Good day, ladies and gentlemen. Thank you for standing by. Welcome to the JD Health International 2026 Interim Results Conference Call. At this time, all participants are in listen only mode. Please note that both management's presentation and the Q&A session will be conducted in Mandarin. Simultaneous English interpretation will be provided by a third-party interpreter throughout the call by the English channel, which will remain in listen-only mode for the duration of the call. I will now turn the call over to today's host. Please go ahead. Thank you, operator. Good day, ladies and gentlemen. Welcome to our 2026 Interim Conference Call. Joining us today are JD Health's Executive Director and CEO, Mr. Cao Dong, and CFO, Ms. Deng Hui. Ms. Deng will first walk us through the financial performance for the period, followed by a Q&A session. Mr. Cao will then deliver closing remarks. Before we start, we would like to remind you that today's discussion may contain forward-looking statements, which involve a number of risks and uncertainties. Actual results may differ materially from those mentioned today. The company does not undertake any obligation to update any forward-looking information except as required by law. During today's call, management will also refer to certain non-IFRS financial measures for comparison purposes only. For the reconciliation between IFRS and non-IFRS financial results, please refer to the interim results announcement for the six months ended June 30, 2026, issued today. Now I would like to turn the call over to Ms. Deng Hui. Please go ahead. Hello, everyone. This is Deng Hui, CFO of JD Health. Thank you for joining our earnings call today. In the first half of 2026, China continued to advance the quality development of the healthcare industry. Our total revenue reached CNY 40.9 billion. Our non-IFRS operating profit income was CNY 30.5 billion, up 40.3% year-over-year. Notably, non-IFRS operating margin expanded by 1.5 percentage points to 8.5%, making nine consecutive quarters of year-over-year. Product revenue increased 15.6% year-over-year, reaching CNY 33.9 billion in the first half of the year, with the core medical categories maintaining industry-leading growth. In pharmacy, on top of the faster Q1 growth, we also maintained faster growth in dermatology, oncology, endocrinology, cardiovascular health, and metabolic health. We have leveraged our omni-channel networks and professional forms of operations. We have launched 65 new drugs on our platform over the period. As the first go-to option has deeply been embedded in people's mind share. In supplements, we have been focusing on branding, coupled with our compliant promotional efforts and also competitive advantages, so we have created a certain growth runway. In medical devices, based on user insights and also direct supply chain, we have customized a few new customized devices and also AI-powered services in at-home health management. Our service revenue in this first half of the year was CNY 7 billion, with a share of the total revenue continuing to rise. All user needs continue to evolve. We have provided a highly efficient digital marketing tool. The number of advertising merchants grew over 20% year-over-year. We also deepened partnerships with Novo Nordisk, Innovent Biologics, CR Pharmaceutical, and Organon, advancing innovative collaborations in areas as new drug launches, academic marketing, intelligent patient management services. We also continue to expand new healthcare service offerings and deepen the integration of online and offline operations. As of the end of June, JD Pharmacy had expanded its presence to more than 450 stores across 10 cities nationwide, working in tandem with JD Instant Delivery Services. We also diversify our payment channels. We have extended added medical insurance payment services to 11 additional cities, bringing the total to 40 cities. In offline scenarios, we continue to broaden our healthcare offerings. In Beijing, we actually opened our first integrated healthcare center, integrating physical examinations, dental care, and medical services. Also expanded home care and at-home rapid testing services, further strengthening our end-to-end consultation, examination, diagnosis, and pharmaceutical services ecosystem. We are also going to focus on enhancing operational efficiency through more refined management practices. Our gross profit was CNY 10.6 billion for the period. Gross margin improved 0.9% year-over-year to 26.1%, marking nine consecutive quarters of yearly growth. Procurement cost optimization was constantly increasing. Non-IFRS, our fulfillment expense ratio was 10%, flat with the same period last year. We have been making user experience, so we increased the fulfillment cost. However, the economies scale has been increasing, which has been largely offset at the associated incremental costs in the fulfillment. In first half of 2026, the non-IFRS marketing expense ratio improved by over 0.5 percentage points year-over-year to 4.6%, mainly attributed to more targeted marketing strategies enhancing spending efficiency. Non-IFRS R&D expense ratio was up 0.2%, now at 2.3%, reflecting our average investments in AI. We have been iterating our chain functionality. Also, we are introducing this application across different scenarios and focusing on user experience. The AI agent, Dr. Dawei, continue to gain traction. Its user base has increased by nearly fourfold, driving the higher product purchase conversion. Also, the AI Jingyi for doctors has been fully integrated in the JD Health online hospital and embedded in doctors' online clinical workflows, including decision-making and improving efficiency. Non-IFRS management improved is around 0.7%. Operating efficiency also is leading the industry. In the first half of, non-IFRS operating income grew 40.3% year to CNY 3.5 billion in the first half of 2026. The interest or finance income was around CNY 814 million. That was mainly due to the fluctuations in the fair value changes in the wealth management product. Non-IFRS net margin was up 8.5% at around CNY 3.9 billion. The net cash generated from operating activities was CNY 4.46 billion. As of June 30th, cash and cash equivalents restricted to cash time deposits with management products totaled CNY 71.5 billion, an increase of CNY 2 billion from the end of 2025. We have repurchased shares worth HKD 840 million. We have canceled all of them. Thanks to the continuous rise in profit and also robust cash position, we will continue executing our share repurchase program. In summary, JD Health delivered high-quality growth with a steady enhancement in operating efficiency and profitability. Looking ahead to the second half, we are able to maintain and confident in maintaining better than industry growth, further solidifying our position as the largest online pharmacy retail platform. Also, we will continue to strengthen our AI-powered supply chain capabilities and maintain disciplined investments in AI, and we will look forward to return the benefits for our shareholders. That concludes my prepared remarks, but I am now open for questions. Now, let's move to Q&A session. If you would like to ask a question, please press star one on your keypad. For the time constraints, please limit your questions to two questions. If you have any further follow-up questions, please re-enter the queue. Thank you. The first question comes from Bank of America, Miranda. Thank you, management, for taking my question. I was wondering the growth trends for the three key categories, some short-term and near-term factors affecting the growth. Also, in Q2, we maintained an accelerated growth in pharmaceutical product revenue. I was wondering what are the key drivers behind the rapid growth, and also what will be the outlook for the second half of the year? For non-pharmaceutical product revenue, the growth has slowed down slightly in the first half of the year. What are the reasons behind that, and also what is the outlook for that? Last but not least, on the policy front, the regulation on nutrition and supplements, what kind of trends are we seeing? Thank you, Miranda. I am Cao Dong. To answer your questions, which are your key concerns. First, let us talk about pharmaceutical product revenue. Indeed, the growth is aligned with our expectations. Let me break you down in terms of the logic behind that. I think there is a prerequisite. Selling pharmaceutical product or medication is not an easy feat. Far more challenging. I mean, to do it well, there are a few things that we need to do well. Number one, we need to have strong supply chain capabilities. That means your category coverage has to be the most up-to-date and comprehensive, and they have to be genuine and with better prices. I mean, to achieve that, it takes years of efforts. So it is reflected in the supply chain capabilities. So you have to be able to offer the most up-to-date product offerings with the most reasonable prices. That can only be achieved with robust supply chain capabilities. Secondly, you have to possess strong fulfillment capabilities. That means your nationwide network has to be complete. I mean, covering majority of the regions in China, particularly those remote and also less developed regions. So there are still access issues that we need to address, I mean, in terms of this market. Thirdly, the company has to have a great mind share. I am talking about both on the To-C side and To-B side. We can sell our medications to remote areas. For example, like I said, we are even making our medicine accessible, available to prisoners. They need medications, and we are able to make it happen. So that is an example that shows you that JD Health is mind share. So we are having a very good performance in both the To-B and To-C front. Number four, we have to have well-established medical or healthcare service capabilities. Leveraging AI, we can better educate our patient. We have to equip that with the medicine retail. We need to have a matching service, so as to reduce the barriers to sell the drugs. Number five, we need to be regulatory compliance. We have to be disciplined looking over the long term. You need to be compliant to the regulations, understanding the logic, making contributions to the regulators, pushing the industry to grow healthily. This takes a lot of efforts. So these five factors that I have mentioned are areas where we are trying to do the best. Like I said, traffic alone will not come to deal. It takes decades of efforts to invest, to accumulate. However, once you are able to possess or build those advantages, they can form very competitive moat for a company. That's why we are able to lead the market in our pharmaceutical or medication sales. We have been continuing to solidify our efforts from these regards. From the regulations perspective, there will be some short-term fluctuations or headwind, but over the long run, we are very bullish. For us, who has a robust supply chain and a strong reputation, it positions us in a very good position to go the long run. If you look at the regulation landscape for JD Health, it has been an industry that has been regulated heavily by the policies or regulators. There have been constant corrections, and we have been a compliant player throughout. Regulation is here to stay for the long run. Medium to long run, it's going to benefit us as a company. That's my answer on the medications sales. Now moving on to nutrition and supplements. Short-term wise, we are seeing some headwinds. It's performing less than we have expected. But again, we have to look at the long run. We are gaining market share in nutrition and supplement market. Some of the impacts that we see, first is the fake overseas brands, which has been reported by CCTV and some other programs. Second, the clear defined categories. There has been some regulatory efforts going on. But it favors us. Over the past few decades, looking at how the market grew, we are seeing that marketing getting more increasingly regulated. This is a process where the true genuine competitive companies will stand out. There is going to be increasingly more domestic substitution. Some of the domestic players would like to leverage the reputation of an overseas brand, and they are conducting fraudulent sales towards the senior citizens. This is necessary for the regulators to come in and crack down on such practices. For us, we should have a healthy market where the market favors the healthy and compliant players. We are seeing the same landscape or same situation for nutrition and supplements, and we have to build our fulfillment capabilities, supply chain capabilities. For JD Health, we have a strong reputation, and we got the medical and healthcare service capabilities as well as the compliance. With the better user experience, we can gain further market share, and over the long run, we're going to benefit from that regulation. Also, like I said, regulation is here to stay for the long run. If you look at the past few decades, it has been a consistent regulation pushing the industry towards a more healthier trajectory. This is an opportunity to have all the players to pursue a more compliant growth. We welcome such kind of policies which will lead an industry towards more healthy trajectory. We definitely expected the performance to improve from the first half of the year. We also expect more visibility into the regulations so that everyone is aware or clear what are those that's going to be put on the blacklist and what are the list of products that can be developed from the domestic substitution perspective. Outlook-wise, we're definitely expecting slower growth in the second half of the year. I will definitely talk about AI, where we would like to elaborate more. We definitely have a lot of expectations. For now, it's performing relatively weak. Medical equipment has contributed the most in the past, if you followed us long enough. However, we are seeing that other segments are growing faster, slightly, than medical equipment. But nevertheless, medical equipment is still a very promising sector. Given the aging society and also the nursing requirements, this is definitely a segment where we can onboard more merchants and introduce more product offerings. Also, they are getting increasingly more home-oriented, smaller size-oriented. But over the long run, we have confidence in the outlook for medical equipment. That's an overview for these three categories. Also, I touched briefly on regulations. Hopefully that answers your question. Your next question comes from Henry Liu from UBS. Please go ahead. Thank you. Management, I am Henry from UBS. Got two questions. Number one, in the first half, the adjusted operating profit, we're seeing better growth. What are the key drivers behind that? What's the profitability outlook for the second half and over the longer term? Second question is on the repurchase, and also an update on company's share repurchase program. Thank you, Henry. We have been maintaining high-quality growth. Our revenue has been leading the industry. Also, our gross profit and also operating expense ratio has been coming down. Overall revenue is growing faster than our profit over the past three years. It's actually maintained a 30% CAGR growth. Looking ahead, we're confident in sustaining the growth momentum. At the moment, there's just a great potential for us to improve the gross margin. For high frequent products, it's a low margin product. For low frequent purchases, it's a high margin business. We have to balance that. Logic-wise, it makes sense. For the healthcare sector, which needs a lot of efforts and care, I think there has been significant demand for this sector, and we have been exploring how we can scale up the services in medical care, which will increase the gross margin. Also, the economies of scale is certain, as you can see that the society is aging. For us, if we were able to provide patients and partners with a certain value, that's going to solidify our leading position and also translate it into our economies. You can see that the gross profit of various segments have been improving. Overall, we are confident in maintaining the momentum and achieving a high single-digit operating margin for the long run. Your next question is on share repurchase. Earlier in May, we announced our first-ever four-year share repurchase program of up to $1 billion. Over the past quarter, we have repurchased over CNY 840 million or $110 million, and we have canceled all of these shares repurchased. With the continued improvements in profitability and robust cash position, we are well-positioned to execute the share repurchase program while continuing to make disciplined investments in our business. We will remain focused on building a healthy and resilient business, actively pursuing opportunities, and driving steady and sustainable growth in both revenue and profitability, creating long-term value and delivering returns to our shareholders. Your next question comes from Lincoln Kong at Goldman Sachs. Please go ahead. Thank you, management, for taking my question. Congratulations on the excellent results in the first half. My question is on AI. How are AI Jingyi, AI assistant has been integrated across the full spectrum of your healthcare services? How does management see AI creating value for the company's core business? Also, as mentioned, AI Dr. Dawei's penetration is accelerating. How do we expect AI to primarily drive cost and efficiency improvements, and how could it also become a new source of revenue? What are some of the differentiated advantages compared with other peers in the market who is also investing in AI? Thank you, Lincoln. I know AI is a key concern for all of you. We also value the investments in AI. Let me first give you the conclusion. In our view, AI can not only reduce costs and improve efficiency, it can also become a standalone business, creating business value. That is highly certain conclusion. In our day-to-day practice, reducing costs and improving efficiency is clear. Not to be exaggerating, AI is integrated in our day-to-day operations and management. Each week, we have meeting sessions related to AI. On a weekly basis, we continue take an inventory of the areas or tools, products that, created by AI, could help reduce costs and improve efficiency. Then we'll quickly replicate that, integrate that, apply that across our day-to-day situations. That is also true with other companies. I'm sure that everyone is learning how to use AI. The key is that it cannot be simply a tool. Particularly in healthcare service sector, it can be a standalone business, and that's how we position AI internally, and this is where we have been working towards. At the moment, can we prove that it has already become a standalone business that yields tangible results? I cannot say that for sure, but I would say we are halfway through. Let me break it down for you. As a standalone business, we have been maintaining a very pragmatic approach towards AI. When it comes to AI technology investments, we are being very prudent. We do not invest blindly. We do not spend a lot of money on PR and marketing, trying to build a reputation. From day one, it has been clear to us that how we need to create synergies between AI and other existing businesses to create further value. If you look at on a higher level, for To-C customer or user-facing AI, we have an AI called Dr. Dawei, which is a male 50-year physician. That's the persona. It has gradually been replacing the consultations with a human or physician. We're seeing adoption. Rather than a chit-chat chat robot, we seriously position it as a medical AI assistant who cannot only do chit-chat. Additionally, we have been trying to commercialize Dr. Dawei. In the future, the online hospital, which will be powered by AI physician, will gradually grow. AI-powered Dr. Dawei or physician will gradually replace those consultations with physicians. At the moment, it's free of charge, providing foundational, informative information or educating purposes or functionality. In some regards, Dr. Dawei could outperform physicians in terms of the technological know-how, therefore, we have been proactively transitioning from manual consultation towards AI-powered consultation. But again, we're going to have the physicians do the final check to review the results. Overall, we are seeing very positive user experience and feedback from the adoption of Dr. Dawei. For commercialization of this effort, we have entered some agreements, and we are quickly iterating the functionality. We're seeing some clear runway for commercialization for Dr. Dawei. Number two, for complex consultations that require top-level physicians, this is somewhere that the consultations cannot be replaced. We do see some positive signs in the capabilities of AI assistants in some regards. Gradually, AI will be able to offer very informative feedback for the physicians to review. We are seeing clear visibility or runway for user-oriented scenarios. Next, to doctors' scenarios, which is our AI product is called Jingyi. By benchmark scores, we have been performing really well. We hope that more of the remote less-developed markets, doctors from, or physicians from these areas, could use this model or assistant because they definitely need more training to help them make a more informed decision. Therefore, this will be an inclusive AI application for all physicians. Also, commercialization has kicked off. I wouldn't tap into the details. Last but not least, to hospital scenario. Our product is called JD Zhuoyi. To simply put, we want to create the increment better market for the in-hospital business. That is moving in tandem with the compliance. We have seen significant potential for this segment. Overall, we have been evaluating where are the ceilings. Right now, 50% - 60% of the market happen within the hospital. For example, we're thinking about where we can replace or access outside the hospital. For example, the prescriptions and cetera. But how long will it take to gradually access these opportunities or scenarios? It's happening, but not at a very fast speed. Other than these I mentioned, we do devise our own plans to develop incremental market or gain more business from those that are happening in the hospital. But it's a very intricate situation. Nevertheless, our two hospital or hospital-oriented AI product of JD Zhuoyi is dedicated to this effort. That roughly is the product that we have. Nevertheless, these three products can also be introduced to pharmaceutical companies which can help better serve their businesses. We don't see significant contribution from AI in terms of the retail of pharmaceuticals. But over the long run, we are seeing that more clearly. That's my overview on how AI, on where it is placed in our ecosystem. Hopefully, that answers your question. Thank you. That is very thorough. Next question is from Xi Feng from CITIC. Please go ahead. Thank you, management, for taking my question. In terms of our core businesses, we are seeing very solid competitive advantages. Nevertheless, we do notice that competitors are playing the role of innovative product solutions and AI to help with marketing. As the need, demand, and technology continue to iterate, what are some of the competitive factors or variables that could help JD Health stand out? Can management share some color on that? Thank you for the question. Like I said, from what I see, JD Health or JD has a gigantic ecosystem. There is a self-operated platform, and then there is our platform. They have been working seamlessly, allowing technologies to be integrated into it to allow us to maintain control of the market, reducing the cost while improving the operational efficiency, and all of our efforts have been towards that goal. In terms of the competitive landscape, let me answer it with an example. We are now trying to build a JD Health app or application. We did not invest heavily in this application. However, a month ago, back in that time, we launched a program called Happy Joyful Weight Losing. Since then, it has become blockbuster. We have ranked the leaderboard of new app downloads thanks to the explosive users. We want to say that we have many niche applications. We want to tap into healthcare management and medical services. We use AI as the solution to build a platform attracting more users to our platform to manage their health. That is one of the examples. There are many apps that focus on losing weight or weight- losing. We have been exploring functionality other than weighing yourself. We have been tapping into equipment like respiratory machine or scale. We have been exploring various means to offer a better digital experience. We are leveraging AI to build a more visible progress for the user's weight loss journey. On that app, we introduced many other equipment as well as related medicines. It has created a significant operator user stickiness for users, and users are constantly staying on the app, browsing within the app. Is it a success already? I would not say, but it has proved that we have already provided a platform that integrates all of these functionalities onto one platform. This case alone has showed very promising results for us. Therefore, for us, we are able to leverage the synergies of supply chain fulfillment and AI capabilities. Coupled with our self-operated platform, we are able to make a lot of progress, and this would help us execute our strategic goals, fine-tuning here and there along the way. I would say we are very confident that we can make innovations in medical services rather than simply selling products. Hopefully this case could help you understand what our strategy is when it comes to AI investments. That concludes our Q&A session. Now let us move on to the closing remark. Thank you for your questions, everyone. Before we wrap up, I would like to share a few closing remarks. We delivered solid results in the first half of 2026. We continued to see strong momentum across our core pharmaceutical categories, with growth ahead of the industry. Our market position strengthened further and operating margin improved year-over-year for the ninth consecutive quarter. These achievements were driven by economic scales that gained in operating efficiency, stronger user mindshare. Now let me walk you through the three key areas that shaped our performance in the first half and our long-term growth trajectory. First, JD Health's differentiated supply chain capability are its single greatest advantage in capturing the industry's long-term opportunities. The out-of-hospital pharmaceutical market is entering a long-term growth stage. Online penetration remains relatively low. Consumers are increasingly seeking more professional healthcare services, which are highly visible long-term industry opportunities. We have consistently built our capabilities around core pharmaceutical supply chain strengths, and through years of investment in strengthening our digital healthcare ecosystem, we have established clear differentiated advantages in supply chain reliability, comprehensive and professional services, fulfillment efficiency, and compliance. This foundation will allow us to further strengthen user mindshare and widen our competitive edge, setting us up to capitalize on the industry's long-term growth opportunities from the strongest possible position. Next, we see significant long-term growth opportunities emerging from healthcare services and AI-powered healthcare. Building on our existing capabilities, we are expanding our healthcare services and offline services offerings while applying AI across healthcare and various other business nodes to create value for both consumers and business partners. These efforts go beyond extending our supply chain capabilities. They also create new avenues for long-term growth. Finally, we have clear pathways for sustained profitability improvement, cost efficiency from economies of scale and stronger supply chain, a more favorable business profile driven by the growth of AI-powered digital services, and continued improvements in operating efficiency. With these in place, we are confident in achieving a high single-digit operating margin over the long term. Going forward, we will remain focused on our long-term strategy and execute with the discipline. We'll further strengthen our supply chain capabilities, enhance fulfillment efficiency, refine our service capabilities, and accelerate efficient AI adoption across our business to create greater value. We believe that staying committed to creating long-term value for our users and the industry will automatically translate into sustainable returns for our shareholders. Thank you all for your continued interest and support for JD Health. Thank you for your questions. That concludes today's conference call. If you have further questions, please contact our IR team. Thank you.