heart of Chengdu's CBD, the north tower of the 2 80 meter online celebrity landmark Tianfu Twin Towers with the products, concepts of high quality living space, high end exclusive services and home privacy and safety. Departments are launching large 3 bedroom spaces, and this is going to be launched in the second half. Incheon. And also in AmpenTech, we provided consolidated statement of P and L and balance sheet, etcetera. We won't go through that, everyone. So that's so much for my introduction. Coming next, Lance, regarding to the Q and A session of the meeting. And please help to first report the notice to people who are going to be DRE. And for those who would like to raise questions, Please Now we have 27 people who are in queue for the Q and A. Only two questions for each investor. Let's welcome Zhang Yu from CICC first. Okay. The presentation. Thank you. Thanks, Madam, Zhu, for your introduction and the presentation. My name is John Yu from CICC. I have two small questions and the question the trends relating to the financial performance. And you can see that and for last H 1. You have the net profit decrease on a Y o Y basis. I think that was in 2018 during the financial crisis. But now you started to again encounter the half year net profit decrease. I think there's a big concern in the KJ. And it also seems that the share price reflected the concern of the market. So may I know why We have such a weak net profit attributable to the Renke Equity Holding. Would you mind to share with us a reason? And is it because of some short term factors sessions that are actually impacting the net profit. And my follow-up question on the first question that's regarding the future prospects, We talked about the 3 red lines from the government, which actually provide more growth for the company, especially the long term growth for the well performed companies in this market. But according to the financials, you can see for the other green tier enterprises in the company. They also have a very strong mid- and long term development. For example, for China Resources, They said and they're going to have a 50% annualized growth for loan form. They said that they're going to have 50% to 20% of the net profit attributable to the parent company, while at the same time, for Benqi as a leading company in the the Property Development Industry. You have a robust performance in your track record. So can the management team also provide us some guidance on the mid- and the long term development. That's the questions regarding the profitability. Thank you. The Thank you. Thanks for Zhang Yu from CICC. You have two questions. The first question, you are asking us to explain why the net profit attributable to the VENKI AGRI Holding was done, and you also want us to provide long term and mid term guidance. Yes. Thank you. Thank you. Thanks for Mr. Zhang from CICC. Well, I'd like to share with you some of my feelings. It's like that my interim exam result is coming out. And now I'm reviewing my performance in front of my teachers. How should I tell you the reason? I feel uneasy in my mind, but the turn. I will always bear in my mind that I still want to be a good student and a well performed student in the classroom. Just let me respond to your two questions specifically regarding the decrease in net profit. And you say that the year. It was decreased by a double digit number compared with 2020. And the YY decrease is close to 11 point 7% for the net profit attributable to the BANKI Equity Holdings. I think there are a few reasons. First of all, we have a limited sales size growth, and we also see a faster decrease of the GP margin. And also, there are some of the Impact from the Upgrading and Transforming Business model. For the past few years, Our property department business growth was pretty limited. And you can see that for this year And our revenue was also growing by 40.2% compared with other peers. Probably, we say we're at the low growth end, where at the same time, our net profit was also down. You can say that regarding all the sales price and you can see the land price is still ticking up a lot. It's probably from 20.70 to 2020. And the land price to the total sales was up by 70%. And the days were also being gradually shown in the future revenues and the sales size. You can see that for this year compared with same period of 2020. Our interim GP margin was down from 24% after tax to 80% after tax. And before tax, it was decreased from 32% to 23%. That's the JPY Merchant before and after tax. So you can say that our sales increase is having some limited hedging performance over the decreased GP margin and which is not enough to help to hedge the average decrease in GP margin. This is the second reason. I think the third reason is because as what you mentioned in the follow-up question, Compared with other peers in the industry and ready, they were performing great. The Q1 of this year. For other peers in the industry, it seems that they have a very good performance in H1 FDIC. Sometimes, we're benchmarking ourselves with them regarding the sales size, sometimes benchmarking profitability and sometimes benchmarking the ability for transformation and upgrading and some of the capacity of benchmarking for the future of the entity development. The 2 peers you mentioned in your question already has a lot of things that we need to learn from them. And regarding the third reason is that Wei. You see that some of the results from our business transformation has not the Qatari at Bing show in our financial performance. It already takes time to be further shown there. If you know that from 2014, and we started to expand our business from property development to property service and property operation. Property development, property service and property session. They were being given the same weight. People said it's all well inside the industry, but you can see the logic between the 3 business lines also different from each other. We are also in the same period of time, and We also have some real estate investment business, and we also have a very stable accounting rules being adopted. It actually helped to bring a lot of amortization and also the dilutions to our financial performance. So actually, it really takes time for the result to be shown in our performance. But if we review what was happening for the past few years, I think for our property operation and property service. There's 2 new business lines or new business tracks. And I think there are a lot of lessons that need to be learned from our performance in the past few years. You say that especially for the times being invested in both business tracks. The difficulties we met there and the capacity need to be built in both business tracks has actually been underestimated by us. So if we review our performance for property service and the property operation. You say that at the very beginning, we have a too positive attitude, but now we should also review how should we double our efforts in both business tracks. Well, regarding the property operation, and you can say that in overseas countries, this industry has been there for more than 100 years, but now time is different. Industrial need is conference. To some extent, they are all emerging and new business. We're starting to find the best and the primary solution in supporting this business my development. As I used to say, we underestimated some of the factors in this industry. Now we learned the lesson, And we find out it's not easy to build the capacity in the property operation and property service business tracks. And you see the opportunities and the challenges are all there in both tracks. If we can truly build our capacity and find a solution in both business tracks, You say that in the mid and the longer term, and our capacity in both business tracks would be very valuable. And my third point on the business transformation is that we should also change our view on the business contribution that the transformative business our doing. Even if you know we are doing very well on each business lines and the business tracks, but how they're going to contribute to the sell size and the profits. They still have a very limited contribution. And probably, they are just helping to further enhance our Enterprises Value and our mid- and the long term evaluation, but not contributing that much to the sales size and profitability. So these are the three reasons why our interim result, especially as you can see, the net profits attributable to the Venky Agri Holdings was down by close to 12%. Coming to your second question, is it possible for us to show you mid- and long term guidance or the large growth logic. Surely, there is. But as far as I can say that for the whole industry, the gaming rule is now changing. And also, our development philosophy need to the adjusted according to the ever changing market. And if we're purely safe for the the growing sell size and the business growth speed. That's not going to sustain our business in the long run. Besides of having some independent review, we are also learning from the well performed peers in this market. Well, you can see for Benqi, for so many years, We are the company stick to the long term development. Still, we have a saying that we need to study steps towards long term objectives and steady growth and steady business operations. They are the key for us to embrace. And the sales size and the business growth rate are not the only two targets for us. We'd like to and make a balance between the risks and the return and also between the sell size and the business growth speed. We still, as I said, believe that steady growth would be our major topic because in 2018, during the financial crisis and we believe surviving this market is a key, You need to make sure that you have a very safe operation to guarantee the survival of your your business in this market and also take care of our responsibilities to respond to what's needed by the market because our Evaluation is already more than JPY 500,000,000,000, so we need to take a more comprehensive analysis of the business environment. Well, Regarding the business size, growth, we always believe we need to build our capacity first and then to seek for a bigger size cell size. If in any new city, we are not building enough capacity but Purely seeking for a growing sales size there, and that not going to be sustaining our business in the long run. And another point is that we would like to become a solution provider for beautiful life and high quality life to our residents. We would like to join hands with our customer for co growth and co development. And that's also the reason we need have a long term perspective in consolidating our capacity building. And regarding how many business tracks we're going to take in the near future, and we're going to work with the city and I think different peers in this industry may have different practice. But the overarching ideology that all the peers in this industry are still expanding their business size, and we can learn from each other for sure. But it seems that we need to learn more from our peers for their best practice in this market. It's easy for us to give some words verbally. And it is always also easy to find a reason, but I think more importantly, we need to take actions to spell more efforts to truly translate what's been said into real in the mid- and the longer term. I think our operation team of Evanki still are going to take more efforts to change our operational philosophy to respond to the market changing needs and then to sustain our business. In the final slide made by Madam Zhu in different business lines, business tracks. We have already made our business strategies there for the the mid- and the long term development. Due to the time reason, I think I won't elaborate on the specific actions and efforts we're going to make well after this meeting and in our IR event that. And in the further small meetings, and we're going to give you more specifics in this regard. I'm not sure, Mr. Zhang, whether you're happy with my answer or not. Thank you, Mr. Zhu. Thank you for your answer. Okay. The Now let's welcome journalists from Pompai News. Hello. The Good morning, management team. My question is that the real estate market industry has seen many regulations, for example, the limits on land buying. So what's your view on the real estate industry's development? Thank you for your question. The You care about the regulations on the industry, and you want to know the impact on our industry, right? Yes. I'll give the floor to Mr. Zhu. The Actually since the 19th conference of CPC, or actually since 2017, the regulation policies has been there, the although they have different forms, but the key message is that houses used for living the and equal rights for home tenants and owners. I think this theme was very clear and stable. The And right now, the regulation policies right now we see is still centered around these key points. The enterprise companies in this industry the May not have better understanding than you than financial institutions on the policies because policies are there publicly for us to obey. The The main thing, the main tone has very is being very clear, has very consistent. Us. So then for us, for companies who's working in this industry, it's then easier to obey and make arrangements. And we have been obeying the rules and policies. And you mentioned the 3 red lines as well. We never break these red lines and then keep ourselves in the green threshold for the long term, keep good credit rating and good liquidity. And these are the priority in terms when we are considering our work. This. This is how we seek for stable growth and for steady progress. Our And our idea is always that we are present. We need we cannot Predict the weather, but what we need to do is just to do our job well to crop the land well. So since we are farmers, Of course, business will always depends on the weather, depends on the market situation. That's inevitable, but we will do our best to make adjustment to market environment and to policy and to harvest more and the Okay. Thank you. Now let's welcome the next question. Now let's welcome Mr. Kuo from Guangfa Securities. The Thank you. I'm from Huangfuai Securities. Mr. The John has answered the question in every aspect. And me, myself, particularly pay attention to development business. And I think your competence in this area has been proved and the concentration of land supply have seen new policies rolled out. The. And what's your view on the resource competition in core cities? And what's your attitude of competition in terms of the 2nd batch of concentration collective line supply. And also another question. The For investment, we kept quite good of a stable pace in the future whether you will increase your investment on new incremental projects to increase your the investment efforts. Thank you for your question. Your question centered around the new rules on the collective line the and the impact also, Venki's attitude for that in the key cities and when Venki will invest We'll increase our investment effort, is that right? Yes. Mr. Chu, the I think Mr. Liu Xia will answer your question. Okay. Thank you for your question. The Actually, for these new rules for the 2 concentration, there are new things. The concentration lines the Of land supply, we are also making adjustments to accommodate these new rules in the first batch. Actually, the In Chongqing and other cities, they have seen the 2nd batch. We are accumulating experiences at the same time. I think the starting point of the policy is to stimulate the healthy growth of the industry. So as Mr. Zhu mentioned, we are farmers. We won't predict the weather. So thank you. We won't predict too much about the 2nd batch of the land supply, and we will keep our policy of a steady and precaution investment. The study steps towards a long term objective. That's going to be our major turn. And we will be strategy oriented and stick to our investment discipline. Of course, we will focus on the quality of investment and efficiency of investment. I think by doing all that I've mentioned above, we will achieve long term goals. Thank you. Session. Thank you for your question. Now let's get in the next question. Thank you for your question. You mentioned that the cooperation between Venky and Honda, is that correct? Is that true? And also the purchase the acquisition of Taiho. Is that true? How is that going to end, right? Thank you. The Thank you for your question. For Evergrande, the We've accumulated cooperation in different projects. We have been in touch with them several times, and we also have a lot of discussions with them. The Right now, we haven't made actual steps in terms of cooperation with him. This. This is about everyone in terms of Taiho. And there is a task force, a small team that's been keeping in touch with them to help them to and providing suggestions for them to help them to grow. In terms of acquisition, maybe as friends from media. Maybe you think there's a lot of rumors, but actually, for this industry, we think we should Do something that's helpful, beneficial for the whole industry. No matter it is peers or all kind of the Yes, it is. We have been made contact with them, cooperation with them. And for VENKI, all projects, the If in terms of number, I think 70% of them in have in cooperation. In terms of amount, 80% of them have been cooperation with other peers. In terms of this new area focusing on management capabilities, we need a lot more partners in financial institution in the same industry in land supply industry as well. Also, we need good contractor suppliers to help us as work as our partners to serve our end user and in the end, provide good quality of products. So as I've mentioned, meet steady steps towards long term objectives. The That's our thoughts about this. And as we've mentioned before, the And efficiency should be reviewed and examined by the customer. If the There are unbearable or negative impact, then we should be careful to the Avoid that. And about the acquisition and deals and the questions you mentioned, the Apart from the 22 cities in the new rules, 2 concentration line supply, we will participate. We will acquire projects. We have different ways to do it. And for other ways, you also as you've mentioned, is acquisition. The But for acquisition, that's more on the project level. And We also cooperate with others or acquire new projects through Old Town renovation renewal. We have a renovation of dangerous buildings, for example, Nantou Asian City. The So, overall speaking, we can provide the comprehensive governance capability for CT. And the other way of cooperation is to getting those nonperforming assets. We will take over some of the non performing assets and improve our capability of getting those suppressed assets. And for like friends from media. And the for projects, if you're new, there are any good quality of projects, we are welcome to recommend them to us. The. Thank you for your question. And now let's get in the next question. The Now let's welcome analyst from Citibank. The I'm Ken from Citibank. I have two questions, 2 quite simple and has been frequently asked questions as well. The firstly is about the integration of the new policies. A lot of the media and customers think that a lot 3 burdens, one of the burden is real estate is housing. And do you think that an opportunity for VENKI and how You can correspond to that. And second is about gross profit margin. We can see the gross profit margin at about 18%. And customer wanted to know that if this level is quite close to the bottom, the If it's not, then maybe next year or the second half of first half of next year, you can touch to the bottom. So this is our question. And when you're going to acquire more land? The Thank you. You mentioned 2 questions. First, about 3 burdens. One of them is housing burden. And you want to know the impact or the talent being brought to VANQI. And second, you mentioned about the gross profit margin. The And if the profit margin of banking has already at the bottom and you also Want to know about the bottom level of the whole industry, right? Yes. Thank you, Ken. We are all friends now. I will answer your questions myself. For these three burdens, Education, Healthcare and Housing. There's 3 burdens of people's livelihood. The For education, we have a little bit of projects. And for health care, the We've only covered a little bit, so we are not really a practitioner in those 2. But housing, we are the main participant. I know that the All of you have been paying attention to the issues that governments care about. The housing. We are the players industry. The contribution we made is not enough. So we hope we can Jumor. At more than 2 decades ago, our aim is Benqi's aim is to let more teenagers who just come into the city can find a place to live, a good place to live with good condition. The So this is our starting point before we start the business. So far, we think the contribution is not enough. The And the only thing we can mention maybe is the rental long term rental housing apartments. I think Mr. Zhu has made an introduction to that. We started this exploring in exploration in long term rental business quite several years ago, and we started the official operation in 2014 and we need to provide long term rental apartments for young people with good price performance ratio. And Lot of them are houses projects built in the villages in city. We rented and then we renovated and then built it out. And also 60,000 of units were located in Shenzhen. And so for the average the price is quite more than 1,000 about RMB1200 per month. I think this price is quite good and people can live in. For urban port, the For city port, actually, the fees or the rental fees is RMB1991 per unit, including the management fees. We feel reassured, but the shareholders is not happy with that because this the business that's not making money. And they also invested a lot of capital, human resources and energy from the company. And to some extent, it actually limits the sales growth. But I think this is a business that is actually taking care of the government policies for the same way it's been giving to house selling and house rental business. So you can say that when we were dealing with Port Apartment and the Property Operation business, we more find out The operation business is for serve the well-being of the citizens and also serving the industry and the real economy. Even if we are not making money, but we are providing a solution to the real need and take care of the real pain point in the site. It is still something valuable to us. This is my response to your first question. Responding to your second question, 80% for the GP margin, is it already at the bottom? And whether it's going to be rebound in the near future? And what would be the trend for the GP merger in the longer run? As I repeatedly share with the market, we our former, it's hard for us to forecast what the policy is going to come and how the weather is being changed. But still wait to see because many of you are here may know that the short term policy is very hard to be forecasted. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] So I can say that we have a saying, if we have the chimpanzee to make the kind of a decision or have the best investment expert to make a decision or judgment. It almost have the same results because in short term, it's very hard for us to foresee what the impact on the from the business to our from the policy to our business would be. But in the longer run, if we do more analysis, We clearly know that now we have a decrease in profit. The conference. And when should it be taken up? And when should the bottom be met? We'll still wait and see. And for every industry, we just want to make sure that we reach the industrial level. When slightly Sire, the industrial level would be great. I think for the whole industry, we're still going to go back to a rational return level. But the rational return level doesn't mean the return level for each company. Just as Mr. Zhang from CICC mentioned, we have different performance. The conference call. You see that with the line management with good service and good product, those ones who win the trust from the investors and also who win the trust from the customers. And the ROI would be higher. You say that for Venki. We are a company with a very strict and very clear policy and strategy in our mind. And we are clear on our strategic options, where the state we'll get in and which business tracks Suigareng, and we always have clear strategies on that. We always bear a lot of efforts to make sure that our strategy could be well executed. The conference. But ultimately, we are in enterprises. We're still waiting for the policy to come to say what it's going to look like. But being an enterprise in the market, we will always make sure that we communicate with all sides to keep good interactions with all parties. For Citibank, and if you have any doubt or any concern of our performance, especially on our daily operation. We would like to hear more comments and from you so that it can help us to further optimize our performance. Thank you. Thank you, Ken. Thanks for Ken from Citibank. Let's welcome the next investor, please. The next. Next, let's welcome Joji Yu. Good morning, ladies and gentlemen, and the team. I have one question. Everyone know that for Benqi, the net profit attributable to BANK Equity Holding was decreasing. And it seems that you have a guidance for the future net profit growth. The conference. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] And when were the net profit improvement going to come? And my second question is that on financial management, it seems that the bank the event. It seems that Benqi takes a very prudent management. Then how about your interest capitalization rate? It's already on the bottom level, the lowest one in history. Have you ever considered to improve your capitalization in order to increase the profitability? Thank you. Thanks for Mr. Zhou from Huawei Street reading. And you were also asking about the decrease in net the profit and you also mentioned about the interest and capitalization rate. And are these two questions from you? Yes, indeed. Thank you. The session. I will ask Madam Han to answer those questions. Thank you. Thanks, Mr. Zhou. Thanks for your question. Yes, indeed. Profitability, especially net profit, is something that people are worried about. And many explanations are already made for the previous questions. But let me make one more comment. And you can say that our GP margin after tax is already 80%. And within that, for a rapid state development product Jig Business. It's around 90.6%. Well, if it is JP margin before tax, it should be 24.9 percent were already included into our interim result announcement. Mr. Zhu has already mentioned, since the year of 2017, You can see that actually the GP margin of the property development business was down because the land price to the total sales price ratio was taken up. And that is also the logic we mentioned, Johnson now. If we take a look at our own performance, in the next 2 years, we're still going to under some pressure for the JP margin. We hope that by doubling our efforts, we will make sure that this JP margin pressure won't impact our business that much. Regarding the interest capitalization rate. And financially speaking, we are very prudent. Our capitalization policy strictly follow the accounting rules in the market by hitting 3 preconditions: making sure finance is there and the funds will actually be used for the JAKKS and then to do the capitalization performance. It seems that our capitalization ratio for the past few years is around 40% to 50%. Well, in the near future, we are going to strictly follow the regulation, the rules to make sure that we have still a prudential attitude towards the financial management. Thank you. Thank you. Thanks for Mr. Zhou from Wall Street's Readings. Coming Let's welcome the next investor. Let's welcome Chen Chong from Citi Securities to raise a question. Thank you. Thanks for management team. Just now, Mr. Zhu, you also mentioned about the social impact from the rental housing and I would like to admire your leadership in the rental apartment business. What's the outlook of this industry? How big it's going to be in the near future. When does the rental housing or the long term rental apartment can actually Make Good Profit, while at the same time honor the social commitment. If this market is going to be profitable, do you need more government the SEC's support or what kind of efforts should the company made? The second question is regarding the financial environment, financing the end of the whole industry to the company and your financing plan in H2 of this year. Thank you. The conference. Thank you. Thanks for Chun Zong from Citi Securities. The first question is regarding the rental housing, how big it's going to be in the near future? And when Tendo Housing, how big it's going to be in the near future and when the company can make a profit from that? And does the enterprises and the government need to work together to make it profitable? And you also talk about the financing environment, financing cost and the the trend for H2. Yes, indeed. Thank you. Thanks for Mr. Chen from Citic Securities. The first question will be responded by Madam Zhu. As introduced by Mr. Zhu. For Renki. Since 2018, we started to provide the rental housing business and we are now the largest solution provider for the rental housing business in China, especially the centralized Guam. And you can see according to the population statistics and in China, We already have 439,000,000 people being inflow into the city. So you can see that the population traffic within city and between city is going to release more demand for the rental housing service, the same as U. S. And Japan. In China, we have also a pronounced trend for people to live solo. And you can say that in 2013, this number is 40.5 percent and now it's already 80.5%. And by 2,030, people live alone will reach 100,000,000 to 200,000,000. So you can see that human moving transportation and also the living solo trend where always there is new demand for the rental housing business. The small sized flat is short of supply in this market and also the quality of the service can also be improved. On the 45 year plan in the 1st year, you can see that it's already become a national strategy to provide such service to the customer. Government also provide the land supply tax and the financial preferential treatment to this industry. I think in the next one decade, the rental housing industry this conference call to see a healthy yet orderly development. Thank you very much to leverage our advantage to making sure that we have a micro profit, while at the same time to SIG for the long term rental apartment solution to help the cities to rent in Thailand and the young label. We need to support the real economy so that we can survive in this market. But as you said, for this business within WENKI umbrella. It's not making money. It's actually losing money. But it is worth mentioning that after past 1 to 2 years' development, No matter on the brand value or from our systematic advantage or customer loyalty side, we made a very good advancement. All those progress and investment will then be translated into our financials later. It is also worth mentioning that at our city Port Apartment. Actually, the occupancy rate is already taken up. And many of the customers, The rental lease renewal rate is also leading this market. This all tells us that this industry is going to see a healthy development in the near future. We are talking about the industrial development. It will need the society and the enterprises to work together. The government has already provided a lot of tax, financial and the land supply preferential policies. And in the near future, we're still going to deep dive into this track. On this business track, we need to maintain our competitive advantage, and I would like to review different business models of the existing projects to explore new business models and to trend the best operational team in this market. By having the best talent and the best business model, We will be able to have a rational yet sustainable profit in the longer run. Okay. Now let's Ms. Han to answer your second question. You mentioned about the financing. Actually, we think this the Mechanism for 3 Red Line. The leverage of the industry has been going down. This is a big trend. The And this year, the financing environment has been tightened. No matter is bank borrowings or pledge loans, mortgage, the it's going down for bonds. And actually, the growth rate is going down too. So, overall speaking, financial institution Has been more careful and cautious in terms of lending money to real estate developer. The Q and A. And for VENKII, we've been stick to our healthy and stable policy. And Mr. Zhu also mentioned the policy that we should make steady steps towards long term objectives. The That's true. And also we need to stick to our financial disciplines. Often speaking, we will be more careful and cautious in terms of financing. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] And actually, in the first half of the shared financing cost has been going down by 32 bps. And now the financing cost is about 4.27 percent. And the second half of this year, we will keep our indicators in the green tier threshold. In terms of specific practices, we will consider the changing environment the changes of company's operation and make flexible arrangements. Overall speaking, we will keep a more like a controlled attitude towards financing so that our financial conditions are healthier than before. Thank you for your question. Now let's get in the next question. The Now let's Mr. Chen from Taixin. Good morning. I have two questions. First, it is about acquisition. First half of this year, you acquired a lot of projects from Huaxia and another the Developer and I want to know the progress of these projects in the future. The Will you acquire more shareholders of these 2 companies, take over these 2 companies? And the first half of this year, you made a big structural adjustment. And you start to induce the adjustment for 3 years. And now for the first half of this year. We can see the results. Your adjustment in terms of structure hasn't contributed too much to your performance, right? You've Always seek to like, for example, the net profit has been going down. So we want to know your efforts in structural adjustments. Will that the How will that impact your performance? Will that be helpful or not helpful? So first question is about acquisition and, for example, in Yangguan and Huaxia Xinfu. And also, you want to know whether in the future, we will acquire more for projects like that. And the Okay. Let's give the floor to Mr. Zhu to answer your first question. The session. Thank you for your question. In terms of Ouyang, when we have cooperation in on the project level, that acquisition. We acquired 3 projects from them. And for the projects acquired, it's been going on regularly smoothly in the development stage for Huachana Xingfu in the recent one year. Actually, We didn't have much discussion or cooperation on the even on the project level. So this is the basic facts. And the second question is about the structural readjustment, how and the efficiency of the efforts. The. And for these recent few years, and we can see that as you can feel from the media, the actually, our focus or priority lies in 4 aspects: business clarification strategy re clarification, structure readjustment and making the right person corresponding to right businesses. So these are the four priorities of our work our management tools. At different stage of development, and different problems will show up, and then we will use different tools. It reflects our the ideas changing of ideas that reflects the environment. The We stick to long term development and stable development. Of course, what needs to be changed will definitely be changed. What needs to be fixed, it will be fixed too. And structure, strategy, cultural, HR, human resources. There's Quite a few things have been integrated together, structured to performance review. This. This line is not so direct or short term. The performance will not be shown in the short term. We've made a lot of adjustment. We believe those adjustment efforts will make us stronger, more competitive, and we think that shareholders and our stakeholders will see the benefits coming out of it. And so in this world, there are a lot of contradictions. A lot of as things happen and people will have different ideas of that. The It's not a clear cut, yes or no, right and wrong, but is the Sometimes it's a problem for the short term or long term. So this is how we feel about your question. There's also need to be a balance between short term and the long term. Short term, it's hard to say, but long term, we need to Achieve the long term goals through hardworking and resilience. I think our management team have this quality of resilience and hardworking, the And we can stick to our principles and strategies once we set it and develop along with our customers to build the cities together, and we are willing to solve pain points of our customers. And the structural readjustment has been serving the customers. That's the aim of doing it. Also, the frequency of this structural readjustment. Maybe you think the frequency is too high, but the underneath logic or aim has never been changed. Thank you. Thank you for your question. I was getting the next question. The. Now let's welcome Mr. Yuan from Shilohoyan, SY Securities. The I have two questions. First of all, you know that the the share price has been declined or not, been down 30% almost. And I want to know what's your view on the VENK's value? And in May 2020, you've mentioned there are some purchase share repurchase and that will need to be done. Do you think the environment is ready for the share repurchase? And the second question is about retail business. The And as Mr. Zhu mentioned, the first half of this year, VENKI has witnessed growth the Of revenue, 19%, while the peers is much higher. So the overly speaking, the growth of revenue in the same industry has been quite high. And then in Q, Mr. Wang Hai the Also, Hassane, we want to know what's your view on the SCPG. Do you have any adjustment to SCPG? And what's your plan for it? The The first question, I will let Zhu Shu to answer. Thank you. It's true that the share price this year has been declining a lot since there and the share price of this whole industry has been declining as well. And in the shareholder meeting, we Applied right to do share repurchase when the environment is ready, for example, one of the conditions that the share price in the past 20 days, 20 days down by 30%, one of these two conditions has been met. We will start our share repurchase. And for VENKI, We have this partnership scheme for the share price declining. The partners We'll feel the same thing as just you do as your shareholders. And I know the shares decline has been impacted by a lot of reasons, but in the mid and long term, the key reason is that whether Benqi can create value for shareholders, the And the management team has been doing this relentlessly. And about the second question, about retail and some of the gap between us and other peers. The First of all, we have to admit that in terms of our retail business, there's still a gap between us and the peers you mentioned who are doing an outstanding job in it. The conference. And when we are reflecting and reviewing our problems, we think there are gap in performance since But the gap in terms of a cap and competency is smaller than that in the performance. For example, let's take SCPG as an example. SCPG in Shanghai has been doing quite well. The in city is very competitive. And if you have the chance, you can GoShop and to experience our shopping service there. And in terms of management, different the biggest The pain point is that we have good projects doing well like Shanghai in city, while other projects in other cities is doing less well. The And as so this is binary. And it's good. It's very good. It's quite extreme. And for those who are doing not well, it's the difference the gap between them is quite wide. And In terms of the performances in Financial Indicators, this is bigger than the differences in competencies. The We are confident that we can find our own strength and competitiveness to find out a way to solve this problem. And We've been it's been 6 years since we are shareholders of SCPG. We are trying different ways to improve the situation, and Mr. Wang Hai has onboard the SVPG. The reason is that Mr. Wang Hao is interested in us. When he was in Dongguan 10 years ago, he was in charge of this retail business in a particular district. Us. So he accumulated knowledge and was quite interested in it. And in terms of the 7 development areas, BG, the cooperation between this BG. I think that will help the the cooperation between SCPG and our business unit, BGs. And in the past, the Chairman and CEO, Mr. Ding Liao. I think Mr. Wang since Mr. Wang is on duty, he is going to be very helpful to provide support to Mr. Jin to provide good execution capability. Also, I think they've also fine EMT members from outside sources. And recently, the the obvious change is that the management team has been enriched a lot. The capability has been enriched a lot as well. The And so thank you for your care. And we also hope that if you have chance, you go shop in our shopping malls to also to provide your suggestions to us. That will be valuable. Thank you. Next question please. The Let's welcome Yan Yan from China Entrepreneur. Good morning, ladies and gentlemen. I'm Yan Yan from China Entrepreneur. I have two questions to Mr. Zhu. The first question is that currently, we are actually doing not only the new project on the property development, but also the improvement on the existing project. And you mentioned that the result will be seen in the next 3 to 5 years. And also some renewal project has a lot of difficulties. So for VENKII, and what's the reason for you to get into the urban renewal project? And it seems that we have JPY 200,000,000,000 of the cash on hand. And how are you going to spend the money? Thank you. Thank you. Thanks for Li Yan Yan from China Entrepreneur. You have two questions. The first question, our business transformation from property development and also taking care of the real estate service and management and urban renewal project. It really takes a long time how we're going to handle that. And we have more than JPY 200,000,000,000 of the cash on hand and how can we optimize the utilization of that, right? Yes, indeed, please. Thank you. Thanks for the journalist from China Entrepreneur. Yes, indeed. For the past few years, 1.10¢ summarize our business transformation. We are expanding our business from property development also into property operation management and city renewal projects. You mentioned about the city renewable project. We have some of the big renewable projects with the demobilization, And also, we have some micro renovation project. And you can see these two a business are different and also requires different capacities. For example, like a big renewable project, Many of the peers in our industry, they also are capable of doing that. Even someone can better perform us in those big urban renewable projects. But due to the policy reason, you can say that urban renewal projects, especially the big ones, they should be no more than 20% of the total renewable projects. So for some of the projects, they will not actually be demolished and then be rebuilt. It's impossible for those projects to be done in this way. And the second business is micro renovation. For example, in Shanghai in Guangzhou, in Yongxing Fan and in Beijing and also the Guangxing Strait the Nantou Asian Town in Shenzhen and the Honmei Industrial and the Cultural Innovation the Chang'e Park in Shenzhen and Chang'e jiuli. You can find all those projects in our financial report. Superficially speaking, those are the projects They are hard to help to generate the profit, but actually they have a very high requirement over our capacity building. And those companies who are very good at resolving the difficulties in the market shortly, the story of Benqi. Benqi, many years ago, the Benqi Foundation already helped to renovate the old temples and Asian temples in Shanxi Chi Province. Around 10 years ago, many investors will find out it makes nothing to our evaluation. But because of our temple renovation projects around 10 years ago in Shanxi Province. You can see that now in Yongqingfa and in Nanto Asian Town, for those micro innovation projects within the downtown area of the city. They were being called as a piece of the city, and they will also become a cultural legacy and historical legacy of the city. In this way and they are somewhat more advantages and the peers of taking care of those projects because of our temporary renovation projects in Shanxi 10 years ago. So you can say that sometimes the capacity won't be translated into profit in short term, but it will Shirley Kham. The question is when that day is going to come? Well, for enterprises or in management, whether that day can come with our presidency, We'll still wait to say, well, regarding the cash on hand, how we're going to spend them, we still take a very prudent attitude. And we always have a saying, steady steps towards long term objectives. And in long run, we're going to I have a lot of cash on hand. And to be frank, the way keep steady growth and steady growth and that business is the key for us. Taking a look at the triple red lights, especially our net gearing ratio for the past 20 consecutive years was the lowest amount in our industry always lower than 20%, generally lower than 20%. And this is our Dyer for the past 20 consecutive years. And such a very steady growth and means that we probably give less return back to the shareholders by taking aggressive attitude. But I think comparatively speaking, long term steady growth and the long term survival in the market means more than the providing more returns to the short term returns to the shareholders because honoring social commitment is very important for us too. But you can't just rest so many cash in our account. And people may ask, and you're probably going to take the liquidity, return and the safety and all those three factors together. Yes, indeed, while considering that, we will make sure that every penny we can strive for will be taken care by us. Especially in the management dependence or stage or in current days, we believe we should keep our steady style as what has been done for the past 2 decades. Many people said the steady steps towards long term objectives. It doesn't mean you're going to have a good performance, but you know that sometimes The it really takes time for the good policies to be executed and the result to be shown there. So you can say that we're still very confident in our capacity, and we still would like to thanks for all your support. Especially, I'd like to thank for those shareholders and customers who followed us all the way. Us. And if we join our hands together, we're sure that Venky, we will be able to Perform Better and Perform Longer. Thank you. Thanks for the question from Li Yan Yan from China Entrepreneur. Because of the time limit. And we are going to have the final two questions, please. The conference. Coming next, let's welcome Tori Mei from Haitong Securities, please. Thank you. Thanks for the management team for giving me this opportunity. I have just one more question. Regarding the residential project investment and the development pace, it seems that in the market, there is a shortage of the supply in certain cities and in July August. And there are some of the problems regarding the public tendering. And it's going to see short supply in the longer run. So how are you going to comment on that, especially the peak shaping in the Supply and Demand site and how it's going to look like in the longer run. Do you have any comment on that? Thank you. Thanks for Tori Yuan from Baidonka Securities. It seems that you especially pay attention to the stringent policy, how it's going to impact the land supply, right? YAS! Indeed. Okay. I would like to ask Ryusho to answer the question. Thank you. Thanks, Mr. Tu. I think probably I'm going to give some talks first and then to ask Mr. Zhu to give more Firetrend. First of all, we have multiple channels for land supply. Collective land supply is one way. You probably noticed merger and acquisition is also another way, especially project merger and acquisition. Mr. Zhu has already mentioned about the project's the merger and acquisition. I think it is worth something worth of our attention, especially for the past 3 years. And projects merger and acquisition actually accounted for 40% of our total property development revenue. And I also share with you a few cases just now. From the land supply perspective, there are so many changes. The companies also carefully review what would be the new development pathways forward. For example, for urban renewal, it's also a change from the supply side. In the long run, you may notice that For ASEITY, it's a department where ultimately, despite what the supply side changes may look like, well, for sure, supply side changes may look like. Well, for sure, demand and supply are always changing for While urban renewal has become a new way for land supply, especially in the Tier 1 cities in Beijing, Shanghai and Shenzhen, especially in Beijing. Some majority of the land supply are the collective land supply. And you can say that in Shanghai, we also joined some urban renewal projects and collective land supplies become a new way and the urban renewal has become a new way for the lender supply already. So you can say that, generally speaking, no matter in the public tendering market or the merger acquisition market or in the urban renewal market. And even while talking with the government, signing the TOD and the strategic contract. And we believe, on one side, it's going to show the supply changes in the city and also mentioned that Venky is going to adjust our strategy according to the market need. You mentioned about the tightening policy. I think the tightening is just in certain channel where ultimately we are also going to take care of that. And You see that, generally speaking, we still need to further polish our capacity and to build our capacity because in majority of the channels where we need to distribute new capacities in so that we will be able to perhaps the opportunities between the demand and supply. Thank you. Thanks, Mr. Tu. Now let's welcome the final question. The Let's welcome the final question, Wang Yu from Tianjin News. The Good morning. I have a question regarding your diversified business mix. It seems that Port Apartment and your retail business are taking up, especially the revenue, but it's not yet being built into our balance a briefly show in our balance sheet, when shall it be built into the balance sheet? Thank you. The call. Thank you. Thanks for all the way. You'll notice that our diversified business, the revenue, some of them has been built into balance sheet where some are not. The Is it a question? Okay. Would you mind to repeat the question again? It seems that we felt to get your question. Thank you. As I can say that the Port Apartment and Business Property side are actually seeing great revenue, but it seems that the rental apartment and Retail business are being consolidated in because other business revenue are decreasing. So the kind of whether the rental housing and retail business revenue has been built into the balance sheet or not. Thank you. The conference. Thanks for the question. I will ask Madam Han to answer the question. Thank you. Thank you. Thanks for the question. Yes, indeed, in H1 of this year. And for Port Apartment, the revenue and also from the business service are growing, and it's already being built into the revenue of the property and the related service item because from the business size perspective, and both service are quite limited. And we still have more business on the property retirement side. So now and we still put both business together, but when we introduce the specific tracks, we're the showing the revenue and the growth and the changes regarding other business revenue. Other business revenue. Some of the brand management fees we collected from our partners, and it's not the fees we got from the property service side. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Thank you. Thanks, Mr. Huang. Thanks for your question. I think our media friends and analysts Investors may have more questions. It seems that we have already around this meeting for around 50 minutes. We also published announcement and collected some all of the questions. Some of the key questions have already been covered in the Q and A session right after this interim announcement meeting. If you have more questions, please send your question to IR e mail box. It's irvenki.com. And also, we launched this result announcement streaming on Yixuan Farm, our our online transaction platform and mini program. If you are interested in getting to know more about it, you can also click on the bottom of the Littoral House to get to know more Venky projects in the near future. Thank you, everyone, and thanks for our investors and media friends. See you next time. Thank you.