Fubon Financial Holding Co Ltd

TWSE:2881

Earnings Call Analysis

Fubon Financial's Strong Q1 2024 Performance

Fubon Financial reported a remarkable Q1 2024, with net profit more than doubling from the previous year to over TWD 30 billion, driven by robust performance across subsidiaries. Taipei Fubon Bank saw a record net profit of over TWD 8 billion, boosted by a 50% year-over-year growth in fee income and a 30% increase in its digital platform's customer base. Fubon Life achieved a total investment return of 4.62%, while Fubon Insurance turned a net profit of TWD 1.35 billion. Fubon Securities benefited from strong market activity, with a net profit of TWD 2.3 billion, up over 40%. The company anticipates continued growth with high-teen growth for first-year premiums and low-teens for value of new business.

Strong Quarterly Performance

Fubon Financial reported an impressive net profit in Q1 2024, surpassing TWD 30 billion, more than doubling compared to the same period last year. This substantial increase underlines a robust performance across various segments. Total assets and book value grew significantly, with the book value up by over 25%. The return on equity reached approximately 10.9%, underscoring prudent financial management.

Key Drivers of Growth

Fubon Life and Taipei Fubon Bank were major contributors to this growth. Fubon Life achieved a total investment return of 4.62% and ranked first in Taiwan's life insurance industry for first-year premiums. Taipei Fubon Bank also saw a record high net profit of over TWD 8 billion, driven by a strong increase in fee income (over 50% year-over-year) and a growing customer base on its digital platform (30% growth to 4.7 million users).

Profitable Diversification

Fubon Insurance and Fubon Securities also posted robust results. Fubon Insurance turned a net profit of TWD 1.35 billion, maintaining a leading market share. Fubon Securities benefited from a thriving market and increased daily turnover, achieving over 40% growth with a net profit of TWD 2.3 billion. The successful merger with Jih Sun further enhanced its earnings.

Loan and Deposit Growth

Taipei Fubon Bank showed strong loan and deposit growth. Corporate and retail loans expanded by double digits, with total outstanding loans up 12.8%. The bank’s margin increased by 6 basis points year-over-year, and fee income surged by over 50%, thanks to wealth management and the credit card business.

Investment and Asset Quality

Recurring investment income rose by 8.6% year-over-year, supported by a higher interest rate environment and stronger equity markets. Total investment returns also increased, driven by realized gains in equity investments. Asset quality remained stable, though provisioning costs rose due to robust loan growth. The net interest margin and spread faced some pressure due to higher funding costs, but the overall asset-liability management remained effective.

Life Insurance Performance

Fubon Life's first-year premium (FYP) saw a significant improvement, growing by 18% due to traditional life policies. The product mix shifted towards regular pay and protection products, which now make up over 51% of total FYP. The value of new business (VNB) increased by 20.3%, although the first-year premium equivalent (FYPE) grew by 42%, indicating a strategic focus on higher-margin products.

Guidance and Outlook

Looking forward, Fubon Financial expects high-teen growth in FYP and low-teen growth in VNB for its life insurance segment. On the banking side, a mid-single-digit increase in net interest margin (NIM) is expected due to volume and spread growth. The company aims to sustain its growth momentum by leveraging its digital platform and expanding its product mix to adapt to market shifts and regulatory changes.

Earnings Call Transcript 2024-Q1

[Operator]

Thank you for standing by, and welcome to Fubon Financial's First Quarter 2024 Financial Results. [Operator Instructions] This call is being recorded. If you have any objections, you may disconnect at this time. Now I will hand the call over to your host, Ms. Amanda Wang, IR Officer of Fubon Financial Holdings. You may begin. .

[Amanda Wang, executive]

Welcome, everyone, and thank you for joining Fubon Financial's Q1 results call today. These will be a 2 sections in the presentation today, including Fubon Financial's first quarter performance and followed by the embedded value of Fubon Life, year '23. Then we'll have the Q&A session hosted by President, Mr. Harn and the senior management team.

And firstly, please turn to Page 4 of the presentation. In the announcement a few days ago that the cash dividend for year '23 is announced, including a cash dividend of $2.5 and stock dividend at $0.50 and that represents about 62.5% of the payout. And in Q1, the net profit, we reach another high level again, and that's more than doubled compared to the same period Q1 last year and reached over TWD 30 billion. In terms of total assets and the book value, we also record a meaningful growth, while the book value increased by over 25%.

Fubon Life, the return continues to be strong. The total investment return reached 4.62%. And on the underwriting side, the first year premium, they ranked 1 in Taiwan industry. While the capital position, equity-to-asset ratio at about 10.9%. In Taipei Fubon Bank, the net profit of over TWD 8 billion, they reached another record high for the same period. The revenue growth -- driven by both the margin and the volume. While the fee income growth is quite strong at over 50% year-over-year, and the digital platform that we also reach a meaningful growth of the customer base at TWD 4.7 million and the growth of nearly 30%.

In Fubon Insurance, the net profit turned positive at 1.35% (sic) [ TWD 1.35 billion ] while the market share that will remain a solid #1. In Fubon Securities that we are beneficiary from a strong market and also the strong daily turnover. We have a meaningful growth of over 40% and net profit reached TWD 2.3 billion, and the scale increase after the merger of Jih Sun, further helped the earnings growth. In the following page, that reiterate the growth that we just highlighted, including the net profit and EPS growth, in the first 4 months, we again recorded a strong growth, leveraged TWD 43 billion (sic) [ 43.1% ] for the first 4 months.

And in Page 6, in terms of profit contribution by subsidiary, the growth from the rising profit of Fubon Life at more than doubled of earnings and Taipei Fubon Bank growth at 22% and Security at 43% and the Insurance earnings turnaround.

And in Page 7, in assets and net profit that we both record quite decent growth and led to our Fubon value per share reached $0.61 and $0.51 per share. And in Page 8, ROA and ROE on an annualized basis, they both show us a meaningful growth. And in Page 9, in the ESG front, Fubon continued to play a leader's role in sustainability to deliver a positive impact across our business and also products offer.

And next section, please move on to Page 11 in Fubon Life. The premium performance turned to a positive trend compared to a decline in [ yuan ], during the past 3 years, including in FYP, FYP total premium and renewal premium. In FYP, the growth of 18%, largely driven by the participating policies of traditional life, while the renewal premium also grow on back of the continuous push for regular paid products. And that also led to the total premium growth. So we can see all 3 indicators outperform the market performance.

And the breakdown of FYP in Page 12, we can see the product mix, transitioned toward regular pay and protection type of product. So the regular pay now accounts for over 51% and health accident and others account for another 9.4%. And in the meantime, the foreign currency policy also grew. As you can see, the contribution now reached 43.4% of the total FYP, mainly from the sales of the U.S. dollar participating policy. And in Page 13, in FYPE's growth of over 35% that again represents the regular pay's product strategy.

While the VNB increases more moderate at only 0.1%, it's mainly because of Fubon Life adjusted is a product strategy. And in Page 14, by channels, the bancassurance contributed 46% of the FYP. That is the top in the industry. In the meantime, the tied agent also contribute to another 43%. While in FYPE contribution, we can see the growth delivered across all channels and the bancassurance and tied agent, China both grew at over 30%.

In Page 15, the investment portfolio is largely stable. All the cash position remained at around 3.7% and the increase in equity position, mainly in domestic and foreign equity that reflects the valuation increase and also the deployments. Well, in the fixed income side, in Page 16, we can see largely stable, with the focus in investment-grade corporate bonds and financial bonds.

On Page 17, in terms of the investment income, recurring investment income remains a key focus, which grew 8.6% year-over-year, as we are under a higher interest rate environment and also appreciation of dollar. While the total investment return both before and after hedge and FX, that shows a year-over-year increase, that reflects the strong growth in the realized gains of the equity investment.

And Page 18, in terms of the FX and hedging costs, the FX part is, again, in Q1, at 96 bps mainly on back of a strong dollar. While the recurring hedge cost, they remained flat at 198 bps, largely because of the rate differential, pretty much at a similar range, while the recurring return before hedge increased by about 23 bps to 3.31%. But the recurring return, as we just mentioned, the hedge costs remain high. So it decreased down to around 2%.

And in Page 19, the spread remained a positive 1 between cost of liability and total investment return and the spread widened to 1.47% in Q1 this year. And while the breakeven point versus the recurring return is a negative one, as we mentioned, mainly due to recurring hedging cost was high. But also, if we look at the dividend income that were gradually booked in Q2 and Q3 that should help to mitigate the gap between the 2 ratios.

And in Page 20, investment performance from the unrealized balance that we can see quite a meaningful turnaround, we delivered a positive unrealized gains at over TWD 40 billion by end of March and actually also as of end of April as we see the financial market gradually recover -- and also the equity to assets or the total shareholder equity also increased as a result.

And next section, let's move on to Taipei Fubon Bank. In Page 22, the revenue of the bank increased 16%, driven by both, NII and fees. The NII growth mainly comes from the volume and also the margin. Margin increased by 6 bps year-over-year. While the fee income shows a very robust growth result at over 50% from wealth management and also the credit card business. While on the other hand, the treasury-related income is a decline that mainly reflect the volatility from the fixed income market and also the soft revenue decrease. And Page 23. From the loan growth across the corporate and retail, both delivered quite decent growth at double digit. That led to the total outstanding, up by 12.8%, compared to the market at only 6% to 7% that Fubon outperformed actually both in corporate and also retail.

In Page 24, the corporate loan growth from NT and foreign currency, both quite balanced at over 10% type of 14% growth in NT and a16% growth in other foreign currencies. They compare to, again, the market growth that we outperformed, while SME also continued to grow at over 11%. In mortgage, on Page 25, we reached the level of over TWD 1 trillion outstanding and the growth rate remains strong at over 10%, while other personal secured loan that increased specifically from personal unsecured, the growth is 24%, 25% and also consumer credit card revolving also at a strong level.

In Page 26, on the liability side, our total deposit growth at 8.6% and while the time deposits remain, always, growth in deposit -- they reflect the interest rate environment. Well, on your lower right-hand side, the foreign currency utilization continue to improve. And in Page 27, the margin from a year-over-year basis, the margin expands by 6 bps while the spread narrowed largely because of the higher funding costs from the deposit structures change into more in time deposits. On a quarter-over-quarter basis, the NIM and spread narrow, mainly reflect the decline in lending the benchmark rate in Q1 versus Q4 last year and also the growth in non-U.S. dollars or foreign currencies loans are comparatively stronger than dollars loan, and that led to a decrease in the lending rate.

In the following page, the asset quality, overall speaking, is stable. While you may see in the lower right-hand side, the provisioning cost increased due to stronger loan growth and therefore, GP is higher. And the following page in credit card, the active card shows meaningful growth, and we reached 5.6 million now with the card spending up by over 50%. That lead to the credit card contribution to the fee in the following page actually continue to grow.

On the per card spending basis, you may see slightly down, that mainly reflect the insurance contribution and also because of the insurance product strategy move towards a regular pays policy. And the rest of the consumption, actually the level remained decent and stable. While the NPL ratio is slightly edged up, it's largely due to the government's bailout measures expired. While the level of -- NPL ratio level compared to the industry average that Fubon continued to outperform.

And in Page 30, the fee growth was over 50% year-over-year, largely driven by the wealth management fee and also the cards business. While wealth management, you can see across all business lines, the fee income all increase that reflects the strong investment market. And lastly, in Page 31, in Taipei Fubon Bank, the overseas branch also delivered decent growth from its revenue and also the contribution of the total bank net profit that reached around 20%.

And in Page 33, in Fubon Insurance, direct written premiums growth at 6% and we record market share top 1 at 24.7% market share. While the underwriting results continue to improve, as we see the COVID policies impact is pretty much behind us. And also, we adjust the product combination selection strategy, and therefore, the combined ratio improved and down to 84% in Q1 this year.

In Page 35, Fubon Securities. Profit also recur a quite strong growth at 43% Y-o-Y. That reflects the daily turnover strength at nearly TWD 500 billion daily basis in Q1. And also the brokerage and also the investment incomes, a strong result. And we also complete the merger of Jih Sun quite successfully last year that expand our scale that we hope that can further help to expand our brokerage and also wealth management business outlook.

In Page 37, in Fubon Bank China, the balance sheet items in loan growth, mainly reflect lower base as we start to have the addition of the mortgage assets starting from second quarter in '23, and that also led to the growth in deposits. And margins trend is a downward one, down by 13 bps, largely driven by the interest rate environment in China. While if we include the SWAP revenue, actually the NIM will be slightly up by 2 bps. And in terms of asset quality, the NPL ratio at around 1%, and we continue to aim for a stable level going forward.

Okay. And next section, we will like to introduce [indiscernible]. She's the Senior Vice President and appointed actuary of Fubon Life and she'll walk you through Fubon Life's embedded value of year '23.

[Unknown Executive]

Thank you, Amanda. Page 39 shows the value creation summary for Fubon Life. Net worth increases by TWD 221 billion due to the solid earnings and asset valuation. With VNB continuing to grow BIS growth, the embedded value is TWD 931 billion, posting a 16.6% growth. 2023 VNB is TWD 20 billion, increased by 20.3%, though FYP is decreased by 11% due to overall market downtrend. Fubon posted FYPE at 42% growth and improved VNB margin by focusing on regular pay and high-margin protection products. The EV per share and appraisal value per share for Fubon Financial Holding company are $71.5 and $86.8 respectively.

Page 40 shows the movement for adjusted net worth. This page shows the net worth movement between year '22 and '23 and how it is adjusted for the embedded value calculation. In 2023, the statutory net worth is TWD 492 billion or 81.6% increase from previous year, mainly due to our financial asset appreciation and also TWD 36.1 billion is recorded. The adjusted net worth is calculated similar to previous years with following adjustments.

Firstly, special reserve is added back as it could be treated as available capital from regulators' perspective in RBC calculation. Secondly, the unrealized capital gain and loss of fixed income assets is adjusted to align with the book yield return assumptions used for value in-force calculation. Lastly, [indiscernible] real estate, its mark-to-market value appreciation is not recognized in current accounting book.

Page 41, the movement analysis for value in-force before cost of capital. The expected earnings and required return explain how value in-force roll over 1 year. TWD 21.1 billion earnings is transferred to the net worth and the unwinding of 9% discounting rate contributed TWD 50.2 billion. As last favorable actual experience is observed, the negative impact is both reflected in noneconomic assumption and data change totaling TWD 35 billion. This is mainly due to the higher surrender and claim costs similar to overall industry situation.

The investment return assumptions are updated, and it will be elaborated more in economic assumption section. The impact in this year is around negative 0.7% from slightly lower returns. The value of new business before cost of capital contributed additional TWD 23.1 billion. The '23 value in-force because before cost of capital reached 582.3 billion, grew 2.0% compared to last year. Page 42, the movement on assets for VNB. On the same basis, VNB increased by 24%, with the negative impact for sales volume reduction and positive impact from improved product mix.

The economic assumption change impact is negative TWD 0.7 billion to reflect lower interest rate, more interest-sensitive life products due to market competition. There is also a minor positive impact from noneconomic assumptions. Page 43, we summarize the economic assumption here for your easy reference. Page 44 and Page 45 shows the investment return assumption for In-force block and new business policies.

The overall return assumption is not materially changed compared to previous year and the ultimate assumption remains at the same level as long-term view has not changed. Minor change are made to NTD return with adjustment for short-term higher hedge costs, but the [indiscernible] has picked up quickly with higher return in the future.

Page 46, the discount rate assumption. The methodology is the same as previous practice. The parameters are showing in the table here, which resulted in the equivalent RDR is less than 9%. It is decided to use a discount rate of 9% same as last year for value calculation. Page 47, cost of capital. We follow the latest RBC regulation and determine the cost of capital at 200% RBC level. Page 48 and 49 shows the sensitivity results. This provides a sense on how these 2 major assumptions drive changes to different value metrics. I will hand over to...

[Amanda Wang, executive]

Okay. Thank you, operator. We are now open for Q&A. .

[Operator]

[Operator Instructions] The first question is from Steven Lam, Bloomberg.

[Steven Lam, analyst]

It's Steven Lam from Bloomberg Intelligence. Congratulations on a good set of results. Just a couple of follow-up questions from the Chinese call. Some of these could be just number for application. But if I may, I'll start with the Life Insurance side. So it seems like the guidance or the expectation is that there will be double-digit FYP and VNB growth. Are we talking about in the range of, say, in the teens? Or it could be possibly a little higher.

And I was just curious, is that mostly driven by the volume growth for example, FYPE growth, while your margins stabilize from second quarter and onwards, after the decline in the first quarter because of the base effect on participating policies. And in relation to the participating policies, could you just quickly remind us, is this -- what is the main reason why it's lower than the interest sensitive policies in that regard?

And then last question on the Life Insurance is about, can you remind us what's driving the higher surrender rate? Is it because people are switching to higher return policies. And after factoring in all the surrender issues, would that have for the -- caused some sort of adjustment on your EV or value of in-force. So that's Life Insurance side.

On the Bank side, just a quick one. I think it's very clear that the bank income is very good. I just want to understand a little bit more about net interest income outlook specifically. Can we assume that the increase, say, double digits or whatnot is mostly coming from loans while your NIM expectation is probably flat for the rest of the year versus 2023.

And then a couple of questions on investment very quickly. I just want to verify, I think it's very positive that the total investment income, for example, dividends plus interest will go up. And then the mix is that mostly coming from higher interest income, while dividend income will -- would decline a little bit. Is that a fair assumption? So the interpretation on your recurring yield and total yield is that basically on an after-hedge basis, your recurring yield might go down slightly, but total yield is expected to rise for the full year.

And then, I guess, just very quickly, on your -- just curious, do you have any exposure? I mean you have -- you flagged the German office property impairment. But I'm curious, do you have U.S. commercial real estate loans that you can give us some color on? Or [ CLOs ] in that regard? Any color that you can provide will be wonderful.

[Unknown Executive]

Okay. I think I'll come back on the last one. We don't have any commercial real estate exposure in the U.S. Okay. [indiscernible].

[Unknown Executive]

Your question on the net interest income for the bank. I think for this year, it will mainly come from our loan growth. The other is from the corporate side or retail side that we will see payments growth on both sectors. And on the NIM increase, we are expecting mid-single-digit increase compared to last year 2023. So I think this will be the mean to positively drive the NII increase of this year.

[Unknown Executive]

To be sure, it would come from both on the volume as well as the spread growth. we expect mid-teens growth in the spread -- on the spread. Double-digit or low teens growth on the loan side.

[Unknown Executive]

Okay. For Life Insurance, we expect a high-teen growth for FYP and the low teen cost for VNB. The gross main income from the FYP was, mainly the regular premium on the volume growth. Why participating as lower VNB margin? The main reason is the way we recognize profit on current accounting standards. It is deferred than the interest-sensitive product. And when we calculate VNB, we're using 9% to discount the future profit. That's why the pricing value is lower than interest-sensitive product. And the other reason is under the current RBC rule, participating product needed to hold more capital than the interest-sensitive product. But after the adoption of ICS, it will be reversed. So that's why we try to push more participating products in order to prepare for the ICS adoption in 2026.

The high surrender rate, mainly caused by the high interest rates, short-term interest rate, especially the bank deposit because right now, the bank deposits over higher short-term rate than insurance credit rate. And the other reason is the [indiscernible] appreciate a lot the first quarter. And for some policy holder, they both [indiscernible] policy, they try to realize the gain on currency. And we expect it will be stabilized in the second half of the year.

[Unknown Executive]

And the higher surrender experience has already reflected in the value in-force calculation accordingly.

[Unknown Executive]

For the recurring yield, we believe that recurring yield will decrease due to currently high hedging cost. But as you just asked about the total return, I think it will depend on realized capital gain also the unrealized gain. And as I just mentioned earlier, we still believe that Taiwan equity market remain -- we keep our [indiscernible] performance in the long run. That means they still have upside on the submarket sold that we think we -- in terms of total return has opportunity to go up.

[Operator]

[Operator Instructions]

Next question is from Jemmy Huang, JPMorgan.

[Jemmy Huang, analyst]

I have 3 questions. First one is a follow-up on, I think, the -- you mentioned about the VNB margin lower for participating policies that you pointed out that cost of capital calculation is higher under the current RBC, but will be reversed on the ICS. Could you explain a little bit detail as to why this would be the case. And the second question is on, I think, the recurring yield, if we're just looking at before hedge, is it possible that we can see some year-on-year improvement? And on the full year basis, what's the likely range? I think maybe the first quarter, we see over 20 basis points, year-on-year increase could be a little bit high. But just trying to understand what's the likely range for the full year?

And the third question is for net interest margin at Fubon Bank China. We can see the net interest margin showing some sequential recovery. So should we assume that if there is further RRR or LPR cuts in China that will be a tailwind for the net interest margin for Fubon Bank China.

[Unknown Executive]

I think on the net interest margin for the Fubon Bank China, under the current environment, we do not expect the net interest margin will expand. On the contrary, we believe that it's still under pressure -- under pressures to further narrow, but we will try to adjust our portfolio -- as you probably know, we are expanding more -- allocate more of resources toward the retail loan. And therefore, we might be balancing the entire portfolio and sustain our interest rate margin. And at the same time, we will also expand modestly on our scale and try to maintain our revenue earning capability under a the rate declining environment. Okay.

[Jemmy Huang, analyst]

So even including SWAP revenues, the adjusted NIM could probably see very limited upside, more pressure than upside?

[Unknown Executive]

Well, it's difficult -- I mean I mean, Jemmy, you know that better than I do. If the interest rate gap widens between renminbi and the U.S. dollar, obviously, there are much more opportunity to expand our SWAP revenue, but it's difficult to actually to forecast how much that we will gain more from the SWAP transactions. It all depends on the markets.

[Unknown Executive]

Okay. And I will come to the cost of capital calculations under RBC basis and under ICS basis, what's the difference between these 2. Firstly, for the RBC calculation, it's mainly based on look at the SSI and liability size risk. So when we have the [indiscernible] products, the risk and profit has been shared with the policyholders, the under current RBC regime, this is not recognized in the calculation. But toward ICS regime because the sharing risk with the policyholders, the ICS could recognize this so-called loss absorbing capacity. So when we can account for this kind of loss absorbing capacity, we think the capital charge under [indiscernible] policies could be fairly recognized in the future. Hope this explain the details -- is that fine with you?

[Jemmy Huang, analyst]

So if we look at CSA margin between participating policies and interest-sensitive policies, would that be quite similar, if there is no major difference in terms of the [indiscernible] location?

[Unknown Executive]

For CSM, because it's mainly looked at the margin that can be taken by the shareholders. So actually, the CSM margin for pop policies is also lower than the interest-sensitive policies. But when we look at the CSM versus the required capital or the cost of capital, both -- then we think the [indiscernible] policy is -[indiscernible] product is still a good product type that we can -- that can be suitable for future IFRS 17 and ICS, both, not just look at IFRS 17 alone, but also consider the ICS requirement in the future. So if [indiscernible]

[Unknown Executive]

About the recurring yield increased compared to last year in the first quarter is benefited by the new Taiwan dollars depreciation as well as we also increased some ETF position. But for the outlook of this whole year, we expect that investment -- interest income will increase because we will keep investing in new Taiwan dollar to dominate [indiscernible] ETF. But about the dividend payout ratio decrease. And also, we focus [indiscernible] gross stock, then we expect that dividend income will be lower than last year.

So overall, the recurring yield before hedge, we think it will be lower than last year.

[Operator]

Next question is from Steven Lam, Bloomberg Intelligence.

[Steven Lam, analyst]

Just a couple of follow-ups. I know we talked a lot about participating policies, but if I may. So -- can we assume that this is probably not right now, but after the adoption, will we get sort of a efficient upward in terms of the [ NBV ]. Is that sort of something that can be expected, because of the dynamics that you outlined earlier? And then just for like data disclosure purposes, is it possible to start sort of telling us how much of [indiscernible] policies you've sold in the FYP or FYPE disclosure. I would assume that those are sort of embedded within your traditional "regular pay bucket". I think in the Chinese call, I heard something about 55%.

That was a rough figure. I don't know if I heard it correctly, so I would like to clarify that for first quarter '24. And then last question on -- coming back to investment, I think there was some discussion about how much of your FX assets are backed by foreign, I guess, ForEx policies, foreign denominated policies. I think I heard 32%, but I wasn't exactly sure. I know there's a pie chart there, but the number wasn't really on there. And on the pie chart, specifically, is my way to interpret that when you say your equity and funds were 15.9%, those are actually -- we can just assume those are not hedged.

So whatever is hedged, it's only within the bonds and cash or deposits. Yes, that will be all.

[Unknown Executive]

Our foreign policy is [indiscernible]. It's about 32%, correct. And also, you mentioned about the equities, Yes, we did not hedge on that.

[Steven Lam, analyst]

So the 32% is within that 75.7%?

[Unknown Executive]

Correct.

[Steven Lam, analyst]

Okay. So okay. Got you. Got you. So those are foreign denominated.

[Unknown Executive]

For first quarter, about 55% of our total sales are participating product and out of which over 60% are regulatory product.

[Steven Lam, analyst]

Okay. So there could be some power products or a single pay -- that's what you're saying?

[Unknown Executive]

Any more questions? If not for the moment, we will call the meeting off for now. If we have any further questions after the call, you are most welcome to contact our IR department. We will provide as much information as we could, on a timely basis, of course, Yes. Thank you for your participation for the day. Thank you.