Conference Call Operator: Hello, everyone. Thank you for waiting and welcome to the first half of the second quarter of the first half of the first half of the first half of the first half of the first half of the first half of the first half of the first half of the first half of the first half of the first half of the first half of the first half of the first half of the first half of the first half of the first half of the first half of the 你可以在Zoom会议中点击传译来选择语言。 我们已于今天早些时候公布了2025年第二季度及上半年业绩, 现在可以在我们的投资者关系网站中查阅。 参加今天会议的有我们的创始人兼首席执行官叶国富先生和首席财务官张静金先生。 Before we continue, I would like to invite everyone to participate in the security statement in our financial news article. This statement will also be applied to this phone call, because we will publish a pre-published statement. Please note that today we will discuss non-international financial reports and financial indicators. We have also explained these indicators in the financial reports and documents submitted to the U.S. Attorney General's Office and the Hong Kong Association. and adjusted it according to the most feasible index of the international financial report. Unless there is another explanation, the currency unit is a people's currency. In addition, we have prepared a PPT with financial and business information for today's call meeting. If you are using Zoom meeting, you can see it now. You can also preview it in our investor relations website later. Next, let's welcome Mr. Ye Guofu to start speaking.
Ye Guofu: Hello, everyone. Thank you for waiting and welcome to join us. Hello, everyone. Welcome to participate in the second quarter of the Mingcheng Goods Group in 2025, which is the first half of the year. In the second quarter, the Mingcheng Goods Group sales revenue adjustment, after adjustment, and the adjustment of the EPS will exceed expectations. Taiwan and domestic business departments have reached or beyond our previous leading range. At the same time, we have also made significant progress in both the IP strategy and the power generation model. Next, we will share with you the performance highlights and key points of this quarter to discuss future strategic planning. The second quarter, the overall GMV of the Group increased by 21% and the income increased by 23.1%. Since the fourth quarter of the Group's power generation, the first positive growth This has not only exceeded the previous expectations, but also increased the speed of the first quarter. Our two major brands, Mingchao Youping and Toptoy, have increased their revenue in the second quarter. Mingchao Youping's brand growth is close to 20%, while Toptoy has achieved 87% of its strong revenue growth. In terms of profitability, the company's net profit is 44.3%, and the net profit increase is mainly due to The increase in overseas income ratio is an optimization of the net profit. After the adjustment of this system, the net profit is 8.5 billion, which is 8.5% growth. After the adjustment, the net profit is 17.2%, and the trading system is improving. We expect that with the increase in sales in the second half of the year, the net profit will continue to increase. Next, I will cover domestic and overseas. and TopToy's three major business models to introduce the business situation of this quarter. First of all, the domestic business continues to maintain a high quality growth. The sales growth is 13.6% compared to the period. The total sales of domestic consumer goods is 5.4% compared to the growth of food products. Food products are selling up to 6.3%. You can see that the domestic business The increase in domestic business not only surpasses the overall retail business, but also surpasses the online channel increase, which proves the huge advantage of Mingchang's offline store. In the last quarter, people were worried about the short-term impact of channel growth. In our view, this is necessary for long-term growth. After a quarter of adjustment, the door store has recovered rapidly. The number of households has also reached a historical high. More importantly, the Chinese private sector has gained double the income in the background of the small increase in the door store. It shows that the channel upgrade can not only effectively boost the growth of revenue, but also make the development of enterprises more balanced and high-quality. The foreign market's revenue in the second quarter has reached 1.9 billion yuan, which has increased by 28.6%. Among them, the U.S. revenue has increased by more than 80%. These increases have both contributed to the increase in power supply and the growth of high-quality new electricity this year. China China China 283 of which are not domestic, and 10 are not overseas. The effective implementation of the product differentiation strategy has continued to strengthen the competitiveness of the product, and the growth in the second quarter has increased by a large number, and has significantly increased in volume. Taobao is also the leader of the Chaohua Corridor, and it occupies a unique market position. In the future, it will continue to expand its brand door to the world, and it will continue to increase its own brand at the same time. and the sales contribution of free IP. Next, I will focus on sharing with you the two strategic movements behind the performance, large-scale strategy and free IP. As of the end of June, Mingtao Repair has already set up 11 miscellaneous nuclear power plants nationwide, covering Shanghai, Beijing, Guangzhou, Chengdu and the core cities. The average number of miscellaneous nuclear power plants has reached 4 million. Shanghai, Nanjing, Luodian, and the world's number one stores opened for nine months with a sales of more than 100 million. Through the new height of Mingchao's high-end single-storey stores, in June, Nanjing, Deji opened Space Store, which is also a long-term product. The product has made a breakthrough into heavy-duty stores. It opens up a new space for Mingchao to deploy in high-end stores. Lanliu Store has a larger storage space, so as to create different IP theme scenarios. With the cooperation of the three companies, we have built a space experience. Lanliu Store has realized the high-end In addition to higher user efficiency, Lander is not only a single-chain performance, but also a high-breakthrough performance. Its efficiency is also higher than that of regular stores, which contributes to a higher utility rate than the average level of single-chain. In addition, Lander is not only an excellent profit performance for itself, but also a core strategy for brand incubation, scalability, and the creation of mock-ups. It continues to serve as a new growth market for limited-time stores and regular stores. The first new products and limited editions of Ruoyan Electronics have been verified by fast data. After that, they will be re-installed in regular stores, and then they will be distributed in large stores. The flow will spread to the regular stores, and then they will be re-installed in non-capable stores. They will continue to be distributed to all stores, and they will be distributed to all stores, and they will be distributed to all stores, and they will be distributed to all stores, and they will be distributed to all stores, and they will be distributed to all stores, and they will be distributed to all stores, and they will be distributed to all stores, and they will be distributed to all stores, and they will be distributed to all stores, and they will be distributed to all stores, and they will be distributed to all stores, and they will be distributed to all stores, and they will be distributed to all stores, and they will be distributed to all stores, and they will be distributed to all stores, and they will be distributed to all stores, and In the last 100 years, we have already opened more than 200 flagship stores in more than 400 square meters. More than half of them were opened in 2024. These major stores are also small and medium-sized, with a profit margin of more than the average water level. As you can see, despite the past two seasons, our store's absolute quantity has not changed much. But the structure of the channel has been upgraded. We will not simply pursue quantity growth. but to continuously optimize the channels, and to dig up more opportunities through different types of power plants. Regarding the overseas market of large-scale electricity, in the overseas market, especially in our largest leading country, the United States, under the pull of the large-scale electricity model, the supply situation and brand market can not only be improved, but the new door-to-door electricity consumption in the United States in 2025 is 1.5 times that of the old electricity, and the efficiency is nearly 30% higher, and the demand is also better than that of the old electricity. The core advantage of it is that it provides a variety of cross-products for different families through large-scale, small-scale, and large-scale. From hand-made, to cosmetic products, to children's toys and gifts. Since everyone in the family likes fashion toys, large-scale can meet the needs of families of all ages, and become the goal of the American family's fashion lifestyle. So why can only we run into large-scale models? I think we can't live without Microsoft's outstanding supply chain and product capabilities. Microsoft has always paid great attention to the development and efficiency of free products. Microsoft has more than 90% of its revenue from free products, has thousands of product development and design teams, and has accumulated more than 1,500 world-class supply chain resources. Only the absolutely efficient supply chain management capabilities can support a multi-product, high-end, high-profile, trend-based warehouse large-scale store model. In the future, with the large-scale store model and the global chain of not only optimization and refining, but also opening up and opening up the open-source space overseas. And the performance is growing, which will also make the product more balanced and more stable. Whether in China or overseas, large stores are the core components of the deepening of the IP strategy of Mingchao Youping. The contents of the channels are mutual, and we are co-operating with each other. Through the continuous innovation and new space experience, we have greatly enriched the IP image. China China China China It has reached the highest record in the Australian market for single-sale. Another one is the IP strategy. Microsoft has become an unparalleled partner in the global IP industry. In the future, we will use the products and capabilities of the past mass-produced products. The full-fledged negative energy will only be digested by the IP, and the value of the market will be greater. Microsoft is an artist that has a lot of potential in the global market. . . . . . The free IP field has taken a step forward successfully. This year, in July, the UOJANG signing event was held. This year, a large number of fans came to support. This mechanism will continue to promote the signing of the world's top mid-size chains and retail chains for signing artists. This will create a deep attraction for top artists. UOJANG's IP products will also meet with consumers within the year and overseas. We will not recommend The goal of 100 Chinese APs to go out into the sea. The operation strategy of EOS is fully demonstrated in the free IP architecture. METAL has unique resources, all-in-one coverage, all-channel penetration, all-programming layout, and all-channel operation. Look at the world. Only the best products have the most flexibility and flexibility in the product. On the channel, it has the most control and innovation. . . . . . to realize the key to the development of cross-country riding in the free IP field. It is definitely not a short-term business deployment, but a long-term choice based on the trend of the times. In 2020, I first explained the concept of interest consumption, and IP is the most important object of interest consumption. The implementation of the IP series is almost successful, not only bringing us better product sales and stronger brand exposure, but also allowing us to work globally fully appreciate the potential of IP consumption and the value of the brand. I believe that with the further deepening of the future of IP and large-scale business, we will create more marketing and sales mechanisms. At present, the Chinese IP market is also in rapid development, but this is just the beginning. The future development space is still very wide. Looking back at the global development process, from Disney in the United States, HANA in China, to Japan's WANZAN, 3DU, Ren Tiancheng, In the future, China will also support its own powerful and practical platform-based IP enterprises. This will be a must-see for the rise of a great country, and it will also be a must-see product for the development of culture. In this market full of opportunities, the unique advantage of using all-in-one coverage, all-channel penetration, globalization layout, and all-channel operation will definitely take the lead in China's IP market. The goal of the future is to make IP sustainable and stable. Not only in China, but also around the world. By deepening the co-operation with global heads to ensure sustainable and stable growth of the overall business, through the construction of free IP, differentiating high-explosive and repeatable continuous growth, this is the key to our confidence in the future growth. Mingtao Youping's new strategic vision is to become the world's leading AP design retail company. According to the channel network, we are currently the world's largest AP product distributor. In 2025, the whole year is expected to generate more than 3.8 billion in sales and more than 2.1 billion in revenue. We have been leading in channel layout, supply chain, product design, and marketing. Next, we will gradually supplement I believe that our vision can be achieved. In the first half of 2025, we have already returned 10.7 billion RMB to shareholders through repurchase and financing. 84% of the net profit after adjustment in the first half of the year. In the future, the Group will still insist on reducing 50% of the net profit as financing every year. At the same time, we will continue to repurchase in a dynamic manner to bring back the expected return of shareholders. This concludes my presentation. Next, Mr. Yi will introduce the financial situation of the second quarter and the first half of the company.
Zhang Jingjin: Okay. Thank you, Mr. Ye. Welcome to today's meeting. Next, I will lead you to review the financial data. First of all, income. Q2, the overall total income of the group reached 49.7 billion yuan, which is 23% of the same increase. This exceeds the previous index of 18% to 21% of the increase. According to various brands, the income of Mingchuan high-end brands in Q2 is 45.6 billion yuan, which is 20% of the total growth. Mingchuan's income in China is 26.2 billion yuan, which is 14% of the total growth. It was accelerated in the last quarter, and it exceeded the growth of the low double-digit value that we previously guided. Mingchuan's overseas income is 19.4 billion yuan, which is 29% of the total growth, which is in line with our previous expectations. The income of the top toy brand, Q2, is 4 billion, with an increase of 87%. It continues to maintain a high-speed growth, and exceeds the previous 70% to 80% increase in value. Looking back at the first half of 2025, the overall income of the group reached 93.9 billion, with an increase of 21%. In the second half of the year, we are confident that the income will continue to accelerate. We don't recommend it. In terms of the structure of the income region, in the first half of 2025, China's domestic income accounted for 62% of the total income. In 2024, it accounted for 65% of the total income. In the overseas region, it accounted for 38% of the total income. In 2024, it accounted for 35% of the total income. It increased by 3%. In terms of the performance of the same electricity, In Q1 of 2025, the drop in the share price has been significantly reduced. In Q2, the domestic share price has continued to improve. Last year, Q2 had a high number of high-tech companies like Chikawa and Hobao. Although there is such a high number of high-tech companies, we still see a positive growth in the share price in Q2. In the first half of 2025, the drop in the share price and in the second half of 2024, this performance has been greatly improved. This is due to continuous channel upgrades, optimization of product results, and improvement of product updates and operation movements. Since entering Q3, we have seen that the recharging of domestic private companies has accelerated further in the second quarter. So far, the recharging of domestic private companies has turned positive from January to August 20th. Looking forward to the second half of the year, we can now tell you very confidently that the recharging of domestic private companies will definitely achieve real growth throughout the year. . . . . . to help the overseas market fully learn the strategy of China's telecommunications improvement, has already achieved initial results. In Q2, we saw that overseas private telecommunications dropped from a medium-high number last quarter to a low number in Q2. Among them, overseas European markets and North American markets' telecommunications have all achieved a medium-high number growth. This has undoubtedly strengthened our confidence in global business growth. In terms of door-to-door growth, our domestic Q2 has turned around the trend of Q1 near-end stores. In Q2, we achieved a near-growth of 30 door-to-door stores, which is more optimistic than we had previously expected. We are talking about brand upgrade and channel advancements internally. Our channel upgrade can be traced to the first large store we opened in Beijing, Guangzhou in Q3 of Q2. From that time on, we began to discuss internally how to build large store goods, how to operate, how to improve the door-to-door model, and so on. The key event in the upgrade of the channel was the opening of Minisoft Land in Shanghai, Nanjing East Valley in Q3 of 2024. Then in Q2 of this year, the opening of Minisoft Space in Nanjing, Germany, our channel upgrade has reached its climax. So far, I am very happy to share with you that the number of our large stores has reached 5% of the domestic door-to-door number. In the first half of this year, 5% of the large stores has contributed to China's unparalleled sales. And this ratio is still rising. For example, in this year's Q2, the top 30 stores are all Minseland and QiJianDian. More importantly, we have already initially formed a seven-storied platform store district. Mingchao's products will no longer rely on a small store to beat the world, but through the Minseland series, QiJianDian series, ChangguiDian series, and KuaiShengDian, to meet the needs of different business environments. In the whole year of 2025, Mingchang's number of stores in China will continue to grow. Currently, we expect that the number of stores will be between 100 and 150. In terms of structure, we will focus on QiJian and MinnesotaLand stores. There will also be regular stores, but regular stores will continue to decline. Mingchang's high-end single-brand stores in China is expected to reach more than 160 billion yuan this year. It is already a very large consumer brand. But in 2025, our goal is to achieve double-digit growth year-on-year under the premise of how to increase the number of stores. Behind this, we will continue to grow healthily and our newly opened stores are of very high quality. There are 94 new overseas Q2 stores. The store's network is steadily expanding. By the end of the first half of the year, the number of overseas stores has increased by 189. The overseas market space is still large, so we are still planning to add more than 500 stores throughout the year. But we will be more cautious in evaluating and expanding the number of direct stores. We previously expected that about 40% of overseas stores this year would be direct stores. Now we have adjusted to about 35%. This means that in the coming years, we will have a more reasonable capital investment and the team will have more energy to focus on the optimization of the current branch stores, and we will do our best to boost the performance of the second half of the year. Next is the interest rate. In terms of interest rate, Q2 increased by 0.4% compared to the same period last year, reaching 44.3%. In the first half of 2025, it was also 44.3%, which increased by 0.6% compared to the same period last year. In addition to the increase in overseas revenue from the group we just mentioned, the effective development of our IP strategy has also led to a steady increase in the net profit of overseas business units. The optimization of the product structure of TTT brands has also increased the net profit of TTT brands. In the future, the net profit may be affected by changes in product structure, interoperability, and some fluctuations, but the increase in overseas revenue and increase in IP sales, We still have room for improvement. Our profit margin is still moving upwards. But we will be more cautious in dealing with profit margin issues. As you know, with our brand's upgrade, IP strategy promotion and globalization, our company's profit margin has increased from 27% in the first half of 2021 to 44% at present. We have also reminded you in the previous phone calls we will pay more attention to balance the price-to-value ratio of our products. On the line of non-IT products, we have to insist on the positioning of the price-to-value ratio of famous products. So, since this year, we have made reasonable adjustments to some categories in China and overseas, and we have obtained better sales performance and increased the company's profit margin. So, in the future, we will continue to make similar adjustments under the premise of maintaining a relatively stable overall profit margin. In terms of cost, the total cost of Q2 increased by 38%. The cost of sales increased by 43%, and the cost of management increased by 19%. The cost of sales increased by 23%, which is 3% higher than the same period last year. The cost of sales increased in the same way as our investment in Zhiyun Inn. The cost of investment in Zhiyun Inn includes 56.3% increase in the same way as the cost of hiring, renting, and saving. In the previous quarter, it increased by 71.4%. So, the direct cost of direct cost of direct cost of direct cost of direct cost of direct cost of direct cost of direct cost So. As we talked about before, our investment in Yonghui started to have an impact on our financial statements. Our investment in Yonghui is based on the Settlement Act. Yonghui's impact on our net profit in this quarter is RMB1.19 billion. This project will be excluded from the financial index for non-international financial statements. Most of it comes from our 29.4% share price ratio, which is equivalent to Q2's net loss. In addition, about RMB 5 million comes from the purchase evaluation related to the sale cost. This part of the sale cost is expected to be stable at around RMB 5 million this year. Regarding profit and loss, our net profit and loss rate has been adjusted to 17.2%, which is 0.6% higher than Q1. compared to last year's 2.3% decline. Compared to Q1, this decline is narrower, and the trend is better. Let's divide into parts, right and left, to explain the reasons behind the decline and why I am confident in the trend of improvement in profitability. First, let's look at MINISO. The profitability of our core domestic joint business is stable. Some domestic new businesses, such as warehouses, e-commerce, The profit margin of these businesses is lower than that of traditional joint businesses, but the impact is controllable. The decline in the profit margin of overseas businesses is due to structural changes in income. The income contribution of direct income has been increasing. After the sales boom in the second half of the year, we expect that the impact will weaken and the profit margin will increase. We believe that the profit margin of overseas direct income businesses itself has a lot of room for improvement beyond our goal. In the future, we want to maintain high growth while maintaining high growth to improve the efficiency of our operations. Then there is the TT brand. The profit margin of this quarter has been greatly improved, but we have made some preemptive investments, such as in product development, overseas and IT. This is a very healthy business investment. In the medium term, about 20% of the operating efficiency is what we think is a very reasonable goal for the company. But in the process of growth, we need to give the new business plenty of space and time The net profit of Q2 has been adjusted to 6.9 billion. The net profit has been adjusted to 13.9%. The EBITDA has been adjusted to 14.7%. The EBITDA margin has been adjusted to 23.1%. In terms of operating capital, our inventory cycle is stable and efficient. Up to 630, the group's inventory cycle has been signed for 93 days. Last quarter, it was 102 days. There have been obvious improvements. From the distribution of brands and regions, The Mingchuan overseas and TT are relatively stable. The domestic Mingchuan's storage cycle is significantly shortened. In the imported section, we promote SKU-structural control, strengthen the standardization of product types, and implement dynamic storage and water monitoring mechanisms to accurately match the supply and demand rhythm. In the storage management section, we established a whole chain of product life cycle label system. Combined with seasonal sales nodes, we implemented a differentiated sourcing strategy to effectively improve the storage efficiency of long-term products. This also laid the foundation for the improvement of our cash flow health and the release of operating capital efficiency. Until the first half of the year, our cash reserves were 74.7 billion, still stable. Our cash flow in the first half of the year was 10.1 billion, of which Q1 was 2.6 billion, Q2 was 7.5 billion. Our business's cash flow capacity has been significantly improved in the currency market. This has led to an improvement in our operating capital efficiency. Our capital allocation strategy will continue to balance our rapid growth and promise to bring stable and predictable returns for our shareholders. Today, we also announced the mid-term stock market in 2025. The amount is about RMB6.4 billion. It accounts for about 50% of our last half-year adjusted net profit of RMB12.8 billion. It will be paid to all shareholders in September. We believe that under the current market conditions, the company's stock price has significantly shown its first-stage internal value. In the first half of this year, we repurchased stocks worth RMB 3.4 billion, accounting for nearly 1% of the total circulation. This also means that the amount of repurchase in the first half of this year has exceeded the total amount of repurchase last year. This is also the highest amount of repurchase in the first half of the past year. The repurchased stocks will all be sold out. In the first half of this year, we have repurchased shares and already paid shares. The payment to shareholders has reached RMB 10.7 billion. accounted for 84% of our net profit in the first half of the year. This figure was 55% in the same period last year. The Board of Directors has also agreed to take advantage of the return of 10% of the total shareholder shares given at the annual meeting in June this year, and continue to return the shares through Hong Kong in the future, and return the shares to the public market through the 10B5-1 return plan. We believe that the return of shares is the best benefit for our company and shareholders as a whole. to create value for shareholders and convey our confidence in the company's business development. Finally, in the third quarter, we remain optimistic about the continued growth of the company. We expect that the company's income will increase by 25% to 28%, and it will increase significantly in the first half of the year. The company's copper power is expected to increase in the first quarter. The company's adjusted operating profit is expected to increase in the second quarter. The net profit rate of the new adjustment will continue to improve and continue to shrink. Looking at the whole year of 2025, we expect that the group's revenue will increase by less than 25% and increase rapidly in rhythm. This is higher than our previous expected growth of less than 22.8%. At the same time, we expect that the net profit of the new adjustment in 2025 will be between RMB36.5 billion and RMB38.5 billion. Thank you.
Unknown: Hello, Mr. Yeh. Congratulations to the company for having exceeded expectations. My main question is about the US. We can see that in the second quarter, in addition to the sales exceeding expectations, the control of the cost is very good. Mr. Yeh, you also mentioned some adjustments to major stores and products. Can you share with us more about some of the new teams in the U.S. market? What do you think is really going well? In the second half of the year, what will be the focus of these strategies in the U.S.? Especially in terms of profit, how can we look at the direction of profit in the second half of the year, this year, and the whole year in the U.S.? ? And it also has to do with the opening. We just adjusted the opening rhythm a little bit. What are the goals of the U.S. opening this year? It's mainly about the U.S. side. I hope Mr. Ye and Ethan can share more. Thank you. There are several aspects to the U.S. economic improvement.
Ye Guofu: The first is to pay more attention to the quality of electricity. So we put the quantity of electricity down. The main thing is to open a large-scale strategy. China China . . . . . Taiwan Taiwan Taiwan Taiwan Taiwan . . . . The third one is economic operation. Do a good job of arranging logistics. Because we found a professional team. In localization, in economic operation, it's better than what we did in China in the past. The main thing is that the U.S. work focus is on this in the next three and a half years. And in the second half of the year, we still, I especially talk about Taiwan's category. In the United States, the growth is very fast, especially in Tangjiaomao. We are very confident that in the 12th month in the United States, Tangjiaomao will create a new record and a new goal, complete a new goal. So the goal of opening stores this year in the United States is 80 stores, which is much less than last year. But we are more willing to open stores and open large stores. Since this year, some Plaza stores have a higher efficiency than the old stores. . . . . . This area, no matter which plaza you go to, you can see that we have a large store. In this case, large stores, I think, is a large brand, a large industry. So, the trend of power supply changes in the American market, this doctor will tell you about it. Okay, thank you, Michelle.
Zhang Jingjin: The power supply performance in the American market, I told you before that the first quarter was a high number last year. The QE in 2024 is 30% of the power supply. So, in this year's first quarter, we can see that Our part of the overseas market, especially the U.S., is under pressure. But as we enter the second quarter, especially the third quarter, we see that copper is constantly improving and continuing to accelerate. So in the second quarter, copper has already turned to the U.S. What I just said is an increase in the number of high-end customers. The third quarter looks like it should still be accelerating. As for the outlook on the profit and loss ratio, we saw that in the first half of the year, the profit and loss ratio at the doorstep level of the U.S. market was the same as last year. This is the first half of the year. Thank you, Mr. Ye. Thank you, Mr. Ye.
Unknown: Thank you.
Conference Call Operator: Hello.
Unknown: Hello. Hello. Hello. Hello. um um It also embraces an O2O activity, so we can look forward to the growth of our future. This is my first question. The second question is, I would like to ask the overseas side, can you help us guess the ratio of sales in different areas? For example, in the United States, Europe, and Asia, what is the ratio? From this perspective, our future growth and strategy, I just talked about the United States. If other areas can talk more about this, we would like to know. And then the third is the Top Toys. I want to know the growth of our overseas side. How many stores do we have overseas now? Where is our focus? Because Top Toys is also in Taiwan. So if overseas, Thank you. Hello, I'm Ethan. Mr. Ye answered the first question.
Zhang Jingjin: How do we improve our domestic power supply this year? We have indeed accumulated some experience and methodologies.
Ye Guofu: I would like to talk about domestic power supply improvement. Mainly, China has established a performance growth group, which is called the Chief Growth Officer. It has a business center and a future. Through this organization, we have opened up the business, operations, channels, marketing, and digitalization centers. We have opened up all the chains, and then let the shop and the business, and also the operation, connect seamlessly. In this way, we have made great improvements to the operation of the shop. The second is the improvement of the product. . . . . The store has also been optimized, and the small store has also changed to a large store. Through the improvement of the store, the area has become larger, and there are more products, so that the exclusive area of the store is also created. The third is to fully utilize the manpower and labor force of Jiejiazhi, because we have now found that Jiejiazhi has a very large customer flow, especially for family travel. The secret is that the mother and child can buy things in our store. At this time, we have done a lot of work. I think the core is still the first step, and the second step is the whole organization. The second step is still the core of the product industry. I will stop at these two points.
Unknown: Okay, thank you.
Zhang Jingjin: Anne, I will repeat your answer. Is it the ASP or the traffic that leads to the problem? First of all, we can see that domestic power supply in the second quarter is growing at a low level. we can see that the main factor is the price of our goods. This is the first aspect. If we take a look at the price drop in the fourth quarter of the second half of last year, we can see that the price flow has a very big impact. This is also a very common problem for our domestic retailers in China. There is a lot of pressure coming from traffic. So if we face a lot of traffic pressure last year, we can see that the pressure is decreasing this year. So I think that although we saw that the growth of our customer traffic in the first half of this year seems to be mainly due to the improvement of the customer price, the customer traffic seems to have dropped a little, but you have to see the trend of the customer traffic drop in the second half of last year is very, very obvious. So I think our customer traffic this year, or our conversion rate is also improving. Yes, the other point is that O2O has contributed to the same store. But in China, in our regular stores, O2O has been doing this for several years. So if we compare this year's first half of the year and last year's first half, the contribution of O2O's copper electricity is not a positive contribution. So this year, we see that the copper electricity has improved. More of it is coming from our offline stores. Yes, and then the sales ratio of different regions, I can probably introduce the GMV in the middle first. In the overseas GMV, . . . .
Ye Guofu: I think TT is also a professional fashion brand. Yes, and its pricing is relatively high in all aspects. Mingchao Youping is a high-end fashion brand in terms of life frequency. Increase the life frequency to increase the fashion frequency. Yes, one is a special store form, one is a special district form. It is also a professional fashion store form. I understand. We still hope to have a 100-storey store overseas. It's not easy. It's not easy.
Unknown: Yes, yes, yes.
Zhang Jingjin: TopTolent is expected to achieve a growth of 70% to 80% this year, but its pace will be consistent with Mingchang. We will have a higher quality development this year, so its number of stores will increase by about 50 to 60 units this year, but its performance will increase by 70% to 80%. Thank you. Okay, thank you. Okay, next question.
Conference Call Operator: Okay, the next question is from UBS. Your line is open. Please ask a question.
Samuel: Thank you very much for the opportunity to ask questions. I'm Samuel from UBS. One of my questions is about the artist IP that we mentioned. I would like to ask about the current artist IP, including the current sales overall situation, such as the ratio, etc. What are the sales goals for this category in the future? For example, what is the sales ratio of our future plan? Also, we may need to add a new business model for IP operations. For this, I don't know if the company has any plans or strategies to share with us. This is the first question about the artist IP. Of course, if possible, I would like to know more about it. In the past, the management layer mainly did global large IPs. Now, the transformation behind the artist IP is also why there is such a change. Then the second question is also about the overseas market. Because I also noticed that the Q2 market of the United States has changed. The overall overseas market is still under some pressure. I would like to ask which of the overseas markets may say that it is the first expected this year, and which of the markets show that it is more than expected. For these markets that may show a little bit of pressure, what are some of our future measures? Thank you.
Zhang Jingjin: Mr. Ye, can you answer the question about the IP strategy?
Ye Guofu: There has been a major change in the past. In the past, we only had one way to go, which was to make international IP authorization. But today, we actually started the deployment half a year ago. We can announce it to you this time. We are now announcing that the IP dual-option, which is part of the international IP, We can see that the market in China has just risen. The market is developing rapidly. So, Mingchao Goods has a strong development advantage here. We can see that we are . . . . . In cooperation with international AP, we have the advantage of product development, the advantage of marketing, and the advantage of channels. But what we lack is the freedom of AP. But as soon as we start to form the freedom of AP, we think we have a great future. We have now signed nine artist APs. Youjiang is the first one. You can see Youjiang. We expect Youjiang to reach about 40 million this year. It will break one billion next year. It must be an over 100 million IP. So from the success of the discount to the way to play, I can tell the market that we have mastered the method of operating free IP. Including us, including the IP acquired by us, called Luoming. Last year, the global sales volume was 100 million. This year, it can reach 250 million. Next year, it can reach 600 million. So whether it's from top to top, or from the business side, our two companies And both of them are doing free IP. One is the artist IP that we signed up for. It's called Mito. The second one is the Luo Ming that Taobao has acquired. These two IPs bring us unexpected surprises. And there will be more new IPs coming in later. I think after Chinese artists and Chinese GDP exceeds US$10,000, the rise of China's big country, the rise of Chinese culture, the most important thing is IP. I think China's IP has just begun. This market has a lot of potential. . . . . . . . . . And let me tell you, I will not only sign a lot of artists' IPs, but also sign these IPs, all of them are not high. I can tell you, you don't have to spend a lot of money. It's not about spending money, it's about spending a lot of money. And these small artists, we can help them run well and grow. At present, in China, those with this platform capability, that is, our two companies, two or three companies with this capability, we have two. One is Meet, the other is TopToy. . . . . . .
Zhang Jingjin: the spirit of a strong entrepreneur and entrepreneur. I'm very excited. I also welcome everyone to participate in our live broadcast in Hong Kong tomorrow. Mr. Ye will share more thoughts on the IP strategy. Samir, I also asked a question. What are the unexpected expectations of the overseas market this year? I think it should be seen as a fact that Mingchang now has more than 100 markets in the world. There are businesses. Then you will always encounter some markets, such as exchange rates, local retail, red crowns, including the situation of our local customers themselves. Sometimes it will be very good, sometimes it will be very bad. It is not possible that all the markets are all good, and it is not possible that all the markets are all bad. So we see that in the first half of this year, for example, our United States, Canada, for example, like our Australian market, we can see that it has a very fast reversal trend. For example, like our Canada, As Mr. Ye said, we have a local team in the U.S. We also have a professional local retail expert leading a professional team in Canada. After he came to the table, we now see that the performance is very good. In recent years, the sales in Canada have been showing a three-digit number, including even a three-fold increase. In Australia, we also talked about the Pre-Pairing Market that we were preparing just now. Whether it's the local fast-food or some local stores, the results are very good. Is there any unexpected growth? Or is the business growth slower than it was in the first half of the year? We can see that there are several important markets. We can also talk about it. You can see that in Latin America's market, the income has dropped in the first half of the year. But its local retail stop, GMV, has increased. This is mainly due to several reasons. The first reason is that the local customer is a very trusted customer of our long-term cooperation. In the first half of this year, he is adjusting his inventory level. Now it has been adjusted to the right place. Secondly, we have seen a big exchange rate fluctuation in Mexico in the past 12 months. Because it uses US dollars to purchase our products, it will affect the exchange rate even more. But we can see that in the past few years, the performance of the entire Latin American market has been relatively stable. There are also some small markets. If the company's volume is small, there may be some uncertainties. For example, in China and Hong Kong, we can see that the whole of Hong Kong's customer base goes to the mainland, including some of the high-end rents in the retail industry. However, the proportion is very small. In general, we think that the entire first half of the year, from Q1 to Q2, the entire overseas market is going up. When it comes to Q3, we see that the overseas market is also accelerating. Okay, thank you.
Conference Call Operator: Next question is from Shidi from Huacai.
Shidi: Your line is open. Thank you very much for the opportunity. I'm Shidi from Huacai. I have two questions. One is that the impact of tariffs started to fall from Q2. We also made some adjustments in the U.S. Regarding the adjustment measures for tariffs in the U.S., including our supply chain, are there any new updates? Including Q2, What are some of the price adjustments made in response to tariffs? Can you give us some details about the influence of sales? The second question is actually about the domestic market. We actually mentioned it in the previous conference. If we continue to push the IP strategy in high-end cities, low-end cities may be more cost-effective. What is the current implementation strategy in terms of supply and demand adjustment? Is there any difference in the performance of high- and low-end cities? These are two questions. Thank you.
Zhang Jingjin: Thank you for your question. I'll answer the second one first. What's the difference between China and other cities with different performance levels? In the first half of this year, the performance of high-end cities is better than that of low-end cities. That's right. The second question is about tariffs. Since April of this year, the US tariffs have been an issue that everyone is concerned about. Let's talk about the results first. We see that tariffs have not significantly affected our US profits. In order to respond to tariffs, we have done several jobs. The first job is that we have already consciously prepared some reports in advance in the US since last year, before the political situation in the United States changed. The second is that we have used the ability to manage and integrate the supply chain of Mingchuan. We have already started to set up local US sanctions. So now in the US, we have a very large ratio of sanctions. In this way, on the one hand, we can better respond to tariffs. On the other hand, we can also develop and purchase local products. We can better adapt to the needs of local consumers. Regarding the third one, we are doing some reasonable tax planning. So now we see that the entire... Hey.
Qin Yang: Thank you, Manager Chen, for giving me the opportunity to ask this question. I'm Qin Yang from Changjiang Securities. I mainly have two small questions. One is that I would like to ask you about the situation of overseas executive and agent businesses. Currently, these two What is the trend of growth in business? Secondly, I would like to ask, because we have been promoting the pace of IP more recently. I would like to ask about the growth of MinisoLand. What is the current situation of its growth? Is it a trigger for domestic market growth? Secondly, what is our plan for the subsequent IP acceleration? Yes, these are the two. One is about overseas business wealth, and the other is about IP. Thank you.
Zhang Jingjin: Excuse me, we have a signal problem here. What is your second question about the IP? Let me answer the first question first. The difference in the number of overseas employees and agents. In the second quarter, 29% of overseas employees and agents are overseas agents. Now, in fact, the number of employees and agents is a division of the internal management of our company. We have one called executive business and one called agent business. But as we speed up our globalization, we will find that you have me and I have you. In our executive business, there are some, for example, this kind of alliance and agent business. In the agent business, there are also some executive branches. So we now think that these two combinations can't be very well represented. It's such a combination of our overseas business. So we are now inside it. But overall, the overall growth of Zhiyun is faster than expected. What is your second question?
Qin Yang: Yes, about free IP. And the other question is about the progress of free IP. And the other question is about the current situation of IP LAN.
Ye Guofu: Free IP is now an important factor for us. In the past, we used to walk on one line. That is to say, China. China Shanghai, Nanjing, Lujian, Jiugeyue, Guoyi. This is what I didn't dare to imagine in the past. In addition, we have recently opened a few bad shops here. Every bad shop is very successful. So what benefits did the bad shop bring to us? It can attract a lot more Chinese and white artists to sign contracts with us, to cooperate with us, to support us, to cooperate with us, to fight for cooperation. Because the bad shop is foreign foreign foreign foreign We have a small domestic API and an international API. But now that we have entered Deji, we not only want to make an international API, but we also want to make a domestic API, a free API. There are many free APIs that want to enter Deji, but they can't. Only through MISO can we cooperate in our Deji store. This can greatly improve our contract with the free API and the contract with the free API and collect the resources of free API artists. This is a great window. And in the future, we, including Space, Malaya, Camille, France, and our three product lines, will do everything in China for IP. And we will create a very good platform for free IP artists and an open platform. For us, developing free IP is a powerful guarantee and mechanism. We believe that China will be the first country to open a nuclear power plant worldwide.
