Good afternoon. This is CFO Sehoon Yang from d'Alba Global.

Thank you for taking your time today. This is scheduled to be a 1-hour session.

About 35 minutes will be spent to go through the slides in our corporate homepage, dalbaglobal.com, and the rest 25 minutes will be spent for the Q&A. Please be noted that the results being presented today were prepared before the external audit was completed and may change during the auditing process.

Our forecasts and related information may also vary with market conditions and strategy adjustments. Also, this earnings call's entire contents will be uploaded in our corporate homepage.

Furthermore, ahead of the Q&A session, we kindly ask for your understanding that we cannot share any non-public material information, such as recent monthly financials. Please refer to page 3.

In the second quarter, we achieved quarterly revenue of 186.9 billion Korean won with 46% YoY growth. The OPM, which means operating profit margin, was 25.3%, totaling 47.2 billion Korean won, which is up 62% YoY growth.

Notably, this marks our record-high quarterly revenue and record-high quarterly operating profit, with overseas revenue proportion also reaching a record high, 76%. Please refer to page 4.

Second quarter revenue grew 46% YoY, and OPM was 25.3%, broadly in line with the 26.4% recorded in the same period last year, with operating profit growing 62% YoY. Revenue grew 9% QoQ, which we believe reflects a strengthening sustainable growth structure as multiple SKUs' rankings on Amazon began to materialize and offline expansion driven by store and SKU number continuing to increase.

The COGS ratio was 23.2%, which is a 0.7 percentage point increase from both last quarter and the same period last year. We view it positively that even as our overall B2B revenue mix rose 4 percentage point from 35% last quarter to 39% this quarter, COGS remained at last quarter's record-low level, especially amid concerns over rising oil prices from the Iran conflict, based on our proactive 6+3 months of safety inventory policy.

However, this oil situation also has caused inventory shortage for polypropylene-based sunscreen tubes, which limited our ability to optimally respond to fast-growing sunscreen demand for Korea, Japan, and Russia. From this third quarter, this sunscreen inventory shortage situation has been normalized, and we expect to be able to fully respond to market demand going forward.

SG&A came in at 51.5%, which is down 3.2 percentage point from 54.8% in the same period last year, mainly driven by scaled economies from increased regional revenue ballparks, financial leverage on certain fixed-cost marketing expenses, and marketing efficiency improvements bringing the marketing expenses ratio down approximately 4 percentage point YoY. Additionally, we recognized approximately 2 billion Korean won in tariff refunds related to last year in this second quarter, and this was recorded as a reduction to freight charges.

We currently see this as a one-off item. Please refer to page 5, Key Growth Drivers.

Our key growth drivers are acceleration of online channel growth, offline expansion, and localized brand campaigns. We were able to observe meaningful results coming from those three areas in this quarter as well.

First, on the left side, regarding overseas online channels, North America, Europe, and ASEAN grew 128%, 235%, and 128% YoY respectively in this quarter, leading overall online revenue growth. This reflects a diversified product portfolio as multiple products, including First Spray Serum, tone-up sunscreen, multi-balm, and Double Cream steadily securing top rankings across key online channels in each region.

Notably, new hero SKUs are continuously emerging in each region, including tone-up sunscreens in Vietnam, multi-balm in Spain, Germany, Canada, Australia, eye patch in Germany, and Vita eye patch in Russia, reducing our dependency on mist and further diversifying our global product portfolio. Our second growth driver, offline channel expansion, is also progressing rapidly.

Store listings expanded from approximately 8,000 stores in the first quarter to over 9,000 stores in the second quarter, an increase of more than 1,000 stores. Store count expansion was led by Matsumoto Kiyoshi and Aeon Mall in Japan, Costco in the United States, KKV in China, and L'Etoile, Rive Gauche, Ile de Beauté in Russia.

In addition, we're working to maximize per-store revenue through SKU expansion, expanded brand dedication shelving, and participation in channel-specific set promotions. Our third growth driver, localized brand campaigns, saw meaningful brand marketing activities tailored to regional characteristics in the second quarter.

In Japan, we held a showcase for eight new SKUs planned for launch in second quarter, targeting key buyers and influencers. In Southeast Asia, we partnered with TikTok Shop to successfully run a sunscreen-dedicated brand campaign in Cebu, featuring influencers from six ASEAN countries.

Please refer to page 6, Regional Sales Breakdown. In this quarter, domestic revenue declined 4% minus YoY, while overseas revenue grew 74% YoY, with North America, Europe, and Pan-China posting relatively higher growth.

Domestic revenue declined QoQ minus 15%, reflecting a similar seasonality pattern to last year when 2025 second quarter also saw QoQ decline due to a high-base effect from strong New Year sales. In this quarter, overseas regions grew in average 20% QoQ and 74% YoY.

Japan marked QoQ minus 2% and YoY 39% growth, while affected by a higher-base effect from strong New Year sales in the first quarter. Revenue continued to grow YoY on the back of a well-diversified channel portfolio.

In Russia, second quarter revenue came in at QoQ 15% and YoY minus 34%. This fell short of the business unit's target, driven by a combination of factors during the diversification of a previously Gold Apple-dependent on-and-offline channel structure, a sunscreen inventory shortage from polypropylene containers supply issues, a Wildberries warehouse incident amid Russia-Ukraine conflict, and the deferral of approximately 3 billion Korean won of the 7 billion B2B Gold Apple shipments originally scheduled for late June into the first week of July.

That said, we're maintaining our previously set revenue target. Europe and North America grew QoQ 49%, 43%, and YoY 242%, 174% respectively.

In both regions, multiple products beyond First Spray Serum, including tone-up, multi-balm, and Double Cream, are now ranking in Amazon's top charts. TikTok Shop continues to perform well as a new dark horse channel, and offline store count expansion at global retail channels such as Costco, Ulta, and Mutino, combined with SKU expansion, is expected to drive larger order volumes.

ASEAN grew QoQ 22% and YoY 99%. Led by Vietnam, our largest revenue country, we plan to sustain solid growth through tone-up sunscreen's progression toward becoming the next hero SKU, rapid growth in TikTok Shop revenue, and further offline expansion through Sephora, Watsons, and Guardian.

Pan-China grew QoQ 1% and YoY 71%. Having completed the establishment of our local China entity in the second quarter, we plan to further accelerate expansion into local online and offline channels, including local Tmall.

Other regions comprised Australia, India, CIS, the Middle East, and Latin America. Among these, India and Australia in particular sustained high growth in the second quarter, up 1,226% and 185% YoY respectively.

Please refer to page 7, Overseas Revenue Growth Trends. All six regions sustained YoY growth with average cumulative YoY growth of 79% in the first half of 2026.

Looking at the first half 2026 cumulative overseas revenue mix by country, Japan was highest at 28%, followed by North America at 23%, ASEAN at 16%, Europe at 13%, Russia at 9%, and Pan-China at 8%, maintaining a fairly balanced regional mix. North America and Europe in particular have seen their revenue mix trend upward, driven by rapidly growing revenue scale.

As B2B revenue mix has expanded rapidly, led by Europe, North America, and Japan, the OPM gap across our six regions has continued to narrow. Stage 2 regions posted strong OPM above 25%, while Stage 1 regions posted OPM around 20%.

This year, for the first time since our founding in 2016, we set regional OPM targets and introduced supporting processes, alongside a number of initiatives carried out with each region, efforts that we believe are translating into positive change. We'll continue this momentum with the goal of exceeding our full-year guidance of 21% of OPM this year.

On revenue growth, the first half 2026 YoY growth was highest in Europe at 230%, followed by North America at 181%, Pan-China at 93%, ASEAN at 69%, Japan at 52%, and Russia at minus 22%. In Europe and North America in particular, a growing number of SKUs are ranking in Amazon's top tier rankings, while TikTok Shop, a newly and emerging dark horse channel, is generating synergies with Amazon through expanding the affiliate activities.

Offline expanded listings at global retail channels such as Costco and Ulta, where sales began in the fourth quarter last year, as well as country-specific specialty retail channels, have led to meaningfully larger reorders, and we expect growth in both revenue and margins to become more pronounced in 2026. Please refer to page number 8.

Domestic revenue grew a modest 2% YoY on the first half of 2026. Among channels, Olive Young, Chicor, and duty-free grew 33%, 655%, and 83% YoY respectively, contributing to domestic revenue.

Second quarter typically reflects a QoQ decline in seasonality due to the high base from large-scale New Year events in the first quarter, a pattern also observed in the 2025. This quarter, online revenue saw a temporary decline, with the first half of 2026 cumulative growth of Naver minus 16%, Kakao minus 5%, Coupang minus 3%, and Kurly minus 28% YoY.

This reflected a temporary sunscreen inventory shortfall from PP container supply disruptions stemming from the Iran conflict, with supply now have normalized from third quarter. Offline grew 44% YoY, and Olive Young, despite a 1.5-month temporary revenue gap from clearing out old-version inventory during the renewal of our steady-seller First Spray Serum, revenue still grew both YoY and QoQ.

In duty-free, we're currently listed at Lotte Duty Free and Shinsegae Duty Free, with Lotte Duty Free exclusively carrying our Vita Toning line, and listing at Shilla Duty Free is planned to begin in the second half of 2026. A newly expanded channel this quarter is pharmacy, where we have completed listings at four independently owned pharmacy stores so far, with discussions underway for entry into the major retail pharmacy chain.

Home shopping is in the process of optimizing the mix between the fixed fee and revenue-sharing fee structure to improve profitability, with broadcast frequency reduced as part of the channel efficiency efforts. Please refer to page 9.

Japan grew 52% YoY on a first half 2026 cumulative basis. In the second quarter, online channels, Qoo10, Rakuten, and Amazon, grew an average 4% YoY, while offline recorded 88% YoY growth, driven by expansion of Matsumoto Kiyoshi and Aeon Mall.

On the right side, in the online channel section, online revenue QoQ growth has remained relatively resilient despite the recent slowdown in K-beauty search trends in Japan, with Korea cosmetics search volume down 30%. Also, while Amazon Japan has begun offering next-day delivery, Qoo10 is known to usually take about 5 business days for delivery, and this can make Qoo10 channel less attractive.

However, as we maintain a well-balanced channel portfolio across Qoo10, Rakuten, and Amazon Japan instead of depending on Qoo10 single channel, we're continuing to construct balanced growth across multiple channels. Heading into summer season, key online channels have seen strong growth momentum not only from our Vita line, but also from liquid panthenol sunscreen, sun mist, and sun powder, all newly launched in the second quarter.

Regarding offline, Matsumoto Kiyoshi added approximately 450 new store entries, and Aeon Mall added 150 stores. At Shibuya Don Quijote, SKU number was expanded to 35, and mist, previously sold only in a 50 ml size, now also comes in a 100 ml size as well, further strengthening our shelf presence within this channel.

We expect store count to expand to 5,000 in Japan by the year-end, and next year, we plan to enter into Welcia, a channel with over 1,000 stores. Please refer to page 10.

North America grew 181% YoY on a first half 2026 cumulative basis, driven by multiple SKUs achieving top rankings in product category charts and larger order volumes coming from offline expansion. Regarding online, on the right side of the slide, Amazon and TikTok Shop continued to drive growth in the second quarter as well.

During Amazon Prime Day in June, First Spray Serum ranked 63 in the beauty category, while multi-balm, grinding cream, and tone-up sunscreen also ranked in the top tiers of their respective product categories. Canada also sustained high growth, with Amazon revenue growing 252% YoY.

During Canada Prime Day, First Spray Serum ranked number 1, and multi-balm ranked number 7 in the beauty category. Regarding offline, at Ulta, where we are selling across the entire 1,450 stores, shelf expansion discussion is progressing.

In the US Costco, we're selling in 225 stores as of the second quarter, and store number will expand to 450 in the third quarter and then entire 625 stores in the fourth quarter. Canada Costco is currently selling in 50 stores and will expand to all 120 stores by the year-end.

Also, Canada Sephora will start selling our products from fourth quarter. Please refer to page 11.

Europe grew 230% YoY on a first half 2026 cumulative basis. The first half 2026 cumulative revenue reached 34.3 billion Korean won, already approaching the 45 billion Korean won previously planned full-year target.

Currently, Europe is the region where we're seeing the most active momentum regarding Amazon's top chart rankings for multiple products and offline channels facing increasing follow-on reorders. On the left revenue graph, Germany and Spain, together with Italy and the UK, account for about 90% of our first half cumulative Europe revenue, with the remainder coming from France, Poland, and other Pan-European B2B revenue.

Regarding online, on the right side of the slide, Europe Amazon revenue grew 139% YoY in the second quarter, with First Spray Serum and multi-balm defending top-tier rankings in the Amazon beauty category across Germany and Spain. In the UK, expanding TikTok Shop affiliate activity drove significant QoQ revenue growth centered on First Spray Serum and tone-up sunscreen, and UK TikTok Shop is now generating daily revenue at a level similar to Amazon.

Regarding offline, Spain and France Costco added multi-balm and tone-up sunscreen following First Spray Serum, and follow-on reorders from UK, Iceland, and Sweden Costco are expected to be recognized as revenue in the third quarter. In June, we started to sell from 100 Druni stores in Spain, and new entries are expected in this second half for Boots in the UK, Douglas in Italy, and Rossmann in Germany and Czech Republic.

Please refer to page 12. Russia declined 22% YoY on a first half 2026 cumulative basis, mainly reflecting temporary supply and shipment issues.

Approximately 3 billion Korean won of the Gold Apple shipment originally scheduled for the last week of June was delayed to the first week of July, and Wildberries warehouses were attacked from the war situation. In addition, a temporary sunscreen inventory shortfall from polypropylene container supply issues disrupted supply, resulting in a 26% YoY decline in online revenue in Russia.

We view these factors as temporary. 10.5 billion Korean won amount of Gold Apple's third quarter order volume was received, which is about 50% QoQ increase, and sunscreen inventory has been now normalized.

Offline sellout demand also remains solid, and we're maintaining our previously set revenue target. Despite the war situation, our efforts to diversify our revenue structure across multiple on-and-offline channels in advance, instead of depending on Wildberries or Gold Apple, is making us remain positive for our upcoming periods.

Offline stores expansion is also progressing smoothly as planned. In the second quarter, we added 23 new Rive Gauche stores, 58 Ile de Beauté stores, and 100 L'Etoile stores.

In the second half, our signature product, Aubeceous, is scheduled for an exclusive launch at Gold Apple. Please refer to page number 13.

ASEAN sustained high growth, generating 69% of YoY on a first half 2026 cumulative basis. In Vietnam, our largest revenue-generating country in ASEAN, tone-up sunscreen has stepped up as a new hero SKU following First Spray Serum, with the first half cumulative revenue already surpassing last year's full-year revenue.

TikTok Shop revenue mix is also rapidly increasing, now reaching roughly one-third of the level of Shopee. On the left graphs, revenue mix by country breaks down to Vietnam 52%, Indonesia 17%, Philippines 10%, and Malaysia, Singapore, Thailand combined 7% respectively.

Regarding online, on the right side of the slide, solid growth was sustained, centered on Shopee and TikTok Shop, following the first quarter, growing 128% YoY. By country, Vietnam, Malaysia, Thailand revenue grew YoY 169%, 51%, and 48% each.

In the second quarter, we successfully ran a brand trip in Cebu with TikTok Shop, featuring influencers from six ASEAN countries. In Vietnam, our largest revenue country, First Spray Serum maintained top rankings, reaching rank number 1 in Shopee skincare category and rank number 2 in the overall beauty category.

Regarding offline, it grew 65% YoY in the second quarter, with Vietnam Hasaki store number expanding from 310 stores last quarter to 334 stores. In the second half, we plan to begin with approximately 200 new store entries at Watsons Malaysia, with discussions underway for further expansion.

Please refer to page 14. Pan-China sustained high growth, generating 93% YoY on a first half 2026 cumulative basis.

Regarding online, on the right side of the slide, Douyin and Tmall grew 156% and 90% YoY respectively in the second quarter, driving 101% YoY growth for overall online revenue. Notably, during Tmall 618 June 18th campaign, tone-up sunscreen ranked number 28 in the base and tone-up cream category, and First Spray Serum ranked number 82 in the toner category.

Regarding offline, we continued to rapidly expand store numbers led by key beauty channels. In this quarter, we added approximately 300 KKV stores, 53 Colorist stores, and 150 Sanfu stores, further expanding our offline distribution network.

This offline expansion trend is expected to continue in this second half. Having completed the establishment of our China subsidiary in the second quarter, we plan to further strengthen our business foundation in Pan-China by expanding into channels that require a local entity and related licenses, such as local Tmall.

Please refer to page 15. Meaningful progress continued in the second quarter across three key pillars of our long-term growth strategy.

On the left side, regarding emerging regions, our three key emerging regions such as India, the Middle East, and Latin America recorded combined first half cumulative revenue of approximately 5.2 billion Korean won, already surpassing last year's full-year revenue. India recorded 1,226% YoY revenue growth in the second quarter and is expected to begin selling at Nykaa, a major beauty channel.

The Middle East grew 36% QoQ in the second quarter, led by Amazon, and continues to maintain top-tier rankings in the mist category. In Latin America, we're opening up B2B opportunities beginning with a direct listing at Sephora Mexico, finalized in the first quarter, and plan to further expand our revenue base into South America, including Brazil, where we recently participated in a brand zone during the presidential visit.

Regarding adjacent new businesses, beauty device, makeup, and hair and body grew minus 19%, minus 32%, and 46% YoY respectively. Device revenue has been very strong in the last year second quarter due to new launching promotions for Kakao Live and Kurly, but now is on track for a Season 2 launch in fourth quarter, and we expect greater revenue growth next year.

About makeup cosmetics, key SKUs are going through a total renewal process, making interim performance stagnant. Additionally, in July, a strategic equity investment was made for premium fragrance brand Coucou and we'll walk through details on the next slide.

Regarding the high-value SKUs, the d'Alba Signature line continues to show steady revenue growth domestically through brand marketing activities, including shopping shots and pop-ups centered on department stores and Chicor. Notably, in the second quarter, d'Alba Signature revenue in Vietnam has climbed to over 5% of the country revenue, exceeding our expectations, and we expect further growth across ASEAN going forward.

The Vita Toning line continued to hold the first ranking in the bundle category on Rakuten Japan for a second consecutive quarter and is making a strong global customer space, including the rank number 2 in the Vita eye patch category at Rive Gauche Russia and the rank number 3 for Vita Toning Serum Toner in the toner category on Shopee Vietnam. Please refer to page 16.

Equity investment in the premium fragrance brand Coucou was made on July 29th. Regarding the deal background, we believe that K-fragrance can become a next trend after K-beauty to gain more momentum in the global market, and decided to invest in Coucou based on its differentiated premium positioning, brand competitiveness, global scalability, and synergies between two companies.

Founded in Seongsu-dong in 2019, Coucou is a premium fragrance brand with a distinctive brand identity, drawing inspiration from gastronomy and ingredients to compose scents the way a chef crafts a dish. Beyond premium domestic channels such as Seongsu, Samcheong, and The Hyundai Seoul, Coucou has expanded into premium overseas distribution in Japan, Hong Kong, and Taiwan, also has recently confirmed to enter into Lucky Scent, a leading niche perfume retailer in North America.

Revenue has also grown rapidly, posting a 146% CAGR from 2023 to 2025 and reaching approximately 5.2 billion Korean won revenue in the first half of 2026. On the key investment terms, together with a financial investor, we're acquiring both new and existing shares of Coucou for a total investment of 14.6 billion Korean won, securing an approximately 34% stake.

We have also secured a call option right to further expand our stake up to 90%, starting 3 years after the investment. However, the two founders will continue to lead management after the investment, and Coucou's independent brand identity and operations will be maintained.

Throughout this investment, we aim to gain meaningful exposure to K-fragrance as a next growth axis while building synergies based on premium brand positionings and global scalability that both companies can bring together. Please refer to page 16, Product Sales Mix.

Mist revenue proportion decreased 1.9 percentage point QoQ to 41% in second quarter, while sun care rose approximately 2 percentage point QoQ to 26%. Home beauty device and others rose 0.8 percentage point QoQ to 15.3%.

Please refer to the last page, 17, Consolidated Financial Statements. Total assets amounted to 339.9 billion, up 84.6 billion from 255.3 billion Korean won as of fiscal year 2025, and total equity amounted to 251.8 billion Korean won, which is up 53.2 billion Korean won from 198.6 billion Korean won as of fiscal year 2025.

On the income statement on the right side, on a preliminary basis, the first quarter 2026 cumulative revenue was 358.1 billion Korean won, operating profit was 92.3 billion Korean won, and net income was 74.4 billion Korean won. Please note these figures do not yet incorporate IFRS 18, which will be applied starting next year.

Upon adoption, foreign exchange-related income and expenses are expected to be additionally reflected in operating profit. Now this concludes our presentation of the earnings resource materials.

Thank you very much for your attentive listening, and now we'll move on to the Q&A session.

While we are waiting for the questions, I can comment on previously asked questions and our answers that were launched in our Korean conference call. The first question was related to Korea and Russia, asking whether those two regions' performance can be enhanced in the third and the fourth quarter.

Our answer is that basically our seven core regions, which means six global regions and Korea, will follow similar seasonality path that has been found in last year. Which means if you check our last year's quarterly financials, you'll find Korea and Japan slightly sluggish or generated minus QoQ or somewhat flat-ish.

That trend is likely to happen again in this quarter. However, we also see some positive sides from those two regions as well because second quarter's somewhat lower than expected results were coming from temporary reasons, mostly the shortage of polypropylene-related sunscreen package, so that led to under-supply.

Despite the rising demand, we were not able to maximize our revenue opportunity. The second temporary point was the renewal of our First Spray Serum in Olive Young.

That has been also normalized, too, we're seeing some positive sides regarding those two temporary reasons. Regarding Russia, shipment delay of Gold Apple was also a reason, and also the strike on Wildberries inventory storage was another temporary reason in combination with polypropylene-related sunscreen tube shortage.

Except for Wildberries situation, we think in Russia, those temporary factors have been normalized, and we're seeing very solid quarterly sellout trends in major Russian channels, such as Gold Apple and Ozon and other channels, plus we see elevating Gold Apple order sizes in this quarter. Recently we received 10.5 billion Korean won worth of this quarterly new order, which has been around 5 to 7 billion Korean won on quarterly basis historically from Gold Apple.

Now we're seeing much larger revenue upside from key channels in Russia, too. I'm saying despite the second quarter performance, we expect there is a decent possibility that we can recover from those dips that we have found in the second quarter from those two regions.

The next question was color on regional expected growth in the third quarter on general basis. We think if you look at the last year's quarterly financials, you'll find Korea and Japan somewhat flat-ish or minus, but other regions we think they will make a sound growth in this third quarter.

Especially Europe and North America and ASEAN and plus Pan-China is expected to generate decent growth over comparing to second quarter in the third quarter. Whereas Korea did about minus 10% QoQ, so that can possibly happen again in this year, too.

Also next question was our view on the third quarter and annual guidance. Our response to that question is we think about 170 billion Korean won in the third quarter and the 21% of OPM is our current expectation for the third quarter.

That is based on last year's seasonality and business perspectives, given that last year our revenue was around 110 billion and operating profit margin was around 14%. It suggests about 3 percentage point operating profit margin improve and about 50% of YoY revenue increase.

Of course, there is a possibility that we may over-achieve the third quarter guidance, but we do not want to be over-optimistic given the macro uncertainties that we have mentioned, such as a war situation and oil crisis and some of the macro K-beauty trend search keywords are going down like 30% in this quarter in Japan. Despite that macro trend, we believe we have generated quite sound performance in Japan relative basis as well by defending our top-three position in Qoo10 Megawari and expanding successfully in key offline channels that we have entered into.

We're doing relatively better than some of the other K-beauty brands in Japan and ASEAN, but we have incorporated those macro trends into our third quarter guidance. However, we want to remind you that our second quarter guidance was 170 billion Korean won and 23% of OPM, we always try not to be over-aggressive in terms of providing guidances.

Regarding annual guidance, based on that background, it will be 725 billion Korean won revenue and 21% of operating profit margin. Previously our 2026 guidance was 700 billion revenue and 21%.

Of course, after the release of the third quarter earnings, there is a possibility that we can revisit our annual guidance. The next question was related to the reason of human resource-related cost going higher and transportation cost going higher.

Regarding HR cost, in the second quarter, our head count was about 180— in the last year, in the same period, our head count was about 180, but now our head count is approximately 250. We think that is related to increased HR cost.

Also, in order to strengthen our global sales organization, we have been actively recruiting foreign nationalities and global staffs to further strengthen our global capability. Those will be key reasons that explain HR cost increase.

Regarding transportation cost, we think on a higher level, for the structural reason, it is the revenue proportion coming from more far regions, such as Europe and North America, is getting higher. On a higher level, we're likely to see gentle increase of our company-level average transportation cost proportion.

However, we're also successfully incorporating some of the transportation cost-saving efforts, such as lowering the air shipment proportion for Japan business and using more of a vessel-oriented transportation, plus achieving local sales license for our Japan subsidiary, which will effectively drive down our Japan logistics cost proportion more than 5 percentage point starting from this third quarter. Incorporating those efforts, we think we can effectively control our freight charges cost proportion to prevent that cost item to drive up too aggressively.

I have two or three more questions that can be addressed, and one of them is given that this year's North America Prime was launched in late June instead of July last year, the question was related to whether we're seeing slightly conservatively regarding third quarter performance in North America. Our answer is no, because despite that we now have had Amazon Prime in the second quarter instead of third quarter, we still see very positive momentum coming from key on-and-offline channels, especially in North America.

For example, our Vita Toning Toners, volufiline grinding night creams, and multi-balms are rapidly rising up in the product category charts. Plus, our TikTok Shop channel is growing very rapidly.

Even though our US TikTok Shop revenue is less than 1/10 of daily United States Amazon revenue, but it is going up, contributing a lot for the unlocking the growth potential for North America. Also, we're seeing US Costco number of stores gradually going up, which was around 250 last quarter and it's going to go up to 450 in this third quarter and will expand to 650 by the end of this year.

Also we're successfully expanding the number of SKUs for Ulta, which was only seven SKU in average, but we're expecting to have around 15 SKUs by the end of this year. Given those factors, despite Amazon Prime was launched in the second quarter in North America, we maintain our optimistic view regarding North America for the third quarter as well.

The next question was related to our equity investment in Coucou, asking whether Coucou is in a profit-generating status or not. When we were looking for investment target, we were looking for a target that has decent profit structure, at least doing better than BEP status.

Coucou was one of them. Last year, they generated more approximately 10% of operating profit margin ratio.

This year, they target to achieve more than 10 billion Korean won revenue on a yearly basis and more than 10% of operating profit margin this year, too. We are going to continue monitoring the profit structure and revenue expansion status for Coucou closely, trying to maximize the potential business strategy via synergy between two companies.

However, the Coucou itself will be operated independently by two original founders. The last question that I want to address is related to shareholder return.

We have announced three-year corporate value maximization announcement, which includes three-year dividend payout ratio minimum 25%. That 25% will include cash dividends plus stock cancellation.

This year, we're positive that we can achieve higher level than our minimum criteria. Far, we think the ballpark can be around 40%, very similar to that of last year.

Regarding 20 billion Korean won tax-free dividend payout, we actually have considered launching that 20 billion Korean won tax-free dividend payout by the end of this year. However, after prudent legal review, we decided to launch that in the regular shareholders meeting in the next year March.

That 20 billion tax-free dividend payout will be executed in the next year March. Plus, additionally, we are considering to also provide non-tax-free cash dividend payout as well in the March, which needs to be currently reviewed, and we'll provide additional visibility if our internal discussion makes a good progress.

These were mostly key questions that have been answered in Korean language conference call. If you have any other questions, please let me know.

We will wait for one more minute, and if there is no any other question, we will conclude this call. Okay.

Now this concludes our earnings call. Thank you very much for your participation.