MNSO

Hello everyone and thank you for standing by. Welcome to MINISO March quarter 2026 earnings result presentation. At this time, all participants are in listen only mode. After the management prepared remarks, we will host a Q&A session. Before joining the Q&A, please state your name and institution. Please also be reminded the event will be recorded. We provide you English simultaneous translation for this call. Please select your preferred language by clicking Interpretation in the Zoom meeting. We released our Q1 2026 results earlier this year. Now please refer to our IR website. Joining us here today are Mr. Jack Ye, our Founder and CEO, and Mr. Eason Zhang, our CFO. Right before we begin, please refer to the safe harbor statement in our earnings press release, which also apply for this call, as we were making forward-looking statements. Please also note that we're discussing non-IFRS financial measures.

Those measures are extend, reconciled to the most comparable measures reported under IFRS. Also in our filing with SEC and Hong Kong Stock Exchange. Unless otherwise stated, all figures are in CNY. We have already prepared a slide deck for financial operating highlights for today's call. If you are joining through Zoom, you will see the slide now. You can also refer to our IR website after the call. Let me just hand the call to Mr. Jack Ye.

Hello everyone. Welcome to MINISO March quarter 2026 earnings call. In March quarter, the revenue rate grows to CNY 5.7 billion, grow by 28.5%, excluding the high end of our previous guidance. Adjusted net profit, excluding forex gain and loss, comes at CNY 630 million, grow by 8%. Operating cash flow grow by 40%. Free cash flow was up by 36%.

I'm not going to read through the financial items one by one. Eason will take you through the detailed numbers and outlook in CFO remarks. I'd like to focus on three areas. First of all, execution of our strategy. I may spend more time here because the details of execution can really tell you where a company is heading to. Secondly, an update on two overseas markets that are of your most concern: Indonesia and the U.S. Thirdly, my view on H2 of this year. Let me just start with strategic execution. Last year, I introduced a store upgrade strategy. We are right on that. MINISO brand store number grow by 280 in China, less than 10% growth, but offline store GMV grow by 25%. The two data tell the story best.

First of all, the share of the pro-rate franchisee base quarter reached the highest level in recent quarters. Franchisees are putting their own money on the line, so their P&L is most honest signal that you can get. The fact that the profitability is a new high tells you that large format store is not asking franchisees to take the risk, but helping them to make money. Secondly, we received thousands of new store applications, half of that requesting for large format or flagship stores. In the past, we have to convince franchisees to open large stores. Today, they're competing for this chance. Such shift is the market's most direct vote for the confidence in our large store format. On April 18, MINISO SPACE and MINISO LAND opened simultaneously at CDF Mall in Sanya.

Duty-free mall has been traditionally taken for luxury and beauty brands, with highest foot traffic density and spending power among the top-tier retail store. The fact that we can move in speak for the brand equity, most importantly, we bring something that people won't be able to take: an immersive IP-driven experience and pop culture to duty-free malls, and translate into incremental foot traffic and time for venue. The real barrier for running a large store isn't capital. It is content density. In a 1,000 sq m space, can you really make the customer want to stay without leaving? This comes to three things we accumulated for one decade. License right over 150 global IPs, a network of 2,000 global suppliers, and a supply chain that fast enough to refresh assortment every week. These are the three that can really make us stand out.

At the same time, we're systematically closing underperforming stores, those open for many years with under 200 sq m. At the same time, we upgrade our franchisee base, removing weaker partners to bring new, strong ones. This is what our store and the channel upgrade strategy is really about. Many people want to know how we have our IP strategy done. This is quite important. In Q1 of this year, we launched an IP operation training program out of our Guangzhou headquarter, bringing together regional manager, store representatives from South China, and functional team. This isn't a classroom-style training. We use our MINISO LAND store as a live training ground, breaking down operations in real store environments. The program covers our IP understanding, storytelling, operational execution, and the data capacity, working through everything from underlying logic to hands-on experience. Why it is so important?

Because IP operation is an organizational capacity. It is not a set of SOP. No matter how well a manual is written, if franchisees and your staff just follow it mechanically, the result won't be good. Only when people genuinely understand where IP resonates customer most, that can help our right half strategy. This can turn IP operation from a headquarter story into a muscle memory across the entire network.

On April 8th, we concluded our overseas trip there. The star of this event was YOYO, a proprietary IP that we built from scratch in-house. The fact that the proprietary IP took center stage is a signal our own IPs are now capable of standing on their own commercially, and the strong order volume from the distributor and overseas customers is the most honest vote of the confidence to our IP and our product. That's more telling than any market result.

YOYO surpassed CNY 100 million in sales within six months of launch. In April, it appeared on Met Gala, the Super Bowl Oscar of the fashion, a stage that has been traditionally for luxury brands and international celebrities. A Chinese original pop toy IP appeared as an accessory along with international stars and was featured as a piece at the event. This is not marketing. YOYO earned its place in the global fashion spotlight on its own merit. From CCTV Spring Festival Gala to Paris Fashion Week to Met Gala in New York, YOYO covered the ground in six months that many IP won't be able to make in 10 years. It's a full stack of the IP capacity from incubation to design to operation and global rollout. YOYO's success is not a coincidence. It's a signal that the proprietary IP strategy is going get into the harvest stage.

In Q1, total overall revenue of MINISO Group exceeded CNY 2 billion, and we also have a great way to extend our business. The success is whether our organizational capacity can keep the pace. Building organizational capacity is what we made a vast investment with. It won't immediately show up in financials, but it's by our long-term development. We have advanced a few things. First of all, standardization. The headquarters has developed operation and merchandising manuals. They deliver video case study and on-site training to ensure consistent understanding and execution across markets. Each market also set up regional management training with regular session for store managers and supervisors. Secondly, would be the benchmark and the rapid replication. When pilot project is selected, once it proves success, we roll out them quickly to other markets.

Thirdly, a membership model, helping experienced operator who deliver result with new comers and continue to have the generation pass on the information. This system means our overseas capacity no longer depends on a single individual. It becomes something that organization can grow on its own. The more market and the store we have, the greater the compounding effect might be. Deep organizational capacity along with IP-driven product, those two things give us strong confidence for our long-term overseas growth. Indonesia and the U.S. are the two markets many of you focused on. Let me give you an update on both. Indonesia has been one of the markets we master product in our international journey. It has truly been so going forward. Winning Indonesia isn't about market. Its young demographic and vibrant consumer environment in the market. We're going to have a long investment.

It also made a demonstration effect for confidence to our global team. We must have made it right. The business reach certain scale, hitting some bumps is entirely normal. The most difficult time is already gone. We already have a clear path forward. Our channel headquarters has set up dedicated negotiation team to proactively pursue primary location and select good locator stores. Our assortment, we have a one size fits all approach. Score on segmentation. Our new product operation headquarters providing direct support to strengthen local IP execution and retail merchandising plan. On the organizational side, we clearly define responsibility. Headquarters lead strategic development, while local team focusing on daily operation. In terms of the membership, we notice that we need to truly make the business from a traffic-driven to repeat purchase-driven. I'd like to spend a few words on membership piece.

We notice Indonesia consumer show a clear spike in store visit at end of each month, which correlates the local payday cycle. We made a payday week membership benefits program. The result was clear. Membership participants was 80.5% higher than during the normal member days. The repeat purchase rate and frequency are all improved. During the Ramadan, we saw participation climb even faster, which tell us this has become a real habit for the consumer. Well, for the first year, Indonesia delivered a solid profit contribution. I believe with our adjustment to event, the profitability in this year would be much better than last year. More importantly, the membership and the repeat purchase become the primary engine for growth. The growth would be even higher. I'm truly confident on Indonesia. Let's also talk about North America, which is another heat.

I have already walked you through the store model and the strategic updates. Today, I'd like to address two questions, including tariffs and the consumer behavior under inflationary pressure. I believe those are opportunities for MINISO. First of all, our price band gives us the structure, the advantages. Our core price range in U.S. was around $5-$25. In that range, what drives purchase, emotional connection with IP. I love this, so I buy it. Where at the same time $5-$25 is quite alluring, but at the same time, a consumer looking for merchandise of specific IP won't walk away because of the small price increase. The tariffs and inflation translate directly into price elasticity. However, for us, we don't apply that the same way. Secondly, MINISO Supply chain capacity is being further upgraded.

From building a localized and specialized merchandising team, we're improving the entire supply chain, including product, strategy, and the supplier development. With strong cross-functional and the supply chain collaboration, we have launched our first SAL program, which can help to improve our supply capacity. Our goal can really support the U.S. business development. We operate in 120 countries and regions worldwide. Any successful store model from one market, proven IP playbook, could be quickly adopted worldwide. At the same time, the stable cash flow and scale economy can also give us the confidence and resources to invest in the U.S. The global complementary framework is not there for our competitors. Tarriff and inflation are cyclical and short-term variable. They come, and they go. Where consumer demand over emotional IP experience is structural, it doesn't appear with micro volatility.

For strong companies, cyclical pressure is also the growth opportunity. This force is going to accelerate industrial shakeout and let truly differentiated brands stand out. In U.S., we are that differentiated brand. Let me just attend to TOP TOY now. In first quarter 2026, TOP TOY revenue grew by 51%. Net store grew by 21, reaching 355, 360 in China, and 79 overseas. In Q1 of this year, we launched a new proprietary IP, Xiao Yu, Daidai, and Bao Long Long. Along with proprietary IP same stores, together with Nomi, TOP TOY portfolio of proprietary IP stand out. The portfolio products become more mature. Our proprietary IP is being validated by the market. By the end of this month, we'll announce Zhao Lusi as TOP TOY's global brand ambassador. Her influence and recognition among young consumer will help us accelerate and reach more young consumer.

Coming next, let me just walk you through my H2 outlook. There are four drivers. First of all, membership is the most important lever for our same-store sales growth. The data tells a clear story. For full year 2026, member contributed 60% of the total sales. In Q1 of 2026, this number rose to 73%. In other words, nearly three-quarters of MINISO China business are coming from our members. There are two structural shifts behind that. I see that consumer accounted for 79% of the total sales for us. Are two highlights. First of all, contribution from repeated purchases continue to grow. In Q1 of this year, repurchase has already accounted for 60% of the member sales. New member acquisition is also accelerating.

In the first purchase contribution from the new members rose from 6% to 11% in Q1, which tell us when we convert new consumers into members, the quality of those new members are also improving. When more than 70% of your business revenue are coming from the consumers you can directly reach and engage, the growth shifts from being opportunity-driven to system-driven. That's the underlying logic behind our confidence why we are there for repeat purchase and ARPU expansion in H2. Secondly, benefit our channel upgrade already started to come through. For the full year, we plan to open close to 500 large format stores, with MINISO LAND and flagship store making up increasing share. Certainly, North America and Europe set to enter into harvest phase in H2. The new store we opened in U.S. and Canada was of high quality.

This cohort will reach maturity and deliver high-quality same-store sales growth and margin improvement. 2026 is the year with highest density of IP. As we move into summer peak season, we have a very strong pipeline of major IP collection launch lined up. We could see some return this quarter from our earlier investment in the AI space. I firmly believe that we surprise lies in the efficiency gain AI can bring to our core business. Strong management capacity get amplified by AI, and the technology dividend from AI will flow first to organizations that already have high execution discipline and a very strong learning capacity. I surely believe we're going to continue to leverage AI to really support organizations who already have a very strong learning capacity.

For me and for my team, we are improving our understanding over AI and also continue to develop AI. What is MINISO? MINISO is a high-density operating organization, launch thousands of new SKUs every year, manage over 8,000 stores, and extends more than 100 markets and regions. For an organization like us, the drive for efficiency is our DNA. On the product development side, AI is supporting the trend forecasting and the assortment decision. On marketing, AI can improve our efficiency in content production and the customer stratification. On operation side, our smart floor system are helping us managing foot traffic by time and day. We approach change with a sense of humility. We see AI as an amplifier, amplifying the supply chain advantage, product development speed, and operational precision that MINISO already has. Recently, we also would like to leverage AI to forecast the product need.

In that way, we will be able to improve the customer loyalty. Those are the two prepared remarks I have for you. Now, I'm going to welcome Eason to walk you through the financials. Thank you.

Thanks, Jack. Welcome, everyone, to today's call. Please allow me to walk you through our financial result of this quarter. Unless otherwise noted, all figures are in RMB. Let's take a look at the completions of guidance. Let me just start by reviewing how we performed against the guidance we provided on the March earnings call. We delivered on every metric we guided for this quarter. First of all, revenue. Group revenue was grown by 28.5%, which is higher than the 25% we made for the previous quarter. I will break down the growth driver by business unit later in my remarks. Next, on same-store sales.

In Q1, MINISO China Mainland delivered high single-digit same-store sales growth, where North America delivered mid-double-digit same-store growth. The two strategic priority markets maintained a very strong momentum we saw in Q4 of 2025, driving group same-store growth to a mid-single digit number. It is worth mentioning, Europe and Latin America also delivered positive same-store sales growth in Q1. The trend will be continued in Q2. Let's also take a look at the top line. In Q1 of 2026, group GMV reached CNY 10.1 billion, grew by 26%. Total revenue grew by 28.5%, reaching CNY 5.7 billion. Let's break down by brand. MINISO Brand revenue was CNY 5.17 billion in Q1, up by 26.6%. MINISO China Mainland was CNY 3.23 billion, up by 29.6%. MINISO China Mainland continued to perform exceptionally well.

This was the fourth year-over-year growth rate in the past nine quarters, and the fifth consecutive quarter of accelerated growth following Q4 of 2025. The success of our China business validates our strategic direction is right, our operating playbook is solid. We will use China experience as our benchmark, use this proven operating experience to drive breakthroughs in international business, turning China's success into a powerful engine for overseas growth.

MINISO overseas revenue was CNY 1.94 billion, grew by 22%. TOP TOY revenue was CNY 510 million, grew by 51.4%, continued a very strong growth trajectory. Let's take a look at same-store sales. In Q1 of this year, Mainland China delivered strong same-store sales growth with high single-digit growth number. MINISO overseas, including the third-party distributor, also delivered solid low single-digit growth. Looking ahead, we will continue to strengthen our same store across three dimensions, people, product, and stores. First of all, people.

We leverage in-store traffic data to capture peak hours, regularly run in-store engagement activities, capitalizing on peak occasions like Mother's Day, 520 Lover's Day, and Children's Day, and the Dragon Boat Festival to drive traffic through online to offline activation. On the other side, we use internal mechanisms such as in-store competitions for the best in-class mentoring to continue to improve our operation capacity. At the same time, as Jack Ye has already mentioned, the value of our domestic membership system continued to be unlocked. In Q1 of 2026, members' contribution to the sales growth from 60% to 73% this quarter. Empowered by our large store and IP strategy, we continued to acquire new customers and use refined operations to close the loop from acquisition to retention and repeat purchase.

In the near future, we will leverage AI capacity plus membership data to make sure we continue to have the demand forecast, the precision targeting, and the channel iteration continue to drive the same-store growth number. Second, let me talk about the product. We continue to align category with seasonal and holiday consumption trend, use hero SKUs to drive a structural upgrade in the personal sales mix. In H1 of this year, our IP preparation has broke through across diversified categories, covering high-value IP for K-pop superstar brand Jennie, the sweet world brand growth, and classic lifestyle aesthetic task season. This fully validates the connectivity of our global IP platform. In H2 of this year, we're going to heavily launch the World Cup collections, Chiikawa plus Sanrio collaborations, and the Toy Story movie. The hero IP will help to drive the high attachment rate. Secondly, our store.

We continue to upgrade the store display and visual identity. In Q1 of this year, we completed renovation to around 80 stores. The average daily sales improved by more than 50% post renovation. The result validates the effectiveness of the model strategy. We will continue to make it right. Let me also talk about our store network. At the end of this quarter, we have already more than 8,500 stores. MINISO, we have 8,210 stores worldwide, a net increase of 722 stores. MINISO China store number grew by 380, where overseas we net added 404 stores, reaching 3,670 stores by the quarter end. TOP TOY have 875 stores, with 355 stores by the quarter end. 39 are located outside China.

In Q1 of this year, we opened high-quality theme park, for example, MINISO LAND and MINISO SPACE in Sanya CDF Mall, MINISO LAND in Grandview Mall in Guangzhou, MINISO LAND in Dongmen and Shenzhen, as well as MINISO FRIENDS in IAPM Mall in Shanghai. By the end of this quarter, the SPACE, LAND, and FRIENDS stores reached 44 in total. In this quarter, we're going to have the SUPER MINISO, a new theme park lineup, bringing the total to 61 by the quarter end, covering 32 cities across China. Together, theme park stores, flagship ones, and the large store ones accounting for 12% of the total store count contributed 30% of the sales. We expect to roll out more better theme park stores by the end of this year and deliver a joyful and unique shopping experience to our user. Let's talk about our GP margin.

GP margin was 43.3% for Q1 compared with 44.2% in the same year last year. We have a 0.9 percentage point decline due to three reasons. First of all, high-margin overseas business represents a small share of the total group revenue. Secondly, the return of the value-for-money assortment in China. Disciplined pricing has translated into higher volume. Thirdly, an increasing mix from our new domestic product, like the quick commerce stores, which are still in a margin ramp-up stage. Let's also take a look at expenses. The total operating expense, excluding SBC, grew by 34% in Q1. The total expense ratio was 29.2%, compared with 28% in Q1 last year. Within that, selling expense grew by 37.7%. The selling expense ratio was 24.5%, up by 1.6 percentage points. G&A expenses grew by 17.4%, slower than the revenue growth, representing 4.7% of the revenue, a decline of 0.4 percentage point.

The growth of the selling expense was primarily driven by investment in operating store licensing fees and advertising and promotion activities. First of all, in Q1, the revenue from direct operating stores grew by 50% YoY, while related expense grew by 35%, demonstrating an ongoing optimization in our DTC store-level economics. Direct store-related investment include staffing, rent-related expenses, depreciation, and amortization. Secondly, advertising and commercial expenses grew by 74%, accounted for 3% of the revenue. That was mainly because of the brand upgrade initiative and the proprietary IP marketing. We invest in brand awareness to reach a broader consumer base, reflecting our strategic investment in building brand equity. Thirdly, logistics expense grew by 43.5%, stably representing between 1.5%-2% of the revenue. Fourthly, licensing fee grew by 42% in this quarter, in line with our strategic investment in IP development, stably representing 2.4%-2.6% of the revenue.

The growth of the G&A expense was primarily due to higher staffing cost. In line with our business expansion, G&A grew slower than revenue. Let's also take a look at other net gains. As being talked with many of you, for the previous quarter four, in Q1, we recorded a large investment gain with other net income related to our direct investment in an AI company. Following that company's recent IPO and meaningful share price appreciation, we recorded RMB 870 million in fair value gains. I'd like to remind all of you, the management doesn't view this type of gain as reflective of our profit and the core operating business, so it's been excluded from adjusted operating profit and adjusted net profit. In addition, the line item also include net foreign exchange gains and losses.

With forex volatility in Q1, we record a net forex loss of more than CNY 8 million in this quarter, which going to impact our margin by 1.5%. Generally speaking, our forex exposure may come in from the holding foreign currency-dominated assets, for example, cash equivalents, or receivables, or carrying foreign currency-dominated liabilities such as our USD-dominated convertible bonds. In Q1, the forex losses mainly come from the intercompany receivables from our subsidiaries in the U.S., Canada, Europe, and Indonesia. The forex gains and losses don't reflect the true operational performance of our core business. As the share of our DTC business continue to grow, the impact of the forex will also increase. The guidance we're going to provide you will exclude the forex impact. Well, for non-IFRS, there will be some item need to be adjusted.

I listed it here for you, including six. The first one is equity settled Share-Based Compensation, SBC. SBC expense in Q1 was CNY 410 million, an increase of CNY 84 million because of the top line. The second one is gain from the indirect investment in our AI company. This is actually a non-IFRS with an investment of CNY 817 million represent unrealized and the mark-to-market gains arising from the change in the fair value.

The third one is losses from the fair value change in derivatives and the issuance of the cost related to convertible bonds. By the beginning of last year, there will be a one-time issuance fees that won't occur this quarter. In Q1, the interest expense on convertible notes was CNY 50.4 million, of which CNY 45.7 million are non-cash. The actual cash interest paid by the company for this convertible note was only CNY 4.7 million.

Interest expense on the loan used to acquire our stake in YH was CNY 23 million. In Q1 for YH, the performance was truly good. The net profit was CNY 290 million as we hold 29.4% of the equity stake in YH. We recognize approximately CNY 77 million in income from YH in Q1, and we also have the change in carrying value of the redemption liabilities arising from the preferred shares. All those items will be excluded from adjusted net profit.

Effective tax rate was 24.9%, which was 20% last year. Let's take a look at the profitability. I was talking about adjusted operating profit. Adjusted operating profit, excluding the net forex loss, grow 40.3% reaching CNY 840 million in this quarter. The adjusted operating margin, excluding the net forex loss, was 40.7% compared with 60.6% in the same period of last year. Let me just walk you through the gap.

First of all, gross margin declined by 0.9% YoY. The total operating expense, excluding SBC, grew by 1.2% YoY. The above partially offsetted by other items, resulting in a total impact of 1.8 percentage point on the adjusted operating margin. It's been declined from 16.6% to 40.7%. As you can see that for this quarter, the increase in our overall expense ratio was increased significantly compared with the previous quarters, where for the full year, we aim to well control the expense ratio and continue to stabilize the GP margin. In other words, we are going to stabilize the operating profit margin for the company as a whole. In H2 of this year, as a peak sales season of the overseas market continue to approach, we are going to honor our commitment for this goal.

Regarding working capital, by the end of Q1 of 2026, the inventory turnover was 101 compared with 102 days in the same period of last year. MINISO China managed inventory turnover was at 67 compared with 83 last year. MINISO overseas inventory was 254. That was 208 last year. The increase of overseas inventory was primarily driven through the inventory build-up ahead of the store opening. The second one is due to the logistics instabilities. In some strategic market, we have a more flexible supply chain management strategies, increase the safety stock in overseas market. Over the time, there will be significant room to optimize overseas inventory turnover. Let's also take a look at the cash flow, liquidity, and capital allocation. By the end of this quarter, our cash position stood at CNY 7.05 billion, remaining healthy.

In April and May of this year, we distributed dividends over $160 million, bringing our cumulative shareholder return to CNY 6.23 billion. We believe our share price is currently significantly below its intrinsic value. Jack has already announced by the end of April, he intends to increase his shareholding. The company also planned to conduct share buybacks based on the market condition. Going forward, we will continue to maintain disciplined cost control and prudent working management. We are balancing the growth with a delivery stable and predictable returns to the shareholders. Last but not least, let me just give you the outlook. Standing here by the end of May, we are highly confident in achieving the full year target. We expect for the full year 2026, the revenue we're going to have a high double-digit growth. Three-year compound growth rate would be no less than 22%.

Full year net store addition would be 450-500. Jack has already mentioned, we're going to pay more attention to the quality of the development. 450-500 net store increase would be adjusted as we continue to balance the quality of the store. However, overall speaking, we are still very confident in hitting our target. Regarding the same-store performance, MINISO China and North America, we hope we can continue a positive same-store sales growth. Excluding forex gains and losses, we expect adjusted net profit growth to accelerate compared with 2025 on full year basis. While the overseas macro environment presents significant challenges, our expectation for the first half operating readout remain unchanged. We believe the revenue will grow by 20%-22%. Net store addition will be 210-230. The MINISO China same-store sales maintain a mid-single digit positive growth.

North America same-store sales maintain a high single-digit to low double-digit growth. That concludes my prepared remarks. I'm happy to take your questions. Thank you.

Thanks for Eason, thanks for Jack. All the investors and analysts, please state your name to have your name and the institution you represent. Please make sure you only raise one question each time. Let's first of all welcome Michelle from Goldman Sachs to raise the first question.

Hello, Jack and Eason. Thanks for giving me the chance to raise a question. Congratulations for the company of having a good performance despite the challenges. My question was regarding overseas markets. They're being touched upon by Jack Ye. You see the crude oil price have risen and stay elevated. Could the management team share with us what is the demand from the key overseas market?

What would be the distributor order, pricing, cost of goods sold, and the transportation and the logistics? What are the impacts on your business, and what would be your response strategies? If in the next few quarter, there are some key upside and downside risks, which are the market and factors that you are most associated with? Are there any market that's going to have a huge fluctuation, and what are the market you're confident on? Thank you.

Thank you very much. A very good question. Let me help to address this question. First of all, on product mix. While systematically laying out the share of the high-margin categories. Proprietary IP product and IP collaboration limited edition are key focus. We also started to pursue narrowing but deeper strategy, concentrating on the true hero product and proactively on the tailor and SKUs.

Fewer categories, but a greater operating depth and efficiency in each. This is, in itself, the most direct way to hedge against cost pressure. On the supply chain, we have extended the raw material stocking circle from the SKU from two months to three to four months, locking the cost ahead of the time. End-to-end stocking price is still stable, gives us sufficient buffer. For U.S. market, over the past two weeks, we started the differentiated price tags, taking price first on high frequency, high velocity items. For example, like a bottom to water and a T-shirt. On the bottom now, we see GP margin already improved compared with April. The price increase roll out further. We believe that U.S. GP margin would continue to stay stable or even go up.

Looking ahead into the next three quarters, the upside risks include successful execution of the pricing adjustment, structural margin improvement, the rising mix of proprietary IP, as well as the logistics cost pressure from the sustained high crude oil and potential pressure on the ticket size if the consumer sentiment is certain continue to go weaken. Overall speaking, we're still very proactive for cost management.

Thank you very much. Thanks for Jack.

Coming next, let me just welcome Samuel from UBS. The line is open for you, please.

Thank you. Thanks for Jack Ye, and thanks for Eason, and thanks for Christina. I have a question regarding your Indonesia and Mexico market. I heard a few remarks from Jack Ye regarding the Indonesia market outlook, but let me just ask you a follow-up question. What are the same-store sales and the overall sales trends in Indonesia and Mexico over the past two months in April and May? What is your strategy for both market, especially Mexico? How should you comment on the sales and profit growth outlook for both market in 2026? Thank you.

Thank you. I think I have already covered Indonesia market. Let me talk about Mexico. The Mexico trend was positive. Same-store sales already turned positive. Latin America are also delivering positive growth. From April to May, same-store sales improved meaningfully. Strategically speaking, we're going to work on channel upgrade. Mexico used to be dominated by small stores under 300 sq m. This year, we're going to roll out another store. Larger store not only means a larger floor footage.

It represent a comprehensive upgrade on IP density and dwell time to improve the higher ticket size and repeat purchase. Our largest store practice in China is fully validated. We're going to have it in Mexico now. Looking to the full year, Mexico, the same-store sales should maintain positive. New store benefit as the channel upgrade would be visible in H2. Latin America has a substantial consumption power and the fragmented competitive landscape. As long as we open right store and execute IP operation well, the market is still quite promising. For Mexico, we're going to have larger stores starting from H2 of this year. We really look forward to its performance. Thank you.

Thanks for Samuel, and thanks for Jack. Let's welcome Anne from Jefferies.

Thank you. Thanks for Christina.

I have a question regarding the mainland China market. As you can see that generally speaking, social retail data is not looking right. However, as I was talking to the expert, we found out MINISO store, your performance is much better than other peers. Is it possible for you to share with us, are there any strategic updates that you can share with us? What are we going to do next? Just now, we have already mentioned some of our franchisees, they're happy to open the large stores. Can I just kindly ask you, are there any capital support we provided to our franchisees? Any strategies you have on the China market we'd happy to hear.

Thank you very much. Let's talk about renovation progress. We renovated around 80 stores this quarter with clear result. Average daily sales increased by 50% post renovation, validating the effectiveness of our store upgrade strategy. For 2026, we plan to renovate more than 300 stores, we need to do it in a phased pace and a proactive intervention way. In other words, open big, close small, open good, and close weak. Transferring those aging undersized stores into new store formats with place to emphasize on evaluating the visual identities, standard display, IP experience mix, and to have efficient renovation strategy. Let's also talk about franchisee profitability and paybacks from Q1 2025 to Q1 2026. The share of the profit franchisee store continued to go up. The GP margin continued to expand. On payback period, larger store are meaningfully higher than the store level profitability.

For some of the best performing MINISO LAND store can even achieve a payback within 6 months, compared with around 18 months for the standardized stores. In 2026, we continue to reinforce the franchisees their understanding over the large stores. We received some positive feedback from many of our large store franchisees. About 50% of the new store application received by the headquarters are for large store format. The feedback indicate the franchisees are increasingly willing to invest in large store renovation. It also reinforce the importance of our strategic shift towards improving per store quality. Thank you.

Thank you, Anne. Coming next. Let's welcome Yang Runbo from CICC please.

Hi, Jack and Eason. I have a question regarding Mainland China this season. As we can see in April and May, the micro consumption data in China is still fluctuating. I'd like to ask the management team, in terms of the foot traffic and willingness to spend, are there any change? What trend are you observing across different city tiers and consumer cohorts?

Same-store average daily order volume and average ticket size are both going up. The ticket size is approaching CNY 14. There's one driver that is becoming more important for our China growth, that is membership operation. It's most important strategy we have. A high quality, highly engaged membership system provide more predictable growth with strong resilience going through the industrial cycle. The data tell us very clearly, members spend at a meaningful higher than the non-members. The higher the share of the member sales, the higher the quality and predictability of the overall business might be. For the past few months, our membership ratio increased from 60% to more than 70%, driven primarily by new consumer acquisition.

In H1 of this year, we'd like to work on the member acquisition. In H2, we will focus on repeated purchase. When the two are combining together, it can help to complete a membership growth flywheel. Taking a look at the city tiers, we observed some positive trend. Consumption potential being unlocked for all tiers. Same-store sales are all positive for all city levels. Provincial capitals are driven by large store as well as top level IP. Tier cities are driven by potential penetration and customer acquisition. The growth was pretty healthy during the Chinese New Year. We roll out the trendy toys to the countryside strategy, bringing MINISO IP product and the same product experience to county level market, and which can help us to have the same-store sales in county level reach double-digit number.

This tells us emotional demand for IP and the trendy toys cover a much broader audience. Young people in county, they also have the same demand. They simply don't have the shelf and adequate supply before. This can also see MINISO brand has already covered different consumer cohorts. The depth of the China market is far greater than what is being generally appreciated by the market.

Coming next, let's welcome Xu Xiaofang from CITIC please. Okay. We may move to the next question first. Let's welcome Shi Di from Huatai Securities first.

I don't know if you hear me.

Yes, great. Loud and clear. Thank you.

I'm Shi Di from Huatai Securities. I have a question regarding the same-store sales in China. We see in Q1 of this year, the company did a good performance on same-store sales. In the next few quarters, the baseline was being elevated. How are you going to comment on the same-store base rising and the subsequent quarter performance? What strategies and tactics are in place to sustain the same-store growth?

You're right, the baseline is indeed rising, but we have a clear and a systematic strategy in place. Let me just share with you a few data. During the May Labor Festival, domestic sales grew by a high double-digit number, outpacing major competitors. Average daily sales hit an all-time high, even higher than daily average during the Chinese New Year holidays earlier this year. We see some third-party data show us foot traffic was under pressure during the May Day holiday, but our store, the entry level improved by 4.1%. Average personal traffic also grow, means we drove traffic against the headwinds. By categories, toys, digital accessories, and travel categories delivered 25% growth, which is a hard-earned result.

For sustaining same-store growth, we have the following strategy. For IP preparation, we continue to deliver differentiated and high-frequency launches. For example, with the global exclusive license for F1 plus Disney collaboration. In May through June, there will be a few gifting seasons with Mother's Day, Children's Day, Father's Day, and 520 Lover's Day. We have already built a dedicated assortment and event plan according the gifting data to improve average ticket size. For operating, we also roll out the foot traffic contest at a store, and to further empower our store. The supply chain also continue to improve. Even during the May Day holiday, we can unlock the sales window. Even if the baseline is going up, we have a diversified toolkit, and we are confident we continue to deliver strong same-store performance. Thank you.

Thanks for Jack. Madam Xu, are you there from CITIC? Can you unmute yourself for questions?

Yes. Christina, thank you. I have to say sorry, there might be some technical issue with my line. Jack, Eason. Good afternoon. I have a question regarding your proprietary IP. For the past few six months, we see that your proprietary IP started to show up in your store media and the lower cities. The design's been quite interesting. Is it possible for you to share with us your proprietary IP, for example, YOYO as well as the pipelines?

Thank you. A radical question, let me elaborate on that. Third-party licensed IP and proprietary IP, since selling the same product, the logic would be different. Let's talk about the GP margin. Proprietary IP product have a high margin compared with licensed IP, the underlying logic matter the most. Proprietary IP is most exclusive and absolutely differentiated.

If you want to sustain the GP margin, you need to have a proprietary IP. The pricing power, operating elasticity, and the entire value chain of the proprietary IP sits fully in our hands. It also provides long-term high margin mode. You need to think about how to diversify the monetization model. A mature proprietary IP isn't sell product. You can sub-license it to the third party. You operate across multiple formats, and it can also drive content production and upgrading the IP capacity. Those are all extreme high-margin business model that compound over time. YOYO appearance on the red carpet and entry in professional way reflect build up the brand value rather than sell product only. We're building our proprietary IP. We're building a business model on an entirely differentiated style. That is most important upgrade for MINISO long-term profit structure. Thank you.

Thanks for Jack. Coming next, let's welcome Mr. Ting from Changjiang Securities, please.

Thank you. Thanks for the management team. I'm Ting Yang from Changjiang Securities. I have a question regarding the Europe business. It seems the business growth in Europe is quite fast, and you are still in the investment phase. Europe is a big market for you to explore. Can I ask Jack Ye, can you share your view on the long-term opportunities in Europe and the specific strategy plan? For the mid and the short run, what would be the pace of the store investment in Europe this year, the profit quality of the new stores, and what would be the change of the margin for the store? Thank you.

Europe has delivered continued positive same-store sales growth this year, with the leading category being trendy toys categories, for example, like the vinyl plush and the Blind Box. This is also the reason for us to go for international expansion. We're not bringing in product others already selling. We're rather bringing the consumption scenario of IP trendy toys, open new demand. Channel upgrades are progressing in parallel. The store will roll out in H1 of this year. Regarding the profitability, Poland and Germany are strong proof point. Both directly operated stores have outperformed expectation. The store-level and marked-out or operating margin reached double digits. The Germany overall operating margin for us more than 10 stores has already stabilized with double digits. Other markets are ramping up. Q1 is traditional the off season for retail. It is also the best window to prepare for new store opening.

Our long-term profitability target for Europe at DTC SKM. Germany has already achieved that. Other markets will follow up. Europe is a market with long-term cultivation. We have the patience and we have a clear pathway there. Thank you.

Thanks for Jack Ye, and thanks to Mr. Ting for the question. Coming next, let's welcome Wu Chenxi from Guotai Haitong. The line is open, please.

Thank you. Jack, Eason, and Christina, thanks for giving me the chance. I have a question regarding U.S. It says that you operate the largest store format in U.S. for quite a while. Is it possible for you to walk us through the operational details as well as the operational result? We can see that, what would be the purchase frequency of your U.S. members? Is it improved as you roll out large stores?

Thank you, Ms. Wu. As I was emphasizing again, that is what we are doing now. For the past two to three years, MINISO continued to build up our non-U.S. consumer goods, the largest DTC network in the local area. Starting from January of 2024, we started to explore the large store. Before that, you say that we entered into U.S. market in 2017. By then, majority of our stores are located in U.S. shopping malls. From January of 2024, we started to have our bottom-proof stores being opened, and we started to build our understanding of a buzzer. By the beginning of this year, Javier went to U.S. to tour around our stores. We find out our buzzer store has already moved into a 2.0 version time. What does 2.0 version mean? Our 2.0 version store is not picky about the business district at all.

You can say that for our good and large buzzer stores, even in an average business district, its store sales and efficiency per square meter is still been looking right. Compared with the 1.0 version buzzer store, the 2.0 version are actually showing better profitabilities. We have already provided you a single store profit model in the U.S. Generally speaking, for a single store, the payback takes around one year in the U.S., where for the 2.0 version store, the payback period is being controlled within one year. Well, for MINISO, we are committed for the long-term business, and we stick to the long-term investment. For the 2.0 version store, and it provide above expectation single store performance, and it is also sustained and continued with improvement.

In other words, in the near future, our U.S. 2.0 version store can be rolled out to more cities and more business districts. It's a proven success, which can help us to continue to unlock its potential in the U.S. market. The second question, you were talking about the sales data from our members. In China, we have a very mature and well-established CRM operation system. In that way, we will be able to extend our success China membership management to the U.S. For the past one year, the sales growth from our U.S. members has been quite significant. The China started to do membership in 2018, and in 2021, the membership sales exceed half of our total business. We made five years making membership spending accounted for half of our revenue, where in the U.S., we only spent one year to make that happen.

We can also see the repurchase rate of the U.S. consumer is no less than that of the Chinese members. That's the reason. We believe we're going to have a very healthy store efficiency this year, and we have every confidence for that. Thank you.

Thanks for Jack Ye, and thanks for Eason. Thanks for all the investors and analysts for your questions. Thanks for everyone to be a part of our earnings call. If you have any further questions, feel free to contact my team. Thanks for your attention this call for MINISO. See you next quarter.

The earnings result presentation. At this time, all participants are in listen-only mode. Following the management prepared remarks, we will open the floor for Q&A. Before asking a question, please identify yourself and the organization you are working for. Please also be noted that the call will be recorded. Simultaneous English translation will be available for this call. You can select your preferred language by clicking Interpretation in the Zoom toolbar. Our December quarter and full year 2025 results are disclosed earlier today and are now available on our investor relationships website at ir.MINISO.com. Joining us here today are Mr. Ye Guofu, our founder and CEO, and Mr. Zhang Jingjing, our CFO. Before we proceed, I would like to refer everyone to the safe harbor statements in our earnings press release, which was also applied for this call.

As management will be making forward-looking statements, please also note that we will also be discussing certain non-IFRS financial measures today. Those measures are described and reconciled to their most directly comparable IFRS measures in our earnings release and our filings with the SEC and Hong Kong Stock Exchange. Unless otherwise stated, all figures are in RMB. In addition, we have prepared a presentation featuring financial and operational highlights for today's call. If you join in Zoom, you will be able to see the slides. They will also be available on our IR website. Now I return the floor to Mr. Ye Guofu.

Good day, everyone. Welcome to MINISO 2025 December quarter and full year earnings presentation. 2025 was the year for steady growth and continued breakthrough for the group.

Throughout the year, the revenue growth followed a strong and constant acceleration trajectory, rising from 80.9% YoY in Q1 to 32.7% in Q4. Surpassing the upper end of our prior guidance and also reaching RMB 6.25 billion in quarterly revenue, marking the first time we have crossed CNY 6 billion quarterly revenue milestone. Looking at our core brands in detail, the MINISO brand recorded its fastest growth rate in nearly eight quarters in Q4, with revenue up by 28%, reaching RMB 5.65 billion. Meanwhile, TOP TOY delivered exceptional momentum, posting 112% YoY growth in Q4, with quarterly revenue approaching RMB 600 million, demonstrating the powerful dynamics of our multi-brand portfolio.

This year, we achieve higher revenue growth with fewer net new store openings than 2023, with greater share of the growth driven by the same-store sales, reflecting a more efficient and high-quality growth model, reaffirming the resilience and the long-term growth potential of our multi-IP plus multi-category and globalization business model. Today, against the backdrop of the group's full year operating performance, I will share with you the significant progress that we made in the past one year regarding MINISO strategy for the past one year, particularly focused on the breakthrough in brand activation and the store experience enhancement. First, let's take a look at MINISO China. In the fourth quarter, the MINISO brand generated a revenue of RMB 5.65 billion. Mainland China contributed RMB 2.87 billion, growth by 25%, representing 51% of the total.

MINISO overseas revenue reached RMB 2.78 billion, up by 31%, accounted for 50% of the total, reflecting a robust financial growth driven by both domestic and international operations. Let's first talk about strategic initiatives in MINISO mainland China business. In Q4, MINISO domestic same-store sales grew by mid-teens in Q4, a record high for the year, with average daily sales per store surpassing the level achieved in 2023. Even 2023 was largely driven by surge in post-pandemic pent-up demand. MINISO ability can exceed those peak levels. This can tell its genuine structural improvement rather than the cyclical tailwinds, and we have every confidence, assuming a more supportive macro environment and a gradual recovery in consumer sentiment in 2026. With our stronger brand equity, superior store positioning, more agile supply chain, and competitive standing, we will be able to outperform the industry by a wide margin, capturing more shares in the market.

By the end of Q4, our domestic franchisee count reaching 1,457, reaching historical high. Franchisees vote with their support. That is the most authentic market signal, and they partnered with us because they have witnessed it firsthand, the traffic momentum, and the financial returns of our large format stores. The trust has been earned store by store, IP activation by IP activation, and it is something that we hold in the highest regard. At our 2024 Investor Day, we articulated our vision to make MINISO the go-to happy destination for international consumers worldwide. Today, the vision is being realized one MINISO LAND store at a time.

By the end of 2025, we have already opened 26 MINISO LAND format stores in mainland China, securely in primary location in Tier 1 cities like Beijing, Shanghai, Guangzhou, and Shenzhen, and also distinctive retail destinations in Harbin, Haikou, and Guiyang. In January, the MINISO LAND opening in Grandview Mall in Guangzhou, attracting nearly 10,000 visitors on its opening day, generating RMB 450,000 in sales, a new record in South China region. Equally impressive is the MINISO LAND flagship opening in the lower tier cities in Urumqi and Nanjing. The Nanjing store soft opening drove 80% YoY growth in overall mall footprint traffic. Urumqi store, featuring a three-story impressive space and a portfolio of over 100 IP collaborations, quickly established itself as a regional primary destination. Such high quality of experience store are at their core, the engine for IP operations.

Through the authentic spatial design and the curated product presentation, they draw consumers in and, as such, the perceivable and tangible in-store experience brings IP value to life. It can also help us to continue to improve our brand IP ecosystem. The MINISO LAND store, combined with blockbuster IP activation, has become the go-to platform for creating citywide mainstream brand momentum. Tens of thousands of consumers share their experience on Xiaohongshu, Douyin, and WeChat Moments. That's the reason I always tell you our physical stores are MINISO's most powerful brand billboard and our most enduring source of consumer traffic. MINISO is not the first brand to pursue large format store trajectory. While others come for photos, the answer comes down to just one thing. A successful large format store must build on the foundation of strong proprietary product development capacity.

Without in-house design and R&D capacity, a large format store is nothing but an empty shell. Behind that, we have more than one decade supply chain deployment, a network of more than 1,500 global suppliers, and a design team of over 1,000 professionals. In this process, no one will be able to copy the successful story from us. They have to build the core capacities. MINISO moved even further ahead. In support of our MINISO LAND strategy, we established a 7-tier store format mix in 2024, continue to refine and evolve it through 2025. Our goal is to ensure every city, every trade area, and every consumption scenario will be served by MINISO format precisely. In the past, I mentioned MINISO's intentions to systematically upgrade its store portfolio. I also would like to share with you the reason behind such initiative.

Why every new store we open must be large format, high quality, and MINISO LAND format store. If we look at our journey, we navigated two distinctive strategic phase. First, rapid global store expansion to build scale, followed by strategic IP positioning, transitioning ourself from a value price variety store into interest-driven consumption destination. We achieved milestone in both phases. Now we move into the third phase, an immersive retail transformation centered on MINISO LAND. It's not only increasing store size, it is an integration of the store capacity built across first two phases, leveraging larger space, creating immersive environment, forging genuine emotional connections, driving repeated visitor. We are selling and translating from selling the product to selling experience, from traffic-driven business to loyalty-driven consumer-centered ones. People are never lack of a good product. They are truly seeking for compelling destination, memorable experience, and moments worth sharing.

Our IP-driven land are designed precisely to meet those needs, that we can inspire consumers to share and continue to come back for, to generate purchase. Regarding international market, our overseas revenue approached RMB 2.8 billion in Q4, all-time high, representing 31% YoY growth. Our overseas store net add was 159 stores, bringing a full year net increase of 465 stores. Our largest overseas market, the United States, delivered a full year growth more than 60% and 57% in Q4. Same-store growth was more than 20%, all ahead of our prior expectation. At our Q1 2024 earnings call, I stated improving store operating quality in North America was our top priority in 2025. A year on, MINISO U.S. business delivered comprehensive improvement on store quality, operational efficiency, and consumer engagement. For stores, our new store quality being further improved.

Sales of the new store in 2025 have all-time high, grow by a double-digit number, and those average transaction value and transaction volume all improving, driving meaningful higher unit level profitabilities and conversion rate. While at the same time, our mature store demonstrate a strong operating resilience. Leveraging a refined same-store performance tracking model, establishing store to deliver YoY growth, both the average daily sales and the transaction improving alongside gains in foot traffic and the purchase frequency. Especially for our plaza store format, we opened 48 plaza locations in 2025. They generate higher attachment rates and average transaction value, ASP. The average ASP outperforming our mall stores, establishing a more flexible and economically retained new store expansion channel. Operationally speaking, we have cluster-based expansion strategy, improving logistics efficiencies and warehouse cost. Employee retention improved. Revenue per headcount increased.

Labor cost as a percentage of sales declined, achieving a dual optimization on cost and productivity. For consumer side, membership in U.S. market grew by 150% YoY. The member-driven sales exceeded 50% of the total revenue for the first time. Together, those results mark U.S. market transition from an investment phase into a phase of high quality profitable growth, becoming our most resilient and dynamic engine for global expansion, which actually gives us great confidence for our global growth strategy. The operational challenges we encounter in other markets are also encountered and navigated in both China and U.S. We are going to leverage our experience from China and the U.S., continuing to unlock profit potential for our international operation. Thirdly, let me talk about TOPTOY. TOPTOY sustained its strong compound growth momentum in Q4, with revenue up by 112%. Reaching nearly RMB 600 million revenue in Q4.

In terms of the store footprints, by the end of 2025, TOP TOY operated a total of 334 stores, including 30 international stores in Thailand, Malaysia, Indonesia, and Japan. Brand global expansion continued to accelerate. Domestically speaking, TOP TOY growth strategy centers on high frequency of the proprietary product launch to drive same-store sales. The proprietary IP, Nomie, actually regained momentum with sales of more than RMB 200 million and likely to be doubled in 2026. By the end of 2025, TOP TOY has built a proprietary IP portfolio of more than 20 brands. In 2020, I first introduced interest-driven consumption. The consumer's core needs is rapidly shifting from the pure functional value to emotional and experiential value, which is being fully validated by the market. MINISO stands as one of the most significant beneficiaries and pioneer of this consumption transformation with our immersive IP experience, multi-category proprietary development capacity.

Those are our key and the hardest to replicate competitive moats in IP-driven consumption era. MINISO's strategic vision is to become the world's leading IP-driven retail platform. My strategy is becoming even clearer. Along the way, we have demonstrated the execution of our strategic development is right, and we also witnessed firsthand the genuine and sustainable enthusiasm we have from the consumers. For the past one year, we delivered strong results in both China and the US The road ahead is long, but with each step forward, our conviction and confidence only deepen. That's all for my remarks. Coming next, I'm going to hand over to Eason to walk you through the financial highlights for Q4 and full year. Thank you.

Thanks for Ms. Ye. Welcome you all. Coming next, let me just walk you through MINISO Group financial results for Q4 and full year 2025.

I will also provide you the outlook. I should also say that all the units will be RMB unless otherwise stated. Let me just start by reviewing financial performance against Q4 and full year. In Q4, revenue grew by 32.7%, supporting the upper end of our private guidance between 20%-30%, driven by the outperformance across all business segments. MINISO China Mainland Q4 revenue grew by 25%, exceeding our private guidance of a high-teens growth. MINISO overseas Q4 revenue grew by close to 31% YoY, ahead of our guidance of a low- to high-20% growth. TOP TOY Q4 revenue grew by 112%, above our guidance of 80%-90% growth. Q4 momentum lifted full-year group revenue growth by 26.2%, exceeding our prior full-year guidance of approximately 25% in the interim result. In Q4, MINISO China Mainland same-store sales growth reached mid-teens.

U.S. same-store sales exceed 20%, both supporting our prior Q4 guidance of a lower double-digit same-store growth. Both markets deliver high single-digit same-store sales growth for the full year in line with our formal guidance, but ahead of the internal expectation we had when we provided the guidance back in November. Adjusted operating profit growth by 12% in Q4, in line with our private guidance of the double-digit growth. Full year adjusted operating profit reaching RMB 3.67 billion, in line with our guidance. In Q4, adjusted operating profit margin was 17%, especially in H2 of 2025. We have already narrowed down the margin compression. Well, let's take a look at the revenue. We have already created three revenue milestones in this quarter. First of all, single quarter GMV exceeding RMB 10 billion for the first time.

Quarterly revenue surpassed RMB 6 billion for first time, and full year revenue crossed more than RMB 20 billion for the first time. Benefiting from all the outstanding performance, we deliver across all of our business line an over-expectation performance. By brand, MINISO brand generated Q4 revenue RMB 5.65 billion, 27.7% increase. MINISO China continued to demonstrate great growth. In Q4, its average growth is the highest one for the past eight consecutive quarters. MINISO overseas revenue was RMB 2.78 billion, up by 30.5%. TOP TOY revenue was RMB 600 million, up by 112%, and also having a triple digit YoY growth with very strong momentum that exceed our expectation. Turning to the full year, group revenue reached RMB 21.44 billion in 2025. A few highlights I'd like to share with you.

MINISO mainland China full-year revenue crossed RMB 10 billion milestone for the first time in such a consumption background, grew by around 70%. MINISO overseas full-year revenue was RMB 8.6 billion, up by close to 30%. TOP TOY full-year revenue was RMB 1.9 billion, maintained a very strong growth. In terms of the geographic revenue mix, mainland China revenue grew by 22%, accounted for 60% of the total revenue. Overseas revenue grows by 33%, representing 40% of the total revenue. We'll take a look at the same-store sales performance. MINISO mainland China Q4 same-store continues its sequential acceleration, reaching mid-teens, going beyond our expectation. Looking back to the full-year trajectory of the MINISO mainland China same-store sales. From negative mid-single digits in Q1 to positive low-single-digit in Q2, to high-single-digit in Q3, and finally mid-teens in Q4.

Sequential progression delivered mid single digit same-store growth for the full year, already exceeding our initial target in the middle of 2025. As I have already shared with you, delivering the improvement in the domestic same-store sales, that we did many hard efforts. In terms of the internal management, the same-store performance has been built into the KPI. We also have the digital infrastructure, making the business flow more digital and intelligent to improve the one team empowerment. Certainly, we have the operation improved, and we improved the store SOP with supply chain optimization and making sure that sustained contribution from the top selling SKUs and then minimizing the potential sales loss. Fourthly, the product development efficiency has been further improved. We actually have more contribution from new SKU and speed to shelf of the new product launch. Fifthly, the inventory cap policy.

Regarding the operations, we are also working at three fronts, including consumer product and channel. For people and consumer, we improve the in-store conversion. Our extensive store network serves as large scale testing ground and rich data pool. By deploying additional foot traffic counter, we're able to capture high frequency store level data that can help to further optimize our store and operation. We also have diversified marketing activations. For example, for this year, we have the one day store manager program on Bread, Artist Street pop-ups, as well as in-store meet and greet, signing events, and celebrity store visit, which can actually become the viral moment on the social media, driving organic brand amplification through fan engagement. Regarding product, let me just give you another two points.

We're capitalizing on seasonal and holiday product trends, where at the same time, we're also managing IP and non-IP merchandise with a profound understanding. We leverage the traffic-driven power of IP product to generate attachment, purchase, and lift the basket contribution for the non-IP items. Regarding the channel, we improve our existing store portfolio. We have upgraded and improved 300 stores with a tangible result. Regarding MINISO overseas, same-store sales performance are different from region to region. First of all, in Asia and in Latin America, the same-store performance is lagging behind than other international markets. However, our strategic direct operated market, United States and Europe, deliver very good results, especially our key strategic direct operated store market, U.S., deliver low-20s% same-store growth in Q4, supporting our previous guidance. We're driven by the strong end market performance and continued polish of our store.

You can also see that we see a healthy improvement of the same-store profit margin through disciplined data-driven site selection and cluster-based store opening approach. U.S. back end overhead costs declined by low single digits, providing further tailwinds to U.S. business profitability. It is also worth noticing that in 2025, U.S. business faced meaningful tariff headwinds. Against a backdrop of significant macroeconomic uncertainties, our team responded with exceptional foresight, sharp marketing insights, and agile execution, still be able to deliver standout set of the results. Such results validate our robustness and business model. Such strength in and out is actually the foundation for our confidence to navigate any economic cycle. While domestic market as our strategic home base deliver sequential accelerating positive same-store sales growth in a highly competitive market, which demonstrate our strategic model and exceptional execution capacity of the team, creating a suitable scope for further growth.

In 2026, successful story and playbook from China to United States will be exported to Southeast Asia. With respect to the challenges in Southeast Asia market, we believe the headwinds are already nearing the bottom. That in 2026, through a comprehensive upgrade of our channel strategy, product assortment, and organizational structure and talent base, we will be able to continue to improve the business in Southeast Asia. Regarding the stores, actually, with total store count approaching 8,500 by the end of 2025. In Mainland China, the net add is 182 stores, compared with 460 in 2024. MINISO Mainland China recorded revenue growth that was around 10% in 2024. However, in 2025, it was close to 17%. In other words, with a clear indication that we have transitioned towards a higher quality and more productive growth model with fewer net new stores.

MINISO overseas new adds was 465, bringing a year-end total to 3,583. TOP TOY new adds was 58 stores. TOP TOY started global expansion by Q4 of 2024. Just within one year, we have 30 stores international wide, present in Malaysia, Indonesia, Thailand, Japan, and Macau. By the end of 2025, our domestic land format store portfolio, including MINISO SPACE, MINISO LAND, and MINISO FRIENDS, has reached 26 destinations across 90 cities nationwide. That format and the flagship large store collectively accounted for 10% of our domestic store count, yet contributed nearly 20% of our domestic GMV. This number will continue to ramp up, which helped validate big store drives big results logic. In 2026, we'll accelerate the release of this momentum and you can see, including CDF in Sanya, David City in Zhengzhou, and Grand Gateway 66 in Shanghai, we'll continue to see our new locations being operational.

In Q4 of 2025, we opened our first overseas MINISO LAND at Siam Paragon in Thailand with very strong market reception, which helped us to understand the potential of our overseas formats remains substantial. In 2026, we'll continue to bring the immersive land experience to more retail destinations across the world. For overseas directed operating markets, led by United States, we plan to have the strategic new openings before Q4. In that way, Q4 would be fully concentrated on in-store operational excellence and experience optimization, so that the peak shopping season arrives, we will be able to fully maximize the growth momentum. Regarding the GP margin, that was 46.4% compared with 47% the same period of last year. In 2025, the GP margin was 45%, flat for the past five years. Our GP margin jumped from 28%-45%, driven by our brand activation, globalization, and IP strategy.

During the years, we made selective gross margin adjustments across product categories, which enable better sales performance and an overall increase in GP margin. In the near future, we're going to continue to manage the balance between margin rate and sales volume, maintain a healthy high-quality growth. Regarding operating expenses, the operating expenses in Q4 grew by 45.3%. Sales expense grew by 47.4%, 3% higher than the same period last year. Administrative expense grew by 36.3%, accounted for 5% of the revenue, flat with last year. The increase in the sales expense was attributable to the growth in direct operated store costs, licensing fees, and advertising and marketing expenses. First of all, our international expansion is still in the early stage.

Direct operating stores are in need of rent and manpower, which was 1% higher than the previous year, accounted for 40% of the total revenue, with total costs growing by 40%. However, it's already a deceleration from 54.5% growth rate in the first nine months of 2025. Secondly, licensing fee grew by 107% year-over-year, accounting for 3% of the revenue, up by one percentage point compared with 2024. This also helps to reflect our proactive upfront investment in IP strategy. Thirdly, advertising and marketing expense grew by 30%, slightly below the rate of the revenue growth in Q4, with the ratio to revenue remaining flat compared with 2024. The increase in G&A, and you can see adjusted operating profit. The Q4 adjusted operating profit grew by 7.7%, and adjusted operating profit margin reaching 70%.

Full year adjusted operating profit, no matter for MoM or year-over-year basis, you can also see our operating actually continued to be well managed. From the P&L perspective, in Q4, GP margin declined by 60 basis points, because Q4 2024 was our highest GP margin quarter on record. Also direct operating store cost ratio increased by 1 percentage point. Licensing fee ratio increased by 1 percentage point, with a further contribution from the licensed items of the IP team, tens of basis points, result in a total adjusted operating margin impact by 3%. For the full year, GP margin flat versus 2024, mainly due to the direct operating store ratio increased by 2 percentage points. Licensing and other fees increased by 1 percentage point, resulting in a 3 percentage points improvement adjustment.

Whereas at the same time, you can also see that in mainland China, from the business unit perspective, the BS business unit part, China franchise business store margin declined by only 70 basis points against a backdrop of 70 percentage points of the revenue growth. This reflect our conservative approach for gross margin exchange for healthy volume. At the same time, the growth was also contributed by our Super Warehouse and e-commerce operation with a modest dilutive effect on margin. The group level margin decline is primarily attributable to the compression in overseas margin. For example, direct operated store revenue as a proportion to the total gross overseas revenue has been increased from 1/3 in 2024 to more than half in 2025. Outside North America. Other directed operating market remained in the early investment phase and carry low margin.

By contrast, our objective agent and franchise revenue, which carry high margin, grow at a relatively slow pace. In our financial statement, we also have some non-IFRS adjustment. There are five points. First one, share-based compensation, SBC. It was RMB 150 million in Q4 and full year RMB 270 million, and that used to be RMB 85 million in 2024. The increase was mainly because of the equity incentive plan we made for the team. The second one is the loss from the derivatives, fair value changes and CB issuance cost. The third one is the interest expense on CB and the YH investment related loans. In Q4, convertible bonds interest expense was RMB 51 million, of which RMB 47 million are in non-cash. Interest expense on acquisition loan related to YH was RMB 24 million.

For 2025 full year, you can see the convertible bonds interest expense was RMB 190 million, among which RMB 170 million are non-cash interest on the YH acquisition loan was RMB 87 million. The fourth point is share of the YH post-tax loss. In Q4, YH's immediate net loss was RMB 1.84 billion. Fifthly, you can also see that we have the fair value changes of the redemption liability arising from the preferred shares. The change was related to RMB 150 million-RMB 160 million. It related to the strategic financing completed last year. In aggregate, the adjustments added back approximately RMB 990 million in Q4 and RMB 1.69 billion for the full year to arrive at adjusted net profit. Excluding the item discussed above, the adjusted effective tax rate was 20.2% for Q4 and 20.1% for full year. Q4 adjusted net profit was growing 7.6%, reaching RMB 815 million.

However, as a result of our active share repurchase and consolidation program, our adjusted EPS grew slightly faster than growth. The adjusted diluted EPS in Q4 grew by 9.4%. Full year reached 7.8%. Regarding working capital, by the end of 2025, inventory turnover was 100 days, 91 days in the same period of last year. In Greater China, inventory turnover was 74 days. International inventory turnover was 228 days. The increase in overseas inventory days reflects a strategic inventory ahead of the anticipated traffic impact, locking in the cost at the favorable level. We also have established local direct sourcing, which can actually help to balance inventory pressure and ensure continued new product replenishment. In the near future, we are also going to adjust our overseas inventory and overall efficiency. By the end of 2025, our cash reserve was RMB 7.1 billion and remained healthy.

In 2025, full year net cash generated from operating activity was RMB 2.58 billion, accounted for 90% of the full year adjusted net profit. A reflection of our business resilience, high earning quality and strong cash generation. Capital allocation means we're going to maintain our commitment for rapid business growth. In 2025, we obtained approval from Hong Kong Stock Exchange with repurchase up to RMB 1.8 billion. You can also see that we continue to have the repurchase that can showcase our commitment and confidence for the full year. Looking at the 2025 full year, the return to shareholders account for RMB 1.9 billion, accounted for 66% of the full year adjusted net profit, including RMB 550 million in share purchase and RMB 1.36 billion in dividends.

You can also see the board has already announced final dividends of RMB 810 million, representing 50% of the second half 2025 adjusted net profit, which will be expected to be paid in April this year. Last but not least, closing remarks and outlook. Looking back at our financial performance over the past five years, from 2021 to 2025, revenue CAGR reached 21%, adjusted net profit CAGR reached 44%. Looking to 2026, we expect group's revenue will have a high teens rate. The three-year CAGR from 2023 to 2026 will be no less than 22%. We expect the same-store sales continue to ramp up in 2026. The same-store sales in key markets like China and North America maintain healthy low single-digit growth. We plan to have a new store 510-550 for the full year. We stick for quality rather than quantity.

In 2026, we balance growth and efficiency, pursuing profitable growth and profit backed by strong cash flow. We expect those adjusted operating profit and adjusted net profit will accelerate their growth rate in 2026. In terms of the profit phasing, the peak retail season for offline retail in North America and Europe is in the second half of the year. For many Western offline brands, 60%-70% of the annual revenue were generated in H2. Our direct operated revenue from North America and Europe will continue to grow. Around 60% of the revenue are coming from H2, and H1 accounted for 40% of the total contribution. In Q1 2026, the revenue growth were no less than 25%. China same-store sales maintain high single-digit growth, most same-store per store delivers strong mid- to high double-digit growth. It is worth noticing, Q1 profit will include a significant investment gain from specific investment.

It was generated from a test investment we made a few years ago. The company's been quite positive on AI company. We invested in a type AI company. That company's been IPO'd. The company's share price appreciated, generating a substantial fair value gain, and it actually bring us an extra RMB 850 million-RMB 900 million. It is worth noticing that such extra gains will not showcase our primary business resilience. We plan to exclude this item from adjusted operating profits and adjusted net profit. That's all for our prepared remarks. Let's open the floor for Q&A.

Ladies and gentlemen, please change your name into a name with your institution name. In order to make sure we allow and accommodate more analysts and investors, please make sure you raise no more than two questions at a time. Thank you. First of all, let's welcome Michelle from Goldman Sachs. Please.

Hello. Mr. Ye and Eason, thanks for giving me the chance to raise a question. Congratulations on the company achieving such a nice growth in the volatile market. I have two questions. The first question is regarding the domestic market. Last year, we observed same-store sales growth through refined store operation, stronger, faster sales execution, and store network upgrades. Looking ahead to 2026, as Eason has already provided guidance, is it possible for you to be more elaborate on the key lever to drive further same-store sales improvement? The second question is regarding the U.S. market. We do notice the sales was looking bright in the U.S. market. However, localized sourcing would somewhat pressure your GP margin. What are your priorities for merchandise supply chain and store expansion this year? What is the expected impact on margin improvement? That's the two questions I have. Thank you.

Thank you.

Our core level for driving domestic same-store sales in 2026 are clear. There are three. The right IP. For example, the JENNIE co-branded product, which can actually help to further consolidate our revenue and the brand impact. The second one is right product. The third one is right experience. Well, regarding the right product, we attach great importance to the product quality, same as ASP, and we also open large stores to provide a good customer experience. You can also see that JENNIE collaboration was first launched exclusively at MINISO LAND and themed pop-up locations, creating fully immersive IP experience. The limited time pop-up at Hang Lung Plaza in Shanghai generated RMB 2.2 million in sales on the opening day alone, setting a new single-day record for any MINISO pop-up in 2025.

This not only validates extraordinary pull of our land format store as a primary destination for IP launches, it also demonstrates a fundamental truth. Prime offline experience combined with top-tier IP content are the golden formula for unlocking global consumer demand and maximizing the IP value. As many of you may know, the Hang Lung Plaza is actually a top shopping mall, which is quite influential, and all these stores and brands are the super luxury brands. We will be able to move into such department stores to launch our IP product. This represents the recognition from the top shopping malls and the recognition from the top valuable consumers. At the same time, the breakout IP product extend our customer range beyond existing audience, elevating average transaction value ASP and strengthen repeated purchase behavior.

Together with our store upgrades, they form a powerful virtuous circle, enhance the store format, provide superior showcase and conversion environment for IP, where IP product in turn provide a targeted and highly loyal customer base, jointly driving sustained high quality same-store sales growth. For us, IP business never purely about selling product. We can start to leverage MINISO global supply chain capacity, category development expertise, omni-channel reach to give every great IP and every talented creator a bigger stage, and to build a more enduring IP that stand the test of the time and earning long trust consumer affection. The JENNIE collaboration is actually a new era we tap into of working with international well-known celebrities. In the past, we have the image IP and the content co-IP.

However, a collaboration with JENNIE actually showcase a new co-brand IP with celebrities, which actually provide ample room for the future cooperation. You see that for one of our peers, they actually have a close collaboration with Lisa, which bring a great and extraordinary global value by working with celebrities. We will be able to continue to improve and maximize the IP value. They are all the world top artists and the KOL. At the same time, I also would like to share with you based upon our latest operating data, we expect domestic same-store sales growth in Q1 will be quite aggressive. In 2026, we hope that we're going to be delivering more surprises. We hope more investors will take a look at that and working with more celebrities in the near future. The second question you asked about is the product and IP strategy.

We will continue to deepen our dual-engine approach of top-tier IP collaboration plus local market adoption. On one side, we'll intensify our partnership with leading global IP. On the other side, we will further extend our store spend on high-margin categories like home goods, plush, and blind box. Just now you mentioned the U.S. market. In terms of the local direct sourcing, we will optimize our SKU architecture to focus on high velocity and high-margin items, achieving a better balance between scale extension and the GP margin. I have just traveled from the United States back. In 2026, we're going to have a more precise analysis on what product need to be sourced locally and what need to be shipped there from domestic China. Sometimes sourcing from domestic China will present high margin. In 2025, due to the volatile tariff policy, we actually released more room for local sourcing However, in 2026, we believe the tariff turmoil has already gone. We will be more certain and clear on what are going to be exported from China to U.S. and what are going to have the localized sourcing. Regarding the margin, let me be frank. At the procurement aspect and the headquarters sourcing, we need to further improve our efficiency, optimize the merchandise mix, and then to improve the GP margin structure as a whole. Our target was to further improve operating margin in 2026 with a more pronounced recovery expected in H2 of the year. We provide a six-month offer in H1 of this year. I believe H2 of 2026 will be great, including our LAND store format. Internally, we keep an eye on increasing ASP and also the price per item.

We are working very hard in order to further improve the ASP as well as the price per product, as well as GP margin per product.

Thank you.

Thanks for Mr. Ye. Coming next, let's welcome Samuel from UBS. The floor is yours, Samuel.

Thank you. Thanks for giving the chance to raise a question. I'm Samuel from UBS. I have a few small questions. The first question, Mr. Ye, in your prepared remarks, you mentioned something regarding IP. I'd like to ask you regarding your proprietary IP. What's the progress on proprietary IP? What are the sales target and strategic plan for 2026? What are the key third-party IP priorities? Anything you can share with us. My second question was regarding overseas market. That is specifically talking about Mexico market. In 2025, Mexico market faced headwinds. What is the outlook for 2026? My final question, I also would like to ask Mr. Ye. You mentioned you invested in an AI company. Can you disclose the name of that company? Thank you.

Thank you. Three good questions. Let me respond to the first one. First of all, let me talk about our IP.

First, starting by YuYu. With less than six months of its launch in 2025, YuYu has already surpassed revenue of more than RMB 100 million milestone. From January to March of 2026, YuYu related sales was already RMB 165 million, around RMB 50 million per year. According to this trend in 2026, for YuYu only, our sales will be RMB 600 million. If we also combine international market, it's going to be RMB 800 million or even RMB 1 billion, likely to hit a RMB 1 billion revenue milestone. The revenue was beyond our expectation. YuYu is actually a Chinese proprietary IP. If you take a look at our IP portfolio, YuYu is the first one to have a revenue exceeding RMB 100 million, it takes less than six months.

There's no other Chinese proprietary IP that could run such a revenue growth as fast as YuYu, which can truly demonstrate our product and IP operation tactics and strategy, and our robust confidence in the operations of the IP management. Once we are working on that, we will be able to deliver faster growth. In terms of the product approach, we will carry forward the successful logic. We redefine the structural landscape for designer toy market, maintain the category innovation as a primary driver of the IP growth. All three product generation of YuYu released outstanding commercial result. First generation remain most popular. Till now, the average transaction value is still about RMB 400 today. The third generation product, the demand is go beyond our supply. Where at the same time, we also be clear that product sales are not one dimension of IP management.

We place great emphasis on healthy, sustainable development of our IP. We will not sacrifice an IP longevity for the sake of short-term sales revenue. I believe 2026 will be a great year for YuYu, and we're very likely to have more product working with international outstanding IPs. For example, IP from the Disney family that are going to have a co-branded work with YuYu. That is how our proprietary IP working with the international IP for co-branding. Till now, we have completed a full pipeline of 30-40 proprietary IPs. Among them, we have IPs from South Korea, from Japan, and from Thailand, or even all parts of the world. Especially Kumade, Chiba, and Chuchu have completed the full proprietary process from creative design to the product readiness, and they will be introduced to global consumer in months ahead.

Through those pipelines, we aim to fundamentally reshape the market perceptions of the MINISO IP categories and product potential, creating more robust IPs that deeply resonate with consumer needs. I also would like to tell you, on the 17th of May, we're going to have the MINISO photo gallery put into operation in Shanghai. That is going to be another key artist we're going to work with. That artist, one painting masterpiece can sell tens of millions CNY. When our MINISO art gallery has been put into operation, we're going to engage more artists to work with us. If we reflect on why YuYu is a great success, I think we do three things right. First of all, we constantly hold to our core conviction of category innovation to drive explosive IP growth. Product innovation is quite important. First generation of YuYu is outstanding.

The success of YuYu can really allow us to recalibrate our direction for product innovation, and how category innovation is going to be for IP business. MINISO has been deeply involved in the industry for many years. We have built world-class capacity in multi-category product development and the depth of consumer insights. That can help us to rapidly convert a creative IP concept into best-selling product. Secondly, we work on IP narrative first, product commercialization second, ensuring that IP develop its own soul and emotional resonance with consumer before products are launched to crystallize the value, not the other way around. Thirdly, we built a fully integrated end-to-end closed loop from the upstream creative ideation to the back-end supply chain, to all the omni-channel distribution, enabling rapid response to consumer demands and efficient product iteration and launch.

The IP incubation model is also the way underpins our future capacity of next generation blockbuster IPs. This is also MINISO's three-part competitive mode. World-class category development capacity, early-stage IP potential detection capacity, and high momentum multi-channel global distribution capacity. Those are the three strands that will continue to empower the growth of our all IPs. As you may have already noted, our flagship and new event format store are having many YuYu installations. That is quite important for IP promotion. You know that we do have a store in Causeway Bay, Hong Kong, where we don't have our proprietary IP. We can only show the Disney IP. In the next months, we're going to have the YuYu artist installations at the store. For any IP, you have to make sure expose the IP, especially your proprietary IP at the stores.

That is our unique advantage of 800,000 stores worldwide. With the installations and the YuYu presence in the store, that will be the best way to promote the IP at our own store and make it visible and touchable by the consumer. The third point regarding the third-party IP and proprietary IP portfolio, I have nine words. More IP, more portfolio globalization. In other words, we need to have the global licensed IP plus the proprietary IP. International IP, they have their advantage. Some of them already have the same groovy, well-curated content and their own strengths. Proprietary IP also are having the attribute of scarcity. If it is only a MINISO proprietary IP, it's going to protect our business strengths. By having international IP plus proprietary IP, that will be the best business combination.

As we're working together, we will be able to make sure we have a stable business and more work to be done. For example, recently we have the Journey collaboration, and we saw the Instagrammable moment on WeChat and the Xiaohongshu a lot. If we only do proprietary IP, I don't think the popularity will be that good. That's the reason I believe multi-IP, multi-category will for sure improve the consumer experience and also contribute to the business stability in long run. We need to be forward-looking rather than short-sighted. We multi-validated. Third-party IP plus proprietary IP would be the golden formula. We hope you can see after 2-3 years whether my words will be validated by the market or not. Till now, we also contracted some incubation of independent original artists, and we're also incubating the IP projects.

Starting from 2026 in 2027 or beyond 2028, our proprietary IP development is going better. From the financial performance standpoint, proprietary IP outperforms third-party IP on gross margin contribution, owing to the stronger consumer loyalty, bringing pricing power, and absence of the licensing cost. The third part, the IP, in other words, is powerful complementary benefits in new customer acquisition, audience expansion beyond our existing base. It also provide us some very good content marketing advantage. The two are highly synergistic, together driving sustained and high quality growth of our IP-related business. You know that for MINISO LAND, the brand impact continue to ramp up. Many international IP are proactively approach us of working together. Even JENNIE, the international top artist, to work with us. JENNIE has a nickname as Ms. Chanel, because JENNIE is actually the brand ambassador for many luxury product.

JENNIE's been happy with MINISO because of our strong brand awareness and customer experience. Well, let me just attend to the question regarding Mexico market. I was just coming back from Mexico. I'm fully confident on that market. I believe it's going to be better in the near future. Mexico market is going to be the top three in the global arena. You can see that I went to Mexico and I have a face-to-face guidance to the GM of Mexico market. We need to do brand upgrading in Mexico market, develop the land store format. We need to have the MINISO LAND and MINISO friends stores in the top 100 shopping malls in Mexico with GFA more than 800 sq m. In that way, the Mexico market going to see explosive growth. You know that I went to Mexico and they have 100 stores have brand Zara.

All those stores have been taken as good shopping malls. Mexico landscape is very much like China. Their GDP per capita and consumption structure is very much like China with lower manpower cost. Mexico is actually in the best time for the offline business development. We hope Mexico could actually become a benchmark market we have in Latin American country. When Mexico thrive, the Latin America market would be driven, so we are fully confident in the Mexico market. We have a high expectation of Mexico market. Now we define Mexico market as our benchmark market. We will spend more effort and resources to make this market right. We have a very clear strategy for Mexico market. Same-store sales growth and future growth will be quite promising. My fourth point, you can see in Q1 of 2026, Mexico also have a high single-digit growth.

However, it's still before the excessive growth of Mexico market. It's still taking the old business model, old store format. If follow my line of thinking, I believe 4 stores could be transformed into Land or Friends stores. There's one store with Hermès, Chanel, and Dior as the neighborhood. This store is just buy something unique and rather than the value for money. I asked them, please just close down that store, retrofit it, and sell the popular IP and the premium product. Mexico is being taken as the back garden of the United States. People come to Mexico really want to shop something unique. We find Mexico is a market with great opportunities. We find out Mexico have a great array of the high-quality shopping malls and with a very strong traffic flow. We're not going to sell the daily necessities.

We're going to translate them into the flagship stores and selling the IP and the trendy toys along with the immersive experience, and to drive the incremental consumption to improve ASP. I believe after Q2, Q3, and Q4 performance is truly expected in Mexico. It will be able to retrofit our store into upgraded ones in top 100 shopping malls in Mexico. I believe the performance of that 100 store in Mexico will be doubled. The first question, this question was asking about our investment. We have been quite lucky. We invested in a company named MiniMax. That is an AI company. MiniMax being applied at our company very well, and I also would like to continue to work with MiniMax. We invested in MiniMax when they still have a very low valuation. Now the return is still looking pretty good. The name of that company is MiniMax.

That's all. Okay. Thank you, Samuel, for your question.

Due to time reason, ladies and gentlemen, please make sure you raise just one question per time. Coming next, let's welcome Runbo from CICC.

Hello, Mr. Ye and Eason. Thanks for giving me the chance to raise a question. My name is Runbo Yang from CICC. Just one question from me. In 2025, it seems Yonghui is pressuring your margin and financial statement. What will be your plan for Yonghui business?

Thank you very much. First of all, I need to clarify to all MINISO shareholders, my primary focus has always been and will always be MINISO. It's our foundation and the core driver of our future growth going forward. It is also the foundation to make MINISO great. So you can sit and be reassured. 90% of my energy and time would be on MINISO.

MINISO would always be my highest priority. My investment in YH will not distract my attention from that. Regarding YH, we have completed the management team transition with Wang Shoucheng be appointed as YH CEO. Under his leadership, YH has its own complete management team that are now independently responsible for the day-to-day operations and strategic execution of the business. Regarding YH future, we still feel confident. Well, for MINISO, me myself, I still would like to say MINISO will still be my highest priority. It is also the cornerstone for the company to further expand and making MINISO truly great. I always notice the market development and momentum of MINISO is quite unique worldwide. We will seize the opportunity, continue to ramp up our business, and making MINISO great. Thank you.

Okay? Thank you. Thanks for Mr. Ye. Coming next.

Let's welcome Shi Di from Huatai Securities, please.

Okay. Thank you. I'm Shi Di from Huatai Securities. Congratulations on the company delivering a satisfying scorecard to the market, which is truly in line with the refined operation. Mr. Ye, you have already introduced a proprietary IP strategy. We have already noticed in 2026, you take it as an operating year for proprietary IP or the dimensional elevation for proprietary IP. What is organizational structure of the proprietary IP team now? What pathway and marketing initiative should we look forward to in 2026?

Thank you. We define 2026 as the elevation year for our proprietary IP, the foundational first steps in the comprehensive organizational restructuring and top-level design of our IP business. We established a dedicated IP business group with full accountabilities from the IP value chain, from creative incubation, to product development, to omni-channel operation.

Actually, our leader of the merchandise has been placed into the IP business group. We're just using the very experienced people to take lead of the IP business group. Leave us and the most capable people to run the IP business. You can already notice how important IP business will be for MINISO. You can see that in that look, you will see many people are just using new manager to run new business. It's going to be quite risky. We are still remain confident in our new business. We're just using the most capable and most capable payment individuals to run the new business. That's what we do at MINISO. The most capable individual and the capable team are running the new business, IP business, and that business is fully independent and is a new business group business.

Regarding the team build-out, we have completed a targeted headcount expansion regarding IP operation, product management, creative design. We also established 2 new back-end R&D departments, including CMF, color, material, finish, and ink and color development. We are among a few companies that started to enter into material study. For our trendy toys, we not only do IP, we also do product design and material study, the color study and finish study. We strengthen IP product manufacturing from supply chain, building the product quality, continue to consolidate the foundation for long-term IP growth. That's what we did in H2 of 2025. We have the fabrics and the raw material experts, and we have a CMF, color, material, finish, unit that established in Dongguan, very close to our headquarters. Regarding marketing and communication, we're working to build global IP influencers through a diversified range of applications.

For example, attending international art fair and fashion week. On the 17th of May, we're going to have the MINISO photo galleries to put into operation in one of the best art centers in Shanghai. That also help to showcase our standing within the artist community will continue to elevate. We're going to have our own photo gallery, not only one in Shanghai, but also a new one in Hong Kong, because Hong Kong is actually the hub for global artists. We're going to build such photo galleries in Hong Kong too. By leveraging those photo gallery, we're going to engage these artists worldwide, continue to ramp up the collaboration, and we're also going to leverage the KOLs to continue to amplify our brand range. Last year for Cathy Cathy Kitty, as well as other international artists, started to work with us for the marketing event.

Even some of the short videos and the secondary creation has been quite popular. Xiaohongshu, there are many secondary creation content of YuYu. You can also see that even within the secondary integration or content creation, YuYu is actually ranking number 1 among all IPs. The fans are quite active. Certainly, at MINISO, we actually have the IP-specific zones translating the brand impact into actual sales in Guangzhou. We also have the Artist Street that is accounted for 50 sq m GFA. We're going to allow new artists and the new products being shelved in those new Artist Street by having the interactions with the consumer. I believe by so doing we will be able to continue to scale our investment in proprietary IP innovation, create an ecosystem, and backend R&D capacity.

All investment would work for long-term healthy development of IP, not short-term traffic speculation. We focus on building high-quality IP that accumulates enduring brand value and generates sustainable cash flow, cementing a robust second growth curve for the company's long-term future. That's the strategy we have now. In the near future, as we continue to improve our business capacity, we're going to have new IP and new strategies to truly unlock the value of IP.

Coming next, let's welcome Anne from Jefferies, please.

Thank you, Mr. Ye. Thank you very much. I have a question for your SSSG. What is the current SSSG same-store sales performance? What about the store expansion or site selection, and also the operating margin level in different markets, especially in the directly operated stores in overseas? In the past, you are still in the investment stage.

When can we expect the operating return improvement. Thank you.

Thank you. I'm Eason. Let me help to respond to your question then. I think for the past 12 months, our growth philosophy is getting more clear. Same-store sales growth as a foundation and new store expansion, especially high-quality ones as incremental upsides. Those are working in tandem. For the SSSG, our 2026 is to deliver a positive SSSG globally. It's quite challenging. However, we have ways to make it happen because, in international markets, we still have some agent stores. It's not easy to make their growth positive. However, with good assortment, we have every confidence that we'll be able to have it happen. Regarding store expansion, I have already mentioned a net increase of 510-550 high-quality stores globally with China and international markets serving as twin engines for growth.

In China, we plan to net add 420 stores. Majority of them would be the land format and the large format stores. We're also going to close down underperforming stores and continue to optimize existing portfolio. In 2026, besides the same-store sales growth, the high-quality new stores opened in 2025 and 2026 will contribute to MINISO in sequential years as they mature. In China, we're still going to harvest a good growth. Net store growth only needs 420. From the international market, net store growth would be 250 stores covering North America, Europe, Southeast Asia, and Latin America. We deploy a combination of land format flagship stores plus high-quality standard stores in prime retail destinations. As Mr. Ye mentioned, we need to move into the world-class business street to improve the brand potential.

Regarding North America, the same-store growth is already clearly exceeding 20% in January, February of this year. We will accelerate store openings in 2026. OPM expected to have a low single-digit improvement. In Europe, since the start of 2026, we see SSG grow by double digits. Store expansion is progressing steadily. For example, in Poland, we opened 2 stores, which is quite efficient, working on trendy toys only, that is making lucrative profits. In Europe, we have another 4 direct operating markets. Those are still in the early stage investment. We hope its OPM could be improved further. In Mexico, since the start of 2026, we will see SSG growth being a positive number, and we believe Mexico with agent model is still providing a simple operating profit margin. Southeast Asia, we see some challenge. However, for MINISO, our business model is globalization.

No matter some markets being challenged, we would be able to have our global expansion to diversify our investment portfolio. Despite some challenges in Southeast Asia, however, we're going to return to positive for SSG, working on Indonesia premier locations to have new stores. Overall speaking, that SSG and OPM trajectory across all key markets still remain healthy, which can also help to showcase we are still in the fast expansion and growth period. For the key driver, there are four: optimizing store product operating, store expansion, and fourthly, we should also well maintain the cost and expenses. Thank you.

Thank you, Anne. Next question. Let's welcome Madame Xu from CITIC, please.

Thank you, Mr. Ye and the management team. I have a question regarding Southeast Asia market. Southeast Asia market is the first start for international expansion. In 2025, I made a visit to Southeast Asia.

The performance of the Southeast Asia market is of concern to investors. What would be the inventory of the Southeast Asia market? Are you going to adjust operations and the product strategy there in 2026?

Thank you. Regarding the question for Southeast Asia market, I think in 2026, there will be a huge adjustment. MINISO started our global expansion for 10 years. We made major investment in Mainland China. In 2026, we're going to adjust the 4 key markets: Thailand, Malaysia, Philippines, and Indonesia. In Thailand, we have been quite successful and the land format stores deliver incredible results. Indonesia is going to copy the Chinese model. Southeast Asia is quite close to China, and their consumption pattern is very much impacted by China. The lesson and success we made from China can help guarantee success in Southeast Asia.

Recently, we went to Malaysia to have a MINISO LAND store with very nice performance. In 2026, we're going to continue to copy what we do in China to the key market in Southeast Asia. I believe after the 2026 adjustment in H1, then in H2, Southeast Asia going to provide you a good turn around. We have a very clear strategy and a very transparent strategy. We're going to make the execution right.

Thank you, Mr. Ye. No further question from me.

Okay. We're going to accommodate the final question. [Qin Yihao] from Yangtze Securities, please.

Thank you. Thanks for the team. Mr. Ye and the management team, I'm [Qin Yihao] from Yangtze River Securities. I have a question to you regarding store renovation and upgrade program. Is it possible for you to tell us what would be the strategy for 2026?

How many stores do you expect to renovate in 2026? What's the result from the completed renovations so far?

Thank you very much. In 2025, we completed renovation for 290 stores. The result was highly impressive. Renovated store average sales uplifted by 40%-50%. The improvement is not attributable to a single factor, but rather than a simultaneous improvement on foot traffic, conversion rate, and ASP. They are all being improved, but at the same time, rent as a percentage to the sales has declined meaningfully. Store profitability and the sales per square meter rising significantly. Single store profitability is improved, too. More importantly, you can see last year, MINISO LAND has been getting popular. We also get greater support from the landowner. They're happy to provide better locations and larger locations to allow us to have the MINISO LAND stores and the larger format.

With primary location, the cheaper rent is being provided. In 2026, with our proprietary IP development, some of the shopping malls and department stores are happy to present the best location for us to do aesthetic IP exposure and the IP presence that can really showcase how we scale the resources we would be. In 2026, we're going to accelerate renovation and adjustment. Underperforming stores will be upgraded and be changed to the primary location. 2026 is a year for accelerated renovation. I have already mentioned in the near future, 80% of the stores need to be renovated and upgraded. With our proprietary IP development, in the near future, our stores are going to be quite unique, quite differentiated, and they're all going to be more influential in the landlords' minds and be able to get a good leasing term.

In that way, I believe they are also going to contribute to our business growth and profitability in China.

Thank you.

Thanks for all the investors and the analysts for your time for this conference. If you have any further questions, please reach out to the IR team. Thanks for your attention and support to MINISO Group. See you next quarter. Thank you.

Thanks for your patience, and also, welcome to join us for MINISO Group 2025 September Quarter Earnings Results Presentation. [Operator Instructions] We have already announced the 2025 September quarter performance early today, and you can also check our slides on investor relationship website. First of all, we are very happy to have Mr. Ye Guofu, the founder and the CEO, and also Mr. Zhang, our CFO, to join us for the webcast. Before we proceed, please refer to the safe harbor statement in our earnings release, and we are also going to make forward-staking statements. Today, we're going to discuss non-IFRS financial indicators today. And we have already included that into and explained that in the filings we filed to the regulators. And we also have already adjusted it with comparable indicators reported by IFRS. Otherwise noted, all the currencies in this presentation are in RMB. In addition, we also include financial and business slides for this presentation. [Operator Instructions] If you are using Zoom Meeting, you will be able to see the slides on the screen. And you can also check for the slides after the call on our IR website. Now let's welcome Mr. Ye to start the presentation.

Good day, and welcome to MINISO Group 2025 September Quarter Earnings Results Presentation. This quarter, the group continued to deliver accelerated growth with revenue increased by 28.2%, supporting the high end of our guidance. And you can see multi-key indicators, including same-store sales and adjusted operating profit, either met to exceed our prior guidance, demonstrating the resilience and growth potential of our business model. Today, I'm going to walk you through quarterly performance highlights and share with you some of our insights for strategic initiatives. In September quarter, the total GMV grew by 28%, revenue increased by 28%. Same-store sales being accelerated, reaching mid-single-digit growth. Our 2 flagship brands, MINISO and TOP TOY demonstrating accelerating revenue momentum in Q3. MINISO brand grew by 23%, while TOP TOY delivered exceptional revenue growth of 111%. On the profitability front, the group maintained a stable GP margin of 44.7%, and the GP margin approached to RMB 2.6 billion, grew by 27.6%. This quarter marked a significant milestone as our adjusted operating profit crossed RMB 1 billion threshold for the first time, grew by 40.8%, reaching RMB 1.02 billion. Our adjusted operating margin stood at 17.6%, show sequential improvement from Q2. Coming next, I'm going to walk you through our quarterly performance across MINISO China, MINISO International and TOP TOY. Starting with MINISO domestic operation, revenue grew by 19.3%. The performance is outstanding, whether compared with China's total retail sales of the consumer goods grew by 3.4%, while online retail sales of the physical goods grew by 7.5% of the same period or measured against our previous guidance. What makes me particularly proud is the growth was coming from same-store sales growth, indicating high-quality growth that is more sustainable with lower operational risk, reflecting our continued enhancement of MINISO's core operational capacity. Entering into Q4, same-store growth still remained robust with strong National Day holiday performance, driving low double-digit same-store growth for the entire month of October. This quarter, we achieved a net addition of 102 MINISO stores domestically. Year-to-date 2025, we have accumulated a net increase of 21 stores. Our franchise base has already surpassed 1,100 for the first time. Since the beginning of this year, our franchise network welcomed new partners with diverse breakthrough and resources, enhancing MINISO franchise system, not only in scale, but also in business ecosystem sophistication. MINISO China business has significantly outperformed the broader consumer market, fundamentally driven our enhanced systematic operation capacity, take Q3 happy holiday shopping at MINISO campaign as an example. Based upon the comprehensive data analysis across multiple categories during holidays and also weekend, we forecasted that toy would be the category with greatest performance elasticities. Consequently, from the early product development to inventory planning, we allocated sufficient resources and capacities for toy category, and we also leverage the summer scenarios. For China front, we secured a prime location in top-tier shopping district with peak summer periods in advance of the PoPark stores, where for our regular store, everything from creative display merchandising to visual presentation of the promotion materials was deeply aligned with seasonal atmosphere and the core product highlights, achieving end-to-end customized operations. Compiled with the TNT brand endorsement announcement in August, we ultimately created powerful strategies of the right type channel, right timing, right product and the right marketing, maximizing the growth potential of our summer toy category. Turning to our international markets. In Q3, revenue exceeds RMB 2.3 billion, grew by 28%. Our international MINISO store network expanded at a net 170 stores during the quarter with year-to-date net addition of 306 stores. Our largest international market, United States, delivered revenue growth more than 65%, with same-store sales growth in a low double digit, exceeding our expectation. Our operational initiative in U.S. continued to strengthen and stable our long-term growth and continued to improve new store success rate, brand recognition and also with consumer retention across multiple dimensions. Starting from this year, we have a store expansion committee structure and a clustered store opening model, opening multiple stores at the same time in different locations. This can actually improve the management efficiency, and also, with great brand exposure, attracting great consumer attention. Year-to-date 2025, new member acquisition in U.S. market have grown by 100%. By progressively building bidirectional communication channels with consumer, we enable the companies to more precisely understand the consumer preference. Our membership program not only driven our revenue growth, but also providing critical data insights and consumer touch points for further enhancing repeat purchase rate. Regarding the product assortment, our IP product launch cadence operates like the release of the same, different season and monthly features, providing freshness to the consumer and encouraging the store activities. You can see that for beauty, consumer electronics, food and beverage, mainly served to drive the basket attachment and repeat purchase once consumers are in store. MINISO is committed in creating balanced product portfolio to achieve a more stable store operating model to address diversified consumer needs across different shopping occasions. The stronger result of the MINISO in both China and the U.S. market are giving us tremendous confidence in both international markets. Our experience in both major markets has provided proven systematic insights across 4 disciplines: optimizing store site selection, creating differentiated store formats, achieving precise product channel alignment and orchestrating full funnel market synergies, all of which can help to consolidate operational stability and long-term growth. International markets represent our key opportunities for MINISO's long-term expectation. We will systematically replicate and scale up our validated operational framework to more countries and regions. Every initiative is facing on the long-term sustained profitability, ultimately unlocking tremendous potentials of the global markets. TOP TOY delivered outstanding revenue growth by 111% in Q3, store account expanding a net increase of 40 locations, reaching 307 in total, including 292 in China, 50 outside China. Benefiting from the enhanced product competitiveness, particularly the rapid scaling of our proprietary IP, and it's actually achieved a very good growth, especially our proprietary IP, [indiscernible]. TOP TOY achieved a middle single-digit same-store sales growth in Q3 with significant gross margin optimization. TOP TOY also continued to elevate store presentation, transforming proprietary IP into more immersive experience, continue to contribute to our owned IP and proprietary IP and brands. This quarter, we achieved 2 significant milestones. First of all, our global network store number already surpassed 8,000 milestone. And our brand presence is actually in key global markets from Asia to Europe, from Americas, from established commercial districts to emerging neighborhoods. Our product and service are reaching an ever-expanding consumer base, marking a new chapter for our global expansion. The second milestone was our quarterly revenue crossing RMB 5 billion threshold for the first time, while a single quarter adjusted operating profit also break through RMB 1 billion mark for the first time. Moving forward, we will transition from scale-driven growth to a new development paradigm, emphasizing on both quality and scale, taking confidence and measured steps along the pathway of high-quality development. Achieving high-quality development need strategic directions and sustained execution excellence. For the past quarter, both our channel upgrades and IP metrics strategy have delivered significant breakthroughs. On the channel upgrade front, our inaugural MINISO FRIENDS store that has been inaugurated in high mall in Shenzhen. The FRIENDS format represent a crucial innovation with MINISO's channel upgrades with the following features. First of all, store design and product curation emphasize on IP content presentation, creating unique shopping experience akin and movie release schedules based upon the synchronized IP launch reason. Secondly, leveraging MINISO's comprehensive category coverage and multi-IP metrics product development, MINISO has already become an anchor tenant for selecting shopping malls so that we will be able to enjoy primary location with favorable lease terms and more marketing support from the mall operator. Thirdly, MINISO FRIENDS store positioned at accessible luxury store, designed for mid- to primary shopping center represent a strategic channel segmentation initiative for MINISO Group. Regarding proprietary IP, by November 2025, we have already contracted 16 pop toy artist IPs, building a rich and diversified owned IP portfolio with enriching IP value of our core objective. Our first artist at trendy district has already been launched at Beijing Road Play Grand store in Guangzhou. Through comprehensive scenario-based renovation of the designated area of the store on third floor, we precisely embedded the exclusive bird view of our TOP TOY IPs. The competitive island area generated a sales performance exceeding a typical store's entire monthly sales result in just 2 weeks. Furthermore, we created atmospheric installations and interactive elements that align the IP character personas transforming every space into extension of the IP storytelling. When consumer enter this immersive store environment, they not only experience the characters appeal and narrative depths of our system, but also deepen their IP understanding and emotional connections through the experimental touch point, facilitating meaningful transmission from product purchase to IP affinity, strengthening the emotional bond between consumer and IPs. I believe over the longer run, MINISO's core competitive advantage in category architecture and IP portfolio will become increasingly pronounced. Geopolitical macroeconomic uncertainties represent universal challenges to all companies. We are already well positioned for that. MINISO maintained the industry's most balanced and diversified IP portfolio with IP assets spanning international renowned licensed properties, primary domestic content, proprietary IP across multiple development tracks. Our extensive category cover enable rapid product assortment and also merchandising adjustment based upon the seasonal needs. And more importantly, we also have precise capture emerging trends and end-to-end channel control capacity, allow our operation to be more adaptive to the market change. Looking to the future, MINISO will capitalize on the expansive opportunities with lifestyle consumption sector, driving high-quality performance through continued strategic evolution. That conclude my remarks. I mean, next, I will turn the floor to Eason, who will walk you through our first 3 quarters' financial performance, please.

Okay. Thank you. Hello, everyone. Welcome to join us for our September quarter earnings release. In front of you is a wonderful scorecard, which is actually showcasing how we leverage flexibilities and high-quality growth to navigate the future development. So first of all, let me help you to review our performance against our guidance. There are 4 guidance we provide you from revenue to SSSG and adjusted operating profit. We hit our profits. And there you can see actually regarding the guidance of the revenue growth. Well, for SSSG, we gave the guidance of a lower single-digit growth, but we made it mid-single digit. But a few points I'd like to share with you. For MINISO China, we made it to a high single-digit growth for SSSG, while at the same time for MINISO International, and we also made a middle single-digit growth. For TOP TOY, it also registered a mid- to high single-digit growth number. It is also worth mentioning that many of our stores in international market are franchised stores. The control is less than the direct operated stores. But even against such a backdrop, we will be able to have a low and positive growth among our 3,000 stores worldwide, while at the same time, you can also see adjusted operating profit also registered a double-digit growth, reaching 50%, where for the adjusted operating profit margin, our previous guidance was a minor improvement month by month. But actually, we made a net profit, 17.86%. And the decrease has already been narrowed down from 2.3 percentage to 2.1 percentage. From a revenue perspective, there are a few things I'd like to draw your attention to. First of all, 28.2% of the growth with RMB 5.8 billion revenue already go beyond our expectation. It's also the first time for the group's revenue to exceed RMB 5 billion. Our Q1 revenue growth was 80.92%, and also Q2, 23.13%, where for Q3, that was 28.2%. And you can also see that we foresee for Q4, the revenue growth would be around 25% to 30%, continue to deliver our commitment for a full year revenue growth by 25%. Well, let me also dive into our operating segments. MINISO Mainland China revenue grew by 90.3%. MINISO International growth was 27.7%, reaching RMB 2.3 billion. TOP TOY revenue surged by 111.4%, reaching RMB 570 million, significantly exceeding our expectation. Breakdown into domestic versus international, group's Mainland China revenue grew by 25%, and international revenue grew by 32.9%. We'll break down to different brands. For MINISO, as a brand with GMV close to RMB 35 billion to RMB 40 billion, and we'll still be able to manage a revenue growth by 23%. While for TOP TOY, the growth was more than 111%, as I mentioned. High-quality growth is inseparable from SSSG. In Q3, SSSG performed good, which can help to drive the same-store growth by a mid-single-digit number, among which in Q3, MINISO Mainland China same-store sales achieved high single-digit growth. Overall revenue growth was approaching 20%. October continued a strong same-store momentum, reaching a low double-digit growth, while for international same-store growth was a low single-digit number. Strategic markets like North America, Europe showing outstanding same-store performance. U.S. and Canada achieved low double-digit same-store growth in Q3, too. While for TOP TOY, same-store sales grew by mid-single-digit number, in line with our expectation. The improvement is because we captured the strategic and high potential product category with multiple sales opportunities. We also optimized the product assortment. We leveraged direct sourcing and international market, enhancing the merchandise dollar capacity, while at the same time, we always focus on product, coordinating with frontline operation, strengthening the refined product assortment management, conducting customized product development and also create some regular best sellers. More importantly, we emphasize on seasonal and holiday opportunities. We organized holiday plus IP-themed pop-up stores to stimulate the sales performance. Our directly operated market are the closest one to our headquarters management radius and also the first place where our strategies and adjustments take effect. The domestic market is our largest, most mature, but also most competitive intense market. Achieving positive same-store growth in such a fierce competition market in China not only validates our effectiveness of the measures we take, but also reflect our rapid market response capacity and strong execution. Through channel and store format differentiation, we continue to explore the boundaries of the same-store efficiency, continue to open up long-term store expansion opportunities. Excellent same-store performance has also emerged in our strategic directly operated market like U.S. Stores are the smallest profit-generating units, just like the sales of the body. Pursuing high-quality growth requires refined optimization of the store model beyond the traditional mall stores. We also actively explore plaza store. We leverage scientific decision-making to be selective for store opening, cluster openings and refined store staffing, continue to optimize profitabilities for the stores, allow the smallest profit unit can fully realize the potential in driving future high-quality growth. We are very happy to see that for our international directed operating stores, including U.S. and Canada, show significant Y-o-Y improvement in operating profit margin in Q3. We plan to first extend our China-U.S. success experience to Southeast Asia market in 2026. We will be in Southeast Asia market for nearly 10 years. Markets like Indonesia contribute substantial profits to company every year. However, alongside the local macroeconomic downturns and the social unrest, we faced certain operating challenges, especially the need for upgrading channel product assortment, organizational and Thailand improvement. The market optimization, we bottomed out this year. It's going to be the key focus of our strategy in 2023, and we are very confident to achieve success in those markets similar to what we accomplished in China in 2025. This quarter, the GP margin was 44.7%, used to be 44.9% same period last year. Looking at the first 9 months of 2025, GP margin was 44.4%, which was 44.1% last year. And I also mentioned our GP margin has climbed from 27% in 2021 to 44% today, increased by 70 percentage points over 4 years. This improvement stemmed from, first of all, continued increased contribution from our international revenue and also upgrades and solid execution of IP strategy. As international-directed operated business continued to expand along with category structured adjustment between quarters, seasonal fluctuations are inevitable. Going forward, we will continue to focus on balancing product price and volume. For IP product, we will persist in product innovation and value for money. And for non-IP products, we will emphasize product profitability and quality to price ratio, achieving better sales performance while maintaining overall GP margin. For this quarter, deducting the equity payment expenses and incentives, our SBC grew by 33.7%, representing 27.6% of the revenue. It is worth noticing SBC, share-based compensation, altogether totaled RMB 176 million, significantly increased compared with the previous period, primarily due to the TOP TOY equity incentives plan. The selling expenses, excluding SBC, grew by 36.5%. The increase was because our international-directed operational store investment, including the labor cost, leasing, depreciation and optimization grew by 40.7% in Q3. Well, you can see in Q1, this number used to be 71.4%, and 56.3% in Q2. So you can see directly operated store, their selling expenses growth has been clearly slowed down, while at the same time, the directly operated store revenue growth was close to 70% higher than the growth rate of the related expenses with significant deceleration because of our continued refined operation and strict expenses management. Well, coming next, let me also touch upon YH. Our investment in YH began to impact our financial statement last quarter. We accounted for these transactions using the equity method. The YH investment affect our net profit by RMB 146 million this quarter, which has been included from the non-IFRS financial metrics. Well, let's also talk about effective tax rate. With IFRS categories, our effective tax rate was 33.9% compared with 24.8% same period last year. 33.9% of the tax rate sounds to be relatively high, but it's not the true tax burden. It's primarily due to the share-based compensation and YH losses, where those items can't be deducted pretax under the tax law, but they actually didn't generate income tax relief, resulting in a higher effective tax rate on our financial statements. These expenses totaled around RMB 320 million. If we're excluding those impacting the nonoperating related items, our adjusted effective tax rate was 22.8%, 1% lower than last year. Let's also talk about profitability. Adjusted operating profit grew by 40.8% and reaching RMB 1.02 billion. Those were actually showcasing our operating quality. Adjusted operating margin was 7.6%, down by 2.1%, but a great improvement compared with Q1 and Q2. The decline in adjusted operating margin was due to the structural changes of the revenue composition. Looking at each of our major business segments, operating profit margin were either flat or improved. For example, international directed operating business maintained a high operating profit margin by a low single-digit number. China franchise business and international agent business have a flat growth, but why we see a 2.1% decline, the key reason is because international-directed operating revenue proportion continued to go up. The business profit margin still facing some gap compared with asset-light franchise and agents business model, causing dilution of the overall profit margin. But you can see as U.S. and Canada already have the directed operating model, the operating profit margin for international-operated -- directly operated business will continue to improve, especially we see low double-digit growth of the U.S. directly operated business going to bless the local profit margin, but we are operating in different countries and regions. We inevitably face profit fluctuations due to the regional economic and social environment. Our team is still young. Capacity needs to be improved, but there is significant room for growth. Q3 adjusted net profit grew by 11.7%, and adjusted EPS grew by 12.7%, adjusted EBITDA grew by 90%. The Y-o-Y also accelerated by quarter-by-quarter, but adjusted EBITDA margin was 23.4%. For the working capital, our inventory turnover remained robust and efficient. As of Q3, MINISO brand inventory turnover was 87 days compared with 104 and 94 days in Q1, Q2. You see our inventory efficiency improved in Q3. And at the same time, as of September 30, our cash reserve was RMB 7.77 billion, remained robust. And our net cash flow from operating activities reached RMB 1.3 billion with a net cash -- net profit to cash ratio 1.7. Capital expenditure was RMB 330 million. Free cash flow was RMB 970 million. In first 9 months of this year, net cash flow from operating activity was RMB 2.01 billion, exceeding adjusted net profit for the same period. Capital expenditure was RMB 770 million. Free cash flow was RMB 1.55 billion, demonstrate our high-quality profitability, efficient working capital management and our stable business, providing fuel for our future high-quality development. Last, but not least, I'd like to walk you through the outlook. Despite pressures and challenges in the micro consumption data, we remain confident achieving full-year guidance, having a 25% full-year revenue growth and RMB 3.65 billion to RMB 3.85 billion in operating profit. We see Q4 revenue grow by 25% to 30%, with China and U.S. same-store sales achieved double-digit growth. For the full year, we expect the China and the U.S. same-store grow by a mid-single-digit number. We expect Q4 operating profit will register double-digit Y-o-Y growth. Operating profit margin will still decline due to the revenue structural changes, but the decline would be modest, close to Q3. North America is about to enter into peak shopping season. China Q4 will maintain rapid growth. Even continued macro weakness in Southeast Asia may bring some impact, but our global business layout will diversify our operating risks. We will continue to talk to the capital market regarding the progress and the expectations. Thank you very much. Thank you. Let's now move into Q&A session.

[Operator Instructions] First of all, let's welcome Michelle to raise a question, please.

Congratulations on the company's high-quality performance in September quarter. I have 2 questions. My first question is regarding domestic MINISO business. From the macro perspective, since Q2, despite consumption slowdown, we still see that MINISO's same-store sales and overall revenue growth continue to be accelerated. Particularly, we noticed the company seemed to have accelerated the rollout of the new store format. For example, Chairman Ye mentioned the MINISO FRIENDS as a new format. In your previous interview, Chairman Ye, you also mentioned you are going to renovate 80% of your domestic stores. Can you share with us the current progress of those store renovation, the targets? What about the unit economies? Anything you can share with us? This is actually my first question regarding domestic MINISO stores. And I also have another question regarding international outlook. Just now, Eason walked us through the Q4 outlook. Is it possible for you to elaborate on that because Q4 is always a peak season. Last year, we saw some adjustment. While for this year, enter into Q4 peak season, is there something worth noticing regarding inventory preparations, marketing, store operations? Can you share your work on the next year international strategy planning? Those are the 2 questions I have.

We are extending the space. We upgrade from the small to large with greater frontage and better display space. The larger stores truly provide consumers with a better experience with more display space, larger, more attractive displays. We want to give more consumers a wonderful shopping experience. Moreover, opening large stores has a higher barrier to entry. Only MINISO's extensive IP portfolio and category place can truly support a large store format. If you don't have enough IP and product category, you won't be able to accommodate large stores. Our 2025 channel optimization achieved initial success, and we have accumulated systematic methodologies and experience. However, the number of the optimized store isn't large yet. In the upcoming years, we will proactively plan and implement store optimization work, hoping that we can optimize more stores next year. The pace of the store renovation would be gradual. We are not going to rush for that. Most importantly, we need to have the right location selection. Many existing stores already have a good profit margin. We will advance our strategy based upon the lease and the new store site selection. Thank you, Michelle. Let me just give a few updates. In the first 3 quarters, we've relocated and expanded and optimized more than 200 stores. The optimized sample store show significant store efficiency improvement, maintain healthy sales per square meter and the rent-to-sale ratio declined by a low single digit. This can help to driving high performance while achieving win-win for both companies and franchisees. Both parties have seen revenue and profit growth from the optimized stores. Store optimization will become a regular part of our channel expansion work. Well, regarding the outlook of the Q4, a few points I'd like to share with you. I think the September ordering conference was very successful with record high ordering amounts. 5 categories each exceed RMB 100 million in orders, and all specialized sections broke historical records. Category were quite evidenced. For IP merchandise, we have a strong creative outlook, where for value for money products, we continue to enhance cost and pricing competitiveness. Well, additionally speaking, our international, localized IP design and category implementation has already been improved. For example, the Mickey Merlion limited edition launched in Singapore in October, an airport store exclusive that perfectly match channel and merchandise. The product has extremely scarcities and differentiation. It actually created a new single store record. Our executive bearer was even asked by tourists at the airport to borrow her passport so that they can purchase more Mickey Merlion product from initial market insights to creative design to logistics support to integrated marketing every step worked closely, demonstrating IP merchandise store operation and marketing capacity integration. This is a very good and replicable IP operation model. This above demonstrated deeper collaborations between IP partners across entire value chain, including channel, product, operation, design. This month, Zootopia film would be released worldwide. And yesterday, Director of the Zotopia was also providing us very good comment on MINISO pop-up store by weaving ourself design product. We remain confident about long-term international opportunities. MINISO's achievements in both China and the U.S. market over the past years give us strong confidence in international market growth potential. The practice in the 2 major markets have provided us with proven systematic insights, optimizing store opening decision mechanism, creating differentiated store model and to be precise to have the product channel matching and full funnel marketing synergy. International markets are MINISO's core potential field for the long-term growth. Those proven, systematic, operational framework will gradually be replicated and extended to more countries and regions with every step centered on long-term sustainable profitability. And ultimately, we will be able to steadily release the tremendous global market opportunities.

Next question, let's welcome Lina from HSBC.

Can all of you hear me?

Yes, please.

Eason and Mr. Ye, congratulate on company's IP strategy success. I have a question to you. I know that IP means a lot for your same-store sales growth. There are some pulse-like growth where we know that for many of the investors, we really would like to know how sustained your growth would be when you just do IPO? Your product category are quite similar to Muji. But how are you going to comment on the non-IP product, especially from the existing suppliers? For example, if you're going to benchmark with Muji, Muji also registered a very good growth in China for the past few quarters, I'd like to ask you, how sustainable the growth would be? What are those categories that are going to register sustained growth in the near future? What would be your plan?

We can see within the consumer conception, the most important and the best one is interest-driven consumption. And you can also see the most promising one is also the interest-driven consumption. Consumers no longer just pursue product functionality contributes, but also value the aesthetic identity, social labels, killing experience and spiritual satisfaction behind the product. That would be the ultimate pursuit for consumers. Going forward, consumer will pay for passion, pay for emotions. This interest-driven, emotionally connected consumption demand has higher stickiness and prime space and also becoming the company's core lever to navigating circles and building differentiated competitiveness. The IP transformation is not abandoning our existing category advantage, but rather IP plus core categories do well drive, allow our 10 years of accumulated experience to unleash greater value. Our supply chain resources covering the home goods, cosmetics, stationeries, [indiscernible], toys and snacks, along with the mature multi-category product development capacity, which are a great way to support our IP strategy implementation. MINISO is a very unique business model worldwide. IP empowerment isn't only about single point best seller, but also the full scenario penetration. Our product development capacity's key is understanding category and better understanding how IP can empower categories rather than printing a logo. For example, since November, MINISO's seasonal product has grown very fast, plush socks, scarves and gloves has captured and converted the traffic brought by IP. Our original key category are the perform [indiscernible] store. Essential categories, including home goods, cosmetics and stationery products, contribute our traffic -- stable traffic and repeated purchase, where IP is a growth catalyst, enhancing product design appeal and the brand pioneer through collaboration and same sale rules. We can also leverage IP popularities to boost the core category sales. The model is quite unique because single IP brands lack multi-category supply chain support, making full scenario coverage difficult. Traditional general merchandise brands lack mature IP development and operation capacity, but our 10 years of accumulated multi-category supply chain plus IP-integrated development capacity allows IP to rapidly penetrate into high-frequency consumption scenario, where key categories can leverage IP to break through the growth bottlenecks. Ultimately, forming a healthy growth structure of having essential category men traffic and category boost to profit.

Let's also welcome Mr. Wei, Xiaopo from Citi.

Can all of you hear me? Yes, great. My first question is quite forward-looking. Just now, I see Eason has already provided the guidance for the Q4 performance. As Eason, you are quite conservative about the guidance, so I think I don't have any doubt on that. But a question I may have is that U.S. business has a strong Q4 seasonality, where Q1 in 2026 will see seasonal declines. In your prepared remarks, you also mentioned you are improving your operational efficiency to buffer the seasonality impact. Is it possible for you to share with us from Q4 2025 to Q1 2026, whether the so-called seasonal decline trend would be similar to last year or narrow down compared with same period of last year? This is my first question. My next question, Mr. Ye, you mentioned about the China IP go for international market. You have already signed 16 artists. Then you're probably going to bring those IP outside China. Mr. Ye, according to your experience, in international market, for Chinese IP go for international business, how long will it take to develop them there? And whether it's going to hurt your profitability?

Let me just respond to your questions regarding the seasonality of the U.S. business. And Mr. Ye will answer the second question. I think the questions are well raised. For the past 3 to 4 years, especially starting from 2021, and we started to work for direct operated business in U.S. Q1, generally speaking, is a low sales season in U.S. The store sales in low season will be around 10% to 20% lower than peak season in Q4. This is the common practice of the U.S. retail industry, but how we can iron out the seasonalities. One thing is store operation, where another thing is the store opening. You can see that our U.S. store, they do have a very good experience. A key takeaway is that in Q4 of the previous year, you have to make sure your stores being well prepared for presence. In Q4 of this year, we're going to have all the stores ready and not open new stores next year in Q4 in order to make sure that all stores are well in place in the first 3 quarters of every year. For example, in 2026, when I tell you how many stores we're going to have in U.S.? We need to make sure at least half of those promised stores are already been contracted. This is also a common practice in retail industry in U.S. In Q1 of 2026, you see we have a very nice store opening growth to iron out the seasonality on scale, where on the other side, regarding the business operation, we're not going to smooth out or iron out, but we are going to follow the trend because the essence of the retail is to capture and satisfy the consumer needs. For U.S. and the European market, they do have a very strong seasonality and the festival attributes. This is something we can work on. For consumers, they have very different needs in different seasonality. For example, Black Friday is coming. It's the peak season for consumers to spend, and the consumer willingness to consume were peaked. We have already made inventories ready. We have worked on the supply chain, making sure we have enough inventories to take care of the shopping festival needs from the consumer. And you can see in U.S., Q4 is still going to register good growth. We're not going to give up on the golden growth opportunity in Q4 just because of seasonality difference compared with Q1 of next year. We're going to leverage the seasonality dividends, having good marketing, seasonal disciplines as well as strategic inventory building, translating seasonal fluctuations into an exemplifier of our business. This is how we respect the market and also be able to continue to follow the retail development. Well, you can see that MINISO brand Chinese IP overseas will definitely leverage our unique advantage, not letting China IP to go it alone. We're going to leverage our past licensed IP experience and massive IP portfolio for mutual empowerment. For example, on first of this month, MINISO Canada National flagship store has its grand opening. Such a prime store provided best stage for IP going overseas, representing a key milestone for MINISO global IP strategy. The Canada National flagship store open day sales again broke North American new store open sales record. Such successful opening was inseparable from the IP catalyst. The event was featured by [indiscernible] surprise, triggering people to check in and purchase the product. Coordinating with this store opening, our gifted bear family made its overseas debut with very cute and lovely design that filled with the opening atmosphere as a joy for energy. The Chinese IP go for international market is not starting from 0. It was standing on the shooter of the giants to -- for steady growth. We have every confidence leveraging our store resources worldwide and a very successful experience to bring Chinese IP international wide.

Coming next, let's welcome Samuel from UBS, please.

I have a question also concerning U.S. market. Recently, no matter for the capital market or investors, we find out the U.S. consumer market has been relatively weakened recently and especially the performance of the retail market in U.S. was not looking right. I would like to ask you, what do you see in the U.S. market, especially in October, what would be the SSSG in U.S.? In that way, how you're going to find your own measures? And also, for U.S. market, specifically, how we're going to look into a full-year revenue and profit guidance for U.S. market?

I'm Eason. Let me just respond to your question. U.S., indeed, we see some of the high-frequency consumption data, especially credit data consumption from the U.S. was quite weak. But it was actually external macro environment pressure that it cannot be avoided. What we can do is to strive to be the best of ours and give our all. I have already mentioned to you the 3 strategies being mentioned. For example, the thing was to take care of the holiday, early preparation, sufficient inventories and good adoptions. Now, we have already been prepared for the decorations ahead of the time, finished creating holiday shopping experience. And the store inventory is more abundant than last year. We expect that the U.S. Q4 revenue growth would be a low double-digit growth, where for Q4 revenue growth would be 50% to 55%. The same-store growth will be low double-digit growth. Well, for Q4, I think the scale growth would be slower than Q3. It's because we are slower than last year for numbers of the stores opened and the cadence, but still, the profit is going to generate a healthy growth. Thank you, Samuel.

Let me also welcome Xu, Xiaofang from Citic.

I have a question regarding your proprietary designer IP. I can surely feel the company investors and the consumers have a high expectation of a proprietary designer IP. Looking to the next 3 years, how the designer and the proprietary design IP may look like? Are you going to have a designer ecosystem organizing the trendy toy communities exhibitions, where you invest in the secondhand market?

By end of June, we have already signed 9 designer IPs. And by Q3, we signed 16. We are proactively discovering highly potential original toy art IPs globally, working hard to build MINISO trendy toy IP landscape. When there is one IP breaks out, it will definitely show exponential growth. The upper limit for proprietary IP volume is anchored to the trillion level interest to consumption market. Generation Z has already become the key consumption force, close to RMB 260 million of them, and their annual consumption would be more than RMB 5 trillion, and they are happy to pay for emotional value. And -- but at the same time, proprietary IP growth always have the risk backstops. We continue to test market through small batch trial sales data iteration, but adjust our design style and the category based upon the market needs and feedback. Such model allow proprietary IP to grow steadily within a very safe trial and error framework, avoiding traditional IP incubation pain points of high investment, high risk and unpredictable returns. We're going to continue. Where for MINISO, we have a great advantage, full category coverage, omnichannel penetration, global layout, full funnel operation. Our stores themselves are theme park ecosystems. MINISO LAND and MINISO FRIENDS has a checking area with proprietary IP characters, placing IP characters sculptured model in the most prominent areas. We also have audience zones like Shiba signing event. And we also have the dedicated product display areas and interactive activities like the gifted bear family plush [indiscernible] that you can see when you visit MINISO stores. Products are key in IP ecosystem. Good product doesn't consume IP, but actually enhance IP value. Yu Yu second-generation ring [indiscernible] has excellent sales with the product innovation and liability maximizing secondary creation attributes. In marketing, MINISO plush festival gifted bear mascot performed supporting store opening activities, and screens in store checkout areas play cute gifted bear family in cartoon clips in snow form that can help enhance IP exposure and strengthen IP personalities and images.

Coming next, we're going to have Runbo from CICC.

Maybe we will move to our next analyst first. Let's also welcome Shi, Di from Huatai Securities. Can you hear me?

Yes. My question is regarding your China business. I find out your store format is more in retail, including the SPACE, LAND and FRIENDS stores and flagship stores. And can you break down on the appropriate proportion structures of different store types in sequential expansion plans? And for your store renovation and upgraded stores, how it's going to drive your domestic business growth?

In the near future, we're going to have 2 kinds of the store models, different models are going to have different VE and logo. The first one is the Wonderland and the regular stores for -- we leverage meaningful space, meaningful land and meaningful land to provide people a Wonderland experience. But at the same time, we also have the regular stores, benchmarking the higher tier and the newer tier cities, asking for the prime location, where we're going to make sure it can cover as many as the traffic possible. Looking at the quantities and different store types, more will still be the flagship stores and existing store location optimization expansion, where we have 2 logos for the regular stores. We have 2 store types. When consumers come to our store, when they look at our exterior design, they will surely understand what are those MINISO LAND, FRIENDS and SPACE, what are the regular stores, where at the same time, we can see still -- we're going to continue to work on the flagship store and the store door renovation, where we're also going to leverage our brand priming and bargain power to leverage the best location in the commercial districts and continue to upgrade our channel. We're also going to leverage 8,000 stores to have a good and high-frequency consumer feedback to provide us the market data and continue to empower our channel upgrading and also lay a solid foundation to further improve our product performance. So that's the reason starting from this year on, our store type is going to be more diversified. Well, at the same time, even for the MINISO, we have MINISO SPACE, MINISO LAND and MINISO FRIENDS. And in the near future, we're also going to have the Super MINISO. Well, for regular stores, we do have the regular stores, small stores, car parks and also the train station stores. By so doing, we're going to be more focused on our IP strategy and making sure we really roll out the product for the price to quality product, which will make our store presence more clear to the consumer, which will also create good space for our IP strategy to continue to navigate the market development.

Coming next, we're going to have Runbo from CICC to raise a question.

Can all of you hear me?

Yes.

My name is Runbo. Congratulate on the continued optimization of the company. And 2 questions. First of all, I see your domestic business continue to go up with more larger and well-performed stores being demonstrated. What would be your next year business development and your store number forecast? My second question, for outside China, especially outside China, U.S., what would be the retail market you see now? Do you see some pressures? What will be the regional difference -- performance difference?

I'm Eason. Let me just respond to your question. In China, we have already confirmed, in China, we are going to seek for high-quality growth, inseparable for the store growth, where in China, we have a mid-double-digit or even high-double-digit growth, which would be supported by SSSG improvement. Well, for this year, our internal KPI assessment also introduced SSSG and hoping that we're going to improve our performance in 2026. The SSSG target for 2026 are not being confirmed yet, but we hope we can have the best-in-class SSSG in our industry. Regarding international business, in Q3, the international market that performed weak are the third-party agency markets, especially in Southeast Asia and Latin American markets. There are some macroeconomic seasonalities. For example, the local currency exchange rate fluctuations and also the consumption tax changes. But we are happy to see that from beginning to now, the terminal GMV growth is much better than our shipment GMV growth. In other words, our agency inventories would be quite healthy. They can still travel light in 2026. In some key markets, like Southeast Asia, GMV already been accelerated in Q3 with a double-digit growth. And we also see there are some comparable listed companies in Southeast Asia, say October consumption stay improved, but we're still observing the performance. Thirdly, we will also be proactive in adjusting the product assortment channel. Many of our investors have already joined us for the order meeting with the new heights being achieved. I surely believe those high order would continued to be converted into revenue contribution in the next few quarters. More importantly, we are very confident that our success in U.S. and China proven our business ability and resilience. We have every confidence to that. For overseas market, we do have the direct sales and agency business. Direct sales would be something we can reach first, which can actually showcase our key market sensing capacities, fast response, where agency market, it was somewhat not easy to be well managed, and we are adjusting the assortment and the channel. We have already identified the root cause. Let's leave more time for further execution to improve the performance.

Final question, Anne from Jefferies. Can you hear me?

I have 2 questions to you. Now, you see your equity incentives plan was registered a high number. Eason also mentioned there are some equity incentives from TOP TOY included into Q3 performance. Is it possible for you to share with us regarding equity incentives plan? What are the KPIs inside? And how it may look like in next quarter? Will you continue to have such equity incentives in the next few quarters? My second question for TOP TOY, I think your drafted prospectus has already been filed. What would be your IPO schedule for TOP TOY? What would be the relationship between you and the TOP TOY? I know you may have some related party transactions. And many of the profit and sales being given to TOP TOY. But once TOP TOY has been IPO-ed or spin offed, what will be the relationship between the 2 entities? And how can we protect the interest of the stakeholders of the MINISO?

For this quarter and the next quarter, the expenditure was relatively high due to the equity incentives plan for TOP TOY. As you have already mentioned that for TOP TOY, its revenue doubled this quarter, significantly exceeding expectation. We believe excellent team in excellent sector combined with incentives, they can release more growth potential. TOP TOY has always been MINISO's fully consolidated subsidiary. So MINISO shareholders were also benefited from TOP TOY's high growth. The IPO plan is advancing now. We will inform the market when any progress being made. Both industry and the TOP TOY brand are in rapid development period. As a leading player, TOP TOY's market share continues expanding from user to category to region. We continue to explore the boundary. TOP TOY also see abundant market opportunities. The only reason for IPO is hoping TOP TOY can become stronger and continue to expand its business, fully capture the broad opportunities in the trendy toy market. Okay. Let me just give one more comment for Anne. Internally, we actually made some long-term discussion. There's no better strategies to advance by having both entities, MINISO and TOP TOY, would be the best strategy. We can leverage MINISO's full category and omnichannel operation and global presence along with TOP TOY as a specialized trendy toy brands. The trendy toy market is growing very fast with explosive growth rate. I believe both business would be able to let our business to be the top one in the dual market. You were worried about SBC expenses. It's going to be RMB 100 million for this quarter and another RMB 100 million for next quarter. It's actually a normal accounting that after we have been IPO-ed. For MINISO, in 2020, after IPO, you can see that SBC and the team equity incentives plan, it's going to be diluted and amortized a few quarters after the IPO, and it's going to have higher IPO in the first few quarters, but going to be smaller in the next few quarters.

Ladies and gentlemen, we conclude the earnings call for September quarter. Thank you very much for your participation. If you have any follow-up questions, please contact our IR team. I wish you a wonderful weekend. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]