CITIC Limited (267) Earnings Call Transcript & Summary

Dear guests, good afternoon. I am Zhang Yunting, Joint Company Secretary of CITIC Limited and Director of the Office of the Board of Directors, we warmly welcome investors and analysts and the media friends who took time to attend CITIC Limited 2023 half year results briefing. And we thank you for your continued attention and support for CITIC. Today's briefing is conducted in the combination of off-line meeting and broadcast with Mandarin language of the conference with English simultaneous interpretation. The meeting has 2 sessions mainly presentation of CITIC Limited 2023 half year results and the Q&A. Today's meeting is attended by Mr. Zhu Hexin, Chairman of CITIC Limited; Mr. Xi Guohua, Vice Chairman and General Manager; Mr. Liu Zhengjun, Executive Director and Deputy General Manager; Mr. Wang Guoquan, Executive Director and Deputy General Manager; Mr. Xu Zuo, Deputy General Manager; Mr. Fang Heying, Deputy General Manager; Ms. Mei Ling Li, General Manager of Financial Management Department. First of all, please welcome Ms. Mei Ling Li to introduce the 2023 half year results of CITIC Limited.

Dear analysts, investors and media from -- and the friends from the media, good afternoon. Now I'm going to report to the 2023 half year results of CITIC Limited. In the first half of 2023, global external environment is conformed with a lot of uncertainties with slow down economic growth and is -- and also a slow recovery of China's economy against the external challenges of the company. We've committed to see the progress while pursuing stability. We recorded a revenue of RMB 334 billion on year-on-year growth of 67%. With the falling commodity prices and an average interest rate spreads in the banking sector in CITIC limited with pretty stable revenue growth through business expansion. And in the first half of the year, we realized a net profit of RMB 57.5 billion and the net profit attributable to the parent company RMB 30.1 billion Y-o-Y, a decrease of 5.9% and 22.6%, respectively, excluding the one-off revaluation gain of CITIC Securities consolidated a net of RMB 10.3 billion in the same period. On a comparable basis, underlying net profits and net profit attributable to the parent company increased by 13% and 2.3%, respectively. And to the financial sectors playing a very important consolidation role, and we see that the revenue and the net profit attributable to the parent company increased by 5.1% and 7.9%, respectively with the share contribution increased to 41% and 74% representing a respective improvement of 1 percentage points and 5 percentage points. The nonfinancial segment continue to drive technology innovation and transformation expand to overseas markets and address challenges arising from sufficient demand. Specifically, the net profit attributable to the parent company's 3 segments, Advanced Intelligent, Manufacturing, New Consumption, New-Type Urbanization increased by 25%, 25% and 2.3%, respectively, due to the decline in commodity price net profit to parent company in the Advanced Materials segment decreased by 25% year-on-year. By the end of June, the market capitalization of CITIC Limited reached HKD 272 billion, up 13% from the beginning of the year, outperforming Hang Seng Index. CITIC Limited continues to unleash the value of its subsidiaries. CITIC Metal was listed on the A-share market as one of the first companies under the registration-based IPO system, the market capitalization of listed companies held by CITIC Limited has exceeded RMB 400 billion, an increase of 19% as compared to the beginning of the year. The company attaches great importance to providing reasonable returns to investors with a stable and sustainable dividend policy. After considering market dynamics and the financial position, the interim dividend of RMB 0.18 per share is recommended a year-on-year increase of RMB 0.01. The interim dividend payout ratio is increased steadily to 16% from 12%. And in terms of external ratings in the first half of the year, we see that the market influence of the company is expanding. S&P Global affirmed our BBB+ rating and the revised outlook to positive, improving our image in the bond market. Fortune 500 published its top 500 list and CITIC Limited ranked 17th from Fortune 500 advancing 2 positions and increasing the position by 6 years consecutively. And CITIC Limited has been listed top 100 ESG listed company in China by CCTV, but 2nd among conglomerates. Acknowledged as a Leader in ESG Development of Listed Companies. So the above is the introduction of the overall performance of the company. Now I'm going to dive into the 5 business segments in detail. For the comprehensive financial services, it's recorded revenue of RMB 138.3 billion, profit of RMB 27.5 billion, up 5.1% and 7.9%, respectively, in the first half of the year, we leveraged the advantage of having comprehensive financial licenses to serve the economy and promote high-quality growth of our financial segment, which surpassed RMB 10 trillion in total assets for the first time, and the company is committed to risk prevention and compliant operations, the scale of nonperforming assets and nonperforming loan ratio have continued to fall. Meanwhile, the asset quality has significantly improved. Amid the continued narrowing of interest rates for us in the banking sector, CITIC Bank, realized an operating income of RMB 105.9 billion, a Y-o-Y decrease of 2.2% to profit of RMB 36.1 billion, a year-on-year increase of 11%. And we see that the value of deposits and loans increased by 8.5% and 4.4% respectively as compared to beginning of the year, particularly the increment for both the general corporate loans and personal deposits hit record high. The balance of nonperforming loans decreased by 0.6% compared to the beginning of the year. The NPL ratio declined by 0.06 percentage point to 1.21%. The provision coverage ratio increased by 7.09 percentage points to 208.28%. And it achieved double-digit growth in credit value across all key areas, such as inclusive finance, media and long-term financing. For manufacturing industry, green credit, strategic emerging industries and agricultural loans and CITIC Securities proactively scaled down our commodity business recorded revenue of RMB 42.8 billion, a decrease of 6.8%. Maintained stable profitability with record profit of RMB 11.3 billion, up 1% year-on-year despite volatility in the capital market. It has maintained a competitive advantage in investment banking achieved 11% of year-on-year growth in investment banking business while actively building a world-class securities company with a market share of 24% in equity writing, 6.3% in bond writing and 33% in A-share M&A all of which ranked 1st in the industry and it has maintained a leading position in wealth management and asset management. The custodial client asset scale remains stable at overall RMB 10 trillion representing a 7% increase as compared to the beginning of the year. The securities firms asset management scale has exceeded RMB 1.5 trillion. Consistently working for the same industry. CITIC Trust recorded revenue of RMB 2.2 billion and profit of RMB 1.3 billion year-on-year decrease of 33% and 13% respectively from the transformation of the Trust industry. It accelerated transformation of the Trust business, rapid growth was observed in annuity services, risk disposal services, inclusive financial services and public welfare and charitable trusts. Assets of innovative businesses surpassed RMB 1.2 trillion to account for more than 70% in total positive results from risk mitigation efforts. It's accelerated progress in disposing risky projects in the first half of the year resulting a considerable settlement and recovery in real estate in the urban investment projects. CITIC-Prudential Life is committed to implement the new regulations under the C-ROSS II. Strived to balanced growth in those NBV and NBV margin. Recorded an original premium income of RMB 17 billion and up by 7.7% Y-o-Y and double-digit growth in operating in first half of '23. It has a significant growth in new business achieved double-digit growth in both new business premium and new business value through distribution channels. NBV margin in bancassurance showed great improvements. And effective mechanism in manpower with high productivity, the number of MDRT rated agents reached 828, a year-on-year increase of 17%, above the financial segment. Let's move to the Advanced Intelligent Manufacturing recorded a revenue of RMB 24.1 billion and profit of RMB 426 million year-on-year increase of 2.2 -- 0.2% and 25%, respectively. We continue to optimize global industry planning and explore international markets, leading to a surge in overseas revenue and a steady increase in market share. We strengthened efforts in major scientific research projects, resulting in breakthroughs in various key technologies and products, which effectively supported business expansion and profit growth realized positive interaction between technological innovation and industrial development. CITIC Dicastal, actively expanded both domestic and overseas markets, leading to a steady increase in global market share and a double-digit growth in profitability. Remarkable results has been achieved in market expansion recorded a significant increase in overseas orders due to efforts to strengthen global business development. Supplied materials for all major EV companies in China, achieving an 18% and a 29% increase in sales volume for aluminum wheels and aluminum castings respectively. And the overseas sales volume of aluminum wheels grew by 25% year-on-year. The gross profit margin for overseas sales increased by 7 percentage points to 26%. Consistent progress in product R&D carried out the R&D of integrated traces die-casting projects for automobiles, in which the preliminary trial production was successful and contributed to the light-weight development of automotive industry. CITIC Heavy Industries realized revenue of RMB 4.7 billion and profit was RMB 190 million, an increase of 9.1% to 3.3% respectively, following our strengthened technology innovation and enhance the core technology R&D committed to providing China's strategy upgrading the countries manufacturing sector and the building projects provide importance to the country. Provided high strength metal castings and forgings for Shenzhou 16 spacecraft. Achieved serial production of key manufacturing machines such as large-scale ball mills and semi-autogenous mills in China. Recorded, a record high new orders expanded the overseas market for mining equipment and offshore wind power. Total revenue of new effective orders reached RMB 7.1 billion. In the first half of the year, the overseas orders accounted for 30%. And for the Advanced Materials, it recorded a revenue of RMB 130.6 billion, up 3.7% and a profit of RMB 5.8 billion, down 25%. Consistently progressed major energy projects ensuring steady production for the stable supply and national strategic resources. Actively extended business planning, fostered upstream and downstream collaborations and boosted the resilience and competitiveness of the industrial chain. And CITIC Pacific Special Steel, overcome the adverse impact of a sharp decline in market demand, revenue increased by 13% year-on-year to RMB 58.3 billion. While the total profits of member companies of China Steel Association declined by 69% year-on-year and 45% of which was loss-making. CITIC Pacific Special Steel achieved profit for RMB 3 billion, a decline of only 20%. Stable operations throughout the cycle seizing the opportunities from dual carbon policy, the company actively ventured into new markets such as wind power and new energy vehicles. Steel sales reached a record high of 9.4 million tonnes, surging by 23% of which steel and energy and foreign trade sales saw remarkable growth with an increase of 88% and 55%. Prominent scientific and technological innovation, the company obtained 185 authorized patents and 89 invention patents. It took the lead in developing world's first low-carbon evaluation standards for Special Steel. A number of high-end products, including aviation bearings, high temperature alloys, received order certification and were consistently delivered on time. Optimization and upgrading of business planning after the successful M&A of Tianjin Pipe Corporation, the company has become the world's largest manufacturer of a special seamless steel pipes with the production capacity of 5 tonnes -- 5 million tonnes. With integrated efforts in marketing and technology R&D and the production and sales volume steel pipes increased steadily. For Sino Iron, due to decreasing iron ore prices revenue declined by 21%. In terms of production operations, we maintained stable production and operations in the first half year after addressing unfavorable factors such as labor shortage, weak demand from steel mills and inflationary pressure, the company successfully maintained a stable production operations, and we produced 10.41 million wet tonnes of magnetite ore concentrate powder, which remained largely unchanged year-on-year. CITIC Metal recorded revenue of RMB 61.2 billion, down 2% year-on-year. After adjusting falling commodity prices. Profit decreased to RMB 1.07 billion, while year-on-year 32% decline due to fair value loss on convertible bonds from the rise in the stock price of a subsidiary Ivanhoe Mines. We also optimize the trade structure, prioritized risk prevention and leverage our resources and channel advantages to adjust our trade product portfolio and scale up copper trading business. Raised market share in nonferrous metal trading with revenue contribution exceeding 50%. Also smooth progress in overseas project contribution. The first and second phases of the construction of Ivanhoe Mines, KK Copper Mine in DR Congo have maintained very smooth operations. CITIC Pacific Energy achieved a profit of RMB 380 million year-on-year growth of 85% due to the increased proportion of low-priced long-term coal contracts. We also have a new energy installation capacity doubled, actively implemented dual carbon goals and continued efforts in wind power, photovoltaic and other renewable energy projects doubled the new energy solution capacity to 395,000 kilowatts as a result compared with the beginning of the year. Approved capacity of thermal power increased by 50%. The Sunburst Energy Phase 5 project consisting of two 1 million-kilowatt high-efficiency clean coal-fired power generation plants. New consumption delivered revenue of RMB 24.9 billion, a year-on-year decrease of 1.8% and the profit of RMB 481 million, a year-on-year increase of 25% in first half 2023. We actively strengthened the application of new technologies and expanded marketing channels in response to new consumption trends leading to continuous improvement in the performance in telecommunications, publishing and the seed business. We also made a significant strides in cooperation with NEV manufacturers CITIC Telecom. International reported revenue of HKD 5.3 billion and a profit of HKD 720 million, marking growth of 7% and a 26% year-on-year, respectively, both hitting record highs. Accelerated expansion of 5G business increased the market share by 1.5 -- 1.8 pp to 47.5% as compared to the end of 2022, by leveraging our first-mover advantage in the 5G business to support Macau to usher in Digital Macau 3.0. Expanded planning of corporate business established an integrated cloud, network, intelligence, security ecosystems. In continusly expanded, the network coverage capacity to cover about 160 countries. CITIC Press recorded revenue of RMB 870 million and a profit of RMB 90 million, representing a year-on-year increase of 2.9% and 1.4% respectively, despite overall downturn in the book publishing market. Also, we have steady progress in market position, boosted market share by 0.48 pp year-on-year to 3.47% for actively engaging. The reading community and exploring owned channels for brand communications. Secured its top market share in the book publishing sector, ranked first in the market in the book categories of management and economic, children's books and biographies. Actively promotion of technological transformations. In terms of Dah Chong Hong, realized revenue of RMB 19.3 billion, a year-on-year decrease of 5.3% and a profit of RMB 36 million a year-on-year decrease of 68% attributable to declined traditional vehicle consumption and auto market price well resulting in a 10% year-on-year decrease in auto sales volume. Increasing new car sales volume months-on-month. Through continuous promotion activities, new car sales have been increasing month-on-month since February with sales reaching 9,600 units in June and returning to normal levels. We also strengthened cooperation with the new NEV manufacturers like Li Auto and XPeng, the motor dealerships and after sales services operations have commenced. CITIC Agriculture realized a significant year-on-year loss reduction of 32%, benefiting from the rising sales volume and the price of rice and corn seeds. Longping High-Tech, which has been actively cultivating scientific and technological innovation in the seed industry had a 5 high-yield and high-quality crop varieties selected as the leading agricultural varieties. New type urbanization had a revenue declined 10% to RMB 16.1 billion, and profit increased by 2.3% to RMB 3 billion in the first half of 2023. We continue to improve the sell-through rate of newly initiated real estate projects to accelerate the return of funds and ensure the timely delivery of our property units. Property development and operations business are affected by the overall downturn in the market. Revenue and profit amounted to RMB 2.4 billion and RMB 2 billion, respectively, a decline of 23% and 27% year-on-year. New residential projects, such as Wuxi Jade Mansion and Guangzhou Harbour City saw strong sales, leading to a 16% year-on-year increase. In contracted sales, the sell-through rate of the Mangrove Bay project acquired from Kaisa Group has reached 81%, resulting in fund recovery of RMB 2.34 billion. The project is anticipated to be fully delivered by the end of the year. Solid operational performance of COLI. Amid challenging market conditions. China Overseas Land & Investment still showcased the relatively strong profitability with a 19% year-on-year decline in net profit. In the first half of 2023, the collective entities of COLI achieved contracted sales of RMB 180.2 billion, bucking the trend with an impressive 30% year-on-year growth. Construction and Urban operations impacted by cyclical factors related to project settlement, revenue declined by 5.9% year-on-year to RMB 14.6 billion. Yet, the successful fund collection of key projects led to the reversal of provisions resulting in the 2.9x year-on-year increase in profit to RMB 1.1 billion. Steady progress of domestic projects deeply integrated into the National Regional Development Strategy. All tunnels in Linqing Expressway Project were completely connected. Smooth advancements in international business operations, CITIC has been making smooth progress in key markets along the Belt and Road Initiatives. Notable achievements include significant advancement in the 20,000 unit social housing project in Riyadh, Saudi Arabia successful inspection and completion of the subway project in Argentina. In the first half year, the company's various business operations developed steadily, our competitive advantages were strengthened and risk resilience was continuously enhanced. That's all for my introduction. Thank you.

Thank you, madam, Mei Ling for the nice introduction. Now we will come to the Q&A session. [Operator Instructions] Now we will invite the first question.

Thank you for the great opportunity to raise my question. Congratulations to CITIC for the good momentum in the performance. My name is [indiscernible], analyst from CICC. I have two questions. The first one is about international macro environment. We know the U.S. Fed reserve continue to increase the interest rate, which caused the global debt crisis. And also shortage in the overseas demand and the global economy is also sluggish, what are the impacts and challenges to the operation of our business? As CITIC, what are the content measures we have developed? The second question is the domestic macroeconomic environment. We know economic growth is still very weak with our sluggish domestic demand. China has strengthened the macro adjustment policies and also release the series of policies to make and promo economic recovery and development. What are the impacts on the CITIC Limited from those policies from the government?

First of all, thank you for the question. CICC is an outstanding company. I read your report every term. And from your report, I can view your evaluation of the domestic and overseas macro environment. So the first question is about the international macro environment. What are the challenges we are faced with. In facing those global macro challenges, we faced a huge challenge because we are an international company, and we have many business presence globally. But despite of the difficulties and challenges, our group is still very healthy and resilient to those challenges. In the first half year, we are also faced with the fluctuations of the bulk commodity prices as well as geopolitical tensions. But overall, has become apprehensive, we had effective counter measures to those global challenges, for example, those counter measures can be reflected in the financial figures from the General Manager of Financial Control department. For the next step countermeasures, we will proceed from the following areas. The first one is that the 3 years pandemic we have done an important thing, which is to control and prevent the risk to make our financial performance steady and healthy. We have the capability to respond to the challenges. We had a very healthy balance sheet. We had effective countermeasures to those small and medium-sized challenges and risks. That's a very positive news. And the feedback from the capital market is also very positive. The second one is that base foundation, our capability to respond to those challenges and also the capability on the comprehensive balance is strengthened over the last couple of years. This is in a large part contributable to the operation of the CITIC Limited. The -- this can further strengthen our competitiveness in the market and make our group healthier than ever before. As a result, the competition can be strengthened in the market and also we can have our overall value displayed against this backdrop. The third one is that during the difficult time for an outstanding company, there will be more opportunities to the outstanding and high-performing company. As for CITIC Limited, we can be better prepared in a difficult time and see on all the opportunities that comes by and also the difficult period is also the opportunity to build a stronger company, stronger group. We have only confidence in doing so. The next one that we aim to build an outstanding and high-performing group in terms of the dual circulation, we will make more efforts. We also want to show the comprehensive financial advantages as we serve the physical economies, the physical economy can be healthier than ever before. And in return is a solid foundation for the healthier future of the group. That's the answer to your first question. The policies released by government. My comment is that the overall Chinese economy is turning for better. That's for sure. The policy and the result from the policy takes time. We need to wait for the effect of the policy. For the business operation is a long-term process to see the final result and effect from the policy incentives of the government. So my overall comment is that government policy is in favor of the development of successful of CITIC Limited. If there is a positive prospect in capital markets. Then for the quality requirement of listed company, the requirement will be even higher than before. And as for CITIC Limited, like CICC and also the financial holding, CITIC Securities, the valuation and the future development will be more resilient and promising and will be more high-performing than ever before because the quality bar has been raised from the positive capital markets. For the traditional financial market from our group perspective, for CITIC Limited, for the CITIC Trust, Banks, Insurance business, it will be helpful in the quality transformation because we have the policies in place and which will effect to break down the revenue at the period. But in the future, they actually can cover the somewhat trend of decline before we should -- because when we improve the quality, then the company is more healthy. And therefore, this is beneficial for the traditional financial business because sometimes we see that -- we see a decline of the revenue, but the provision is also declining, therefore, the profits for increase on the contrary. So this is my -- certainly, we have introduced certain policies around consumption. This is also a positive signal and for CITIC Limited because we have the new consumption segment. As you know, we have altogether 5 segments, as you mentioned. The Dah Chong Hong you see sales, and we should look more at is EVs, the NEVs as well as the changes for the traditional automotive industry and changes in -- due to the dual carbon goals. Later on, no matter for the real estate business or other businesses, which will be approved by the time today in Beijing. So we see some -- we see the traffic congestion because this is also a signal for the recovery maybe of consumption. And e-commerce consumption is also important. There are other like buildings and real estate is under pressure, but we will need some time to recover. And the fourth is about our industrial sector and manufacturing sector. Generally speaking, the manufacturing industry as we are supporting the development of the manufacturing industry, no matter is input and the output ratio is quite good. We have seen this good result from the group. We see the dual growth of the manufacturing sector. In manufacturing sector, which is also relevant with the service industry, like the supply chain, industrial chain and which are subjected to the changes of commodity market, which is affected by domestic markets as well as geopolitics in the world. We are faced with great external challenges last year. Oil price. We experienced challenges in oil price and mineral ore prices and including iron ore prices, and we also experienced the interest hike by the United States and we see the decline of the consumption index. But overall, I think CITIC Limited is performing very healthily in the first half of this year, even though against the downward and very sluggish external environment. We have -- actually, we have achieved revenue that is beyond our previous expectation. And I think our business is going to be healthier in the future.

Next, let's see by the next question.

I'm Xu Bichen with China Securities Journal. I would like to congratulate on the achievement against the downward trend in the market. I would like to ask two questions. The first question is to -- for the introduction of policy of high-quality system. And for CITIC, I would like to, in order -- so what are the opportunities brought by the new policy? And what are the work that has been implemented by CITIC Limited. And then just now, you mentioned that there was -- there is a double-digit growth of revenue and the profit attributable to parent companies. So I would like to invite the management to talk about what are the initiatives that is going to be taken.

Thank you very much for your question. We believe to build a valuation system with the Chinese characteristics is a long-term and fundamental work. So which means that it cannot be achieved overnight. For CITIC Limited, the ratification of our valuation will also take some time. So we need to understand it in terms of the trend and its nature. So as for you to correctly understand the valuation of the company. And secondly, for CITIC. Firstly, it has brought us with a lot of attention. Analysts and investors, specifically the CITIC. And while we are -- we were organized -- well organizing more frequent road shows. And now investors and analysts have more comprehensive understanding of the fundamentals for its dividend distribution, optimization and business, stable operation, safety of its liquidity. They have -- it has demonstrated a high value for investment. So we have seen the recovery of our valuation. But what is the -- is that the market value capitalization is actually heavily deviated from our revaluation. We have done the following work. Firstly, is the communication with the capital market? We have organized more domestic road shows and in the next -- in the latter half of the year, we are going to organize road shows in the overseas markets as is needed. The second about dividend, we pay much attention to the reasonable return to investors and our dividend policy will maintain continuity and stability to share the dividend with our shareholders. Thirdly, about evaluation. Evaluation and assessment system. We follow the requirements for science-based sustainability and system evaluation to expand the scope of evaluation and to optimize the setting up of the indicators for optimized evaluation. So as to strengthen the evaluation management. And firstly, it's about the salary incentives. We remain committed to market development and to retain the high-quality talents so that we can build a high-quality proactive and high-level talent team. The fifth is the -- about wealth management. Since the founding of CITIC Financial Holding, we have been improving our wealth management system, enhance digitalization foundation in -- catalyze the potential of comprehensive financial services to improve the synergistic for development. So as you do a good job in information disclosure. My sixth point is about the high-quality development of bank -- of CITIC Bank. And as Heying is also here, he's going to talk about that in more detail, but I can say that we are committed to supporting the banking sector for its positive and high-quality development.

I'd like to take this opportunity to share with you that, for the 14th 5-year plan, as for our targets for 10, 100, 1000 and 10,000. As of the end of 2022, CITIC Group has total assets of over -- of [ JPY 10 trillion ] with a net profit of over [ JPY 100 billion ]. And CITIC ranked the 100 among the Fortune 500 published, these are August. So we have achieved these first 3 targets as -- among those we set up for the 14th 5-year plan. So we believe -- so which has reflected that we are committed to our promises. And we are going to continue to work together to overcome the difficulties ahead and join forces to achieve to deepen reform and the professional integration of business. Every year, we -- and try -- we try to have a -- to have an IPO of one of our companies, and at the same time, we are going to accelerate the digital transformation to improve the synergistic development of the whole company. And to consolidate our advantage in the industries so as to achieve our goal. And I hope that the investors, well, stay tuned to the further development of CITIC and we will continue to communicate with all the investors to share the investment value of CITIC. Thank you for the question.

Just now you mentioned how we will support the development of CITIC Bank. For CITIC Bank, which has experienced changes that is quite healthy and positive. And we will remain committed to provide more support to the CITIC Bank due to the changes happened over the past few years. We will continue to consolidate the position of CITIC Bank in the group as it contributed a lot to the group. Second, we will continue to support the CITIC Bank to have come back among the top of commercial banks in China. I used to work for other commercial banks in China. We are a joint stock company like China Merchants Bank, Commission Bank, PN Bank, Everbright Bank and et cetera. We hope that we can come back at the top among those joint stock commercial bank. So that we've all live up to our reputation. According to the comparable basis, we are very close to top 2. Therefore, we are very confident to come back to the top -- among the top. And in addition to the expansion of the size, business quantity, we will work -- we will continue to work on our revenue control of risks as well less to address the changes happened in the market to come back to the top as a joint stock commercial bank. The third is that CITIC Limited and CITIC Group will fully support to make CITIC Bank to demonstrate new vitality and to form new competitive advantage to be a really respected bank -- high-quality bank so that it can live up to its name as the CITIC Bank. We see substantial internal and healthy changes to CITIC Bank, we should express more high expectations to CITIC Bank. A few asked what should CITIC Bank do, what should CITIC Limited do to support the CITIC Bank. The first is the stability of the management team, which has shown our commitment to the support of the development of CITIC Bank. So we have a professional and very stable management team which can -- which is trustworthy. Now, we have -- so we see that we have more support as we see the -- of the bank has become the General Manager. So firstly, we should look at whether we have a stable managing team. As we say, it is a substantial internal healthy changes. So from the management team perspective, we need to look at and rely on the stability of the team. Number two, for the bank to be healthy and to be more competitive in the market, where is the source of capital for CITIC Bank. In terms of core capital, we are different from other banks. What should we do? We need to support the group. We have comprehensive measures. ROI, ROE are very high, while not making more investment since the bank is rest assured while not making more investment. It's a good gesture to return to the society and our employees. This is the second. Number three, we are a comprehensive group in banks sector, how to utilize the comprehensive group to contribute further to the bank's development, especially in terms of the risk control from the tools we developed so we can better prevent and reduce the tools. I dare say that CITIC Bank is very competitive in the market. Our Deputy Financial General Manager mentioned Mangrove Bay Project where is it from? It is a way to improve the quality in financial sector. We have dissolved the raise so that they will not become a provision and have a very good collection of the capital. That's a very unique achievement. So in terms of dissolving risks, we have a clear advantage and dissolving risk in our company is very compliant. It's relying on the CITIC tools from our professional capabilities from our evaluation of the industry, we can better resolve the risks. As a result, our CITIC Bank can be healthier and more competitive. Number four, we have coordinated plans through our group, through the CITIC Limited. The friends circle can be further expanded. The products are more a better modularized and our product can enhance the adhesion with the customer so that we can grow up together. Have a better growth. Especially CITIC Financial Control, it's been 1 year since the operation and CITIC Financial Control is a very important asset management company. Safety is the and security is the top priority. I believe it's a better way to empower our customers and empower the growth of the bank. So we are confident of the bank's business. If the operations of the bank is good, the foundation of the CITIC Limited will be more solid. Then the contribution to other physical business will be stronger. So in terms of investment for input and output. Input is much less than output. We -- sometimes we have 1% of input, the output will be 10x bigger. So for CITIC Bank, we focus on the high-quality operation. For CITIC Bank, the Manager of the Bank is also here. You can have your own comment and evaluation of the performance there.

Now let me invite the next question.