Ladies and gentlemen, thank you for standing by and welcome to the Huazhu Group Limited Q2 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. There will be a presentation, followed by a question-and-answer session. [Operator Instructions] Please be advised today’s conference call is being recorded. I would now like to hand the conference to your first speaker today, Ms. Ida Yu. Thank you. Please go ahead, ma’am.

Thank you, AJ. Good morning, everyone and thanks to all of you for dialing-in today. Welcome to Huazhu second quarter 2019 earnings conference call. Joining us today is Mr. Ji Qi, our Founder and Executive Chairman; Ms. Jenny Zhang, our CEO and Mr. Teo Nee Chuan, our CFO. Jenny and Teo will present the strategy review and Q2 results. Following their prepared remarks, management will be available to answer your questions. Before we continue, please note that the discussion today will include forward-looking statements made under the Safe Harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our results may be materially different from the views expressed today. A number of potential risks and uncertainties are outlined in our public filings with the SEC. Huazhu Group does not undertake any obligation to update any forward-looking statements except as required under applicable law. On the call today, we will also mention adjusted financial measures during the discussion of our performance. Reconciliations of those measures to comparable GAAP information can be found in our earnings release that was distributed earlier today. As a reminder, this conference call is being recorded. The webcast of this conference call, as well as supplementary slide presentation is available in the Investor Relations section of Huazhu Group's website at ir.huazhu.com. Now I would like to turn the call over to Jenny Zhang, our CEO. Jenny please.

Hello and thank you, everyone for joining us today. We are excited to report our second quarter results with double-digit growth in our number of hotels net revenues, adjusted EBITDA as shown on Slide 2 at the end of Q2 this year we had a total number of 4,665 hotels, an increase of 20% from the end of Q2, 2018. Our total turnover at a hotel level reached RMB 8.8 billion, an increase of 18% from the year-ago. Our net revenues increased by 13% from RMB 2.5 billion to RMB 2.9 billion in Q2, 2019. Our adjusted EBITDA stood at RMB 1.07 billion for Q2 2019 as compared to RMB 965 million in the Q2 last year. The pro forma adjusted EBITDA would have been RMB 1.15 billion or 40.4% of net revenue is excluding the impact of our significant investments in development teams Upscale brand hotels and IT capabilities during this quarter. We believe such investments will help fuel our sustained future growth. Due to the weak macro economics and general slowdown in business activity and leisure travel, our same hotel RevPAR and occupancy has softened since the beginning of this year. Nevertheless our mature hotel occupancy maintained industry leadership and outperformed the industry average by 20 percentage points in Q2 2019. Huazhu’s core competencies and resilient business model remain solid during cycles. Along with the more challenging economic situation, more growth opportunities for consolidation become available to us, thanks to our industry leader position. As we are seeing, we are capturing those opportunities effectively through our well defined strategic focuses. As listed on slide 4, firstly we are continuing the rapid expansion of our hotel network, secondly we focus on innovative technology applications to enhance our guest experience and operational efficiency, thirdly, the strategic deployment in Upscale hotel…

Thank you, Jenny and good morning everyone. Please flip to Page 14, in Q2 our blended RevPAR grew by 1.3% driven by higher ADR and partially offset by a decrease in occupancy. The ADR increase of 4.4% was contributed by a positive 0.4% increase in our merchant hotel ADR and also by an increasing mix of mid and Upscale and upgrade hotels with higher ADR. Our hotel occupancy was at 87% in Q2, three percentage points lower compared to 90% a year-ago. The lower occupancy was largely attributable to the softer macro economic environment as well as higher base in Q2 2018. Turn to page 15, our same hotel RevPAR declined by 2.1% in Q2, our ADR slightly improved by 0.14% and partially offset by a lower occupancy of 2.3 percentage points, mainly attributed to softness in business travel demand. We observed fewer hotel stays for trip fairs and conference in April compared to last year. In May, the overall travel demand was relatively stronger because of more tourist stays due to longer holiday. However, the performance in June became softer again. This is consistent with our original forecast earlier this year. However, given the recent escalations in the China, U.S. trade war, as well as the uncertainty in the timing of the final resolution of these trade disputes, we need more data to determine the timing of the final recovery in the subsequent quarters. Moving on to final results on slide 16. Our net revenues grew by 13.4% in Q2 in line with our guidance of 13% to 15%. As we look at revenue component, net revenues from our leased and operated hotels improved by 5% year-over-year, and net revenues from our manachised and franchise hotels were up 30% compared to last year. In Q2, revenue that was attributable…

Certainly, ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] The first question comes from the line of Justin Kwok from Goldman Sachs. Please go ahead.

Hi, good morning management. Thanks for taking my question, perhaps I have two questions. To start with the first one is on the share buyback program. So I think it’s interesting to see you have initiated quite a sizeable amount of this program. I want to get a sense on the rationale and the logic in terms of why you’re initiating it today. And in terms of the quantum, why you think this $750 million will come up and how do you look at this in the kind of context of balancing as Jenny mentioned, at the beginning of the call that you actually see opportunities for M&A, onshore, how do you balance the use of cash on this bulk side. The second question is on the HanTing 3.0. So I remember a few years back when you roll-out the HanTing 2.0 there was a massive wave of upgrade within your franchisees, which at the end bring in RevPAR growth before and after. So for this HanTing 3.0 would you mind to give a bit more guidance on the potential ROI or the CapEx for this upgrade and any time frame for the roll-out of this program throughout your system? Thank you.

Teo will help respond the first one, I will address the second one.

Okay. Hi Justin, we put in place a share buyback program considering couple of factors. Number one, we believe that the current situation, the current economic environment and turbulence may cause some turbulence in our share price, which will cause the share price to fall below the long-term valuation of the company. So, what but having said that, we believe that China lodgings in Huazhu is that we have a long-term view of the company, and we have been consistently invested in some of the long-term growth the company, which will bring back the revenue and as well as the revenue growth in the longer term. So, we believe that the valuation will recover in the longer term. So, we expect that, we would like to put in place a longer term kind of like share buyback program to enable us to actually buy back some of the shares, when the share price is far below our long-term value is number one. Number two is the cash that we have put in place in terms of the M&A as well as the share buyback is that we have actually have some cash balance offshore to facilitate these share buybacks. In addition to that, for if there is any M&A opportunities within the China, we have also had some cash balance as well as the credit facilities within China to execute the M&A activities.

On your second question on the HanTing upgrade, by now we have already got more than 65% of our HanTing hotels are 2.0 or above. And this launch of the new 3.0 model has brought a lot of excitement to the market. So we have decided to accelerate the renovation and upgrades of the existing HanTing portfolio, our internal what we call goal is to increase the 2.0 up version of the product to 65% by the end of this year, and 80% by the end of next year, that will be driven by three components, one is accelerated growth of new opening of the HanTing Hotels, and second is the upgrade of the existing old HanTing Hotels and thirdly we will also of course some assets and also some of that will be natural exploration of the franchise agreements for some of the oldest hotels. We believe we know those efforts are going to continuously strengthen our HanTing brand and our goal is to make HanTing the largest single brand hotel in the world in the next 18 to 24 months.

Thank you.

Thank you, Justin.

The next question comes from the line of Billy Ng from Bank of America. Please go ahead.

Hi, good morning, I have two questions. The first one is can you provide a little bit more color on the current quarter in terms of the demand on the brand and in particular, in different segments if you can provide some, shed some light to that will be okay. Thanks.

Okay, hi Billy. What we have observed in Q2 was that we break it down to the different tiered cities is that the Tier 1, I will say that is mix where we see continued growth in Beijing as well as Guangzhou on the other hand if you do see some weakness in Shanghai and them. On the other hand, overall in the Tier 1 cities the RevPAR has been holding up. On the other hand is that in Tier 2 cities is that we see that the RevPAR has experienced a quite significant drop in Tier 2 cities meaning we expected that in many because the business activities in these areas has been slowing down with our competitive activities in other commercial activities as well as leisure and in the lower tier cities like Tier 3, we are happy to see that the RevPAR continue to hold up in the lower tier cities.

Would you mind to tell us for July and August, you see similar trend as well and overall trend for July and August?

Okay. Although it’s still too early to call but having said that is in July we see a softness in the overall demand as well. And I will say that in August is that the first week was pretty good but except that in the starting from the August 10, you said there was a typhoon that was hitting the Shanghai and good part of the eastern coast which will also affect I would say that the peak period of our demand. But having said that, it’s too early to call, we need couple more weeks to see where the numbers will fall.

Thanks. And then my second question actually is related to your Madison brand, can you tell us how many of your Madison pipeline could be lease and operated hotel and so whether there will be any impact on the opening itself for the next two quarters?

Also the existing pipeline of Madison and Grand Madison there are leased hotels and the rest are manachised or franchise hotels. This is our Upscale soft brand, we expected in order to become a innovator in how we manage the Upscale hotels especially the food service one, we’ll be able to consolidate a lot of them.

Okay. And just to follow-up on that as because we understand in the last few quarters, the Joya brand actually contribute to most of the opening expense, just want to clarify or whether we will see a significant increase of the opening has been due to the pushing of this new brands.

Well although there will be some leased and operators on the Madison brand, but for this brand is that the whole objective is that we try to retain as much as possible, the existing structures and renovations of the existing hotels, which is in normally in a good quality. So the investment is the expenditure into these. Even the leased hotel is actually pretty minimal. But the objective, the purpose of this brand it actually consolidates the three to four star hotels, existing hotels on the manachised models.

Okay, thanks. Thanks a lot.

The next question comes from the line of Dylan Chu from CLSA. Please go ahead.

Thanks very much. Good morning and this is Dylan from CLSA. I have very quick few questions. And I'll ask them one by one. Number one is on your updated revenue guidance for 3Q and full-year. Could you please also help us update the same hotel RevPAR assumptions that you have behind the updated revenue guidance and related to that, just any thoughts or color on the margins, particularly for 3Q, which is a few quarter? That will be very helpful.

Okay. On the revised revenue guidance we expected the same hotel RevPAR will actually will be slightly I would say in the low single digits in the negative territory. We have we feel a bit uncertain because of I will say that the events happening in the China and U.S. trade disputes, which one time in June it seems to be recovered, then subsequently in July and August, but even like two days ago, the event has turned out pretty badly and it seems to appear escalate again. So and because we see that the due to these uncertainties. So we were not very sure that the original expectation that the overall demand will as far as the business activities will recover in the second half or even Q4. So as a result, we decided to lower down our revenue guidance, as well as the RevPAR expectations. As to your questions on the margins is that we had been about our growth model is through the asset-light business model. So because the majority of our openings are the asset-light model. So we expect that the revenue that's coming in from the franchise manachised model is that will help to actually bolster the decline in our leased hotel operating margins.

Okay, great, thanks Teo, the second question just in terms of costs, many about next year. In addition to pre-opening and development team investments, which should normalize, do we see any further areas where we can achieve more cost efficiency, if open environment continue to be quite subdued? Just any areas we can identify and sort of anything you could quantify will be very helpful.

Okay, you may invent that, this year in 2019 we make significant investment in couple of areas. Number one is the development team areas, as well as IT resources as well as our sales teams. This has put we will say that, the additional investment approximately RMB 30 million of the people costs every quarter, okay? We currently that we do not expect this quantity, the number of headcount to increase much further or significantly much further. So we expect that these costs will retain in the remaining this year as well as next year. But on the other hand, is the pre-operating expenses that are related to our investment in our Upscale hotels, the additional pre-operating expenses of about RMB 200 million is at this moment is we have not made any new or say investment in the high-end hotels, which will require such a high capital expenditure as well as pre-opening expenses in 2020. So we expect that the pre-opening expenses in 2020 will be lower compared to 219.

Okay, yes, okay, thanks. Final question, just on the buyback programs. You just mentioned that, we also had a head view in terms of our long-term value. Just curious, it's obviously no obligation. It's highly discretionary. But what kind of price range would you be interested in terms of buying back would there be any sort of selling price about which you wouldn't consider just any color on that would be helpful and sort of related to your capital allocation? Obviously, there could be compelling M&A opportunities spoken out, sort of what kind of maximum leverage would you consider if you do see a compelling candidate? That would be helpful and also, would you consider a potential to use the equity to fund any B2B acquisitions?

Okay, number one is related to the pricing the pricing questions that I'm afraid that I'm not able to answer your questions, because it's actually totally up to the management and it's not appropriate to answer to provide answer to the public. As to the capital allocation, we are pretty open. The reason why we put in place a share buyback is because we have existing shares in cash as well as the credit facilities in place. In fact, we said that we will also due to our better credibility is that we are able to increase our credit facility further in at the end -- by the end of this year. So, we do have the cash resources to deploy. So, the first and most important thing is that, we would like to grow this company, so it’s attractive M&A opportunities we will first utilize the cash to pay for the M&A activities. But having said that, we also believe that what we have been doing in Q1 in the last few years as to I believe 2019 is that you will have a bearing on there will be a pressure on the profitability, which some of the investors may not appreciate, because of the low operating margins. But we believe that by doing this investment, our profit margin and growth potential will accelerate in the coming years. So, we think that we would use some of our cash to buy back these shares when the market, I will say that did not react well in some of the profit situations. And then is that we will consider to re-issue the stock in the future.

Okay, great. Thank you very much.

Thank you. The next question comes from the line of Lina Yan from HSBC. Please go ahead.

Hi, management. Thanks very much for taking my questions. I have two questions. So first question is regarding your guidance on revenue growth in 3Q and is like three percentage point deceleration versus a 13% revenue growth in 2Q, you just mentioned, you're still expecting like low single digit negative, same hotel RevPAR in like the second half of the year. So I'm wondering, if you're going to have more temporary closure of owned and leased stores like in 3Q or second half for upgrades while we have so much like macro like uncertainties? Thank you.

I will say that the upgrading our -- our upgrading sorry -- we closed some of our hotels for upgrading actually part of our long-term plan to upgrade our hotels is that in a good time is that the opportunity cost to upgrade is bigger because you actually lost opportunity to make the revenue. But having said that in the slower economy, it’s actually good timing. But we also consider that there will be a number of activities coming up for example, the Beijing Olympics is going forward in the next couple years and you actually see that some of the government meetings to address the timing of the renovation. So we need to seize the opportunities to do some upgrades of our lease and operated hotels. So that when after the cloud and miss and that has been cleared, we are in a better position to actually attract more market share into our hotels.

Is there a target for upgrades like for owned and leased and specifically to HanTing 3.0?

Okay, we actually said we do have, we do have some sort of specific target in doing that our plan, our upgrading and maintenance plan was according to our original plan that we set at beginning of 2019.

Okay. Okay, thank you. And my second question is regarding the expenses. So as I understand your investment into the IT development team and the pre-opening, reflected in the SG&A and pre-opening expense, but when I look at the other expense under hotel operating expense, actually, the growth in first half was still quite like significant. So, may I know what is the reason for that? Thank you.

Okay, the other operating income, the other operating expenses is reflective of couple things. Number one is that we do have an IT company, which we call which generate revenue from our excellent customers. So the cost is actually, the cost in servicing those customers actually reflected in that. And of course, the revenue for that was also reflected in the other revenue in the revenue line.

Okay, that's the only reason, right. Thank you very much.

Thank you. The next question comes from the line of Tianxiao Hou from T. H. Capital. Please go ahead.

Yes, good morning management. So the questions related to your expansion. So in your press release, you mentioned that you have about more than 1,000 hotels in the pipeline for your guests to on-board. So I wonder where those hotels are in terms of the Tier 1, Tier 2 regions. And also that is one they may take, the one angle to look at it, the angles, the other angle to look at it is, what's the portion of the hotels are much more like a higher tier to that, what are the middle tier or lower tier so that the classification of your pipeline. And another question is related to China hotel market. So if I look at 2019, we have like almost 300 million room nights already. And those 300 million room nights and I wonder is that already penetrated saturated? So we will expand is that consolidating the existence or it's the market expansion, what exactly it is? Thank you so much.

Okay. First I will answer the question regarding the tier cities, is that approximately 33% of pipeline between Tier 1 and then in Tier 2 we have approximately 36% and the balance in the lower tier cities. Okay. Regarding that we see that, the number of hotels that you have now currently have as a percentage of the total market is actually pretty small, we’re talking about like 2.5% to 3% is very, very, very small. What we have been seeing is that our expansion, if we like to expand in the market, where the penetration is low, and then it says we would like to convert existing hotels into our own brand, because we think that we can operate the hotels in the better way as appropriate pricing and appropriate quality to our customers. So, we see that our opportunity is still very, very small. To give you an example is that even the total penetrations of the all the branded hotels include not only us but also other like the bigger brands like BTG, or is it Lijiang, in the Marriott, Hilton, everyone, those brand of hotels is that approximately 30% in the market. So, if you look into the U.S. is 70% assuming that because of the fragmented nature in China is that it can go up to 50%, we still need to grow at least 2.5 times more, at least. So, we were seeing is that opportunity to do that is much bigger. So that is reason why we have been putting in appropriate brands including introduction of the Madison brand to further consolidate this market in the good locations.

Thank you. That's clear.

Thank you. The next question comes from the line of Praveen Choudhary from Morgan Stanley. Please go ahead.

Thank you. Hi, Jenny, hi Mr. Teo. Couple of questions from me. One, you mentioned that IT investment Upscale and business development, 3% of your margin in this quarter. I'm just wondering that in 2020, when these investments will go away, how should I think about the pressure on your margin, but that 3% completely go with a zero percent or will there always be some pressure on adding Upscale hotels so maybe 1% lower than what it could be?

Okay. I will say that the pressure, I wouldn't characterize investment as a pressure, but I will say that is actually a fit for growth. Okay, so the investment that we put in place for development team, it will bring growth to our company to increasing that especially the manachised hotel to expansion on particularly on the asset-light franchise models. So, this revenue will come in but having said that is that we do not expect the team to grow much bigger as compared to like as what we have added the results in 2019 compared to 2018, so we see that in 2020 we said our resources in this area will actually remain approximate the same number. So, in other words, we said the revenue that this team will be bringing into the new hotel will be more than offset, in the years coming forward. The IT team is the same thing as well, as far as the pre-operating expenses as I mentioned earlier is that we have not secured any more major strategy hotels in the location where they bring with a very high rental costs at this moment, so we don't -- we expect that the pre-operating expenses will be coming down in the years to come in 2020.

I understand Mr. Teo, I think you have explained that, my question was particularly on 3% margin that you have shown in your presentation very clearly that in Q2, your margin could have been 3% higher. My question is that 3% goes to 1% or zero percent when I look in 2020?

Okay, we are not providing the revenue guidance for 2020 yet. But we do expect because as for the absolute amount for the expenses were approximately what the current stage is. So we expect the percentage of these expenses will be coming down, going forward.

Okay, that's helpful. Quickly on the second question is related to your pipeline. You mentioned your pipeline has grown over time, which is good news. It is also grown as a percentage of your installed number of rooms. But your net opening guidance have remained same. So what I wanted to understand why and the second is how much of these net openings in second half 2019 and in 2020 would be from Huazhu as well as H hotel.

I will say that the -- all our pipelines are only related to the hotel selected leases in our disclosure and H Hotel is not within, is not within our consolidation scope and is not included in our premier hotels. Zero, okay, number two is that we expect that normally support our hotels we are opening it up within the next 12 months. As you may see that with our pipeline hotels in the beginning of the year. And now what we -- our target opening is approximately the same. And the reason why we have not been increasing the pipeline hotel, the opening time that is -- that you never know, because that -- and particularly at the end of the year coming to the third and fourth quarter of the year, there may be some meetings, there may be some timing of the issuance of the fire certificate license. They may actually cause the deviation of the timing of opening. So we -- it is -- we prefer to stick to our current target and we see how it goes. If that opening target were to be -- is that actual openings would be higher than what we expect that we revised that in Q3.

Okay. Great. And then on Upscale hotel, if I may ask the question, are you seeing RevPAR trend in Upscale hotels to be similar to what you have seen in your own hotel? Meaning business travelers are traveling whereas RevPAR is declining. And if that's the case, your entry into this segment, is it a good thing or a bad thing for your business?

And Upscale segment this year has seen or more some RevPAR decline. And currently we have a very tiny weight in the Upscale segment in China. Given our main business model is to do management and the franchise, I think it's the perfect opportunity for us to enter into this segment. As a newcomer, we come into this segment with more efficiency tools that will help this segment to improve their profitability, where is their current suffering point across the industry. And because of the significant revenue base, each upscale hotel is going to contribute more management fee than the small economy hotels. Therefore, we believe, number one, there is a demand for our capability, and number two, there is a good profit base for us to expand into. We think this is the perfect timing.

Yes, thanks Jenny. And I liked all your idea, innovations, those hotels really look great. So congratulations and all the best.

Thank you.

Thank you. The next question comes from the line of Carlton Lai from Daiwa. Please go ahead.

Hi, management. Thanks for taking my question. Just one quick one, can you just comment a bit about the trends and the take rate, and if we're seeing any pressure, given the kind of rising competition from a lot of new hotel chains we're seeing right now in China? Thank you.

You may -- okay. Hi, Carlton. Now, what we have been seeing is that we have been putting a lot of effort in actually increasing our, how to put it, our take rate, obviously our take rate, I would say that we have been putting a lot pressure here, I think we're putting -- we increased our central reservation systems, and the traffic that goes through our central reservation systems. And at this moment is that we are -- we will continue to maintain our take rate, our management fees on the base fees. And I would say, royalty, management fees on the management -- on the franchised hotels and we -- and through the higher traffic that flows through our central reservation systems, we expect that our take rate will creep up a little bit by little bit. So we have actually experienced a similar pressure before, I would say that back in 2015, 2016. But having said that is that we -- because our franchisees have been seeing value in our management. So at this moment, we have not seen any pressure on our overall base fee take rate yet.

There is an accounting truth I want to remind everyone that I think it's beginning of this year, right, the initial franchise fee is amortized into the lifetime of the franchise agreement. This is the significant change, because we used to recognize the revenue as a hotel opening. This has caused a significant mismatch, when we open a new manachised or franchised hotel, because the spending in development and the service of opening that hotel will be expensed immediately into our books. But the revenue, according to the new U.S. GAAP rules, need to be amortized this through many years. So when we accelerate the opening of the -- the opening scheme that we will have to absorb more expenses compared -- as a percentage of revenue, compared with previous years. I would just want to bring that to your awareness.

Can we move to the next question? The next question comes from the line of Yue Wen Liu from SWS Research. Please go ahead.

Okay. Thank you. I have two questions. First one, I read our second quarter report and say it's like we have like increased bank charge for online payment and higher commission fee to online travel sales, travel agencies. So could you explain like, what's the increase like in -- like our commission fees to OTA, what's kind of the new percentage that we have to pay. And about the bargaining power over fee like me to add?

Right. I would say that the one-off -- as you mentioned, that there's somehow cut off these increase in selling expenses was actually due to the increase in commissions. So as bank charges to the banks. This is mainly due to a couple of things. Number one is that we have a bigger number of hotels now. We have a larger number of hotels today. So is that -- as a result is that the -- due to the new openings, is that we would need some OTAs to help to fill up our rooms. So as a result is that the OTAs' contribution has also increased by one percentage point compared to the last quarter. So the commissions payable to the OTA has increased. But having said that, is that the rate that we pay to the OTAs remain the same. There was no increase in the rate that's been under discussion right now. This is number one. Number two is that because there is an increasing number of our customers also using the credit cards or the online payment versus using cash. So the bank charges related to their transactions has also increased.

Okay. Thank you and I have...

Yes, just to add to Teo's point, we want to confirm, number one, there is no rate increase in both banking charge and OTA fees. And actually we are gradually negotiating the bank charges down and we have achieved some success recently. So that increasing expenses you have seen are purely due to volume increase. And in addition to the increase, the number of hotels we are having, is driving this volume growth. There's another driver, it's primarily because they are more and more central booking and a payment through our own central reservation system. And we have been recognizing the revenue of -- the bank charge we paid on behalf of the franchisee in the revenue line and the expenses of them in the selling expense line. So there has also, of course, some volume increase recognized in our book under the SG&A line.

Okay. Thank you and I have my second question. I also notice that approximately 84% of our room nights was through our direct channel. So it's a bit lower than last year, which is like 86%. So that mean like we have more like midscale hotels and midscale hotels rely more on the OTA channel?

The increase in the online -- the OTA contribution estimation is that because we're opening a lot more new hotels, usually in the hotel expansion, in newer expansion is that we need the help from OTAs to have them to fill up the rooms. So as a result of that, the percentage has also increased. The main reason is because we need the help to having to fill the rooms at the beginning of the hotel life growth.

Okay. Thank you.

Thank you. Ladies and gentlemen, this does conclude your conference for today. Thank you for participating. You may all disconnect now. Thank you.