CITIC Limited (267) Earnings Call Transcript & Summary

I'm an analyst [ Sun Yin Sing ] from Western Securities. My question goes to CITIC Bank. The bank has remarkable achievements in recent years with the share price outperforming the market for many years. So based on the performance of the first half, would you like to share with us how to realize the good momentum of development and what's the thought for future development.

Okay. This question goes to CITIC Bank. Then we have the Vice President of CITIC Bank, Mr. Hu, to answer your question.

The first question is about the development momentum. I will share 2 aspects. Firstly, Pharma half 1 performance, Citibank has 2 highlights. One is from the financial data. The other highlight is from the stock price. In terms of financial data, we have 3 characteristics. One is both or dual increase in the revenue and profit exceeding 3%. And so since the 14th 5-year plan period, we are one of the few banks to maintain the positive growth in net profit. The second characteristic is the stability in quality. The NPL ratio was 1.15%, flat the last year. And then the number for me, loan generation rate was 0.5% also unchanged from last year. And the provision coverage ratio was 23.1% remains above 200%. The third characteristic is cost reduction. Our operating costs decreased by 2.1% Y-o-Y. Our cost-to-income share also decreased by 1.35% Y-o-Y. Then about the share price. CITIC Bank's stock price has been outperforming the market for 4 consecutive years from January to August this year, our A shares and H shares continued to rise by 17.9% and 23.9%, respectively. Our growth ranks first among joint stock commercial banks, the total market value of CITIC Bank stands at the level of RMB 460 billion we rank second market cap among joint-stock commercial banks. Behind those good numbers, I would say the main reason for that is our improved development capabilities and business philosophy. Have development demonstrate 2 distinctive features, first sustainability second, safe development. First of all, sustainable development. I'd like to focus on 3 parts. First, the net interest margin, NIM, that's about 1.62% for the half 1. So 21 bp higher than the market average. So for the CNY 9 trillion of interest-bearing assets, and for 21 bp higher, that means we can have additional 19 billion revenue additionally in a year. And since the 14th 5-year plan, the NIM of our company, over bank has reduced by 24 bp has been -- has decreased by 24 bp less than the industry average and NIM mainly benefit from the low cost of our liabilities with a liability cost ratio of 1.37%, down by 24 bp from the previous year, also decreased by 92 bp compared to 2020. And our corporate deposit cost ratio has also expanded is an advantage over the industry average to 20 bp. The proportion of our corporate deposit average balance remains among the top among the joint stock commercial banks. So because you guys are the experts here. and NIM of the banks is mainly benefiting from tours back, either it's from the high-priced loans or low-cost liabilities. High price means high risk. So that means the risk for the future is increased. And only by achieving low-cost liabilities, the NIM attributable to the low cost of liabilities is safe and sustainable. So that's the core competitiveness of a bank and for us as well. Second aspect is our sustainable development. That is our light capital development or capital efficient development. Since the 45, the proportion of the noninterest income has increased by 10.4% cumulatively. Noninterest income has grown positive for 6 consecutive years. In terms of the charges, fees, income, and we ranked #2 compared with our industry peers for the last 6 consecutive years. And also, our Wealth Management business has reached RMB 2.5 trillion, ranking second in the industry. And also the coverage yield of our fixed income products in half 1 outperformed the market average, more than -- by more than 20 bp. So you can see the number and scale of a bond underwriting firmly at the forefront of the entire market. In terms of the investment trading income, our security investment business income in the half 1 increased by 1.3% Y-o-Y. Our bond and interest rate derivatives trading reached RMB 9.48 trillion, up by 55% Y-o-Y. In terms of our foreign exchange market trading, market making trading reached RMB 1.98 trillion, making us 1 of the first pilot programs in Shanghai retreat offshore foreign exchange trading. You can see the growth of the noninterest income is underpinned by the concept of the capital-efficient development and wealth management and comprehensive financing has a management and investment treaty and also other capabilities of our company. So the third aspect for the sustainable development is cost management. In half 1, the number of our corporate base customers has increased in a better way compared with the same period last year. The increased number of our retail VIP customers also hit renew in the past 3 years. I think the 5-year plan, the number of the corporate base customers and effective customers have increased by 130,000 and $153,000, respectively. So you can see the increased level has achieved more than 80%. Our retail customers have also increased by 40%. And Hanawa -- and also VIP customers have reached a new level of $5 million. So private bank clients have also increased from 51,000 to 15,000. So it has been doubled, increasing the number of clients and optimization of our client structure or the results of the Seabank insight into our clients' needs and all enhancement of our comprehensive service capabilities. Second, I'd like to come to the safe development. First of all, in terms of the risk indicators, we are improving continuously. So for 7 consecutive years, our nonperforming loan ratio has continued to decline, down by 62 PP in the last 7 years. And also 0.12% PP are lower than the average of the other peers. So our provision coverage ratio has also remained about 200%. So it has been increased by 31 bps since the 45-year plan. it's 29 bp higher than the average of the peers. Our credit cost ratio is stood at 0.15 flat, and also decreased by 0.5 pp since the 45-year plant. So you can see those indicators reflect CITIC Bank's risk management ability in concept. In terms of the risk pool risk management, in the past years, CITIC Bank firmly believes that we need even forego the returns rather than the risks. So we pursue the risk-adjusted returns rather than the short-term gains at cost of risk. So you can see the risk monument concept has been deeply rooted in our employees' hearts. In terms of the system capability, I'd also like to focus on through aspects. First, the risk system. We continue to optimize the small advancements like each small step a year. So after 7 years of progress, we have accumulate that into significant growth. We implement the risk responsibility of our accountability system, the appropriate approval and authorization system and unify authorization system. In terms of basic system development, we have also implemented systems such as full-time approvals and integrated reviewers. And in terms of the credit and inclusive in finance and financial market services, we have also embedded the risk management mechanism. And in recent years, we continuously optimized the joint prevention control business and risk. And third practice, we have also enhanced the risk control integrated system for the parent and also the song companies to subsidiaries. So another aspect is the structural changes we have made over the years. So as a structure defines the bank's future financial earnings and risks. So this is very important for us. Over the years, we have built the strategies plus 1 methodology system. So the 5 strategy plus 1 methodology focused on the credit policy approval standards and the marketing guidelines and also resource allocation work. And by implementing those methodologies and efforts, we have achieved very good results and changes in asset structure. One is the regional change. So in terms of the Yangzi River region and also point region and [indiscernible] and also [indiscernible] and other regions in China, we have achieved better proportion of incremental loans. And also, we have fully tapping to the national strategy by focusing on more investment in 3 big areas and 5 scenarios. So all those investments have given us exceeding a higher growth rate. So the crop order financing also grew by more than 30% and capital market financing grew by more than 12%. Also, we are adjusting some risk industries, for example, the real estate loans, proportion for that was 17%, which was relatively high, but now has dropped to 8%. And in terms of the risk of a local financing platform, we also have continued to convert that kind of risk. From the perspective of customers' product. You can see the proportion of corporate customers we support has reached 73% has been continuously improving. In terms of the main assets of our retail business, especially the mortgages, the proportion of the mortgages in loans and loans has reached 60%. And the third aspect is about strong management we have implemented over the years. There are also 3 respects. First, we improved the risk control capability at very force. So last year, we have implemented 4 category classification of our customers and proactive post-loan management. So that has been closed our credit exposure by about RMB 46 billion. So it has improved our capability of problem asset disposal and written off assets disposal capability. So every year, we have a callback of more than RMB 10 billion regarding nonperforming loans every year. And last year, that's the highest year. We have closed the exposure by RMB 16.5 billion in terms of nonperforming loans. The third aspect is the enhancement of CITIC Bank's digital risk control capabilities. Now we are implementing the kept new validation acceptance and work according to some rules we have implemented. So we have come up with various measurement or validation tools. And for example, the data management has been improved in digital and has been digitalized. And in terms of the future development, we have our own thinking, I'd like to come to two aspects. So we have a new strategy -- last year, we made the 15th 5-year plan. We call it 33 strategy that excellence and 3 leading. So 3 excellence means excellence in wealth management, bank management and comprehensive financing bank management. And 3 leading means we are leading in the professionalism in the industrial model and also industry standards. So also the 3 leading in the payment settlement bank and cross-border service bank can also digitalize the bank -- so why we want to become a top performer in the industry. There are 2 reasons for that. So the Phase III strategy focused on the current client can changes in their needs and also to tap into the new market opportunities. So the excellent wealth management bank means that's an expansion beyond our traditional deposit taking and also in outstanding comprehensive banking financing banking. And in terms of the leading payment settlement bank, that means that is the traditional fee and charges expansion based on the traditional banking services and leading digitalized bank, that is to build a digital platform. That is also the core of our operation concept -- so those 3 strategies are built upon our past experience and also the competitive agents we have built over the years. So from the for operational themes to the 3 enhancive enhancement actions and also to the 5 leading and excellent strategies we are having now. They are helping us to build the most core competitiveness in a long-term effort. So our strategy with the latest strategy has changed in to some degree. So 3, 3 and 55 strategies the extension of the 5-year plan. We add additional strategy that is excellent trading investment bank. That is one additional strategy. So why we have had this one? We can look at it from external and internal aspects. Externally, we've seen some new economies in the world. They are going through different economic cycles. So there are different as allocation requirements across different cycles and different markets. coupled with the geopolitical conflicts. So for the clients, they have the hedging need and value preservation. Domestically, currently, it's in the cycle of the low interest rate. So for the bond investment, it can provide both coupon payments and the capital gains, making it a profitable asset for banks. And for the expansion of direct financing market as well as the investment banking and asset management banking business are becoming [indiscernible]. Thirdly, the internationalization of RMB and the pace of Chinese enterprises going global are accelerating. So within the external and internal landscapes, that we have made the new strategy. Another reason is that for CITIC Bank, we have profound business capabilities and foundation. On one hand, we have the unique synergy to the CITIC Group, our leaders and the managers already mentioned that. On the other hand, we have more than 30 years of expertise in this business, including the market-making business of exchange rates interest rates and precious metals, we have a very rich market position and professional experience. So in the following 5 years, this is our planning for the 33 strategy. In the following 5 years, yes, we have made the plan, and we will take actions in 3 areas. One is the customer management. We will continue to enhance customer management vertically we will continue to have a customer-oriented philosophy at all the departments taking each customer as our partner for common growth. Also, horizontally we will leverage the synergy advantage of CITIC Group, and we should consolidate the licenses of CITIC Group and advantages of products break down departmental barriers to meet the diverse needs of clients. Then about the structural optimization, we will build a healthier balance sheet, including optimizing the liability structure consolidating the advent, driving the liability cost reshare and more proactive asset allocation and active expansion of the sources of intermediary business income. We need to improve asset quality, make good allocation of major asset classes and we need to build and enhance our system and capabilities. First, we need to continue reform and optimize the organization to improve operational efficiency. Second, we need to improve our digital capabilities, including the capabilities to make decisions based on data. the past years, CITIC Bank has achieved steady and resilient growth. And in the following 5 years, yes, we have a very clear direction, and we have the promising growth. We have the confidence in high-quality development.

Thank you President Hu for the detailed answer. Now #5 question.

I'm the analyst [ Shui Kang ] from Hua Chuang Securities. First, combinations to the remarkable achievements for half 1 at CITIC Limited the revenue and the net profit have exceeded the expectations of investors and analysts. I still remember when I was writing the in depth report and CITIC Limited this year, we coordinated analysts from multiple industries, including banks and nonbanks, steel and nonferrous metals to work together on it. And part presentation, we really see the performance exceeded our expectations significantly. Through this event, we feel the company's emphasis on Investor Relations and the market value management. So I have 2 questions. The first half, there was a good performance in securities. So First question is about the overall strategy. We see that the industry development is shifting towards quality-driven development and then also the regulation or the authorities guiding the 2-way opening our opportunity outside the world. So there is some competition from the first-class investment banks, both at home and abroad, so how to respond to that? Then the second question is about the overseas business. Half 1 was remarkable and CITIC Financial Holdings completed the additional investment of CNY 16 billion in CITIC Securities. And what will be the strategy to leverage the advantages?

So we have the General Manager to [indiscernible] from the CITIC Securities.

Thank you for the question. At present, we have completed the at-share private placement. I will take the opportunity to share some of our views in the 15th 5-year plan period from the guideline we see there is the acceleration of build in China into a financial power, this released a clear policy signal, the authorities support leading and high-quality institutions to grow stronger and the larger transforming from competition in quantity to competition in quality in the first half this year. our operating revenues and net profit have reached a new historical highs. At the same time, the core competitiveness, market leadership and risk resistant have continued to strengthen from the perspective of building a first-class investment bank the domestic industry is accelerating its concentration capabilities of resources, business and clients within the gradual acceleration of internationalization process, we are continuously enriching our global network clients and the product system and CITIC Securities will remain steadfast and stay committed to the goal of building a financial power, maintaining strategic focus through 3 core measures of improving quality and efficiency, strengthening competition and expanding internationally. First, improve quality and efficiency. We will depend era of functions and enhance service capabilities. We will adhere to the deep integration of functionality and client service we will build an integrated comprehensive service system and consolidate the client base with the services throughout the life cycle. Second, strengthen competition optimize the business structure of light and heavy capital and comprehensively enhanced the core competitiveness, we will promote the coordinated development of all the business lines balance the right capital and heavy capital business and optimized resource allocation. Number three, we will expand internationally we will deepen the global layout and promote internationalization strategy taking Hong Kong as the spring board and through a 3-step strategy, we will gradually deploy the Asia Pacific hub, expand the global network enrich the business forms in overseas markets, and we will actively serve the global customers, especially Chinese capital going global and the foreign capital coming in. Regarding the capital or the private placement since the end of May, we initiated 8 and after more than 70 days, we efficiently complete the issuance and the settlement. And the first batch of CNY 10 billion equivalent of Hong Kong dollars completed the capital increase on August 14. CITIC Holdings fully -- or Limited fully subscribed and the CITIC Securities has fixed increase promised that within 48 months, it will not transfer, which fully reflects the group it Limited's long-term confidence and firm support for the development of CITIC Securities. And this also is for strengthening strategic synergy, achieving high-quality development and this program has 3 important strategic significance. One is to solidify the international capital foundation promote the strategy to go deeper and further and older raised funds will be used for the company's international business development and respond to -- they all copay the competition from large international investment banks. Secondly, it will help to enhance the profitability and long-term capital returns. Since 2024, the international business has been faster, has seen faster revenue growth and profitability domestic business. In half 1, this year, the contribution of the international business revenue has increased to 23.7%. And this program of capital increase will further stimulate the development potential of the international business. Thirdly, it will enhance global competitiveness and resource allocation will strengthen the company's competitiveness in the global capital market and its ability to allocate global resources and the better play the roof be trend link, connecting the capital markets at home and abroad. In recent years, CITIC Securities has unswervingly implemented the international development strategy increased the resource investment and the capacity building in the future. will take this capital increases and opportunity, actively integrate into the high-level 2-way opening up of the Capital Market do a solid job in organizational structure to be the first choice investment bank for China and abroad. First, we will consolidate the global capital base, enhance the capital strength and the risk resistance ability of international business and empower ability of global capital allocation. Second, we will improve the global diversified business network with establishment of branches in Middle East, Frankfurt, Germany, and we will enrich business layout in European and American markets. Third, we will improve the global comprehensive service ecosystem, improving the domestic and foreign platforms built across market business coverage capabilities and business varieties. Okay, that's my answer.

Next, the #6 question. .

I'm the analyst who [ Hong Sidney ] from the China International Finance Corporation Securities. The first question is about internationalization. What is the highlight and achievement of internationalization in half 1? Then in the future, what's in the outlook or what's the overall plan and the priority for internationalization? The second question is that currently, China has the strategy of the science and technology, self reliance and industry upgrading. So what will be the development opportunities for the company? And what will be the core high-end products to be very competitive SMD alternatives from the foreign products?

Okay. Thank you for your question. Thank you very much for your support to the CITIC Steel. You are quite professional by raising this question. In half 1 this year, yes, we have been committed to internationalization and the transformation towards the high-end products. These are the 2 important strategies which were fully implemented in half 1. On one hand, we have the layout of overseas industries and markets which has been fully implemented and has made new progress. This expands our overseas business. On the other hand, we see the opportunities brought by domestic industrial upgrading, structural adjustment and the high-end product development and this is new opportunities. overall business quality and the technology innovation capabilities have achieved a stable improvement. In terms of internationalization. Yes, this year is the first year of the 15 5-year plan. We already have a very comprehensive bank this period, including the upgrading of the corporate culture, including the adjustment to our vision and the mission. Our mission is to provide green and smart special steel for human securitization in accordance with the current requirements. And we have established the characteristics of green and smart development. Our vision used to be to become the most competitive special steel enterprise group in the world. has now been changed to becoming a globally respected leading special steel enterprise. So we have made some adjustments for the international layout in some the beginning of this year, we have been comprehensively implementing the strategy, and we have achieved some success. In Europe, we have established innovation and the center Also, we jointly established a joint laboratory with the global leading company Schlumberger, it's a joint laboratory for low-carbon new materials, which has built an innovative system of cross-border collaborative industry university research linkage. At the same time, in Europe, we also have laid out a high-end material processing base in Europe and CITIC eventual steel supplies high-end billets in China. So the reason we want to have a euro base is because of the high energy cost and also labor cost. And so usually, other ordinary companies cannot do that. but we can do that. So that's our strategic industry layout. And another aspect, probably you already learned about that last year, we signed the British telco. So that's one of the world's 3 largest traders. So we implemented these shares swap in August 24 this year. And in half 1, in terms of the R&D, we have established the European Innovation Technology R&D center in Europe and also the joint laboratory. Second is the channel stage development. So our trading company is 100% controlled by us. So the China's -- our steel exports can be more facilitated due to that kind of arrangement. And the third one is the per casting base in Europe that's related to industry layout. And in terms of the steel investment, we have some potential projects we are studying closely. So it will probably enhance our industrial layout for the next step. So in terms of the international development, we want to become respected steel company globally, we still need to have more internationalization level. So that's why we will increase our international assets. In terms of the business data, I'd like to talk about our half foreign export. That's about 1.2 million tonnes, 7% increase Y-o-Y. And now we're foreign trade cap operating income was RMB 6.5 billion. So next step, we will continue to pay attention to the funding value of the trading company platform, StockCo, as I mentioned earlier. And also adhere to the top level thinking of the whole industry going overseas and implementing the step-by-step, have better strategic layout by going global at a grassroot level. So we're going to continue to integrate and upgrade the global marketing network, make up of our shortcomings in the global application resources. And finally, to achieve the going global with our products to the going global of our brands and technologies. So that's the internationalization on different levels and the respects. So we want to about the rate in all different kind of regions around the world. So with that kind of platform company we have signed earlier, I believe it will facilitate our going global efforts. And in terms of the domestic market, I think high-end products should have a promised market. So global technology revolution is accelerating. China is striving to achieve high level reliance in size and technology and also upgrading these different kind of industries, including the steel industry. So from a domestic perspective, we also focus on different energy markets. For example, we know some emerging industries like nuclear energy, we LNG, high-end equipment sectors are still in the high boom development period. So that also drive the demand for high-end special steel and also special materials. And those are the opportunities will further capture. And in terms of the opportunities we are seeing, we will see the trend right with the trend and focus on the high-end special steel as our main business and overcome the difficulties and core technology barriers in different elects. So we actually have both successfully the high-tech barrier, high added value and high market adaptable and high-end product matrix of our portfolio. So that's our 8 best-in-class portfolios. So it can satisfy the domestic company's requirements, but also the overseas requirements. So that kind of structural advantage has continued to be released. So we have firmly captured the advantages in this differentiated market sector. And I think if you follow us closely, you probably know what I'm going to say very well. So in the half 1, you can see the growth drivers for our high-end products is very strong. For example, the high-end bearing sales up by 16.1% Y-o-Y. The automotive purpose steel sales increased by 14.7% and specialized small giant releases steel sales also up by 23.2%. What we call little giant because that's our niche market. We are the #1 in this niche market. We have occupied more than 50% of the market share. So you can see, we have achieved 23.2% of the growth in this little giant sector. So you can see those are the emerging opportunities we have obtained. The total sales has been increased by 48.6%. And also the specific products have increased by 50% in terms of the sales volume, especially the high-temperature alloy, high strong steel and specialty stainless still -- so all increased by 50% -- 55% in total. So you can see those high-end product transformation has brought in many more opportunities so we can open up more or capture more growth momentum in the future. So in the future, we're going to continuously making progress. So for example, the aerospace still is widely used in aerospace industry and the bearings we made for that aerospace engines have been very successful. For example, we have exported that very successfully. For example, to the Safran or also the GE in Canada and also the Collins Aerospace and also many other aerospace companies. And by leveraging our technical advantage and top-tier certifications that we have obtained. We will continue to expand on the application in aviation and also aerospace area. Second is the high-end equipment still that has also been very popular in some technology industry. So for example, we have overcome the barriers of some technology in this area. So it can be widely adopted and used in China without importing from other countries. That will also be our strong growth driver in the future. So is the energy purpose still, for example, for wind power, nuclear power and oil and gas industry. So those specialty steel -- special steel demand has been very strong. So we have enjoyed very stable growth in the energy-related industry. So our -- 1 of our old product has enjoyed 15 year growth expanding the market share. And we are also the only Chinese companies that can export this type of product to Europe. So we capture about 12% of the European bearing steel market. So you can see we have seized the opportunities we built our technology moat and also will continue to innovate. So relying on the European base, we have established and also the joint laboratory for developing new materials. We have built our platform that links domestic and international needs. And also we have integrated the resources from industries and cantina. Also, we come up with a new innovation system so as to overcome the technological barriers in these different sectors of still. Also, innovation requires high-quality talent. In the half 1, our scientific and technology achievements have been abundant. For example, we have innovated products and produced 1.4 million tonnes of new product, especially 2.75 million tonnes of them are high-end products. We also obtained 253 licenses and invention license. And also 6 technological awards from provincial and above levels. Also, we have spearheaded 6 national standards drafting work and also on international common standard drafting work and also obtained many other awards, for example, in net international invention or word development award and things like that. For the next step, we'll continue to destock and also compete with structural advantage, also eliminate unnecessary business and optimize our business structure. So we will always follow closely of the national strategy needs and also adhere to the self-reliance in our corporate development. And by focusing on the high-end precision autonomy nature of development will continuously improve the international R&D and innovative efforts for technologies for top scientific research talent and make every effort to technologies in the industry. So this is a very real opportunity for us to communicate here. And also lastly, I'd like to express my sincere gratitude to all the guests and media friends and investors long-term support and trust. Thank you very much. And in the future, let's communicate more and also empower the development. Thank you.

In the interest of time, I'd like to ask the last question from the floor.

So a researcher from [ Hitenfu Fund ]. So first of all, congratulations to your interim results very wonderful. And also the -- we see the share price increase Okay. My question is for the CITIC Metal. I have 3 questions. In half 1, the CITIC Metal forms almost reached the level of the whole year last year. So what's the drivers behind for such wonderful results? Second, when you are expanding the business in mining and also commodities, what are the latest advancement or developments? And last question is, what is your international layout for business going forward?

Okay. Thank you for your questions. Good afternoon, everyone. 3 years -- 3 days ago. So CITIC Metal was listed as 1 of the first company to get listed in here -- sorry, that's 3 years ago. So since 3 years ago, we have enjoyed faster growth. And we have also enjoyed very fast growth regarding some key projects and key businesses. And we continue to tap into the momentum of growth. In half 1, our total profit has almost reached the level of the 2025 whole year. So of course, we have seized good market opportunities and some other reasons. In terms of the half 1, the operating revenue reached RMB 86 billion. And the net profit achievable to the shareholders achieved also a very high level. So for example, reached RMB 2.6 billion with a Y-o-Y increase of 85%. So first of all, I'd like to talk about the main business of mining investment and also the commodity business and its progress. In terms of money investment, we'll continue to enhance will strengthen the post-investment management of our projects. So the investment earnings for revenue has contributed greatly to the overall improvement of our profitability. So globally, we have allocated 3 projects. In Peru, our mineral investment project is the Las Bambas mine. In half 1, the production went very well and steadily. Meanwhile, it has quite a high level of the grade, and it has the improvement in the processing volume for all driving in half 1, the Las Bambas produced 210,000 tonnes of copper ore and the output in half 1 for this year is basically the same as that of the whole year of last year. Output of copper in the second quarter was 109,000 tonnes, with a month-on-month growth of 8%. This has driven the continuous improvement of the overall profit, and that has brought nearly doubling of the contribution to the equity profit. And the second project is the in home mines, which has 3 projects in Africa. For the copper mines, it is the KK copper mine in half 1, it produced 136,000 tonnes of Catoca, lease to copper and also saleable selected war and the new mine in Kaposi set a new record for the output of new mines in second quarter the output reached 70,000 tonnes and a total of 135,000 tonnes of gold in the first half. And the platinum metal polymetallic mine in half 1, it steadily promoted the climbing of the first phase production capacity and the progress of the second phase construction. The third project is the Embraer, it's the PBM. And the world largest and the most competitively fill mine use production sales also increased in half 1 for the commodity trade, we actively see some the structural opportunities in the market and optimize the market layout product mix and business model but copper business. We focus on strengthening market research and the judgment optimize resource organization and flexibly follow the pace of production cells. We made every effort to promote the collaborative efficiency of variety trade across the entire industrial chain. You may know that our copper trade covers the copper in the upstream bleed copper in the midstream, electrolytic copper in the finished product and recycled copper. In terms of the niobium business, we deepened strategic operation with the Brazilian mining companies and is our traditional core market. We further consolidate advantages in the area than in emerging markets, especially in high-temperature alloys and optical glass markets, we have achieved positive results. And Chinese demand continues to grow. In half 1, the company still maintained over 80% of market share in China. Overall sales have reached a new high and our leading position in the industry has been consolidated. In the aluminum business, the market opportunity to have the bauxite to alumina to electronic aluminum. We have whole chain on basis of consolidating the domestic market, we accelerate expansion of the reexported trade model at home and abroad. Then the second question is about the driving force for the future growth. We believe that the major growth driver is our dozen years of expertise in investment in business, trade business, technology, innovation, risk mitigation, Thailand, Echelon. Due to time constraints today, I will only focus on 3 areas, for example, mineral investment and commodity trade and technology innovation. The first one is the investment in the scales, minerals, this is one of our future development drivers. For the portfolio of industry and scarce mineral resources, we have a prominent advantage. We have the overall resource allocation striking a balance between strategic security and economic returns. Our highlight is the company is strongly insisting on direct investment in upstream. We already showed you the 3 projects introduced, which have the high market recognition worldwide. The gas and valuable, and they have great growth potential as the core driving force for future development. On the other hand, in the middle and lower streams of the industrial trend. We also have the deployment. We have the broad market influence and strong business synergy. We believe that rational resource allocation is one of the cornerstone for our long-term competitiveness. Number two, we have the philosophy towards commodity trading, that is the plus within the trades model, we create value and build a differentiated advantage. In terms of upstream resources through the world-class mines we have obtained some offtake and the distribution rights in the third-party market. We strengthened in-depth cooperation with leading mines, enhancing our resource acquisition and guarantee capabilities. And about the downstream market, we continue to expand the global service network. And in terms of business cooperation, we reached out to the core clients in the ferrous and the nonferrous metal sectors and we help customers to maximize their success. That is also fund of foundation for our own success. Number three, we believe technology innovation will empower our growth. Technology innovation is one important DNA of CITIC Development. During the 15th 5-year plan period, we have elevated the technology innovation to a crucial part of the corporate strategy. Over the past 3 decades, in the bone business, we have successfully promoted it to Chinese steel industry and many new material fields. And now we are working on the nano-crystal material, aerospace, material, superconducting material battery material and the optical glass and other advanced materials are also committed to building a more open and collaborative innovation system, focusing on the Research Institute of Advanced Materials for communication technology the mode of independent innovation and the joint R&D. Your third question is about the overseas business deployment in the future. I would like to give you a briefing in the future, in terms of overseas business, we will continue to center around our principal business. We will continue to depend the layout of global resources and accelerating the new pattern of international business in terms of global resource layout. Our goal is to continuously consolidate the base with long-term competitiveness. So we will continue to improve our investment research and development capability. In terms of the project We Work Center around the new quality productive forces and we will continue the work in the varieties of copper and aluminum. We will focus on the projects in Africa, South America, Southeast Asia, Central Asia and other key regions to deepen our research capability and broaden sources of high-quality projects in terms of building capabilities, in international trade have set a goal to improve resource acquisition capabilities, enhance channel extension and differentiation and refined customer service capabilities and use the 3 plus model build differentiated advantages. So specifically, we will leverage our company in Singapore to expand to the market and opportunities in Southeast Asia. And in Africa, we also we have a plan part of the Tanzanian company to strengthen the exploration of the African region. So for the overseas market layout. The first is the commodity trade, the place of resource acquisition. The second is the world major consumer market, the 30s and the center of global trade traders, we will center around these 3 to seize opportunities. Then about technology innovation, we also have the consideration overseas, for example, leveraging global resources and the strength to empower business development to provide technical support and the innovation momentum for business development, while we once mentioned a couple of coffee absorbing the energy of the universe I also mentioned earlier, our technology innovation must absorb high-quality global research forces and uphold the concept of open corporation joined R&D and also the joint promotion. That is the model we would like to approach. And this is my answer to your 3 questions. Again, on behalf of CITIC Metal, to all these investors and the experts analysts and media friends who have been supporting us. I want to say thank you. We hope you will continue to support us. Thank you very much.

Yes, we are already 10 minutes later than scheduled. Please understand that. We have addressed your questions one by one. At the new starting point of the 15 5-year plan, CITIC has a clear strategy and stronger comprehensive financial strength, our subsidiaries delivered steady distinctive performance China City Bank sees stabilizing and rising net interest margin with NPL ratio down for 7 consecutive years, driving better results and the market value and CITIC Securities hit record revenue and the net profit, advancing towards a world-class investment bank. CITIC Steel completes the Sanco equity closing and the launches of the European R&D center for innovation and globalization. CITIC Metal maintains China's top market share in niobium products, leveraging the dual driver model of trading and investment analysts once noted in a research report that CITIC holds many hidden jams as the revitalized champion explore initiatives move forward, we believe more impressive heaten jams will be uncovered across CITIC diversified businesses. through years of practice, we have a deepened understanding of the nature and the rules of a market value management. We would like to share our insights with you today. First, CITIC Limited embarked on market value management at an early stage unlocking corporate value through value-driven reforms at the start of the 14th 5-year plan City elevated market value management to a strategic priority. It rolled out the Phase 1 reform and build a full-fledged methodology, which has been continuously refined ever since. In the later period of the 14th 5-year plan, we pushed ahead with the Phase II market value management reforms focusing on 3 key measures launching the first shareholder return plan, rolling out voluntary share purchases by senior and mid-level management their own events and implementing market value-based assessment across all the listed subsidiaries. HSBC analyst described the 3 reforms as a watershed of CITIC limited valuation upgrade. On the widely watched dividend issue, the Board and the senior management have delivered more than very promised despite the various challenges we maintain long-term stable and predictable dividend policy. In 2024, for the company unveiled a 3-year shareholder return plan, which comes to an end this year at the CITIC Group's Board meeting held last week. Chairman, Zhi clearly stated that. And also now, we are have or we have started to work on a new shareholder return plan covering the 15th 5-year plan period. From the perspective market, capital markets stock price performance is determined by various factors, such as fundamentals, policies, capital conditions. And the best can be encountered but not pursue, while alpha can be obtained to striving to be the best. In recent years, amidst the complex and changing environment, we have not only brought back returns to investable so create tangible alpha returns. During the 5-year plan, despite the Hansen index falling by 5.88%, [indiscernible] price bucked the trend and rose by 209%, with its market capitalization increasing by over HKD 190 billion, achieving its first 5-year consecutive increase since the overall listing. And also today's stock price is also very quite good. So in terms of the morning closing price, the share price has reached in total, $13.8 billion. so up 19.1% from the beginning of the year. So making the -- reaching a record high in the past decade. So the past years, so actually, our practice over the past few years have proven that there is a difference between doing and non doing in market capitalization moment. And second, CITIC has always been cable in learning, understanding and applying the loss of capital market, also integrating them with the company development logic. There's no unified and authoritative standardized textbook for market ferment. But we adhere to the principle of value creation is the foundation, value transmission as media and always respect and learn from and apply the laws of the capital market by focusing on speaking instead of listening. So we promote a close alignment between business logic and capital market valuation logic. First of all, speaking means, we are telling the CITIC story well. We focus on improving the coordination and linking performance announcement between parent and subsidiary companies. Starting this interim results, the timing of regular performance briefings for SELIC-listed companies has been generally advanced forming a coordinated flying model. The content of the interim performance announcement and semiannual reports have also been specifically improved enriched optimized focusing on the 335 strategy. So presenting company's operating results in the half 1 of the year from a spec of the financial quality and industrial revitalization from the other aspects Recent years, we have been going out more frequently to communicate face-to-face with investors and analysts, striving to clearly explain the synergistic [indiscernible] of a comprehensive company. This is also particularly important for a comprehensive company like CITIC. So secondly, listening also is very important to us. we have established a mechanism to continuously sort out and summarize the opinions and suggestions collected from motion exchanges in a timely manner, forming special reports to submit to the company's Board of Directors and senior management. And the demand and the subtractions and needs from the capital market are fully absorbed into the company's internal governance and business marge decisions and the laws and the rules of the capital market and the company's business logic are well integrated. At the same time, the positive feedback from the company's Board of Directors and the management on the voice of the capital market is also a valuable incentive for investors in the analysts. So market trust is built and accumulated a bit by bit through such ones exchanges. Third, we have gained a deeper understanding the clear view for the development during the 15th 5-year plan. And we are fully committed to leading valuations or strategically reshaping. So in early stage, the current price-to-book ratio is only slightly over 0.4x, indicating a clear value gap. The diversification discount in the capital market is a challenge. We cannot avoid, but it doesn't mean there's no way to overcome it. So the strategic shareholders of the company and also the [indiscernible] Japan is also a comprehensive enterprise but the market value performance has exceptionally excellent even years. And we also are building a very clear map and view to do the right things. So only by building a better management beacon characterized by good leading system, then we can -- it can guide us to do the right thing with clear strategies. And also, I believe the value of our company will be reemphasized by many more investors and analysts. And I believe the -- shareholders. So I really like to thank all of for your enthusiastic questions. The on-site Q&A session for this interim results announcement is now concluded. Next, we will answer to all the online questions through the written format. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]