Mar 13, 2019
Operator
Good day and welcome to the ZTO Conference Call and Webcast. All participants will be in listen-only mode.
[Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.
I would now like to turn the conference over to Sophie Li, IR Director. Please go ahead.
Sophie Li
Thank you, operator. Hello everyone, and thank you for joining us today.
The company's results and the Investor Relations presentation were released earlier today and are available on the company's IR website at ir.zto.com. On the call today from ZTO are Mr.
Meisong Lai, Chairman and Chief Executive Officer; and Ms. Huiping Yan, Chief Financial Officer.
Mr. Lai will give a brief overview of the company's business operations and highlights, followed by Mrs.
Yan, who will go through the financials and guidance. They will both be available to answer your questions during the Q&A session that follows.
I remind you that this call may contain forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance or achievements to differ materially from those in the forward-looking statements.
Further information regarding this and other risks, uncertainties and factors is included in the company's filings with the U.S. Securities and Exchange Commission.
The company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under law. It is now my pleasure to introduce Mr.
Meisong Lai. Mr.
Lai will read through his prepared remarks in their entirety in Chinese before I translate for him in English.
Meisong Lai
Hello and thank you everyone for joining our call today. We met our goal for 2018 and achieved a solid performance results.
Parcel volume increased by 37.1% year-over-year to reach RMB 8.52 billion as we increased our leading position in China's express delivery industry with the market share of 16.8%. Meanwhile, our industry leading service quality and high levels of customer satisfaction allowed us to achieve adjusted net income of RMB 4.2 billion during the year, an increase of 30.1% from 2017.
To cap [ph] on 2018, firstly, we closely monitored micro environment and industry trend, maintained a healthy pace of growth as competition intensified. We focused on sustainable long-term growth and implemented network policies that are effective in incentivizing profitable incremental parcel volume growth.
Secondly, we continue to build out and upgrade our sorting infrastructure and long haul transportation capacity and efficiency. By the end of 2018, we owned and operated over 4,500 transportation trucks, including 2,800 high capacity vehicles, which accounted for 62% of our total trucks.
Despite increasing operating costs, such as labor and fuel costs, our combined transportation and sorting hub cost per parcel is decreased by RMB 0.11 in 2018. As a result of steady improvement of our operating efficiency.
Certainly, we implemented various corporate initiatives to establish pick-up and delivery fee standards aiming to strengthen stability enhanced profitability of our network partners through increasing compensation levels of our delivery personnel. At the end of 2018, we had 30,100 pick-up and delivery outlets and 4,500 direct network partners.
The unofficial count, there were approximately over 300,000 frontline personnel working under the ZTO brand in 2018, cultivating their entrepreneurial spirit and pro-activity is one of the most important cornerstones of ZTO's brand value. Lastly, our ecosystem continues to take shape.
Expanding from our core express delivery services, LTL business, cross border logistics, cloud warehousing solutions, commercial and financing businesses are integrating resources and developing business models along the logistic value chain. Since their investments in ZTO in June 2018, Alibaba and Cainiao has been working closely with ZTO to explore opportunities in new retail and support digitization of logistic processes and the utilization of smart technology.
Looking ahead, we strongly believe that the China's economy will continue to grow steadily over the long-term despite near-term macro economy uncertainties and short-term fluctuations. The express delivery industry will continue to develop its skill and efficiency and being a catalyst to economic growth providing greater value to customers and adjacent industries.
Annual parcel volume is likely to reach RMB 80 billion to RMB 100 billion over the next three years. Market share will become increasingly concentrated as large scale express delivery companies take advantage of this opportunity to increase parcel volume and market share.
With such enormous growth opportunities ahead, we will accelerate our pace of expansion. Our target parcel volume growth is to exceed industry average by at least 15 percentage points, while carefully manage service quality, market share increase and profits.
We will continue to implement our strategy of building a large and scalable platform that is well integrated with profitable all its densely located across our vast network. By leveraging infrastructure investments, financial strengths, ability to generate cash and strategic partnership, we are confident in delivering our corporate objective.
In 2019, we will focus on the following initiatives. First, we will strengthen overall service quality by using multi-faceted assessment indicators such as time limits, customers service appraisal and the final index to monitor ending constant value and customer satisfaction.
Second, in conjunction with establishing standard pickup and delivery fees schedule, our network partners, our network's policies are designed to be more direct and effective in balancing existing and incremental profit by our network partners, as we help to increase the level of earnings of our express delivery personnel. Third, we will improve and expand the breadth and depth of our network in rural area to support our agriculture customers to help alleviate poverty.
We will proactively plan resources and improve capacity for pickup and delivery and prepare for increased pressure on last mile delivery. Fourth, we will increase and accelerate our investments into infrastructure to further strengthen our cost advantage and provide readiness for incoming value demand.
Lastly, we will increase investment in research and technology to digitize operations and establish data driven management framework further reduced cost and improve productivity. 2019 is a crucial year for us, we will dig deep and execute.
With greater capacity and higher efficiencies and productivity gain, our platform will be able to better empower and support our network partners and frontline personnel. Over the past three years, we have successfully outperformed our competitors by relying on our shared success core value system and a strategic early mover investment in infrastructure.
We are more capable and have greater financial resources today. Over the next three years, if we were to further expand our leadership we need to rely on strong execution of our team and technology driven tools.
A lot of work is ahead of us and I am confident in our ability to take full advantage of the market opportunities as well as overcome challenges that comes along increasing market demand. Now, I will pass the call to over CFO, Ms.
Yan, to go over our financials.
Huiping Yan
Thank you. Hello everyone on the call.
As I review our financial results, please note that unless specifically noted all numbers quoted are in RMB and percentages changes refers to year-over-year comparisons. In summary, our parcel volume increased by 34.7% and 37.1% for the fourth quarter and full year respectively to reach 8.52 billion parcels for the full year and the associated market share in China's express delivery industry increased to 16.8%.
Adjusted net income was RMB1.29 billion for the fourth quarter which came in at the high end of our guidance for the quarter and our full year adjusted net income was RMB4.2 billion, which grew 30.1%. Let's now go over the fourth quarter financial results.
Revenues increased 29.9% to RMB5.63 billion, mainly driven by 29.4% increase in revenue from express delivery services, with a 34.7% increase in parcel volumes and were partially offset by a decrease in unit price per parcel or ASP, which is largely due to incremental volume incentives. ASP for express delivery services decreased by RMB0.09 or 4.3% as a net results of RMB0.03 increase for weight per parcel increase, RMB0.02 decrease in waybill use, RMB0.10 decrease due to impact from incremental volume incentives.
Revenue from the freight forwarding business increased by 45.6% to RMB392.5 million compared to the same period last year. We started consolidating freight forwarding or COE business in the fourth quarter of 2017.
Revenues from sales of accessories increased to RMB252.8 million, mainly due to an increase in sales of thermal paper used for printing of digital waybills. Electronic waybill utilizations rose to 99.6% versus 93% last year.
The cost of revenues increased by 36.9% to RMB4.08 billion from RMB2.98 billion last year. Now let's take a closer look into cost of revenues.
Line haul transportation cost was RMB1.95 billion. An increase of 28.9% as a percentage of revenues line-haul transportation cost decreased to 34.6% from 35.0%, mainly driven by an increase in the use of self-owned and more efficient high capacity trailer trucks.
Sorting hub operating costs was RMB1.04 billion, an increase of 35.7%. As a percentage of revenues sorting hub operating costs increased to 18.5% from 17.7%.
The increase in sorting hub operating costs was mainly due to an increase of RMB214.4 million in labor costs. There were negative impact of average wage hikes and temporary hiring to handle increased parcel volume during peak online shopping season.
During this peak season exercise, we have identified opportunities to improve labor structure and planning, coupled with improving integration of small and large parcel sorting equipment and dynamic weighing machines, sorting hub operating costs, productivity will provide greater efficiency gains and strengthen our cost advantage in the future. Cost of accessories were RMB158.1 million, an increase of 23.8%.
The increase was in line with the increase in sale of accessories related to e-waybill. Other costs were RMB542.8 million, an increase of RMB233.2 million when compared to last year.
They increase was mainly due to an increase of RMB165.1 million in dispatching costs associated with serving our enterprise customers, an increase of RMB49 million in IT related expenses and an increase of RMB33.6 million in tax surcharges. Gross profit was RMB1.55 billion, an increase of 14.6% from RMB1.35 billion last year.
Gross margin decreased to 27.5% from 31.2%, mainly driven by parcel volume increase, which is partially offset by a decrease in unit price per parcel and increase in costs associated with serving large enterprise customers, which generally have lower gross margin and an increase in third-party transportation costs during peak season, as well as labor costs inefficiency opportunities that we have mentioned earlier. Separately, the lower margin freight forwarding business also caused minor dilution.
Total operating expenses were RMB197 million compared to RMB127.5 million last year. SG&A were RMB276.4 million compared to RMB222.5 million during the same period last year.
The increase was mainly due to an increase in salaries and accrued bonuses. SG&A cost as a percentage of total revenue decreased to 4.9% from 5.1%, demonstrating corporate costs leverage.
Other operating income was RMB79.5 million in the fourth quarter of 2018 mainly consisted of government subsidies and rebate of fees from ADR bank. Income from operations were 135, - RMB1.35 billion, an increase of 10.4%.
Operating margin decreased to 24% from 28.3% in the same period last year, mainly driven by the decrease in gross margin by 3.7 percentage points. Net income was RMB1.28 billion, an increase of 4.7% from RMB1.22 billion in the same period last year.
Adjusted net income was RMB1.29 billion compared with adjusted net income of RMB1.27 billion during the same quarter last year. Excluding an one-time tax rebate related to company's high and new technology enterprise qualifications received in fourth quarter of 2017, adjusted net income increased by 20.5% in the fourth quarter.
Adjusted EBITDA was RMB1.77 billion, compared to RMB1.42 billion, an increase of 24.6% from fourth quarter last year. Net cash provided by operating activities was RMB1.8 billion, compared with RMB1.37 billion in the same period last year.
I will now quickly go through a few key points for full year 2018 financial results, further details can be found in our earnings release. Revenue increased 34.8% to RMB17.6 billion, mainly driven by a growth in parcel volume and a COE Business acquired in October 2017, which contributed RMB1,278.7 million.
Total cost of revenues increased 40.5% to RMB12.24 billion from RMB8.71 billion last year. Line-haul how transportation costs increased by 20.0% to RMB5.76 billion, and sorting hub costs increased by 31.1% to RMB3.2 billion.
Combined unit line-haul transportation and sorting hub cost per parcel declined by RMB0.11. While our initiatives to improve our cost leverage were temporarily impacted by increased in labor and third-party costs during the peak season, we have attained reasonable cost productivity gain during the quarter - during the year overall.
As I mentioned earlier, there are improvement opportunities in labor planning and labor structure optimization. Further, we expect to realize greater cost efficiency as our install base of automated sorting equipment to gradually reach optimized utilizations alongside of incoming large volumes.
By the end of 2018, 120 sets of automated sorting equipment have been put in use compared to 58 sets as of December 31, 2017. Regarding our transportation and sorting hub costs, as combined and fully integrated, we will further improve our usage of self-owned and operated high capacity trailer trucks and reduce use of third-party transportation services.
Further, as we improve our utilization of digitized management tools, route planning will yield greater productivity gain in the future. Gross profit was RMB5.36 billion, an increase of 23.5% from last year.
SG&A were RMB1.21 billion, an increase of 55.1% from RMB780.5 million in the last year, mainly due to an increase of RMB208.8 million in share-based compensation expenses of which RMB188.6 million was a lump sum charge for 2017 grant in contrast to 2016 grant, which were vested over three years and charged over three years. Income from operations was RMB4.33 billion, an increase of 15.6% from RMB3.75 billion last year.
Operating margin decreased to 24.6% from 28.7%, primarily due to the decrease in gross margin by 2.8 percentage points. Net income was RMB4.39 billion, compared with RMB3.16 billion in 2017.
Net margin increased to 24.9% from 24.2%. Adjusted net income was RMB4.2 billion compared with adjusted net income of RMB3.23 billion increased by 30.1%.
Adjusted EBITDA was RMB5.86 billion compared with RMB4.45 billion last year. Net cash provided by operating activities was RMB4.4 billion compared to RMB3.63 billion last year.
The Board of Directors has approved a special dividend of $0.24 per ADS for 2018, which is expected to be paid on April 8, 2019 to shareholders of record as of the close of business on April 1, 2019. Based on the current market conditions and operations conditions, the company parcel volume is expected for 2019 to be in the range of 11.51 billion to 11.93 billion, representing a 35% to 34% year-over-year.
And the company's adjusted net income is expected to be in the range of RMB4.8 billion to RMB5.2 billion, representing a 14.3% to 23.8% increase for the same period. The company will no longer provide quarterly estimates going forward.
Above estimates represent our current and preliminary view, which are subject to change. This concludes our prepared remarks.
Thank you everyone. And now we are ready for Q&A.
Operator
[Operator instructions] Your first question comes from Baoying Zhai from Citi. Please go ahead.
Baoying Zhai
Hi, Ms. Li, Ms.
Yan and Sophie, good morning. My first question is regarding the cost.
So from this 4Q 2018 results we see there is some pressure on cost reduction. The unit transportation cost only down 4%, unit sorting costs is flat.
I understand the peak season was part of the reasons, but compared with last year peak season reduction degrades, it's still a little bit later, what are the reasons behind? And what's the guidance for 2019 cost reduction, which we will do, in the past we had cost advantage compared with our peers.
Now going forward our reduction degree maybe less than our peers, because their cost base is much higher but his would narrow the gap the advantage gap between us and our peers in terms of costs. So how would we react to this?
My second question is on ASP, 4Q 2018 ASP was pretty good, is this because of the narrowed subsidies to franchisees during peak season and is there a guidance for 2019 ASP? Moreover from our general check we noticed that the press war this year started earlier and much more intensive and were more reactive to this press war this year too.
Can you share with us our press spreadsheet this year? Thank you.
Huiping Yan
Thank you, Baoying, for your question. I will answer the cost related question first, and then Chairman, Lai will address your pricing strategy question.
Yes, so your observation is accurate that our fourth quarter overall operating costs decrease was less than expected. There were few detailed reasons if I may first to comment.
One, there were a 3% increase in the personal weight, when compared to the same period last year. We didn't control especially during the peak season for bulky and heavier parcel to come through our system, compared to some of our other competitors.
Second, the volume of parcels during the peak season increased and cost per unit increased relatively. So - and then also certainly the price of third-party transportation services increased year-over-year, especially during the Single's Day and in Double 12.
Now for line-haul transportation, we have improved the reliance on our self-owned and operated vehicles. And we have more in the pipeline to be added.
As I mentioned earlier route planning still currently are done on a semi-automated basis. There are a lot of judgment costs.
And as we improve with more technology driven tools with greater visibility and quicker response, the line-haul route planning will become another greater productivity generator going forward. The third-party costs, if I may further explain, during the peak season, we do rely on increased portion of our transportation on third-party.
Because during the normal time, our usage of those third parties were low, because of our increased self-owned operations. So their bargaining ability for peak season price became higher.
In that sense, there was also an impact on our overall line-haul costs reduction, which is below our expectations. Second, relating to our sorting hub cost, the unit costs remained stable at RMB0.38 for the same period last year compared.
So there is no gain or no increase. Now the hike in labor costs as I mentioned earlier did impact, but we also found improvement opportunities in the number of temporary hiring that we should do.
Now this is not a standalone issue. When we look at the integrated installation of our sorting and automation capabilities going forward this issue will be greatly addressed.
So you have also asked about what our expectations for next year. Overall, we have anticipated the greater installed base to further improve the utilization.
Large small sorting machines, as well as dynamic weighing machines will all become well integrated as a part of the solution - total solution to our overall cost reduction. Currently we expect in 2019 there is an at least 5% productivity gain for our line-haul plus sorting hub cost in 2019.
Hope that answers your question. Now Lai will address your pricing strategy inquiry.
Meisong Lai
So for our pricing strategy first of all if you look at volume, we have accelerated our growth target to exceed market average by 15 percentage points at least. Because we realize and firmly believe scale is our first priority, which is very important to express delivery businesses.
We do believe that the pricing sensitivity is a tool that is used to adjust volume in a highly competitive and increasing market environment. Our strategy still remains that we will maintain a level of profitability or a level of profit.
Our goal with the pricing is to properly manage existing volumes and incremental volumes. As you may have done your channel checks, there are price adjustments necessary and were done during the first and the second months of the year to stimulate further volume increases.
As higher concentration of the market taking place, we are anticipating price movement, but we will never initiate price competition. Our goal is to improve our market share by 2 percentage points and that is all predicated on maintaining quality of services, as well as reaching our targeted profit goal, pricing again will be properly managed as we have done in 2018.
However, with a heightened focus on gaining market share and accelerated growth. Thank you for your questions.
Operator
Thank you. Your next question comes from [indiscernible] from China Renaissance.
Please go ahead.
Unidentified Analyst
My first question is that our - whether management can provide outlook for the market competition for year and what is our market share target in for years? And my second question is about the CapEx this year and also do we have any M&A plans?
Thank you.
Meisong Lai
China's express delivery industry still in the medium to high speed growth stage with parcel volume growing incrementally every year, in 2018 was a 10 billion growth. In addition, e-commerce expected to continue gradually penetrate further.
With this in mind, we are expanding our service offering to cover more industries and regions, including rural areas. Our goal this year is to maintain our profit target and service quality, while growing our parcel volume more than 15 percentage points higher than industry average.
And we raised our parcel volume growth target for the year, because we are confident in our ability and readiness to achieve this goal. Going forward, we will increase the parcel volume and expect to reach 25% of the market share by year 2022.
Huiping Yan
And Nicky, you have a second question regarding our use of capital and the M&A - any M&A plan. Yes, the company has a very strong cash generation capability that's generated RMB4.2 billion - RMB4.4 billion from operating costs in 2018.
And for 2018 total capital expenditure was approximately RMB4 billion, which included roughly RMB2.4 billion for land acquisitions in sorting hub construction, approximately RMB775 million were used to purchase of self-owned vehicles and about RMB700 million for acquisition of sorting hub equipment and facilities installations. We expect to spend another - we expect to increase our spending for 2019 to a level of RMB6 billion to RMB8 billion.
It's a 10% to 15% of which will be on truck purchases, 15% to 20% on automation and the rest on land acquisition and sorting hub construction. Our CapEx plan is of course closely being monitored with the development of our overall market as well as our operational requirements.
Our future capital expenditure plan will be very much geared towards matching the demand on the volume as well as planning ahead for our capacity increases in meeting the incoming volume. As we have discussed in prior conversations, we do expect a longer term growth in our industry, albeit being 20%.
But yet on a huge base, we do believe investment and scale advantage will continue to be a critical competitive considerations for ZTO. Our past track record has proven that early investment is important especially in self-owned land, self-owned facilities, which provides a huge advantage compared to rented costs and which are largely relied on some of our other competitors.
Investment in infrastructure and coupled with our volume growth will become an important advantage going forward. M&A you've asked that question, as a normal corporate activities we will continue to look at ways and opportunities to increase our market penetration as well as support some of our ecosystem businesses that are underway, that are either in startup stage or in ramp up stage.
As of now there are no definitive plans that we are able to communicate. Thank you.
Operator
Thank you. Your next question comes from Edward Xu from Morgan Stanley.
Please go ahead.
Edward Xu
Let me just translate my two questions. First is that, how do you see the market landscape for this year, especially how do you cooperate with Alibaba in China, especially given Ali's recent investment in STO [ph] it looks like the Ali has invested in most of the Tongdas payers, so what's implication from that?
And second question is regarding your market share, because you give the target of at least 15% growth above the market and probably gain market share by a 2 percentage point, so how do you achieve that, would you do it through pricing or what's your strategy in achieving this goal? Thank you.
Huiping Yan
Thank you, Edward. Let me first address the question of Alibaba's investment.
Yes, we have consistently communicated that the industry, the express delivery industry is a critical or the logistic experience is a critical element to Alibaba's overall customer satisfaction. And on the other hand for this industry overall, there is still plenty of opportunities to improve efficiencies and increase productivity.
And Ali has a very strong technological advantage and capabilities through Cainiao as we have seen in the past have provided great support to all the players in the express delivery industry to help us reduce cost and increase scale and improve productivity. So we see this further acquisition of further penetration into the express delivery industry as positive.
Because in addition if we look into the future, the huge volume that is coming in, not just from Alibaba, from the overall Chinese economic development from online shopping or new e-tailing all these require strengthened capability, as well as improved productivity for the industry as a whole and we believe Alibaba and Cainiao will play an important role. We as part of the industry will benefit from a further support and further investment by Alibaba into this industry.
Meisong Lai
We have mentioned that there are five initiatives or strategic sets that we are focusing on in 2019. First, most importantly improve and maintain our quality of services and provide greater satisfaction to our customers so as to enhance our brand.
Two, we will improve and invest last mile capabilities and especially focusing on improving the earnings quality or earnings capability by our front-line couriers to provide greater competitive advantage for them. Thirdly, we are expanding our business reach and coverage to include rural area of services and specifically last mile delivery our cooperation with Cainiao Post is part of that initiative.
Fourth, we will continue to invest in our infrastructure as proven beneficial for us and greater advantage on a cost and productivity will be realized. And fourthly improving our ability to manage our business with greater visibility, greater response through digitized process management and so as to reduce costs, find issues and solve problems.
Looking back in the past, we had lesser from a resource standpoint from our scale standpoint, but we were able to surpass and outperform. Today we are with greater resources and our team are in better shape in executing.
So we believe that as we accelerate our growth target going forward the 25% market share achievement by year 2022 is very much attainable and we are confident to reach that and even surpass that goal.
Sophie Li
Thank you. Next one.
Operator
Thank you. Your next question comes from Steve [indiscernible].
Please go ahead.
Unidentified Analyst
[Foreign Language]
Sophie Li
Hi, we can't hear you, Steven.
Operator
Pardon, this is the operator, we appear to have lost Steven, I'll just see if we can get him on the line for you one moment. Your next question comes from Eric Zong at Macquarie.
Eric Zong
So I have three questions. First of all I want to ask about KA account business.
How is the revenue share for the fourth quarter last year and also the volume growth for the first quarter? And how is the gross profit trend looks like for the first quarter as well?
And so my second question is about the direct shipment. So what's the volume contribution to the overall business?
And my third question is on Cainiao Post. So, I would like to ask more about the management view and Cainiao Post impact on ZTO's last mile delivery in the longer term.
Thank you.
Huiping Yan
Thank you, Eric for your question. Let me answer the first two questions, regarding KA account and direct route.
First of all revenues generated by our key accounts where about RMB730 million accounting for about 13% of our total revenues, it's up about 81% from the same quarter last year. They accounted for about 8.1% of our total parcel volumes, which does increase 119% from last year.
The gross margin were flat with compared to last quarter is at approximately 50%. Revenue generated from key accounts is about 11%, while parcel volume accounted for 6.3% in 2018 as a whole.
Gross margin remained flat. KA accounts are normally large enterprise clients such as Ali Pay which they have higher bargaining power and higher requirements for service qualities throughout the nation.
KA volume has been increasing rapidly, we do have - we did form our specific special department to receive such demand from our KA clients. And going forward the profitability of these KA accounts will remain stable.
And the second question relating to the direct shipment. Parcel volume for our direct shipment business accounted for about 5% of our total volumes during fourth quarter.
The direct shipment business currently accounted for about 6% of total routes and we do not expect the parcel volume from direct shipment to change significantly in 2019. Going forward as volume come through, we may see the direct shipment businesses to increase, because it does overall provide greater timeliness, as well as greater cost advantage.
And then Mr. Lai will address the Cainiao Post question.
Meisong Lai
Cainiao Post is a total solution to reduce overall delivery cost for the industry. In addition our consumers have increased their need and demand and they have developed new preferences from door to door services in the past to self-pick up on their own leisure time.
And so we believe these two key points are important going forward in meeting the market demand. Cainiao alliance is consisted of all express delivery Tongdas companies.
ZTO as one of the shareholders have been fully engaged and supportive of this overall initiative. We believe in 2019 our activity level will increase Cainiao Post development and increase will continue.
Sophie Li
Okay, operator.
Operator
Thank you. This concludes our question-and-answer session.
I would like to turn the conference over to Sophie Li for closing remarks.
Sophie Li
Thank you, operator. In closing on behalf of the entire ZTO management team, I'd like to thank you for your interest and participating in today's call.
If you require any further information or have any interest in visiting us in China, please let us know. Thank you for joining us today.
This concludes the call.