Half Year 2025 Origin Agritech Ltd Earnings Call
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Operator: Thank you for standing by and welcome to the Origin Agritech first half fiscal year 2025 conference call. Please note that today's call is being recorded.
Speaker Change: Thank you for standing by and welcome to the origin <unk> first half fiscal year 2025 Conference call. Please note that today's call is being recorded it is now my pleasure to introduce Matthew App and anti of strategic Investor Relations. Please go.
Matthew Abernathy: It is now my pleasure to introduce Matthew Abernathy of Strategic Investor Relations. Thank you, Operator, and thanks to all of you for joining us today on the Origin Agritech Business Update Conference.
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Matthew Abinanti: Thank you, operator, and thanks to all of you for joining us today on the Origin Agritech Business Update Conference Call. Joining us on the call today are Mr. Weibin Yan, Chief Executive Officer, and Mr. Patrick Cheng, Chief Financial Officer. Before we begin, I would like to remind our listeners that any statements on this call that are not historical facts are forward-looking statements. Today's call includes forward-looking statements that address expected future business and financial performance and financial conditions, and contain words like expect, anticipate, intend, plan, believe, seek, will, would, target, and similar expressions and variations. Forward-looking statements address matters that are uncertain. Forward-looking statements are not guarantees of future performance and are based on assumptions and expectations, which may not be realized.
Speaker Change: Thank you operator, and thanks to all of you for joining us today on the origin Agri Tech business update conference call.
Matthew Abernathy: Joining us on the call today are Mr. Wei Binyan, Chief Executive Officer, and Mr. Patrick Chang, Chief Financial Officer. Before we begin, I would like to remind our listeners that any statements on this call that are not historical facts are forward-looking statements. Today's call includes forward-looking statements that address expected future business and financial performance and financial conditions. contain words like expect, anticipate, intend, plan, believe, seek, will, would, target, and similar expressions and variations. Overlooking statements address matters that are uncertain. Forward-looking statements are not guarantees of future performance and are based on assumptions and expectations, which may not be realized.
Speaker Change: Joining us on the call today are Mr. Wang Bing Yang Chief Executive Officer, and Mr. Patrick Chaffin, Chief Financial Officer.
Speaker Change: Before we begin I would like to remind our listeners that any statements on this call that are not historical facts are forward looking statements.
Speaker Change: Today's call includes forward looking statements that address expected future business and financial performance and financial conditions and contain words like expect anticipate intend plan believe seek will would target.
Speaker Change: And similar expressions and variations.
Speaker Change: And we're looking statements address matters that are uncertain.
Speaker Change: Forward looking statements are not guarantees of future performance and are based on assumptions and expectations, which may not be realized there.
Matthew Abernathy: They're based on the management's current expectations, assumptions, estimates, and projections about the company and the industry. But involve a number of risks and uncertainties, many of which are beyond the company's control. Some of the important factors that could cause the company's actual results to differ materially from those discussed in forward-looking statements are failure to develop and market new products and optimally manage product life cycles, ability to respond to market acceptance, rules, regulations, and policies affecting our products. Failure to appropriately manage process safety and product stewardship issues, changes in laws and regulations or political conditions, global economic and capital markets conditions such as inflation, interest and currency exchange rates, business or supply disruptions, natural disasters and weather events and patterns.
Matthew Abinanti: They are based on management's current expectations, assumptions, estimates, and projections about the company and the industry, but involve a number of risks and uncertainties, many of which are beyond the company's control. Some of the important factors that could cause the company's actual results to differ materially from those discussed in forward-looking statements are failure to develop and market new products and optimally manage product life cycles, ability to respond to market acceptance, rules, regulations, and policies affecting our products, failure to appropriately manage process safety and product stewardship issues, changes in laws and regulations or political conditions, global economic and capital markets conditions such as inflation, interest and currency exchange rates, business or supply disruptions, natural disasters and weather events and patterns, ability to protect and enforce the company's intellectual property rights, and separation of underperforming or non-strategic assets or businesses.
Speaker Change: They are based on management's current expectations assumptions estimates and projections about the company and the industry.
Speaker Change: But involve a number of risks and uncertainties many of which are beyond the company's control.
Speaker Change: Some of the important factors that could cause the company's actual results to differ materially from those discussed in forward looking statements are failure to develop and market new products and optimally manage product life cycles ability to respond to market acceptance rules regulations and policy.
Speaker Change: It's affecting our products.
Speaker Change: Failure to appropriately manage process safety and product stewardship issues.
Speaker Change: <unk> and laws and regulations or political conditions global economic and capital markets conditions, such as inflation interest and currency exchange rates business their supply disruptions natural disasters and weather events and patterns.
Matthew Abernathy: to protect and enforce the company's intellectual property rights, and separation of under-performing or non-strategic assets or businesses.
Speaker Change: Ability to protect and enforce the company's intellectual property rights and separation of underperforming or non strategic assets or businesses.
Matthew Abinanti: The company undertakes no duty or obligation to publicly revise or update any forward-looking statements as a result of future developments or new information, or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws. Although the company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and actual results may differ materially from the anticipated results. You are urged to consider these factors carefully in evaluating the forward-looking statements contained herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by these cautionary statements. With that, I would like to turn the call over to our first speaker, Mr. Weibin Yan, Chief Executive Officer of Origin Agritech. Hello, Mr. Yan.
Matthew Abernathy: The company undertakes no duty or obligation to publicly revise or update any forward-looking statements as a result of future developments or new information or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws. Although the company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and actual results may differ materially from the anticipated results.
Speaker Change: The company undertakes no duty or obligation to publicly revise or update any forward looking statements as a result of future developments or new information or otherwise should circumstances change, except as otherwise required by securities and other applicable laws.
Speaker Change: Although the company believes that the expectations expressed in these forward looking statements are reasonable it cannot assure you that such expectations will turn out to be correct and actual results may differ materially from the anticipated results.
Matthew Abernathy: urged to consider these factors carefully in evaluating the forward-looking statements contained herein and are cautioned not to place undue reliance on such forward-looking statements which are qualified in their entirety by these cautionary And with that, I would like to turn the call over to our first speaker, Mr. Wei Binyan, Chief Executive Officer of Origin Agritech.
Speaker Change: You are urged to consider these factors carefully in evaluating the forward looking statements contained herein and are cautioned not to place undue reliance on such forward looking statements, which are qualified in their entirety by these cautionary statements.
Speaker Change: And with that I'd like to turn the call over to our first speaker, Mr. Wei bin Yan Chief Executive Officer of origin accurate test.
Wei Binyan: Hello, Mr. Thank you, Matthew, and thank you all for joining us. The first half of fiscal year 2025 represents a pivotal period in the origin of Agritech's transformation of leadership and development strategy, while we navigated some near-term operational challenges. I am pleased to report that we made strong progress establishing the foundations for sustainable long-term growth. Our mission is to enable better life and better nature through better agricultural technology. This mission drives every decision we make as we position Origin Agritech to become the leader in biotechnology within China's seed industry.
Speaker Change: Hello, Mr Yan.
Weibin Yan: Thank you, Matthew. Thank you all for joining us. The H1 of fiscal year 2025 represents a pivotal period in Origin Agritech's transformation of leadership and development strategy. While we navigated some near-term operational challenges, I'm pleased to report that we made strong progress establishing the foundations for sustainable long-term growth. Our mission is to enable better life and better nature through better agricultural technology. This mission drives every decision we make as we position Origin Agritech to become the leader in biotechnology within China's seed industry. During this period, our priority has been paced in 4 areas. First, to improve our seed variety portfolio to achieve better seed revenue. Second, to accelerate the commercialization of our biotech strength, in particular for GMO and gene editing. Third, to improve our sales team and network in the major corn areas. Fourth, to upgrade our seed production and processing capabilities.
Speaker Change: Thank you Marcio. Thank you all for joining us.
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Wei Binyan: During this period, our priority has been pied in four areas. First, to improve our seed variety performance to achieve better seed revenue. Second, to accelerate the commercialization of our biotech systems, in particular for GMO and gene editing. Third, to improve our sales team and the network in the Amateur Corn Area. Fourth, to upgrade our seed production and processing capabilities. Since November 2024, We have successfully rebuilt our R&D capabilities with a dedicated team of 25 professionals. Our comprehensive R&D meeting in Beijing in November confirmed our strategic direction. and we successfully restructured our general situation in November 2024.
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Weibin Yan: Since November 2024, we have successfully rebuilt our R&D capabilities with a dedicated team of 25 professionals. Our comprehensive R&D team meeting in Beijing in November confirmed our strategic directions, and we successfully restructured our germplasm subdivision in November 2024. This rebuilt foundation now supports our accelerated innovation pipeline across four major domestic corn ecological zones. From October to December 2024, we closed critical deals for variety acquisitions, including Jingke 317 and Jinqiao 8, which formed the cornerstone of our 2025 marketing strategy. I'm very pleased to report that we achieved immediate market launching for both Jinqiao 8 and Jialong 377 in the same year, demonstrating our enhanced execution capabilities. Our expanded portfolio now includes five national and provincially approved varieties, Jingke 317, Jingke 4580, Jinqiao 8, Jialong 377, and Xuntian 23. With regards to seed production, our production capability has been significantly strengthened through facility upgrading in Xinjiang.
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Wei Binyan: This rebuilt foundation now supports our accelerated innovation pipeline. across four major domestic corn ecological zones. From October to December 2024, we closed the critical deals for variety acquisitions, including Ginkgo 317. and the GingerAid, which formed... the cornerstone of our 2025 marketing strategy. I am very pleased to report that we achieved immediate market launching for both Ginger 8 and Jialong 377 in the same year, demonstrating our enhanced execution capability. Our expanded portfolio now includes five national and provincially approved varieties JINCO 317, JINCO 4580, JINCO 8 Jialong 377 and Xundan 323. With regards to seed production, our production capability has been significantly strengthened through facility upgrading.
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Wei Binyan: We will complete a comprehensive perception plot in innovation. including boiler removal, new drying line installation, and team restructuring. that optimizes our operational workflow. Our field operations now implement very strict separation protocols. such as recording, data sending, and other procedures to ensure the highest quality standard. Our G-Marker Biological Breeding Service Consortium, established October 2024, has reached our initial expectations. We now maintain cooperative relationships with more than 20 breeding organizations around China. are actively improving our one-country-convo routers planted in key cornfields. producing reagent. This consortium model is proofing transformation allowing us to monetize our biotechnology innovations. while accelerating their adaptation across the industry.
Weibin Yan: We will complete comprehensive processing plant innovation, including boiler removal, new drying line installation, and team restructure that optimize our operational workflows. Our field operations now implement very strict separation protocols, such as re-growing, data sealing, and other procedures to ensure the highest quality standards. Our Origin Marker Biological Breeding Service Consortium, established October 2024, has reached our initial expectations. We now maintain cooperative relationships with more than 20 breeding organizations around China and are actively improving over 100 corn varieties planted in key corn-producing regions. This consortium model is proving transformation, allowing us to monetize our biotechnology innovations while accelerating their adaptation across the industry. To acquire more partners and to enlarge our influence in the seed industry, we launched Origin Insect-Resistant and Herbicide-Tolerant GMO Corn and Smart Plant Architecture Improvement Seminar in January 2025. This successful seminar marked our strong return to industry leadership.
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Wei Binyan: To acquire more corners and to enlarge our influence in the seed industry, we launched our ranging insect-resistant and herbicide-tolerant GMO corn and smart plant architecture improvement seminar in January 2025. This successful seminar marked our strong return to industry leadership. this event Co-founded in landmark partnership with China Agricultural University and the Beijing Academy of Agriculture and Forest Science. which validated our biotechnology capabilities by China's most prestigious agriculture and research institutions. In addition to the efforts of our operating team led by Professor Niu Hongbin, through our collaboration with renowned experts including academics Dai Jingrui, Professor Zhao Jiuren, Professor Wang Yuandong, etc., three-country variety for potential partnerships, dramatically expanding our development pipeline.
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Weibin Yan: This event culminated in landmark partnership with China Agricultural University and the Beijing Academy of Agriculture and Forestry Sciences, which validated our biotechnology capabilities by China's most prestigious agriculture and research institutions.
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Weibin Yan: In addition to the efforts of our breeding team led by Professor Niu Hongbin, through our collaboration with renowned experts, including Academician Dai Jingrui, Professor Zhao Jiuren, Professor Wang Yuandong, et cetera, we have secured across our 3 county variety for potential partnerships, dramatically expanding our development pipelines. Currently, 28 varieties are processing through different stages of national testing in our variety registration pipeline. Our GMO corn hybrid trials continued advancing through the regulatory process, with 1 hybrid remaining on track for potential approval in 2025 and 2 others progressing towards anticipated approval in 2026. The commercialization momentum for our BBL2-2 maize, which received the GMO safety certificate in May 2024, continues building strong market interest. We have successfully restored sales operation across key regions, including Henan, Anhui, Shandong, Jiangsu, and North China, Xinjiang, by reinforcing our 5 subsidiaries and recruiting new personnel.
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Wei Binyan: Currently Twenty-eight varieties are processing through different stages of national testing in our variety registration pipeline. Our GMO corn hybrid trials continue. advancing through the regulatory process. With one hybrid remaining on track for potential approval in 2025 and two others progressing towards a Anticipate approval in 2026. the commercial operation moment here for our BBL-222, mate. which received the GMO safety certificate in May 2024 continues building strong market interest. We have successfully restored sales operations across key regions, including Helan, Anhui, Shandong, Jiangsu, and North China, Xinjiang. by reinforcing our five subsidies. subsidiaries and recruiting new personnel. Our taunt wins, sir!
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Weibin Yan: Our Chongqing sales company in the southwest market continues advancing, expanding our geographic reach and market penetration. Our branding initiatives have gained significant attraction through high-profile industry platforms. Our China Beijing Seed Industry Conference and Sanya International Seed Industry Scientists Conference represent effective communicated Origin's resilience and breakthrough biotechnology innovations to industrial stakeholders. The partnerships, technology advances, and operational improvements we've achieved during this transformational period position us exceptionally well to execute our strategic roadmap. Our rebuilt R&D capabilities, expanded variety portfolios, modernized production infrastructures, and strengthened market presence create a solid foundation for sustainable growth in the future. Our mission is to enable better life and a better nature through better agriculture technology, guided by our core values of integrity, innovation, collaboration, and win-win partnership. The enthusiasm from our distributor network and the validation from China's premier research institutions confirmed that Origin Agritech is well-positioned to achieve our ambitious goals.
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Wei Binyan: Sales capital in the southwestern market continues advancing, expanding our geographic reach and market penetration. Our branding initiatives have gained significant traction through a high-performance industry platform.
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Wei Binyan: Our Beijing International Seed Conference and Sanya International Seed Industry Scientists' Conference represent Effective Communicative Arrangement refugees and breakthrough biotechnology innovations to industrial stakeholders. The partnerships, technology advances, and operational improvements we have achieved during these transformational periods position us exceptionally well to execute our strategy roadmap. Overbuilt R&D capabilities, expanded variety of portfolios modernize the production infrastructures and strengthen the market presence, create a solid foundation for sustainable growth in the future. Our mission is to enable a better life and a better nature through better agriculture technology guided by our core values of integrity, innovation, collaboration and win-win partnership.
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Wei Binyan: The enthusiasm from our district build a network under the validation from China's premier research institutions. confirmed that Origin Agritech is well positioned to achieve our ambition goals.
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Wei Binyan: Now I'm returning the call over to Patrick to discuss our financial results in details. Thank you. Thank you, Mr. Yan.
Weibin Yan: Now, I'm returning the call over to Patrick to discuss our financial results in detail. Thank you.
Patrick: Now I'm returning the caller to Patrick to discuss our financial results Indeed house.
Speaker Change: Yeah.
Patrick Cheng: Thank you, Mr. Yan. I will now review our financial performance for H1 of fiscal year 2025. For the 6 months ended 31 March 2025, revenue was $10.1 million, compared to $13 million in the same period of fiscal year 2024. This decrease was primarily due to the planned halt of partial production lines at our Xinjiang factory to implement equipment upgrades and technical renovations. While this reduced our production capacity temporarily, these improvements are essential for supporting our long-term growth plans and enhancing our operational efficiency. Additionally, some of our proprietary products experienced sales declines due to market cycle impacts. While our newly launched products are still in the market cultivation stage, with channel penetration rates and customer awareness yet to be fully developed. Total operating expenses for H1 were $4.6 million, compared to $1.9 million in the same period of last year.
Patrick: Thank you Mr. Yang.
Patrick Chang: I will now reveal our financial performance for the first half of fiscal year 2025. for the six months and then March 31st, 2025. Revenue was $10.1 million compared to $30 million in the same period of fiscal year 2024. This decrease was primarily due to the planned halt of partial production lines at our Xinjiang factory to implement equipment upgrades and technical renovations. Wildish reduced our protection capacity temporarily. These improvements are essential for supporting our long-term growth plans and enhancing our operational efficiency. Additionally, some of our proprietary products experience sales decline due to market cycle impact. while our newly launched products are still in the market cultivation state.
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Patrick: Thank you to Nicole.
Patrick: This decrease was primarily due to the planned it hot off the postural protection lines at our Xinjiang factsheet to implementing equipment upgrades and tenneco renovations.
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Patrick Chang: with channel penetration rates and customer awareness yet to be fully developed.
Patrick: With channel penetration base and customer awareness yet to be fully developed.
Patrick Chang: Total operating expenses for the first half were $4.6 billion compared to $1.9 million in the same period of last year. this increase reflects our strategic investment in strengthening our biotechnology platforms and expanding our R&D capability. Daring and Marketing Experiences. decreased to 0.4 million dollars from 0.5 million dollars. Demonstrating our disciplined approach to marketing investments. during this conditional period. general and administrative expenses increased to 3.5 million dollars from 1 million dollars. primarily due to investment in talent acquisition. system infrastructures. professional services and increase the direct fees. necessary to support our biotechnology commercialization initiative. Research and development expenses increased to million dollars from 0.5 million.
Patrick: Total operating expenses for the first half with more part of $6 billion compared to one 9 million in the same period. After this year.
Patrick Cheng: This increase reflects our strategic investment in strengthening our biotechnology platforms and expanding our R&D capabilities. Selling and marketing expenses decreased to $0.4 million from $0.5 million, demonstrating our disciplined approach to marketing investments during this transitional period. General and administrative expenses increased to $3.5 million from $1 million, primarily due to investment in talent acquisitions, system infrastructures, professional services, and increased director fees necessary to support our biotechnology commercialization initiatives. Research and development expenses increased to $0. million from $0.5 million, reflecting our continued development of new proprietary products and advancement of our gene editing and GMO technologies. Our operating loss for the H1 was $3.4 million, compared to operating income of $0.6 million in the prior year period. While this reflects the impact of reduced revenues and increased investments, we view this as necessary steps in our transformation to a biotechnology-focused business model.
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Patrick Chang: Reflecting our continued development of new propriety projects and advancement of our gene editing and GMO technology. Our operating laws for the first half was $3.4 million. compared to operating income of $0.6 million in the prior year period. Wow, this reflects the impact of reduced revenues and increased investment.
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Patrick Chang: We view this as necessary steps in our transformation to a biotechnology focused business model. Net loss attributable to the company was $3.6 million. compared to a net profit of $0.2 million in a prior year. Loss per ordinate shear is about 50 cents. compared to income per share of 3 cents in the same period last year. As of March 31st, 2025, We had $330,000 cash. compared to $1.2 million as of September 30, 2024. While this represents a decrease, we have maintained a conservative depth structure with total borings of $690,000 and changed it from September 30, 2024.
Speaker Change: We view this as necessary steps in our transformation to a vitale chief focus business model.
Patrick Cheng: Net loss attributable to the company was $3.6 million, compared to a net profit of $0.2 million in the prior year. Loss per ordinary shares was $0.50, compared to income per share of $0.03 in the same period last year. As of 31 March 2025, we had $330,000 cash, compared to $1.2 million as of 30 September 2024. While this represents a decrease, we have maintained a conservative debt structure with total borrowings of $690,000, unchanged from 30 September 2024. Looking ahead, our financial strategies align with our three-phase business development plan. In the near term, we are focused on achieving cash flow breakeven with a combination of operational improvements at our Xinjiang facility and increasing revenues from our biotechnology services consortium. The equipment upgrades at our Xinjiang facilities, while temporarily impacting production, will enhance our capacity and efficiency.
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Patrick Chang: Looking ahead, our financial strategies align with our three-phase business development plan. in the near term. We are focused on achieving cash flow breakeven with a combination of operational improvements at our Xinjiang facility and increasing revenues from our biotechnology services consortium. the equipment upgrades at our Xinjiang facility. while temporarily impacting production will enhance our capacity and efficiency. Combined with our expanding biotechnology partnerships and the expected launch of new varieties.
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Patrick Cheng: Combined with our expanding biotechnology partnerships and the expected launch of new varieties, we anticipate improving financial performance in H2 of fiscal year 2025. Our increasingly diversified revenue model, which includes transitional seed sales, biotechnology services, and licensing fees, provides multiple pathways for growth and improved margins. The high-margin nature of our biotechnology services, combined with the scalability of our consulting model, positions us well for long-term profitability.
Patrick: And by that with our expanding bypass the partnerships and the expected launch of new varieties.
Patrick Chang: We anticipate improving financial performance in the second half of fiscal year 2020. I will increasingly diversify the weaponry model which includes traditional cells, biotechnology services, and licensing fees. provides multiple pathways for growth and improves the margins. the high-energy nature of our high-temperature surfaces. Combined with the scalability of our consulting model.
Patrick: We anticipate improving financial performance in the second half of fiscal year 2020 sites.
Patrick: Our increasingly diversified the revenue model.
Patrick: Which will cruise transitional receipts.
Patrick: Talos bioterrorism surfaces and licensing fees.
Speaker Change: Rice Metropole pathway for girls and Krista Matthews.
Patrick: The high margin nature biotech.
Patrick: <unk> surfaces.
Patrick: And by the.
Patrick: The ability of our consulting model.
Patrick Chang: positions as well for long-term profitability.
Patrick: She serves us well for long term profitability.
Patrick Chang: Thank you.
Operator 3: Thank you. That concludes our conference call today. Thank you for joining us. You may all now disconnect.
Patrick: Thank you.
Operator: That concludes our conference call today. Thank you for joining us. You may all now disconnect.
Patrick: That concludes our conference call today, Thank you for joining us email now disconnect.
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