Everyone is on mute. Please give you the announcement. For this conference, this is only servicing those investors upon the reception and invitation for the presentation, and minutes are only for internal use. For Inovance, we do not authorize any media to disseminate the minutes of this meeting. For those, dissemination and republication are the infringement of the rights without the authorization, and we hold the legal obligations, and we are not responsible for any losses caused by the dissemination or reproduction. There is a risk in investment. Please be precautious in making decisions of investment. Before the start of the meeting, I would remind everyone that after the presentation, we are going to have Q&A session. Now, please allow me to give introduction about the management. Director, Vice President, and Board Secretary, Mr. Song Junen. Now, I would like to give the floor to Mr. Song. Thank you very much, moderator. Thank you very much, investors, for attending today's meeting of Inovance 2026 half-year report. As usual, I would like to give you a walkthrough of our performance in the first half and then start the Q&A. First of all, let's briefly take a look at the situations in China and overseas, and the opportunities, challenges, and countermeasures that we took. As everybody knows, in the first half of the year, overall speaking for the industrial component, because of the AI investment and the export of Chinese equipment to abroad, as well as the core equipment and core parts self-controllability, we have seen very good demand. At the same time, for industrial automation as an industry, the order placement had a very good growth. This was pretty much the highlight of the first half of the year, especially for the downstream of the industry. Another point I would like to say is that we are facing some of the good opportunities in the first half of the year. First of all, we had very good and robust AI investment and empowerment of AI to manufacturing industry. We've been seeing a lot of AI + manufacturing and physical AI. As for industrial automation industries, and especially when you combine hardware and software all together and focusing on this manufacturing industry, I believe that this is a very good opportunity. So we have been making efforts in this area. We used artificial intelligence to empower the automated products, and we have AI + automated software and hardware to empower the manufacturing industry. There is another very important opportunity, which is the very good solutions and applications in different scenarios. For instance, in those different verticals. Of course, we do not have those general purpose solution, but you can see that still there are many different factories and brands that are pretty much focusing on those closed loop solutions for data values in different verticals. This is providing very good soil for the growth of humanoid robots. Another one is about the energy revolution as well as the new power electronic system related investment. So we have been seeing a lot of good opportunities brought by this. So we had a lot of good opportunities in the first half of the year. We had short-term AI investments, and we have AI empowering manufacturing, which is lasting for a very long time, and we have general-purpose humanoid solutions as well as energy revolution. Of course, everybody knows that we had a lot of challenges in the first half of the year. First of which was that for the automation or industrial automation raw materials, we had rising costs, rare earth, aluminum, for instance, that are actually increasing their overall prices, and this has continued. As well as some of the electronic materials that are actually increasing the overall cost. This was pretty much impactful to our overall cost. Second point is about the new energy vehicle. From official data, you could see that for NEV sales, this is declining here in China with around 10% or so decrease. Of course, we had actually a pretty much challenging situation for demand, and this impacted our subdivision of our business. Third is that we had a K-shaped economic divergence, which is manifested as one end with a very hot investment, the other is having a coldness of investment. This is impacting our overall budgeting and the applications of our projects. Because of these external opportunities and challenges in the first half of the year, we had several countermeasures that we took in the first half of the year. First is that on the supply chain side, we had all kinds of different cost increase and shortage of supply of some of the raw materials. On the supply and R&D side, we had different countermeasures to overcome the difficulties. Another point is that you've been seeing some of the lack of capacity in the first half of the year, and we made efforts to expand our capacity and to, for instance, increase the overall shifts and a secure delivery. This is pretty good and well guaranteed. Another kind is about the marketing, which is that we actually increased the product prices and focusing on those opportunities and secure very high growth of our order placement. At the same time, the product price increases are actually quite important, for instance, for control system, for servos, and inverters, as well as the industrial robots. We have adjusted, i.e., increased the product prices to different scale and also give us a very good outcome, and this has offset the impact of the raw material price increase. Third point is about the operations. We have been seeing a reduction of costs and improvement of quality and efficiency. The overall operational cost has been reduced. This is actually something that we had in the first half of the year. At the same time, with regards to some of the external opportunities that we had in the first half of the year from a strategic application standpoint, we've been seeing a very good operations. For instance, first part is AI +, for instance, AI + manufacturing industry. As for Inovance, we have to embrace AI + automation plus China manufacturer. We needed to empower the industrial automation solutions with artificial intelligence, and especially empowering the Chinese manufacturing industry to be developed on a more intelligent tract. This is a very important strategy that we have. In many different products, we have been seeing some of the AI features added, and at the same time, we have launched the iFG AI platform on which not only our own AI agents could be developed and at the same time we're able to provide a platform for developing the AI applications for our customers. This is the platform that is under the construction yet. Of course, as a giant company of industrial automation, we had features or advantages of software and hardware combination, and we had a very solid foundation for manufacturing industry, and we had a lot of scenarios of manufacturing industry. We believe that we could combine AI with China manufacturing. The second point is about the humanoid robots. As for the components and parts that we have started the business with last year, we have been seeing a very good validation. In terms of the electromotors, we had a small batch of sales already. The seven axis, the bionic arm has already been validated. At the same time, we have the general purpose humanoid solutions for industrial applications. We have already seen some of the samples or I mean the portfolios and some of the prototypes, and started validation already. Third part is about the energy. We believe that we have to seize the opportunity of this development of ESS and develop these projects in overseas, which is actually already disclosed in our annual report. Another part is about the zero carbon emission. Together with some of the governments, we have already seen some of the sample examples with some of the governments about the zero carbon emission. At the same time, we've been seeing a forward-looking deployment of SST products. The fourth point is new energy vehicle. At the same time, we've been seeing some of the stressful situation for the operations and maintenance of NEV, but we have a long-term strategy. First important strategy is some of the overseas validation point or nominations. As you all know that you can see that in Europe for new energy vehicles, for the quality and growth margins, they're actually pretty higher. Second point is about the intelligent chassis. In the future, a very important solution would be the intelligent chassis solution. With regards to this overall trend, we had a very good strategies taken in the first half of the year. In terms of this proactive suspension, we had batched sales with the sales value of exceeding CNY 100 million. At the same time, we had some of the nominations already. Next, with Inovance Automotive company, 800 volts or 550 volts, we have some of the technical advantages with our understanding of the solutions and the auto grade solutions. We are also going to offer next generation AI server power supply solution, but this is still under R&D. Very last point is globalization. This is actually quite important as well, and we've been focusing on this for years. In the first half of the year, except for tackling against those opportunities and challenges in the short term, we are also laser-focusing on the application and implementations of the short-term strategies, and these are pretty much supportive to our business in the long run. While talking about those operating performances, I would like to give you a recap about financial data in the first half of the year. From operating revenue, CNY 24.7 billion, increase in 20% year-on-year. Overall speaking, even if we had some of those pressures from automotive industry due to the outperformance of industrial automation, we are meeting our expectations in terms of revenue. Net profit attributable to parent shareholders, CNY 2.81 billion, - 5% year-on-year. That was due to the loss-making of automotive industry, and that was quite stressful. But if we exclude the automotive industry, we had actually a pretty good net profit. NPAPS, excluding non-recurring items, CNY 2.76 billion, increasing 3% year-on-year. In those particular kind of item, we have also those incorporated fund in overseas. Because of the Forex reduction and depreciation for the fair value-related investment returns, in the period, we had actually less impact. This was actually pretty much shocking, but excluding that, we had actually increased 3% in this item. Net operating cash flow, CNY 1.98 billion. That decreased by 35% year-on-year. This seems to be large figure, but you all know that in the first half of the year, especially in January and February, we had raw material costs increase. In terms of our order placement, we had a very good growth. Overall speaking, we had built up some of the inventories for our raw material. In the same period, for the raw material prices that we are paying, it was about CNY 1 billion or so more. This impacted this. As for gross margin, despite the increase in price of raw materials, yet still, overall, we maintain our gross margin to be pretty healthy, down by 0.48 percentage points, but mainly due to the impact from the automotive business. The expenses, our selling, administrative, and R&D expenses all added together would be CNY 3.9 billion, among which R&D is CNY 2.2 billion. The three expenses accounted for 16% of revenue, while R&D maintained at 9%. This obviously shows that we still have this very positive investment into our R&D. Next, if we just look at Q2 for 2026. The second quarter operational performance overall is better than that of quarter one. For example, operating revenue, it's CNY 14.5 billion, year-on-year growth 26%. Net profit attributable to parent shareholders is CNY 1.8 billion, with a growth of 9% year-on-year. NPAPS excluding non-recurring items would be a growth of 19%, and the gross margin is up by 0.43 percentage points. In quarter two, be it our orders at hand and also our way of dealing with the raw material price hike by passing down the price pressure overall had been pretty effective. Our operation in quarter two was better than quarter one. Now let's take a look at the different breakdowns of our business. First part would be industrial automation and digitalization. The overall general automation is CNY 11 billion, up by 36%. This is beyond expectation, and this helps to bring a very strong support fundamentally for the revenue of our company in the first half of this year. Second part to that would be elevator with the CNY 2.4 billion revenue, up by 5%. Next one is NEV powertrain systems, CNY 9.4 billion revenue, up by 4%. Due to raw material price growth and our price linkage, we had very difficult negotiation with our clients. Some of the prices have not been confirmed yet, and the delivery had been delayed. Overall, it is due to the macro economy and environment. NEV sales are domestically decreasing, so there had been only 4% growth to our NEV powertrain systems. As for our emerging business, it has been pretty well, up by 96%, and the revenue was CNY 1.5 billion. Now let us take a look at this slide, because many of you are concerned about our price adjustment methods, considering some other competitors are not doing so and whether this is going to affect our market share. If you look at this slide, you get to see our market share on general automation, industrial robot, also PLC, AC drives. Mostly they are on the rise. As well as the powertrain systems of NEV, motor stator, motor controllers, and OBCs, et cetera. The market share performance of ours has been pretty positive. Okay, so now let us take a look at our H2 business strategy. Second half of this year, we are going to be focusing on the following things. One, on the marketing end. Probably you have all felt from the capital end that the upstream of industrial automation, there are more than the bulk commodity as raw materials. There is also electronic devices, including chips, IGBT, and PCB boards, et cetera, are having to start their price hikes. In order to do that, we are going to continue to uplift our price to pass down the pressure of price to the client side. Although this is quite pressured due to the current economic situation, but we are still focusing on trying hard to raise our price because we are anti-involution. Secondly, as for the new opportunities emerging in the market, including AI investments and localization increasing, there might be some chances while other overseas competitors are in a short of supply due to their shortage in raw material and supply, and we would have to capture those opportunities. Next in our strategy, the high-quality businesses of ours, we are going to have further investment, including the PLC, HMI, and also the AC drives, servo systems, et cetera, which are the ones that we have more competitive advantages on. We are going to continue to do that. As for AI humanoid, and the new energy, the strategic investment will continue. In the past years, we have been laying quite widely in terms of many businesses. Right now we are also considering to execute the retrenchment strategy so that we can focus more of our resources onto the more potential ones. The third part would be SCM, the supply chain. On one hand, we still observe that the bulk commodities and semiconductors and the electronic raw materials are having price hikes still ongoing. We are actively responding to that by, on one hand, negotiating with clients to pass down the price pressure to clients. Secondly, also include more suppliers and change some of the raw materials in our production to deal with the price increase in raw materials. There are some raw materials which are now in some sort of a short supply, and we are taking advanced measures to ensure the delivery. The fourth aspect would be, as you may know, Inovance has been making our organizational changes to combine AI businesses by establishing substantial organizations so that in the future, we could leverage AI better to empower ourselves as a manufacturing business. Also continue with a more independent business delegation management, decentralize our management for independent business units. As for the expenses, we still have very stringent and stricter control of the cost to further do the cost optimization. Those are the strategies we are going to up here in the second half. We are not making any changes to the overall guidance of this year's target revenue, 10%-30% growth. Net profit attributable to parent shareholders, also in between 10%-30% growth. That was a recap of first half of 2026, and also some strategy explanation for second half. Now let's welcome the questions. If you need to ask a question, press star then one if you joined through telephone. If you are on the webpage, you can use the question text box or use the voice question function. Participants joined through telephone, please press star one. On webpage, please press the function of raising hand or inputting your question in the inbox. Question from telephone number ending with 6981. Please state your name and organization name, please. Hello? Hello, Mr. Song. I am from Dongwu Securities, Zeng Duohong. Inovance, in the first half of this year, you have been performing really strong, especially in industrial automation. I would like to ask about the industrial automation business. Second quarter revenue and profit are both higher than previous expectations. What do you think of the momentum into the second half, quarter-by-quarter as well as year-on-year trend? Overall, the entire industry in industrial automation has been performing better than expectation, and how is it going to be in the next year? You also talked about the combination of AI empowerment of industrial automation. Could you elaborate on that to talk about whether this AI empowerment is going to further expand your leading advantage and becoming another new central part of your growth in the future? That was my first question. Thank you for the question. In the first half of this year, the industrial automation, also the AI investment, the localization increase, as well as the exporting businesses. Anyway, the demand has been pretty strong from all of these aspects, and caused our order to surpass beyond expectation. That overall trend is still existing into the second half. Do not expect it to be as popular as in the first half, because in the first half if you look at our orders, especially in March and April, we have large amount of orders during those two months. I think in the second half of this year, the overall trend is still going to continue with that momentum, but might be with some fluctuations. Not as prosperous as in the first half. In terms of the revenue for this part in second half, we are still going to hit the target for our operational targets. As for next year, the overall momentum would continue positively. Like we said before, industrial automation overall is now in a pretty upward cycle, though we are not making any budget for next year yet. Overall, the expectation for next year is quite optimistic. Secondly, about industrial automation plus AI, like you said, indeed, from Inovance perspective, we now put our key focuses on better leveraging AI, using AI to empower the manufacturing business of ours, of the manufacturing business in China and empower the industrial automation. Of course, we are using the large models provided by others, but based upon on our know-how and experiences about manufacturing business, leveraging the data we had in our data pool to train some vertical industry specific models. Together with the inference models, we are offering these products portfolios of industrial automation plus AI as well as iFG platform plus industrial automation. So the industrial automation solution, which has some AI functionalities, is what we are aiming for. The target is to reach several application field, including industrial automation plus vision AI, or let's say we put AI functions on the servo product, so it does automatic healthiness check of the production lines and efficiency check. The PLC could also add it in with a bit of more of a AI function to finish some part of the coding process. Such functions, our AI research institute has been operating for several years. iFG platform has been explored since last year, and some new product had already been launched into the market. Of course, the AI function are not as capable as you probably have imagined, but it's a progressive and gradual process with the large models becoming more mature. Also, by adding on our know-how for the manufacturing business, we are helping to train some of the vertical smaller size models and manufacturing small models. These are really needed by manufacturing businesses in the industrial automation and together with our AI's inference model and the mechanism models to finish with the AI empowerment. That is the bigger picture, though it hasn't been achieved yet, but it is a gradual process. As you said, the second half of the year is not as good as the first half, but I would like to understand that. Is it good that you had a very affirmative 30%-40% of the increase in the second half of the year? Okay. It is very hard to say, but in terms of detailed figures, how much of the growth that we are going to hit, this is difficult for us to predict because we only had the visibility of a short period of time of our order placement. Overall speaking, I believe that we are going to have a very good momentum last. But if you are talking about 40%-50% of the growth as Q2, it will be a little bit difficult. Understood. Overall speaking, you had a very good momentum kept. My second question here, Mr. Song, is that I would like to understand the Inovance Automotive company had a weak second quarter. We would like to understand that for the automotive business in the second half of the year, what is about the price part through and how well you are going to eradicate the revenue and profit, whether we are going to have very stable growth in next year. Is it okay for you to talk about this? It is quite complicated at the current stage. How do you think about this? Yeah, surely it is quite complicated talking about the new energy vehicle industry. We had a lot of debuff this year. For instance, first of all, the industrial situations, the decline of the sales in China, this was impactful to all different industries. Some of the OEMs profitability, as you see, was bad. We had big losses made for most of the companies. That means that the demand is not picking up. Second is that we had raw material price increase, which was more impactful to automotive industry. For instance, this particular general bus has been impacted because of the copper price increase. For majority of our raw materials, we have been actually now seeing the impactfulness and the system management as well as aluminum and rare earth, for instance, pretty strict management. IGBT also, we have some of the price adjustment. We have seen stressful situation. For automotive business of our own, we have been seeing some of the situations. First of all, we had a tax of CNY 120 million in the first half of the year. Without that, we would not make a loss. You could see that we had actually this CNY 120 million additional taxes. Second point is about some of the customers of Inovance Automotive Company. We had one to two key accounts that performed pretty good last year, but this year they did not reach the expectations. We had all kinds of different influential factors, and this caused a stressful situation of our operating profit in the first half of the year. In the second half, we think that the demand will be quite poor as well, and it is very difficult for us to pass through additional cost to the downstream. For some of our customers, we could only actually predict this price as a virtual one, because for majority of them, we are not confirming the final price. What about the changes that we are going to experience in this industry? First of all, I do not say that there are a lot of changes happening in this industry. Whether it should be L-shape, it has already reached to the bottom, or whether there is a rebound, it is not quite affirmative. Second is that it is still continuous in terms of the raw material price increase. Next is that for some of the price increase, for some of our customers, they accepted it already, but for some, they are not. If the raw material prices increase further, then I believe that the price pass-through mechanisms will be more adopted by our customers. I think that in the second half of the year, in terms of difficulties of pass-through original cost, this will be lowered than the first half of the year, but whether or not all the customers are going to be accepting this will be difficult, because we are talking about difficult operation on our customers' side as well. When you have all the factors combined all together, if you ask me to predict the performance of the second half, it is difficult. In the first half of the year, we had the taxation, and I believe that excluding that tax, it could be less stressful in the second half of the year, and it will be even less stressful next year. Because as you know, that overseas market would be actually one of the focuses of Inovance Automotive industry. For some overseas OEMs, they are actually accelerating electrification process. Inovance Automotive Company, we are actually doing global market quite early, and we had advantages. Second point is about intelligent chassis business. We had some of the batch sales in the first half of the year. Now we have more customers of choosing intelligent chassis. This will be something advantageous to us because we have a leadership positioning. These are all some of the good news to Inovance Automotive Company. Next year and the year after the next year, I believe that definitely it is going to be less stressful than 2026. Thank you. Thank you. I would like to have a third question, which is that on a humanoid robot, in terms of components and parts, you had a very good leadership positioning. I want to understand that how is the situation or what is the volume of sales? When are we going to expect further nominations from customers? At the current stage, bipedal robot is going to be launched, and do you have a timetable on that? Okay, so we are actually now doing this particular components of humanoid robot later than the others. You all know that it takes time for us to have, first of all, nomination. Just as automotive industry, we are actually launching the components later than our peers, so we receive nomination later than our peers. Second point I would like to say is that at the current stage, for the robot, if you are talking about those truly advantageous robot makers, or if you are saying that guaranteed very good performance in the future, this is too early for us to say that whether there is any name. First, about the humanoid robot itself, in terms of application scenarios, at current stage, it is not realized yet. As you all know that most of the scenarios are not something that the investors are really in favor of. For application scenarios, we need to sort them out, and especially general purpose in a humanoid robot, as I used to say, that it takes at least three to five years for this to be truly implemented. At the current stage, most of the scenarios are verticals. We have some nominations, but still it is difficult for us to have a very precise prediction. I am always making a comparison with automotive industry. Inovance Automotive company is not those early companies, but at the current stage, we are the best company in working on this. For some of the early comers, probably most of them had been phased out. I believe that it is going to be the same situation for humanoid robots. At the current stage, the scenarios are not mature for applications. For components and parts, we just follow our plan, and we select our customers to work with. If the customers do not have any sales volume or if the application scenarios are not good, it is going to be a burden to us. We are quite selective on customers, and we have to know that the customers are going to be survived till the end, otherwise it is not meaningful for them to place order with us. Second is that we are selective on the application scenarios. Just because of this, we are receiving nominations. Nominations means that we have tailor-made products. But if it is not a strategic scenario, we just provide our standardized components. We do not want to spend too much of our time or energy to do tailor-making situation. This is our strategy of components. As for the PAN or general purpose humanoid robot solutions, at the current stage, we do not have a thinking about making components for bipedal robots because we are only talking about industrial kind of scenarios, and it is less likely for them to adopt bipedal robots. But we would like to have quite flexible solutions like the wheelbase or bionic arm to be applicable to the industrial scenarios. But these are not general purpose. They are just working for different verticals. It just focus on one working spot. It do not expect the humanoid robot to work as humans. You can see that this is something that we need to solve as the biggest issue. We have two bottlenecks at the current stage. First point is the general purpose capability of large language model is not good enough. We need to actually train the AI with, or train the robot with the vertical data, and we need to actually mitigate this with motion control. Second, some of the motion control capability is not that good, and especially that we had a actually quite poor controllability of those fine work. This is actually what we believe. In the future, it might be the case that there might be general purpose robot coming out, but it is less likely to be the case. In the next three years, we just focus on different verticals application. If you are working on general purpose humanoid robot, it takes a longer time, and it is not good in terms of motion controllability for fine manipulation tasks, and we need to gather data further, which takes time as well. We are now targeting industrial applications and some of the vertical applications, for instance, on a working spot or in the small factory, be it we are talking about intelligent arms or six axis, bionic arm, or talking about wheelbase. You just have solution. If you provide solutions, you need to validate that solution, right? You have to provide your performances to guarantee your reliability. It should be cost friendly as well. This is quite comprehensive. This is indeed the strategy of humanoid robot components and some of our solutions. Thank you. Thank you so much for my questions. Thank you very much for the sharing. Please make sure that do not ask more than two questions at a time. Now I would like to give the floor to the next investor, and please identify yourself. Thank you. Hello, Mr. Song. I am from the Yangtze Securities, and my name is Cao Xiaomin. I have two questions. The first question is, from a half year report, you can see that in different segments, like the frequency converter, you had about 40% of the increase, and for servo, 80% of the growth. Does that mean that for downstream industries, we had a lot of conventional industries that are having very good growth? According to your knowledge, how do you think about the overall driving forces at the back end? Another point is about the July and August figures. According to our communications, we had about 40% of the growth in July and in August, whether you are going to maintain that overall growth rate and across different industries, whether or not you are seeing anything that is becoming better or stronger or anything is getting weaker. Pretty much about this. Second question I would like to know from you is about the Suzhou Inovance Automotive. The Inovance Automotive company in their annual result announcement or the interim result announcement had also been seen some of the new businesses. I would like to understand that how do you think about the overall product at the current stage, and in terms of doing sampling and for some of the time spot, how do you think about this? This is pretty much about my two questions. All right. Thank you very much for this question. The first question was about the general industrial automation and what is about the order placement situation. As you said, that in the first half of the year or in Q2 of this year, overall speaking, the downstream and the order placement was pretty good. I remember that we had about 20%-30% of the or 20 or 30 different industries that had over 30% of the growth. AI investments were pretty good, and it brought the growth of 3C industries, headset makers, and the tooling machines as well as the heating and the venting machine providers. Also, you know that we had a very good growth of the lithium iron batteries as well as HVAC. In China, for some of the critical equipment and areas, we had domestic making, like automotive and semiconductor industry. These kind of demands also give a very good advantage to Inovance as a leading company in China. You can see that in these two industries, we had also pretty good growth. Yeah, of course, there are some more traditional industries, including plastic injectors and textile air compressors industries, et cetera. They performed pretty well in the first half. Mainly including for air compressors or plastic injectors, they are more for exporting. Some OEM equipment in China with the capability increased so much, they used to only compete domestically, but now they can compete in a global competition. The increased export of them have also brought to the growth of our business in industrial automation. Indeed, in the first half, our performance were due to several factors overlapping with each other. There is going to be pretty good growth in July as well, around 30%. The August number hasn't come out yet, probably not as fast as previous month, but one reason is that the process industry wasn't performing that well in August, including metal smelting, metallurgy, the non-iron metals, and chemical processings. These industries' investment were not that well. The process industries' investment had been relatively weaker recently when compared to over the past months, and especially that they had a pretty high base from last year. Of course, the numbers still haven't come out yet. The overall situation was like this, and probably we just need to wait for a few weeks when we had the number for August, and we're going to communicate with you again, probably. The next question of yours about Inovance Automotive, the data center server power supply. Right now we are creating samples and delivering to clients for testing. Based upon our communication with them, we would do continuous feedbacks and build newer samples. As for when the official delivery is going to happen, it's still going to take some time. Thank you. Thank you, Mr. Song, for your questions. Thank you very well. Thank you very much. I don't have other questions. Thanks, Mr. Song. We have a lot of questions in the queue, so please limit your question to only two. Next one, phone number ending with 7983. Please state your name and organization first, please. Hi, Mr. Song. Thank you very much for your time today. I am Sheng Zhong from Morgan Stanley. I have two questions regarding your new businesses, emerging businesses. Well, as for embodied intelligence, you talked about how the bionic arm, you have already finished the whole sample verification on the client side, and the Pan-Humanoid business has also been sending samples to your clients, but you also said they would need more time for it to be really applied. As for the bionic arms, do you have an estimated volume of it in the near future? As for the humanoid application, based upon that trial process, could you elaborate on how that testing process is for the sample capabilities? Another question regarding energy for digital businesses. I see the gross margin from your report, there is a 5 percentage point decrease. Is it because of the gross margin pressure there with the digital power part? In the mid and the longer term, what is your perspective and attitude for the long-term gross margin for that part of your business? Thank you very much. For bionic arm, indeed, we have sent samples for the testing and finished with the verification process at the client side. There are some expected volume, but not at convenience right now to talk about it. Of course, it is going to have a ramp-up process, not going to have immediate large volume. It is going to be a very gradual process, including for humanoid and also the components, including the bionic arms. Originally, we had a plan to have two or three to have finished closed loop for the value of those. Currently, we are still within the pace for that. Only when the value loop got closed, clients would think, "Okay, so this thing is valuable to my business. It has to be good in cost, efficiency, reliability, and application functions." Right now, we haven't met that condition yet. Still need half a year to achieve that at least. As for digital energy, you could see we didn't independently disclose the number of the gross margin for those emerging businesses. Indeed, the reason for gross margin decrease is because we had a higher proportion of that business from the digital energy, because we are now extending the overseas energy storage business. You could see, revenue-wise, it increased by 200%. Order number increased to 100% in the first half year-on-year. The higher volume of digital energy for energy storage facilities overseas draw down the overall gross margin for our emerging business. Secondly, for the energy storage business itself, the gross margin had been in the increase, especially overseas is higher. Even though there are some raw material price increase, yet still overall, the gross margin is being elevated there as we are also adjusting our product portfolio. For example, the digital energy, the local PCS, according to our internal saying, we actually abandoned order with accumulated value of over CNY 1 billion- CNY 2 billion. In between that, the order amounting to that much value were abandoned just because we don't want to engage in price wars domestically. Overseas overall, the gross margin still had been relatively higher. It is even though at now a pretty low level, but it is been constantly improving. Okay. Thank you. Thank you very much, Mr. Song. We have a lot of questions in the queue. Please limit your questions to only two. Next one coming from cell number ending with 9160. Please state your name and organization first. Thank you. Hello, Mr. Song. I am [inaudible] from Dongxing Securities. I have two questions. One is, your first half industrial automation revenue growth had been very positive, and you talked about how made some price adjustments in the first half. I would like to ask you, with that increase in your revenue, how much were contributed by your price increase? If we were to further look at the second half of this year, you said some more price increase are in the process. We would like to ask you, what is your plan on adjusting the price upward furthermore in the second half? Also another question regarding emerging business. Could you help us to break it down to the revenue split in between industrial robot, energy storage, and the PCS? The next question, financial-wise, we noticed that in the first half, your asset depreciation, amortization, and credit amortization, the provision were a bit higher than expected. Is it mainly because of the Inovance Automotive business? I see the provision for credit amortization has been CNY 200 million in the second quarter. Which business is it mainly coming from? Thank you for your questions. First question regarding pricing adjustment. Price adjustments made were positively impacting our gross margin because hedging against the raw material price increase, but not completely because the gross margin is a year-on-year growth, but adjustment is based upon the price in December. If you're asking about the contribution of price increase to the overall revenue, it's a very fractional number. Because if you look at the number of order, how that had grown, it's 4% - 50% growth in second quarter alone, and more impact would be on the gross margin side. The second half, further upward adjustment will continue. You see the PCB raw material price increased by several rounds. It has started to affect not just industrial automation, but many other industries as well. MLCC and semiconductor chips and the power devices, those are also having trends to show they're going to increase their prices as well or have already issued price adjustment notices. Not just the bulk commodities that had price hikes before. Overall, the cost pressure still is there and maybe furthermore in the second half. We're going to increase the price furthermore. Not sure about how competitors would do that, but this is what we're going to pass down that price pressure by price linkage to the clients. We will try our best to do that. Also as for the emerging business, industrial robot, around CNY 600 million, digital energy, CNY 800 million. Third question of yours about asset amortization and credit amortization. The credit amortization are completely based upon our contract volume. That CNY 200 million provision are completely normal based upon our collectibles and also in compliance with the accounting rules. It's just that with this year, the Inovance Automotive business, some products cannot have the price further increased. Some products are having negative gross margin, and we had the provision for that asset amortizations. In the second half, if the price could be increased, then there's going to be some hedging against that. It's going to be improved. All right. Thank you very much. I don't have other questions and wish your company has a bright future in the second half of this year. Thank you. Thank you, Mr. Song. Please limit your question to only two, as we have many questions in the line. Next one, cell number ending with 9649. Please state your name and organization first. Hello. I am from BofA Securities, and I have two questions. One is, in your industrial control products, you had a lot of market share growth there. Small PLC, last year it was around 9%-10%, and this year it's now 14.6%, and some Japanese competitors are having lower market share. Does that mean this localization trend will continue to further expand in PLC products, even expanding to large PLCs? Your large PLC is also having market share increase, but still having some gap to catch up to when compared with the first one in the market. Are we going to continue with that trend? That's my first question. The second question about energy storage related emerging business of yours. Revenue, you said it's around CNY 800 million. Basically, as far as we know, they're mostly from clients from domestic. What about some of the buyers? They are quite worried about how the energy storage demand are going to slow down next year. How do you see that? Are you going to prepare to adjust the split between domestic and overseas business for that? Okay. Thank you for your questions. First one regarding PLC, especially the small size PLC. Well, like I said before, most Chinese-produced PLC can meet the demand in most application scenarios. So that localization trend for small PLC is very clear. Plus our Inovance's delivery capacity and our efficiency, this trend is very clear. For large PLC, if you look at the demand for localization, it's been pretty strong. Mid to large PLC, they're all applied in those more important sectors. So their demand for PLC has been pretty high, and they want better process and also coding and programmabilities. The willingness has been very strong. But in China, those made in China, large size PLC versus the competitors in the world, is still having gap in terms of performance and still there is demand, but because of this gap in terms of capabilities, the replacement speed is not as good as that of the small size PLC. But in China, for Inovance and other companies, while we're improving our capability in manufacturing those large size PLC, especially with safety features, we at the same time had iFG platform for automation application coding. I do believe that at the same time, our medium and large size PLC will actually be accelerated in terms of the replacement of those imported companies. So the demand is still there, and very urgent as well. In recent years, we've been actually seeing some of the short advantages of our large size PLCs. First is about the safety, it is very important, safety and security. Third point is that when you are using medium and large size PLC, whether it is convenient and whether you have any iFG software or industrial software. On that engineering software, you are just making everything and you are able to make simulation, adjustment, and fine-tuning, et cetera, in that software. At the current stage, we are improving our capability. When that is the time, I do believe that our medium and large size PLC will actually replace more those imported PLCs. Second question is about the energy segment. As I have already showcased that we are now doing this business in China and focus on business in overseas. In the annual report, we have already said that in overseas, we have focused on several areas: India, Europe, Australia. We already had breakthroughs. We had about 3.9 GW of project signs, and in terms of revenue, we had about CNY 120 million sign off overseas revenue, and it is very good momentum. Not only we have projects, especially in Europe, now we are trying to find some of the partners to work with us. You all know that we are now doing the PCS, not system integration. In overseas, we have been passing some accreditations and finding some partners in helping us to explore the Europe market. So the PCS is going to be our focus in overseas. In China, we choose to do this business of energy, as we have already had meetings in the past, and our business unit colleagues saying that for some low-value projects, we just all give them up in China. I think that the total value will be CNY 1 billion-CNY 2 billion, but the growth margin is too low. We just give up on this market in China. So we are selective here in China for the energy business. Even if next year there is a slowdown of the business, it is not going to be impacting our overall situation, because we have the technical know-how. We had a small volume of this business, but still our technology know-how is pretty good, and we could leverage our existing technologies to get some high-quality order. For digital energy segment, this is a very important transition that we are making. There is another very important strategy, which is zero carbon solution and zero carbon energy solution. At the current stage, we are working with some governments in trying to set up those example zones and in the truck parks or factories, et cetera. These are some of the measures in the digital energy area. Thank you. Thanks a lot. Thank you very much for this Q&A. Now I am going to give the floor to the next investor, please identify yourself first. Please limit your question to the number of two. Hello, Mr. Song. I am from Guangdong Development Bank Securities. My name is [inaudible]. I have two questions. The first one is that, as you have already mentioned, that in the first half of the year, artificial intelligence was giving us a lot of margins. I would like to ask you that in terms of your downstream customers, how much of them are using artificial intelligence? What is the situation of AI application in different area or industries? Second question is, as you have already mentioned, we are now promoting the implementation of AI strategies and the empowerment to your overall business. Would you like to elaborate on this point? As for AI, as for PLC and humanoid robot, how are you combining AI with these different segments, and how you are going to realize the value for your customers? Thank you for these two questions. Actually, as for artificial intelligence support, it is very difficult for me to give you a quantified answer, because at the current stage, as for machine tool, for instance, we just use part of the machine tools that have been impacted by artificial intelligence, but we have other types of machine tools. It is difficult for me to give you a separation, but we are talking about other industries. For instance, the pan-3C industries. In the first half of the year, AI was contributing to about CNY 1 billion or so to this industry, and for the pan-3C industries, like intelligent speaker or smart glasses. You all know that for some of the overseas companies, they had large investments attracted and some of the intelligent hardware, we did see a lot of drivers. As everybody knows, overall speaking, for the pan-3C industries, they had placed over CNY 1 billion order in our company. As for machine tool, for the small machine tool, this was so popular in the first half of the year. We had about less than CNY 1 billion, say CNY 700 million value of the contract signed in the first half of the year. HVAC, everybody knows that it is quite popular in North America and has contributed CNY 500 million, roughly, to our overall revenue. It is difficult for us to really separate them out, say, whether it is AI impacted or not. I just would like to give you some of the overall situation about the demand and order placement. Second point I would like to say is on AI strategy. At current stage, there are so many things that are associated with artificial intelligence, and we can do a lot of things. To be brief, first is that the AI + current products, PLC inverter, industrial robot, and industrial bot. PLC is quite easy to understand the combination with AI, because PLC is a software used for our customers, and as long as our customers are actually doing the engineering coding on the PLC. If you are providing with them the code generation, AI is going to be really liked by these customers. For the industrial robot, this is something that you could easily understand, because at the current stage, the most difficult area of application is the demonstration and pre-programming. Education and demonstration, if we can actually do the demonstration using 3D vision, and if we could use the coding technology to do pre-programming and efficiencies are going to be driving up. These are some straightforward areas that could combine with artificial intelligence. It is necessary for you to have combination with AI, otherwise your products are going to be phased out, right? If you have this AI feature for PLC, instead of having long Q&A like query generation, it is going to be really more easy for the previous solution. It is quite straightforward. Second point I have to say is the iFG platform. Everyone knows that for iFG platform, this is the AI platform. On that iFG platform, we are only introducing in the models from other platforms. The customers are able to actually develop the AI agent or AI applications. I have the tools of data analytics and distillation and some AI-developed interfaces. As for general customers, they had really weak capabilities of doing AI. The customers are able to actually develop their solutions on our platform. This is the platform that we would like to do. This could be separately sale or sellouts, or you are able to have combination of this with the other industrial engineering products to combine as a whole. I think that these are something that we are doing at the current stage. As you said, as I have already said about the model, we just don't want to incorporate, or we don't develop the large language model ourselves. The thing is that we have to understand the detailed business of every application scenarios, and we could actually combine our data, and we trained the vertical model with some small model, and also to conduct with some of the reasoning capabilities. The agent that could be pretty much used could be much better, and we are going to make the solutions out. This is something that we are talking about. On top of these two existing products, we are going to have more vertical and mechanism model. You can see that in industrial scenarios, I think that all the questions cannot be resolved by big model or large model. You have to train a smaller model with mechanics and mechanism model. Mechanism model includes all the fundamental knowledges in order to resolve the issues of AI application in certain scenarios. This is our focus. I don't know how the others are doing this, but from an industrial standpoint and from the manufacturing standpoint, this is something quite straightforward and realistic, right? Because if you want to build a general-purpose large model, you can have actually a certain kind of a model with the management feature. You just develop on this based on your data or customer data. But it's difficult to copy and paste that managed model to other areas. It is necessary for us to have the product-level model developed and trained. This is the behaviors and some of our businesses of AI related. We don't have the broad and the bold narratives, we just want to be very pragmatic. Thank you. Thanks a lot, Mr. Song. It is very clear. Thank you, Mr. Song, for the sharing. Now I would like to give the floor to the next investor. Please identify yourself. Thank you. All right. Can everybody hear me? Yes? Hello, this is [inaudible], the Industrial Analyst of HSBC. I have two questions. First is that we have seen that in the last cycle, you are going to actually seize the opportunity of the shortage of raw material from overseas customers, and you are increasing your overall price. At the current stage, there is going to be even more shortage, so the delivery cycle has been elongated from overseas brands. I would like to understand that from a component standpoint or from chip standpoint, whether you are going to build up the inventory to be tackling against this situation. Because you had a concept of strategic inventory as you did in the last COVID period. What is the situation right now? At current stage, what is about the overall delivery cycle comparing with that of last year? How do you think about this? I think that whether you have been seeing some kind of elongated situation. As I have already said that in the first half of this year, we had some of the preparations of our inventory, and you are going to see that from our cash flow. We had a lot of cash spent. This is something that we are very good at. Internally, we are having meetings of all kinds, discussing the raw material cost increase and some of our countermeasures. As you said that those countermeasures are business negotiations, as you could see. At the same time, we are going to make the advantages fully taken for our supply cash, and we are going to pay cash to our suppliers to guarantee the supply of raw materials to us. Because for some of the materials, you have to actually take some special measures to actually win the resources over. We did have this situation, but it is not that common. Overall speaking, you just either increase the price to a downstream or you have to prepay, and you have to lock those resources in advance. We are now doing some selection of the raw material, key materials. This is something that we are very good at doing. At the same time, we think that we have been seeing the situation that for overseas brands, they are having a very long delivery cycle, or some of them are experiencing shortage of supply even. This is a good opportunity for us. As for Inovance, the most important thing is not to compete too much with the Chinese companies, but with foreign brands. When there is situation, this is going to be a very good opportunity for Inovance. This half a year, one of our very important marketing strategy would be to capture that opportunity while foreign competitors are either in short of supply or having a very long delivery cycle. This is an opportunity of ours. Of course, the prerequisite is that we must have in advance prepared raw materials by building up a stock or pay in advance. In that case, our cash flow advantage shall be exerted. This might affect our cash flow, but it does not matter, because in the longer term, this is a great opportunity for us to replace the market share of foreign competitors. Okay. Thank you, Mr. Song. Another question, like I mentioned again just now, have you been shortening your delivery cycle compared to last year? In the first half of this year, it had been pretty tight, but right now it has been gradually recovering to the normal delivery cycle. Thank you. Thank you very much. No further questions, and wish your company prosper in future. Next one. Question coming from cell number ending with 0556. State your name and organization first. Thank you. Cell number ending with 0556, please state your name and organization first. Hello? Or maybe we will invite someone else, and please call in again. Next one, cell number ending with 5168. Please state your name and organization. Hello. Hello, Mr. Song. I am Analyst [inaudible] from Citibank. I have two questions. One, in the first half, I see your small PLC market share increased by a lot. I would like to ask you about once the PLC market share has increased, and how is that going to exert its coordination effect or synergy when it comes to industrial automation? Does it help with that? Well, small PLCs, there are various kinds, and the best binded one would be servo systems. In most of the cases, small PLCs and the servo systems are bounded together. Okay, understood. Another minor question, also a quick one. Third quarter. I see last year, third quarter gross margin were basically the lowest in the previous quarters, and due to the revenue of the new energy powertrain systems of NEVs and also the Inovance Automotive has a higher proportion of revenue. If this year gross margin in quarter three, is it going to be better? Yes, indeed. For sure. Because last year we had the lowest gross margin in quarter three. If you look at our gross margin in first and second quarter this year, they are still higher than quarter three last year by 2 percentage points. This year, the third quarter gross margin will definitely be better than last year. Okay, understood. Another question. In general automation gross margin, will it be better in gross margin in the third quarter? Well, this is a bit more complicated because there is a product structure issue here. Our gross margin of the main product in Q2, like transducer, servo, and the PLCs, quarter-on-quarter-wise, they are improving in quarter two compared to quarter one, because we are not reducing the price furthermore, especially in 2024, 2025. The price war were so fierce in those two years. But right now we have the way of increasing our price to hedge against the price drops in those years. So overall, our quarter two gross margin had been improving in comparison with quarter one. Thank you. Very clear. Thank you, Mr. Song. No further questions. Next one, let us invite the final, and the last but not least, investor. Cell number ending with 1309. State your name and organization first. Thank you. Thank you for giving me this last chance. I am Aries from Deutsche Bank. I would like to ask you two questions, Mr. Song. One is related to Inovance Automotive. Quarter two revenue has slight decrease year-over-year. Indeed, domestically, the cars are not selling well, but if we sell at their whole wholesale new energy vehicle, passenger vehicle, quarter two was actually having some slight increase year-on-year compared to last year. Of course, your largest client performed relatively less than others, but other clients, well, they are supposed to be still performing pretty okay. So why is the performance of yours, Inovance Automotive, performing not so well in quarter two? You talk about that price linkage negotiation have not been completed yet, as well as the delivery delay. Could you talk more about it with more details? Second question regarding overseas strategy layout, because you said you are planning for Hong Kong IPO, and that is probably related to your overseas business for the planning. Right now, your largest profit stream would be from elevator, and then followed by new energy vehicle, and then automation. What about in next three or five years, your overseas business revenue split, what is going to be your target among these different parts of the businesses? Well, thank you. First question, Inovance Automotive Q2 year-on-year, indeed, there have been a 2 percentage point decrease. On one hand, it is because that if you look at the production volume of the new energy vehicles domestically, it has been increasing, but sales decreased a lot, 16%. The production volume were mainly due to export. BYD export a lot, but BYD is not our client, and some other good exporters are not our client. We did not actually benefit from their increased export. The domestic sales decrease really affected us. The second reason was that there were some of our client who used to rank top 5 domestically, and then in the first half of this year, did not meeting their operational target and facing a lot of pressure impacted us a lot. Thirdly, with the price increase, it is a very arduous process of negotiation, because for our clients, those OEMs, they are having operational pressures. I say, "I want to raise the price because raw material price increased." They understand, but they could not accept it. It is a long and arduous process in negotiation. Sometimes the price cannot be settled, and that would affect our delivery. All those aspects added together cause our Q2 performance to decrease year-over-year. As for a second part of your question, overseas business. Our overseas business are not performing as much as we expected. We are adjusting some of our organizational structuring and strategies. If you look at our managerial structure, there are three to five types of products: general automation, elevator, automotives, robots, and energy. In the first half, robots and energy increased pretty well. Elevator also pretty nice. Overseas elevator business grow faster than domestic. For general automation, the growth were not as fast as domestically. Automotive, it is a bit better than in domestic. But in the future, what we really value, what we focus on the absolute value of general automation and robotic business and the NEV business, and then less prioritized than the previous three, that would be elevator. Of course, for energy and the automotive business, gross margin are relatively lower, which comes back to our conclusion that we still value our general automation business overseas in the next few years the most. We hope it to account for 20%-30% of our total revenue overseas. The key to reach that would be whether we can meet this target for general automation. We hope the overseas general automation business revenue from general automation would be 20%-30%, and the rest, 70%-80% from domestic. In that case, we can say we had been pretty much successful in internationalization with Inovance. Because you consider the profit stream, the gross margin, and the quality and the market size overseas. The overseas business market is three times bigger than the domestic market. General automation is definitely our priority for future years in overseas business. Thank you. Thank you very much. Thanks, Mr. Song, and thank you all investors for your questions as well as the answers from Inovance. This has been a very in-depth meeting. Now let's hand it over to Mr. Song for the final remarks. Well, thank you all very much for your support as always for Inovance Technology. Though this year, our operational pressure had been pretty clear due to external impact from the environment, from the cost side, the demanding side of automotives, and some interference factors from overseas. Yet still, from management's perspective, like we talked about in the board meeting a few days ago, we are still confident about our operation in 2027, especially for the future development of industrial automation and new energy vehicles. We hope you investors can, as always, support Inovance. Thank you very much. Thank you all for your participation. This is the end of today's meeting, and wish you good luck and a happy life. Thank you.