KT&G Corp
KRX:033780
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
83 500
123 000
|
| Price Target |
|
We'll email you a reminder when the closing price reaches KRW.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
KT&G Corp
You don't have any saved screeners yet
[Interpreted]
Ladies and gentlemen, thank you for attending the call today. We will now begin the conference call for KT&G's 2023 Fourth Quarter and Full Year Earnings Report. After the presentation from KT&G, there will be a Q&A session with the participants to the call.
[Operator Instructions]
We will now begin with KT&G's presentation.
Ladies and gentlemen, this is Kate Park, Head of Investor Relations at KT&G. Thank you attending KT&G's 2023 Fourth Quarter and Full Year Earnings Report. Please allow me to first introduce the KT&G management team in attendance today. We have Mr. Jin-han Kim, Chief Strategy Officer; Mr. Seong-sik Park, Chief of Marketing; Mr. Kwang-il Park, Chief of Real Estate Business; Mr. Jae-Young Cho, Chief of Global Business; Wang Seop Lim, Chief of NGP Business; Mr. Yong-chan An, Head of Strategy and Planning; Mr. Gyeong-Bo Kang, Head of Finances; and Mr. Kyung Bang Li, Chief of Strategy at KT&G.
I must advise you that the earnings we're about to present today have yet to be audited by the outside auditors. Therefore, are subject to change in the audit process and any forward-looking information discussed today in the call today may differ from the actual results to be reported in the future.
With that, I will now hand it over to Mr. Jin-han Kim, our CSO, to brief you on some details on our shareholder return plan as resulted the Board today.
[Interpreted]
Ladies and gentlemen, I'm Jin-han Kim, CSO at KT&G. I would first like to express my appreciation for all the interest and support you have shown for the company. Before we go into the Q4 and full-year earnings report for 2023, I wish to share with you decisions on shareholder returns, results of our Board of Directors meeting today.
In November of 2023, KT&G announced a mid- to long-term shareholder return plan spanning 3 years from 2024 to 2026 of KRW 2.8 trillion cash return and share cancellation of approximately 15% of today's total outstanding shares to reinforce predictability in the market and enhance shareholder value.
As announced, among the KRW 2.8 trillion returned, KRW 1.8 trillion will be used for dividends under a policy of constantly rising DPS and about KRW 1 trillion will be used for new share buybacks. The repurchased going forward will be canceled immediately after acquisition. And we communicated that this will be in the scale of about 7.5% of outstanding shares for the next 3 years. We also promised that we will be canceling our existing producers in the 3 years in the scale of the 7.5% of outstanding shares.
As a first step into '24 to '26 shareholder return plan, our board has resolved today to cancel 3.5 million treasury shares, which translates to 2.6% of total outstanding shares. The value of the shares to be canceled will be approximately KRW 315 billion based on yesterday's closing price and the cancellation will take place on February 16. Also, the year-end dividend for 2023 has been decided as KRW 4,000 per share, and this is to be approved at the upcoming AGM March. For your reference, in August last year, we have executed interim dividend of KRW 1,200 per share.
In the second half of this year, we will acquire new shares cancel them to continue enhancing shareholder value. Going forward, any decisions made on the matter by the Board of Directors will be communicated with the market transparent and timely manner.
KT&G will to continue to duly fulfill its promise of the market to carry out top-level shareholder returns and maximize shareholder value. I ask for your continued support for the company. Thank you.
[Interpreted]
Now we will begin the 2023 fourth quarter and full-year results. Thank you for attending our quarterly earnings for the fourth call today despite your busy schedules. For today's presentation, I will begin with the highlights of our consolidated results and move on to each business segment.
Starting with the key takeaways of our 2023 results. In 2023, our 3 core businesses, namely Global CC, NGP and Health Functional Food drove the growth of the entire Group with our consolidated revenues reaching another record high, particularly the operating profit growth of the 3 businesses outpaced the revenue growth.
In Global CC, expansion of direct business and nurturing of new markets led to a 7.7% volume growth. Revenue was driven by volume growth and pricing in key regions to rise 12.8% versus the previous year and reached a record high revenue for Global CC business.
Volume growth also continued in NGP sticks, especially for the Global business, robust growth in stick sales within launch to market improved the profitability of the business. In Global Health Functional Food, revenue in China, our key priority target market, grew 47.6%, strengthening the momentum for Global business expansion.
In 2024, we do expect the impact of material cost headwinds to persist, but our top line is projected to grow more than 10% and our bottom line more than 6%, driven by the 3 core businesses.
I will now move on to Q4 consolidated results. Q4 revenues supported for stronger sales in tobacco and HFF showed a 3.2% Y-o-Y growth to stand at KRW 1.4512 trillion. However, Q4 operating profits impacted by higher costs due to global inflation and temporary costs related to Suwon Development Project in real estate suffered a 1.4% Y-o-Y decline to KRW 198.6 billion. Net income was effected largely by currency fluctuations within the quarter with higher currency-related profits leading to a KRW 177.1 billion increase in net income, which stood at KRW 117.1 billion for the quarter with EPS at KRW 1,105.
Q4 EBITDA declined 0.6% year-over-year at KRW 260.3 billion and the EBITDA margin of 17.9%.
The 3 core businesses supported the growth of the top line in the full year, which recorded KRW 5.8724 trillion, an all-time high for the company. The bottom line affected by a stronger cost headwind from global inflation with the completion of large-scale property development projects like Suwon and Daejeon saw a 7.9% Y-o-Y decline to KRW 1.1679 trillion.
Currency-related profits due to currency fluctuations drove down net income by 7.8% Y-o-Y to KRW 926.6 billion, and the EPS was KRW 7,866. Annual EBITDA was KRW 1.409 trillion, 5.6% lower the previous year and the EBITDA margin at 24.0%. Zooming in on major factors behind movement in profit.
In the fourth quarter, improved profits across tobacco, HFF and other business segments were more than offset by a steep KRW 72.1 billion decline in real estate profits caused by completion of large projects, including Suwon and Daejeon as well as temporary costs following the completion of Suwon development. Consolidated operating profits were down KRW 2.8 billion Y-o-Y.
Next, on factors behind profit movement for the full year. Annual profits despite improvement of KRW 42 billion in HFF and other businesses was impacted by cost headwinds overshadowing improvements in profit in the KRW 110 billion profit decline in real estate to lead to a 7.9% Y-o-Y drop to KRW 1.1679 trillion.
I will now move on to the performance of each business segment. First is on the tobacco business. Tobacco revenue in the quarter was driven by higher Global CC revenue and stronger domestic duty-free sales to rise 4.7% Y-o-Y to KRW 900.6 billion. Full year revenue rose by 1.3% year-over-year to KRW 3.619 trillion. In Q4 operating profit, improved sales mix with a stronger representation from high-margin products, brought about a 25.9% increase in profit for this quarter to KRW 228.4 billion. However, the surge in material prices, including leaf tobacco put pressure to the full year operating profits, which declined by 3.2% Y-o-Y to KRW 977.1 billion.
In the quarter, Global business was impacted by temporary adjustment of shipments in some regions, accounting for 55% of total operations, which is a 1.5 percentage point drop. Global business in the full year, however, increased by 2.6 percentage points to reach 57% at International NGP sticks and cigarettes, both grew in volume.
Let us go deeper into segments within the tobacco business. Beginning with domestic cigarettes. Sales of our domestic cigarettes in 2023 was impacted by a 2.1% decline in market volume, leading to a 1.1% decline to 40.66 billion sticks. Our share of market despite intensifying competition throughout the year with aggressive new product launches from competition, as we launch new products catering to consumer needs, our share rose by 0.6 percentage points to 66%, continuing growth for nine consecutive years. Our domestic CC revenue in Q4, duty-free sales in high-margin channel grew by 71.5% Y-o-Y to more than offset the drop in market volume to drive a 7% Y-o-Y revenue growth to KRW 413.6 billion. Full-year revenue also overcame the decline in market volume, supported by recovery in duty free to grow 1.1% Y-o-Y to KRW 1.6779 trillion.
Next is on global cigarettes. Annual global cigarettes volumes grew 7.7% to 53.15 billion sticks through expanded direct business, including Indonesia and nurturing a few markets including Africa and Latin America. However, the numbers for the quarter was impacted by temporary adjustment of shipments in some regions to see a 7.6% decline Y-o-Y to 11.79 billion sticks. Stronger sales volume, combined with pricing in key regions led to a 10.4% increase in Q4 revenues to KRW 287.3 billion and full year revenues grew by 12.8% to KRW 1.1394 trillion, which is the highest ever for our global cigarette business.
Moving on to NGP. In Korea, new product launches and aggressive promotions from competitors intensify the competition for NGP, but an expanding NGP market and our product launches led to higher volumes, resulting in domestic NGP revenue, 11.5% higher than the previous year at KRW 519.3 billion. However, global NGP revenues suffered unfavorable comparison from the advanced device exports in the previous year amid the global supply disruption with overall NGP revenues down by 11.1% Y-o-Y to KRW 779.4 billion. Despite drop in device export volumes, stick sales, which represent the growth potential of the entire NGP business and its profitability continued growth both in and outside Korea.
Domestic stick volumes were up 14.4% Y-o-Y at 5.71 billion sticks and global stick volumes up 43% at 8.24 billion sticks. A little bit further on NGP performance. Penetration rates of NGP in Korea supported by higher conversion of consumers and new product launches continued its growth trend to rise 2.3 percentage points to 90.4%. KT&G stick market share at 46.6%, which was affected by aggressive promotion from competition, maintaining market-leading position, with stronger competitiveness with the launch of lil HYBRID 3.0.
In the global business, despite the absence of new markets in the year, higher penetration within launched markets continued to support stick volume growth. We expect to see such penetration to expand further going forward and the higher share of sticks within the mix to lead to even more profitability.
Moving on to HFF. Q4 HFF revenues saw 21.9% Y-o-Y growth to KRW 336.1 billion, as stand-alone stores in Korea and DFS revenues grew along with overseas HFF sales. Full year HFS revenues were up 0.3% to KRW 1.3938 trillion. Operating profits in the quarter was supported by stronger contribution from high-margin channels and high-margin products overseas to see a turnaround to profits. Full year operating profits were up 32.6% Y-o-Y to KRW 116.4 billion, thanks to holistic profitability enhancement initiatives and stronger high-margin products overseas.
Global sales in Q4 increased by 6.4 percentage points Y-o-Y to 42.7% with a robust revenue growth internationally and global revenue shares in the full year was up 3.7 percentage points to 24.2%.
Breaking down the revenues domestically and globally. Starting with domestic revenue for the quarter, as you look into the revenues by channel, increase in revenue within stand-alone stores and the recovery of duty free drove domestic HFF revenue by 9.6% to KRW 192.5 billion. For the full year, while channel stores' revenues grew mainly among duty-free stores, subdued consumer sentiment in Korea and a shrinking market, put revenues down 4.3% to KRW 1.0565 trillion.
Q4 revenues overseas benefited from holidays, including Chinese Black Friday and the U.S. Thanksgiving as well as vitalize sales in Ginseng routes, including in Taiwan, to rise by 43.3% to KRW 143.6 billion. Annual revenues overseas saw strong growth in China via online-based marketing initiatives to increase 18.4% Y-o-Y to KRW 337.3 billion.
Lastly, on real estate numbers. In Q4 real estate, revenue from development projects on legacy properties in Greater Seoul led to higher development revenues, but subsidiary revenues were reduced as Daejeon project came to an end and revenue from Dongdaemun was partially reduced, driving down total revenue by 31.9% to 134.4 billion. Q4 operating profit was impacted by completion and one-off infrastructure costs of the Suwon project to see a year-over-year decline. In full year profit, costs from new development projects in the first half and completion of Suwon and Daejeon development projects drove down profits by 60.9% to KRW 70.5 billion.
I will now move on to our guidance for the year 2024. Going into 2024, we foresee high material costs to persist, market competition to intensify and consumer purchasing power to shrink, giving us a continued unfavorable business environment. However, KT&G will engage in sophisticating our cost management systems, expanding our penetration into the global market and increasing our global ASP to do our utmost in bolstering our top line and profitability, making the year of higher growth and rebounding profits.
As these efforts materialize, we target our consolidated revenue to grow 10% to 10.5%, and operating profits by 6% to 6.5% versus the previous year. Especially, we aim to ensure our 3 core businesses to grow 15% in revenue and 31.5% in operating profit to see our bottom line growth outpace our top line growth.
Also on our shareholder returns, KT&G announced during the Value Day in November that for 3 years from 2024 to 2026, we will be paying out about KRW 2.8 trillion in cash returns and canceling about 15% of today's total outstanding shares as our mid- to long-term shareholder return plan. As the first step to this return plan, as announced earlier, we will cancel 3.5 million scheduled shares, which translates to about KRW 315 billion. To continue with this effort in the second half of this year, we will repurchase shares and cancel them immediately after acquisition to keep the promise we have made to the market.
The Board also resolved on the year-end dividend for 2023 as KRW 4,000, combined with the already paid interim dividend for KRW 1,200, this makes total dividend of the year KRW 5,200. Going forward, KT&G will duly fulfill the shareholder return plan that we promised to our shareholders as we strive to enhance shareholder value.
Please refer to the materials for details of our 2024 guidance. This concludes the earnings report of KT&G on Q4 and the full year of 2023. We will move on to Q&A.
[Interpreted]
[Operator Instructions]
The first question will be presented by [ Chung Kim ] from Merit Securities.
[Interpreted]
I have 3 questions in total. The first theme for the Domestic CC. So I think in the presentation, it was mentioned that the anticipated market volume decline is 4.5% to 5%. That seems to be a larger margin of decline compared to the previous years. Are there any special drivers that you're forecasting like this? And we did mention before that there will be continued cost burden of cost pressure on the company to experience. I think that was at a level of last year, around KRW 200 billion. In comparison to 2023, do you have any guidance on which that level would be for 2024?
The second question is with regards to the Health Functional Food. So I think there have been ongoing efforts to improve profitability for this segment. But this year, there hasn't been much movement or differences in terms of the operating profit target. Are there any special reasons for that?
And the third question is related to real estate. So it seems that there are going to be new developments in the real estate sector moving forward. I would like to get more details on the projects that will be carried out. And also if you have a timeline per project, it would be appreciated if you could share that as well.
[Interpreted]
First, I would like to take the question for the forecast in terms of the large decline for Domestic CC. This is Chief of Marketing, Seong-sik Park. So if we look at the overall trend globally, it seems to be quite common that there is a natural decline due to the overall involvement or increased interest in health and also the natural decline of population. So as a result, we are seeing a decline in market volume, and we are also seeing an impact from the increased portion of the NGP market, mainly the heat-not-burn segment and those are the main factors that we believe.
[Interpreted]
Yes, I would like to answer the next question. This is Jin-han Kim, the CSO of the company, in terms of the impact on the cost burden and the level of moving forward. We have your question and as I mentioned before, for the tobacco leaf that was purchased in 2022, that will be inputted it into the product in 2023. There was a price increase of 14.3% on a Y-o-Y basis. For the tobacco leaf to be input in the product this year, which was bought in the year 2023, there was a 13.7% increase in terms of price on a Y-o-Y basis.
So if we take a look at that in comparison, it's 14.3% and 13.7%. So it's at a similar level. So there are going to be continued impact from a cost pressure side from the rise of the tobacco leaf prices. So overall, because of such factors, we believe that the cost burden coming from the main material tobacco leaf will continue for the time being.
However, we also have to consider not only the main raw material, the tobacco leaf, but the non-tobacco material as well. And the non-tobacco material also has a considerable burden on the cost structure. And we see the non-tobacco material actually quite stabilizing in terms of the prices during the period of 2023. So in the long term, we are cautiously forecasting that the overall cost burden in terms of the pressure will be mitigated.
[Interpreted]
With regards to the questions in terms of the Health Functional Food profitability, so we have carried out multiple efforts to increase profitability of the Health Functional Food products since the second half of 2022, such as price increases, cost optimization efforts and reduction the cost of goods manufactured. So we have made a lot of efforts to improve profitability. Though we also do have to consider that there are a lot of strategic investments being made in the global market and we will continue to try to make improvements to our profitability by trying to increase the portion coming from our global business and also high margin products.
In the mid- to long term, we believe that the right direction to take is to expand further our global business and also solidify our domestic business as well to secure a high level of profitability. We do believe that moving forward, we will also prioritize profitability securing as a top priority. For the full year, though, we have to consider that in order to expand our global business, there have been also, in the heels of last year, investments that are planned for. So all in all, considering such investments to be made, we will still try to make efforts to improve our profitability and keep the profitability level up than the guidance provided.
[Interpreted]
This is Kwang-il Park, Chief of the Real Estate Business. I would like to take your question on the real estate side. So in terms of the projects that are currently under preparations, we have been undergoing preparations for EMEA and East projects since last year. And we're also looking into the completion of construction of this year in March for the Andong and Daegu which is the 5 to about 1,100. In 2025 in the second half, we're also making preparations for the factory site, at the production site development in China. We also have a considerable portion of stake in the China complex to the 5 of 80,000 as well.
So we do believe that from that, there will be also for that China project. The sales of -- presales activity is going on from the end of 2025 to be expected. So right now, currently, if we take a look at the status of the real estate market, it's quite stagnant. I think we are still undergoing necessary preparations on our side to make preemptive efforts to respond to the market conditions and also equity instruments so that we could have a lot of the revenue and profit decline since the Suwon project and the Daejeon project offset.
So the main direction moving forward for the real estate business will be to try to improve both the revenue and profit together.
[Interpreted]
The following question will be presented by [ Sung Jong ] Park from Kim Securities.
[Interpreted]
I have 3 questions in total. The first question would be with regards to the CapEx size for this year. So if you could provide some more details in terms of the new replanned investments, which projects they will be going into, that would be much appreciated.
The second question is regarding the guidance. It seems like for the revenue growth, our target for Global CC, it has been quite high. So would that be because of volume or also price increase impact is included there as well? I would like to know more detail there. If price increase impact is also included, if you could provide some more details into which region or level of price increase, that would be appreciated.
And third question is with regards to the NGP. So last year, I think terms of new market entry and new countries, it wasn't that many. So there was a weak performance in terms of revenue of devices as a result. If you could provide some more details into the newly planned entered countries for this year, that would be great.
[Interpreted]
This is CSO Jin-han Kim to answer the question on CapEx. So we did provide CapEx plan on Investor Day of last year of KRW 3.9 trillion. We revised that on Value Day in November to KRW 3.5 trillion. In 2023, if you look at the total CapEx that was executed, it was KRW 500 billion. Excluding maintenance, KRW 0.4 trillion or KRW 400 billion was spent on the 3 core businesses.
For the execution rate versus plan, for the CapEx investment for NGP is according to the plan. For CC, it's 70% compared to against the plan. This year, for the CapEx, we are expecting the CapEx investment size to be about KRW 1.1 trillion. Excluding the maintenance, at KRW 0.8 trillion will be invested into CC, NGP and HFF. Mainly, if we look into the details for the CapEx investment, they will be spent on the Indonesian overseas business, also the [indiscernible] Plant for the CC plant capacity expansion.
Domestically, for NGP, there will be investments into the facility CapEx upgrade for our Gwangju Plant that are currently planned. So moving forward, we will also look very closely at the market conditions and the situation to execute the CapEx plan that has been set forward. So looking at both of such factors, we will closely monitor and make adjustments to the plan accordingly and make all the efforts to make the investments in an effective and timely manner.
[Interpreted]
This is Chief of the Global business, answering the question on our Global CC revenue guidance. So you asked whether the factors are volume driven or ASP price increase driven. And I would like to say that there are both factors at play and a little bit more detail to be provided on the ASP increase side.
So if we look at the supply price of what we are supplying into the market, there has been various ranges of price increase to the minimum of 3% and as high as 20%. And they are taking place accordingly to the market conditions. And if we look at the markets that are operating under a direct subsidiary model, we also have to view the timing of competitors' increase in terms of the price and the timing of their increase. So please understand that it's difficult to provide a guidance there.
In terms of the brands, there are a lot of high-margin, high ASP brands that are currently at play in the global markets. We plan to increase the number of new products available in the market to further increase profitability and our numbers there. And we will gradually withdraw a lot of the low ASP product markets and understand the market for better performance. If we look at overall the performance in the overseas subsidiaries, even though we increased the export price and also the ASP price, despite such price increases, the actual volume of -- in terms of revenue have been going up. So we do believe that moving forward, this will be a good factor and overall the numbers that we see for our revenue forecast.
[Interpreted]
This is Wang Seop Lim, Chief of NGP, taking your question with regards to the NGP business. So for the NGP market, there are about 70 countries that have such market and currently in existence, and we have already entered 31 of them. And those 31 countries actually account for 80% -- over 80% of the total heat-not-burn market size. So we have already made entry into the key core markets.
So again, as we have done in 2023 and moving into 2024, our strategy will be to expand further our business in the countries that we already have presence in, to improve and expand the SKU there for better performance. And of course, as I said, the markets that we're currently in, account for 80% of the heat-not-burn market. So there is the remaining markets to be penetrated. So for those remaining countries, we're currently assessing whether there will be new good countries to enter for consideration. And also we're considering looking into making entry into the duty-free channels as well.
[Interpreted]
The following question will be presented by Hyeeun Kim from Morgan Stanley.
[Interpreted]
I have 3 questions in total. The first one is with regards to the duty-free sales channel. So there has been an increase in terms of the portion of revenue coming from the duty-free channel from Q4 and there has been ASP increase in the Domestic CC. So if you could provide a little bit more detail into how much the duty-free revenue mix accounts for in the entire volume, please do so. And if you could make a comparison to pre-pandemic levels, how much more room do we have?
The second question would be with regards to exports. It was mentioned during the earnings presentation, there were export volume adjustment controls that we're taking in effect in Q4. So could we understand that from -- starting from Q1 of this year such adjustments in terms of the volume control have been normalized.
The third question is also regarding to the guidance. So the guidance is providing that the NGP market share increased target for the domestic market is 1%. I think in 2023, there have been also considerable efforts to increase the market share for NGP. So for this year, I guess I'm curious to the extent of what effort will be put into which area and how much possibility you see for the actual improvement in the market share numbers?
[Interpreted]
This is Seong-sik Park answering the first question from -- the Chief of Marketing, answering the question with regards to the duty-free channel revenue portion and also our outlook in terms of the duty-free channel recovery. So if we look at the portion that duty free accounts for in entire revenue, it's 7.7%. And as you well know, the current momentum is definitely we're seeing a recovery trend in terms of the number of international flights and also international travelers.
So there definitely does seem to be a recovery at the moment. But we do also have to consider and be mindful of other impacts, such as the FX rate fluctuations and such. If we compare it against the pre-COVID levels, we would say the volume recovered to about 60% compared to pre-COVID and also in revenue about 76%.
[Interpreted]
And I would like to answer the part for KGC. So for KGC, the revenue coming from the duty-free channel is about 70.5% of total revenue, and if we look out on a Y-o-Y basis, it did increase by 74%. Pre-COVID level comparison compared to 2019, the revenue has recovered to about a 50% level. And this year, we expect that the overall growth in terms of Y-o-Y basis would be about 30% compared to the previous year.
[Interpreted]
And the questions with regards to the adjustment in export volume, this is Jae-Young Cho, the Chief of Global Business, answering your question. So we do definitely believe that external growth in terms of revenue and volume are definitely important for our business operations. But we also believe that for stable business operations, management of our account receivables is also a critical part. And we believe that, that part that we considered for a volume adjustment due to such factors will be normalized in Q1.
[Interpreted]
This is Wang Seop Lim, Chief of NGP. So if we look at the year 2023, we would say that it was a year of fierce competition because the competitor released a new product in the market the first time in 5 years. So indeed, the competitive landscape was quite fierce. And they had a lot of aggressive promotional efforts in terms of the price for devices, which also was very fierce on the competition front.
So if we look at our response, we did launch our lil Hybrid 3.0, ahead of schedule, and we are getting very good response above our expectations currently from the market. So as a result, we were able to secure the #1 position in the year 2023. And in 2024, our major strategies moving forward will be in 2 parts. The first, we will be looking at how we could further develop the lil Hybrid platform that is going very well. And in order to do so, we'll take the approach of launching limited devices, also releasing of new sticks so that we could further strengthen brand competitiveness.
And we also think our key competitiveness compared to our competition is our fresh ideas and also our timely R&D. So for the year 2023, we don't think that after that in this year, there will be any new product releases that we can expect from the competition at the moment. So for our side and our response will be timely in trying to provide an upgraded model to the market so that we can secure our competitive edge once again. So these will be the main 2 pillars moving forward so that we could continue to secure leadership position in the market in the year 2024.