PT Avia Avian Tbk (AVIA) Earnings Call Transcript & Summary

Good afternoon, everyone. Thank you for taking the time to participate in today's call. We appreciate your continued interest in Avia and welcome you to our Quarter 2 2024 earnings call. For your information, we uploaded the presentation materials to our website yesterday. The plan for today is to start with a quick presentation followed by one hour Q&A session. [Operator Instructions]. For those who cannot join us today, please note that the webcast of this event will be uploaded to our website no later than tomorrow. Thank you again for being here today. Allow me to start by introducing myself. My name is Andreas Timothy Hadikrisno. I am Avia's head of Investor Relations and will be moderating this earnings call today. Joining me on the call from Avia are Mr. Ruslan Tanoko, the Vice President Director of our company; followed by Mr. Robert Tanoko, the Operations and Development Director; and finally, Mr. Kurnia Hadi, the Finance Director. In quarter 2, Avian Brands recorded a total revenue of USD 106 million. Within the same period, the company reported a gross margin of 43.3%, and EBITDA margin of 26.1% and a net profit margin of 21.1%. By the end of quarter 2, we had 162 distribution centers across the nation, comprising 123 wholly-owned DCs and 39 third-party disease DCs, providing high-quality services to more than 57,000 retail outlets throughout the country. This page showcases the company's quarter 2 2024 performance compared to the same quarter last year. We have been observing raised concern regarding the tough market conditions across various industries. The combined impact of food inflation, online gambling and digital lending have been exerting significant pressure on disposable income, leading to weaker consumer purchasing power. Despite the soft economic backdrop, the company continues to undertake multiple growth strategies, accelerating our ability to expand the market share and within the competitive gap. During quarter 2, we expanded our nationwide distribution network by adding two wholly-owned DCs. This brought the total number of wholly-owned DCs to 123, complemented by 15 mini DCs and 39 third-party DCs. Our robust logistical infrastructure, coupled with various technological-driven initiatives enables us to facilitate over 12,000 daily deliveries and achieved a 92% success rate in providing 1-day delivery services to retail outlets across the country. The company remains committed to ongoing improvement with a focus on elevating our delivery capabilities and optimizing our supply chain to drive operational efficiency. Our fast and strong distribution network will provide long-term support for the company's operations, especially considering Indonesia as an archipelago country. In quarter 2, the company reported IDR 1.7 trillion in consolidated sales. For the first half, consolidated sales increased by 3.2%, reaching IDR 3.6 trillion. Throughout the first half of 2024, we recorded transactions from almost 54,000 retail outlets making an increase of over 800 retail outlets compared to the same period last year. This steady growth in customer base is supported by our strong capabilities in new product development and service excellence. I will now turn the call over to the Finance Director, Pak Hadi. Please go ahead, Pak.

Thank you, Andreas. And good afternoon, everyone. The chart on the left present our sales division by segment. The Architectural Solutions segment accounted for 80% of the total sales, maintaining a strong contribution throughout the first half of this year. Within this segment, the Wall, Wood and Metal and Waterproofing categories remain the top 3 sales contributors. On the other hand, the trading goods segment had a steady contribution representing 20% of the total sales. Moving on to the sales breakdown by customers. Traditional retail outlet contributed around 92% of the total sales whereas sale contribution of modern retail outlets accounted for around 8%. If we divide sales based on the distribution network, the maturity of our sales came from wholly-owned distribution centers accounting for around 89% of total sales. This gives us the flexibility to adapt our operational and strategic process as necessary. In Q2, consolidated gross profit was recorded at IDR 744 billion, with a 43.3% gross margin. For the first half, consolidated gross profit increased by 2.9%, reaching IDR 1.6 trillion with a 45% gross margin. During Q2, raw material prices estimated a relatively stable trend. However, certain materials have started to go up. Additionally, in response to the more aggressive action from competitors, the company has decided to ramp up its promotional activities which has also impacted the gross margin. Normally, the sales contribution between the architecture solution and trading goods segment is around 80% and 20%, respectively. However, in Q2, the sales contribution of the trading goods segment reached 23% as a result of Q2 consolidated gross margin [indiscernible] construction. In Q2, the company recorded a consolidated EBITDA of IDR 447 billion, with a 26.1% EBITDA margin. For the first half, consolidated EBITDA reached IDR 1 trillion, reflecting a 27.7% EBITDA margin. On the other hand, the reported Net profit for Q2 amounted to IDR 362 billion, with a 21.1% net profit margin. For the first half consolidated net profit reached IDR 808 billion, demonstrating a 22.3% net profit margin. For the first half of 2024, both EBITDA and net profit margin returned to normal level. The decline in net profit margin aligned with our initial forecast at the beginning of the year, we anticipated the escalation of promotional and marketing activities within the paint industry when the net profit margin reached a record high level last year. The Architectural Solutions segment's performance was relatively softer in Q2. However, the company managed to sustain its first half results despite the difficult economic environment. Facing the challenging market condition, the company demonstrated a strong focus on acquiring market share from other competitors through our sustainable growth strategies, especially from the smaller scale paint companies. Our focus on product innovation remain unwavering, and we are effectively expanding our distribution network and reinforcing our marketing endeavors. By leveraging our competitive advantages, we aim to accelerate our growth trajectory and strengthen our leading position in Indonesia decorative paint industry. Throughout the first half of 2024, the company recorded transaction from more than 49,000 retail outlet, indicating an increase of more than 1,000 retail outlets compared to the same period last year. By consistently meeting customer needs and providing unparalleled service quality, we have [indiscernible] of trust with our customers. The company's ongoing investment in growth initiatives and program is designed to deliver exceptional customer experience, and drive positive outcome for our value customer. Our Avian brand priority customer program is just one example of the company's strategic initiatives in and fostering long lasting relationship among its major retail partners. Display on the right is an image taken at the company's National Gathering event in June. The event was attended by over 1200 major retail outlet across Indonesia. The Trading Goods segment experienced a double-digit growth of 19.9% year-on-year, amounting to IDR 395 billion. In the first half, the trading goods sales were up by 17.1%, reaching IDR 726 million. Moreover, during the first half of this year, the Trading Goods segment recorded transaction from over 43,000 retail outlets, representing around 81% of our overall consolidated customers. The double-digit growth in the Trading segment, especially in the PVC pipes category was contributed by a less intense competition. In Q2, the Architecture Solutions segment reported a gross profit of IDR 673 billion, representing a 51% gross margin. During the first half the segment's gross profit stood at IDR 1.5 trillion with a 51.8% gross margin. Regarding the Trading Goods segment, the gross profit for Q2 increased by 19.2% to IDR 71 billion, resulting in a 17.8% gross margin. Over the first half, the segment's gross profit rose by 17.4% to IDR 131 billion, with an 18.1% gross margin. I will now pass to Pak Robert to continue the presentation.

Thank you, Pak Hadi, and good afternoon, everyone. Throughout the first half, we observe a consistent pattern in operating expenses with general and administrative expenses accounting for 3.5% of the total sales. And sales and marketing expenses accounting for 17.1%. Regarding the COGS breakdown, raw material prices accounted for 25.5% of the total sales. In addition, due to the more intense competitive dynamics, we have been increasing our promotional activities, which led to a rise in BTL expenses. In the first half, the company effectively maintained the trade working capital at around 29% of the total sales. During this period, the total capital expenditure was 4.6% with around 1% allocated towards the construction of the company third factory and around 3% allocated to the routine CapEx. The company's robust cash generation capability, coupled with the low routine CapEx has resulted in a strong free cash flow, representing about 18% of the total sales. These preferable financial positions has underpinned the company's commitment to distributing a minimum 50% dividend payout ratio. Please note that the company remains focused on its merger and acquisition efforts while at the same time, aiming to maximize its dividend payout ratio. The chart on the right illustrates the company's consistent on-time collection of accounts receivable. There was a slight decline in the first quarter this year. Due to the challenging operating environment faced by retail outlets. Nevertheless, the company was able to meet 89% on-time collections of account receivables. Retail outlets continue to prioritize Avian brands in terms of payment. In December 2023, the company launched a share buyback initiatives, allowing for the repurchase of up to 1.42 billion shares with a maximum allocated fund of IDR 1 trillion. As of June 2024, the company has acquired around 49% of the maximum shares utilizing around 37% of the total allocated fund. To achieve the sales guidance for 2024, we are determined to execute all the strategic actions presented in this slide, amidst the pressure in market conditions. We are driven to help our customers grow their business and achieve greater profitability, hence establishing ourselves as a valuable partner in their success. That concludes our Q2 2024 presentations. Thank you very much for joining today's earnings call. I will now pass to Andreas to moderate the Q&A session.

Thank you, Pak Robert. We can now proceed with the Q&A session, which will last for 1 hour. The first question is from Robin [indiscernible]. Avia team, may I ask, number one, what is estimated market share right now? Which players are struggling in the industry? Number two, what is the strategy if macro conditions remain unsupportive. And number three, any change in M&A strategies as it has been almost 3 years post IPO?

So thanks for the question, Robin. The first one, which is the estimated market share right now. As you know, it is very difficult to actually gain that kind of insight, especially in the building materials segment, maybe outside of cement. The full transparency only exists within the cement industries and then nothing at all beyond the cement industry. But from what we see, right, we look at the number of players that have been aggressive in the market. And it's usually the same companies that have been aggressive ever since the first day of our IPO. So there hasn't been any new players that has been trying to be aggressive and trying to launch new products and trying to ramp up their marketing initiatives and trying to do more branding and everything else beyond maybe more than 5 companies. So the rest are just not doing anything. So logically speaking, based on that, that our market shares continue to grow, not only for ours, maybe the top 3 players continue to grow in terms of market share. And that's how we see it at this point in time. If I can now move on to the question number 2. So if I go back, which players are struggling in the industry? I think outside of the 5 companies that have been ramping up their marketing efforts they should be struggling because none of these companies actually do anything. We've been launching quite a number of products, as you know, ever since the IPO. And yet outside of these 5 companies, they barely do anything. The second question is the strategy if the macro conditions remain unsupportive. So we mentioned earlier that the focus, a more sustainable way of growth for the company is to get it from the other competitors, right? I've mentioned this multiple times in the past. But we're now -- we feel that we're in a good stage now with our product portfolio with the multiple business expansions that we are trying to achieve, including the project segment, we're starting now to look into the B2B segment because if we have all the DCs spread across the countries, what else can we do to take advantage of those locations, right? So obviously, there are factories everywhere, there are potential customers everywhere that we can look at and everything gets supported by the product initiatives -- product innovations that we've been doing. So more products will actually be launched in order to cater to these 2 segments, whether that's the project as well as the B2B. So we continue to look from the markets to see what the opportunities are in the new product innovations that we need to address in order to be more successful in this segment, whether that's floor coatings, whether that's fire retardant coatings, and you name it as long as they are used in the B2B or project and that's what we're trying to basically also participate. Question number three, any changes in the M&A strategies? It's almost been 3 years post IPO. Yes. I think, Robin, you know that acquiring companies in Indonesia have not been easy. I've met with multiple of these companies in the past 3 years. I continue to do so in this year, but the efforts have not been successful. One company that we're quite close at this point in time. Again, we need to update you as soon as there is a 100% clarity in the deal. But beyond that, it has been quite difficult to actually do any M&A. But let me remind you that we don't want to just acquire random companies, I think the commitment from the company in terms of deploying our capital has always been consistent because from our point of view, there are many, many hundreds of regional players in Indonesia. So regional players really do not fall into our bucket for M&A because for the simple reason that if we were to acquire regional players, let's say in the East Java region, then when you look at the rest of Indonesia, people who will never have heard of their brands. And therefore, it doesn't make sense for us to acquire these local players. We might as well just launch our own brand because it's much simpler and much cheaper and it's more straightforward. So that's how we see it in terms of M&A.

We go to the next question from [ Andrea Nika ]. Number one, can you give me some color on the competition in the industry now? As I recall, Nippon and Akzo Nobel are trying to catch up to Avia's distribution channel, which is this company's main strength. Number two, what is the market share for Avia now in paint market domestically? I think this has been answered for number two. And number three, could you update us on the new factory that is going to open, opening schedule and expected capacity if possible to disclose?

Yes. Let me answer number one, and then I'll pass on to Robert for question number three. So out of the 5 companies that we've seen in Indonesia that has been ramping up their aggressiveness. Nippon, obviously is one of them. But we don't see Akzo Nobel to be included in the bucket of 5. In fact, we feel that Akzo Nobel in Indonesia have been losing quite a bit of market shares because there's been a lot of personnel changes in the top level. I mean, if I'm not mistaken, the CEO for Akzo Nobel, Indonesia, in the past 5 years, I think there's been more than 3 people. So I think it's not good for any business when the leader of the company has -- it only stays there for a very short amount of time. Some changes do need time in order for them to show the results. And I don't think Akzo Nobel has done a great job in that aspects. I heard that the latest CEO now is quite promising, but we'll continue to keep an eye. But I think if we go back to the rise in our below-the-line expenses, pretty much consistent with what I highlighted at the beginning of the year, right? Last year, we produced a record net profit margin. Because of that, I mentioned to all investors that, look, for this year, we're expecting our net profit margin to actually go down, maybe hovering between 21% to 22%, because when we're making very high profit margin, it's safe to assume that the top few players will also make very high margins. And because of that, the competition landscape should intensify and that's basically what we've seen. People continue to try and get the wallet size from the building material shops, more and more discounts have been offered to all these retailers. And obviously, because of that, retailers are now sitting at high inventory levels. So because the market condition has not been great, they haven't been shopping and buying products at the retail outlets. But if all these companies continue to offer deals here and there, then shops will be incentivized, okay, let me increase my inventory, and that's what has happened in Indonesia, especially in this Q2, in our view. I'll move on to Robert for the question 3.

Thank you, Andrea. For the new plan factory update, so we have finished the [ piling ] phase last month, July. The building structure will start within this month. Currently, the construction of Cirebon manufacturing plant prioritize the production plans for the water-based paints due to the current capacity constraint. For your information, the utilization rate for our water-based paints has exceeded our optimal threshold, which is more than 80% utilization. We expect the production plans for the water-based products will be ready by the end of 2025. So in addition, the construction of the other plants, such as solvent base and metal packaging plants might be extended to 2026 which will impact our CapEx allocation time line for the Cirebon factory from our initial projections. The total CapEx for Cirebon factory is around IDR 750 billion for 2024 alone, the CapEx allocation is estimated to be around IDR 220 billion, representing roughly 30% of the total budget. And as for the capacity plan for the beginning, we have planned 225,000 metric tons per annum capacity when the our construction are completed. But for the first two years, our capacity plan is about [ 100,000 ] tons per annum. That's about the update for the new factory.

We go to the next question from Divya. Given the weak first semester, meeting full year guidance on volume and value growth looks quite a challenge. Why aren't we revising this down? How is July and what can happen in the second semester that can accelerate growth as the drivers of purchasing power weakness persist?

Yes. Very good question, Divya. Thank you for that. So it was obviously an internal debate between us to whether we should revise our guidance or not. But look, I think when we see what has happened in July, we recorded mid-teens in our paint sales. So we felt like, okay, well, let's actually not revise our guidance. We know that last year, we launched a few economical products up to maybe the month of September or October, which may impact our volume growth last year because we did quite well in Q3 as well as Q4. But I think the way we see it is that we should be able to still achieve the guidance even though the market condition is not strong. And the key success in that obviously arrives with the fact that if we can get it from the other players. So I think this is a key importance when it comes to the guidance to be met, and we really have to get it from the smaller players. So a few things are actually being tweaked at this point in time. Unfortunately, we cannot share any of them here because our competitors are also listening but the way we see it is that, look, what it is that we can do to really ramp up our sales target to meet our target for the second half and really get from the market -- competitors. So that's how we think about it. We really have to get it from the competitors because that's the only sustainable way for us to continue with our market share gains. If we don't do that, then it would be extremely challenging for us to meet the guidance. But we feel quite confident with some of the approaches, some of the execution that we are going to do in Q2, and that's how we see it this year.

An additional question from [ Andrea Nika ]. Sorry for a follow-up question. For the B2B, are the potential clients going to be big developers or smaller ones as the big developers may push down margins as I understand it?

Yes. So Andrea, in the past, I've mentioned this a few times, right? As a company, we are always quite selective when it comes to choosing property developers as to our clients, right? And you can see that in our volume growth, if we basically decide to be more aggressive with the property developers, especially the big ones, then you can see that our volume will probably go up a lot more. But at the same time, like you said, right, our margins will go down. So this is not our way of doing things, right? We're always trying to find opportunities where it is possible to grow both sales and volume, but in a manner that does not sacrifice our margins. The concern in terms of supplying to the bigger or the biggest property developers is not only from the margin, Andrea, it's actually more on the accounts receivable side because they tend to pay higher loan. And that will obviously reduce our free cash flow conversion, and that's really not a good thing to have as a company. But the B2B that I mentioned here refers not just the property developers, Andrea. We're also thinking about -- again, we have 123 wholly-owned DCs and they're spread around Indonesia, across Indonesia. So when I say B2B, I was referring to the factories, even though they may be big, medium or small. But there are potential clients. We hardly touch them at this point in time. So I've been telling my team that, look, we need to also make the introductions to the B2B, to the multiple industries, which are around our wholly-owned DCs because they will require paint for whatever reason, whether that's maintenance and repair, whether that's to paint whatever it is that exists in their factories so that they can basically be supplied directly from us because at this point in time, they'll just be buying it from unknown sources. It's not from official companies. So we see that as a potential opportunity.

Next question coming from Theodorus Melvin. Avia management, thanks for the opportunity to ask. Melvin here from Stockbit. I have a few questions. Number one, with the same guidance after the first half of 2024 results. Can we expect a significant increase in volumes sold in the second semester of 2024? Do you also provide any guidance regarding the blended ASP for the second semester 2024? Number two, with the expected strong volume in second semester 2024, will you raise marketing expenses, either ATL or BTL?

So the first one, when it comes to the blended ASP, let me answer that first, right. I've mentioned in Q1 that a few companies have decided to actually raise prices. As of today, actually, one waterproofing company decided to also increase their price. But the way we see it is that when the purchasing power is really not that strong. I think it will be better for the long term and the future growth of the company that we don't actually make any changes on our selling price. And because of that, we haven't actually adjusted anything. In Q1, a few companies that participated in raising their selling prices are predominantly in the premium markets. So in the premium segments, they have decided to raise their price between 3%, 4% and a few companies participated in that. Akzo Nobel is one of them for sure. So for us, we've decided not to participate in any of the price hike, right? Even though as of today, another waterproofing company also decided to increase their price by about 3%, we decided not to participate in that. Now obviously, now the biggest challenge is how can we grow our volume in the second half this year so that we can still meet our guidance, right? The way I see it is that, again, Melvin. It's not within the realm of impossibility to actually meet this, right? Because even though it means that we're only going to reach the lower end of the guidance, but nevertheless, we're extremely committed into making all hands on deck when it comes to achieving our guidance. A few things, like I said, which unfortunately, I cannot share here are being done at this point in time, right? We always look whenever there is weakness in the market. We always try to find this opportunity to see, okay, internally, what are some of the things that we need to improve. Do we need to ramp up our training? Do we need to ramp up our marketing initiatives and everything else that we're doing. Do we need to reduce our head count and all these things. So that's basically where we're focused in trying to do so that we can basically do far better in the second half. Number two, with the expected strong volume in the second half, will we be raising marketing expenses either ATL or BTL? We've allocated a moderate increase in the ATL since the beginning of the year when we were doing our budgeting. But when it comes to BTL, obviously, it depends on the aggressiveness of our competitors, right? I think this is again where we need to be wise and this is again where we need to also be careful, right? Because some competitors have decided to be extremely aggressive. They'll be giving an extra 5%, 10% discount on some products. But the way we see it with all the DCs that we have spread across the country, we can pick and choose in which region do we really want to retaliate. And -- but before we do that, we always have to also assess the strength of our brands, right? If we believe that our brands are incredibly strong, let's say, within the wood and metal category as well as the waterproofing. We know that our brands are very strong, and we have commanding market share in the country even if our competitors decides to ramp up their promotions, it doesn't mean that we need to retaliate, and we need to copy them, right? Because we believe in the strength of our brands. But the biggest battle ground for us always and will continue to be in the world of paint segment. This is an area where we're willing to really go and become aggressive in this category so that we can basically continue to grow in this category. So I think when it comes to increases in the BTL or even ATL, ATL not so much, but in the BTL, you can rest assure that we'll be a lot more aggressive in the wall paint segment, whether that's mass market, economical segment or even premium. So we're really trying to address these three segments in the wall paint and that's where we will be deploying our below-the-line budget.

Next question from [ Nasrullah Sulaiman ] from [ DBS ]. Two questions from me, why are you maintaining your 4% to 8% volume guidance despite of minus 0.1% achievement in the first half of 2024. Number two, your ASP in second quarter 2024 is significantly increased by 6% year-on-year in second quarter of 2024, if I calculate it correctly. Any color on this? Is this because of product mix or new product?

Yes. So Nasrullah, I think I've answered the question previously with regards to our -- I don't want to use the word stubbornness when it comes to trying to maintain our guidance. But I think volume is something that we really pay attention a lot, right? And then when we look at our product portfolio, in particular in the wall paint category, we think that it's not impossible for us to actually meet this kind of guidance. So I think with that in mind, multiple internal initiatives as well as external will really be directed towards achieving this in the second half, and that's why we're maintaining it. Maybe on the second half, Hadi can answer the second question.

Thank you, Pak Ruslan. As mentioned by Pak Ruslan before, we did not do any price adjustment during the period. And up to first semester, actually, our ASP is still flatten. So if there's any -- as we [ discern ], I believe it's just a product mix, I think.

Next question from Felicia Barus. Number one, in the first half of 2024, Avia did not raise their prices, while competitors did. However, it didn't seem that Avia was able to grab some of the demand from competitors. Can I check what are your thoughts for price strategy in the second semester of 2024? Number two, is the BTL expense will remain as heavy in the second semester of 2024 as the first semester? I think number two, we have also answered this Pak.

Okay. So good question again, Felicia. Thank you for asking. So let me go back to that point where the competitors that participated in the price hike in the first quarter were mainly done on the premium segment. And unfortunately, our presence in the premium category is still very small, which is why it hardly impacted us right? But let me see, I think only 4 competitors participated in the price hike in the first quarter, and all were only done in the premium segment. In the mass market, in the many other categories, they actually didn't do anything. So that's how we see it. So that's why it didn't really impact us in any way because we're still a very small player in the premium segment, and that's basically what we're trying to address. We're trying to achieve our volume not only from the mass market products or from the economical products as well as the more premium segment because that's where the profit margin is, and that's where the biggest opportunity lies for us in terms of getting more market share. For the second question, even though I've highlighted this earlier, Felicia, but let me just add one thing, right? The aggressions that we have been displaying in terms of the BTL expense is really in our response to our competitors, right? But that being said, I also mentioned earlier that we'll -- we need to be wise, right? If some products that we believe that we have commanding market shares we can maintain what we have been doing, then we won't actually do anything on that. We won't raise our BTL expenses on that. But the majority of the BTL will really be targeted on the world bank category, right? And maybe in select areas where we need to catch up in maybe, let's say, even though we're the #1 in wood and metal and perhaps we have around 40% market share in the country. But maybe there are 1 or 2 or 3 DCs where we don't have 40% market shares that may be in those select areas. We will decide to deploy some below-the-line budget so that we can strengthen our position in those areas. But we are always going to be selective. And majority, like I said, the BTL will be deployed in the wall paints category.

Next question from Calvin. Thank you very much for your presentation. I have a few questions. Number one, can you provide some colors on the industry landscape for the pipes, which dominated the revenue of trading goods, any target on medium-term growth or market share? Number two, do you have any estimation on mix of paint usage in Indonesia in terms of DIY by the house owner versus using professional painters or construction worker?

Yes. Thank you, Calvin, let me answer number two first. I think from the first day that I've started to meet investors, this question was brought up a lot. Unfortunately, in Indonesia, again, there is no data to support this particular area, whether the house owner versus professional painters, which one is more dominant. But here's what I can tell Calvin that the moment that any of these consumers can actually afford to get painters to paint their home, that's what they'll do. So the DIY market in Indonesia is really not an area where people actually have interest. In contrast to the U.S., for instance, right, where DIY is really dominating the market. In Indonesia, people don't even like to pick up brushes. I mean, Robert and I have been working here forever. We don't know how to paint. I hope you guys don't hate us for that, but that's a fact. So I think Indonesians don't really like to paint. And the moment that they can afford to actually get painters, then that's what they will do. So when we think on that statement, right? Longer term, it would be best for us to continue to build relationship with the painters, right? I mean, homeowners obviously are important also. But I think the painters will carry a lot more weight in the future. I think that's how we see it. On question number one, the PVC pipe has always been the main revenue driver within the trading goods. If I can refresh your memory Calvin, we have two other segments within the trading goods. One is the paint accessories and the other category is furniture, right? So the PVC pipe has always been dominating in that category. Now we mentioned earlier that the growth in the PVC pipe 18-plus percent in the first half was due to lack of competitive dynamics and that's basically true because that was the main reason why the family decided to venture into PVC pipe 10 years ago because the competition there wasn't as intense as we have seen in the paint market. And even though we've been listed for a while now, we're really not seeing potential threats in that segment. And in fact, the way we see it but BTL deployment in the PVC category is nowhere at the same level as that of paint. What I mean by that is many of our competitors are just using basic, basic promotions. They'll be giving cash discount here and there. None of them are giving gold coins, none of them are giving all kinds of things that we have been doing in the paint segment. So I think there's still a lot of learning curve for the PVC pipe players. When we assess our market dominance in PVC pipe, we know for a fact that we should now be in the third position as the third largest PVC pipe in the country. So maybe even second, but we still have quite a bit of ways that we need to accomplish in order to be the top PVC players in the country. And obviously, the plan for that is trying, again, right, in line with what we're trying to do, whether that's on the project segment as well as the B2B segment. We also are trying to identify that within the trading goods that we do, what are some of the products that would be suitable within these projects or B2B segments. And that's how we think about our expansion in the PVC pipe or even in the trading goods segment. We're trying to find opportunities where we can basically contribute and basically make our money there.

Next question from [indiscernible] Avian team ,I want to ask which market segment do you plan to focus on the next 3 years ahead?

Yes. So the three main categories, as you know, has always been the top 3 on the left here, the Wall, Wood & Metal and Waterproofing. In the top 3 categories, we continue to look for opportunities when it comes to product innovations, right? But [indiscernible], to be honest, out of the 3, Wall, Wood & Metal, and Waterproofing, Wood & Metal is actually a segment where we believe that in the next 10 years, growth will be flat at best because there's been a lot of product replacements in the Wood & Metal category, right? A quick story that I always mentioned, like if we look back 10, 15 years ago, [indiscernible], how is this use wooden or metal frames on their windows as well as their doors. But now there's been a lot of product replacements, right? There's aluminum, there's plastic, there's glass, and you name it, stainless steel and so on. So the areas that used to require paints for the wood and metal segment continues to decline as more and more products become available for consumers to choose. So that's basically why we think that this segment should be only flat at best in the next 10 years. Now with that in mind, the biggest areas for opportunity for us, obviously, than in the wall as well as the waterproofing segment, right? Even though we're a market leader in the water proofing segment, it does not mean that we already have a complete range of products. So during our China trip at the beginning of the year, my team and I have really looked at, okay, what are some of the products that was available in China that we are still not producing yet in Indonesia. So those are just some of the early thoughts that we have when it comes to continuing with our product portfolio expansion. Again, some products that we have now are -- well, not some majority of the products that we have now in the waterproofing are catered for retail. But when we start digging deeper into the projects as well as the B2B, a, there are a few different requirements in the waterproofing segment that we don't have. So obviously, we are trying to be a dominant player in the project segment as well as the B2B, we also need to have more products to complement our product variants in the Waterproofing. The same thought process is applicable on Wall. We're trying to see, okay, what are some of the areas for opportunity in this Wall segment? What are some products that we need to have -- are we going to grow this enough? Do we have enough products in the premium segment? We do need to add more? So we're always looking for opportunities in these 2 segments, in particular, [indiscernible]. Wood & Metal, we continue to launch products but the pace will be a lot slower than the other 2 segments.

Question from Robin, can we assume the June event drove July volume? Does management see this sustaining? Which price segments have the stronger growth?

Yes, Robin. Unfortunately, due to time, I did not have enough time to really pay attention to the different categories. I mean, we only closed July yesterday, right? But I mean, obviously, I look at the overall sales in the trading goods as well as the architectural solutions, and that's basically what I got. Can we assume that this was driven by the June volume decline? A part of it would be true on that statement, Robin. But we also think that, look, I think getting it from our competitors should always be the focus. And in fact, that's what we're always trying to do. Wherever we go, I don't accept excuses from my team, which basically always say that, "Hey, Pak, I'm sorry, growth is not strong because the market is weak." The way we see it is, when we have less than 25% market share, there's really no reason that can be expressed whenever people say that the market is not strong. The market is weak, I said, "So what? The market is weak, but our market share is only less than 25%, meaning that if we can get it from the other players, then we still have plenty of room for growth. So that's always been the thought process that I communicate to my team. And that's basically what I'm trying to do. As you know, Robin, I've also been going around the country quite a bit. I spent a lot of times now -- more times now in Jakarta to meet with big clients, potential clients, with building material shops which did not used to sell a lot of our products, but after I met them, I somehow are able to convince them that we are the right long-term partners for them. So I think this is what we will continue to do. My engagement with these clients, hopefully, will allow for a lot more accurate information gathering so that I can really know what's happening in the market. And so that I can really get a much better feel when it comes to what is it that we have that they don't like. What is it that we have that they like. So I think that is very good in trying to really gain insights from them directly, and that's what I'll continue to do in the second half.

Next question from [ Anutri ]. May I ask what is the current inventory delays at retailers level? As you mentioned, the top players, including Avian are aggressively pushing down the products. How much has the inventory they've been increasing? Given current absorption and second semester outlook, how long do you think it would take for inventory days at retailers to go back to healthier level?

Yes. So thank you, Anutri. This, again, is a question where we have very little visibility. As you know, retailers really don't have -- retailers themselves don't know how much stock they're carrying, right? And for 2 reasons. One, they are still very basic mom-and-pops operator type; and number two, it's done on purpose in my view, so that they can avoid paying taxes. So because of that, the clarity in terms of inventory level is not very good. What we can sense is that, look, if they're buying from us and from many other competitors because of whatever kind of below-the-line promotions, which they want to participate because they still have money to buy. And at the same time, we gather insights from various sources that the painters don't come to their shops, right? The traffic at their shops have been quite poor. Then obviously, it makes sense to assume that retailers now are sitting on high inventory levels. So that's how we get that conclusion that the retailers are sitting on high inventory levels. The next question, again, which is difficult to answer is that how long will it take? Well, if the aggression from competitors continue in trying to shopping down retailers with as many products as possible, I don't think inventory will go down anytime soon. And in fact, they will continue to be high because it's really a game between us and all the other competitors, right? They're all trying to find opportunities where which shop have more money or which shop have money left that can still buy our products. I think that's the focus of everyone. And that's how we're always playing catch with them, okay? We can identify the shop first and maybe we'll push more stock to them, but I think you noticed earlier that the on-time account receivable for us has declined quite a little bit, right? The graph on the far right is showing the on-time collection, right? So for the full year 2023, you saw that we basically delivered 90.2% of on-time collection. And yet when it comes to Q1, it dropped to 88.8%, right? And we think that this will persist in the second quarter and for the remaining of the year. So my target now is to maintain this so that it does not dip below 88%. Because of the various incentives that we have, we feel quite good that retailers will continue to prioritize us. And let me share one thing, Anutri, we give 2 payment terms, right, in Indonesia. One is around 45. The other one is around 60. Well, we just hired a person on the RM level, on the regional manager level from a competitor who just joined us just 2 weeks ago, right? So I asked him straight away, right? What kind of account receivables does your company used to give or that the company give when you were working there? The answer was quite shocking, okay? I don't want to mention the company name, but -- so they also give 45 to 60 days, which is very similar to us, right? But a regional manager level is also given from the company an allowance to add up to 60 days beyond that. So can you imagine. So this company started off with 45 to 60 days. And yes, a regional manager position is given a further 60 days without the need of any approval from head office. So I mean, if I was a regional manager at that company, guess what, I mean, I'll fully take advantage of that. So this is a company in the top 5. Again, I don't want to mention their name. But that's the kind of competitive dynamics that we're dealing with in Indonesia. And our payment on-time collection, even though we're only 45 to 60, zero extension, we're still quite high at almost 90%. But competitors have been postponing and extending their account receivable collections as part of their of ways, look, you buy more from me, I'll give you an extra time when it comes to paying. So that's the intensiveness that we're seeing basically.

An additional question from Anutri. If I understand correctly, you are looking to consolidate your brands within the Wall Paint segment. May I ask how has the progress been?

Yes. So thank you for the question, Anutri. Very good question. So we'll continue to actually do this, right? So that ultimately, in the mass market as well as the economy, we only have two brands. Likewise, in the premium segment, we only have another two brands. So only 4 brands in total within the Wall Paint and everything else, you can see there, for instance, are in the forms of brand extensions. We have Avitex Exterior, Avitex Anti Viruz, Avitex Gold, Avitex Wizz, blah, blah, blah. But the brand Avitex continues to be there, right? Same thing with Aries. Aries is more of the economical products that we have. But when we want to do this in the best way possible for the company, in terms of minimizing loss Anutri, we cannot do this as fast as we would like to. The moment that we announced to our customers that a product A, B, C and D will be discontinued what will happen? Well, they immediately will return everything to us. So we actually don't share any of this to our customers. We don't tell them anything about the products that will be discontinued. But it will take us because of that, it will take us maybe about 2 to 3 years to actually conclude our consolidation in the brands. But that's how we minimize the loss Anutri. So we will continue to do that, but it will take us some time. And what we're doing is that we look at the monthly revenue for each of the products that we want to discontinue. And when the timing is right, then we'll make a decision. Okay, as of the next month, this product will stop. We won't make any more at the factory, and that's how we see it Anutri. It will take us between 2 to 3 years, but the progress continues up till now.

Next question from [ Della from Ashmore ]. Could you give color on the result of June Gathering? What are the feedback of the retailers learning from this, what is the strategy for the next Gathering?

Yes. So for us to actually do a National Gathering, in fact, this was our first time Della. We've never conducted a National Gathering forever. So at this event, we decided to do to showcase because in some areas where we're not very strong, let's say, in Jakarta area, right? Some customers there may not know the true demand of our products from other regions, right? So we really took advantage of this as a way of a marketing tool to really show them that, look, these are some of the top customers that buy from us and then look what they're basically ordering. And because of that, you should feel a lot more comfortable with buying more from us because you know, hey, there are many shops that actually buy quite a bit and so that was one of the purpose of the National Gathering, right, to boost the shops confidence, in particular, in areas where we're not market leader yet. So that was one of the idea. But in areas where we're already very strong. Again, the purpose of the Gathering is to show them that, hey, even though you've been buying, let's say, $5,000, $10,000 a month. don't ever be satisfied, and that's not a big number for us because you will see here that shops buy in hundreds of thousands, right? So I want them to also understand that, wow, okay, there are many other big fish out there when it comes to our products. So that was the purpose of the National Gathering. And obviously, because this was our first event, you can tell I'm in the middle there participating to give them the Top Orders and everything else. We took this very seriously. We're trying to package this in the best way as possible, giving them a really different experience than many of our competitors have done in the past. And up till now, I think we're still the only one that has done a National Gathering on this level because we have invited about 1,200 shops to participate, right? And some of the shops have to buy something first. So we don't just invite them randomly. In order to qualify in the month of May, they needed to buy certain amount of quantity from us, then they will qualify for the air ticket and everything else in June, right? If you buy more, we give you 2 air tickets and the hotel and everything else. But it's capped at two, even though you buy more than that, we still only give you 2 tickets, right? So it's just one fine detail that I'm sharing here. But that's basically what we learned . Shopper were happy, they were all saying that the experience that they get from our event has been a lot different and a lot better than any events that they have previously gone to. And obviously, those are nice words for us to hear. But we also ask them if you can basically give us some comments what are some of the things that we need to improve. And obviously, we then use that opportunity to assess for future Gathering.

Next question from [ Yuan Long ]. Question number one, any notable sales trends so far year-to-date and in July? In example for premium versus economy, Wall Paint trends, Water Proofing and Wood & Metal and et cetera. And number two, 3-wheelers rollout, how has the progress been? Is everything okay on here?

Ye's. So the first question Yuan Long, the notable trends that we have been seeing is that, look, going back to my answer earlier, right, the Wood & Metals segment continues to be sort of flattish. Waterproofing has been doing quite well. And then the Wall Paint is doing okay, right? So I think that's what we see. And unfortunately, what I mentioned just now, you only up to the data year-to-date June I haven't had a chance to look at the year-to-date July because we only concluded that yesterday, right? So we'll share more color, obviously, in the future. But for now, we're basically seeing that, okay, well, July is definitely a good month, let's see what happens and see what it is that we can do to maintain this kind of trajectory, and that's our focus and getting it from the competitors, again, is how we're going to do it. The second question with the 3-wheelers rollout. Yes, the 3-wheelers rollout has been -- it continues to be done. We're rolling them out in the pace that we're able to get them from our suppliers because trying to get them from suppliers as it turns out, has not been the easiest. They do not have as many shops as we basically would like them to have. So it's taking a bit of time to get the 3-wheelers that we ordered to be delivered. But I mean, look, in conclusion, the 3-wheelers is another way for us to step up and improve our service quality, right, in particular, the delivery aspects. What we're trying to think here, Yuan Long, is that when consumers -- retailers are sitting on high inventory, right? We know they're sitting on high inventory. We don't know how high, but they are sitting on high inventory. The 3-wheelers in our view, is the best way to get them to buy more products because essentially, what we tell them is that, look, just offer our products especially those where you make high profits, but you don't need to keep any inventory because my 3-wheelers will have the capability to actually deliver to you in less than 2 hours. Now obviously, then when you look at the map of Indonesia here on the screen, we can only do this because we have so many DCs around the country, right? If the number of DCs that we have, let's say, is only half of that then obviously, the kind of shops that will enjoy the benefit of 3-wheelers will also be reduced significantly. So we're taking this opportunity to think -- how can we get more sales from the shops if they are already sitting at high inventory level. And I think this is the best way for us to incentivize them, buy more from us, no inventory, you get it from us in the next 2 hours, and that's the kind of rollout that we want to accomplish. We tell them now that, unfortunately, in some areas, I won't be able to do it in 2 hours. And the reason is that because the 3-wheelers, let's say, in one DC, we meant to have 3. But at this point in time, because of delivery issues, we can only have one, then obviously, with that one. I cannot do 2 hours. But they understand and ultimately, the way we see it is that shops that have tried the 3-wheelers, the Express Delivery will never go back because they say, "Wow, this is so wonderful. I don't have to keep stock on blah, blah, blah. " But rest assured that for the fastest-moving products Yuan Long, they'll continue to get stock because people will always want even faster delivery. So if you're a painter you go in there, I want to buy that product, you want to just pick it up on the shelf and give it to them, right? They're not going to wait for 2 hours. But some products, they're willing to wait but not the fastest-moving product. So obviously, shops will use this for products which are not the fastest moving.

Next question from Calvin again. I have an additional question. For M&A expansion, are you also looking into industrial paint as an attractive segment for further growth?

Yes. So Calvin, I think our parameters for M&A has always been consistent since day 1. We need to find products which are available on a nationwide scale, right? Any regional players do not fit in that category. To be honest, at this point in time, we haven't looked for M&A in the industrial segment category. As far as we know, there will be hundreds of players in this category, but most of them would be in the regional kind of capacity. Not on a nationwide scale because those on the nationwide scale would be mostly foreign players that have been around Indonesia, but not many -- I don't even know of 1 or 2 that are existing in a nationwide scale for the industrial paint, which are local companies that we can potentially acquire. So we haven't looked at any in the industrial segment. But I think the way we see it is that we want to launch more products in that industrial segment so that we can then participate in that segment. Because as of now, we're not doing a good job at it yet, and we need to ramp up our efforts.

Next question from [indiscernible]. What were the insights after meeting the bigger shops in Jakarta as to why they don't carry Avian products and what will convince them?

Yes. So [indiscernible], when I meet with them, right? I always tell them that, look, we, as a company, always think long term, right? I shared with them that my grandfather, when he was alive when I first started getting into the business, he always tells me that we're in the business to make money, obviously. But we're not in the business of making $100 at one time. We're in the business of making maybe $0.10, but for the rest of your life kind of approach. So that's basically what I shared with the shop owners when I meet them, right? Look, we are going to be your longest term partner. We're going to be here for the longest time. And you can see that from the locations of our DCs, which tend to be nearby your locations. So no other companies have the kind of DCs that we do. And the DC locations that we have, near to your shops is one of the way that we show our commitments because then we cannot run. If there are problems, we'll be there to be responsible. If you are not happy with anything, we'll fix it. And I think they can see that as soon as they try to have a better or a significantly more relationship with us, they will see that our service quality is really good. They will see that we're very consistent with what we say. And they will see that as a company, even though we're local, but we try to think like a multinational companies, and we learn from our past mistakes so that we don't repeat them in the future. And look, I don't want to brag, but the success rate of me meeting shops in multiple locations have been quite high. And as a result, they are quite happy to start adding more and more products of Avian brands. And I tell them that, look, I will try to meet you once a year. So at least once a year, I will come here, and we'll discuss. And so if you have any issues, don't hesitate, reach out. Obviously, if there are just operational issues, you can reach out to the local team. But the moment that these are potentially serious issues, you can reach out to me because then I will want to give you an answer that you will be satisfied. But -- and that's how I see it.

Next question coming from [indiscernible]. He has 5 questions. Number one. Just to confirm that you mentioned July volume, up 10% year-on-year or month-on-month, what reasons behind this? Did heavy BTL market dynamics change? And number two, any imported cheap paint from, say, China started to show up in Indonesia? And then number three, update on tinting machine rollout as well as 3-wheelers. I think 3-wheelers has been answered. And then number four, while you maintain top line guidance, how about each segment's gross profit margin, EBITDA as well as net profit. And last one, while sales outstanding days are around 111 days, while credit terms are only 45 to 60 days. Does it mean you also extend extra payment terms?

Let me answer the first one. [indiscernible], all I got to see was that sales in July was in double digits month-on-month, right? So definitely not year-on-year. So -- but I don't have a lot of visibility with regards to the different segments and everything else. So it will take me a bit of time to look because we just concluded July again yesterday. The second question, any imported cheap paints, let's say, from China. So this was an obvious concern for myself and my team as soon as Tokopedia was acquired by TikTok, right? When I saw this news, I said, okay. I suspect that there will be more and more product coming from China through the online shops. And immediately, we've noticed that some really try to have popped up in Indonesia. But I can say that they're not paints [indiscernible]. In fact, they are more of products with very little SKU, let's say, clear waterproofing products and waterproofing, spray can or whatever that is, right? So a lot of products actually that came from China are not in the Paint segment rather in the maybe adjacencies there you go. If you look at this page, we prepared this so that you guys can have a bit of a feel. So on the left-hand side here, Jaysuing waterproof, this -- they say that this is the best seller, okay? But when we see any product from China, we always buy them so that we can benchmark with our products. I mean I can tell you right now that this product is not that good because we benchmarked it already against our products, it doesn't do what they claim they're able to do. okay? But when we see these products and then we feel that, "hey, do we have something in our portfolio to cater for this? If the answer is no, then okay, hey, maybe we should launch something that's obviously better than what they have." So that it can, in fact, deliver what it's meant to be, that's how we see it. The second one here, as you can see here, obviously, is a very mass product, which is sealants. I think from the logo, you can tell that this is from Oriental Yuhong. So Oriental Yuhong again with their sealants, I think most companies in China are under pressure because of the property market, there is not good. So we sort of also, again, anticipated this so we keep an eye on the e-commerce platform so that we know what's happening, and we don't get caught off guard with regards to some of these potential threats in Indonesia. So sealants is one of them, again, because sealants doesn't have a lot of colors. And then on the right-hand side here, it's just tape, right? Again, that doesn't have a lot of colors, doesn't have a lot of SKUs, and they have a much longer shelf life than sealants or maybe the waterproof. But what we have seen in the online platform [indiscernible] is more products like this. So no paint companies are selling their products online. So products which get sold here are products with almost no color essentially. Number three, update on tinting machine rollout as well as 2-wheelers? Yes, [indiscernible], I think this is not something that I want to disclose because I don't want our competitors to pay too much attention to this. So because of that, I cannot answer this question 3. Number four, while we maintain the top line guidance, how about each segment gross margin EBITDA as well as net profit. The one thing that was mentioned earlier is that in Q2, because of the strength of the trading goods segment, trading goods historically was always contributing between 20% but in Q2, in particular, because it grew by 20%, the contribution from trading goods all of a sudden become 23% in Q2 and that the Architectural Solutions shrank to 77%. So obviously, the mix of these two categories basically attract our margin down, right? But when we saw that the raw materials for paints. Most are relatively stable. So to be honest, I don't even know why some of our competitors decided to raise price. I mean, obviously, what's evident is the weakness of Rupiah against U.S. Dollars. I mean, we also see that, right? But beyond Rupiah versus U.S. Dollars, raw materials are relatively stable. Only a few are starting to go up -- so again, I don't understand what's the reason behind most of these multinationals when they decided to implement a price hike in the first quarter this year. The last one, Hadi, you want to answer that?

Yes. And just to Pak Ruslan explanation for EBITDA, I think for first semester, our operating expense, excluding depreciation and amortization is over around 17.3%. So if we can maintain the operating spend at the level, I think we can also maintain the EBITDA at around 27%. And for the last question, yes, I think based on our calculation, the outstanding account receivable is about 64 days. Yes. I think it's increased by 2 days compared to last year. But I think it's still in the normal level here because with the current alternative [indiscernible] economic condition, I think some of the [indiscernible] trying to prolong the payment. But yes, I think as we discussed before, the collection is still okay for us. So [indiscernible] we will keep monitoring mostly. But it is not 100 days, but it's about 64 days.

And to add to that [indiscernible], we do not give any allowance on extra payment terms. So no one in the company actually has the ability to give extra payment terms, only I do, but I've never done it. So -- and that includes like for our customers like [ Mitra ], [indiscernible] you name it. We do not give some extensions on when it comes to payment. And our system because we use [indiscernible], right, for more than 10 years, the moment that you pay us late, we -- immediately, the auto block system kicks in and you cannot order anything. We also think about that on the next step [indiscernible]. Let's say you're an owner of a shop with 10 locations, right? Let me say you have 10 shops. Well, what about if you pay late on one shop and then you buy from a second shop, you buy from a third shop and so on. No. We have a further measure to prevent that from happening. We group you into one group, so that if one of your shops pay us late, the other 9 shops cannot order anything as well. So that's how disciplined we are when it comes to our account receivable. And as far as we know, we're the first company that basically decided to implement this maybe more than 10 years ago. But so stores across the country know that when it comes to payment terms, we're always the strictest but at the same time, we also are very commitment when it comes to giving them what they deserve, whether that's gold coins and other products that we promised them that will give them as gifts we're always very committed.

Next question from [indiscernible]. Pak Ruslan, may I ask our company plan to more aggressive in Waterproofing segment to grab market share from other players due to less competitiveness in Waterproofing segment, only Aquaproof and [indiscernible] in coating base and Sika into component base have some market share here.

Very good question, [indiscernible]. Yes, so the answer is yes. As I mentioned earlier, we would be very aggressive in the Waterproofing as well as in the Wall segment. But because we have launched enough Wall segment, I think we'll slow down a little bit in there. Maybe 1 or 2 products will be launched. But a lot of opportunity we see in the Waterproofing and you'll definitely hit this question on the spot. We mentioned Sika here. So Sika is obviously a potential competitor that we would like to also try to get market share strong, but the Sika business model in Indonesia compared to us is the complete opposite, right, where we are more than 95% or 98% retail, Sika is probably 90% projects. So they have been in Indonesia for so long, I think, in the early '80s. And they've decided to enter and set up their business model in such a way where they provide more support to the painters or applicators, right? So in line with our project division that we set up last year, right, we're also trying to be a more dominant player in the projects. And therefore, as I mentioned earlier, right, there are going to be some products which are meant for projects only, which may not fit the retail market, and that's what we'll look at. We continue to pay attention to various products in Waterproofing to see if there are opportunities in there. To give you an additional color, [indiscernible], just today, okay, today is the first of August, right? So on the first of August today, we actually launched one more product, No Drop product. Obviously, we don't have any slide in here because my team on this call probably don't even know except myself and Robert. So we actually launched one No Drop as a waterproofing coating for natural stone. So if you have a natural stone in your house, you can coat it with that so that then it prevents water from leaking into the house. But what's important about this product is that it maintains the natural look of the stones because you don't want a coating that will put like a plastic kind of feel on your stone in your house. So we're not doing that way because we realized that if I have a stone in my house, I wanted to look natural. So that's what this new product from No Drop will do. You'll definitely see this in the next earnings call.

Additional questions from Felicia Barus. Did you launch any new product in second quarter 2024 and what are the plans for the second semester in 2024?

Yes. I think Felicia is very detailed and you caught us not launching anything or sharing anything in this slide. Yes. So you're definitely right, Felicia. We did not launch anything in Q2 and we've decided to basically launch more in the second half. So quite a bit of products will be launched in the second half. Again, we cannot share too many at this point in time. But you'll see us in the next earnings call as well as the full year, you'll see that a lot more product will be launched into the market because we believe that product innovation needs to be one of the pillars for our future growth. To put it into context, Felicia, out of all the paint companies in Indonesia, in terms of product portfolio, we believe we're still #3, meaning that there are 2 other companies with more product portfolios than us. So even if you think that we've been very aggressive in our product launches and everything else in the past 2, 3 years, we're still #3 Felicia. So quite a bit of ways to go to become #1, I'll give you a bit of color. I think we need to launch maybe another 75%, 80% products, almost doubling our entire products. That's how many products, the #1 paint company have in terms of product portfolio. So this one company have so many products, and I was always amazed when I look at them because I have no clue what they're selling. If I have no clue and I run a painting company, I say, what about customers? Will they have any idea what these products are for? But they choose to be that way. So that's what it is. And to become #2, I think we need to add maybe another 20%, 30% product portfolio and then we'll be #2 company with the most product portfolio in the country.

Additional question from Anutri. Have you seen any competitors pulling out of the market? Do you expect this to happen more meaningfully in the future?

Yes. Also another quick question, Anutri. So when we see -- I think there's two elements in this trend. We need to separate the foreign players, all the multinational players from the local players. Let me answer from the point of view of local players, right? For most of the local players in the country, the paint company that they have and operate now is pretty much their only business. So for them to pull out from this, which means that they have to shut down and basically not do anything else. So from that point of view, Anutri, no, they will not pull out. No local companies will pull out until they are in the brink of bankruptcy. So I think that's the short answer for the local players. Now if we move on now to the foreign players, on the other hand. Well, foreign players are used to operate -- I mean they all operate in a very professional way, right? So for them to enter any particular market and exit from there, again, it's no big deal, right? So there is one company that we know is exiting Indonesia. Again, I cannot share the name here, but you probably know it. So -- and I don't know whether that will actually happen or not, but we were offered to buy their assets in Indonesia. So whether we want to acquire the assets, the machineries, the land, including the brands for Indonesia. So we're looking into it. We've signed an NDA to see whether we couldn't participate in looking at some of the assets, whether the machinery and everything else. So this is a company that has operated in Indonesia, less than 10 years. And obviously, it's a multinational company. So they've decided I think, to exit Indonesia, and that's why they offer the assets to us. Beyond this one company, we haven't seen anybody else that wants to pull out from the market.

Are there any more questions? We still have 3 minutes left. I think if there is no additional questions, we can close this session. If you have any other questions that have not been answered, please feel free to e-mail me. I will coordinate with management and get back to you as soon as possible. Once again, we appreciate your participation in our quarter 2 2024 earnings call today and hope to see you at our next earnings call. Take care. Thank you.

Bye.

Bye.