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Edited Transcript of SFUN earnings conference call or presentation 31-Mar-17 12:00pm GMT

Thomson Reuters StreetEvents

Q4 2016 Fang Holdings Ltd Earnings Call

Beijing Mar 31, 2017 (Thomson StreetEvents) -- Edited Transcript of Fang Holdings Ltd earnings conference call or presentation Friday, March 31, 2017 at 12:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Lei Hua

Fang Holdings Limited - CFO

* Tianquan Mo

Fang Holdings Limited - Founder, Executive Chairman and CEO

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Conference Call Participants

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* Alvin Jiang

Deutsche Bank AG, Research Division - Research Analyst

* Binbin Ding

JP Morgan Chase & Co, Research Division - Analyst

* Hillman Chan

Macquarie Research - Research Analyst

* Lavender Ng

Morgan Stanley, Research Division - Research Associate

* Ming Xu

UBS Investment Bank, Research Division - Director and Research Analyst

* Monica Chen

* Qing Zhang

BofA Merrill Lynch, Research Division - Equity Research Analyst

* Robert W. Cowell

86Research Limited - Research Analyst

* Tianxiao Hou

T.H. Capital, LLC - Founder, CEO, and Senior Analyst

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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 Quarter 4 2016 Fang Holdings Limited Earnings Conference Call. (Operator Instructions) Now I'd like to hand the conference over to your speakers for today, our CFO, Hua Lei; and our CEO, Vincent Mo. Thank you. Please go ahead, sir.

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Lei Hua, Fang Holdings Limited - CFO [2]

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Thank you, operator. Hello, everyone, and welcome to Fang's Fourth Quarter and Full Year 2016 Earnings Conference Call. I'm Hua Lei, Fang's CFO. Joining me today to discuss Fang's results is our Chairman and CEO, Mr. Vincent Mo. Before we get started, I'd like to remind you that during the course of this conference call, we may make forward-looking statements, statements that are not historical factors, including statements about our beliefs and expectations.

Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. Fang assumes no obligation to update the forward-looking statements in this conference call and elsewhere. Potential risks and uncertainties include, but are not limited to, those outlined in our public filings with SEC, including our Form 20-F.

Now let me walk you through our financials. I'll begin with the fourth quarter results. Revenue, Fang reported total revenues of $174.7 million in the fourth quarter of 2016, a 42% decrease from $300.7 million in the corresponding period of 2015, primarily due to the decline in e-commerce and the marketing services.

Revenue from e-commerce services was $89.9 million in the fourth quarter of 2016, a decrease of 48% from $173.9 million in the corresponding period of 2015. The decline was primarily due to the decreased transaction volumes impacted by tightening regulations as well as the strategic change to have scaled down our -- on rental and home furnishing business. Revenue for marketing services was $48 million in the fourth quarter of 2016, a decrease of 42% from $83 million in the corresponding period of 2015, primarily due to less demand from property developers for online advertising under the regulatory change.

Revenue from listing services was $38.6 million in the fourth quarter of 2016, an increase of 74% from $22.3 million in the corresponding period of 2015, driven by increased number of paying members and the unit price. Revenue from Internet financial services was $0.6 million in the fourth quarter of 2016, a decrease of 96% from $15.6 million in the corresponding period of 2015, primarily due to the policy impact on the new home financial services and the decreased secondary transaction volumes of the company's own brokerage services.

Revenue from other value-added services was negative $2.4 million in the fourth quarter of 2016 compared to $5.9 million in the corresponding period of 2015, primarily due to the reclassification accounting treatment of BaoAn's revenue.

Cost of revenue was $89.4 million in the fourth quarter of 2016, a decrease of 59.1% from $218.4 million in the corresponding period of 2015. The decrease in cost of revenue was mainly due to the downsizing of the secondary agent team and the scaling down of rental and home furnishing in the e-commerce services.

Operating expenses were $94.6 million in the fourth quarter of 2016, a decrease of 18% from $114.9 million in the corresponding period of 2015.

Selling expenses was $59.2 million in the fourth quarter of 2016, a decrease of 27.2% from $81.3 million in the corresponding period of 2015, mainly due to the decrease of sales staff cost. G&A expenses was $35.3 million in the fourth quarter of 2015 (sic) [ 2016 ], an increase of 5.2% from $33.6 million for the corresponding period of 2015, primarily due to the increased bad-debt expense.

Operating loss was $8.9 million in the fourth quarter of 2015 -- 2016 compared to operating loss of $32.6 million in the corresponding period of 2015, which is attributable to the strategic change of optimization and effective cost control.

Income tax expenses were $3.1 million in the fourth quarter of 2016 compared to the income tax expenses of $7.5 million in the corresponding period of 2015.

Net loss attributable to Fang's shareholders was $10.4 million in the fourth quarter of 2016 compared to net loss of $38.8 million in the corresponding period of 2015. Loss per fully diluted ordinary share and ADS was $0.11 and $0.02 in the fourth quarter of 2016 compared to loss of $0.44 and $0.09, respectively, in the corresponding period of 2015.

Adjusted EBITDA, defined as non-GAAP net income before income taxes, interest expenses, interest income, depreciation and amortization, was $2.4 million in the fourth quarter of 2016 compared to the loss of $23.4 million in the corresponding period of 2015.

As of December 31, 2016, Fang had cash, cash equivalents and short-term investments of $590.5 million compared to $983.7 million as of December 31, 2015. Net cash generated from operating activities was $85.1 million in the fourth quarter of 2016 compared to cash used in operating activities of $31.6 million in the same period of 2015, primarily due to the decrease of loan receivables of $80.4 million in the 3 months ended December 31, 2016.

Now here are our full year financial results. Revenue, Fang reported a total revenue of $916.4 million for 2016, representing an increase of 4% from $883.5 million for 2015, primarily driven by the growth in e-commerce business.

Revenue from marketing services was $165.4 million for 2016, a decrease of 34% from $249.9 million for 2015, primarily due to less demand from property developers. Revenue from e-commerce services was $577.7 million for 2016, an increase of 22% from $474.8 million for 2015, primarily driven by the growth of our secondary brokerage services in the first half of this year -- of the 2016, sorry.

Revenue from listing services was $118.1 million for 2016, an increase of 9% from $107.9 million for 2015, driven by the increased number of paying members and unit price. Revenue from financial services was $27.6 (sic) [ $29.6 ] million for 2016, flat with $29.6 million in 2015.

Revenue from other value-added services was $25.6 million for 2016, an increase of 20% from $21.4 million for 2015, primarily driven by the growth of our research-related products. Cost of revenue was $687.2 million for 2016, an increase of 23.7 from $555.4 million for 2015. The increase in cost of revenue was mainly due to the increase in staff cost in secondary brokerage services.

Operating expenses was $381.1 million for 2016, an increase of 5.3% from $362 million for 2015. Selling expenses was $229.8 million for 2016, a decrease of 2.9% from $236.6 million for 2015, primarily due to slightly decreased staff cost.

G&A expenses was $151.3 million for 2016, an increase of 20% -- 20.6% from $125.4 million for 2015, primarily due to decreased bad-debt expense. Operating loss was $151.5 million for 2016 compared with operating loss of $34.5 million for 2015.

Income tax expenses was $25 million for 2016 compared to $5.9 million of income tax benefit for the corresponding period in 2015. The expense increase was primarily due to no reversal or accrual of withholding tax for the dividend declared in 2016. Net loss attributed to Fang's shareholders was $169.6 million for 2016 compared to $15.1 million for the corresponding period in 2015.

Fully diluted loss per ADS was $0.36 for 2016 compared to $0.04 for 2015. Adjusted EBITDA was $121.2 million of loss for 2016 compared to $9.6 million of loss for 2015.

Cash generated from operating activities was $131.2 million for 2016 compared to net cash used in operating activities was $165.3 million for 2015, primarily due to the decrease of loan receivables of $263.6 million for the 3 months ended December 31, 2016.

Business outlook. The company is undergoing adjustments to its transformation and that the company is planning to return to open-platform strategy. Before these changes are finalized, the company will see a decrease in its top line revenue, but will expect to be profitable for the whole year 2017. That's all for the financial details. And now we're open for the questions. Operator, please go ahead.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question comes from the line of Hillman Chan from Macquarie.

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Hillman Chan, Macquarie Research - Research Analyst [2]

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(inaudible)

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Lei Hua, Fang Holdings Limited - CFO [3]

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Mr. Hillman, your line is not very clear.

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Hillman Chan, Macquarie Research - Research Analyst [4]

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Is it okay now? Is it better now?

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Lei Hua, Fang Holdings Limited - CFO [5]

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Yes.

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Hillman Chan, Macquarie Research - Research Analyst [6]

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We think the secondary divestment model, we were assuming some agents to solve...

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Lei Hua, Fang Holdings Limited - CFO [7]

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Sorry, Hillman. We still cannot hear you very clearly.

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Operator [8]

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Mr. Chan, if you're speaking on the speaker phone, can you try picking up the receiver and speak, please?

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Hillman Chan, Macquarie Research - Research Analyst [9]

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Let me try again. The strategy for secondary model (inaudible) as well?

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Operator [10]

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I'm sorry, Mr. Chan, but the line is not very clear. I'm sorry, sir. Did you get the questions? I would suggest you try and reconnect the call? I would suggest that you redial because the line is very bad.

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Hillman Chan, Macquarie Research - Research Analyst [11]

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Okay. I'll get into the queue then.

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Operator [12]

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Thank you. We move to the next question, which comes from the line of Alvin Jiang from Deutsche Bank.

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Alvin Jiang, Deutsche Bank AG, Research Division - Research Analyst [13]

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I only have 1 question for Dr. Mo, is that our long-term strategy, our 2 business, one is our traditional listing business and the other one is our kind of a new business, which is the transaction service business. So which one is our focus, and how we allocate or balance our resource for these 2 businesses? And going forward, how we can see the synergy of these 2 strategies in long term?

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Tianquan Mo, Fang Holdings Limited - Founder, Executive Chairman and CEO [14]

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Okay. Thank you. As you know, we are changing our strategy and adjusting -- making adjustments to our transformation in 2 directions, to clarify. One is our traditional Internet and media business, including our advertising, listing services across new home, resale and home furnishing, 3 sectors. We can also add our data business, our research business into that traditional business direction. We're going to definitely reinforce this part going forward. Other than this, another direction is still transaction-related. We did everything our own in the past, and going forward, we are making adjustments to our transaction model. We're going to focus on more building of the platform, transaction platform, and in providing different transaction services to our partners, agents and brokers, mostly this category of our partners, to facilitate, enhance their businesses and their operations. So rather than doing it everything ourselves, we would focus more on what we're good at and to provide different and related tools, products, services to our partners. Those are the second direction we will move on.

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Operator [15]

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The next question comes from the line of Ming Xu from UBS.

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Ming Xu, UBS Investment Bank, Research Division - Director and Research Analyst [16]

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I appreciate your attentiveness in your management comment. So I just have 2 questions. So one is in your transformation. So in your transformation, you mentioned that your 2 core business going forward, one is the traditional advertising, listing, data research service. So for this business, what's your view, so what's our key advantage or differentiation from our key competitors in this field, particularly given they probably have support from the Internet -- larger Internet companies in terms of traffic? And secondly, in the transaction platform business. So I just want to better understand the revenue model going forward, and what kind of commission rates they were charged? And my second question is on this transformational restructuring. So what kind of cost do you expect the company will incur?

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Tianquan Mo, Fang Holdings Limited - Founder, Executive Chairman and CEO [17]

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Yes. Our competitive advantage, for your first question, I think it's in 2 aspects. One thing is that our platforms, whether it's apps, WAP or PC, the traffic is still growing. And as you know, the visitors to our platforms, to our apps and PCMs, they are very accurate property buyers and sellers, thus going to be much more accurate, much more with high efficiency, if you want to get clients. So it's an advantage of us. And the other one is that in the past 10 plus years, we have had a very good relationship with our different partners, our clients, and we also provide good services to them. So those are the 2 things we have. By improving this, we believe that we can do better than now, and we can improve our market shares. And for your second question, it's about the transaction platform. We have the revenue -- to us, it's really from sharing. So we share the commission things in the transaction. And we do have some fixed income from our partners. And we also have a percentage of their commission. And cost wise, we do not expend to that. We're going to have a very heavy, very big new staff to support that. Mostly we're going to do this based on our system, our transaction platforms to support our partners. So that's why we indicated in our guidance that, although revenue wise it will fall -- the top line will continue to decrease because the revenue to us, we would just recognize that part, which is a small part of our partners. On the other hand, expenses will be seriously under control. So eventually, we hope that we expect that we can make this company profitable eventually for the whole year.

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Ming Xu, UBS Investment Bank, Research Division - Director and Research Analyst [18]

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So just follow up on this transaction platform business model. Am I understanding this right, that you are actually adopting a business model similar to what (inaudible) used to do?

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Tianquan Mo, Fang Holdings Limited - Founder, Executive Chairman and CEO [19]

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I don't know what are they doing, but I do know what we have been doing. We have been doing the connecting developers and the agents, brokers. And we have been doing that for more than 3 years. Now going forward, I believe that we will have more partners to go with us by using our platforms.

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Ming Xu, UBS Investment Bank, Research Division - Director and Research Analyst [20]

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So what you mean platforms, that does not only include the former employee -- the former agents you hired that now you transfer -- convert into free agents, but also you expect more agents -- more other external agent -- a third-party agency company to use the platform?

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Tianquan Mo, Fang Holdings Limited - Founder, Executive Chairman and CEO [21]

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You're right. It's a -- we will design our open platform in a strategy. And we will open our platforms to everybody in the industry.

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Ming Xu, UBS Investment Bank, Research Division - Director and Research Analyst [22]

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So about the other question. So what level of restructuring cost do you expect from this?

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Lei Hua, Fang Holdings Limited - CFO [23]

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If I understand your meaning fully of the restructuring cost, we do not expect that we're going to have something specific in a restructuring cost. It will be not that big, and it will be integrated into our normal operations.

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Ming Xu, UBS Investment Bank, Research Division - Director and Research Analyst [24]

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Do you mean that the agent -- secondary housing agents you used to hire have now been -- all of them have been converted to free agents?

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Tianquan Mo, Fang Holdings Limited - Founder, Executive Chairman and CEO [25]

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90%.

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Ming Xu, UBS Investment Bank, Research Division - Director and Research Analyst [26]

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90%. Okay, okay, okay. Mo, just last question, sorry about this. So on the listing platform, could you share with us how many agents you now -- paying agents you now have? And given the tough market condition all over the country, so what kind of level -- what kind of growth do you expect in 2017?

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Tianquan Mo, Fang Holdings Limited - Founder, Executive Chairman and CEO [27]

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We have -- over country, I believe we have over 200,000 paid agents who are using our platforms to list their properties. You mentioned the current regulation or the turbulence of the market. That is an issue now, everybody is facing that. The government is very keen to put everything under control in the property market. So there is uncertainty there. Other -- all of this said, the best thing we can do is really trying to make our platform more efficient and to generate more leads to our clients.

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Lei Hua, Fang Holdings Limited - CFO [28]

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Okay. I mean, at the end of quarter 4, we have 247,000 paying members on our platform on the listed business, which is 16% increase compared to last year same period.

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Ming Xu, UBS Investment Bank, Research Division - Director and Research Analyst [29]

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247,000, right?

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Lei Hua, Fang Holdings Limited - CFO [30]

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Yes, yes.

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Operator [31]

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The next question comes from the line of Tianxiao Hou from T.H. Capital.

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Tianxiao Hou, T.H. Capital, LLC - Founder, CEO, and Senior Analyst [32]

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The question is related to the policy. The new policy starts from October and escalated into much higher level in terms of restriction. So when we transform ourselves from a current agency model to a platform, and we assume our existing -- the focus before like immediate listing, and if there are a lot of transactions, how do we benefit from our current new strategy? And what do you think the policy will play out in 2017 in the whole year?

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Lei Hua, Fang Holdings Limited - CFO [33]

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All right. You mean the impact from the new policy to our business, right?

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Tianxiao Hou, T.H. Capital, LLC - Founder, CEO, and Senior Analyst [34]

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Yes.

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Lei Hua, Fang Holdings Limited - CFO [35]

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Okay, we're seeing the government, they are releasing different level of new policies to the property market. Actually, you know, during past 5 to 6 years, we have been experiencing different new policies from the government. In the mid -- in the short term, probably we will see the transaction volumes will go down a little bit. But in the mid-term and the long term, we still believe and expect the property market will still keep at good level, I mean, in terms of the transaction volumes, both in the new home and separate home. So for our business, we think in the short term, probably where we are affected negatively by the new policy, probably in 1 or 2 quarters. But we do believe still -- the market is still there and the development still need to launch the new projects. And homebuyer, home seller, they still need to do the transaction to sell or to buy the properties. So we think, as long as we can keep building up our platform to meet the needs of the customers and also to provide support to our clients, we think our platform will benefit from those same things in the long term.

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Tianxiao Hou, T.H. Capital, LLC - Founder, CEO, and Senior Analyst [36]

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I understand. And also for the change in the business, the agencies which you have in-house, now you turned them into like franchisees. So what's the arrangement between SouFun and those franchisees economically?

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Lei Hua, Fang Holdings Limited - CFO [37]

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Economically, as Mo explained it before, actually we had like the revenue sharing from the agent or our franchisees from 2 ways. One is that we were charged like branded fee from them, and also, we were sharing like 3% of their revenue on each store. So yes, basically, it's just like the typical franchise model, yes.

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Operator [38]

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The next question comes from Nora Zhang from Bank of America Merrill Lynch.

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Qing Zhang, BofA Merrill Lynch, Research Division - Equity Research Analyst [39]

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I have a question for Vincent. Just now you talked about partnership strategy in transaction business. What type of feedback is from agents? And up to now, how many agent partners we have currently? And how many we're targeting to grow this year? Do we see any difficulty in the recruiting process? And additionally, which cities are we focused on? Previously, we were only in about 30 cities. And how many cities do we operate the partnership business model now? And are we looking to expanding to larger cities because this year, they don't have much tightening policies? That's my question.

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Tianquan Mo, Fang Holdings Limited - Founder, Executive Chairman and CEO [40]

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Okay. Thank you for your question. We are testing the model at this stage. And actually, we're going to start tomorrow, April 1. Let's see how the market will respond to our initiatives. We do have an internal target, you know, say, every city we are trying to sign up about 10 partners for the month of April. So we are now working -- we plan to work in 20 cities to start with the partnership program. Well, that is the current situation.

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Qing Zhang, BofA Merrill Lynch, Research Division - Equity Research Analyst [41]

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Just to clarify. Is that 10 partners in each city? Does that mean 10 agency partners or 10 agents?

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Tianquan Mo, Fang Holdings Limited - Founder, Executive Chairman and CEO [42]

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Agency partners.

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Qing Zhang, BofA Merrill Lynch, Research Division - Equity Research Analyst [43]

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You partner with individual?

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Tianquan Mo, Fang Holdings Limited - Founder, Executive Chairman and CEO [44]

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Not individual. It's a company. It's an agency company.

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Operator [45]

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The next question comes from the line of Binbin Ding from JP Morgan.

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Binbin Ding, JP Morgan Chase & Co, Research Division - Analyst [46]

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I have a question regarding our guidance. So understood, the e-commerce business is actually in the transition stage with barely no visibility. So I am just wondering if management could give some color on the outlook of the traditional business, including marketing, listing, as well as e-coupon. And also, when shall we expect we could have better visibility into the full year outlook of the company as a whole? And also, I have a follow-up on the policy side. So is this policy tightening still within the expectation of management? And what is your current judgment about how long it will last? And about the reason that -- which I already discussed -- the real estate registration policy. What kind of impact shall we expect from the implement of such a policy?

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Lei Hua, Fang Holdings Limited - CFO [47]

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Okay. So for your first question about our transition business, marketing, listing, right. Our outlook now, I think, is on the transition business, right. So for the marketing business, actually, we will very soon -- actually, back 2 or 3 years ago, during this 3 years, we do have some problems on this marketing business. For this year, we're working very hard, trying to, at least, make our marketing business not decrease again, in the new year. This is our target. We hope that we can, at least, achieve this target on the marketing business. For the listing business, actually, we are seeing some good change on quarter 4 in last year, you also can see the number there. Actually, compared to 2015 quarter 4, we had over 70% growth on the top line for the listing business. We expect our listing business will continue to grow in 2017, this year. Hopefully, we can see something like 20% to 30% growth there, if possible. For our e-coupon business, actually this part probably -- I mean, e-coupon business is not our company priority and focus. Because as you know, we had our new home (inaudible) sales business there. So I personally don't expect the e-coupon business will grow a lot in the new home -- in the new year. So it's for your first question, right?

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Binbin Ding, JP Morgan Chase & Co, Research Division - Analyst [48]

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Yes. And the second question about the policy side, probably for Mo.

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Tianquan Mo, Fang Holdings Limited - Founder, Executive Chairman and CEO [49]

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I wish I could explain this. Well, we experienced different policy seasons before. But this time, I think, it's probably my experience is the harshest time throughout the whole country and it's directly from the leadership of the government. So to me, at least, for the coming 3 to 6 months or even 12 months, the market will be as it has been for the time being. I think, the market will be under heavy regulation. And I would not expect the price and the volume increasing in the near future. That said, well, things change here, especially in Chinese property market. Last year, the first half and most part of the year, everybody is supporting the industry, the market. And the last quarter, it's a 180 degrees change of direction. So -- but it looks like, at least for the coming 6 months, I think the market situation will be tough and the policies will be there, will not go away. That's my thinking.

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Operator [50]

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The next question comes from the line of Robert Cowell from 86Research.

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Robert W. Cowell, 86Research Limited - Research Analyst [51]

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I guess I have 2. The first one is on the listing business. I'd like to know more about how the traffic to your listing platform has changed in the last year or 2 during this transition period? And then also where our pricing is relative to other listing products available to agents? That's my first question. And then my second question is about the core business as a whole, so that's marketing and listing. And I would like to know what your expectations are for the margin of those businesses going forward?

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Lei Hua, Fang Holdings Limited - CFO [52]

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Okay. For the listing business, you're talking about traffic, you know, regarding to the listing business in last year, right?

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Robert W. Cowell, 86Research Limited - Research Analyst [53]

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Yes, and then over the pricing.

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Lei Hua, Fang Holdings Limited - CFO [54]

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Actually, for the traffic costs as a whole, we're seeing our traffic is keeping, increasing, in 2016 compared to 2015. So our listing business traffic also is increasing as well. Currently, actually, our listing business part is 30% of our total traffic. So for the unit price, actually, compared to our competitors, we are still, like, 20% to 30% cheaper than them. So if considering our traffic, actually, our listing product is very attractive to the clients. So this is why we are seeing more and more clients returning to our platform during past several quarters. And yes, that's it.

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Robert W. Cowell, 86Research Limited - Research Analyst [55]

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And then the other question was about your expectations for the margin of the marketing and listing differences?

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Lei Hua, Fang Holdings Limited - CFO [56]

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For the margin side, actually, for the marketing business, we said net margin was around like 35%. For the listing business, net margin is like 45% to 50%.

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Operator [57]

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The next question comes from the line of Amanda Chen from Morgan Stanley.

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Lavender Ng, Morgan Stanley, Research Division - Research Associate [58]

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This is Lavender asking question on behalf of Amanda. So I have 2 questions here regarding the business outlook in 2017. First question is, how do you see the property market in different Tier cities this year? And for the second question, what is the ad and listing business outlook for this year?

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Lei Hua, Fang Holdings Limited - CFO [59]

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For the first question about the property markets in different Tier cities, actually, for this time, we're seeing the new policy roll out in different Tier cities. Before, normally, we're seeing the new project is only for the Tier 1 cities. Actually, at this time, they are rolled out in different Tier cities. So probably, we think this time Tier 1, Tier 2 cities definitely will see the transaction volumes come down very quickly. For Tier 3 cities -- for some Tier 3 cities, even the transaction volumes will also go down. But for most of Tier 3 and Tier 4 cities, probably we still can see some active property marketing there. For the pricing, still we think the price will keep stable in most cities because we don't think the government -- they actually want to see the price drop a lot. Actually, they just want to keep stable property markets there. So this is for your first question. For the second question about listing. As I just explained, we think, because our platform's traffic and also our price, we think our listing business is very attractive to our clients. And we also, under our new franchise model, we believe more and more agents will join our franchise model and use our listing business. So we expect our listing business will have some good growth there in this year.

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Operator [60]

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There are no further questions at this time. I'd like to hand the conference over to your speaker today. Please go ahead, sir.

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Lei Hua, Fang Holdings Limited - CFO [61]

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We are still seeing Monica Chang is on the line from Crédit Suisse.

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Operator [62]

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Yes, sir. We have her. I'll announce her name. Monica Chen from Crédit Suisse.

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Monica Chen, [63]

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Cash flow level, so we still see we have a very healthy operating cash flow. So can management comment on what will be the cash flow level outlook for this year? And the second question will be what is our headcount plan for 2017?

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Lei Hua, Fang Holdings Limited - CFO [64]

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For the cash flow, actually, because we expect 2017 will be a profitable year for the whole company, so we don't think we'll keep burn on cash. So we expect we'll continue to see the positive cash flow from operating, definitely. Sorry, what was the second question?

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Monica Chen, [65]

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It's the headcount plan, like new home and secondary and the others?

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Lei Hua, Fang Holdings Limited - CFO [66]

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Yes, for the headcount, definitely our transitional business, I mean, the online business market and the listing business, we will continue to grow in these 2 businesses. If needed, we'll keep -- hire more people to expand our headcount. And also, now we are using new technologies like Big Data and other technologies to improve the whole company to efficiency. So probably we'll not see a big growth on the headcount in 2017. Yes, we'll keep, like, stable, I think, the headcount.

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Operator [67]

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There are no further questions at this time, sir. Please go ahead.

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Lei Hua, Fang Holdings Limited - CFO [68]

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Okay. So thank you all for joining us today. Thank you, Operator. Thank you.

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Operator [69]

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Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you all for your participation. You may all disconnect your lines now. Thank you.