This conversation is not intended for the media and is off the record. Participants will be removed from the call if they cannot be properly identified. This call 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 and should not request non-public or otherwise confidential information about issuers or securities, or about the markets for securities. Good day, and thank you for standing by. Welcome to the conference call with Advantech. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference call is being recorded. If you require any further assistance, you may press star zero. I would now like to hand the conference over to your first speaker today, Mr. James Wang. Thank you. Please go ahead. Thank you. Hi, everyone. Thanks for joining Advantech's first quarter earnings conference call hosted by Goldman Sachs. This is James Wang, Technology and Industrial Analyst at Goldman Sachs. The speakers today are Mr. Eric Chen, Advantech's President of General Management, Miss Linda Tsai, Advantech's President of IIoT, and Miss Grace Liao, Investor Relations Manager of Advantech. At this point, I would like to turn the conference over to Miss Grace Liao. Grace, please go ahead. Thank you. Thank you, James. Good morning and good afternoon, ladies and gentlemen. Thank you for participating in Advantech first quarter 2021 result conference. The presentation material is ready to download on our IR website at www.advantech.com/investor, and the Taiwan MOPS. This is Grace Liao, the IR Manager of Advantech. During the meeting today, I will give 10 minutes briefing regarding our first quarter 2021 results and the second quarter guidance, and leave around 30 minutes for Q&A section. Luckily, today we have two senior management to join us in the Q&A section. Welcome, Mr. Eric Chen, the CFO and President of General Management, and Miss Linda Tsai, the President of Industrial IoT, to share their views regarding business strategy and industry trends during the meeting today. Now, let's start with the presentation. Please go to page two. As usual, please take a few seconds to read the safe harbor notice. Please go to page three. The first quarter financial results. Q1 sales revenue reached TWD 13.2 billion, increased 17% year-on-year, and 3% quarter-on-quarter. Gross margin rate was 39.6%, improved both year-on-year and quarter-on-quarter basis. Operating expenses rate were 22.2%, declined 2.1% year-on-year. Operating profit rates were 17.4%, increased 2.7% year-on-year, but slightly down quarter-on-quarter. In non-operating side, Advantech booked a TWD 72 million for fixed asset disposal gain in Q1 for one time. With effective tax rate of 24.2%, net income reached TWD 1.9 billion in Q1, increased 48% year-on-year. Earnings per share were TWD 2.48 in Q1. Please go to page four. The first quarter performance by region. In terms of the U.S. dollar, first quarter revenue increased 24% year-on-year. Most markets have reported year-on-year revenue growth. The major three markets accounts for almost 70% contribution of our total revenue. North America increased 11% year-on-year. Europe market increased 8% year-on-year, while Greater China increased 76% year-on-year, which is the best performer in Q1. For overall North Asia, increased 13% year-on-year. Both Japan and South Korea market increased 17% and 40% respectively. However, Advantech Technologies Japan, ATJ, declined 12% year-on-year in Q1. Other Asia and intercom markets total increased 36% year-on-year. Almost all the individual markets enjoyed double-digit growth, mainly due to the strong macro rebound across the board. Please go to page five, the Q1 performance by strategic business group. The Industrial IoT Group increased 54% revenue increase year-on-year. The revenue of Embedded IoT and Service IoT increased 7% and 18% year-on-year respectively. The Cloud IoT reports 37% year-on-year growth. In all business groups, only Applied Computing Group, ACG, declined 14% year-on-year, mainly due to major project ended and ATJ underperformed. Please go to page six, the working capital and the balance sheet. Advantech generated NTD 7.8 billion in Q1 for cash, which is at a record high cash level, indicating we are quite sufficient in working capital. The cash conversion cycle, CCC, is back to normal level, under 100 days in Q1, mainly due to the improvement of inventory turnover days, which is also a healthy improvement on the balance sheet. Please go to page seven. The guidance of our second quarter of 2021. This is on the basis of the exchange rate assumption of one U.S. dollar versus NTD 28.3, we expect Q2 revenue in the range of $480 million-$500 million, while the gross margin would be in the range of 37%-39%. Operating margin was between 16.5%-18.5%. Looking forward, the demand remains strong due to infrastructure opportunities and IEM smart upgrades in the semiconductor sector. Though the supply chain remains tight recently, however, with early action and design flexibility, we will strive to minimize the impact of supply chain issue. That's all for the briefing of our first quarter financial results. Let's open for Q&A section now. Thank you. Okay. Thank you so much, Grace. Let's start the Q&A section now. As a reminder, please feel free to raise your questions in English or Mandarin. Management will answer the questions in English. Operator, we are good to take questions now. Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, please press the pound or hash key. Please stand by while we confirm the Q&A roster. Thank you. Okay. Thank you. While we're waiting for some questions from investors on the line, let me just quickly ask a few quick questions, if I may. My first question is regarding the order momentum. Could you please share with what's Advantech's current book-to-bill ratio, and also how sustainable will the order momentum be? If you could also highlight a few key applications that's seeing a stronger demand in the coming few quarters, that would be great? Thank you. Thank you, James. Okay. Thank you, James. This is Eric. Actually, our B/B ratio turns to strong in the first quarter of last year. In the first quarter, the B/B ratio reached up to 1.66. B/B ratio from three regions, including China, the U.S., and Europe, all larger than 1.6. This is the first time we encounter before. In the past two or three years, the B/B ratio was around 1.1. In last year, the B/B ratio was lower to 1.0 add. The reason for B/B ratio in our internal study becomes very high had two. The first one is the material shortage impact. All customers want to get their product from Advantech as early as possible. Since they have a real project on hand, without the supply of our IoT or EIoT product, their project might cause a delay. The second reason is the price up issue. We informed our customers that we will increase our selling price in quarter two due to the component price up. This action also triggered the customer demand to place their order in advance to avoid the price up. From our analysis, the 1.3 B/B ratio should be a reasonable figure to reflect our organic growth and customer real demand. For the surplus portions, 80% orders belongs to pre-booking, and the rest of the 20% will come as a double booking. This is the whole full picture for our B/B ratio. Here, I want to let you know for the 20% double booking orders, most of the purchase item belongs to standard product and the hard selling item. In the supply chain point of view, the inventory risk is quite low. This is just let you know we have around 20% of double bookings orders, but this all belongs to standard products and hard selling items. Okay, this is my answer from the order bookings status. Okay, thank you so much, Eric. Also, I have a very quick follow-up question, especially regarding the COVID-19. Just wonder that if the COVID-19 situation improves globally in the coming few quarters, would you expect a pretty significant demand uptick in the short period, or do you think it would be a more long-lived but more moderate demand resumption? Would just be great to hear your view. Also, could you also share with what approaches would Advantech take to make sure your customers can be better serviced? Thank you. This is Linda speaking. I'm the President of Industrial IoT. At this moment, some of the country, they might have different progress of vaccine. As Eric mentioned, we have high P/B ratio. Of course, some of the reason is because of the lead time is getting longer. Customer place the PO earlier than before, second is because of material shortage and the price up. On the other hand, we do see some of the market is coming back compared to last year. That is one of the reasons that we have higher booking. Last year for Advantech, I think our business is one like really minor decline because last year we are strong in semiconductor, in some of the medical application, not all of them. We are strong in smart manufacturing or the warehouse logistics. Those applications that I mentioned previously still go strong this year. This year, at the beginning, that we see some of the low light of the market that the other side of the medical or the gaming is slowly coming back. The beginning of the year, we have the project which that they have low volume last year, but they say they're coming back. That related to dental or eye or any kind, is not really life related. Those medical are coming back. Secondly, we do have some of the gambling project or lottery project. We are receiving the order that will be shipped by the end of the year. I believe some of the market had the low sales last year. Those are expect coming back at the second half. Of course, it still depends on the vaccine situation. In U.S., it's going very well. You will see that U.S. will have a good booking and revenue momentum. In Europe, because different countries, right now it's still on this recovery, but the strong is not that high. In China, we have strong rebound. I want to particularly focus on China after COVID. In addition to one I talking about that for the gambling lottery, that could be from U.S. and Europe. In China, we see that we have the strong demand because the EV car. It's not that Advantech is doing any EV car, but the battery is a key element for EV car, and we know that the largest battery manufacturer for EV car is in China. On the first half, even quarter one, we see the strong demand from the battery-related manufacturing from China. Secondly, as all previous China growth momentum is Apple related equipment, that including iPhone and AirPods. iPhone demand is okay. It is not that strong because there is no really big new iPhone this year, but AirPods still have very strong demand. In addition, for China, another growth momentum this year and the coming year is their energy strategy. They are talking about carbon net zero emission. We see the demand of renewable energy from wind power and solar. Align with China 14th Five-Strategy. Also sort of explain why China on the first half, even quarter one, we see strong booking. I hope I answer part of your question is that what will be the more new demand post-COVID, where those market is coming back, as I mentioned, around like medical and also gambling and gaming related. Okay, thank you. Okay. Thank you so much, Linda. That's pretty comprehensive answer. Operator, we are good to take questions now. Thank you. Thank you. As a reminder, if you wish to ask a question you may press star one on your telephone. Please feel free to ask questions in English or Mandarin. Once again, to ask a question, it is star one on your telephone. We have the first question coming from the line of Hank Hu from China Life Insurance. Please go ahead. Thanks for taking my questions. I would like to ask first question about how do we see the infrastructure and the plan in China and U.S. to affect our business prospect? As far as we know, most of China's new infrastructure is already under construction or may be in effect in 2021. If U.S. is going to have more EV charging business plans, how do we see our revenue contribution in such areas? Thank you. For the revenue contribution, it's hard to give the number right now. I want to share for China and U.S.A. for the infrastructure, the demand. Some of them are similar, some are different. In China, just a little bit, since last year, 14th Five-Project. For infrastructure under transportation wise, this transportation is an important market for Advantech. This year we'll continue to invest on that one. Currently, the transportation, we haven't seen the biggest infrastructure on railway or on road. I know two years ago, there's a big infrastructure on road traffic for the ETC. On the other hand, for China, for energy, the investment and the opportunity for Advantech, I think they will bring us the new demand, especially on renewable energy. Advantech provide the controller and the end-to-end gateway and I/O communication product, especially for the wind power or solar related range of energy. That would be the one. Regarding for China, for the EV car, we focus on the automobile manufacturer, that their manufacturer will be upgraded to require to have the new device and the product from Advantech. The other one I mentioned is that for the EV car, some of the components are new, especially battery is a key element. We have receiving a lot of new demand on the battery-related manufacturer. That's also very important key momentum for us. In the USA, their new infrastructure, again, on energy and also on transportation. On transportation wise, we may particularly focus on the rolling stock, because the investment is particularly related to Amtrak. For that one, we will work with the rolling stock and those system integrator together for the rolling stock investment, and that including many kind of systems. On the energy wise, again, on the renewable energy, even though the infrastructure is in the U.S., but for the energy, big giant, the big five, some of them are in Europe, like ABB, Schneider or GE is in the U.S. On the energy, on renewable energy, we are designing not only in the U.S., also from Europe, since five or six years ago. We will pay attention to exactly that which type of energy, no matter it's wind or solar or any power station, we will work. Hope to wrap up on your question is that both China infrastructure, I think energy will be the key market that we will focus on. As for the infrastructure on transportation in China and U.S.A. will be slightly focused differently. Okay. Thank you. Thank you for your answers. My second question will be regarding our revenue recognition delay. As we previously mentioned, that there will be the 10%-15% of revenue delay from first quarter to second quarter, and due to the component shortage. Do we see this trend to continue from the second quarter to third quarter, or do we think that the second quarter will possibly deliver the most of our delayed order? Thank you. Let me answer your question. Because the component that material supply are mainly concentrated in the audio codec and LAN chip, also power management IC and the MOSFET. At present, we only get around 40%-50% of the order quantity in the quarter two. According our procurement head feedback, the supply location variation will be better in the quarter three, but the lead time for new order is longer than 13 weeks. Probably for the second quarter, the revenue is in a threat. In the quarter three and quarter four, the situation will be getting better and better if the component shortage issue can be solved. It is my answer regarding the quarter by quarter guidance. Okay, let me paraphrase this. All you mentioned is that only 40%-50% of component could be delivered in the second quarter. We'll see continuous delay in the second half of this year. We see a better supply in component side, so we think that the delay will be less and less. Is that correct? Yeah. Okay, thank you. My last question will be regarding the gross margin. As per our forecast, we can see that the gross margin in the second quarter is a little bit lower than the first quarter. May I ask the reason is due to the product mix, material price increase, or do we see some other factors that may affect our margin? Thank you. Yeah. Well, we did encounter the material cost up ratios. A lot of component are right there, price around 10%-15%. This will lead to our cost of goods sold increase of around 1.8% in our estimate. However, we do transfer the cost up ratio into our customers, or we already announced our price adjustment guidance in the quarter one. In general, we have up our selling price for 3% for board level products and 6% for system products. For those at risk, such as CPU, memory, and boards, the selling price were caught by market price plus a certain markup rate to reflect the price change. We do expect that price adjustments will ease our gross margin pressure and take down our gross margin targets. This is quite important because the component already priced up in the quarter one, but we will adjust on the selling price in the quarter two, so they have the time there. We expect in the quarter two, the gross margin will slightly down a bit. For the full year, we still have the confidence to maintain our gross margin as our plan. For the quarter two, it's the most challenging season in terms of margin performance. This is my answer. Understood. May I ask that, do we have a guidance for the full-year gross margin range? Full years. Full years. Full years. 2021. 2021. Full years margin guidance, right? Yes. Our target to stick on 40% of the gross margin, our plan. 40%. I see. Okay. My last question was about the Service IoT industry. Since we see demand recovery from multiple industries, do you think that there will be potential operating margin hike in Service IoT in the area, or do we think that we will have to expand our R&D so that the operating margin will remain the same? Thank you. Service IoT, this is one business group that they have three focus areas. Operating margin, I think for Service IoT, is improving year by year. This year, if you look at the business, I think Medical will grow, as I mentioned previously, and Logistics Warehouse, because that is still booming, because lots of the goods need to be transported. Retail, we're not so sure yet for the second half. With all the combination on the high side of Medical and Logistics, we believe that Service IoT performance this year for the operating margin should improve. I would not say, but it should be better than last year. Depends on what will be the target compared to other business groups. Maybe not yet to the level, but the operating margin for Service IoT is improved year by year. Thank you. I have no further questions. Thank you for your comprehensive answers. Operator, next question, please. Thank you. Thank you. As a reminder, participants, to ask questions, you may press star one on your telephone. Please feel free to ask questions in English or Mandarin. We have the next question coming from the line of Willy Chen from JP Morgan. Please go ahead. Thank you for taking my question. Just want to clarify some numbers first. Eric, you mentioned your P/B ratio in the first quarter. Is it 1.6 or 1.3? Just want to clarify first. 1.66. 1.6? 1.66. Yeah. Okay. Can you talk about the April order condition? Yeah. In April, you mean April? The P/B ratio is still very high. We will release the revenue announcement, a press announcement this Friday. Yeah. I see. Okay. Do you think the order backlog in April continued to remain strong? Is that the direction we are expecting? Yes. I see. Second question is, you mentioned about the ASP hike for your product, right? I heard it's 3%-6%. Is that correct? Just want to clarify. Yes. 3%-6%. I see. Okay. I think 3% price up for the board level product. For the system product, the price increase around 6%, but it depends on each region market competition. Yeah. I see. I think the second quarter guidance, if you take the midpoint of the revenue, it probably implies a 5% growth. Which means that the volume will probably be negative year-over-year. I think previously, you mentioned that delay will be 5%-10%. Is that better than our previous guidance or slightly weaker than our previous guidance regarding your component shortage condition? I think the quarter two guidance is more similar to them, but our estimate internally. In the first half of IR meeting, we announced that the quarter two revenue will impact 5%-10% because of the chip shortage. The guidance is matched with our estimation. I see. Next question is regarding the condition in China. I think Linda mentioned about some of the strong EV orders from automotive OEMs. Can we quantify a bit, what's the contribution for this EV-related increased battery or auto OEMs sales in China? Is it low single digit, mid-single digit or double digit? Just direction-wise numbers will be fine. If we talk about the new demand from the EV-related business, it's hard to tell the growth rate, because last year is almost a very low level. I don't know how to [weather-wise] the growth rate, because that would be a very high number. Regarding the contribution in revenue-wise, because some of demand are from channel partner and some of them are from our direct customer. It's not easy to give you the round up number of that, what is the percentage of the China revenue come from that. That's why I share previously, this quarter one and even the first half, China's strong is because first one is that business as usual. We are strong on the equipment for the electronic, for Apple. The new growth momentum are from EV-related manufacturing. I hope I answered your question even though I did not give you the number you want. I will discuss that how we can provide that, but that is the growth momentum for us we have, and we see it will stay last of the year. Also, the other one I want to share, because you asked China, the new growth momentum, we also see that from Korea, because another big manufacturer for battery, rechargeable battery, not only for EV car or for any battery, also in Korea. We also have very good performance in Korea for not just only because of battery, also for the semiconductor. Yeah. I see. My last question, is regarding to the demand from North America and also Europe. I think previously in the previous analyst meeting, you mentioned that growth in first quarter will be a single digit for U.S. and Europe. I think apparently that was doing better, right? What's the outlook for those markets in the second quarter? Are we going to expect a growth there? You are asking Europe and North America. North America. Okay, fo r North America, because this is our biggest market share over there, and our business diversify in U.S. as well. Our expectation for North America, I think the second half will be better than first one. Still, semicon is the biggest market we have. Secondly, on the Cloud IoT, the data management and data backup and storage still remains strong, that will be another growth engine. The third one I mentioned about the medical. Medical related, the industry we have, the market share and also is a strong portion for us in U.S.A. team. Lastly, last year we have very good business on warehouse logistics because a lot of the e-commerce related business going up, and we supply a lot of the product for warehouse logistics. This one still keeps very good growing momentum. Under North America, under Q1, the growth rate is okay. In the Q2 and Q3, we expect will be slightly higher. One of the reason is because in U.S.A. on the vaccine, I think probably is one of the countries in the world that has very good progress on that one. Regarding Europe, because there are many countries in Europe, the performance of the Europe may different from different sales teams. On the infrastructure-wise, for the energy or the equipment, we see the strong momentum is still coming back. On the other side, on the first half, on the gambling is not there yet. We are receiving the order of the lottery and the gambling for the second half shipment. On the medical-wise, some of the medical for dental or for the surgery-wise also coming back. On the Euro second half, I still look at the bright side, but the risk in Euro will be on the COVID-19. The risk on the COVID-19 Euro is higher than in U.S. That is the one is uncertainty. Thank you. That's very clear. No further question. Operator, next question, please. Thank you. Thank you. As a reminder, participants, to ask questions, you may press star one on your telephone. We have the next question coming from the line of Liz Gifford from Jupiter Asset Management. Please go ahead. Hi. Hello. Thank you very much for the presentation. That's very helpful in this session, and thanks for taking my question. My first question is just regarding the competitive dynamics currently, how you're seeing the competitive environment, and how you see this evolving longer term? Okay. On competition landscape, Advantech is a diversified company. We have many kind of competitors. It is not easy to name any one sole competitor to Advantech. May I know which market or the region you particularly want to ask? Yeah, of course. I guess, previously we'd heard a lot about Ennoconn doing quite well. Right Also when they purchased Kontron, doing quite well. Just trying to understand if you're seeing those competitors being a little bit more aggressive in trying to get clients, or whether that's not really an issue anymore? Right. I see. Okay. Thank you. Regarding Ennoconn, Kontron, S&T, the most related countries or region is Europe and China. Beside these two region, we don't see much about the competition with Ennoconn or Kontron, S&T. These two region have different competition with them. In China, few years ago, indeed, we see the competition because they are coming after our customer. On the recent year, even last year, we are getting less competition with Ennoconn in China. Perhaps that they are going to the different market than us, even though it's still on IPC, but Advantech is doing value proposition business. We are now driving for the revenue without considering the margin. In summary, only China, we haven't compete against with Ennoconn. I'm sorry, not Ennoconn. Ennoconn. Yeah. Only on few account, that's not much of the competition. On the other hand, in Europe, because of Kontron, S&T, their homeland is in Europe, and Kontron is a respectful company in Europe. They have very good brand awareness over there. Indeed, the alliance of the Ennoconn, Kontron, S&T, do create a strong competition against Advantech in Europe, especially on the embedded market. With the brand awareness of Kontron, they leverage Ennoconn on their low-cost manufacturing, and S&T is the IT consulting service. For Advantech, in addition of our Advantech footprint over there, we also have a design center in Germany to service the customer who might require customization locally. Even though the competition is very strong in Europe against Kontron, S&T, but Advantech is not just product selling. We also invest the design team in Germany to work and compete against Kontron for local designing business. Thank you. Thank you. That's really clear. I guess, longer term, you're hoping to be at the same level as Kontron and S&T in Germany in terms of the design you're offering, or do you think that the product you offer is on the same level as Kontron and S&T already? Yeah. For Advantech and Kontron, because I am talking about Advantech embedded team, one of the strengths for Advantech is that we not just only have the embedded team for edge computer or the modules, we also have the connectivity product, data acquisition gateway, the end-to-end gateway for Industrial IoT team. I think that makes Advantech Europe as one company provide the complete solution from the sensing to data acquisition to edge computer and to the solution we are talking about that some of solution partners we have working there. I think that's one our value proposition as the total solution. On the design service on the long run, that's also the strength of Kontron over there, because that's their homeland. As I shared that, the design center we have in Germany, we already have that team since three years ago already. In the long run, we are offering the wide range Advantech product portfolio and also the local design service in Europe. This is not just only that we do that to compete with Kontron, not just because Kontron, because we have many competitors in Europe, that's Kontron, but that's Advantech, the investment in Europe to grow local business. Okay. That's clear. Thank you. My second question is regarding Service IoT. Could you perhaps provide any outlook on how much Service IoT might contribute to revenues in the next two- three years? Okay. For service IoT, our expectation, the projection for the service IoT for the revenue-wise on the growth rate actually is higher than others. On the percentage-wise, right now it's around 8% of revenue for the service IoT. Since we want all the business group to grow very healthily in double digits, our projection for service IoT, the growth rate is higher than IoT, the embedded. In the coming three years, the expectation is for the revenue portion for service IoT, we hope they can reach double digit of the Advantech revenue. Okay. That's great. Thank you. That's all from me. Operator, next question, please. Thank you. Thank you. As a reminder, participants who ask questions, you may press star one on your telephone. We have our next question coming from the line of Theo Wong from Diamond Asia Capital. Please go ahead. Hi. I have two questions. My first question is, I think your component shortage and the strong book-to-bill ratio has been there for a while. Can you talk about whether you believe there is any double booking or double ordering at your customer end? In terms of how do you actually maybe mitigate the situation of customers potentially giving you duplicate orders in the future that could result in some kind of sudden order disappearing when the situation changes? Maybe do you accept some customer prepayment for order, et cetera? That's my first question. I think previously Eric mentioned that the estimation for double booking or long-term PO could be like 20%. Yeah. Secondly, what do we do to ensure that those orders will not create a risk for Advantech? Most of the product we sell are standard product. As Eric mentioned previously, we estimate even though there is 20% of the double booking, but they are standard product, so they will not create a high risk for us. For some of the ODM project, they are not standard product. Our sales will generally ask for the NCNR. Even though some of customer may not able to agree with the NCNR, then we will have a letter of intent for the liability of the special component we reserve for them to minimize Advantech risk. At this moment, this is the communication with customer. For the ODM product we have, not just because this year's material shortage, even in the past year, when we discussed those ODM project with a special part only used for this customer, the contract and the letter of intent or the NCNR order are in the discussion to ensure minimized Advantech risk. This still continue this year. Of course, we become stricter because right now become material shortage, and we have to ensure that the order will not be canceled. Even though they will be rescheduled for the shipment upon customer request, our sales still will confine the rescheduling into the minimized time frame. I hope that answers your question. Okay. That's good. Okay. Thank you very much. Operator, next question, please. Thank you. Thank you. Once again, as a reminder, if you wish to ask a question, you may press star one on your telephone. The next question comes from the line of Hank Hu from China Life Insurance. Please go ahead. Thanks for taking my questions. My question is about Allied DMS sector. As far as we can see, the sector, you can say, the growth rate is getting slower. I'm just wondering that, I'm sorry. Do you see that in the second half, we will see a potential recovery in the Allied DMS revenue, or is it the component shortage continue to drag it and maybe lower the total revenue growth of this year? Thank you. Allied DMS, there are two business group. One is Applied Computing, the other is called IoT. I think you're referring to Applied Computing. As everybody mentioned earlier, also Grace, is that Applied Computing, one of the portion is from Advantech Japan, ATJ, and the big project is ended. That plan is that one of the big project will end this year. Second one for Applied Computing is last year, because COVID. High demand for patient terminal projects from U.S.A., from Europe. That year, Applied Computing Group has outperformed the business group for Advantech. In terms of the Y-o-Y, because they have a very high revenue last year, even from quarter one already. They are the reason that it declined right now. If you look at the coming quarters, as mentioned, even though on the patient terminal project, it could be slowing down right now after COVID, but on the other side of the medical, for the medical equipment or less life related, as I mentioned, less surgery or the eye, the dental, those kind of the medical equipment, the demand is coming back. On the second half, the shipment, because of the material issue, so we are unable to ship on quarter one and only partially in quarter two. Applied computing on the medical-wise will pick up in the coming quarter. Yeah. Actually, Applied Computing Group set a low-digit growth in this year. The reason is they have a very good performance in last year. In a year-over-year comparison at base, they just set a single-digit growth for this year. Okay. Understood. I have no further questions. Thank you for your comprehensive answers. Hey, Chen. I think that's all of the questions we have for today's call for now. I have two quick questions here, if I may. The first question is regarding the M&A strategy. Could you just remind us what's Advantech's future M&A strategy? Also what region or what segment or what products or technology would be the key focus for Advantech in the future, sort of to complement your overall product and also the technology portfolio? That's my first question. Thank you. Regarding the M&A strategy, let me answer your question first, then maybe Linda can give some comment. All M&A targets mainly divide into three categories. Let's say S 1, S 2, and S 3. For the S 1 category, we treat it as a technology platform for the regional expansion. Actually, in the past 10 years, almost all Advantech M&A belongs to this category. For example, we acquired [DLoG] to provide robust vehicle computer and display terminal for transport, for logistics, and retail. B+B SmartWorx for industrial network communication. In S 1, we still search for the right target for a specific segment. Also, we will keep going on the regional expansion, especially in the emerging country. As to the S 2 category, the target will focus on solution-oriented rather than hardware platform provider only. Till now, we don't have a clear M&A target candidate on hand. I don't expect we will have a new deal this year or the year 2022. As to the S3 category, we define it as our cooperation partner business area. We believe the cooperation partners will take the most share of AIoT value chain by integrating the software, hardware, via IoT platforms, and providing value-added service in a specific domain, such as smart manufacturing, intelligent healthcare, and intelligent transportation, something like that. For this category, our M&A strategy is to invest by minority share. 100% merge is not our intention, since it might cause conflict with our customers. This is our M&A strategy divided S1, S2, and S3. Right now, till now, we don't have a clear M&A target. My answer is for this year or even the next year, we don't expect we have a new deal for the M&A. This is my answer. That is great. Thank you for the very clear answer. My last question is a pretty straightforward one. Just want to know that how should we think about Advantech's OpEx trend going forward? I think the trend for you guys, OpEx, has sort of contracted a lot from the first quarter of 2020 due to COVID. I think moving forward for the coming one- two years, how should we think about Advantech's OpEx trend? Do you think the OpEx will again, be in a very strong expansion mode once the world is back to normal again? Any sort of target for the OpEx amount or the OpEx ratio? Thank you. On the OpEx side, the OpEx in our plan is expected to increase 5%-6% year-over-year. The OpEx ratio will be kept flat due to the top-line growth. In the long run, we don't foresee any specific OpEx growth in this year, or even in the coming years. We will keep the OpEx as flat as usual. Thank you so much. I think since there are no further questions, Eric or Linda or Grace, anything you would like to highlight before we end the call? I think we would like to refocus on our dividend policy as we share the same mindset that we try to share the profit with all the investors. Advantech keep a high dividend policy for the past. Therefore, the dividend payout ratio was over 75%. I think most of the investors are very long-term and value-focused partners, and is very appreciative for our high payout policy for now. We will keep on going with the high policy with the investors. Okay, that's great. Is there any- Thank you so much. Is there any key point for Eric or Linda to highlight? No. Just a reminder, we will have a press release regarding the April revenue. Yeah. April monthly revenue will be announced in this Friday afternoon. Yeah. Cool. Okay. Thank you so much, Eric, Linda, and Grace for your time today, and also thanks to everyone for joining the call today. Thank you. Thank you. Thank you. Thank you. Thank you, everyone, for participating. Thank you. Thank you. Bye bye. Thank you. Okay, bye bye.