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Operator: Hello, ladies and gentlemen. Thank you for standing by for GreenTree’s Third Quarter 2023 Financial Results Release. [Operator Instructions] As a reminder, today’s conference call is being recorded. I would now like to turn the meeting over to your host for today’s call, Mr. Rene Vanguestaine of Christensen, GreenTree’s Investor Relations firm. Please proceed Rene.

Rene Vanguestaine: Thank you, MJ. Hello, everyone, and thank you for joining us. GreenTree’s earnings release was distributed earlier today and is available on our IR website at ir.998.com, as well as on PR Newswire services. As a reminder, we also posted a PowerPoint presentation that accompanies our comments to the same IR website. On the call from GreenTree are Mr. Alex Xu, Chairman and Chief Executive Officer; Ms. Selina Yang, Chief Financial Officer; Ms. Megan Huang, Vice President of Sales and Marketing; and Ms. [Ellen Zhao], Financial Director, stepping in for Mr. Bill Zhou, who is not available today. Mr. Xu will present the company’s performance overview for the third quarter of 2023, followed by Ms. Huang and Ms. Zhu, who will discuss business operations, and then Ms. Yang and Ms. Zhu will discuss financials and guidance.

A large hotel room with touches of luxury and hospitality in every corner.

They will be available to answer your questions during the Q&A session, which follows. Before we begin, I’d like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 as amended and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as may, will, expect, anticipates, aims, future, intends, plans, believes, estimates, continue, target, is or are likely to, going forward, confident, outlook and similar statements. Any statements that are not historical facts, including statements about the company and its industry, are forward-looking statements. Such statements are based upon management’s current expectation and current market and operating conditions and relate to events that involve known and unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the company’s control, which may cause the company’s actual results, performance or achievements to differ materially from those in the forward-looking statements.

You should not place undue reliance on these forward-looking statements. Further information regarding these and other risks, uncertainties or factors is included in the company’s filing with the U.S. Securities and Exchange Commission. All information provided including the forward-looking statements made during this conference call are currently occurrences of today’s date. The company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law. It is now my pleasure to introduce our Chairman and Chief Executive Officer, Mr. Alex Xu. Mr. Xu, please go ahead.

Alex Xu: Thanks, Rene, and hello, everyone, and thank you for joining us today. We had a good third quarter with a strong recovery in our hotel business year-over-year as tourism and business travel continued to rebound. RevPAR increased 30.5% year-over-year, reaching as high as 110% of its third quarter of 2019 levels in July and August, with a surge in the number of tourists during the summer vacation. The pace of recovery of RevPAR slowed slightly in September but remained stable. We will continue to implement our long-term strategic development plan, focused on helping franchisees to maintain high-quality service and operation and expand our hotel network and the sales channel, provide stable operating profitability and maintain long-term stable growth.

Please turn to Slide 5. Compared with the third quarter of 2022, hotel RevPAR was RMB 156, up 30.5%. And the restaurant ADS, that is average daily sales per store, was RMB 6,548, up 7.4%. Total revenues were RMB 460.9 million, up 15.3%. The increase was partially due to the recovery in RevPAR. The increase in the number of hotels and the increase in the ADS offset by the closure of 85 restaurants over the past 12 months. Income from operations increased to RMB 137.8 million with a margin of 29.9%. Net income was RMB 117.4 million with a margin of 25.5%. Adjusted EBITDA, that’s non-GAAP was RMB 173.4 million, that’s up 215% with a margin of 37.6%. Core net income, that’s non-GAAP, was RMB 127.2 million with a margin of 27.6%. Cash provided by operating activities was RMB 154.8 million.

Slide 6 shows detailed numbers for hotel, total revenues, income from operations, net income and adjusted EBITDA. On Slide 7, operating performance was great. RevPAR was RMB 156. At the bottom of the slide, you can see the weekly RevPAR performance in the third quarter of 2023 compared with 2019. RevPAR gradually recovered to more than 110% of its prepandemic levels in July and August, then slow down gradually in early September. During the mid-autumn festival and the National Day, we ushered in a new round of development and growth. Slide 8 shows the operating performance of restaurants with ADS continuing an upward trend and reaching the highest level in a long time. Now starting with Slide 10. We will review our strategic execution across our businesses.

In our hotel business, we further expanded in the mid- to upscale segment and increased our penetration in Tier 3 and the lower cities in South China. As you can see on Slide 11, we continue to grow our mid-to-upscale segment with 455 hotels. That is 10.9% of our total portfolio, at the end of the quarter, up from only 50 in 2017. While the mid-scale segment remains the core of our hotel business with 70.8%, we continue our expansion into the higher-end segments. The economy segment remained stable at 18.3%. Please turn to Slide 12. Over the past 5 years, most of our new hotels have been in China’s driving Tier 3 and the lower cities. As we pursue greater penetration in Tier 3 and the lower cities, 73.7% of hotels in our current pipelines are in such cities and we will further capitalize on the substantial opportunities in such locations.

On Slide 13, we continued to focus on increasing profitability in our restaurant business. We closed unprofitable stores, increased the proportion of franchise and managed the restaurants and expanded the number of street stores. On Slide 14, during the third quarter of 2023, we closed 10 restaurants in areas of decreasing economic activities, helping improving the profitability. On Slide 15, you can see the growth in the proportion of our franchise and managed restaurants since the acquisition of Da Niang Dumplings and Bellagio during the first quarter of 2023. We opened the sixth F&M restaurants in the third quarter of 2023. Slide 16 shows the restaurant breakdown by location. Most of our restaurants are currently in shopping malls. However, we believe there is substantial potential for street stores, and we intend to grow this segment.

Now let me turn the call over to Megan and Allen Zhu. Megan?

Megan Huang: Thank you, Alex. Please turn to Slide 18 to start reviewing the operating and financial highlights. Slide 18 shows the trend in our quarterly operating performance. In the third quarter of 2023, RevPAR for our L&O hotels increased to RMB 212. RevPAR for our F&M hotels increased to RMB 155. ADR for our L&O hotels increased to RMB 268 and ADR for our F&M hotels increased to RMB 190. Occupancy at our L&O hotels increased to 79% and occupancy at our F&M hotels increased to 81.3%. Slide 19 highlights the growth in our membership programs, which accounted for most of our direct sales. Individual memberships grew to 88 million, up from 77 million a year ago. And corporate membership grew to 2.02 million, up from 1.92 million a year ago.

Now please turn to Slide 20. In the restaurant business, the number of individual members grew to 2.67 million, up 1.6% year-over-year. ADS increased 7.4% to RMB 6,548 in the third quarter of 2023 compared to 1 year before. With that, I will pass the call over to our CFO, Selina Yang.

Selina Yang: First, I will review our hotel business. Please turn to Slide 21. In the third quarter, total hotel revenues increased 40.4% year-over-year to RMB 339.1 million. The increase was primarily due to the recovery in RevPAR and the increase in the number of hotels. Total hotel revenues increased 9.2% to RMB 339.1 million compared to second quarter of 2023. Total revenues from F&M hotels were RMB 186 million, up 20.8% year-over-year, while total revenues from L&O hotels increased 83.1% to RMB 151.8 million. On Slide 22, total hotel operating costs and expenses decreased 14.7% year-over-year to RMB 212.4 million and total hotel operating costs and expenses decreased 0.5% compared to the second quarter. Total costs and expenses are composed of hotel operating costs, selling and marketing expenses, general and administrative expenses.

Operating costs were RMB 159.9 million, increased 12.1% year-over-year. The increase was mainly due to the higher personnel costs, higher consumables and higher utilities as business rebounded, as well as higher depreciation and amortization with increase in assets, partially offset by the consolidation of Argyle and Urban. Operating costs increased 6.5% to RMB 159.9 million compared to the second quarter of this year. Selling and marketing expenses were RMB 14.3 million, a year-over-year increase of 24.9%. The increase was mainly attributable to higher sales channel commissions and higher sales staff salaries. Selling and marketing expenses increased 3.7% compared to second quarter of this year. General and administrative expenses were RMB 26.7 million, down 50.9% compared with same quarter of last year.

The decrease was mainly due to lower bad debt, lower staff-related expenses and lower consulting fees. General and administrative expenses decreased 40% to — compared to the second quarter of this year. Turning to Slide 23. Income from hotel operations increased from RMB 1.3 million to RMB 127.5 million year-over-year. Net income of hotels trend positive year-over-year at RMB 108.5 million. Adjusted EBITDA increased 221.1% to RMB 164.3 million. And core net income increased from RMB 5.4 million to RMB 118.1 million year-over-year. Next, let me turn the call over to Allen, the Financial Director.

Unidentified Company Representative: Please turn to Slide 24. In the third quarter of 2023, total restaurant revenues were RMB 121.8 million. You can also see the revenue breakdown for F&M restaurants and L&O restaurants. On Slide 25, total operating costs and expenses decreased 29.6% year-over-year to RMB 111.8 million and decreased 2.6% sequentially. You can also observe the down trend in material costs, personnel costs and the rent. Turning to Slide 26. Income from restaurant operations was RMB 10.3 million. Net income was RMB 8.8 million. Adjusted EBITDA increased 134.4% to RMB 9.1 million year-over-year. Core net income was RMB 9.1 million. Next Selina, please introduce the profitability of our group.

Selina Yang: Please turn to Slide 27. Group net income per ADS, basic and diluted, was RMB 1.15. Group core net income per ADS, basic and diluted non-GAAP, was RMB 1.25. Let’s now take a look at Slide 28. As of September 30, 2023, the company had total cash and cash equivalents, restricted cash, short-term investments, investments, equity securities and time deposits of RMB 1,331.4 million compared to RMB 1,440.1 million as of June 30, 2023. The decrease was primarily due to repayment of bank loans and investment of property, partially offset by cash from operating activities and repayment from franchisees. On Slide 29, based on our performance in the first 9 months of this year, we revised our full year 2023 guidance for the total revenues of our organic hotels upwards.

We now expect them to grow 36% to 38% year-over-year. We expect total combined revenues from our restaurant and organic hotel business for the full year of 2023 to grow 17% to 19% over the 2022 levels, reflecting the impact of the closure of restaurants. Finally, a word about our share repurchase program. In October this year, the company repurchased 554,158 of its ADS from a single investor at a price of USD 4.40 per ADS, for a total consideration of USD 2,438,295.20 in a private negotiated transaction. The repurchase was made under the auspices of the company’s share repurchase program for a total of USD 10 million authorized by its Board of Directors for 2 years on October 13, 2023. This concludes our prepared remarks. Operator, we are now ready to begin the Q&A session.

Operator: [Operator Instructions] Today’s first question comes from Dan Xu with Morgan Stanley.

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Dan Xu: Thank you for the presentation, Alex and management. It’s good to hear from you again. I have 2 questions. Maybe let me brief my first question. My first question is about RevPAR outlook. From Slide 7, I observed that since the beginning of — since mid-autumn festival, there was a very linear decline in terms of the RevPAR as a percentage to 2019. And I think by beginning of November, it went to around 95%, which was back to, I think, April level. I’m just wondering, is this — what was happening in the beginning of November? Was it due to a low season or weakness of business? Was it due to timing calendar differences? And what is the management’s outlook for the remaining of the fourth quarter? And possibly, if you can, any outlook for 2024, please? That was my first question.

Selina Yang: Okay. Thank you, Dan. Thank you for your question. For the first question about the RevPAR comparison for the national holiday, actually, this year, we have 8 days for the national holiday. And for the year of 2019, we have 7 days. So for — when we compare with the RevPAR with year 2019, we compared the first — very beginning of the holiday here the last day and also compared since — the third of the holiday period last day. So when we compare the third day — the third date of the holiday period end, we find our RevPAR increased by 20% over the year of 2019. But if we compare the whole period, that means, since first day till the end, we find the increase over 2019 will — is about 7%.

Dan Xu: How about for November? Early November, it seems that it has weakened a little bit to below 100% for the weekly data. Do you think that was a one-off? Or was there any calendar event also going on just like Golden Week?

Selina Yang: Dan, and more words about your first question. So the RevPAR for the October compared with ‘19, that is a 5% decrease compared with the 2019. So for the next — for the second question, why the whole period for the national holiday the increase is less than 10% because we observed the first holiday of this year, and that is less than that first day of 2019.

Alex Xu: Let me continue to add on the comments, Dan, to the Selina’s comments. After the national holidays, we typically experienced a slowdown period. And then the business travels and work will resume before the end of the year. But on the November we do see a slightly downward trend on the RevPAR. Traditionally, our business model has been more resilient than the downward or upward, the challenges of the fluctuation of the hotel market. So we will observe and to see whether before the year-end, whether there is going to be a major shift in upward trend. But at this moment, our November trend, we do see a slightly below the 2019 level. So that is our projection at this moment because we have a relatively higher occupancy to begin with.

So we may be able to adjust and our — the pricing structure and to offset this downward pressure. So with regarding to the 2024, we believe the economic recovery will continue, but maybe I’m a little bit uncertain, we do not know. It might be uncertain. So our business model in the past, then you have — we have observed and are dealt with to deal with future changes. So we will report in the next quarter what we observed for the earlier part of next year.

Dan Xu: My last question is regarding your share repurchase program or share repurchase transaction. Can you share a little bit more of the details or rationale on this transaction in October? We know that our trading volume, daily trading volume and liquidity has been relatively lower compared to our peers. So I’m just wondering, is this a one-off transaction to just onetime? Or does the company actively seeking from investors to do share repurchase in this sort of transaction? And is there any concern on our liquidity from the management’s perspective?

Alex Xu: With regard, Dan, the purchase of this privately negotiated transactions. Since it is not an open market transaction, so it has not impacted the daily volume of our hotel ADS. We have a relatively lower volume because the number of floating shares, the percentage of things is much smaller. And besides, I think that our shares has also concentrated, we are making efforts to increase trying to structure so that we may be able to help to increase the volume of the shares. And that’s as far as this transaction, the Board believes, the private investors that the block sales would benefit the entire shareholders. And so that’s all I can share with you.

Operator: [Operator Instructions] The next question comes from Bruce Mi with UBS.

Bruce Mi: So I actually have 2 questions. And first one is regarding the hotel opening. So could you please share with us about your hotel opening plan for 2024 and your long-term hotel operation target? And the second question is still on RevPAR. So — actually, we have observed very strong leisure term demand in the summer travel season and also the national day, The Golden Week. So — but some investors worry that it’s maybe a one-off pent-up demand after the China’s reopening. So do you worry that this leisure travel demand could be sustainable in next year? And what’s your RevPAR assumption for 2024 and Q1 next year?

Selina Yang: Thank you for your question. Okay. Maybe I can answer the first question. Actually, for this year, we have shared the number of signed contracts last time, that is 600 towards end of this year. And we are likely to open more than 400 hotels this year. And for the next year, we plan to sign more than 650, that is about 650 to 680 hotels in the year 2024, and we are likely to open 450 to 470 hotels in the next year. That means about a 12% increase of this year to 15% increase of this year.

Alex Xu: Okay. So with regard to the RevPAR projection, as we discussed earlier, the remaining of the fourth quarter of 2023, we believe the pressure is there. And the RevPAR compared with 2019, we were trying to make it stable and reach the same level, and we do not see a significant increase that will be the same as the third quarter, like during the summer vacation because that is driven by leisure tourism. And regarding the next year, because our hotels are primarily priced at the most affordable value-driven and we do not believe that our system-wide RevPAR will be impacted that much. There will be, I think, still continued demand in the leisure tourism segment, especially on the affordable segment due to the large portion and a larger percentage increase in the retirees and their demand for the leisure travels.

And also, we believe there will be gradually recovery of economic activities result in more business travels, but we certainly do not see the leisure travel will be as strong as the last summer. So in our own assumptions, the same store, the same hotel RevPAR and our goal is to maintain the same. And our system-wide RevPAR increase will be upward because we’ll continue to open more mid- to upscale segment hotels. And that’s right now around 11%, will continue to increase that percentage. And meanwhile, we will — system-wise, we’re closing down certain lease expired hotels. And so because of the way the change, we’ll see the system-wide RevPAR continue to an upward increasing trend for the 2024.

Operator: [Operator Instructions] The next question comes from Simon Cheung with Goldman Sachs.

Simon Cheung: So I was just referring to — I have 2 questions. One is just on the hotel opening numbers that Selina was sharing. I cannot miss that. Is that 650 or 680, and then there were another 450 and 470. Was that one is gross and other one is net for next year and this year? And perhaps maybe just more broadly, given that you have given guidance for specifically the hotel as well as the restaurant segments overall for this year. Perhaps you can give us a sense of your assumption for fourth quarter. What sort of RevPAR are you expecting? What sort of a hotel and then similarly for restaurant? That’s the first question. And then the second question is, when I look at your costs, particularly on a sequential basis, there’s quite a bit of a cost saving across restaurant and hotel business.

Can I — and then I’ve observed that your hotel EBITDA margin back to, what, 47%, 48%, pretty much back to 50%. Just wanted to get a sense how you’re thinking about scope for cost saving and the magnitude or potential further margin expenses, if any?

Alex Xu: Thanks, Simon. I’ll answer the first question. Regarding the margin, I’ll leave that to Selina. So Simon, that — the 650 to 680, I believe that’s what we shared with you, that’s the signing up of the hotels. And the 450 to 480, and so we have an internal projection that’s the opening of hotels. So that’s the number I want to clarify with you. Regarding the next quarter’s RevPAR, and we just reiterated, I think that we continue to project and continue to work hard to achieve at least the same level of that of 2019. And so that’s on fourth quarter of 2023. Okay. So with — regarding the margin, I’ll leave that to Selina.

Selina Yang: Okay. Thank you, Simon. Here, I wrote down 2 questions for you. The first one is about the hotel — the restaurant margin, why is better? Why was better than before? Because in this quarter, the restaurant — the net income of the restaurant was nearly RMB 10 million, that’s much better than before, I think for several reasons. The first one, as for the seasonality reason and as the recovery of the industry, the performance of the restaurants was better than before. Second reason for [Da Niang], we closed 85 unprofitable hotel stores over the past 12 months, and the profitability of the remaining hotels was much better than before. And the third reason is that we changed the franchise model. We have already begun to change the franchise model.

We begin to open more street stores. And the CapEx at the very beginning the investment and profitability from the — it was much better than before. And for [Luca], we can see the trend — the profitability trend was always stable. So that’s why in the third quarter we also — for the Luca brand, it also makes money, okay? So your second question is about the fourth quarter. Yes, after entering October, yes, we can find yet the profitability with a little downwards than the third quarter. Yes. However, for Da Niang brand, just as we — I just explained because of the model — of our franchise model has begun to be adopted. So we can expect the profitability of Da Niang brands in the fourth quarter as well, although the sales — I mean the revenues decreased much year-over-year speaking, okay?

Alex Xu: The future margin, Simon, that we projected, that will slightly — will continue to improve the margin, and we hope that the previous margin we generated will achieve that — in that level with the increase of our brand quality overall in terms of products and services, we’ll continue to do, I think, a better drop in that area. And secondly, due to the market competition, we also lowered some of our fees to our franchisees, such as reservation fees, such as the supporting fees in other areas. And therefore, on the top line level, we’ll see a slight impact, which will also impact our margin, but we’ll continue to improve the internal productivity and efficiency and also using the system, improve the management efficiency, so to go back to achieve the optimum margin. So that is our goal. So we have observed, we still need — I think considering the uncertainty and we have to work really hard to achieve that.

Simon Cheung: Can I just double check — one more follow-up question, I guess. The fact that you think that you have been lowering your fee for franchisee in order to get more sign-up, is that what you’re saying? So that you are now expecting a step-up on your new hotels sign up that is a function of — because from our perspective, I thought that the market environment has actually been very conductive to new hotel signing. But yes, did you say that you lower your fee or something? How competitive is the market is to be, just more broadly?

Alex Xu: We are not talking about the sign-up fees that — the sign-up for new hotels. We’re considering the supporting of our existing franchisees by lowering certain ongoing like central reservation fees and various fees. Because a number of our franchisee restaurants they still have a fair amount of obligations accumulated from the past 3 years. So in other words, we not only have the current obligations, the rents, salaries and there — the current incurring immediate payments. They also have to go back to deal with the liabilities like most of the hotel and restaurant business accumulated from the past 3 years. So as we have shared with you the strengths and also the key value system of the GreenTree is to help our franchisees to achieve their profitabilities.

So we feel it is still urgent for us to help them and to increase their own profitability by adjusting some of our ongoing while continue to maintain our healthy profit margin. And with the sign-up initial application fees, I think that in the market overall, there is a downward trend in that area. So — and that is given. So I think the — it’s going to — is going to be a very, very — both the market has full of opportunities in this hotel segment as well as there are also that more brands and companies are competing in this area. So that is the — that is current our own assessment segment, Simon.

Simon Cheung: Sorry, can I just — just to clarify. So you’re saying that you lowered the fee, is that only for restaurants? I think was it restaurant only? Or is it in general, wherever you see difficulty, whether it’s a hotel and restaurant, you generally have lower your fee across the board and how does that?

Alex Xu: No. This is — we’re only talking about the hotel sector for the centralized reservation fees. For the restaurants, it is more — the market is very more dynamic and fluent in a way. Because traditionally, a lot of our restaurants, for instance, like Da Niang Dumplings are located in the supermarket anchored local shopping malls. And the traffic to those supermarket malls are down significantly. So the consumer behavior assumes trend in that area. So as a result, we are rebalancing the mixed. So by focusing on opening in a more stable traffic area, more street front stores — street stores. And while that closing down, those, I think, are primarily the reason in the last 12 months, we closed the 80 slowdown traffic areas restaurants.

But we think that with the repositioning of the restaurant locations, increase the food quality and both of our brands, we will continue to achieve the profitability. I think that’s very, very important in the restaurant sector and then try to take advantage of the new market opportunities to provide a healthy and value-driven tasty food for our customers.

Operator: [Operator Instructions] The next question is from [indiscernible] Capital.

Unidentified Analyst: Firstly, congratulations on the excellent performance in the third quarter. Could you give a separate update on the recovery of the hotel and the restaurant business in the third quarter?

Selina Yang: Okay. Thank you for question, Mr. Mah. Actually, in the third quarter, yes, we can find our revenue has increased by 40.1% year-over-year, speaking for the hotel business. And for restaurant business, the total revenues decreased by 13% year-over-year, that’s because the closure of 84 — 85 lease-operated stores over the past 12 years. But for the same-store, speaking, the third quarter — the third quarter’s average daily sales per store increased 5% compared with the year of 2019. So for the EBITDA margin, yes, we can find for the hotel business, actually EBITDA margin has recovered above 40%, has reached to 48%. And for the total — I mean, including the hotel and restaurant, the total margin — EBITDA margin has increased more than 13%, has reached to 37.6%.

Also, there is a negative impact from the — from the negative profitability of our lease operating hotels because you know we have opened more than 20 hotels during the COVID-19. And most of this — our lease-operated hotels turned negative to positive profitability since this quarter. Due to the negative impact of the lease operating hotels to our EBITDA margin, that — the impact was about 6.5% to our EBITDA margin. That means if our lease operating hotels continues to recovery — tend to positive, our blended EBITDA margin we are likely to increase the other 6.5%, okay? So that’s what we observed for the third quarter’s performance.

Operator: Seeing no further questions, this concludes our question-and-answer session. I would like to turn the call back to Selina Yang for closing remarks.

Alex Xu: Before the — operator, there is an earlier question regarding — I have looked at the question regarding the liquidity. I think I forgot to answer that question to Dan. Dan, we only discussed about the privately negotiated block sales in this stock repurchase. Regarding the liquidity, we have also the share price. We have implemented — the Board of Directors implemented share purchase — repurchase program because we think the share price is undervalued and — due to various factors. Number one, after we became public traded companies, we made a few merger and acquisitions. And due to the various factors, especially during the pandemic, some of the business are not performing — were not performing up to the standard.

So trigger that into various resolution, dispute resolutions and which also interrupted some of our quarterly reports and also — and consume some of the management — that attention and the time. I think those are pretty much all resolved. So in the new areas, we will continue to maintain a more frequent dialogue with our investors and to — and also to share our plan and the growth and the business operations more frequently with various investors. So secondly, that will continue to improve our core efficiencies and to improve the system-wide standard of our hotels and the restaurant in terms of basically the products and service consistent quality improvement. And with consistent growth and consistent profitability, we believe the performance and also our — basically the company’s liquidity will demonstrate the value of our companies.

And the third, we’ll continue to explore ways to benefit our shareholders by deploying our current cash positions, either by resuming the routine dividend and share repurchases or the continued investment in new opportunities. And we learned — accumulated a lot of experience in this area. And so we have also demonstrated that we’re able to make most of our units performing even under some of the challenging conditions. So the last point I want to make is the largest shareholders and about 90% of the GHD is held by GTI, a privately held company. GTI has many shareholders in it. So we’re also trying to change the structure. And so given our shareholders the direct access to the shares of the GHDs to further increase the liquidity. And then lastly, and when the opportunity comes, we may also considering a follow-up offering of the shares and to further increase, again, the liquidity.

So overall, our Board of Directors have discussed many ways in the next few years to increase the profitability of the company and increase the share — that liquidity, and we hope that the share price eventually will reflect the true value of the company. We’re pretty confident in the next 3 years or so with many, many of our new standardized branded hotels in strategic located areas and in a fast-growing the second and third tier cities, was — unleash the new potentials of the company. So that is the answer I’d like to address Dan’s first question regarding liquidity, which I forgot earlier. So thank you for reaching all those great questions. And thank you for all of you for your support and continued guidance and continued advice to the company.

With that, I’ll pass the call — I pass the microphone to Selina.

Selina Yang: Thank you, Alex. Again, on behalf of our entire GreenTree management team, we thank you for your interest in GreenTree and your participation in today’s call. If you require any further information or have plans to reach us, please feel free to contact us. This concludes today’s call. Thank you.

Alex Xu: Thank you, all.

Operator: The conference has now concluded. Thank you for your participation. You may now disconnect your lines.