Maria Xin - IR Director Donald You - Co-founder & CEO Conor Yang - CFO Alex Yan - Co-founder & COO.

Amanda Chen - Morgan Stanley Evan Zhou - Credit Suisse Juan Lin - 86Research Tian Hou - TH Capital Ida You - CICC Ella Ji - Oppenheimer Henry Guo - JG Capital.

Good morning or good evening and welcome to the Tuniu Corporation fourth quarter 2014 earnings conference call. [Operator Instructions]. I would now like to turn the conference over to Maria Xin. Please go ahead. Maria Xin^ Thank you and welcome to our fourth quarter 2014 earnings conference call.

Joining me on the call today are Donald Yu, Co-founder and Chief Executive Officer, Alex Yan, Co-founder and Chief Operating Officer and Conor Yang, Chief Financial Officer. For today's agenda management will discuss highlights for the fourth quarter 2014 and the fiscal year 2014.

Before we continue, I refer you to our Safe Harbor statement in earnings press release which applies to this call. I believe we will make forward-looking statements. Also this call includes discussions of certain non-GAAP financial measures.

Please refer to our earnings release which contains a reconciliation of non-GAAP measures to the most directly comparable GAAP measures. Finally please note that, unless otherwise stated, all the figures mentioned during this conference call are in renminbi.

I would now like to turn the call over to our Co-founder and Chief Executive Officer, Donald Yu..

Thanks Maria. Good day everyone. Welcome to our fourth quarter and full year 2014 earnings conference call. I am pleased to report that we ended the quarter with a solid topline growth of 91% year over year.

As we continued to expand market share rapidly, Tuniu was ranked the number one online organizer tour provider in China with over 20.4% market share in 2014, up from 17.8% in 2013 according to our research, recent report.

Our growth and market share expansion in 2014 were driven by our ability to aggressively capture outbound and the domestic opportunities. Within the fast-growing online outbound travel market, Tuniu grew our market share from 16% in 2013 to 20% in 2014. We saw strong demand for focus for tours to Europe, Japan and South Korea.

Tuniu remains the market leader in Maldives and tour booked through Tuniu accounted for 17.4% of the overall travel market in China in the fourth quarter of 2014. We also made solid progress in the Japan market, as tours booked through Tuniu accounted for 3% to 4% of the overall online and offline travel market in China in 2014.

These were both impressive achievements, considering that online leisure travel market only accounted for around 10% of overall leisure travel market in China in 2014.

Within the online domestic travel market, Tuniu's gross booking for domestic tours in 2014 grew more than 9% [indiscernible], thanks to our ongoing supply chain [enhancement] effort which focused on direct procurement and the closer cooperation with local operators to provide the best value and flexibility to Chinese leisure travelers.

Now I would like to walk you through Tuniu's strong competitiveness in five key areas which we believe have formed an effective barrier to entry and is difficult for our peers to replicate. They are broad regional coverage, effective supply chain enhancement, rich product offering, high brand awareness and the industry-leading customer service.

Let's start from our regional coverage. We are committed to providing more Chinese leisure travelers across the country with more choices when it comes to booking the tour.

As such, during the fourth quarter, we opened 45 additional regional service centers in second and third-tier cities, broadening our presence to a total of 75 service centers in 73 cities at the end of 2014.

As we execute on our regional expansion strategy, we are particularly pleased to see strong growth momentum from 80 -- from 58 cities with newly-added regional centers in 2014 with their aggregate gross booking from the newly-added cities already contributing to 5.7% - 8.7% of the Company's total gross bookings in the fourth quarter and over 12% in January and February compared with 1.8% in the fourth quarter 2013.

Looking to supply chain enhancement, over the past year we enhanced our supply chain management growth, deepening cooperation with strategic suppliers and continuing transition into direct procurement relationships with the suppliers.

These initiatives are vital component of our plan to improve the quality and the variety of our products, to provide better pricing and greater flexibility for our customers and to enhance Tuniu's price competitiveness. We are increasingly working directly with local tour operators to enhance efficiencies and service level to our customers.

Taking our Sanya tour as an example, in the past we had to gather around 20 people in one single departure city to qualify for an organized tour to Sanya. But through direct cooperation with local tour operators, we can pool tourists across multiple departure cities, fly them to Sanya and therefore organize tour locally in Sanya.

This model was an important driver of topline growth for our domestic tour business in 2014. And significantly improved the efficiencies, while lowering the procurement cost. By the end of 2014 over 50% of our domestic tour involved packaging airline tickets with services from local tour operators.

In 2014 we plan to further optimize our supply chain and expand this business model to outbound tours to certain destinations. In terms of product offerings, in 2014 we added over 60 additional destination countries and regions, bringing our total outbound destinations to over 145 at the end of last year.

We also grew the number of departure cities to 120 by the end of 2014 from 64 by the time of our IPO in May 2014. This brought our organized tour SKUs to 300,000 from 100,000. And self-guided tour SKUs to 250,000 from 100,000 over the same period.

We have divided our broad range of product offerings into different product segments, tailoring to different needs and requirements of Chinese leisure travelers.

We offer price-competitive products to the mass market, while, at the same time, meeting the needs of mid to high-end leisure travelers by offering different product lines such as Tuniu designed tours.

For many destinations we are also seeing a growing trend of customer upgrading their tours packages as Chinese leisure travelers are becoming more discerning and looking for higher-quality experiences.

Moving on to our branding initiatives, one of our biggest assets is our brand and we want to ensure that our customer recognize and trust the Tuniu brand. This is particularly crucial, given the high average price per order in our business.

In the past year we have invested in building Tuniu's brand via comprehensive marketing and advertising channels, including online and offline branding campaigns, mobile platforms and localized marketing events.

Lastly about our customer service and Tuniu's commitment to providing Chinese leisure travelers with unparalleled customer service experience.

Over the past eight years our management, including myself, have read customers' feedbacks and especially complaints every day, to listen to their concerns and their needs, through which we accumulated valuable experience in handling various problems customers might face during their trips and factored the solutions into our product design to preempt these issues.

We are proud that Tuniu's name is now synonymous with industry-leading quality of customer service.

By the end of 2014, we had over 652 advisors; mainly in our Nanjing headquarter with a team of Cantonese-speaking advisors in Guangdong as well as 150 employees of call centers, providing customers with services ranging from advisory to assistance pre, post and during a trip.

This, together with all the other strategies and efforts mentioned earlier in this call are integral and crucial part for Tuniu to maintain our customer-service leadership in the industry. Looking forward, we will continue to invest in the following areas to strengthen our long-term market leadership position.

Regional expansion, product offerings, branding as well as mobile and technology. We will open more regional service centers to further integrate our online to offline customer service and improve the local marketing and the sourcing capabilities. We expect to open 45 regional service centers, achieving a total of 120 regional service centers in 2015.

As we expand and enhance our offering to make Tuniu a one-stop travel solution provider, we will continue to increase our product variety and the price advantage through direct procurement, expand our departure cities and destination coverage and develop new premium-service products that meet the needs of our Chinese customers such as our Tuniu-designed destination travel services, car rental services and free Wi-Fi services.

Regarding branding, we will invest in marketing and advertising campaigns to strengthen our brand awareness. In the first quarter of 2015 we sponsor popular TV shows, Super Brain and I am a Singer. Lastly regarding mobile and the technology development.

In the fourth quarter our mobile contributes to over 65% of total online traffic and 45% of total orders, up from 50% and 35% respectively from the previous quarter. We saw rampant growth from our mobile orders, especially in standard products with lower ASPs.

In the last month our mobile order contributed 70% in tour attraction tickets, 55% in local tours, 81% in train tickets and 57% in cross line. As more customers rely on mobile, we will make ongoing investments to refine our platform to ensure customers have a seamless experience.

In the fourth quarter we also unveiled our Dynamic Package System which enables travelers to customize their own travel products, tailored to each individual's needs.

This system is able to combine trip components from different suppliers to provide truly customized trips, automating and pricing in the hand of our customers, a function that was previously performed manually. This unprecedented technology is unique to Tuniu and provides customers with more flexibility and wider choices.

I will now turn the call to Conor Yang, our CFO..

Thank you Donald. Hello everyone. We are pleased to deliver a strong quarter with the net revenue exceeding top of our guidance and market expected growth in China leisure travel market. Now I will walk you through our fourth quarter and full year 2014 financial results in greater detail.

Please note that all the mandatory amounts are in RMB, unless stated otherwise. You can find the US-dollar equivalents of the numbers in our earnings release. Starting from the fourth quarter of 2014, overall gross bookings for the quarter increased by around 70% year over year to over RMB1.4 billion.

Organized tours accounted for 72% and outbound tours accounted for about 67% of the overall gross bookings in this quarter. For fourth quarter net revenues were RMB928.7 million, representing 91% year-over-year growth.

Revenues for organized tours, which are recognized on a gross basis, were up 88.7% year over year to RMB896 million and accounted for 96.5% of the total net revenues for the quarter.

The increase was primarily due to the rapid growth in demand for travel to certain international destinations such as Europe, North America, South Korea and Japan, and for domestic tours.

The number of trips for organized tours exceeding local tours increased by 140% year over year to over 192,000 and the number of trips of local tours increased by 62,8% year over year to over 250,000.

Revenues from self-guided tours, which are recognized on the net basis, were up 293% year over year to RMB28.6 million and accounted for 3.1% of our total net revenues. The increase in revenues were primarily due to margin improvement in Maldives and certain domestic tours.

The number of trips of self-guided tours increased by 83.7% year over year to over 116,000 in the fourth quarter of 2014. Other revenues were up 26.8% year over year to RMB8.9 million, primarily due to a rise in revenue from service fees received from insurance companies and tourism boards and bureaus which are recognized on a net basis.

Gross margin for the fourth quarter of 2014 was 6.6%, compared to 3.6% in the same period in the 2013. The increase in gross margin was primarily due to cost savings from economies of scale and increasing direct procurement, as well as less price competition for Maldives product lines.

Operating expenses for the fourth quarter 2014 were RMB238 million, up 211% year over year. Exceeding share based -- excluding share-based compensation, non-GAAP operating expenses were RMB227.2 million, representing a year-over-year increase of 197%.

Research and product development expenses for the fourth quarter of 2014 were RMB38.7 million, up 177% year over year. The increase was primarily due to investments in technology personnel for mobile-related initiatives and new product lines such as Dynamic Packaging, destination services and regional services.

Sales and marketing expenses for the fourth quarter 2014 were RMB143 million, up 273% year over year. The increase was primarily due to brand campaigns and advertisements for our mobile business expansion. General and administrative expenses were RMB59.2 million in the fourth quarter of 2014, up 141% year over year.

The increase was primarily due to growing headcount of personnel as a result of our business expansion and an increase of the professional service fees associated with being a public company. Net loss attributable to ordinary shareholders was RMB168 million in the fourth quarter of 2014.

Non-GAAP net loss attributable to ordinary shareholders, which excludes the share-based compensation expenses, was RMB157 million in the fourth quarter of 2014. As of December 31, 2014 the Company had cash and cash equivalents, restricted cash and short-term investments of around RMB2 billion.

In the fourth quarter cash conversion cycle was negative 44 days compared to negative 54 days in the corresponding period last year. Capital expenditures for the fourth quarter this year was RMB30.9 million. Now, moving to our full year 2014 results. In 2014 net revenues were RMB3.5b, representing an 81.3% increase from 2013.

Revenues from organized tours, which are recognized on a net basis, were RMB3.4 billion in 2014, representing an increase of 81.4% from 2013. In 2014 the number of trips of organized tours, excluding local tours, increased by 94% to 711,000, up from 367,000 in 2013.

And the number of trips for local tours increased by 56% to over 1 million, up from 687,000 in 2013. Revenue for self-guided tours, which are recognized on a net basis, were RMB93 million in the full year of 2014, representing a 90.4% increase from 2013.

The number of trips for self-guided tours increased by 78.7% to over 395,000 in 2014, up from 221,000 in 2013. Other revenues were RMB28.8 million in 2014, representing a 38.6% increase from 2013. Gross margin was 6.4% in 2014 compared to 6.2% in 2013. Operating expenses were RMB699 million in 2014, representing a 222% increase from 2013.

Share-based compensation expenses, which are allocated to related operating expenses line items, were RMB38.4 million in 2014. Non-GAAP operating expenses, which excludes the share-based compensation expenses, were RMB661 million in 2014, up 204% from 2013.

Research and product development expenses were RMB105 million in 2014, representing a 169% increase from 2013. The increase was primarily due to investments in new product offerings and mobile-related initiatives and the rise in technology and product-development personnel-related expenses.

Sales and marketing expenses were RMB434.2 million in 2014, a 295% increase from 2013. The increase was primarily due to branding campaigns and advertisements for our mobile service expansion. General and administrative expenses were RMB167 million in 2014 representing a 140% increase from 2013.

The increase was primarily due to an increase in headcounts of our personnel as a result of our business expansion and an increase in the professional service fees associated with being a public company. Net loss attributable to ordinary shareholders was RMB463.5 million in 2014.

Non-GAAP net loss attributable to ordinary shareholders, which excludes the share based compensation expenses, was RMB424.3 million in 2014. In 2014 cash conversion cycle was negative 34 days compared to a negative 40 days in 2013. Capital expenditure for 2014 was RMB64.4 million. Now let me provide topline guidance for the first quarter of 2015.

We are confident about the outlook for the first quarter of 2015 and expect the trend of the accelerated growth in our topline to continue, as our investment in regional expansion, product offering and marketing initiatives started to pay off.

Tuniu currently expected to generate revenues in the range of RMB1.13 billion to RMB1.16 billion in the first quarter of 2015, representing a 95% to 100% year-over-year increase. Please note that this forecast reflects Tuniu's current and preliminary view on the industry and its operations which is subject to change. Thank you for listening.

We are now ready for your questions. Operator..

The first question comes from Amanda Chen of Morgan Stanley. Please go ahead..

Hi, good evening. Thank you management, thank you for taking my question. My first question is regarding Company's sales and marketing expenses.

May we know if you already have an initial budget plan for 2015? If yes, could you please share if that percentage of total revenue will increase further? And also how much of it will be used for branding advertising and how much will be used for mobile promotions. That's my first question; thank you..

Yes Amanda. Sales and marketing will -- branding campaign is a long-term investment, so we invested in -- our plan is to invest two years, in 2014 and 2015. Therefore the percentage of sales and marketing will be similar to 2014 and then out of which probably 40% something will be offline versus online.

Mobile will be increasing percentage spending out of the online. And the mobile marketing expenses will exceed the PC size. Thank you..

Got it, thank you. And my second question is regarding the new [indiscernible] product. Do you have any operating metrics that you can share with us, such as GMV contribution, gross margin compared with regular products. And anything you can share with us would be helpful; thank you..

Yes. The Tuniu-designed product GMV contribute to about 10% plus. And this year we will be more focusing on this; we'll try to increase to like 20% of the GMV. And the gross margin for this product line will be higher than our other product lines.

Amanda Chen^ So did you see that maybe tourists for new introducing product prefers destination markets different from the regular tourist? Do they have any destination preference compared to your regular customers?.

[Foreign Language]. Right. In terms that we have more focusing on the Tuniu-designed products, domestic packaged tours, European, Thailand, Japan and Korea products, yes. Amanda Chen^ Got it, thank you. And the final question is regarding the competition. We notice that the 4Q competition may be not as intense as we previously estimated.

So the gross margin improved a lot year on year. Now I think 1Q already almost over, so did management see the competition maybe not as -- not that intense? Thank you..

Yes, right, in first quarter we do see some of our peers are new entrants of this market and because the online leisure travel is growing very fast and, therefore, attracting some of the smaller players in this market and they had been very, very aggressive.

We are determined to fight against these and new competitors, if necessary, with more aggressive pricing. So first quarter we do see that happening, but on the other side we are happy to see our market share continue to increase..

Got it, thank you.

Very quick for last question, actually it's for housekeeping; can you share with us your gross booking for fourth quarter?.

In my script I did mention that the total Company's gross booking for the fourth quarter was about over RMB1.4 billion..

The next question comes from Evan Zhou to Credit Suisse. Please go ahead..

Hi, good evening. [indiscernible]. Conor, congratulations for the strong quarter. I've got two questions.

Could you maybe provide some more color on our gross margin for this quarter? I know this has been a very standard quarter for the gross margin line and other than the relatively benign competitive environment, how do we attribute the effect from more contribution from the direct sourcing for the gross margin? And is there any color that you can give us for the gross margin trajectory in 2015? That would be very helpful, thank you..

Right, well direct procurement is our direction that we started from 2014 and will continue to increase that portion of the direct procurement of our overall product. If by doing so at least the gross margin can improve several percentage points, so that also helped in the fourth quarter.

And regarding to the 2015 gross margin, again that is just like what we say in the past, in 2014 our top priority is the top line growth. We do investment in terms of the branding, in terms of the regional expansion, in terms of the pricing to grow our top line to gain more market share.

We believe by expanding our market share that the [indiscernible] upscale will come and also more and more we can go to direct procurement. And sorry, we do not really give specific guidance on the gross margin numbers. Thank you..

Understood. Second question is regarding our marketing stand and customer retention profile.

So I think we've been investing in our marketing and brand building for around two to three quarters already, so have we seen any improvement or any maybe customer call forward metrics that you can share with us along the way for the past couple of quarters? And also, regarding your spending focuses, did you see any specific areas that you think are more effective compared to the other channels? So any color you have, thanks..

[Foreign Language]. Right, actually we spend more marketing on the [Audio Gap] year-over-year increase over 200%, and also if we check in the [vital] index of Tuniu has also increased significantly.

Therefore, these are the feedback of the investment and also we do see the mobile component continue to increase; that is also reflecting the effectiveness of our marketing.

In terms of which area is more effective, the offline for December that's a popular TV investment is more like long-term, therefore it's hard to measure what kind of GMV they bring into our business, but it is reflected, as I said, the BAU or the traffic increase over 200%.

But overall that mobile investment pricing is currently more effective than the PC side. The branding campaign also helps our mobile app download; by now we have accumulated over 120 million app downloads for mobile. Thank you..

The next question comes from Juan Lin from 86Research. Please go ahead..

[Indiscernible] congratulations on very strong guidance and thank you very much for taking my question. My first question is regarding your guidance, you have indicated a growth acceleration starting from the first quarter.

What is the main growth driver in terms of product formatting organized tour, self-guided tour or in terms of the operating metrics is that mainly volume growth or to create improvement and any particular destinations that contribute to the strong top line guidance? Also, does it reflect a full-year growth pattern for 2015? And I have a follow-up question..

Right, the accelerated growth top line guidance is a result of our continuing long-playing investment in branding and regional expansion and technology.

We see that a very strong top line growth from our continuing European product lines, Thailand and South East Asia is recovering, organized tours still are going very strong and actually we have seen pretty much across the board strong growth of our product line.

And we expect that with the more relaxing visa application for Chinese people, for example the US visa, for example Japan visa, these will be helpful to contribute more top line growth in 2015. Thank you..

Thank you Conor. My second question is regarding the revenue split and tax rate.

So out of the organized tours, what is the revenue contributed by local tours and what are the tax rates in Q4 for organized tour, local tour and self-guided tour?.

Yes, tax rate remains quite stable and overall organized tours are around 7% to 8% and self-guided tours about 5-6% overall. In our overall business, we do see that our package tour for organized tours going faster than the local tours.

We had disclosed the number of trips [indiscernible] and the as cheap local tours are about RMB350 so we can cancel out the numbers..

Thank you very much, Alex.

My final question, if I may, what is the cash flow from operating activity for the fourth quarter?.

Okay, this quarter, due to the loss, we have a negative operating cash flow and also, through our more direct procurement, for example we're dealing with [indiscernible] but we're dealing directly with airlines, dealing directly with the upstream resources, especially like airlines we need to do some prepay.

Therefore, in our balance sheet, you can see that the prepayment and other current assets has been increased quite a bit, therefore it's causing, together with the loss, it's causing a negative cash flow from operating activity..

[Operator Instructions]. The next question comes from Tian Hou from TH Capital. Please go ahead..

Good evening management, congratulations on the strong top line growth. I have a couple of questions; one is related to your direct procurement initiative. So for this business, can you give us some color on either what's the target, how much you can grow this part of the business? That's number one.

Number two, also for the direct procurement, isn't there a potential risk to cause conflict with the service provider or product provider on your platform, since you are also doing direct procurement? That is number one question, I have another follow-up. Hello? Give me two seconds..

Okay..

[Foreign Language]. Right, in terms of our domestic product, about 50% of the domestic package tour is already we do the direct procurement, but in 2014, there was a very small portion on the outbound [indiscernible].

This year will be increased more on the outbound package tour for direct procurement and also continuing to increase the overall percentage.

In terms of the conflicting with suppliers our direct procurement mostly, for example, we use a Tuniu design product or others, is a kind of differentiate and target to more like mid to high-end customer's needs, rather than more mass market from suppliers.

Since we are growing at very high growth rate year-over-year, the amount increased could be allocated to direct procurement, but as our supply [indiscernible] doing business with Tuniu. Thank you..

Okay, so follow-up on that Conor.

So what is the margin profile on the direct procurement product, the gross margin?.

Typically we do that direct procurement will enhance 2%, 3% or even -- it depends on product line, but overall that's couple of percentage points higher than we purchase from suppliers, like wholesale suppliers..

So by the end of the year what percentage of your total GMV do you envision come from direct procurement?.

Yes, I think that overall that of our GMV, I think that will be over 30% of our GMV will come from direct procurement for 2015..

Very helpful.

Last question is related to sales and marketing and can you break down the composition of the sales and marketing how much is from the brand advertising, how much spend on staff and the traffic and, going forward, what's your plan in different component?.

Again that's in 2014, on the offline advertising mostly for campaign -- a branding campaign is close to 40 something percent of our overall marketing expenditures. And the online portion is slightly above this versus offline.

The difference will be last year in online portion, the first three-quarters we spend more on like PC, on advertising, more than the mobile site; but middle of last year the mobile advertising spending has already surpassed PC and we expect this trend to continue of more -- spend more on mobile for our online portion of advertising. Thank you..

The next question comes from Ida Yu from CICC. Please go ahead.

Hi good evening, thank you for taking my questions.

My first question is in regard of your organized tour and as we see that based on estimation, correct me if I'm wrong, I see the average price down 19% year-over-year and is this due to the competition or change in destination mix? And what do you see the trend going forward?.

Yes, for organized tour we estimate a drop, year-over-year, a little bit because of the product mix.

Again, as we mentioned, that this year in domestic product package tour we go more direct to like direct procurement, so therefore as Donald mentioned, that in certain package in the past we have to gather 20 people in departing city, now we can spread around in multiple departing cities and get people into their destination.

This has greatly enhanced the business and many tours, because there were not enough people, therefore trip got cancelled. So the growth rate of our domestic package tour increased quite fast this year and the SP of domestic is small than the outbound organized tour, so therefore we do see that happening..

Okay and my second question is in regard of the self-guided tour. In terms of the gross booking, can you share more operating data with us? And what are the destinations now included and what is the proportion of thee domestic trips in self-guided tour? Thanks..

Yes, for the self-guided tour that again overall that half is noted. On the domestic side that pretty even spreading around those most popular destinations, such as [San Yar, Lijiang, Xiamen] is also quite popular. Domestic trips overall for our Company is about -- outbound it's about 67, so domestic about 30 something..

The next question comes from Ella Ji from Oppenheimer. Please go ahead..

Yes, congratulations on a strong quarter. First also a question relating to the direct purchases -- direct procurement.

So Conor, you mentioned that in 2015 you target to cover over 30% of total GMV, so long-term to you think you can eventually make 100% of all your tours all from direct procurement or do you think, especially for some overseas tours, maybe there is something that you have to still rely on third parties?.

[Foreign Language]. Yes, in the past direct procurement percentage was too low. Now, as we scale up many destinations, our scale is enough for us to go direct procurement. So that's a nature evolvement. But in terms of the overall mix that we believe that direct procurement will continue to increase to certain optimal level.

But suppliers, like wholesale suppliers, still quite important because many of them they are good at certain destinations or certain departing city to certain destinations, therefore by working with them they can still broaden the product offerings.

And there are different types of created product resemble more like mass market from wholesale suppliers and mid to high-end products from our Tuniu branded products. Therefore, there will be a combination of suppliers and also the direct procurement going forward..

Thank you.

Would you mind just providing your estimate of over the long-term what's the optimum level of the mix?.

[Foreign Language]. Yes, well we think that 50%, 50% mix of direct procurement versus wholesales suppliers will be probably the situation..

Got it, thank you. My second question is relating to the competition level on the market. So over the past two years, online travel has been a very competitive sub-segment and almost all companies are losing money. So Donald, I wonder if you can comment on the competition level as we enter 2015.

Do you think it's stabilizing or do you think it's getting worse? We start to see in some other areas, such as tax, how people consolidate instead of compete with each other. So I wonder if you can comment in the online travel segment, do you expect the M&A Activities will also pick up in 2015? Thank you..

[Foreign Language]. Right, we believe that in 2015 -- we have experience that is very fast growing in this online leisure travel market, the penetration rate increased from [70.7%] in 2013 to 10% in 2014 and believe we will continue this trend going forward.

Therefore, eventually we will track lots of competitors, but we will continue to maintain our -- to widen our leading position in this area as any certain area or segment that we see more crazy competitors who are determined to fight against them to grab market share and gain market leadership.

And in terms of M&A, yes we are looking as we continue increase our market share we will look for a suitable [indiscernible] we may acquire them; because this industry is still very fragmented. Thank you..

Thank you, that's very helpful. A housekeeping question now.

How big is your flash sales in 4Q?.

Still around 5% of GMV for the last minute sales, flash sale, like deep promotion products..

Okay, so in 2015 do you expect this mix to remain stable at around 5%?.

Actually we give all our product line a good chance to run ahead, but we do not target a specific in favor of this one or others. If market opportunity is there, we will continue to see very fast growth of our flash sales. But we believe we have achieved the market leadership, even leader, in this area..

And the last question for today will come from Henry Guo from JG Capital. Please go ahead..

Hey, thanks for taking the questions. A very quick one. So I note the Company has started the TV sponsorship last year Q3, Q4, which incurred significant sales and marketing spending here.

So what are your plans for the first half of 2015, are you guys going to continue to spend money on the TV sponsorships or what is the budget for 2015 for that? Thank you..

Right our product line has a very high ASP in nature and also, to cope with our regional expansion that we'll continue to invest in branding campaign.

WE believe by the end of this year we should have enough -- we should have work above in terms of the regional expansion and the top line marketing campaign was to go together for the regional expansion. Then, after that, we will see the shrinking budget percentage for marketing..

This concludes our question and answer session. I would like to turn the conference back over to Conor Yang, Chief Financial Officer, for any closing remarks..

Once again, thank you for joining us today. Please don't hesitate to contact us if you have any further questions. Thank you for your continued support and we look forward to talking with you in the coming months. Thanks..

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect..