China Green Agriculture, Inc.
Q4 2015 Earnings Call Transcript

Published: 14 Sep 2015

[Operator:]

Hello, and welcome to the China Green Agriculture Fiscal Year 2015 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. I would now like to turn the conference over to Ran Liu, Secretary of the Board. Ms. Liu, please go ahead.

[Ran Liu:]

Thank you, operator. Thank you and welcome everyone to China Green Agriculture fiscal year 2015 earnings conference call. The earnings release went to the wire pre-market today. Our call today is hosted by Mr. Tao Li, the Company’s President and Chief Executive Officer; Mr. Ken Ren, the Company’s Chief Financial Officer, and me. I would like to remind our listeners that the management’s prepared remarks contain forward-looking statements that are subject to risks and uncertainties, and the management may make additional forward-looking statements in response to your questions. Therefore, the company claims the protection of Safe Harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from those discussed today due to such risks but not limited to fluctuations in customer demand, management of rapid growth, intensity of competition from other providers of China Green Agriculture products and services, general economic conditions, geopolitical events and regulatory change. The falling exchange rate amidst an unexpected announcement by the PRC Government in August 2015 sending the renminbi to a 3% devaluation and other information detailed from time to time in the company's filings and future filings with the United States Securities and Exchange Commission. Accordingly, although the company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. In addition, any projections as to the company’s future performance represents management’s estimates as of today, September 14, 2015. China Green Agriculture assumes no obligation to update these projections in the future as market conditions change. Now, I’m pleased to report the results for the fiscal year 2015 ended June 30, 2015. Revenues were $263.4 million as compared to $233.4 million for fiscal year 2014. Net income for the fiscal year 2015 was $31.4 million or $0.93 per share as compared to $25.5 million or $0.81 per share for fiscal year 2014. We are very pleased with our consistent performance in the fiscal year 2015, where we continued to build shareholder value through focusing on prudent revenue growth, building a long-term durability of our business model, sustained net profits, and balance sheet discipline. As we exited our recently concluded fiscal year with the close cooperation of business partners and government support, I believe the company will grow into a leading one in the agriculture industry. We look forward to start our new quarter that we aim to fulfill our strategy of developing the new business model. Finally, as we enter the new year, China Green Agriculture is well on its way to achieving the benchmark of our 10-year plan. I will now discuss the financial results in greater detail. The first three months of fiscal year 2015 results of operations. For the three months ended June 30, 2015, net sales were $78.5 million, an increase of $6.3 million or 8.7% from $72.2 million for the three months ended June 30, 2014. Among which, Gufeng contributed $45.9 million or 48.9% of total net sales, as compared to $41.7 million, or 57.8% of total net sales in the same period last year. Jinong's net sales increased $1.9 million, or 6.4%, to $31.4 million from $29.5 million in the same period last year. Yuxing's net sales increased $0.2 million or 20% to $1.2 million as compared to $1 million for the same period last year. This Net Sales increase was mainly attributable to the greater sales of humic acid fertilizer products, including our liquid and powder fertilizers as a result of our increased distributors and the aggressive marketing strategy. Cost of goods sold increased $1.8 million or 3.7% to $50.3 million for the three months ended June 30, 2015 as compared to $48.5 million in the same period last year. Gross profit increased by $4.5 million or 19% to $28.2 million as compared to $23.7 million in the same period last year. Gross profit margin was approximately 35.9% and 32.9% of net sales for the three months ended June 30, 2015 and 2014 respectively. Besides general and administrative expenses were $2.4 million or 3.1% of net sales as compared to $3.1 million or 4.4% of net sales in the same period last year, a decrease of $0.7 million or 22.6%. Total operating expenses as a percentage of sales were 21.7%, as compared to 23.7% in the same period of last year. Operating income was $11.2 million, an increase of $4.6 million or 69.7% from $6.6 million in the same period last year. Operating margin was 14.3% as compared to 9.1% in the same quarter of fiscal year 2014. Finally, net income was $8.2 million, an increase of $3.9 million or 90.7% as compared to $4.3 million in the same period last year. The increase was attributable to the increase in net sales. Everyone, I will now turn over to my colleague Ran to continue. Ran please?

[Ken Ren:]

Well, thank you. Hello everyone. Now I am going to discuss the result of operations of fiscal year 2015. The total net sales for the year ended June 30, 2015 were $263 million, an increase of $30 million or 12.8% from $233 million for the year ended June 30, 2014. This increase was due to an increase in Gufeng's and Jinong's net sales. For the year ended June 30, 2015, Jinong's net sales increased $12 million or 10.7% to $130 million from $117 million for the year ended June 30, 2014. This increase was mainly attributable to the greater sales of humic acid fertilizer products, including our liquid and powder fertilizers as a result of our aggressive marketing strategy and the increased number of our distributors. For the year ended June 30, 2015, Gufeng's net sales were $129 million, an increase of $17 million or 14.9% from $112 million for the year ended June 30, 2014. The increase was mainly attributable to Gufeng's expanding of its marketing promotion strategy, especially the large amount sale to Sino-agri Group during the last fiscal year. For the year ended June 30, 2015, Yuxing's net sales were $4 million, an increase of 0.6 million or 17.3%, from above 4 million for the year ended June 30, 2014. The increase was mainly attributable to the increase in market demand and the higher prices on Yuxing's top grade flowers during the last fiscal year. Total cost of goods sold for the year ended June 30, 2015, was 159 million, an increase of 18 million or 12.1% from 142 million for the year ended June 30, 2014. This increase was mainly due to the 13.7% increase in the net sales. Cost of goods sold by Jinong for the year ended June 30, 2015 was 52 million, an increase of 3 million or 6.8% from 49 million for the year ended June 30, 2014. The increase in cost of goods sold was primarily due to Jinong's higher net sales. Cost of goods sold by Gufeng for the year ended June 30, 2015 was 104 million, an increase of 14 million or 15% from 91 million for the year ended June 30, 2014. This increase was primarily attributable to an increase in cost of raw materials and an increase in the sales of fertilizer products. For year ended June 30, 2015, cost of goods sold by Yuxing was 3 million, an increase of 0.3 million or 9.3%, from about 3 million for the year ended June 30, 2014. This increase was mainly due to the increase in Yuxing's net sales. Total gross profit for the year ended June 30, 2015 increased by 13 million to 104 million as compared to 91 million for the year ended June 30, 2014. Gross profit margin was 39.5% and 39.1% for the year ended June 30, 2015 and 2014, respectively. Gross profit generated by Jinong increased by above 9 million or 13.5%, to 78 million for the year ended June 30, 2015 from 69 million for the year ended June 30, 2014. Gross profit margin from Jinong's sales was approximately 60.1% and 58.7% for the year ended June 30, 2015 and 2014. The increase in gross profit margin was mainly due to the increased weight for higher-margin product sales in Jinong's total sales due to Jinong's sales strategy. Jinong has adjusted its production process to focus on producing the high-margin liquid fertilizer during the last fiscal year. For the year ended June 30, 2015, gross profit generated by Gufeng was 24 million, an increase of 3 million or 14.3%, from 21 million for the year ended June 30, 2014. Gross profit margin from Gufeng's sales was approximately 18.9% and 19% for the year ended June 30, 2015 and 2014. The decrease in gross profit percentage was not significant. For the year ended June 30, 2015, gross profit generated by Yuxing is about $1 million, an increase of $0.4 million or 43.8% from $0.9 million for the year ended June 30, 2014. The gross profit margin was approximately 28.6% and 23.3% for the year ended June 30, 2015 and 2014. The increase in gross profit percentage was mainly due to the higher priced top grade flowers that Yuxing sold during the last fiscal year. Our selling expenses consisted primarily of salaries of sales personnel and promotion expenses, freight-out costs and related compensation. Selling expenses was $9 million or 3.4% of net sales for the year ended June 30, 2015 as compared to $8 million or 3.8% of net sales for the year ended of June 30, 2014, an increase of $0.2 million. The selling expenses of Yuxing were $45,000 or 1.1% of Yuxing's net sales for the year ended June 30, 2015 as compared to $50,760 or 1.4% of Yuxing's net sales for the year ended June 30, 2014. The selling expenses of Gufeng were about $1 million or 0.9% of Gufeng's net sales for the year ended June 30, 2015 as compared to about $1 million or 1.2% of Gufeng's net sales for the year ended June 30, 2014. The selling expenses of Jinong for the year ended June 30, 2015 were $8 million or 5.9% of Jinong's net sales as compared to selling expenses of $7 million or 6.3% of Jinong's net sales for the year ended June 30, 2014. The increase in Jinong's selling expenses was due to Jinong's expanded marketing efforts and the increase in shipping costs which is caused by our increased sales. The selling expenses -- amortization of our deferred assets was $42 million or 15.8% of net sales for the year ended June 30, 2015 as compared to about $27 million or 11.7% of net sales for the year ended June 30, 2014, an increase of approximately $15 million or 53%. This increase was due to the increased amortization of the deferred tax assets for the year ended June 30, 2014 related to our business strategy implemented since December 2013 that assisted our distributors in certain marketing efforts and develop standard stores to expand our competitive advantage and market share. The general and administrative expenses consisted primarily of related salaries, rental expenses, business development, depreciation and the travel expenses incurred by our general and administrative departments, and legal and professional expenses including expenses incurred and accrued for certain litigations. General and administrative expenses were about $11 million or 4.3% of net sales for the year ended June 30, 2015 as compared to about $15 million or 6.2%, of net sales for the year ended June 30, 2014, a decrease of 3 million or 21.9%. The decrease in general and administrative expenses was mainly due to the related expense in the stock compensation which amounted to about 5 million for the year ended June 30, 2015 as compared to about 8 million for the year ended June 30, 2014. Net income for the year ended June 30, 2015 was 31 million, an increase of about 6 million or 23.2%, compared to about 26 million for the year ended June 30, 2014. The increase was attributable to the increase in net sales, offset by an increase in selling expenses and selling expenses amortization of deferred asset. Net income as a percentage of total net sales was approximately 11.9% and 10.9% for the year ended June 30, 2014 and 2015, respectively. Now I'm going to discuss the financial conditions. As of June 30, 2015, the Company held cash of about 93 million, an increase of 66.1 million, or 245.8%, from 26.9 million as of June 30, 2014. Net cash provided in financing activities for the year ended June 30, 2015 was 1.1 million, a decrease of 7.4 million or 86.8% from cash provided by financing activities of 8.5 million for the year ended June 30, 2014. The Company had 23.6 million in short-term loans as of June 30, 2015, a decrease of 0.4 million, as compared to 24 million as of June 30, 2014. Net accounts receivable was 68.5 million, a decrease of 20.3 million as compared to 88.8 million for the same period last year. Now let's move to the first fiscal quarter 2015 and fiscal quarter 2016 guidance. For the first quarter ending September 30, 2015, our management expects the net sales of 51.6 million to 54.2 million. The net income of 5.1 million to 5.7 million, and the EPS of $0.15 to $0.17 based on 34 million fully diluted shares. For the Fiscal Year 2016, our management expects the net sales of 265.9 million to $278 million, net income of $21.7 million to $24.9 million, and EPS of $0.64 to $0.73 based on 34 million fully diluted shares. Moreover, we view implements of few results development process along with our new coroporate restructuring to just our result. Therefore we expect [impact] to update our fiscal year guidance when we announce the financial results of the first fiscal quarter 2016 Now with this it concludes my remark. Thank you.

[Ran Liu:]

Thank you operator, we are now prepared for questions from our audience.

[Operator:]

Okay, yes. Thank you. We will now begin the question-and-answer session. [Operator Instructions]. And the first question comes from Robert Trojan, a private investor.

[Unidentified Analyst:]

Good evening. I am calling to ask you primarily to discuss the reasons in detail for your expected flat sales in fiscal '16 and also your expected decline in net income? Thank you. Are you able to hear me? Hello?

[Operator:]

Yes, the speakers are still connected. Are the speakers present?

[Unidentified Analyst:]

Yes. Did you hear my question?

[Operator:]

All right. We will check on their lines. One moment please.

[Unidentified Analyst:]

All right.

[Tao Li:]

Our guidance reflects the management's expectation and vision for the company's business performance in the period that we provide projections. We provide these projections based on our best knowledge and the development in the market that could potentially impact our business operations. There are few number of fundamental factors and within these factors, very critical and very important and some of these factors involved new regulations and policy changes by the government and certain factors are market related. I will elaborate these factors and explain you why we consider them very important. The number one factor that we incorporated in our projection of business is related to the updated tax regulation in the fertilizer market in China. Last month, a new order from the national tax agencies become public then it is related the fertilizers production sales in China. Specifically this new order will request the tax system to collect turnover of tax or fertilization tax again in the fertilizer industry. Historically this month's in the fertilizer market such an over packed and/or commodity circulation impact has been waived for the sake of promoting and subsidizing the agriculture industry. However, according to the most recent order from the beginning of this month September the1st, the government will restart to collect such type of tax from business participants in a fertilizer industry. They do allow waivers for pure organic fertilizers sales from turnover tax. However, pushing of our fertilizer sales include no organic fertilizers or chemical fertilizers or organic and un-organic fertilizers containing the chemical ingredient will be subjected to the recollection of circulation to over tax and this will impact both the demand and our financial performance, this is factor number one. Secondly, as we largely experience the slowdown of the momentum in the Chinese economical growth, we in the fertilizer industry or the overall agriculture industry are also facing higher than before pressure for such slowing down. So in order to mitigate such slowdown or to maintain the growth momentum, we may [Technical Difficulty] conduct efforts to overcome the difficulties in overcoming such major cost or expenses for promoting our products for selling or [Technical Difficulty] our market shares. And based on this impact of [Technical Difficulty] both the regulatory changes in the tax system, in the tax [Technical Difficulty] and our expectation for potential efforts, more efforts in promoting our products that we project our financial performance in the press release to the best of our knowledge. I hope it helps.

[Tao Li:]

Our act to further comment our company matter to mitigate the impact from the updated tax code, we expected that the recollection of turnover tax will impact the entire supply chain in the fertilizer industry. Our supplier will be affected, we as the manufacturer of compound fertilizers and liquid fertilizers will be affected and our distributors will be affected. And eventually, the updated reinitiated tax burden will fall on to the shoulders of end users. So in this supply chain, we will leverage our positions and our advantages to optimally bypass such cost burden from the turnover tax to other components or other participants in the supply chain. [Technical Difficulty]. We foresee these tax codes to affect the fertilizer’s end users' demand, [Technical Difficulty] users who are most price wise sensitive. By launching or utilizing marketing skills and sales efforts we’re incurring new cost but we work very hard to protect our net income and if we could successfully pass the tax burden of cost in the supply chain to our suppliers or distributors and in the meantime keep or grow our customer basis, the net income measurement could potentially be higher than the number we provided in our guidance which I consider, we consider the guidance information is a baseline case is a conservative baseline projection. And management are currently working on initiatives to countermeasure [Technical Difficulty] and we will provide updates in the [Technical Difficulty]. Thank you.

[Unidentified Analyst:]

Thank you, and will you please discuss the reason again for the substantial rise in cash and do you expect that cash to continue to rise from the current level?

[Tao Li:]

I think it's a very good question. The question is very true and reflect our thoughts and how we have been working to improve our business performance. As you had already thought, our cash position improved significantly year-over-year from last year end to this year end. The improvement in cash is attributable to our previous efforts is how we try to increase our market share, how we try to better increase our product exposure and how we try to improve our marketing performance. Recently we have launched a number of marketing initiatives such as promoting our products by establishing or expanding our network of franchise stores as well as signing up new distributors and developing our e-commerce sales platform. All these efforts have been proved successful. We increased our sales revenues and have successfully controlled the expense and cost in other direction. Due to these effects, with the help of these marketing efforts and our sales network, allow us to healthy collections of sales revenues from the channels. We reserve the increase in cash balance and such increase in cash balance is comprehensive consequence but all these [indiscernible] initiatives and efforts. We also mentioned a critical point, o how we are going to deal over this cash and if these momentum of how cash build can be sustainable. Having necessary and sufficient in hand there is always advantages to entrepreneurs to complement with ambitious plans with eagerness to grow their presence. Our future corporate development rely on our opportunity and our condition to launch, to initiate our content. With sufficient cash, it will enable us to consider more options, better alternatives to grow our business. The Chinese economy, macro economy is slowing down its growth than before. It nevertheless brings on both difficulties, pressure and [indiscernible] opportunities and challenge. To encounter this challenge we will timely coordinate our marketing strategy. The guidance we discussed in earlier questions reflect our conservative projection and estimate of such related expense and we are confident that our plan or our initiatives can point us comparable, a similar successful impact as our earlier efforts. I’d like to give you an example, to answer your question. During the last conference call we disclosed that the Company has been working on an e-commerce sales platform to sell fertilizer products and such platform started its core operation since this past March. Five or six months later, by the end of this past August from last month, on this sales platform cumulatively realized we realized nearled $3 million sales, equivalently RMB16 million. I'm very excited and enthusiastic with this new initiative and that point a direction of our expenditure [indiscernible]. We will timely update and disclose the program and performance of these basic fertilizer materials sales platform, e-commerce based. And I believe that by working continuously, improving and working very hard on these e-commerce platforms, it will help to contribute additional cash, additional net income and realized in additionally added, newly added cash in future and will further enable us to improve both our financial performance and help us to better design our budget or initiative. Thank you.

[Operator:]

Thank you and the next question comes from Kevin Roux [ph], also a private investor.

[Unidentified Analyst:]

Yes, I had a couple of questions. The first, is sort of a suggestion and I can't see any reason you wouldn't do it. There's a few problems with the $2 stock price and I was going to recommend that you consider and ask you why you wouldn't consider a 1% reverse stock split with a $2 stock price, first off a lot of institutions won't look at your stock because they don't look at stocks below say $10, they consider a $2 stock a penny stock. And secondly, the bid-ask spread tends to be wider on a lower stock price. It tends to typically be $0.02 whereas on a higher stock price as a percentage it’s smaller. Finally for those investors who like to borrow against a stock, stocks below $3 you have to post a 100% of the stock price in the form of margin, so what I was going to ask you is why you don't consider a 1 for 10 reverse stock split that would take your stock price up to $20 and that would I think raise institutional interest, it would make the stock marginable and it would lower the bid-ask spread as a percentage of stock price? So that's my first question. Second question is why when your stock is trading at two times earnings and 15% of book, your issuing stock is compensation and when you have $93 million in cash and why you don't just use cash for compensation. I was very disappointed to see that you'd issued $5 million in new stock, about 2.5 million shares, you could still issue cash compensation tied to the stock price, you'd just still have to issue new stock which is incredibly dilutive to existing shareholders. So that's second question, why don't you -- when you are probably the cheapest most undervalued stock on New York Stock Exchange, why you don't just use cash for your employee and director compensation? Finally, a third question, when you have $93 million in cash, which is certainly a very low return to bank and you're trading at a price to earnings ratio of 2. Why you don’t take [indiscernible] cash? Say, $20 million to $30 million and either arrange a tender offer for your shares or give it to one of the leading brokerage firms and do a prepaid forward share buyback to buy in shares who could by in, they could be in the market buying in shares every week up to the SEC maximum or do a weekly block trade and I think that would boost the earnings per share, the cash flow per share and then asset value per share and improve the perception of your shares and start shrinking the share count and rather than the share count going up. So those are my three questions. Why don’t you do reverse stock player, use cash compensation rather than shares and take some of your cash and start reducing the share count and boosting earnings per share and asset value per share. Thank you.

[Tao Li:]

Sir you asked three fabulous questions and I consider these points not just questions but very valuable recommendations and for righteous. You asked if we should or consider the reverse split of stock to make our stock eligible for institutions to invest. You asked and recommended. We pay more cash instead of stock incentive to more invest our key members. You ask and suggest if we consider or should conduct buyback of our shares in open market? Yes, we are considering. And in addition to what you suggested, you asked, remember that we issued a dividend last year and such dividend issuance is an illustration on how we could or we have rewarded our shareholders. Your suggestions are on our radar and under prudent consideration. We are currently researching and studying these considerations and we consider your suggestion very valuable and very constructive. These are nevertheless very shareholder friendly and helpful suggestions. The management and the Board will take care of that and incorporate these considerations in our future plans. Thank you.

[Tao Li:]

I'd like to refer to your comment on your point number 2, the compensation, importance of cash or stock, or cash in combination with stock. In our company, a lot of employees will rather take stock or accept stock-based incentive than cash because my employees are a key member of confident with the company's future. They would rather choose the future of the company that will realize reward in forms of cash. At this critical moment, as the management, as the leader, I am liable, I am responsible to grow the company to reward, to protect the shareholder value, to grow all the company's value for the shareholder. However, to achieve that I rely on our key member, our team members' confidence, their motivation and their enthusiasm to work with me, to stay with me, to dedicate their careers, to dedicate their lives, their work to the whole corporate growth. In stocking or dividing stock incentive, in their compensation is a very effective measure for me to unify the team members around me, around us. Your comment that issuing, using the stock-based compensation to motivate the employee could, hurt or is harmful for shareholder value is not necessarily accurate or true in the company's case by absolute basis. I believe and it's, first ensuring that using the stock compensation is a very effective approach to retain key employees to attract new talents by having these top notch talents or key member in the company is necessary for the company to maintain its performance to continue on the right track to its growth goal. Thank you.

[Unidentified Analyst:]

Thank you very much. Many American companies issue cash compensation to employees which is tied to the growth in the stock price but without actually issuing new stock, so you don’t have to issue new stock at 15% of book value or 2 times earnings, but if the stock price doubles and we hope that the stock price will go from $2 to $4 or more, that employee still benefits greatly but you're not issuing maybe stock at a big discount to book value that way, so it's not as dilutive to shareholders but they still can watch the stock price and benefit from that. And you mentioned also the dividend perhaps to recognize the great increase in earnings per share and the great increase from cash balance coming up to the dividend perhaps China Green Agriculture consider an increase in the dividend, the October dividend from $0.10 maybe increase this share would be nice. Thank you very much for earlier helpful comments. Thank you.

[Operator:]

Thank you. And the next question comes from Reeds Jury [ph] a private investor.

[Unidentified Analyst:]

Hello, I'm a shareholder and I wanted to ask a couple of questions. The first is related to the attack guys had on Seeking Alpha regarding surveillance cameras that was probably setup. You had said that you guys were going to prosecute them and you've got the local police force involved. I was wondering what happened in that situation because I think it's important that somebody is attacking your creditability and it's untrue that you have to pursue that till the end to prevent that from happening in the future?

[Tao Li:]

Thank you very much for briefing it's actually important on the critical question. This work is very important and very critical to our company and management fully realized it's important and we have been fully cooperating with the law enforcement in the Chinese government to investigate and proceed with the case. And in this effort it's involved the legal matters, and we also look to where attorneys and the legal experts as the law enforcements are making positive and very impressive progress. And we, like you said, we will pursue this to the very end and we will return a clear fact to the shareholders about the company, and the [criminals] will nevertheless to the end those who conducted the harmful crime to the company will be pursued by the law enforcement in China. And government's law enforcement operates in China collecting evidences and building the case and we will timely update and report the progress to our shareholders. And again, thank you very much for pointing out this very important, very good question.

[Unidentified Analyst:]

Thank you very much also. And let me ask you another question. The main issue for shareholders is the performance of the stock price and the biggest go aheads and good suggestions. I would also like to ask why Mr. Tao Li would not consider buying shares in the open market as in starter trades. And the tax, he’s has bought shares directly from the company which is not the same as to the market as buying shares in the open market. And I am wondering if that's one thing he might consider doing to show confidence in the shares, buy shares directly in the open market?

[Tao Li:]

Thank you very much again for asking another very excellent question and again I considered this not a difficult question but also a very valuable. My recommendation and regards, and I appreciate your suggestion and buying back shares in the open market is effective means to increase the amount of per share in the Company's possession. And also important to our key members like a said earlier are very interested and have [indiscernible] confidence in the Company's future and they're very enthusiastic to become a shareholder or to own the Company's share as the Company's future growth is closely founded up high to their performance, to their -- and to their endeavor and their dedication. So as foreign nationals in China, they announced there's a lot of caveats and technicalities for them to invest directly in the US capital markets such as purchase of shares from open market with their own wealth, so we as the management have considered their request and their means and like you said how to balance the use of these tools and metrics to best motivate. Their performance is referring the management to find the best approach. For instance we had opened the program and allow them to invest in the Company in exchange for employee shares in the employees stock purchase plan. And we believe that when if in future this caveat in the foreign exchange regulation as well as stock investment or capital investments across the [indiscernible] become more convenient and friendly for our employees, and it will be much easier and convenient for the Company to consider or to exercise more plans or more approach, and we will consider and embrace these approaches when the conditions are permissable and allow us to do so. And we had issued dividend before and you're correct that that's a [indiscernible] approach and need for us to exercise, and in future we consider all this various means to the best interest of our shareholders to mostly base our employees to the maximum to grow the company for the shareholders. Thank you very much again for bringing this excellent question and the valuable advice for the management to take to learn, to consider, thank you.

[Operator:]

Thank you. And there are no more questions at the present time, so I would like to turn the call back over to management for any closing comments.

[Ken Ren:]

Thank you very much everyone for participating in today's conference call. We wish you have a great day and see you next quarter. Have a good day. Bye-bye.

[Tao Li:]

Thank you so much everyone. Thank you.

[Operator:]

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