Super Hi International Holdi Aktie

Esteemed investors and analysts, good evening. Thank you for joining Super Hi International 2026 Second Quarter Earnings Conference Call. The company leaders attending today's meeting are Mr. Yu Li, Executive Director and CEO; and Mr. Cong Qu, Chief Financial Officer and Board Secretary. Today's meeting content may contain forward-looking statements, including, but not limited to, the company's statements regarding strategies and business plans as well as outlook on performance prospects. The content of this earnings presentation and the comments and response to your questions represent management's view only as of today. Please refer to the latest safe harbor statement in the earnings press release, which applies to the conference call. The meeting is conducted in Chinese with an external agent providing simultaneous English interpretation.

In case of any discrepancies, the Chinese content shall prevail. The presentation materials have been uploaded to the company's IR page, please feel free to review them. Now we invite Mr. Li Yu, CEO and Executive Director of Super hi International to review the company's performance for the second quarter of 2026.

Thank you, moderator. Can everybody hear me okay?

Yes, we can. Please go ahead.

Dear investors and analysts, good evening. I am Li Yu, CEO and Executive Director of Super Hi International. Let me present to you the key highlights of Super Hi International for the second quarter of 2026. This quarter, the company's earlier investment in employees and customers have further translated into operating improvements, customer traffic and table turnover rates both improved year-over-year, while the employee cost ratio in several operating expense ratios declined, driving a significant year-over-year increase in operating profit.

In Q2, Haidilao restaurants reserved 8.1 million customer visits, up 5.2% compared to the previous year last year. Supported customer traffic, overall table turnover rate for the quarter was 3.9 tonnes per day. Same-store turnover was 4.0 tonnes per day, both up 0.1x per day year-over-year, both dining service at Haidilao restaurants and also we're expanding revenue sources, the revenue from delivery and other business, both doubled this quarter, driven by the above business, the company achieved total revenue of $219 million in the second quarter representing a 10% increase year-over-year. This quarter, company's operating profit increased by 118.9% Y-o-Y. The operating profit margin increased by 1.8 percentage points Y-o-Y.

Profit growth is significantly outpaced the revenue growth, reflecting the continued conversion of the company's earlier investment and the beginning of the operating leverage release. Now I will review the major operational initiatives of this quarter. First, continue to enhance the operational management of Haidilao restaurants. This quarter, we maintained management flexibility with each region autonomously adjusting operating strategies based on the local business conditions, market conditions and consumer trends. At the same time, we further strengthened the professionalism and support capabilities of the headquarter platform by introducing digital tools and new technologies we enhanced our insights into the industry markets and consumers empowering frontline restaurants in areas such as menu items, marketing and labor efficiency there, but making improvements in the precision and execution efficiencies.

This second quarter is a traditional low season, judging from the table turnover performance. We believe that these initiatives have delivered positive reports. Secondly, in terms of products and menus us, in the first half of this year, the company fully integrated low dietary habits with consumption trends and timing scenarios to drive revenue optimization. New product development, for instance, in South East Asia, we introduced a local flavors such as lemongrass Saute and Basil, extended suit basis in snacks and beverage combinations around the core products to enhance the cross-selling. At the same time, we optimize the existing products by improving taste to presentation and product combination during the barrier for a customer trial in enhanced product appeal.

In addition, the company continuously conducts dynamic operations based on new products, the sales performance, the customer feedback and regional market characteristics of providing customers with a more value-oriented and differentiated consumption experience. Third, in terms of the membership and marketing, as of the end of June, the number of overseas numbers reached 9.46 million. This quarter, we continue to improve customer management, loop around sustained marketing, pursuant to traffic acquisition and member operations. On the other hand, each region combined the local consumption happens, holiday occasions, the preference of the younger customer groups to continue to enhance brand exposures and reaching new customers through IT collaborations and new product launches and new local events.

On the other hand, we place a greater emphasis on post-marketing customer retention by further strengthening tiered membership operations using member exclusive activities, differentiated benefits, the customer communications and in-store experience optimization. So we improve the member activities and visit frequency. We're continuously exploring more scenario -- more across the scenario and the multi-branded membership benefits are hoping to gradually transfer onetime marketing traffic into long-term membership relationships further enhancing customer repurchase and store operating resilience.

In terms of store expansion, this quarter, we opened 1 new Haidilao restaurant in South Korea, 1 in Vietnam. In the first half of this year, we opened a total of 3 Haidilao restaurants at end of Q2, we operated a total of 120 Haidilao restaurants overseas. To date, the number of signed but not yet open Haidilao stores remain in the double digits. Meanwhile, based on the current construction schedules in July and August, we expect several new stores to be opened successfully in the second half of the year and the full year. New store opening target is in the double digits. As of this quarter, the pomegranate plant has operated a cumulative total of 12 brands and 22 2nd brand restaurant overseas.

We continue to optimize the Haidilao [indiscernible] project, which originated in Canada, and we're now opening up the 2nd Haidilao store in Japan. At the same time, the Izakaya project in Japan is also improving in sustainability with the potential for further replication. Various country markets are exploring opportunities to independently incubate or replicate existing second brand formats -- that's my conclusion for the business performance for this quarter, and I'd like to invite Qu Cong to present the financial results.

Thank you, Mr. Li. I will now report about the financial results in the Q2 of 2026. The company achieved a total revenue of $219 million, an increase of 10% year-over-year. Haidilao restaurant operating revenue was $198 million, up by 4.6% year-over-year. Number of Haidilao restaurants increased by net of 3 compared to the same period last year. The company served around 8.1 million customer visits in this quarter, an increase of 5.2% year-over-year continuously to support the restaurant business. Beyond the dining business, the company continued to expand the revenue sources, the delivery service reached 7.562% up by 105% year-over-year.

During the period, each region continued to strengthen delivery operation investment, keep in collaboration with the major delivery platforms in each country, secure more promotional resources and online traffic favorabilities. We enrich their delivery product offerings to enhance product appeal in the delivery scenario. Other businesses reached $13.439 million, up by $119.7 million year-over-year, many contributed by sales of food and seasoning under the Haidilao branded from the company's own central kitchens as well as the active development of some new restaurant business under the pomegranate plan.

Overall, in this quarter, delivery and other business together generated $21 million in revenue, up by $114.3 million year-over-year. The share of total company revenue increased from about 5% in the same period last year to nearly 9.6%, further diversifying company's revenue. In terms of cost and expenses, overall operating efficiency improved compared to the same period last year. In the second quarter, raw material and consumable cost was $74 million with a gross profit margin of 65.9 down slightly by 0.1 percentage point year-over-year.

Restaurant operating gross margin remains stable, mainly because of the Central Kitchen BN the supply chain business has grown significantly versus the last year in terms of employee cost of $74.51 million and the employee cost to revenue ratio decreased from 35.3% in the same period of last year, down approximately 1% decrease as past years efforts in employee capacity building, staffing and store management to optimization have gradually been implemented. Labor efficiencies, improvements have begun to materialize. The rent and related expenses were $5.6 million accounting for approximately 2.6% of revenue, down by 0.4 percentage, mainly due to revenue growth diluted rent expenses as well as adjustments in restaurant network layout reductions in short-term utility expenses of $7 million accounting for approximately 3.3% of revenue, down 0.3% year-over-year.

Depreciation and amortization, $21 million accounting for 9.6% of revenue, down about 0.3% year-on-year. In terms of travel communications and other operating-related expenses, about $25.73 million accounting for about 11.8%, remaining broadly stable year-on-year. Overall, the decline in the employee cost ratio in expenses ratio for rent utilities and depreciation and amortization were important factors in the operating margin improvement this Raw material and other expenses, resources still have room for further optimization. In Q2, the company achieved operating profit of USD 8.1 million, up by $118.9 million from $3.7 million in the same period last year. Operating margin increased from 1.9% in the same period last year to 3.7%, up 1.8 percentage points year-over-year as revenue grew the employee cost ratio in the several fixed operating expense ratio deciding the earlier investment in employees or customers management to gradually translate into operating efficiency improvements.

Although operating profit improved significantly, nonoperating items in this quarter were mainly affected by exchange rate fluctuations. The same period of last year. There was a net foreign exchange gain of $16.33 million. For this quarter, there was the loss of $4.34 million, a negative swing of more than $20 million year-over-year. A company resulted -- recorded a net loss of after tax of $1.93 million for this quarter compared to a net profit of $16.39 million in the same period last year. Although final net profit was affected by nonoperating factors, but the company's core operating profitability improved significantly.

In terms of operating cash flow, companies -- for this quarter with a net inflow of $28 million, an increase of 6.2% compared with net inflow of $26 million in the same period as of the 30th of June. This year, company's cash reserve was approximately $266 million and overall liquidity remains ample to be used for continued store expansion in terms of key restaurant operating metrics. The company served approximately 8.1 million customers visits this quarter, up by 5.2%. And this reflects that the Haidilao turnover ratio and as well as same-day period is going up further improvement in the store customer traffic and overall spending per store for the quarter was $24.3. Day revenue was $17.4000, down slightly by 1.1%.

And this overall restaurant operations, the customer traffic and table turnover have improved this quarter, though single-store operating quality in certain regions that have room for further optimization. By region, market performance diverged this quarter in a turnover in South Asia and East Asia continue to improve the turnover risk in North America and other regions are faced of pressure for Southeast Asia and the restaurant revenue for this quarter was 98.66%, up about 3.9% in terms -- this is mainly driven by high customer traffic and then in terms of average spending per customer was $18.6 year-over-year, the overall Southeast Asian stores maintain a steady and upward operating trends in Eastern Asia, Haidilao restaurant revenue was $33.7 million, up about 9.9% year-on-year. Average turnover increased from 4.8 tonnes per day, 4.9 tonnes per day to maintain at a high level. And this is mainly because the customer decreased the spending from 29.4% in the same period down by $2 to 27.4%.

On a constant currency basis, the average spending per customer in both countries actually increased year-over-year, excluding exchange-related disturbance as the East Asia continues to maintain a strong operating trend with good customer traffic and the table turnover performance. In North America, Haidilao restaurant revenue was approximately $14 million, about 6.6% year-over-year with the store count increasing from 20 to 22 average table turnover 4 turns. And in terms of the average spending per customer increased from 39.1% in the same period to 41%, but the higher average check has not fully offset the impact of lower turnover North America still needs to focus on improving customer traffic and operating efficiency.

Other regions, the restaurant revenue was 25.1% and down by 1.8%. Average table turnover is 3.7 turns per day down by 0.2x per day. This is mainly due to geopolitical volatility in the Middle East is still affecting the operation, though the impact is currently assessed to be gradually diminishing. Average spending per customer in other regions increased from 39.7% in the same period to 41%, primarily driven by exchange rate effects. Overall regional operating performance in the second quarter showed some divergence. The Southeast Asia improved, East Asia continue to maintain level, North America and other regions need to further enhance the customer traffic and per store output same-store performance, were 111 same-store restaurants. Same-store sales was approximately $179 million, down about 0.8% Among the same-store sales in Southeast Asia and East Asia increased by 2.5% and 0.9% year-over-year.

Same-store in other regions declined by 2.7% and 8.5% in the same reason as consistent over trend overall. Going forward, the company will continue to focus on corporation customers -- customer operations and in-store operations or in further conversion of customer traffic improvement into per-store sales and profitability enhancement, and we now welcome questions.

And our first question comes from Shengwei Lai from CICC. Please welcome.

Thank you, Mr. Li Ms. Chief, thank you for giving me the opportunity. And I have 3 questions. And number 1 is that so we can see that in China. And right now, there is an emphasis on empowering through an intelligent middle platform because the overseas operations have any new ideas or plans regarding middle platform constructions or organized structure adjustment. And second is about the pomegranate plant and how do you balance the mature single store model to share and you balance the investment in the cost of the new brands with the company's short-term performance? Do you currently have any relatively mature mechanisms and methodologies to further improve the probability?

And my third question is about further optimism measures there are for cost and expensive controls going forward.

Thank you, Mr. Lai, for your question. There are a total of 3 questions, and I will take them one by one. In terms of the middle platform capability building, overseas is similar to China, but the overseas characteristic is that each country has a different consumer habits, labor regulations, supply chain tax and marketing environment, there is no single set of operating methods that can be directly replicated across all markets. Therefore, the principle for overseas middle platform construction is is the headquarters should build common capabilities as well, whilst the regions and stores should run their local business as well.

In terms of the division of labor headquarters centrally build content capabilities such as digital systems, box supply chain, personal management, the financial management and a membership system tenders and infrastructure regional teams and then adapt and implement these capabilities in combination with the local market conditions whilst specific operational decisions are lifted to the frontline teams who know the local markets and customers.

From an organizational perspective, HP's role will increase become increasing become that a supporting platform and frontline autonomy and operation will continue to be preserved. But things such as food safety and service quality will not be relaxed in any way. Currently, there are 2 projects that are running relatively smoothly. One is high Bomelatong currently. We have both in Canada and one in Japan. It's a simple and fast causal and easy to run low barrier in terms of turnover efficiency and operating performance both in our expectations. So we're also looking at the United States, Canada and other markets will continue to verify recordability.

Others is the Japanese Izakaya, its product offering focused on [indiscernible] and Japanese side dishes at the moment in Tokyo, the customer acceptance and operations stability are continually improving, and the second store is being prepared in Osaka. Regarding the balance between long-term investments and short-term performance, we use -- we verify the certainty with the small cost each project start with 1 or 2 stores. The investment per store is not large, try and error cost is controllable. It will not have a material impact on the short-term performance during the process, if operating performance or customer experience, it does not mean expectations will make adjustment without landing pursuing scale.

So the real significant spending comes in a scale replication, and we only allocate replication resources to models that have been verified and proven viable. So once proven, the company has already designed the return on and expectation for projects in the replication phase. Third question about the cost control. The currently, it's not about compressing costs across the board, but to narrow the gap between the stores. There is still imbalance in operating performance among stores, lifting underperforming stores to the average levels, and this is a better way forward.

And if we continue to compress the store level investment, this will ultimately harm a customer experience, and that's not to the efficiency we want nor is it sustainable. We have identified 2 sources of improvement. The first is operating leverage as the second half enters peak season. Customer traffic again the table turnover maintain good performance. Revenue growth itself will dilute relatively fixed costs such as labor run and depreciation. Second is the daily refinement and staffing and scheduling efficiency, procurement and supply chain and inventory shrinkage, we will continue to optimize these areas as routine work and not dependent on peak season.

And right now, we still focus on our investment in pomegranate plant. And we are not going to be stopping due to short-term profit pressure, but we'll control the pace and strictly manage budgets. So as you can see, with the new brands that gradually contribute to revenue and the middle platform capability building completes its major investment phase this gap will gradually narrow.

Thank you, Mr. Li, for your comprehensive response. Our next question comes from Jun Zeng from Huatai Securities.

Thank you, Mr. Li and Ms. Qu. This is from Jun Zeng from Huatai. I would like to congratulate the company on your very stable performance. My first question is that with the more Chinese hot and catering brands are going overseas, how do you view the competition and especially that you are quite competitive in the China market, how do you view the overseas competition. And especially for the pomegranate plant in this phase, where the brands are not yet established, how do you view the competitors entry for instance, in terms of your brand's buzz and what are the localized approach that you would adopt.

My second question is on, so we can see table turnover performance has been good. Average is steadily rising. What specific measures are used to improve the stores that need improvement. And in addition, what are the planned measures that you have in mind. Thank you.

Great. Thank you, Mr. Zeng for your questions. I will take the first few questions and Ms. Qu will answer the third question. Number one, in terms of overseas market apart from Chinese cruising and the [indiscernible], we also look at the entire dining market currently oversees the consumers' acceptance of Asian cuisine and Chinese food continue to rise, there's a lot of room for development. Our main brand is in the hot pot segment and Chinese cuisine. We're still contemplating the market and raising consumer awareness far from a zero-sum competition at the moment. Therefore, more Chinese brands going overseas is a positive sign.

It validates they will demand existing and will also accelerate the process of overseas customers are getting to know and accept the Chinese cuisine expanding the overall category part, but of course, we maintain a healthy respect for competition. We will focus on doing our own things well, continue to enhance brand appeal through products and service and customer experience, especially by diversifying our customer base and continue improving the proportion of local customers. For pomegranate projects, they are relatively diverse, including incubating and operating restaurants and serving local cuisine. It's not about the brand, but it's about the model and capability, for instance, for these projects being the first to enter is not the most critical factor.

What matters the most is to really prove the single store model and make it replicable. Second, in terms of the overseas brand building, we don't really need to increase the marketing spend to buy the buzz. We center on products and service store experience to let buzz grow organically. Marketing expenses have always been kept at a reasonable level. And what we pursue is discussion, conversion notes, impressions, there are 3 layers. The first layer is to place a marketing creativity and execution locally. Teams in each region have for considerable flexibility to collaborate with the local IP artists and games to plan around the local festivals and a major event in to interact with the customers on the local online platform so that the activities are rooted in local culture and feel familiar to local customers.

Second is to make the products themselves carriers of communication. We launched a Coriander [indiscernible] product series in some of the regions, the Coriander as ingredient is strongly loved or hated by people. And so we build a complete product portfolio around this theme standing from Subasio dishes and snacks generated excellent organic discussion in in-store conversion. We plan this every season with the same logic, the theme selection comes from the real interest of local customers or supply chain and R&D are essentially supported by the company.

And number three, is to capture and retain the buzz. If it only comes at once, then the value is limited. We continue to connect the market activities. The member operations and online attention is directed to offline stores and after arrival through membership benefits and refined operations, it is converted into repeat purchase and referral buzzes the entry point membership and repurchase are the lasting accumulation. Finally, we must return to the fundamentals. And no matter how from and marketing changes, the metric of win wind value is all about customer satisfaction. -- willing to come again and recommend us to other people. This is where the brand influence truly takes a verge.

Marketing amplifying the process, but cannot replace it. Third question about turnover performance and what are the specific measures that we have have, will Ms. Qu to answer this question.

Thank you, Zeng, for your question. I will take your third question. For Q2, our overall increased by 0.1 turn year-over-year Yes. The trend is healthy, but there is indeed divergence among regions, East Asia and Southeast Asia performed better while North America and other regions still have room for improvement. Take North America as an example, the issue for some stores is that cost structure is relatively concentrated and coverage of mainstream local customers insufficient. For instance, if there are changes in the local immigration or visa policies, this can cause a fluctuation in traffic. In the short term, we'll drive store traffic by adjusting menu combination of peak operations above at the end of the day, it's really about diversifying the customer structure, developed surrounding customer groups and number of operations and localized marketing, reducing reliance on any single customer segment. And this is our long-term direction across all over overseas markets in other regions, there are external factors such as geopolitics which are beyond our control. What we can do is to adjust the operating strategies and control expenses in a timely manner based on local conditions.

At the moment, we can see that the negative impacts are gradually diminishing. In terms of mechanisms, the headquarters role is to help store accurately identify problems and using operating data to attribute to underperforming stores. So by table turnover on a store-by-store basis, whether it's a customer base issue, or trade area issue or operational issue, and we will be looking at solutions, for instance, whether we will be relocating adjustments and rather than continuing to invest in just to maintain the store count.

Comes from Jiwei Liu from Citic.

This is Jiwei from CITIC Securities. I have 3 questions. Number one is what is the outlook for the average average unit price per customer trend in Q3 and Q4? And why, what are the specific measures that you will be taken if there are price increase or decreases and second, which region will be for store openings in the coming quarters, will you accelerate openings in the regions with a few current stores or entering into entirely new countries.

Next question is on the investment and payback period and in each region compared with the past, are they improving roughly flood or increasing? And what are the reasons for these changes behind those, if any?

Thank you, Mr. [indiscernible] for your question. Your first question with respect to the unifier Q3 and Q4. Right now, we don't really have any plans for a uniform price adjustment. We will not simply pass all costs on to customers. Each market will adjust autonomously based on the local customer acceptance, the competitive environment and product structure. We pay more attention to the value redeemed by customers rather than simply pursuing higher prices. For instance, we add new products across different price ranges, adjusted set mills and combo products and give customers more choices. So that's on unit price. And with respect to store openings for the second half, and we expect double-digit new stores to open. In North America, East Asia and Southeast Asia. In addition, there are still about a dozen of stores with a substantial progress among which stores in North America and the U.K. are already in construction phase and will open successively over the next 2 years.

Payout and business expansion in existing countries will continue to be handled by each country in the bottom of manner. And the project advancement pace in each country is basically consistent with its operating rhythm. For new entrants, headquarter will more cautiously assess market conditions, consumption in specific site locations. There is currently no definite entry plan for new countries. We are under discussion, but they are not yet definitive.

On your third question, for new stores currently, we are looking at a standard payback period of 3 to 4 years roughly. Southeast Asia relatively faster in Europe and America, relatively slower versus the past, each region has become more careful and prudent in site selections. So the overall store payback periods are more controllable and quality has also improved. For single store investment fluctuates due to factors such as location, store size and decoration style. In the meantime, decoration and labor cost in some markets have indeed risen over the past 2 years. We continue to control investments by optimizing store formats, decoration design, local procurement and construction management and overall per store expenditure remains stable.

Our next question comes from [indiscernible] Securities, Ms. [indiscernible]

I have 2 questions here. Number one, which is about the localization of supply chain. For instance, Singapore and Malaysia in these areas in Southeast Asia, do you have central kitchens? And do you have plans for localization of central kitchens and supply chains in these areas? My second question is about the impact of exchange rate fluctuation on your net profit and hedging because we can see that there is an impact to a certain degree on the net profit? And what are the control measures that you have taken and perhaps you could share with us on those points?

Thank you, Ms. Li, for your question. The first question on supply chain and central kitchens in Singapore and Malaysia, after many years of operation, local procurement and supply chain systems have become mature. For products that can be stably procured locally and meet quality requirements, we will localize as much as possible. For some core seasonings or products whose local supply is not yet stable enough, we will continue to source from central kitchens or established suppliers. Central kitchens do not necessarily expand linearly with the store count. We will consider store density, delivery radius and capacity utilization.

Existing central kitchens have a surplus capacity, then we will also try to do some external sales to improve capacity utilization efficiency. With respect to the exchange fluctuation for Q2, there was indeed quite pronounced, and this is mainly due to base effects. Same period last year, we recorded a large foreign exchange gain. This year, it's a loss, positive and negative combined amplified the year-over-year fluctuation. But it should be emphasized that this is a nonoperating noncash impact from currency translation does not reflect the changes in the underlying business, excluding foreign exchange gain losses, operating profit and operating profit margin in Q2 both improved significantly year-over-year. Therefore, we ourselves focus on the operating profit measures.

In exchange rate management, our approach has 2 layers. The first layer is natural hedging. That is most of our revenue and costs occur in the same market, local collections, local procurement, local labor and rent repayments, the higher degree of the business localization, the smaller cross-border exposure that truly needs to be managed. The second layer is for exposures that do exist such as centralized funds and cross-border settlements. Company will continue to monitor them.

And based on the size of exposure, hedging costs, local compliance requirements, evaluate appropriate funds and exchange rate management methods. However, we will not engage in speculative ForEx operation just for the sake of reported numbers. Overall speaking, we're quite cautious.

[indiscernible]

[indiscernible] I have 2 questions. Number one is about stores. If we divide them into mature stores, relatively new stores and new stores, are there significant differences in the table turnover and store model among them? If we compare and which ones would perform better and/or vice versa? And my second question is about incentives for overseas headquarter management teams, and we are going overseas early, and we have a large-scale relatively sound talent pipeline with more and more Chinese cuisine brands going overseas. So it's likely that there are people who will be approaching your staff and your talent. So how do you ensure the team stability?

Thank you for your question. And on the first point, the store age itself is not the key factor determining store performance and the difference among mature stores come from the trade areas and operational capabilities rather than how many years they have been opened. The real impact of the store age is mainly in the first 6 months after opening, new stores need to go through a ramp-up period of team integration, developing of surrounding customers and groups and stabilizing operating processes. This is a normal pattern.

Taking 2024 as a dividing line, 107 stores opened from 2018 to 2023, about 50 achieved a positive cash flow in the first month of opening. Among the 27 stores opened from 2024 to June this year, the proportion rose to about 78%. In other words, the ramp-up speed of the new generation stores is significantly faster than before. The underlying reason is that in recent years, we have tightened requirements in site selection standards, investment calculations, store format design and store manager reserves. Stores are opened more precisely and preparation before opening is also more thorough.

Taking 2024 as a dividing line, 107 stores opened from 2018 to 2023, about 50 achieved a positive cash flow in the first month of opening. Among the 27 stores opened from 2024 to June this year, the proportion rose to about 78%. In other words, the ramp-up speed of the new generation stores is significantly faster than before. The underlying reason is that in recent years, we have tightened requirements in site selection standards, investment calculations, store format design and store manager reserves. Stores are opened more precisely and preparation before opening is also more thorough.

Headquarter functional teams are evaluated on whether they can truly help frontline improve efficiency rather than merely completing their own tasks and targets. In terms of talent stability, intensified competition is inevitable, but retaining people is not only about compensation, but also growth space and operating space.

Haidilao overseas early. Its great advantage is that it has already cultivated a group of local store managers and regional managers from the front line. They have a deep understanding of the local market and company culture. As new stores expand, new regions are entered, the new promo business are explored. Outstanding managers will always have the next bigger stage.

They can also share in the fruits of the business growth through incentive mechanisms. This is our most fundamental way to maintain teams stability. Thank you for your question. I would also like to thank the management for your very clear answers, and I also wish the company a bright future.

Thank you very much, everyone. And in the interest of time, this concludes today's conference earnings call. I'd like to thank all the investors and analysts for joining us in today's call. Thank you, and we'll see you next time.

Dear esteemed investors and analysts, good evening. Thank you for joining Super Hi International.

[Interpreted]

Hello, respected investors and analysts. Thank you for joining today's super high earnings call. Participating in today's meeting are Mr. Li Yu, Executive Director and CEO; and Ms. Qu Cong, Financial Controller and Board Secretary.

Today's meeting may contain forward-looking statements, including, but not limited to, the company's statements on strategies and business plans as well as outlook on performance. The content published by the company during the earnings presentation as well as comments in response to all your questions represent only management's views as of today.

Please refer to the latest safe harbor statement in the earnings press release, which applies to the conference call. The meeting is conducted in Chinese with simultaneous English interpretation provided by external agency. In case of any discrepancies, the Chinese version shall prevail. The presentation materials have been uploaded to the company's Investor Relations page for your review.

[Interpreted]

Hello, investors and analysts. I'm Li Yu, Executive Director and CEO of Super High International. Welcome to Super High International Q1 2026 Earnings Call. And I'm going to be talking to you about -- on behalf of the company, I thank you for your interest and support. It is my honor to share with you the super high international operating performance for this quarter. In the first quarter of 2026, the company's operations maintained a positive improvement trend with all core operating metrics achieving simultaneous increases.

As of 31, 2026, the company operated a total of 127 Haidilao restaurants in overseas market, added 1 new store in Southeast Asia during the period, recorded a net increase of 4 stores compared to the same period last year. At the same time, the operating quality of the existing store is continuously being strengthened. In the first quarter, Haidilao Restaurant revenue was RMB 204 million, an increase of 8.4% year-over-year.

Same-store sales increased by 4% year-over-year. Total customer traffic exceeded 8.1 million visits and the overall table turnover rate was 4 turns per day. An increase of 0.1 turn per day compared to the same period last year. Meanwhile, the delivery business, Red Pomegranate Project and other businesses continue to contribute to incremental growth with a combined year-over-year increase of 130.9%. The multiple initiatives drove the company's total revenue to RMB 226 million, a year-over-year increase of 14.2%.

On this basis, thanks to increased customer traffic and refined operations, we have seen a significant release of operating leverage.

In the first quarter, the company's operating profit reached RMB 13.993 million, a year-over-year increase of 7.7%. The operating profit margin rose from 4.1% last year to 6.2%, representing a substantial improvement in profitability. In terms of specific business initiatives, we continue to focus on strengthening the 3 fundamentals: focus on employees, focus on customers and focus on line employees. Therefore, the quarter, we continuously emphasized flexible operations, helping employees understand the logic behind services actions by strengthening post-event reviews and store manager mentoring and granting them more on-site discretion.

While maintaining high standard operations, we provide more personalized and flexible service, thereby continuously improving customer satisfaction at individual stores. We're gradually seeing that these actions focused on enhancing employee awareness and capabilities are translating into better customer experiences.

In terms of the product and menu innovation, this quarter headquarters focused on scenario segmentation, differentiation and product empowerment, providing targeted support to various regional markets globally. First, we deeply explored dining scenarios. We offered various kids meal sets for families with young children. For late night hours, we focused on launching spicy brazed dishes paired with refreshing drinks to precisely drive the consumption during that period.

Second, following the summer season, we collaboratively launched a combination products such as vegetable and mushroom factor and beef and lamb combo in multiple regions of our core categories, we focused on upgrading the beef series, offering premium Australian value and freshly cut beef to meet the quality experience and needs of different customer segments.

Looking at the results, the menu innovation in the first quarter were more customer-centric and each market produced excellent localized products. This not only effectively drove a single store sale, but also validated the effectiveness of our strategy of localized product selection and refining menu planning. In terms of the business expansion, we added 1 new restaurant in Southeast Asia during this period. Since last year, the company has imposed stricter requirements on new store location accuracy, profit expectation and execution quality.

Currently, our pipeline of reserved stores remains in the double digits and the overall expansion pace going forward will continue to adhere to the principle of balancing stability and quality. Regarding the Red Pomegranate Project, we are actively building a multiple brand matrix, continuously incubating prototype stores and second brand projects in different countries.

To date, we have operated a total of 10 brands with a total of 18 stores, including formats such as Canadian Malatang, Indonesian Halal Hot Pot, Japanese Izakaya, Korean Scores and SPARC Cora BBQ. This quarter, other business revenues achieved a strong growth of 166.7%, marking substantial growth in the diversifying of our revenue structure and expanding our customer base.

Looking ahead, the company remains committed to its long-term development goal of becoming a leading global integrated catering group, continuously improving in 5 areas: customer experience, restaurants and network, operational enhancement, new businesses and headquarter capabilities. That concludes my introduction of the business situation.

Next, let me invite Mr. Chi Song to present the financials.

[Interpreted]

Thank you. President, Li Yu next, I will report on the financial situation. In the first quarter of 2026, the company achieved a total revenue of RMB 226 million, an increase of 14.2% year-over-year.

Haidilao restaurant operating revenue accounted for 90.4% of total revenue, reaching $204 million this quarter, an increase of 8.4% year-over-year. This was mainly attributable to the continued improvement in operating performance of the existing Haidilao stores in both the table turnover rate and customer traffic. Second, a net increase of 4 stores in the company's restaurant network compared to the same period last year, with adjustments in the store network layout contributing incremental revenue.

Delivery businesses, revenue accounted for 3.2% of total revenue, reaching $7.3 million this quarter an increase of 82.5% year-over-year, primarily because we continue to optimize delivery products and services based on market demand and strengthen the corporation and joint marketing with local delivery platforms Other businesses, the revenue accounted for 6.4% of total revenue, reaching 14.4 million this quarter, an increase of 166.7% year-over-year.

The revenue growth came primarily from the sales of food products and seasoning under the Haidilao brand and from the company's own Central Kitchen as well as from the active development of some new brand restaurants business under the red pomegranate project in other businesses this quarter, external sales from the Central Kitchen contributed significantly.

We have commercially converted some of the central kitchens excess capacity for external use, although the gross margin of this type of B end, supply chain business is lower than that of the C end in restaurant business. And there is a order volatility dilutes our supply chain fixed cost, of course, from the perspective of our core model the high on restaurant domain business remains our most core business.

Next, regarding cost and expenses benefiting from the company's proactive investment in employee management and customer experiences throughout to 2025, the operating leverage brought by revenue growth in this quarter has led to further improvement in the cost structure. Raw material cost for this quarter was $76 million with a gross margin of 66.1% an increase of 0.1 percentage points compared to the same period last year.

Employee costs were $76.6 Page 6 million with employee cost as a percentage of revenue at 34%, a decrease of 1.3 percentage points compared to the same period last year. This improvement was mainly because after the company proactively shared profits with the employees and strengthened the team last year, we began to see in the first quarter of this year, the release of personal efficiency brought by higher customer traffic, rental expenses over $6 million representing 2.8% of revenue remaining relatively stable.

Utilities expenses were $7 million, representing 3.2% revenue, a decrease of 0.4 percentage points compared to the same period last year. Depreciation and amortization were $20.658 million representing 9.2% of revenue, a decrease of 0.9 percentage points compared to the same period last year, demonstrating the diluting effect of revenue growth on the fixed cost.

Meanwhile, the end of the amortization period of certain individual stores that brought to some short-term optimization. Travel and other operating expenses were $23.891 million, representing 10.6% revenue, a decrease of 0.1 percentage point compared to the same period last year. On the profit side, by -- driven by both revenue growth and cost structure optimization, the company's core profitability improved significantly this quarter. Operating profit reached HKD 13.99 million a substantial year-over-year increased 78.7% with an operating margin of 6.2% a year-over-year increase of 2.6 percentage points, representing a clear improvement in operating quality.

A special note is warranted regarding the fluctuation in net profit for the period. This quarter, we had a net foreign exchange loans of approximately $4.292 million compared to a foreign exchange of -- compared to a foreign exchange gain of the HKD 7.435 million in the same period last year.

The difference in nonoperating exchange rate fluctuations amounts to HKD 11.73 million, affected by this book change Translation impact to the reported net profit for this quarter was $4 million, a decline compared to the same period last year, excluding the nonoperating factor of the exchange rate fluctuations, the company's actual business profitability showed a growth trend.

The company's operating cash flow for this quarter was HKD 24.24 million, an increase of 23.1% compared to HKD 19.69 million in the same period last year. As of the same period end, our cash reserves were $240 million, a decrease of HKD 30 million compared to HKD 270 million at the end of 2025, but primarily due to investment in the continuous expansion of the stores and the development of a second brand business.

Regarding the peak restaurant performance metrics. This quarter, Haidilao restaurants served approximately 8.1 million customers, an increase of 3.8% year-over-year, driven by customer traffic and the overall average table turnover ratio for Haidilao restaurants was 4 tons per day, an increase of 0.1x from 3.9 tonnes per day in the same period last year, the average check per customer at Haidilao restaurants this quarter was 25.3%, an increase of 1.1% from the same period of last year, of which approximately $0.8 of the increase came from exchange rate and fluctuations driven by both the customer traffic and coverage check.

The average daily revenue per Haidilao restaurant was $18.4 an increase of 3.4% year-over-year, effectively improving single-store operating efficiency. Looking at the regional breakdown, there was some divergence in regional performance, but the overall foundation of restaurant operations remained stable. This quarter, the Southeast Asia region served 5.2 million customers, an increase of 2% year-over-year, benefiting from customer traffic, the table turnover rate increased by 0.1% year-over-year to 3.8 turns the average tax in Southeast Asia was $19.6 million, an increase of $0.9 million from $18.7 in the same period last year, mainly affected by the exchange rate fluctuations of the U.S. dollar against other currencies.

As of the end of the the company operated a total of 7,200 restaurants in Southeast Asia, a net increase of 1 restaurant compared to the end of previous quarter and a decrease of 1 restaurant compared to the same period last year. Overall, Southeast Asia remains to the company's most profitable and stable foundation with relatively steady customer traffic and average check this quarter.

The Eastern Asia region continued its strong growth momentum this quarter. Haidilao restaurants in this region served 1.3 million customers, an increase of 18.2% year-over-year. The table turnover rate for high end restaurants was 5.1 per ton, a further increase of 0.1x from 5x in the same period last year. The average check in East Asia was $28.2, flat compared to the same period last year. As of the end of this quarter, the company operated a total of 21 Haidilao restaurants in East Asia, unchanged from the end of previous quarter, a net increase of 2 restaurants compared to the same period last year. The North America region served 1 million customers this quarter, roughly flat year-over-year due to the frequent dream of cold weather in North America in January and February as well as the new stores opened at the end of last year in both the U.S. and Canada that are still in the ramping up phase.

So overall table turnover for North American restaurants down from 4.0 turns to 3.6 turns this quarter. The average check was 41.4, an increase of $1.8 from the same period last year, of which is $0.7 of the increase came from the exchange rate fluctuations.

As of the end of this the company operated a total of 22 Haidilao restaurants in North America unchanged from the end of previous quarter and a net increase of 2 restaurants compared to the same period last year. The other regions had a table turnover rate of 3.6 turns this quarter, a decrease of 0.4x year-over-year, mainly because the geopolitical volatility in the Middle East had a significant impact on restaurant operations.

The average check was $41.3, an increase of $3.1 from the same period last year, primarily due to the exchange rate fluctuations as of the end of this quarter. The company operated a total of 12 [indiscernible] on restaurants in other regions, unchanged from the end of previous quarter and a net increase of one restaurant compared to the same period last year, facing the uncontrollable external macro environment, we have implemented a more prudent cost control measures locally to enhance our risk resistance capabilities there.

This quarter, same store revenue for Haidilao restaurants was $184 million, representing same-store revenue growth of approximately 4%. Among them, East Asia performed the most prominently with the same-store sales growth of approximately 10.6% year-over-year. Southeast Asia and other regions saw same-store sales growth of approximately 6.3% and 1.8% year-over-year respectively. Same-store sales in North America declined by 5.1% this quarter still affected by the extreme weather in impacting customer in-store dining behavior.

Table turnover rate and average the performance were generally consistent with the overall trends and will not be reiterated here. The above is the performance review of the first quarter of 2026, and we now go into the Q&A session. We welcome questions and comments.

Well, Mr. Young departure affected the company's established strategy of prioritizing customer and employee benefits to drive long-term growth. Will the approach to balance short-term profits and long-term development change, what specific consideration does the new management have to ensure strategic continuity and team stability.

Mr. Young's departure will not affect the Deep embedded strategy of prioritizing customer and the employee benefits, customer experience, service of action and employee engagement remain our remain on our core focus and will not change in the short term.

Employee benefits, service enhancement and food quality control are key areas. We continue to advance. This quality is the profit improvement and mainly comes from a more proficient daily store operations, identifying more areas improvement in strategy execution and boosting employee motivation. With the revenue growth that we are managing cost based expenses more efficiently, but our long-term strategic direction remains unchanged.

Since the second half of 2025, this strategy has become ingrained in store operations, the proactive investment made earlier apart of our strategic design. As we balance the short-term returns and long-term growth, we will continue to follow the logic of the quality first, growth second.

Even after Mr. Young's department from Super Hi, the system will oversee the regional managers and store managers are responsible for store openings and the operation remains unchanged. We will further deepen employee training incentives and mentoring to steadily improve store operation quality. How is the category layout and the decision-making authority of the red pomegranate plan allocated across the region.

How is the collaboration achieved from regions of headquarters [indiscernible] have any linkage in collaboration on the Red Pomegranate after restructuring to Haidilao in China.

The Red Pomegranate plant is a key part of our development strategy. It now combines a regional decision-making with headquarters empowerment, success projects such as [indiscernible] Monarto in Canada, [indiscernible] model, [indiscernible] in Japan were incubated by regional managers after in-depth local market research and the customers announced including selections of business times and products.

During incubation and operation, we continuously adjusted management approaches a cross-functional team covering product, a brand marketing business analysis technology and [indiscernible] has been formed at the headquarter level to deeply engage in key projects better mobilize resources and make new brand-new incubation more efficient once the decision-making authorities remains with the regional managers.

Some brands are driven top-down and involve collaboration with China, for example, Spark Cora, BPQ overseas was inspired by BPQ in China with a brand and menu selection you'll find from the top, after opening the first prototype, the store in Malaysia, Sparkora has been replicated to Indonesia and Vietnam with the daily operations managed by local country managers.

We maintain regular but informal communication with highly announced Red Pomegranate plant in China. After Mission returns to Haidilao China. She will share her experience with overseas the Red Pomegranate projects and the new business formats. We continue to give regions sufficient autonomy to ensure local adaptation and innovation.

What changes in consumer demand observed since the beginning of this year. Are there any noticeable new trends of our characteristics based on recent consumption trends, how do you assess our medium to long-term growth potential, the most noticeable trend this year is that overseas consumer markets are not deteriorating rather consumers have become a more rational and value conscious.

Value is not just about price, but also about the memorable products, the dining experience, the service quality and suitable ambience, intangible value for their money. This trend that varies by market. North America customers focus more on cost performance and are more cautious in ordering Southeast Asia remains vibrant but prioritizes the convenience, delivery and use oriented dining scenarios.

Mature markets like Japan and Korea are more sensitive to the efficiency limited time offerings, light version and the social sharing. Australia, the U.K. and the Middle East and others have their own habits and pressure points.

The common strategy is that the customers are increasingly want restaurants to give them a clear reasoning to choose them. For Haidilao [indiscernible] trying to clarify our direction. What we have always done is essentially to provide a clearer value choices for customers that we continue to advance the quality to price the ratio initiatives, adjusting manustructure, product combinations, proportion sizes and price reasonableness, combined with the effective promotions to make it easier for customers to choose and fuel value, we are building the experiences, we are building a different Haidilao, not just through decoration and get by designing our products variances tailored to different scenarios such as family meals, late-night snacks, friends gatherings and people's interactions, fresh cuts, set meals, combo launches and extended the delivery scenarios, all follow the same logic, giving customers a reason to choose the Haidilao in different contexts.

In the medium to long term, we do not see the market space shrinking, but rather industry barriers are rising. And we're earlier management adjustment and strategy execution are making the company more resilient from employees to products from organization to operations. We believe a resilient company can quickly adapt to any market change and capture medium- to long-term growth opportunities.

Number next question, what is the current status of member consumption? Members spending share repurchase rate and what are the future strategies and expected outcome for member management.

As of the end of this quarter, Haidilao overseas membership reached 9.05 million.

We continue to promote the membership of work overseas. This quarter, over 92% of the table turns that came from the member customers, member [indiscernible] rate 92.5%, a slight increase from last year in terms of consumption composition over 20% of spending came from newly registered numbers this year and about 1/3 came from repeat customers over in 3 months at the overall members contribution structure remains stable.

Regarding membership work, we will continue to strengthen front end and back end corporation. At the headquarter level, we will enhance the digitalization of the membership system and a focus on optimizing member experience, including improving each reach [indiscernible] and refining a point system and the benefit designs.

On the operations side, we are committed to having a strong managers and frontline staff plays a greater emphasis on customers by designing different tier the benefits that we enable members to experience exclusive services handled thereby increasing customer loyalty.

Next question. Based on current oil prices and raw material cost, what is the impact on the company's gross margin this year? Based on current observations, the impact of rising oil prices and cost on our gross margin is relatively controllable.

On one hand, the product mix adjustment and supply chain optimization can buffer some pressure, regional manager can choose more cost advanced suppliers while ensuring quality. The local supplier model -- we can see that the overall margin is controllable. And the first reason is that for hot pot and basically there is control in there is a flexibility.

So we can see, for instance, including different seafood and restaurants, et cetera, and all of these are actually quite flexible. And this means that once we are ensuring the experience of the customers, we are able to provide them with better choices. And the second is that respect to our overseas business, we continue to have a localization.

We have a localized supply chain. And some of those, we have worked, strengthen our collaboration with the local customers and some of those, we will be working with for instance, collaborations, and this has helped us to offset the commodities cost and in the meantime, in terms of where cost on the store front side, and we have also been able to control the store front.

And with respect to other fees, for instance, the labor costs, et cetera, on this front, in terms of our optimization, it's not sacrificing the benefits of the customers and the growth really comes from the business growth.

In terms of the human labor and at the moment, it's about 3.3% to 3.4%, and that is in the range. And going forward in the future, it's about the flexible arrangement of the labor allocation to further improve our human efficiency, for instance, in terms of rent, and we can see that it is a quite stable going forward, will also be adopting more strict selection of locations and to further improve our space in the stores and to further improve our negotiation prices.

So Apart from this, we can also see that in terms of different cost of consumption as well as the store front management for the cost in terms of cost outside, we do think that is quite under control. Thank you, Mr. [indiscernible]. It's very clear.

Thank you, Mr.. How do you see the room for optimization and labor cost ratio, rent costs and other expenses this year?

We have always maintained to ensuring customer experience and service quality is the most important. So store staffing has a certain rig rigidity. This quarter, overall labor costs accounted for 34%, a reasonable level that -- thank you very much for your question. And with respect to the turnover since April and our performance overall speaking, is relatively stable. And generally speaking, we have been able to continue with the trend of the first quarter and in terms of the turnover rate and we can see that in different regions, there are some variations and the reasons would be roughly the same.

In terms of the price wise [indiscernible] have been working through optimization of combinations in the localized marketing. And in the meantime, and we continue to maintain a stable unit price per customer. And right now, we have entered into the off-season of hot part. And we are relying on the following areas to further improve. So first of all, we know that this is the low season, and that's something that we cannot change. But during this period, we continue to improve our internal capabilities. And for instance, for the summer and as well as for the customers, we will be providing them with the summer food. And in the meantime, we're also launching new products as well as in the summer. And we have, for instance, barbecued sushi and various different drinks that are suitable for the summer drinks. So we are also adjusting for some allocation in a more flexible fashion.

In the meantime, in terms of our scenarios, we continue to further expand our scenarios. For instance, interactive marketing with the various IPs using local performance in social events overseas to with set mills and gifts to attract customers a number form, whether it is our existing customers or it is our new customers, and we will be able to find new ways to tap into these comments, and we are trying our best so that we are able to maintain healthy turnover and a good customer experience even during the half season.

[Interpreted]

So my next question is about the store opening expectations in a store opening plans for this year in the next 3 years as well as the approximate numbers by regions. Can you please tell us more about these aspects.

[Interpreted]

Okay. No problem. Thank you for your question. Our store opening strategy, we have always adhered to bottom up, and Mr. Li has also said that have put forward strict requirements. And at the moment, we have double-digit stores that we have already signed or we are already entering into the substantial contract signing stage. Apart from Haidilao and in various places, we will also have a Red Pomegranate plant and 1 type is bottom up.

And so this is based on the local regional managers in and those are the ones that they rely on the local platforms and another 1 is from top to bottom, and those are the ones being pushed by the company from the headquarter and which will also help us to further expand and grow within the company ourselves.

So we are not going to be providing any specific numbers or figures, and it's really because relying on the local people and rely on their local situations to specifically come up with a plan that is suitable for them for their future development and opening.

Thank you, management, and thank you, hosting. Thank you, everyone, for joining the call.

Good evening. Thank you for attending today's Super Hi International 2025 Q4 and Full Year Earnings Conference. The company leaders are present to the conference are Ms. Yang Lijuan Executive Director and CEO; and Ms. Qu Cong, CFO and the Secretary of the Board. The content of today's meeting may contain forward-looking statements, including, but not limited to, the company's statements on its strategies and business plans as well as the outlook for its performance. The content released by this conference at the earnings conference as well as the comments and responses to your questions only represent the views of the management as of today.

Please refer to the latest safe harbor statement in earnings press release, which applies to all the conference calls. The meeting is conducted in Chinese with an external institution providing simultaneous English translation. In case of any discrepancies, the Chinese content shall prevent. The meeting presentation materials have been uploaded to the company's Investor Relations page for your reference. Now we remind Ms. Yang Lijuan, Executive Director and CEO of Super Hi International to review the company's performance in fourth quarter 2025.

Thank you. Host. Dear investors and analysts, good evening. I am Yang Lijuan, Executive Director and CEO of Super Hi International. I'm here to brief you on the company's performance in the fourth quarter and the full year of 2025. In 2025, under the strategy of focusing on both employees and customers, the company took the initiative to offer benefits to these core groups.

We have witnessed a sustained growth in revenue and customer traffic with the quality of growth improving in the fourth quarter of 2025, that the company's overall operation continued the recovery trend of the first 3 quarters, the customer traffic of Haidilao restaurant reached 8.31 million persons times in this quarter, driving the overall average table turnover rate of Haidilao restaurant to 4x per day, an increase of 0.1x per day year-on-year. At the same time, the company's delivery business and other businesses continue to contribute to revenue in this quarter. Company's total revenue reached the U.S. dollar 230 million, an increase of 10.2% compared with USD 208.8 million in the same period last year.

And month-on-month increase of about 7.5% from the third quarter, indicating that our investment in optimizing product cost performance ratio and reaching consumption scenarios and improving service experience that have gradually been recognized by customers. Looking back to the full year of 2025, for Haidilao restaurants operated by the company received a total of 32 million diners. The overall average table turnover rate of the restaurants reached 3.9 turns per day, and the same-store average table turnover rate reached 4 turns per day both an increase of 0.01 turn per day compared with the same period last year. Total revenue in 2025 was USD 841 million, an increase of 8% year-on-year. Now I shared with you some of our continuous efforts in business improvement. First, adhere to offering benefits to customers and employees and consolidated the foundation of store management in 2025 on the basis of focusing on both employees and the customers. We further clarified and implemented the proactive strategy of offering benefits to customers and employees throughout the year.

In terms of the employee development, we have continuously optimized from multiple dimensions, such as salary and welfare, daily care and training and development, enhancing the sense of belonging of the diversified team. Up to now, we have about 90 reserve backbones and nearly half of whom are foreign key staff laying a talented foundation for diversifying management. In the frontline management, on the basis of a formulating corporate line principles, we have turned the focus of work to frontline stores in the regional divisions, allowing them to focus more on the market customers and employees themselves.

This transformation has released very obviously, frontline vitality in the second half of the year in many excellent service cases and the management practices have been spontaneously created by regional divisions in stores. At the same time, we also encourage management, the team in various regions to conduct cross-departmental and cross-city store inspections that conducts a comparison learning and reflection in on-site work, in conjunction with the dual store management and multi-store management policies, we extend excellent management capabilities to more stores and to further expand the talent training action. Second, to create a unique Haidilao and continue to invest in customer experience this year in our work of focusing on customers that we have formulated the differentiated service plans for different scenarios such as birthdays, parent-child activities, the diners and late-night snacks and implemented the scenario-based services in [ holdings ] such as dishes, peripheral products and decorations with a more substantial investment.

In terms of our products, we have continued to promote localized new product launches in various countries with a total of more than 1,000 optimized new launches throughout the year. This year, we focused on the implementation of fresh-cut food scenario. Fresh-cut meat is quite novel for overseas consumers. We have simultaneously equipped with the declaration of open kitchen, fresh-cut workshop, which can bring a better consumption upgrade experience. At present there are a total of 57 SKUs over fresh-cut beef and pork series covering 13 countries.

As of December 31, the average click-through rate of the fresh-cut meat series products in overseas countries reached 12.21%. This year, we have continued to innovate in the takeout scenario, launching faster food categories such as spicy boiled food cups, fried snacks and wraps and noodles. At the same time, we launched and promoted on multiple platforms and expanded delivery coverage at the annual takeout revenue increased 68.1% year-on-year, effectively reaching customer groups beyond the dine-in meals, in terms of space and service, we selected some pilot stores to carry out the transformation of nightclub scenarios, upgrading lighting, sound effects and the interactive experience.

The improvement of table turnover rate during late night snack hours in pilot stores is more obvious than not similar stores around us. In addition, we have actively explored the innovative marketing models in many countries and driven a certain degree of talk-of-town popularity and customer traffic support of the through the dual track strategies of celebrity co-branding and IP authorization.

In terms of cost performance ratio, we have authorized the teams in various countries to make a reasonable adjustment in pricing, portion size and plating allowing customers to better feel the cost performance ratio. This is also one of the important reasons why our table turnover rate remained stable in the traditional off season in the first half of the year.

Thirdly, enhance the capability of the headquarters and promoted the upgrading of organizational efficiency and digitalization. We have made several important progress in the capacity building of the headquarter this year.

In terms of supply chain, we have continuously increased the production capacity of our own central kitchens strengthened the hierarchical management and the bargaining power of global suppliers. The continuous efficiency improvement of the supply chain since this year has offset the gross profit pressure brought by the customer benefit strategy to a certain extent, proportion of the employee cost that has also gradually approached this level of the same period last year. In terms of digitalization and organizational efficiency we have actively explored the application of AI technology in management to improve the operational efficiency of the headquarters and stores.

We have also further integrated the coordination mechanisms of products and marketing guided menu optimization and the data evaluation informed in normalized product management cycle of new launch evaluation and iteration. Up to now, the scale of our overseas members has continued to expand and the application of digital tools in the members activation and scenarios reach has gradually deepened. As of the end of 2025 with the number of overseas and members of Haidilao has exceeded 8.5 million.

Fourthly, the expansion of store network and the wood picker plant are promoted in parallel.

In terms of expansion, we still adhere to the bottom-off strategy where country managers are responsible for site selection and implementation. The headquarters control the quality and pace. In 2025, we opened a total of 13 Haidilao stores throughout the year, covering 9 countries, including Malaysia, South Korea, Indonesia, Japan, United States, Australia, Canada, UAE and the Philippines. In the meantime, we continue to optimize the store network layout in hand and make adjustments at the right time. In 2025, we closed a total of 9 stores in Singapore, Thailand, Malaysia and Japan, some due to lease expiration, others due to active adjustments among the 3 locations that have completed the format transformation from Haidilao to the second brand and been incorporated into the Pomegranate Plan for unified operation.

As of the end of 2025, we operated a total of 126 Haidilao stores overseas. In terms of store opening quality, the number of stores we have signed contracts for and should be opened it still remains in double digits with a steady overall expansion pace, we have not relaxed that -- the requirements of our profitability and implementation of a quality of new stores, 50 in terms of Pomegranate Plan, we have implemented at a steady pace of advancing gradually and verifying was a polishing the plan. As we go along this year, we continue to incubate prototype stores in the second brand, projects in different countries around multiple catering trucks, such as the hotpot, BBQ, smart spicy cups and in terms of the implantation mechanism, we adhere to bottom-up approach in the terms. The teams in various countries identify trust and promote the site selections and implantation based on the local market whilst the headquarters focuses on the construction of the middle office capabilities, such as product R&D, brand marketing, informization and business analysis forming front-end and back-end coordination.

We can also show you some of the results this year. In terms of progress, we have some specific achievements that we will report to you this year, projects such as [ spa power barbecue and HiboMalatanian ] the Japanese Izakaya are progressing as an the some of which have achieved a single store probability proving that our exploration of new formats overseas is feasible. In addition, 3 original Haidilao locations were transformed into second brand operations throughout 2025, and the Pomegranate Plan has begun to link with the optimization of the existing store network rather than being an isolated new thing from the perspective of operating data, the revenue contribution of related business has also continued to increase.

Other business revenue increased by 61.4% year-on-year and the substansive contributions have begun to be seen in reaching the revenue structure and expanding the customer base. And next, we'll still adhere to a prudent pace of advancement to continue to polish the proven project, buildup information, digitalization and the mid-of the support capabilities and on this basis, gradually improve replication efficiencies and enrich the company's format layout and growth sources. Looking forward into the future, we take becoming a leading global comprehensive catering group as our long-term development goal and continue to improve in 5 aspects, the customer experience, the restaurant network, operational improvement in new business and headquarter capabilities.

The above is my introduction to the business development in situation. So now please welcome Ms. Qu Cong to introduce the financial situation to you all.

Thank you. Ms. Lijuan and next, I will report to you on the financials of the company. Our total revenue for the full year 2025 was USD 840.8 million, an increase of 8% compared with the same period last year. Operating revenue of Haidilao restaurants was USD 790 million, accounting for about 94% of the company's total revenue, an increase of 5.7% compared with last year, take out revenue USD 19 million, increase of 68.1% year-on-year. Other business revenue was USD 31.8 million, increase of 61.4% year-on-year mainly due to the continued expansion of the revenue contribution from restaurants incubated under the Pomegranate Plan and the continuous penetration of peripheral products such as hot pot condiments among local consumers and in retail channels.

Full year table turnover rate of Haidilao restaurant was 3.9 turns per day and the same-store turnover rate was 4 turns per day, both an increase of 0.1 turn compared with 2021 in achieving steady improvement in operating quantities against the background of a continuous expansion of the store network -- from the perspective of the annual rhythm, the year-on-year revenue growth rate of each quarter was 5.4%, 8.5% to 7.8% and 10.2%, respectively, with the growth momentum and strengthening quarter-by-quarter and reaching the annual highs in the fourth quarter, reflecting that our continued investment in optimizing product cost performance ratio reaching consumption scenarios and improving service experience.

In terms of the raw material costs accounted for 33.6% revenue increase of 0.5% over last year due to our active optimization restaurant dish quality and increase in the proportion of fresh products, which brought certain fluctuations in raw material cost in the short term, employee costs accounted for 33.9%, an increase of 0.6 percentage over last year in 2025. We systematically reached the salary and welfare for the frontline employees and increased the investment in employees daily care.

Rental accounted for 2.9% of revenue increase of 0.3 percentage points compared with the same period last year. Quarter and electricity expenses of 3.4% for revenue, a decrease of 0.2 percentage points compared with last year. Depreciation and amortization accounted for 9.8% of the revenue decrease of 0.6 percentage points compared with last year. Above changes are mainly due to dilution of a promotion proportion of relevant expenses by the increase in revenue, other operation-related expenses accounted for 11.3% of revenue increase of 1.4 percentage points over last year, mainly due to the increase in our outsourcing services piece for restaurants as well as the company's increased investments in continuous promotion of the Pomegranate Plan and the brand building regional expansion in 2025. Our full year operating profit was USD 37.4 million, operating profit margin, 4.4% decrease compared with 2024, from a perspective of quarterly trends against the background we actively increased the investment in the first half of the year.

Operating profit margin had a low of 1.9% in the second quarter recovered significantly from the third quarter and rebounded from 5.9% to 5.7% in the third and fourth quarters, respectively, with a clear recovery trend in the second half of this year. This resulted in line with our forecast at the beginning of the year, and this has laid a solid foundation for the company's long-term healthy development under the comprehensive influence of above factors after tax net profit to 2025 was USD 36.3 million in any substantial increases compared with 2024, significant improvement in net profit and is mainly due to the favorable impact of 2025, the global exchange trend on the company's multicurrency asset and liabilities.

So now looking at Q4, achieved a total revenue of USD 230 million, an increase of 10.2% compared to the same period last year, month-on-month to 7.5% from third quarter, mainly due to expansion of the store network compared with last year, continuous improvement of table turnover rate the peak season, in fact, driving double growth of customer traffic and average customer spending among the operating revenue of a Haidilao restaurant with USD 211.9 million accounting for 92.1% of company's total revenue increase of 6% compared with the same period last year. Takeout revenue was USD 6.8 million substantial increase of 94.3% compared with the same period last year continued high-speed growth and other business revenue was USD 11.3 million, increase of $109.3 million compared with same year last year.

We can continue to see the success of Pomegranate Plan with further evidence in our fourth quarter. Fourth quarter of 2025 raw material cost is USD 76 million. The gross margin, 66.6%, a decrease about 1 percentage point compared with same period of last year, mainly due to the short-term cost increase brought by optimization of further materials employee cost was USD 74 million, accounting for 32.2% of revenue, basically same as same period last year, improvement compared with the third quarter mainly benefiting from the increase in revenue scale in fourth quarter rental expenses is USD 6 million, accounting for 2.8% of the revenue basically same as the same period of last year.

Quarterly, electricity expenses at USD 7 million, accounting for 3.1% of revenue, a decrease of 0.3 percentage points compared with the same period last year. Depreciation and amortization was USD 21.5 million, accounting for 9.4% of the revenue, a decrease of about 0.9 percentage points compared with the same period last year. Total revenue and other operating expenses of USD 29 million, accounting for 11.7% of revenue increased about 1.1 percentage points and mainly due to the promotion of Pomegranate Plan, brand building and the store expansion. Q4 company's operating profit was h-h. $12.98 million operating profit margin, 5.7%, decreased about 2.7 percentage points and basically, the same as third quarter, the decline in the profit margin is mainly due to active investment on the cost side, which is in line with our overall rhythm of continuously offering benefits to customers and the employees and net exchange losses in the fourth quarter was USD 3.8 million, mainly due to the revaluation impact of exchange rate fluctuation.

Under this impact, in Q4, our after-tax net profit was USD 4.47 million achieving profitability by end of 2025 on and our capital reserve is USD 270 million compared with USD 250 million at the end of 2024, mainly due to the net cash inflow generated from annual operating activities. In terms of performance of the restaurants in Q4, we have served a total of 8.31 million customers, an increase of 3.89% compared with the same period in 2024.

Company's average table turnover rate was 4 turns per day, increase of 0.1 turn compared with the same period of last year. Our average customer spending was USD 25.4 increase of U.S. dollar at 0.4% compared with the same period last year, mainly because we continue to optimize the this structure and marketing measures to providing consumers with a more differentiated choices. Average daily revenue per restaurant was $18,800, slight increase from the same period last year. And we can see that if the Asia performance is the most outstanding. It has increased about 0.3 turns compared to the same period of last year, reaching 5.1 turns and hence this is mainly thanks to the operating efficiency in Japan and South Korean markets as well as the incremental contribution of the newly opened stores, the average customer spending remaining at USD 28.

North America, roughly the same as last year at 4.1 turns per day. In terms of average daily revenue per restaurant is USD 24,100 in the same period, roughly the same as -- same period of last year, and the average customer spending in North American market was the USD 41.4. It rebounded from USD 41 in the same period net increase of 2 Haidilao restaurants in North America in this quarter supported revenue growth.

Other regions, the table turnover rate in the fourth quarter were 3.9% affected by ramping up period of newly opened restaurants during the same period. Average daily revenue per restaurant is a USD 24,300 slight adjustment from USD 26,100. Average customer spending for the USD in Southeast Asia total of 5.3 million customers and in terms of the average customer spending USD 19.3 slightly the same as last year maintaining stable operation overall.

In the fourth quarter, same period revenue was $195.4 million, an increase of 2.3% for the same-store growth, achieving positive growth for Southeast Asia, we can see 12.8% year-on-year growth and for other regions, they are at 1%, 0.2%, 0.5% year-on-year. For North America, Southeast Asia and for regional same-store performance is pretty much consistent with the overall trend, and I'm not going to go into further details. So this concludes our presentation. We now go into the Q&A session.

[Operator Instructions] The first question comes from [ Jong Yezhang ] from [ Yezhang ] Securities.

Ms. Yang and Ms. Qu, This is [ Jong Yezhang ] from [ Yezhang ] Security. I have two questions. The first one is on store opening. May I please ask for the next 3 years and what your store opening plan and looking at the different regions, what the approximate quantity given that there are certain global geopolitical changes and will this affect your current store opening plans?

My second question is on the brand equity? And what indicators do you use to judge the strength of your brand in terms of Haidilao branding in various countries? And what is the strength and for the countries that you're not doing so well? And how would you further strengthen your brand equity in those countries.

Thank you. Mr. [ Yezhang ]. I will answer your first question in terms of store opening. For store opening, we continue to focus on bottom to up and we're not going to have a specific target. And in terms of our selection of the stores and in terms of the business district maturity preparation for the local team, those are more important. The present most of these plants, they will be opened up in 2026. In terms of regions, the East Asia is where we have the most confidence, we can see that single store model in Japan and South Korea have been very fine. We have also noticed that North America achieved a net increase in the fourth quarter. And for Southeast Asia, we have a large base. Hence, the focus is on optimizing the existing stock and improving quality of single stores, Middle East, Europe, Australia, and we'll be following and watching the market closely.

You also talked about the geopolitical frictions and the work going on at the moment. So for our Middle East deployment, of course, for the short term, that will come as a headwind. But in terms of geopolitics and our approach is that. So we will not be making unified decisions on contractions or accelerations, but it is really country managers to make their judgments call because they are the ones who know the best about the local situation. And again, it is still bottom to upper hand, so we will maintain very prudent.

In terms of your second question, how do we evaluate our brand power? and I'll have Ms. Yang to answer this question.

So you can see that these would be reflected in our internal indicators, and we mainly look at the following areas, for instance, and number one is the quality of natural growth of the members, the customer registered. Voluntarily and repurchase without relying on promotions or discounts. And second, steady growth of table turnover rate in peak season again, which reflects our customers' willingness to visit certainly continues to increase in the proportion of local customers.

If the market mainly relies on the Chinese customers and then the brand barrier is fragile. Number four is the spread of word of mouth that we continue to follow the natural discussion volume and the emotional tendency in a local social media in each market by market. By markets, in the mature markets such as South Korea and Southeast Asia, the brand awareness is high and the local customer base is solid. Japan is growing rapidly with a remarkable progress in the past year. In addition, in some markets where we have entered a short-term -- short time and the brand awareness is still in the early stage, and Asian customers are still the main support. For markets with a relatively weaker brand power, our strategy has several levels.

So first, the localized products and the services to make local consumers to feel that a Haidilao dishes are made for them. Secondly scenario-based marketing strategies such as Star co-branding and IP authorization have a higher leverage effect in the market with a weak brand awareness; and number three, be patient, we will not easily abandon a market because of a poor short-term data, but we will carefully evaluate which stores need adjustments based on performance. Thank You.

So the next question comes from CITIC Securities [ Wei Jaba ]. Please go ahead.

Thank you. I have two questions for the management team. And the number one is with respect to the Pomegranate Plan. Ms. Yang has mentioned this in detail. Could you please share with us about some of the single store models and the profit levels of the representative of brands in this area? And what are the subsequent development plan?

And my second question is about 2026 to 2027. How do you look at this in terms of customer experience and the employee benefits? How do you look at this? And how will this be reflected in operating indicators such as the expense ratio?

Okay. Thank you, Mr. [ Wei ] for your question. The first question, will ask Ms. Yang to answer your question.

Thank you, Mr. [ Wei ]. The Pomegranate Plan has achieved some specific results this year. Sparkora BBQ and the Canada Hi Bowl Spicy Hot Pot and the Japanese Izakaya are all progressing as planned and some of them have already achieved a single store profitability. This is a very important signal for us, proving that it is feasible to build a second brand overseas. For single store models, there are great differences among different brands in the markets. At moment, it's difficult to give a unified figure because we're now basically are literally crossing the river by touching the stones and it is not yet the time for large-scale replication and we consider there are mainly 3 factors, whether brand is worth promoting first whether a single store can make a profit without headquarter subsidies.

Second, whether the model can be replicated to opened a second store in the same market. And thirdly whether the local team has the ability to operate independently. Only when all 3 conditions are met, will we consider accelerating the expansion. The other business revenues increased by 61.4% year-on-year in 2025, with the substantive contributions starting to emerge behind this growth in this follow-up, we will adhere to a prudent pace of first polish in the successful projects and build the middle platform to support capacity and gradually improve the replication efficiency.

At this stage, we still focus on independent research and in incubation and selection, no clear acquisition plans at the moment.

And let's wait for the next question.

I'll take your second question. 2025, this is a year of our active investment concentrated in the first half of the year, operating profit margin hit a bottom of 1.9% in the second quarter, but rebounded to 5.9% and 5.7% in third and fourth quarters of the second half of the year, showing a clear recovery trend. Entering into 2026, our investment strategy has shifted from increasing to optimizing the established the employee benefits of standards and customer service quality will not be reduced, and we'll continue to pay attention to any unreasonable aspects in dish and pricing.

However, the strategy running in period has passed, the corporate correction has been briefly improved. The investment direction will be more precise and the more attention will be paid to the input/output ratio reflected in the expense ratio, the ratio of the employee cost of revenues is expected to gradually spin out with the revenue growth, the continuous efficiency improvement of supply chain will support the proportion of the raw materials, the fee of food delivery platforms will rise with the business growth.

But the investment in brand building and the consulting will be more focused. Overall speaking, the expense ratio structure in 2024 will be optimized to a certain extent compared with the 2025, but we will not set a specific profit margin target and then reverse deduced business behavior. We will not shrink investment in customers and employees for the sake of short-term good profit margins, but they will be more precise. Thank you.

And we now go into the next question, is Mr. Lai Shengwei coming from CICC.

Can I please ask about the raw material cost, and we can see that the price of the beef in [indiscernible] has recent shop team recently, and there are external environmental disturbances and how do you look at the future gross profit margin trends? How would the company hedge against the pressure of rising raw material costs?

My second question is about the different store level operating profit and margin across different regions, which regions may perform relatively poorly in 2026 further? And improvement measures that the management might take?

Thank you, Mr. Lai for your questions. So first question on raw material, this is our key focus. 2025 raw material accounted for 33.6% of our revenue for the whole year, an increase of 0.5 percentage points compared with 2024, mainly due to the increase in food material costs driven by business expansion. For instance, we have introduced fresh fruit cutting. Our response measures are mainly in threefold: first centralized procurement and hierarchical supplier management to continue to strengthen the bargaining power with the global suppliers.

And none of the scale effect has already been partially reflected in 2025. Secondly, continuously to improve the production capacity of our central kitchens, reduce the dependence on external processing. Number three, menu structure optimization, we have established an evaluation system of click rate, coverage rate, gross profit margin and continuously iterate the items with no gross profit contribution to avoid inefficient SKUs occupying procurement resources.

Overall, we expect the ratio of raw materials to revenue will remain basically stable in 2026. Your second question, in terms of store level profit margin by region separately. We do not disclose those, but we can give you some directional judgments. East Asia is the region with the healthiest single store model at present with a table turnover rate of 5.1x in Q4, average revenue of USD 20,800 per single store. Profit contribution at the restaurant level has improved significantly.

North America remains above USD 24,000 with a high absolute value, but the rent and labor costs are correspondingly be higher. Southeast Asia has a large base of stores with a great individual differences. Some mature stores performed very well and a few individual stores are still in the adjustment stage. If we look at the future improvement potential, the table turnover rate of some stores in Southeast Asia has not reached the expected level in 2026. So we'll focus on promoting the operational improvement of these stores, including deepening of product localization and upgrading of the services scenarios. The newly opened stores in North America need time to ramp up their performance and we have expectations and patience for this. The improvement direction over each region in 2026 is a clear and will not change our long-term judgment call on any of the regions due to short-term fluctuation.

Next question. We have Ms. [indiscernible] from [indiscernible] securities.

Thank you for this opportunity. I have three questions.

here to ask the management team. The first one is short term, we can see that right now -- Japanese relations are being affected. And so I don't know whether this would affect your table turnover rate performance. And second, about average customer spending -- we can see that 2025 average [indiscernible] trending downwards has helped with the increase in the customer traffic in 2026, what about your pricing? Would you continue to reduce your price. In terms of the mid and long term, how do you balance this short-term profit concessions? And as well as profit margin balance, how do you strike a balance between those two?

And my next question is on the stores because in 2025, you have closed certain stores, underperforming stores. Right now, what is the proportion of the current store network that are still in loss or have a low operating profit margin? Going forward, how would the company evaluate those companies when you consider whether those should be close or -- what are the key indicators?

Thank you, Ms. [ Li ] for your questions. So your first question, the performance of the Japanese region in terms of what we can see right now, our operation has not been affected and our turnover -- table turnover rate is maintaining stable in terms of proportions of local customers that continue to rise, the consumption scenarios are also relatively rich, impact over short-term certain fluctuations on the overall operation is limited. This is the result of our persistent localization operation and in-depth cultivation of local customers. We have not yet been impacted, but we will continue to follow up on the external environment closely. In terms of the adjustment or reduction in average customer spending in 2025.

And this is not simply about a price reduction. This is about making customers feel better in terms of cost performance, such as pricing rationality, portion science, plating and the service experience. So some of those are our active adjustments and some of these are superimposed with the structural changes on the other hand, such as the number of stores in different countries, the increase in local customers, the changes in average number of people per table and so on. Our direction in 2026 will remain to ensure Haidilao's position as the mid- to high-end restaurants whilst subordinating to the improvement of customer perceived value, healthier and fresher tissues, better new product launch experience and more dimensional consumption choices in the mid- and long-term profit concession and profit margins are not an opposing relationships.

The customer flow growth and the customer stickiness brought by profit concessions are the foundation for the long-term improvement of profit margin for every 0.1% increase in the table turnover rate and the positive impact on the store level profit margin is quite considerable and the profit concessions and the profitability for a positive cycle with a time lag. In 2025, and we have closed down 9 shops and 3 of those have actually changed to a second brand. And for us, it's not giving up on those companies. And out of these 126 companies that we are running overall speaking, and overall quality is improving. We're not really able to disclose to you about the specific number of the ones that are not doing so well, were underperforming stores, but I can give you some guidance and when we look at a store whether any adjustments need to be made, mainly three aspects.

Number one is to see the operating -- number one is to see whether there is any visible improvement in the pathways. Second, the trend of the table turnover rate and not only just at a single time point, but also in the past 6 to 12 months, rather, for instance, a store with a continuously declining table turn rate and even if it's not in loss at the current stage, we will also intervene.

And in terms of the ones that we're seeing a positive turnaround, and we'll encourage the local managers and the division head to further improve. Number three, we look at whether the problems are management related, which we will change and update the management. And if it is about the market related and then we'll review our overall market strategy and to make adjustments accordingly. That's my answer. We also hope that the company can achieve better results in the future.

[Audio Gap]

My first question is about your strategy, focusing on both customers and the employees. And we can see that in Q4, the table turnover rate has improved. So if I look at this strategy itself, it in terms of the strategy itself and how will this drive the table turnover rate?

And secondly, how do you look at the customer satisfaction? And because in 2026 in terms of this strategy, how would you continue on with the customer satisfaction strategy?

And my next question is still asking about the Middle East impact on your business. For the Middle East, of course, that market will be affected and for European, how do you look at the European market expansion and deployment? Those are my 2 questions.

Thank you, Hildy, for your question. The first one with respect to focusing on both customers and the employees, hence, giving profit concessions to customers and our employees, and we not only look at the numbers, but also customer behavior. Last year, our overseas members has exceeded 8.5 million with a continuous natural growth. The second overall overseas table turnover rate has been rising continuously. Customers' willingness to visit actively is increasing.

Whether it is repeat purchase or new customers that they're both increasing. And number three, same-store sales growth rate has maintained positive growth throughout the year, reaching 2.2% in the fourth quarter. Among them, the same-store growth in Eastern Asia was 12.8%, indicating that our stores have closer connections with the surrounding customers and our overall grasp of the business district customer group is improving. In terms of the local customers, we have seen that there is an increase in the number and the proportion of the customers who place the orders in local languages.

So for instance, in South Korean market, the proportion of the bills placed in Korea exceeds 90%, which is the most direct signal of brand localization and the performance of a repurchase rate varies across the regions, in the regions with a strong growth momentum, both customer acquisition and the repurchase performance and are improving simultaneously in relatively mature regions.

So the contribution of our regular customers is more prominent, and we have not disclosed the specific figures of the repeat purchase, but the repeated behavior of members is a core indicator that our system continuously to track. For 2026 is that the customer base construction brought by profit concession strategy will continue to take effect. This -- we have believed that last year, this is a long-term investment and not simply a short-term move. For your next question, Middle East and Europe, yes, indeed, geopolitics is indeed an unavoidable external variable for our overseas restaurant operations.

We have a business and the deployment in Middle East and Europe, we have 2 stores in the Middle East at the moment for the short term in terms of some of the projects that we are working on. It has been affected negatively, but we also have authorized to the country manager. They are the ones who know the market very well and to ask them to determine the pace and the timing.

In Europe, we also focus on different stores, and we are constantly visiting those stores, but whether we would sign the contract or not, depending on the location such as customer footfalls and looking at the country's macroeconomy as well as the number of population, et cetera. So there are quite a lot that we need to consider. So it's all about the bottom to up and we are very prudent, but we're very, very positive as well for the market.

Thank you, Ms. Qu, for your answer.

We also hope that next year, we'll see better results from your strategies.

Next question comes from Jun Zeng from Huatai Securities.

So how do you look at the customers' satisfaction? And at the moment, do you think that the table turnover rate is already quite satisfied? And can you please also share with us in terms of the same-store improvement for the future, how to consider the price dimension?

Thank you Mr. Zeng. And stability of table turnover rate is a result of our continuous investment in the past 2 years. There are several directions. We can continue to tap into the potential. Number one is optimization of a time period structure to present our potential for improving table turnover is mainly in off-peak hours, especially the late-night snack scenarios we have carried out a nightclub style, seeing transformation in some pilot stores. And going forward, we'll be looking at some other different investment methods and different types of sales to help us better promote the transformation.

And the second is on the customer stickiness. And we already have done quite well, but we do believe that there is a lot of improvement. For instance, using digital tools to reactivate the members and to be able to reach them precisely. And we will want to make the customers change from knowing Haidilao being used to comeing to Haidilao. And number three is the enrichment of the scenarios, not only the birthdays, the parent child activities, the dinners, the late-line snacks and each have an independent customer group. This is the most direct way to improve the table turnover rate and based on different customers at different time periods in terms of the pricing, we are not going to actively raise the average customer spending nor are we going to offer disorderly profit concessions in pursuit of customer flow.

And I think that the headquarters that does not have a one-size-fits-all approach, and we'll continue to monitor the market and which is more sustainable than simply our price adjustment.

That's all very clear, and I also wish the company a bright future going forward.

Thank you, analysts and investors online. We will see you next time. That concludes our conference result announcement today. And thank you, everyone, for joining us on the call. Thank you. Goodbye.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Dear investors and analysts, good afternoon. Thank you for attending Super Hi International's Q3 2025 Earnings Call. Today, the company's Executive present on the call are Ms. Yang Lijuan, Executive Director and CEO; and Ms. Qu Cong, CFO and Board Secretary.

Today's conference call may include forward-looking statements such as the company's strategies, business plans and performance outlook. The content of this earnings call, along with management's comments and Q&A, reflects their views as of today. Please consult the latest safe harbor statement in the earnings press release, which is applicable to this call. This session was -- will be conducted in Chinese with simultaneous English translation provided by an external agency. If there is any discrepancy, the Chinese version shall take precedence. The presentation materials will be uploaded to the company's IR page for your review.

Ms. Yang Lijuan, CEO and Executive Director of Super Hi International, please?

Thank you. Dear investors and analysts, hello, everyone. I am Yang Lijuan, CEO and Executive Director of Super Hi International. Coming up, I will be highlighting the main development of Super Hi International's Q3 2025 performance. This year, thanks to our ongoing investment in customer and employee benefits and our strategy of prioritizing customer satisfaction, we are pleased to see significant progress in store management quality and restaurant operating results this quarter. Overall table turnover rate in Q3 was 3.9x and our same-store table turnover rate was 4x, both increasing by 0.1x compared to last year. Q3 revenue reached USD 214 million, a year-over-year increase of 7.8% and our Haidilao same-store revenue grew by 2.3%.

As we continue to implement the customer and employee benefit policies and share benefit policy introduced in the first half of the year, we achieved an operating profit of USD 12.64 million this quarter, a decrease of USD 2.3 million or 15.4% compared to the same period last year. The operating profit margin was 5.9%, down 1.6 percentage points year-over-year. However, we were able to balance benefits for customers with operational improvement, adjusted some ineffective strategies and enhanced efficiency in areas such as product output and staff scheduling as a result. Our operating profit increased by USD 8.9 million or 240.5% compared to Q2. And also the OP profit margin rose by 4 percentage points from Q2, demonstrating significant quarter-over-quarter growth. Additional year-on-year gap in the third quarter has also been notably narrowed year-over-year.

Let's review Q3's key initiatives. First of all, we focus on store operation. This quarter, we continued to reduce headquarters oversight of stores and eliminated performance ranking for individual tap. Our focus shifted to support, guidance and improved communication, allowing frontline stores and regional offices to better concentrate on the market customers and employees. During this process, our regional offices and stores actually generated many excellent service cases and management practices. At the same time, we have around 90 potential key personnel, building strong talent pool for our overseas management and development.

Second, this quarter in creating a different Haidilao, we concentrated on the fresh cut scene or scenario. Fresh-cut meat is relatively fresh and new for overseas consumers and offers a better consumption upgrade experience. Currently, over 60% of our stores have launched these products and overall the take rate or the adoption rate has been increasing month by month and now surpassing 11%, which led to higher per table consumption. Overall feedback has been very positive. Additionally, some stores in Southeast Asia have completed the nightclub style theme renovation and compared to stores in other regions, the table turnover rate during late night hours has increased more significantly. Moving forward, we will continue to expand the scenario aiming to provide customers with richer and more unique dining experience.

Third, regarding the store network expansion, we opened 2 new Haidilao stores this quarter located in Malaysia and Indonesia. Also, we discontinue a Singapore Haidilao restaurant. Also we are going to adjust 1 store in Thailand to a secondary brand based on changes in the surrounding business district and customer base. As of the end of Q3, we operated a total of 126 Haidilao restaurants overseas with 10 new restaurants opened and 6 stores discontinued this year. We have signed contracts for more than 10 Haidilao stores that are not yet open. Given the ongoing construction and time line, we anticipating -- we are anticipating opening a few stores in the fourth quarter, which will result in a total of over 10 new stores opened this year.

Fourth, under the Pomegranate plan, our second international brand is steadily advancing in Q3, our malatang brand, Hi Bowl launched in Canada and quickly became profitable at the store level. The next step, we're going to work on refining customer flow, products and operations, where we're exploring the strategy internally. Currently, we aim to use information technology and smart middle office system to support management, which will make it easier to expand and roll it out to different regions gradually avoiding over extension. Additionally, other opportunities in various sectors identified earlier are also underway.

In November, we opened a Sparkora BBQ store in Indonesia and also an Izakaya in Japan, both showing consistent growth and ramping up through ongoing adjustments and innovations, we have gained greater confidence in tackling challenges in the global market. We will persist in our management philosophy of connecting interest and securing management, making necessary adjustments to incentive policies and fully leveraging the mentorship system to attract and retain employees from various countries. Additionally, we aim to pass on and develop Haidilao's culture and management practices. We will focus on advancing the Pomegranate plan and also implement the Woodpecker plan for stores that underperformed. Moreover, we'll actively adopt new technologies and integrate AI to boost organizational efficiency.

That concludes my overview of the business performance this quarter. Now Ms. Qu Cong will present the financial performance.

Thank you, Ms. Yang. Hi, everyone. I am the CFO of the company. My name is Qu Cong. Next, I'll introduce the Q3 financial performance.

In Q3, the company generated a total of USD 214 million in revenue, a 7.8% increase from last year the same period. Haidilao restaurant operating revenue was USD 201 million, up 5.1% year-over-year due to ongoing business expansion, including a net addition of 5 Haidilao restaurants year-over-year. Additionally, increased customer traffic led to more table turnover rate year-over-year with our focus on takeaway business resulting, we saw increased multiple stores launching actually takeaway menu items, we are able to generate better results. Takeaway revenue reached USD 4.4 million, 69.2% rise from the previous year. Plus other business revenue stood at USD 8.9 million, 74.5% increase.

Regarding costs and expenses, raw material costs totaled USD 71.2 million with a gross profit margin of 66.7%, down 0.3 percentage points year-over-year. Employee costs was USD 71 million, representing 33.2% of revenue, increase of 0.1 percentage points year-over-year. Since applying the discount strategy this year, these primary cost items have been optimized this quarter. Customer traffic driven by previous investment has continued to expand, continue to expand our revenue while ongoing management efficiency improvement during strategy implementation have helped. Compared to last year, our employee cost ratio remained similar. Efficiency gains and supply chain enhancement have partially offset the gross profit margin impact from customer discounts. Rent and related expenses reached USD 612 million (sic) [ USD 6.12 million ], 2.9% of revenue, up 0.2 percentage points year-over-year.

Our depreciation and amortization totaled USD 21 million, about 10% of revenue, a decline of 0.3 percentage points last year -- from last year. Our utility expense were USD 778 million (sic) [ USD 7.8 million ], a 3.6% of revenue, a 0.2 percentage point decrease year-over-year. Operating expenses, including travel and other costs was USD 23.7 million, up 11.1%, an increase of 1.7 percentage points year-over-year. Among the operating expense mentioned earlier, we followed the same trend as last quarter. The other expenses showed the largest increase in revenue compared to last year. This includes customer -- sorry, higher outsourcing service fees, professional consulting fees and brand marketing costs in some countries. And the Pomegranate project and brand building resulting in higher expense year-over-year.

The second largest increase was rental costs amounting for 2.9% of revenue. It was mainly due to company's increased number of leased properties this year, including Haidilao and second brand stores under renovation as well as short-term warehouse leases. In the third quarter, the company's operating profit was USD 12.6 million, down USD 2.29 million from the same period last year. The operating profit margin was 5.9%, dropping 1.6 percentage points from 7.5% last year. This aligns with our expectations for the profit sharing strategy, but indicates room for improvement in our management during dynamic operations. In the third quarter, net profit after tax was USD 3.59 million, a sharp decline from USD 37.6 million last year. This was because of the exchange rate fluctuation of the Japanese yen, Singapore dollar and British pound against U.S. dollars, causing a foreign exchange loss of USD 5.8 million after we have -- revaluation compared to a gain of USD 25.8 million in the same period last year.

Regarding the operating cash flow, Q3 was USD 34.1 million down USD 6.5 million from last year. It was because of the cyclical fluctuation in operating receivables affecting by holidays and weekends, the fact that operating profit was lower than last year's same period and also because of our profit-sharing scheme.

Regarding restaurant key performance in the same -- in Q3, we serve approximately 8.1 million customers representing 9.5% rise year-over-year. Haidilao has a daily table turnover rate of 3.9 rounds, which is 0.1 rounds higher than last year, where average order value was USD 24.6 down USD 1.2 from USD 25.8 last year because of strategic adjustment in menu pricing and marketing. The average daily revenue per restaurant reached USD 18,000, a USD 300 increase from last year, driven by a higher number of diners per table.

Our 4 regions show a slight improvement year-over-year. East Asia remained a top performer, serving 1.2 million customers, 50% increase from last year. This basically was 0.6 rounds in rise -- increase in the table turnover rate, reaching 4.9. And the average spending per person in East Asia was USD 28.9. The average daily revenue per restaurant was USD 20,300, 14.7% increase. North America, the table turnover rate was 4 rounds up by 0.1 from last year. The average transaction value decreased by $4.4 compared to last year, but higher restaurant traffic and more customer per table resulting in a 2.8% increase in average daily revenue per restaurant, which was USD 22,100.

Southeast Asia's table turnover rate was 3.7, increased by 0.1. It -- mainly due to increased investment in customer rewards and offering more cost-effective products. Other regions show a 3.7 round average table turn over rate. It was mainly because of new stores in the UAE that are still ramping up.

Our same-store revenue grew by 2.7%. The average table turnover rate across 107 stores was up 4 rounds daily, an increase of 0.1 year-over-year. The average transaction value per customer -- average spending per customer decreased by $1.1. Regional performance trends within the same stores basically aligned with the overall results that I mentioned before, so I will not repeat.

That's all for our performance review. We're now ready for your questions. Please feel free to ask questions.

[Operator Instructions] The first question comes from Zeng Jun with Huatai Securities.

So my first question is that what are the strategic plans for operations and expansion in each region next year? What will be the focus and pace of operation in different regions? And the second question is I understand that business development takes time but how should we project profit margins? And what kind of metrics can indicate a tipping point or an inflection point before starting full-scale acceleration? That's all for my 2 questions.

Thank you Zeng Jun from Huatai for your questions. Let me try to address your first question. Basically, different regions have distinct development strategies based on their unique environment and situations. As mentioned earlier, Southeast Asia and East Asia now shows strong overall growth. We aim to increase the local customer base by opening more high-quality stores. We also trust regional managers judgment to develop new business formats tailored to local preferences. For example, a Japanese Izakaya store has already opened in Japan and South Korea is planning to launch its own Korean BBQ restaurant as well. North America is a large market, especially in the U.S.. We focus on internal improvement, management enhancement and developing leadership talent. At the same time, we're actively expanding into the market. Many upcoming projects right now are in North America. So management and talent development are definitely a priority.

Southeast Asia comprises many countries with very diverse conditions. Indonesia has experienced relatively stable growth. And we're applying a similar strategy to East Asia by expanding new stores and exploring new business models. On the other hand, Thailand needs to improve its management, focusing on internal development, including product quality, service and customer experience. Internationally, each country has a unique condition that require us to adapt. We emphasize customer and employee focus while embracing technological advancement and AI to gradually strengthen our mid- platform or middle office kind of management, easing the pressure on frontline staff. That's the first part of your question.

And the second question is that first of all, we do not set short-term profit target for each store. I think relying on numerical goals for operation can lead to deviations and potentially harm customers and employees, outcomes that we aim to avoid. So instead, we prioritize the efforts of managers at each country and store level along with the health of their management practices. Our evaluation criteria are multilevel and multifaceted taking into account customer satisfaction, employee efforts and reasonableness of store performance figures.

Sometimes this requires offering discounts, other times, focusing on internal enhancement and ultimately, good table turn over and profit margins will follow naturally. All of our store openings, whether under the Haidilao brand or Pomegranate Project are driven from bottom up. We don't rush the process. We emphasize the quality of each store we launch. I hope I answered your question.

The next question comes from [indiscernible].

All right. Thank you for the 2 questions. The first question is about the profit forecast for 2025 full year and the coming 3 years. In 2025, the company total revenue reached USD 610 million with an operating profit of $24.45 million resulting in an operating profit margin of 4% from January to September. And Q3 is typically the peak season. Usually, the operating margin will be slightly higher, but we are waiting for the end of the year before we can announce the official figures. As of the operating profit margin over the next 2 years, this involves projections and it's very difficult to project. Nonetheless, the company will continue efforts to enhance store management, open high-quality new stores and also explore initiatives -- innovative business models for our Pomegranate initiatives.

Regarding localization, I think we have been increasing the localization rate. I mean -- but the different regions, things are different. For example -- internally, we have done the calculation, for example, in Asia and South Korea, Indonesia and Vietnam have a localization rate above 90%, while in North America, the United States, Canada and U.K. the rates are around 40% to 50%. Other countries are in between, but Singapore is a unique case because it's dominant kind of ethnicity is Chinese immigrants, making it very hard to define what local means. So that's basically an overview of the localization rates.

The next question comes from Lai Shengwei with CICC.

All right. Thank you for the 2 questions. Mr. Lai. So regarding the plans for store inventory and also future store opening strategies, 10 Haidilao hot pot restaurants have already been opened this year with a few more expected to open in Q4. Currently nearly 20 projects in the pipeline are underway, including those that we have signed and also are about to be signed. However, due to varying property handover time and overseas construction periods, especially for longer time lines in Europe and in the United States, there will be an inevitable kind of cycle before opening. The company's overall store opening principle remains bottomed out prioritizing the quality of new locations over space. And as we mentioned, we have done some adjustment according to the Woodpecker initiatives. We will continue to monitor the store performance for timely adjustment.

And the second question is basically about the current status of overseas employee satisfaction and turnover rate and how store manager performance ratings distributed over time. This year, initiatives to cut employee costs and improve employee care across different regions have shown positive outcomes. The average monthly employee turnover rate has actually dropped by 1 percentage point from same period last year, which was usually above 8%. The latest Q3 figure was just over 7%. Store performance has also seen improvement with a greater number of stores earning A ranking or A ratings or B ratings in management reviews. Going forward, our focus will remain on the 2 areas of retaining customers and developing employees. That's all for my answer.

The next question will come from [indiscernible] with [ Founder Securities ].

So what has been the trend of table turnover rate since Q4? What are the expectations for store performance during the upcoming peak season? Also are there any further plans or construction projects regarding overseas supply chain? And how are the new overseas brands progressing? Are there any operational data that you can share? Are there any differences in the synergy between the new overseas brands and Haidilao compared to the domestic ones or landscape besides incubating brands to yourself, are you considering acquiring promising projects?

Thank you for the 3 questions. The first one is about the Q4 table turnover rate forecast. Q4 is typically the usual peak season for hot pots. Based on the current situation, the demand for gatherings on both weekdays and holidays have significantly increased compared to Q3 and also year-over-year. So we can see that, as we mentioned, our profitability or margin was about 4% from Q1 to Q3 and Q4 should usually would be higher than that, but we will wait for the official figures to become available to disclose.

The second question is about construction projects or plans for supply chain building. There are currently no plans for large-scale investment in building new supply chains. We will continue to promote localized procurement of raw materials, enrich and optimize our cooperation channels or partnership with importers in various countries and establish small localized R&D labs based on business needs. But we're not going to invest heavily in asset-light factories.

And the last question is about new overseas or international brands. As was mentioned, we launched our Hi Bowl malatang in Canada in Q3. In November, we also opened Sparkora BBQ in Indonesia and Vietnam, along with an Izakaya Japanese pub in Japan, all are in very stable kind of growth phase with malatang already profitable. Regarding other brands, we are evaluating our current management capacity and aim to empower stores through an information and also smart platform, making it easier to manage and replicate the business across regions, we will proceed cautiously rather than rationally.

The synergy between the second brands and Haidilao stores involve sourcing sharing such as property negotiations and also procurement because of our economy of scale. And also management efficiency can be achieved and improved through proximity. However, new brands target different customer groups and has different products and positioning. It requires managers with innovation and strategic thinking. Therefore, we're not going to adopt a dual management model blindly. Also, you talked about potential M&A. Apart from developing our business organically, we are also open to external partnership. Currently though, we have no specific targets or plans. We welcome suggestions of any promising opportunities that you may know of.

The next question comes from [indiscernible].

Since the beginning of this year, we have been offering discounts to customers such as more reasonable pricing, more affordable portions and more diverse dining options. In some areas, the average order value has decreased year-over-year. Could you provide further forecast in trends regarding average order value and also menu pricing? How does management balance this discount strategy with long-term profitability. And my next question is that how can effectiveness of employee incentive plans be quantified and evaluated? Is there any data showing a correlation with performance?

Thank you so much for the question. The first one is about our menu pricing and also discounts to customers. This year, we did optimize our pricing and portion sizes in some markets. So make more consumable -- consumers feel like they're getting good value for money. In the short term, the average transaction or the average value per table decreased slightly in some regions, but table turnover rate remained stable with slight increase. In the long term, we focus more on the overall operational quality rather than a single metric. The core of our profit sharing strategy is to improve customer satisfaction and repeat business, which ultimately lays the foundation for long-term profitability. So the long-term profit will come from our efficiency of management, of our customer and also employee and also the waste control, et cetera.

The second question is about to quantify and evaluate the effectiveness of employee incentive plans. It's actually difficult to directly quantify and link employee incentives to operational metrics such as table turnover rate and profit. However, in terms of management, improving employee salaries and benefits and implementing more reasonable incentive schemes will enhance team morale and also our color coding management system, which will, in turn, improve the customer experience. With the implementation of this year's profit sharing measures, the overall table turnover rate and same-store table turnover rate both increased year-over-year in Q3. The profit margin also rebounded compared to Q2, which was in line with the company's expectation.

As was mentioned by one of the previous questions, our churn rate of employee actually reduced by 1 percentage point, which was really rare in the industry. And that says a lot about our effectiveness of the employee. So that's my answer for your second question.

[Operator Instructions] The next question comes from [ Wei Jaba ] with Citic.

My question are as below. What are the reasons for the changes in average order value? And how do you predict future trends to be? And also besides Singapore, Vietnam and Malaysia, both have a relatively large number of stores in the Southeast Asian market. What effective measures have been taken? What are your views on future store expansion potential?

Thank you so much for your questions. Let me address your second question first. Actually, the number of stores across different countries and regions depend on different factors, including local customers eating habits, acceptance of hot pot population, consumption levels, economic development, et cetera. It also is closely linked to our management, our branding, brand awareness in the region. In the countries that you mentioned, we enter early, established our brands for a long time, and hot pot is generally more accepted. That's why we have more stores, more present and we will keep exploring lower tier cities in these countries and regions, but only after thorough research, site selection and market preparation our approach will be steady and solid and deliberate to ensure the opening of high-quality stores.

Thank you all for your questions. This is the end of today's earnings call. Thank you so much for your participation. See you next time.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]