The general director of the group "Cherkizovo" complained about personal household plots of Russians

Sergey Mikhailov told about the company's updated strategy and gave the officials advice how to support consumer demand.
One of the largest Russian agricultural holdings - Cherkizovo Group has almost completed the main investment projects in agriculture: the company is the leader in the production of poultry meat and number two in pork. What's next? In recent years, Russia has fully provided itself with these types of meat, and access to exports is limited due to constant outbreaks of animal diseases. "Cherkizovo," however, considers the home market to be strategically important, regardless of export opportunities. But now the main emphasis will be on products in consumer packaging, the global goal is to become the first to sell such products, says CEO and son of the founder of Cherkizovo, Sergey Mikhailov. An ambitious task is to be solved in difficult conditions, when demand for sausages and delicacies is falling: consumers are increasingly eager for a healthy diet, and the restaurant market with food delivery services is growing. But the choice is made: Mikhailov assures that Cherkizovo has abandoned the organic growth of the agro-division.

- What is the next step in the development of Cherkizovo after the completion of large projects?

- The company's strategy is changing. If earlier we were aimed more at organic growth, now we have entered the phase of qualitative growth. Our portfolio is rebuilt in the direction of products under own brands and with higher added value, and production itself is aimed at increasing efficiency. Together, this will increase profitability.

- Does this mean that the group will gradually be transformed from the producer of the agricultural commodity exchange into the producer of food products for the end user?

- We have always been and remain the company that produces products for the end user: the business of Cherkizovo began with sausage production. We sold a small share of the poultry to the processors, the rest - the branded chicken meat "Petelinka", "Chicken Kingdom", "Mosselprom". Over the past three years, we have abandoned the sale of live pigs, reduced sales of carcasses.

Today, more than 60% of Cherkizovo's revenue comes from branded products and high added value, that is, the divided meat in consumer packaging, cutlets, meatballs, shish kebabs, marinated products for baking, and so on. Therefore, our main focus will remain on retail, another direction - food service for companies such as McDonald's, Burger King, KFC. Their combination will allow us to implement our strategy.

- How much do you plan to increase the share of such products in the group's revenue and when?

- The task - in the near future, possibly by 2020, to bring this level to 80%.

In general, the company made a choice: it is no longer important for us to be the leader in terms of volumes, although today we are the largest meat producer in the country in total - in different categories. It is important for us to lead in the target categories: we are engaged in smoked sausage, or ham, or something else, we want to be the leader in each category. If it's a branded chicken, then Petelinka is undoubtedly the number one brand. We also want to be not the largest producer of turkey, and the leader in sales of turkey - under the brand "Pava-pava" - in Moscow and St. Petersburg.

The global goal is to be the first to sell products in consumer packaging.

The future of brands

- There are a lot of brands in the Cherkizovo portfolio, which the company has gradually accumulated over many years, including through M & A deals. In your opinion, should it be optimized?

- We to some extent have already optimized it. The main chicken brands, "Petelinka" and "Pava-pava", we consider as premium with a focus on Moscow and St. Petersburg. Now we are working on the re-positioning of the Cherkizovo brand, which is still presented only in the category of sausages and pork; our goal is to make this brand umbrella for all types of meat protein that we produce. In addition to sausage and pork, it can also be chicken, and turkey, and semi-finished products. It is conceived that the brand "Cherkizovo" for products of mass demand should take its place in the whole country, and not only in regions with the highest purchasing power.

- Marketers do not tire of repeating that it is difficult and even impossible at the federal level to develop under the umbrella brand products of everyday demand.

- It's just an eternal debate of marketers, to have in the portfolio one global brand or many point brands.

It is very difficult to cover with one brand different categories in a wide price range, but this task is quite feasible if you focus it for one price niche. The consumer understands that "Pava-pava" is a turkey, "Petelinka" is a chicken. It's more difficult to position Cherkizovo so that it's chicken, turkey, pork and sausage, but in one price niche it's possible.

The fate of the brand "Chicken Kingdom", which will be competing with "Cherkizovo", remains open - a merger may occur here. This also applies to the Vasilievsky broiler, with strong positions in the Volga region and directly in Penza, where the Vasilyevskaya poultry farm of the group is located.

- The company's brands are not associated with Cherkizovo itself.

- The big question is whether it is necessary.

- Why?

- Will it be easier for you because it's Cherkizovo? You buy "Petelinka".

- There is a story in my head.

- This story is more for partners and PR. And "Petelinka" feels well autonomously, associating with an environmentally friendly product. This is just an example, when there are more advantages in working with a particular brand, so that the consumer can translate clear things.

Meat against sausage

- By the way, about the consumer: how much has the consumer and his tastes changed since the beginning of the crisis?

- We periodically conduct research, an obvious trend is the transition to a smaller package.

There has been a weak trend for meat so far - requirements to everything connected with the naturalness of the product and EZL have increased. This trend manifested itself earlier and more vividly in the dairy market: people began to pay attention to the composition, so that the milk was not made of powder, but fresh.

In general, the purchasing power of the last 2-3 years is not experiencing the best of times.

Sergey Mikhailov

General Director of the Cherkizovo Group

He was born in 1978 in Armavir (Krasnodar Territory). He graduated from Georgetown University (USA), received a bachelor's degree in Finance
1998 interned as a financial analyst in the investment bank Goldman Sachs, in the same year he headed his own telecommunications company aTelo Inc. (Washington)
2001 marketing manager of Cherkizovsky meat processing plant
2002 Deputy Director General for Marketing and Sales of the same plant
2003 general director of the agro-industrial complex "Cherkizovsky"
2005 General Director of the Cherkizovo Group

- People continue to save?

- Yes, and in the regions too. Partly smaller packaging formats allow you to spend less money and balance.

- In a recent study, GfK once again confirmed the trend in recent years: sales of meat products are declining. Can you confirm this?

- Consumption of sausages in general stagnates, because it historically was at a very high level. People began to switch to other types of protein, when meat became more accessible - I mean that it became more on the shelves. After all, 10 years ago we did not have such a choice of meat: pork, chicken, turkey; chilled, packed ... Sausage is now trying to stay in this row. Its consumption falls annually somewhere 2-3% (while remaining very high - more than 16-17 kg per capita). Exception - smoked sausages: they are associated in people with a meatier and more natural product.

- This is confirmed by GfK analysts.

- People still believe that in boiled sausages and sausages it may be incomprehensible what, and in smoked sausage - only meat. This segment continues to grow, and we are leading in it with a large margin.

Including, therefore, we invested about $ 100 million in the construction of a new plant in Kashira and we are already launching it - it will allow us to double the production capacity of Cherkizovo in the segment of sausage sausages, which means that we will further increase our market share.

- Have you updated the strategy, do you plan to continue to expand production capacity in this regard? For example, to build a second line in Kashira.

- Let's just say: the general focus is on getting away from agricultural investment and increasing the production of value-added products, including sausages. Today these are smoked sausages, and tomorrow there may be something else. Kashira-2 is also on schedule.

- What exactly?

- Speech on further expansion of production of other types of sausage products; details are now being worked out, but in terms of volumes it will be comparable with the first stage.

We also plan to increase the production of turkey from 55,000 to 80,000 tons, since the slaughter plant, incubators and other infrastructure are designed specifically for such production.

- In Russia, many turkey projects have been implemented - consumption is no longer growing, having stopped at the level of 235 000 tonnes. At the same time, companies continue to announce plans for expansion. Will it bring down the market?

"He's already fallen." In early 2018, turkey meat was cheaper than chicken meat, which is absolute nonsense. Our strategy differs from competitors: for a year since the launch, we almost completely switched to turkey sales exclusively under the Pava-pava brand. Therefore, here again our production will meet the strategy and its scale will depend on the portfolio of orders at a particular time. In addition, we can always use our vertical integration possibilities: for example, making turkey ham or turkey sausages in larger quantities.

- Is it too expensive to use such a turkey in processing?

- Not all turkey meat can be sold in consumer packaging, and our task is to sell the entire carcass with added value: under the brand or in the processed form.

- How much a company can invest in the tasks of the updated strategy?

- If we abstract away from M & A deals, then this year we will complete the main investment stage. In the future, investments will become significantly less, mainly in the modernization of existing assets. Of the large investments - the construction of Kashira-2 worth 10 billion rubles. However, the implementation of this project will take several years, another 2.5 billion rubles. it may be necessary to build up additional volumes for the turkey.

Diseases and how to deal with them

- About two years ago, many manufacturers sought to establish export supplies. Has your position changed: do you focus on exports or are you looking for growth points within the country?

"We have always focused on the domestic market, because here we still have many opportunities for quality growth. He always was and remains for us in priority.

Export takes place in two formats. On the one hand, this is the forced balancing of our assortment - for example, chicken legs and pork patches in Russia are not consumed in contrast to Asian countries. On the other - in this way we can sell products with high added value. As suppliers for McDonald's, Burger King or KFC, if necessary, we could export the same nuggets to the institutions of these networks around the world. True, it is unlikely that these will be large volumes - no more than 5% of the group's revenue in the 3-5 years perspective.

- Yet the main export markets - China, Japan, Korea, the European Union - remain closed to Russian producers.

- Unfortunately. The main problem here is an epizootic situation. Not all countries, including the European Union, recognize the principles of veterinary regionalization in relation to Russia. In fact, this means that in some region the bird sneezed - the whole country is closed. The situation with African swine fever (ASF) also detracts from the prospects for opening export markets for us.

In the long term, we believe that Russia will become one of the leading exporters in the meat and agricultural products market as a whole. However, in the next 3-5 years to achieve this will not be easy.

- Russian officials have been trying to solve the epizootic problems for more than 10 years, and this can not be done in any way. As a representative of big business, what solutions and actions do you lack at the state level?

- Unfortunately, there are still more declarations and slogans, but there are few actual actions. All this is well understood. The necessary actions are very difficult and unpopular, some of them can not be implemented because they do not comply with the Constitution. For example, we can not prohibit all in the country of personal subsidiary plots (LPH) to keep pigs. But to abandon the LPH in 5-6 regions, which account for 70% of the total pork production in the country, it would be quite logical.

- Belgorod Region in the beginning of 2010 developed a program to buy pigs from the population in the fight against ASF.

- You see, these are all half measures: today the region bought pigs, and tomorrow the people started making new money for this money. The only thing that saves from catastrophic consequences is the low population density in Russia. Although, perhaps, this stops radical action. Today, there are a little more than 20 million pigs in the country, of which 20% are in private households, so material losses are still tens of thousands of rubles. If we were talking about millions, as, for example, in the 80's in Spain, when the country was forced to destroy 80% of the population due to ASF, we would have looked at the problem differently.

- Over the past 10 years hundreds of billions of rubles have been invested in the production of poultry and pork. It turns out that now all these investments are under threat.

- While we live in such a paradigm that within a radius of 10 km from our farms there is a sea of ​​small farms and we can not do anything about it. In the end, we can only invest in biosafety. We soberly understand that these risks are laid directly on us - the producers of pork and in everything that happens, only business is to blame. The modern pig farms have a high level of protection, but even this does not give a full guarantee. Unfortunately, the human factor continues to play a very large role.

- You mentioned the human factor. How do you work with the staff in this direction? Can you really think of nothing that will prevent viruses from entering your poultry factories and pig farms?

- Believe me, we invested hundreds of millions of rubles in biosafety. My transport, people take a shower twice each time to enter the perimeter of production. We separately conduct explanatory work with the staff, but this is all a consequence. Until there are hard decisions, the problem can not be solved. We would like the government to be ready for more radical measures to combat these infectious diseases.

- What are the measures?

- Minimize smallholdings in those regions that account for the majority of the country's meat production. As a consequence, the fight against wildlife in these regions would be more effective. In addition, it is necessary to strengthen the work of veterinary services both at the regional and federal levels. We often notice the lack of timely notification and information when there are outbreaks of disease. Sometimes such cases are even hushed up. As a result, we know from our own channels, for example, about the outbreak of avian influenza in a particular village, and official information from the authorities comes only after a few days or even weeks.

- It is true that when in the Penza region at the end of June the bird flu reached large enterprises, local authorities first tried to hide the situation, because of what the governor's decree on quarantine was released much later than it should?

- I'm not ready to comment on the situation in detail, I can only say: we learned about this much later than we would like.

State support - consumer demand

- So far, the support of domestic agribusiness continues mainly through subsidies and subsidies. However, it is obvious that after self-sufficiency for basic types of agricultural products, state support should be transformed. How does it see such big companies as Cherkizovo?

- Obviously, since import substitution for pork and poultry has already taken place, it is necessary not to stimulate production growth, but to reorient to maintain consumer demand - otherwise we face overproduction. These can be food allowances or some kind of analogue of the American program of preferential food purchase (food stamps). It can also be indexation of pensions and salaries - all that leads to increased demand.

In the near future, there will be more and more challenges associated with overproduction, and we hope that the state will develop more sophisticated mechanisms for balancing markets.

"Is there really such talk?" Last time we have a year, a record harvest, we reached the ceiling for meat - objectively it needs to be regulated.

- The grain has a working valve in the form of exports: the current grain infrastructure allows sending more than 50 million tons of grain abroad, this saves us. As for meat, it's not so obvious here. Export markets are closed, and where there are open, especially no one waits for us. Export subsidy, we can not get - Russia has deprived itself of this opportunity, when it joined the WTO.

The mechanisms can be different. It is possible, like the European Union and America, to balance production, using export subsidies for other markets and thereby keeping prices on domestic ones. Another option is to create a stabilization fund: the same America buys chicken legs for hundreds of millions of dollars, releasing them to the market as needed. Or, going back to the food stamps, with their help you can not just support the producers through subsidies to the population, namely to regulate the market, every quarter determining in the basket those products in whose markets intervention is required. For example, today for cards you can buy milk and chicken, and tomorrow pork - when it comes overproduction. This is a colossal instrument, on the one hand, but very complex - on the other, therefore requires a conscious approach to regulating the industry. Russia has long worked, based on the needs of a scarce market, this era has already been completed.

- Do we have to learn to work in new conditions?

- Yes. We need to review the mechanisms of state support and think about new ones that would allow us to regulate the market while maintaining a minimum investment attractiveness. The goal is to avoid the situation of last year, when the prices for poultry were so low that many producers had to leave the market.

- But it's good when the strongest players remain in the game.

- These are not necessarily low-performing companies. And if someone invested recently and created good production, but simply did not manage to pass the investment phase? In the case of self-regulation of the market, including, they may be on the verge of bankruptcy. The last 2-3 years among the producers of poultry, we have seen this very often. While such situations did not arise with pork, but if it happens, everything will be much worse. The cycle of production of poultry is short - 2-3 months, so you can react to price changes, unlike pork, where for 10 months nothing can be changed.

Under the sign of Mercury

- In May, the industry received not only a new minister, but also a curator in the government, very savvy in agrarian matters. What do you expect from new managers? What dialogue do you expect?

- We are optimistic about the new leadership in the industry. They have extensive experience behind their backs and will easily immerse themselves in all the main problems, work out with the business the necessary solutions and determine the priority vectors of development.

- You have already met with Deputy Prime Minister Alexei Gordeyev and Minister of Agriculture Dmitry Patrushev. What are your impressions of communication?

- Certain formats of communication with the ministry have been worked out, their dialogues are based on interaction with industry alliances. Those, in turn, represent our position at a very high level. We consider this cooperation successful - it must be continued to develop. At the same time, our company is invited to various meetings, so we, as a business too, are directly involved in the dialogue. Recently we discussed the launch of the system "Mercury" (electronic veterinary certification .- "Vedomosti").

- Have you overcome this difficulty?

"It's a very difficult task to scale the country-to deploy such a complex system at one time." While several weeks have passed, there are difficulties, not without it. But I can say: how Mercury works, far exceeds our expectations, everything is very good.

- In your opinion, is this system really necessary?

- There are no ideal systems, but on the whole it definitely has more pluses. Work on the preparation of the system is huge, and it would be foolish not to run it.

- It really helps to solve the problems associated with animal diseases?

- It will definitely help to add transparency and help in the overall administration of processes. The latter should help reduce the burden on business - the lack of automation generated considerable costs.

- Some manufacturers criticized electronic certification for finished products, indicating that the system is permissive. They referred to the experiences of other countries, where there is nothing like this. Do you agree that such regulation is redundant?

PJSC "Cherkizovo Group"

Agroindustrial holding

Shareholders (as of June 30, 2018): MB Capital Europe and affiliates for the Babaev family - Mikhailovs (over 89%), the Spanish Grupo Corporativo Fuertes (8%), top management (0.48%), the rest - Free float.
Capitalization on the Moscow stock exchange - 46.2 billion rubles.
Financial indicators (2017, IFRS):
revenue - 90.5 billion rubles.,
net profit - 5.6 billion rubles.

It unites eight complete poultry complexes, including turkey, 16 pig farms, seven meat processing plants, eight feed mills, elevators with a capacity of over 700,000 tons of one-time storage, and more than 287,000 hectares of agricultural land. In 2017 the company produced 549 335 tons of poultry meat, 211 750 tons of pork in live weight, 236 638 tons of meat processing products, 449 215 tons of cereals.

- We do not see minuses. What risks can there be?

- The system may break down, and you will not be able to ship perishable products.

- For this, the system should work. If everything is done in electronic format and it works, we do not see any disadvantages. The main thing is that the system processes a huge array of data - while it copes with this task.

- At the beginning of the year the issue of marking goods was discussed. All the food products were included there. How much will Cherkizovo become critical if this marking is mandatory?

- We do not see any sense in such a marking of the goods, because we already have a modern and complete system of traceability. In Russia, there is no problem with the smuggling or counterfeiting of such standard food products as, for example, milk or sausages. It is also not entirely clear how this system will relate to the import of goods without such labeling. In fact, this is an extra burden on the business, especially the small one.

The village needs people and robots

- In Russia there is a permanent crisis. In the world it is believed that the village always remains an asset to the state: own farming can support the family. In Greece, Spain, Portugal people in times of economic instability went to the village to survive. When the hard times passed, they could return to the city. The Russian village has already achieved this development? Business should be on hand.

- It's a philosophical question, but it's no secret that thanks to modernization and evolution in agriculture over the last 20-30 years, the number of employees in agricultural production has greatly decreased. For example, before on Kuznetsovsky pig complex "Cherkizovo" in the Moscow region more than 2000 people produced 10 000 tons of meat, now 1500 employees make 300 000 tons. The same is in plant growing: for 1000 ha 5-6 people work. Automation affects all sectors of the economy and the agro-industrial complex, including. To be afraid of this is wrong. Russia was lucky that here this industrialization happened later than in other countries. At the same time, new production requires high competence from employees, so today there are often not enough people.

- Are highly skilled professionals still luring into the countryside?

- Our complex in Kashira is a highly robotized production. We call it "industry 4.0". It's not just automation of production processes, but also their synchronization with the help of IT-system. If in the traditional production of sausage sausages we employ about 700 people, then at this plant 200 employees will be able to produce twice as much. However, the requirements for them are higher. And the question of where to get these engineers, of course, arises: we have to look for, train, overpay, so that direct savings are not always there. Therefore, the issue of training such qualified personnel today should, perhaps, even at the state level. We, as a company, are always interested in having as many of them as possible.

- Have you discussed this topic with regional educational institutions, universities? Perhaps joint programs have already been launched?

- While we are at the beginning of the road, but the trend is laid and eventually gain momentum, we must think and create special programs with the support of the government.

- What about the search for cadres not from the sphere of technology? Are they also missing?

- I can not judge what is happening in each separate village, but in the regions of our presence we often experience a shortage of skilled workers - in recent years we have had to raise salaries significantly.

"Many companies invest to improve traditional processes through new IT developments, for example through face recognition technology. Do you have something similar?

- Now we are testing the project using machine vision to determine the quality of products, and we already see the potential. There are also pilot development of the interface for processing certain types of documentation, for example, references. The bottom line is this: the robot distributes up to 90% of the necessary data automatically in the automatic mode, and the person behind it then only recheck the correctness of the execution of the work. Thus, many operations of back-offices - not the most creative work - can be robotized. Now it happens with operators of call centers, which are replaced by bots.

- How much new technologies will Cherkizovo help to reduce labor costs?

- The average cost of the company's payroll account for about 12%, while in Kashira it is less than 1.5%. Therefore, there is a reserve, but I would not say that it is colossal, and objectively it is not the number one task for us now.

Development scenarios

- De jure "Cherkizovo" remains a public company, but it is de facto private. Do you plan to revise this status in the near future?

- We are considering different strategies. In many respects this will depend not only on us, but also on what is happening in the markets, as well as on the political and macroeconomic situation in the country. If there is an opportunity, we are ready to return to the market and significantly increase the number of shares in free circulation to once again become a full-fledged public company. But this is one of the scenarios.

- That is, the purpose of the spring SPO was not so much to attract money, how many to confirm the status of a public company?

- Yes. And if we decide to do this, then the qualitative distribution will be a prerequisite for placement. In addition to a good free float, the company had a wide pool of investors, which means good liquidity - plus the company's valuation is important. Today, Russian agricultural companies often trade below 6 P / EBITDA [capitalization / EBITDA], and the risks only increase, so there is no special motivation for being a public company - it is very expensive to attract money.

- Does the group have enough funds for the planned development?

- Yes, therefore SPO is not an end in itself.

- Do you allow the sale of the company and exit from the business?

- We definitely do not sell the Cherkizovo Group. At least, now this task is not worth it.

- The market says that strategic investors came to you. It's true? Many people are willing to invest money in the Russian agro-industrial complex, CP Group and TH Group are actively investing.

- We constantly communicate with different investors, but the question arises. Here we have a long-standing partner - the Spanish Grupo Fuertes with about 8% of the capital "Cherkizovo", and we clearly understand that in addition to money we get from them as a strategist. That is, it is not only expertise in the production of turkey - they are in principle a strong industry player. Therefore, we are open to various kinds of cooperation, but we must understand what and from whom we will receive. If we see partners who, for example, help us significantly improve the situation on opening Asian markets or export strategy to the Middle East and Asia, then we are ready to discuss the options.

- In the prospectus for SPO, one of the areas where the group planned to send money was called M & A deals. You at the expense of such transactions which directions do you want to strengthen or create?

- We continue to monitor the markets. We are interested in quality players with a good share or quality players who will help us to provide even greater synergy. In addition, we are ready to consider strong players with a key stake in regions where we are not yet represented. Just the volume for the sake of volume is uninteresting to us.

- Then why the group "Altai Broiler", the agreement on the intention to buy which was signed by Cherkizovo?

- There are several reasons. First, the purchase of this asset will give access to new interesting regional markets, where we are practically not represented, primarily the Urals and Trans-Urals.

Secondly, Altai is a grain region; accordingly, it becomes possible to produce products with a lower cost price. And the last thing: the competition in this region is much lower than in the European part of Russia, and this is important for us.

And we plan to produce products under the former brand "Altai Broiler", which is familiar to the local consumer.

Of course, this transaction will allow us to consolidate the leading positions in the production of chicken meat, "Altai Broiler" in 2017 produced more than 67 000 tons of products in live weight. With a successful outcome due diligence, the transaction will be closed in the near future, we will use the funds as our own and borrowed.

- Are you still negotiating with someone?

- I do not comment on specific deals - the market is small. I can identify general directions: we are more interested in a bird than pork or sausage production, because in the first case very few new players, in the second - we are more focused on the creation of new industries on the principle of Kashira. But on the whole, we are completing the organic growth of our agricultural unit, further - only the development of products with added value.

- Do you plan to invest in new directions?

- In completely new - no: only in those proteins that we already have. Beef is not interesting to us, lamb - too, did not look at the fish. Perhaps, we will diversify the work on processed products.

- Many producers of food products are aimed to actively develop sales on the Internet through their own showcases or partners. What are the plans for Cherkizovo?

- We have not thought about this deeply. While we are running everything on the project with the network "Myasnova" (Sergei Mikhailov and his brother Eugene have 50% of the company according to the USRLE - Vedomosti) - they think more about it. As it seems to us, the delivery of products has not yet been thought of an effective solution.

The question arises as to how to take the products: it's one thing when a customer comes to the store and takes out the selected goods himself; another - when it is necessary to do it for him. We are following the topic, there is a lot of desire to develop in this direction, but so far we do not see economically justified solutions for this.

Land for construction

- Several years ago your family left the project with a Polish developer, but you still have land in the suburbs. On them you were going to build a residential complex in Lobnya. Now will you do the project yourself?

- We have a number of lands, we have done more redevelopment work. We have never seen ourselves in the role of developers.

- Have you already found partners?

"We are ready to do [projects] in partnership, but for the past few years we have just been observing from the outside. We are sure that the situation in the economy is normal, and taking into account the fact that mortgage lending will become more affordable, the market should come to life, and then we will more actively consider participation with profile players in this market.

"We know you built a golf course." How did you get involved in this sport?

- It was one of our development projects. The field was designed by the cult golfer and architect of golf courses Jack William Nicklaus, the operator will be the world leader of IMG. In recent years, the housing market has been very uncertain, so we focused on developing the infrastructure of our land to create an additional value for them. Now we are completing the construction of the club house, and then, perhaps, on this basis we will implement residential settlements.