Hello ladies and gentlemen, thank you for standing by for GreenTree's Fourth Quarter and Fiscal Year of 2023 Earnings Conference Call. Should you need assistance, please signal a conference specialist by pressing the star key followed by 0. After management's prepared remarks, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your question, please press star, then 2. Please note this event is being recorded. I would now like to hand your meeting over to your host today, René Vanguestaine with Christensen. Please go ahead. Thank you, Darcy. Hello everyone, and thank you for joining us. GreenTree's earnings release will be distributed shortly and will be available on our IR website at ir.998.com as well as on PR Newswire services. We have also posted a PowerPoint presentation that accompanies our comments to the same IR website. On the call from GreenTree are Mr. Alex Xu, Chairman and Chief Executive Officer, Ms. Selina Yang, Chief Financial Officer, Ms. Megan Huang, Vice President of Sales and Marketing, and Ms. Ellen Zhao, Financial Director. Mr. Xu will present the company's performance overview of the fourth quarter of 2023, followed by Ms. Zhao who will discuss restaurant business operations, and Ms. Yang and Ms. Zhao will then discuss financials and guidance. They will be available to answer your questions during the Q&A session which will follow. Before we begin, I'd like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as may, will, expect, anticipate, aims, future, intents, plans, believes, estimates, continue, target, is or are likely to, going forward, confident, outlook, and similar statements. Any statements that are not historical facts, including statements about the company and its industry, are forward-looking statements. Such statements are based upon management's current expectations and current market and operating conditions, and relate to events that involve known and unknown risks, uncertainties, and other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance, or achievements to differ materially from those in the forward-looking statements. You should not place undue reliance on these forward-looking statements. Further information regarding these and other risks, uncertainties, or factors is included in the company's filings with the U.S. Securities and Exchange Commission. All information provided, including the forward-looking statements made during this conference call, are current as of today's date. The company does not undertake any obligation to update any forward-looking statement as a result of new information, future events, or otherwise, except as required under applicable law. It is now my pleasure to introduce our Chairman and Chief Executive Officer, Mr. Alex Xu. Mr. Xu, please go ahead. Thanks, René. Hello everyone, and thank you for joining us today. We had a good and stable fourth quarter in our hotel business and continued to make progress in restructuring our restaurant business. Hotel RevPAR increased 23.3% year-over-year, reaching 110% of its fourth quarter of 2019 level during the October national holiday. Restaurant average daily sales were up 14% year-over-year. We continue to streamline our hotel and restaurant operations to increase efficiency and quality. We're working on optimizing our products and service standard to further improve brand identity for each of our hotel brands. In our restaurant business, we are focusing on growing our network of franchisees as we expand the number of street stores while reducing our footprints in shopping malls and supermarkets. Now, please turn to slide 5. Compared with the fourth quarter of 2022, Hotel RevPAR was RMB 128, up 23.3%, and the restaurant ADS was RMB 5,433, up 14%. Total revenues were RMB 372.2 million, up 3.2%. Hotel revenues reached RMB 289.6 million, up 21.7%. The increase in total hotel revenues was partially due to the continued improvement in RevPAR and the increase in the number of hotels, income from operations increased to RMB 23.1 million with a margin of 6.2%. Adjusted income from operations, excluding other general expenses, which include provisions for trademark, especially due to the acquisition of the restaurant business, loan receivable related to franchisee loans, and impairments of assets, increased to RMB 99.2 million with a margin of 26.7%. Net income was RMB 7.4 million with a margin of 2%. Adjusted EBITDA, that's non-GAAP, was RMB 161.3 million, that's up 2.1% with a margin of 31.3%. Slide 6 shows detailed numbers for total revenue, income from operations, net income, and adjusted EBITDA. On slide 7, RevPAR was 128 RMB. At the bottom of the slide, you can see the weekly RevPAR performance in the fourth quarter compared with 2019. RevPAR during the October national holiday was 110% of its pre-pandemic levels, but trended down for the rest of the quarter to the end of the year, even compared with 2019. Slide 8 shows the trend in our quarterly operating performance. In the fourth quarter, compared to a year ago, RevPAR for our L&O hotels increased to 161 RMB. RevPAR for our F&M hotels increased to 127 RMB. ADR for our L&O hotels increased to 241 RMB, and ADR for our F&M hotels increased to 175 RMB. Occupancy at our L&O hotels increased to 72.5%, and at our F&M hotels increased to 66.9%. Slide 9 highlights the growth in our membership programs, which accounted for most of our direct sales. Individual memberships grew to 91 million, up from 78 million a year ago, and the corporate memberships grew to 2.05 million, that's up from 1.94 million a year ago. Slide 10 shows the operating performance of restaurant with ADS up 14% year-over-year at RMB 5,433, but down sequentially due to seasonality. Starting with slide 12, I will review our strategic execution across our businesses. In our hotel business, we further expanded in the mid-to-upscale segment and increased our penetration in Tier 3 cities and lower cities. As you can see on slide 13, we continue to grow our mid-to-upscale segment with 474 hotels, that's 11.2% of our total portfolio at the end of the quarter. While the mid-scale segment remains the core of our hotel business with 70.2%, we continue our expansion into the higher-end segment. The economic segment remained stable at 18.6%. Please turn to slide 14. We continued to expand in Tier 3 and lower cities, and 73.5% of our hotels in our current pipelines are in such cities, and we will further capitalize on the substantial opportunities in such locations. On slide 15, we continued to focus on increased profitability in our restaurant business. We closed unprofitable stores, mostly in shopping malls and supermarkets, increased the proportion of franchised and managed restaurants, and expanded the number of street stores. Next, Selina Yang and Ellen Zhao will review operating and financial highlights. Thank you, Alex. Please turn to slide 17. In the fourth quarter, total revenues increased 3.2% year-over-year to RMB 372.2 million. The increase was primarily due to continued improvement in RevPAR and the increase in the number of hotels. Total hotel revenues increased 21.7% to RMB 289.6 million compared to the fourth quarter of 2022. Total revenues from F&M hotels were RMB 162.9 million, up 6.5% year-over-year, while total revenues from L&O hotels increased 48.9% to RMB 125.5 million. On slide 18, total hotel operating costs and expenses increased 9% year-over-year to RMB 252.2 million, excluding other general expenses consisting of provisions for trademarks, especially due to the acquisition of the restaurant business, loan receivables related to franchisee loans, and impairment of assets. Our total hotel operating costs and expenses increased 3.1% year-over-year. Among the total hotel operating costs, operating costs increased 7.6% to RMB 154.6 million compared to the fourth quarter of 2022. The increase was mainly due to higher consumables and the higher cost of general managers of franchised-and-managed hotels due to the increase of our F&M hotels and partially offset by lower utilities. Selling and marketing expenses were RMB 8.3 million, that's a year-over-year increase of only 0.9%. G&A expenses were RMB 49.7 million, down 12.5% compared with same quarter of 2022. The decrease was mainly due to lower staff-related expenses and lower bad debts. Turning to slide 19, income from hotel operations increased from RMB 13.3 million-RMB 47.4 million year-over-year, and net income of hotels was RMB 21 million compared to RMB 7.5 million in the fourth quarter of 2022. Adjusted EBITDA increased 82.8% to RMB 107.7 million, and core net income increased from RMB 47.8 million to RMB 61.7 million year-over-year. Next, let me turn the call over to Ellen, the Financial Director of our restaurant business. Please turn to slide 20. In the fourth quarter, total restaurant revenues were RMB 87.7 million, up 29.2% year-over-year, decreased mainly due to the close of L&O stores and partially increased in ADS. Please turn to slide 20. In the fourth quarter, total restaurant revenues were RMB 87.7 million, up 29.2% year-over-year, decreased mainly due to the close of L&O stores and partially by increase in ADS. You can also see the revenue breakdown for F&M restaurants and L&O restaurants. On slide 21, total operating costs and expenses decreased 16.7% year-over-year to RMB 118.1 million. You can also observe the downtrends in materials costs, personnel costs, and rents. Turning to slide 22, loss from restaurant operations was RMB 29 million, net loss was RMB 18.2 million. Adjusted EBITDA increased to RMB 4 million year-over-year. Core net income was RMB 21.7 million. Next, Selina will review the profitability of our group. Please. Thank you. Please turn to slide 23. Group net income per ADS, that's basic and diluted, was CNY 0.11. Group core net income per ADS, that's basic and diluted, non-GAAP, was CNY 0.87. Let's now take a look at slide 24. As of December 31st, 2023, the company had total cash and cash equivalents, restricted cash, short-term investments, investments in equity securities, and time deposits of CNY 1,377.1 million, that's compared to CNY 1,331.4 million as of September 30, 2023. The minor decrease was primarily due to investment in property and the repurchase of ordinary shares, partially offset by bank loans and repayment from our franchisees. On slide 25, for the year of 2024, we expect total revenues of our organic hotels to grow 7%-12% year-over-year, and total combined revenues from our restaurant and organic hotel business to grow 3%-5% year-over-year. This concludes our prepared remarks. Operator, we are now ready to begin the Q&A session. Thank you. Thank you. We will now begin the question-and-answer session. To ask a question, you may press Star, then 1 on your touchscreen phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press Star, then 2. Once again, that is Star, then 1 if you wish to ask a question. At this time, we will pause momentarily to assemble our roster. Thank you. Your first question comes from Dan Xu from Morgan Stanley. Please go ahead. Thank you, Operator. Good morning, management. Thank you so much for this opportunity to ask the question, and congratulations on the fourth-quarter result, and also good work on narrowing the losses in the restaurant business. My question is I still have not gotten a good time to look at the results in details, but I'm looking at the revenue guidance that Selina just kindly mentioned. Just want to check with you for the full-year guidance of 2024 of 7%-12% for hotel business, what are we factoring in in terms of drivers from RevPAR and also drivers from hotel opening, and how is our hotel opening plan for 2024? That's my question. Thank you. Okay. Thanks, Dan. The 7%-12% of the hotel revenue upside consists of the following factors. We expect to continue the improvement of the overall RevPAR, but only slightly with the 2023. So that's around 2% or so, the RevPAR growth. The balance of the growth is roughly 10% of the hotel numbers growth because we planned about the detailed number of hotels opened this year. We plan to be about 500. Selina, correct me if I'm incorrect in that number. And then also, we will have a number of hotels in the transition period. That is, we have a relatively older portfolio compared with some of the new start competitor group. So the last quarter, we have taken down in the last year after the pandemic, many hotels into a renovation stage, so then reduced by the renovation stage. Then combined, we have been into a 7%-12% of total revenue. Okay? So that's then consists of that number. And to further elaborate that, okay, why only 2% of the RevPAR over 2023? Why not be a little bit more aggressive? Because last year, we've seen the RevPAR increase a lot stronger than 2022 because of the post-pandemic and also many, I think, pent-up demands. The Tier 3 cities, where we have a larger percentage and over 73%, the Tier 3 cities, the RevPAR increase, I think, in the higher single digits compared with the double digits, 15% to around 15% to 13% in the first tier and second tier. So we expect that the third-tier RevPAR growth to be a relatively flat in 2024 compared with 2023. And with more seasonality and ups and downs, for instance, we have observed during the holiday season and during the weekend, we see a sharp increase, for instance, during the Chinese Spring Festival in the RevPAR in the overall ADR and occupancy, but then trended down and also relatively sharply, just like in the fourth-quarter national holiday. And so in balance, and they will be trending to be a little bit upward than 2023. And we will continue to add new products, and new products have a better identity and can offer more family and leisure-oriented elements. So we will expect a stronger RevPAR increase in the following several years after we complete this transition period. So Dan, that's our assessment to you. Thank you. Thank you, Alex. Can I just follow up with one question on the RevPAR? I saw that fourth-quarter RevPAR growth versus 2019 was mainly driven by ADR, and also occupancy was still, although recovered, but still, I think, around 10% below 2019 level, so 6 percentage points below 2019 fourth-quarter level. So I'm just wondering, Alex, for your 2024, and if you look at your weekly chart, we are now maybe around 90% of 2019 as of March. Are you seeing this year, 2024, we are seeing occupancy increase year-on-year versus 2023, but ADR was flat to decline, so resulting in this 2% increase, or you would say it's 1% + 1%, both are growing? Just my last question. Thank you, Alex. Okay. Thanks, Dan. The two actually are interrelated. If we lower the ADR, then the occupancy will be increased. So on balance, there is an optimal rate, but we do not know what's the best strategy of achieving the optimum RevPAR increase. However, this is our plan. We plan to have a slight increase of the ADR, but the occupancy, we expect to be relatively stable. So we would like to increase the room rates. And then so we expected that most of the growth should be the ADR. And then once the ADR reached certain levels, then we'll try to then further increase the occupancy. Some of the occupancy is resulted from the seasonality and also, I said, the sharp ups and downs. To balance the travel pattern for the end of 2023 to 2024, we find there's a little bit higher trend in terms of holiday and leisure and the family-related travels. So that's more seasonal than the constant demand for the business travels, which also resulted in a blended, a little bit lower occupancy. So our internal projections to be on the increase primarily resulted from the ADR. Thank you. Thank you, Alex. Thank you. Once again, if you wish to ask a question, please press star, then 1 on your telephone. That's star, then 1 to ask a question. We'll pause a moment to allow for any final questions to register. Thank you. We have a follow-up question from Dan Xu from Morgan Stanley. Please go ahead. Sorry. I have another follow-up question on the hotel opening. Just wondering for management, what's the plan for your leased hotel, the L&O hotels for 2024? Do we still have hotels in the pipeline, and are we still continuing to build net additions in leased and owned hotels? Thank you. Okay. Dan, as we previously stated, we will only build the L&O hotels in the key Tier 1 and the transportation hub as showcase hotels. Currently, I think we plan 1-2 showcase L&O hotels for our flagship brands such as GreenTree Eastern and GreenTree Inn. So there is a single-digit numbers there as currently we're evaluating. And we are still focused on continuing to grow our hotel in the franchised and managed. That is our core competitiveness and strength. So let me elaborate our overall business strategy again in light of this question. 2023 is a transitional year. I think that we, in the past, we have evaluated potentials for acquisitions and growing of the business with many different approaches with also many more brands. Now with the COVID and the post-COVID, we have transitioned into focusing more on the traditional and fundamental approach to the hotel operations, the hotel management. That is, our objective is to deliver a consistent service and products to our customers. We need to upgrade our little bit aging portfolios. So we have taken a larger number of hotels and giving our franchisee six months and most of the time to almost one year time to renovate to a newer standard, which we find we can substantially then increase the ADR occupancy and therefore RevPAR. And we'll continue to build our team to be more proficient and more efficient in both their career growth and their productivities and delivering a consistent service quality to our customers. And then thirdly, we're trying to implement and upgrade our existing technology platform to incorporate the new features, especially some of the new applications in the technology industries to further improve or enhance our frontline employees' ability to serve our customers. And then combined, we also have a restaurant. Two great brands. There are not many brands can withstand the pressure and competition in the restaurant business for over 20 years. And fortunately, we have two g reat brands. That's Bellagio and Da Niang Dumplings. And so we have started to build the brand and to use the core experience and the standard to expand in the franchise and managed models. And we have managed to increase that, which will further increase, I think, our profitability in the restaurant business. And slowly, we're already seeing the seed and trend. And they were not obvious from the previous year. But now with the travel trend to be more leisure and also more family-oriented, we find the leisure element such as the dining becomes a more essential part of the future hotels. So we do see more opportunities for synergies between the hotels and the restaurants. And so that's our business strategy. We'll continue to focus on the fundamentals. We'll find that the hotels we have built and we have established with our franchisees continue to perform very robust and that our service quality, we can see slowly increasingly becoming more satisfactory to our customers. And the customer satisfaction scores are improving. So even after this post-COVID transition period, where there's a lot of hotels coming out of that has wear and tear, even with that conditions, we slowly improved our customer service scores. We do see a great fundamental to be built in the last year, this year, and next 1-2 years for a stronger growth in the near future. Thank you. Once again, if you wish to ask a question, please press star one one on your telephone. Your next question, it comes from Simon Cheung from Goldman Sachs. Please go ahead. Thanks for taking my question. I have three quick questions. Just on your slide 8, where you laid out the leased and owned and the franchise RevPAR performance individually, I can't help to basically observe that the leased and owned RevPAR performance is much stronger than the franchise. So Alex, you mentioned that you are modeling or expecting a 2% RevPAR growth. Just wondering that obviously, the franchise exposure is going to keep increasing. The weaker performance of the franchise RevPAR performance, would that be any way that would track your overall RevPAR performance to percentage point? On an individual basis, let's say just from your observations, are you seeing any possibility that the franchise are starting to do better? Just generally wanted to get a sense how you are thinking of the respective segments and the aggregate overall. That's the first question. And then the second one is in relation to the profitability of your both business. Great to see you do have some leverage in the last 1-2 quarters. But wanted to and you also mentioned some synergy benefits between the two businesses. Can you just briefly chat about how you are seeing the margins maybe in the medium term for respective business, maybe in a 2-3-year time? And equally, just also wanted to get a sense how you are thinking about the top-line growth or actually the number of hotels and restaurants because obviously, for restaurants, for example, you already reduced your restaurant count by quite significantly over the last one year or so. And then that hotel count, 4,000s, is that some medium-term target that you have in your mind? Thank you. Okay. Great. Great questions. I will leave the third question to Selina about the restaurant business revenue change because the restaurant business, the revenue had a sharp drop because we have closed many direct-owned, leased and operated restaurants due to the impact from the lower traffic to the shopping malls and the supermarket-anchored malls. So even though the number of restaurants, the segment changed, and we have a little bit increased number of franchise and managed restaurants while the number of directly owned dropped, but the impact of the revenue was much larger. But going back to the first question, leased and operated and the franchised, the RevPAR trend, as we have said earlier, we build the leased and operated as showcase hotels. So naturally, with the showcase hotels, they tend to perform that ADR-wise, which has service elements, more complementary services to the family, to the businesses. So as a result, the ADR has been improved much higher than the balance of the larger base of franchised hotels. But we do see that trend will be probably similar because many, many franchised hotels are going through the renovations. Once after the renovations is done and the ADR, we expect the ADR will grow at the same level. And our focus and the strategy right now has been focusing on the ADR-driven growth strategy because you have an you always have an option of lower your price a little bit, increase the occupancy, and thereby taking the higher a little bit different market shares resulted in an increase of the same level of ADR RevPAR. But with ADR increases, I think we have more room and a better potential to move the quality of the products into a higher and higher level. So for the next two years, we expect similar levels of growth for both all hotels and the F&M hotels. So that's one thing. Another thing is that the L&O hotels because we have gone through renovations with a lower base. So the percentage of L&O hotels have gone through the renovation is higher than F&M hotels. That's also drive up the ADR increase a little bit higher. So I hope that I answered the question for your first for the second question regarding the synergy and then also the restaurant business. We have experimental moving the restaurant with the hotels, combining the breakfast delivery to be a three-meals, four-day restaurant. And we have seen some good result such as in our Jing'an hotels in Shanghai. That increased the revenue substantially. But moving the larger staff in the restaurant into the hotels requires a new system and new operating standard. So we are doing the second experiment in the second-tier city. So the first-tier city, we have done. And there are many elements that we need to take into consideration. For instance, the competition landscape of F&B in the buildings. Some of the buildings that we leased hotels already have other restaurant services. And then also the space constraints. And thirdly, the staff constraints. And so taking those three factors, we have taken more an experiment this year. And we have another couple of them opened scheduled to be in the summer. So we'll report to you the result of the synergy in that area. And right now, I think it's experiments and forming the standard and system and building a better fundamentals and making sure we are not also introducing some of the uncertainty and higher competition in the restaurant business into the stable hotel business. So those are the elements that we are considering. So third question. Simon, could you please repeat the third question, which we think had to do with L&O hotels versus F&M going forward? Oh, no. My first question is actually more related to, broadly speaking, the number of hotels now you're running at. It's like they're over 4,000 and restaurants are over 200 now. I hear that you have a hotel target additions, 500 for this year. But in more in the medium term, do you have any target in your mind in terms of the count for both respective segments? Thanks. Simon, our ambition and the plan is always that let's build the fundamentals. Then we'll build a growth plan that's compatible with our current resources so that we can continue to improve our brand standard and brand identity. So we plan internally the next 3-5 years and continue to grow our hotels by the numbers by 10%-15% per year. Slowly, hopefully, after we build a stronger fundamental, build a stronger base, we can even further accelerate the growth. But right now, because we have a number of issues and experience and lessons we have learned through the past M&A, which also resulted in some of the legacy problems that also consumes our internal resources to restructuring those kind of businesses and also to restructuring the restaurant and making sure the restaurant has a robust logistics system support to grow the franchise and the management models. The hotels' landscaping is very clear. The restaurants were still trying to learn the lessons and patterns of our strengths in which area, such as community store, the streetfront stores, and also the high-traffic area such as train stations, subway stations. Once we have firmly built a profitable, robust business model, then we will grow more quickly. That's the next midterm plan. Sorry, I haven't looked at the numbers yet. But then to the restaurant, are you done with all the closure? Do you feel that your restaurant count is pretty much bottom and likely going to steady at least in the coming quarters? Sorry, Simon? Number of restaurants going up in the future? That is correct. Right now, with a substantial completion, I think the restaurant reorganization is substantially completed. And so now we can focus on instead of closing, transitioning, working, restructuring of the unprofitable stores, that now we can focus on growing the franchise and more profitable stores. The legacy issues of the restaurant side, Simon, is primarily resulted in I think some of the locations have the higher rent and continued reducing the traffic. And so it's more challenging to stay profitable even after our staff put in more efforts. And so those restaurants, we have already substantially closed. So we will expect a number of restaurants and we're also growing, but albeit initially, I think slowly because, as we stated, the pattern and the system are still emerging. And the competition in the restaurant is stronger than we originally estimated and expected. So we do not know the trend will continue, but we still think that the restaurant business, I think, has more characteristics and challenging than the hotel business. If I may just get a very final follow-up question. You mentioned number of hotels that you're planning for some upgrades. So out of your 4,000-ish hotel, how many of them are going to offer upgrades? And your receptions by the franchisee, how are they willing to indeed do the upgrades when you compare to your assessment of the entire portfolio? Right now, about half. I think that my last numbers came in about half of them are in the renovations. And I think another half, we expect them to be completed next two years, next 2- 3 years. Understood. Thanks a lot for the answers. Thank you. Thank you. Thanks, Simon. This concludes our question and answer session. Really appreciate it. I would like to turn the conference back over to Selina Yang for any closing remarks. In closing, on behalf of the entire GreenTree management team, we thank you for your interest in our company and your participation in today's call. If you require any further information or have plans to reach us, please feel free to contact us. Thank you, everybody. Thank you. Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.