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Edited Transcript of FUTU.OQ earnings conference call or presentation 18-Mar-20 12:00pm GMT

Q4 2019 Futu Holdings Ltd Earnings Call

Mar 27, 2020 (Thomson StreetEvents) -- Edited Transcript of Futu Holdings Ltd earnings conference call or presentation Wednesday, March 18, 2020 at 12:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Arthur Yu Chen

Futu Holdings Limited - CFO

* Daniel Yuan

Futu Holdings Limited - IR Officer

* Leaf Hua Li

Futu Holdings Limited - Founder, Chairman & CEO

* Robin Li Xu

Futu Holdings Limited - SVP

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Conference Call Participants

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* Daphne Poon

Citigroup Inc, Research Division - Associate

* Lily Liu;HSBC;Investment Banking Senior Associate

* Stanley Xia;RHB Banking Group;Analyst

* Wei Chen

Goldman Sachs Group Inc., Research Division - Executive Director

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by and welcome to the Futu Holdings Fourth Quarter and Full Year 2019 Earnings Conference Call. (Operator Instructions) Please be advised that this conference is being recorded. I'd like now to hand the conference to your first speaker today, Chief of Staff and Head of IR at Futu, Mr. Daniel Yuan. Thank you. Please go ahead, sir.

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Daniel Yuan, Futu Holdings Limited - IR Officer [2]

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Thank you, operator, and thank you for joining us today to discuss our fourth quarter and full year 2019 results. Joining me on the call today are Leaf Li, our Chairman and Chief Executive Officer; Arthur Chen, Chief Financial Officer; and Robin Xu, Senior Vice President.

As a reminder, today's call may include forward-looking statements, which represent the company's belief regarding future events, which by their nature are not certain and are outside of the company's control. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. For more information about the potential risks and uncertainties, please refer to the company's filings with the SEC, including its registration statement.

So with that, I will now turn the call over to Leaf Li. Leaf will make his comments in Chinese and I will translate.

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Leaf Hua Li, Futu Holdings Limited - Founder, Chairman & CEO [3]

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(foreign language)

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Daniel Yuan, Futu Holdings Limited - IR Officer [4]

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[Interpreted] Hello, everyone. Thank you for joining us today. I am pleased to once again announce a strong quarter, driven by robust growth in paying clients and total client assets.

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Leaf Hua Li, Futu Holdings Limited - Founder, Chairman & CEO [5]

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(foreign language)

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Daniel Yuan, Futu Holdings Limited - IR Officer [6]

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[Interpreted] We added 21,620 paying clients in the fourth quarter of 2019, the highest quarterly paying client net addition we have witnessed so far. As of year-end, the total number of paying clients reached over 198,000, representing a 49% increase year-over-year. When we reported our third quarter earnings, our guidance was 190,000 to 195,000 paying clients. We're pleased that our actual results surpassed our previous expectations. In 2020, we are aiming for 45% growth in the number of paying clients, which means that our total paying clients will surpass 285,000 by the end of 2020.

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Leaf Hua Li, Futu Holdings Limited - Founder, Chairman & CEO [7]

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(foreign language)

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Daniel Yuan, Futu Holdings Limited - IR Officer [8]

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[Interpreted] We attribute our strong paying client growth in the fourth quarter to a combination of optimized marketing efforts, upbeat market sentiment and high-profile Hong Kong IPOs. In the fourth quarter, we selectively worked with a number of targeted third-party channels whose client profile is similar to ours. The active IPO market was also beneficial for us. Our client's total subscription for Alibaba and Poly Property Development IPOs both exceeded HKD 5 billion. Notably, our clients accounted for 13% of Alibaba's total number of retail subscribers and 5% of its public tranche allocation. The frenzy around Alibaba's secondary listing in Hong Kong gives us confidence that our business will be a key beneficiary of the continued dual and secondary listing of high-quality Chinese new economy companies in Hong Kong.

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Leaf Hua Li, Futu Holdings Limited - Founder, Chairman & CEO [9]

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(foreign language)

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Daniel Yuan, Futu Holdings Limited - IR Officer [10]

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[Interpreted] Total client assets jumped 71% year-over-year to HKD 87.1 billion. Average client assets totaled HKD 439,000 as of year-end, up 15% year-over-year. As we transform to a business model that increasingly relies on AUM-based income, we are encouraged that clients continue to entrust us with more assets, with a growing share of their assets flowing into our mutual fund distribution business. Total client assets in mutual funds surpassed HKD 6 billion as of year-end, about 4 months after the official launch of the business, representing over 100% sequential growth. We have established comprehensive fund selection criteria and continue to source and onboard the best-performing fund products across asset classes from top-notch Chinese and global fund houses. We expect to distribute over 50 mutual funds on our platform by mid-2020. Besides mutual funds, we also plan to roll out other wealth management products in the second half of 2020.

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Leaf Hua Li, Futu Holdings Limited - Founder, Chairman & CEO [11]

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(foreign language)

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Daniel Yuan, Futu Holdings Limited - IR Officer [12]

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[Interpreted] Our enterprise service in the fourth quarter posted strong results yet again. We added a record 23 new ESOP clients, which brings our total number of clients to 79 as of year-end. In addition, we provided subscription services to 8 U.S. IPOs during the fourth quarter. Our enterprise clients continue to make steady contributions to new paying clients.

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Leaf Hua Li, Futu Holdings Limited - Founder, Chairman & CEO [13]

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(foreign language)

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Daniel Yuan, Futu Holdings Limited - IR Officer [14]

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[Interpreted] Moving on to the current quarter. Despite the outbreak of the COVID-19, our operating metrics have shown resilient growth so far. Many traditional financial institutions, that rely heavily on an offline presence for account opening and customer services, has had to suspend the operations of their physical branches, which at this difficult time underscores the merits of a purely online one-stop financial technology platform like us, where clients can enjoy an end-to-end mobile experience for everything from account opening and money transfer to trade execution, margin lending, mutual fund investments, market news and social interaction. The launch of new products and services during the first quarter may be slightly delayed, but it should not weigh on the long-term growth prospects of our business.

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Leaf Hua Li, Futu Holdings Limited - Founder, Chairman & CEO [15]

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(foreign language)

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Daniel Yuan, Futu Holdings Limited - IR Officer [16]

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[Interpreted] In 2020, we redefined our company's mission and vision as below. Our mission is to make investing easier and not alone. Our vision is to become a highly influential global financial services platform. To achieve that, we will continue to enhance our technology infrastructure, maintain our relentless focus on user experience, enrich training product offerings, expand our wealth management services footprint and promote social collaboration.

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Leaf Hua Li, Futu Holdings Limited - Founder, Chairman & CEO [17]

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(foreign language)

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Daniel Yuan, Futu Holdings Limited - IR Officer [18]

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[Interpreted] In 2020, we will continue to focus on our 3 KPIs, namely paying clients, client retention and net asset inflow. We are confident that we will extend our market-leading position and further entrench ourself as the broker of choice.

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Leaf Hua Li, Futu Holdings Limited - Founder, Chairman & CEO [19]

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(foreign language)

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Daniel Yuan, Futu Holdings Limited - IR Officer [20]

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[Interpreted] Next, I'd like to invite our CFO, Arthur, to discuss our financial performance.

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Arthur Yu Chen, Futu Holdings Limited - CFO [21]

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Thanks, Leaf and Daniel. In the fourth quarter, we record total revenue of HKD 254 million, up 37% year-over-year and 20% Q-on-Q. Let me walk you through some of our key financial details for this quarter. Brokerage commission and handling charge income was HKD 152 million, an increase of 34% from the same period in 2018 and up 23% Q-on-Q. Total trading volume in this quarter was relatively flat year-over-year, but was up 7% sequentially.

Our blended commission rate climbed to 6.7 basis point in the fourth quarter. This rate hike can be attributed to higher IPO subscription fees amid active Hong Kong IPO market and the growing contributions from derivative tradings. Brokerage commission and handling charge income contribute about 49% of our total revenue in this past quarter.

Interest income was HKD 128 million, an increase of 24% year-over-year and 11% Q-on-Q. This growth was mostly due to a 52% year-over-year increase in margin financing and the security lending balance. IPO financing interest income also surged due to higher Hong Kong IPO subscription.

Interest income contribute about 41% of our total revenues. Other revenue was HKD 31 million, this 185% year-over-year increase was mainly attributed to our new mutual fund distribution business and higher IPO financing service charges income as well. Other income contributed about 10% of our total revenue.

On the cost side, total cost was HKD 87 million, an increase of 35% year-over-year and 24% Q-on-Q. Most of costs grew in line with our revenue. As a result, gross margin was 72%, which was relatively flat compared with the same period last year. In terms of the operating expenses, total expenses was HKD 181 million, an increase of 81% year-over-year.

Breaking down our operating expenses. R&D expenses were HKD 74 million, an increase of 63% from last year and up 4% from last quarter. The year-over-year rise was primarily due to the increase in R&D headcount in 2019 as we continued to enhance infrastructure and enrich our product offering. But as you can see from the Q-on-Q trend, our R&D headcount stabilized in 4Q, and we are projecting a moderate headcount increase in 2020.

Selling and marketing expenses was HKD 51 million, up 108% year-over-year and 30% Q-on-Q. We further diversified our marketing efforts and partnered with some target third-party channels to continue to bring high-quality clients. Average assets per paying clients stood at HKD 439,000 as of year-end, which is much higher than our peers.

General and administration expenses was HKD  56 million, an increase of 80% on a yearly basis. The rise was primarily due to the increase in headcount for general and administrative personnel as well as higher professional service fees post the IPO.

Net income increased by 15% year-over-year to HKD 44 million. Non-GAAP adjusted net income increased by 19% to HKD 49 million. Overall, we are pleased with our performance in this quarter. We have demonstrated resilient growth across our operating metrics, and we are particularly glad to see that our paying client growth has reached -- accelerated in fourth quarter. We are expecting robust growth in the first quarter this year as well, as our purely online business has benefited from the drop in off-line activities as a result of coronavirus outbreak.

As we continue to enrich our trading product offering and execute our strategy of becoming a one-stop digital financing platform, we are confident about the growth prospects of our business in 2020.

That concludes our prepared remarks. We would now like to open the call to questions. Operator, please go ahead. Thank you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) We have the first question coming from Goldman Sachs, Chen, Wei.

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Wei Chen, Goldman Sachs Group Inc., Research Division - Executive Director [2]

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Leaf, Arthur. Can you hear me?

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Leaf Hua Li, Futu Holdings Limited - Founder, Chairman & CEO [3]

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(foreign language)

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Arthur Yu Chen, Futu Holdings Limited - CFO [4]

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Yes.

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Wei Chen, Goldman Sachs Group Inc., Research Division - Executive Director [5]

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Okay, okay. So congratulations on the strong first -- fourth quarter. I got 2 questions. One is regarding the client. Second is regarding service pricing. So for the clients, we actually see a very strong new paying client growth in the fourth quarter. I think you elaborate some more on the results about the IPO of Alibaba and some of the third-party channels you are working with. So can you elaborate more on third-party channels, like how do they work with you in terms of like client traffic addressing? And secondly is, can you break it down more on the percentage of -- or the mix of Mainland investors, Hong Kong local investors and ESOP clients, what's the mix of those -- of 3 types in the new paying clients? And is there any like profiling of their -- like how they -- how much they're putting money and also how frequent they trade on these 3 type of clients? And secondly, I just want to ask, you see the brokerage commission rate has pick up quite a lot in the fourth quarter. If we calculate it around like the gross, commission rate is around 6.7 bps. And can you, yes, just explain some more on why there was a strong pickup? And also regarding the margin financing pricing, so we see the Hong Kong Financial Bureau has cut the benchmark interest rate, so not the prime rate yet, but would that be subsequent rate cuts on margin financing loans in 2020?

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Arthur Yu Chen, Futu Holdings Limited - CFO [6]

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Okay. Thank you, Wei Chen. This is Arthur. I think you mentioned 4 points. Maybe I address the first -- the second to fourth questions. I will leave the first question to my colleague, Robin Xu, who can elaborate our cooperations with third-party channels in terms of new client acquisitions in the fourth quarter.

In terms of the client profiles, we see a very strong growth from the Mainland in fourth quarter. I think partially because of many hot IPOs, such as Alibaba and Poly Project Management, the names these Chinese clients are quite familiar. So they are more willing to participate in these activities.

So far, I think at the end of last year, the Hong Kong-based clients account for roughly 30% of our total paying clients. And I do think this -- percentage-wise, this portion may continue to increase in the first quarter of this year. We got a very strong momentum in Hong Kong in terms of new client acquisitions.

And in terms of the pricing or the fee rate, I think the major reason Leaf and I mentioned in the opening remarks, there are certain one-off activities such as the IPO subscription fees which also we blended into our trading commission rate into our total commission revenue in fourth quarter. And also, as we mentioned to investors earlier, because certain of our new clients -- normally, we will offer them 3 to 6 months commission-free period. As more and more people -- the commission-free period expires, this will boost our blended commission rate. And in terms of the margin and also the impact of the interest rate cut, we do notice that the recently the Fed cut rates very aggressively. I think for the time being, we will continue to maintain our margin rate policies. Even back, we -- just to recall, when we launched our margin business 3 to 4 years ago, at that time, the Fed was also keeping the 0 rate. So for the time being, we will continue to keep our fixed margin rate in Hong Kong and in the U.S. as well.

I will leave the first question to Robin.

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Robin Li Xu, Futu Holdings Limited - SVP [7]

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Okay. (foreign language)

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Daniel Yuan, Futu Holdings Limited - IR Officer [8]

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[Interpreted] So breaking down our new paying client acquisition in the fourth quarter. So our paying clients from word-of-mouth referrals is strong as always. And as for ESOP clients, it may take some time for their shares in RSU to get vested. So you will see some of the impact from our strong ESOP business later on in the following quarters. And regarding the third-party channel collaboration, and as we mentioned, the fourth quarter was very hot -- we saw a very hot Hong Kong IPO market. And through these third-party channels, we were able to reach a lot of clients that are interested in these high-quality Chinese new economy companies. And in the fourth quarter, roughly 20% of our new paying clients come from this channel. And in terms of our Hong Kong new paying clients, so in the third quarter due to the social situation, the client acquisition growth came down a bit, though we are very glad to see that the growth rate has rebounded in the fourth quarter. And the contribution from Hong Kong paying clients continue to increase steadily.

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Wei Chen, Goldman Sachs Group Inc., Research Division - Executive Director [9]

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Robin and Arthur. I just -- I need to follow-up a bit on the client acquisition. So given all -- like you said, the social -- the social event is phasing out like what you can see from the first quarter new clients from Hong Kong local investors. So is there any changes of marketing strategies in the Hong Kong local markets? Maybe broadly overall, like in China, Mainland? So is there any change of the marketing strategy or client acquisition strategies, including like the third-party channel you mentioned that you worked with in the fourth quarter? Is that the norm that you collaborate with in 2020 to attract more clients?

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Arthur Yu Chen, Futu Holdings Limited - CFO [10]

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I will leave the question to Robin.

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Robin Li Xu, Futu Holdings Limited - SVP [11]

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Okay. (foreign language)

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Daniel Yuan, Futu Holdings Limited - IR Officer [12]

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[Interpreted] Right. So in terms of our Hong Kong strategy, so we see a growing contribution from our online marketing channels. So in the fourth quarter and also in the first quarter of 2020, we have over 90% of our paying clients that come from online marketing. And in the short time being, we'll also prioritize online client acquisition in Hong Kong. And as far our Mainland China client acquisition strategy, I think we want to change our strategy dynamically based on the market sentiment and also based on the hot topics in the market. And obviously, the hot IPO -- Hong Kong IPO market in the fourth quarter kind of fueled the growth of the third-party channels marketing, though we'll also keep an eye on what's going on in the market and timely adjust our strategy.

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Operator [13]

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Our next question comes from the line of Daphne Poon from Citi.

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Daphne Poon, Citigroup Inc, Research Division - Associate [14]

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So I have a couple of questions here. I probably will go one by one. So the first question is about your -- the trading volume or the turnover. As we observed the turnover has been declining over the past few quarters, which is if we divided trading volume by your average client assets. So I would be wondering whether that is a structural trend because of the change in like client profile, whether new clients are getting less active compared to the previously acquired clients? And yes, so what is the outlook here? And also related to that is, since you're launching some new [securities] product, whether that will help improve the turnover going forward?

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Arthur Yu Chen, Futu Holdings Limited - CFO [15]

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Okay. Thank you, Daphne. This is Arthur. Let me answer your questions. I think it is still too early to judge whether the investors profile or characteristics have been dramatically changed. You are right. Our -- in terms of trading velocities of our client in 2019 was softer compared with what they did in 2018. But we think it is mainly due to the market's fluctuations and the markets -- the overall market [hangovers], slowdowns in 2019. Year-to-date, actually, we see the trading velocities increase a lot, partially due to the volatile market, and secondly, due to our continued expansions of our new clients. So I think it is still too early to tell there's any structural changes for the trading velocity assumptions going forward.

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Daphne Poon, Citigroup Inc, Research Division - Associate [16]

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Okay. But do you expect like the product launch to help actually to improve? Or have you seen any impact so far with the launch of the [future's] products?

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Arthur Yu Chen, Futu Holdings Limited - CFO [17]

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Yes. We launched our Hong Kong option tradings in last -- fourth quarter. And also, we just launched our index future products in Hong Kong this March. We do think -- we do observe that the trading velocities for these new products help our overall trading velocity increase a lot. And I think we will continue to enrich our products in the future, this asset class, going forward. So I do think this will help us regain the momentum in terms of trading velocity this year.

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Daphne Poon, Citigroup Inc, Research Division - Associate [18]

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And the next question is about the trading volume breakdown. So can you give us a breakdown by market like Hong Kong versus U.S.? And also by products, how much contribution you have from derivatives in Q4?

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Arthur Yu Chen, Futu Holdings Limited - CFO [19]

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Sure. Similarly to the previous quarter, in the fourth quarter, the trading volume was roughly evenly spread over Hong Kong and the U.S. And in terms of the asset class, still main income's from the cash products, given that we just launched the option trading in Hong Kong last November. But I do expect in the coming quarters, you can see percentage-wise, the derivative contribution will become much, much higher.

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Daphne Poon, Citigroup Inc, Research Division - Associate [20]

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Okay. And the next question is actually a follow-up about the interest rate cut cycle. So you mentioned just now that your product pricing on the margin [room] will remain stable. So does it means that your NIM is actually going to expand in the rate cut cycle because, I guess, funding cost should be coming down as well?

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Arthur Yu Chen, Futu Holdings Limited - CFO [21]

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Yes, we are still doing the detailed evaluations on the interest as the news was just out early this week. On a static basis, I think the rate cut may hurt our top line by 7% to 8% given we will suffer the interest income from client's idle cash. Definitely, the rate cut will hurt our profitabilities. But I think on the flip side, it is also an opportunity for us to get closer to clients, as people are seeking for more investment products and useful investment education, and we will become more determined to move forward our wealth management business initiative this year.

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Daphne Poon, Citigroup Inc, Research Division - Associate [22]

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Okay. So you mean the decline in the -- basically the idle cash interest income will be the key driver here?

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Arthur Yu Chen, Futu Holdings Limited - CFO [23]

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Yes. I think in terms of margin, as I answered Wei Chen's questions before, initially or for the time being, we will continue to maintain our fixed rate, which -- the pricing charge to clients. So in terms of the margin spread, actually, we will get some benefit from the rate cut. But this benefit cannot fully offset the revenue loss we generate from the clients' idle cash.

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Daphne Poon, Citigroup Inc, Research Division - Associate [24]

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Right, right. Understand. Okay. And lastly, is about the commission rate, the brokerage commission rate. So can you give us some outlook on the trend here? Because we've seen that it has been rising in the past few quarters. Do you think that the current level, like the 4Q level, 6.7 basis points, is this sustainable? Or yes, so how should we expect the trend going forward?

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Arthur Yu Chen, Futu Holdings Limited - CFO [25]

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Sure. I think there are some one-off reasons for the fourth quarter high commission rate because of the -- we blended the IPOs' contributions into the commission incomes. So on a like-for-like basis, I do think there is no near-term pressures in terms of commission pressure from a competitive landscape. So I think the average numbers, which we generate in 2019 can be a reference point for 2020.

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Daphne Poon, Citigroup Inc, Research Division - Associate [26]

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Okay. Actually, related to that IPO contribution, so may I know that how do you book that IPO revenue? Because I see that comes in actually different revenue lines. So that contributed to both your brokerage commission income and also part of that is booked under the other income. So how do you like split between the 2 categories?

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Arthur Yu Chen, Futu Holdings Limited - CFO [27]

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Yes. For the Hong Kong IPO, for example, we do some marketing campaigns and PR activities for these IPO companies or the corporates. So we booked the revenue generating from such kind of service into the other income. And for the IPO retail portion participations besides the normal trading commissions when people participate IPO subscriptions, we will have additional one-off commission charge. We will book these commission charge into the overall -- our commission revenues.

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Operator [28]

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Our next question comes from the line of Stanley Xia from Goldman Sachs.

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Stanley Xia;RHB Banking Group;Analyst, [29]

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I actually want to follow-up a bit on wealth management sector. We see that the total client assets in mutual funds surpassed HKD 6 billion, which beat the last management guidance. I was just wondering what is the main driver for this. And on top of that, I'd really appreciate if management team could provide some more outlook for wealth management business in 2020?

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Arthur Yu Chen, Futu Holdings Limited - CFO [30]

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Sure. Thank you. I think one of the major reasons for the increase in terms of AUMs in the wealth management in fourth quarter is more product offerings. Because in the third quarter, we just have less than 10 mutual fund products launched in our platforms. Actually, in the fourth quarter last year, we provided more products. In particular, we diversified from money market funds to more fixed income products and also the equity funds, not only just concentrate in Hong Kong, China or even Asia, actually, will provide a more diversified global products, which can further enhance our clients' interest. We will maintain such strategy. I do think product availability is very important when we start to kick in this new business. As Leaf mentioned in the opening remarks, we do expect in our platforms, you can see over 50 new mutual fund products launched in the middle -- before the middle of this year.

In terms of the client assets, it is very difficult to tell, in particular, judging from the recent market volatilities, we do see a very strong good momentum in terms of AUM growth in January and also in February. But suddenly, it has been pulled back a lot in the past 2 weeks. Because of the market volatilities, a lot of people just redeemed their money market funds and tried to average down their stock positions. But despite this near-term market volatilities, we do think we should make up very big efforts in terms of growing the wealth management's AUM this year. I think one of the reasons we have some hesitation last year is because of the rate cycle, as I answered the questions to Daphne and also Wei Chen before. But this hurdle has been erased given that the Fed has cut rates into 0. So the opportunity cost for us now actually become nothing. So we will make more efforts into the fund distribution.

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Operator [31]

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(Operator Instructions) Our next question comes from the line of Lily Liu from HSBC.

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Lily Liu;HSBC;Investment Banking Senior Associate, [32]

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(foreign language)

I will ask this question in English. Because we see a very significant growth in the balance of margin loan, so going forward, will we see a source of funding for this business growth? And are we see a massive margin pulled pressure from our clients in the recent market crash?

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Arthur Yu Chen, Futu Holdings Limited - CFO [33]

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Okay. Thank you, Lily. This is Arthur. For your 2 questions, I will answer your second question first. I will leave the first question about growth and the competitive landscape to my colleagues, Leaf and Robin.

In terms of margin balance, you're right, we've maintained a very good momentum in 2019, partially thanks to the overall good benign market condition. In terms of funding source, last year, equity fundings, i.e., our own capital contributed about 50% of the funding source, and the remaining 50% mainly come from our financial partners, such as commercial banks in Hong Kong, et cetera. Currently, after our last year's IPO, I do think that our leverage ratio is still quite healthy. So in terms of the leverage upside, we still have a very room to -- big room to grow.

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Robin Li Xu, Futu Holdings Limited - SVP [34]

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Okay. (foreign language)

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Lily Liu;HSBC;Investment Banking Senior Associate, [35]

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(foreign language)

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Arthur Yu Chen, Futu Holdings Limited - CFO [36]

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Sure. I think the reason market volatility may -- left people concerned whether there's any margin cost, I think in Hong Kong markets and also in the U.S. market, we still use a very prudent margin policies, but we did not provide a very high leverage to our clients. We do see some small margin cost, but I think the overall the size is not very material compared with our coming first quarter P&L impact.

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Operator [37]

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(Operator Instructions) There are no further questions at this time. I'd like to hand the conference back to our presenters. Please continue.

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Daniel Yuan, Futu Holdings Limited - IR Officer [38]

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Thank you. That concludes our call today. On behalf of the Futu management team, I would like to thank you for joining us today. If you have any further questions, please do not hesitate to contact me or any of our Investor Relations representatives. Thank you, and goodbye.

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Operator [39]

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Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]