Thank you for standing by for CNinsure's First Quarter 2016 Earnings Conference Call. [Operator Instructions] Today's conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the meeting over to your host for today's conference, Ms. Oasis Qiu, CNinsure's Investor Relations Officer.

Good morning. Welcome to our first quarter 2016 earnings conference call. The earnings results were released earlier today, and are available on our IR website, as well as on newswires. Before we continue, please note that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause our actual results to differ materially from those projected or anticipated. Such risks and uncertainties include but are not limited to those outlined in our filings with the SEC, including our registration statement on Form 20-F. We do not undertake any obligation to update this forward-looking information, except as required under applicable law. Joining us today are our Chief Executive Officer, Mr. Chunlin Wang, and Chief Financial Officer, Mr. Peng Ge. They will walk you through our financial and operating performance in the first quarter 2016, and take your questions after their prepared remarks. Now I will turn the call over to Mr. Wang.

[Interpreted] Good morning. Thanks for joining us in our first quarter 2016 earnings conference call. I am happy to have our CFO Mr. Peng Ge here with me. Now I will give you an update of our financial and operational results in the first quarter 2016. And then Mr. Ge and I will take your questions at the end of the report. In the first quarter 2016, the Chinese insurance industry presented a mixed performance, which was in line with our expectations. The property and casualty insurance sector slowed down, with 8.9% year-over-year growth, affected by the downward pressure of the Chinese economy and slower growth in automobile sales, while the life insurance sector continued to gain traction, with [50.2%] year-over-year growth, partially benefitting from the strong sales growth of investment-type insurance products. Secondly, the major progress in the first quarter 2016 for CNinsure. The first quarter of 2016 unveiled CNinsure's third eight-year plan. With the aim of achieving RMB100 billion in insurance premiums within the next eight years, we started implementing our strategic plan in the first quarter of 2016, with focus on the following aspects. Firstly, marketing. In order to rapidly expand our sales goal and enhance our market position, we spent RMB78 million on marketing to test the waters. We're excited that our marketing strategy was well-received in the market and proved to be very successful in propelling our business growth across the board. We reported 46.2% growth in insurance premiums and 56.7% growth in net revenues. Secondly, upgrade of CNpad applications. We started the research and development on updating the firmware of CNpad App back in the second half of 2015 and made major progress in the third quarter of 2016. The new version was officially released in April and is currently in trial operation in…

Hi, Evan. We are ready to --

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of Joe Lin [ph] from VBA [ph].

[Chinese language spoken]

The first question is from Joe Lin [ph] and his question is about our expense ratio. It seems that we basically provided online spending for each quarter in the previous quarters, but for this quarter we stopped providing that number. So he would like us to give him some idea about our expense level -- online expense level.

[Interpreted] For the third quarter, our online spending was roughly RMB20 million, so it's basically consistent with the online spending level for the previous quarters. And we spent about RMB78 million in marketing in the first quarter. Can we expect the same amount of investment for the next quarters? According to our budget, we intend to spend roughly 2.6% to 3% of the total insurance premiums that CNinsure has generated, as deemed -- in marketing.

[Chinese language spoken]

As Mr. Wang announced, in the first quarter 2016, we are going to spend a massive amount of investment on marketing, in the total amount of RMB500 million in 2016. And the investment in the first quarter was basically a test water for CNinsure, and also the total amount of investment was also slightly affected by the Spring Festival, which means that basically for almost one month, sales agents don't really work much. And we've already seen that investment in the first quarter has produced very good results to our business growth. So going forward, we're going to continue this investment, so based on the progress of our business.

Thank you.

[Operator Instructions] Your next question comes from the line of Matt Fortune from WFA. Please ask your question.

Hello there. What steps of action do you plan to take to improve your net profit margin? Thank you.

[Chinese language spoken]

[Interpreted] As we mentioned previously that the insurance intermediaries are facing a golden time for development, as presented by the more favorable market environment, due to the new -- the promulgation of the new insurance law, and also the 10 new guidance issued by the State Council, and also the support to the development of insurance intermediaries by the CRC [ph]. So against this favorable market environment, we set out our eight-year plan, with the purpose to establish our market position and achieve a strategic goal of RMB100 billion in terms of sales volume. And based on this sales scale [ph], we expect that -- we think the next three years after the investment, so that will be 2016, 2017, 2018, our operating income will be flat. We will break even in 2018. And then we expect to make about RMB1 billion -- over RMB1 billion operating income in 2023. Thank you.

Your next question comes from the line of Andy Nahas from Prospect Fund. Please ask your question.

Yes, two questions. Can you tell me, give me an update on how much cash you have per share, in dollars? And then also, when you spend the money to get new customers and grow the revenue, what is giving you confidence that you will keep those customers in the future years?

[Chinese language spoken]

[Interpreted] Well, as we mentioned, we are facing a very good opportunity for development, and as you can see, in the first quarter, we basically outgrown the industry. We can see [inaudible] grew by 8.9% while CNinsure grew by over 40%. So our intention going forward is to continue to spend our P&C business, to grow our P&C business, as well as expand the sales capability of our life business. And going forward, we would like to use some P&C products to -- as a product to gain more market position, to grow the scale and gain more market position, while build a life insurance product as a product that can help us generate more profitability. In the meantime, when we grow our sales scale, of our property and casualty insurance business, we believe that we can gain more bargaining power and which allow us to consolidate the market, further consolidate the market. If we do not make such large amount of investment, we kind of feel the threat that some new internet players and other competitors on our peers may grow faster and gain our market share. We're also seeing a change of inflow of capital into the insurance intermediary sector in recent years, so, which means that there might be opportunity for the establishment of a large -- even larger insurance intermediary companies to compete with us. So it's important for us to take advantage of our leading position at this stage and increase investment to further solidify our leading position. Our cash per ADS is about $1.6, per ADS. And if the short-term investments in financial products are included, the total cash per ADS was 8.5% -- sorry, was $8.5.

Okay, thank you. And congratulations on the strong growth.

Thank you. [Chinese language spoken]

[Operator Instructions] The next question comes from the line of Richard Koo from Nomura Capital. Please ask your question.

Hi. I understand you are going to spend RMB181 million on the acquisition of 35% Inscom which owns the Baoxian portal. But given the contribution of Baoxian is actually quite small, why is it that you are spending such a huge sum on this venture? Maybe management can elaborate a bit. And also, is this RMB181 million part of the RMB500 million that you'll be spending on marketing spend this year? Thank you.

[Chinese language spoken] Sorry, could you elaborate on the second question?

Well, because you -- the budget for this year for marketing is RMB500 million. So I would like to find out if this RMB181 million for acquisition of Inscom falls under this RMB500 million or is it additional RMB181 million plus RMB500 million?

[Chinese language spoken]

[Interpreted] It's not included in the RMB500 million marketing spend.

Okay. Thank you.

[Chinese language spoken]

Now our CFO will take your first question.

[Interpreted] We acquired [55.1%] of [inaudible] Inscom, which at that time owned Baoxian.com, back in 2010. And we use Baoxian.com as a base platform for us to enter the online insurance business. The original goal for Baoxian.com is actually to tap into the B2C market. So right now Baoxian.com is also doing a consumer -- is direct and consumer-facing business, but mainly focused on travel, [central] and house insurance. And it is already the largest -- one of the leading insurance -- online insurance providers for this type of insurance products. And in addition to Baoxian.com, Inscom actually also runs the back-office operations of CNpad Application, which currently contributes significant amount of insurance premiums to CNinsure. And in order for us to achieve our long-term strategic goal of RMB100 billion insurance premiums over the next eight years, it's crucial for us to continue to improve the technology and improve the back-office operations in order to further improve the user experience of CNpad Application. So in that sense, Inscom or Baoxian -- or Inscom and the operation that it owns will play a very crucial role in helping us to achieve our strategic goal. And it is the management's intention to increase investment to develop the online insurance business. However, the minority shareholders of Inscom doesn't really agree to this plan. However, it's very crucial for us to gain 100% control over the back-office support system for CNpad Application in order to support the achievement of our goals. So that's why we decided to buy out the minority interest of Inscom. And based on our two and three years' growth target, which is over several dozens of dealings of insurance premium, we believe that the current considerations to acquire Inscom is reasonable.

[Chinese language spoken]

Our CEO would like to add a few additional comments. He mentioned that actually Inscom owns two assets. One is Baoxian.com and the other is our B2C business, CNpad Application. And currently, CNpad contributed over RMB30 billion insurance premium. And also we believe that we are the only one in the industry that are able to contribute that amount of insurance premium in the insurance intermediate market. And the second asset is Baoxian.com. And for this year, their total insurance premium was RMB50 million. And we believe that in 2016 they will be able to achieve RMB100 million. And we also see a potential for them to further grow the insurance premium to RMB1 billion. And those are based on two platforms, CNpad Application and Baoxian.com currently hold a leading position in their respective fields. The management, and we would like to further increase our investment to develop these two platforms, and we need as much quicker decision-making process. So that's why we decided to buy out the minority interest. And based on the growth potential of these two platforms, we believe that the [consideration] is actually quite [inaudible].

[Interpreted] And we believe that CNpad will be able to generate RMB10 billion insurance premium in 2017.

Okay. Thank you very much.

[Operator Instructions] Your next question comes from the line of private investor, [Albert Guan]. Please ask your question.

[Chinese language spoken]

As management mentioned that CNpad Application will be a major tool for CNinsure to grow our business, however, compared with the fourth quarter 2015, the active users of CNpad actually recorded a major decline in the first quarter. Would you please comment what's the reason behind the decline? And how do you see the number -- the growth of the number of active users of CNpad Application in the next quarter or in 2016?

[Interpreted] Our CNpad, the first version, the previous version of CNpad Application was designed to adapt to the current operation environment, before the auto insurance pricing deregulation. However, with the trial operation -- trial implementation of the auto insurance pricing [which launched] in 18 provinces in 2016, the user experience of the previous version of CNpad Application actually dropped slightly. And we have rather expected this challenge back in 2015. So that's why we started with version development on updating CNpad Application in the second half of 2016. While in this process, we think that it may not be a good idea for us to spend much effort to promote CNpad Application before we issue -- we believe the updated version, which can provide the users better user experience. We released the updated version of CNpad Application in April for trial operation in Shandong and Guangdong provinces. And we expect to -- we expect a nationwide rollout in July. And then we will start to promote the adoption of CNpad Application. And we expect there will be an acceleration of growth in the number of active users and also the number of downloads of CNpad Application after July. And we believe that insurance premium contributed by this CNpad App will grow significantly year over year in 2016. And the new version of CNpad Application has significant improvement in user experience. And we are quite content about that and we'll start promoting the adoption of CNpad Application in July as we mentioned. And the RMB500 million in marketing expenses, majority of this RMB500 million marketing expenses will be related to the promotion of CNpad App. And we believe that, with this investment -- with this increase of investment in July, and we will also see growing contribution from CNpad Application. Thank you.

Xie-xie.

[Operator Instructions] There are no further questions at this time. Please continue.