GreenTree Hospitality Group Ltd. (NYSE:GHG) Q2 2024 Earnings Call Transcript

GreenTree Hospitality Group Ltd. (NYSE:GHG) Q2 2024 Earnings Call Transcript August 15, 2024

Operator: Hello, ladies and gentlemen. Thank you for standing by for GreenTree’s Second Quarter of 2024 Earnings Conference Call. At this time, all participants are in listen-only mode. After management’s prepared remarks, there will be a question-and-answer session. As a reminder, today’s conference call is being recorded. I would now like to turn the meeting over to your host for today’s call, Mr. Rene Vanguestaine of Christensen. Please proceed, Rene.

Rene Vanguestaine: Thank you, Rocco. Hello, everyone, and thank you for joining us. GreenTree’s earnings release was distributed earlier today and is available on our IR website at ir.998.com, as well as on PR Newswire services. As a reminder, we also posted a PowerPoint presentation on our website. that accompanies our comments to the same IR website. On the call from GreenTree are Mr. Alex Xu, Chairman and Chief Executive Officer; Ms. Selina Yang, Chief Financial Officer; and Mr. Jason Zhang [ph], our new Financial Director. Jason replaces our former Financial Director, Ms. Ellen Zhao [ph], who officially retired earlier this month. Mr. Xu will present the company’s performance overview of the second quarter of 2024, and Ms. Yang and Mr. Zhang will then discuss financials and guidance.

They will all be available to answer your questions during the Q&A session which follows. Before we begin, I’d like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminologies such as may, will, expect, anticipates, aims, future, intends, plans, believes, estimates, continue, target, is or are likely to, going forward, confident, outlook and similar statements. Any statements that are not historical facts, including statements about the company and its industry, are forward-looking statements. Such statements are based upon management’s current expectation and current market and operating conditions and relate to events that involve known and unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the company’s control, which may cause the company’s actual results, performance or achievements to differ materially from those in the forward-looking statements.

You should not place undue reliance on these forward-looking statements. Further information regarding these and other risks, uncertainties or factors is included in the company’s filings with the U.S. Securities and Exchange Commission. All information provided, including the forward-looking statements made during this conference call, are current as of today’s date, the company does not undertake any obligations to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law. It is now my pleasure to introduce our Chairman and Chief Executive, Mr. Alex Xu. Mr. Xu, please go ahead.

Alex Xu: Thanks, Rene, and hello everyone, and thank you for joining us today. In the second quarter, we faced the challenges as China’s economy continued to recover. We believe both consumers and business exercised caution in discretionary spending, which had a negative impact on our overall performance. However, we continued to upgrade a number of hotels in our portfolio in order to better respond to increasing competition. While we believe this will help our performance in the future, second quarter Hotel revenue did decrease 14.8% year-over-year. We continued to execute on our strategy to return our Restaurant business to profitability by moving away from leased and operated restaurants in supermarkets and regional shopping centers towards franchised street stores.

As a result, the net income turned positive this quarter after breaking even last quarter compared to losses in both corresponding quarters a year ago. Our focus is now fully on growing the number of franchised street stores and the stores with stable consumer traffic. Please turn to Slide 5. Compared with the second quarter of 2023, Hotel RevPAR was RMB125, down 10.8% and the Restaurant ADS, that’s average daily sales per store, was RMB4,737, down 22.1%. Total revenues were RMB329.7 million, down 20.5%. Hotel revenues were RMB264.6 million, that’s down 14.8%, mainly due to a 10.8% year-over-year decrease in RevPAR and the closure of some hotels and partially offset by new openings. Restaurant revenue decreased to RMB65.3 million as we continued to execute on our strategy to reposition this business and close a number of underperforming restaurants.

Income from operations decreased to RMB84.4 million, with a margin of 25.6%. Net income was RMB62.3 million, down 38.9%, with a margin of 18.9%. Adjusted EBITDA non-GAAP was RMB83.1 million, down 34.5%, with a margin of 25.2%. Slide 6 shows detailed the number of total revenues, income from operations, net income and adjusted EBITDA. Slide 7 shows the trend in our quarterly operation performance. In the second quarter, compared to a year ago, RevPAR for our LO hotels decreased by 7.3% to RMB177. RevPAR for our FM hotels decreased by 10.9% to RMB124. ADR for our LO hotels decreased by 2.1% to RMB250. And ADR for our FM hotels decreased by 4.4% to RMB117 — RMB171. Occupancy at our LO hotels was down 3.9% to 70.7% and occupancy at our FM hotels was down 5.3% to 72.6%.

Slide 8 highlights the growth in our membership programs, which accounted for most of our direct sales. Individual memberships grow to 96 million, up from 84 million a year ago, and the corporate memberships grow to 2.1 million, up from 1.96 million a year ago. Slide 9 shows the operating performance of restaurants with ADS down 22.1% year-over-year at RMB4,737, but up sequentially. Starting with Slide 11, I will review our strategic execution across our businesses. In our Hotel business, we further expanded in the mid-to-upscale segment and in Tier 3 and the lower cities in South China. As you can see on Slide 12, we continue to grow our mid-to-upscale segment with 505 hotels, that’s 11.8% of our total portfolio at the end of this quarter.

While the mid-scale segment remains the core of our Hotel business at 69%, we continue our expansion into the higher end segment. The economy segment ended the quarter at 19.2%. Please turn to Slide 13. We continue to expand in Tier 3 and the lower cities, and the 72.3% of our hotels in our current pipelines are in such cities and we’ll further capitalize on the substantial opportunities in these locations. On Slide 14, we continued to focus on increasing the profitability of our Restaurant business. To achieve this, we have implemented a three-pronged approach to reposition the business. First, closing unprofitable LO stores, increasing the proportion of FM stores and expanding the number of street stores. Franchised and managed restaurant accounted for 86.9% at the end of the quarter, compared to 72.3% a year ago and the street stores accounted for 45.4%, compared to 37.9% a year ago.

Next, Selina Yang and Jason Zhang will review operating and financial highlights.

Selina Yang: Thank you, Alex. I will review our Hotel business. Please turn to Slide 16. In the second quarter, total Hotel revenues decreased 14.8% to RMB264.6 million, compared to the second quarter of 2023. Total revenues from LO hotels were RMB105.9 million, down 19.5% year-over-year. The decrease was primarily attributable to a 7.3% year-over-year decrease in the second quarter RevPAR of LO hotels. Five LO hotels closed and a reduction of subleased revenues, mainly due to the disposal of property. Total revenues from FM hotels decreased 11.3% to RMB157.8 million. The decrease was mainly due to a decrease in FM hotels RevPAR and remodeling. On Slide 17, total Hotel operating costs and expenses increased 2.1% year-over-year to RMB217.7 million.

Operating costs decreased 4.5% to RMB143.4 million year-over-year, which was mainly due to the lower personnel costs, lower hotel-related material consumption and lower utilities gave a lower occupancy rate and the closure of LO hotels. Offset by increased rental costs and D&A due to newly opened LO hotels since the third quarter of last year. Salary and marketing expenses were RMB13.2 million, a year-over-year decrease of RMB0.5 million, mainly due to lower advertising expenses. General and administrative expenses were RMB4 — RMB54.9 million, up 23.6% compared with the third quarter of last year. The increase was mainly due to an increase in bad debt provisions for long-aged accounts receivables. Turning to Slide 18, due to the decline in revenue, our Hotel business saw a decrease in profitability in the second quarter.

Income from Hotel operations decreased from RMB108.5 million to RMB81.6 million year-over-year. Net income was RMB63.1 million, compared to RMB114 million in the second quarter of last year. Adjusted EBITDA of Hotel business decreased 37% to RMB81.9 million and core net income decreased to 22.4% to RMB67.6 million year-over-year. Next, let me turn the call over to Jason for the review of our Restaurant business.

Jason Zhang: Please turn to Slide 19, in the second quarter, we continued to refresh our Restaurant business and open more franchised and managed stores. Total revenues were RMB35.3 million, down 37.8% year-over-year, and total costs and expenses decreased 44% year-over-year to RMB34.3 million. Mainly due to lower ADS and a decrease in the number of LO stores due to the closure of unprofitable LO stores. And on Slide 20, these measures lead to improved profitability. Income from operations was RMB2.9 million. Adjusted EBITDA was RMB1.2 million. Net profit and core net income turned from loss to profit. Next, Selina will review the profitability of our group.

Selina Yang: Thank you. Please turn to Slide 21. Group net income per ADS, that’s basic and diluted, decreased by 39.9% to RMB0.61 and core net income per ADS, that’s basic and diluted non-GAAP, increased by 3% to RMB0.69. Let’s now take a look at Slide 22. As of June 30, 2024, the company had total cash and cash equivalents, restricted cash, short-term investments, investments in equity securities and time deposits of RMB1,737.2 million, compared to RMB1,517.1 million as of March 31, 2024. The increase was mainly attributable to continued operating cash inflow, the disposal of property and the repayment of loans from franchisees. On Slide 23, considering our performance during the first half of this year and the impact of closing certain LO hotels due to lease expirations and strategic decisions, we have revised our revenue guidance for the Hotel business.

Now we anticipate its performance in 2024 to remain flat compared to the last year. As Board of Directors has approved the payment of cash dividends of US$0.10 per ordinary share or US$0.10 per American deposit share, that’s ADS, payable to holders of the company’s ordinary shares shown on the company’s record at the closing of trading on September 30, 2024. This concludes our prepared remarks. Operator, we are now ready to begin the Q&A session.

Q&A Session

Operator: Thank you. [Operator Instructions] And today’s first question comes from Bruce Lee [ph] with UBS. Please go ahead.

Unidentified Analyst: Hi, Alex, Selina, and Jason. Thanks for taking my question. So I have two questions. The first one will be regarding the Hotel business. So could you please introduce a bit about the RevPAR trend in July and in August so far on a year-over-year trend basis? And also, we saw that you have changed your four-year Hotel revenue guidance. So could you please also provide some color on the RevPAR outlook for the second half? And that’s my first question. And the second question is regarding the shareholder return plan and we saw that we have declared a cash dividend at this time. So will it be a long-term shareholder return plan? Thank you.

Alex Xu: Thank you, Bruce. Regarding the Hotel RevPAR for July and August, the Q3 imply we saw a little bit steep drop compared with the same period or same July last year around 15%. Trend in August, the first half in August our RevPAR and is catching up recovered to about less than 10% of drop compared to last year. Last year I think was especially in the summer the stronger than the previous years and so there is a correction from the record. I think we — looking back, I think somewhat is more understandable. So that’s the next two months. For the third quarter, we anticipate we will operate probably the same levels of reduction as the second quarter comparing with the last year, 2023. For the balance of the year and our projection is our total revenue side will be flat compared with the year of 2023 for several reasons.

One, we have a reduction in terms of the RevPAR. We also have an increase in terms of new openings. We still anticipate and plan about 480 new openings, even though we have a short dip in the second quarter. But we’re looking at the pipeline, the third quarter, fourth quarter will catch up. And that also will be offset a little bit by we have a reduction in the membership income somewhat. And also, we have about 400 hotels in the upgrade mode, because about 400 this year will be going through the remodeling slightly more than last year. Because last year was the first year we’re coming out of the pandemic and we have given our franchisees some breathing room to operate the hotels to generate some cash to help their businesses. So, this year, we have planned and also encouraged a lot more hotels in going through the upgrade and the remodeling.

So we have a lot the — we typically give six months to one year of the grace period if the hotels go through that remodeling phase. And also, in light of the challenging, at least on the service hotel and restaurant industry, we have given our franchisees a little more in terms of franchise signing application fees and various services and we have added the various services. So, combined, and so we’ll see revenue to remain flat compared with the 2023. So, that’s on the Hotel business. And on the shareholder dividend, even though the second quarter we see a drop compared with the same revenue side with the same period of last year. However, you can see we still generate a very strong cash flow. And especially with our disposal of one property and added another RMB120 million cash into the bottomline.

And therefore, we think and anticipating the other growth needed capital, we think it is appropriate for the first half of the year and we declare this dividend. We had a continued dividend policy before, which was interrupted by the pandemic and our plan is to continue this dividend practice. And the borrowing from any great growth potential requires further cash infusion. We’ll continue to deliver sustainable, profitable growth to the bottomline and deliver sustainable returns to our shareholders. So, this is our long-term plan and we’ll continue to do this. So, thanks, Bruce, for those two wonderful questions.

Unidentified Analyst: Thanks, Alex, for the answers. It’s super helpful. Thank you.

Operator: And our next question today comes from Lewen Liu [ph] with China Securities. Please go ahead.

Unidentified Analyst: Okay. Thank you. Thank you for the management team. And I have two questions. The first is about the demand. I wonder if there is a difference between the business and the leisure demand. Can you draw some colors on this question? And also, the second question is about, is there any difference like for us, for the second quarter, for our hotels, like in the first and second tier city and the low-tier city? Thank you.

Alex Xu: Yeah. With regard to the operation issues, I’ll take them, Selina, with the financial numbers. So, I’ll take Lewen’s question. The first question regarding the pattern changes in terms of the ratio between leisure and businesses, we do observe the trend. There is more leisure travels than the business travels. And there is also higher demand in the third-tier cities that typically we have the scenery and the resort area. And that also the cities where they have a friendly climate, temperatures, attract a lot more leisure travelers in the summer, especially in the July or August. And so, we do think that the trend will continue, considering we have a large number of retirees are going into the retirement mode in the next few years.

So, the leisure travel, and especially the economy and the budget leisure travel, will continue to rise and we are anticipating and planning for this. And the hotels in these areas are performing exceedingly well. And, for instance, some of our hotels in those resort and summer retreat areas and achieved even a record earnings and record occupancy. With regard to the first-, second-, and third-tier cities, we did have a trend, which we can share with you. We see this year, the first-tier cities, the RevPAR drops, at least in our business, the most at 12.5% and the second tier, a drop of 11.7%. Typically, the last year, with the finish of the pandemic, I think a lot more travelers — business travelers, generally businesses, and also government for their business seminars and business development activities are exceedingly very high and we do see some reduction in that number.

So, the third-tier, the most resilient in our model had a reduction — has a less of an impact, about 9% reduction in RevPAR. So, that’s the phenomenon trend that we have observed and we do believe this trend may continue for a while. So, thanks, Lewen.

Unidentified Analyst: Thank you very much, Alex.

Operator: Thank you. And our next question today comes from Kelvin Wong with Mica Capital [ph]. Please go ahead.

Unidentified Analyst: Thank you. Good evening. Thanks for taking my questions. I would like to have three, if I may. I think that it’s better for me to ask the question one-by-one, so that that will make it easier to answer that. The first one is more, we will look at it more on a broader top-down base. I would like to know, could you talk about the trend of actually the whole industry and how do you see this trend going forward? And at the same time, are you facing any difficulties at the moment and what measures have you been taking to deal with these difficulties? And we would be glad if you could also give us a comparison of the company’s performance in the second quarter compared with other peers. So, that’s my first question. I have another two after you answer this one.

Alex Xu: Okay. All right. Thanks, Kelvin. Regarding the trend in the, I’ll talk about the, especially the Hotel industry, and then later we can talk about the Restaurant. We have not seen industry-wide statistics of the performance for the second quarter. So, we cannot make a meaningful comparison to others, but I can share with you what we have observed. And we did get some feedback from the leading industry OTAs and so we have an idea. So, we are at least, I think, a better performing group among our peers in terms of the price, occupancy, reservation numbers compared with the same period of last year. And our company has built our strength to face the challenges, both up and down. So, when the industry is facing challenges, our main concern is the health and the profitability of our franchisees and also the stable employment environment for our people.

So, in order to fend off this kind of up and down volatilities, I think the key is how do we increase our core competitiveness. I think that the GreenTree in the past, especially after the pandemic, we have many aged, older properties that needed to be upgraded, okay. And we have worked with our franchisees in the last one and a half years, and we continue to increase our brand value proposition. And so, in other words, how we can help our franchisees to maintain the revenue or even increase the revenue, meanwhile, streamline the operating systems and streamline the operation to reduce the leakage, the waste and all the costs. So, we have built a better supporting system, improved, especially this year to have a timely and more efficient support to our franchisees.

And we also have more focused local sales, because everybody is fighting for the national sales. But I think the local sales, the local customers, I mean, this is not only for the Restaurant business, for the Hotel business as well and we focus on the local sales and the business development. As a result, we believe our downward trend is like-to-like, and the same, for instance, the same store or like kind of properties. We’re not talking about the new — the different composition of the properties. And then, it will be — I think we’re performing one of the better ones in the industry. We’re waiting for the other groups to report the numbers. We’ll make a detailed comparison. Another effort we’ve been focusing on is building and also continue to showcase our brand by going — by repositioning, by improving our F — by our LO hotels.

You can see from the page, I think Page 7 or 8 in the Hotel performance side, our LO hotels continue to lead the FM hotels in both the RevPAR and also the occupancy. So as a result that, we will transfer, we’ll replicate the business practice to the franchisees and leading the franchisees to face this downward pressure challenges. So, Kelvin, that’s our focus for the time being.

Unidentified Analyst: Very good.

Alex Xu: And we’re confident that we’ll continue to be the most profitable value deliverer to our franchisees, to our businesses.

Unidentified Analyst: Okay. That’s very helpful. I would like to have two more questions. The second one, again, a follow-up on the Hotel industry. I heard that you’re going to maintain the plan of opening 480 to 490 hotels throughout the year. But if we look at the second quarter, is there any special reason for the particularly low number of hotel openings during the quarter? Is it because of competition or franchisees? So — and at the same time, apart from organic growth, are you also looking for any M&A opportunities?

Alex Xu: Okay. Thanks, Kelvin. The second quarter we did have a slower — lower number of openings. And for, I think it just happened that some of the scheduled openings are getting delayed a little bit. I think it’s partially because now I think the regulation for opening hotels is a little bit more, I would say, restrictive and all the required licenses are a little bit harder to obtain than before. So we have a — we looked at the pipeline. So we have a number of hotels that takes a little bit longer to obtain all the licenses, okay. And we have a plan to do a better job in terms of educating our franchisees and to give them a better support in doing so. And we have looked at the pipeline in the next quarter. I think in the third quarter we are going to open 170 plus or minuses and then the fourth quarter, we’re likely the same speed.

So the year — we will end of the year with between 480 plus or minuses, or even maybe towards 500 level, okay. And so we have the hotel numbers in the pipeline. So we’re pretty confident in that. With regard to whether we have other competition in the marketplace, our experience, Kelvin is that, we want to maintain a quality higher growth. Instead of just for the numbers sake. And I think standardization, higher quality of the hotels and the products and services and that is more important to our franchisees, to the long term growth and profitability of the company. So we want to take a more disciplined approach, and every hotel we open, we want to be a profitable one and can be sustainable for our franchisees, and so we are not going to be just for growth — for the sake of growth by growing the numbers.

So that’s our internal focus and it’s absolutely strictly focused on the franchisees’ profitability. So, and that is our focus. And so even though there may be some competitions, but our core customer space are there and so we’re helping them to evaluate the site and do a better design and build the products at the most efficient ways. And anticipating the future consumer’s behavior and the requirement and that’s what we’re doing. And then with that, we think we can earn the confidence and the respect from our customers. That we still are proud of our loyalty of our GreenTree franchisees and that feeling is mutual, okay. With regard to M&A, we have not done an aggressive searching in the M&A opportunities. Partially because we had two, which was not so successful.

And part of the reason is also because of the pandemic and also the performance guarantee. So it didn’t lead to a good result. And so we are going to be more focused on if we do an M&A and we have to find the group with the same culture, with the same focus on the profitability of the franchisees and the team growth and efficient system and operations. And most importantly, their value proposition has to be, and the brand proposition has to be complementary to GreenTree. And at this moment, I think it’s a little bit harder to find. We do not want to dilute our efforts and focus now and to reposition some of our older properties and also build new ones. And in a very short period of time, I think we’ll be the leading, we hope we’ll become the most valued brand by our customers in the industry, okay.

Unidentified Analyst: Great. Great. The stance is very clear. And one final small question about your Restaurant business. So actually it’s great to see that it has turned profitable in Q1 and now better in the second quarter. So I’d like to know about the company’s plan for this business in the future, especially in terms of like, store openings like FM store openings, LO stores. What’s your plan on that? Any potential difficulties you may face? And actually, is there any plan for you to lease or separately lease this Restaurant business because it’s doing so good?

Alex Xu: Okay. Thanks, Kelvin. Appreciate it for your praise and it is a tougher business, and we have spent some time in repositioning our business. We have two of the famous but legendary, also a legacy brand. Both of them are over 20 years old. And I — I think in our economy, if you can survive and still grow and still be a little bit more profitable after 20 years, it’s almost a miracle to our team. And the — one of the reasons we’re able to turn the business around, I think, is really to understand the consumer demand, the traffic pattern and also the products mix and the team efficiency. I think those are a few factors we’ve been focusing on. And we’re especially focusing on the value creation for the Restaurant business.

So which part of the area that we can create the most value to make both Da Niang Dumplings and also Lu Gang Café relevant to our consumers. So we did quite a bit of reposition. I think our team has made a great effort. And we have also been receiving many inquiries to see whether we want to buy or invest in other restaurant brands. At this moment, I think with our transition is still not completely solidified. So we’ll take some time to figure out what is the best format, what is the best product mix and value propositions for our customers and for our franchisees. And then we can speed up the Restaurant development. The worst case scenario is that we spend a bunch of or spend the franchisees a bunch of CapEx and end up selling RMB1 million, loss RMB500,000 and that’s the area we do not want to get into that.

So this year, we still want to be conservative. We planned for about 60 in the beginning of the year, 60 new stores, new restaurants and we’re still trying to target open that. It’s more in the community, street stores with the right format. And our ADS reduction partially was also due to we shrink, we reduced the footprint, the square footage of those restaurants. And in the long run, we hope that we can grow that into a separate group, separate business, either with a separate M&A with other groups, they can buy us out or we can have our team to lead a separate spend to be a separate independent business such as IPO. And at this moment, we are still not — we still do not think that we are capable, we are able to do any kind of M&A in the Restaurant business to actually to export our business models to other businesses.

It’s still a tough industry, service industry, even though it’s growing, but it’s a tough competition and we have to be really careful in making those kinds of decisions. So those are the areas we welcome any recommendations and we respect the great operators in the industry. So we wouldn’t mind doing multiple different kinds of joint ventures and cooperation with other leading restaurant chains and with the leading restaurant group in order to enhance — further enhance our competitiveness in the restaurant side.

Unidentified Analyst: Okay. Great. Great. Very helpful. Thanks. Thanks for answering my questions.

Operator: Thank you. [Operator Instructions] Our next question today comes from Storm Shu [ph] with ABC Capital. Please go ahead.

Unidentified Analyst: Hello. Thank you for answering my question. And I have one question about the capital market. Can you comment on how to improve liquidity in the capital market? Previously, the company considered several paths. Is there any progress or timeline now? Thank you.

Alex Xu: No, no, no, I understand. Storm that I didn’t — can you rephrase the second? I know the first question is increase the — how do we plan to increase the liquidity.

Unidentified Analyst: Liquidity…

Alex Xu: And the second…

Unidentified Analyst: …in the capital market.

Alex Xu: Okay.

Unidentified Analyst: And the second question is…

Alex Xu: What is the second.

Unidentified Analyst: Yes. Because our company considered several paths to improve the liquidity. Is there any progress on the timeline now?

Alex Xu: Timeline for?

Unidentified Analyst: Improve the liquidity in the capital market.

Alex Xu: I see. Okay.

Unidentified Analyst: Got it. Thank you. Thank you.

Alex Xu: Okay. Got it, Storm. Appreciate it. Yes. Our shares are pretty concentrated by some of the largest institution investors and our corporate company owns about 90%, which is — we are in the process of doing a reverse merger and then to — we are also after that we plan to in the phase stage and we discuss whether we can systematically do an offering to the outside investors to increase the liquidity stage-by-stage and that detail the timeline and depends on the restructuring, which we hope will be completed any time soon in the next quarter or so. So that’s the market liquidity, which is a major concern for ourselves as well. So we’re taking the active — we are taking the concrete plan to do that. Meanwhile, we’ll continue to focus on, again, our core competition, strength building.

And I think as long as we continue to deliver the profitable sustainable growth and continue to grow the product and services in the high quality standardized, then I think that the long-term value is there for all of our shareholders.

Unidentified Analyst: Okay. Got it. Thank you.

Operator: Thank you. And this concludes our question-and-answer session. I’d like to turn the conference back over to Selina Yang for any closing remarks.

Selina Yang: Thank you, Operator. In closing, on behalf of the entire GreenTree management team, we thank you for your interest in GreenTree and your participation in today’s call. If you require any further information or have plans to reach us, please feel free to contact us. Thank you all.

Alex Xu: Thank you.

Operator: Thank you. This concludes today’s conference call. We thank you all for attending today’s presentation. You may now disconnect your lines and have a wonderful day.