[Call Starts Abruptly] In Hong Kong Stock Exchange. In addition, we have prepared a PowerPoint presentation for today's call, which contains financial and operational information for this quarter and fiscal year. If you are using Zoom Meeting, you should be seeing it right now. It can also be visited on our IR website later. Now I would like to hand the conference over to Mr. Ye and Mr. Wang will translate for Mr. Ye. Please go ahead, sir.

Hello, everyone, and welcome to our earnings conference call. Our overall performance once again reached new highs as we achieved breakthroughs in both revenue and profitability. Total revenues exceeded the RMB 3 billion milestone for first time, increasing by 40% year-over-year to RMB 3.5 billion. GP margin reached 39.8%, an increase of 6.5 percentage points year-over-year. Adjusted net profit surpassed RMB 570 million, increasing by 156%. Adjusted net margin also hit a new high, reaching 17.6%, an increase of 8 percentage points year-over-year. I'll now walk you through business updates for our 3 major segments; MINISO China, MINISO Overseas and MINISO TOP TOY. MINISO China showed resilience despite the challenging consumption environment. Offline sales of MINISO China achieved 40% year-over-year growth in this quarter, as well as according to the National Bureau of Statistics China, domestic retail sales increased by only 10%. Average transaction volumes increased by 18%, while average transaction value increased by more than 5% year-over-year. Entering July, nearly 1/3 of MINISO stores in China achieved new sales record, marking a strong start to the September quarter. GMV increased by over 25% year-over-year with GMV per store increasing by 14%. Average transaction volume and average transaction value increased by 10% and 3% respectively. For the first 7 months of 2023, GMV per store in China recovered to 2021 level and around 85% of pre-COVID level in the same period of 2019, in line with our expectations at the beginning of the year. Notably, we opened a total of 221 new stores on a net basis in China during the June quarter, including more than 90 of new stores in Tier 1 and Tier 2 cities. This not only set a quarterly record for store openings for MINISO, but also represents the highest quarterly new store openings in Tier…

Thank you, Jack. Hello, everyone. Thank you again for joining us today. I'll walk you through our financial results for the June quarter. Please note that all numbers are in renminbi unless otherwise stated. And I will also refer to some non-IFRS measures, which have excluded share-based compensation expenses. Revenue is RMB 3.25 billion, representing an increase of 40% year-over-year. Revenue from China was RMB 2.14 billion, up 39% year-over-year. The increase was driven by a growth of 42% in revenue from MINISO's offline stores and a growth of 81% in revenue from TOP TOY. The 42% year-over-year growth of MINISO offline business was the result of a 9% growth in average store count and 31% of growth in per store sales. However, on a more comparable basis, per store sales increased by about 25%, excluding the impact of store closures last year. The 81% year-over-year growth of TOP TOY was a result of 24% growth in average store count and a 46% growth in per store sales. On a more comparable basis, per store sales increased by about 30%, excluding the impact of store closures last year. Revenue from overseas market was RMB 1.11 billion, up 42% year-over-year, driven by an increase of 11% in average store count and a growth of about 28% in average revenue per MINISO store in overseas markets. Revenue from distributed markets was about RMB 609 million, an increase of about 20% year-over-year. Revenue from directly operated markets was about RMB 506 million, an increase of about 85% year-over-year, accounting for 45% of overseas revenue as compared to 35% last year. Through fiscal year 2023, revenue was RMB 11.5 billion, up 14% year-over-year. Of this, revenue from overseas market was about RMB 3.82 billion, up 45% year-over-year. Gross profit in the June quarter was…

The first question today comes from the line of Michelle Cheng from Goldman Sachs.

So I have 3 questions. So first 2 is for Mr. Ye. The first one is the IP performance has been very strong this year. And can you share with us the sales contribution from IP products this year? And whether we have any target for the future? And regarding the cooperation method with partners, is there any difference between the domestic market and also the overseas market? And my second question is about the China per store GMV upside given it's still around 15% gap versus pre-COVID level. Do we have any specific strategy to drive further improvement? And third question is about the OP margin for overseas. This year -- this quarter, we have 35% revenue from overseas and 40% contribution from operating profit for overseas business. So can you share with us what is the drivers for DTC and also the distribution model? And how should we think about the margin upside for the overseas business?

Michelle, thank you for your first question. So we will continue to enlarge our cooperation with strong IPs with global influence and in line with our strategic direction of brand upgrade and we'll be helpful in expanding our sales. Specifically in overseas market, we will stick to our big IP product strategy and we will continue to fund the strong IPs in each important market we are in and that is -- that will be one of our focus too. For the target of IP sales, we do not have specific numbers at this moment. But my personal estimate is that in the near future, it will be stabilized at about 25% to 30%. In the first half, the IP contribution was about 25%, about 1 percentage point higher than the same period last year. But compared to 2019, it has been a 10 percentage higher. And I would say, at least for a while, the percentage contribution will be 25% to 30%. But in the future, we will dynamically change the contribution from IP based on the market change. And there's no significant difference between our cooperation model between -- in China and overseas market. We specifically found that IPs in the U.S. or from Japanese has a global appealing among our customers. And we will cooperate with our IP licenses in terms of product authorization, in terms of marketing, in terms of shopping experience and the store experience and in all these aspects. We will leverage IP to empower in terms -- and power us in terms of branding power and product power. In terms of the second question, you are right that with the progress of our brand upgrade, we will stick to our big store strategy or flagship store strategy. By the end of June, we…

And Michelle, this is Eason. About your third question, about the OP margin of improvements. I think, first of all, you have to know that this percentage in OP margin contribution is the one before the allocation of headquarter overheads because there's always some overheads in headquarters that even is allocatable to each [PU]. And for the OP margin of overseas business, I would say, now currently it's between the 22% of the Group level and about nearly 30% of MINISO China is between them. I'd say, whenever the OP margin of overseas business is above the average -- the Group level, its profit contribution will be higher than its revenue contribution. And if you look at the comparison between this quarter and last quarter, I would say, the source from the improvement is mainly from the operating leverage. If we look at the expense structure in both directly operated markets and the distributor markets in this quarter, we will see that the expense ratio -- the OpEx ratio decreased about several percentage points compared to last quarter. So in general, the OP margin of overseas market in this quarter has improved by about 5 percentage points on a quarter-over-quarter basis. And the last point I would add is, I'm saying it's not the first time that we have seen OP margin contribution of overseas market surpassed 40%. As we shared earlier, before the pandemic when the overseas market contributed about 35% or nearly 40% revenue contribution, then we already saw nearly 40% or over 40% of margin contribution. And I'd say, because the directly operated market of our overseas business is still picking up operational leverage. So the overall profit contribution from overseas market, I would say, you were not surprised to see it will fluctuate for a while.

The next question is from the line of Anne Ling from Jefferies.

My first question is on the super store strategy. Just a follow-up question regarding like whether we will be opening a self-owned super store or how many of these stores in the future will be operated by the franchise? And in the future, what is our target for the [Technical Difficulty] for these super stores in our 300 to 400 store openings for this year for both China as well as for the overseas market? And the second question is coming out from -- it's actually for the U.S. market [Technical Difficulty] from the U.S. as a percentage to the -- from the overseas sales? And in terms of the per store performance, how different is it so far versus the China market? I remember that in the past, our -- and it's been gradually building up, which in the future will help drive the sales as well as the profitability?

For your first question about the large store strategy, I'd say, we'll stick to the strategy. In my design, we have a blueprint that in the future we do believe that each city or each provincial city in China has a flagship store that represents MINISO's brand image. So my best guess is, we should have by 500 such stores. And there's no such thing that these stores should be directly operated or franchisee operated. The first thing -- the first and the foremost important thing is, we should find the optimal location. And we will suggest every of our MINISO's overseas market to open suitable flagship stores, because as I said, the big store strategy is critical for our future success because it can bring our -- it builds MINISO's brand image and our store performance to a new heights. And it will also have a demonstration effect for its peer stores among the sales markets. So for example, in the U.S. market, our flagship stores there, we can deliver like 1.3 million to 1.4 million sales record. And for our Guangzhou Beijing Road flagship stores, we may have 5 million sales per month and all these are new sales record for MINISO universe. And for the second question about the U.S. market specifically, I'd say, the U.S. market for the past 3 quarters, it has 2 quarters ranked the first amongst revenue contribution in overseas market. And in June quarter, it's the second largest in terms of revenue contribution. And its revenue contribution of our overseas market is high-teens. And its revenue contribution of our total sales is like mid-single-digits during the past several quarters. And you are right that we have a lot of potential in terms of store operations, in terms of product optimizations, in terms of unit economics in the U.S. in the near-term. And as I shared in our prepared remarks, the unit economics of the U.S. stores has been improved a lot. For example, the OpEx ratio of U.S. stores during the past 12 months decreased by about 20 percentage points and that is one big thing that turned this business into a profitable for one.

The next question is from the line of Lucy Yu from Bank of America Merrill Lynch.

So there has been mentioned in the announcement that China is targeting for 5,000 stores in 2027. So what's the allocation or geography allocation of those new stores? And do we have any mid-term plan for the overseas market which may have greater potential in the long-term? And the second one is on the China store unit economics post-COVID. So what's the detailed GP margin of the expense breaking down as well as payback period?

Okay. Thank you, Lucy, for the first question about the store opening potential. In China, our target is to have 5,000 stores by year-end of 2027. We have a strong track record and we have high confidence to achieve that goal. And in terms of our overseas potential, I would say, from my perspective, we do not have any concern about the store opening in overseas market for at least the next 10 years. My personal observation in this year, I have spent a lot of time in overseas market, is that in a lot of countries in overseas markets, we can open 1 MINISO -- at least 1 MINISO store for each 100,000 people in overseas market.

And Lucy, for your second question about the payback of the domestic stores, we strongly believe that the payback period for most of our franchisees has been shortened during the past several months. There are several reasons. The first is our better store performance during the first half of this year. And the second reason is the optimization of their expense structures, i.e., the rent level decreased, the staffing cost optimized and there are other savings in their cost too. So our estimate is that our franchisees on average, their margin profile has improved significantly compared to 1 year ago or 2 years ago, especially in Tier 1 cities. In this year, we have observed that in Tier 1 cities, our MINISO stores, their sales per store increased by 30% -- more than 30% on a year-over-year basis. It's higher than the 20% of the average year-over-year growth. And for the new stores in Tier 1 cities in this year, we observed that their average rent level has decreased by single-digit compared to last 3 years. As Mr. Ye just shared, in the first half, we have opened a batch of demonstrated big stores. So the big stores, the average payback period is far, far less than the ordinary stores. So I'll say as my last point to your question is that the big stores will also help increase the ROI of our franchisees.

The next question is from the line of Samuel Wang from UBS.

So we saw from the announcement that our July sales is also very strong with a domestic growth above 25%, overseas growth 50%. So what are the reasons and drivers behind that?

Samuel, this is Eason. Yes, our domestic sales increased by more than 25% in July month. It's between 25% to 30% driven by 2 drivers. The first is the per store sales of MINISO China increased by mid-teens during the same period. And we have also dozens of strong number growth. So on a single store basis, the mid-teens per store sales increase was major from low-single-digit of ASP hike and a high-single-digit or about 10% of traffic improvement. In the overseas market, we also mentioned in the earnings release that the GMV increased by about 50%. And I'd say, the overseas directly operated market still has a continued high growth rate comparable to the June quarter. And in overseas market, we also see the drivers also come from the traffic and ASP hike.

The next question is from Jingru Song from Industrial Securities.

I will have 2 questions. The first question is about how to improve our supply chain and about the overseas supply speed and control inventory SKU. And the second question is how do we forecast the ASP? Seems like it increased by 3% year-on-year this time. But how do we forecast about the overseas ASP on the next year and the domestic ASP on the next year?

Okay. Thank you for your questions. In terms of our overseas supply chain expansion plan, we have 2 points to add here. The first is that we will stick to our accumulated resource in China. So China will definitely will be the major supply chain base, but we are still exploring new partners in Southeast Asian countries such as Vietnam and so on. And second, we will increase the percentage of direct sourcing in local markets such as the U.S. market. For example, we have been proactively increasing the percentage of IP-related snacks in the U.S. market. And for your second question about ASP in overseas market, I'd say in China it's around RMB 35, right? And now it's about RMB 37 in the June quarter. For overseas market, I'd say, we have a rough number that on average ASP in overseas market is about 2x or a little bit higher of China's ASP. But in countries -- in specific countries like in European countries, in the U.S., I'd say, this number is about 3x or even higher than that of China. In our rapid growth markets such as the U.S. and Canada and so on, we still see our ASP increasing at a very fast speed. Thank you.

Thank you once again for joining us today, and our conference call now comes to an end. If you have any further questions, please contact MINISO IR team. Our contact information can be found on today's press release. We will see you in the next quarter. Have a nice day. Good bye.