Good day, and welcome to the Tu Huo 25H1 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask the question, you may press star, then 1, on a telephone phone. To withdraw your question, please press star, then 2. Please note, this event is being recorded. I would now like to turn the conference over to Qi Xu Wang. Please go ahead.
Thank you, operator. Hello, everyone. Welcome to Chiu Wu's first half-year of 2025's earnings conference call. The company's results were released earlier today and are available on our website. On this call today are Leslie Yu, chairman and CEO, and CFO Barry Bass. Leslie will review business operations and company highlights, followed by Barry, who will discuss financials and guidance. They will be available to answer your questions in the Q&A session that follows. Before we begin, I would like to remind you that this call may contain forward-looking statements made under the seat of the private securities litigation reform act of 1995. Such statements are based on management's current expectations and current market and operating conditions related to the events that involve known or unknown risks, uncertainties and other factors, a lot of which are difficult to predict and many of which are beyond the communist control, which may cause the communist actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding these and other risks, uncertainties and factors is included in the company's filing with the U.S. Security and Exchange Commission. The company does not undertake any obligation to update any forward-looking statement as a result of new information, future events, or otherwise, except as required under the With that, I will now turn the call over to our Chairman and CEO, Mr. Leslie Yu. Please go ahead.
Thank you, Xishu. And I thank you all for joining our 2075 First Hub earnings conference call. In the first half of 2025, China's local service industry experienced significant structural shifts, with the intense market competition becoming the new normal. Against this backdrop, Qigong has adhered to a clear dual-track strategy, first optimizing the structure of our core business to pursue quality growth, and second accelerating the development of second career business to strengthen the group's earnings foundation. I will now share our operating performance and the strategic progress over the first six months of 2025, along these two dimensions. I also look ahead to Qihu's future vision. Half of 2025, Qihu achieved total revenue of IMB 1.13 billion. Let me begin with our core business, the on-demand delivery solutions during the first half of 2025 particularly in the second quarter the domestic food delivery market saw significant changes in the competitive landscape these changes were mainly reflected in two areas the delivery was passed part of the cost burden to service providers to respond to directed order fluctuation and safeguard service quality we made targeted investment in workforce management and operations. Structural adjustments by major upstream customers reshaped the competitive landscape. Liberating our long-standing service capabilities and reputation, we took our new business share, while integrating and launching this new site's added short-term costs. Beginning in May this year, we observed signs of increased market share, which we believe will lay a solid foundation for scalable profitability. Although these measures place the pressure on short-term profitability, we believe the company's overall financials remain sound. At the same time, we proactively closed a number of underperforming sites and concentrated resources on higher return areas in order to further strengthen our overall network health. These initiatives reflect our confidence in and commitment to the long-term value of the on-demand delivery business. We believe that as the integration period ends and operating efficiency improves, the scale benefits and the profit potential of the business may become more evident in the second half of 2025. While consolidating our core business, our second core business, housekeeping and accommodation solutions and vehicle export solutions are now contributing meaningful profitability. In the first half of 2025, our housekeeping and accommodation segment reported strong growth with revenue up 70.8% year-over-year and growth profit up 63.4% year-over-year, becoming an important driver in optimizing cheap-worth profit structure. This performance was primarily driven by our two business units. Chengdu Homeslee achieved 83.6 revenue growth and 319.8 growth profit growth, with growth margin rising to 65.2%. We believe this strong performance reflects a replicable operating model and effective marketing. Our self-development mini program, now fully rolled out, allows users to browse and search for home-free listings, communicate with hosts, and complete reservation and payments in one seamless process. This closed-loop system greatly improves the booking experience, making the factor more transparent and more reliable for both guests and hosts. while also enhancing operational efficiency. Based on this material system, Chen Tu plans to open that platform to more home sale operators in China, providing standardized management tools and marketing support, and transitioning from a property management service provider to a platform operator. Lionel's accommodation business recorded a 63.6 year-over-year increase in revenue, primarily supported by its new cooperation with Baker, a leading housing transactions and service platform in China. This cooperation extends beyond a traditional clean union, with Lionel providing a more comprehensive property service solution for the properties listed on Baker's platform. Covering formative preparation and maintenance, ongoing household services and tailored offerings. In service delivery, LANA has translated years of localized service experience and technological advantage into practice. By leveraging its proprietary digital dispatch system, it integrates cleaning, repair and other service orders into a unified scheduling platform, supporting efficient management and high-quality fulfillment. This cooperation already covers Chengdu, Beijing, Shanghai, Ningbo and Xinlan and is expected to expand to Shenzhen, Guangzhou and other cities. We believe it may generate sustainable and sustainable revenue growth for life. This ability to deliver a standardized high-quality property services provider provides a solid foundation for new initiatives. Building on this, we also participated in the Better Life No. 1 Fund Trust Plan, initiated by China Foreign Economy and the Trade Trust. This one and phase two of this plan, total RMB, $60 million, are designed to enhance the quality and rental value of entrusted properties through standardized renovation and long-term asset management, ultimately generating stable returns for investors. In this project, Lina is responsible for upgrading property quality and providing ongoing property management services, ensuring continuous value creation and compliant operations. Meanwhile, Chiu, in its role as a strategic partner, works alongside the trusted fund to design the pathway from operating assets to data assets and ultimately to financial assets, and jointly manage and share single returns. Through this cooperation, we have put into practice a full pathway from business operations to financial value. Leverage the standardized renovation and service capabilities built by Laila as solid operating assets. Rely on the real and variable data assets continuously accumulated through operations for risk pricing and asset management. and ultimately achieve asset financialization through trust cooperation, completing a critical upgrade to financial assets. This process not only broadens the true world business boundaries, but also provides new directions for the integration of industry and finance. This advances in the housekeeping and accommodation segment not only provide financial returns, but also support our business model initiatives, provide opportunities for longer-term growth for Qihua. Our third major growth driver comes from international business. In the first half of 2025, used car exports achieved 17.8 growth profit growth with growth margin improving from 4.2% to 7.0%. This reflects the continued optimization and upgrading of our business model. We currently operate with two models in parallel. The first is traditional sales model under which vehicles are sold upon export with a crash cycle about three to four months with a gross margin typically at around seven percent. The second is the technological empowerment and resources cooperation model which we believe to carry greater potential. Here, we leverage our accumulated technology, operations, and management activities from domestic-wide selling sector and packaged solutions for overseas partners to jointly operate vehicles and share with long-term higher margin income. This model offers significantly higher profitability and a unique economy, with a payback period of roughly 24 months, which means revenue growth may be realized more gradually but on a stronger foundation. Cooperation in Azerbaijan with Ford Auto and Ford provides an example of this model. By deploying our SaaS platform and management expertise, we are helping partners shift from one-time vehicle sales to our recurring service-based model. Till now, hundreds of vehicles have been on the management with a project level margin of 43%, well above the pure trade model. The success of this pilot has already led partners to place multiple mark-follow-up orders, validating its replicability and long-term profit potential. Looking ahead, we plan to draw on the asset financialization experience gained in the accommodation segment to adjust cash cycle challenges in this model, enabling broader expenses into new markets, charging our international business to evolve from linear growth based on vehicle sales to a higher quality development model of maintaining skill through sales and creating profit through operations. We believe this approach is building a automotive ecosystem through technology empowerment and management expertise, we have raised our earnings ceiling and established more durable competitive advantage. In the first half of 2025, despite the pressures in the on-demand delivery business, we maintained resistance in our core business and made progress in our second core business. We believe this result reflects the soundness of our strategy We plan to remain focused on our dual-track strategy of optimizing cooperation and cultivating new growth. On this side, we recently entered into a cooperation with JD, Jingdong, KKW to provide delivery services in some cities. We believe this not only demonstrates recognition of our cooperation facilities, but may also potentially add incremental volume under the new competitive landscape in on-demand delivery. On the new initiative side, our supply chain empowerment partnership with New World has been progressing steadily. Since May this year, it has generated approximately approximately IMD, $14.4 million in revenue, and is expected to contribute approximately IMD $60 million for the full year. We view this as an early milestone in our transition from a procurement service provider to a supply chain in labor, which may create new opportunities to capture additional value from our delivery network. We plan to continue focusing on our operational efficiency and refining our business models while seeking key market optimizations in order to deliver more sustainable long-term returns for our investors. To conclude my remarks, I will now turn the call over to our CFO, who will provide a detailed overview of our financial performance.
Thanks, Leslie. Hello, everyone. This is Barry Vaughan, the CEO of CHU4 Technology Limited. Welcome to CHU's first half of the 2015 conference call. Please be reminded, all the amount of coding here will be in R&D than otherwise. Total revenue decreased by 30.2% from RMB 1.619 million in the 6 months ended by June 30th, 2024 to RMB 1,131 million in the 6 months ended by June 30th, 2025 due to the following reasons. Revenue from undemanded solutions for RMB 1,039 million representing a decrease of 30.7% from RMB 1,499 million in the six months ended by June 30th, 2024. Primarily because we optimized our business by disposing of several underperforming service stations which led to a decrease in the revenue scale. Revenue from mobility service solutions consisting of shared maintenance while having vehicle export solutions and the flight service solutions for RMB 57.4 million, representing a decrease of 42.8 percent from RMB 100.5 million in six months ended by June 30, 2024. Currently due to one, a decrease in the unit of vehicle sold in our vehicle export solutions business as a result of introduction of new business model and the decrease in purchase of vehicles for sales. And the second optimization of our business by Chasing from our right-handing solutions in several underperforming service service. Revenue from housekeeping and accommodation solutions and other service for RMB 34.8 million representing a sharp increase of 70.8% from RMB 20.4 million in the sixth month ended by June 30, 2024, primarily due to the adoption of online promotion channels in addition to traditional platform-based customer acquisition. Cost of revenue will be 1,127 million, representing making a decrease of 29.3% by OI, primarily attributable to the decrease in our labor cost and service fees paid to service station managers along with the decrease in the revenue. And the result of forgoing our gross profit for RMB 24.8 million and compared with RMB sorry and sorry as a result of going our gross profit for RMB 24.8 million and RMB 4.1 million in the months ended 2024 and 2025 respectively. GIA expense for R&B 76.3 minutes representing an increase of 7.7 percent from R&B 70.9 minutes in the six months ended June 30, 2024. Currently attributable to one an increase of professional service fee from RMB 14.5 minutes in the first half of 2024 to RMB 25.2 minutes in the first half of 2025 due to the insurance cost of ADS occurred in the first half of 2025 of RMB 9.7 minutes and the second increase of welfare and business business development expense and office expense from R&B 12.4 million in the first half of 2024 to R&B 15.1 million in the first half of 2025. Resulting from the expansion into new cities for its housekeeping service and offset by the decrease of labor cost from R&B 36.6 million in in the first half of 2024 to RMB 30.6 million in the first half of 2025, and the result of our expense control through a technology called opt-in valuation. RMB expense for RMB 3.6 million, representing a decrease of 27.3 million from RMB 4.9 million in the six months ending by June 30, 2024. Primarily due to the decrease in the average compensation level for our R&D personnel as we restructured our R&D team. We recorded gain of disposal of asset night of R&D 7 million and R&D 5.7 million in the six months ended by June 30, 2024 and 2025 respectively, primarily due to the transfer of a certain long-term asset to third parties. Our interest extends and remains stable at RMB 2.2 million and RMB 2.3 million in the six months ended by June 30, 2025 and 2024 respectively. Relating to the stability in our average short-term bank borrowings, we recorded other income net of RMB 1 million in the 6 months ending by June 30, 2025 compared to other lost net of RMB 3.1 million in the 6 months ending by June 30, 2024. due to the disposal of investment in the mutual fund in the second half of 2024. We rated income tax benefits of RMB 17.9 million in the six months ended June 30, 2025 as compared to income tax benefit of RMB 2.6 million in the six months ended June 30, 2024, probably due to the reversal of unrecognized tax benefit recognized in the previous years and has been passed in the retroactive period. As a result of foregoing, we have net loss of RMB 53 million in the six-month end date of June 30, 2025 compared an increase of 14% from R&B 46.5 million in the six months by June 30, 2024. EBITDA loss for R&B 16.2 million as compared to EBITDA loss of R&B 34.8 million in the first half of 2024. In terms of balance sheet as of June 30, 2025, the company has cash as equivalent and restricted cash of R&B 33.1 million and short-term diet of R&B 118 million. In this concludes my prepared remarks. Thank you for your attention. We are now pleased to take your questions. Operator, please go ahead.
We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question,
please press star then 2.
At this time, we will pause momentarily to assemble our roster. The first question today comes from Sally Gao, a private investor. Please go ahead.
My question is, could you explain Xu Ho's specific role in the trust corporation and what impact this corporation may have on future financial performance? Thank you.
This is Leslie, and thank you for the question. Our cooperation with Trust builds on our traditional BPO for human services, but we take a step further. We're turning business revenues into data assets and then into investor financial assets. So this is not only strengthens the credit, but also increased asset returns. QiHuo is one of the initial of this project and core operator. To be more specific, LANA is the operational base. It makes sure the properties are upgraded and managed at a higher standard, creating stable rental income. On top of that, QiHuo group works to pull the receivables generated. And through trust structures, we monetize future cash flows in advance and on long capital. The financial impact is quite direct. First, it brings in higher margin income such as asset management fees and the capital gains, which is very different from traditional labor services and improves our profit mix. It also improves cash flow, giving us more flexibility to expand our core and new business. So this is not just a single business success. It proves our new model of combining on-the-ground operations with financial empowerment, opening up a lighter, more profitable, and sustainable growth path for the company. Thank you.
This concludes our question and answer session, and concludes our conference call. Thank you for attending today's presentation. You may now disconnect.