BEST Inc.
Q3 2019 Earnings Call Transcript

Published: 14 Nov 2019

[Operator:]

Good morning and good evening, ladies and gentlemen. Thank you for standing by, and welcome to BEST Inc.'s Third Quarter 2019 Earnings Conference Call. At this time, all participants are in listen-only mode. Following management’s prepared remarks, there will be a question-and-answer session.With us today are Johnny Chou, BEST Inc.’s Chairman and CEO; and Jenny Pan, Principal Accounting Officer. For today’s agenda, Johnny will give a brief overview of business and operational highlights. Then, Jenny will explain the details of financial results. Following the prepared remarks, you may ask your questions. Please note, this call is being webcast on BEST Inc.’s IR website at ir.best-inc.com. A replay of this call will be available after the call. An investor presentation is also available on the IR websiteBefore it begins, I will read the Safe Harbor statement on behalf of BEST Inc. Today’s discussion will contain forward-looking statements. These forward-looking statements are based on management’s current expectations. They involve inherent risks, uncertainties, and other factors, all of which are difficult to predict and many of which are beyond the management’s control. The company does not undertake any obligation to update any forward-looking statement as a result of new information, future events, or others except as required under applicable law.Please also note that certain financial measures that the company uses on this call are expressed on a non-GAAP basis such as EBITDA, adjusted EBITDA, and non-GAAP net loss. The GAAP results and reconciliation of GAAP to non-GAAP measures can be found in BEST Inc.’s earnings press release.Finally, please note that unless otherwise stated, all figures mentioned during this conference call are in RMB. Today’s call is being recorded.Now, I would like to turn the call over to Johnny Chou, Chairman and CEO of BEST Inc. Johnny, please go ahead.

[Johnny Chou:]

Thank you, operator. Good morning and good evening, everyone. Welcome and thank you for joining our 2019 third quarter earnings call.BEST’s third quarter results were highlighted by strong revenue growth and significant net loss reductions, which you saw us achieve positive non-GAAP net income for second consecutive quarter. And we remain on track to achieve our goal of achieving positive non-GAAP net income for the full year 2019.Despite challenging market conditions, e-commerce grew at a healthy pace, which contributed to accelerating demand for BEST supply chain solutions and logistics services. BEST Express and Freight continue to bring market share and lower costs. While Supply Chain Management and Store+ optimize the operations and improve the profitability.Our other segments of UCargo, Global and the Capital continue to expand and to deliver strong growth as we capitalize on the significant opportunities in the truckload service brokerage and geographic expansion in Southeast Asia.BEST is very well-positioned to maintain our strong momentum as we enter into the fourth quarter, which is a peak season for our businesses and we - as we execute our strategy of above market growth and increased profitabilities.Now let me share some business highlights with you. BEST Express continue to gain market shares while improving its operating efficiency. Express parcel volume exceeded at RMB 1.89 billion in the third quarter, an increase of 38% year-over-year which is 1.38 times of the industry.Market share increased to 11.7% from 10.8% in the same period of 2018. Market ASP continued to trend lower in the third quarter, ASP including last-mile fees, decreased by 13% year-over-year to RMB 2.75. ASP ex-last-mile decreased by about 17% year-over-year from RMB 1.32. We continue to make a strong progress in improving cost structure by optimizing BEST Express networks and investing in technology applications.Cost per parcel decreased by 13% to RMB 2.62 year-over-year as we continue to reduce transportation, labor, lease and other cost. Cost per parcel ex-last-mile decreased by 17% to RMB 1.19. We also reduced Express operating expenses of parcel significantly.Nine years ago in November better spread target operations and has since made a tremendous progress. We have since build one of the leading networks in China and achieved a significant growth over last - over that period.As of the end of third quarter, BEST Express network spend 94 spend 94 regional hubs and sorting centers, over 5,000 franchisees operating nearly 40,000 service stations, carrying 100% of all provinces and cities and the 99% of all districts and counties in China.We have deployed 80 automated sorting lines and a 967 dimension and weighting scanning systems and achieved 100% digital weight bills. As we continue to optimize our network and invest in technology application, BEST spread is well-positioned for this next phase of robust growth.BEST Freight, our leading nationwide LTL platform continues to deliver outstanding results. For the quarter, freight volume exceeded at 1.88 million tonnes an increase of 28% year-over-year significantly higher than industry average. Revenue grew by 26% to RMB 1.38 billion, while gross profit margin increased by 1.7 percentage points year-over-year to 6.3%.We continue to expand it’s last-mile current footprints, the total number of franchisee operated last mile service stations increased by 52% year-over-year to over 17,800 from 11,700 in the same period of 2018. BEST freight is entering its eighth year of operation over that period we have built top two LTL network in China spending 99 regional hubs and sorting centers, over 4,500 franchisees covering 100% of provinces, 99% of cities and 97% of all districts and countries in China.Our extensive network, nationwide network and expanded last-lime service coverage, position us well to serve increase demand for large items e-commerce transactions, while continuing our industry-leading growth. For BEST Supply Chain Management, our focus was on growing the franchise to cloud order fulfillment centers and improving margins.As a result, the total number of orders fulfilled increased significantly by 53% year-over-year to over RMB 86 million, of which, the total number of orders fulfilled by franchise Cloud OFCs increased by 1013% to over RMB 40 million.As of September 30, total ground floor area of Cloud OFC increased by 15% year-over-year, to the 3 million square meters, of which over 1.3 million square meters were operated by franchisees. Gross profit margin doubled year-over-year to 8%. Going forward, we will continue to focus on developing smart supply chain solutions and expanding BEST supply chain service offering to our customers.For BEST Store+, we continue to execute our strategy of growing the number of a higher margin franchise BEST-Neighbor stores, while improving order quality of the margin membership stores. In the third quarter, total number of branded stores, including franchise and self-operated stores, increased by over 160% year-over-year to over 3,400 as of September 30, of which the number of franchise of BEST-Neighbor stores increased to over 3,000 number franchise BEST-Neighbor stores increased to over 3,000 from around the 1,000 in the same period last year. The total number of orders fulfilled for franchise of BEST-Neighbor stores increased by 400% to nearly 100,000.When the total number of orders fulfilled for membership stores decreased by 5% to around 780,000. As a result, we improved the margin by 3 percentage points year-over-year to 11%, while reduced EBITDA loss by 25% compared to the same period of 2018.As I mentioned in the last call, we are in the midst of conducting strategic review of the Store+ business as it turned back on its next phase of development. We'll tell you more about it later on.UCargo, our truckload service brokerage platform, continued to grow rapidly since we opened its platform for external customers in March of 2018. In the third quarter, the total number of transactions on the UCargo platform generated from external customers increased significantly by over 220% year-over-year to over 158,000, while revenue generated from external customers increased by more than 170% year-over-year to over RMB 700 million.The number of registered agents on the UCargo platform increased over 15% year-over-year to over 4,900 and number of registered trucks increased by 27% year-over-year to over 307,000 as of September 30th. UCargo platform now covers 30 provinces in China. Chinese government recently issued a favorable new policies to promote the growth of the enormous truckload service brokerage market.We are confident that with our leading technology infrastructure and transportation operations expertise, UCargo platform is well positioned to capture tremendous opportunity in a potentially over RMB 1 trillion market and become a leader of the industry.BEST Global continue to expand its cross-border logistics businesses and building its presence in Southeast Asia. As of September 30, BEST Global services 19 countries and regions outside of Mainland China. We continue to invest in Southeast Asia to capture the opportunities from its explosive growth in e-commerce.We launched the Vietnam nationwide Express in supply chain management business in July, after launching Thailand nationwide Express in supply chain management business in January. Both businesses are growing rapidly. We will continue to look for opportunities to invest and expand our service and networks in Southeast Asia in coming years with a goal of becoming the leading integral supply chain and logistics company there.BEST Capital continued to provide financial solutions to our ecosystem participants and contribute to improve overall operating efficiency in our network. Overall, we delivered solid results for third quarter. BEST is very well positioned to continue our strong momentum as we enter into the fourth quarter, which is a peak season for our business. And as we execute on our strategy of above market growth and increase the profitabilities.Before I turn it over to Jenny, I would like to make two announcements. First, I'm pleased to announce that we have concluded our search for a CFO. Ms. Gloria Fan will join the company and start on November 18. We're very pleased to welcome Gloria to our leadership team. Gloria brings with her over two decades of financial management and operational experience from working in number of public and private technology companies in the U.S. Most recently she served as CFOs of Corporate Visions Inc. and before that she spent nearly 10 years as CFOs for a number of software as a services and clean technology companies. Gloria will bring invaluable expertise to our financial and strategic planning as we continue to expand our business.And second, I would like to announce that our Board has authorized a share repurchase program where BEST made purchase up to $100 million worth of its outstanding ADS during the next 18 months.With that I will turn it over to Jenny our Principal Accounting Officer. Go ahead Jenny.

[Jenny Pan:]

Thank you, Johnny. Hello everyone.Best delivered an excellent third quarter with strong revenue growth and margin improvements despite a competitive industry environment and the traditionally slow season for our business.We recorded solid revenue growth of 22% year-over-year on revenue of RMB 8.7 billion. We also achieved positive non-GAAP net income for the first time during a third quarter period, with non-GAAP net income of RMB 16.7 million compared to non-GAAP net loss of RMB 101 million for the same period of last year.Gross profit margin increased by 0.4 percentage points year-over-year to 5.8%. EBITDA increased by 71% to RMB 93 million, while adjusted EBITDA increase to RMB 140 million from RMB 1.3 million for the same period of last year.Our company also generated a positive operating interest of RMB 237 million, compared to RMB 86 million for the same period of last year. The consolidation of non-GAAP measures to comparable GAAP measures and the regular adjustments can be found in our earning press release.Now, I would like to give some key financial highlights for the quarter. On a year-over-year basis, Express revenue increased by 19% to RMB 5.2 billion primarily due to our 38% increase in parcel volume and 13% decrease in revenue per parcel.We obsess the decrease in ASP will decrease in cost and operating expenses, as we continue to optimize network and invest in the minority application to improve operating efficiency. Cost per parcel decreased by 13% of which transportation cost decreased by 13% year-over-year to RMB 0.75.Labor costs decreased by 23% to RMB 0.23. Lease cost decreased by 5% to RMB 0.1. Other cost decreased by 35% to RMB Other costs decreased by 25% to RMB 0.11. Last-mile diluted cost decreased by 10% to RMB 1.43. As a result gross profit increased by 12% to RMB 245 million while gross margin decreased directly to 4.7%.Freight revenue increased by 26% to RMB 1.4 billion primarily due to a 28% increase in Freight volume. Unit economics continued to improve driven by economics upscale, coverage expansion and focus on the e-commerce product. Revenue per tonne decreased by 1.6% to RMB 730, while cost per tonne decreased by 3.3% to RMB 684, of which transportation cost decreased by 8% to RMB 342, labor cost decreased by 13% to RMB 84, lease cost decreased by 9% to RMB 58, and other cost decreased by 0.4% to RMB 43. Gross profit margin improved by 1.7 percentage points to 6.3%. Gross profit increased by 71% to RMB 86 million for the quarter.Supply Chain Management revenue decreased by 8% to RMB 451 million despite 50% increase in number of orders fulfilled. The decrease was primarily due to discontinuation of projects with a low profitability and focus on growing franchised business. Gross profit margin doubled to 8.1% compared to the same period in 2018 and gross profit increased by 87% to RMB 37 million.Store+ revenue decreased by 3% to RMB 862 million, primarily due to 4% decrease in total number of orders fulfilled, and as we continue to execute our strategy of enhancing operating efficiency. Gross profit margin improved by 2.5 percentage points to 10.5%, while gross profit increased by 28% to RMB 91 million. Other Service lines, BEST UCargo, BEST Capital and BEST Global, continued the strong growth momentum and become our important contributors. Revenue from those service lines increased significantly by 137% to RMB 855 million.Finally, driven by the significant increase in value volume transaction from UCargo platform, revenue generated from external customers of UCargo platform increased 174% to RMB 702 million accounting for 8% of the company’s total revenue in the third quarter of 2019. Gross profit from Other Service lines also increased by 58% to RMB 48 million.The major operating expense items are excluding share-based compensation expenses compared to the same period of 2018, selling expense as a percentage of revenue decreased by 0.9 percentage points to 2.4%.General and administrative expense as a percentage of revenue decreased by 0.9 percentage point to 2.4%. General and administrative expense as a percentage of revenue decreased by 0.4 percentage points to 3%.Research and development expenses as a percentage of revenue increased by 0.1 percentage point to 0.7% as we had margins on limited professionals. CapEx in the third quarter was RMB 523 million or 6% of the total revenue compared to CapEx of RMB 412 million or 5.7% of total revenue in the same period of 2018. The increase in CapEx was primarily due to the upgrade of automation systems in major hubs and sortation centers.In mid of September we successfully complete a $200 million convertible note offering. As of September 30, 2019, our cash and cash equivalent, restricted cash and short term investment in total were RMB 4.8 billion which allow us invest for the future and for the long term value of our shareholders.Now let’s revisit our 2019 financial outlook. Based on current market conditions and operations, as with taking into account to the lower average selling price per parcel was success and the lower revenue growth was surpassed. We adjusted our full year 2019 revenue guidance to be in the range of RMB 34.9 billion to RMB 35.1 billion. This is equivalent to management's current and primary expectation which is subject to change.With that, we will now open the call to Q&A. Thank you.

[Operator:]

[Operator Instructions] And our first question will come from Scott Schneeberger of Oppenheimer. Please go ahead.

[Scott Schneeberger:]

My first question is just - I’m curious how you anticipate volume in the fourth quarter and in balancing pricing obviously - it's an industry dynamic, but what do you foresee in this - current quarter as we head into the New Year? Thanks.

[Johnny Chou:]

Yes, so we still maintain a robust growth in volume. So, we stated that we will grow faster than the - the industry. And bypass, we also announced that the - pass Double 11, the first day we’ll receive about 130 million parcels, so very strong. So, I think for the fourth quarter we are still maintaining a robust volume growth up 30s, similar to probably - a little bit lower than third quarter, but it’s going to be still way up in the 30s.

[Scott Schneeberger:]

Thanks specifically, how did singles day compare year-over-year in the volume. I added the volume, but I could use for pressures and what that was?

[Jenny Pan:]

Yeah so - year-over-year, we grow about over 30%.

[Scott Schneeberger:]

Okay.

[Jenny Pan:]

About 31%.

[Scott Schneeberger:]

And then just - thanks. One follow-up just on staying in Express how do you perceive right now the competitive environment for the competitors who are not in the top five, but those that are smaller. How do you perceive their activity and their relative strengths in the market at the moment?

[Johnny Chou:]

Yeah so, if the competitors are not on top PAC probably they are negative growth, right because if you think about idea on the top pass everybody is growing above the market industry average. That means the - based on the number we see is the one behind that a smaller competitor basically, they have an active growth. So, it’s just a matter of time how, when this is going to be pricing our market.

[Scott Schneeberger:]

And just one more if I get throw it in. The CapEx keeps moving up a little bit. I assume that's predominantly investment in technology. Could you just speak to trend of - what we should anticipate in future quarters regarding CapEx as a percent of revenue and how that investment is going? Thanks.

[Jenny Pan:]

So, as we said, we have a huge amount of a volume in Double 11. But I look in the whole country, the South Asian standard even though our volume has grown so much, but it actually has less labors and much more automated. So we did spend a lot of money to automate and to reduce cost and automate the sorting centers. Even said that, every third quarter literally it’s traditionally just a higher CapEx spending quarter, because most of the projects actually are coming in the third quarter and the fourth quarter in anticipating of the Double 11 peak season.So traditional third quarter we always spend a little bit more compared with relatively first quarter or the fourth quarter, so third quarter is just a high spending season for the upgrading the automation. And said that this year we’ll probably spend little bit more. So as I said traditionally about 3% to 4%. So I would say full year, we still will maintain about 4 percentage points, because first quarter will be less and the full year will be - probably a little bit more than last year.We did spend about RMB 140 million RMBs I mean no I’m sorry RMB 1.4 billion this year. So, last year we spend about over RMB 1 billion. So this year is about 40% growth but our revenue didn’t grow 40%. So that would - that will bring up the percent is slightly higher, last year full year was about 3.9% so its anticipating this year and maybe about 4.3% to 4.5%.

[Operator:]

Our next question comes from Baoying Zhai of Citi. Please go ahead.

[Baoying Zhai:]

Hi Johnny and Jenny. I have three questions. The first question is about the guidance. Actually we’re seeing 5% guidance reversed down from previous guidance and the implied fourth quarter revenue growth guidance, the mid-point was only 17% year-on-year growth. It seems a little bit conservative so could you please share more color by segments which segment is the major reason behind - who drives the guidance revised down. And could you please share a little bit more details on the Express delivery segment ASP of the fourth quarter.This is the first question. Second question is about the supply chain management. Actually, while seeing the third quarter revenue growth was negative. The volume was still quite okay, but what happened to the ASP still with a lower ASP, the JPM the gross margin improved a lot what’s the reason behind. And third question is regarding the buyback program, I’m a little bit confused here, we just issued U.S. dollar 200 million CB two months ago and now we are going to use 100 million of it to do the buyback. What’s the rationale behind? Thank you.

[Jenny Pan:]

Thank you, Baoying very sharp question. The first question is regarding to first quarter guidance. Yeah, so if you look at the third quarter, right so this year with full year we tried to achieve our net income positive so non-GAAP. So we try to see what area we want to restructure ourselves given the competitive market so the fourth quarter re-adjustment or re-adjustment in the guidance is first of all is the super competitive parcel business that ASPs being lower than we anticipated. So that is part of major reason that one of them.Second reason is that the Store+ as we said, we have been continuing try to improve the margin and to make a business model looks - more workable by improved margins and reduce the costs and loss. In that, we actually you know cut out a lot of our non-profitable, lower margin, low quality orders. So instead retracing for GMV for revenues and we are really focusing the quarterly orders.So if you look at the third quarter the Store+, actually some actual growth. So that's the second one it’s driving down the fourth quarter. And third one is basically - that you already mentioned it, the supply chain. The supply chain you see, we will try to control the risk in terms of the bad receivables or control, the improved quality of that, so in a sense that we really restructuring orders, so that’s the major reason.As Scott was asking you know the volume growth, so we still think it’s good. The freight, the Express and the supply chain, our international global, I think the order business that grows on the volume side is still good. But we do making - some strategic change in terms of the - sort of business like supply chain and the Store+ to make it a more you know focus on the profit margins and quality of the orders. And that’s for the reason for that. So you were talking about the APS for - the actual - that’s the second question, but you said its one question.So I'm going to ask one question. The Express ASP for the fourth quarter, we are actually seen a similar or a slightly higher again third quarter, traditionally always being the case fourth quarter ASP can be slightly higher given that going to the high season business season, their pricing will go up a little bit. So ASP is not going to drop versus third quarter as can be slightly higher.That's your first question. The second question we’re talking about the supply chain. Why the bottom grow so much and the margin went up like doubled, but - the revenue actually went down. So, we are focusing on more of the B2C franchise, the Cloud OFC business. So actually volume goes up a lot. If you look at a Cloud OFC, volume doubled, more than doubled. So - that the order fulfilled went up. But we also carry out some of these projects we deem to be a low margin or last quarter of the project which in the end of day probably will make money out of it.So, we just cut it out. So, we are doing some kind of cleanup if you will to say on some of the older project and also structuring it into a more long-term growth. So, these are short-term. I were expecting that to come back a quarter after, next quarter or quarter after the supply chain will go into the gross again in fact that I think the Store+ also will be on a gross trajectory in next quarter or so. So, that’s your second question.The third question is, yes, you maybe ask you a question to say, why we issue $200 million of convertible bonds and meanwhile two months later say want to buy back some shares. So first of all, the issue of convertible bond is more of an opportunity right because we are seeing a market, their capital market is good.So, we just go ahead to go to a pop up of the Worcester and you know get some more reserving cash, so that is the - it’s a complete separate event that it’s not like you know one two months ago we just saw a our capital market is really good and why not you know getting some more and more cash on one side which is good.But by issuing an announcement saying that we are also planning to buying back some of the shares it's purely we think that we are confident in what we're doing and we're executing. So basically just we know we’re confident on our execution, our strategies, and to achieve the profitability. So that that there is a true of the separate events. But when you look at it you probably look just like confusing but it's really you know when we did a convertible bond which we really think is a good market to get some cash on side.

[Baoying Zhai:]

And may I now follow up on the Express ASP. So in terms of the young year decline is should it be smaller than the third quarter, right?

[Johnny Chou:]

You’re saying the year-over-year should be similar because last the fourth quarter, 2018 fourth quarter the ASP also went up. So basically the last year 2018 of course ASP is higher than the third quarter. So the same thing this year is going to be higher than the third quarter. So given that said I think that the year-over-year decline quarter by quarter like-to-like, like we say it’s probably similar.

[Q –Baoying Zhai:]

Okay Thanks.

[Johnny Chou:]

It’s maybe 12 also.

[Baoying Zhai:]

Okay. Thanks, Johnny.

[Johnny Chou:]

What are you saying yes.

[Baoying Zhai:]

Okay, understood. Thank you.

[Johnny Chou:]

Thank you, Baoying.

[Operator:]

[Operator Instructions] And our next question comes from Calvin Wong of JPMorgan. Please go ahead.

[Calvin Wong:]

Few questions from my end here. First couple still on Express. So first, just wanted to follow up on sort of ASP trend that we kind of saw in 3Q and what we're talking about in 4Q. So we did notice a bit of a cut to the last mile fee, which we kind of held off on doing in the first half you know mainly to kind of continue support in our network. In terms of going into 4Q, what's our thinking on that front and in terms of the sequential increase in ASP. Is that mainly from a boost in last-mile fees or are we also able to boost the revenue effectively that we get to keep. So that's the first question on pricing.Second is just broader pricing competition in the market at this point in time. 4Q you raising a bit of pricing overall I think that's largely in line with historical seasonality in practice, but in terms of the message we've been getting from a lot of these players it seems like you know competition is still quite high and intense. So any adjustments would likely to be quite short term. So how are we looking at our pricing strategy? Do we have any visibility beyond just double 11 how about the rest of the PCs in double 12 and maybe heading into first quarter next year?The third question is related to Store+. So we kind of talked about the whole restructuring that we were still exploring and looking at for that business. Just any update on this front. And you know what we could be expecting to hear from you guys going forward? Thank you.

[Johnny Chou:]

Okay. Thank you, Calvin. Regarding to the ASP for Express, the last mile on the third quarter we will reduce a little bit the fee - we will reduce a little bit. Primary, we think why more at your last mile delivery is using other means other than just the done by the human - deliver boy. So more and more like the personal lockers or the stores the last mile just a lot of other means to do that, so the cost ratio reduced a little bit.In the fourth quarter we actually raised last mile delivery fee slightly. We raised about maybe a few cents or something across the country. It was just because of peak season coming and we want make sure that the delivery query is maintained. So we actually increased the price a little bit but meanwhile we also actually increased the pricing to the revenue that we keep, right, because the last mile that basically goes to the delivery people, our franchisees but we also raised for the transportation and other type service cost so which we - so what’s the ASP for a non-last mile fees we actually raised so that - that's a part of revenue we can keep.Given the pricing strategy, I think you asked - you’re right. So fourth quarter we're seeing that because every - traditionally every first quarter people raise price there. So after that I guess there is more pressure - still going to have more pressure to - in the marketplace, so yes, we’re expecting to - we’re expecting the pricing will continue to be under pressure after high seasons and into the next year.So last, we’ll talk about Store+. So, we already hired a certain professional team and they’re doing a strategy review as well as some other strategy on that. So I cannot share anything further, but when we have that we will continue to share with everyone, but like I do can say that we already hired some professional on looking at the structures and possibility of how to do this.

[Calvin Wong:]

That's great. Just one very quick follow up on sort of what you mentioned about other means of delivery at this point. Do we have a rough percentage of what - how many parcels are done by sort of lockers and stores? So those are

[Johnny Chou:]

Yes. So last-mile is increasing so you receive the orders like over 30% already being to - through the other means. I think that percentage of that -

[Calvin Wong:]

Okay.

[Johnny Chou:]

Of that continues to increase. Yes.

[Calvin Wong:]

And just roughly what it was maybe a quarter though or last year just so we get a sense of pieces increase here?

[Johnny Chou:]

Last year probably is about - probably this year over like 10 years - 10 percentage - additional 10 percentage points. So last year maybe about 20 some and this year is again to 30 some, but we're seeing that this number is continuing to increase. Just to share the number.

[Operator:]

This concludes our question-and-answer session. I would like to turn the conference back over to Johnny Chou for any closing remarks.

[Johnny Chou:]

Okay. Thank you for joining our call and we appreciate it your support for BEST. Please reach out to our Investor Relationships team if you have further questions. We look forward to speaking to you soon. Thank you very much.

[Operator:]

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.