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Good day, and welcome to the GreenTree Hospitality Group Limited Fourth Quarter and Fiscal Year 2024 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, today's event is being recorded. I would now like to turn the conference over to Rene Vanguestaine with Christensen. Please go ahead.

Thank you, Rocco. Hello everyone and thank you for joining us. GreenTree's earnings release was distributed earlier today and is available on our IR website at ir.998.com, as well as on PR Newswire services. We 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; and Ms. Selina Yang, Chief Financial Officer. Mr. Xu will present the company's performance overview of the fourth quarter and fiscal year of 2024 and Ms. Yang will then discuss financials and guidance. They will both be available to answer your questions during the Q&A session which follows. 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 US Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as may, will, expects, anticipates, aims, future, intends, 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 US 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, Rene and hello everyone and thank you for joining us today. Our performance in the fourth quarter was negatively impacted by the closure of 12 leased and managed hotels during the year and lower RevPAR compared to a higher base last year and the continued optimization of our restaurant business. In our Hotel business, we are simultaneously accelerating the opening of new hotels, with a planned 480 in 2025, that's an increase from 405 in 2024 and upgrading our existing portfolio with an absolute focus on quality to ensure higher standards of products and services. We believe that rejuvenation of our portfolio that was slowed down by the pandemic will be completed by the summer of 2026. While mid-scale remains our core segment hotel openings in 2024 and our pipeline highlights our strategic commitment to expanding our mid to upscale segment, where we expect the growth over the next two years to deliver a significant economy of scale. Finally, we'll continue the phased closure of leased and managed hotels, especially, in the lower-tier cities retaining only select flagship properties in key cities to serve as a showcase of our capabilities for the prospective franchisees. The strategic transformation of our Restaurant business made further progress on our two priorities. At the end of the quarter, Franchised and Managed stores accounted for almost 90% of all stores. That's up from 78% a year ago and the Street stores that benefited from more stable consumer traffic accounted for 50% of all stores up from 40% a year ago. Additionally, we have been rightsizing many of our stores reflecting the new economic reality to improve overall profitability. We believe we now have a strong foundation to build on and will grow the overall numbers of restaurants in 2025 with a particular focus on Franchised and Managed as well as Street stores. Please turn to slide 5. Compared with the fourth quarter of 2023 Hotel RevPAR was RMB 116, a decrease of 9.6% and the Restaurant ADS was a decrease of 16.8%. Total revenue was RMB 304 million, a decrease of 18.2%. Hotel revenues were RMB 240.2 million and a decrease of 17.1% mainly due to the closure of 12 L&O Hotels in 2024 and a year-over-year decrease in RevPAR of 9%. Net income was negative RMB 72.8 million mainly as a result of impairment of goodwill and trademarks of our Restaurant businesses impairment of assets and provisions for loan receivables related to franchise loans. Adjusted net income defined as excluding these impacts was RMB 77.3 million, an increase of 26.8% with a margin of 25.4%. Core net income was RMB 57.8 million, a decrease of 22.3% with a margin of 19%. And adjusted EBITDA was RMB 71.5 million, a decrease of 38.3% with a margin of 23.5%. Cash from operation was RMB 74.2 million. It's up from a negative RMB 13.5 million a year ago. Slide 6 shows detailed numbers for total revenues net income, adjusted EBITDA and the core net income. Slide 7 shows the trend in our quarterly operating performance. In the first quarter compared to a year ago RevPAR for our L&O hotels decreased by 2.1% to RMB 158. RevPAR for our F&M hotels decreased by 9.8% to RMB 115. ADR for our L&O hotels was largely in line with that of last year and ADR for our F&M hotels decreased by 4.6% to RMB 167. Occupancy at our L&O hotels decreased to 65.5% from 66.9% and occupancy at our F&M hotels decreased to 68.6% from 72.5%. Slide 8 highlights the growth in our membership programs which accounted for most of our direct sales. Individual memberships grew to 102 million up from 91 million a year ago and the corporate memberships grew to 2.17 million up from 2.05 million a year ago. Slide 9 shows the operating performance of Restaurants with the ADS decreasing year-over-year to RMB 4,234. Starting with slide 11, I'll review our strategy -- strategic execution across our businesses. In our Hotel business, we further expanded in the mid to upscale segment and in Tier 2, Tier 3 and lower cities. As you can see on slide 12, we continued to grow our mid to upscale segment with 553 hotels, that's 12.5% of our total portfolio at the end of the quarter. While the mid-scale segment remains the core of our Hotel business at 67.3%, we continue our expansion into the higher-end markets. We also continued to grow our Economy segment ending the quarter at 20.2%. Please turn to slide 13. Our current pipeline is growing in Tier 2 cities and we also opened more hotels in such cities. On slide 14, we continue to turn around our Restaurant business to ensure that it is sustainably profitable going forward by focusing on areas with greater foot traffic. We have closed L&O stores and opened new F&M stores, completing the strategic transformation to our new business model. As a result, F&M restaurants accounted for 89.6% at the end of the quarter compared to 78.4% a year ago; and the Street stores accounted for 50.5% compared to 39.7% a year ago. Next, Selina will review operating and financial highlights.

Thank you, Alex. I will first review our Hotel business. Please turn to slide 16. In the fourth quarter, total Hotel revenues were RMB 240.2 million, a 17.1% year-over-year decrease. The decrease was mainly attributable to our L&O hotels segment and a 9.8% decrease in RevPAR in our F&M hotels segment. Our L&O hotels segment was impacted by the closure of 12 hotels in the year of 2024, while in 2023 it benefited from a one-time revenue recognition of recognitioned rooms and a successful lawsuit against the sublease. Total revenues from L&O hotels were RMB 91 million, a 27.5% year-over-year decrease. Excluding the impact of the above-mentioned factors, same L&O hotel revenue in the fourth quarter of 2024 decreased by 2.4% year-over-year. Total revenues from F&M hotels were RMB 148.2 million, a 9% year-over-year decrease, mainly due to a 9.8% decrease in F&M hotels RevPAR. On slide 17, total Hotel operating costs and expenses decreased 10.5% year-over-year to RMB 225.7 million. Operating costs decreased 9.5% to RMB 139.9 million year-over-year. The decrease was mainly attributable to the closure of 12 L&O hotels in 2024, which resulted in lower rental consumable food and beverage and staff-related costs. Selling and marketing expenses were RMB 13.5 million, a year-over-year increase of 61.7%. The increase was mainly attributable to the reclassification of selling staff-related expenses previously recorded as G&A expenses. Excluding this factor, selling and marketing expenses increased by 22.2% year-over-year. General and administrative expenses were RMB 39.7 million, down 20.1% compared with the same quarter of 2023. The decrease was mainly due to lower consulting fees, lower bad debt due to accounts receivables and lower G&A staff-related expenses. Turning to slide 18. The decline in revenue resulted in a decrease in profitability for our Hotel business despite lower operating costs and expenses. Cash from Hotel operations however, increased from RMB 18.4 million to RMB 68.8 million year-over-year. Net income was RMB 28.4 million, compared to RMB 8.1 million in the fourth quarter of 2023. Adjusted EBITDA decreased 34% to RMB 71.1 million and core net income decreased 24.2% to RMB 46.1 million year-over-year. Next, let me review our Restaurant business. Please turn to Slide 19. In the fourth quarter Restaurant revenues were RMB 65.1 million, a 25.8% year-over-year decrease. The decrease was mainly due to the closure of L&O stores and a 16.8% decrease in ADS. Same-store revenue decreased by 3.1% to RMB 31.2 million. Total costs and expenses increased by 98.7% year-over-year to RMB 187.4 million, mainly due to the impairment of goodwill and trademarks. Excluding these impairments total costs and expenses for Restaurant business decreased by 14% year-over-year to RMB 67.3 million. [Audio Gap] the improvement in profitability of our Restaurant business due to our strategic execution. Cash from operations turned positive at RMB 5.5 million in the fourth quarter of 2024. Net income excluding the impairment of goodwill and trademarks increased 44.3% to RMB 18.9 million in the fourth quarter. Next, I will review the profitability of our group. Please turn to Slide 21. Group cash from operations despite the revenue decrease increased year-over-year from negative RMB 13.5 million to RMB 74.2 million. Net income in the fourth quarter excluding the impairment of goodwill and trademarks of our Restaurant business, impairment of assets and provisions for loan receivables related to franchisee loans increased from RMB 60.9 million to RMB 77.3 million. Adjusted EBITDA was RMB 71.5 million compared to RMB 115.8 million one year ago and core net income was RMB 57.8 million. On Slide 22, net income per ADS basic and diluted for our Hotel business increased year-over-year to RMB 0.29 that's USD 0.04 and core net income per ADS basic and diluted for our Hotel business was RMB 0.45 that's USD 0.06. Group net income per ADS that's basic and diluted was negative RMB 0.70 that's USD 0.10 and Group core net income per ADS basic and diluted was RMB 0.57 that's USD 0.08. Let's now look at Slide 23. As of December 31, 2024, the company had total cash and cash equivalents restricted cash short-term investments, investments in equity securities and time deposits of RMB 1839.1 million compared to RMB 1883.9 million as of September 30 2024. The decrease was primarily due to dividend distribution to our shareholders and investment in property partially offset by cash from operating activities. On Slide 24, taking into account the recovery in long-term trends and short-term industry fluctuations, we expect total revenues of our Organic Hotel business for the full year of 2025 to be flat compared to their 2024 level. We expect to open approximately 480 hotels and close about 200 hotels for a net addition of 280 hotels. This concludes our prepared remarks. Operator, we are now ready to begin the Q&A session. Thank you.

Thank you. [Operator Instructions] Today's first question comes from Bruce Mi with UBS. Please go ahead.

Hi, Alex. Hi, Selina. Thanks for taking my question. So I have a question on the Hotel RevPAR. So may I know what's your assumption -- RevPAR assumption on your full year flat Organic Hotel revenue forecast? And secondly, what's your observation on the recent RevPAR trend? And what's your expectation on the business travel demand outlook in this quarter and the rest of the year? Thank you.

Okay. Thank you. And the RevPAR trend our expectation for the year of 2025 is going to be flat because we observed the first quarter we have down about 5% in RevPAR. And we expect the -- that's compared with a little bit higher base of last year. And the second and third quarter we see a gradual recovery and to be flat on the RevPAR for the year. So in terms of the demand we do see more cyclical demand that is more from leisure side, and especially, during the weekend and also during the holidays. So we do observe a tick-up in terms of the leisure travelers than the business travelers. So those are the two observations we have. And that's why we expect that the -- for the full year the RevPAR, we expect in our company we should maintain -- we should be maintaining at a flat level.

Thanks, Alex. That’s very clear. Thank you.

Thank you. And our next question comes from Frank Ma with Qixin Capital [ph]. Please go ahead. Hello, Frank Ma, your line is open. Please proceed.

Okay. Okay. Thank you very much. I have two questions. The first one is can you give -- please give us an overview of the strategy for the Hotel business in 2025. And in particular how fast we are making progress in upgrading older hotels? And the second one is can you provide a bit of color on our strategy for the Hotel L&O segment going forward? Why are we closing so many of them? Thank you.

Okay. Thanks, Frank. That Selina will pick up those questions, okay? In terms of our Hotel business in 2025 we do plan and from our pipeline and from our compilation of the interested parties we have planned to open 480 new hotels. That's about 20% more than that of 2024. And that's one of our core focus. The second is upgrading of our existing portfolio the aged hotels. We still have 700 to 800 of those that needs to be upgraded. And hopefully that's going to be done by the summer of 2026. And we are making tremendous amount of progress in terms of incentivizing our hotel owners because right after the pandemic they need a couple of years recovery time to accumulate some capital to start upgrading the existing hotels. And then the third is, we're improving the overall -- the efficiency in terms of our management system and our team and so that we can better support both the new franchisees and existing franchisees for the businesses. So with that, we feel that in 2025, we are able to have a fresher portfolio of the hotels. And in terms of the closing of L&O, Leased and Operated hotels, that's for a couple of reasons. One is a lot of them are because of the lease expired and we feel that those second tier, third tier locations that are no longer ideal to be a flagship hotel locations. So we want to focus on our resources on the Tier one flagship hotels and also on the Franchised and Managed segment. And the closure of Leased and Operated hotels really will depend on the lease term. Once the lease term is up for renewal, we'll carefully review the status to see whether we should make the further investment continue to extend the lease term or terminate. And sometimes, it's a mutual discussion issues. And our focus is going to be bringing the focus into the franchise and manage the sectors. So that's our strategy and our focus in the future and we'll continue to evaluate the L&O hotel segment to make sure it does not consume a lot of additional resources from ourselves.

Okay. Got it. Thank you, Alex.

Thank you. [Operator Instructions] Our next question comes from Alice Xu [ph] with Cowen Capital [ph]. Please go ahead.

Thanks for taking my question. My first question is in our Restaurant business, we're increasing the proportion of Street stores and reducing the number of more restaurants. Do you expect this trend to continue? That's my first question.

Okay. Yes, we do expect that trend to continue. The number of shopping malls and the traffic to the malls I think are changing very fast. So in addition the rent and all the expenses associated to be a renter in the mall is also very high. And plus the mall has certain operating hours that's also limiting sometimes the traffic. And we have not really found the great operating models to operate in the mall. And therefore that we have focused on the opening of the Street stores, where at least we have the stable consumer traffic, foot traffic and we can control our own operating hours. And the results are really showing that in light of the very competitive environment in the Food businesses that we are still maintaining a profitable operation, while we are transforming from the older and existing legacy brand into a fresher and more trendy concept. So, we are making I believe a great progress in that end and we'll continue to focus on that end. And the second is, we're also changing and adjusting the size of the restaurant to make sure, they are the most economic, most efficient and deliver the best profitable result to our franchisees. So that's the overall plan and strategy for our Food business for the 2025.

Thank you. My second question is, at the end of 2024, we had 182 restaurants, the same number as three months earlier. You mentioned that the business transition is over. What can we expect in 2025? That's my second question.

Yes. In terms of net openings, we have not done a good job. And we have not pushed really hard in terms of opening the new restaurants, especially considering the sentiment in the marketplace. But this year, I think that we see with the profitable operation for our existing restaurants, and we feel confident that the trend and also the pipelines, we should be able to deliver 60 new openings of the restaurants for the year of 2025.

Awesome. Thank you.

Thank you. And our next question is a follow-up from Frank Ma at Qixin Capital [ph]. Please go ahead.

Hi. Thank you. Alex, I have one more question. You have talked on previous earnings call about the initiatives to increase the trading liquidity in our shares. Any progress on this? Thank you.

Thank you. We have evaluated a number of options to increase liquidity. And we have planned the reverse merger, which took a little bit longer time than we originally planned. And once that is done, I think that our liquidity should increase substantially. The second is, the last couple of quarters, has been a transitional quarter. We've been trying to uplifting upgrading our existing portfolios opening up new hotels. And so we have focused on really running a profitable operation for both Restaurant and Hotel businesses, and trying to have a strong cash flows and stable dividends. And eventually I think that we will earn the confidence of our shareholders and that they will potentially also increase the share price and liquidity. And we feel that the merger and other available financing will be available to us in the near future. And I would make those announcements as soon as they become available to you.

Thank you for your time, Alex and have a good day.

Thank you. [Operator Instructions] This concludes the question-and-answer session. I'd 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 GreenTree 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 all.

Thank you.

Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

Good day. And welcome to the GreenTree Hospitality Group Third Quarter 2024 Financial Results conference call. All participants will be in listen-only mode. Should you need assistance, please signal the conference. Please note today's event is being recorded. I would now like to turn the conference over to Renee VanGestin. Please go ahead.

Thank you, Rocco. Hello, everyone, and thank you for joining us. GreenTree's earnings release was distributed earlier today and is available on our IR website at ir.998.com, as well as on P&L's wire services. As a reminder, we also posted a PowerPoint presentation that accompanies our comments to the same IR website. On the call from GreenTree, I am joined by Mr. Alex Xu, Chairman and Chief Executive Officer, and Ms. Selina Yang, Chief Financial Officer. Mr. Xu will present the company's performance overview for the third quarter of 2024. Ms. Yang will then discuss financials and guidance. They will be available to answer your questions during the Q&A which follows. 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 terms such as "may," "will," "expect," "anticipate," "aim," "future intent," "plans," "believes," "estimates," "continue," "target," "is likely to," "going forward," "confident," "outlook," and similar expressions. Any statements that are not historical facts, including those about the company and its industry, are forward-looking statements.Such statements are based on current expectations, market conditions, and operating conditions. They relate to events involving known and unknown risks, uncertainties, and other factors that are difficult to predict and often beyond the company's control. These factors may cause the company's actual results, performance, or achievements to differ materially from those expressed or implied in the forward-looking statements.You should not place undue reliance on these forward-looking statements. Additional information regarding these and other risks, uncertainties, or factors is available in the company's filings with the U.S. Securities and Exchange Commission.All information provided, including forward-looking statements made during this conference call, is current as of today's date. The company does not undertake any obligation to update forward-looking statements as a result of new information, future events, or otherwise, except as required by applicable law. It is now my pleasure to introduce our Chairman and Chief Executive Officer, Mr. Alex Xu. Please go ahead.

Thanks, Renee. Hello, everyone, and thank you for joining us today. I am pleased to report that our hotel business improved in the third quarter over the first two quarters of this year. As the economy continued to recover, travel patterns have normalized following last year's surge, which has influenced year-over-year comparisons. We are back to a more positive environment, focusing on growing our pipeline and upgrading numerous hotels across our portfolio. We are confident that we are on the right track and will benefit from the ongoing stimulus measures implemented by the government.

Our restaurant business net income remained positive for a second consecutive quarter as we continued to grow the number of franchised street stores and stores with stable consumer traffic.

Street stores now accounted for 55.5% of the store count compared to 44.6% a year ago. Following the closing of unprofitable stores over the past year, the number of restaurants in operation stabilized at 182 at the end of the quarter. We are now focusing on growing that number. Please turn to Slide 5. Compared with the third quarter of 2023, hotel RevPAR was 135 RMB, a decrease of 13.6%, and restaurant ADS was 4,891 RMB, a decrease of 25.6%. Total revenues were 357 million RMB, a decrease of 22.5%. Hotel revenues were 286.9 million RMB, a decrease of 15.4%, mainly due to a 13.6% year-over-year decline in RevPAR and the closure of older hotels, partially offset by new openings. Income from operations decreased to 106.4 million RMB with a margin of 29.8%. Net income was 65.2 million RMB, a decrease of 44.4%, with a margin of 18.3%. Adjusted EBITDA (non-GAAP) was 122.5 million RMB, a decrease of 32.1%, with a margin of 34.3%. Please turn to Slide 6. Slide 6 shows detailed numbers for total revenues, income from operations, net income, and adjusted EBITDA. Slide 7 shows the trend in our quarterly operating performance. In the third quarter, compared to a year ago, RevPAR for our LO hotels decreased by 7.5% to 196 RMB, while RevPAR for our FM hotels decreased by 13.8% to 133 RMB. ADR for our LO hotels decreased by 3.6% to 258 RMB, and ADR for our FM hotels decreased by 6.1% to 179 RMB. Occupancy at our LO hotels decreased to 75.9% from 79%, and occupancy at our FM hotels decreased to 74.6% from 81.3%. Slide 8 highlights the growth in our membership programs, which accounted for most of our direct sales. Individual memberships grew to 100 million, up from 88 million a year ago, and corporate memberships grew to 2.1 million, up from 2 million a year ago.

Next, I will review operating and financial highlights. Please turn to Slide 16. In the third quarter, total hotel revenues decreased 15.4% to 286.9 million RMB compared to the third quarter of 2023. Total revenues from LO hotels were 118.2 million RMB, a decrease of 22.2% year-over-year, primarily attributable to a 7.5% year-over-year decrease in RevPAR and the closing of six hotels. Revenues from FM hotels decreased 9.7% to 167.9 million RMB, primarily due to a 13.8% decrease in RevPAR, partially offset by new openings. On Slide 17, total hotel operating costs and expenses decreased 4.9% year-over-year to 201.9 million RMB. Please turn to Slide 18. Income from hotel operations decreased from 106.4 million RMB to 99.5 million RMB year-over-year. Net income was 58.6 million RMB compared to 108.5 million RMB in the third quarter of 2023. Adjusted EBITDA decreased 32.8% to 110.5 million RMB, and core net income decreased 21.4% to 86.9 million RMB year-over-year. We will now open for questions.

Thank you. If you are using a speakerphone, we ask that you please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. Our first question today comes from Kevin Wong with Piper Capital. Please go ahead.

Good evening. Thank you for taking my question. I have two, if I may. The first one is about the trend of the industry. How does the company's performance in the third quarter compare to other peers? And my second question is about the restaurant business. It seems that the business turned profitable in Q2 and improved further in Q3. What do you expect for Q4?

Okay, Kevin. This is Alex. Thanks for those two questions. In terms of the trend in the hospitality industry, we have compared like-to-like, and our portfolio has a higher percentage of aged legacy hotels. As a result, our RevPAR impact during the downward trend is more severe compared with newly opened hotel portfolios. However, we noticed that our newly opened hotels have performed much better than the legacy hotels. We have a track record of twenty years, which means we have accumulated more legacy hotels. Therefore, the downward pressure is more noticeable after mid-August. However, in October, we happily observed an improvement in occupancy trends. We expect that the fourth quarter will perform better than the third quarter. With more new hotels being added to our portfolio, we believe the trend will reverse, and we will outperform the industry average within one to two years, especially with our substantial new products coming online. On the restaurant side, we have worked very hard to reposition our business model. In the past, many of our stores were located in supermarket-anchored shopping malls, which experienced a severe drop in foot traffic. A substantial number of those stores were closed and repositioned into street stores. Secondly, we improved our supply chain. The restaurant business model relies on foot traffic, the supply chain, and the management system. As a result, we have performed better than the industry average in the restaurant chain side. We are happy to see continued profitability and will continue selecting new locations to add stores at our own pace to ensure that profitability can be sustained. We aim to have all business segments contributing to the bottom line. So, Kevin, this is the trend for both the hospitality and restaurant businesses. While we remain cautiously optimistic, we will keep delivering more value to meet consumer demand at affordable prices.

Very clear. Thanks.

Thank you. Our next question comes from Betty Udew with UBS. Please go ahead.

Thanks, management, for giving me this chance to ask questions. I also have two questions. The first is, could you give us more color on your expectation for the supply-and-demand landscape going forward? Will rapid supply expansion continue in 2025? My second question is, what measures is the company planning to take in the next one to two years to further improve RevPAR and meet current macro conditions? Thank you.

Thanks, Betty. The industry's competition has intensified significantly. However, we are entering a more normalized period. Last year, there was a big surge post-pandemic. This year, we are seeing a normalized competitive environment. There are more new hotels and brands on the supply side, while demand has not fully caught up. As a result, there is downward pressure on RevPAR across the industry. For our LO hotels segment, the pressure is less than on our franchise hotels, as the latter include many older properties. We are confident that our new products in new locations will be more competitive, and we expect better performance in 2025 for both RevPAR and hotel openings. We have many new hotels in the pipeline, not only in tier-three cities but also in tier-two cities, particularly regional economic centers and provincial capitals. These new hotels will enhance our presence in those regions and help improve the performance of our tier-three city hotels. Overall, we are optimistic about our 2025 outlook and performance. Regarding RevPAR, as I mentioned earlier, we see improvements in Q4 of this year. However, predicting travel patterns for next year is challenging given the current economic environment. That said, GreenTree's business model remains resilient. While second- and third-tier cities yield lower RevPAR compared to first-tier cities, they have higher profit margins due to lower rents and personnel costs. This gives our franchisees more room to grow and enables us to withstand market fluctuations better.

Thank you. That is very clear.

Thank you. Our next question today comes from Leewen Li with China Securities. Please go ahead.

Thank you for taking my question. I have two questions. The first is about the OTAs. In Q3, we still see strong double-digit growth in OTAs despite the challenges. What do you think about the bargaining power of the hotel side versus OTAs in the future? My second question is about your investment in the Guizhou Province project. Could you share some color on this project?

Thank you, Leewen. Regarding OTAs, their strong double-digit growth reflects the shift from offline to digital. It does not necessarily indicate an overall increase in hotel demand but rather a redistribution of market share. We are working closely with reputable OTAs. As long as it is mutually profitable and commissions remain affordable, this creates a win-win situation. With younger consumers relying more on digital platforms, we are adapting to these trends and enhancing our collaboration with OTAs. Regarding the Guizhou project, we are working with strategic partners in the four- and five-star hotel segments. The local government sought our help in repositioning and reopening a non-performing asset, which is ideal for a showcase four- or five-star hotel. We are happy to collaborate with them and look forward to reopening this project in the near future.

Thank you. Our next question comes from Victor Lee with DMHY. Please go ahead.

Good evening. Thank you for taking my question. I have two questions. The first is about dividends. Dividends were announced in Q2, but Q3 performance was lower than expected. Do you plan to continue paying dividends in the future? My second question is about liquidity. What steps are you taking to improve liquidity in the capital market, and is there a timetable for these efforts?

Thanks, Victor. Regarding dividends, while Q3 performance showed a decline of 44%, we are confident in our fundamentals. As Selina mentioned earlier, 33 million RMB of the decline is due to a foreign currency exchange loss, which is a paper loss. Additionally, there was an 11 million RMB bad debt provision for long-aged accounts receivable. We believe a significant portion of these receivables will eventually be recovered as franchisees improve their performance. We also see improved performance from newly opened hotels. Going forward, we expect operating income and EBITDA to improve significantly. Therefore, our dividend policy will remain unchanged, and we will continue as planned. Regarding liquidity, we are undergoing a reorganization in which the parent company will merge with GHG. This will enable some current shareholders to become direct shareholders of GHG, increasing liquidity. While there are approval processes involved, we remain on schedule and optimistic about boosting liquidity in the long run.

Thank you for your answer.

Thank you. If there are no further questions, this concludes our question-and-answer session. I would like to turn the conference back over to Selina Yang for closing remarks.

Thank you all for your participation today. On behalf of the entire GreenTree management team, we thank you for your interest in GreenTree and your time. If you have any further questions, please feel free to contact us.

Thank you. This concludes today's conference call. You may now disconnect your lines. Have a wonderful day or evening.

Hello, ladies and gentlemen. Thank you for standing by for GreenTree’s Second Quarter of 2024 Earnings Conference Call. At this time, all participants are in listen-only mode. After management’s prepared remarks, there will be a question-and-answer session. As a reminder, today’s conference call is being recorded. I would now like to turn the meeting over to your host for today’s call, Mr. Rene Vanguestaine of Christensen. Please proceed, Rene.

Thank you, Rocco. Hello, everyone, and thank you for joining us. GreenTree’s earnings release was distributed earlier today and is available on our IR website at ir.998.com, as well as on PR Newswire services. As a reminder, we also posted a PowerPoint presentation on our website. 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; and Mr. Jason Zhang [ph], our new Financial Director. Jason replaces our former Financial Director, Ms. Ellen Zhao [ph], who officially retired earlier this month. Mr. Xu will present the company’s performance overview of the second quarter of 2024, and Ms. Yang and Mr. Zhang will then discuss financials and guidance. They will all be available to answer your questions during the Q&A session which follows. 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 terminologies such as may, will, expect, anticipates, aims, future, intends, 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 expectation 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 obligations 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, Mr. Alex Xu. Mr. Xu, please go ahead.

Thanks, Rene, and hello everyone, and thank you for joining us today. In the second quarter, we faced the challenges as China’s economy continued to recover. We believe both consumers and business exercised caution in discretionary spending, which had a negative impact on our overall performance. However, we continued to upgrade a number of hotels in our portfolio in order to better respond to increasing competition. While we believe this will help our performance in the future, second quarter Hotel revenue did decrease 14.8% year-over-year. We continued to execute on our strategy to return our Restaurant business to profitability by moving away from leased and operated restaurants in supermarkets and regional shopping centers towards franchised street stores. As a result, the net income turned positive this quarter after breaking even last quarter compared to losses in both corresponding quarters a year ago. Our focus is now fully on growing the number of franchised street stores and the stores with stable consumer traffic. Please turn to Slide 5. Compared with the second quarter of 2023, Hotel RevPAR was RMB125, down 10.8% and the Restaurant ADS, that’s average daily sales per store, was RMB4,737, down 22.1%. Total revenues were RMB329.7 million, down 20.5%. Hotel revenues were RMB264.6 million, that’s down 14.8%, mainly due to a 10.8% year-over-year decrease in RevPAR and the closure of some hotels and partially offset by new openings. Restaurant revenue decreased to RMB65.3 million as we continued to execute on our strategy to reposition this business and close a number of underperforming restaurants. Income from operations decreased to RMB84.4 million, with a margin of 25.6%. Net income was RMB62.3 million, down 38.9%, with a margin of 18.9%. Adjusted EBITDA non-GAAP was RMB83.1 million, down 34.5%, with a margin of 25.2%. Slide 6 shows detailed the number of total revenues, income from operations, net income and adjusted EBITDA. Slide 7 shows the trend in our quarterly operation performance. In the second quarter, compared to a year ago, RevPAR for our LO hotels decreased by 7.3% to RMB177. RevPAR for our FM hotels decreased by 10.9% to RMB124. ADR for our LO hotels decreased by 2.1% to RMB250. And ADR for our FM hotels decreased by 4.4% to RMB117 -- RMB171. Occupancy at our LO hotels was down 3.9% to 70.7% and occupancy at our FM hotels was down 5.3% to 72.6%. Slide 8 highlights the growth in our membership programs, which accounted for most of our direct sales. Individual memberships grow to 96 million, up from 84 million a year ago, and the corporate memberships grow to 2.1 million, up from 1.96 million a year ago. Slide 9 shows the operating performance of restaurants with ADS down 22.1% year-over-year at RMB4,737, but up sequentially. Starting with Slide 11, I will review our strategic execution across our businesses. In our Hotel business, we further expanded in the mid-to-upscale segment and in Tier 3 and the lower cities in South China. As you can see on Slide 12, we continue to grow our mid-to-upscale segment with 505 hotels, that’s 11.8% of our total portfolio at the end of this quarter. While the mid-scale segment remains the core of our Hotel business at 69%, we continue our expansion into the higher end segment. The economy segment ended the quarter at 19.2%. Please turn to Slide 13. We continue to expand in Tier 3 and the lower cities, and the 72.3% of our hotels in our current pipelines are in such cities and we’ll further capitalize on the substantial opportunities in these locations. On Slide 14, we continued to focus on increasing the profitability of our Restaurant business. To achieve this, we have implemented a three-pronged approach to reposition the business. First, closing unprofitable LO stores, increasing the proportion of FM stores and expanding the number of street stores. Franchised and managed restaurant accounted for 86.9% at the end of the quarter, compared to 72.3% a year ago and the street stores accounted for 45.4%, compared to 37.9% a year ago. Next, Selina Yang and Jason Zhang will review operating and financial highlights.

Thank you, Alex. I will review our Hotel business. Please turn to Slide 16. In the second quarter, total Hotel revenues decreased 14.8% to RMB264.6 million, compared to the second quarter of 2023. Total revenues from LO hotels were RMB105.9 million, down 19.5% year-over-year. The decrease was primarily attributable to a 7.3% year-over-year decrease in the second quarter RevPAR of LO hotels. Five LO hotels closed and a reduction of subleased revenues, mainly due to the disposal of property. Total revenues from FM hotels decreased 11.3% to RMB157.8 million. The decrease was mainly due to a decrease in FM hotels RevPAR and remodeling. On Slide 17, total Hotel operating costs and expenses increased 2.1% year-over-year to RMB217.7 million. Operating costs decreased 4.5% to RMB143.4 million year-over-year, which was mainly due to the lower personnel costs, lower hotel-related material consumption and lower utilities gave a lower occupancy rate and the closure of LO hotels. Offset by increased rental costs and D&A due to newly opened LO hotels since the third quarter of last year. Salary and marketing expenses were RMB13.2 million, a year-over-year decrease of RMB0.5 million, mainly due to lower advertising expenses. General and administrative expenses were RMB4 -- RMB54.9 million, up 23.6% compared with the third quarter of last year. The increase was mainly due to an increase in bad debt provisions for long-aged accounts receivables. Turning to Slide 18, due to the decline in revenue, our Hotel business saw a decrease in profitability in the second quarter. Income from Hotel operations decreased from RMB108.5 million to RMB81.6 million year-over-year. Net income was RMB63.1 million, compared to RMB114 million in the second quarter of last year. Adjusted EBITDA of Hotel business decreased 37% to RMB81.9 million and core net income decreased to 22.4% to RMB67.6 million year-over-year. Next, let me turn the call over to Jason for the review of our Restaurant business.

Please turn to Slide 19, in the second quarter, we continued to refresh our Restaurant business and open more franchised and managed stores. Total revenues were RMB35.3 million, down 37.8% year-over-year, and total costs and expenses decreased 44% year-over-year to RMB34.3 million. Mainly due to lower ADS and a decrease in the number of LO stores due to the closure of unprofitable LO stores. And on Slide 20, these measures lead to improved profitability. Income from operations was RMB2.9 million. Adjusted EBITDA was RMB1.2 million. Net profit and core net income turned from loss to profit. Next, Selina will review the profitability of our group.

Thank you. Please turn to Slide 21. Group net income per ADS, that’s basic and diluted, decreased by 39.9% to RMB0.61 and core net income per ADS, that’s basic and diluted non-GAAP, increased by 3% to RMB0.69. Let’s now take a look at Slide 22. As of June 30, 2024, the company had total cash and cash equivalents, restricted cash, short-term investments, investments in equity securities and time deposits of RMB1,737.2 million, compared to RMB1,517.1 million as of March 31, 2024. The increase was mainly attributable to continued operating cash inflow, the disposal of property and the repayment of loans from franchisees. On Slide 23, considering our performance during the first half of this year and the impact of closing certain LO hotels due to lease expirations and strategic decisions, we have revised our revenue guidance for the Hotel business. Now we anticipate its performance in 2024 to remain flat compared to the last year. As Board of Directors has approved the payment of cash dividends of US$0.10 per ordinary share or US$0.10 per American deposit share, that’s ADS, payable to holders of the company’s ordinary shares shown on the company’s record at the closing of trading on September 30, 2024. This concludes our prepared remarks. Operator, we are now ready to begin the Q&A session.

Thank you. [Operator Instructions] And today’s first question comes from Bruce Lee [ph] with UBS. Please go ahead.

Hi, Alex, Selina, and Jason. Thanks for taking my question. So I have two questions. The first one will be regarding the Hotel business. So could you please introduce a bit about the RevPAR trend in July and in August so far on a year-over-year trend basis? And also, we saw that you have changed your four-year Hotel revenue guidance. So could you please also provide some color on the RevPAR outlook for the second half? And that’s my first question. And the second question is regarding the shareholder return plan and we saw that we have declared a cash dividend at this time. So will it be a long-term shareholder return plan? Thank you.

Thank you, Bruce. Regarding the Hotel RevPAR for July and August, the Q3 imply we saw a little bit steep drop compared with the same period or same July last year around 15%. Trend in August, the first half in August our RevPAR and is catching up recovered to about less than 10% of drop compared to last year. Last year I think was especially in the summer the stronger than the previous years and so there is a correction from the record. I think we -- looking back, I think somewhat is more understandable. So that’s the next two months. For the third quarter, we anticipate we will operate probably the same levels of reduction as the second quarter comparing with the last year, 2023. For the balance of the year and our projection is our total revenue side will be flat compared with the year of 2023 for several reasons. One, we have a reduction in terms of the RevPAR. We also have an increase in terms of new openings. We still anticipate and plan about 480 new openings, even though we have a short dip in the second quarter. But we’re looking at the pipeline, the third quarter, fourth quarter will catch up. And that also will be offset a little bit by we have a reduction in the membership income somewhat. And also, we have about 400 hotels in the upgrade mode, because about 400 this year will be going through the remodeling slightly more than last year. Because last year was the first year we’re coming out of the pandemic and we have given our franchisees some breathing room to operate the hotels to generate some cash to help their businesses. So, this year, we have planned and also encouraged a lot more hotels in going through the upgrade and the remodeling. So we have a lot the -- we typically give six months to one year of the grace period if the hotels go through that remodeling phase. And also, in light of the challenging, at least on the service hotel and restaurant industry, we have given our franchisees a little more in terms of franchise signing application fees and various services and we have added the various services. So, combined, and so we’ll see revenue to remain flat compared with the 2023. So, that’s on the Hotel business. And on the shareholder dividend, even though the second quarter we see a drop compared with the same revenue side with the same period of last year. However, you can see we still generate a very strong cash flow. And especially with our disposal of one property and added another RMB120 million cash into the bottomline. And therefore, we think and anticipating the other growth needed capital, we think it is appropriate for the first half of the year and we declare this dividend. We had a continued dividend policy before, which was interrupted by the pandemic and our plan is to continue this dividend practice. And the borrowing from any great growth potential requires further cash infusion. We’ll continue to deliver sustainable, profitable growth to the bottomline and deliver sustainable returns to our shareholders. So, this is our long-term plan and we’ll continue to do this. So, thanks, Bruce, for those two wonderful questions.

Thanks, Alex, for the answers. It’s super helpful. Thank you.

And our next question today comes from Lewen Liu [ph] with China Securities. Please go ahead.

Okay. Thank you. Thank you for the management team. And I have two questions. The first is about the demand. I wonder if there is a difference between the business and the leisure demand. Can you draw some colors on this question? And also, the second question is about, is there any difference like for us, for the second quarter, for our hotels, like in the first and second tier city and the low-tier city? Thank you.

Yeah. With regard to the operation issues, I’ll take them, Selina, with the financial numbers. So, I’ll take Lewen’s question. The first question regarding the pattern changes in terms of the ratio between leisure and businesses, we do observe the trend. There is more leisure travels than the business travels. And there is also higher demand in the third-tier cities that typically we have the scenery and the resort area. And that also the cities where they have a friendly climate, temperatures, attract a lot more leisure travelers in the summer, especially in the July or August. And so, we do think that the trend will continue, considering we have a large number of retirees are going into the retirement mode in the next few years. So, the leisure travel, and especially the economy and the budget leisure travel, will continue to rise and we are anticipating and planning for this. And the hotels in these areas are performing exceedingly well. And, for instance, some of our hotels in those resort and summer retreat areas and achieved even a record earnings and record occupancy. With regard to the first-, second-, and third-tier cities, we did have a trend, which we can share with you. We see this year, the first-tier cities, the RevPAR drops, at least in our business, the most at 12.5% and the second tier, a drop of 11.7%. Typically, the last year, with the finish of the pandemic, I think a lot more travelers -- business travelers, generally businesses, and also government for their business seminars and business development activities are exceedingly very high and we do see some reduction in that number. So, the third-tier, the most resilient in our model had a reduction -- has a less of an impact, about 9% reduction in RevPAR. So, that’s the phenomenon trend that we have observed and we do believe this trend may continue for a while. So, thanks, Lewen.

Thank you very much, Alex.

Thank you. And our next question today comes from Kelvin Wong with Mica Capital [ph]. Please go ahead.

Thank you. Good evening. Thanks for taking my questions. I would like to have three, if I may. I think that it’s better for me to ask the question one-by-one, so that that will make it easier to answer that. The first one is more, we will look at it more on a broader top-down base. I would like to know, could you talk about the trend of actually the whole industry and how do you see this trend going forward? And at the same time, are you facing any difficulties at the moment and what measures have you been taking to deal with these difficulties? And we would be glad if you could also give us a comparison of the company’s performance in the second quarter compared with other peers. So, that’s my first question. I have another two after you answer this one.

Okay. All right. Thanks, Kelvin. Regarding the trend in the, I’ll talk about the, especially the Hotel industry, and then later we can talk about the Restaurant. We have not seen industry-wide statistics of the performance for the second quarter. So, we cannot make a meaningful comparison to others, but I can share with you what we have observed. And we did get some feedback from the leading industry OTAs and so we have an idea. So, we are at least, I think, a better performing group among our peers in terms of the price, occupancy, reservation numbers compared with the same period of last year. And our company has built our strength to face the challenges, both up and down. So, when the industry is facing challenges, our main concern is the health and the profitability of our franchisees and also the stable employment environment for our people. So, in order to fend off this kind of up and down volatilities, I think the key is how do we increase our core competitiveness. I think that the GreenTree in the past, especially after the pandemic, we have many aged, older properties that needed to be upgraded, okay. And we have worked with our franchisees in the last one and a half years, and we continue to increase our brand value proposition. And so, in other words, how we can help our franchisees to maintain the revenue or even increase the revenue, meanwhile, streamline the operating systems and streamline the operation to reduce the leakage, the waste and all the costs. So, we have built a better supporting system, improved, especially this year to have a timely and more efficient support to our franchisees. And we also have more focused local sales, because everybody is fighting for the national sales. But I think the local sales, the local customers, I mean, this is not only for the Restaurant business, for the Hotel business as well and we focus on the local sales and the business development. As a result, we believe our downward trend is like-to-like, and the same, for instance, the same store or like kind of properties. We’re not talking about the new -- the different composition of the properties. And then, it will be -- I think we’re performing one of the better ones in the industry. We’re waiting for the other groups to report the numbers. We’ll make a detailed comparison. Another effort we’ve been focusing on is building and also continue to showcase our brand by going -- by repositioning, by improving our F -- by our LO hotels. You can see from the page, I think Page 7 or 8 in the Hotel performance side, our LO hotels continue to lead the FM hotels in both the RevPAR and also the occupancy. So as a result that, we will transfer, we’ll replicate the business practice to the franchisees and leading the franchisees to face this downward pressure challenges. So, Kelvin, that’s our focus for the time being.

Very good.

And we’re confident that we’ll continue to be the most profitable value deliverer to our franchisees, to our businesses.

Okay. That’s very helpful. I would like to have two more questions. The second one, again, a follow-up on the Hotel industry. I heard that you’re going to maintain the plan of opening 480 to 490 hotels throughout the year. But if we look at the second quarter, is there any special reason for the particularly low number of hotel openings during the quarter? Is it because of competition or franchisees? So -- and at the same time, apart from organic growth, are you also looking for any M&A opportunities?

Okay. Thanks, Kelvin. The second quarter we did have a slower -- lower number of openings. And for, I think it just happened that some of the scheduled openings are getting delayed a little bit. I think it’s partially because now I think the regulation for opening hotels is a little bit more, I would say, restrictive and all the required licenses are a little bit harder to obtain than before. So we have a -- we looked at the pipeline. So we have a number of hotels that takes a little bit longer to obtain all the licenses, okay. And we have a plan to do a better job in terms of educating our franchisees and to give them a better support in doing so. And we have looked at the pipeline in the next quarter. I think in the third quarter we are going to open 170 plus or minuses and then the fourth quarter, we’re likely the same speed. So the year -- we will end of the year with between 480 plus or minuses, or even maybe towards 500 level, okay. And so we have the hotel numbers in the pipeline. So we’re pretty confident in that. With regard to whether we have other competition in the marketplace, our experience, Kelvin is that, we want to maintain a quality higher growth. Instead of just for the numbers sake. And I think standardization, higher quality of the hotels and the products and services and that is more important to our franchisees, to the long term growth and profitability of the company. So we want to take a more disciplined approach, and every hotel we open, we want to be a profitable one and can be sustainable for our franchisees, and so we are not going to be just for growth -- for the sake of growth by growing the numbers. So that’s our internal focus and it’s absolutely strictly focused on the franchisees’ profitability. So, and that is our focus. And so even though there may be some competitions, but our core customer space are there and so we’re helping them to evaluate the site and do a better design and build the products at the most efficient ways. And anticipating the future consumer’s behavior and the requirement and that’s what we’re doing. And then with that, we think we can earn the confidence and the respect from our customers. That we still are proud of our loyalty of our GreenTree franchisees and that feeling is mutual, okay. With regard to M&A, we have not done an aggressive searching in the M&A opportunities. Partially because we had two, which was not so successful. And part of the reason is also because of the pandemic and also the performance guarantee. So it didn’t lead to a good result. And so we are going to be more focused on if we do an M&A and we have to find the group with the same culture, with the same focus on the profitability of the franchisees and the team growth and efficient system and operations. And most importantly, their value proposition has to be, and the brand proposition has to be complementary to GreenTree. And at this moment, I think it’s a little bit harder to find. We do not want to dilute our efforts and focus now and to reposition some of our older properties and also build new ones. And in a very short period of time, I think we’ll be the leading, we hope we’ll become the most valued brand by our customers in the industry, okay.

Great. Great. The stance is very clear. And one final small question about your Restaurant business. So actually it’s great to see that it has turned profitable in Q1 and now better in the second quarter. So I’d like to know about the company’s plan for this business in the future, especially in terms of like, store openings like FM store openings, LO stores. What’s your plan on that? Any potential difficulties you may face? And actually, is there any plan for you to lease or separately lease this Restaurant business because it’s doing so good?

Okay. Thanks, Kelvin. Appreciate it for your praise and it is a tougher business, and we have spent some time in repositioning our business. We have two of the famous but legendary, also a legacy brand. Both of them are over 20 years old. And I -- I think in our economy, if you can survive and still grow and still be a little bit more profitable after 20 years, it’s almost a miracle to our team. And the -- one of the reasons we’re able to turn the business around, I think, is really to understand the consumer demand, the traffic pattern and also the products mix and the team efficiency. I think those are a few factors we’ve been focusing on. And we’re especially focusing on the value creation for the Restaurant business. So which part of the area that we can create the most value to make both Da Niang Dumplings and also Lu Gang Café relevant to our consumers. So we did quite a bit of reposition. I think our team has made a great effort. And we have also been receiving many inquiries to see whether we want to buy or invest in other restaurant brands. At this moment, I think with our transition is still not completely solidified. So we’ll take some time to figure out what is the best format, what is the best product mix and value propositions for our customers and for our franchisees. And then we can speed up the Restaurant development. The worst case scenario is that we spend a bunch of or spend the franchisees a bunch of CapEx and end up selling RMB1 million, loss RMB500,000 and that’s the area we do not want to get into that. So this year, we still want to be conservative. We planned for about 60 in the beginning of the year, 60 new stores, new restaurants and we’re still trying to target open that. It’s more in the community, street stores with the right format. And our ADS reduction partially was also due to we shrink, we reduced the footprint, the square footage of those restaurants. And in the long run, we hope that we can grow that into a separate group, separate business, either with a separate M&A with other groups, they can buy us out or we can have our team to lead a separate spend to be a separate independent business such as IPO. And at this moment, we are still not -- we still do not think that we are capable, we are able to do any kind of M&A in the Restaurant business to actually to export our business models to other businesses. It’s still a tough industry, service industry, even though it’s growing, but it’s a tough competition and we have to be really careful in making those kinds of decisions. So those are the areas we welcome any recommendations and we respect the great operators in the industry. So we wouldn’t mind doing multiple different kinds of joint ventures and cooperation with other leading restaurant chains and with the leading restaurant group in order to enhance -- further enhance our competitiveness in the restaurant side.

Okay. Great. Great. Very helpful. Thanks. Thanks for answering my questions.

Thank you. [Operator Instructions] Our next question today comes from Storm Shu [ph] with ABC Capital. Please go ahead.

Hello. Thank you for answering my question. And I have one question about the capital market. Can you comment on how to improve liquidity in the capital market? Previously, the company considered several paths. Is there any progress or timeline now? Thank you.

No, no, no, I understand. Storm that I didn’t -- can you rephrase the second? I know the first question is increase the -- how do we plan to increase the liquidity.

Liquidity…

And the second…

…in the capital market.

Okay.

And the second question is…

What is the second.

Yes. Because our company considered several paths to improve the liquidity. Is there any progress on the timeline now?

Timeline for?

Improve the liquidity in the capital market.

I see. Okay.

Got it. Thank you. Thank you.

Okay. Got it, Storm. Appreciate it. Yes. Our shares are pretty concentrated by some of the largest institution investors and our corporate company owns about 90%, which is -- we are in the process of doing a reverse merger and then to -- we are also after that we plan to in the phase stage and we discuss whether we can systematically do an offering to the outside investors to increase the liquidity stage-by-stage and that detail the timeline and depends on the restructuring, which we hope will be completed any time soon in the next quarter or so. So that’s the market liquidity, which is a major concern for ourselves as well. So we’re taking the active -- we are taking the concrete plan to do that. Meanwhile, we’ll continue to focus on, again, our core competition, strength building. And I think as long as we continue to deliver the profitable sustainable growth and continue to grow the product and services in the high quality standardized, then I think that the long-term value is there for all of our shareholders.

Okay. Got it. Thank you.

Thank you. And this concludes our question-and-answer session. I’d like to turn the conference back over to Selina Yang for any closing remarks.

Thank you, Operator. In closing, on behalf of the entire GreenTree management team, we thank you for your interest in GreenTree 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 all.

Thank you.

Thank you. This concludes today’s conference call. We thank you all for attending today’s presentation. You may now disconnect your lines and have a wonderful day.