Fosun International Limited (656) Earnings Call Transcript & Summary

Dear investors and analysts, good afternoon, everyone. Thank you for joining Fosun International 2022 Interim Results Announcement. And I'm the General Manager of Capital Market and IR of Fosun International. I'm Sun Lu. First of all, I would like to introduce our Fosun International's management team. They are the Chairman of Fosun International, Mr. Guo Guangchang.

Hello, everyone.

The Executive Director, Co-Chairman of Fosun International, Mr. Wang Qunbin.

Hello, everyone.

The Executive Director, Co-CEO of Fosun International, Mr. Xu Xiaoliang.

Hello, everyone. Thank you.

Executive Director and Co-CEO of Fosun International, Mr. Chen Qiyu. And we also have Executive Director, Executive President and CFO of Fosun International, Mr. Gong Ping.

Hello, everyone.

This announcement will be divided into 2 days. And today, Fosun International management team will introduce the results in the first half of this year and the corporate strategy and business outlook. Tomorrow morning, the executives are responsible for 4 segments and will introduce the results and business for the first half of this year and also strategy. First of all, I would like to give the floor to Mr. Gong Ping, CFO of Fosun International, about the financials and also H1 in 2022. Please, Mr. Gong.

Hello, everyone. So dear investors and then analysts and shareholders and then our friends, good afternoon. Today, we are very honored to represent the Fosun International management team to introduce the interim results in year 2022. Well, in the first half of this year, as we know that because of geopolitical and also capital market and also the resurgence in COVID-19, there are a lot of challenges. And for Fosun International, and based on our 4 engines and our strategy, we have seen very stable growth in the first half of this year. And then our total revenue amounts then to more than 20 -- CNY 82 billion, up by more than 17%, and of FTG increased by more than 131%. And also 10-year CAGR of total revenue up by 12%. And also in the overseas market, we have seen the increase of 31%. The net profit attributable to the owners of the parent amounting to CNY 2.7 billion, down by 32.6%. And also, we can see the industrial operation profit down by more than 35% because of the fluctuation in the capital markets and also the devaluation of the investment assets, but that is not a loss in the cash and flow, so that is primarily about the valuation. And then we have also seen the 10-year CAGR of net profit attributable to owners of the parent of 6%. And then here, you can also see that we have the enterprise and operation profit this year. And based on the net profit attributable to the owners of the parent, and also in addition to the industrial operation profit, we have also introduced the idea of enterprise and operation profit because for our group -- because in all our subsidiaries, and then we have removed this contribution of the operation subsidiaries. And then we can also see that this is the profit contribution of the major members of the group. And also, despite all these uncertainties, our enterprise and operation profit amounted to CNY 2.33 billion, up by more than 35.5%. The 10-year CAGR of enterprise and operation profit is 6%. The investment of technology and innovation is also increasing and up by 21%, amounting to CNY 4.6 billion. And then we have also seen 414 million for the number of operational members. For all our 4 business segments, based on all these considerations, despite all these uncertainties and despite the pandemic, we can see the continuous growth of all these 4 segments, and up by 21% for the Health, and also more than 17% for the Wealth, and more than 13% growth for Happiness and more than 44% increase for the Intelligent Manufacturing. And we have also seen the growth of the international travel and we have also seen the growth of the FTG. And also, you can see that for the Yuyuan, and you can see basically flat. And also for the Fosun Pharma up by 26%. And also for Fosun Insurance Portugal up by 14%, and Peak Reinsurance down by 1% and FTG up by 131%, thanks to the overseas business growth. Despite the fluctuation in the capital market, we still have seen very stable level. And you can see 4.5% for the average cost of the debt at a low level. And then also, we have CNY 17.67 billion for the fundraising in the open market during the reporting period. And then we also have very sufficient cash and bank balance and term deposits. And then also for -- our adjusted NAV decreases slightly due to the impact of the secondary market volatility, but still HKD 24.2 per share. And our leverage ratio rises slightly, but it is still under control. Overall speaking, I know that you're very keen that in terms of the credit rating, it is still very stable at this moment despite the market fluctuation, and we continue our financial strategy. And then in order to improve on our rating, and we plan to steadily and orderly reduce the debts year-by-year from 2022 to 2025, extend the duration of debt, increase the dividend upstream from subsidiaries, and control the headquarters overhead, thereby steadily optimizing the credit indicators and consolidating the ability of steering through the economic cycles. And with timely and orderly disposal of the nonstrategic and noncore assets and then also, we'll continue to strike the balance between the investment and divestment. And in this regard, and we continue to diversify our assets. And in order to maintain the cross-region and cross-industry asset portfolio to diversify risks, and we will continue to have our core subsidiaries. And then at the same time, we have also done a lot to enhance the transparency of capital structure and asset valuation. And you can see that divestment at the group level continues with our number of investment in the first half of this year. And in the group level, that is the divestment higher than investment. It doesn't mean that we do not make any investment in the portfolio companies, but we continue with an M&A for our Fosun Insurance Portugal and we have acquired the La Positiva, the remaining 40% of the shares, the third largest insurer in Peru. And also in H1, and then we have completed syndicated loans, nearly USD 900 million. And also for our Fosun Pharma successfully completed the group's first overseas sustainability-linked syndicated loan with an amount of USD 400 million. And we have also signed a strategic agreement with HSBC. So we can also receive [ adjustment ] from our partners. And then also -- and we have also leveraged the repurchase offers and secondary market purchases. And then we have purchased in our offshore bonds prior to maturity for Fosun Pharma by July. And we have also raised a total of more than CNY 4.4 billion for the nonpublic offering. And also, in terms of AI platform of Fosun Proxima, we're committed to building a medical AI industry platform. For our Lanvin Group and then we have completed the merger with Primavera Capital. And then we plan to be listed in the New York Stock Exchange. And also, for Wansheng and Intelligent Manufacturing, we have completed a nonpublic offering of shares amounting to more than CNY 1.475 billion. So despite the volatility, we haven't seen a slight decline of our NAV. But after the adjustment, it is still much higher than the share price, and it can also demonstrate our investment value. And in the past 15 years, the total dividend and payout is more than HKD 25.2 billion. So we will continue to consider the dividend payout. So now after the introduction to our financials. So on behalf of our Co-CEO, Mr. Chen Qiyu, I would like to give you some further introduction to our business segments because Mr. Chen just arrived at the Hong Kong airport. There was a little bit delay of his flight. So that's why on behalf of Mr. Chen, I'm going to introduce our business segments. First of all, the Health segment. In the health segment, we have our pharmaceuticals, medical device and diagnostics, and health services and products. And across the world, we continue to make innovation in order to provide a one-stop scenarios. In the first half, for our Health business, you can see very robust growth and up by 21%. And in terms of the net profit attributable to the shareholders, recorded in the RMB 287 million, down by 76%. That is primarily due to the fluctuations in the secondary market positions. For all the other portfolio companies, Fosun Pharma if you take in H1, revenue amounted to more than CNY 21 billion, up by 26%. And you can also see the R&D investment is also increased by 23% and amounted to CNY 2.4 billion. And also, for Fosun Pharma, we can also see that the pharmaceutical manufacturing revenue amounts to more than CNY 14 billion. And for the devices and diagnostics, more than CNY 4 billion. And for our health services, revenue amounted to more than CNY 2.92 billion. And while we are coping with the COVID-19, we have also identified more on investment opportunities in the COVID-19, in the post COVID-19 era and in terms of the medicine for COVID-19. And in July this year, together with Genuine Biotech, we have established the cooperation on the joint development of the first approved oral small-molecule COVID-19 drug, Azvudine. And together with Sinopharm, we will continue to promote the coverage of the national channel network. And the medicine has already been transported to different places. And also, we have been authorized in MPP. And we can supply the MSBs on oral drug to more than 105 low- and middle-income countries. And also, we have a supply to the Pfizer oral drug against the COVID-19, Paxlovid, and also, we are working with the Kintor Pharma to develop the commercialization in Africa. And we have also provided the detection solutions against COVID-19. And it is also in the -- on white list in Europe and also [indiscernible] And also, it has already been sold by more than 30 million. And also, in April and then in May, it has also been sold for those children aged 5 to 11 years already in Macau and in Taiwan. In August, it was also approved for the vaccination of the kids between 6 months and 4 years sold in Taiwan, China. And then in terms of R&D, there are some highlights here in terms of R&D investment. And after all our cultivation, we have reaped the fruits and we made a lot of investments on R&D. And here, you can see in terms of the growth rate is more than 20%. And also, we have seen the contribution by the high-quality innovative R&D. And in March this year, the first indication, and that is Han Si Zhuang for the PD-1 inhibitor and was approved. And then just for 3 months, the sales revenue amounted to more than CNY 76 million. And also for Yi Kai Da, received domestic clinical trial approval for the second-line treatment in August. And then also for the mRNA, Comirnaty, approved by FDA globally. And also, in terms of our self-developed Han Li Kang, Han Qu You, Han Da Yuan, Han Bei Tai and Han Si Zhuang and they have also been launched in the market. In terms of the devices and diagnostic products, you can see in terms of LMNT, an anti-hair loss product, and also COVID-19 antigen detection kit and monkeypox virus detection kit has also been launched. And also, in terms of our global operation, we continue to dive into details, for example, in the H1. And then in terms of the international revenue, it amounted to more than 37% (sic) [ 35% ]. Together with Amgen, we have received the exclusive commercialization license. And also, for Shanghai Henlius, we have also entered into the licensing and the supply agreement for various products with companies such as Organon. And also, in the United States, we have established now second headquarters in the U.S. And also in Africa, we have set up 5 regional centers and about 800 people. In India, we continue to promote Gland Pharma to become the biological drug and the CDMO and complex preparations and difficult injections. And compared with our peers in China, we are taking the leadership. We will continue to compete in the global arena. And then for the pharmaceutical revenue structure, it is optimized gradually. And here, you can see that in terms of the optimized pharmaceutical and in terms of the innovative and also the biologics contributed to continuous high growth in H1. And you can see, the new and recently launched products account for more than 25%. And Han Qu You sales apparently amounting to CNY 813 million, up by more than 150%. And Su Ke Xin witnessed the revenue up to more than CNY 360 million. And also, for Han Si Zhuang and Han Li Kang and also for all the other products, you can see in a very high sales revenue. In terms of the innovation, we have already bear the fruits. And then for the medical devices and medical diagnostics and then for our own proprietary brands that is on the rise. Take Sisram, for example, for the medical cosmetology, we have also promoted the cosmetic products, et cetera. And also, we continue to work with Intuitive and we set up the joint venture. The Intuitive and Fosun, we have set up the Da Vinci Center in order to provide learning and training platform and we had installed 24 units of Da Vinci surgical robots. And in August, the construction of the Intuitive Fosun Medical Robot Manufacturing R&D Center officially commenced. And also, in terms of the medical diagnostics, and then we have also set up our R&D and manufacturing capabilities. And then in terms of the medical service and health management, we continue to make evolution. And for our health care services engine, we have controlled 19 hospitals and we have more than 5,000 beds. And then we also continue to synergize our resources with the international partners. And currently, we have more than 200,000 online doctors. And then we have also completed the operation in Guangzhou. And we have also provided the proactive services. And here, you can see health and also insurance, wellness and health management, and they have also been synergized. And for the second part, I'd like to talk about is our Happiness segment. Here, as you can see, we have a diversified product portfolio. And we have, for instance, consumer brands and also tourism leisure. For instance, we have jewelry, fashion. We have C-end platform. We have cultural dining. And also, we have sports and e-sports. And in tourism leisure, we have tourism destination. And also, we provide resort and also hotel. And we also provide overall services and solutions. And as you can see, the total revenue is CNY 32.07 billion and increased by 12.5% year-on-year. And this is due to the strong recovery from overseas market. And we have 2 groups. We have Yuyuan and also we have FTG. Later on, we will have a deep dive into each of them. And also, we have Fosun Sports. And also, we have Baihe Jiayuan and Yuyuan. And due to the pandemic, because Yuyuan is located in Shanghai, and due to the resurgence of the pandemic, actually, we have a very stressful quarter 2. However, in quarter 1, it has a great quarter. And therefore, it has achieved growth of CNY 22.1 billion. And also, if you look at the consumer business, it has high profitability. It is because we have a diversified product metrics, and it has increased the profitability to 13.69%. And if we look at jewelry and also fashion, again, it is a very strong segment as well. And also, if we look at the revenue, it has increased by -- it has a positive growth of 2.3%. And also, we have further expand our stores. And in total, it is more than 4,000, and it is among the top core in China. And also, we have the first boutique store of LUSANT, which is located in Shanghai. And also, in terms of liquor, still Shede and Jinhui Spirits in H1, they have achieved an increase of 26.4% year-on-year. And especially, we have the Tuopai brand. And also, Jinhui has further diversified its portfolio, and also, it has increased its revenue proportion in the high-pricing segment. And if we look at beverage and also food, Songhelou has opened a new store for 12. And also, it has entered into Wuhan and also Tianjin. And for Foliday, it has increased -- it has enjoyed a revenue growth of 131%, and especially due to a strong growth of Club Med business in Europe and the Middle East and also Americas. And also, it has a wonderful summer vacation, and it has increased its liquidity and also the global revenue from FTG. In China, we also see a strong rebound. For instance, in July, Sanya Atlantis and also for Lijiang Foliday Town, all have achieved record-breaking year -- months. And for FTG, we have global business. And in China and also in overseas market, we have different policies for the pandemic. And if we look at Club Med, it has a strong recovery. And also especially since July, the rebound -- the recovery is accelerated and also the capacity has achieved more than 85%. And also, if we look at average beds, actually, the price is 40% higher than that of 2021. And also, 53 Club Med resorts were in operation worldwide in June 2022. And Sanya Atlantis in July also has a rebound, a strong -- a very strong recovery. So if we look at the revenue, it is up by 44% year-on-year. And also, for Lijiang Foliday Town in H1 and its average capacity is more than 40%. And yes -- and due to the location of the Foliday Town in China, it is more or less impacted by our pandemic control. And also, Thomas Cook, especially Thomas Cook in U.K., and in H1, we see the restriction is lifted, and therefore, the revenue has increased to CNY 700 million. And also, we see the order increased by 4.7x (sic) [ 7.4x ]. And also, we have expanded the brand into, for instance, Europe and also like the Dutch market and also the Belgium market and also the German market. And for Fosun Fashion, we used a SPAC to get listed in the New York Stock Exchange. And also in terms of the top line and also bottom line, both has been increasing. And in 2022, compared with 2021, we see a 37% of growth. And for our Lanvin, its revenue increase is 120%. And in terms of the channel, we have Jingdong flagship, and also, we have IFC and also Harbour store in Hong Kong established. And also, we have Sergio Rossi in the Greater China. It has released its new Jelly Capsule series of Sergio Rossi. And also, for the other 2 companies, Baihe Jiayuan and also we have Fosun Sports. Baihe Jiayuan, its revenue is experiencing a slightly downward trend. However, we have the online business booming. And it has increased its followers by 9%. And also, the registered number has increased by 15%, which is more than 500 million now. And we have finished its brand optimization. And for the sports group, we have Wolves and also we have e-sports. For e-sports, we have again 3 championships. And also, we have achieved a breaking month as well -- or quarter as well. And also for Wolves, it ranked at 10th place in 2022 season. And for the third-party is our Wealth. And in terms of insurance and also asset management, as you can see, we have improved our efficiency and also the rate of return. For insurance and also investment, we have a high, and although we have the third-party asset management platform. And in the total revenue, yes, CNY 22.97 billion and which is up by 16.9% year-on-year. And also, the net profit attributable to the owners, yes, slightly down due to the secondary market fluctuation, and also for -- secondary to that, in total, it has achieved 12.80% of growth. And also for HAL, its revenue is at CNY 200 million and also increased by 40%. And that this is mainly due to our M&A and also consolidation. For Fosun Insurance Portugal, its overseas income attribute -- contributes to 10% and for the first time and this shows our globalization has achieved a milestone. And also, for our core portfolio companies, and they have registered a digit -- double-digit growth rate. And for instance, like Fidelidade and also Peak Re. Peak Re, its policy has increased by 58%. And also, for Pramerica and also for Fosun Health, they are a relatively small scale. However, with our very diversified consumption scenarios and also portfolio, they have achieved a wonderful growth as well. And for both Pramerica -- Fosun Pramerica, its new policy has increased by 7% and also 938 policies brought in from Fosun Care Community. And for Fosun Health, the total premium revenue growth is 13%. And all the indicators are very satisfactory. And if we look at investment and also the third-party asset management, we utilize our HAL resources and also our PE and also VC platforms. They are RZ Capital and also Fosun Capital and also Hani securities. And also our Rio Bravo and also Guide in Brazil and also other countries in Latin America, they all have achieved wonderful results, especially for Fosun Hive. And we have a sluggish property market in China. However, they -- Fosun Hive has reduced their exposure. And also, in terms of the third-party asset management, we have made a preemptive strike. And therefore, if we look at Hive Domestic and also Hive Overseas, we have created synergy in the overseas capital markets and the domestic capital markets. And this shows our capability in terms of globalization and also diversification. And as you can see, we have seen the asset under management increased substantially, both for the domestic and also for the overseas Hive business. And for the fourth part is our Intelligent Manufacturing segment, and it covers, for instance, steelmaking and also industrialization, digitization and for the green resource industry. And in terms of manufacturing, yes, our total revenue has increased about 44%. And also, for NISCO, it is slightly downward. It is down by 9.59% year-on-year. And it is mainly due to the blast furnace overhaul and also the steelmaking furnace maintenance, which has decreased by 8.55%. And also, the net profit attributable to the parent, also a slight decrease of 34%. However, it is still better than the 50% decline in the industry. And also, Hainan Mining, and for the total revenue is CNY 2.748 billion and up by 34.35%. And also, if you look at our Easun Technology, it has obtained orders from many domestic manufacturers and also has entered into industrial fields, like construction machinery and also automotive. And for JEVE Power, they have -- it has received a notification from Geely Commercial Vehicles and the SAIC. And also Besino is preparation -- is in the preparation for IPO. And if we zoom in to look at NISCO and in terms of its advanced steel materials, its revenue is increasing as well, and we are managing the ESG. And if you look at FTSE Russell, its rating has increased for NISCO from 1.6 to 2.2, which is ranking among the top 3 among Chinese steel companies. And also, the gross margin has increased by 60 basis points as well. And also, we have the so-called "Four Fields and One Chain" development strategy. And also, NISCO also embarked on the digitization journey. And we have now the Indonesia coking plant also enter into the operation, enter into the production. And also, we used our corporate venture capital to establish investment of fund. And also, NISCO will make investment in new segments. And for instance, now we have the Wuxi Binhu venture capital fund and also we have the NISCO investment fund as well. And for Hainan Mining, it is increasing its revenue and also profit as well. For instance, the gas output has increased by 58% and also the revenue has increased as well. And also, we need to look at, for instance, other -- our flagship companies like Wansheng Chemical. And it has finished a private placement. And also, it is the flame retardant leader in our domestic market. And also, it has the world's largest continuous intelligent engineering plastics flame retardant production line. And also, it has acquired 100% equity of Shandong Hanfeng. And also for Besino, focus on water disposal. And it has more than -- it has a capacity to dispose more than 6 million tonnes per day. And also, it is in the preparation for a near future IPO. And also Easun Technology, as I have mentioned just now, not only it focus on the domestic market and it has win orders -- secured orders from Li Auto and also from Xiaomi Motors and Great Wall Motors. And it has successfully expanded into liquor intelligent manufacturing solutions. And also, for JEVE Power, it is focusing on the auto battery. And here, for instance, if we look at the number of orders, number of customers, it is quite satisfactory. And also it has now opened 5 production sites in Tianjin, Yancheng, Jiaxing, Changxing, and Chuzhou. And also, it has a capacity of 35 -- 3.5 gigawatt of holding capacity, and also 22 gigawatt capacity is under construction. So this is about our financials and also our performance in 2022, the first half. And now I'd like to pass the microphone back to our host today.

Well, thank you, Alex, for your introduction. And now I'd like to invite our Co-CEO of Fosun International, Mr. Xu Xiaoliang, to talk about our strategy.

Hi, dear investors and also dear friends who cares for Fosun. And now I'd like to talk about our strategy and also corporate governance in H1 2022. So in the past 6 months, we see the tension in geopolitics. And also, we see the resurgence in pandemic. And also, we see the energy shock and also the monetary shock. So we're faced with a very uncertain external factors, external environment. And actually, this has put a lot of challenges in front of us. And -- however, in such a backdrop, we need to show our resilience. And we need to keep in sight our vision and also mission and to focus on our financials and also our capital health. And we have demonstrated our resilience and also our capability to ride through the waves. And this year is the 30 years anniversary of Fosun. Since day 1, we always talk about our mission, that is, to contribute to the society, and this has never changed. And we need to always bear in mind the mission and vision of ours. And we want to create a happier life for our families worldwide and to create an ecosystem underlined by Happiness, Wealth and Health for our households. Therefore, we need to talk about our strategy. Strategy plays guidance -- is a guidance for us. And this can facilitate our business growth and also performance optimization. So at the very beginning, we focus on the pharmaceutical R&D, and we enhanced our capability of R&D. And also, we focus on Fosun Hive. And also, we started transformation of Fosun Hive. We have -- we are the leading company in terms of ESG. And also, we have focused on dual engine and also FES system. And in 2021, we began to launch our FES system. That is, to accumulate the best practice from the past and also to continue to use it as an enablement for our further development. And with our strategy and also the evolution of our strategy, we have achieved long-term and steady and stable growth. And also, we have our core competency now at hand. And these are the guarantees and also the basis for our success. And also, it is a driving force for our future development. And in March, in our annual performance result announcement, we talked about our FC2M: Globalization, ecosystem, innovation and the FES, 4 core capabilities. And now I'd like to use the following time to talk about, in the past 6 months, what we are doing in these 4 core capabilities. So first of all, if we look at globalization, we always say that we're the practitioner of globalization. And we combine the Chinese momentum to the global resources. And we have the dual engine. And also, last year, we have the Globalization 3.0. And we have -- we combine global with a local operation. And globalization provide us with the talent, capital and also the fund we need. So if we look at our global operation in the first half of 2022, we achieved a new record. So we have seen 46.8% of the sales revenue from overseas countries and regions. And now we cover more than 30 countries. And also, the total revenue of the China-Global 2-way empowerment is CNY 6.5 billion. And apart from the financial indicators, where if we zoom in to look at operations. For instance, for NISCO, it has the new project. And also for the Indonesia, the coking plant phase 2 has entered into the operation. And also, with -- BCP has been rated as one of the European climate leaders by Financial Times. And also for [ Fosun Right ], it has expanded into the overseas countries and it has established its global R&D capability. And for Lanvin Group, it is promoting the SPAC listing in the New York Exchange as well. At the same time, Fosun is going to build in the happiness of all the treated families. And we have our FC2M ecosystem. And for all our portfolio companies, and they have to [ improve ] in their FC2M ecosystem, focused on the customers and in terms of the system membership. And at the [ M end ] and full R&D innovation, we will continue to promote the high margin and also unveil products in terms of link. And we have to build our flexible production line. At the same time then, we have to set up an offline BD system in order to get linked with more products with our customers. And in terms of FC2M ecosystem improvement, we have made new breakthroughs. And in terms of the membership, we have the evolution. And currently, in terms of the user operation, and we have more than 414 million users and then at this moment. And we have covered 50 members in terms of digitalization. And also, for our Fosun Health, and then, we have also seen more than RMB 1.17 billion. Through the deep ecological synergy, Health segment achieved a cross-selling of RMB 1.17 billion. And also, we have a 938 sales synergy with the ecosystem and higher than 477 last year. And then also, we have witnessed RMB 2.9 billion for the Antique Gold series of Lao Miao. And then also in terms of link and through our centralized operation, and then we have continue to improve our purchase amount. And we have achieved RMB 1.5 billion for cost reduction. And then through the battle and in H1, and then we have also and seeing that a more than 100% increase for the product improvement. And also in H1, and we have seen the investment in science and innovation amounting to CNY 4.6 billion, and we have a total of more than 1,500 authorized invention patents and more than 500 research projects in progress. And also, in terms of our intuitive and also robotic surgical operations, and we have also made investment in more than CNY 700 million. And also for the NISCO, and then we have also certified by the classification societies of 7 countries in terms of crack arrest and steel that is also applied to the world's superlarge and 24,000 TEU container ships. And then in terms of both our operation and investments, we had a lot of experience in the past and we haven't crystallized in our experience. And step by step, we have built our FES system. And essentially speaking, and Fosun is going to make a tailor-made management system for Fosun based on our 3-decade experience in terms of business operation and investment capabilities. It is hoped that we are able to develop and also duplicate our methodologies to support our sustainable growth in H1 based on FES. And also based on continuous evolution, we have a deeper insight and understanding into FES. For example, the Investment Wolves team, is also the demonstration of our FES capabilities. And at the same time, this experience can be used to empower other portfolio companies. And also, after our investment in Wolves teams, so we set up on our professional team to operate and improve the football club. And also, in the second year of football club, and then it returned to the Premier League. And also it is one of the top 8 in the European League. And it has continued to improve the values of the Wolf teams. At the same time, through our consolidation, and we also have for the brand for sports and lifestyle, including the e-gaming industry. And we have also enhanced the synergies within other Fosun brands to achieve a multiplier effect. So here, you can see, thanks to the FES wheels, we can see continued growth for Wolf, for example. And fundamentally speaking, we need to have the organization to support continued growth in order to build our global happiness assessment. And we need to have a holistic matrix. Last year, and we have set out in our 4 committees. And then based on these Overseas Operation Committee, Science and Technology Innovation Committee, Ecosystem Committee and FES Committee. And we have [ BG ] and a [ P&L ] and vertically. And then we also have a [ hyphen ] and also [ AMZ ] vertically. So here, you can see that within all these horizontal and vertical matrix, we can continue to enhance on our core capabilities, and through, continued development. And here, you can see the Overseas Operation Committee, trying to set up a global organization structure to synergize the global resources and also to set up the global shared center. And also, for our Science and Technology Innovation Committee, it is also trying to plan the innovation strategies in order to deliver more products and then also services. In terms of innovation, it is also going to harmonize all our technological resources. And therefore, the Ecosystem Committee, it is also going to promote the implementation of FC2M models. FES Committee is going to extract these excellent practices and cases and implement FES empowerment projects through internal certification experts. And then we require different business lines and dimensions. And also our partners with entrepreneurship, in order to get connected with each other and also harmonizing all these resources. And after the upgrading from our partnership, and we have more than 140 global partners. And then we also have more than 300 Fosun global partners and more than 3,000 in the future, and entrepreneurs. And we have continued to include our new partners currently. And you can see that, in the future, we are going to have more than 3,000 globals in different levels in addition to the partners. The recruitment and also operation will continue to be reinforced. So we continue to recruit and introduce high-caliber talents in order to improve on our asset value. And through the challenging battles, we are going to cultivate these partners. And through the battles, we are going to identify more partners with entrepreneurship. And then we can continue to enlarge our partners team. Through the partnership system, we will continue to improve our talent acumen, and then we can achieve a multiplier effect thanks to the high efficiency of the mechanism. And we also need to enhance our entire system. And because of these ecosystem. [Audio Gap] [ Okay. Let's continue. ] So last year -- and the in terms of the goal-driven mechanism, battle assurance and mechanism and talent development mechanism, in H1, we continue with all these mechanisms. For example, we put emphasis on the OKR. And in order to make a breakthrough, the KPI, and we have included OKR appraisal mechanism. And also at the same time, and then we have all the monthly operations supervision mechanism. And we have to ensure the investment on these operating mechanisms through the battles. And we have also organized the rotation system to nurture our young talents. And globally speaking, we have set up our culture mechanism. And in order to build on our global ecosystem, and our original aspiration is to make contribution to the whole world as our corporate culture, we will continue to enhance our system. So that is on also the resilience over the past 3 decades. And this is also the core aspiration for ESG, because we believe that the personnel improvement and also corporate improvement, they should be closely related with the social contribution. And over the past years, we made a new improvement on those achievements in ESG -- in terms of ESG. And last year, we made the commitment by 2028, we are going to achieve carbon peak. And by 2050, we would like to achieve carbon neutrality. And we are trying to follow on the Paris agreement in order to control the temperature increase by 0.5. And in May, NISCO has also obtained the first SA8000 social accountability management system certificate in China's steel industry. So that is also our CSR accountability. Then in terms of rural doctors program, and also malaria-free world, and we are also making contribution to the global pandemic prevention and control. Then in terms of governance, and based on the GRI and also the TCFD, we have also launched our TCFD reporting project in order to make disclosure and also protect the legitimate rights and interests for all the stakeholders. And thanks to our performance in ESG, we have also been highly rated by different agencies in terms of ESG. And in Greater China region, I'm very honored to say that we are the only conglomerate in Greater China with an MSCI ESG rating on AA as of 2021. And we also selected as a constituent of the MSCI China ESG Leaders 10-40 Index. We're also selected as a constituent of Hang Seng and also FTSE. And then we have also being as the constituent of a different index. And at the same time, we have also joined the United Nations Global Compact and also the China ESG Leaders Association in order to further improve on our ESG result. So that is about the governance and also strategy of Fosun International in the first half of this year. I would like to thank all the investors and also friends to join this interim results announcement. And as I said just now, at the 30th anniversary, we have a clear objective in order to provide our global families with happiness and also wealthy ecosystem. In order to build the ecosystem, this is a long journey. And because everything is interconnected, and it is also growing exponentially, for any single company, it is impossible to go forward alone. So we have then to ensure the coexistence and also co-creation. So we would like to join hands with all our stakeholders, including our friends and investors, analysts and employees, et cetera, to move towards the happiness together. Thank you.

Thank you, Mr. Xiaoliang, for your excellent presentation. So this is the end of the presentation today. Now let's move to the Q&A session.