CITIC Limited Stock

Distinguished guests, media representatives, investment service center and industry analysts and investment representatives from online and offline. Good afternoon, everyone. Welcome to the joint press conference for CITIC Limited 2026 Interim Results. It's my great pleasure together with all of you here by the beautiful [ Huangpu ] river in the season of Osmanthus fragrance.

My name is Choy Wing Kay, Director of the Board Office of CITIC Group and Joint Company Secretary of CITIC Limited and also your host for today. Today's press conference holds great significance for us. In recent years, investors trading through the Hong Kong Stock Connect have shown growing investment appetite and research interest in CITIC Limited with their shareholding ratio rising steadily. Thanks to the strong support of the Shanghai Stock Exchange, SSE, CITIC Limited, which is a listed company on the Hong Kong Stock Exchange. This is our first time to organize this first joint performance press conference with our major listed subsidiaries in the roadshow of the SSE. This is also an innovative practice by CITIC to actively embrace respond to and win the trust of the market.

Shanghai is an international financial center, and the SSE is one of the world's leading stock exchanges, gathering the most active long-term funds, professional investors, analysts and financial media from both domestic and overseas. So it's extremely valuable opportunity for our communication. Today, we have the old friends of CITIC and also many new friends here. So this is a great gathering of all the talent from different areas.

First of all, on behalf of our company, I would like to extend a warm welcome and sincere gratitude to all investors, analysts and media friends who have been long paying attention to us and supporting our development in the past. Thank you so much.

CITIC Limited is one of China's largest enterprise groups. Its parent company, CITIC Group, originated from China International Trust Investment Corporation, which was established by Rong Yiren in 1979 and the advocacy and support of [ Xiaoping ] former Chairman of the [ docking ]. As one of the China's earliest enterprise to go global after reform and opening up, CITIC Group served as a key pilot for economic reform window for opening up, attracting foreign capital and introducing advanced technology, equipment and management expertise. After years of development, CITIC Group has gradually grown into a large-scale integrated multinational enterprise group with industry finance integration and diversified business format covering about 160 countries and regions.

Over the past half century, CITIC has always been at the forefront of China's opening up to the outside world from being a window for China's reform and opening up at its inception to striving to act as a bridge connecting the world in the new era, we are building the service brand proposition that is to turn to CITIC for going global and turn to CITIC for entering China. We fully support China's high level opening up growing stronger and better while serving the country's needs and the people's aspirations.

Standing at a new starting point of the 15th Five-Year Plan, CITIC is deeply promoting the 3-3-5 strategy for high-quality development. In the half 1 this year, the company adhered to the principle of seeking progress while maintaining stability and moving towards the new horizons. Our operating performance for both quality and quality increased and development momentum accelerated. So the main indicators for operations have become more impressive. So we have delivered strong interim results because of that.

Today, CITIC Limited, together with CITIC Financial Holdings and 4 of our subsidiaries, gathered at this SSE for CITIC's collective presentation. We hope to guide stakeholders and shareholders through a clear value chain to gain further fuller insight into the fruitful outcomes of the CITIC future high-quality development. So we will elaborate on the CITIC development strategy and also the business drivers. Our earnings release aims to go beyond numerical disclosure, but also serve as an value-oriented dialogue.

Now I'd like to introduce the leaders who are present here today. So they are Mr. Hu Gang, Executive Director and Vice President of China CITIC Bank; Mr. Qian Gang, Chairman of CITIC Steel and Mr. Zhang Youjun, Executive Director, General Manager, Executive Committee member of the CITIC Securities; and Mr. Zhang Li, Director of the Board Office CITIC Financial Holdings; Mr. Tiangui Lyu, General Manager of the Wealth Management of CITIC Financial Holdings; Mr. Yang Jianqiang, Deputy General Manager of the Financial Management of CITIC Group; and Mr. Zhang Xuejun, Deputy General Manager of the Strategic Development of CITIC Group; and Mr. Wang Meng, Director and General Manager of CITIC Metal. Also attending today's press conference are Mr. -- so here are the secretaries, shareholders and also financial directors attending today's meeting.

So according to the agenda, we will first invite Mr. Zhang Xuejun, Deputy General Manager of the Finance Development Management from CITIC Group to present the briefing on CITIC Limited 2026 interim results. And then we will be followed by a Q&A session and online Q&A is also available via the interactive platform. And so you're welcome to submit your questions.

Now I'd like to hand it over to Mr. Zhang Xuejun.

Dear analysts, investors, media friends, good afternoon. So first of all, I'd like to give you the 2026 interim results. So there are 2 parts of our presentation. The first part is the overall performance. The second part is the business performance of different segments. So first of all, the overall performance in half 1 2026, facing with the external conditions and environment, our company continued to improve the management efficiency and seize market opportunities, and we achieved the growth in revenue and profit, outperforming the market. And specifically, the revenue reached RMB 408 billion in half 1, up by 10.7%, mainly because of the CITIC Metal and CITIC Securities actively captured opportunities from rising commodity prices and capital markets, respectively.

Net profit reached RMB 70.8 billion and profit attributable to the shareholders reached RMB 33.8 billion, up by 18.3% and 8.1%, respectively, Y-o-Y, mainly driven by some profit growth at the CITIC Securities and also the metal and bank companies. I would like to talk about the continuous optimization of the revenue structure. So in 2 aspects, first, the financial strengthening project has been advanced continuously. And then so also the cost has been further improved. So the -- in the first half of the year, the company achieved net fee and commission income of RMB 39.7 billion, an increase of 22% Y-o-Y and the proportion of financial business income reached 24.7%, up by 1.6% Y-o-Y. And also CITIC Securities revenue from brokerage, investment banking and asset management all achieved significant growth.

And also the agency business growth of the CITIC Bank as well as well as the trust business scale expanded. Second, the international business has also maintained very rapid growth. And in half 1, the company achieved overseas revenue of RMB 84.7 billion, increase of 29% Y-o-Y. And the proportion of total revenue reached 20.7%, up by 2.9% Y-o-Y. And -- by the end of the first half of the year, the overseas total assets reached RMB 1.48 trillion increased by 11% from the beginning of the year. And also the CITIC Securities overseas business has grown significantly, achieving revenue of RMB 11.8 billion, increased by 71% Y-o-Y. And the Dicastal business has also shown the increase of aluminum wheel ranking the first in the world and increased by 9.9% Y-o-Y.

And also in terms of the operating expenses, the company's cost-to-income ratio in half 1 was 31.6%, increased -- decreased by 2.6% Y-o-Y. Also continuous downward trend in subsidiaries such as CITIC Bank Securities and Metal company have reduced the cost-to-income ratio. And also the half 1, the profit to labor cost has also reached 197% in the first half of the year, an increase of 19% points Y-o-Y. Also a very virtuous cycle. In terms of the financing costs, we have continued to consolidate the achievement of reducing financial costs and nonfinancial business interest expenses totaling RMB 4.76 billion in the first half and a decrease of RMB 900 million Y-o-Y, so a decline of 3%.

So we continue to improve its asset liability management with steady increase in the asset side. In terms of the asset side, in terms of the end of the first half of the year, the total asset has reached RMB 13.65 trillion, increased by 4.9% from the beginning of the year and of which the financial sector assets continue to grow steadily, reaching RMB 12.96 trillion, up by 5.2% from the beginning of the year. CITIC Bank's assets amounted to RMB 10.39 trillion, an increase of 2.5% from the beginning of the year. And CITIC Securities reached RMB 2.47 trillion, an increase of 19% at the beginning of the year.

Liability side at the end of the first half of the year, company's nonfinancial business interest-bearing liabilities has shown a decrease of 3.9% at the beginning of the year. The CITIC headquarters also used the funds from the return of the Sino Iron and also dividends from subsidiaries to reduce outstanding debt. And CITIC Metal and CITIC Steel both achieved effective debt reduction as well. Thanks to the improvement in performance, the company's earnings per share in the first half of the year increased by 8.1% Y-o-Y, reaching RMB 1.16 per share.

And in order to show our thanks to the shareholders, we also planned to distribute an interim dividend of RMB 0.21 per share, an increase of 5% Y-o-Y. And also in terms of the ratings, we maintained the A3 rating according to the Moody's and also has been revised from stable to positive, reaching the best level in history. CITIC Bank's rating is maintained at Ba2 with outlook revised from stable to positive. And also in terms of MSCI ESG rating, we also upgraded from A to A+. And also -- so you see we have delivered a very good report card in the first half of the year.

Now I'd like to give you some more information about different segments and its performance. First of all, this is the Financial Service segment. In terms of that area, we have achieved revenue of RMB 160.6 billion, Y-o-Y increase of 14.5% in half 1. Realized profit attributable to shareholders at RMB 31.7 billion with a Y-o-Y increase of 11.8%. Segment competitive advantage continued to consolidate. And we're also leading in the direct funding asset management across-border financial business and also many other aspects, including the bond underwriting. So the total asset scale reached RMB 11.69 trillion.

Now coming to the CITIC Bank. So we felt that the -- in the first half of the year, the NIM, the interest -- net interest margin or NIM reported 1.62% down slightly on the basis of 1 bp Y-o-Y. And also cost control has continued to strengthen, leading to a reduction of RMB 600 million in operating expenses, down by 2.1% Y-o-Y. The cost-to-income ratio decreased by 1.35 percentage points Y-o-Y, reaching 25.46%. The net profit attributable to shareholders reached RMB 37.6 billion with a Y-o-Y increase of 3.1%.

The bank's AL structure continued to optimize with the balance of deposits and loans, rising by 3.8% and 2.5%, respectively, from the beginning of the year. And the proportion of the medium long-term loans in general loans rose to 67.29%. The asset quality of the banks remained stable. At the end of June, the nonperforming loan ratio was 1.15%, unchanged from the end of the previous year. The provision coverage ratio was 203.12% and risk coverage liability was sufficient.

CITIC Securities achieved double-digit growth in revenue from all major business lines in the first half of the year with revenue of RMB 49.7 billion with net profit attributable to the shareholders of listed companies of RMB 23.3 billion, increased by 50% and 69.6% Y-o-Y. And CITIC Securities ranked the third in the domestic market and the largest equity underwriting scale and bond underwriting scale. M&A deal size in the Chinese market also achieved the top position in the industry. The international business of CITIC Securities continues to grow rapidly. In terms of the number of securities -- equity projects, IPO sponsorship in Hong Kong also ranked the second in the market. The underwriting scale of Hong Kong refinancing in Chinese offshore bonds ranked the first among Chinese security companies. It completed the largest global M&A deals for Chinese enterprises.

We would like to share with you that on the 6th of August 2026, CITIC Securities completed the private placement and for the financial business, we have further enhanced the strength. This is a solid foundation for future performance. Now we take a look at CITIC Trust. We focus on transformation and development of its principal business. CITIC Trust steadily improved its operating efficiency, recording revenue of RMB 2,937 million and profit of RMB 1,722 million, up 0.7% and 9.8% Y-o-Y, respectively.

Trust assets under management rose to RMB 4.15 trillion. And also, there is a new business expansion to the expansion, finance and also its selected as a trustee for Jiangsu Province occupational annuity supplementary scheme. And about CITIC Prudential Life, the first half sees the income reaching RMB 24,431 million, up 29.6% Y-o-Y, outperforming the industry. And the value transformation continued to deepen Sales of floating return and protection type products were actively promoted with annualized new premiums up 21% Y-o-Y and new business value up 13% Y-o-Y. Risk rating indicators improved. The integrated risk rating remained at category AA under Class A.

Now we take a look at the advanced intelligent manufacturing. In the first half, the revenue was RMB 29,588 million, up 8.5% Y-o-Y. Profit attributable to ordinary shareholders reached RMB 433 million, down 5.5% Y-o-Y due to exchange losses caused by RMB appreciation. CITIC Heavy Industries achieved breakthroughs in key international markets. And in the first half, Heavy Industries reached the revenue of RMB 4,025 million and profit attributable to shareholders reached RMB 209 million, up 1.1% and 3.0% respectively, and it supported 23 consecutive successful launches of Shenzhou spacecraft and as a lead contractor for the net-based recovery system or the China's first successful offshore Rocket net capital recovery mission.

CITIC Dicastal as the core business of the advanced intelligent manufacturing and -- as we mentioned before, its overseas sales had a growth of 9.9% and its integrated die-casting technology achieved the bulk delivery of finished products with 2 new supporting units and an annual output of about 300,000 pcs. Magnesium alloy completed forming and inspection pilot production line and robotic housing rapid prototypes were delivered. This is about advanced materials. In half 1, the revenue was RMB 185,116 million and profit about RMB 6,102 million, up 13.1% and 7.7% Y-o-Y, respectively. Facing downward pressure in the steel industry, the 2 companies achieved a steady growth in sales volume and CITIC metals, copper, niobium and other nonferrous metals business performed well.

Firstly, about CITIC Pacific Special Steel. In the first half, operating revenue reached RMB 53,672 million, down 1.9% Y-o-Y, while profit attributable to shareholders reached RMB 2,990 million, up 6.9% Y-o-Y. Business scale grew against the downward or downtrend with renewed products, product iteration was accelerated and the high-end bearing steel and the automotive steel sales increased by 16.1% and 14.7% Y-o-Y, respectively. Overall sales of the key Little Giant project increased by 23.2% Y-o-Y. Building technological moats to drive long-term growth. High-end product iteration accelerated with a new offering reached 1.4 million tonnes in the first half and the high-grade products reaching 2.75 million tonnes.

Core technological strength was recognized for domestic and international authorities and about Nanjing Steel, the operating revenue reached RMB 31,131 million, up 7.6% Y-o-Y. Profit about RMB 1,320 million, down 9.6% Y-o-Y due to lower nonrecurring gains and principal business operations remained resilient and stable. Steel sales volume reached 4.75 million tonnes in the first half, up 5.7% Y-o-Y. The Indonesia coke project turned fully operational, achieving coke sales of 2.51 million tonnes and the contribution from high-end products increased. Sales of advanced steel materials reached 1.45 million tonnes in first half, accounting for 30.57% of total sales.

Now about CITIC Metal. In the first half, the company reached revenue of RMB 86,911 million and profit attributable to shareholders reached RMB 2,673 million, up 36.5% and 84.6% Y-o-Y, respectively. The Las Bambas mine project maintained stable production and improved efficiency, producing about 210,000 tonnes of copper content in copper concentrates flat Y-o-Y and CBMM's production and sales both increased further consolidating its leadership in niobium with global market share remaining above 70%. And Ivanhoe Mines, KK Copper Mine produced a total of 136,000 tonnes of anode copper, blister copper or concentrate recovered from slag and advanced trading products increased in both volume and quality. Ferrous unit adhered to a prudent operating strategy and business operation proceeded steadily.

About CITIC Energy in first half, revenue reached RMB 5,690 million, up 30.4% Y-o-Y due to a lower production volume at the Sino Iron mine declines in the new energy utilization hours and annual contracted electricity prices, profit attributable to shareholders reached RMB 722 million. And now we take a look at the new consumption. This segment had the revenue of RMB 20,753 million, down 11.8% Y-o-Y. The loss attributable to ordinary shareholders of RMB 50 million. CITIC Press maintained the #1 retail market share in sales among single publishers in China, while nonbook businesses achieved a relatively faster growth.

And for the CITIC Telecom International, in the first half, the revenue reached HKD 4,748 million and the regional leadership continued to strengthen. CTM acquired Hutchison Macau, further consolidating its leading market position. And for CITIC Press, in the first half, revenue reached RMB 791 million and profit attributable to shareholders reached RMB 77 million. Cultural communication influence broadened, focusing on 4 key directions: technology trends, economy and finance, children's picture books and vertical comics and also it introduced 160 copyrights, exported 120 copyrights and won 292 awards. Non-book business grew strongly. Digital intelligence services and IP business both achieved revenue and profit growth.

And CITIC Agriculture, the core seed market has the high inventory in China, affected by that and extreme weather during Brazil's planting season, the -- in the first half, the business loss was RMB 218 million with losses increasing by RMB 68 million Y-o-Y and specialized and sophisticated businesses grew. Premium price proactively deployed by Longping High-Tech achieved a 20% revenue growth by meeting changes in market demand. Anhui Tsuen Yin, seed revenue rose sharply by 141.5% with support from coarse grain policies.

Chili Pepper seeds achieved revenue growth for 9 consecutive years. And for the property and there is the -- for the new type urbanization segment recorded revenue of RMB 12,648 million. Property development has seen the pressured market environment. Revenue reached RMB 3,480 million, and the projects in Wuxi and Yangzhou achieved centralized delivery with a one-time visit delivery rate of 100% for both projects. Shenzhen Qianhai Bay project set a benchmark for high-quality residential projects and achieved 2 launches with 2 sellouts, affected by slower growth in construction industry and tighter PPP project policies. Revenue reached RMB 10,102 million, down 7.7% Y-o-Y. Cost reduction delivered significant results. The TKU and KB Road construction projects in Kazakhstan were fully operational and the large building construction project in Dubai, the UAE.

And dear analysts and dear friends in the first half by reviewing the performance, we have the growth in both revenue and profit. And in first -- in the second half, we will continue to implement the 3-3-5 strategy to enhance our valuation innovation capability to give even higher returns to the shareholders and investors. Thank you.

Thank you, Mr. Zhang Xuejun for the presentation. Now we open the Q&A session. Please state your name and organization before asking questions. We will take the first question.

Dear managers and executives from CITIC. I'm [ Huamin Yuan ] from [indiscernible] Fund. This year is the first year of the 15th Five-Year Plan period. And I see that CITIC Limited has the 3-3-5 high-quality development strategy. Could you give us more details about this strategy? And also, would you like to introduce kind of advances and retreats in business layout?

Okay. Now we have the CITIC Group Strategic Development Department, Mr. Yang Jianqiang to respond to your question.

Thank you for the question. I would like to share 2 aspects. The first one is about strategic planning. We closely follow the national development plan and also follow the market dynamics as well as CITIC capacities and capabilities. We have put forward the 3-3-5 high-quality development strategy with the aim to build a world-class science and technology enterprise group. It's not starting from scratch, but a systematic review and upgrade based on the strategic practice. The 3 numbers 3, 3, 5 represent 3 main businesses, respectively, 3 major projects and 5 key measures.

The first 3 is to strengthen and optimize the financial industry and invest in 3 main businesses. I believe you already know that. And we elevate the business of investment to the same height as the financial sector, which is not a simple conceptual adjustment, but a strategic choice based on the CITIC's endowment and capabilities. As our Chairman, Xi, introduced at the March earnings briefing, investment is not a new business for CITIC. Since its inception, the company has been marked by its investment DNA. It also possesses a range of financial licenses that other investment institutions don't have.

So CITIC Equity Alliance has comprised more than 10 companies' financial and industrial resources. And in the total asset under management is over RMB 350 billion. And also, we have co-incubated more than 1,300 technology enterprises. CITIC Securities, CITIC Construction Investment Securities and also in the first half of the year have added 60-plus projects. And we have achieved a very good start and smooth operation. So we will further fulfill our positioning as the long-term capital and also the multiplier of reform and development for the country.

And the second 3 is about the integration of the financial industries and also focus on the 3 different kind of industries, including the industrial science and technology projects. And these 3 projects aim to build ourselves into a world-class or first-class financial holding group. And so in the 15th Five-Year Plan, we will focus on the securities, banking, trust, and insurance as the basis and then build a demonstrated or pilot project with the 5 focuses. So in terms of that kind of level, we already ranked the largest in terms of the business scale and the market share in those 3 areas I just mentioned earlier. For the next stage, we want to shift from the largest scale to the strongest strength. So that's our position.

Also, recently, we have increased our capital to CITIC Securities by RMB 16 billion, which is one of the major measures we have implemented. And the core of the real economy new chain project is to build high-end industrial cluster. As you know, we have some subsidiaries focusing on steel, the special steel, for example, and automotive lightweight manufacturing, equipment, manufacturing, scarce resources, crop breeding and things like that. So for instance, our Dicastal company is well known for its largest production and supplying of the aluminum auto parts. And also CITIC Heavy Industries has made continuous breakthroughs in core technologies.

Also, CITIC Metal has been the leading position in the metal market in terms of nickel products. And our steel company and then 2 steel companies has also ranked top in terms of the iron steel manufacturing or making. During the 15th Five-Year Plan, we will continue to promote the 3 efforts, initiatives in the [ Xi'an ] project, we strive to achieve the goals of better linking and clustering. And in terms of renewable, it means we were cultivating the champion business and promoting more industrial subsidiaries to benchmark against the best. And [ doing ] that means we need to combine our capability with the investment focus. As we mentioned earlier, so we can explore high-quality targets with high technology and high growth.

And currency means to explore new business opportunities to make use -- good use of the 2 brokerages. And in terms of the core technology engineering, the core is to build a high end for technological innovation and set up the vision of being a world-class technology enterprise group. The focus is on technology. So the technology as our cornerstone for the future development in terms of this project. So we will increase not just the investment in the scientific research, but also the temporary emergency arrangement and also long-term strategic choice made by CITIC based on the national strategies. So those platforms, we are trying to build, we call it 2+4+N technology cluster platform.

So in the past year, 2 of our achievements have won the second prize of National Science and Technology Progress Award. And in terms of comprehensive finance development, we have obtained 18 achievements and also the first price -- 2 first prize awarded by the PBOC and also many other awards. On August 28, the newly announced 2026 Metallurgical Science and Technology Awards have been obtained by us and also have achieved another 27 achievements, which also have us won a lot of different awards.

And so the 3 major projects, as I mentioned earlier, can fully reflect our comprehensive strength in industry and finance integration and also can demonstrate our capability to how to demonstrate or promote the deep integration of innovation chain, industry chain, capital chain and talent chain. And the 3-3-5, in terms of the 5, it highlights the strengthening of the management and the prevention of risks, improvement of the collaboration, cultivation of talent and also enhancement of quality and many other aspects. So those are 5 aspects we're going to focus.

First of all, I'd like to come to the collaboration improvement. So CITIC business has also always emphasized the philosophy of collaboration, cooperation. So the collaboration among industries between different sectors or industry and industrial business or segments and the financial segments. So we are always aiming to build a good bridge between China and the rest of the world. So the 3-3-5 strategy focused on the synergy of the 3 main businesses, the in-depth advancement of 3 major projects and also the 5 key measures. So in order to explore a sustainable path for value creation.

Second, you talk about the strategic arrangement or planning and also business layout. So I understand the question as how can we make a trade-off and also how can we still adhere to the principles of doing something that is necessary and avoiding something that is not necessary. So we are focusing on serving the establishment of a strong financial nation and center on the core orientation on several aspects. So there are 2 main areas specifically. First is we will continue to strengthen our core financial business. So all our subsidiaries, especially in the financial aspects, they are the cornerstone will provide a very vital role in profit contribution.

And second is about the acceleration of the emerging and future industry focus. So we mentioned 3 renewable projects. That's renewable creation and exploration. And those 3 actions or projects will help us to focus on our advantages, including the industrial cluster advantage in manufacturing, equipment manufacturing, mineral resources, and special steel and things like that. So currently, we are building on our foundation and existing industry subsidiary. And we are also focusing on the emerging industry, including new energy, new materials, robotics, life sciences and other sectors. And there are 2 aspects of the progress we are making. That means we will make strategic overall arrangement for our progress.

And also, if necessary, we will also retreat in some sectors. So when the sector is not good for further investment, we will make withdrawal necessarily. So since we started the work from 2024, the legal company -- legal person company number has been reduced by 13% within our ecosystem. So we have carried out the work very steadily, even probably the outside work didn't feel that very strongly. But gradually, you will understand our logic of eliminating some unnecessary businesses or segments. So those are for our operation logic.

Finally, I also want to say, during the 14th Five-Year plan, we have a very successful implementation. It has also guided CITIC Group to be one of the world's 500 company, and we have advanced the ranking to top 115 -- from 115 to top 59. And this year is the starting year of the 15th Five-Year plan. And our strategy is continuous and coherent from the last Five-Year plan. So we are confident that we are able to implement our strategies in the next 5 years. Thank you.

Now I'd like to invite the second people to mention your question.

My name is Mao Qingqing. I'm from CICC. My question is, when China is facilitating the progress of building a strong financial nation, there is a high requirement for high-quality development of financial sector. And CITIC has the most comprehensive financial certificates or the licenses. And what kind of role are you playing in terms of advancing this strong financial powerhouse for China?

Okay. I'd like to ask Xiaoyan Liu to answer the question.

So there are 6 elements of a strong financial powerhouse for China. So the CITIC Bank Securities, CITIC Trust, and CITIC Insurance are all the key elements for that kind of development. So we are leveraging our strong financial capabilities and agencies, actively exploring the innovations in integrative financial models. So by pulling all those resources and institutions into one ecosystem, and then they can collaborate more actively. So this is transforming the financial -- powerful financial institutions from just a concept to a very closely needed system with enhanced capabilities.

So there are 3 layers for our roles in facilitating that powerhouse development. First of all, we innovate in collaborative services. We create the wealth management committee by establishing 1+4+7 mechanism. So we have a dual Chairman system for subcommittees. And therefore, we established a set of well-defined institutional arrangements so we can have better co-creation products and the management of our clients and development of our ecosystem in a better way. So this is our way to shape our branding values and also can give us many more opportunities in coming up with 10 innovative models that has already been created in the past.

And also, in the first half of the year, the AUM of our financial holding company has reached RMB 12.9 trillion with a revenue of RMB 164 billion, net profit of RMB 65 billion. Net profit attributable to the shareholders of listed companies of RMB 30.9 billion, so up by 18%, 22% and 13%, respectively, Y-o-Y. So CITIC, as the largest direct investment institution in China, continue to receive higher recognition by the capital market. Second, we continue to make [ lean ] management on our capital management. So we try to achieve cost reduction in the first half of the year, we have saved RMB 3 billion of capital costs in half 1. And ROE up by 0.6 pp Y-o-Y, which has [ exceeded ] more than 10%.

And also, at the same time, we are supplementing the capital to the subsidiaries in orderly manner. So for example, to the CITIC Bank, over RMB 26 billion convertible bond conversion, CITIC Prudential Life, that's RMB 2.5 billion capital increase. CITIC Securities, RMB 16 billion, private placement project. On the third layer, that is related to risk management and risk prevention, we have been going deeper in that direction. So building on our perspective to the parent company, we have built a comprehensive risk management system across different entities and various business forms.

So we have built 3 lines of defense, early warning, mid-stage control, and post coordination from risk mitigation. So including covering unified credits and concentration limit management mechanism in order to prevent and control the risks better. In the first half of the year, we have re-mitigated risks by about RMB 8.2 billion and disposal of nonperforming loans amounted to nearly RMB 15.8 billion. We'll also build batch banking -- benchmarking projects such as Shenzhen Qianhai Bay. So the risk in comprehensive financial effect continue to converge. In addition, we also deepened the development of the compliance system, successfully complete the 3-year compliance management improvement campaign.

And also the efficiency of the financial holding platform has solidified our foundation for the value improvement. Firstly, the most obvious value is to unleash the collaborative potential of the full financial license. The financial holding company builds a collaborative platform, establishes a mechanism and system and rules and guiders system synergy, making collaboration the norm moving forward towards a system. When clients face CITIC, they feel the entire set of solutions. And for the full financial license, we could better serve clients' needs and serve the real economy CITIC and clients are more deeply rooted.

And second, the most unique value lies in the combination of CITIC's financial capabilities and the real economy scenarios where finance injects fresh blood into the real economy. The real economy provides application scenarios for finance, so that to achieve risk mitigation through synergy. This is the most typical case. And the trusts isolate risk banks inject liquidity and the real economy thrives.

Third, the most sustainable value lies in relying on the financial core initiative, and we continue to advance during the 14th Five-Year plan period, and we comprehensively enhance the comprehensive financial business and the 5 core competitiveness. We excel in 6 business formats and strengthen 6 business ecosystems and upgrade the financial core initiative.

Looking to the future, we will continue to explore a development model for financial holding company that suits China's characteristics and pursue multidimensional empowerment and becomes the really important force in building CITIC and China into one with strong financial capabilities.

Now the third question.

I'm analyst [ Li Hua ] from GF Securities. I have 2 questions. Yes, our company is committed to developing into the best direct financing and comprehensive asset management company. So we would like to know more about the latest achievement and the future plans. That's the first question.

The second question is about the fintech and how to empower the new quality productive forces and what's your unique advantages?

Okay. We have the Wealth Management Department of CITIC Financial Holdings.

Thank you for this question. It's about how the finance could serve the real economy precisely. For us, we firmly implement the decisions and arrangements of the Party Central Committee, and we practice the political and people-oriented nature of financial work. We do our best to meet people's needs for a better life. So our response in aspects of the asset management and the direct financing in Shanghai at this year's [ Lujiazui ] Forum, the Governor of People's Bank of China, Mr. Pan already pointed out that China's financial structure is undergoing profound changes.

Based on a set of data in China's incremental financing in 2025, the combined proportion of bonds and equities has reached 47%, exceeding the 45% of RMB loans for the first time. So this indicates the decades-old financing pattern dominated by bank credit has reached a structural inflection point. So it aims to increase the proportion of direct financing. And from our market practice, equity financing is in the Asia market. In the Asia market, it is further concentrated on the technology IPO in Hong Kong stock market has rebounded significantly and the issuance of science and technology innovation bonds and REITs has been accelerated.

And in terms of the R&D and industrialization, technology and policy, we have seen the coordination. According to CITIC's data, CITIC maintained its market-leading position in direct financing in the first half. It boasts a large scale and has seized the structural opportunities and the direct financing business scale reached almost RMB 2.8 trillion. Its equity bond and the REIT business also ranked the first. It has helped a number of high-quality enterprises to successfully go public and at some special times such as in May when we participated in the Ministry of Finance, the first issuance of green offshore RMB bonds in Hong Kong. And in June, when we participated in the centralized signing offshore RMB bonds. And for us, we will deepen our roots in the multi-tiered capital market and expand equity and debt financing.

Secondly, along the industrial chain, we will seize the opportunity for M&A and restructuring and extend our services from enterprises IPO to industrial integration and market value management. We will expand or broaden financing channels for domestic enterprises. As for asset management, if direct financing answers the question of well, the money for the real economy comes from asset management answers, well, the money of social wealth goes. The essence of asset management is based on the fiduciary responsibility through specialized asset allocation, smoothing cross-cycle risks, converting them into sustainable long-term returns.

Our requirements for ourselves can be summed up in 4 words, focusing on both quantity and quality. In terms of quantity, CITIC has achieved a high growth on a high base. As of the end of June, the overall asset management scale of CITIC is nearly RMB 11.7 trillion, up by 8.6% over the beginning of the year. The average growth rate of the market is 3.89% and the asset management trust has a scale of over RMB 2 trillion, ranking among the top tier. We mainly need to enhance our active management capabilities to achieve a win-win situation for clients' wealth appreciation and social responsibility. Fixed income products outperformed the benchmark by 10 basis points. The asset management institution of CITIC jointly created CITIC platform to empower projects in the public welfare projects, children's education, and medical assistance with a total donation of over RMB 20 million.

So the temperature of the wealth is not only reflected in the rate of return, but also in the hope it brings. We will focus in the future on enhancing 3 capabilities. We will strengthen our internal capabilities, including investment research and advisory and deepen the presence in key areas such as technology and elderly care. We will help clients identify quality assets. Second, we will strengthen supply capabilities. All the asset management institutions on the CITIC will leverage their unique advantages, improve the long-term mechanism for product creation, operational efficiency. And three, we need to enhance cohesion. We will deepen cooperation with leading onshore and offshore asset management institutions and introduce high-quality institutions and overseas assets.

Then about fintech. As the first of the 5 key areas, the focus is on facilitating the virtuous cycle of technology, industry and finance and accelerating the cultivation of new productivity from a single innovative seed to a large rain forest technology innovation calls for patient capital and financial companionship throughout the entire life cycle. Horizontally, it covers the seed, start-up growth and mature stages of enterprises. Vertically, we connect with the banks, securities, trust, insurance, funds, asset management, futures, leasing and other full license resources, providing diversified services in equity investment, debt, loan and guarantee in terms of equity. In the first half, CITIC Equity Alliance established 14 new funds with a new fund management scale of RMB 12.4 billion, both doubling year-on-year and 1/4 of which was invested in the hot technology or the core technology.

In terms of equity financing, the underwriting scale of STAR Market, GEM and NEEQ was RMB 33 billion. The balance of loans to strategic emerging industries and future industries exceeded RMB 780 billion. In terms of bonds, the underwriting of STAR Market bonds was RMB 208 billion, ranking first. In terms of guarantee, we co-create risk-sharing products with local government guarantee institutions, providing exclusive group insurance services. So the unique advantages of us can be summarized into 3 points. The first is the overall planning of the financial holding platform where financial institutions operate independently and the technology enterprises engage in multiple connections. The role of CITIC Financial Holding is to unite stocks, bonds, and insurance.

The second is the 2-way empowerment of industrial finance, hard tech companies often lack more than just money. They need application scenarios. We open up our industrial application ecosystem to technology companies, empowering the commercialization of technology achievements. Third is the leading advantage of cross-border financial services. We have a business spanning over 160 countries and regions. We have an established a service brand of when going overseas, come to CITIC, when coming to China also come to CITIC from Hong Kong IPO to offshore bond issuance. And from cross-border settlement to global supply chain layout, we accompany enterprises all the way from product export to global layout expansion. So we are shouldering our responsibility to act as the national team of long-term capital through comprehensive financial services, industry empowerment, we will make our contribution.

Thank you. Now the fourth question.

I'm an analyst [ Sun Yin Sing ] from Western Securities. My question goes to CITIC Bank. The bank has remarkable achievements in recent years with the share price outperforming the market for many years. So based on the performance of the first half, would you like what's the thought for future development?

Okay. This question goes to CITIC Bank. Then we have the Vice President of CITIC Bank, Mr. Hu to answer your question.

Thank you for the question. The first question is about the development momentum. I will share 2 aspects. Firstly, from half 1 performance, CITIC Bank has 2 highlights. One is from the financial data. The other highlight is from the stock price. In terms of financial data, we have 3 characteristics. One is both or dual increase in the revenue and profit exceeding 3%. So since the 14th Five-Year Plan period, we are one of the few banks to maintain the positive growth in net profit.

The second characteristic is the stability in quality. The NPL ratio was 1.15%, flat with the last year. And the nonperforming loan generation rate was 0.55%, also unchanged from last year. And the provision coverage ratio was 203.1% remains above 200%. The third characteristic is cost reduction. Our operating costs decreased by 2.1% Y-o-Y. Our cost-to-income ratio also decreased by 1.35% Y-o-Y.

Then about the share price. CITIC Bank's stock price has been outperforming the market for 4 consecutive years. From January to August this year, our A shares and H shares continued to rise by 17.9% and 23.9%, respectively. Our growth ranks first among joint stock commercial banks. The total market value of CITIC Bank stands at the level of RMB 460 billion. We rank second in market cap among joint stock commercial banks. Behind those good numbers, I would say the main reason for that is our improved development capabilities and business philosophy.

Our development demonstrates 2 distinctive features: first, sustainability; second, safe development. First for sustainable development, I'd like to focus on 3 aspects. First, the net interest margin, NIM, that's about 1.62% for the half 1. So 21 bp higher than the market average. So for the RMB 9 trillion of interest-bearing assets and for 21 bps higher, that means we can have additional RMB 19 billion revenue additionally in a year. And since the 14th Five-Year Plan, the NIM of our company, our bank has reduced by 24 bp has been -- has decreased by 24 bp less than the industry average. And the NIM mainly benefit from the low cost of our liabilities with a liability cost ratio of 1.37%, down by 24 bp from the previous year. Also decreased by 92 bp compared to 2020. And our corporate deposit cost ratio has also expanded its advantage over the industry average to 20 bp.

The proportion of our corporate deposit average balance remains among the top among the joint stock commercial banks. So because you guys are the expert here and NIM of the banks is mainly benefiting from 2 aspects, either it's from the high-priced loans or low-cost liabilities. High price means high risk. So that means the risk for the future is increased. And only viable to the low-cost liabilities is safe and sustainable. So that's the core competitiveness of a bank and for us as well.

Second aspect is our sustainable development. That is our light capital development or capital efficient development. Since the 14th Five-Year Plan, the proportion of the noninterest income has increased by 10.4% pps cumulatively. Noninterest income has grown positive for 6 consecutive years. In terms of the charges, fees, income, and we ranked #2 compared with our industry peers for the last 6 consecutive years. And also our wealth management business has reached RMB 2.5 trillion, ranking second in the industry. And also the average yield of our fixed income products in the half 1 outperformed the market average by more than 20 bps. So you can see the number and scale of our bond underwriting firmly at the forefront of the entire market.

In terms of the investment trading income, our security investment business income in the half 1 increased by 9.3% Y-o-Y. Our bond and interest rate derivatives trading reached RMB 9.48 trillion, up by 65% Y-o-Y. In terms of our foreign exchange market trading -- market making trading reached RMB 1.98 trillion, making us one of the first pilot programs in Shanghai Free Trade Zone for offshore RMB foreign exchange trading. So you can see the growth of the noninterest income is underpinned by the concept of the capital-efficient development and wealth management, comprehensive financing, asset management and investment trading and also other capabilities of our company.

So the third aspect for the sustainable development is customer management. In half 1, the number of our corporate base customers has increased in a better way compared with the same period last year. The increased number of our retail VIP customers also hit a record new in the past 3 years. Since the 14th Five-Year Plan, the number of the corporate base customers and effective customers have increased by 130,000 and 153,000, respectively. So you can see the increased level has achieved more than 80%.

Our retail customers have also increased by 40% and high net worth and also VIP customers have reached a new level of 5 million. So private bank clients have also increased from 51,000 to 105,000. So it has been doubled, increasing the number of clients and optimization of our client structure as a result of the CITIC Bank's insight into our clients' needs and also enhancement of our comprehensive service capabilities.

Second, I'd like to come to the safe development. First of all, in terms of the risk indicators, we are improving continuously. So for 7 consecutive years, our nonperforming loan ratio has continued to decline, down by 0.62 pp in the last 7 years. And also 0.12% pp lower than the average of the other peers. So our provision coverage ratio has also remained about 200%. So it has been increased by 31 bp since the 14th Five-Year Plan. It's 29 bp higher than the average of the peers. Our credit cost ratio stood at 0.15% and also decreased by 0.59 pp since the 14th Five-Year Plan. So you can see those indicators reflect CITIC Bank's risk management ability in the concept.

In terms of the risk philosophy of risk management, in the past years, CITIC Bank firmly believes that we need even forgo the returns rather than the risks. So we pursue the risk-adjusted returns rather than the short-term gains and cost of risk. So you can see this risk management concept has been deeply rooted in our employees' heart. In terms of the system capability, I'd also like to focus on 3 aspects. First, the risk system. We continue to optimize the small advancement like each small step a year. So after 7 years of progress, we have accumulated that into significant growth. We implement the risk responsibility or accountability system, the appropriate approval and authorization system and unified authorization system.

In terms of basic system development, we have also implemented systems such as full-time approvals and integrated reviewers. And in terms of the credit and inclusive in finance and financial market services, we have also embedded the risk management mechanism. And in recent years, we continuously optimize the joint prevention and control business and risk. And so as practice, we have also enhanced the risk control integrated system for the parent and also the son companies, so subsidiaries. So another aspect is the structural changes we have made over the years. So asset structure defines the bank's future potential earnings and risks. So this is very important for us.

Over the years, we have built the 5 strategies plus 1 methodology system. So the 5 strategy plus 1 methodology focused on the credit policy approval standards and the marketing guidelines and also resource allocation work. And by implementing those methodologies and efforts, we have achieved very good results and changes in asset structure. One is the regional change. So in terms of the Yangtze River Delta region and also Pearl River Delta region and [ Tianjin ] and also [ Chengdu ] and other regions in China, we have achieved a better proportion of incremental loans. And also, we have fully tapping into the national strategy by focusing on more investment in 3 big areas and 5 scenarios. So all those investments have given us exceeding a higher growth rate.

So the cross-border financing also grew by more than 30% and market -- capital market M&A financing grew by more than 12%. Also, we are adjusting some risk industries. For example, the real estate loans, our proportion for that was 17%, which was relatively high, but now has dropped to 8%. And in terms of the risk of local financing platform, we also has continued to converge that kind of risk. From the perspective of customers' products, you can see the proportion of corporate customers we support has reached 73% has been continuously improving.

In terms of the main assets of our retail business, especially the mortgages, the proportion of the mortgages in loans and loans has reached 60%. And the third aspect is about strong management we have implemented over the years. There are also 3 aspects. First, we improved the risk control capability at the various source. So last year, we have implemented 4 category classification of our customers and proactive post loan management. So that has been closed our credit exposure by about RMB 46 billion.

So it has improved our capability of problem assets disposal and written off assets disposal capability. So every year, we have a callback of more than RMB 10 billion regarding nonperforming loans every year. And last year, that's the highest year. We have closed the exposure by RMB 16.5 billion in terms of nonperforming loans. The third aspect is the enhancement of CITIC Bank's digital risk control capabilities. Now we are implementing the new validation acceptance work according to some rules we have implemented. So we have come up with various measurement or validation tools. And for example, the data management has been further improved in digital and has been digitalized.

And in terms of the future development, we have our own thinking. I'd like to come to 2 aspects. First, we have a new strategy. Last year, we made the 15th Five-Year Plan. We call it the 3-3 strategy that is 3 excellence and 3 leadings. So 3 excellence means excellence in wealth management, bank management, and comprehensive financing bank management. And 3 leadings means we are leading in the professionalism, in the industrial model and also industry standards. So -- and also the 3 leadings in the payment settlement bank and cross-border service bank and also digitalized bank.

So why we want to become top performer in the industry. There are 2 reasons for that. So the 3-3 strategy focus on the current client changes in their needs and also to tap into the new market opportunities. So the excellent wealth management bank means that's an expansion beyond our traditional deposit taking and also an outstanding comprehensive banking -- financing banking. And in terms of the leading payment and settlement bank, that means that is the traditional fee and charges expansion based on the traditional banking services and leading digitalized bank, that is to build a digital platform that is also the core of our operation concept.

So those 3-3 strategies are built upon our past experience and also the competitive edges we have built over the years. So from the 4 operational themes to the 3 enhancement actions and also to the 5 leading and excellent strategies we are having now, they are helping us to build the most core competitiveness in the long-term effort. So our strategy or the latest strategy has changed to some degree. So 3-3 and 5-5 strategies, the extension of the 14th Five-Year Plan, we add additional strategy that is excellent trading investment bank. That is one additional strategy. So why we have had this one? We can look at it from external and internal aspects.

Externally, we've seen some new economies in the world. They are going through different economic cycles. So there are different asset allocation requirements across different cycles and different markets, coupled with the geopolitical conflicts. So for the clients, they have the hedging need and value preservation. Domestically, currently, it's in the cycle of the low interest rate. So for the bond investment, it can provide both coupon payments and capital gains, making it a profitable asset for banks. And for the expansion of direct financing market as well as the investment banking and asset management banking business are becoming the trend and there is the growing importance of investment trading business.

Thirdly, the internationalization of RMB and the pace of Chinese enterprises going global are accelerating. So within the external and internal landscapes that we have made the new strategy. Another reason is that for CITIC Bank, we have profound business capabilities and foundation. On one hand, we have the unique synergy to the CITIC Group, our leaders and the managers already mentioned that. On the other hand, we have more than 30 years of expertise in this business, including the market-making business of exchange rates, interest rates and precious metals. We have a very rich market position and professional experience. So in the following 5 years, this is our planning for the 3-3 strategy.

In the following 5 years, yes, we have made the plan, and we will take actions in 3 areas. One is the customer management. We will continue to enhance customer management Vertically we will continue to have a customer-oriented philosophy at all the departments, taking each customer as our partner for common growth. Also, horizontally, we will leverage the synergy advantage of CITIC Group, and we should consolidate the licenses of CITIC Group and advantages of products, break down departmental barriers to meet the diverse needs of clients.

Then about the structural optimization, we will build a healthier balance sheet, including optimizing the liability structure, consolidating the advantage of the liability cost ratio and more proactive asset allocation and active expansion of the sources of intermediary business income. We need to improve asset quality, make good allocation of major asset classes and we need to build and enhance our system and capabilities. First, we need to continue to reform and optimize organization to improve operational efficiency.

Second, we need to improve our digital capabilities, including the capabilities to make decisions based on data. In the past years, CITIC Bank has achieved a steady and resilient growth. And in the following 5 years, yes, we have a very clear direction, and we have the promising growth. We have the confidence in high-quality development. Thank you.

Thank you, President Hu for the detailed answer. Now #5 question.

I'm the analyst Shui Kang from Huachuang Securities. First, congratulations to the remarkable achievements for half 1 at CITIC Limited, the revenue and net profit have exceeded the expectations of investors and analysts. I still remember when I was writing the in-depth report on CITIC Limited this year, we coordinated analysts from multiple industries, including banks, nonbanks, steel and nonferrous metals to work together on it. And from today's presentation, we really see the performance exceeded our expectations significantly. Through today's event, we feel the company's emphasis on Investor Relations and market value management.

So I have 2 questions. The first half, there was a good performance in securities. So my first question is about the overall strategy. We see that the industry development is shifting towards quality-driven development and also the regulation or the authorities are guiding the 2-way opening up to the outside world. So there is the competition from the first-class investment banks, both at home and abroad. So how to respond to that?

Then the second question is about the overseas business. Half 1 was remarkable and CITIC Financial Holdings completed the additional investment of RMB 16 billion in CITIC Securities. And what will be the strategy to leverage the advantages?

So we have the General Manager, Youjun Zhang from the CITIC Securities.

Thank you for the question. At present, we have completed the H-share private placement. I will take the opportunity to share some of our views in the 15th Five-Year Plan period. From the guideline, we see that is the acceleration of building China into a financial power. This released a clear policy signal. The authorities support leading and high-quality institutions to grow stronger and larger, transforming from competition in quantity to competition in quality in the first half this year. Our operating revenues and net profit have reached new historical highs.

At the same time, the core competitiveness, market leadership and risk resistant have continued to strengthen. From the perspective of building a first-class investment bank, the domestic industry is accelerating its concentration capabilities of resources, business and clients within the gradual acceleration of internationalization process, we are continuously enriching our global network, clients and product system. And CITIC Securities will remain steadfast and stay committed to the goal of building a financial power, maintaining strategic focus through 3 core measures of improving quality and efficiency, strengthening competition and expanding internationally.

First, improve quality and efficiency. We will deepen the role of functions and enhance the service capabilities. We will adhere to the deep integration of functionality and client service. We will build an integrated comprehensive service system and consolidate the client base within the services throughout the life cycle. Second, strengthen competition. We will optimize the business structure of light and heavy capital and comprehensively enhance the core competitiveness. We will promote the coordinated development of all the business lines, balance the light capital and heavy capital business and optimize resource allocation.

Number three, we will expand internationally. We will deepen the global layout and promote internationalization strategy, taking Hong Kong as the springboard. And through a 3-step strategy, we will gradually deploy the Asia Pacific hub, expand the global network, enrich the business forms in overseas markets, and we will actively serve the global customers, especially Chinese capital going global and foreign capital coming in.

Regarding the capital or the private placement, since the end of May, we initiated it. And after more than 70 days, we efficiently complete the issuance and the settlement and the first batch of RMB 10 billion equivalent of Hong Kong dollars completed the capital increase on August 14. CITIC Holding fully or limited fully subscribed and CITIC Securities H shares fixed increase promised that within 48 months, it will not transfer, which fully reflects the group CITIC Limited's long-term confidence and firm support for the development of CITIC Securities. And this also is for strengthening strategic synergy, achieving high-quality development.

And this program has 3 important strategic significance. One is to solidify the international capital foundation, promote the strategy to go deep further and all the raised funds will be used for the company's international business development and respond to -- they will cope within the competition from large international investment banks. Secondly, it will help to enhance profitability and long-term capital returns. Since 2024, the international business has been faster -- has seen faster revenue growth and profitability than domestic business. In half 1 this year, the contribution of the international business revenue has increased to 23.7%. And this program of capital increase will further stimulate the development potential of the international business.

Thirdly, it will enhance global competitiveness and resource allocation will strengthen the company's competitiveness in the global capital market and its ability to allocate global resources and better play the role of bridge and link connecting the capital markets at home and abroad. In recent years, CITIC Securities has unswervingly implemented the international development strategy, increased the resource investment and the capacity building. In the future, we will take this capital increase as an opportunity, actively integrate into the high-level 2-way opening up of the capital market and do a solid job in organizational structure to be the first choice investment bank for China and abroad.

First, we will consolidate the global capital base, enhance the capital strength and the risk resistance ability of international business and empower the ability of global capital allocation. Second, we will improve the global diversified business network with establishment of branches in Middle East, Frankfurt, Germany, and we will enrich business layout in Asia Pacific, European and American markets. Third, we will improve the global comprehensive service ecosystem, improve the domestic and foreign platforms, build cross-market business coverage capabilities and expand business varieties. Okay. That's my answer.

Thank you, Mr. Youjun Zhang. Next, the #six question.

I'm the analyst Huang Sidney from the China International Finance Corporation Securities. The first question is about internationalization. What is the highlight and achievement of internationalization in half 1? Then in the future, what's the outlook or what's the overall planning and the priority for internationalization?

The second question is that currently, China has the strategy of the science and technology, self-reliance and industrial upgrading. So what will be the development opportunities for the company? And what will be the core high-end products to be very competitive as the alternatives of the foreign products?

Okay. Thank you for your question. Thank you very much for your support to the CITIC Special Steel. You are quite professional by raising this question. In half 1 this year, yes, we have been committed to internationalization and the transformation towards high-end products. These are the 2 important strategies, which were fully implemented in half 1. On one hand, we have the layout of overseas industries and markets which has been fully implemented and has made new progress. This expands our overseas business.

On the other hand, we seize the opportunities brought by domestic industrial upgrading, structural adjustment and high-end product development and seize new opportunities. The overall business quality and technology innovation capabilities have achieved a stable improvement. In terms of internationalization, yes, this year is the first year of the 15th Five-Year Plan. We already have a very comprehensive plan for this period, including the upgrading of the corporate culture, including the adjustment to our vision and mission. Our mission is to provide green and smart special steel for human civilization in accordance with current requirements and we have established the characteristics of green and smart development.

Our vision used to be to become the most competitive special steel enterprise group in the world has now been changed to becoming a globally respected leading special steel enterprise. So we have made some adjustments for the international layout. Since the beginning of this year, we have been comprehensively implementing the strategy, and we have achieved some success.

In Europe, we have established innovation and R&D center. Also, we jointly established a joint laboratory with the global leading company, Schlumberger. It's a joint laboratory for low-carbon new materials, which has built an innovative system of cross-border collaborative industry university research linkage. At the same time, in Europe, we also have laid out a high-end material processing base in Europe and CITIC Special Steel supplies high-end billets in China.

So the reason we want to have a euro base is because of the high energy cost. And also labor cost. And so usually, other ordinary companies cannot do that, but we can do that. So that's our strategic industrial layout. And other aspects, probably you already learned about that. Last year, we signed the British Stemcor. So that's one of the world's 3 largest traders. So we implemented this share swap on August 24 this year. And in half 1, in terms of the R&D, we have established the European Innovation Technology R&D center in Europe and also the joint laboratory.

Second is the channel stage development. So our trading company is 100% controlled by us. So the China's -- our steel exports can be more facilitated due to that kind of arrangement. And the third one is the processing base in Europe that's related to industrial layout. And in terms of the steel investment, we have some potential projects we are studying closely. So it will probably enhance our industrial layout for the next step. So in terms of the international development, if we want to become a respected steel company globally, we still need to have more internationalization level. So that's why we will increase our international efforts.

In terms of the business data, I'd like to talk about our half 1 foreign trade exports. That's about 1.2 million tonnes, 7% increase Y-o-Y. And our foreign trade operating income was RMB 6.5 billion. So next step, we will continue to pay attention to the signing value of the trading company platform, Stemcor, as I mentioned earlier, and also adhere to the top-level thinking of the whole industry going overseas and implementing the effort step by step, have a better strategic layout by going global at a grassroot level. So we're going to continue to integrate and upgrade the global marketing network, make up for our shortcomings in the global application resources. And finally, to achieve the going global with our products to the going global of our brands and as well technologies. So that's the internationalization on different levels and aspects.

So we want to build the sales branches in all different kind of regions around the world. So with that kind of platform company we have signed earlier, I believe it will facilitate our going global efforts. And in terms of the domestic market, I think high-end products should have a promising market. So global technology revolution is accelerating. China is striving to achieve high-level self-reliance in science and technology and also upgrading its different kind of industries, including the steel industry. So from a domestic perspective, we also focus on different energy markets. For example, the -- we know some emerging industries like nuclear energy, wind energy, high-end equipment sectors are still in the high boom development period. So that also drive the demand for high-end special steel and also special materials. Those are the opportunities we will further capture.

And in terms of the opportunities we are seeing, we will seize the trend -- ride with the trend and focus on the high-end special steel as our main business and overcome the difficulties and core technology barriers in different aspects. So we actually have built successfully the high-tech barrier, high added value and high market adaptable and high-end product matrix or portfolio. So that's our 8 best-in-class portfolios. So it can satisfy the domestic company's requirements, but also the overseas requirements. So that kind of structural advantage has continued to be released. So we have firmly captured the advantages in this differentiated market sector.

And I think if you follow us closely, you probably know what I'm going to say very well. So in the half 1, you can see the growth drivers for our high-end products is very strong. For example, the high-end bearing sales up by 16.1% Y-o-Y. The automotive purpose steel sales increased by 14.7% and specialized small giant related steel sales also up by 23.2%. Why we call it little giant because that's our niche market. We are the #1 in this niche market. We have occupied more than 50% of the market share.

So you can see we have achieved 23.2% of the growth in this little giant sector. So you can see those are the emerging opportunities we have obtained. The total sales has been increased by 48.6%. And also the specific products have increased by 50% in terms of its sales volume, especially the high-temperature alloy, high-strength steel and specialty stainless steel. So all increased by 50% -- 55% in total. So you can see those high-end product transformation has brought in many more opportunities so we can open up more or capture more growth momentum in the future.

So in the future, we're going to continuously making progress. So for example, the aerospace steel is widely used in aerospace industry. And the bearings we make for that aerospace engines have been very successful. For example, we have exported that very successfully. For example, to the Safran or also the GE in Canada and also the Collins Aerospace and also many other aerospace companies. And by leveraging our technical advantage and top-tier certifications that we have obtained, we will continue to expand the application in aviation and also aerospace area.

Second is the high-end equipment steel that has also been very popular in some technology industry. So for example, we have overcome the barriers of some technology in this area. So it can be widely adopted and used in China without importing from other countries. That will also be our strong growth driver in the future. Third is the energy purpose steel, for example, for wind power, nuclear power and oil and gas industry. So those specialty steel -- special steel demand has been very strong. So we have enjoyed very stable growth in the energy-related industry. So our -- one of our products has enjoyed 15 year growth in expanding the market share.

And we are also the only Chinese companies that can export this type of product to Europe. So we capture about 12% of the European bearing steel market. So you can see we have seized the opportunities we build our technology moat and also we continue to innovate. So relying on the European base we have established and also the joint laboratory for developing new materials, we have built a platform that links domestic and international needs. And also, we have integrated resources from different industries and continue. Also, we come up with a new innovation system so as to overcome the technological barriers in the different sectors of steel.

So also innovation requires high-quality talent. In the half 1, our scientific and technology achievements have been abundant. For example, we have innovated products and produced 1.4 million tonnes of new products, especially 2.75 million tonnes of them are high-end products. We also obtained 253 licenses and 70 of them are invention license and also 6 technological awards from provincial and above levels. Also, we have spearheaded 6 national standards drafting work and also won international common standard drafting work and also obtained many other awards, for example, Geneva International Invention Award Development Award and things like that.

For the next step, we'll continue to de-stock and also compete with structural advantage, also eliminate unnecessary business and optimize our business structure. So we will always follow closely of the national strategy needs and also adhere to the self-reliance in our corporate development. And by focusing on the high-end precision autonomy nature of development, we'll continuously improve the international R&D and innovative efforts to forge technologies, forging top scientific research talent and make every effort to tackle core technologies in the industry. So this is a very rare opportunity for us to communicate here.

And also lastly, I'd like to express my sincere gratitude to all the guests and media friends and investors for long-term support and trust. Thank you very much. And in the future, let's communicate more and also empower the development. Thank you.

Thank you, Mr. Cheng, for your response. In the interest of time, I'd like to ask the last question from the floor.

So I'm a researcher from Huitianfu Fund. So first of all, congratulations to your interim results, very wonderful. And also the -- we see the share price increase. Okay. My question is for the CITIC Metal. I have 3 questions. In the half 1, the CITIC Metal performance has almost reached the level of the whole year last year. So what's the drivers behind for such wonderful result?

Second, when you are expanding the business in mining and also commodities, what are the latest advancement or developments?

And last question is, what is your international layout for business going forward?

Okay. Thank you for your questions. Good afternoon, everyone. 3 years -- 3 days ago, so CITIC Metal was listed as one of the first company to get listed in here -- sorry, that's 3 years ago. So since 3 years ago, we have enjoyed faster growth. And we have also enjoyed very fast growth regarding some key projects and key businesses, and we continue to tap into that momentum of growth. In half 1, our total profit has almost reached the level of the 2025 whole year. So of course, we have seized good market opportunities and some other reasons.

In terms of the half 1, the operating revenue reached RMB 86 billion. And the net profit attributable to the shareholders achieved also a very high level. So for example, it reached RMB 2.6 billion with a Y-o-Y increase of 85%. So first of all, I'd like to talk about the main business of mining investment and also the commodity business and its progress. In terms of mining investment, we'll continue to enhance or strengthen the post-investment management of our projects. So the investment earnings or revenue has contributed greatly to the overall improvement of our profitability.

So globally, we have allocated 3 projects. In Peru, our mineral investment project is the Las Bambas mine. In half 1, the production went very well and steadily. Meanwhile, it has quite a high level of the grade, and it has the improvement in the processing volume of all driving in half 1. The Las Bambas produced 210,000 tonnes of copper ore and the put in half 1 for this year is basically the same as that of the whole year of last year. The output of copper in the second quarter was 109,000 tonnes with a month-on-month growth of 8%. This has driven the continuous improvement of the overall profit, and it has brought a nearly doubling of the contribution to the equity profit.

And the second project is the Ivanhoe Mines, which has 3 projects in Africa. For the copper mines, it is the KK copper mine. In half 1, it produced 136,000 tonnes of cathode (sic) [ anode ] copper, blister copper and also salable slag selected ore and the new mine in Kipushi set a new record for the output of new mines in the second quarter, the output reached 70,000 tonnes and a total of 135,000 tonnes of goal both in the first half. And the Platreef platinum metal polymetallic mine in half 1, it steadily promoted the climbing of the first phase production capacity and the progress of the second phase construction.

The third project is in Brazil. It's the CBBM, the world's largest and most competitive lithium mine, whose production sales also increased in half 1. So for the commodity trade, we actively seize the structural opportunities in the market and optimize market layout, product mix and business model. About copper business, we focus on strengthening market research and judgment, optimize resource organization and flexibly follow the pace of production sales. We made every effort to promote the collaborative efficiency of a variety trade across the entire industry chain.

You may know that our copper trade covers copper ore in the upstream, blister copper in the middle stream, electrolytic copper in the finished product and recycled copper. In terms of the niobium business, we deepened strategic cooperation with the Brazilian mining companies and steel is our traditional core market. We further consolidate advantages in the area than in emerging markets, especially in the high-temperature alloys and optical glass markets, we have achieved positive results. And China's demand continues to grow. In half 1, the company still maintained over 80% of market share in China. Overall sales have reached a new high and our leading position in the industry has been consolidated.

In the aluminum business, we seized the market opportunity to have the bauxite to alumina to electrolytic aluminum. We have the whole chain on basis of consolidating the domestic market, we accelerate expansion of the reexport trade model at home and abroad.

Then the second question is about the driving force for the future growth. We believe that the major growth driver is our dozens years of expertise in investment in business, trade business, technology innovation, risk mitigation, talent echelon. Due to time constraints today, I will only focus on 3 areas, for example, mineral investment and commodity trade and technology innovation. The first one is the investment in the scarce, minerals, this is one of our future development drivers.

For the portfolio of industry and scarce mineral resources, we have a prominent advantage. We have the overall resource allocation, striking a balance between strategic security and economic returns. Our highlight is the company is strongly insisting on direct investment in the upstream. We already showed you the 3 projects introduced, which have the high market recognition worldwide. They are scarce and valuable, and they have great growth potential as the core driving force for future development.

On the other hand, in the middle and the lower streams of the industrial chain, we also have the deployment. We have the broad market influence and strong business synergy. We believe that the rational resource allocation is one of the cornerstone for our long-term competitiveness. Number two, we have the philosophy towards commodity trading that is the trade plus. With the trade plus model, we create value and build a differentiated advantage in terms of upstream resources through the world-class mines, we have obtained some offtake and distribution rights in the third-party market. We strengthened in-depth cooperation with leading mines, enhancing our resource acquisition and guarantee capabilities.

And about the downstream market, we continue to expand the global service network. And in terms of business cooperation, we reach out to the core clients in the ferrous and nonferrous metal sectors, and we help customers to maximize their success. That is also the foundation for our own success.

Number three, we believe technology innovation will empower our growth. Technology innovation is one important DNA of CITIC development. During the 15th Five-Year Plan period, we have elevated technology innovation to a crucial part of the corporate strategy. Over the past 3 decades, in the niobium business, we have successfully promoted it to China's steel industry and many new material fields. And now we are working on the nanocrystal material, aerospace material, superconducting material, battery material and the optical glass and other advanced materials. We are also committed to building a more open and collaborative innovation system, focusing on the Research Institute of Advanced Materials for communication technology with the mode of independent innovation and joint R&D.

Your third question is about the overseas business deployment in the future. I would like to give you a briefing, in the future, in terms of overseas business, we will continue to center around our principal business. We will continue to deepen the layout of global resources and accelerate the new pattern of international business in terms of global resource layout. Our goal is to continuously consolidate the base with long-term competitiveness. So we will continue to improve our investment research and development capability.

In terms of the project, we work center around the new quality productive forces, and we will continue the work in the varieties of copper and aluminum. We will focus on the projects in Africa, South America, Southeast Asia, Central Asia and other key regions to deepen our research capability and broaden sources of high-quality projects. In terms of building capabilities in international trade, we have set a goal to improve resource acquisition capabilities, enhance channel extension and differentiation and refine customer service capabilities and use the trade plus model to build differentiated advantages.

So specifically, we will leverage our company in Singapore to expand to the market opportunities in Southeast Asia. And in Africa, we also will have a pilot -- pivot of the Tanzanian company to strengthen the exploration of the African region. So for the overseas market layout, the first is the commodity trade, the place of resource acquisition. The second is the world major consumer market. The third is the center of global traders. We will center around these 3 to seize opportunities.

Then about technology innovation, we also have the consideration overseas, for example, leveraging global resources and strength to empower business development to provide technical support and innovation momentum for business development. While we once mentioned a cup of coffee absorbing the energy of the universe. So I also mentioned earlier, our technology innovation must absorb high-quality global research forces and uphold the concept of open cooperation, the joint R&D and also the joint promotion. That is the model we would like to approach. And this is my answer to your 3 questions.

Again, on behalf of CITIC Metal to all these investors and the experts, analysts and media friends who have been supporting us. I want to say thank you. We hope you will continue to support us. Thank you very much.

Yes, we are already 10 minutes later than scheduled. Please understand that. We have addressed your questions one by one. At the new starting point of the 15th Five-Year Plan, CITIC has a clear strategy and strong comprehensive financial strength. Our subsidiaries deliver steady distinctive performance. China CITIC Bank is stabilizing and rising net interest margin with NPL ratio down for 7 consecutive years, driving better results and market value. And CITIC Securities hit record revenue and net profit, advancing toward a world-class investment bank.

CITIC Special Steel completes the Stemcor equity closing and launches its European R&D center for innovation and globalization. CITIC Metal maintains China's top market share in niobium products, leveraging its dual driver model of trading and investment. CITIC analysts once noted in a research report that CITIC holds many hidden gems as the revitalized champion to explore initiatives move forward. We believe more impressive hidden gems will be uncovered across CITIC's diversified businesses. Through years of practice, we have deepened understanding of the nature and the rules of market value management. We would like to share our insights with you today.

First, CITIC Limited embarked on market value management at an early stage, unlocking corporate value through value-driven reforms. Back at the start of the 14th Five-Year Plan, CITIC elevated market value management to a strategic priority. It rolled out the Phase 1 reform and built a full-fledged methodology, which has been continuously refined ever since. In the later period of the 14th Five-Year Plan, we pushed ahead with the Phase 2 market value management reforms, focusing on 3 key measures: launching the first shareholder return plan, rolling out voluntary share purchases by senior and mid-level management at their own expense, and implementing market value-based assessment across all the listed subsidiaries.

HSBC analysts described the 3 reforms as a watershed of CITIC Limited's valuation upgrade. On the widely watched dividend issue, the Board and the senior management have delivered more than they promised. Despite various challenges, we maintain a long-term stable and predictable dividend policy. In 2024, the company unveiled a 3-year shareholder return plan, which comes to an end this year at the CITIC Group's Board meeting held last week, Chairman, Xi clearly stated that. And also now, we are -- we have started to work on a new shareholder return plan covering the 15th Five-Year Plan period.

From the perspective market, capital market series stock price performance is determined by various factors such as fundamentals, policies, capital conditions and beta can be encountered but not pursued while alpha can be obtained through striving to be the best. In recent years, amidst the complex and changing environment, we have not only brought better returns to investors, but also created tangible alpha returns. During the 14th Five-Year Plan, despite the Hang Seng Index falling by 5.88%, CITIC Limited stock price bucked the trend and rose by 209%, with its market capitalization increasing by over HKD 190 billion, achieving its first 5-year consecutive increase since its overall listing.

So and also today's stock price is also very quite good. So in terms of the morning closing price, the share price has reached in total HKD 13.8 billion, so up 19.1% from the beginning of the year, so making the -- reaching a record high in the past decade. So the past years, so actually, our practice over the past few years have proven that there is a difference between doing and not doing in market capitalization management. And second, CITIC has always been humble in learning, understanding and applying the laws of capital market, also integrating them with the company's development logic.

There's no unified and authoritative standardized textbook for market value management. But we adhere to the principle of value creation as the foundation, value transmission as a medium and always respect and learn from and apply the laws of the capital market by focusing on speaking instead of listening. So we promote a close alignment between business logic and capital market valuation logic. First of all, speaking means we are telling the CITIC story well. We focus on improving the coordination and linkage to the performance announcement between parent and subsidiary companies.

Starting this year, interim results, the timing of regular performance disclosures. Performance briefings for CITIC's listed companies has been generally advanced, forming a coordinated flying this model. The content of the interim performance announcement and semiannual reports have also been specifically improved, enriched, optimized, focusing on the 3-3-5 strategy.

So presenting company's operating results in the half 1 of the year from aspects of the financial quality improvement and industrial revitalization and also many other aspects. In recent years, we have been going out more frequently to communicate face-to-face with investors and analysts, striving to clearly explain the synergistic advantages of a comprehensive company. This is also particularly important for a comprehensive company like CITIC.

So secondly, listening also is very important to us. We have established a mechanism to continuously sort out and summarize the opinions and suggestions collected from road show exchanges in a timely manner, forming special reports to submit to the company's Board of Directors and senior management.

And the demand and the suggestions and needs from the capital market are fully absorbed into the company's internal governance and business management decisions and the laws and the rules of the capital market and the company's business logic are well integrated. At the same time, the positive feedback from the company's Board of Directors and the management on the voice of the capital market is also a valuable incentive for investors and analysts. So market trust is built and accumulated bit by bit through such honest exchanges.

Third, we have gained a deeper understanding and a clearer view for the development of during the 15th Five-Year Plan period. And we are fully committed to leading valuation through strategic reshaping. So in early stage, the current price-to-book ratio is only slightly over 0.4x, indicating a clear value gap. The diversification discount in the capital market is a challenge we cannot avoid, but it doesn't mean there's no way to overcome it. So the strategic shareholders of the company and also the ITOCHU of Japan is also a comprehensive enterprise, but the market value performance has exceptionally excellent in recent years.

And we also are building a very clear map and view to do the right things. So only by building a better management beacon characterized by good leading system, and we can -- it can guide us to do the right thing with clearer strategies. And also, I believe the value of our company will be reemphasized by many more investors and analysts. And I believe the value return is still ongoing. And I believe there are many more ideas work we need to push forward together with every other stakeholders. So I really like to thank all of you for your enthusiastic questions. The on-site Q&A session for this interim results announcement is now concluded. Next, we will answer to all the online questions through the written format. Thank you.