Ladies and gentlemen, thank you for standing by, and welcome to MINISO's Earnings Conference Call for the First Half of 2024. At this time, all participants are in a listen-only mode. After the management's prepared remarks, we will conduct a question-and-answer section. Please note that this event is being recorded. We have announced our June quarter and interim financial results earlier today. An earnings release is now available on our Investor Relations website. Joining us today are our Founder and CEO, Mr. Jack Ye, and our CFO, Mr. Eason Zhang. Before we continue, I would like to refer you to the safe harbor statement in our earnings press release, which also applies to this call as we will be making forward-looking statements. Please also note that we will discuss non-IFRS financial measures today, which we have explained and reconciled to the most comparable measures reported under the International Financial Reporting Standard in the company's earnings press release and filings with the US SEC and Hong Kong Stock Exchange. The currency unit is Chinese yuan. In addition, we have prepared a PowerPoint presentation for today's call, which contains financial and operational information. If you are using Zoom meetings, you should be seeing it right now. You can also revisit it on our IR website later. Now, I'd like to hand over the conference to Mr. Ye. And Ms. Allis Chen from MINISO IR team will translate for Mr. Ye. Please go ahead, sir.

Hello, everyone. Welcome to MINISO Group's earnings conference call for the first half of 2024. During this period, our global market presence continued to grow. We reached a milestone of 7,000 stores worldwide, just under a year after surpassing 6,000 stores. In the first half of 2024, we added 502 net new stores to our network, with both MINISO overseas and TOP TOY experiencing their fastest expansion to date, contributing 266 and 47 new units respectively. Both segments also recorded double-digit growth in same-store sales, serving as strong growth drivers for the group. MINISO in mainland China added 189 net new stores and achieved a same-store sales performance of 98.3% compared to the previous year. Consequently, the group’s revenue for the first half rose by 25% to RMB7.76 billion, including a 7% growth in same-store sales and a 90% increase in average store count. Product capability remains our core competitive advantage. We continue to focus on intellectual property (IP) and strategic categories, increasing our gross margin from 39.6% in the first half of last year to 43.7%. This improvement of 4.1 percentage points is crucial for distinguishing us in future capital competition, particularly in overseas and direct-operated markets, especially the United States. The expansion pace in the U.S. has consistently exceeded our expectations, doubling store counts and achieving double-digit same-store sales growth. Although we are still in the investment phase in overseas markets, effective cost control measures allowed our adjusted net profit in the first half of 2024 to increase by 80% year-over-year. When excluding foreign exchange impacts, adjusted net profit rose by 26% year-over-year, slightly outpacing revenue growth. Earlier this year on Investor Day, I shared our mission, vision, long-term strategy, and tasks for the next five years. Our mission is 'life is for fun,' and we aim to be the world's top IP design retail group. To achieve this vision, we prioritize affordability, globalization, and product innovation in our IP designs. Our targets for 2024 to 2028 are to add 900 to 1,100 net new stores annually; achieve at least 20% CAGR for revenue and a higher CAGR for EPS; and ensure that by the end of 2028, over 50% of sales come from IP products. In the first half of 2024, despite changes in global markets, our business model has shown great resilience, and our financial performance met our expectations. Moving forward, all our businesses will progress firmly according to our five-year strategic plan. Now, I will provide a business update for the first half of 2024 for our three major segments: MINISO mainland China, MINISO overseas, and TOP TOY. First, MINISO mainland China continues to see strong same-store sales growth driven by high-quality channel expansions, with offline GMV up 60% year-over-year. The National Bureau of Statistics reported a domestic retail sales growth rate of 4.1% during the same period last year. Same-store sales reached 98.3%, reflecting a 0.9% increase in ticket size and a 2.5% drop in foot traffic. However, purchase conversion rates have remained stable. If we incorporate Q2 sales from our pop-up stores, we would see positive same-store sales growth for the first half in domestic markets, marking a strong performance in the online retail sector. Our online-to-online models have also advanced rapidly, with GMV rising nearly 80% in the first half of the year. As we enter the third quarter, year-to-date domestic sales continue to exhibit double-digit growth. We expect MINISO mainland China to grow by 10% to 15%, consistent with our earlier projections. The expansion of our store network remains healthy, as we opened 189 net new stores in the first half of 2024, putting us on track to meet our annual target of 350 to 450 net new stores. Almost 60% of our new stores are in first and second-tier cities. We're encouraged to see that same-store performance in higher-tier cities, especially first-tier ones, has nearly returned to last year's levels, performing better than in lower-tier cities. This suggests that MINISO still has ample room for expansion in higher-tier cities, and our IP strategies have been notably effective in driving same-store sales. With almost 2,000 cities and towns in lower-tier regions of China, MINISO has already entered over 1,000, indicating a significant untapped market for expansion. Our retail partner structure remains very stable, with the concentration rate for our top 50 partners maintained at 50% over the past four years, and more than 600 of them have worked with MINISO for over three years. The progress of MINISO relies on the support from our partners, and we will continue to cultivate successful collaborations for enhancing our store network. Next, let's discuss MINISO’s overseas business update. In the first half of 2024, overseas revenue exceeded RMB2.7 billion, representing a 43% year-over-year increase. Notably, revenue from the direct operation market jumped 70% year-over-year on a comparable basis, accounting for 56% of overseas revenue in the first half, surpassing distributor revenue. We achieved a net addition of 256 stores in overseas markets, marking the fastest rate of new stores since MINISO began its globalization nine years ago, which boosts our confidence in achieving our full-year guidance of 550 to 650 net new stores. Among the newly added stores, the number of directly operated locations reached a record 105, with more than half located in the United States. Last week, we celebrated opening our 200th MINISO store at Santa Monica Beach in California, making MINISO the Asian consumer brand with the widest store network in the United States. We have established a presence in 40 states nationwide, and alongside the rapid increase in stores, same-store sales experienced healthy growth in the first half of 2024. Looking ahead, we plan to enhance our store management, aiming for sustainable same-store sales growth through localized product offerings, operations, and consumer engagement. Our IP strategy has been deepened and implemented further in 2024. During the first half, the contribution of IP product sales exceeded 30%. In our domestic market, the contribution from IP products increased to nearly 30%, with almost a 40% year-over-year growth. In overseas markets, IP product contributions reached nearly 50%, with revenues doubling. We prioritize the IP strategy as a core brand element and are continuously exploring innovative collaborations. In summary, the three uses of IP operations in the first half of 2024 included new models, new store formats, and new product series. GMVs of IP-themed models increased by about 400% year-over-year, contributing more than 30% of IP product sales compared to under 10% last year. Our new store format, the IP pop-up stores, launched in the first half of the year, offers consumers an exciting shopping experience and serves as a new sales channel for IP products. Lastly, the enhanced development of product lines under the same IP brands is set to extend promotion and sales cycles, creating more opportunities. In overseas markets, we executed our IP operational strategies and generated significant momentum for popular IPs like BT21, consistently setting new sales records across various markets. The successful execution of these IP series not only improved product sales and brand exposure but also showcased the potential of IP consumption and the value of the MINISO brand to our global rental partners. We appreciate their support during these initiatives. I believe that with continued in-depth cooperation, we can create more marketing initiatives. As of June 30, due to the effective implementation of our IP strategies, MINISO's global registered membership surpassed 100 million. Enhancing our global membership system will help in converting more IP events into brand members and vice versa, fostering the growth of MINISO in the future. The superstore strategy is also progressing steadily worldwide. We recently opened a global flagship store on the prestigious Champs-Élysées Avenue in Paris, attracting consumers globally to learn about our products and Chinese culture through MINISO stores. As of June 30, we have over 300 stores in Indonesia, and we will be unveiling the largest MINISO flagship store in the world, covering 3,000 square meters, in Jakarta tomorrow. We hope these global flagship stores serve not only as shopping destinations but also as enchanting spaces that captivate consumers and inspire a sense of wonder, turning visitors into treasure hunters. We believe that happiness can be shared and aim to create this experience for every consumer at MINISO. Meanwhile, we are actively enhancing our overseas supply chain. In the first half of the year, most core categories in the U.S. can be fully sourced from supply chains across Southeast Asia, Japan, South Korea, and the U.S. Operating an efficient supply chain is essential for global companies navigating evolving and challenging market conditions. Now, let’s move on to TOP TOY. In the first half of 2024, TOP TOY's revenue rose by 38% year-over-year, with impressive same-store sales growth of 14%, along with a net addition of 47 TOP TOY stores in this period. TOP TOY's self-developed products are thriving, with their proportion exceeding 35% in the first half. The average merchandise gross profit margin for self-developed products stands at around 60%, positively impacting our overall gross profit margin. TOP TOY has been profitable for three consecutive quarters, reaffirming its strong growth potential. The self-developed series launched in Q2 has outperformed all categories in TOP TOY this year, with one product exceeding 100,000 units in sales within just 50 days of launch, achieving total sales of over 10 million. Moving forward, we will continue to increase the share of self-developed brand products and further optimize profit margins. In 2024, while concentrating on business growth, we are also emphasizing the development of our corporate culture, which I consistently highlight, focusing on having the right strategy and dynamic teams. Reflecting on our 11-year history, I believe that talent is the most crucial asset for our enterprise development. As of June 30, our global workforce has surpassed 5,200 employees, with over 2,800 from overseas. In March, we launched a marriage and family support initiative with initial funding exceeding RMB10 million. On Qixi Festival, we held MINISO's first group wedding ceremony for 17 couples, expressing our heartfelt congratulations. I have consistently emphasized the importance of passion and persistence within our organization. In our quest for success, these traits, alongside strong values and rational capabilities, are essential. Passion and persistence are shared by MINISO employees, driving continuous industry advancement and enterprise growth. Given the retail industry's significant potential for development and profitability, we are committed to operating with integrity and ambition, aiming to provide playful, engaging, and useful products to our global consumers while offering competitive career opportunities for our employees and delivering sustainable, long-term returns for our shareholders. That concludes my remarks. Now, I will pass the floor to Eason to discuss the company’s financial status for the first half of the year.

Okay. Thank you, Jack, and welcome, everyone, for joining us today. I'm pleased to see that our business has made firm progress in accordance with the five-year strategic roadmap. Our performance has met expectations at the beginning of the year. Our business model has demonstrated great resilience despite the softening of the consumption market. In overseas markets, where we doubled our directly operated store network, we managed to balance growth and margin, and we can surely do better in the second half because the initiatives we adopted recently to improve operational efficiency have begun to pay off. Although the economic data remains mixed, we see structural opportunities in IP retailing and globalization. We are fully confident to deliver our new beginning targets. Now, let me walk you through our financials for the first half. Please note that all numbers are in renminbi unless otherwise stated. I will also refer to some non-IFRS measures, which have excluded share-based compensation expenses. Revenue saw a robust increase of 25% on last year's high base and is at the high end of our expectations. We are thrilled to see the drivers of revenue performed very well in the first half. In terms of store network, we've delivered record net additions in overseas and TOP TOY, and we expect acceleration in the second half in mainland China. In mainland China, we are on track to deliver our guidance of 350 to 450 net new units, while making necessary training to our existing store formats and franchisee structure. When it comes to same-store sales, we've delivered a 7% year-on-year growth at group levels. We are particularly encouraged by our achievements in mainland China. While Same-Store Growth was 98.3% from the previous year's level, outperforming the domestic retail sector, our product team kept introducing best-selling SKUs, as they have been doing for the past eleven years. Our operation team has launched several initiatives to ensure MINISO's same-store sales is best in class. For example, our O2O business or instant retail increased by nearly 80% in the first half because our 4,115 stores are easily accessible to our customers. We have the right products and a comprehensive set of fast and convenient digital fulfillment solutions. In overseas markets, same-store sales growth was 16%. We are still at a very early stage of uncovering sales potentials for overseas stores. It will grow very fast but will inevitably fluctuate. The mission critical here is localized products and operations. Although MINISO is a pioneer in Chinese consumer brands going overseas, our attempts at retail localization are nearly at the beginning stage. In addition, TOP TOY same-store sales growth was remarkably at 14% in the first half. Next, let me talk about channel mix. The overseas DTC market now constitutes 20% of our total revenue compared to 14% in the first half of last year. The revenue contribution from MINISO training offline stores decreased by 4 percentage points. This shift in revenue mix is one of the reasons we had another record high gross profit margin and also changed operating profit distribution within a year, with a small profit expected to be made in the second half. In terms of gross profit margin, the year-over-year high of 4.1 percentage points is a result of not only revenue mix shift but also improvements in gross profit margin at every single line of business, notably in TOP TOY and overseas. Going forward, we have reason to believe our gross profit margin can be optimized further because of the above reasons, yet, we will keep an eye on value proposition and make dynamic judgments. SG&A expenses increased 56% in total, including a 66% increase in selling and distribution expenses, and a 27% increase in general and administrative expenses. SG&A represented 24% of our total revenue, which is 5 percentage points higher than the same period last year. Among which, 3 percentage points were directly related to our new DTC stores opened in the past 12 months, including rents, D&A, and payroll. As we discussed in the press release, the investment into DTC stores is to ensure the future success of our business, especially in strategic overseas markets like the U.S. As of June 30, 2024, the number of DTC stores in overseas markets was 343, nearly doubling compared to a year ago. In the first half, revenue from DTC stores increased by 111%, while related S&D expenses, such as rents, D&A, and payroll, excluding SBC expenses increased by 83%. These new stores are expected to contribute more substantial sales in the second half of 2024. We are taking effective measures to improve operational efficiency in these DTC stores and control costs. So, the initial results are very good. We believe the hike in operating expense ratios won't last too long. Promotion and advertising expenses increased by 46% in the first half. P&A expenses as a percentage of revenue stabilized at around 3% in the first periods. License expenses increased by 24%, consistent with our revenue growth. Logistics expenses increased by 54% compared to 43% of revenue growth in overseas, reflecting rising freight costs during the first half. Turning to profitability. Operating profit increased 18% year-over-year. OP margin was 19.3% compared with 20.4% in the first half of last year. Notably, there was a RMB12 million net foreign exchange loss in this first half compared to a RMB55 million net foreign exchange gain in the same period last year. Excluding SBC expenses and FX impact, adjusted OP margin was 20.3% compared with 20.1% last year. Adjusted net profit was RMB1.2 billion, up 18% year-over-year. Adjusted net margin was 16% compared with 17% last year. Excluding FX impact, adjusted net margin was 16.2% compared with 16.1% last year, implying our stable profitability and scalable growth. Adjusted EBITDA increased by 26% year-over-year. Outpacing the growth in revenue, adjusted EBITDA margins were 25.4% compared to 25.2% in the same period last year. Adjusted basic and diluted earnings per ADS increased by 18% and 19%, respectively. Turning to cash. By the end of June, we maintained a strong cash position of RMB6.9 billion. Net cash flow generated by operations in the first half was about RMB1.3 billion. CapEx was RMB303 million, and free cash flow was above RMB1 billion. Turning to working capital. The channel inventory turnover remains efficient. By the end of the first half, 26% of MINISO's brand inventory were located in overseas DTC markets compared to 21% a year ago. Inventory turnover days were 81 days, including 70 days in China and 147 days for MINISO overseas DTC markets. Structurally, inventory over 180 days accounted for about 12% at the group level. Turning to capital allocation, we are committed to a dividend payout ratio of no less than 50%. Our capital allocation strategy will continue to balance fast growth and our commitments to bring stable and foreseeable returns to shareholders. The Board has approved an interim cash dividend for the first half of 2024, totaling approximately RMB621 million. Upon payments of the interim dividend, the company will have returned RMB1.4 billion in cash to shareholders through dividends and share repurchases year-to-date. Since 2020, we have returned RMB3.6 billion to our shareholders upon payment of the interim dividend, accounting for 62% of adjusted net profit accumulated from 2020 until the first half of this year. We are confident in accomplishing our full-year business plan and five-year strategy and believe that our share price has been trading below its intrinsic value. The Board has approved a share repurchase program to take advantage of the general mandate granted at our Annual General Meeting held in June this year. Under this general mandate, the company may repurchase its shares in ADS in the next 12 months, not exceeding 10% of the total outstanding shares, and execute share repurchases in the open market, subject to market conditions. We believe that the share repurchase program is in the best interest of the company and its shareholders as a way to create value for shareholders. Our performance for the first half once again demonstrates the strength and resilience of our business model and reflects our ability to execute on our IP and globalization strategy. I'm very confident that we will once again meet our full-year targets. Our financial strategy will continue to remain disciplined in terms of budgeting, cost control, and capital allocation, as we commit to delivering stable profits and cash flows. Our target for the year of 2024 remains unchanged from our expectations at the beginning of the year. Revenue is expected to increase by 20% to 30% on a year-over-year basis, and our adjusted net profit target is RMB2.8 billion or higher. Thank you, and this concludes our prepared remarks. We are now ready to take questions.

Thank you. The first questions are coming from Ms. Lucy Yu from Bank of America Merrill Lynch. Please go ahead.

Hi, management. Thanks for taking my question. So, two questions here. Firstly, on the domestic market. In July and August, we have witnessed some weakness in domestic demand. So could you please update us on your performance in the first two months of July and August? And how should we think about the pop-up store contribution to these two months as well as for the rest of the year? So that's the first question. The second one is about the selling and distribution expense as a percentage of revenue, which has exceeded 20% this quarter. This is the highest since we have listed. So, I believe this is due to faster overseas DTC expansion during low season. But how should we think about this ratio going forward in the second half? Should we expect it to go back to maybe first quarter level or last year level? Thank you.

So, I will translate for Mr. Ye quickly. Regarding your questions on the performance in recent months, MINISO's same-store sales in China in the first half were about 98%, which is an increase of 0.1%. However, traffic decreased by 2.5%, and our conversion rate from store visits to purchases has remained stable. We are currently facing challenges due to a very soft domestic consumer market, but MINISO is highly confident in maintaining best-in-class same-store service in China, specifically with same-store sales above 97% year-to-date, and we will benefit from a comparatively lower base entering September. We are also focusing on our IP products to enhance operations and investment in instant retail. Our goal for the full year is to stabilize same-store sales with a recovery target of 100% or slightly above or below that base. Our target for MINISO's offline business remains unchanged, aiming for 10% to 15% year-over-year growth. In terms of same-store sales in China, we have several initiatives planned moving forward. The first initiative is to enhance our product capabilities, which are very profitable, with a focus on IP and strategic pathways to optimize our product structure. We plan to introduce many interest-driven product categories, including blind boxes, collectible dolls, and other items, which will help boost our same-store sales. The second initiative is to improve our channel expansion capabilities, as we have discussed in previous quarters. Currently, we have thousands of stores in China, and we can make structural improvements to our store formats and operations. Since last year, we have been implementing these improvements, and our plan is to continue this over the coming years. The third initiative is to enhance MINISO's brand awareness, including upgrading our brand strategically. We aim to build many flagship stores with improved images and performance. For example, two weeks ago, we opened a new IP event in Tianjin, and we received very positive initial feedback from consumers there. We are also launching new store formats this year and looking forward to more trials and experiments. Regarding your second question about DTC store selling and distribution expense, I can briefly say that it will decrease. As I mentioned earlier, the increase in our expenses, particularly related to DTC stores, is not expected to last long. To recap, MINISO stores in the U.S. are now operational in 40 states. With approximately 200 stores, our U.S. locations are well-distributed. Thus, we will need to open more stores to optimize our logistics and related expenses. Our store expansion in the U.S. is progressing rapidly. By the end of this year, we will have doubled our store count compared to last year. Therefore, we believe that with around 300 to 400, or even 500 stores, we will be able to fully leverage our logistics expenses, as well as other costs such as store rents and labor, which will also be optimized. I am confident that in the second half, you will see a significant reduction in our operating expense ratio. Thank you.

The next questions are coming from Ms. Michelle Cheng from Goldman Sachs. Please go ahead.

I have two questions for management. The first one is about the U.S. market. Given the volatile consumption market in the U.S. over the past few months, are there any new opportunities or risks? How will this affect our strategic expansion and store formats? The second question is regarding the European market, which we previously highlighted as a key focus this year. Can you provide any updates on developments in various markets concerning store format partnerships and other store formats? Are we seeing any progress so far and is there potential for further improvement? Thank you.

Let me quickly translate. Overall, in the overseas market, same-store sales showed double-digit growth in the first half, and we're in the early stages of our cycle. We have long-term factors influencing brand awareness, product authorization, operational authorization, and more. We strongly believe that we have significant potential to enhance our same-store sales growth; while it will grow rapidly, it will also inevitably fluctuate, particularly when compared to last year. In 2023, same-store sales growth was the driving force behind our U.S. business, but this year, with a goal of doubling this business, our primary focus will be on expanding our store network. In the first half, same-store sales growth in the U.S. rose by 14%. We successfully doubled the number of strong network stores, which aligns with our expectations. By the end of July, we had added about 69 new stores in the United States, aiming for approximately 100 by year-end. Looking ahead, we anticipate that store openings in the U.S. will accelerate. We will initiate discussions to attract more franchisees or distributors for rapid store network expansion while ensuring healthy profits. Given the 14% increase in same-store sales growth in the U.S., we expect this growth to continue. On the product side, we will adapt our product structure to enhance local supply chains and increase inventory turnover to shorten product lead times. Additionally, we aim for greater local sourcing, especially in IP-related snacks, cosmetics, and similar products. We will also introduce top-tier suppliers from other regions, including cosmetic and beauty tools from Japan and Korea, and boost our R&D in IP-related products to enhance our offerings. In terms of store fronts, we will upgrade our stores, focusing on enhancing the image and product experience. We will also improve our digital systems for better store efficiency, similar to what has been done in China. Our loyalty programs will be enhanced, and we will improve customer insight capabilities to better tailor our product structure and store operations, thereby increasing customer loyalty and repurchase rates. We are establishing a strong overseas team, particularly in the U.S., with localized teams including buyers. We plan to develop our department in Southeast Asia to train new overseas teams in Malaysia, with the first phase of this project already completed. This new team will be central to our expansion in the United States, and we will establish a training center in North America in 2024 to support our growth there. Regarding your second question, we have three measures. The first is to upgrade our store formats. For example, in the U.K., we have been working to enhance and expand channels to develop larger and better stores. In the first half, same-store sales increased by 50%, and total sales rose by 150%. This again shows that our superstore strategy has positively impacted the overall market performance. Daily sales per person in the U.K. are now around RMB20,000, reflecting a 50% year-on-year increase. While there remains potential for recovery in the United States and possibly in Mexico, the progress in the U.K. is significant, making it the best performer in Europe. Looking ahead, the U.K. could serve as a benchmark market for MINISO in Europe. I see the European market as a pathway to opening 1,000 stores in the future, indicating substantial potential. The second measure is focusing on intellectual property, which is crucial for our future success in European growth. Intellectual property currently accounts for 49% of total sales in Europe, showing a year-over-year increase of about 65%, especially notable in our flagship store in France, where IP sales make up around 85%. This has significantly enhanced the overall distribution market's gross profit margin. The third measure is to remain focused on our core offerings. Our top 100 SKUs represent about 90% of our total sales in Europe, and each segment has performed robustly. In the future, our key product categories will make MINISO stores in Europe more specialized and provide customers with a more engaging shopping experience, thereby improving our store conversion rates. Thank you.

Thank you, Michelle.

Thank you. We shall conclude our call now. Thank you all for joining us today. We will see you in the next quarter. Goodbye.