Home Inns Q2 2008 Earnings Call Transcript

Aug.11.08 | About: Home Inns (HMIN)

Home Inns & Hotels Management Inc. (NASDAQ:HMIN)

Q2 2008 Earnings Call

August 11, 2008 9:00 pm ET

Executives

Ethan Ruan - Investor Relations Manager

David Sun - Chief Executive Officer, Director

May Wu - Chief Financial Officer

Analysts

Chris Woronka - Deutsche Bank

David Katz - Oppenheimer

Hao Hung - Brean Murray, Carret & Co.

Marisa Ho - Credit Suisse

Brenda Li - Merrill Lynch

Lin Hi - Morgan Stanley

Operator

Hello and thank you for standing by for Home Inns second quarter 2008 earnings conference call. (Operator Instructions) I would now like to turn the meeting over to your host for today’s conference, Ethan Ruan, Home Inns' Investor Relations Manager. Please proceed.

Ethan Ruan

Hello, everyone and welcome to Home Inns' second quarter 2008 earnings conference call. Our second quarter earnings results were released earlier and are available on the company’s website as well as on Newswire services. Today you will hear from David Sun, our Chief Executive Officer, and May Wu, our Chief Financial Officer. After their remarks, David and May will be available to answer your questions.

Before we continue, please note that the discussion today will include forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our results may be materially different from the views expressed today. A number of potential risks and uncertainties are outlined in our public filings with the SEC. Home Inns does not undertake any obligation to update any forward-looking statements except as required under applicable law.

As a reminder, this conference is being recorded. In addition, a webcast of this conference call will be available on Home Inns' investor relations website at English.homeinns.com.

I will now turn the call over to our CEO, David Sun.

David Sun

Hi, everyone. Thank you for joining us for Home Inns' second quarter 2008 earnings conference call. The second quarter was another positive one for Home Inns. Although there were challenges, both anticipated and unexpected, we worked to overcome them to achieve strong revenue growth, improve bottom line results, and further expand our hotel chain.

During the second quarter, we almost doubled our revenues year-on-year due in large part of our continued expansion throughout China. We opened 67 new hotels in the quarter, meaning that in the first half of the year, we have reached half of the 200 new hotels target for 2008, putting us well ahead of last year’s progress at this point.

Our mature hotels, or those in operation for longer than 18 months, maintained their strong stable performance with REVPAR of RMB193 compared to RMB192 a year ago. Our Top Star hotels, despite 20% of the properties being directly impacted by the earthquake, reached REVPAR of RMB95, up [significantly] from Q1, while achieving a positive EBITDA for the quarter.

During the first half of the year, we opened 100 hotels or 50% of our target for the year. At the midpoint of 2007, only 28% of the year’s target for the new hotels had been achieved, as this is the period during which the pace of construction is typically slow due to the Chinese New Year and winter weather, although the rapid growth of our hotel chain during the earlier part of the year resulted in the higher expense as well as a greater percentage of new hotels. This was an important step to ensure we are capturing key locations, penetrating important markets ahead of our competition, and to bring more hotels online during the first half of the year, we believe that opening a great number of hotels in the first half will be beneficial as these hotels will be operating during the traditional strong second half of the year, unless we have a short break-even period, then those hotels will open later in the year.

To ensure that we continue to be the best positioned economy hotel chain in China, we believe that expanding at a faster rate than our competitors is an important goal. However, I would like to note that while our expansion plans are robust, they are sensible and we remain [inaudible] at the overall macro environment that we face and ensure that we do not overly erode margins and profitability. This balance is actually becoming easier to achieve as we have recently been experiencing less pressure from competitors who are slowing down their own expansion plans.

Looking forward to the rest of 2008, with our target of 200 new hotels, we believe that even as this strategy has temporarily put pressure on margins, it will alleviate operational and financial costs from hotel conversion and opening for the latter part of the year. We aim to achieve a prudent and potentially self-financed plan so as not to be impacted by the cost of [inaudible] and marketing conditions, and we will benefit in future quarters as the hotels under construction are temporarily offset by the large number of hotels in operation.

While there were many positive aspects from the quarter, we did experience pressure on REVPAR and occupancy rate. Overall, REVPAR in the second quarter was RMB153 or RMB160 excluding our Top Star hotels, compared to RMB174 a year ago. This decline can be attributed to the large mix of new hotels due to our accelerate hotel openings in the first half, the increasing mix in low tier cities as expected, and the impact of the earthquake, which was obviously not anticipated. This impact was especially meaningful to our newer hotels, as these hotels do not yet have a stable customer base and we currently have a large mix of such hotels.

While we believe these metrics will show some recovery from the earthquake related levels as normal travel resumes, the trend overall, we continue as we gain exposure in key markets.

Overall, occupancy was 88.2% or 90% excluding Top Star, which while lower than the 95% a year ago. Given the larger mix of new hotels and the earthquake impact, we believe this illustrates some strong business fundamentals and our ability to execute despite facing headwinds.

20% of our Top Star hotels were located within the more severely impacted earthquake zone, which experienced a significant decrease in travel activities. While this was a setback for our effort to develop the Top Star hotels, the overall operating performance of those hotels will continue to improve as it becomes more integrated into Home Inns. Top Star as a whole reached 95 REVPAR in the second quarter, up substantially from Q1, to reach positive EBITDA. In addition, we have also seen a further rebound in REVPAR in July.

As you know, the Olympics began on August 8th here in China and based on the most recent information, we continue to believe the Olympic Games will be a neutral event with regard to our operational and financial performance. The benefits of the number of people attending the games is expected to be largely offset by reduced business activity during the Olympic period.

With regard to the overall increase in travel costs that has been experienced globally, this should have a limited impact on our performance as the majority of our customers are domestic Chinese and the majority travel by train.

Home Inns remains a leader in the economy hotel space and we are taking steps to ensure that remains the case. The overall economy hotel market is still strong, as evidenced by our same hotel REVPAR comparison, and we are seeing evidence that large, more established hotel chains are gaining overall market share in China. This aspect, as well as our nationwide coverage and strong brand recognition, mean that Home Inns is well-positioned to benefit from this trend.

Now I will turn the call over to May Wu, our CFO, to walk you through the financials. May.

May Wu

Thank you, David and hello, everyone. As per usual, I will be taking you through some of the detailed financials and discussing some of the drivers behind them and how they are going to impact Home Inns. And as usual, please note that all the figures I mention will be in RMB.

For the second quarter of 2008, Home Inns had total revenue of RMB448.1 million, which represents a 93% increase year over year and a 25.5% increase sequentially. Excluding Top Star, total revenues were RMB409.7 million, representing a 76.4% increase year over year and a 24.6% increase sequentially.

Revenues from leased-and-operated hotels for the second quarter were RMB424.6 million, representing a 91.4% increase from a year ago while franchise and managed hotels had revenues of RMB23.5 million, representing an impressive 125.5% increase.

Revenue growth is largely due to our expansion plan, which saw 67 net new hotels open during the quarter, for a total of 100 during the first half of the year. We opened 51 new leased and operated hotels during the second quarter to reach a total of 271 leased and operated hotels, including the 26 Top Star hotels. In contrast, during the same period a year ago Home Inns opened 20 new leased and operated hotels.

Sixteen net new franchised and managed hotels were opened during the second quarter, reaching a total of 95 such hotels compared to only 6 net new franchised-and-managed hotels during the same period a year ago. Currently, Home Inns has 137 hotels under contract and development.

Our hotels performed strongly during the quarter, although below previous levels due to the factors David had mentioned. Overall, the occupancy rate for the entire Home Inns hotel chain was 88.2% in the second quarter of 2008. Excluding the impact of Top Star, which was more impacted than the overall chain by the earthquake, the occupancy rate was 90.8% for the quarter, compared with 95.2% in the same period in 2007 and 86% in the previous quarter. As we discussed earlier, this decline from a year ago was by and large due to the impact of the earthquake, changes made to China's national holiday schedule in May, as well as the higher proportion of new hotels in our overall hotel mix. The sequential increase in occupancy rate was a result of the second quarter being typically a seasonally stronger quarter.

These factors impact ADR in a singular manner, with ADR being RMB173 and without Top Star, RMB176 for the quarter, compared with RMB183 in the same period in 2007 and RMB174 in the previous quarter. In addition, the ADR trend also reflects Home Inns' increased presence in lower-tier cities where room rates are typically lower.

This resulted in REVPAR for the quarter of RMB153, and without Top Star, this jumps back up to RMB160, compared with RMB174 in the same period in 2007 and RMB150 in the previous quarter.

Despite the negative impact of the earthquake and changes in the national holiday schedule, we were able to achieve the level of revenue which was within our previously expected range due to accelerated growth. Along with this growth also came increased costs, which in our opinion is a viable use of capital to ensure our position and future profitability.

Total operating costs and expenses for the quarter were RMB390.5 million. Excluding those from Top Star and share-based compensation expense, operating costs and expenses for the quarter were RMB346.4 million, or 84.6% of total revenues. This compared with operating expenses excluding share-based compensation of RMB176.7 million during the same period a year ago, or 76.1% of revenue.

Operating costs and expenses include the costs incurred by our leased and operated hotels, our sales and marketing, and general and administrative costs. The high expense level this quarter was largely caused by the substantial costs associated with our leased and operated hotels.

Total leased and operated hotel costs for the second quarter were RMB348.7 million, or 82.1 % of the leased and operated hotel revenues, and excluding Top Star, total leased and operated hotel costs were RMB311.2 million, representing 80.6% of the leased and operated hotel revenues. This compared with the 69.8% of leased and operated hotel revenues for the same quarter in 2007. This increase can be attributed to the large number of leased and operated hotels under construction, a higher mix of new hotels, and an increased hotel mix in lower tiered cities, as well as the negative impact of the earthquake.

Sales and marketing expenses for the second quarter were RMB5.5 million, or 1.2% of total revenue, while G&A expenses were RMB36.3 million. G&A expenses excluding share-based compensation were RMB30.9 million, or 6.9% of total revenue. These expenses as a percentage of revenue were largely similar to the level from a year ago.

The above leads to Home Inns' reporting an income from operations of RMB31.3 million, and without Top Star, income from operations was RMB33.6 million, and if we also exclude share-based compensation expense, income from operations was RMB39 million, compared to RMB10.5 million in the previous quarter.

This quarter’s income from operations was 9.5% of total revenue compared to 18% in the same period of 2007 and 3.2% in the previous quarter.

EBITDA was RMB63 million and excluding foreign exchange losses and share-based

compensation expenses and Top Star, our adjusted EBITDA was RMB78.7 million, up 27.8% year over year and 62.1% from the previous quarter, because the unfavorable D&A, depreciation and amortization cost ratio that impacted income from operations did not impact EBITDA. Also, Top Star achieved a positive EBITDA during the quarter, which is a satisfying achievement compared to last quarter.

Adjusted net income for the second quarter was RMB26.6 million, a decrease of 33% year over year but significantly up from RMB3.6 million we reported last quarter. U.S. GAAP net profit for the quarter was RMB7.5 million.

For the second quarter of 2008, excluding for-ex losses and share-based compensation expenses, adjusted basic and diluted earnings per share were RMB0.38 and RMB0.36 respectively. Adjusted basic and diluted earnings per ADS were RMB0.75 and RMB0.72 respectively.

Looking forward, given the factors we are facing and the growth that we have experienced, we expect total revenue in the third quarter of 2008 to be in the range of RMB500 million to RMB520 million. This forecast reflects Home Inns’ current and preliminary view, which is subject to change.

I would like to close by noting that we believe that many of the factors that have impacted profitability are now largely behind us and we are well-positioned to cost effectively manage our expansion in order to improve margins and achieve attractive top line revenue growth.

David Sun

Thank you, May. As in any business, there are challenges we must work and overcome, many of which we are aware of and working to address through the measures, such as cost control. However, I believe that we may have now reached an inflection point in our business model as our mature hotels continue to provide stable revenues and as our chain continues to expand. The cost of adding new hotels as a percentage of overall revenue is declining. The long-term strategy that we have been implementing over the past quarters is working and the dedicated commitment of our entire team has led to our continued success. I am looking forward to updating you on our progress in the future.

Now, we are happy to answer any of your questions.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from the line of Chris Woronka with Deutsche Bank. Please proceed.

Chris Woronka - Deutsche Bank

A couple of questions; one, we appreciate the breakout of the hotels that have been open for 18 months or more with the REVPAR. Can you just directionally maybe tell us how the margins on those compare to the margins for hotels open less than 18 months?

May Wu

Well, the hotels that have been open for over 18 months, typically our hotels reach stabilization after six months. We use the 18 months hotels for year-over-year comparisons because we are comparing their mature performance with their mature performance a year ago. So to answer your question, how do our ramped up hotels perform, we would like to say that for all our hotels that have been open for over six months, in the second quarter overall as a portfolio that margin is down in the 2% to 3% range year over year, exactly as we had anticipated due to the migration to the lower tier cities.

On a same hotel basis, for the hotels that’s in the 18-plus month portfolio, their margin has been very stable or increasing slightly.

Chris Woronka - Deutsche Bank

Okay, great and could you tell us what the Top Star REVPAR would have been without, if you kind of took out the 20% of the hotels that were impacted by earthquakes, the earthquake?

May Wu

Let me get back to you on the exact figures; however, think about it this way -- overall, Top Star reached a REVPAR of 95 during the second quarter and the 20% of the property that’s in the earthquake region, their REVPAR was only in the 60, 70 range, starting from mid-May, so for about half of the second quarter, but we can get back to you on the exact figures later on.

Chris Woronka - Deutsche Bank

Okay, very good and then one final one -- can you maybe tell us a little bit about the mix of hotels you opened in the second quarter, kind of tier one versus tier two or tier three? And then how does that look for the hotels you have in the pipeline? And maybe even within that, kind of what is the mix of leased and operated versus franchise look like? Because it looks like you were skewed a little bit more towards the leased side in the second quarter.

May Wu

Sure. Of the hotels that we have in the pipeline in terms of tiers of city breakdown, approximately 10% of the new properties will be in first tier cities, about 70% will be second tier cities, and about 20% will be in even lower tier cities or test markets.

With regard to the mix of leased and operated versus franchised hotels, yes, the first half opening was more geared towards leased and operated hotels and this is by and large a function of our entering a lot of new markets starting from late last year. However, if you look at our pipeline, we have 137 hotels under development and almost 40% of that is franchise and managed hotels, which again is a natural function of the fact that now that we are in these markets and we have hotels opened in the first half and attracted franchisees as a result.

David Sun

Adding on to that, that’s really -- it’s our new strategy, is try to improve the local franchise mix in the future, so that you can see in the second half of 2008, we are starting to increase the franchise mix in the pipeline.

Chris Woronka - Deutsche Bank

Okay, very good. Thank you.

Operator

Your next question comes from the line of David Katz with Oppenheimer. Please proceed.

David Katz - Oppenheimer

Good evening, or good morning. So I just want to make sure I’m clear -- I know we’ve sliced this a couple of ways and I apologize if you’ve already sort of gone through this but if we exclude Top Star and we -- margins were still -- I think they were still down, correct? And if we remove -- how do we get to a clean number and figure out where the profitability is excluding some of the noise that was in the quarter, particularly Top Star?

May Wu

Sure. At this point, what we have disclosed is the cost associated with the hotels that’s under construction. What we do is to recognize expenses, especially rental as well as utilities as personnel costs that’s incurred during the construction period as operating expenses. And this cost was $26.7 million in the second quarter of 2008 versus $7.8 million a year ago, or this quarter it was over 6% of leased and operated hotel revenue versus a little over 3% a year ago. So there we lost about 3% margin. And the -- if we exclude the expense associated with hotels under construction for the entire leased and operated hotel segment, this quarter margin was still down quite a bit compared to last year. By looking at my number, this year the margin on a year-over-year basis would be down by about 6%. Now, this 6%, as I mentioned to Chris Woronka earlier, the hotels that have been open for over six months had fairly -- had margins decrease of 2% to 3%, exactly as we had anticipated due to the migration to lower tier cities. And the remainder 3% to 4% margin erosion was caused by the large number of hotels that’s opened for fewer than six months in the portfolio.

Last year at the same period, the hotels that opened in the previous three quarters represented about 30% of our leased and operated hotel portfolio. And this year, because we accelerated hotel openings in the first half, that figure was about 40%. And also, the fact that during the earthquake period, in addition to the hotels that were impacted directly in the earthquake region, we did see a slight slow down in national travel activity and that impact was not felt substantially in our mature hotels but it was more felt at our new hotels, which do not yet have a stable customer base.

So overall, the hotels that are younger than six months achieved a lower margin this quarter compared to a year ago, which contributed to the overall margin deterioration. So these are the factors that impacted second quarter. We believe going forward as our growth pattern becomes more smooth throughout the year and as the percentage of new hotels younger than six months becomes a stable proportion of our -- or a lower proportion of our hotel portfolio, the impact will also be stable or even reduced going forward.

David Katz - Oppenheimer

Okay. That’s lots of good information. Thanks.

Operator

Your next question comes from the line of [Hao Hung] with Brean Murray. Please proceed.

Hao Hung - Brean Murray, Carret & Co.

Thank you. Just two questions; firstly, I’m just wondering, because now you are expanding really fast, probably at the fastest pace in your history, I’m just wondering how difficult it is to find 137 hotels and open all of them in the next couple of months. That’s like opening a hotel every other day so I’m just wondering what kind of challenges you will be facing executing your expansion on such a grand scale.

David Sun

Okay, first of all, I’d say in the first half, we have already opened 100 hotels. That means we do have a capacity to open the hotels -- open 100 hotels for the first half of the year, and also that in the pipeline, we do have 137 hotels in the pipeline. That means not all these hotels will be open in the second half. The majority of them will be open in the second half but not all of them will be open. And also, if you look at the mix of leased and operated and the franchised and managed, that’s about 40% are the franchised and managed hotels, so we are pretty confident to say that we do have the capacity and also we do have the ability to maintain our expansion speed.

Hao Hung - Brean Murray, Carret & Co.

That’s great. Also then, what are some of the responses you get from your competitors?

David Sun

I think the competitive environment in economy hotels in China because of [inaudible] the captive market, because of the market conditions get a little bit changed, so starting from the later of last year, the competition is getting a little bit slowed down. Most of our competitors have slowed down their expansion plans so that we really benefit from the property selection and also the construction paths. So in this moment, we say that’s really the whole market, the whole industry is getting slowed down a little bit.

Hao Hung - Brean Murray, Carret & Co.

Right. Because also recently the property price in China appreciation is starting to slow and in some cities actually declining, I’m just wondering whether you would get some benefit in terms of your rental payment.

David Sun

In this movement because most of our hotels in the pipeline, we signed the contract before, about two or three months ago, so we start to see the competition of the property selection or choice start to getting to slow down, but it’s not a direct benefit on the rental side.

Hao Hung - Brean Murray, Carret & Co.

Okay, just one last one on the tax rate, I noticed that the tax rate has been substantially better than the last two quarters. Just going forward in the next two quarters, will we see the tax rate coming back to the 20% rate?

May Wu

We believe the tax rate will stay in the low to mid 20% range and the reason it substantially improved this quarter is some of the Top Star hotels started to be profitable and also there is more of a prospect of those hotels being profitable, so we are able to recognize some deferred tax assets going forward.

So overall, we still continue to expect, excluding share-based compensation and the for-ex loss, our tax rate should be in the low to mid 20% range for the full year.

Hao Hung - Brean Murray, Carret & Co.

That’s great. Thanks, May. Thanks, David.

Operator

Your next question comes from the line of Marisa Ho with Credit Suisse. Please proceed.

Marisa Ho - Credit Suisse

Good morning, David. Good morning, May. Could you remind us of your expectations for pre-operating expenses going into the third quarter and the fourth quarter of this year? I mean, should we expect that number to be fairly consistent with the roughly RMB25 million to RMB26 million per quarter as seen in the first half? And perhaps if you can also talk about how the second half pre-operating expenses should compare to the same number a year ago as well?

May Wu

Sure. Yes, we do expect costs for hotels under construction to be in the RMB20 million to RMB25 million per quarter range for each of the third and fourth quarter. As we opened 100 hotels in the first half and we expect to open another 100 in the second half, although with a slightly higher franchise mix, so the pre-opening costs will be similar or slightly lower for each of the third and fourth quarter going forward.

Last year in the third quarter, pre-opening costs were about $10 million in the third quarter and about $18 million in the fourth quarter, so considering that our revenues have almost doubled in the second quarter, going forward the third quarter comparison will be somewhat neutral and fourth quarter comparisons on the pre-opening side will be more favorable.

Marisa Ho - Credit Suisse

Great, thanks.

Operator

Your next question comes from the line of Brenda Li with Merrill Lynch. Please proceed.

Brenda Li - Merrill Lynch

Hi May, hi, David. I have just a few very simple questions. First is on the expansion pace; does your previous guidance of 1,000 hotels by the end of 2011 still stand or do you have intention to achieve slow down of new hotels opening pace from 2009 onwards?

And just May mentioned that the margin has achieved pretty stable for existing hotels. We know that the cost elements of hotel operations has been increasing in China so how do you achieve that? Could you please share the dynamics?

And in terms of investment cost per hotel, are you saying that your costs are essentially much lower compared to your competitors? Could you tell us how you achieve that? Thank you.

David Sun

First of all, regarding the 1,000 hotels target objective, we still maintain the 1,000 hotels, open 1,000 hotels before 2011, end of 2011, because we reviewed our expansion plan and we believe if we add 200 new hotels in 2008, that’s put our whole chain wise -- opened hotels would reach about 460 to 470, so if we still maintain the pace of 200 hotels new opening in the rest of three years, that definitely we can reach our objective in 1,000 hotels by the end of 2011.

May Wu

And let me answer the question with regard to investment cost and inflation -- first on the investment cost, we have been able to maintain the RMB50,000 to RMB55,000 per room investment all along since our -- since a few years ago and we have only seen a very modest increase in this cost in the low-single-digit range on an annualized basis. This is a result of our more efficiently managing the construction process as well as utilizing our purchasing power as economy of scale and we are very pleased with that and we continue to vigorously execute on that front.

So with regard to the margin of our existing hotels, as you can see in our same hotel comparison, the hotel that is open for 18 months or more, in the first quarter the price increase was about 4% year over year and in the second quarter, the price was -- the utilized ADR was about 2% year over year, somewhat impacted by the earthquake. But overall for the mature hotels, we aim to increase price in the low- to mid-single-digit range on a year-over-year basis.

And when you look at our cost structure at those hotels, rent is the largest component but that’s fixed and stable. The cost items we are experiencing the worst inflation is utility and personnel, which combined represent in the low to mid 20% of our -- as the percentage of revenue. Those are going up by the 10% to 15% range, so that will cost us low- to mid-single-digit in terms of margin, which is pretty much offset by the price increase.

So this is how -- while the other cost components are pretty stable, so that’s how we are able to maintain or even increase slightly our margin at our mature hotels and unfortunately, we are in a -- we are still in an inflationary environment. Should the inflation moderate, we think we also have some margin improvement opportunities at those mature hotels.

Operator

Your next question comes from the line of [Lin Hi] with Morgan Stanley. Please proceed.

Lin Hi - Morgan Stanley

Hi, May, hi, David. My question is regarding the trend of operating margins. We all understand that the rapid expansion and your lower tier city strategy and also some natural disasters in the first half of this year had some negative impact on the operating margins but could you give us some guidance -- when do you expect that the operating margins will show some sign of stabilization?

May Wu

We believe that by the fourth quarter of this year, we will experience some favorable year-over-year comparison. Again, the margins, we’ve always said that all else equal, we expect overall margin to be down in the 2% to 3% range because of the migration into the lower tier cities, where the room rates are lower but some of the cost components are not. So this 2% to 3% margin deterioration was due to the mix change. But on top of that, in the first half we experienced unfavorable comparisons due to the accelerated hotel opening in the first half, as well as the resulting launch mix of new hotels in the portfolio.

So this opening schedule will reverse compared to a year ago. The comparison will reverse versus a year ago, which will lead to a possibly neutral comparison in the third quarter and a favorable comparison in the fourth quarter, so that’s on that front.

And then, coming back to the margins in lower tier cities, how are we going to offset that, this year we are still expanding units by 70% to 80%, but starting next year, if we still add about 200 hotels and let’s say with about 60% of that being leased and operated, the percentage of new hotels in the portfolio will start to moderate and we would have reached a stage where we can potentially utilize leverage on our SG&A. So starting from next year, we do expect margin stabilization to the very least.

Lin Hi - Morgan Stanley

Okay, great. Thank you.

Operator

With no further questions in the queue, ladies and gentlemen, this does conclude your presentation of today’s conference. You may now disconnect and have a good day.

David Sun

Thank you.

May Wu

Thank you.

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