MINISO Group Holding Limited (MNSO) Earnings Call Transcript & Summary

[ Strategic ] investors, our global partners, a very good morning to you all. Welcome to [indiscernible] Guangzhou for MINISO Investor Day 2024. I work for MINISO. I am the moderator today. My name is [indiscernible]. Our [indiscernible] the first ever investor day after we have the dual listing. It is the very first investor day communicating with our global investors in the beginning of 2024. Today, we are going to have this investor at the hotel. And tomorrow, we'll lead you to our offices. In the morning, we're going to have the management presentations. In the afternoon, we're joined by our IP licensors, global agencies, suppliers and distributors for a roundtable. We also have a little bit of time today for direct communication with all investors. Tomorrow, we will be very happy to host you in our headquarter and our MINISO top 3 stores for a store visit. Now let's kick off our morning session. The first presentation comes from Jack Ye, Founder and CEO, Chairman of the Board. Mr. Jack Ye, now the floor is yours.

Distinguished staff, guests, ladies and gentlemen, dear investors, good morning. Thank you so much for making your time for our Global Investor Day 2024. In my presentation, I'm going to talk about how MINISO has been exploring the new [ world, our brave ] theme. Now this is my signature in my WeChat Moments, and this represents my commitment to MINISO. So what do I mean by that? First, this is the first ever offline investor day after that we're listed for 3 years. So I must really recap on our past 1 decade of business development. And today, online and offline, we're joined by over 1,000 professional investors and investment institutions. Taking this opportunity, I'd like to particularly reiterate on our global competitive edge. [indiscernible] I would love to walk you through our strategy from the year 2024 [ onto ] 2028. Now let me recap on the past 10 years. From 2013 to 2023, it is the going overseas 1.0 plus affordability. In the next 10 years for MINISO, our strategy would be interest-based consumption plus outbound expansion 2.0. So a very updated global strategy. Now let me walk you through on the statistics. In the last 5 years -- our accumulated GMV amounted to RMB 100 billion in the last 5 years, starting from to Q3 2018 to Q4 2023. Globally, we have over 6,200 stores. In the fashion products variety stores, we're one and the only with the revenue and GMV up more than 100 billion, and we have over 218 stores in Europe. So what are my key takeaways from my last 10 years of efforts? First, long-termism. The retail sector is a sector of patience, and we must stay true to long-termism. Especially given the economic downturn around us, long-termism must be observed especially for entrepreneurs. I know we are joined today by many hedge fund managers or fund managers. I think in your business, speed is the key. In our business, long-termism is the key. Now I started MINISO [ in my 33 years old ]. And in the last 15 years, I have been there starting up, and I still consider myself a young man who has great financial [ will unveil ]. So long-termism is true for me, and I must observe long-termism to do the right [ thing ]. Secondly, I would love to stress on the ultimate goal of our business. The ultimate goal of our business is to create your own customers. In such a competitive retail market, we have proposed a concept of customer creation. How? By co-branding by the IP, we have really hit the peak of the product quality. The market is brutal. If your product is not what the market need, you won't find anybody who's willing to pay, and you will gradually lose the customer's interest. So the interests of the customers are constantly improving, and that's why our ultimate goal is to create customers. So how do we constantly create customers? In the last few years, you don't see any co-branding on IP in the retail sector. We're the only one to [ get so ] and the only one that has constantly see profit and scale growing out of co-branding IP. In the past, our customers never had a need or demand for co-branded retail goods. And with our efforts, the customers are presented with a better choice, more choices. And with constant product innovation and co-branded products, with our marketing, we constantly attract our customers for purchase and repurchase, so interest-based consumption. And that's what I have pioneered in the year 2023, a new word, interest-based consumption or creating your own customer. For example, Steve Jobs, when he -- prior to releasing iPhone, he said the users at that time, they didn't know they need an iPhone because at that time, a simple phone that helps our users to have phone calls or send messages is good enough. However, after iPhone, Apple has created its own customers and needs. Today, Apple has sales volume of more than USD 500 billion. Why? It is successful because they're always creating new need for customers. The third key takeaway for me is we need to go out of our comfort zone. In any sector, we see things very clear with our clear mind. In the retail sector, we have the low cost or the affordability model like the PDD model, right? And we also have the specialty retail represented by Sam's Club, Costco and MINISO. So why do I talk about Sam and Costco in my presentation? If you think back on the last one decade, in China's markets, Walmart, Carrefour, they all have been disappearing from Chinese market; where Sam's Club and Costco, they are gaining great success. Costco, today, they have number of shops in China. And last Friday, the first ever Costco opened in Shenzhen. It was such a phenomenal event, and each store brought them more than [ RMB 2.5 trillion ] sales. So why is there such a clear contrast? Retail is a promising sector, and we need specialty retail. So what's so special about Sam's Club and Costco? Their specialty is membership system plus affordability. A good value for money. So by introducing the membership system, they gradually screened their ideal users. And how do we do that in MINISO? We use IP to screen our users, and we only target those users who are interested in IP, interested in consumption based on their interest. If I borrow the time machine theory, as [ TikTok and PDD ] disrupt the consumption world, the retail market today, its scale, its landscape reflects the retail in the future. What's the retail landscape in China today will be the future of the global retail. If you look at Walmart's stocks, in the future, it is going to be so disruptive. Who will survive in the competitive market? Those with their own features and specialties. Time machine will enable leading Chinese businesses to be successful in a number of emerging markets, becoming #1 in our own segment. In my second part of the presentation, I'd like to stress on what's so good about MINISO. What are our competitive edge? 1 plus 3. So just remember the formula, 1 plus 3. What are our advantages? Number one, one China supply chain plus 3 global advantages. So one supply from China plus global IP, plus global design, plus global channels; 1 plus 3. Now let me talk about one supply chain in China. We work with more than extensive number of 1,400 quality suppliers in China. Then we talk about 3. First, our global IP. We work with super IPs, amounting to 80 globally. We work with these IP licensors, and we will continue to grow our licensors numbers. The second level is global design. We now have 4 design centers. Design is a very important part of our competitiveness. The next is global channel. Globally, we have over 6,200 stores. As we continue to open [indiscernible], we will engage on the global e-commerce and online business. In the future, in terms of [ design centers ], now we have the global retail design capacity. Now I would like to outline our strategic plan in the next 5 years. So you can see our strategic map. Our mission is to create happiness. So I think to be happy, it's very important, especially given the adverse market environment. We know that life is very short. Therefore, we couldn't afford -- we cannot afford to be unhappy. And therefore, our mission is to create super brands, and we want to be the world #1 IP retail group. [ How we work ] in this is carefully chosen and deliberated. These are the core main keywords for us in the future. In terms of the strategy, we believe affordability is very important. In addition, globalization and product innovation are also very important. How to do the product innovation? That is through IP design. As for our aim, between 2024 to 2028, every year, we will have 900 to 1,100 new stores opened. By 2028, in comparison with 2023, the number of stores will be [ nearly tenfold ]. Between 2024 to 2028, the compound growth rates will be no less than 20% annually. So I believe [ these are some opportunity ]. And our IP branded products should account for more than 50% of the total products that's sold in our stores. 2023 was the 10th year anniversary of MINISO. We think in the last 10 years, the consumer behavior is characterized by affordability. Today, we think -- in the past, competition is highly related to international trade. It means that the cost should be low and the quality should be high. As for [indiscernible], it doesn't offer [ use ] with high quality, although the price is very low. Nowadays, we think that affordability is very important. MINISO is an [ IP ]. If you are not a member, you are not allowed to be in. So for instance, for consumers, if the product doesn't have a high quality, I won't have any interest at all. So nowadays, we think to go out is becoming a master choice for the enterprise. So in the past, we tried to seek a new blue ocean in the overseas market. And in terms of the competition strategy, [ we also understand ] that you need to be a leader in terms of cost or to be a leader in product differentiation. We think that we are very good in both these 2 aspects. We could say that the overseas market competition is more fierce in [ our fields ] because it is different from us when the trade defines everything. We have been upgraded from the 1.0 version to 2.0 version. Localization and IP design brand building are all very important. So we need to do the product innovation. We also need to build the brand to be a super brand. For instance, for UNIQLO, it doesn't have any competitors in Japan. But then [ between 2025 to 2015, its overseas ] revenue grew by 45% annually, overseas market. So we think that at least the model for us, our aim is 20% lower than [ that ]. So the overseas market has become a very important source of growth for UNIQLO. So we believe that there is still a large room for us to grow in terms of international markets. I paid a visit to many countries last year. I think in Europe or in America, there is 1 store per 100,000 people. In the emerging markets, we think that per 200,000 people, there should be a store. In North America, it has a population of 470 million. So if there is 1 store per 100,000 people, it means that we can open 4,663 stores in the next 10 years or 20 years. So I think there is still a very large room for us to grow in terms of the number of newly established stores. IP retail market is also a market with a lot of potential. In 2022, globally, IP sales reached CNY 1,800 billion. This includes, for instance, plastic toys and other products. And the average or the per capita spending on it is CNY 227 globally. So 20 years ago, the IP retail market didn't exist at all. In 2 decades, it has recorded a tremendous growth. Looking to the future, I believe the potential is even bigger. As for in China, the per capita spending is CNY 51, significantly lower than the global level. In Japan, the per capita spending is CNY 581, 10x as much as that of China. In the U.S., the spending is CNY 3,000. That's about 60x as much as that of China. China is at a very initial stage in terms of [ any ] retail. If we want to sell consumer goods, we need to have a huge population. China is a populous country; therefore, offering a very big market for us. So you can see the figures here. Globally, the IP retail and service value is about CNY 2,300 billion. In China, about CNY 71.5 billion. So U.S. is about 60x that of China, and Japan is about 11.5x that of China. So I think this gives us a strong confidence in the Chinese market. And we noted that there is a very small IP in Japan. We know that -- its sales is about RMB 10 billion. That is JPY 230 billion. We know that Japan is a very seriously aging society. Given this, this small IP could record such an impressive sale. So I believe in the next 10 years, the IP retail sales globally will reach about RMB 3 trillion. This means that we need to leverage our advantage since there is such a huge market, and we are at the right time to develop it. Let's take a look at the case of LEGO. It's toy brick plus IP. LEGO is famous for its bricks products supported by IP. It has become the biggest retail toy brand globally. Therefore, very appealing, and it's able to create a lot of value. So we think for us, we have a huge potential in terms of, for instance, like blind boxes toys and fragrances. These are interest-based consumption. We could expand the IP to include other categories. For instance, consumer electronics, stationery, gifts bags and snacks. We can see in Japan, a lot of snacks and drinks have an IP. So we believe since we have -- if we have a global IP, global design and global channels, we will be able to integrate them. So in MINISO, the customers are able to buy the cheapest and authorized or licensed IP products. That's the reason why we define ourselves as the world's #1 IP design retail group. We believe we will be able to bring happiness and fun to our customers. And we base our philosophy on the concept of being happy. We want to bring happiness to the Chinese people and to the consumers around the world. And we think a brand that is able to bring happiness to the consumers will become a super brand at the end of the day. So in the last 10 years, we sold to 1 million customers, and we have become a major brand in China. In the next decade, we are going to take part in the international competition, pursue globalization, keep innovating, foster sustainable growth and become the #1 IP design retail group in the world. Thank you.

Thank you very much. Would you please go back to your seat? Now may I invite Chief Product Officer and Executive Vice President of MINISO, Ada Dou.

Good morning. I am the Chief Product Officer of MINISO. My name is Ada. It gives me great pleasure to be here for the 2024 Investor Day of MINISO. As CPO, I would like to give you a speech how to create a super brand through our products. Our products is one of our core [indiscernible] our core competitiveness in our products. That's because we make a lot of explorations and innovations. We have the following [ core ] capacities: super product, super supply chain and super IP. In terms of super products, in the last 10 years, we are able to achieve best [ cost effectiveness ]. We introduced to our consumers over 100,000 products. Some of them have become the new super products. We could see that there are 3 characteristics of such super products. First of all, they are at the top of the market and are highly concentrated. And the second, the most popular products are becoming even more popular. Lastly, they are interest-driven consumption. So if we focus on the super products, we could see that the contribution made [ by them ] have increased from CNY 2.5 billion to CNY 6 billion, accounting for about half of our annual sales. And as for the top sellers, they have become even more popular in the last year as our -- among -- product sales is over CNY 100 billion -- it's really hard to [indiscernible] the so-called best sellers. And some of them, the sales is very phenomenal. So in the last 5 years -- there is toothbrush. We own the design patent and invention patent. The sales for it were over [ 25 million ]. Another characteristic is interest-driven consumption where the customers are interested not only in our products for everyday use but also for their personal interests. For instance, [indiscernible] and blind boxes. Both of these products have had an annual sales growth of more than 50%, whereby our commitment in these [ sectors ]. So now I'd like to talk about how a super product is born. At MINISO, one super product is born after more than 10 sets of smart digital systems verification. And this is our visualization of the digitalization platform, representing our keen interest and specialty in digitalization. I'd like to walk you through a typical case. In the gift bag, there's one product. That is disposable towel, and this is a product that we have sold for more than sales of RMB 50 million. We started off with an initial batch of products, and we identified that emergency needs and [indiscernible] market development has driven the demand for disposable towel. And after prototyping of 500 products, we have finalized the end product, including [indiscernible], texture, raw material and how it will be wrapped and packaged. So quality first is what MINISO has always been keen on developing. We have used the medical materials with the fifth-generation [ German RF ] system for production. This super product is just the beginning. We need a strong supply chain to support our demand from the users. Let me take the disposable bath towel as an example. If we are to have more than [ 50 million ] sales -- maybe in 2024, we're going to have a sales volume of more than 100 million from this one single product. What should we do in our super supply chain after 7 days of testing to 7 days of production line [indiscernible] manufacturing? We have a 7-1-1 principle. Meaning, every 7 days, we select 100 best design product for product release. So we need to build a strong supply chain ecosystem to support such responsive product release. We have more than 1,400 super suppliers [indiscernible] number of these landmark suppliers. And there, the ecosystem -- have ensured the completeness of our ecosystem, and that has enabled us to distribute it to over 6,000 stores globally. In the same time, we have lean management to improve the overall efficiency. Last year, our supply chain has been accelerated by 15 percentage. Now thirdly, I'd like to talk about super IPs, the co-branded IPs. Some consumers say we are the [ tycoon ] for IP. Yes, that's definitely true. IP first is what MINISO has been committed [ to do ]. In 2015, we worked with Sanrio to start the super IP development. And [ ninth ] year, by the year 2023, we have collaborated with more than 80 top IPs. We operate more than 300 products on various categories, and we have released more than 30,000 IP products with the sales of more than 700 million [ pieces ] of these super IP products and covering more than 100 million consumers. Consumers who have [ once bought ] the super IP products contributed more than 263% of their sales, and the average transaction volume is also 176% higher than those people who have never been purchasing super IP products. So how do we continue to elevate the super IPs? We need to have responsiveness and our customer insight as well as how we consolidate the super IPs in the future, and I attribute that to our strength in MINISO. I'd like to give you some other examples which just happened in 2023 or prior to 2023. These cases will help us to showcase the professionalism of MINISO in operating the super IP first. Barbie. I think you all know how popular Barbie is in 2022, especially with the movie. Barbie is the world's #1 dolls brand. It represents the fashion and [ trending goods ]. At the end of 2022, MINISO has identified the emotional connection of Barbie with our targeted users. So we have formulated strategic cooperation with Barbie. And in 2023, Barbie pink must be the trending color. In the same time, we also developed the insight that Barbie on garments products will be best selling and popular. So we are focused on garments and accessories to develop Barbie-associated products. In 2023, we listed our Barbie products to the market. Together, after the movie, we see a whirlwind of Barbie fan, and all of our products sold out, especially the bags. [ Small purses ] have become the most popular products, creating a few million RMB sales. And not only are we successful in China, in Singapore, Indonesia, in those stores, we continue to surprise our targeted users with our Barbie products. Now I'd like to talk about another case, Loopy. Loopy [ doll ] is another famous celebrity. She is extremely cute with a sharp personality. And making her as a super IP has enabled MINISO to be the most popular read news on microblog. Our quick and responsive supply chain have enabled such a success for [ Bubble ]. And this year, we will continue to launch Loopy 3.0 version. And we work with the IP owners, and there's further potential from this celebrity to surprise our consumers. So please, stay tuned. After the 2 new cases of IP in 2023, now I'd like to quickly recap on our old IP licensors. The first is Disneyland. The year 2024 honors 100th anniversary for Disneyland. So happy birthday. In the last 5 years [ of deep ] collaboration, MINISO and Disneyland have formulated such synergy. We not only become a licensee, we are working on the same business with Disneyland, our licensor. We have co-branded a number of products. Commemorating the 100th anniversary of Disneyland, we promoted a lot of meaningful products. For example, the centennial blind box. In that centennial commemoration blind box, we have selected 6 cartoon characters from Disneyland. We have created blind box, and it is sold out the first day [ after release ]. The fans not only see their favorite Disney figures, they can touch and feel the goods. Also, we are working with Disneyland on developing new contents, new channels. In 2023, we have great accomplishments with Disneyland. We have seen over 80 percentage growth for our collaboration with Disneyland. So there's much more to see from our collaboration with them. The #4 case dates back to an older friend. In the year 2015, Hello Kitty became so popular, and MINISO started the first IP co-brand with Kitty. And in the same time, we were the first licensee for the licensor in the retail and lifestyle product. So together with Kitty, we have had 9 years of collaboration. We have cumulatively listed more than 8,000 products around Kitty, and we have been exploring the preferences of our users. We not only have Hello Kitty, but a number of altogether 16 super IPs from the Kitty family. And in our flagship store, we also built dedicated shelf zones for Kitty-associated products. So if you go to MINISO, you have to buy Kitty products. And if you want to buy Kitty products, go to MINISO. That success signifies our joint efforts in the last 9 years, constantly creating better quality content to our users. In all these cases, you see the commitment, the efforts of MINISO and success on our co-branded IPs. The past success laid a solid foundation for next decade. As [ Jack just mentioned ], we want to be global #1 IP retail design group. Long-termism, IP innovation, globalization and value creation and innovation will be the key. Let me talk about them one by one. First, focusing on strategic categories. How do I define strategic categories? We differentiate a category to see whether it is strategic or not in the following formula. First, we talk about the traffic-driven categories. We need to continue to accumulate traffic so that our consumers will proactively buy from us. Second, content traffic or content products. We stimulate the need from our user with our content, and we continue to dive deeper on content creation. We design differentiated products to seize the market. The other part is organic traffic. Organic traffic produces by itself, so for MINISO, we want to leverage our brand, lead the trend for consumption with good value for money. With scenario-based consumption, we'll convert our users into paid users. Today, we have more than 500 series of products in 16 categories. And in the future at MINISO, we will have 4 -- at least 3 billion SKUs and a number of 1 billion scale categories, and this is just the beginning. Here, I'd like to talk about a few examples on the mentality mindset driven consumption First, Blind Box in 2023, a whole year, relying on IP resources from MINISO, we have promoted more than 100 Blind Box product. We have responded to the user's emotional needs, preferences, and we have constantly innovated our Blind Box relying on our [ style ] supply chain. That, of course, is our core competitive edge. In the year 2024, Blind Box will continue to be 1 key best-selling product for MINISO because it can deliver emotional value to customers, and it's able to enhance the price per transaction. And the companies about the [indiscernible] and actually, we're trying to cultivate this category products for many years and issue a few collection. The sales is about CNY 112 million. And then the last year, we tried to combine or create an entity called [indiscernible] and the sales is also excellent. So we believe that this has a very [indiscernible]. In '16, we are solving this [indiscernible] and DSOs in overseas markets account for about 10% of total sales of this category, and we try to become the #1 self-owned doll sellers in the world. And the next is perfume and our fragrances. I think this is a very difficult product that we can create emotional value for us. So those I talked about just now those [indiscernible]. So talking about perfume and fragrances is also one of our new products that will do the innovation. So every year, we sold over 10 million such products. So for aroma, for fragrance, we believe there is a lot of room for imagination. And the next is for tourism and travel. For the travel products, we believe, from this represents one-stop shopping behavior for the consumers. Last year, it has become a very innovative area and the new area. So for instance, 47% of the customer according to our survey, if they want to shop for the tourists, the first shop that they will think about is MINISO. And we think this will also help us to stimulate I think is based on consumption. We believe growth in this category will be about 3 billion. We have about 13 category products covering 500 products. So just now and just highlight, some of them out of the 500 products, it is impossible for me to exhaust all of them. Talking about IP as it has become part of our vision. I'm thinking about this question. How can IP provide additional growth for us? So for me, I think to do IP innovation, we need to focus on the following 3 things. And the IP creation is very important. First of all, we need to expand IP cooperation. And the second, you need to innovate IP design. And lastly, we need to do end-to-end presentation of IP to bring better experience our consumers. First, IP cooperation expansion. This will provide us opportunities. Now we collaborate with over 80 IP owners and IP licenses. In this way, we are able to build a collaborative relationship with global IP owners. Therefore, our IP collaboration would be extended. And domestically, we're also trying to discover more cooperation opportunities. And we want to develop new materials, develop new products, diversify IP structure so as to identify the growth opportunities. Design innovation is a very key element. It is magical just like the magic used by Harry Potter. So first of all, how to create super IP? So for instance, Barbie, Disney, they're all create of super IP. And the second point I want to make is IP design innovation. We need to deepen our understanding of IP stores try to leverage them as best as possible. Through our R&D supply chain and sales, we try to tell the history of IPs as best as possible. So 50% of our IPs will be updated or will be presented in a fresh way every year. Besides, we hope that the consumers could be better connected with the things and the IP stores. And for the way to represent the IT, we explore many different ways. And therefore, now we've learned a lot of possibilities. First of all, the IP land store. So remember, there is one comment. It's not that we cannot afford Disney. It's just that MINISO offers good value for money. Therefore, I think it's very important for us to create different scenarios for the customer shopping. So IP land in one of them. Besides it's also possible for us to have the IP-themed in the stores. For instance, the stores in [indiscernible] in Guangzhou and other places in China, and we also opened an IP-themed in the store in Indonesia. And bringing the customers a lot of brand experience. And the other thing is the [indiscernible]. This is also a new thing. Since we have so many things to offer and we have a strong design capacity anytime, anywhere we will be able to present the story of IPs. And the third point I want to make is globalization. We think we need to bring together the design resources globally. Last year, we proposed the idea of establishing [ 24 ] design centers globally. Now we are trying to -- well, that's a plan into action. The first step we make is to establish a design center in Korea. We hope that 10 years later talking about the MINISO, as soon as are able to cover the most typical, most representative products and the rest of our company, since we have a strong design power, we believe we will be able to create world-leading product plan. So our globalization strategy will be driven by 2 views. So one view is the 5 leaders globally and the other view is the global supply chain. We are going to be deeply engaged in North America, Latin America, Europe, Middle East and Southeast Asia in our globalization strategy. We are going to understand more about the local demand into our supply chain to better satisfy the customers' needs. In terms of transportation, we are going to adopt the shipping, the air transportation so as to deliver more benefits to the customers. So quick, good cost effectiveness and abundance good supply will be our defining characteristic. And now let's look at the value innovation to deliver sustainable value creation is what we offer to our customers. Differentiation is very important in this regard. I would like to give you an example. So this is the washing -- the facial tissue, cotton facial issues, actually. We have improved the product quality for over 30 years since its launch in the market. So you could see the yellow color represents the raw material price. Then how about our retail price? It is always kept at CNY, [ 15 ]. As far as those, it grew from CNY 20 billion to CNY 50 billion. What's more important is our gross profit grew by 15%. So this is a typical example of our value creation. You might be interested in knowing how we managed to achieve that. First of all, the answer lies in the technological innovation, the product raw material's innovation in terms of supply and manufacturing sessions, we try to adopt automatic technology so as to reduce the manufacturing cost by half. And we also make use of our resources in sourcing by buying and spreading the contract in advance, we manage to keep the raw materials stable. We know that the raw materials could be widely applied in the end products. For instance, the facial tissue and many other sectors. Therefore, you could imagine how important the cost is for the raw material. We are able to maintain our edge in terms of raw material cost. So create super products and MINISO brands. I think to achieve this goal, there is no shortcut for us. We're very committed and believe one day our customers will realize our innovation and our achievement.

[indiscernible] Chief Marketing Officer and Vice President of MINISO to speak to us.

Distinguished cash ladies and gentlemen, on behalf of MINISO, I feel very delighted to share with you the brand upgrading in MINISO. So last year, we formally launched the brand upgrading action of our company because we believe the super brands and super products, the key factor for us to sustaining our success. In terms of R&D, sales and operation, there are a lot of new actions are taken by us. So first of all, let's have a review of what we did. Last year in terms of marketing. [Presentation]

Right upgrade serves better operation. In last 1 year's financial statement, you can see absolute improvement of our KPIs. Now let's look at this round of the brand wellness survey. Now first, the reputation of our brand has up by 60%. And the preference rate improved by 26%. Now let's look at user insight. In the key tags of our users associated of MINISO, they look at our products as strong IP, playful, useful, good value for money. So IP stands out for MINISO, meaning our IP strategy is successful. Now let's look at how we have developed a better business out of the branding upgrade. First, we have really stimulated our users from knowing our brand as good value for money to IP cobranded products, trendy fashion products, globalization, improving the branding effect. In order to develop global brand, we have 3 transformations pointing to each layer of these traffic pyramid. In the past, we survived because of our organic traffic. Now we talk about DTC. direct to customers, where we can retain the traffic, then consolidate the traffic and developing incremental traffic. Now we want to stimulate needs, expanding content traffic by developing, building, branding and strategy will we own the users with our strong IP, which enable the users to visit our stores proactively. We not only have deepened the traffic base, we also have created new traffic. This is highly relevant to content operation. This is our so-called marketing flywheel. Let's look at internal circulation. IP enable us to have so much differentiated content to continuously touch the users. And then the content continue to develop. The IP fans, their impact help us to obtain new users, and then we will promote new products to increase stickiness between our products and our users. At the same time, all of these user-generated content have enabled wider popularity from our users. So why do we particularly look at user operation and content marketing? You can see that the marketing note [indiscernible] platform have increased in terms of its exposure and leadership, so the IP product exposure is 3.2x of our usual products with better [indiscernible] much higher than usual notes. I mean [indiscernible] have been tagged with interest-based consumption. Their consumption frequency is 176% higher than normal users outlook, and they are spending at MINISO 263 percentage higher than an all user. Now let's look at the content marketing ecosystem we built in the last 3 years on. Content production, we built a middle platform where we continue to output new contents. In May 2020, we have built our own [indiscernible] and we also talk about the private domain [indiscernible] or everyone can be at our table, so that's what we developed on content. We also have a smart decentralized content asset support where the content assets will be so important. The content distribution is also a decentralized platform. So once authorized, the public domain content will then be output to private domain, improving the click rate and the conversion rate. Now let's talk about the more centralized content production after AITC technology. We work with leading AIG companies where we produce content much faster. We have automatic tagging and categorization for the content and in the last 2 years, the sales system has helped MINISO to build over 25,000 KOL producing over 55 million content with an effective exposure of 4 billion. If you search for MINISO Medical, we have more than readership of 6 billion on Redbook. Blind Box As I said, is a strategic category, all year round, we have been remarketing around Blind Box, especially in the second half of 2023. All year round, we have produced more than 195,000 contents with more than 1 billion exposure. Content marketing has continued to build the mindset for our users in terms of Blind Box, and we have access to a number of new users. The first-time users in 2023 for Blind Box increased by 168%, and the penetration rate of Blind Box also doubled. Now let's talk about Loopy. Loopy is [indiscernible]. We have Loopy fans in private domains and the self-owned KOL resale and the first 3 weeks of the product release, we have created more than 1,672 notes on Red with a total content exporter rate of more than 15 million. In our flagship store in Guangzhou, we have created more than 98 percentage of sell-through rates in the first day of opening. And we replicated this model in Indonesia, where we have, also have localized adaptation. In 9 months, we have accumulated more than 12,000 general KOL, KLC, publishing more than 50,000 contents on their social networking side. Today, the monthly exposure is about 300 million and the cost for per 1,000 exposure is less than RMB 3. On the very right, you can see the hair accessories products exposure. We have been producing these accessories with very low exposure cost. So [indiscernible] want to talk [indiscernible] video can definitely convert into great sales performance. In China and Indonesia, we have such a great success with common creation, content and outsource marketing can definitely help us to become successful. This year, we are going to see at least 50% amount for self-owned KOC and 62% for the external KOL, creating 12% of our marketing rate, which saves about more than 100 million sales expenses for MINISO. Now let's talk about users operations. Brand is all about people and personality. So build the relationship, acquire users and strengthen the bond with users. With the mentality of long-termism result, we start some material bond to emotional bond with our users. Constantly, we'll translate our novel users into membership users or private domain TLC and user values like higher frequency of purchase and the marketing value of corporate content. From the year 2019, we constantly develop [indiscernible] users. Today, our members and private domain marketing accounts for a majority of our marketing efforts which enabled us to have the automatic and digital marketing. Ever since a member has joined our group with their private domain, we maximize the users life co value. The users value continue to contribute to our sales. Here, you can see the user scale. In the private domain, their annual consumption is 3x of the usual users with higher frequency of consumption almost 4x of a nonuser. So membership development helps us to retain traffic. In 2023, 36% of our users contributed more than 57% of the GMV and 21% of the private domain users contributed 41% of the GMV. At the end of 2023, we have accumulated more than 83 million users, among which the premium users are amounting to 15 million, accounting for 8%. They have been tagged by over 300 tags for detailed marketing. And private domain user amounted to 39 million and people who joined our WeChat chat group amounting to 5 million. Our product domain operations have become such a landmark being verified by WeComm as the best practice. And last year, we replicate our private domain experience in Indonesia. In the last 1 year on WhatsApp, in Indonesia, we have more than 0.5 million private domain users with frequency consumption is 133 higher than non-users, and the contribution of the private domain users purchase in our overall GMV has been increased exponentially. Looking ahead, we will replicate this private domain operation in North America in U.S.A., EU. In North America, we want to do membership or premium users operation. Now we have kicked start the U.S.A. Our North America membership premium plan. In Southeast Asia, we will start our private domain by the year 2028. In the key markets overseas, members spending will account for 35%, contributing a GMV of 11.3 billion. On the special marketing methodology focused on content and users, in our super stores, the super IPs and super categories differentiate MINISO from other brands. In our super stores, this is the middle ground where we communicate with the users. We create exceptional user experience, where the store will become the destination and a super factory to produce content and users are 2 flywheels and the exposure that we have obtained as of low cost and high growth. So with [ MINI-raised ] investment, we harvested high exposure and high growth. So never worry about our expensive marketing because here, marketing in MINISO is good value for money. Recently, I've been reading a book by Niall Ferguson, Square and the High Tower. When the author talked about Square and High Tower. He said the impact from High Tower is now being distributed to common people on the Square. We need to participate in this distribution process. In media age, the user's preference reputations spread out of words is what matters. We need to come out of the High Tower and to create content for common people on the Square. Before I conclude, I'd like to share 3 stories. So I made this boy who is a very faithful fan of MINISO products. He collected about 80 pieces of our dolls. From -- probably some of them are bought by others for him overseas. So U.S. has [ Crissy ], And in MINISO, we have the Dundun, and he expected his hope for us that is this can be a big IP in China, and we hope that when we develop new products [indiscernible]. We sent it to this fan. And the second is a couple in Indonesia. They collected about 100 pieces of this figure, the doll figure. And last year, they send us a invitation to their wedding. And so in order to celebrate their wedding, we send them to 2 of our dolls. And we also are now developing new merchandise around this IP. And the third story is a little girl. She got famous because of video posted on the social media. And where she was [indiscernible]. It was accompanied by this doll. When the doll was missing, she was very upset. So his father send a post [indiscernible] asking who still has this particular doll, which is out of stock in our store. Therefore, this story got popular [indiscernible]. I hope that such stories will tell you why our products are so touching. We can see that our customers show that they are very happy and that they had a lot of fun when they own our products. To be happy is become -- it has become our philosophy. I remember the person he said that if we want to make our customers happy. It means that we will become a super brand. One thing, think if you buy the share of MINISO, you are investing in brand which has a lot of stores. It also -- which means that you are investing in our brands, which has the potential to be the super brand in the future.

Now may I invite Mr. Yao Jianzheng, the General Manager of MINISO China and our Vice President.

Good morning, dear friends. I am the General Manager of MINISO China, and very glad to give you a briefing on the Chinese market. MINISO has been serving in the Chinese market for 10 years. So we are onboarding is a huge [indiscernible]. Although there are many uncertainties However, as Mr. Ye has said that we are adopting [indiscernible]. We truly it that the society will be better and better, and this economy will be growing and the people's aspiration for better life will remain unchanged. Under the leadership of Mr. Ye, we believe actually we are still very [indiscernible] in our voyage. So I'd like to share with you some figures. Now we have 3,802 stores which amounted to CNY 12.4 billion. The gross profitability is [indiscernible]. Now there are a few more figures. For instance, in terms of cost initiatives, we are present in 551. In terms of product innovation, 2 products has saw more than 50 million. In terms of digitalization, we can see that from 2019, the number of employees per store, it has decreased from 6.6 to 4.5. And in terms of the retail category, has grown from 700 to about 1,000. So in the last 10 years -- in the last 4 years, we have 1,418 more stores and restoration level is 93.2%, and our operation profitability is over 30% showing our resilience. So definitely, I will share with you some of the figures. So in terms of the Chinese business itself, saw some growth. Let's look at our potential. So in China, over were 1 million people where this -- about 8 MINISO stores. In comparison in Japan, the number of stores is 33. so that is for Daiso. China's combinations about the [indiscernible] and many times that of the Japan. So if we calculate that -- so given that China's consumption power is 1/3 of Japan, retail order is about 10,000 stores in China. So now in China, there are about 8,000 shopping malls. We are represented in 3,000 [indiscernible]. So therefore, the penetration is about 38%. In terms of [indiscernible], I think there is still a large room for imagination. What kind of stores are there? [indiscernible] our customers demand and tap into such a massive market. So we try to create the loss who's annual sales is over 10 million. We hope there will be more such stores, therefore, beginning from August last year, about 28 new stores. And there are 12 more are underway. So annual sales will be about 10 million. You will see that the daily sales sees is around 100 million. About profitability up to Q3, last year, 90% of the stores are able to make a profit. And the average profit reach is about 11% for a single store. So it means that the profit is about CNY 35,000. So they will make a profit of about CNY 420,000 a year. So the stores could have the costs recovered and returned in less than 12 months. So what is the spirit of MINISO? So you could see that one of our partners have the operators in [indiscernible] the spirit of MINISO written by a famous calligrapher and the hand is in his office. So what does the spirits mean to the retail partner? First of all, speed. Our speed is very fast. And second, it means we are innovative. And thirdly, we are able to sell most -- although there are some adverse environments. So we're popular with consumer. So 28 million consumer base order with us for 3 years in a row. And 43% of the consumers are first-time consumers with us. And the number of transactions last year was 350 million. So how about the customer profile? So 70% of our customers are willing customers. For those who are aged between 15 to 59 in China, there are 430 million population. So this offers a lot of potential for our sales growth. Our company is committed to high-quality development and high-quality management. It means that we need to take concrete actions and to take care of every aspect of operation. Performance and standards are very important. So our performance is measured by the price per transaction multiplied by the traffic. So on the left-hand side, this is the -- there is some package. So this is created in collaboration with [indiscernible]. So you can see that it looks like a shopping mall. So we try to attract more customers by putting up such a thing. For the facade of the shop or the appearance of the store is very important. So this is a store opening in [indiscernible] city in [indiscernible]. And on the right-hand side, this is another store. Also on the right-hand side, is 1 per square in and the right-hand side is store in [indiscernible]. And on the left-hand side, that is store near Beijing. It used to be the store of our competitor. Last year, we upgraded the appearance. And it was opened once again yesterday. So it's sales yesterday was as much as 80,000. So you see how popular it is. So our image is very important because it is able to attract customer traffic. In addition, we believe [indiscernible] KOC is very important. So as our employees total [indiscernible], every day, they will take photos of the store and post them. It's financial as a means of publicity. We also organize many activities to create fun and appeal. So for instance, we invite some staff to the store to attract the fans. And the other thing is that we organize events for the growth figures. And we also make some candies on-site to attract the young mothers and also young couples. So when the customers attracted each of the store, how can we increase the conversion rate? First of all, the new image of the store and the second the scenario of seeing based debt ratio. Thirdly, the atmosphere of IP and lastly, the micro renovation of the stores, we know that some of the stores has a history of about 10 years. Now for some of them, it look a little bit outdated therefore, by taking some small actions, we try to innovate them on a very micro scale. Our products have been updated a lot, but if the store looks the same. It might not be able to attract the customers. Therefore, it's very worthwhile to make some micro renovation of the store. So you can see some of the spots for taking photos. The flagship stores in some of the cities in China. Besides, we have the dedicated area for IP, they are able to retain IP sales. So the dedicated area for blind boxes -- after this category had been introduced Blind Box has contributed more than RMB 1 billion sales, and I'm sure the Blind Box will continue to take off. We also have toys zone. We not only find the toys zones very popular among kids but it's the young people. Cosmetics. Last year, we used the new cosmetics bar, where we have reshuffled our products. And all of these stores that used the new cosmetics are has been improving its sales. So scenarios, pipes have been sold really to enable our users to such immersive shopping experience. So conversion is the key. Then how do we improve the average transaction value per store? When the users need baskets, they will receive a large basket. Why? Because the small basket looks so full when they just place 2 to 3 products. So a large baskets will help them to buy more. In the same time, we have very good packs on 1 store. So 1 precise display policy of one store where we can have targeted supply of products, which is the favorite product in this particular location, shopping mall. So last year, we visited a number of stores. We see the overall average transaction value has been improved. This is a store with the GMV of more than 1.4 million. So you can see the average transaction value has been improved to reach RMB 57. So it's not happening overnight, but it is happening. So I talk about the store business. But what about realtime retail? In the last few years, we also identify the realtime delivery business. For example, [indiscernible]. We see great performance of sales on these platforms are made in 2023. We saw 70% above growth of business. And with this platform, we identified that there are a number of customers that was willing to buy -- for example, every day after 10:00, they make their order and especially when the shopping malls are -- those people have to order from online platforms. So this is a picture showcasing our mini store in [indiscernible] by online targeted operation. In this store every day, the online business doubled. So RMB 1,000 more every day. And offline, the sales also improves. We extend the office hours by midnight. So that paid another CNY 500 off-line. So we have over 600 street-side stores accounting or 16% of our total store sizes. I'm not saying we need to expand the office hours of all these stores, but this is a good clue. In different types of stores, we have differentiated marketing policy and community. And over 90% of the stores after extending their office hours, their performance improved by 3% and 15%. Yes, among all these platforms, we have 95% of stores there, and there are some stores that are not so well connected in terms of transportation, so they're not fully there on the platform. Now let's talk about people. People matters. And that's why we have built a professional, digitalized team. And one key of our talent policy is our regional manager. Now our regional manager, on average, managed 36 stores, which is leading and phenomenal in the both sector. There isn't a second brand, which in cast 1 regional manager to manage 30, 60 stores and MINISO, some of the regional managers manage over 40 stores in the [indiscernible]. So what else do we do to improve the sales of our stores? Store manager. So how we incentivize the store managers? Let me give you an example of our philosophy. First, we have a very complete training system. Every year, we train over 1,000 qualified store managers. And these store managers will help us to respond to market development. And how do we incentivize them? We choose role models. A role model can inspire a large of people. For example, in Guangzhou, Beijing road, flagship store, as an example, in July of 2023, they have a single month GMV of RMB 4.6 million, the highest ever. So after July, on August 1, we wanted to give them #1 award. So #1 award means key contribution makers in the company. So in the 1st of August, we host a great ceremony. All the store managers are there; and Jack Ye, the Founder and CEO, had presented the award to Beijing Road Store, and they're so excited that they created 5.12 million sales in the next month in August. When the news spread out, all the store managers are so excited and they say, "Hey, if we do the same, I might receive the same award." So in a year in 2024. We see good performance, great morale of our teams. So that is almost -- everything I want to say. We all want to see sustainable growth. We want to make money to open more stores. So we want to develop winning culture as our beliefs in the company.

Now thank you to Mr. Yao. Coming next is Mr. Huang, who is the General Manager of MINISO Overseas Distributor Markets and Vice President. Vincent Huang to speak for us.