Ladies and gentlemen, thank you for standing by and welcome to the NaaS's Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. I must advise you that this conference is begin recorded today. I would now like to turn the conference over to your first speaker today, [indiscernible] Vice President of Strategy. Thank you and please go ahead.

Thank you, operator. Hello, everyone and welcome to NaaS second quarter 2022 earnings conference call. The Company's results were issued earlier today and up listed online. Joining me today on the call are Ms. Cathy Wang Yang, our Founder and Chief Executive Officer; Mr. Lei Zhao, Chief Financial Officer and other members of our team. For today's agenda, Ms. Wang will provide an overview of our recent performance and highlights and Mr. Zhao will discuss our financial results. Before we continue, I will refer to our safe harbor statement in the earnings press release, which positively quote [indiscernible] forward looking statements. Also, please note that this call includes discussions of certain non-IFRS financial measures. Please refer to our earnings release, which contains a reconfirmation of non-IFRS measures to it most directly comparable IFRS measures. Finally, please note that unless otherwise stated all figures mentioned during the conference call are in renminbi. I will now turn the call over to our CEO, Ms. Yang Wang, who I'll translate for.

Greetings everyone. I'm NaaS's CEO, Yang Wang, and it's my pleasure to be able to share with everyone NaaS second quarter 2022 and first half 2022 earnings report. First our financial situation, second quarter net revenue increased by 5.9 times. In the second quarter of 2022, net total revenues increased by 47% and net revenues increased by 5.9 times while losses are increased by 5% reflecting our strong improvement in operating efficiency. During the first half of the year, the macroeconomic environment was [cutback] with different COVID lockdowns as well as reduced demand for [chargers]. It was under these difficult circumstances that NaaS overall revenues continues to increase by 90% reaching RMB1.8 billion. In the first half of the year, net offline services revenue increased by 4.3 tons and by 5.6 tons in the second quarter. This was improvement mix the result of strong increases in offline charging stations revenue and growth in charge of sales. Second, this is overview. Total charging volume was 1.06 GWh, an increase of 160%. According to the EV6, [CITA] in first half of '22, China's public and specialized charging market volume increased by 26% during the same period NaaS charging volume reached 1,062GWh, an increase of 160% year-over-year representing more than double -- that of the old market. As of June recorded, NaaS ' coverage extended to China 258 million connection 44,000 charging stations, 400,000 chargers with the charging compound growth rate over the last four quarters of approximately 22.4% and the number of active chargers increasing by 75% in the second quarter. Now, [indiscernible] AI technologies and comprehensive operational capabilities to work with a brief the China's southern power grid because such chargers and other partners who don't help drivers quickly find quality working chargers and help with the Chinese EV charging market…

Thank you, Cathy. As we mentioned, we are very proud to announce our record second quarter for our first reporting quarter as a public company. In the interest of time, we will now go over each individual line of the financial statements and if that will focus on the key highlights. For additional details, please refer to our earnings press release. Our total gross revenue for the first half reached RMB108 million, representing year-over-year growth of 90%. Net revenue grew by 4.5 times year-over-year to raise RMB18.1 million for the first half of the year. It should also be noted that our final results will be impacted by the one-time cost associated with our merger and the leasing. Our non-IFRS net loss for the first half was RMB140.3 million representing year-over-year growth of 19%. Our non-IFRS net loss rate was 130%, decreasing from 209% for the same period last year. In addition, I'm also pleased to announce that we have secured an additional RMB400 million new financing from the China's construction plan, will proceeds from this financing will be used to further develop our charging operations and the services as well as to improve our charger sales. With that, I conclude our prepared remarks. Operator, please proceed with the question-and-answer session.

Thank you. [Operator Instructions] And our question today will come from [Skyler G.] with Credit Suisse. Please go ahead.

My question is about could you please elaborate on the role of the Company in the cooperation with charging operator like TGOOD, [TLV] and the downstream OEMs like Li Zhang, Xiaopeng and NIO?

Yes. So thank you for your question. In terms of who we are, we're a service provider within the industry value chain. And first, in terms of some of the companies you mentioned for the upstream, we are partners -- we're partners with whether it's the State Grid, TGOOD or it's Star Charge. So first with regards to how we serve players in the upstream. We have strong relationships with thousands partners. And what we're essentially offering as a one-stop solution to address all their needs and problems. We can help them with site selection for the development of a charging station, additional consultation. We can help them with procurement. And this procurement extends not only to purchasing chargers and charging pipes, but also with electricity procurement. It also helps with their daily operations including full outsourcing as well as provide additional retail, including such things as for example F&B and massage chairs. So ultimately, what we're offering is a single-stop solution offering everything. So given that we provide a full menu of services through our one-stop solution, so naturally getting back to your question, where we position ourselves and what we offer to the players is going to be different, depending on each individual player. So for example, a SME or smaller player, they may choose five or more services from us, whereas a larger player, regional player may do the same or they may offer less. So for downstream players such as auto OEMs, logistic companies and other similar type large companies, we provide digital solutions and the ability to digitize. So for the major auto OEMs whether as people have mentioned [Li Xiao] [Huawei], [Dongfeng] and others what we offer is a one-stop solution to help address their key concerns, when it comes to new energy vehicles.…

And our next question will come from David Gu with CICC. Please go ahead.

How do we expect to price more in the U.S. market?

First, the Chinese market is undergoing a transition from oil to electric. So, currently, we're looking at 400 million ICE in 300 million cars and the future we will be reaching 600 million to 700 million. Correct me if I got some of the numbers wrong?

It's okay.

So I think it's important to emphasize in the current situation that we are undergoing a transition, a transition from oil to electric. So on one hand, maybe we should not describe ourselves as a challenger or disruptive, but as the transition is occurring, and as we have to encourage more people to adopt the new model. Obviously, electric prices will be effective as a result, but ultimately the growth is the key especially in the longer term. If we look at the comparison of costs though, when we talk about a car set our vehicles that are being used publicly, in terms of their charging costs or their costs, it could be a quarter of gas. Now for private cars, those that can charge at home, it could be a 10th of gas. So I think as the transmissions occurring, you will continue to see these trends but before the transition end, we do expect some of the price wars to end. And as the saturation or penetration rate for EV vehicles as a whole in the market reaches a certain stage we believe that the electric prices will begin to return to a more of a rational or normal level. I think when we look at the 10 million EVs sold in China for a lot of public charging and for battery in the majority of charging, it is for -- if you will business use. So these are not private cars, but rather as I always say, business or shared or light hailing type vehicles. And for some of those available with private charging, we believe that will not be the mainstream. In mainstream, it will continue to be public and business use. Now another way to look at the issue of pricing is that, as the…

[Operator Instructions] And our next question will come from [indiscernible][Gong] with Caitong Securities. Please go ahead.

So my question is the cost advantages available to the Company being centralized the power procurement?

Thank you very much for the question. I think first, it's important to point out that the liberalization of the market has only occurred recently as in the liberalization of the electricity market. And very importantly, different provinces, you're going to have different levels of restrictions in liberalization. So some provinces, for example, you need to have a certain amount of value, let's say over 50 million. Others is perhaps more liberal. Currently, we are doing transactions and involved in this procurement in essentially supply provinces. And there we have done centralized purchases, where clearly we can potentially save on the procurement costs for various parties. But, however, as mentioned because there's different levels of liberalization for different provinces, you're going to see different levels of savings across different provinces. Yes, so through this weekend, lower costs for our customers and partners, but there's going to be differences, depending on the usage time, say peak usage and location. And it can range vary greatly from several multiple renminbi or alternatively maybe only in the cents. We believe that actually in the bigger picture when we look at ways of reducing the costs of procurement or electricity, these types of centralized procurement, if you will, there's only one method. Ultimately, we believe that there's other areas that will generate greater savings for our customers and partners whether it's working with for example PV sort of various sources or having virtual power generation or alternatively other network solutions. We believe that those particular types of methods in the longer term will be the larger sources of cost savings. So, I'd like to share a little stories or video that I saw earlier today in one of our user groups. So, I think as many of you know, we do the current conditions and that certain provinces there are limits when it comes to the electric use. So I saw a certain video where two EV drivers they basically got into a tussle or fighting over a single charger. We can see that or we can imagine that in 2030 when there are 80 million or so EVs, at that time, you're going to need 1,480 million or 100 million to 2,100 million in terms of electric charge. Correct me, if I got that last number wrong?

I think the challenge the challenges we need 2030 is that maybe 100 million.

Okay, I thought we mentioned the charging amount but I guess we need 20 million chargers. In a few years, we're going to be looking at the requirements for 80,100 million in terms of the watts. And as a result you're going to see tremendous pressure on the electrical grid and the network. So ultimately, when we look at the longer term and what is needed to lower costs, the upstream procurement that is needed. That is one part, but we feel that in terms of the longer term, being able to provide the virtual electric generation, better supply management through AI and greater efficiencies within the downstream through digitalization and technology. Those will actually be the bigger or the biggest cost savings. So, to summarize, yes, while the current types of procurement that we are doing, does lower cost for our customers, but ultimately, longer-term, the bigger savings we believe will come from virtual power generation or virtual electric factories as well as greater transparency and more connections or liquidity between the downstream and upstream.

And ladies and gentlemen, that does conclude the question-and-answer session, also concluding today's conference call. Thank you for participating. And at this time, you may all now disconnect.