Welcome to China Resources Beer (Holdings) Company Limited 2022 results announcement. I am Huang Zifeng, Director for IR division. This is the first on-site results announcement after the COVID-19, and it is such a pleasure thing to meet you all in person. On behalf of the management, welcome all to join our session. We welcome those friends online. Let me introduce the management to you who are here on present in person. They are Mr. Hou Xiaohai, CEO and Executive Director. Mr. Wei Qiang, CFO and Executive Director. Mr. Zhao Chunwu, Vice President. Mr. Liang Weiqiang, Company Secretary and IR Director. Mr. Liang Weiqiang is going to walk you through the business overview and business highlights. Thank you. Thank you, moderator. Thank you very much for joining our results announcement today, because in the past three years, we didn't have this result announcement until today in person. Today is really a special day. We see so many friends in person and also friends online, and we're very happy to share with you our business performance in 2020. This is a summary. Overall, in 2022, our business turnover was CNY 35.263 billion, up by 6%. Our EBIT, excluding special items, is CNY 5.462 billion, up by 17%. If you look at our dividend payout ratio, it is 40% this year. Another point I wish to draw your attention to is in our balance sheet. It is very healthy. Our assets rose by 11%, reaching over CNY 27 billion. Our net cash is CNY 9.12 billion. This net cash will be able to help with our future growth as well as our expansion into the non-beer business. This slide, you may also concern about operations KPIs. Our total sales volume increased by 0.4%. ASP last year was above single digit. That is 5.2%. Turnover, as I said, 6% last year. Gross margin also enjoyed 4% of a growth. This year, in 2022, we received a lot of pressure from the uprising material costs. Therefore, we balanced the different areas and realized business growth in turnover and in gross margin as well as improved profit performance. Company-wide EBIT and the company-wide and non-excluded special items EBIT and non-special items PAS. Basically, it was similar levels as last year, as our net margin increased by 26%. Compared with that in the first half, which was 20%, there was a slight increase. Overall, you can see, excluding special items, there was over 2% of increase in PAS. This is about our performance in the premium sector, about 2.1k liters, about 18.9% of our growth. We also realized that 12% of our growth in the sub-premium and above. In the second half, the growth was higher than the first half, and we are growing both segments, including Heineken. The growth rate is faster. The other two, Super X and our draft, also enjoyed growth at the different levels. For per ton EBIT, the current EBIT and the per ton PAS, there was 17% and 26% of a growth each. This is, as I say, that we have our vision and this, for this slide, I wouldn't elaborate too much. Next slide. This is a brief summary from 1994 till last year. Particularly, you can see after 2017 till 2020, we entered into three plus three plus three strategy. And within this roadmap, you can see our average increase of about 30% each year, and the turnover also increased year by year. Our cooperation with Heineken has been growing very well. Last year, Heineken enjoyed a very fast growth, two digits. Therefore, we are very optimistic and confident on the growth of Heineken. Mr. Hou and the management team has said that we want to be the leader in the beer new world. We know that in the new world of beer, from quality, production level, and efficiency brand, as well as diversification and premiumization, we see our opportunities. Therefore, in 2022, as well as our future growth, you can see in addition to continuing Super X, Heineken and the draft, we are also launching a lot of new products. In 2023, we will have a lot of new products, including the existing LaoTze and other new products. This year, we are going to launch the Heineken, the Heineken 0.0, and other new products. We will continue with our key accounts, hoping that through our key accounts we can go even further to premiumization. As for scenarios and the channels, this year, we will open our minibar and mini pub business. Through such programs, we can make use of the minibar and mini pubs to further build our brand and communicate with our consumers further. In terms of the optimization of a capacity, last year, we closed two breweries. The influence to us as we communicated to you earlier, the closing down of two breweries as well as the once for all expenses won't represent any influence to us, and we have taken different measures to optimize the efficiency of our capacity. You can see our utilization rate of capacity, even though it was a very difficult year last year, our utilization was maintained at above 60%. Another thing you may concern about last year is the pressure from raw material, packaging material, aluminum drums and malt, and there was a very big increase in raw material costs. This year compared with last year, the pressure was less. However, no matter how, we are taking different measures, hoping that we can effectively control the material cost. On the other hand, based on our growth in the sector, we will set up a new headquarters in Shenzhen as well as the beer town. So through these two projects, we hope to further promote our brand and uplift our corporate image. In the new world of alcoholic beverages, we hope that through our platform of CR Beer, we invest in different alcoholic assets and build a new world of value and build up this business. There will be three phases from exploration to development and ultimately enhancement, so that we can uplift our business growth in this new world. As for specific measures, we are going to build valuable brands and establish a working mechanism. In addition, we enhance our business management, carry out dual empowerment for businesses and finally explore group buying business. In terms of the empowerment strategies for beer and Baijiu businesses. We focus on six areas: organization, connection, talent pooling, channel sharing, point of sale, joint expansions and so forth, so as to achieve the 1+1 greater than two effect. In addition to this, we also hope that with this model to promote our business in alcoholic beverages and through sharing resources as well as, our management expertise, will help to further uplift our strategic positioning, meanwhile maintaining our strategic consistency. Finally, these are some of the awards we received. Here, on behalf of the management, thank you all for your great support in all these years, and thank you for your recognition. With this, I would like to conclude my reporting. Thank you very much. Now we're going to open the floor for questions. You are the first one to raise your hand. Okay. Thank you. Thank you, management. I am fast today. Thank you. My first question is about the big direction. Mr. Hou is very happy for so many years that we are facing with each other face to face, and we are communicating with each other. I have been following your company for over 10 years. In the past three years, I have felt that number one, you have never stopped working on different things, brand building, the integration for sales teams, optimizations and so forth. It's because of the COVID-19 pandemic, so maybe there will be some interference to your pace. However, good things are coming very quickly, and now we feel that this is a year with a lot of spring breezes and a year of good news. Because in the past three years, you have accumulated a lot of energies. Maybe one thing we're concerned about is about revenue profit and the market share. From these three aspects, how would you keep a balance? Do you want them all or you just want one more and rather than the other two? Because we're worried that if you, if one causes more and then they may influence the other target. This is the first question. The second question, also a big one. We have learned about your understandings and insights and the synergies on Baijiu and beer. One thing we're concerned about is about consolidated financial reports. Also the water, what about the inventory? How to get rid of the inventory and also the industry. How do you think about the channels and the inventory in the industry? In your consolidated financial reports, how do you differentiate yourself? Thank you. Our strategy is a three plus three plus three. The first three year and the second three years. We hit our target over hard. Because we were faster than expected, and our results were also better than expected. We overheat our target. More than expected. The first two, three years has decided that Snow Beer, say in the past, it used to be a lot of a burden. Used to have a lot of burdens and used to based on the mainstream products. Now we're going to premium, and our organization is now receiving more power. The beer and alcohols are running at the same time in different in the tracks. The brand energy is now being released. The digitalization is now put into operations, and now we are reaching the high level. In the past six years, our pace was not influenced, but rather, so it give us even greater speed in our three plus three plus three strategies, as well as good, very good conditions. From 2020 to 2022, our premium products grew very fast. Our profit went over doubled. Our optimization of our production capacity and international brands also growing very fast. Everything happened during the past three years, when we had the COVID. COVID didn't stop us from growing forward. After the COVID, this year, what will be the situation? It's very clear that this will be a year of a faster growth and also with a greater hope. The consumption is recovering, particularly the consumption for beer. You can see it very clearly. The consumption scenarios are open. Scenarios, locations are also opened, the consumption energies are back. Consumption energies and consumption capabilities, particularly for beer, because after COVID, this is a very complicated. Some, for some segments, the consumption power is going down, but not for beer. Currently, the growth of a beer and the development of beer, particularly the premium beer brands, the sales and the profit are both growing very fast. Perhaps they're growing the fastest during the past few years. After the COVID, now it's open and the beer is enjoying. It has a great energy and a great force for the growth. For Snow Beer, our sales profit and revenue, we need them both. This will always be so. Last year, our market shares slightly decreased because our market in Guangdong, we took some active adjustment. That's why there was a sales drop in Guangdong. In other two markets, while we increased the prices, the sales volume decreased a little bit. It's not because of other factors. For example, 31, 32, 33 is not a fluctuation. Actually, this change will be over very quickly. We adjust the different markets, critical markets. Henan market, northwest and Hebei markets. Very big adjustments before. Henan and Hebei markets in our history, we lost about 200,000 tons of our sales. Now Henan, the growth is very fast in Henan market. From this angle, from a market share point of view, we think that we need it, we need volume, we need profit, we need revenue, we also need market share. Last year, we realized that the three growth is in sales volume, profit and revenue. This year, we also strive for the positive growth of our sales. The revenue is the upper mid single digit growth and profit double-digit growth. This year, these are three growth. Also will be much easier than last year. The growth speed will be faster than last year, and the growth will be better than what we're hoping for. As for alcohol, actually, for the because of the consumption of baijiu last year, there are some features. For the Jiangjiu. Usually, you have to receive the payment first, to bring along your revenue growth. Therefore, the growth of Jiangjiu or the Jiangxiang is very different. We do not agree to this model since it has been in place for several years. Therefore, we see the risks. There will be a lot of inventory in the market, particularly the Jiangxiang alcohol or the Jiangxiang alcohol, because you seek too much on collecting your payment, you seek too much for high growth speed. Jinsha in all the inventory holders is one of them. It is not the biggest inventory holders. I'm not saying that it doesn't have a lot of inventory. It has. It's above the medium level. The high level inventory, you can't imagine. Usually, who wants to get listed, that is the company that is holding a lot of inventory. Because you are too hasty, a lot of them are short-sighted, and they don't have a long-term vision. This is a very important shortcoming for all the baijiu business. This is a very important pain points for them. For Jinsha-Reducing inventory, adjusting the inventory management strategy are two important areas. This is also our first priority in our list. In this regard, CR Beer has got a lot of experience. We will never make the same mistake again as other baijiu companies has had made, and we would not take the same path. Of course, we will not adopt the same path as Fabia, which requires very strict management. For example, seven days inventory only, 15 days only. This is extreme inventory management model. Our path will be a very unique one for our alcohol business in CR Beer company. We will conduct a dynamic inventory management model this year in our business operations. We will form our own mechanism, including the mechanism of managing our inventory dynamically, the product pricing managing mechanism, as well as the uplifting atomization, as well as the key account management model, as well as the payment collection strategy. These are the areas that we have already begun implementing our strategy. All these are against some pain points, including the baijiu business. For baijiu business, just like real estate industry. If the price goes up all the time, if your property is selling, and then you will have the courage to buy land and then build. When the price doesn't go up, you have two wheels, and now one wheel is stopped running. If you cannot sell, then both wheel will stop running. That is what you can say with Evergrande. Actually, the same mistake also happens with the baijiu business. If the price doesn't go up, and then you cannot grow. And if you cannot sell, the business will be in trouble. Just like baijiu. Baijiu, Moutai can still sell, but the price has stopped going up. Your first engine already stopped running. When will the second engine stop running? It may still go on for some time, but it will be in trouble. You keep increasing your inventory. You are paying your cost for the future. Of course, it won't do. We have confidence that we can manage the inventory of Jinsha very well. Of course, this year, we started our consolidated financial report. We will pursue stability of our business performance in Jinsha, and we will articulate a new source of growth in Jinsha. We will not focus on the collection of append only. That kind of growth is not something we are pursuing for. Yeah, that is my answer about your question. Mr. Hou, Mr. Wei, and management, good afternoon. I'm Lu Cheng from Merrill Lynch. I can't help assigning that in 2019, I met you all here, and there have been a lot of changes since 2019. However, I feel that your strategy, your capabilities in strategy execution results has been proven in the past several years. This is the last year in your three-year strategy. Mr. Hou said about the vision about building a new world of alcoholic beverages. Can you please share with us your vision in 2025? That is the last year in the third three year. In terms of the premium and the super premium categories, what will be a target for volume? In terms of profit margin, what will be a target? If I look back, in 2016, at that time, you didn't start transitioning your business. At that time, it was about 7% of profit margin. Last year, it was about 16%. Can we expect that you will grow your profitability gross margin, your profit margin in the same speed till the third year of the third, three-year? The second question, in the recent years, how do you think about the premium and above categories in terms of the volume growth? Particularly some key brands such as Heineken, Super X, and Draft, Qiangsheng. These are the big KPIs, SKUs. How do you think about them? I'm sorry, I have to ask a follow-up question because I just noticed that Mr. Zhao is here as well. We also wanted to know about the landscape in the competition because you have been CRB, so you have been very aggressive and others they were trying to defending and you are offending. How do you think about the competition landscape? Do you see any changes in the market in Zhejiang, Fujian, or Guangdong, where we see a lot of our competition? Do you have any strategy for those markets? Thank you. Your third question will be answered by Mr. Zhao. In the past three years, there have been great changes in the industry, and there will be even greater changes in the next three years. Remember what I say today, and you will see in the next three years, this is my forecast. There is a heads up. Today you see, and today you will see in three years, there will be greater changes, and there will be a lot of changes in this, in the industry. Okay. Beer, the leader of the new world of beer. The leader. What is a leader? We are a premium one. One signature, one indicator is that you must be number one in terms of premium category. Very simple. In the past that we said we were closer, now we are not close. We actually going beyond the key competitors in terms of the premium categories. We think that within a certain period of time, we can hit this target quickly. Our next target is to lead ahead, far ahead of the competitors. For the super premium, we will chase our competitors and go beyond the competitors. In quality and in quantity, we will go beyond our competitors. This is one of the key indicators of a leader. This means that in the premium category, in the next three years, we have to set our targets. I can't tell you what is our target right now, but currently 90% of the products is a premium, and this year it will be 23%. We will strive to achieve 25%. We hope that, in the next three years, we will realize 35%. 30%-35%. That is to say, so 3.5 tons. This is our basic goal. If we talk about the premium, what will be the volume? It will be more than that is above CNY 12 per bottle, the premium beer. The ultimate battle. The ultimate market, who will be the market leader determines who will hold the pearl in the crown. Simply, you can look at the volume, but it is not enough. That is the old school, that is the old way of thinking. The one who owns a very big brand and volume, great profit, and market share of a premium category, who will be the winner? We know that between 10-18 CNY per bottle, this category, for a long time, at least 10-15 years. In the future, in the premium category, the trend is, in the future, who will be the leader for the next 10-15 years? That is, it's not just 3.5 million tons. If we talk about 3.5 million tons, if you have a different brands in this category, no, it won't do. In the premium category, when the volume reaches a certain level, when we look at the quality, we have to look at who is the leader in this category. This profile of the leader will determine who will be the winner in this category. In competition, why we can beat our competitors, why we can over perform our competitors, because they cannot hit this goal, just as we couldn't hit our goal years back, because they wanted to compete, but you couldn't do it because of capacity. This is what we can foresee. Of course, we want to have this 3.5 million tons. For the premium category this year, next year, very soon, we will talk about it because it will be meaningless. When our volume is bigger than the competitors, then it will be meaningless to talk about it once again. A leader will also bring along, as you said, a leader. There's another thing, it's about your profit. Your profit must be higher than your competitors. No doubt about that. Is in the past, it is 7%-16%, a wide range. In the future, you can't do it from 3-30. That would be too much. It is ridiculous. You must dare to imagine. Of course, it is... You have to be realistic, but you must have the courage to imagine. We are pursuing a double-digit growth in our profit. It's a double digit. It's a high double-digit growth. I'm talking every year, double-digit growth. In three years, of course, the overall growth will be over 50%, right? Yeah. At least 50% in three years' time. The profit for us is not something that we're particularly concerned about. Currently in the company, in talking about the beer business. This is still great room for us to explore in the profit. First of all, there are a lot of low margin areas where we can further improve our profitability. For the midterm, for the mid and the high end, we can also raise the prices. There's also room for us to reduce the material and the packaging material cost. Also our sales. We can save more savings, saving more expenses from the sales, as well as, the production and the sales cost reduction after the transitioning. In the future, the premium category will grow very fast. This will bring along greater profitability. Profit for us is not something that we concern the most. Because, there's a gold mine everywhere in every market. For this, we don't worry a lot. Regarding the growth of this year, right? You asked about the growth of this year, right? As of for the subprime subpremium, we also have a double-digit growth and a much higher than that last year. Last year, it was 12.6%, very low speed. Strategically speaking, it was very low speed, very slow. This year, at least it must be doubled. I'm talking about the range of a growth. At least over 20% of our growth. Currently we have the two point million something, and if we've double the growth, that will be over 4 million tons. If you look at our performance in the first quarter, there's a great prospect that we can realize double-digit growth. Currently, for the premium category, we see greater dynamics as the upcoming dynamics. After the restrictions were lifted, we found that beer is a very elastic market. A lot of goods were influenced, so particularly the premium categories. For the premium beer, it's not garments, it's not vehicles, not cars. It's not about, it's a value reflection, so it is not very expensive. Therefore, the influence is not very big. In the past, there was a big influence to beer minimum for the premium category because of the nightclubs and the restaurants and so on and so forth. Now the restriction were lifted, and therefore we see less influence to the premium brands, premium categories. Mr. Zhao will take your third question. Your third question is about Zhejiang, Fujian and Guizhou, the market momentum. I used to work in Zhejiang and Fujian, that's why I know those markets. In Zhejiang, Fujian, and Guangdong markets, even though there was a pressure in the markets, however, we took active measures and the momentum has never changed in the past few years, and the speed is also growing faster and faster. For us, every year, even during the COVID-19 in the past three years, our growth speed was a very good one, particularly last year in Fujian, we launched the Xinying in the market. In addition to Shi Li Classics, who had a faster growth already, our new product was also very well, very accepted by the consumers. A very big growth last year. The SuperX, as I've known, and the Xinying, this combination has entered into more and more terminals. In China, it is one of the fastest growing market. At the end of the year, in terms of our channel deployment, our distribution deployment, we enjoyed a much faster growth than the previous two years. In Fujian, Guangdong, Zhejiang, our key channels are from our competitors. They joined us, and the competitors will be squeezed and curbed. We also provided incentives to the channels. If they sign agreement with us, we provided incentives to them. We have policy for that. That's why the channels signed agreement aiming at a higher growth. From the performance in the first quarter this year, all these partners in agreement, most of them, they hit our targets and the actual growth in the markets are also very high. It's a high double-digit growth. In Guangdong market, we see some pressure there. Last year, we actively adjusted our approach in Guangdong market. In terms of pricing and channel, we try to streamline. We focus on the premium categories and in resources and the talents. In the past, we had some existing channels and products from our legacy. Now we're trying to focus on the premium categories first. Three years ago, I remember in Fujian market, we took it over from Heineken. We went through such a process, and there were fluctuations in the market. After one year, less than one year adjustment in the following two years, Fujian enjoyed a very good growth and very remarkable growth. It's quite satisfying. In the 1st quarter this year, Guangdong market has seen recovery with a double-digit growth. Of course, compared with the Zhejiang and Fujian, it is a weaker double-digit growth. Generally speaking, southeast coastal provinces, our competitors in the premium categories, their market share is higher, their margin is also high. Therefore, in the past three years, including last year and the first quarter this year, our growth speed has been very fast, and it is beyond our expectation. Thank you. Quick comment about Heineken. Last year, we realized that over 30% of our growth. This year, our growth speed has been faster and faster from then, 2019 till now, including 2020 to 2023. Our growth this year will be faster than last year. Because the growth of Heineken has been growing so exclusively because of the strategies. Number one, in China, in more regions in China, we began to cover Heineken. We also made new deployments. In the past, we didn't focus on these areas, and now we do it in the nationwide, therefore you can see more dynamics. Number two, in those areas where the advanced area with premium categories, the growth of Heineken is a major driving forces, particularly the Fujian, Zhejiang, Jiangsu and Shanghai. The Eastern China regions. These are the traditional premium category market, and Heineken has been growing very fast. In Guangdong, we have to work even harder. As for other high-end Super X and draft. Since the restrictions were lifted, they have been growing also very well, but not as fast as Heineken. This is a quick follow-up comment. Thank you. Next question, please. Mr. Hao, management, good afternoon. I'm Lillian from Morgan Stanley. I have two questions for you. The first one is a follow-up question about the Heineken strategy. Just want to know more. As another of Tsingtao was launched to Fujian to bring along the dynamics for Heineken and in the international market, we know that Tsingtao is also very well accepted in the market. Just want to know that in 2023, under the driving of big Heineken and a plan, market expansion plan for Tsingtao, also in your channel, we know that because of the restrictions are lifted and some new brands, new products are coming to China. How do you think about the import as well as the impact to the market? The second question, a big question. Listening to you just now, for your vision for 2025, as I remember, you communicated with us, and now you are more confident on your target for 2025. Is the target bigger? There will be big changes in the competition landscape in the market. What changes will there be specifically, Mr. Hao? What will be the measures you are going to take? Actually, for Heineken. Actually, it is a overall, it's an overall strategy. It's only that we have different focuses for different scenarios, different locations. For example, for nightclubs and restaurants, we launch the Tsingtao. For other locations and scenarios, we focus more on the Classics. Currently, Classics has a greater volume. Now, because Tsingtao is growing very fast and Tsingtao is a new product. For the Heineken plan, everything is growing as expected. Just as the same GBP targets as Heineken started in China. As for the parallel impact from import from 2019, we set up a management mechanism with Heineken. Looking back in the past five years, this mechanism is playing its role, even though there were ups and downs. The parallel impact from Heineken was controlled at a range. It is now a lot more than in 2020, 2019, and sometimes 1,000 tons more or sometimes 1,000 tons less, there isn't any big impact to us. One thing you have to pay attention to is that along with the Heineken International is getting listed in Holland, France and Italy and so forth. If we import more parallel, there will be more influence. We have to take proportionate actions. 600 ml Tsingtao is now impacting our local market. Now we are taking different, counter measures, to launch, our products. It is an event, but it is not influencing our fast growth. The launching of this product is not harming our products. It's not that our target is bigger than 2025. We maintain the same saying. It's the stable and continuous and the double-digit growth for 2025. We maintain from, 2.1 million tons for PPM. In the future, it will be doubled. In 2025, if we can't hit this goal, we can, deliver the result in 2026. Doubling is not that important. What really matters is that our three brands can form a cascaded pricing levels and or to form a foundation for Snow Beer or a very big dam for us, so that we can grow our business better, including Heineken beer and Snow Draft and SuperX. These are three brands. At the different price levels, they can form a very good foundation or a very good dam for us. If each of them can do 1 million, then the quality and the stability of our premium beer will be good. The 1 million of Heineken can lay a foundation for our leadership in the premium category. We can foresee. Of course, we focus at that. I don't think any brand can do that for this price category. Heineken will do it. Maybe nobody can really challenge us within five years, 10 years, even 15 years. For draft. We think that it could conform itself into a basic premium category and be a contributor to our revenue. The Super X will be the bottom of this premium category. Over nine CNY per bottle. We have the Laoya and other beers. They are also growing very fast. These are very personalized and personalized supplementation to our portfolio and product mix. It's a three plus two. This is the matrix that we are thinking about. As for profit, as I said earlier, just I said that it will be different in three years' time. Snow Beer being a listed company, the business in three years' time will witness a great lot of changes. You must know it very clearly about the changes. In three years, our Baijiu business will form a scale as well as a bunch of profit coming to our revenue, to our business. In three years' time, after three years, at the results announcement, you have found that our business mix, our revenue, our profit... You cannot do the same comparison as we do today. This way, something you will see, another track will be about 20 billion about 10 billion or CNY 1 billion, CNY 2 billion, so on and so forth. Net profit as CNY 10 billion in five years or in 10 years is easy for you to foresee, right? The strategy of our development determines, otherwise the strategy will fail. It's CNY 10 billion with the CNY 2 billion profit, this isn't very high. This is based on the old world. In three years' time, in China, you have to find a company to benchmark with, right? I mean, this is the changes I'm talking about. In terms of beer, there will also be changes because Budweiser, Tsingtao and so on, and Carlsberg, they are all growing. For the industry, the contribution to profit will also be different for all the premium brands. Three years ago, think about the profitability, the profit margin of premium. Putting aside Budweiser. Look at Tsingtao and look at us. What about our profit margin? Tsingtao already doubled its profit. Yanjing is also booming, and Carlsberg is also growing very fast. In three years' time, the beer industry, the top five margin, profit will also be doubled based on what you see today. By then, you will see that the industry is very different from what you see today. That is to say. The first opportunity for us to grow is through M&A and expansion. The second important opportunity for us is to go premiumization, to go centralization, to go leaning, to go digitalization. This will reshape the whole industry. You can see, we see great room for our profit and so with Tsingtao and Budweiser. This is just the start of the whole industry to reshape. You look at Tsingtao. Tsingtao just published its result. Very good. Yanjing also very good, right? You have already seen that. In three years, wouldn't they be even better? We don't have so many premium kind of products. There are so many things. We haven't formed our digitalization, right? There are so many tasks for us to do. Even though you see, three years ago, we were different. We are much better this year. After three years, after the COVID, we are the industry that has gone through the biggest changes. It's greater than Baijiu. Why? Because Snow Beer started the high-end faster growth as strategy. We reduce people, we close down factory, we go for digitalization. This is a rapid change. We close the factories. Isn't that other brands are also closing down their factories? Yanjing is also closed down, and cutting down people. Tsingtao is also cutting down people. Is it easy? No, it's not easy. You have to do it because they are runners, and then you have to run too. Everybody's running, and the industry must be better. In three years' time, you will see the industry will be even more different. This is what I want to say. Next question, please. So Mr. Hou, Mr. Wei, Kevin, good afternoon. I'm Yoshi Jia from Guotai Junan. In the past three years, in China, it's true that we felt the dramatic changes and achievements from China Resources Beer. You just now said that in next three to five years, your super prime will hold a percentage from 20% to 30%. Were three aspects. Above are CNY 12 per bottle. The other category is CNY 8-CNY 12 per bottle, which is the sub-premium. The third one is below CNY 6 per bottle. That is the iteration. Three tracks. Just now, you talked a lot about Heineken. I just want to know between CNY 8-CNY 10 category, because we have seen so different local brands, they are launching key SKUs, and be it from a competition point of view or benchmarking with Super X. The competition is getting fierce. How do you think about this price category? How do you, how do you plan to hit your target for the sub-premium? Below CNY 6 per bottle price category, what is your plan for that? In five years, how many volume will you lose? Will you maintain the stable volume and increase your price gradually? This is my first question about beer. The second question is about Baijiu. For your sub-prime, such as Jinzhongzi, the sub-prime, or Jinsha is the Jiangxiang, these two tracks. The industry, and we see lot of competition in the market. What strategy do you have to excel for these two tracks? The timings and the market environment are different from 30 years ago. How would you think about it? Just now talk about the CNY 10 billion. In next to five years of the Jinsha and Baijiu, what will be the contribution for Chuan 91? This is about Baijiu. A follow-up question for Baijiu. It's different from Pijiu. How do you balance the key KPIs versus the multi-strategy coexistence? For example, Golden Seed or Jinzhongzi, which product will be your key KPI, your key SKU? Thank you. For the sub-prime, with the 8 yuan, this is a key focus, including the Tsingtao Classic and 1903. Their price is going up. Our key price, Super X, and also Brave the World. U8. This is about the 8 yuan per bottle division. Because of the raw material costs are going up, we see a lot of uncertainties around this division line. A lot of 8 yuan are now going up to 9 yuan. About 25% of them. We call it 8 plus. Either 8 yuan or 10 yuan or 9 yuan or 10 yuan. This is the CNY 8+. This is the division line. There's a lot of competition, and we see also a lot of room to grow. First of all, it brings along the consumption needs and also a lot of push from the, from below. For us, we definitely will have a Super X. Super X are our main brand. There are some other products. We have about 200,000 to 300,000 tons. In the past, we had about 100,000 tons for the Brave the World. Now, we didn't put it into the CNY 8+. Super X, we just take it as a CNY 7. Chengsheng Draft is CNY 10+. For the beer concept, it's a beer market, it's just a concept. We stick to SuperX, the Draft and the Brand. These are their brands. For Heineken, it's a 12+ or a 13+. They have different price levels. For the three key main brands, these are something we stick to all the time as for how our competitors do and what they do. It really depends on how much they can deliver in terms of their segmentation for 8+. It's absolutely normal to see 3-4 key SKUs. For the 10+, maybe three key SKUs that can deliver 100,000 is also normal. For the 8+ line in next to five years, we think that in the future, now 20% only. Now it's over 20%. 25%. Probably about 8 million tons in total. We think that in the future, it's possible that it will be doubled, even reaching to 20 million tons. This means that it's only in China, only 20% are premium. In the whole industry, about 20%-25%. In the Western countries, in Japan, it's more than that. You think about the premium, what will be the volume? At least 60%. That is three-folds. Yeah, that will be the future, the reality in the future, and naturally. Because everybody has gone through the same way for Europe. What will be about 23, about 20-30 of their main beers. For the U.S. Even if we spend 10 years to double it, that will be amazing as well, right? The premiumization in China, we have a great room to go. We just started the journey. In the past, the inventory is declining. Actually, the existence. The existence of premium categories are increasing. They are not reducing. The exist quantity and the quality for premium categories are both increasing. Below CNY 6 for bottle. First of all, I have to clarify, in 2022, our segmentation for below CNY 6 category didn't decline. Some people say that Super X declined in sales a little bit, but because it entered into the CNY 7 bottle. For the 6 CNY per bottle category, a small amount of Super X, some of the products that they are supplementing, the overall, the quantity didn't decline. We still stick to the growth for this 6 CNY category. For the 3-4 CNY, the mainstream beer, we also pursue for growth. This is a big strategy. As for beer, our strategy, CNY 10 billion is our initial target because we entered into this target, this industry, so we are a SOE, essential corporate. This is a minimum requirement for us to enter the baijiu industry. Otherwise, it will be meaningless if we enter into it. Our CNY 10 billion is that we'll have two or three brands that can combine themselves as the CNY 10 billion. This is initial target, not a long-term target. For this target, it won't take us a long time. Maybe just 3+ years, three-four years, we hope to realize this goal. While we achieve this goal, our strategy is we effectively deploy ourselves independently grow our business in Baijiu, and also build up synergy between Baijiu and also the empowerment between pijiu beer and Baijiu alcohol. We establish this strategy, manage the approaches, build up the teams, and empower the brands, and empower beer and alcohol. There isn't anything about the SKU worries. Also the Golden Seed, of course, it has the key SKUs. These are also the key SKUs for us, not only for Jinzhong or Golden Seed. For Jinsha, Jiuyou can be a national SKU, KSKU, and it is a brand that has the great potential. But that doesn't mean that Jingzhi doesn't have such a potential. It's only that it needs cultivation and needs more financing. Who is the nationwide high-end brands? Moutai and also Luzhou Laojiao and Fenjiu. For the Baijiu, we don't need the national. Regional will be very, very enough, very, it's powerful enough. The local will also be very good. If you look at the beer, if otherwise, you are a beer person to do the alcohol job. It is not the story for baijiu. Independent business can succeed independently in different market, can also succeed in different markets, different regions, but not necessarily be successful nationwide. It's not needed either. From this perspective, our strategy is very simple. Okay. Three steps. We set up three year ago. We took three steps. The first one, we learn and explore. Why? To stabilize. To stabilize our growth, our team, our business, and our fundamentals. Number two, learn. Learn how to do the alcohol, the alcohol market, the private business, Wuliangye, Maotai, and Fenjiu, their approaches, and also the good things about those target companies. Number three is also learn beer, learn Snow market. For this is explore. Explore what? Explore what are your, what are the bad things, what are the things to change, what are the pain points. You have good things, I explore and turn them into our own stuff. The good thing from Snow Beer, we want to implement and we want to empower and to turn them into new things. Also explore the good practices from other baijiu companies and implement them here in the company. After exploration, you can form your own, your own approaches and methodologies, including the one we kept up this the beer alcohol empowerment. We didn't do it in the past, and now we have started. In some markets, we have already seen the results, very good results. We just took over this year as a whole. We have already seen the results and also the collection of management, inventory management, pricing management, expenses and fee management. In many places, we have seen there is such learning and explorations. We have seen a lot of changes and the results are obvious. We have seen, of course, for baijiu, their products, they have been their own features and advantages. But beer, for their packaging material, for their pricing, for their refined for the fund management, for their terminals, as well as the customer empowerment, it's true that as it is different from that, it is I believe it's an uplift to the traditional methodology for baijiu. This is about learning and exploration. In year two, we hope to optimize and form our own capabilities. Forming such a capability will enable us to grow bigger and stronger, and to give full play to our advantages and also learn from others' advantages. In year three, we can transform ourselves to be at least more competitive, at least regionally and even nationally, we are competitive, not necessarily be better than others. At least for their high-end, all their high-end products, seeing the best ones in China. Their method of growth, what are good, what are worth of our learning, what we are learning, what we evaluate, we will observe, we will change and we will reshape. We believe that there's a big room for us to reshape, to rebuild. For the Guilin Beer, we have the conditions to reshape, to rebuild. For the for baijiu. We have the room to reshape, to rebuild, to streamline the price and forming up the dynamics. In baijiu, a lot of companies is not the whole industry. The high-end baijiu products, it's really hard to go out of the box. They have a very big product section. CNY 100, CNY 300 per bottle. Now we are exploring how to grow. A lot of them, their prices are in a chaos. In addition to Bofun and some others. Shenpiaо Lang. Shenpiaо Lang. These are in the past. They have some advantages and now they are still at the very early stage. This is your pure bottle box. Pure bottle alcohol. I think that we have already seen the results. There are a lot of things for us to learn from Baijiu. Of course, we have to. Of course, you cannot hold a very high expectation for Baijiu at the very beginning. For capital or for your management party or the capital party, we are against any hasty attitude for Baijiu. We hate any blind actions. We hate any short-termist. We hate, we are against any blind copying. Baijiu needs 3x. We need 3x to learn, explore, to uplift, optimize, and grow bigger and stronger. Three steps so that you can only have a really a Baijiu performance. In year one, please don't expect too much. In the second year, please do lose hope. Year three, so you can't go without any pursuit. After three years, and you can require even more, and you can grow even faster. We enter into baijiu segment. Compared with the time we entered into beer segment, we did it faster and the results were better, because we see a very big market of baijiu in China. Actually, it is a place where it is an industry where you can make quick money, easy money, and competition is not that fierce because there are too many fishes there. You can no matter how you fish, you can catch a fish. Not like a beer. You are very capable, but when you go fishing, you can only catch a small fish. For baijiu, there are so many bigger. Even if you go to the water, even if you go into the water, you drink a mouth of water, you can still get a very big fish. There are some businesses, they are also improving themselves. Now we enter into this segment. It is the right timing because for pijiu, we have already built our capabilities and we are willing to explore in the Baijiu segment. There's a much bigger room for us to explore in Baijiu segment in China. In the past three years, we saw the bigger market in pijiu. In 10 years time, you will see a bigger size in Baijiu market than in pijiu. For Baijiu, the pijiu in 2005 from 1993-1994 till now, about 30 years, it's 3.5. It's CNY 35 billion-CNY 40 billion. This year, the 10 years, yes, 10 years' time, we can grow from CNY 10 billion to CNY 30 billion in just five years. It's actually, 10 years versus 30 years. CNY 30 billion, that is about the contribution of the past 20 years of our profit, and we can realize in three years' time. We realized CNY 1.2 billion with CNY 28 billion sales. In Baijiu, if you sell the... It's a CNY 4 billion and your profit will be over CNY 1 billion. For the interest of time, the last two questions. The next question, please. Thank you, management. Mr. Hao, Mr. Hao, Kevin and Angel. Thank you. I'm Leo Lee from Goldman Sachs. You have got a lot of questions. Mr. Hao also shared with us your deployment for beer business. Can I go to a specific question about Baijiu, your product deployment? Even though we see that it is not consolidated into the listed company, but the Jinzhongzi versus Heineken and Xuehua, they are being sold in the same channels. Mr. Wei is also here. Just want to know that at Jinsha, for the Huisha and Zhaiyao, these are two SKUs. Do you have any specific channels, channel strategies? In the past two years at Zhaiyao, you raised the prices, and this year, based on the price, pricing, do you have any other ideas about streamlining the prices? This is about the Baijiu products, SKUs, and strategies. The second question about your key account platform. It shows that in Guangdong, your key account platform and the conversion of conversion result, if you just convert, the second distributor, it will bring along several times of growth for you. I just want to know more about the key account platform. What is the target and what is strategy, particularly in Guangdong? Do you have any target for the growth of a key account? What is your plan for strategy for Guangdong? Thank you. Actually, for Baijiu. We entered into Baijiu, and of course, we did some work. We had for the rebuilding the organization, we did it very fast. Only three months time, we basically had already finished the first round of organization structure, the responsibility allocation, the selection of talents, as well as the optimization of our staff. We did it very well, very smoothly. It seems that we built our experience and capabilities from our beer business. It seems that we did it faster with our beer business. This is the rebuilding of our organization. We also rebuilt our brand. Now for the brand, for the Baijiu, we need to rebrand their brands because their brand image, their brand positioning, their consumer target consumers, so they are not very clear. The flavors is, their history, their culture, and the connection with the brand. We're going to rebuild those brands. The third one is a product rebuilding. This is the rebuild the products. By this, so far as I know, Jinchi and Jinzhongzi Golden Seed in the CR, in CR Beer. The rebuilding of our product and the product combination is now drawing to the end, approaching to the end. In next few days, Jinzhongzi will make its announcement and other companies are also going to launch their new products in the next six- seven months. The Jinsha is slow a little bit. We took it over in February. As for the rebuilding for Jinsha brand, we are doing it right now, the first round, and we've got some ideas already. You're talking about Jinsha and Huisha. We need to rebuild them. Zhaiyao need to be optimized, upgraded, and uplifted. Even though it is good, not bad. In addition to managing the inventory and the prices, there's another important task. For Jihao, this brand, we need to rebuild it. We think that the connotation exploration, the value exploration, there's still room for us to go. For this is about rebuilding brand. We have to rebuild the channels as well. Currently, it's about empowerment from beer and the cultivate and the development of key account. This is the model that we use in Snow. It is about the empowerment of a management approaches, management model. And currently, Jinzhongzi's Golden Seed has made a big progress and also Jingzhi and Jing Fang hasn't started yet. These are the rebuilds, organization, brand, product, and the channel. For Jihao and Jinsha, we have different tasks. Jinsha and Huishan, we need to rebuild and attack. Jihao is image management and price recovery. Its upgraded version will be launched gradually. As for the high-end sales model in China, in Jinsha, we will use the Snow Beer featured high-end innovation practice. Will be implemented in the second half in Jingshan. From end of April and early May, it will kick off. These are the jobs we are doing right now. For the key account for beer, for baijiu, we don't have any key account program. Currently, we have about 1,000 key accounts, Huading Hui, Huading Club, Huazun Hui, and Huahui Club. They contribute about 20 over 20% of our sales. For the key account platform, so it's a very big support to our premium categories for beer in Fujian, Zhejiang, Jiangsu, Shanghai, and even in Beijing, Guangdong. We have a lot of support from these key accounts. For the Jing Er. From Zhejiang and Fujian, we started the further key account. I will set up the secondary team under the key account. Fujian did a very good job. Just now said, they have a set up a evaluation system. For Fujian and Zhejiang, but southern Zhejiang, usually from Budweiser, other regions. There are different sources. Why? It is because it face the terminal. Why it is refined? Because they hold the key terminals. If it... This is the final, second batch. Because they... It's targeted. It's targeted, second, secondary distributor. That's why we call it the targeted. They usually, they hold the key terminals. Targeted secondary distributors, it not easy for them because they are very important, weapon for us to go premiumized. They are also, the trend for us. They're also a very important role in our ecology. That's why we have them. Otherwise, why do we keep this secondary distributor? For Heineken, their sales, the resources investment, I must say that, we have this dominant growth momentum. That's why the secondary distributor are willing to go to you. Otherwise, actually, they can sell other brands. This is also a choice of in the market and negotiation and cooperation. It is a key account supplementary, and it is also a very important part in the key account management. And it is also a help to build up the key account structure, management structure. Wang Dong already talked about it just now. Mr. Zhao. Now we're meeting. Shall we invite. No, no. Lady first. The lady first. The last question. Thank you. Thank you very much. Thank you for giving me this opportunity. I have a question for you. I see a lot of idea to... If you don't look at the competition, if you look at the low alcohol, low alcohol products. It seems that the content of alcohol is going up and some SKUs are going up. Just, my question, for the low alcohol content, what is your take on this? A lot of competitors, for the low alcohol content is a heated topic. It's just like a Jiangyang probably, whether it will go to the level of a Jiangyang. This is such a momentum. There's such a trend. For the low alcohol content-It's for... I think it is pursued for young people for alcohol. It is not exciting. It is for the new generations, young people, they like this, the low alcohol content. It's easy to give them up because a low alcohol content is also a trap. You may feel that there are a lot of opportunities, but it's really hard to grow this market because it's very scattered. The consumption population is there. The demands are very scattered. Unless you are very capable, otherwise you cannot grow this market. Otherwise you are killing yourself. For the fruit flavored low alcohol content has a big room but it is much more complicated than beer or Jiangyang. We pay a close attention to it. It is a. Whether it is a transitional trend or it is a long-term trend, we keep a close eye on it. From beer point of view, beer is a typical of a low alcohol product in China, in the market. We have a Baijiu, we have a beer. These are the two extremes. If you don't have the two extremes, anything in between won't be possible. This is not by me. This is an expert of different alcohols, different beer. He said, "You are really something because you're taking the two extremes. You are not start from the middle." They're both ends. They're the two extremes. You've got more resources and capabilities to handle the products in between. We keep a very close eyes on it, but we are very cautious. We actually try it. Now we have a soda beverage. This year we're going to launch a soda beer, a soda product, and we will also try a fruit flavored beverage with alcohol content in the future. Will they be a new track? No, we will continuously keep a close eye on it. Now beer is going. It's transforming into the low alcohol content beverage as well because the lee is very expensive and the mouth taste is very good. It's much better than the soda alcohol. Beer from a four degree to five degree to eight degree. This is also a track for the low alcohol content products. It's not started yet, don't worry. We still have five to six years for premiumization. In the future there will be beer products, just a little one. Just like a Chimay, about a 10 degree, right? This type of products will turn themselves into beer-like or the fruit-flavored products. This can be another track. This beer, this brewery, you need to pay attention to that. The baijiu in China. This is another segment, another development. Whether there will be low alcohol, low percentage baijiu, for example, 15%, 20% of alcohol content. Maybe in the future, this is one of the directions possible as well, because the baijiu businesses are doing a very good job and living a good life. They don't think about it. They can mix for new products. These are all the possibilities for the low alcohol content. We need, still need some time to observe. We just watch and observe and we will keep a close eyes on it. Thank you again management for taking the questions, and thank you for all the questions, for the interest of time. This is the end of the results announcement. If you have any further questions, please contact our department. We'll be happy to keep communicating with you. Thank you.