Ladies and gentlemen, thank you for standing by, and welcome to MINISO's Earnings Conference Call for the First Half of 2024. At this time, all participants are in a listen-only mode. After the management's prepared remarks, we will conduct a question-and-answer section. [Operator Instructions] And be kindly noted that this event is being recorded. We have announced our June quarter and interim financial results earlier today. An earnings release is now available on our Investor Relations website at ir.miniso.com. Joining us today are our Founder and CEO, Mr. Jack Ye, and our CFO, Mr. Eason Zhang. Before we continue, I would like to refer you to the safe harbor statement in our earnings press release, which also applies to this call as we will be making forward-looking statements. Please also note that we will discuss non-IFRS financial measures today, which we have explained and reconciled to the most comparable measures reported under the International Financial Reporting Standard in the company's earnings press release and filings with the US SEC and Hong Kong Stock Exchange. The currency unit is Chinese yuan, unlike that advice stated. In addition, we have prepared a PowerPoint presentation for today's call, which contains financial and operational information. If you are using Zoom meetings, you should be seeing it right now. You can also revisit it on our IR website later. Now, I'd like to hand over the conference over to Mr. Ye. And Ms. Allis Chen from MINISO IR team will translate for Mr. Ye. Please go ahead, sir.

[Foreign Language] [Interpreted] Hello, everyone. Welcome to MINISO Group's earnings conference call for the first half of 2024. During the reporting period, our global market footprints continued to expand. We achieved a milestone of 7,000 stores globally, which is less than a year since we surpassed 6,000 stores. [Foreign Language] [Interpreted] In the first half of 2024, the group's net -- store network have seen 502 net new units with both MINISO overseas and TOP TOY experiencing their fastest store openings period in history, adding 266 and 47 new units on a net basis on the first half of the year, respectively. These two business segments also making double-digit growth in same-store sales, continuing to [be robust boost] (ph) and act as growth engines in the world -- in the group. MINISO mainland China achieved steady growth by adding 189 net new stores, including a best-in-class same-store sales performance of 98.3% of previous year's level. As a result, the group's revenue for the first half increased by 25% to RMB7.76 billion, including a 7% same-store sales growth and a 90% growth in average store count. [Foreign Language] [Interpreted] Product capability, it's our core competitive strengths. We continue to focus on IP and strategic categories, increasing gross margin from 39.6% in the first half last year to 43.7% respectively, adding 4.1 percentage points. [General probability] (ph) is crucial for us to stand out in future capital -- competitions, especially in overseas markets, especially in direct operated markets, and especially in the United States. The pace of store expansion in the United States have exceeded expectation continuously with double store counts and a double-digit same-store sales growth. Even though we are still at investment stage in overseas markets, under our effective cost control measures, adjusted net profit in the first half of…

Okay. Thank you, Jack, and welcome, everyone, for joining us today. I'm pleased to see that our business have made firm progress in accordance with the five-year strategic roadmap. And our performance has met the expectations at the beginning of the year. Our business model has demonstrated great resilience despite the softening of massive consumption market. In overseas market, where we doubled our directly operated store network, we managed to balance growth and margin, and we can surely do better in the second half because the initiatives we adopted recently to improve operational efficiency has begun to pay off. Although the economic data remains mixed, we see structural opportunities in IP retailing and globalization. We have full confidence to deliver our new beginning targets. Now, let me walk you through our financials for first half. 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 or SBC expenses. So, revenue saw a robust increase of 25% on last year's high base and at high end of our expectation. We are thrilled to see those drivers of revenue performed very well in the first half. In terms of store network, we've delivered record net addition in overseas and TOP TOY, and we expect acceleration in the second half in mainland China. And in mainland China, we are on track to deliver our guidance of 350 to 450 net new units, while making necessary training to our existing store formats and franchisee structure. When it comes to same-store sales, we've delivered a 7% year-on-year growth at group levels. So, we are particularly encouraged by our achievements in China mainland. While SSG was 98.3% from previous year level, outperforming domestic retail sector, our product team kept introducing…

Thank you. The first questions are coming from Ms. Lucy Yu from Bank of America Merrill Lynch. Please go ahead.

Hi, management. Thanks for taking my question. So, two questions here. Firstly is on the domestic market. In July and August, we have witnessed some weakness in the domestic demand. So, could you please update us how is your performance in the first two months of -- in July and August? And how should we think about the pop-up store contribution to these two months as well as for the rest of the year? So that's the first question. And the second one is for the selling and distribution expense as a percentage of revenue, which has exceeded 20% this quarter. So, this is the highest since we have listed. So, I believe this is due to a faster overseas DTC expansion during low season. But how should we think about this ratio going forward in the second half? Should we expect that to go back to maybe, like, first quarter level or last year level? Thank you.

[Foreign Language] So, I will translate for Mr. Ye quickly. [Interpreted] So, about your questions on the performance in the recent -- in recent months, so, first, MINISO's same-store sales in China in the first half was about 98%, [indiscernible] increased by 0.1% and traffic down by 2.5%, and our conversion rate from store visit to purchase stabilized. Now, we are facing and challenged by a very soft domestic consumer market, but MINISO has very, very high confidence to keep the best-in-class same-store service in China, specifically in [indiscernible] same-store sales above 97% year-to-date, and we will see a relatively lower base entering into September. And we also are working on our IP products, improving the operational and investment in instant retail. So, our target for full years is to stabilize our same-store sales with 100% of recovery or higher or lower than -- on that base. And our target for the whole year for our MINISO offline trend business remain unchanged, with 10% to 15% year-over-year growth. And about the same-store sales in China, we have more initiatives going forward. The first is improving our product capabilities, and which is how very profitable it is and we'll focus on IP and strategic pathways to improve our -- to optimize our product structure. And we will have a lot more and more interest-driven product categories going forward, which will help our increase in same-store sales, including blind box, collectible dolls, [indiscernible] and other products. The second is increase -- improve our capabilities in channel expansion as we have talked in the past several quarters. Now, we have in thousands of stores in China that we have -- we can improve by structurally operate the store format or inside and so on. So, since last year, we have been executing this…

The next questions are coming from Ms. Michelle Cheng from Goldman Sachs. Please go ahead.

[Foreign Language] [Interpreted] So, I have two questions for management. For the first one is on U.S. market. Given the volatile consumption market in U.S. in the past few months, do we see any new opportunities or risk? And how this will impact strategic expansion and store format? And also, the second question is about Europe market. This is one of the key focus we mentioned earlier in the year. And can you update us the key -- any development for different markets in terms of the store format partnership with different partners and also the store format, et cetera? And any good progress we are seeing so far and any room for further improvement? Thank you.

[Foreign Language] Let me quickly translate. [Interpreted] So, overall, in overseas market, the same-store sales was double-digit growth in the first half, and we're at that early stage in our [cycle] (ph). We have long-term influence in brand awareness, product authorization, operational authorization and so on. So, we strongly believe that we will have -- we'll still have a lot of room to boost our same-store sales growth, but it will grow fast, but it will inevitably fluctuate, especially [indiscernible] basis. In last year, 2023, the major driver of our U.S. business was same-store sales growth, but in this year, since our target is to double this business, so I think our major driver will be in store network extension. So, in the first half, the U.S. same-store sales growth increased by 14%, one-four. And the strong network store numbers doubled, and which is in line with our expectation. And by the end of July, we already added about 69% -- or 69 new stores in United States, and we'll have about 100 for -- in this year. And in the future, we'll see that the United States will accelerate in terms of store opening. And we will open to discuss to have more franchisees or distributors currently joining us have very rapid store network expansion, while maintaining a healthy profit in United States. And since we increased 14% in terms of same-store sales growth in the United States, in the future, we will have the [same-store sales] (ph) to increase further. The first is the product side. We're going to adjust our product structure to increase the local supply chain and increase our inventory turnover and reduce the product lead time. And on upside, we want to increase more local sourcing, especially in IP-related snacks, IP-related cosmetic products and…

[Foreign Language] [Interpreted] On your second question, so we have three measures. The first is to upgrade our store formats. Let's take U.K. as example, where we have been [indiscernible] helping to increase and upgrade their channels to open bigger stores and to open better stores. So, in the first half, its same-store sales increased by 50%, five-zero. And its total sales increased by 150%. And that has once again demonstrated that our superstore strategy has helped increase the overall performance of the market. And in terms of personal sales per day, U.K. now is about RMB20,000, an increase by 50% year-on-year. So, it still has room [in recoveries] (ph) to United States and probably with Mexico market. But it's already a huge jump for itself, and it's the best in Europe already. And in the future, U.K. will be the benchmark market in Europe for MINISO. And I think the Europe market is the pathway to open 1,000 stores in the future, so it's huge potential. The second is, we want to still reiterate our focus on IP and differentiate IP is a key to our future success in the Europe growth out there. IP is now 49% of total sales in there, and year-over-year increase is about [65%] (ph), especially our flagship store in [France] (ph), which has an 85% of our IP sales. And this has remarkably helped the overall distribution market to increase its GP margin. And the third is stay core. Our top 100 SKU contributed about 90% of our total sales in Europe, and each segment has performed very well. In the future, our key product categories in this will make MINISO stores in Europe getting more professional and more -- and provide more immersive shopping experience to our customers. That's helped us to increase our store conversion rate. So, thank you.

[Foreign Language]

Thank you, Michelle.

Thank you. We shall conclude our call now. Thank you all for joining us today. We will see you in the next quarter. Goodbye.