Pop Mart (Minutes): The net profit margin in 2025 is expected to be around 35%.

$POP MART(09992.HK) The following are the minutes of Pop Mart's FY25Q2 earnings call organized by Dolphin Research. For an interpretation of the financial report, please refer to "Pop Mart: Sewing Machine 'Overheating', Can Pop Mart Continue to Soar? - "

I. Review of Core Financial Information

1. Profitability Analysis:

a. Reasons for Gross Margin Improvement (from 64% to 70.3%):

- Contribution from Overseas Business (+4.0 percentage points): Overseas product pricing is generally higher than domestic, and as the proportion of overseas revenue increases, the overall gross margin is significantly elevated.

- Product and Cost Optimization (+1.5 percentage points): Reduced the proportion of low-margin outsourced goods, decreased promotional activities, and optimized procurement costs.

- Dilution of Fixed Costs (+0.8 percentage points): The proportion of fixed costs such as licensing fees and mold fees in total revenue decreased.

b. Reasons for Net Profit Margin Improvement (reaching 33.7%):

- Economies of Scale and Cost Control: While revenue grows rapidly, the group strictly controls expenses.

- SG&A Ratio dropped significantly from 39.2% in the first half of 2024 to 28.6%.

II. Detailed Content of the Earnings Call

2.1 Key Information from Executive Statements

1. IP Performance: In the first half of 2025, the group's IP matrix performed strongly, achieving multi-point blossoming and explosive growth. There are 5 IPs with over 1 billion in revenue; 13 IPs with over 100 million in revenue.

a. THE MONSTERS (LABUBU): Revenue of 4.81 billion RMB, a year-on-year increase of +668%, surpassing last year's total. It has become a world-class super IP, gaining a large fan base globally (China, USA, Europe, Asia).

- Sales accounted for about 34%-35%. Management believes this ratio indicates both a challenge in capacity and the simultaneous high-speed growth of other IPs.

- Continually increasing investment in R&D and operations, consolidating its position through new designs, new products, content stories, park interactions, and armed performances.

b. MOLLY: Revenue of 1.36 billion RMB, a year-on-year increase of +73.5%. This year marks the 20th anniversary of MOLLY's birth and the 10th year of Pop Mart's operation of MOLLY, maintaining strong vitality through diversified operations.

c. SKULLPANDA: Revenue exceeding 1 billion RMB, a year-on-year increase of over 100%. Maintains a unique style, leading in sales of hardline blind box products, and newly launched plush products sold out quickly. Continued explosive growth from 2024, with new series integrating fashion, gaining popularity in multiple countries worldwide.

d. DIMOO: Revenue exceeding 1 billion RMB, a year-on-year increase of over 100%. After long-term operation, it continues to grow and expand into more possibilities, its latest plush product has become a hit.

e. Emerging IPs:

- Hirono: Original IP, nearly 200% year-on-year growth.

- Pino Jelly: Launched in 2024, one of the fastest-growing emerging IPs, quickly gaining recognition through multi-category products.

- PEACH RIOT: An IP by an American artist, performing outstandingly in Europe and America with its strong illustration style.

- Licensed IP Cooperation: Nezha performed well in the domestic market, contributing good revenue and bringing in many new users. Star Wars and others helped the group achieve rapid user conversion in European and American markets.

2. Product Category Development:

a. Plush products grew by +1276.2% year-on-year, with sales surpassing figurines for the first time, becoming the company's current largest category.

b. Figurine products grew by +95% year-on-year, achieving strong growth on a high base.

c. MEGA COLLECTION grew by +71% year-on-year.

d. Future Direction: Will continue to actively explore more new categories, showcasing IP charm in different forms, and expanding commercialization space.

3. Globalization Strategy: The globalization strategy has been remarkably effective, with overseas markets becoming a key growth engine.

a. China (including Hong Kong, Macau, and Taiwan): About 60%, achieving rapid growth on a high base.

b. Asia Pacific outside China: Continued excellent performance, sustained growth.

c. USA: Achieved high-speed growth, with revenue share reaching 16%, expected to increase further in the second half.

d. Europe: Officially entered the fast track of development, with future performance worth anticipating.

4. New Business Exploration (Incubation Stage):

a. Pop Mart City Park: Entered the 1.5 phase of construction and 2.0 phase of design planning.

b. Content Production: Producing animated shorts for multiple IPs, to be launched successively. Parks and content are important IP operation methods, but will not contribute high direct revenue in the short term.

c. New Retail Formats: For new businesses such as accessories, desserts, and theme stores, the group will incubate them more patiently, not expanding rapidly in the short term, nor making them the main performance growth point. The main focus of the team will still be on the group and globalization core strategy centered on IP.

- Pop Mart Accessories (Accessory Store): Opened one each in Beijing and Shanghai.

- Dessert Business: Debuted in parks, PDS stores, and the Thailand flagship store.

- IP Theme Stores: Launched MEGA and Hirono theme stores to broaden the user base.

5. China Business:

a. Offline Channels: The core strategy of offline channels is to enhance consumer experience and operational efficiency.

- Retail Stores: Revenue of 4.4 billion RMB, achieving triple-digit growth year-on-year. Focus on space design and brand image enhancement of stores. Optimized store teams to improve service quality. Dynamic product management as a core growth driver, precisely managing product circulation.

- Robot Stores: Achieved triple-digit growth year-on-year. From being mainly blind boxes in the past, added more other categories in the first half. Reduced SKU width to make selection more focused, improving single product efficiency.

b. Online Channels: Online channels performed excellently, with different platforms having their own focus, developing synergistically.

- Content E-commerce Platforms (mainly Douyin): Experienced an explosion of high-traffic, high-interaction live broadcasts in the first half. Focused on enhancing the effectiveness of products in the Douyin content ecosystem, successfully converting traffic into sales.

- Traditional E-commerce Platforms (mainly Tmall): Grew by over 200% year-on-year. Successfully absorbed high-traffic customer flow from various channels and achieved efficient traffic absorption and conversion through cross-category, multi-category integrated operations.

- Pop Mart Box Draw Mini Program: Revenue exceeding 1.1 billion RMB, growing by over 180% year-on-year. "New launch" capability significantly enhanced: launching new products faster and more frequently to attract users. While achieving rapid growth of new users, maintained a very good new customer conversion rate.

c. Membership System: Membership scale achieved leapfrog growth, becoming a solid foundation for the business.

- Total registered members exceeded 59 million as of June 30, 2025. Net increase of over 13 million new registered members in the first half, with a very rapid growth momentum.

- Membership Quality: While the number of members increased significantly, the sales contribution ratio and member repurchase rate, two core indicators, remained basically stable, indicating high quality and stickiness of new members.

6. Overseas Business: Total revenue reached 5.59 billion RMB, a year-on-year surge of 439.06%. Total number of overseas stores reached 128, a net increase of 70 stores year-on-year (58 stores in the same period last year). Average revenue per store increased by 99.3% year-on-year, demonstrating strong store operational efficiency and expansion capability. E-commerce channel revenue share increased to 45.8%, a significant rise of 22.6 percentage points from the same period last year.

a. Offline Channels:

- New store average area increased by over 25% compared to the same period last year, providing consumers with a more comfortable shopping space and more creative product displays.

- Entered global core business districts and world-class tourist destinations, such as Harrods in London, World Trade Center in New York, Chiang Mai in Thailand, and Bali in Indonesia, enhancing brand influence in city core areas.

- Optimized store design and display, and implemented IP theme stores, deeply integrating IP with offline experiences, enhancing fan stickiness and social topics.

b. Online Channels:

- Established brand live streaming rooms in multiple countries worldwide, recruiting localized teams to interact with users in real-time using local languages and cultural habits, bringing the brand closer to consumers.

- Launched lightweight, high-participation marketing activities such as the "Thailand Songkran Festival", successfully adding 13.03 million registered users to the overseas official website within half a year.

- Launched "Box Draw" business in multiple countries overseas, continuously enriching its functions and gameplay, allowing overseas users to experience the fun and surprise of opening blind boxes without leaving home.

c. Brand Activities:

- By creating fashion styles (such as statue shows), combining IP products with trendy clothing, attracting trend enthusiasts, enhancing brand influence in the trend circle, and promoting conversion from interest to purchase.

- Held large-scale events covering culture, art, e-sports, sports, and other fields, attracting more consumers from different circles.

- Adhered to the principle of localization, integrating local cultural elements into event design, consolidating brand identity in a multicultural background.

d. Future Outlook:

- Actively exploring emerging markets such as the Middle East, Central and Eastern Europe, and Latin America. Will continue to adopt the D2C (Direct-to-Consumer) model, flexibly using online and offline channels to gradually penetrate.

- Plans to open flagship stores and travel retail stores in more core cities worldwide (such as Paris, Sydney, Milan, New York, etc.), selecting premium locations to create high-impact benchmark stores.

- Actively exploring the landing of new business lines overseas, with categories covering desserts, food, trendy clothing, etc. Combining the cultural characteristics and popular trends of various countries, allowing core IPs to collaborate with new businesses to build broader consumption scenarios and meet the increasingly diverse needs of consumers.

7. Capacity: Current monthly capacity of plush categories is about 30 million units, more than 10 times that of the same period last year. Capacity in July-August 2025 also increased by more than 10 times compared to the first quarter of 2025.

a. Core Strategy: Views lean production and automation as key to achieving capacity breakthroughs (automation painting line transformation & laser marking quality inspection).

b. Demand Grasp: The core is to match three key data to the greatest extent:

- Real Demand: Love from a large number of fans and consumers.

- Sales Forecast: Company's market predictions.

- Production Plan: Internal actual production arrangements.

c. Two Major Synergies (Integration):

- Horizontal Integration: Connects the entire process from artist -> product design -> development -> sales -> market -> production manufacturing -> supply chain logistics.

- Vertical Integration: Runs through the entire chain from raw materials -> production manufacturing -> packaging and transportation -> assembly processing -> logistics and warehousing.

d. Reconstruction of "Three Elements of Production": Drawing on the theory of reconstructing "productivity, production materials, and production relations", achieving production reconstruction through technological innovation.

- New Processes & New Materials: Adopts "multi-color conformal injection molding technology" and "sand mold 3D printing technology". Can make products present marble-like textures and touch. Combined with special painting processes, it can reproduce the ice crack effect of Chinese Ru kiln porcelain's "sky blue waiting for rain". These exclusive technologies provide more sources of inspiration for artists and product development teams.

- New Standards: First-class enterprises create standards. In the first half of 2025, jointly released industry product standards for blind boxes, trendy toys, and peripheral products with Guangzhou Customs, China Consumer Product Quality and Safety Promotion Association, and other institutions. By formulating and introducing standards, leading the healthy development of the entire industry.

- New Technology Outlook: Online inspection, AI quality inspection, and other technologies will be launched in the third and fourth quarters. Jointly developing projects with top domestic and foreign universities and research institutes (such as the Chinese Academy of Sciences).

2.2 Q&A

Q: How does the company view the performance guidance for the entire year of 2025? Considering the high growth in the past two years, how does management assess the sustainability of future growth? Given the current high attention of consumers to Pop Mart IP, does the company have new thoughts or plans for long-term strategic development?

A: We are very optimistic about this year's performance, and the growth rate is likely to far exceed the initial expectation of 50%. However, rather than just the growth numbers, we are more concerned about the overall "health" of the company. We hope everyone can focus on the details that support performance, as a healthy and sustainable model is our core pursuit.

The confidence in future growth mainly comes from several aspects:

1. The strong performance of the North American and Asia-Pacific markets proves that we have the ability to become a world-class consumer brand. Although the number of overseas stores is far less than domestic, the growth momentum is very rapid.
2. We have shifted from "expanding quantity" to "improving quality". Domestically, we are no longer adding new stores but are fully enhancing the operational efficiency and profitability of existing single stores.
3. We have successfully transformed the company into a healthy IP platform. The head IP family (The Monsters) has internally incubated multiple successful characters (such as LABUBU), achieving diversified and balanced development of the IP ecosystem, avoiding over-reliance on a single IP.

Q: The North American market has seen rapid growth in recent quarters. What is the core driving force behind this? How does the company view the sustainability of future growth in the North American market? What specific strategies are in place to maintain this momentum?

A: We recognized the opportunity in the US market early on: consumers have a demand for IP design, and the retail system is mature. Therefore, we spent nearly two years focusing on building a top-notch local team and understanding local business rules. This solid groundwork allowed us to enter the fast track of growth from the second half of last year. So, even without the explosive popularity of LABUBU in the second quarter of this year, we are equally confident in North America's growth.

Of course, the popularity of LABUBU greatly accelerated growth, thanks to: a. Channel Advantage: We opened exquisite large stores in core business districts frequented by celebrities and influencers. b. Social Spread: Our products have strong social attributes, achieving viral spread through sharing by these opinion leaders.

More importantly, the success in the North American market has brought us two major strategic values: a. Brand Effect: As a global trendsetter, success in the US has enhanced our brand image worldwide. B. Talent Engine: We are building a stronger team in the US to drive the group's future globalization development.

Looking ahead, the North American market has huge potential. The current dozens of stores are far from saturated, and the high online share also indicates this. Therefore, in the next one to two years, we will accelerate store openings in North America to seize growth opportunities.

Q: From the management's perspective, is the current high sales proportion of The Monsters family, represented by LABUBU, in a long-term sustainable healthy state? Does the company have a "ceiling" or warning line for the sales proportion of a single IP? What measures will be taken to balance the development of the IP matrix when a certain threshold is reached? How do we view the development ceiling of a single IP, and how do we ensure the long-term balance and health of the entire IP platform?

A: We have always positioned Pop Mart as a platform company dedicated to incubating a diversified IP matrix. Regarding the issue of a high sales proportion of a single IP (such as The Monsters), I personally do not believe that "high proportion" is equivalent to "unhealthy". Just as we would not consider Disney unhealthy because Mickey Mouse has a high proportion. Of course, a more balanced IP matrix can indeed prove the success of our platform. Therefore, we will provide ample resources for all IPs to develop independently and serve different consumers.

Ultimately, what we care more about is not controlling the proportion, but how to present the best side of each IP to consumers. The relatively balanced IP development trend is a natural result of our platform strategy, not deliberate control.

Q: Given the strong demand in the current global market, is the company considering accelerating the pace of overseas store openings in the future? Based on the current level of consumer love for the brand, does management believe that the long-term development space of the overseas market is larger than initially expected? Can you provide a more optimistic assumption? Can you break down the store opening plans and long-term development space assessments in major regions such as North America, Asia-Pacific, and Europe in the coming years?

A: The speed and potential of overseas market development have exceeded our expectations. The love of global consumers proves that our products and IPs are world-class, which gives us great confidence.

Many markets are just starting. For example, the opening of the first store in Germany required a 6-hour queue, reflecting that in many countries we have entered (such as European countries, the US), the number of our stores is still far from enough. At the same time, a large number of online orders from areas without stores also prove that the strong demand is due to the brand and IP's existing popularity, not short-term marketing-driven. Therefore, we are accelerating. There are currently 140 overseas stores. The year-end target is over 200 stores, equivalent to opening three new stores per week on average. On the one hand, we are intensifying the layout in existing markets, and on the other hand, exploring new markets such as the Middle East and South America, with the first store in the Middle East to open in Qatar in the second half.

Regarding the US market, although growth is rapid, the space is still huge. Precisely because the business is doing well, we will not simply pursue "further acceleration" in the number of store openings, but focus more on "improving the quality of store openings", and will be more patient in opening flagship stores in core cities.

Overall, our overseas strategy will focus on the US, while primarily exploring other new markets such as Latin America through online business.

Q: In the next two years, what will be the most important growth drivers for The Monsters (e.g., category expansion, regional expansion, content deepening)? What specific measures will the company take to help The Monsters transition from a "hit IP" to a "classic IP" with long-lasting vitality?

A: First, compared to short-term sales numbers, I value its long-term value as a world-class IP more. Once an IP becomes a global symbol like Mickey Mouse or Hello Kitty, its true commercial value exploration has just begun and will not disappear due to a temporary decline in discussion heat. The Monsters, as the first super IP from China to go global, has potential far beyond the plush toys everyone sees today.

For this reason, we have maintained relative restraint in product development and external cooperation this year, without over-consuming it. The current core contradiction is still "consumers can't buy it", which proves that there is still a huge space to meet the existing demand.

Secondly, our confidence in performance essentially comes from confidence in the product. Whether it is The Monsters or other IPs, the growth in performance is backed by our continuous progress in product development capabilities.

Finally, I can reveal that we will release a mini version of The Monsters this week, which can be hung on mobile phones, creating more application scenarios, and I believe it will become another super hit. We are very confident about the future.

Q: Can you specifically introduce the optimization measures taken by the company in domestic store operations this year? What effects have these measures achieved? Looking ahead, in which areas does management believe there is still room for further optimization in domestic stores?

A: Our store optimization in the first half of the year mainly focused on four aspects:

1. Location Optimization: Moved many stores to larger and better locations in malls. After the upgrade, both store traffic and sales achieved double-digit growth.
2. Talent Optimization: Strengthened talent development, notably, for the first time in the first half of this year, over 20% of supervisors and key store managers came from international first-line brands, bringing new management ideas.
3. Display Upgrade: Transformed the previous "warehouse-style" wall cabinets into "theme-style" displays, highlighting IP storytelling more. We increased the monthly display replacement frequency by 30%, driving double-digit growth in store efficiency per square meter.
4. Experience Optimization: Upgraded the checkout system, reducing the average checkout time from 60 seconds to 10 seconds, reducing customer queue waiting.

Looking ahead, there is still a lot of room for optimization. One key direction is to improve the accuracy of distribution. We are exploring refining the current store classification, mainly divided into three levels, into dozens or even hundreds of levels, to achieve "one store, one policy" precise distribution, better meeting the unique needs of consumers at each location.

Q: Does the company observe that in different countries and regions overseas, consumer preferences for IP and products tend to be consistent or show significant differentiation? Specifically, in several major regional markets overseas (such as Asia, North America, etc.), are there significant differences in product category structure and popular IPs?

A: First, the popularity of top IPs is common globally. The Monsters (LABUBU), SKULLPANDA, and DIMOO perform very strongly in all markets, which is basically consistent with the domestic situation.

However, different regions also show unique preferences: for example, the US market prefers Peach Riot, the European market favors SCAR PANDA and Hirono, while the Southeast Asian market sees strong performance from CRYBABY.

In terms of product category structure, overseas markets follow a similar trend to domestic ones, with the proportion of plush pendants gradually increasing. Although there may be a situation where a single category dominates in the early stages of entering a new market, the category structure will eventually tend to balance as the market matures.

Additionally, the success of Peach Riot (whose designer is American) in the US gives us great confidence. In the future, we plan to discover more local designers in Europe and America to achieve diversification in product design and better adapt to local markets.

Q: Regarding the current strong demand and insufficient capacity for some products (such as The Monsters), what specific expansion plans does the company have to address this? Besides expanding capacity, is the company exploring ways to further shorten the production cycle through technological means or other methods?

A: Regarding supply chain and capacity issues, our strategy is a combination of "symptomatic treatment" and "root treatment". Symptomatic treatment (direct expansion): We have planned six major production bases globally (four domestically, two overseas) to directly increase capacity to meet market demand. Root treatment (precise management): We focus more on accurately grasping real demand. The core is two points:

• Improve forecast accuracy: Continuously optimize data models to narrow the gap between forecasts and actual demand.
• Build an agile supply chain: Even if there is a deviation in the forecast, it can be compensated for through a quick response. We pursue not only absolute growth in capacity but also the health and flexibility of the entire supply chain.

Both accurate forecasting and quick response of the supply chain benefit from the strong data acquisition and rapid execution capabilities brought by our global direct sales system. In addition, with the expansion of global direct stores, we plan to establish local artist discovery and service teams in various countries overseas, utilizing the global operation network to sign more excellent designers and promote product localization and diversification.

Q: The company underwent a global organizational structure adjustment in the first half of the year. From an internal perspective, what are the most significant progress or achievements?

A: Organizational adjustment is a continuous dynamic process. The core goal of this year's adjustment is to promote globalization and achieve flatter and more flexible management. Facing the huge language and cultural differences in various regions, we hope to solve local problems more efficiently through organizational optimization, thereby supporting the group's internationalization strategy.

Q: The overall and regional profit margins of the company reached historical highs in the first half of the year. Looking ahead, as revenue continues to grow, bringing economies of scale and operating leverage, how does management view the potential for further improvement in profit margins?

A: Currently, the China region has the highest profit margin due to mature operations and high efficiency; the Americas region also has a considerable profit margin due to high pricing. The Asia-Pacific and Europe are still in the investment period, and as the scale expands, there is great potential for future profit margin improvement.

The group's overall non-GAAP net profit margin in the first half was 31.9%. Considering higher revenue in the second half, economies of scale will be stronger, and profit margins are expected to improve further. We expect the overall net profit margin to reach around 35% in 2025.

Q: What changes have been observed in the user profile and consumption behavior of newly added members in China recently compared to the past?

A: First, the overall profile structure of members is stable, with no fundamental changes, but while new customers are growing rapidly, the overall average revenue per user (ARPU) has significantly increased, proving the high quality of new users. In terms of category preference, although the growth rate of plush pendants is impressive, the number of new users purchasing blind boxes is still accelerating, remaining the main force for attracting new customers. At the same time, we have observed two important trends: First, consumers, whether new or old, are more willing to try new IPs and categories such as CRYBABY; second, for the first time, we have found that consumers' cross-channel shopping behavior is becoming increasingly common.

Q: How is the operation progress of the overseas official website and App? Are there significant differences in online consumption behavior and platform preferences in various overseas regions? Is there any plan to apply or reference the private domain traffic model, such as the box draw machine, in overseas markets?

A: Our official website and App have covered more than 30 countries worldwide and have topped the shopping category rankings in app stores in countries such as the US and Australia multiple times. More importantly, the next-day retention rate of the overseas App exceeds 50%, indicating high user stickiness. Independent sites (official website/App) are already the core of online sales in each region, especially accounting for nearly 50% in the US. We are localizing and promoting successful domestic models such as the box draw machine and selection globally, while increasing R&D investment to support business growth.

China: Continuously deepening the advantages of WeChat private domain operations.

Americas/Asia-Pacific: Successfully replicating the domestic TikTok live broadcast model, with TikTok sales in the US steadily ranking among the top three in the category, and actively deploying localized platforms such as Amazon and Shopee.

Europe: Previously, the online volume was small, and it will be a focus in the future, with increased investment to enhance the proportion of online revenue.

Q: Are products such as trendy toys (e.g., vinyl) and plush pendants mainly purchased by new customers? After purchasing, do these new customers show a trend of further trying other IPs or categories?

A: The main purchasing force is still old customers, but the growth rate of new customers is faster, showing strong ability to attract new customers. These new customers who enter through vinyl show a very high willingness to repurchase and will try to purchase other IPs. However, it should be clarified that this is not the decisive factor for the growth of other categories; our diversified products themselves have strong appeal to different consumers, who will make their own choices.

Q: Regarding categories such as figurines and plush, what is the update cycle for using new materials and developing new product forms (such as mini-series)? How does the supply chain cooperate with these innovations? In the medium to long term, what specific plans does the company have for R&D, optimization, and related capital expenditures in the global supply chain?

A: The core of our supply chain strategy is to adhere to the "Four New": new materials, new processes, new standards, and new manufacturing. For example, in new manufacturing, we have increased the automation level of partner factories from the industry average of 20% to 50%. At the same time, through horizontal and vertical integrated management, we have maximized collaboration from design to production, creating an agile and flexible supply chain.

Additionally, although we are eager to increase R&D investment in materials, automation, etc., the current market demand is extremely strong, so the primary task of the entire supply chain is still "chasing capacity". Our strategy is: first, increase capacity to a level that can basically meet the market, and then immediately increase investment in fabric innovation, automation equipment, etc. But at this stage, expanding capacity is our top priority.

Q: As brand influence expands, consumer profiles become more diverse, and the main IPs and channel strategies in each market differ. In this context, how will the company develop more differentiated strategies in product and content operations for these diverse consumer groups?

A: Our core is to build a unified ecosystem and provide a consistent consumer experience, with each channel playing different roles:

• Online Box Draw Machine: Focuses on shifting from retention to attracting new users, with the core being to lower the threshold for new users and improve conversion rates.
• Offline Stores: The primary task is to enhance service capabilities under high traffic and vigorously promote standardization to ensure consistent experience.
• E-commerce Platforms (Tmall): The main goal is to establish full-link digital capabilities, using real-time data to inform product and channel decisions.
• Content E-commerce (Live Streaming): Focuses on "humanized" differentiated experiences, building emotional connections through storytelling.

In terms of product strategy, we dynamically manage and precisely match different categories and IPs with the most suitable channels to maximize the effectiveness of products across all channels.

Our most important strategy for the future is to focus on "grouping" centered on IP on the basis of "globalization". This means we will actively expand into diversified businesses such as film and television, parks, and games. For example, in parks, we are rapidly iterating, and even with 50% of the area closed for upgrades, the traffic and revenue of the Beijing park this year have already exceeded the entire year of last year, proving its popularity. We adhere to the principle of "respecting time and management", not blindly expanding, but continuously iterating and optimizing new businesses, and scaling up after the model matures. In summary, diversified businesses centered on IP are our most core growth direction for the future.

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