Ladies and gentlemen, welcome to Luk Fook Financial Year 2022 Interim Results Announcement call. I will now hand the session to Ms. Chloe to begin today's presentation. Ms. Chloe, please begin. Good evening, everyone. Thank you for joining the call. I'm Chloe from the IR team of Luk Fook. Today, we have the pleasure to have Dr. Kathy Chan, Executive Director and CFO of the group, as speaker to talk about our financial year 2022 interim results. We will go through the corporate presentation, which is already uploaded onto our corporate website, followed by the Q&A session. Now, may I pass the time to Kathy for the presentation. Okay, thank you, Chloe. Good evening, everybody. Thank you for joining our interim results conference call. I would like to start to look at our financial highlights then, followed by financial review and then our future plans and strategies. I believe you got our corporate presentation already, so I would like to go through that with you on the phone now. Let's look at slide four about the financial highlights first. The group's revenue recorded a growth of 67.2% to HKD 5.6 billion due to the low base effect and the gradual recovery of retail atmosphere. With the turnaround of retail business in Hong Kong, Macau, and overseas markets, while mainland markets performed well in all businesses. The group's operating profit increased substantially by 101.5% to HKD 118 billion. Profit attributable to equity holders increased by 124.6% to HKD 654 million. The basic earnings per share increased by 122% to HKD 1.11. Proposed interim dividend is HK$0.55 per share with dividend payout ratio of 49.4%, while last interim dividend was HK$0.50. During the period under review, the group has net increased 235 stores worldwide, while, which were mainly Luk Fook licensed shops in Mainland. At the end of September 2021, including the sub-brands, the group has 2,601 shops worldwide altogether. Now, let's go into details of our financial performance. With the significantly increased retail sales amount by HKD 1.6 billion, the group's revenue recorded growth of 67.2% to HKD 5.6 billion. The overall gross margin decreased by 6.4 percentage points to 26.8% as gross margin of gold products returned to a relatively more normal level, and the revenue mix of gold sales increased. Gross profits therefore increased by 35.1% to HKD 1.5 billion. On the other hand, benefiting from the operating leverage to the operating expenses to revenue ratio improved by 8.3 percentage points to 15.4%. Together with the significantly narrowed gold hedging loss from HKD 51 million to HKD 8 million during the period under review, the group's operating profit increased substantially by 101.5% to HKD 718 million. In addition, our strong cash position led to an increase of net interest income by HKD 24 million. The share of loss from associates also reduced by HKD 24 million under the improved market sentiment. Our profits attributable to equity holders increased by 124.6% to HKD 654 million, and the basic earnings per share increased by 122% to HKD 1.10. Our operating margin maintains at a double-digit level, increased by 2.4 percentage points to 14%, while net margin increased by 2.9 percentage points to 11.7%. Now let's turn to slide 7. The inventory level increased by 16.9% during the period under review to around HKD 8.1 billion, because of the inventory need in view of the improved retail sentiment and the expansion of licensed shops in Mainland. As the retail sales grew significantly, the average inventory turnover days declined by 265 days to 357 days when compared to the same period last year. On the other hand, the group's net cash increased to HKD 2.1 billion because of the increase in inventory balance. Our OE was 11.4%, which was 5.9 percentage points higher than the same period last year. Let's go to slide eight now. The group's NAV per share as at end of September 2021 was HKD 19.58, which was 8.1% higher than the same period last year. Now let's go to slide nine. The group is pleased to see 123.2% growth in the overall net profits during the period under review. Operating margin and net margin were 14% and 11.7% respectively, which were the second highest in our record of its interim results, while the overall gross margin returned to a more normal level. Now let's look at slide 10 for our by market analysis. Revenue from the Hong Kong, Macau, and overseas markets increased by 104.6% to HKD 2.5 billion, which accounted for 44.1% of the group's revenue. The segment profit turned around from a loss of HKD 93 million in the same period last year to a profit of HKD 120 million, which accounted for 14.4% of the group's total. Its segment profit margin was 4.9%. Increase in profit contributed about half of the group's profit increase in the period under review. In the mainland markets, the revenue increased by 43.1% to HKD 3.1 billion, accounting for 55.9% of the group's total revenue. The segment profit increased by 40.7% to HKD 706.15 million, accounting for 85.6% of the total. Its segment profit margin was 22.9%. Its increase in profit contributed another half of the group's profit increase in the current period as well. Slide 11 shows our revenue and segment profit by business. The retail business remains as the group's primary source of revenue. As a result of the low base effect and the encouraging recovery of retail sentiment in various regions, the group's total retail revenue increased significantly by 102.6% to HKD 3.5 billion. Accounting for 62.6% of the group's total revenue. The segment profit amounted to HKD 208 million, accounting for 24.9% of the total, and its segment profit margin was 5.9%. Attributable to the increase in number of licensed shops, the group's revenue from wholesale business rose by 26% over the corresponding period last year to HKD 1.5 billion, accounting for 27.2% of the group's total revenue. The segment profit increased by 46.9% to HKD 260 million, accounting for 25.9% of the total. The segment profit margin was 14.2%. Licensing income increased by 39.6% to HKD 569 million due to the increase in number of licensed shops as well, accounting for 10.2% of the group's total revenue. The segment profit margin was 72.3%, while segment profits increased by 41.6% to HKD 411 million, accounting for 49.2% of the total. As the gradual fall from the historical peak in gold prices stimulate the consumption and under the low base effects, sales amount of gold and platinum products increased substantially by 100.2% to HKD 2.6 billion, accounting for 51% of the overall sales amount. Actually, out of the HKD 1.8 billion increase in retail revenue, gold sales contributed around 76% of that. However, its gross margin returned to a more normal level of 18.3%. Gross profit of gold and platinum products thus increased by 30.9% to HKD 417 million, accounting for 43.8% of the overall gross profit. On the other hand, sales amount of fixed-price jewelry products rose by 48.5% to HKD 2.5 billion, accounting for 49% of the overall sales amount. Gross margin of fixed-price jewelry products dropped by 2.7 percentage points to 24.5% because of the promotional activities reducing slow-moving stock. Its gross profit as a result increased by 33.6% to HKD 603 million, accounting for 56.2% of the overall gross profit. Now let's look at slide 14 for performance in Hong Kong, Macau, and overseas markets. During the period under review, retail revenue from Hong Kong, Macau, and overseas markets increased by 130.9% to HKD 2.4 billion, which accounted for 97.1% of its total. The segment turned around from a loss to a profit of HKD 78 million, which accounted for 64.8% of the total, while the segment profit margin was 3.3%. In addition, because of the absence of sales of raw material gold in the current period, its wholesale business revenue decreased by 50.9% to HKD 48 million, which accounted for 2% of its total. Its segment profit was HKD 19 million, which accounted for 15.7% of the total, while segment profit margin was 38.9%. As the segment profit of wholesale business included the profit of intersegment sales to third parties, if including intersegment sales in this denominator, the margin would be 2.6%. On the other hand, Hong Kong licensing income decreased by 4% to HKD 23 million, which accounted for 0.9% of its total. The segment profit was HKD 23 million, which accounted for 19.5% of its total. The segment profit margin was 101.2%. During the period under review, with the strong gold sales, retail revenue from the mainland market increased by 60% to HKD 1.1 billion, which accounted for 35.3% of its total. The segment profit increased by 55.8% to HKD 130 million, which accounted for 18.1% of its total, the segment profit margin was 11.8%. Due to an increase in number of licensed shops, revenue of the wholesale business in the mainland market rose by 20.8% to HKD 1.5 billion, which accounted for 47.2% of its total. The segment profit increased by 24.4% to HKD 197 million, which accounted for 27.7% of its total. The segment profit margin was 13.4% as the segment profit of wholesale business included profit of intersegment sales to third parties. If including intersegment sales in this denominator, the segment profit margin of wholesale business would be 12.8%. Operating income in the Mainland market grows by 42.3%, HKD 546 million as a result of increase in number of licensed shops as well, which accounted for 17.5% of the total. The segment profit was HKD 386 million, which accounted for 54.2% of the total. The segment profit margin was 71%. Now let's look at slide 19 at our self-operated shops performance. During the period under review, the overall same-store sales growth of the group was positive 110%. Same-store sales growth for Hong Kong Macau markets and that for Mainland market were 109% and 89% respectively. Same-store sales growth for gold and platinum products was 120%, and that for fixed-price jewelry products was 91%. Due to the gradual fall in gold prices since the sixth stimulated consumption, the average ASP with the revenue and quantity of gold and platinum products increased substantially in all markets, with quantity growth of 132%. Furthermore, with the successful strategy of refocusing more on high-end markets, ASP of fixed-price jewelry products much increased and led to substantial increase of 140% in retail sales amount of fixed-price jewelry in Hong Kong and Macau markets. Its quantity had a single-digit growth only. On the other hand, the retail business in Mainland market was mainly driven by strong gold sales with a substantial increase in quantity while ASP of gold products remained flattish. Slide 20 shows the same-store sales growth figures of self-operated and licensed shops in different city tiers and regions in Mainland. Overall speaking, gold and platinum products performed much better than fixed-price jewelry in Mainland China in all tiers and regions. The overall same-store sales growth of licensed shops was positive 37%, which was lower than the 89% of self-operated shops during the period under review because of low base effect as self-operated shops are mostly located at more problematic regions under the pandemic last year. Now let's look at slide 23, at our total operating expenses. We have TOE of HKD 816 million, representing an increase of 8.3%. Its ratio to revenue level decreased by 8.3% in response to 15.4%. With the adoption of HKFRS 16, rental-related expenses, including rental-related depreciation of right-of-use assets, fixed and variable rental, and interest expenses amounted to a total of HKD 201 million, representing a 10% drop year-on-year. There were leases for shops in Hong Kong and Macau subject to rental review in FY 2022, accounting for around 60% of the total number of shops. 10 out of which were actually brought forward from last year for short-term lease of one year only because their landlords were unwilling to sign longer term lease under the high rental reduction. The overall rental reduction during the period under review was around 26%. It's highly likely that we'll still have double-digit drop of rental renewals for the full year, while that for last financial year was 33% reduction. Apart from the reduction in renewals, we have around HKD 9 million rental concession from landlords because of the pandemic during the period under review, while that was HKD 50 million same period last year. At the end of September 2021, the group's inventory level went up by 16.9% to around HKD 8.1 billion. Nevertheless, as the retail sales grew significantly, the average inventory turnover days therefore declined by 265 days to 357 days, with the average inventory turnover days of gold products being 250 days, and that of fixed-price jewelry products being 459 days. In the first half of FY 2022, the group incurred CapEx of HKD 143 million, which included HKD 100 million for acquisition of office in Shenzhen for flagship showroom purpose. Now let's look at slide 26. With improvements in retail sentiment, CGS Group's loss substantially narrowed. In addition, as there was no further provision on financial guarantee contracts, the total loss reduced to HKD 60 million only. Now let's look at the group's future plans and strategy. More than two years ago, the group had set up its new three-year corporate strategy with supply chain management, Mainland market expansion, and strategic growth as the three main focuses so as to foster its future business growth. In order to further enhance its competitive edge, the group will focus on strengthening supply chain management through various means. The group will revamp supply chain management and aim for right product at right price and offer the products to the market at the right time by implementing full automation, big data management, and full integration with supply chain management, improving factory productivity, improving inventory turnover period, establishing strategic partnership with suppliers, streamlining logistics and distribution, intensifying approach to licensees. With the hope that all these will help promote business development and strengthen operational efficiency. We believe that customers increasingly focus on jewelry with unique design. Following the introduction of the DIY ordering service system in Mainland during the period under review, I mean in last financial year, the group has also launched the DIY system in Hong Kong and Macau this financial year. This will help the group to penetrate into the high-end market progressively. Let's look at slide 30 now. To meet the customer needs of different profiles, the group actively created different sub-brands and product lines. During the period under review, we have net added three Goldstyle shops. Slide 31 shows our expansion plan in FY 2022. As at 22 November 2021, including new brands, we have a total of 2,658 shops worldwide. As at end of September 2021, the group had a total of 2,601 shops globally, including 2,528 in mainland, 48 in Hong Kong, 14 in Macau, and 13 in overseas. With effective border restrictions lifting in Macau, the group targets to net add two shops in Macau and one overseas licensed shop in this financial year. In view of the anticipated considerable growth of the middle-class population in mainland, the group remains optimistic about the mid to long-term business prospects. Therefore, the group will focus its expansion in the mainland market. The co-target for net addition of shops in mainland for this financial year will be adjusted upwards to around 500 shops, which will remain in local licensed shops in 4th- and 5th-tier cities. The group is committed to further developing its e-commerce business and strengthening cooperation with various e-commerce platforms in mainland. At the same time, we will also establish our own e-commerce platform, aiming to sustain the growth in e-commerce revenue, a target of 20% growth in this financial year. The CapEx budget for FY 2022 will be around HKD 400 million, which will be used for shop renovation, Nansha plant and office renovation, the establishment of new production line in Yichang, and purchase of equipment and premises. The site areas of plants in Nansha and Yichang were 40,000 sq m and 33,000 sq m respectively. Now let's go to slide 32. In first half FY 2022, the e-commerce revenue increased by 56.8%. The revenue can account for 51.6% of the retail revenue in mainland, with ASP increased by 16% to RMB 1,500, while it accounted for 16.3% of the group's retail revenue. The group will continue committing to further enhance the synergy between online and offline sales channels. We have also cooperated with live streaming KOLs to increase brand awareness and boost sales. Slide 33 shows our membership program. As at end of September 2021, the total number of members increased by 205% to approximately 3.2 million members. The members contributed 16% of the group's total retail sales. The members in mainland, Hong Kong, Macau, overseas markets increased by 241% and 130% respectively, while the members contributed 20% of mainland retail sales and 55% of Hong Kong, Macau, and overseas retail sales. Let's turn to slide 34. The group also continued to capture the rapid growth of online marketing by various marketing activities in new media platforms. We made use of trendy social media platforms, including Threads, TikTok, and Little Red Book to increase our brand exposure and expand our footprints in the young consumer market. We expanded online sales by live streaming by staff and KOLs and enhanced CRM via instant messaging apps to reach and engage with customers. We are now on slide 35. To celebrate the group's 30th anniversary, a series of promotional activities have been rolled out. In Hong Kong, the group held a lucky draw to give away more than 66 taels of gold and launched an online game to share the joy with the public. In mainland, the group also organized gold bar lucky draw on major social media platforms, recorded over 300 million engagements, and teamed up with Threads to create a limited edition of Little Gold Potato gold ornaments in crystal ball music box, which has effectively enhanced brand visibility and created hot topics. Let's go to slide 36 now. The topics on anniversary promotion altogether gained a total of 436 million views and 1.2 million discussions. The group also showed the creative video of Mr. Li Yifeng, Luk Fook's jewelry's global and brand ambassador on the glasses-free 3D screen in Chengdu. The vivid 3D effect as if Li Yifeng was giving out a diamond ring in person attracted a large number of the public's likes. To conclude, the same store sales in the group has a turnaround to positive growth, indicating that the group's business has restored growth gradually. The same store sales in Hong Kong, Macau market recorded growth of approximately 35% from first of October to twenty-first of November 2021, while the overall same store sales of the mainland market, including both staff operated and licensed shops, recorded a growth of approximately 20% in the same period. Subject to the development of the COVID-19 pandemic, it is believed that there will be a second growth in second half of the financial year as compared to the first half due to a higher base. Nevertheless, with the gradually relaxed border restrictions, the Hong Kong and Macau business are expected to have a continuous increase. The middle-class population in mainland will expand gradually under the Common Prosperity policy, and with the double circulation policy, domestic consumption will be further encouraged. The group therefore remains optimistic about the mid- to long-term business prospects. Accordingly, the group will still focus expansion in the mainland market, particularly the markets in fourth and fifth tier cities, and looks forward to having further increasing its business in the future. This is the end of my presentation, and thank you for listening. Thank you, Kathy. Moderator, please open the floor for the questions now. We will now begin the question and answer session. All your participants with questions to pose, please press zero one on your telephone keypad, and you'll be placed in the queue. To cancel the queue, please press zero two. Once again, zero one on your telephone keypad now. First we have Ms. Lena from HSBC. Your question please. Hi, Kathy. Good evening. I have two questions. Good evening. Hi. First question is regarding your store opening in China. You increased that to 500 for the year. What's the visibility on that? How many new stores are in your pipeline? And also in your three-year business plan, right? Your plan was to open 150 per year. Given you have opened 500 this year, what's your likely plan for the next year? That's the first question. Thanks. Okay. Now, actually, the three-year plan was set more than two years ago with a target of adding net 150 shops each year. Actually, you can see from our previous record. I mean, the first two years we have already exceeding the 150 all the time in the first two years. This is the last financial year for that three-year plan. In the first half, we have already net added 230-something shops already. Basically, with a queue of more than 1,000 at the moment, that's why we are very confident that by end of this financial year that's to be ended 31st March, we will be able to net add around 500 shops altogether, I mean, for the full year, full financial year. It's highly likely that we would increase the next addition targets in the next three-year plan that's to be started sometime in early 2023. Basically, I think we should expect our net additions maybe around 400-500 each year for the coming three years. Because right now we've got only 2,500 shops altogether. Basically I think when you look at the room for the expansion actually is still a lot there in mainland markets because of the expected middle class population growth and the domestic consumption strengthening. Basically the pie would grow larger and larger and for the mass luxury sector, they will be benefited from that kind of I mean the Common Prosperity policy and the double circulation policy. That's why I guess for us may. Maybe our next target will be talking about in 5,000 shops, and then we consider the next step after that. Okay. Thank you very much, Kathy. You're welcome. I have a second question. Like regarding the China wholesale and the licensing revenue growth in first half. Comparing with the growth in the number of POS of licensing shops, it was 24%. Your wholesale was up by 33%, and the licensing revenue was up by 43%. Could you give us further analysis? What's the contribution of a new licensing shop opening to wholesale revenue growth and licensing revenue growth? For example, like when you open a new shop, how much do they procure from you at wholesale? And for licensing, when you open a new licensing shop, how much of the procurement was authorized by you? You take a licensing fee income and what is the average take rate like of a licensing revenue in first half? Thank you. In fact, when we look at the licensing income, normally in the past we may have something like around 15% of that coming from new shops. I mean, we talk about new shop, normally we talk about shops opening within one year. Basically, for this current period, actually, we've got the contribution from, I mean, in terms of licensing income. The mix from the new shops actually increased to 20%. Altogether, you'll see kind of that's why we've got 40%-something increase altogether for the income. When you look at the wholesale revenue, actually most parts of that will be coming from diamond sales, because our factory mostly produce diamond. Of course, there will be another minor part, we're talking about hard gold products. That's Goldstyle. Basically, when you look at the revenue growth for the fixed-price jewelry in our record, you can see that actually in mainland market is something like flattish or little bit dropped from licensed shops. Basically, I mean, in terms of fixed-price jewelry. That's why you can see that the wholesaling revenue actually increased not as high as the licensing income. That's the reason why. Because of the different sales product mix in the wholesaling and the licensing business. Okay. That's very clear, Kathy. Just to follow up, like you mentioned, new shop revenue contribution for licensing revenue in first half this year is 20%. What was the percentage contribution in first half, FY 2021? It's something about 20%. Oh, that's around only 14%. Oh, okay. Got it. What was, like, the take rate for licensing income? Like, I remember you collect, like, a loyalty income, right? Based on procurement- Yes. I guess, certified sales. What is average take rate? Basically for the licensing income, normally, because when they first open a shop, they need to buy a lot of inventory. Based on that inventory they purchase, because we charge royalty income when they purchase, not when they sell. Basically, when opening a new shop, they would need to pay us a licensing income on all the purchases of inventory. Okay. Got it. Thank you. Mm-hmm. Thank you. Next, we have Mavis Hui from DBS. Your question please. Hi, Kathy. Congratulations on your good results. Thank you. I have a few questions here. Yes. I hope to chat with you, they are very simple questions actually. For October, November, in terms of same-store sales growth trend for Hong Kong, Macau, China, how has it been, in terms of self-operated stores and franchise stores respectively? And what about the sales trend of gold and gem sets respectively? This is my first question. Thank you. Oh, it's so specific. Actually, because it's still a very short period of time, so I think it's not really that representative. That's why normally we won't talk about the details for those periods of time. Actually, we say that, you know, we always talk about the low base effect and then, you know, for the second half, there will be higher base than the first half. The highest base will be in the January to March quarter. You can see that the base will actually grow higher and higher month by month. That's why you can expect that our October performance will be better than November performance. In subsequent months, you will see a lower growth, something like that. You're talking about the self-operated shops and licensed shops performance. I think for the mainland market, it's now maybe similar. I mean for both of them. Not their performance will be too much, won't have too much difference. Of course, when you talk about by product, still it'll be gold-driven in mainland, and then in Hong Kong, Macau market is still having similar performance for gold and fixed-price jewelry. I see. Thank you. With that, could we just wrap up very quickly in terms of our latest guidance or targets in terms of same-store sales growth or profitability for the second half of this financial year? More color will be very much appreciated. Oh, it's actually, we still expect a growth, but the growth will be much smaller than the first half. It's hard to tell, it's hard to quantify actually because you all... Yeah. There will be a lot of uncertainties going forward. Like the cross-border restrictions, would that be uplifted? We don't know how the extent of that. It's hard to forecast actually. We should expect overall speaking for the full year, there should still be double-digit growth. Right. What about your like operating margin? Do we expect some improvements from the first half into the second half? In fact, I guess for the full year, we still enjoy the operating margin because, you know, when you talk about the revenue growth was so by 60%-something, so when you look at the rental, it's actually a drop. For all other expenses, it's actually the increase, I mean the cost increased by only maybe something like high single digits. Basically, I guess, the operating margin would still. I mean, the operating leverage would continue in the second half and then we would benefit from that in terms of margins. Right. Thank you. Kathy, maybe on e-commerce. Actually, how is the performance on the Singles' Day? In terms of profitability, could you remind us how is the margins of e-commerce at like operating level compare to group level? Thank you. Are you talking about the performance on Double 11? Are you asking that? Yes. Singles' Day. Yes. Oh. Double 11. Actually, you know, for Double 11, nowadays, it's a period of time. I think when we look at that, it's not much different from the other periods of time this year. It's the impact, I think it fade out, and then it's just like ordinary time. When we look at the margins of e-commerce, actually it's becoming very similar to those physical shops' margins. In terms of gross margin, it's been always similar because of same pricing strategy for both online and offline. For operating margin, the beginning years, it's higher than the physical shops. When various platforms try their best to increase their income, that means that the costs we have to bear the additional costs, like for the promotional activities, that kind, or A&P, that kind of cost, so that the operating margin for both online and offline are becoming similar. I mean, at similar level nowadays. Right. Thank you, Kathy. Just last question, because if you look at the segmental margin for China, it was 22.9%, and that edged down very slightly year-on-year. Would it mean that such a level would be probably peaked out already for the medium term for China, so going forward, we probably will rely a little bit more on top line growth? In fact, I think for mainland markets, it's been quite stable actually nowadays. You know, the pandemic actually sometimes becoming, sometimes even become more serious in some certain regions at times that will hit the retail performance, local level. Overall speaking, I think for the mainland market, because they don't have that much base effect as what we see in the Hong Kong-Macau market. I guess they should have something like steady performance, much more steadier performance than the Hong Kong-Macau market. That's good to know. Thank you, Kathy. At least we have a lot of room for Hong Kong market margins. Thank you. Should be, yes. It all depends on the cross-border restrictions, how they release that, or relax that. Great. Thanks, Kathy. That was something. Thanks. You're welcome. Thank you. Next we have Linda Huang from Macquarie. Your question please. Hi, Kathy. Thank you very much for taking my question. The first one, I just want to check that, you, what about the gross margin outlook into the second half? Because we saw that in the first half, the gross margin down by more than 6%. How should we look into the second half? That's my first question. I guess, you know, actually the gross margin for gold has been too high in the past year because of the continuing increase in gold price, gold prices. After the peak, actually it gradually dropped from, I mean, from August, the peak was August to August. Basically, that's why. Nowadays, you can see our gross margin for gold products goes back to something like 18%. That's a much more normal level. I guess we should see kind of this kind of level if the gold price won't fluctuate too much in the second half. You know, we always talk about gold prices fluctuation would affect the gross margin in shorter period of time than longer term because normally we see higher volatility in the first half, and then a more stable annual gross margin for gold products. Basically, I guess, hopefully, we will see something like similar level of something about mid-teens% to high-teens% kind of a gross margin for gold sales in the second half. Basically, for the overall gross margin, it's 20%-something, so that's a more normal level as well. Hopefully, if the gold price or gold margin for gold product won't fluctuate too much, then we will have a similar overall gross margin for the group as a whole in the second half. The other question is regarding for the recent Hong Kong performance, because last week we also saw that your peer they also announced their same-store sales growth. Obviously, Luk Fook noticeably outperformed peers. I just want to know what is the reason behind this big outperformance for Hong Kong? In fact, I have explained the difference of performance of mainland Hong Kong local markets and mainland markets in terms of the fixed-price jewelry. When you look at the quantity, actually for both Hong Kong, Macau, and mainland markets, it's not really that volatile. When you look at the ASP for fixed-price jewelry in Hong Kong, it's kind of more than the Hong Kong Macau market, it's more than double. In Mainland it's all something like half-ish. Basically, actually in last financial year, in second half, actually we have already changed our strategy to focus on the kind of a good value for money type of product. We try to be focused more to the high-end products, high market, because our ASP has been dropping for quite some years because of the strategy of, I mean, for the strategy target I think at the big trend of Mainland markets, I think, that's talking about people buying jewelry for office wear, for daily wear purpose. We try to offer good value for money type of products in the market for quite some years. Last year, after kind of a continuing drop of ASP for some years, we thought that it maybe time for us to focus more on the high-end market. That's why we launch a different campaign to encourage the front line to sell more high-end products and high value products. It worked very well in Hong Kong, Macau market. That's why you can see very good ASP increase in fixed-price jewelry in Hong Kong, Macau markets although the quantity won't change that much. Only in Mainland markets because people are so fond of gold, so gold products, and they focus on buying gold and things that hold value. That's why for the gem-set jewelry. I mean, the fixed-price jewelry products, we don't see much volatility in terms of both the ASP and the quantity. That's also the reason why like October until now, the Hong Kong, Macau up by 35%, still quite strong, right? Yeah. Okay. Do you have any of the guidance for the Hong Kong market for the second half? I mean, in terms of the same-store sales growth. Well, it's hard. Because, you know, we put a very high base in January to March quarter. Basically it's really hard for us to forecast or to give a guideline for that. It's really hard. Okay. Of course. Last... We should expect it to be a much more growth than the first half altogether for the second half. Okay. Still can positive, right? Hopefully, yes. Okay. Lastly, Hopefully, it all depends on whether the cross-border restrictions can be relaxed in a greater extent. Okay. Lastly is about CGS, the 3D-GOLD, right? We see the big loss... Mm. Narrowed in the first half. How should we see... Mm. This business into the second half and even beyond FY 2022? Any chance that we can see that not just only for the breakeven, but they can have a decent profitability? I think there will be. Actually, they've got some kind of profits in some months, but not all the months. Because their business are now mainly in Mainland China, they've got only a few shops in Hong Kong. Basically, if the pandemic situation in Mainland is good enough, I guess they will have a better performance in Mainland markets. Because they've been profitable in Mainland business. Basically if the Mainland business is growing well and the market sentiment there is good enough, then there will be possibility that they will turn around. I see. Okay, thank you very much. You're welcome. Thank you. Next we have George from JP Morgan. Your question please. Hi. Thank you, Kathy, for taking my question. Sure. I have two questions. Firstly on your licensing income. I recall that like two to three years ago you mentioned, you know, the license. You actually charge about 9% on a blended basis, you know, for those gold products for your licensees sourced from third parties. I'm not sure whether this 9% is stable or you actually have a little bit decline over the past six months. In fact, that 9% is actually a blended percentage. That's because we charge royalty income on both gold and fixed-price jewelry. For gold is lower, and then for fixed-price jewelry is higher. Altogether it's around 9%. It should be something like that. I mean, quite stable. It is still 9%, this year, right? Yes, something like that. Okay. Okay. That's on their purchase, not on their revenue. Yeah, yeah, on their purchase. Yes, correct. Okay, thank you. My second question is about your fixed-price jewelry. May I ask that how much of, you know, within this, category, how much is gold products, for your first half of this fiscal year? Sorry. For your... Fixed-price jewelry, how much is that? Jewelry. Uh, that's, uh... Gold. How much is that for gold products? Gold. Correct. For fixed-price jewelry, let me see. For overall speaking, it should be something like it's talking about the kind of pure gold, hard gold products plus the semi karat gold. Yes. Correct. Karat gold. It's something like maybe 30%. Around 30% of the fixed-price jewelry. Yeah, 30%. Around 30%. Could you remind us, what's the ratio? Let's talk about the retail part. Retail part. Yes. Also it's not including, the franchisees, you know, the partners, right? Only your retail stores. Yeah. This is retail. Maybe the percentage I'm talking about is talking about the retail shops. Our retail shops altogether. Your retail shops. I see. Do you have any idea about what's the ratio for your, you know, the licensed shops? Well, for the licensed shops, I think it's even higher. It's something about something like 50%. Yeah. 50%. Understood. Could you remind us what's the ratio, you know, the similar ratio, in the same period last year, like first half of fiscal year 2021, what's the gold products account for the, you know, the... If talking about last financial year same period of time for the self-operated shop, it is something like 45%. Basically the Okay. Yeah. Yeah. It's lower. It's lower percentage actually in the fixed-price jewelry this year for the gold products. Gold related products. For the licensed shops, it's actually something like 46%. For licensed shops it's an increase. In last financial year... Right. Same period, it was something like 46% for the hard gold, pure gold and the K gold. Karat gold. I see. Sorry, to clarify. For retail, it was like 45% last year, and this year it's 30%? For self-operated shops, it's 45%... Self-operated shops. Last year and for 30%, around 30% this year. Okay. Understood. Yeah. Thank you so much. This is basically my all questions. Thank you so much, Kathy. Thank you. You're welcome. Thank you. Next we have Tiffany from PT Group. Your question please. Hi, Tiffany. Your question please. Sorry. Sorry, I just muted. Yeah. Hi. Hi, Kathy. My question is on the GP margin of fixed-price jewelry product. I see the margin, the GP margin continued to decline, and compared to last year and two years ago, it declined from over 30% to below 25% now. What is the reason behind, and what is the outlook for the GP margin for the fixed price? In fact, we have explained that already, because actually the decline was mainly because of the promotion activities going on for reducing the slow-moving stock in the fixed-price jewelry. This continues in the first half of this year? Oh, not really. It all depends on whether we've got a lot of slow-moving inventory to be cleared. Uh-huh. We only do that. And, uh... Once in a while. Mm-hmm. Okay. Have you completed this slow moving inventory clearance? Yes. Okay. Is there any difference between the higher end product versus the regular product? You mentioned you refocused more on the higher product. Normally for us, actually the higher-end product would enjoy lower gross margin than lower-end products because of the negotiation power of the customers. That's because of the product change for the GP margin to come? Yes. A bit of that. Yes. What is the outlook going forward? Will continue to decline due to the product change? Well, I think should be something like. I mean, the current one is 20%-something, so basically it should be more or less the kind of level. Okay. Okay. Thank you. Thank you, Tiffany. As there are no further questions, I will now hand the session back to you. Please go ahead, Ms. Chloe. Okay. We come to the end of our conference call. Thank you, Kathy, and thank you very much for joining the call everyone. Have a nice evening. Bye-bye. Thank you. Bye-bye. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.