All right. Hello, everyone. Thank you very much for joining AirTAC third quarter 2023 earnings call, hosted by Goldman Sachs. It is our pleasure to welcome Mr. Ivan Tsao, CFO of AirTAC. This is Yuichiro Isayama, Head of Asia Industrials Research, Goldman Sachs. Also, Chao Wang, Taiwan Tech and Industrials Associate, will be the co-host of the call. Chao? So, hi, everyone. Before we dive into the call, we need to read out the disclaimer statement first. So this call is strictly for client of Goldman Sachs and anyone invited from AirTAC. This call is not intended for the media and is off the record. Participants will be removed from the call if they cannot be publicly identified. This call, webcast, is not for the purpose of sharing or receiving non-public or otherwise confidential information. Attendees are public side market participants who may not receive or should not request non-public or otherwise confidential information about issuers or securities or about the market for securities. So thank you so much for your participation. We will move to the call now. After Ivan gave his introduction of the quarter result, we will move to the Q&A session. Hi, Ivan, the floor is all yours. Thank you. Okay. Thank you, Isayama-san and Chao, and good day, everybody. This is Ivan Tsao speaking from AirTAC, and welcome to join this conference call. Now, let me read our third quarter results and current market situations. First of all, even the overall economic situation is not good, and the revenue in third quarter is still in line, as I always expected. In such traditional low season, the order received can continue to be higher than the shipment amount, indicating that there is still a certain demand for pneumatic component in the market. In general, the best demand for pneumatic is driven by rising labor cost and declining labor population. Especially for the declining labor population, the number of new births have been lower than people death for years in China. Young generation don't like to work in a bad environment, even they don't want to work. Customers have to improve automation. Even the China Plus One theory has been, for some customers, who have capacity in China, have to set up new capacity out of China. But as we know, even the China production environment has not been as good as it did in 10 or 20 years ago. But compared to South Asia, India, Middle America, China production still could be, have a higher efficiency than other countries. So customers still will stay some capacity in China, and they still have to improve automation. And pneumatic still can sustain single digit growth annually once there is not too severe non-economic issues. In addition, pneumatic is replacing simple manpower to improve automation and also has capacity demand and component replacement demand at the same time. Whenever there are production activities, they need to replace pneumatic component, and poor demand in other automation segment doesn't mean the pneumatic industry also will be bad. For the reviewed consolidated revenue for the third quarter of 2023 of AirTAC, the consolidated revenue was RMB 1.732 billion, a 26% growth year-on-year. Gross profit was RMB 83 million, a 26% growth year-on-year. Gross margin was 46.4%. Operating income was RMB 58 million, a 32% growth year-on-year. Operating margin was 29.3%. The low operating margin is mainly due to the annual employee salary increase, which has an impact of around 0.6 percentage point on the OP margin of third quarter, and used to take around 2 quarters to dilute such impact. Now, the net non-operating income was RMB 59 million, including RMB 65 million of other spend, RMB 11 million of interest expenses, and RMB 7 million of interest income. Income before income tax was RMB 567 million, a 39% growth year-on-year. Pre-tax margin was 32.7%. Net profit was RMB 444 million, and 41% growth year-on-year. Net margin was 25.6%. EPS for the third quarter of 2023 was TWD 9.7. EPS for the first three quarters of 2023 was TWD 26.33. Revenue from top eight industry for the third quarter of 2023, the biggest one still was electronics, around 21% to consolidate revenue. It's around 14% growth year-over-year. Second one, battery, was around 12% of the revenue, 8% decline. Then energy lighting was around 15% to revenue, 130% growth. General machinery was around 8% to revenue, 31% growth. Packaging was around 8% to revenue, 26% growth. Auto was around 6% to revenue. It's flat in third quarter, year-over-year. Machine tool was around 5% to revenue and 23% growth. The textile was around 2% to revenue. It's 10% decline. Basically, traditional application demand in 2022 was very high percent decline, and in past three quarters, most of them have been improved. Part of them have been growth year-over-year, and even those industries have not improved, they still could be below single digits or 10% decline year-over-year. Those traditional applications won't be a burden to our consolidated revenue. For current market situation, although there is some noise in the market regarding China's recent economic situation, as we mentioned earlier, people need some time to restore psychological consumption confidence due to the strict COVID control for three years. In addition, the government still timely proposes global announcements or substantive incentive policies, stimulus policies, subsidy policies. We expect there could be continuous loosening monetary policy, additional local special bond quota, more bank financing policies, and real estate policies with less restriction. The economic situation could be able to improve quarter-over-quarter. Necessary consumption has been improved currently, and selective consumption can be repaired. We expect more and more customers will restore their confidence and accelerate their capacity expansion. Moreover, pneumatic products are used to support customers' production line, rather than in that, in end product. Although the current overall economic situation is not good, end product consumers need to consider whether to launch more new product to attract their pent-up consumption or maintain existing spec to reduce relative expenses. If they decide to develop more new product, the demand for pneumatic product is an opportunity to be stronger. As for the demand of various industry of pneumatic component in coming quarters, the edge lighting, the edge lighting equipment is the newer application. The overall industry demand will continue to growth, and AirTAC still can have additional revenue growth from market share again. And we still expect edge lighting industry revenue still can sustain pretty good revenue growth in coming quarter, even coming years. And battery, even they have some noise of the overcapacity in battery industry in China domestic demand, and this could be a pretty common situation in China, when government, they want to encourage the basic application or industry, so many existing player or new company enter in this industry, and it can sustain pretty good or strong demand for a period, and followed by the overcapacity and fierce competition, then they have to take some time to digest the overcapacity. So battery in China domestic currently could, in the stage, have to digest the overcapacity. But there's still so many countries, they want to set up their own battery capacity in their domestic-... And, Chinese players still can enjoy such expansion. We expect after so many countries have confirmed their domestic expansion policies, the demand for battery still can be stronger again. For electronics, we said pneumatic component just support production process, not in their end product. When brand customers, they decrease their selling volumes, it won't affect pneumatic demand too much. But once they don't have too much model change or spec upgrade, customers, they can apply existing capacity to produce their demand. It hurt pneumatic demand. In the past two to three years, there could be limited spec upgrade or model changed. So electronics revenue have been not so good for two to three years. But from this August and September, it had been around 20% growth year-over-year from electronics customers. And we expect such strong demand can be sustained to 2024 from electronics. And pricing, pricing is stable and competition is limited in pneumatic market. The weakness of the Japanese yen will not affect the competition with Japanese peers, mainly 'cause, mainly because the cost of materials account for around 40%-50% of the cost of goods of pneumatic. Most of the material costs are metal materials. Suppose Japan owns production of metal always should be limited, so it need to purchase metal material from foreign suppliers. A weak yen will increase the cost of materials, but it still can enjoy the benefit of the Japanese production capacity in labor cost and overhead. In addition, the production capacity of major competitors in Japan is around 40%+, and another 30%+ of their capacity is in China. The currency impact should be similar to AirTAC. Since December of last year, metal materials have been relatively stable and fluctuated with a reasonable range, which will be friendly to our profit margins in 2023 compared to 2022. The OP margin still has to depend on revenue scale and capacity utilization rate, even we can improve our margins by launching more higher margin new items, and continue to improve our internal production efficiency to reduce production cost. Inventory turnover days was around 155 days currently, and, it still is in a healthy situation. Moreover, the production cycle of pneumatic component is long, and most of them are made of metal materials, so the inventory rate of risk is limited. Our current utilization rate is around 90%-100% for pneumatic and 40%-50% for linear guide, and still it depends on the demand to adjust our utilization rate. For development of linear guide business, the sales progress is improving from first quarter of 2023. The monthly revenue of linear guide in second half of 2022, just around CNY 10 million a month. It's around CNY 30 million from this March to July, and CNY 45 million in August, CNY 52 million in September. More and more customers have visited our factory and verify our production process. They mean more and more opportunity we can get the orders from customers. And customers are very interested in the quality and our pricing of the linear guide. Certification period varies for each customers, still depends on customers' situation. In addition, the sales model of linear guide is different from that of pneumatic component. Most pneumatic manufacturers have direct sales revenue and distribution business, but most of the linear guide manufacturers sell their products through distributors. Most distributors need to purchase a certain quantity each year in order to become the qualified distributors for the following years. When demand is weak, so many of these distributors, they used to decrease their selling price aggressively and digest their inventory. So, so many customers, they can get much cheaper linear guide products from their existing or new linear guide suppliers, so they are not urgent to change their supplier to AirTAC. Many customers, they have signed annual contract, annual purchase contract with their existing suppliers in 2023. But they have promised to AirTAC, we'll transfer part of their orders to AirTAC from 2024, then it can improve our shipment from 2024 of linear guide business. We have developed around 60% of the market product portfolio currently in current mini size and large types from Type 5 to Type 60. Annual capacity at end of September 2023 was around CNY 2 billion, CNY 2 billion, and will not increase by end of 2024. Current utilization rate was around 40%-50%, will improved, will improve it according to our sales progress. The gross margin will be around 40% when we have 60%-70% utilization rate under CNY 2 billion annual capacity, and will be around 50% when we have 80%-90% utilization rate. Even 40, even 40% gross margin is lower than our existing pneumatic business, but we use the same system to do cross-selling, pneumatic and linear guide. Without too much additional OpEx, it still can improve our consolidated operating margins. With continuous utilization rate improvement and capacity expansion, gross margin still can be improved. We divided our sales team into China team and non-China sales team, with different team leaders and having their own goals. For China's sales team, we expect they could have 30% China pneumatic market share within three to five years. The market size for pneumatic in China could be more than RMB 22 billion, and has a single digit compound annual growth rate. 30% market share represent a revenue of RMB 8 billion for pneumatic business. In 2022, our revenue just around RMB 5.4 billion, and that means we can have additional RMB 2 billion in next three to five years from China pneumatic business. Linear guide market size in China could be more than CNY 16 billion-CNY 17 billion, also have single digit CAGR. We expect we could have 30% market share in around 10 years, meaning a revenue of CNY 5 billion-CNY 6 billion in around 10 years. After we have a better progress on linear guide business, maybe in later 2024 or 2025, we will launch electrical cylinder. It's another CNY 10 billion market size in China. We still have fourth and fifth component related to automation in late development. We will find the right timing to launch those two new component in coming years. For non-China sales team, we still expect they could achieve 20% of our considered revenue in coming years. Even it could be a very hard task for our non-China sales team, but they still have to do their best. We try to set up more sales offices in non-China countries, and recruit more local sales people, and attain more customer installation show to improve our non-China business. The CapEx in 2023 still could be TWD 2 billion-TWD 3 billion, and we could generate much better free cash flow from our end, and we still will improve our payout ratio to be around 50% in one to two years. The company does not have any acquisition plan in the short term. This is my briefing, and we can discuss of your questions. Thank you. Thank you so much, Ivan. We will move on to the Q&A session now. From Goldman Sachs, we actually have two opening questions. First question, Ivan, why such a strong 24% revenue growth? You did mention about the demand, but even compared to possibly bottoming demand in China, nobody is up like AirTAC. This is just exceptional. So I want to ask me more in details about you, not about the competitors or demand. What is driving the solid 24% growth for AirTAC? Is it driven by market share gain, better exposure in the focus market? More importantly, do you think this over 20% revenue growth can continue into 2024? Thank you. ... Thank you. Basically, we choose customers, we choose orders in part. When the demand is weak, end demand is weak or mass demand is weak, we used to consider the pricing and volume relationship, and maybe we will receive some orders which we will not accept that in past. We try to sustain specific utilization rate, revenue scale, to sustain our share gain in the market. So basically, we still can get more shares even the overall demand is weak. In addition, we still continue to launch more new items. Most of those new items could be high application, high margin items. We launch more new items, we can support more existing customer, approach more new customers, also can enjoy multiplying effect. So basically, we still can sustain pretty good revenue growth in coming years. Maybe it's still too early to tell the guidance for 2024, but basically, we still can sustain better share gain from pneumatic market in China, and we also can improve our linear guide shipment from 2024. So to sustain 10% or double-digit revenue growth from 2024, it could not be difficult for our AirTAC. Thank you. Thank you so much, Ivan. The second question is about the margin. Despite the slower revenue seasonality, your margin improved. I mean, the GP margin improved a surprising 46.4%. What is going on in there? Is that driven by better linear guide or better pricing on pneumatics? Appreciative to elaborate gross margin improvement. Linear guide gross margin is still much lower than our existing pneumatic designs. So the more shipment of the linear guide still will dilute our average of the margins. And we have increased our utilization of linear guide designs, also continue to improve our pneumatic production efficiency. And what I mentioned earlier, much more high margin items and sell more, still can improve our margins. So basically, we still can improve our gross margin in coming quarters. Thank you so much. We would like to move on to the Q&A session and open for everyone. If you have any questions, please raise your hand. Chao It's all yours now. Okay. Okay, thank you so much, and thank you, Ivan. So everyone, now we are opening the question to all. Please press raise your hand button to be in the queue, and we will open the line accordingly. We appreciate if you can state your name and company before you ask the question. So, we now have Ming Lee. Your dial, your line is open right now. Okay. Thank you. Can you, can you hear me? Yes, please. Yeah. Thank you, Ivan. So, Ivan, previously, you've believed that China FA sector will start to see some demand recovery starting in 4Q this year. So, do you have an updated view for the industry growing outlook? And also, although the property or real estate industry does not have the direct impact to pneumatic, but it also indirect provide a lot of growth for pneumatic industry in the past. So, what do you think about the real estate industry related in the coming year? That's my first question. Thank you, Ivan. Thanks, Ming. And basically, COVID control have affected the end demand pretty strict. Even government have relaxed the COVID control in early of last December, but the infected case is pretty high in following two to three months. So many customers or so many company, they cannot operate their business in normal situation. So such demand have pent up to this February and March. So China have a pretty good economy numbers in this February and March, and we think it just pent up demand, not so agreed the China reopening fate. And based on such good number in this February and March, we heard from the local government, they said central government supports, they can achieve the GP growth 5% for the whole year, could not be difficult. So they try to let the market to develop naturally. In the past couple of years, whenever they closed the meeting in March, they always announce so many stimulus, stimulative policies. But this March, limited stimulus policies have been announced, so they got very bad economy numbers in this April and May. So from June to August, they have announced or launched so many stimulus policies. And early in the year or first half of the year, we expect or we predict the market demand could be better or recovered from fourth quarter or end of the year. But we think after they let the market natural develop in April and May, some, maybe they will take a little, a little longer time to restore market confidence. So maybe from end of the year, even first quarter of 2024, the economy or demand just will be better. And we have a better human growth in third quarter. Mostly, we have a better shipment from pneumatic, and we also have improved our linear shipment. We just can say, maybe, it have been at the bottom in this July or August. When the, when, when the market will be recovered, obviously, still depends, and maybe from end of the third quarter or first quarter of 2024. The second question of yours, real estate industry, even construction industry, just run those single digit of our revenue. But there's still so many industries related to real estate, and almost around 10%, even 14% of our construction revenue. In 2022, is pretty bad demand. You almost run 50%-80% decline year-on-year in 2022 for those real estate-related industry. But from one to two quarter or past one to two quarter, those traditional application or real estate-related industry have improved, and some of them could have single-digit, even double-digit revenue growth year-on-year already, especially for the bathroom facilities or the ceramics industry. It had been around 30, 30-plus% growth in past two months. And we expect more and more stimulus policy launched by government. Even it cannot expect the real estate industry will be as booming as it did for three or four, or four or five years ago, but it won't be such bad demand in coming quarters in China. Thank you. Yep, thank you, Ivan. Sorry, one more question for me. In the past, I think, your sales team member prefer to sell more pneumatic component compared to the linear guide product, because they have more understanding in the product, and they are not more familiar with the product. Well, right now, what is their attitude, or are they more willing to sell the linear guide based on the latest, you know, new product design and good quality? Because, in the past few months, your linear guide revenue, monthly revenue has improved a lot. Yeah. Thank you, Ivan. Yes, especially our sales team or our sales people have improved their psychological condition and more willing to promote our linear guide business. We have a better sales progress for linear guide in the past couple of months, mostly because the COVID control in 2022, so many customers did not allow AirTAC to approach them or visit their factory. Because any factory have one infected case, this factory have to be shut down for one to two weeks. But this issue have been better from this February or March. We can visit more and more customers gradually, and so many customers, they still came to our factory to verify our production process. And after their verification, more and more customers can place order to AirTAC. But what I mentioned, so many customers, they have, they have signed annual contract with their existing linear guide suppliers, and they have some restriction to do more linear business with AirTAC in 2023. And from 2024, we could have more opportunity to get more orders from such customers. And another reason could be, we have around 70% revenue from their account customers and 30% through distributors, and we just had the chance to approach customers from this February and March. And by end of this June, we prefer to approach our direct account customers first, to promote our linear guide, rather than to approach distributors. Because once we approach our distributors, and this distributors to approach our pneumatic direct account customers, these customers will be confused. They buy pneumatic from AirTAC directly, but why is the distributors to promote AirTAC linear guide to that? So by end of this June, most the promotion activities just to approach direct account customers. And from this July, we began to approach more and more distributors customers to buy linear guide from AirTAC. So from third quarter, it could be more and more direct account customers and distributors customers will buy linear guide from AirTAC and improve our linear guide shipment in coming month or coming quarters. Thank you. Thank you, Ivan. I don't have further question. Thank you very much. Before moving on, we have been receiving some of the questions from the, Zoom Q&A box, but we would like to prioritize the ones who are already open, I'm sorry, raising their hands. After those, people finishes, we will move on to some of the questions that we've received from the Zoom Q&A box. Chao, please, proceed again. So, hi, thank you, Ivan. Our next question will come from Hank Hu. Your line is open, and please state your name and your company's, and then ask question to Ivan. Thank you. Thanks for taking my questions, Ivan. This is Hank from China Life Insurance. Am I making myself clear? Yes, please. Thank you. My first question is that, considering the current good situation in the linear guide business, do we plan to increase our CapEx into 2024 to meet further demand? Or, do we plan to maintain the same level of CapEx as 2023? It's still too early to tell the CapEx number for 2024. And we mentioned earlier, we won't increase our linear guide capacity in 2024. So by end of 2024, our capacity of linear guide still will be CNY 2 billion annually. And lead time for pneumatic equipment, just around three to four months. We can adjust our pneumatic CapEx easier. Linear guide equipment lead time could be around six to eight months, so the expansion plan have to set up a little earlier than pneumatic. But what we mentioned, the linear guide capacity won't be increased in 2024, and the CapEx for 2023 will be TWD 2 billion-TWD 3 billion billion. And 2024, it's still too early to tell, but it could be around TWD 3 billion. Thank you. Understood. I hear you loud and clear. My next question is that, considering the situation you mentioned about the battery plant capacity localization, meaning that many countries plan to have their own battery capacity within their soil. So in this case, do we help companies like CATL or BYD to build up the capacity in other countries? Pneumatic is very upstream component to support equipment. So basically, we just sell our pneumatic component to the equipment maker or module solution integrator located in China. What's the percentage do they support non-China demand? Still depends. Such issue we have told to the market from 2018, because the trade tension, so many customers, they have to set up new capacity out of China. And once those customers, they have existing capacity in China and set up new capacity out of China, most of their equipment supply chain still came from China. So such situation won't affect our pneumatic business too much. Just the difference, we support those demand to local China equipment maker or not. Thank you. Okay, thank you. My last, I have two last related question, and the first one is that you mentioned that you expect the electronic sector customer is gradually increasing their order pooling. So, do you think they are going to increase their new spec product capacity in third quarter of next year, so that they will have to increase their CapEx in the second quarter of next year? And also, if we see better revenue growth from both business, does it mean that we are more optimistic about our growth and OP margin in the next year? Thank you. We expect have a better revenue growth rate from the brand customers, just based on our expectation of reduction. We cannot speak for those end brand customers. Basically, the trans demand have been not so good for three years. Just based on the logic, prediction, it's rare for electronics customers with three years, no product launch, no new product launch or spec upgrade. Once they have new product launch or spec upgrade, they need to spend more capacity and they need more pneumatic. So we just based on our expectation to predict the demand from electronics could be better in 2024 than 2023 or 2022. I am so sorry. We do have a couple of people in the line, so please be in the queue again. So please open the line for the next questioner. Apologies, but if you want to question in live again, please be in the queue. Thank you so much, Hu, Mr. Hu. To net the next person, please talk to Mr. Bill Lin. Hi, Bill. Hi. Yeah, yeah, your line is open. Please state your name. Yeah. - and the company. Yeah. Thank you. Thank you for taking the call. Hi, Ivan, this is Bill from JP Morgan. I have two questions. First of all, I think due to the salary increase, these quarters, operating margin is around 29% something. Given the seasonality, I think fourth quarter is usually a low season, so do you still expect this year, the full year operating margin can go above 30%? Second is about the electronic business. I'm thinking it's a quarter, as you mentioned, electronic revenues up 14% year-over-year. But in terms of quarter-over-quarter, how is the trend? I just want to understand about the momentum, if that is due to the low base, or we are really seeing some fundamental demand recovery from the electronic industry. Thank you. Yeah. Basically, the OP margin still depends on the revenue scale and utilization rate, mostly. We expect we still can improve our gross margin in coming quarters, and OP margin depends, depends on the revenue scale. Our OP margin of 2023 still could be around 30%, because the economy is not that good in third quarter, and could, also could be lower than our expectation. So in first half of 2023, we expect we could have more than 30% OP margins. In this moment, we just can say our OP margin for the whole year of 2023 could be around 30%, but it doesn't mean we cannot achieve 30% OP margin for the end of the year. We still try to improve our production efficiency, and utilization rate still could be better for linear in fourth quarter. Still, it's good for our margins in fourth quarter, but it's still difficult to tell the OP margin will be more than 30% or not in this moment. The second question, electronics, the revenue in third quarter still was lower than second quarter, because second quarter always is the peak season of our business. Even it's low season, we say second quarter of 2022, it still is a low season, but our electronics revenue in second quarter of this year still is declined year-over-year. Basically, we could find a little better demand in such low season from electronics, but how long it can sustain in coming months or coming quarters still depends. We just based on our expectation or information we got from customers, electronics could be better. Pneumatic demand from electronics customers could be better in 2024 than 2023. But how better it will be still depends, because the lead time of pneumatic is still pretty short. Got it. Thank you, Ivan. I think it's very clear. Thanks. Thank you. Okay, thank you, Bill. So our next question come from Jody. Jody, your line is open, and please state your company name. ... Hi, Ivan, can you hear me? Yes, please. Okay. Hi, this is Jody from CRP. Thank you very much for sharing. I have a couple quick questions. The first one is that I think you mentioned that we're setting up some sales offices overseas. If you don't mind, can you just briefly elaborate, like, which regions or countries that we are setting up our sales offices? Thank you. We just plan to set up our sales offices, but have not entered in the building stage. We say more and more customers, they dilute their capacity out of China to Southeast Asia. And currently, we have Thailand, Malaysia, and Singapore sales offices already. And we will, based on the local demand, to set up new sales offices, maybe in Vietnam or other countries, but still depends on the local demand. Current demand for those new capacity out of China, mostly still could be CapEx, and we can support such CapEx demand from local China equipment maker or provider. And maybe couple years later, those new capacity have replacement demand. And we have discussed with our distributors in so many countries. Once in first stage, the local demand just a little better than past, we will ask our local distributors to build up some inventory for AirTAC to support those local demand in a little shorter lead time. Once those local demand improve to a little higher, we will set up our own sales offices. Sorry, we will set up our own warehouse then, to set up our own sales offices. We have different stage for support local country demand. Thank you. Got it. That's very clear. My second question is, I think previously we set a goal for the linear guide sales this year. Now three quarters have passed. Would you say we're still on track to reach that target, or would you like to change the target? Thank you. Yeah, maybe it's a little difficult to achieve CNY 500 million for the whole year of 2023, but we still ask our sales team to do their best. It's not good in this moment to say our sales team cannot achieve such goal, because the sales progress have been improved. And once we have more than CNY 60 million-CNY 70 millio n shipment a month in following month, even we cannot achieve CNY 500 million revenue for the whole year, but it's not far away from this number. Thank you. Thank you very much. My last question is about market share. Previously, you said we target to achieve 30% market share for pneumatic in China. Would you, like, comment on where we are now? And my second question is, for linear guide, we also target at 30% market share, but this seems to be a more fragmented, competitive market. How do you think we can, like, achieve the same market share in this market? Thank you. Okay. We have around 25%-26% market share in China pneumatic market already, and we still were launching more new items. We still can enjoy better share gain in coming years to achieve 30% market share in around three to five years. Linear guide, even we have limited sales progress in 2020 and 2021, but we still try to find some ways to improve our design and production process. We have success by end of 2021. Even we just have around CNY 2 billion annual capacity, but once we have 80% utilization rate, our production cost could be much lower than Taiwanese, Japanese, even local China players. So in 2025-2026, we still will increase our capacity. We also can have a better fixed cost leverage. Production cost even could be much lower, and we will base on market situation to launch aggressive pricing to speed up our share gain from linear guide market in China. So we have an expectation to our China sales team, in around 10 years, they have to achieve 30% linear guide market share for AirTAC. Thank you. That's all my question. Thank you very much. Thank you. Thank you so much, Jody. Our next question is coming from, Willie, Willie Chen. We're gonna be opening your line. Thank you, Willie. Please unmute yourself and state your name and the company. Willy, we cannot hear you.... I am so sorry. Somehow the line is still very much quiet. Ivan, can you hear him? No, I cannot. Yeah, I am so sorry, Willie. Appreciate if you could try to reconnect yourself. In the meantime, I will go back to some of the other people. Apology for that. Mr. Hu, your line is reopened again. Can you please ask your questions? Yes. Thank you for coming back to me. My question is that, considering the utilization rate improvement and also the revenue scale increase, do we expect to see better margin and OP margin and gross margin in 2024, considering both business is improving according to this projection? Yes, we could. Okay. So, might I add another question instead. Before you mentioned that we see a good linear guide revenue growth consistently in the third quarter. And does it mean that we're still going to see a continuous growth in fourth quarter to see a QoQ sequential growth? Or, is it going to start QoQ growth in the first quarter of next year? Thank you. Yeah. Basically, we could, because more and more direct account customers have verified our process. Once they conclude or terminate their annual purchase contract in 2023, from 2024, they can place more orders to AirTAC. We also have developed our dispersed business from July, and the verification period could be much shorter than direct account customers. So basically, we still expect the shipment this quarter in the fourth quarter and in 2024, still could be better than that. Oh, okay. Understood. I have no further questions. Thank you for your elaborate answers. Thank you so much. We're gonna go back to Willie again. Charles, please open the line for Willie Chen. Can you hear me now? Yes, we can. Thank you so much. It's Willie Chen from JP Morgan Asset Management. So I got three questions to Ivan. The first one, you mentioned consumer electronics in third quarter has shown a pretty decent growth. Just wondering, is that driven by Apple or non-Apple client? And then, are we doing any business for with Huawei? Firstly, it's not good to discuss specific customers. But you mentioned those company, all of them are AirTAC's customers, and most of our electronics revenue came from EMS, ODM, OEM, or electronics supply chain manufacturer. None of them is the very big big customers of AirTAC. Our biggest, our biggest single customers, just around 1.2%, 1.3% of our consumer revenue. Top ten customers, just around 5%-6%. Okay, so you basically mentioned it's more like a broader recovery from the consumer electronics, not from specific client uptake, right? Yes, basically, yes. Great. And also could be the low base in third quarter of last year. Got you. Fair point. And second question is, regarding to the margin on, battery and also energy lighting. I think that's more on solar, 'cause from, my understanding, the margin for these two products, two end markets, actually, quite competitive. So I'm just wondering, do you see that margin profile for these two MR market is lower than corporate average? Maybe not. Those applications margins still higher than our average of the company. Hmm. Is it because you see less competitors in this area? And then do you have an estimated market share in this two A market? We have around high 20s to 30% of China battery market share. Got you. How about, energy lighting? Energy lighting still could be similar, because we have much relationship with such kind of customers, and we have pushed them, support them for years. You see the same competitors, like SMC, Festo in these two end market instead of the domestic players? Is that correct? Firstly, we have a pretty good revenue growth from those industries for years. Mostly could be guesses from the company who you mentioned. Got you. Last question is regarding the sustainability of energy lighting. Because we look at the battery contribution in the past two, three years has been a pretty strong growth, and then that started rolling over from second half this year. Don't you worry that energy lighting, specifically to solar industries, which are also facing an oversupply situation in China, will face the similar situation in 2024, or you think it's more like the share you have is still small, or your clients are expanding capacity, so you are, you know, pretty comfortable to the growth target you mentioned? Yeah, basically, we still expect the revenue growth rate from energy lighting, as it still could be pretty good for a couple of years. Even in, there could be some noise for solar expansion in past couple of months, but we also have heard from the market, some cities' government, they have restrained the bank facilities to solar expansion. Maybe they are afraid the overcapacity situation will extend it from battery to solar. And energy lighting, we think still could be pretty good for years, because even the LED lighting application of technology have been maybe around 10 years, even more than 10 years. But early of the LED lighting, the technology was not so good. You can see the bubble lighting on the screen. But in past three or four years, the technology or illumination have been much, been much better, and have improved. So in past, even for old tech application, we just applied LED lighting on the non-core lighting place, just like the lighting on the road or some signboard. But from two to three years ago, our main lighting function have been replaced by LED lighting modules in the workshop, main or major lighting. Even so many car headlight or domestic, decoration in the car, the house decoration have applied LED lighting already. So basically, such demand still will be better and better. Once you have re- you want to redecoration of your house, so many, buildings or offices, you still could apply LED lighting module, because it can save your electricity expenses, also can last a little longer time than traditional bulb. Thank you. Thank you, Ivan. So just one small question? William, I am so sorry. It is already past 5:00 P.M. Taiwan, so- Sure. We have to start closing the call. Apologies. Sure. Thank you so much. Thank you. Thank you so much, everyone. Apologies, but it's already past 5:00 P.M., so we have to close the call. Ivan, do you have any closing commentary would you like to have? I'm fine, thank you. Thank you so much for your comprehensive commentary. Thanks everyone for your understanding. Apologies that we could not touch everything, but I appreciate it, that if you could follow with the company respectively. And once again, thank you so much for attending today's call. This was Yuichiro Isayama and Chao Wang from GS Asia, hosting AirTAC third quarter 2023 call. Hope to see you next time, and have a great night. Thank you, Ivan, and thank you, Julia, for attending today's call. I hope to see you soon. Thank you, Isayama-san, and thank you, everybody. Have a good day. Lin Jun, please close the call. Thank you, everyone. Once again, have a great night.