EHang Holdings Ltd

NASDAQ:EH

Earnings Call Analysis

Robust Revenue Growth and Optimistic Projections

Investors would be enamored with the company’s current standing and its high-velocity growth. In the last quarter, revenues surged to CNY 56.6 million, showcasing a monumental 260.9% increase compared to the same quarter the previous year, and an impressive 97.8% leap from the previous quarter. This exceptional growth is accredited to soaring sales of the EH216 Series products, with 23 units delivered, marking a 283% year-over-year and 77% quarter-over-quarter increase. Over the fiscal year 2023, the revenue accumulation was a striking CNY 117.4 million, an increase of 165% from CNY 44.3 million in 2022. The high gross margin levels of over 54% highlight the company's competitive edge and align with its foreseen revenue of about CNY 58 million in Q1 of this year, a hopeful year-over-year uptick of 161%.

Strategic Cost Management and Projection for Decreased Operating Expenses

The company has exhibited commendable strategic acumen by reducing adjusted operating expenses to 113% of total revenue compared to a staggering 466% a year earlier. The decrease in operating expenses attests to the company’s ability to scale efficiently alongside its rapid revenue growth. The company aims to further optimize its operational costs, expecting adjusted operating expenses to plunge to nearly 40% of total revenue in three years, fostering an environment ripe for enhanced profitability.

Growing Order Book with International Expansion

The company is on a significant growth trajectory with an influx of orders and preorders. It is poised to fulfill these according to individual customer specifications, particularly from government and premium customers indicating initial trial batch purchases with room for increased acquisitions. Delivery volumes are anticipated to grow considerably throughout 2024, backed by favorable policies. The company boasts an annual capacity of 600 units at its Yunfu facility. It’s nudging towards expanding its facilities further as global demand surges. Moreover, overseas markets are playing a significant role, contributing 26% to total revenues, with expectations of substantial revenue contributions in the upcoming year.

Innovation at the Forefront: VT-30 and EH216 Products

The company is forging ahead with innovations like the VT-30, which, alongside the EH216, covers most urban air mobility scenarios. They have accumulated extensive flight data for the EH216, and the company is ready to introduce further updates. The VT-30 brings stability and versatility to the table, with plans to release flight videos and submit a Type Certificate (TC) application within the year, hinting at an enriched product portfolio and potentially broadening their market reach.

GAC Group Partnership: A Production Milestone

A strategic partnership with the GAC Group marks a pivotal point in production capabilities. The collaboration is not limited to improving production capacity and quality; it extends to aiding GAC Group in developing their flying taxi products. Staking a production site in Guangzhou and slated to establish an autonomous production line with GAC, the company is cementing its expertise in eVTOL manufacturing, positioning itself as a leader in the aviation transformation space.

Earnings Call Transcript 2023-Q4

[Operator]

Good day, ladies and gentlemen. Thank you for standing by and welcome to the EHang Fourth Quarter and Fiscal Year of 2023 Earnings Conference Call. As a reminder, we are recording today's call.Now I will turn the conference over to Anne Ji, EHang's Senior Director of Investor Relations. Ms. Anne, please proceed.

[Anne Ji, executive]

Hello, everyone. Thank you for joining us on today's conference call to discuss the company's financial results for the fourth quarter and fiscal year of 2023. The earnings release is available on the company's IR website. Please note the conference call is being recorded and the audio replay will be posted on our company's IR website. On the call today, we have Mr. Huazhi Hu, our Founder, Chairman and Chief Executive Officer; and Mr. Conor Yang, Chief Financial Officer and Director of the Board. The management team will successfully give prepared remarks. Remarks are delivered in Chinese will be followed by English translations. All translation is for convenience purpose only. In case of any discrepancy, the management's statement in the regional language will prevail. A Q&A session will follow afterwards.Before we continue, please note that today's discussion will contain forward-looking statements made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today. Further information regarding this and other risks and uncertainties is included in the company's public filings with the SEC. The company does not assume any obligation to update any forward-looking statements except as required under applicable law. Also, please note that all numbers presented are in RMB and are for the fourth quarter and fiscal year of 2023 unless stated otherwise.With that, let me now turn the call over to our CEO, Mr. Huazhi Hu. Please go ahead, Mr. Hu.

[Huazhi Hu, executive]

[Interpreted] This is English translation of Mr. Hu's remarks. Hello, everyone. Thank you for joining us on this conference call. In the fourth quarter of 2023, we have achieved remarkable results across various aspects. In October last year, our EH216-S pilotless passenger-carrying aircraft system and innovative product independently developed by EHang obtained a Type Certificate, TC, from the CAAC. This milestone marks the world's first TC for a Passenger-Carrying eVTOL aircraft signifying our qualification for commercial applications of a pilotless passenger-carrying eVTOL aircraft. In December last year, our first certified EH216 rolled out our production line and obtained the world's first eVTOL standard Airworthiness Certificate, which is AC. As a result, we commenced the delivery of the certified EH216-S aircraft.Following the TC and AC, we are delighted to see a substantial surge in market demand for our EH216-S pilotless passenger-carrying eVTOL resulting in significant sales volume growth in the fourth quarter with a total of 23 units of EH216 Series product delivered. Notably, this represents the highest number of deliveries in a single quarter in the past 3 years. The revenue of the fourth quarter surpassed RMB 56 million marking a year-over-year growth rate of over 3x and nearly doubling quarter-over-quarter. Moreover, we generated positive operating cash flow in the fourth quarter as demand for our product is strong and the company's operations continue to steadily improve. Our strong growth was attributed to the proactive policies and support from local Chinese municipal governments that are actively fostering the high quality development of the low-altitude economy.Since the Central Economic Work Conference chaired by President Xi in December last year when the low-altitude economy was elevated to a strategic emerging industry, nearly 20 provinces in China have incorporated the low-altitude economy into their 2024 government work reports. Furthermore, during the 2 sessions recently held in China, the central government work report included the low-altitude economy for the first time. This recognition underscores the expectation that the low-altitude economy will serve as a new growth engine for China and a globally competitive emerging industry and a vital sector for nurturing and advancing new high quality productive forces. According to research institution estimate, the market size for China's low-altitude economy surpassed RMB 500 billion in 2023 and expected to reach RMB 2 trillion by 2030.This represents a substantial emerging market and pilotless passenger-carrying airway vehicles like EH216 are poised to play a leading role in propelling the industry forward. Capitalizing our first-mover advantage in obtaining Airworthiness Certification and benefiting from favorable policies, we have witnessed a surge in the market demand and enthusiasm for our EH216 Series product. In the fourth quarter, we received hundreds of preorders from domestic and overseas customers in China's Guangzhou, Hefei, Wuhan and UAE and other regions. Furthermore, we have recently formed a partnership with the Government of Wuxi City in Jiangsu province resulting in preorders for at least 100 units of EH216-S. Through these collaborations, we are actively planning to create low-altitude economy demonstration applications in the area. The strong market demand from our customers give us great confidence in our future growth prospects.We have also announced the pricing of the EH216-S pilotless passenger-carrying aircraft system in both the domestic Chinese market and overseas market. The pricing has been set at RMB 2.39 million for the Chinese market and USD 410,000 for international markets. We believe these prices are highly competitive when compared to other eVTOL products worldwide. Moreover, this pricing strategy aligns with the market demand and contributes to the development of the low-altitude economy. In preparation for the next stage of mass production, our efforts to obtain the Production Certificate, which is PC, is almost completed. Currently, the CAAC review team have conducted all the onsite inspections and all the required quality system documents have been submitted to the CAAC for the final process.The PC is expected to be obtained in the near future offering a robust assurance and support for the production quality of the newly produced EH216 under the supervision system of the CAAC. During the fourth quarter, we developed several low-altitude economy demonstration sites [Technical Difficulty] and our EH216-S completed the first commercial flight demonstrations at the UAM operation center in Shenzhen OH Bay, Jiulong Lake Park in Guangzhou Huangpu District and the Luogang Central Park in Hefei. The Hefei municipal government has reached a strategic cooperation agreement with EHang in the low-altitude economy, planning to extend support to EHang in various forms with a target amount of USD 100 million while the Guangzhou municipal government announced 10 major supportive policies to stimulate the low-altitude economy.Currently, we are actively conducting a series of crucial preparations for commercial operations including operator training and the development of our operation systems, deleveraging our distinctive and pioneering expertise in pilotless eVTOL operations. EHang continues to strengthen collaborations with the CAAC to establish the world's first regulatory system standards for eVTOL commercial operations by the second quarter of this year. These efforts will set reliable regulations and benchmarks for the safety operations in the eVTOL industry. In 2024, we will coordinate with multiple governments to complete the construction of infrastructure such as the eVTOL vertiports and shape the benchmark cities that exemplify the potential of the low-altitude economy and launch commercial operation ceremonies in key use cases such as the aero tourism and urban air taxis.This will allow the things from science fiction movies to officially step into the public eyes. In terms of industry chain, we have been actively cooperating with our standing suppliers and partners striving to expand opportunities within the low-altitude economy sector. In January, we entered into a strategic partnership with Gotion, a leading global provider of the new energy solutions, to jointly research and develop battery cells, battery packs, storage system and charging infrastructure especially designed for pilotless aerial vehicles. In February this year, we partnered with Guangzhou Automobile Group, GAC in short, which will capitalize on GAC's extensive experience and well-established industrial chain and intelligent manufacturing to accelerate the smart production, application and market expansion of our pilotless aerial vehicles.Regarding product development, we will continue to enhance our EH216-S performance to unlock its full potential for various applications.To this end, last year we strategically invested in Inx, a solid state lithium battery company based in Shenzhen, to strengthen the supply chain for solid state lithium batteries in eVTOLs. Lithium metal solid batteries offers significant advantage over the liquid batteries in terms of the safety, energy density, thermal stability, cruising range, charging and discharging performance, et cetera. As a result, we believe that the flat range and many other performance of our EH216-S product will be greatly enhanced in future. Furthermore, this year we will devote more R&D efforts towards testing and certification of our VT-30, another pilotless passenger-carrying leased and cruise eVTOL model. This is a long-range aircraft designed for intercity transportation.We will conduct a rigorous testing on older system of the VT-30 and full transition flights in the near term. Based on the test result, we will finally analyze and actively iterate improvements to ensure that all the performance indicators meets desired requirements. Myself has experienced a flight with VT-30 in person and it feels amazing. Meanwhile, we also are doing preparations for the PC application for VT-30. And just a few days ago, we commenced another tour of a passenger-carrying flight across several cities in Japan. I'd like to extend my thanks to our COO, Mr. Xin Fang, who is currently at our Japan events and thus unable to attend this earnings call.Next I will turn the call over to our CFO, Conor. Thank you.

[Chia-Hung Yang, executive]

Thank you, Mr. Hu. Hello, everyone. This is Conor. Before I go into details, please note that all numbers presented are in RMB and are for the fourth quarter and fiscal year of 2023 unless stated otherwise. Detailed analysis are contained in our earnings press release, which is available on our IR website. I will now highlight upon some of the key points here. Having obtained the TC and AC for our proprietary EH216-S, our total revenues reached CNY 56.6 million in Q4, a significant increase of 260.9% from RMB 15.7 million in the same period last year and a remarkable increase of 97.8% from CNY 28.6 million in Q3. The increase was primarily attributed to the increase in our sales volume of EH216 Series products. We delivered 23 units of EH216, up 283% year-over-year and 77% quarter-over-quarter. For the fiscal year 2023, total revenue were CNY 117.4 million, a significant increase of 165% from CNY 44.3 million in 2022.The EH216 series of AAV deliveries in 2023 were 52 units, up 148% from 21 units in 2022. Gross margin remained stable at a high level of 54.7% in Q4, flat from 54.6% in Q3. Gross margin was 64.1% in 2023 despite a slight decrease of 1.8 percentage point from 65.9% in 2022 primarily due to changes in revenue mix. This represents the continued high gross margin level as a result of our competitive strength and first mover advantage in the global UAM and digital industries. In Q4 our adjusted operating expenses, which are operating expenses excluding share-based compensation expenses, was CNY 64.2 million, down 12.4% from CNY 73.2 million in the same period last year and up 18.8% from CNY 54 million in Q3. The quarter-over-quarter increase was primarily driven by the expansion of sales channels and intensified marketing efforts in enhancing brand awareness.On an annual basis, the adjusted operating expenses were CNY 226.3 million in 2023, down 6.6% from CNY 242.4 million in 2022. As a result, our adjusted operating loss in Q4 was CNY 24.9 million a 59.4% improvement from CNY 61.3 million in the same period last year and a 27.3% improvement from RMB 34.2 million in Q3. For the fiscal year, adjusted operating loss was CNY 144.8 million, a 30.1% improvement from CNY 207.1 million in 2022. Adjusted net loss in Q4 was CNY 22.1 million, a 62.8% improvement from CNY 59.4 million in the same period last year and a 29.4% improvement from CNY 31.3 million in Q3. For the fiscal year, adjusted net loss was CNY 138.8 million in 2023, a 32.7% improvement from CNY 206.2 million in 2022.Thanks to our stringent approach to cash and liquidity management, I would like to highlight that we achieved positive cash flow from operations in Q4 further strengthening our balance sheet. As of the end of Q4, we had CNY 334.1 million of cash, cash equivalents, short-term deposits, short-term investment and restricted short-term deposit balances. We are also actively in discussion with several commercial banks regarding the expansion of credit facilities although our current cash position and expected cash flow from operations will be sufficient to fulfill our cash needs for us to reach profitability in the near future. Looking ahead, with our safety progress towards obtaining TC for mass production and deliveries, we anticipate achieving revenue of about CNY 58 million in Q1 this year representing an increase of 161% year-over-year.That concludes our prepared remarks. Let's now open the call for questions. Operator, please go ahead. Thank you.

[Operator]

[Operator Instructions] First question comes from the line of [indiscernible] from TF.

[Unknown Analyst]

So my first question is really about the like order size. So with large scale deliveries becoming possible after obtaining the TC, have you seen an increase in customer interest that has actually converted into more orders compared to before?

[Chia-Hung Yang, executive]

Thank you for your question. As the low-altitude economy industry grows rapidly, we have seen increasing demand for our EH216-S from both government related and [ tourism ] operators. In the first quarter of the year, we received an intentional purchase order of 100 units from the Wuxi municipal government with the delivery at stage and with more similar purchase orders to come. With the supportive policies and growing demand, our EH216 is poised to demonstrate our first mover advantage in the global market this year contribute to EH stable growth. So other than like Guangzhou, Wuxi, we also see that similar demand from Shaanxi, Henan, Wuhan, Zhuhai, Hainan and many other orders to come.

[Unknown Analyst]

So my second question is about the competition landscape. So could you elaborate on your customers and how you [Technical Difficulty]? Also could you provide further insight in the company's landscape?

[Chia-Hung Yang, executive]

October last year that we have obtained the first TC and end of last year we have obtained the first AC. So this is first of its kind in this industry and many other eVTOL companies and peers in China and overseas are still undergoing the prototype testing and also the application for the PC. So in the next 1.5 to 2 years, basically we will be the only company that can commercialize for eVTOL. And compare our product to other eVTOL products, we have several advantage. Firstly, we have a very compact usage so measuring around 6 meters in length and very lightweight design. So that means we have the lower demand on the urban infrastructure so making our product highly adaptive and also very easy to deploy within the city. And secondly, our 216 is a 2-seater aircraft without pilot. So this can definitely use a predetermined route that will eliminate the need for pilot training, pilot cost and potential safety issues related to human errors in pilots.And also by utilizing our autonomous technology and command and control system, a fleet management can be achieved. So that will enable to operate in a net scale in the future. And also our price is very, very competitive with a domestic selling price of RMB 2.39 million and also international selling price of USD 410,000 in comparison. As far as we know that our other global peers will be selling at between USD 3 million to USD 10 million. So from a customer's point of view, we think that only our customer can be profitable so that will enable our business to sustain other time. So with all those advantage that we think we are very, very competitive. And these are systems for intracity like short range. For the long distance, we also have a product line of VT-30 that Mr. Hu has mentioned earlier that we plan to send for TC application sometime this year.

[Operator]

We will now take the next question from the line of [ Robin Zu ] from Citi.

[Unknown Analyst]

Can you hear me?

[Chia-Hung Yang, executive]

Yes. We can hear. All clear.

[Unknown Analyst]

[Technical Difficulty] So as we mentioned before, things tend to come trading in China. So here I have 2 questions. I would like to know about the [Technical Difficulty]. That's my first question.

[Anne Ji, executive]

Okay. Thank you for your question. First of all, I would like to translate the question into Chinese for our CEO. [Foreign Language]

[Huazhi Hu, executive]

[Interpreted] Through the end of last year that the central government on the very various top level of China that has a central committee meeting. And after this meeting that the top authority of China has indicated that the low-altitude economy as one of the strategic industries that the government is going to focus on for this year. That there are currently through the [indiscernible]. So currently, there are more than 20 provinces of provincial government that has formally adopted the low-altitude economy as their focus for this year. Through the focus of the central and local government that pilotless passenger-carried aircraft will be applied to not only for tourism, but also for urban transportation integrated as part of the city's transportation system. So also in the future, that's not very long that the air taxi scenario will come true. Now we estimate that the total market size of the low-altitude economy in 2023 in China has reached a high RMB 500 billion and we expect it to grow to RMB 2 trillion by 2030. Our plan to operate the air taxis and make it a real scenario sometime this year. So by air taxis as a transportation vehicle that the people can soon change from their regular transformation from 1 dimension to 3 dimension and this will greatly enhance the total market size of eVTOL. This is from our CEO, Mr. Hu.

[Unknown Analyst]

And so I have another question about our expense. So in fact as the company grows, the company's sales and operation costs will be managed more precisely. So would you mind sharing more details regarding the expense in the future just for our company?

[Chia-Hung Yang, executive]

Yes. Regarding to our operating expenses, which is composed of sales and marketing, G&A and also research and development. As we ramp up our revenue so you can see that fourth quarter 2023 for example, we have reached revenue of RMB 56 million with a year-on-year growth rate of 250%. So when revenue grows as such as this, our adjusted operating expenses at fourth quarter last year was 113% of total revenue and that compared to 1 year ago the adjusted operating expenses was 466% of revenue. So you can see the rapid drop of OpEx that's due to rapid increase in our revenue. So we believe that our growth on revenue will continue to grow at a very high growth rate in the next several years. So we hope that we can manage that our adjusted operating expenses in 3 years' time drop from currently 113% of revenue drop to about 40% of total revenue in 3 years' time.

[Unknown Analyst]

Thank you very much for your answer. And thank you for all of your company starts to help the low-altitude economy in China's development in the future. So that's my all questions and thank you all of you and have a nice weekend.

[Operator]

We will now take the next question coming from the line of Ting Song from Goldman Sachs.

[Ting Song, analyst]

So EHang has announced the launch of UAM operation demonstration center with Shenzhen government in December. So my question is do we expect to see any revenues from UAM operation this year besides the sales revenues from shipment of EH216-S?

[Chia-Hung Yang, executive]

As Mr. Hu mentioned earlier, the company plans to kick off the commercial operations this year. We see that there are many companies [Technical Difficulty]. We expect to [Technical Difficulty] operation service area, but it may not be significant this year. In the current initial stage, majority of our revenue will still come in from the sales of our EH216 Series for the time being. Looking forward as we expand air services to more areas, recurring revenues such as the operational revenues will grow gradually so we can kept receiving -- we have kept receiving orders from domestic and overseas. And we also received a lot of requests from our customers not to form a joint venture for the future operation. So we expect that next year and going forward, the revenue coming out from operation will gradually increase the percentage of our total revenue.

[Ting Song, analyst]

So another question is about overseas revenues. So I see the company has a partnership with a partner with overseas company in Dubai and also some government in European countries. So do we expect any progress in overseas market this year or next year?

[Chia-Hung Yang, executive]

Yes. After we have obtained TC, we also received a very strong demand from overseas market. As we have announced that we have formed a strategic relationship and also we received orders from UAE customers, Wings Logistics, that they intend to purchase 100 units and actually we started to deliver the first batch in the first quarter of this year. As of fourth quarter last year, we also sold our product 216 to many places like Colombia, Saudi Arabia and Qatar. And we also performed our drone live shows in Japan and in Spain. So in fourth quarter last year, the revenue derived from overseas market was 26% of our total revenues. And this year we also expect that a fairly good amount of our revenue will be coming out from overseas market.

[Operator]

We will now take the next question from the line of Yu Chen from Haitong Securities.

[Yu Chen, analyst]

Okay. I have 2 questions. And the first one following the previous one, we would like to know the detailed progress regarding the overseas AC updation because if we need to enter the overseas market, we think that the first step is to obtain the overseas AC first. And the second one is about our production capacity. We would like to know the capacity regarding EH216 this year and in the following 3 years as well as the new vertical of VT-30. So that's 2 questions.

[Chia-Hung Yang, executive]

Yes. Regarding to overseas TC, as I mentioned earlier, we have seen strong demand from overseas markets especially in the Middle East, South Africa and ASEAN countries. And so for those places, we will rely on our local partner to obtain the local TC. So having already obtained the TC from CAAC so when we apply the overseas TC through a streamlined process we call validation of TC, validation of Type Certificate with the overseas aviation authorities and this is expected to be a simplified procedure. Consequently, this approach enable us to expedite market entry and expansion in these countries. And in terms of the order and the production, we're currently receiving a substantial number of orders and preorders, which will be fulfilled according to our customers' specific requirements. And typically, the government and customer commit to preorders or intentional orders for example up to 100 units and with an initial purchase of 5 to 10 units for trial operations at local sites.As their operations expand and demand increase, then they will acquire additional products. So the favorable policy surrounding the low altitude economy has provided us an attractive environment for growth. So consequently, we anticipate a substantial increase in delivery volume throughout 2024. First quarter we gave our guidance at CNY 58 million, slightly increased quarter-over-quarter because the first quarter is the Chinese New Year. Typically, there's a long vacation during the quarter. But so far we look forward that we have seen very strong demand for orders for this year. Currently, our production in Yunfu facility has an annual capacity of 600 units of eVTOL and we are exploring opportunities to establish other facilities to further support our production capacity as market expands and as market demand grows.

[Operator]

[Operator Instructions] We will now take the next question from the line of Laura Li from Deutsche Bank U.S.

[Xinran Li, analyst]

Congratulations on a robust quarter. So my first question is about the VT-30, your new product. You mentioned you're preparing for the testing and the application now. So are there any specs you can talk about now? And do you expect like the client base will be similar to the EH216 or the new product will kind of bring us more applications now?

[Anne Ji, executive]

Okay. I will translate your question to our CEO, who will take your question. [Foreign Language]

[Huazhi Hu, executive]

[Interpreted] Yes. Actually we are doing the R&D work for the VT-30 during the certification in the past few years and we have done some internal testing flight. And for the air traffic volume, as we know the air traffic within the urban area is the most traffic demand. That's why we're doing the certification for EH216 type of a model. And now we have completed all the configuration design and internal testing for the VT-30. And in this year, we will put more efforts into the testing for the VT-30 and we will release more videos about the flight. Actually the VT-30 will do a lot of practical flights and our CEO personally has taken the flight. We think VT-30 is a very stable flight experience. And later we will release our CEO's flight video with VT-30 and we will submit the TC application for VT-30 within this year. So the EH216 and VT-30 almost covers all the application scenario for the urban air mobility. That's why these 2 models are our main products. Yes, we have a accumulated a lot or almost the most flight data for EH216 and soon we will release more updates and progress for the VT-30.

[Xinran Li, analyst]

Okay. And my second question is about as you mentioned, you recently reached cooperation agreements with GAC Group. Could you give more details about this like how does it work? Will you like share the R&D or manufacture collectively or like what kind of support we can provide to each other?

[Anne Ji, executive]

[Foreign Language]

[Huazhi Hu, executive]

[Interpreted] There was a strong variable policy and plan in China about the low-altitude economy. So under this background, a lot of governments are working with us. So it's our pleasure to work with some state-owned enterprises such as the GAC Group. The first thing maybe that pop up into people's mind about our collaboration is mainly about the production. And actually on the other hand, we will also help the GAC Group to develop their flying taxis product. Now we have selected a production site within Guangzhou enter our cooperation with GAC Group and we are going to establish autonomous production line with GAC. So through our collaboration, we will continue to improve the product quality of our eVTOL product and to ensure the safety of our eVTOL flight.

[Operator]

Thank you. Given the time is limited, let me turn the call back to Ms. Anne for closing remarks.

[Anne Ji, executive]

Okay. Thank you, operator. Thank you all for participating on today's call. If you have any further questions, please contact our IR firm by email or participating our following investor events through the calendar information provided on our website. And we appreciate your interest and look forward to our next earnings call. Thank you.

[Operator]

This concludes today's conference call. Thank you for participating. You may now disconnect.[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]