CITIC Limited (267) Earnings Call Transcript & Summary

Dear investors and analysts, good afternoon. Welcome to CITIC Limited's 2020 Full Year results Release and Investor Briefing. I am [indiscernible] with the Board Office of CITIC Limited. Due to the pandemic, today's briefing will be held by means of live webcast, telephone conference and on-site conference. The briefing will be conducted in Mandarin Chinese with simultaneous English translation. We have a Q&A session for today's results release and investors briefing. If you wish to communicate with the management of the company for investors, investment institution analysts online, please dial in the conference in advance. [Operator Instructions] Please note that the contents and your questions may be recorded. Now let's -- please allow me to introduce you the management attending today's briefing. They are: Mr. Zhu Hexin, Chairman of CITIC Limited; Mr. Xi Guohua, Vice Chairman and General Manager; Ms. Li Qingping, Executive Director and Vice General Manager; Mr. Liu Zhengjun, Vice General Manager; Mr. Wang Jiong, Vice General Manager; Mr. [indiscernible], Vice General Manager; and Mr. Cao Guoqiang, Chief Financial Officer. We also have Mr. [ Zhen Chang ], Chairman of CITIC Pacific, who attends the meeting by telephone. Now let's start the investors briefing and the 2020 full year results announcement. First of all, as spoken, Chairman, Zhu Hexin, to address us.

Thank you, investors and analysts, for joining us for CITIC Limited's 2020 Full Year Results briefing. As you all know, 2020 was an extremely unusual year and full of challenges. The COVID-19 pandemic dealt heavy blow to countries around the world, and the series of [indiscernible] by the pandemic exerted a profound impact on the world economy. However, China achieved effective results in the prevention and control of COVID, and our society and the day-to-day life has resumed quite quickly, and the economic order has been quickly stabilized with various industries resuming work in production one after another. CITIC, as a member of the Chinese economy, also achieved the rapid stabilization of its operations after pandemic was brought under control, and the 2 satisfactory results in this morning. So we have made a report about the operational performance of the whole company. CITIC Limited's net profit for the year 2020 increased by 5% year-on-year to HKD 56.6 billion comparing to the year of 2019. In the second half of the year, I see national economy stabilized and recovered. CITIC Limited's net profit grew by 45% year-on-year. As Chinese had an important time point of ushering into 14th Five-Year Plan period and in line with China's 13th Five-Year Plan and the new development stage, we're actively deploying CITIC's strategic planning, and we will deepen in the 5 major segments of integration: comprehensive financial services, advanced intelligent manufacturing, advanced materials, new consumption and a new type urbanization. And we build 5 major platforms: financial holding, industrial group, capital investments, capital operation and strategic investments with integration synergy and expansion as the key means for future development. We're committed to building our outstanding enterprise group and forging a century old national brand. The system major plan developed by CITIC to find the right development position focus on top level design, strengthen strategic planning and integrate into the new development pattern. This is a major plan about by CITIC to find the right development position. And we believe that if you welcome shareholders and investors to learn about CITIC's latest strategic planning, I believe you will have more confidence in us. I will stop here, and I would like to give the floor to Mr. Cao Guoqiang, Chief Financial Officer, to explain in detail the operation results of each segment and business of our company in 2020. After that, we will take your questions. Thank you.

Dear investors and analysts, good afternoon. Next, I will be explaining you the 2020 full year results of CITIC Limited for 2020. In 2020, CITIC Limited recorded revenue of HKD 452.9 billion. And expanding -- so excluding the delisting of the Dicastal, and we have increased by 4.5%. After the pandemic was brought under control, we have resumed our work production. So when we have achieved the profit in the full year, so we have realized a positive growth of 5.1%, realizing a profit attributable to ordinary shareholders of 56.6%. And we have achieved the gross for the latter half of the year of 45%. The financial sectors contributed 41% to revenue and contributed 68% to the profit. And this is the next slide about the segment information. I'm not going to dive into details. So you can see on this slide about the key indicators. In addition to the 2 indicators I have shown you, we will see that the earnings per share is HKD 1.95, and the dividend per share HKD 0.488, increased by 4.9%. And the earnings per share increased by 5.1%, and the CapEx is HKD 29 billion. It decreased by 8.4%. Total assets, HKD 9.74 trillion and increased by 18%. Total liabilities, HKD 8.7 trillion, increased by 80%. In terms of consolidated debt of the group, we can see that as at the end of last year, the total liabilities is HKD 1.131 trillion, increased by HKD 163 billion, increased by 17% because of the increase of the deposits for the CITIC Bank. And the -- we will see that it has increased by 14.1 billion. And because of Dicastal and the environment, business has increased. So their loans has increased from the previous year. In terms of the CapEx, last year, the total CapEx is HKD 29.6 billion, focusing on the advanced materials, new type, urbanization and comprehensive financial services. For the advanced materials, this is mainly the special steels, improvement of the process and expansion of the production volume. And for the new type organization, it's mainly the environment business, health care and old-age care services. And for the comprehensive financial services, mainly the information technology expenditure into the CITIC Bank. So next, I'm going to review you the businesses. So on this slide, you can see is -- that we have the new classification of our segments and the allocation of the different subsidiaries in the 5 business segments. You can have a look. I'm not going to dive into details. And I have given you a brief introduction of the segments for the comprehensive financial services last year. It recorded a revenue of HKD 229 billion and a profit of HKD 43.5 billion, increasing by 3.1% and 1.6%. Excluding the conversion of the exchange rate, it has increased by 4.4%, 2.9%, respectively. Banking and Trust insurance businesses recorded historical highs in profit. Securities businesses grew steadily and maintained market-leading position. And let's have a look at our subsidiaries. For CITIC Bank, it realized a revenue of RMB 195.4 billion, increased by [ 12% ], and it grew by 2% -- the profit grew by 2% to RMB 49 billion. And the -- so the noninterest income grew by 9.6%, and its contribution to the revenue increased to 23%. It's mainly driven by the increased fee income generated by the wealth management business and income from the fund cost of the businesses. We're continuing to increase the efforts to resolve nonperforming loans. And last year, we disposed 92.7 billion of nonperforming loans grew by 13% year-on-year. The recovery of return of loans in previous years doubled year-on-year to RMB 10 billion. The NPL ratio decreased to 1.64%. And the bank issued RMB 40 billion in the Tier 2 capital bonds as supplementary capital in the second half of 2020, and the capital adequacy ratio increased by 0.57 percentage points to 13% at the end of 2020. For CITIC Trust, it realized a revenue of 20 -- grew by 22% to 8.7 billion. Profit rose by 3.3% to 3.9 billion. The fee income increased 24%, maintaining a top position in the industry, and we continue to improve the active business management. So we see now the active asset management capability has increased by 8 percentage points to 54%. And the AUM of the wealth management business and the standardized trust grew by 44% and 5%, respectively, for CITIC Securities. It registered a revenue of 71.9 billion, grew by 26%, and the profit grew by 22% to 14.9% -- to RMB 14.9 billion. Investment banking delivered outstanding performance, and we see the -- well, the consulting services. This market showed the Asia lead underwriting bond underwriting and the financial advisory lead to the industry at 19%, 13% and 43%, respectively. Other businesses also maintained leading position. For CITIC-Prudential Life, premium income increased by 9.4% to 23.4 billion. Our profit grew by 50% to RMB 2.5 billion. Both growth rates were above industry average. Well, CITIC-Prudential Life, it adhere to a diversified and differentiated strategy, continue to deliver synergies. We see that the premium income from bank service surged to 20 -- surged to 31%, representing 47% of the total premium income. Total investment of insurance funds increased by 40% to 127 billion at the end of 2020. And the rate of the return on investment increased by 1.3 percentage points. And this is the first time that we have a total investment of insurance funds over RMB 100 billion. And for the -- we see that advanced intelligence and manufacturing, the revenue was HKD 13 billion, and the segment profit decreased primarily due to the reduced shareholding in CITIC Dicastal as well as the loss recorded the company's KSM Castings business in Germany. For the CITIC Dicastal, it realized revenue of RMB 26.1 billion. And we see the growth of the sales of aluminum wheels increased by 1.9%, retaining a ranking -- top ranking in the world. And profit fell by 26%, primarily affected by the production suspension. And we see that the sales volume of aluminum wheels, retaining top ranking the world's leading aluminum wheels, manufacturing for 12 years. And the CITIC Heavy Industries, and we just now said that because of the loss of the subsidiary in Germany, which has affected and contributed to the negative increase of its profits. The phase 2 of the Morocco project commenced production at the end of last year and have doubled the production capacity from 3 million to 6 million units. CITIC Heavy Industry increased by 21%, and its profit grew by 67%. The Heavy Industries has new orders and sufficient orders as well as we see the growth of the offshore wind farms. The new orders increased by 48% year-on-year to a record high, including the secured orders from the heavy machinery and fast-growing orders from the offshore. And innovation remains a priority and represent a 6.7% of annual revenue with breakthroughs in premier forging products and specialized robotics for advanced materials. So the total revenue was HKD 195 billion, increased by 9.7%. And the profits attributable to ordinary shareholders increased by 28%. CITIC Pacific Special Steel has achieved a RMB 74.7 billion with more than RMB 6 billion for the record high of revenue, and that's been up by 2.9% and 12%, while the total sales volume was nearly 14 million tonnes by giving full play to the scale effect and reduce the cost and the productivity. Now the same arm, due to a strong iron price, continued improvements in operating efficiency and ongoing cost control effects. Sino Iron recorded a significant increase in both revenue of HKD 19 billion and net profit of HKD 3.4 billion. It has been upgraded by 30 and 56 folds. We have maintained the top 1 of the iron imports. Well, the CITIC Metal group has achieved HKD 88.5 billion, plus HKD 1.7 billion, up by 21% and 80%, respectively. Both the revenue and profit of its trading business increased significantly due to higher prices and trading volumes of iron ore and continued to account for more than 80% market share. And profit account for 34% increase, while we maintain 80% of the market share. Well, because of many Chinese investment, we have made capital for the profits reduction in the overseas markets. CITIC Resources, due to our lower commodity prices, particularly crude oil, realized revenue of HKD 2.85 billion, down 17% year-on-year. Well, for the business revenue, has seen positive growth. It's [ 550 million ] for the -- we have been profited of 898 million. By consolidation, it has been decreased by 4.4% and 21% for the segment revenue and the profit decrease because of the deconsolidation of McDonald's in China at the beginning of the year. While for CITIC Press, we have achieved RMB 1.9 billion and is a positive increase and profit to RMB 182 million, up 12% by rapid deployment and the online transferring. We have make up for the losses caused by the pandemic to off-line. In the depression of the off-line development, we have made increase. Well, for that, Hong Kong, we have achieved HKD 136 million profit. Well, for the CITIC, we have the auto industry. We have achieved an increase. Well, by the privatization, we have become total subsidiary, and the total profit has increased by 49%. CITIC Agriculture, it has delivered the positive growth with a total net profit of RMB 52 million. For the new organization, it is RMB 44 billion. It has been increased by 8.6%, and 7% is due to the real estate development and operation as well as the construction, engineering booming. For the update, development operation and management, we have obtained HKD 10.3 billion and profit, HKD 6.6 billion, up by 73% and 70%, respectively. For construction and engineering, we have achieved HKD 25.8 billion and profit of HKD 1.9 billion. We have made further efforts to seize the opportunity after the recovery of the -- from pandemic. And the revenue and profit in the second half of 2020 increased by 17% and 7.4%. The value of annual contracts reached RMB 41.4 billion, an increase of 24% against 2019. For urban operations, we have achieved HKD 9.3 billion and profit of HKD 820 million, down by 19% and 58%, respectively, primarily due to a weaker performance of health care business. That's all for my presentation and briefing. Thank you.

Thank you, Mr. Cao, for briefing. Now let's come to the Q&A session.

First, let's welcome the representatives institutions from online. [Operator Instructions] Now let's welcome the first question. Now let's welcome CICC, [indiscernible].

I'm analyst from CITIC Limited. I have 2 questions. The first question is that could you elaborate on the strategic plan for CITIC group, like the 5 models, considerations and how we can achieve single developments when we have a new strategic initiatives. My second question is that, well, with the further recovery of the economy and the recovery of the overseas demands in 2021, for now, financial performance. And what is outlook for nonfinancial performance? Are there any risk? Are there any risk? That's all my 2 questions.

Thank you for your questions. I will roughly share with you our work. Last year, we have a new work team in 2020. Mr. Guohua and I came to join this team and with new initiatives. So as to plan for the 14th Five-Year Plan, to efficiently -- effectively connect with a previous initiative, we want to have further and perfect the completion. For this full year results briefing, signifies to the successful completion, we are going to kick off the 14th Five-Year Plan. We will take into consideration the national Five-Year Plan. And for CITIC Group, we have made our plan. It is mainly reflected the [ 553 ] strategy and it's to achieve the 100 million strategy -- billion initiative -- 100 billion initiative. And we are under implementation. Now Mr. Guohua is going to answer this question. Actually, I think you haven't asked 2 questions. It is quite -- first is about strategy on nonfinancial. Now let's welcome, Mr. Guohua to answer this question.

Thank you. Thank you for your questions. During the 14th Five-Year Plan, CITIC Group and CITIC Limited, we will follow the instructions of deepening national enterprises reform and follow the regional development, where we'll implement [ 553 ] strategy. Our target is to -- by the end of 14th Five-Year Plan, we will achieve million and thousands of millions targets. We will build up several platforms to highlight the 3 pillars to implement flow in the 5 models: comprehensive financial service, advanced manufacturing, advanced materials, new consumption and the new organization. These 5 models for financial model, we will become the leader of the comprehensive financial service, providing the utmost high-quality solutions to the real economy. And advanced manufacturing, we will take -- overtake at the corners. We are going to create a high -- a batch of the higher cutting -- highly cutting-edge technology companies. And for high manufacturing, we will become the guarantor of the new supply chain. The new materials, we are going to make up for the bank in the industry of the China. And the advanced materials, we are going to make shortcomings of that. And for more new consumption, we will become the promoter of new consumption, and we will play the demonstration role in the piloting area. And the new organization when we will become the cultivator of the new urban areas and when we all become integrated, the operation development in terms of the smart development solutions. To cultivate the 5 platforms refers to that we are going to build up the monitoring system platform and corporate and capital investment, operation, capital and strategic investment platforms, among which the monitoring system platforms -- monitoring platforms should -- we'll assess the opportunity of the monitoring to get supplied to the full license and make further efforts to highlight to make our industry effect prosper. And we will deepen the industry effect to become the leader of the newly emerging industries. And for capital investments, we are going to serve the corporate strategy, optimize the capital arrangements and enhance our industry competitiveness, focusing on the core competitiveness. We will promote the [ aggravation ] of the industry and upgrading of the industry. And for capital operation, we are going to upgrade the industry, operation contingency and ROI. By using the financial shareholdings to -- we are going to achieve the reasonable liquidity and the value of guarantee. So preservation. And we are going to get supply to the synergy effects of the -- within CITIC Group and also create the platform from newly emerging industries to promote the respective developments. And to get supply to 3 pillars means, firstly, we are going to consolidate, synergize and expand those 3 areas of pillars. And to the end of 14th Five-Year Plan, we are going to achieve them. The total value will be more than 10 trillion and 101 trillion and -- 100 billion for the net process. Well, for the non-financial panel, the business performance. By 2021, the non-financial panel, the profits revenue will see considerable increase, respectively. Thank you.

As for the synergy, steady group has been undergoing all the time, and we attach high importance to that since last year because of -- we have given the utmost premium on that. We have done the following work. First is top design because the financial and the industrial has been diversified in our industry. Without the top design, we cannot achieve good synergy. Therefore, we reinforce the top design and coordination at top level. We have established the Coordination Committee, led by Mr. Zhu. We have set up the target for this synergy targets in the entire year and what the functional departments should do and the 8, 7 subsidiaries will be the member of the committee for the top design. We have formulated the articles. We have 7 methods and guidelines like the rules and the assessments rules and also the guidelines for this. And the committee, we have -- with that part incorporated, we can highlight. We can make it even stronger. We have synergy coordination. We will have the routine meeting every quarter. Every -- and Mr. Zhu, we'll attend that and listen to the reports. And secondly, we have reinforced the regional conference organization and construction. We have been identifying that the Head of the Provincial Level Bank of CITIC Group will be the Head of the Regional Coordination Committee. Every month, they will convene a meeting where all parties related will attend. And the Head of the Committee has formulated the use and methods on the Regional Committee instructed by the headquarter. And thirdly, we have set up the synergized review and evaluation mechanism. That is the first time with synergy coordination committee. We have qualified the parameters, like the asset trust, and the cast today and across the sales. For every month, we will present the report to the committee about the completion of the businesses, performance of the business. We can urge those, propel those not performing well businesses to continue. And then we have the special rule for the coordination. We have elected 5 outstanding coordinated projects and cases and also 5 coordinated regions and also the outstanding person and individuals who are good at coordination and has set up the risk coordination mechanism. It's more important to control the risks. So for our financial subsidiaries, every month, they're going to come together to look at in our customer service, do we have any risks arising from there? And what are the risks from which subsidiary? So they are going to share the risks to the others financial subsidiaries, and they're going to discuss together how to deal with the financial risks and how do we guard ourselves against the risks. Such kind of meeting are also held on a monthly basis. The first point is that we have a planned synergy digitalization plan in our management role. So actually, this is an administrative approach in order to make synergy into our ecosystem. We propose our vision for synergy is that we're going to build a synergy ecosystem for CITIC Group. So we're going to rely on the IT system on the C end. We have this share price, which is -- which means that -- or the financial subsidiaries have been brought together into this system. So when you are using this app, you can look at the CITIC Bank, Securities and Trust and et cetera. No matter what kind products you would like to have and what if you feel you want to look at the risks and its earnings, so it's going to show you the products that you want. So such an application has a customer base of 110 million with a very high rate of active users. And what we are doing is to develop this synergy plus system. So the first module is the integration of business model. And we have other modules like the tracking, sharing of risks, evaluation of projects, which will be launched on this platform. According to our planning of the digitalization, what we hope to achieve is that like Chairman Zhu and Mr. Xi have asked us, one customer for one group, one account for one customer. So we would like to achieve such a goal. Through all the efforts that we have done last year, we have achieved good results in our synergetic work. I'd like to report to you is for the aligned finance, so it's over 1 trillion, so -- which has been increased. And for the asset scale, it's 840 billion, increased by more than 20%. And the sales is 45 billion, which has been increased by 142%. And for 5-plus financial subsidiaries, so the synergic income is 14 billion, which has contributed deposits of 250 billion. So just now, as I said, that we have 110 million registered users and the visit is 570 million because of our increase -- because we have increased our top design administrative management and the system support. We have a lot of good examples that we can share, like the analysts asked in our strategic planning, how do we promote the integrated development and integrated development of finance and industries. From our cases and examples, we can see we have the Eisenhower mine projects. So from 2019 -- 2018, 2019, it's merger and acquisition. The finance department has provided more than USD 400 million of support. And then CITIC Heavy Industry, CITIC Construction have been working together. And we have this 2 heavy machinery, which has been developed by the CITIC Heavy Industry. For heavy construction, we have win the bid for the Kamoa projects. And we also attended the procurement and transportation of the plant, so with a value of contract of USD 15 million. So this is actually the way that different subsidiaries are working together and integrate the businesses. So just now, talk about the financial sectors. And next, let's have a look at the second project. It's about our network security projects, our Wuhan branch of CITIC Bank. The CITIC Construction has participated in the development of the base for -- the network security base with investment of over RMB 10 billion. So we have the EPCC and the fund model. We have established a fund, which has a shareholding in this company. We have a shareholding of 55% and the loan accounts for 18%. And also have this underwriting of the bonds -- of the financial bonds of the projects so as to satisfy the demand of this project financing. So this is the way that we are contributing and supporting these national key projects for network and for cybersecurity.

Thank you for the answer. Thank you. Mr. Zhu, Mr. Xi and Ms. Li. Let's welcome the second question. Citibank, George Choi.

First of all, to ask about 2025. What's your target profit for 2025? So are you going to achieve this HKD 100 billion target, because we see that the profit attributable to ordinary shareholders? So according to my estimation, the next 5 years, the growth rate should be 13% or 14%, then we can accomplish the goal of HKD 100 billion profit. But the annual growth rate, so far, it's not that high. So to be more specific, I would like to ask the management, how can we achieve this profit target of HKD 100 billion?

I would like to ask Mr. Xi Guohua to answer this question.

Thank you for your question. First of all, the management is of the opinion that our strategy is a commitment at the management level under the guidance of the Board. We're going to be steadily pushing forward our goals and strategies. So to be more specific, we have several considerations. Firstly, what we are doing is to make a research into the subcategories for the different segments. In the first half of this year, we're going to publish our strategies of the subcategories. And secondly, we're going to develop a 3-year rollout plan so that we can support the 14th Five-Year Plan implementation. And to be more specific in this year, what we are going to do is to focus on our foundation and to make strategic deployments. And then next year, we are going to see the preliminary results. In 2023, we're going to see that -- we're going to elevate ourselves to a new stage. And we hope that every year, we can accomplish more goals. Thirdly, last year for CITIC Limited, what we have been doing is to dispose the nonperforming loans and the nonperforming assets. So like we have said that for the -- so Citibank has disposed of 92.7 billion of nonperforming assets. Then we're going to tight our control of the cost, improving the operating efficiency and improve our fine management. The potential for the improvement of profit of finance and nonfinancial businesses are very large and extensive. I believe that the financial sector is going to contribute higher -- contribute a higher ratio to our profit. And for the non-financial segment, we're going to enhance our work to make breakthroughs to increase our R&D investments, and the absolute profit is going to be elevated. Fourthly, CITIC has a very strong capital operation capability. We're going to rely on our 2 securities companies and their research teams to improve our capacity of operating the capital. So in addition to the management of operation, we're going to enhance management of investment so that -- to quicken our pace of development. Thank you for your question.

Thank you, Mr. Xi, for the answer. And next, we're going to welcome the third person to ask questions to the management. Let's welcome Daniel Fang from Morgan Stanley.

I have two questions that I would like to ask the management. The first question is that about this new financial holding company's management role, whether it is going to change the operational management of CITIC Limited, whether there is going to be new provisions and when it has become a new type of commercial bank, when -- or how it's going to provide the support to the development of this business. The second question is about improvement of the operating efficiency. I want to ask the management, in 2021, do you have any plans to sell any asset so that to make the business of the group leaner?

According to the national plan, we are going to push forward this work steadily. I'm going to ask Qingping to answer this question about the specific initiatives. The floor is yours.

Thank you for your question. For CITIC Financial Holding, because CITIC is one of the first under the guidance of the People's Bank of China to establish a financial holding company, so we're going to follow the rules of the PBoC. And then we're going to develop our plans according to all the requirements of the regulatory bodies. So we're going to fund our capital, the allocation of capital, estimation monitoring, analyze -- analysis of the capital as well as make the due disclosure of our management. So actually, according to the PBoC #4 documents this year, if you study these documents very carefully, there are a lot of very specified regulations. So in the future, CITIC Financial Holdings is going to control the capital. Affiliated and associated business is seeing synergy developments, where we are going to focus. So we're going to make the platform management and to make the risk control of our foundation and to synergize our businesses so that we can have a macro-controlled business and to establish the rules in place so that to build this ecosystem of synergy. So this is your first question about the future development plan of our financial holding corporation. How will we continue to develop our financial holding company? So what kind of changes it's going to bring to CITIC Group? I believe it will come make positive contribution to CITIC because all the financial subsidiaries will be put under this financial holding, which can help us to save costs, control risks as well as to develop our synergetic business. So we welcome such a -- we welcome the #4 regulation of the PBoC. The second, about the provisions to the bank. So this isn't necessarily a must for us. Because the bank, CITIC Bank is very important to CITIC Limited, no matter the proportion of it in the revenue, in the asset, in the profits. So it is of paramount importance to the group. So we are going to continue to give steady support through its financial provisions, customers and synergetic development. So I think also, we will provide the talent and the material support to CITIC Bank. Thank you for your question.

About your third question, whether we're going to have any plans for the sales of the assets. So Mr. Xi is going to answer this question.

So CITIC Limited has given top priority to the dispose of the nonperforming and the low-efficiency assets. Last year, we have disposed -- we have finished our 3-year battle of the disposition of assets. We have recovered of HKD 36.7 billion and recovered a profit of HKD 16.9 billion. So we have achieved very good results in our improvement efficiency. And in the future, we're going to follow this 14th Five-Year Plan of the country. And to lean our business, we're going to continue to improve and to make more efforts to dispose nonperforming assets for these businesses, which are not competitive, which will be disposed, for example, oil, gas, coke, coal. Of course, we see that they are making a very good profit due to the increase of the commodity price. But it is not in line with the 14th Five-Year Plan of the CITIC Group. For each company, as we have mentioned, the industrial group will stipulate that we need to focus on main industry, main business. They should have not more than 3 main business. If they exceed, we will dispose them. And thirdly, for the net asset profit and the cash flow -- nonperforming cash flow projects, we will identify and tell them, we will ask to eliminate them. And fourthly, we have set up the IRR. If for finance, it's less than 10%, real economy less than 8%, we will not allow to invest. And for those existing investments, well, we will dispose them. Therefore, in the future, for asset management disposal, we have specific arrangements. Thank you.

Thank you, Mr. Zhu, Li and Xi, thank you. Let's welcome the fourth question. Now let's welcome Citibank, Yang Haiyang, to post a question -- HSBC.

I have two questions. There is a rumor that Prudential Life is going to see increased share. So for this platform, Prudential Life, what's our expectations for its long-term development? And what's your position towards that? And secondly, China is promoting the carbon peak and carbon neutrality. So do we have any target for the carbon peak and carbon neutrality? And what are the specific strategies and layout of the industry? And for those panels which generate more carbon peak, is there any pressure?

Thank you for questions. For your first question, that is we are going to ask Qingping to answer this question. Before Qingping is going to answer the question, with Prudential Life, it's very smooth. And as of now, the outcome is quite good. Just now, the CFO, Guoqiang, analyzed the indicators of financial performance. Last year, he had spoken highly of the outcome and performance of Prudential Life. We are going to have further discussion after this meeting. Since Qingping is the Director -- the Deputy Director, Vice Chairman of Prudential Life, some of the question is for carbon peak and carbon neutrality. So since the very solemn commitment made by central government, actually our industry is the industry and finance combination, we will take the nonfinancial model into consideration, especially for manufacturing, it is advanced managed factory and advanced materials. It's all touched upon and relate to the neutral -- carbon peak and carbon neutrality. Actually, we are actually implementing a push-forward growing development and growing development of the industry. Now let's welcome [ Ms. Qingping ] to elaborate on that.

Yes. Let me answer the question relating to CITIC-Prudential Life. Actually, Prudential Life, the share structure is 50% versus 50%. Over the past few years, 8 to 9 years in the past, we have witnessed the sound development of the business. Mr. Guoqiang has introduced besides that [indiscernible] actually CITIC-Prudential Life risk management has been undergoing well. The market sales ratio, 249%, actually in the assessment of the CBRC and CSRC, we are classified as [indiscernible] for the risk prevention or other related areas, that thanks to the cooperation between CITIC Limited and CITIC-Prudential Life. Since we share 50%, respectively, we need to sit down together to make a joint decision. Therefore, for the shareholding and equity, actually the partner -- the shareholders from both parties have never discussed further. Therefore, we haven't got any news about the changes of the shares proportion. We still remain 50% to 50%.

And as for the carbon pick, let's welcome Mr. Guohua.