China Vanke Co., Ltd. (SHE:000002)

Earnings Call: H2 2020

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Mar 31, 2021

Distinguished investors and media friends and good morning. Welcome to join Benqi's 2020 Annual Results Release. This results release announcement will be conducted through online web broadcast and teleconference. You can join our conference through VENKi's official website, Yixunfa Mini Program, Port App and the Transient Net. Before we start communication, let me introduce the management member being with us. They are Chairman of the Board, Mr. Yu Liang Director, President, CEO Mr. Zhu Zhou Shen Director, Executive VP, COO, Mr. Wang Hai Executive VP, Head of Finance, Ms. Hanhui Hua. I am Secretary of the Board, Ms. Zhu Xu. First of all, I will introduce about our 2020 results. And we have 4 parts of this results. They are business summary, financial overview, operational review and future prospect. And all photos in the slides were selected through Benqi's project. For example, this picture is our TOD project in Shanghai, Uni City. And let's go to Page 3. This is a Guangzhou project we did in, and it's called Yongxing Fan. It's an urban renewal project. And now Page book. In this reporting period, we have healthy financial indicators. Net profit distributable 41,520,000,000, up by 6.8 percent and weighted average ROE 20.1 percent and annual dividend distribution, JPY 14,520,000,000, up by 23% Y on Y. And we have been giving cash dividend distribution for 29 consecutive years. And since we listed, Total distribution amounted to JPY 83,690,000,000. Operating cash flow, JPY 53,190,000,000, remained positive for 12 consecutive years. And our net gearing ratio of 18.1 percent remained lower than 40% for 20 consecutive years, and we remained good credit rating among the industry. For property development business, contract sales amount, JPY704,150,000,000. At Rental Housing, we have aggregate of 142,400 units in operation and the largest decentralized apartment operation in the country. And Property Services, the revenue, JPY 18,200,000,000 and Urban Service covered 10 cities, And we have 12 new projects in this during this year and a total 16 projects. Now let's our some of financial overview, Page 6. The business is steady remained steady growth. If you look at the P and L, revenue, JPY 419,111,000,000, up by 13.92 percent. And after tax gross profit margin is 22.7 percent net profit 59,300,000,000. Net profit attributable to shareholder is JPY 41,520,000,000 up by 6.8 percent earnings per share is 3.62 and up by 4.52 percent dividend per share 1.25 year. For balance sheet, cash and cash equivalents, JPY 195,230,000,000 and the total assets JPY 1,000,000,000, JPY 1,800,000,000. And interest bearing liabilities JPY 258,53,000,000,000 remained steady compared to last year. Among that short term, due within 1 year interest bearing liability uses JPY 82,910,000,000 and shareholders' equity, JPY349, JPY349.82 billion and equity attributable is JPY224 billion. Net assets per share, JPY 19.32. And let's go to Page 7. Our women remained stable cash to debt ratio for a long period of time, positive operating cash flow for 12 consecutive years. And net gearing ratio of 18.1% remained below 40% for 12 Consecutive years. And for our interest bearing liability accounted for 13.8% of total assets is quite healthy. And we can see there are more like mid- and long term interest bearing liability due over 1 year accounted for about 67.9%. And then if you look at by types, bank borrowings accounted for 52.7% And then the bond payables, 21.9%, the other borrowings. And if you look at by domestic and overseas, Domestic accounted for 74.4%. If you look at the interest rate type, floating rate accounted for 60.7%, the other is a fixed rate. And we had quite low financing costs. Would the S&P Global Fed gen give us very good like stable outlook and CCCX won't give us AAA rating. And the asset liability ratio, excluding advances, is 7 point 4% and cash to shorten debt ratio 1.8 times As far higher than the requirement of green tier, net gearing ratio 18.1% is much lower than the green tier requirement 100%. So we think we will recover to green tier within this year. And financing cost, we have balance of financing line of liabilities, JPY 136,130,000,000. And for lenders bank loans and financing cost is LIBOR plus margin. And for bonds, the balance is JPY 56,510,000,000. The financing cost ranges between 1.9% and 5.35%. The other borrowings have balance of JPY 65,89,000,000. Let's go to Page 9. For the We have Property Development Operation Businesses. You can see Page 10 that. Sales amount exceeded JPY 700,000,000,000 and ranked among top 3 in 43 Cities. And in 2020, the sales amount up at 11.6% and selling price remained stable. And then in actually, it's remained at the same level compared with 2018 2019. And then we ranked in 1 in 23 cities, including Shanghai, Chengdu, Suzhou, Xi'anhe, FeifuZhou, etcetera. And then we ranked top 2 in 14 in we ranked the top 3 in 6 cities. For sales breakdown by products, residential accounted for 88.2%, While retail and offices accounted for 7.9%, the other remaining is other auxiliary facilities. And we have sold by north settled amount reached JPY698,000,000,000, providing support for future development. Newly commenced Construction reached 39,600,000 Square Meter. Completion ratio is 135.6 percent. And completed GFA completed construction. JFA is 33,820,000 Square Meter, representing like 101.9 percent. And realized settlement area is JPY 28,89,000,000 and realized settlement income is JPY 3 37,000,000,000 yen. And sold by no sold settled contract amount in a consolidated statement is JPY 6 90,000,000,000, up by 14.6%. Now let's go to Page 12. That's about pipeline projects. 86.6% of the newly acquired projects located in key cities, project resources meet needs of future development. An acquired project GFA amounted to 33,670,000 square meter and average line premier of newly projects is at JPY 6,710 per square meter. Total line premier attributable totaled JPY JPY 138,150,000,000 and planned JFA of the new projects attributable is JPY 20,590,000 Square Meter. And we if we see that lent premium by region, Shanghai and Southern region accounted for a lot. And for 2021, SME area commenced construction of existing projects of 31,410,000 yen. If we look at by the land premium by region, we can see that Southern Shanghai region accounted for 35%, and the Southern region accounted for 24%. The others is Northern Region, Central West and Northwest Region. And in terms of Property Development Operation Businesses, we developed 2 capabilities, including TOD projects. We have built 4 types of TOD development models, And we have created a number of benchmark signature projects, including Shanghai Unit City, Hangzhou Unit City on top of rail lines. And for Shanghai, you will see that's a signature project of 2 d in Shanghai located in Hongqiao. Comprehensive development along the rail lines. For Hangzhou, it's quite big. And total JFA is about 1 200,000 Square Meter. And the other type is Shenzhen, Zhihuangue and Chongqing, Tianjin. It's a station integrate into the city on top of the station. For Shenzhen Lake, the total JFA is quite big. It's about 500 40,000 Square Meter. For Chongqing Tiandi, the total GFA is about 1,800,000 Square Meter. And we have the tallest building in Chongqing with a height of 458,000. That's Page 15. We'll continue to introduce some of the ToD business. The 3rd type is Hangzhou, Huanglong, Vanqui Center, Shanghai, Xuhui, Benqi Center. There are set connection types. For Hangzhou's projects includes commercial office, education, culture and art and it's an innovation center. And for Shanghai Shihui, that covers office, commercial park, cinema, culture and shows that covers multiple like business types. And we have a TOTI plus park dimensional type. And the 4th type is the Nanjing Metro Heights and Hefei City Apartment, built within 200 meters of the station. And now let's go to Page 15. So I will talk about some what we did in other renewal, Some of what we did in like cultural heritage and old times. We focus on renewal and operation in parallel. Sogou trying to revitalize city blocks with cultural heritage. As we can see that the first project Guangzhou Yongxinfa, it's in En Enrolled Liwan District. And we it's a vibrant community with the start ups and residences. On one hand, we tried to restore the historical character and charm of the Qiguan district. On the other hand, we merged modern elements. While in Shenzhen, Nantou, Asian City, It's a capital city of Eastern Guangdong and cradle of the history and culture of Shenzhen and Hong Kong. So we built it into a signature cultural heritage in the Bay Area. In Shanghai Columbia Circle, We also introduced some of the trendy stores like bookstore, structure, build a historical street. And in Shenyang, let's go to Page 16. In this homemade cultural and creative park. It used to be a plant, a workshop, and then we introduced international Design Resources, Restoration and Transformation Design Concepts. And then we also built in creational and innovative elements and create the venue for culture and artist life interaction. And then the next one is fujoulin. We integrated modern history, culture and architectural styles of All Nations, Fashionate, Leisure Retail and Executive Lifestyle on Riverside. And then Page 17. In urban renewal, apart from those historical street, we also innovate some of old streets to make them another signature landmark of culture. For example, in Beijing, Guangjin Street Block, release, a project that introduces like social capital. We pushed the boundary of urban renewal to street blocks and at least. It's kind of like the block vessel of a city. We created a very, very new dynamic experience. Wanshingshan. We brought in Beijing Design Week, etcetera. And then in Suzhou, there's a WhiteHat Street project. We created this developed them into a place for cultural exchange between China and foreign. So just for now, I'll walk you through the development and urban renewal business. And please go to Page 80 to talk about our Rental Housing business. And I can say that regarding rental housing, we have 40,240 units in operation in 33 cities. And currently, we have already newly commenced 33,000 of the units in 9 major cities in 2020 and last year, the operating revenue was JPY 2,540,000,000, up by 72.33 percent. While at the same time, we hope that we can build a youth innovation eco community for our rental housing business. We set up the Port Apartment Renting Club, the interest community and the rating club together and also to support our residents' interest and hobby to for their career development, to empower them for their further development, thereby to create a healthy living environment. We have successfully pioneered 6 corporation models and including the full process service DLI construction operation [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Using collective development land to build leasing residents, working with SOE in building platforms, cooperation with government and the development or operation of apartment projects on commercial and office site or urban renewal project. On Page 90, you will be able to see and some of the represented projects for port apartments. For example, in Beijing, We have a long term rental apartment project on collective land in China. It's been called as Village. And it also helped to collect 5 themed rental housing and the occupancy rate is already 100%. Where you can see in Nanshan, we also have a Cloud City flagship in Shenzhen. It's a trip in Shenzhen. It's a largest single centralized rental community, weighs 4,830 units And currently, occupancy rate is more than 99%. We serve more than 6,000 young people in this project. In Shanghai, we also have another project named Home Apartment. We are working with an SOE named Home Farm Group of operating this project together. The occupancy rate is already more than 98%. While in Shenzhen, we have the one Sun Port Apartment, Dailong community and 60 farmers' residence being translated into 2,293 units and which become a welfare house project for Shenzhen for the talent. And please go to Page 20. And let me also share with you some of our public service. For Wanho, and you say that we hope it could become a dimensional technology service provider and so that it can provide the services including residential property service, commercial property, facility service, smart city service, community lifestyle service and Wahu growth. And in 2020 for Wahu, the realized income is JPY 80,200,000,000, up by 27% And its GA, CAGR for the past 5 years is 34%. And to deep dive into that, You can see residential property service takes 55 percent commercial property and facility service, 29% Smart City Service, 5% Commercial Community Lifestyle Service, 5%. And currently, We had an area of 566,000,000 square meters under construction. 47% of them are non Venki projects. Please go to Page 21. And regarding the Engho service for residential properties, we have already served 3 51 projects in more than 100 cities. And we also have transparent commercial properties. And the real estate developers I also enjoy the transparency in Elevator advertising income. And you see that regarding commercial property and the facility service, we already have presence in 149 with 1700 service projects and the income has already more than 10,000,000. Regarding smart city service, And we're already penetrating to more than 10 cities with 60 projects. For Community Life Service and last year, we initiated the first hand agency business. And the total revenue is more than 5,500,000,000 and connecting 22,000,000 users in the community. Huawei Growth is our incubator. It continues to connect peers with other mature companies. Now we have We've already worked with 54 PS in the field of property services. It is worth mentioning that We also started the digital construction for Wango. Last year, we already released our BPAS, business process as service and connect an extensive range of IoT, we call it as Stardock System. As a first batch of the companies of the RMB pilot, we worked with the 4 major state owned banks and users can use digital currency to pay for the property fees online in the community app LiveHere. We have 2 national high-tech enterprises, Shenzhen, Wanwu and Wanri Technology. And we are also working with high convention and that is based to provide the public security and web based service. At the same time and we are also having the mobile Internet workbench as well as the command center to have an online web based and remote operation. Let me go to Page 22 on the Retail Property Development. Now you can see we have an aggregate of 9,900,000 square test of the retail L rail commenced operation. With the COVID-nineteen, we have many projects been put into operation successfully, And the group has 1,230,000 square of the retail area commenced and including surcharge in malls 20 community retail release. The aggregate retail area in operation amounted to 9,900,000 square meters. And the operating income from the real estate amounted to JPY 6,320,000,000 representing JPY 4.63YY. And we also have the commercial area under construction and planning to around 4,350,000 square meters. We also further improved our digitalization. The operation system of digital members covers 62 projects. Number of SCPG member exceed 8,700,000,000. We also completed the issuance of the Yingxiao No. 2 CMBS. And the CMBS, the 2nd phase of Shenzhen SAPG Center. And let me also share with you a benchmark project and it's been called as the Shanghai Nanxiao Ink Lady Mega. The total GFA is 240,000 Square Meters and it's already the largest stand alone pure retail shopping center. And around 40% of the first store in Shanghai and the new concept stores and 85% of the first store in this district. And on the inauguration day, we already attracted 300,000 food traffic and achieving a sales amount of 25,000,000 yen. We also have Olympic Standard Ice Rink and the EcoBotanical Gardens, Sky Runway and Fun Age Silters to be located there to provide entertainment service to the local residents. Please go to Page 24. That's on our logistics and warehousing service. Last year, our revenue was JPY 1,870,000,000, up by 37%, 20% from the high standard warehouse and JPY 580,000,000 for the cold storage, up by 60%. We're already the largest a cold storage supplier. We manage more than 148 projects in 24 cities and the leasable floor area of 11,480,000 square meters. And also for the cold storage, we have 20 cold storage warehouse with a visible floor of 8 1,000 square meters. We also completed the 1st rapid construction high standard code storage in the industry. To support the mission of COVID-nineteen vaccine storage, we We converted a Beijing Yijuan project in 68 days to become extended vaccine code storage facility approved by the partner Sinopharm Group During the COVID-nineteen and we also take our social responsibility, in Xiamen, in Ningbo and in Chengdu, we have 3 cold chain parks that have been designated as a local government as a transportation supervised warehouse. Please go to Page 25. You can see this is a benchmark project for our logistics and the warehouse project. It's named VX Shanghai Seaport Code Channel Logistics Park, GFA, is around 43,000 square meters. And it is also the first thermal control aerials and the first cold storage project in China being awarded by LEED Platinum Certification. It can provide an active 25 to positive 50 degree storage temperature. Okay. Let's go to Page 26 in sharing you with our other business. For the hotel and vacation business, we now have 23 hotel assets in operation in Shenzhen, Guangzhou, Suzhou and Hangzhou and Certain Tourist Sports. We are for the ski resort business. Currently, we operate 3 projects in Jilin Lake, Songhwa, Beijing, Shijinlou and Beijing Shoshansky Resort. And we received 6 120,000 ski tourists during 2020 skiing season. And we were being awarded as the best ski resort in China by the World Ski Award For 4 consecutive years, regarding educational business, we successfully established unique brands as Wanke Meisha Academy and DTD Education. After 5 years development, VENKi Meisha Academy has become the largest private educational groups in Shenzhen. VENKi Meisha Academy also list on the Run Educational Top 100 International School for 3 consecutive years, ranks in Shenzhen in 2020 and for DTD. And together, It has already 90,000 enrolled students. Go to next page. I would like to share with you how we leverage technology to empower our business. Regarding the development business, we leverage AI technology to realize the intelligent drawing review and e marketing. Well, regarding AI Intelligent joining the EU, and you see that We have already leveraged the technology to support more than 800 industrial routes. So the speed of the drawing review It's 8 times higher than that of the manual work. And currently, it has already been wide promoted and applied in Shenzhen and we're also working with more than 10 Design Institute and Agencies. And you see, Yixuan Feng, our mini programs also be self developed by Benqi, which can help to connect our users. And so that way, we can help to have the digitalized process, including digital sand box, VR pocket slot selection, online house visit, online house comparison selection, digital business card and the digital scenario so that the users can search for the right department online and come to visit us in the Uplight channel And currently through e house, our GMV is already 268,000,000,000 yen with total user of more than 10,000,000. So this time, for those audience who get access to our meetings through eHouse, and I also would like to encourage you to follow eHouse So as to take the coupon for future transaction. And at the same time, we also leverage the digital technology to manage every of our dollar. We provide customer with a better experience to have the smart cash rejector, online refunds and foster commission settlements to provide better experience to customer. And we also help to leverage the automatic and intelligent cash flow management. And based on the algorithm to find The opportunities make analysis and forecast and help to speed up the financial statements. Go to Page 25 Regarding the rental housing and we also established the largest and the leading digital operational platform in the industry. And we have already made the SaaS adopted by majority of the project. And we also Make sure we have a cockpit of the operational management to make sure that we have the well monitoring of the operational data. And we also have the Steward work order system. The store work can be assigned to the store store through online allocation to make sure that The responsibility has been clearly designed and workflow has been shown online. But at the same time, we also have a security management plus personnel plus Housing and Contract Management System. And currently, our smart security community has already been shared with other parties. And please go to Page 29. Well, for VX Logistics, it also leveraged technology to build an end to end supply chain business. Well, for the OMS order management system, it can effectively get access to multiple channel orders without additional cost. It can connect warehousing and also to optimize the cost. Our Tierless transportation management can also have a real time monitoring of the temperature to do the follow-up, service planning and data uploading. Well, for WMS warehouse management system, we can also have the intelligent order dispatch as well as intelligent allocation Tracking, which can help to improve the efficiency of the cargo movement in the warehouse. Please go to Page 30. Let me also share with you some of our practice from ESG perspective. First of all, we insist on the green construction And we continue to construct a product project to comply with green building standard. And you'll see that for 7 consecutive years, Our project, combined with green building standard, last year, we have 37,030,000 square meters of the newly added green buildings. By the end 2020, the cumulative area of the projects complying with green buildings amounted for 231,000,000 square meters. But at the same time, we also started to take industrial approach, for example, prefabrication to help to reduce the material consumption and energy consumption. And now it's already being loaded in 5 BG. And jointly speaking, the prefabricated building area exceed 170,000,000 square meters And 86% of the newly constructed mainstream project standard standardized constructions to be made. Please go to Page 31. This is a representative project for the green low carbon development. It's been called as Shanghai Shihui Benqi Center. And it has already 3 Star Green Building and LEADS Certified Gold Certification. For this project, the heating and air conditioner energy consumption for this project has been reduced by 15%. Higher than the specification and thermal efficiency of the boilers 92%. Now let's go to Page 32. In terms of the We are still doing our best to make contribution to the city. Last year, we did we donated JPY 200,000,000 to help Xiaoguan, Heche and Baixi in Guangxi completed the science countryside development in He Yuan, Shanwei and support construction of schools in Fujian and etcetera. And also, we organized hundreds of charity events and actively contribute our efforts in various aspects such as 0 wastage production for biodiverse, etcetera. We also fight to the pandemic. We donated 100,000,000 to Wuhan. Also Page 33. In terms of sustainable development, we are actively realizing the concept of it of this concept. And we conduct a stakeholder survey to identify key points for sustainable development. They are opportunities for green building, Occupational Health and Safety, Product Quality and Safety. And also, we established a Board Management's executive ESG management structure, integrating ESG management to the daily operation of the company. We continue to improve our ESG rating. For example, we continue to be included in the Hanhren Corporate System Sustainability Index. We are included in 100 and EAS 250 Index for the first time. We were rated in the MSCI. ESE Index has been raised from BBB to BBB. We're also awarding number 1 in the top 50 ESE Best Practice Enterprise by the center of Zhongshi. Okay. The last page of our business strategy. As we know that the Policy has been tightened in the real estate market. That means that We need to strengthen our fundamental, and we think that there's a era that highlights management strength. So we will There are still huge prospects for business such as urban renewal and rental housing. And for Also, Urban Management, we there's still huge prospect for it. For example, like cold storage, We will do our best to contribute our to the city, to people's life for their better life. Benqi will assist in serving our strategy to consolidate and improve the fundamentals to offer quality products and serve service meeting the budget needs of the customer, create true value. In 2021, We will persist in serving the real economy to consolidate our fundamentals to provide good quality products. And second, we'll persevere with steady and healthy operation to enhance resource conversion efficiency, speed up payment collection and manage better manage our expenditure with budget and ensure sufficient liquidity. Thirdly, we will insist on paying equal attention to development operation. From the perspective of full products category and full services, for cycle service, we will consolidate comprehensive residential community development and achieve capabilities, enhance our coordination of projects various formats. And 5th, we are all here to business development supported Biotechnology. So this is our report for 2020 annual results release. Now let's go to the interaction and Q and A. Actually, before the meeting, we have already started to gathering questions from investors. We gathered questions covering industry policy and technology methodology and dividend policy, etcetera, and Business Operations and for Business Technology and Dividend that has been covered in our slides. In terms of strategy and industry, I think a lot of you are caring a lot about this industry, so we will get questions. Good morning. Now we have 35 question raisers waiting in the queue. So Please keep your language in size and raise one question at one time. Now let's get in the question from Huachi, Citibank. Good morning. I am Jim from Citibank. So first of all, thank you for your providing this dividend payout of 20% for shareholders. I think that sales growth for like warehousing and logistics, you are the leading position and the gearing ratio still maintained at very low level. I think At the same time, this is very hard, hardly achieved, I know, heart 1. And I have two questions. My first question is that, firstly, now we see that since the second half of last year, the Government has issued a lot of policy. And for example, the red 3 red lines in August and now The management of a low end centralized rate and also some other policy in terms of a landscape. Supply and thing. We want to know Mr. Yu's view about this policy and the impact on VENKEE's operation. And some other real estate developer also released their results. We think that we saw that growth has been slowed, And we want to know the future prospect of the industry from your point of view. Thank you for your question. You mentioned questions. First of all first question is about the regulation like 3 red lines and you want to know Mr. Yu's view of those policies on Benqi. And second, you see you've seen that our peers have witnessed a slowdown sales. You want to know our estimation of our future, right? Thank you for your question. So previously, we gathered some of the interest topics that investors care about. And I think the policy's impact on vanqui is one of them. And I will spend a little bit time to answer your question and also similar questions. So first one, since the second half of last year, the government has issued a lot of policy like 3 red lines and 2 centralized management, 2 centralized management, low and centralized Centralization Management and Line Supply Centralization Management. And a lot of this policy all attract a lot of attention and study. And I think all this policy have the similar common resource that is a full character. In English, that means housing are for living instead of for speculation. If we like explain it, extend it, you're saying Actually, in 2017, from the government's report of the 2019 conference, it's already been raised that the house are used for living. It's not for speculation. We need to speed up our established measurements of a housing system that covers multiple entity of land supply and multiple channels of security. If like when the government just started to raise this concept, there is still a hesitation or question from the market. But now the past 4 years have shown that and have educated the market, let the markets Knowing the stability and consistency of government policy has never changed. In the government's report, We raised this concept and also Yi pointed out that we the government's the industry has already entered a new area. In the past, it was a high speed development. Now we come into a rough high quality good quality development. So the real estate development real estate market also need to adjust itself to this trend. In the past several years, we've seen this trend very evidently. Three red lines to centralized management policies that shows that this market, this industry not highlights management capability. In terms of this new era, the highlights management capability, we found out that one of the most significant changes that The house needs to go back to the nature of living. And real estate market needs to go back to its true nature. So this is a very clear trend. And in terms of the markets in the industry's nature, that means that The return rate of the industry will gradually go back to the average level of this of the society. So And that means the real estate industry needs to focus on development operation at the same time. And for operation business that covers long term rental, commercial office, etcetera. The very own nature of it is operation is So the enterprise cannot develop this business relying on hoarding materials and then making the money from land premium. And since 2007, Benqi has already raised our concept that we will not hoard land. We will not gather more land than we need. So we will not blindly seek for high land bank And we're not to make money on leverage. In the future, the competition will become fierce and comprehensive. So Where is the way out? That we think there's still a way out. We need to learn from the manufacturing industry to be more down to earth and make money on our service, on our products, on our work to create Good Products and Good Services. And this year is the 1st year that highlights management era for this industry. People are saying that's harder and harder to make money. We can not only make money online premium or leverage. So the opportunity Where is the opportunity? I think the Home Appliances Electronics have already set up a very good example for us. 10 years ago, the Home clients industry has already entered a similar stage of this real estate industry today. Now every household has already got enough home electronics in the hold has already got enough home electronics and appliances. People are saying that there is a ceiling of the industry in around like 2,007. But after the fierce competition, there are still Good companies leading companies survive like higher like media, like greed. They survive and they won the competition by their good product, good services and good operation like Media. Media firstly set up its strategy oriented efficiency oriented and global operation. So they did like digitalization reform, they did China reform and set up the T plus 3 sales and pricing model improved their efficiency of operation and return level as well. So this example told us that even in this era of competing in existing markets, Good companies can still survive can still win the competition through high quality development. As BenQi already said, The customers are our parents. We need to take good care of them and establish our comparative edge. We can still survive and win the competition. So where are the future opportunities? I think, First of all, our opportunities will come from 2 sides. First of all, the customers' demands are changing. For example, in the traditional development businesses, customers' preferences has already been changed a lot. Especially like after this pandemic, people are changing their preferences. People are spending more time at home and doing more things at home like and they have shorter time going out and the length and distance of going out has been narrowed. And we did a survey. We found out that Of course, the results are interesting. We found out that 87% of the customer spend most of the time at home. And so they have more demand for the space that provides better house, better apartments. And 92% of our customers have the need to work in their home like online. So they need a good environment and enough space. And 74% of our customer have the need to exercise and workout at home and 93% of the customer needs to pay more to dividing the function rooms. For example, living area or like area for hobby. So how can we provide multiple function for with our apartments to our customer. So this is new pain points from our customer. And we have another fan out of that. For apartments, customers also care a lot about the environment within 1 kilometer outside of their block outside of their district. So like the infrastructure auxiliary facilities within 1 kilometer of their home has become a necessary facilities for their customers. Togo. Around 83% of the customer, they hope that within the residential community and it could help to provide the exercise track as well as sports facilities. And around 58% of the customer, they believe the community based e commerce is much Important than the orientation of the flat. In the past, people prefer to have a house that has been already dented in either north or south, But now people believe the community based e commerce is more important. So you know that customer nowadays or in the near future, what they need is no longer a flat. They really need a high quality residential community that provide the commercial need, provide them good experience and some exercise facilities. For example, they can do body exercise with facilities. The school is next to the residential community So that they can send the kids to there and they can also send the kid to some of the core curriculum event clubs after the schooling time. And also the outreach, they can go to some areas to for example, the parks to take a work or do some puzzle dancing. And also, people can go to coffee bars if they already need to discuss something about the work. So you can see that the local residential community to impact the life quality of our users. So for us, it's more like a competency based tournament. And we need to consider the residential community, the supporting facilities. So this would be a new addressable market. For a real estate developer, we need to be fully capable of developing the residential communities also with the commercial settings, office settings and school settings. More importantly, we need to also well optimize the operation of those in that regard. Nowadays, we also see a huge demand from the Rental Housing department, the latter from the central governance meeting or from the 45 year plan. And the government has already made the full arrangement regarding the tax fees, the land, the finance and The responsibilities and the rights of the tenants from the central rental housing perspective, The government is trying to reduce leverage in the property market. Government also started to provide more policy support for the rental housing. It's a good signal for the long term rental housing business. Benqi is probably one of the earliest one to get into the rental housing market. Since the year 2007, we have already built our 1st centralized rental housing project named Wanhui Lo, Just in the Board for Guangzhou and for Shan, in 2008, these projects have been put into operation. I still remember The blessing that the residents give to this project, it's been made that we I'm living here currently, but in one day, we hope we can go for a better place. In 2,040, and we started to penetrate more aggressively into the Rental Housing business. And now we become the China largest centralized long term warehousing companies. And currently, we already have 140,300 units available. And currently, our occupancy rate is also more than 95%. Even if we see that there are going to be more challenges on the Rental Housing business, But we'll still be very positive on Rental Housing Business. I hope that it's going to be a very promising one in the near future. Well, you see that the changes from the customer can support our future development. Another factor is regarding the urban development. China's urban development already got into the 2nd phase. Building a metropolitan cluster would become a new driving for China's next round development, city redevelopment, TOD And mega project has already become a necessary part of a future city. For example, like TOD, when we get into the city belt or the city cluster department stage. The intercity connections and Will be conducted by rail transportation and the TLD model adopting rail plus property is very promising, But I can say that the TOD also requires the real estate developers to have very high capacities regarding design, construction and resources integration. Benqi did a lot of preparations in advance. And currently, you see our total GFA for the TOD product is already more than 20 million square meters. We showed you some of the benchmarked projects for the TOD project. And more importantly, the city is now developed in a more mature approach. How can we revitalize those historical and the culture straight and some legacy straight? In the past, we simply do the breakdown and the rebuilding. But now I would like to respect the history to keep the piece of the history for our next generation to do the so called organic redevelopment. The challenges that's not rest Apart with design, construction, the challenge is that how can we translate those legacy buildings and to empower them with some new culture elements. So in our presentation, we mentioned about Wangtings Street, Nantou Asian Town, Huang Hai Street and Yan Taishan of Fujian and Hongmei Culture Park from Shenyang. Those projects are very popular locally. And many 1 of those benchmark projects has become a necessary and a master destination for the local residents. So city redevelopment business has already become our new advantage. And we can say that for China, our industrialization is moving faster than that of the urbanization. So foresee That China, many cities and they started to catch up in building more infrastructures. And that's why many cities started to build structure. For example, Shenzhen, we are trying very hard to build more and comprehensive infrastructures. So for VENKi last year, And we joined the project, for example, 53 such projects for the school campus building, hospital building and sports culture facility building. And we also say that China's future urban planning has already been shifted from the traditional industrial planning into a triple integrated planning, including production life and ecosystem. That is also the trend for the future city development involving the Production, Life and Eco development. So you can see that when the future city march towards this 3 Element Integrated Development approach. It will also bring us more opportunity. For Benqi, from the very early on, we started to to work with our client and to work with the city together. In recent years, we also give the same weight to development and operational business. So So I think we're now on the right track and also build our competitive advantage in certain business and verticals. I think I've already mentioned some of that. So jointly speaking, we follow the client needs and also to catch up with the city redevelopment. This Industry still provide us a huge addressable market, but those opportunities are not coming to us so easily. Whether we can see these opportunities truly depends on whether we're capable to take care of the pain points for the customer and then provide a competitive product and service. I think maybe We won't be able to make a lot of money or the quick money, but we will still spare our efforts [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] To make the money more sustainably, this market is still full of fatalities. We always believe Those people with competency will be able to win in the market for the future. Thank you. Thanks. Thanks for Ken. Thanks for your question. Now let's welcome the next investor to raise a question, please. Let's welcome Guangfa Security, Guo Zhen, to raise a question, please. Thank you very much. Thanks for VENKEE executives. And my name is Guzheng from Guanhua Securities. And we say that VENKi is a well consolidated company. So I have one question. Mr. Zhu Madam Zhu, as you're doing the presentation, you said you're Still on the tier yellow, and you can see that and your NACM ratio is very close to the standard of the green tier requirement. So what would be the future outlook? And may I also Say that the net gearing ratio was kept at very low level, but a very low net gearing ratio, is it also going to impact the company's future investment? For VENKi, do you also consider further improve the net gearing ratio so that to provide more cash support to the company's future development. Thank you very much. You mentioned two questions. The first one is regarding the tier yellow and the tier green situation. And secondly, whether the OUTRO low net gearing ratio would be further improved in order to support our future development, right? Yes. These are the two questions. Let's welcome Madam Han to answer the question, please. Thank you. And thanks for Bojoon for the question. And I know this is also a concern for many investors. For VENKi, for long term, we support the stable and the prudential financial strategies. We hope that we can keep a healthy financials and well performed crediting. And that's a strategy we insist for many years. Madame Zhu also mentioned, in 2021, our operating OpEx is JPY 53,200,000,000, and we have a positive cash flow flow for more than 21 years consecutive year. And we also have JPY 195,200,000,000 of the cash on our balance and 2.4 times higher than those interest borrowing liabilities. And you can see our net Like diabetes ratio is 80.1 percent and lessons very low in the market. So it's already been optimized compared with beginning of 20 I think with such prudent attitude, we will still stick to this policy. Well, Madame Zhu mentioned about that excluding our receivables, Currently, our gearing ratio is already 40.4%, only 0.4% higher than the standards of Tier green. So we're very confident we will go back to Tier green in Q1 of this year. And just now, our Chairman mentioned The industry is now seeing more management dependence. The high leverage and high land banking history has already been changed. We won't be able to stock the Bitter Materials and the land banks to wait to cash out from the appreciated land price. So we believe a prudent financial policy and good financials can make sure we have A promising future and more flexibilities, and we will also stick to stable and healthy operation in the near future. I have one more point. And you mentioned whether the net giving ratio is too low, whether it's going to impact our redevelopment. And we're not seeking for to a loan net gearing ratio. 40% would be the bottom line we sticked for a long time. It would be the ceiling of our net gearing ratio. Sometimes, we keep a low net income ratio because we are still waiting for the opportunities. For example, the centralized supply of the land resources And it means that the cash need to be very flexible. If there's no flexibility from the cash flow perspective, we're going to be highly pressured in the centralized land resources supply age. So that's the reason. And our net gain ratio, 80.1 percent, It's because we are still waiting for the opportunities from this ever changing market. So I say we are not keeping the low net giving ratio on purpose. We'll just keep it with a rational range. Thank you. Thank you. Thanks, Guo Jun, for the question. And also thanks for Madam Han for your answer. And let's welcome the next question. Now let's welcome Huang Yi to raise the question. Executives. I come from Jinwei Finance. I'm a finance journalist. I would like to ask a question regarding your investment in Taiho. Of course, there are some market information claiming that Wang Yaowen, who used to work for VENKi and started to work as the Vice General Manager of Wangho. And then VENKi and Wangho established The asset management company, is it true? And we would like to know for Benqi whether you're going to involve into the operational and management for Wanqo. Are you going take over the management in the near future. Thank you. Thanks for Interface Finance for the question. And you are regarding you were talking about the progress of working with Taiho and whether we're going to take over the management in the near future, right? Yes. Mr. Zhu, do you mind to answer the question? Okay. Thank you. Thanks for Madam Wang. Thanks for the question. Actually, this question has already been asked during the interim release last year and many people are concerned about this. And let me just respond to you with 3 points. First of all, for Taiho. If it could be well resolved and it would be a good signal for the client financial institutions, The project shareholders and other stakeholders, but sometimes even if it's a good signal if A Tahoe issue could be well resolved, but it is also very challenging. And it's already been 6 months, but We don't have a very good progress on this project. And second point is that We help someone else, but it doesn't mean we're going to trouble ourselves. And talking about whether BenQIES is going to invest In Bangho, actually, we have some very strict conditions. As long as we have a very good plan and then we will consider whether to invest it in or not. And still We are still far away from being an investor for Wangho. And thirdly, we believe that the key to solve Taiho's problem. Still lies in the hand of Taiho itself and its creditors and other stakeholders, especially its own creditors stakeholders. And also you asked whether the title is a company as we planned to get in, but It's not like a company that does agency work for others. Tahoe is one of those like companies, but it has An issue that we can see that is still going to take long time to solve its own problem. And previously, all stakeholders are talking about whether we establish another company to solve the problems. And for the projects, we can start to commence some of the projects before others for the projects that stakeholders can reach agreement on. But the specific solution is still in the process of negotiation and discussion. Thank you for your answer. Now let's get in the next question. Next, Welcome, Ms. Wu Shuying from 21st Century Finance Economics. Good morning. My question, as Mr. Yu mentioned that for the future, the industry still holds opportunity. And was VENKi's file and what measures VENKi is going to take to respond to it. And we can see that and other fees We have seen a trend that for the we've seen peers have making investment and whether Benqi are going to make similar actions. Thank you for your question. You raised a question that for the future opportunities, whether how VENKEE is going to see some? And You've seen that our peers have been increasing their investment in some of the operating businesses. Are BenQi going to do the same thing? Thank you for your question. As Mr. Yu Liao already mentioned that I have already actually covered some of the issues that you've asked. First of all, the industry is changing. We think it still holds journey. We still need to face the opportunity and seize them. In terms of how to seize the opportunity, we have the 3 types of measures. First of all, to serve our customer well. So first of all, the industry comes from customers' demand and needs. And as a company. All competitive edge advantage lies in our ability our capability to serve our customer well licensing products and services that we can provide. We need to serve them well. Before that, we need to understand them well. Last year, we issued we launched a new post that's called Chief Customer Officer. That's Mr. Yulian launched this scheme. We have several Chief Customer Office in our office. For these people, they've help us raise like more hundreds of customers' needs and demands. That helped us a lot to generate better insights to understand our customer. And during this process, we, of course, discovered some of the endpoint that we ignored before. For example, people are saying that they can only get their housing certificate after 1 year when they're after 1 year they're lifting the new house. So To solve this problem, we issued a new program that where we can offer the certificate while we deliver the house And we set up the record of the of how speed we can deliver our certificate in Qingdao City. And also, in terms of also after customer purchase our housing, We provide our housekeeper to serve them. So starting from the house and delivery, our housekeeper are starting to serve them and the same person, same housekeeper will keep serving them after they live in a new house. And also, While our customer purchasing our house, It's enduring consumption goods and occupy quite a big proportion of their money. Of course, they care about the process how the houses are constructed. So we will open our construction site online regularly, but customers still not satisfied like we did it like every 2 months, every 3 months. And then later, we opened this online construction site. So customer can visit the constructions, the house is being constructed anytime. And we hope that customer will make their own contribution in the construction, help us to co construct DARE Apartments. And second, along the development of the city Along the pace of the city's development, we are paying equal attention to the traditional development business as also the operational operations FRS business. And as you mentioned, how what's your our view on self holding business and operating business, I think we need to pay equal attention to them. In our traditional business, they are what we could add like development business and Logistics, but sorry, they are development business and the property services business. But then we are also building up our capabilities and edge in other business like logistics, commercial, long term housing, laundry and ski resort and hotel, And also, people are caring a lot about how VENKEE is doing with the self holding business. And people are paying more attention to the indicators like the revenue and profit. But this type of business, for the model of it, is different in terms of how the cash flow going to perform and how the business is going to develop. If we only use the SIM point indicators, same as Development Business, then this is not appropriate anymore. And last month, we have a case, a similar case that we can share with you. For example, last month, Linjiang has signed a agreement that you take over 50% of the stake from Qibao, VENKi Square from GIC and with the valuation of JPY 6,400,000,000. And for this project, the development, construction operation were all covered by Benqi. And now Benqi holds 50% of the stake, but We can see that the valuation of Linjiang's stake has already been raised a lot compared with the initial investment. If we Due to calculation based on the current trading price, then we can see the annualized return rate is quite good, meaning 15%. But if because we Financial our financial report were calculated based on historical cost, so the true value can hardly be reviewed, but we still believe that the market value of this assets was very high, was very good. And so for the holding type of this business, we should not use single financial indicators to evaluate. But instead, we need to use like from like, we need to do it from the market perspective, use market valuation. And another case is about VX Logistics. After 6 years of hardware, we've already built up a nationwide logistic web. And our business has been in the process of a rapid development. For example, orange that everyone's having in 'eighteen, This is that comes from our VANKIS Logistic Park in Kunming. That's the only high standard transition logistic warehouse in China. And for the 1 of the chocolate that you're that people are eating in the Everyone out of 2 actually, 50% of This chocolate comes from our Benqi cold storage warehouse. So we think the NOI of Our highstand warehouse and the cold storage hand housing, which are in stable operation, can satisfy our basic return requirement. Of course, during this process, we've paid our tuition, but we've seen we've learned our lessons. We've seen this effect, And we've already built up our comparative edge in different markets submarkets. And thirdly, We need to better utilize technology methods to empower our business development. As we you can see from our slides I showed to you, I think the technology can play a much wider role, not just improve the efficiency, But also, it's going to be one of our competitive edge facing the future challenge. And it has already been embedded in some a lot of our specific business process Like the example we've already shared with us, logistics, long term rental housing and other or those self holding operating business. Behind each of this business, there is an IT team technology team. Like Wanwo, we've got we've Wanhua has already got one of the high technology certificates in China. And for customer, we provide a lot of benefits from the technology side like AI drawing review that drastically improved efficiency and quality of the menu work and lowered the cost by 90%. So in the future, we'll keep investment our investment in the technology. So this is the 3 measures that we're going to take to see this opportunity. Firstly, is to serve the customer well and second is to stick to our position that means the service provider and talent and CV and talent developer and pay equal attention to develop an operation business. And on top of our existing business, we need to keep build our edge and capability. And 3rd, aspect of that we're going to focus is technology. That's so much from my answer. Thank you. Thank you for your question. And now let's get in the next question. Now let's get in, Mr. Wangfu from CIC. Good morning. I'm Wang Yu Zhong, CIC. I have two questions. First of all, The nonresidential development business, including logistics, commercial dairy and healthy and stable development getting better. So I want to hear some of the outlook of this business. What are the priority of this business? And how are we going to allocate resources? What are the our priority rank and what's your plan for like getting listed or capital operation for this business? And the second As far as you mentioned about management capability, can you talk more about it? What does that mean specifically? And how Benqi going to evaluate whether a company has a good management or not? And what are the areas that you can make continued improvement in the future. Thank you for your question. So for CSCC WENPU, I think you have two questions regarding our non development business. And what would be the business priority ranking? And what's our plan for the future capital operation, including the IPO possibilities. And secondly, you are asking about our interpretation of management dividends and how VANQIES is going to take actions in order to seize opportunities from management defendants, is it? Yes. I think the first question And let's welcome Howard to answer the first question. And then the second question will be answered by Mr. Zhu. Okay. Thank you. Thanks for the question. Besides Residential Department business. For other business, how we do the priority rankings? You see that for our business deployment, besides the residential project development, property service. These 2 are our fundamental business. Well, in other verticals, we also started to and provide a diversified services. We have 7 BUs internally. And we mentioned in the presentation, We have long term rental housing, commercial properties, logistics warehousing, resort and fee as well as the educational sectors. So I think Mr. Zhu has already mentioned Regarding the Commercial Properties and Logistics and Warehousing performance, we made some very interesting pilot in the past few years, And we will also be well performed in those segments. For example, Qibao, VANQY Plaza and the case in Shanghai. And also, We shared with you some of our practice and the progress in logistics and warehousing. Well, regarding the priority ranking of those so called other business, And we always stick to the principle of co development and co grow with Citi and the client. That's our fundamental principle. Our investment into those verticals would be given the same weight. But regarding where should we invest and how much should we invest, It's truly going back to the philosophy of go with the city and go with the client. The client's need would be our priority for future investment. So how can we judge the future development of the city and the client? I have 3 indicators to share with you. And first of all, we're going to take a look at the inflow population of the city. Regards whether the city do have the net inflow of the population. And secondly, no matter for our client for the city and they are still [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Asking for the supportive infrastructures be made. For example, Mr. Yu Liang mentioned and many users, they are paying attention to the supportive facilities 1 kilometers along the residential community. And more importantly, we'd like to know the industrial development within one city. We mentioned about the 3 elements integrated approach, including production, lifestyle and ecosystem. And we first of all needed to have the production industry to provide job opportunities to support the life and ecosystem development. So inflow of the population and Industrial Development and as well as the City development would be our key concerns. So for our resources allocation, we don't have a so called priority ranking or a master plan in advance. We still would like to seize the opportunity in this market and also stick to the fundamental principle of go with the city and go with the client to identify the opportunity in the market and then to seize opportunity. And this is my answer to your first question. Thank you. Let me say a few words on the first question. I think something is starting to be further aided by me. You know that regarding Our investment into the business, we need to consider how much the addressable market would be in each vertical and how whether we can have the corresponding capacities to do so. And if the market is truly huge, but we don't have the capacities to take that opportunity. It is still going to be felt. So the competency or capacity would be our first consideration. We will consider our capacity and the competence in advance. We have a say in Chinese, if you are not capable of doing something, it's better for you not to go for it. So for some verticals, if we don't have a well consolidated capacity, we won't go for it. And regarding the IPO possibility, I think all of our business need to be proved in the market and need to be challenged by the market. And they will be IPO ed gradually 1 by 1. But there are two considerations we need to be made, including the comprehensive development and the long term development. Talking about the comprehensive development, it means that for Benqi, all of our business are actually working with each other like sharing the synergic approach. So for BenQ Group, and we will take care of IPO listing according to the performance and profitability rather than just purely think about a single business line. So we really want the business to be IPO that could actually support the comprehensive development of the company. Well, secondly, in the longer run, we don't need to catch up with those popular trend in the capital market. For VENKi, we don't want to incubate our business and then to sort it out. And this is not the business model to show how successful we will be. We already wanted to operate our business in the longer run to make it better. That's our wish. So if we follow the capital market trend to choose which business to be IPO or not. That's not going to be something we're going to do. And we have to consider the comprehensive synergy with other business units and long term development of the business and then to choose the right business to be IPO ed. Thanks for CICC, Mr. Wang, for your question. Management dividend time truly bring us some new reflections, new lessons and new challenges, and we need to think about what actions should we take. We made a very long time study In talking about how can we respond to this management dependence time, 2 key words. We need to be away from our shortcomings, we are at the same time to build our advantages. Mr. Yu, in his answer, has already mentioned. In management dependence time and in the past, We cash out from the appreciated land price and from the financial market, but now We're making money because of our hard efforts. So with catching out your own capacity and your own competency means You have to try to build your own advantages in the management dependent aids. And we see that the competition would be more fierce in the market. Enterprises, they won't be able to rely on just 1 to 2 key resources to be successful in the market. So it's better for the company don't to have any disadvantaged business in the longer run. And last year, we also launched the summer action plan to consider our business development. And we hope that a key market value would be our key strategy for future development and also an important KPI to assess the business development. Long term market value means we need to stick to long term development and stimulate innovation, use less energies so as to cater the customer need and then to create the maximum social surplus as possible. If we really want to have the long term market value, we have to take care of the following points. First of all, on each of vertical, we need to have the leading advantage. And this is the first point. And for each of our business, we We need to follow the changes in that vertical, identify the risks and find the opportunity and then to seize opportunity by building our advantages, especially the value proposals that competitors won't be able to be copied and then to create value to the customer. And secondly, we should also have a multidimensional capacity in house. With the fair browse competition, A small team is going to be able to success in this market. We have to build our advantages as a leading one to make sure our middle decks and the back office can also support our front line work. And thirdly, we hope that technology could also empower our business and so that it can help to release more values to the market. As I mentioned to all of you, Technology is not only empowering the business, it's already changing our business. We need to make sure technology is a part of our business and so that we can take countermeasures very easily. But I probably used too many VENKi glossary terminology or too much corporate terminologies To put it into a layman language, and I was just want to share some of my personal points with you. In the management development's edge, we need to serve the customer well and also build a good product and a solution, operate the business in a comprehensive approach. We should also make sure that the ecosystem could be well reviewed and investor relationship and payout to the shareholders need to be well obtained. And so these are some higher requirements for our overall capacity. If we work harder and we pay and we give decent returns to our shareholders and also have the so called 3 element integrated development approach, then we will be confident to adapt to the management event and age as well as to formulate countermeasures to take care of the challenges in the market. And I also would like to make one more comment besides what's being said by Mr. Zhu. And I'd like to say that VENKi has a very clear strategy for the past few years. With the clear strategies, There are 2 shortcomings, 1 on organizational structure, 1 on Thailand acquisition. And when we got into the management and development's age, if there's more various competitions, if the synergy between different BU need to be well managed that we need to have a corresponding well performed organizational structure. And that's why 2 years ago, we started to build our organizational structure and optimize it. And another point I'd like to mention is that for VENKi, we're encountering a new challenge that is on Thailand's site. With the organizational structure, we need to pay more attention to talent. Last year, it is Benqi who first proposed a concept of being a younger brand. And now We have the so called a name called as the Elite Place. It's not only to make our brand younger, but more importantly, for Tencent, those tech giants. And they have We've already become a very well brand. And when we were we are now competing with them over the well performed talents. Why could it be? According to our introduction, you see technology is a part of our daily operation. That's why We started to work with the talents and compete with those tech giants over the talents. So our definition of talent has been changed a lot. In the past, we take care of the talents in the industry. But Now we need to acquire the talent from the whole society rather than just in the property market. So for VENKi, we need the so called best talent, the 10 point talent. So you see that how can we have a good organizational structure and acquire the best talent from the society. These are the 2 great challenges we need to address in the management time. Thank you. Thanks for CICC, Mr. Wang, for your question. And also thanks to our executives for the answer. And now let's get the next question in. Let's welcome Sally and Shi to raise the next question, please. Executives, good morning. Can you hear me? Yes, very clear, please. I have just one question for Benqi and Your 2020 summer meeting, I mentioned about the extended meaning of the partner scheme. I know that your share price being down by 5%, whether this equity holding scheme is still going to continue? And this is my first question. Madam Yang? And did you already finish your question? Yes. This is my first question. And for the partnership scheme, and you extended its scope. And but your stock price was down, and it was down by 5% today. So I'm not sure whether your employee partnership scheme will still continue. Thank you. So your question is regarding the employee partnership fee and its future outlook, right? Yes. And also your share price was pretty down recently. So How do you going to comment on that? You know that for VENKi, we have our employee partnership scheme And our shareholders can actually arrange a scheme by themselves. Our partners, they truly want to tie their interest with other shareholders. Woman. Of course, we hope that in the future, we can hope to make more plans for this partnership scheme. Now let's get in The other question? Now let's welcome a question from Mr. Xu from Tianfu Gen Securities. Good morning. I'm from Tianfeng Securities. I've realized that the settlement gross that margin has gone down. And in the future, what are going to trend for gross part for settlement and for sales in the future 2 years? And what are the are you What's your view on the future on the industry's gross profit trend? Your question is about the trend for the gross profit margin and also the sales trend for the industry. I'll let Mr. Zhu answer your question. So first question about gross profit margin. On the surface, it's a profit margin question, but actually is a profit margin issue of the whole industry. We've made some internal discussion about it as well. Internally, for VENQY, we have reached the consensus covering 3 aspects. First of all, we noticed that in the future several years. The land premium has occupied a higher and higher percentage among the housing price. And so that will be shown in the settlement in the future. In the short run, the profit margin in these real estate industries is going down. There is a downward trend. And this is the fact and the consensus we reached. And second, in terms of the long term, for the industry that can develop forever. No singular industry can be better than all other industries forever. And talking about our own industry, I think the return and profit level We'll go back we'll revert back to the average level in the society. And thirdly, it's about the return. Social the return level average return level industry does not equal to a return level of a company. For those companies who have a better management operation, they can provide a better return and provide true value. Of course, market changes, profit margins changed, and that will impact the value we created for shareholders. So far, Of course, we see more difficulties than before. We need to work harder than before. And in terms of the total the overall industry, and I think for Benqi, We face uncertainty. While we are facing uncertainty, we rarely make any more comments. We don't like to make more comments and predictions like others. Like as we Often say if we are present, we just need to do our job well, crop our land well. The industry has its own logic. It has its own principles. And we will make we responded to the changes and do our job well. We will flow with the tide to follow the change and accommodate ourselves to better meet the needs of the changes. Of course, we need to Seek for the best results, but we respect the markets. We need to do the right thing. So what are the measures or correspondent measures? 1st As we've often said, first of all, we need to satisfy the need for common citizens, They're excited for the real needs. And second, we need to focus our strategy to be a talentless developer that covers like 3 aspects like places with population inflow, places that has industry support, Land has become enjoying consumption goods already. So these are the three metrics that we're going to evaluate How we going to develop business geographically? And thirdly, we need to go flow with the tide. So we think we will just do our job well every day, and every day is a good day to sell house. Thank you so much for my answer. Thank you for your question and thank Mr. Zhu for his answer. Now let's get in the next question. Now let's welcome Mr. Huang from Meiji's Daily Economics News. You've mentioned about talents. I want to know what Are the hiring clients and there are rumors that Benqi is Select is launching a headhunter scheme and what are the reasons behind this scheme? Thank you for your question. You noticed that There's Dajiangdaha program. And you've also heard about that we are launching headhunters game, so you want to know the reason and target. Okay. I'll answer your question. And it is true that we have this pet hunter skin. And after this game launched, actually, every 10 year in Vanquis history ever When VENKIES entered a new stage, we will make our own preparation in terms of organizational structure and talents preparation. Let's go back to like 20 years ago, like in 2000, when we are in the golden time of the real estate market industry. The industry has faced a shortage of talent. So we launched a scheme of hiring scheme. We're recruiting talents directly from schools. At the same time, We have already prepared talents in Hong Kong. We also we hired a lot of for managers from Zhonghai to support the VENKEE's development. And later, We already have the sense that VENKi is going to have a huge target, huge aim and of like JPY 100,000,000,000 of market. So what are we going to do afterwards? So then we started the 7 plan. That means to recruit elites, talented people from the society to join us. And then now it's 2020. We also now feel it's the time, it's the era that highlights management capability. So we made corresponding strategies to prepare ourselves in terms of organizational structure And then to better call to match people with tasks, as we said, for comprehensive competitiveness. We are evaluating ourselves from the whole society. So we need the talented people from the whole society. For like Benqi today, like we need to legal head and think these people need to have very good knowledge, perspective and expertise of the domestic law and also international law. Then he's going to be really helpful for what's BenQIES going to do in the future. So as Now we already recruit our Head of Legal. And also later, We will recruit a Chief Development Officer, and we have already evaluated the candidates of general managers. We recruit talent from the society. But for specific human resources issue is quite sensitive. Some of them are still under negotiation. Of course, we have achieve something, but at the same time, we have we are bearing losses. Some of the talent people being hired away by others. And we are of course, we are hiring talent from RPS as well. So this is our ideas in terms of human resources plans. So when the strategy has been satisfied has been set, we need to have talents. We need to prepare ourselves in that aspect. So of course, you have good candidates to recommend. We are most welcome. We have a special task for Phosphat. So for these hiring issues, each of them each of these requirement will be replied within 2 days. So we won't keep the talented candidates waiting for long. That will reduce the attractiveness of VENKEE. We are we desire, we crave for talents. So and we are looking forward for your support and recommendation. Thank you for your question. And Mr. Yu's answer, we have always craved for all kinds of talents, And we now are making advertisement for hiring. And because we have a limited time now, we only and answer 2 more questions. Now let's get in the next one. Now let's Welcome Mr. Yuan Hou from SY Securities. I am from SY Securities. I have a question That's about WAMO. I want to know what's the medium long term development target for WAMO and what are the targets competitive competition. Is it like a beike? And what are the indicators going to use to evaluate its performance? What kind of indicators are you going to use to evaluate? Okay. Thank you for your question. You mostly care about Wanwu, its mid- and long term development and its target of competition and indicator of evaluation. We upgrade our brand on top of our existing Property Services business. There's a picture in our slides that shows 3 aspects. There's 3 7 branches of a tree that goes to everywhere. In short, for Wenwu, we will position ourselves to a service Service Provider Office Space and Technology. We will cover like office, commercial and Others for Benqi's Property Services and KUSHMAN. And for Wenwu, We hope that we can base on existing advantage to provide quality services, better manage the time, better manage the city. In terms of technology development that will be based on our PaaS PaaS platform. We position ourselves to lower the operating costs for property companies to improve their efficiency, improve their quality of services, to help them build their web of business. It's just like hotel management company, help the hotels to manage the business well. It's like a technology company behind the hotels management. We also provide like remote digital method for peers, digital tools for them. Under this new brand, we We'll still be centered around like space and services and technology and services. We extended the boundary of what we provide, what we do, and we focus more on the synergy between different segments of business. And we are exploring more opportunities and possibilities outside of the circle. And in terms of the digitalization of 101. It is already based on our operation and experiment experiences that we accumulated in the past. And then we transfer them as a capability to offer to others like PaaS, like smart devices, like OSs. For example, like BPAS is an end to end services. Always, it's a spatial operating system. It's like a fundamental AI platform. So this is our preparation in 3 aspects. They are all from perspective of long term development. We did not position ourselves as a traditional property services company, but rather, if we focus more on technologies utilization to better connect Different streets, different blocks, different communities, different commercial, different cities with technology and better connect different digital spaces. And then Ultimately, we provide our unique value and competitive edge. So that's how we position ourselves. And then you asked about target of competition. We can't find a specific one exact one. We of course, there are a lot of good companies covering different industries. As Mr. Yu mentioned, and you know that we're soliciting we're soliciting the Thailand from other industries. Base. And just as Mr. Yu mentioned, the 10 point based talent, and we hope that the talent can actually work with us to help to accomplish this journey. Thank you. I just have one more comment to be made. We mentioned about bake And but for Wangwu, and we share one point, the same as Baker, what we need to learn from Baker. Baker is redefining the vertical ZRA, Well, for Wangwu, we're also going to redefine our vertical. Another comment I'd like to make is that For WANU, and we still have a huge addressable market. We won't be able to like that the Chinese parent always full of anxieties and use the academic school to consider the kid's growth and development. As it is addressable market, How can we support a comprehensive development of this market is a key. We need to have a well consolidated basis in advance rather than just purely look at the academic score of the kids. This market is more like a kid. It was growing healthy and happy, And we will be able to bring this kid to become a wonderful person. Thank you very much. Thanks for the question and thanks for the answer. Now let's get the final question in. Let's welcome Li Yan Yan from China Entrepreneur to raise a question. Thank you. Thanks for executives. My name is Yidian Yan. I have just one question to Mr. Yu. Just now you mentioned about BANKY. And for BANKY, it was being IPO ed and its market cap are very high and which makes other property developers envy a lot. So what's your interest in Beko? And for Alibaba and JD.com, those e commerce client. They also started to penetrate into the property market. So for VENKI, I know that you are also accelerating your business development. Can you share with us on the risks and the situation of this industry. I think you were mentioning about the digitalization and how it's been done within Benqi. And you truly want to know what would be the interest of Mr. Yu in those technology. Actually, I'd like to learn from those peers to improve our technology driving content so as to define this vertical. That's all from answer. Okay. We see that we have many investors and friends from on the media. And that's why we overrun this annual release for a few 20 minutes. I'd like to make a commercial here, and we also use e house and This mini program to provide the live streaming of this annual release. E House is a very important digitalized marketing platform of Benqi. If you are in need of our service or solution, please follow our e house mini program. And you will also be collect the coupon if you register and follow us today. Thanks for joining us for 2020 VENKEE annual release announcement. And if you have any further questions, please send it to our IR e mail box, ir.oneco.com. And here comes to the end of this announcement.

• Annual report
• Slides