Good morning, everyone. Welcome to the H&H Group 2025 annual results presentation.

In 2025, against a challenging macroeconomic environment compared to 2024, our three business segments have returned to our growth track. I would like to thank the management for the great effort.

Our full year revenue grew by 10.3% year-on-year, and we have seen significant increase for adjusted net profit and EBITDA. We continue to maintain strong cash conversion.

We have seen that our leverage ratio has been reduced greatly from four times in 2024 to 3.45 times. I would like to highlight several milestones.

As we know that 2025 marks the 10th anniversary of acquisition of Swisse, and in 2025, our revenue sales for Swisse has exceeded 1 billion, which is a milestone for us. In China and Australian market, we have achieved number one position.

This is great achievement after 10 years of acquiring Swisse. Swisse is now number one in both mainland China and Australia.

In 2025, we have started to see the active reduction of the Daigou business in Australia, and at the same time, we have achieved Australian domestic market sales increase. For the Chinese market, we have also seen the double-digit growth for Swisse.

We are very happy to see the sustainable growth of our Swisse business. Secondly, about the BNC business, as we know that there is a cutover of GB in 2024, and now our business has resumed strong growth.

In 2025, we have achieved 17.1% of growth for our super-premium infant formula segment. Our IMF growth momentum is quite strong as well.

We are very happy to see that probiotics and pediatric nutrition business, our PNC bus- BNC business has seen 20% of growth as well. This is for BNC.

Thirdly, about the PNC business, which continued to grow. The supplements for pets has achieved double-digit growth.

In 2025, our PNC business has accounted for 15% of our group's total revenue, which is a new milestone for us. We have seen great achievement for the three segments.

At the same time, we continue to make sure that we have strong operating cash flow to support our deleveraging effort. We have continued to maintain our dividend payout policy.

For the end of the year, for the whole year, we can maintain 30% of our dividend payment ratio. We will be paying HK$0.35 per share.

We have also made a new three-year plan to make sure that we'll continue to invest in our three business segments so that we can return the values to our shareholders, consumers, and the society. Lastly, I would like to thank the investors and our long-term banking partners for your continuous support.

Thank you. Now I would like to pass the floor to Suceka for the details.

Good morning. I'm Suceka.

I would like to turn your attention to page 6. Just like Mr.

Luo said that we focus on growth, we need to answer the first question: where does the growth lie? We persevere in the stem innovation.

We believe that the insight of consumers' demand, as well as the conversion of science to solutions that cater to the needs of the consumers, has been the momentum for growth for us. Here you can see that every year we have launched new products.

For example, for our ANC business, in the past three years, we continue to focus on our core products. We have Little Swisse, which focus on the growth needs of children.

We also have Swisse Plus that anchors the anti-aging segment. Age-wise, Little Swisse and Plus and Swisse together can enable us to cater to the needs of customers of different age groups.

At the same time, it can help us to lower the volatility of a single category or single segment, which is what we call systematic innovation. After COVID, we also tap into vertical segment.

For example, the magnesium tablets, which is based on our insights for the anti-pressure and insomnia, as well as sports recovery. That's why we have a very outstanding performance in Australian and New Zealand markets.

In the future, we will continue to deepen our insights and research, as well as consumer behavior to lead this trend. For BNC, we continue to take roots, and our experience in the past 20 years, we have long-term research for milk, and we continue to launch the newly upgraded IMF based on the new GB.

We are the ceiling for the newborn baby formula. We have also promoted our new products for pediatric probiotics.

For PNC business, we uphold the spirit of scrutiny and the science-driven innovation. We have promoted the probiotics for pets in the US, and in China, we also have the whey protein products.

For different BU and different segment, we continue to stick to scientific innovation and speed up our launch-to-market speed. We have combined big data and AI to increase our product-to-market speed, and innovation will continue to be the engine for our future.

On page 7, as Mr. Luo said, in 2025, we have seen lots of highlights for our performance.

Our revenue grew to RMB 14.3 million, and it went up by 10.3%. We have a positive growth for three business units, and our adjusted EBITDA margin is 14.3%.

Adjusted net profit margin is 4.6%. The growth rate for net profit growth is 22.7%, and we continue to enhance our capital efficiency.

We are very strong cash flow conversion. We have 88% of operation cash flow as of the adjusted EBITDA, which shows our efficiency increase.

We continue to deliver our promise for dividend payout. Our whole year dividend is HK$0.35 per share, which includes an interim dividend of HK$0.19 and a final dividend of HK$0.16.

Our dividend payout ratio is 30%. On page 8, you can continue to see our deleveraging highlights, and I will not elaborate on that as Mr.

Luo has already mentioned it. Now I would like to walk you through the overall performance for 2025.

In terms of product category, nutritional supplements continue to be our core business. It accounted for 64.7% of our 2025 revenue mix, increased by 5.6 percentage points.

For IMF, after the cutover to the new GB, we have seen the growth coming back, which achieve 26.5% of like-for-like growth. This has showed good momentum for our growth and has given us lots of positive profitability contribution.

In terms of nutritional supplements overview, VHMS has grown by 4.3%. For pet supplements, it grew by 14.3%.

As you can see that after the M&A, PNC has accounted for 16.7% of our nutritional supplements revenue. Lastly, in terms of the pediatric probiotics and supplements products, we have realized a positive growth, 2% of growth on a like-for-like basis.

The market share position has been consolidated in the Chinese market. On page 11, you can see the revenue mix by geography.

China continues to be our biggest market, accounting for more than 70% of our revenue. It grew by 17.5%.

The main contribution is from the strong rebound of our IMF, as well as the double-digit growth of our Swisse business in the mainland China market. It continued to consolidate our leading position in China.

North America has become our second-biggest market, accounting for 12.1% for our revenue, and we have seen 7.5% of year-on-year growth. For ANZ market, accounts for 11% of our revenue.

It decreased by 20.2% due to our active adjustment of our strategy. In 2025, the corporate Daigou channel was actively adjusted.

We want to return our focus to the more controllable business, which is the retail platform as well as the e-commerce platform business. This is an active risk management from our side.

If we look at the domestic ANZ market growth, we are very happy to share that we have realized high single-digit growth. At the same time, for the ANZ domestic market, we continue to enhance our overall market share.

For other markets, it accounts for more than 5% of our revenue, realizing 14.7% of year-on-year growth. These new territories will become the new momentum for our growth.

Back to page 12, you can see our 2025 revenue mix and growth by business segment. All three segments have realized positive year-on-year growth.

For ANZ, the growth was 4.4%, BNC 20%, PNC 8.7%. We have stabilized the mix of three business.

All three businesses segments have returned to healthy growth trend, which lay a solid foundation for our growth in the coming three years. Now let's take a look at the performance review by geography.

China continued to be the main market for ANZ and BNC. For North American market, the PNC business was the biggest contributor.

We will consolidate our core market, and at the same time, we will support the branding and campaigns in different markets. We are very happy to share that for our expansion markets, our ANC revenue mix is over 7%.

For Europe, Asia, and ANZ, the BNC revenue is around 6%. The expansion markets enhancement would serve as the growth engine for our future so that we can diversify our market strategy.

On 13 and 14 pages, you can see our EBITDA. For our EBITDA in 2025, margin was 14.3%.

ANC continues to be the core profitability contributor, accounting for 67.4% of our EBITDA. Our EBITDA margin is around 19.9%.

The decline was mainly due to the Daigou channel as well as the Douyin channel in the Chinese market. For BNC business, after the cutover to GB, BNC has realized EBITDA margin enhancement from 9.9% contribution to more than 10% in 2025 and is mainly driven by the IMF as well as the probiotics.

For PNC, our EBITDA margin in 2025 was 3.1%, mainly contributed from Zesty Paws as well as the investment in the expansion markets. The revenue was driven by such factors.

For the China market, we had been impacted by tariffs in 2025. On page 15, you can see the EBITDA margin by market.

For ANC, the EBITDA margin has seen a moderate decline, but if you look at the EBITDA margin by market, ANZ was impacted by the Daigou business shrink, but still has a 30.6% of EBITDA margin. The Chinese market with the Douyin platform, we still have maintained a stable EBITDA margin at 18.6%.

For the expansion markets, ANC business has seen an optimization, which is almost flat compared to that of last year. For PNC business in North America, adjusted EBITDA margin was about 10.9%.

The decline was mainly because of the investment of Zesty Paws in channels as well as the new products. For other markets, it was mainly impacted by the tariffs in the Chinese market.

If we look at the product structure, the gross profit margin products has accounted for more than 30% for PNC. Now I would like to share with you the performance by geography and some highlights.

For the Swisse in China, we have maintained a strong growth, and we have seen a revenue growth of 13.3%. Swisse, after entering China for 10 years, ranked number one in overall VHMS or ANC business in the Chinese mainland.

Douyin channel grew dramatically by more than 70%, and the Douyin channel, Swisse ranked number four. New retail channel is also one of the key driver for growth.

The revenue grew by 30% approximately, contributing 8.7% of the total ANC sales in the Chinese market. Little Swisse and Swisse Plus have seen a very strong growth, contributing more than 30% of revenue growth, which can realize our mega-brand strategy.

Page 18, with the Biostime IMF cutover to the new GB, we have seen the returning of growth. Our IMF revenue grew by 28.3%, outpacing overall IMF market in retail sales.

In terms of the super-premium IMF segment, our market share has risen from 13.3% to 17.1%. In quarter four of 2025, this growth of market share has accelerated to 19.5%.

Our stage one and stage two IMF has outpaced the market average growth rate, which has proven the correctness of our strategy. Pediatric probiotics and kids nutritional supplements in Chinese mainland has recorded positive growth, 2%, which has helped us to retain our number one position in the Chinese mainland pediatric probiotic market.

For the PNC in the Chinese market, the revenue maintained high single-digit growth, 8.6%. The revenue decline was mainly due to the tariffs impact in 2025, which has posed pressure on our profitability.

We have actively launched our localization strategy for PNC, and in 2026, our products will be switched to made-in-China products, which will have a strong impact on the sales of our PNC products in the Chinese market. With such optimization, the high-margin pet food and supplement products contributed more than 35% of our total PNC revenue.

The supplement products for PNC, revenue grew by 122%. Solid Gold dietary fiber ranked top 10, which has shown the potential for PNC supplements in the Chinese market.

On page 20, you will see the performance of the ANZ market, which is quite stable. We have realized 5.8% of domestic sales.

We have actively adjusted the channel sales, for the ANZ market, the revenue decreased by 20% due to the deprioritization of corporate Daigou business. Swisse will continue to expand its market share, and it's attributable to the innovative products.

For example, the Swisse magnesium and glycinate, as well as the Little Swisse. We have deep insights of our consumers' behavior, which contributed to the success of the local market in the ANZ market.

Next page, you will see the North America market performance. The revenue grew steadily by 7.5%.

For Zesty Paws, we have expanded into Amazon, Chewy, and offline channels. It grew by 12.8%, and it accounts for more than 85% of North American market growth.

We also can see that in the second half of the year, Solid Gold has stabilized its decline around -13.1%, and the e-commerce contributed 83% of our sales. High-margin products contributed 37.4% of our total Solid Gold sales in North America.

What's noticeable is that Zesty Paws and Solid Gold have been launched and present in more than 20,000 and 40,000 stores respectively across the US, including Petco, Walmart, and the major retail channels, which is a very good foundation for our future growth in North America. On page 22, you will see the performance in other territories.

In Asia, our supplements products have carried on its growth momentum. Revenue grew by 53.9%.

For Hong Kong, Thailand, Malaysia, India, and Middle East have shown highlights in growth as well, which is a very good foundation for our future growth as well. For Swisse in Singapore sustained number one position in liver health and men's health.

In terms of the European market, we have stabilized our revenue in 2025, and Swisse ranked number two in the beauty VHMS market in Italy. Biostime retained number one position in organic IMF category and goat milk market category in French pharmacy channels.

Zesty Paws has entered EU and UK markets through our omnichannel strategies. We are also very happy to share with you our achievements in sustainability in 2025.

We continue to show our commitment to ESG, and we have also advanced our sustainability effort together with the suppliers. We continued to step up in reducing carbon emission, providing a good workplace for our employees, and the well-being of our employees.

The Hang Seng and MSCI ranking is standing at A+ and AA level respectively. Our Singapore office has been awarded as a company of Good 3 Hearts as well.

We will continue to create values in sustainability aspect. Following this, I would like to share with you our 2026 strategy and outlook.

For 2026, our strategic direction remained the same. Growth would continue to be our first priority, and we'll continue to deleverage our business to realize sustainable growth and healthy profitability level.

For the ANC business in the Chinese mainland market, we will continue to invest in our core brands and categories and reinforce our number one leadership through sustained investment. For Swisse Plus, Swisse Me, and Swisse will continue to bring meaningful innovation to our consumers, and we will expand our presence in high-growth channels, including Douyin and new retail.

For ANZ and expansion markets, we will strengthen our domestic leadership through innovation and channel expansion. For the new expansion markets, especially in Thailand, Italy, and Indonesia, we will continue our strong growth, and at the same time, we will focus on the profitability improvement.

For the BNC business in the Chinese mainland market, we'll focus on the new mother education and our stage three IMF conversion based on our stage one and stage two advantage. We'll continue to gain share in super-premium IMF segment, and we'll leverage our world's number one position in pediatric probiotics, and we will extend our probiotic portfolio in the Chinese mainland market so that we can offer a full lineup of nutritional products for our consumers in the Chinese mainland.

For the PNC market, for our core market, which is North America, will strengthen our native probiotics and Zesty Paws' leadership in this market. We will also drive the growth in premium pet food category.

In the Chinese mainland market, we continued the localization of supply strategy, which is expected to be completed by the end of 2026, and we'll focus on the new high-margin supplements categories of Solid Gold. We will also continue to expand Zesty Paws into new markets, including Europe, UK, Asia, and ANZ market so that we can step up in our efforts of our globalization of this business.

In summary, we'll continue to uphold the strategy of premiumization, innovation, and diversification, and realize healthy growth. We're very confident about the realization of our 2026 market.

Now I would like to pass the floor to Jason for the financial highlights.

Thank you, Suceka. I will give you more details about the financial data.

On page 28, you can see the P&L summary of the group. As Mr.

Luo and Suceka said, that in 2025, our sales revenue and the adjusted net profit margin have realized double-digit growth. In our financial statements, we have carried on our good practice.

The one-off and the non-cash-based adjustments have been listed separately and clearly in 2025 for adjusted EBITDA and adjusted net profit. The main adjustments are three items.

The first one is that in the 20- in January 2025, we have the new US dollar bond issuance, and there was a redemption of the old bonds, which is around 224 million RMB. This is to help us to save financial expenses with the new bonds.

At the same time, it can extend our duration of our US bonds by 3.5 years. It gives us a very good status for our balance sheet.

This 224 million redemption expense is beneficial to our financial health. The second-biggest adjustment is the 106 million depreciation for the goodwill.

The goodwill business is still in operation, but from the prudent financial principle, in 2024 and 2025, for Dodie goodwill and Aurelia goodwill have been depreciated so that our balance sheet can maintain a healthy status. The third-biggest adjustment is the 83 million of the fair value change due to the hedging tool.

In the beginning of 2025, we have completed the refinancing for loans and bonds, and we have done a cross-currency swap for our US exposure. Our US exposure exchange is fixed at 7.2 to 7.5.

As we know that RMB to US dollars appreciated to 1.7. That's why there's a fair value variation.

We have benefited to such hedging tool. In 2025, our interest expense for US dollars have given us two percentage points of savings.

That is around $12 million of savings. Believe such a financial hedging tool can help the group to save interest spending, and at the same time, it can help us to mitigate the foreign exchange exposure.

These three major adjustments are one-off and non-cash-based nature. I would like to remind the investors why we have listed the adjusted net profit EBITDA, which can be the KPI for our performance.

This reflects the real business operations and the results of our operations. Page 30, you can see the gross margin by product category.

We're very happy to see that in 2025, all the product categories' gross profit margin have realized optimization. This is because we continue to optimize our product portfolio, and we have enhanced our supply chain management efficiency to reduce our procurement cost.

The gross profit margin for IMF declined slightly, mainly because we have adjusted the IMF structure, and also in 2025, to make sure we have in-time supply, we have some additional airfreight expense, which is necessary to make sure that we can expand into new customer group and grasp the market opportunities. If we exclude the airfreight factor for IMF, the normalized gross margin is around 57%.

In summary, all the gross profit margin for different categories have maintained at a very healthy and sound level. Next page, you can see the selling and distribution expense ratio for sales.

It increased by 0.9 percentage point. For BNC, S&D ratio optimized by four percentage points is because our IMF has successfully been cut over to the new GB, which help us optimize greatly our investment in branding and channels.

In ANC, as we can see that S&D ratio increased due to three reasons. Firstly, in the Chinese mainland market, our Douyin channel contribution increased, as Suceka has mentioned.

Also we have invest in our strategic expansion. The third factor is that for our BU structure, as we have mentioned, our Daigou business contribution has been actively adjusted so that our S&D expense ratio have been increased.

For the PNC business, in 2025, the S&D ratio also increase moderately. This increase is also because of three reasons.

The first one is that in 2025, our core market, which is North American market, we have enhanced our investment so that we can promote the launch and the innovation of our new categories, which includes diffuser, dental control, and other new products. Secondly, we have stepped up our investment to make sure that our core market channel expansion can be secured.

For example, in North American market, we have expanded into vet market and TikTok. Thirdly, in 2025, we have increased our investment in expansion markets.

We're mainly talking about European market, Australian market, as well as Southeast Asian market. We believe these investments are necessary and useful in speeding up our overall growth for our PNC business.

Next page, which is page 32, you will see the administrative expenses. We continue to enhance our efficiency for administrative expenses.

Admin expense ratio declined in 2025 by 0.2 percentage point. Page 33, you can see our working capital analysis.

In 2025, we're very happy to see our receivables and inventory turnover days have been optimized, and I would like to point out the inventory turnover days for ANC, BNC, and PNC have seen drastic improvement and it's thanks to the effort in the improvement of our supply chain. For payable turnover days has been quite stable, our working capital has been quite sound and healthy, which can help our group to continue to maintain at a high cash flow conversion.

In 2025, 88% of our EBITDA can be converted to the operating cash flow before tax, which gives us very good cash status to support our business development and deleveraging effort. Page 34, you can see our liquidity status.

At the end of 2025, we realized 1.7 billion of cash position. In 2025, we have decreased more than 6 million of debt, and we have paid 104 million of deposit to the tax bureau in Australia.

This gives us a very strong cash base to support our business development, and at the same time, this year, we would be able to accelerate our deleveraging effort. On the right-hand side, you can see the more than 100 mil more than 10 billion of undrawn facility, if it's necessary, we can utilize these facilities.

We're very happy to say that we have maintained a very good liquidity status. Lastly, on page 35, you can see our overall debt situation.

On the left-hand side, you can see that on one hand, we have reduced our overall debt by the 600 million, and on the other hand, we have optimized our debt structure. Here you can see that the RMB-denominated debt accounts for around 40% of our total debt.

For the cost and expense, our interest expense in 2025 have seen a 100 million of decrease to 550 million. If you look at the interest rate, one year ago is around 7%.

By 2025, the number was below 6%. It was 5.6- 5.96%.

This help us to continue to optimize our debt structure, and in 2026, we will also continue to do the optimization of our debt status. On the right-hand side, you will see our leverage ratio curve in the past years.

For our investors, the leverage ratio is the debt divided by EBITDA. Two years ago, our leverage ratio was around four times, was relatively high.

By the end of 2025, this number was lowered to 3.45 times. Based on our business and financial outlook, we maintain our guidance for 2026.

We are very confident to lower our leverage ratio to around three times. We are very happy to see that we have realized our targets for 2025, which includes revenue and profitabilities double-digit growth, and at the same time, we have maintained healthy cash flow and deleveraging effort.

In 2026, we are very confident to continue such kind of good momentum and continue to return to our shareholders. Thank you.

Now we will start the Q&A session. First, we will give the floor to the onsite questions.

The onsite questions.

I'm Dong Jie. Thank you for the presentation.

We're very happy to see the improvement on all business. I have two questions.

The first one about IMF, and the second one is about overseas market for Swisse. The first question is that for the IMF grew by 27%, better than the market, and in 2026, the outlook is also quite positive.

I would like to ask, apart from our own efforts, what have we done right for IMF? The second question is that from the market share, whose market share have we grasped, which competitor?

Follow-up question is about A2. Have we benefited from such trend?

Thank you.

First, about the IMF in China, in 2025, it is true that we have seen very strong rebound for our IMF, more than 25% of growth. The momentum has been carried on, which is more than 25% for 2025, and we're very confident for 2026.

We have done several things right. The first thing is about the formula of our product, which is quite strong.

Our upgraded IMF is the design philosophy of the ceiling for nutritions for IMF for a impact. Our imported IMF did not get impacted by RA.

There are some acquisition issue for IMF. For stage one and stage two IMF, we have seen the speed up the launch-to-market, which is the positive growth of A2.

For 2026, we'll continue to do several things. The first one is the early-stage IMF education.

Secondly, we will continue to expand our e-commerce channels. For e-commerce share for our brand is still lagging behind.

This is one of our blind markets, this would be our priority. Thirdly is about Biostime.

It covers not only the IMF for zero to three years old, it is also a pediatric supplementary products brand. In 2026, we want to focus on the child pediatric and supplementary products, which is for the market from 3 to 12 years old.

These are the priorities for IMF and BNC. Your question is about what we have done right.

This is a easy and complicated industry. Why I say that?

In 2026, we had a lot of pressure for the cutover of the GB, the national standard, and our investors have expressed their concerns about our business as well. I said that we need to do the right thing.

We would see some selling decrease because of the cutover of GB, but we want to insist on doing the right thing despite some short-term impact on our sales revenue. What we have done right is to stick to this category, and by 2025, we have returned to growth.

Of course, there is some impact from the external environment. Sometimes it's because of luck, for example, for A2.

We stick to our quality control philosophy, to be honest, we have benefited to these events. From the Q1 report later, you will see our accelerated growth for our IMF business.

Another thing is that you need to stick to doing what's right. Your second question is about market share, right?

If you look back, we focus on super-premium. If you look at the super-premium market share before, we rank the number four, number four number three number four.

Before us, there was a foreign brand, and the top two are two domestic brands. Just like we said, we have accounted for 17.1% of the market share, and by Q4 it was 19.5%.

Now I think it's very clear where we get our market share, but I will not mention any names.

Thank you. Another small question about Swisse overseas market.

Everybody's paying attention to Southeast Asian market because the overall market is upgrading. Can you please share with us your expansion plan for Southeast Asian market?

At present, we focus on Thailand, Indonesia, Singapore, and Vietnam. There are three aspects for our expansion.

First, we will continue to leverage the ANZ and the Chinese markets product innovation and launch them to Southeast Asian market. At the same time, we have balanced the demand and the requirements of the local consumers.

These are our strengths in our products. We started our expansion in the market of Singapore, and we have already been ranked number one in several small categories, and this would help us with our overall expansion in terms of organization and products.

We are all in TikTok for Indonesian market. With such a trend, we can see very rapid growth for Indonesian market.

We have taken a lot of learning from the Douyin channel in the Chinese mainland market. Our top line and profitability growth have been quite stable and within control.

Thank you. I'm Wang Zihua from Fangzheng Security.

I would like to thank you for this opportunity and very happy to see your great performance in 2025. We can see that you have a very good brands in all business segments, and you enjoy great potential.

With the change of the demographic in the Chinese mainland and with the increase of consumption in health, you would enjoy lots of potential. I have two questions.

The first one is about channel, and the management has mentioned that for the important online channels such as Douyin and new retail, you will continue the efforts. For the other consumables in the past two years become hard to get profitable in Douyin.

For nutritional products, maybe the performance will be better than other consumable products. We have our strengths as well.

That is in the past two years, the cross-border import has seen very good growth, and we are a top brand. What do you think of the Douyin channel?

Is there any insights for Douyin because lots of other product categories are having difficulties to get profit from Douyin channel? The second question is about marketing expenses.

You might see an increase in the investment in the new channels, and you will also continue to invest in the brands. What is the trend for marketing expenses?

Let me answer the two questions, and I invite my colleagues to supplement. The first question is about Douyin.

Actually, your two questions are the same question. For the Douyin or TikTok, we embrace this channel because this is very important channel for us, for all our portfolio, including IMF.

IMF is a product of high penetration, nutritional product low penetration. We need to educate the consumers.

Be it Douyin or TikTok, it's a very good channel for consumer education. In terms of mindset, we embrace this channel a lot.

Douyin for H&H is not a simple scenario channel. It is actually a omnichannel for education, which covers sales and education.

In terms of sales, for the Chinese Douyin, we have strike a balance. That is why, apart from the high growth of Douyin, we also invest in new channel, for example, Sam's Club, Costco, and other high-end channels.

We also have put in investment efforts so that we can cover more consumers. For H&H, we are operating on a omnichannel basis, be it China, overseas market.

We cover online, offline. We are very resilient, which gives us a lot of space for possible adjustment or possible developments.

Just like you said that the profitability of the Douyin channel will give us some channel, and that's why we said that we are very clear about our target customer groups on Douyin to hedge against the profitability pressure. What we would stick to is the EBITDA growth.

Let me add on to that. We have been talking to the management, which is one thing very simple: we go where the consumers are.

Of course, it's easier to talk than walk the walk, right? As you said that a lot of brands are seeing very high operation costs on Douyin, but for us, we have a omnichannel brand.

For Tmall, JD, or other channels, we already have been present for a long time. For Douyin, we need to see the role of Douyin as a e-commerce channel, sales channel.

Of course, we will cover it, but at the same time, Douyin is a very important platform for education, especially for new product categories. That's why we believe that Douyin would have a spillover effect, because the consumers might not place an order on Douyin.

The consumers might go to channels that they are used to to place an order. We need to see it in a very comprehensive manner.

It is not a simple sales point. It's just like TikTok in North America.

I was talking to Jason, our Zesty Paws EBITDA in North America decreased, it's because we invested in the TikTok channel in North America. We have been discussing whether we want to invest in TikTok in US.

Some people will argue that TikTok might be closed for the US market, but I believe that the consumers are growing quite fast in North America, and that's why last year we have decided that we have to invest in TikTok in the US. We were very lucky that Zesty Paws has become number one brand in the US.

There's another interesting phenomenon is that when we invested in the US, Amazon has also seen great growth. China's Douyin is not the same as TikTok in the US.

TikTok or Douyin platform are quite suitable for consumer education. I believe that for TikTok business or Douyin business, we need to look at it in a very holistic manner.

Of course, if the sales volume is very high, it will have impact on your EBITDA. That's why we have analyzed our ANC and the new retail growth.

In 2025, we have 30% of growth, and the profitability is quite good for Sam's Club, for example, in China. I believe we need to consider this from a different angle.

For the guidance, we expect in 2026, we will have a stable S&D ratio similar to 2025. On one hand, we'll continue to invest into new channels, new product categories, and new expansion into markets.

On the other hand, just like Chairman and CEO said, that we can enjoy the omnichannels spillover effect benefit. At the same time, we can also enjoy the scale and scale.

In 2025, our IMF grew by 26.5%, our S&D ratio optimized by four percentage points. Lastly, it's about the segment mix.

We have the Daigou channel adjustment, as we said, that is the Daigou contribution last year has decreased from 10% in 2024 to 3% in 2025. As you know that Daigou by nature, S&D ratio is quite low.

If the contribution decrease, then by default, our S&D ratio would increase. In 2026, the dilution impact would be very limited because it only accounts for 3%.

Of course, there's some base, but compared to 2025, it will continue to be lowered. Some people might ask this question, I will talk about this in advance: why we want to decrease the Daigou business in Australia?

It's a very natural decision to us if you look at the sales revenue in ANZ. Based on the accounting, the Daigou business is accounted as the sales revenue in ANZ.

In 2025, ANZ sales decreased by 20%, but as we have said that the domestic market increase by more than 5%. Why do we want to decrease the investment in Daigou business?

Because the EBITDA is quite good, S&D ratio is very low, why do we want to actively decrease its percentage? You want to ask this question, right?

A good CEO, a good management should foresee the future changes and take actions in advance. Last year, when we are doing this active adjustment, you might not be able to see, but recently you might see some regulation change for cross-border business.

The regulation has been tightened. Our CEO is quite forward-looking, and she expected that this would happen, and that's why we had started the active adjustment for the Daigou business.

We wanted to decrease our investment in the Daigou business, and that's why the corporate Daigou business volume had been decreased, but for the domestic market, we have seen double-digit growth for Chinese market.

For ANZ, a 4% growth, would we be worried about the ANZ's low growth? In the future,

don't worry. Our domestic ANZ market has seen a 5% growth, a double-digit growth for the Chinese market.

By Q1 quarters, you will see accelerated growth for ANZ as well.

Thank you for the question. Do we have any more questions?

One more question.

Thank you. I have two quick questions.

I would like to thank the management and congratulate on your performance. I'm from Merrill Lynch.

My name is Gao Xiang. I have a question about debt.

Jason mentioned about the deleverage into three times. The long-term target used to be two times.

Do we still maintain this target? If it's three times, then it is actually close to the standard of adjusting up the rating.

Have you talked to the rating agency, and can you please share with us what their attitude is? This would be helpful for financing cost.

Another question is a follow-up question about ATO. You mentioned that in June that there would be a preliminary results.

If the result is positive, then can you get the money back? If not, what are the next steps?

Thank you. For the deleveraging target, in January 2025, when we issued the bond, we had given a guidance to the market, that is by 2027, our leverage ratio would be around three times, by 2028, around two times.

This target remained the same, and from our performance, we are very confident to say that we can realize such a target. This year, we will accelerate our efforts in deleveraging.

Last year, our overall debt decreased by 603 million RMB, and this year, we will lower that further. We continue to maintain regular communication with the ranking agencies, and based on the annual results of this year, we will also update our communication with them.

From the management perspective, we would strive to optimize our ranking outlook and ranking results. For ATO, in our announcement last year, we have mentioned that by June 2025, we had offered our objection to ATO.

Based on ATO's work process, this objection process would take around 12 to 18 months to complete, and that's why we expect that by June this year, they will give us an official reply for our objection. In this process, we continue to maintain a very tight contact with ATO.

After rounds of consultation, we have explored further about some technical details. The annual results this year is also based on the advice of our legal consultants and tax consultants.

We want to tell the market that we remained very clear about our positioning, that is we do not need to make a provision for this case, and that's why we did not make any provision this year. This has been confirmed by our auditor.

For the next steps with ATO, if there's any new updates, we will update the market and make announcements in a timely manner.

Thank you, management. Thank you, everyone, for joining us.

This brings today's presentation to an end. Thank you.