Hello, everyone, and thank you for joining 111's Conference Call Today. On the call today from the company are Dr. Gang Yu, Co-Founder and Executive Chairman; Mr. Junling Liu, Co-Founder, Chairman and CEO; Mr. Luke Chen, CFO of 111's Major Subsidiary; and Mr. Haihui Wang, COO. [Operator Instructions] The company's earnings press release was distributed earlier today and together with the earnings presentation are available on the company's IR website. Before the conference call gets started, let me remind you that this call may contain forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based upon management's current expectations and current market and operating conditions and relate to events that involve known and unknown risks, uncertainties and other factors, all of which would cause actual results to differ materially. For more information about these risks, please refer to the company's filings with the SEC. 111 does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise expected as required under applicable rules. Please note that all numbers are in RMB, and all comparisons refer to year-over-year comparisons, unless otherwise stated. Please also refer to the earnings press release for detailed information on the comparative financial performance on a year-over-year basis. With that, I'll now turn the call over to 111's CEO, Mr. Junling Liu. Please go ahead.

Thank you for joining our first quarter 2023 earnings call. The information that we'll be discussing here is also provided in the slides earlier today on the company's website. I encourage you to download the presentation along with the earnings report at ir.111.com.cn. I'll begin by providing an overview of the macro environment, followed by a review of our recent operational performance. Additionally, I will comment on our continued commitment to industrial digitization, driving revenue and margin growth, fortifying upstream supply capabilities, enhancing operational efficiency and outlining our future strategies. Subsequently, our CFO, Mr. Luke Chen, will present a detailed [indiscernible] of our financial results, ensuring a thorough understanding of our organization's financial standing. As many of you are aware, in the first quarter of 2023, China's economy achieved a solid start. It was reported that the GDP reached RMB 28.5 trillion, growing by 4.5% compared to the same period last year. The economic recovery remained positive as the effect of various policies gradually became evident, both online and offline economic activities resumed. The medicine market in both B2B and B2B segments also experienced aligned growth with China's economy in Q1 of 2023. Meanwhile, through the COVID-19 pandemic, China has undergone a transformative phase in its healthcare industry, embracing digitization and achieving remarkable progress. The adoption of electronic medical records has streamlined data management, enhancing efficiency and accuracy. Telemedicine services have expanded, enabling remote consultations and bridging the gap in healthcare access, particularly in rural areas. Online pharmacies and e-commerce platforms have revolutionized the medication procurement offering convenience and accessibility to patients. China's commitment to digitizing the healthcare sector during the pandemic has not only improved the efficiency, but also paved the way for innovative healthcare solutions and improved patient outcomes. I'm pleased to report that leveraging these transformative trends in the healthcare industry, 111, as a prominent healthcare technology company in China has experienced solid growth and improved all of our operating metrics. With a focus on digital healthcare solutions 111 has capitalized on the rising demand for digital medical service platforms for both B2C and B2B customers. Through our robust technological infrastructure and strategic partnerships 111 has effectively connected patients with pharmacies, healthcare professionals, pharmaceutical companies and other healthcare service providers. Our growth trajectory showcases the immense potential of digitization in revolutionizing healthcare delivery and improving overall patient experiences in China. During the first quarter of 2023, the company rose to the challenge and achieved RMB 3.7 billion in revenues, an increase of 23.9% year-over-year, marking the 19th consecutive quarter of Y-o-Y growth since our IPO. I'm also pleased to report that our gross profit reached RMB 236 million, representing a margin growth rate of 22.7% year-over-year. Our B2B business remains the key driver of revenue growth. In Q1, B2B revenue [Technical Difficulty], representing a year-over-year increase of 24.9% and gross profit increased to RMB 211 million, an increase of 25.5% year-over-year. The hard-earned margin growth is the result of our consistent adherence to 111's customer-centric philosophy and our strong determination to create value for our customers. Meanwhile, we are thrilled to share this exciting news with our stakeholders that our non-GAAP operating profit has finally turned positive compared to a loss from operations as a percentage of net revenues of 2.4% in 2022, reaching our goal of quarterly breakeven at the non-GAAP operating income level. With hard work and dedication, we are now seeing the fruits of our labor and the progress towards achieving our financial goals. This milestone not only reflect our company's focus on efficiency and cost management but also our commitment to delivering value to our customers. We believe there will be plenty of challenges lying ahead and there will be ups and downs in our business, but we will work tirelessly to create more value for our customers and shareholders. Now allow me to take a moment to discuss the progress we have made on our operations. Let me start from our supply side. We have successfully enhanced our partnership with upstream pharmaceutical partners by promoting neutral understanding, upgrading cooperation level, enhancing supply chain efficiency and bolstering our comprehensive digital capabilities. As our business continues to expand and as we position ourselves as an effective commercialization partner, we will continue to offer value-added services to pharmaceutical enterprises. At present, we assist hundreds of pharmaceutical companies in drug commercialization, digital marketing and market insight. For example, on our B2C platform, in addition to the successful launch of Hua Medicine stores at HuaTangNing, Sanofi's Allegra [indiscernible] 111, marking its first online nationwide release on the platform. This medication is indicated for the treatment of seasonal allergic rhinitis and a chronic idiopathic urticaria in individuals aged 12 and above. The introduction of Allegra in China and its availability on 111 not only improves accessibility for patients but also provides a better medication experience through professional guidance from healthcare professionals and pharmacists. I personally experienced severe allergic symptoms during the spring season and taking traditional antihistamine drugs often leaves me feeling excessively drowsy, tampering my ability to work effectively. However, with the introduction of this medication on our platform I as a patient have been able to enjoy the convenience of accessing online doctor consultations and having the medication delivered right to my doorstep. This experience has been nothing shorter but wonderful, especially when compared to the hassle of visiting a physical hospital enduing the registration process and enduring long queues before finally seeing a doctor and obtaining a prescription. To exacerbate matters, there is also no guarantee that the hospital stocks the specific drug I require. Knowing that there are countless individuals across the country facing similar issues I'm thrilled that they too can now benefit from 111's digital healthcare platform. Meanwhile, on our B2B platform, through our partnerships with downstream pharmacies, we can deliver digital value to upstream pharmaceutical companies with our newly developed digital tool, Telescope. Telescope serves as a lens for pharmaceutical companies allowing them to gain [indiscernible] and a comprehensive view of their drug sales and the pricing dynamics real-time. By leveraging advanced data analytics and market insights, Telescope enables these companies to analyze sales patterns, identify pricing opportunities and make data-driven decisions to optimize their strategies. With Telescope, pharmaceutical companies can assess the performance of their products in real-time, identify market trends and adjust their marketing campaigns accordingly. This invaluable tool not only provides a clear understanding of the market landscape but also assists in forecasting demand, refining pricing strategies and ultimately maximizing sales and profitability. On the other end, we are deeply committed to empowering downstream pharmacies in a digital way, offering comprehensive support across all aspects of pharmacy operations. Our solutions not only provide cost-effective medical product options with satisfactory services that help them streamline processes and enhance operational efficiency. Through our network and the partnerships, we negotiate competitive pricing and favorable terms with suppliers, allowing pharmacies to access product at lower costs. Additionally, leveraging technology such as automated ordering system and efficient logistics, we ensure timely delivery and reduced operational expenses for pharmacies. By offering cost-effective products and efficient services, we enable pharmacists to deliver value to their customers and maintain their competitiveness in the market. Particularly, by the end of first quarter, our 1 Health virtual franchise model enables around 20,000 pharmacies provide superior products and services to their customers. All participating pharmacies can use our platform to better manage their product selection, procurement and inventory management as well as accessing our distribution tools through our digital SaaS services, including Smart Sourcing, Digital Marketing, O2O and CRM. Thirdly, operating efficiency remains a continuous focus in our strategic imperatives. With growing scale of business and enhanced technological capabilities, 111's operational efficiency continues to improve. We're glad to see that revenue and gross profit have both increased, whereas as a percentage of net revenue, the sales and marketing expenses in Q1 was down to 2.41% from 3.85%. General and administrative expenses was down to 1.12% from 1.61% and technology expenses was down to 0.68% from [ 1.131% ] in the same quarter last year. The total amount of sales and marketing expenses, general and administrative expenses and technology expenses year-over-year has been reduced by 22.3%, 13.9% and 35.1%, respectively. We have made significant efforts to enhance management efficiency through various measures. Firstly, we have implemented a strategic reduction of redundant staff, carefully optimizing workforce allocation while leveraging technology to automate certain tasks. Secondly, we have upgraded our standard operating procedures and streamline management processes to eliminate redundancies and enhance productivity. Additionally, we have prioritized better corporate governance practices, fostering a culture of accountability and transparency across the organization. Lastly, we have made substantial investments in technology solutions that improve operational efficiency, such as advanced analytics, robotic process automation and digital platforms. This continued efforts aimed to drive efficiency, reduce costs and ultimately deliver enhanced value to our stakeholders. To further improve operational efficiency, we will keep on focusing on implementing our strategy, flattening our organizational structure and improving the work efficiency of our employees through multiple operational tools. Regarding logistics, our fulfillment costs have decreased significantly, thanks to our upgraded self-owned warehouse operation and joint venture warehouses. By investing in our infrastructure and technology, we have been able to optimize our supply chain processes and achieve greater efficiency. These efforts have allowed us to deliver our products to customers faster and more accurately while also lowering our fulfillment cost to 2.78% from 3.1% as a percentage of net revenue. We will continue to prioritize these initiatives as we seek to provide the best possible customer experience and remain competitive in the market. It is also worth noting that we have further sharpened our focuses to operate on the principles of value creation being customer-centric and strengthening our supply base across the organization. As part of our organizational change initiative, we have established an in-house advisory department dedicated to driving strategic improvements across multiple disciplines. This department plays a pivotal role in analyzing customers' needs, enabling us to refine our product assortment to better align with market demand. By closely monitoring market trends and leveraging customer insights, we can intelligently adjust pricing to ensure competitiveness while maximizing profitability. Additionally, the advisory department works towards optimizing internal resource allocation, streamlining processes and enhancing operational efficiency. Through those efforts, we aim to continually improve our ability to meet customer expectations, achieve optimal pricing strategies and to drive efficient allocation of resources across the organization. Digitizing the healthcare industry has been our goal since our inception. Under China's 14th 5-year plan for National Economic and Social Development, the digital economy has been elevated to a vital position and expected to enter a period of rapid expansion through 2025. We see this as a tremendous opportunity to leverage digital technology and reconstruct the value chain in the healthcare industry. To achieve this, we have built a world-class technology platform that is already transforming China's healthcare industry. We have built an industry-leading smart supply chain platform that is uniquely tailored to optimize our digitization model and unrivaled national sales network providing comprehensive coverage and a sophisticated multichannel digital platform that serves [indiscernible] in this massive market. This has made us an attractive commercialization partner as evidenced by our growing number of partnerships with pharmaceutical companies [indiscernible] designed to serve many players in the healthcare industry, pharmaceutical companies, pharmacies, doctors and [indiscernible]. We have created the largest virtual pharmacy network in China with about 440,000 pharmacies and have strategic partnerships with more than 500 globally renowned and domestic pharmaceutical companies. We feel very proud of the ecosystem we have built to-date, and it will enable us to scale our business to the next level. Now let me spend a moment to talk about our future initiatives. One, align our product assortment and structure with customers' needs. We are committed to enhancing the customer experience by optimizing our product assortment in accordance with customers' needs. Through diligent efforts and the utilization of the information collected from various channels, including customer feedback, market research and data analytics will continuously optimize our product offerings. The leverage and insights obtained from the sources, the company ensures that the right products are regularly available to meet the diverse demands of customers. This approach not only enables us to deliver tailored solutions but also allows for an exceptional and customized procurement experience. 2, reduced procurement cost. Direct sourcing from pharmaceutical companies has been highly effective in lowering the cost of products. We now source from over 500 global renowned and domestic pharmaceutical companies, and we will continue to deepen our strategic relationship with our existing partners as well as securing new partnerships. In the meantime, many new metrics have been set to drive our procurement team to perform better in the cost [indiscernible] campaign. This will provide us with a wide range of drug selection at lower cost. 3, be competitive with intelligent pricing. At the Digital Medicine platform, especially in B2B area, we are dedicated to continuously improve our market position by optimizing our pricing strategy through an intelligent pricing system. Leveraging advanced algorithms and better analysis, we meticulously evaluate market dynamics, competitive pricing, customer demand and other relevant factors to determine the most competitive and profitable pricing for our products. This approach allows us to strike a balance between affordability for our customers and the profitability for our business. By adopting this intelligent pricing system, we aim to gain a larger market share by attracting new customers, retaining existing ones and establishing ourselves as a trusted and cost-effective partner in the pharmaceutical industry. 4, invest in Smart Supply Chain. We are committed to optimizing our supply chain to ensure efficient procurement, storage and delivery processes. By establishing strong partnerships with pharmaceutical companies, we can source high-quality products directly from them, enabling us to streamline the supply chain and minimize delays. Furthermore, we are implementing a mixed model approach, combining direct sales and a consignment business to optimize warehouse operations by strategically managing inventory levels and help sell large quantities of partners of consignment stock. To ensure continuity of supply, our dedicated continuity of supply department focuses on optimizing procurement practices reallocating resources when necessary and maintaining optimal storage levels to meet the demand and ensure the availability of products in a healthy condition. By implementing these measures, we aim to reduce costs and deliver exceptional service to our customers. 5, relentlessly driving operational efficiency. Our commitment to driving operational efficiency is steadfast. And we're implementing strategic measures to achieve this goal by prudently reduce labor costs with technological supplement, we aim to optimize our workforce while maintaining productivity levels. Additionally, we're actively engaging in negotiations with third-party vendors like logistics suppliers to secure competitive rates, optimizing logistic network, enabling us to streamline our supply chain and minimize costs. We have ground sales team across the country to cover over 440,000 pharmacies. Productivity from each sales rep will be vitally important to our business. Detailed measures and the metrics are reviewed each month and ensure continuous improvement. Furthermore, we recognize the critical importance of improving management skills and decision-making qualities as these factors directly impact our operational effectiveness. Through focused efforts in these areas, we are confident that we can reduce overall operational expenses to a minimum level, ensuring sustainable growth and success. We founded the company without so much resources and connections. Therefore, our survival depends on making ourselves efficient and also making our partners more efficient. This will be our most important competitive advantage. With the scale of our business continues to grow, our leverage will grow as well. We aspire to be the most efficient operator in the industry. Sixth, keep building 1 Health project for [indiscernible] growth. We will continue to actively engage pharmaceutical companies and the pharmacies within the digital framework of the 1 Health project, utilizing an eco-systematic approach, the beneficial outcomes. By cultivating strong partnerships and collaboration, we strive to attract more pharmaceutical companies and pharmacists to join our program, expanding the network and are generating additional opportunities for growth. Through comprehensive market analysis, tailored marketing strategies and the data-driven insights, we work closely with our partners to optimize their product offerings, enhance sales performance and drive profitability. 1 Health Network has reached 20,000 stores, and we expect more to join this digital franchise. 7, committing to digitization. We're committed to consistently investing in digitization as we firmly believe that it will yield long-term benefits. By embracing digital advancements, we can optimize our processes, enhance efficiency and unlock new opportunities for innovation. Through strategic allocation of resources to RMB, we can stay at the forefront of technological advancements and drive groundbreaking solutions that meet the evolving needs of our customers. By prioritizing digitization and nurturing a culture of innovation, we ensure that our organization remains agile, competitive and well-positioned for sustained growth in the ever-evolving landscape of the healthcare industry. To sum up, in the phase of post-COVID opportunities, 111 aims to position itself at the forefront of the healthcare industry, driving positive change and delivering superior services in the evolving post-pandemic landscape. We wish to thank all investors who have supported us. Now, I will hand the call to Mr. Luke Chen to walk through our financial results.

Thank you, Junling, and good morning, evening, everyone. Moving to the financials; my prepared remarks will focus on a few key business and financial highlights. You can refer to the details of the first quarter 2023 results from slide 15 to 18 in Section 2 of our presentation. Again, all comparisons are year-over-year and all numbers are in RMB, unless otherwise stated. Let's start with the first quarter results. For the quarter, we partially benefited from the lifting of COVID-related restrictions since December last year. Our top line and gross segment profit continued to grow. Total net revenues for the quarter grew 24% to RMB 3.7 billion, and gross segment profit for the quarter grew 23% to RMB 236.2 million. Top line growth for the quarter was mainly attributed to our B2B segment revenue growth at 25% to RMB 3.6 billion. The gross segment profit for B2B segment has increased by 26%, with gross segment margin kept stable at 5.9%, which reflected our ability to steadily expand our business scale and our margin. Our B2C segment revenue increased 0.1% to RMB 112.9 million, with gross segment margin improved from 21.6% to 22.3%. Total operating expenses for the quarter decreased 12% to RMB 257.9 million. As a percentage of net revenue, total operating expenses for the quarter was down to 7% from 9.9% as we continue to enhance our operating leverage and optimize our operational efficiency. Procurement expenses as a percentage of net revenue for the quarter was down to 2.8% from 3.2% in the same quarter of last year. Sales and marketing expenses as a percentage of net revenue for the quarter was 2.4%, down from 3.9% in the same quarter of last year. General and administrative expenses as a percentage of net revenue accounted for 1.1%, down from 1.6% in the same quarter of last year. Technology expenses accounted for 0.7% of net revenue, down from 1.3% in the same quarter of last year. As a result, income from operations was RMB 2.5 million compared to non-GAAP loss from operations was RMB 72.4 million in the same quarter of last year. Non-GAAP net loss attributable to ordinary shareholders was RMB 7.6 million compared to a loss of RMB 80.6 million in the same quarter of last year. As a percentage of net revenues, non-GAAP net loss attributable to ordinary shareholders decreased to 0.2% in the quarter from 2.7% in the same quarter of last year. As you can see, we are improving our financial performance quarter-by-quarter. And for the first time, we have achieved non-GAAP operating income on a quarterly basis. Please refer to slide 19 to 23 of the Appendix section for selected financial statements. A quick note on our cash position as of March 31, 2023, we had cash and cash equivalents, restricted cash and short-term investment of RMB 878.8 million. As previously disclosed, if our key subsidiary when pharmacy technology proposed listing on the stock market was not completed before June 30, 2023, certain PRC investors will be entitled to require us to redeem all or part of their equity for an amount up to [ RMB 1.01 billion ]. As of today, certain investors have agreed not to exercise their rights before June 30, 2024, to redeem their investment totaling RMB 726 million. We are proactively working with the remaining investors, but in case all of such investors choose to exercise their redemption rights, we do not believe such redemption would affect our business and the prospects as we expect to have sufficient capital resources to fulfill such redemption obligations. This concludes our prepared remarks. Thank you. Operator, we are now ready to begin the Q&A session.

[Operator Instructions] Your first question comes from Xipeng Feng from CICC.

Congratulations on the company progress. And well, I have 3 questions. My first question is what are the profit drivers for the year 2023 after achieving a profit in the first quarter? And my second question is what will be the company's operational focus going forward. Last but not least, when we see that the company has just established a strategic cooperation with domestic Internet Enterprise Tencent. Do you please share some more colors on this project?

Yes. Thank you, Xipeng Feng. I think I'll take the first 2 questions. And then I think Luke participated in the signing ceremony with Tencent -- maybe you can take that question. So the first question with regards to the margin drivers or profit drivers for the remainder year of 2023. I think there are numerous drivers here, just to name a few. First of all, we're going to continue to grow revenue and margin. And with margin growth, that is going to contribute to our bottom line. And secondly, with scale, we aggressively pursue a cost down initiative from the upstream suppliers and all our people on the ground has [Technical Difficulty] really improved productivity. We have a number of hundreds and hundreds of salespeople on the ground. And we also have many people who are working with suppliers. And of course, detailed plans have laid out for them to improve their productivity, and that's going to be happening on a continuous basis. And I spoke in my script briefly about we're going to improve operational efficiency because this -- to be more efficient is going to help us to deliver better bottom line. And there are also many innovative initiatives and projects in our technological digitization efforts. First of all, we started from ourselves to digitize some of the work we do, and we can also leverage our internal capabilities and extend the same capability to our upstream pharmaceutical partners and also the downstream pharmacies. And of course, when we talk about to build a stronger supplier base, for instance, we have much better product assortment now. And in particular, our private label is really creating great momentum, and we expect that momentum to continue. So there are many, many drivers for us to continue to really drive the bottom line improvements. And with regards to the operational focus going forward, so internally, we use 3 sentences. And if I may say that in Chinese, that is [Foreign Language] so essentially, that is how we really design our operational framework. And if I could translate that, our focus will be value creation, building a customer-centric management system and to build a much stronger supply base. So first of all, when it comes to value creation, we have decisions, a lot of decisions to make on a daily basis. Really, every decision will have to be made on the basis of the value it creates for our customers, our partners. If the value is not that obvious or it's all internally driven, and that decision will have to be really based on the priority is going to be much, much lower. And being customer-centric, all we wanted to do is to really build a superior experience for our customers. For our downstream customers, we essentially have 2 words, monies to have. The element is better to have a lot. So essentially, whatever the customers need, we're going to have it. So in other words, we're going to have a vast selection of medications available on our platform. So customers can always find whatever they need, and this is going to be the final destination. If they cannot find the same drug elsewhere, they should always know that in 111 they can locate it. Now by having it, it's not good enough, and we're going to have a better pricing, competitive pricing. So that is going to be essential for us to really build a superior customer experience. And of course, in order to really create that experience, we have a lot of sub projects or mini projects that are going on. For instance, we use our digital tools to really create competitive advantages, and we're investing in our Smart Supply Chain. We are doing cost down. We are doing the assortment optimization. And we also use the data that we directly linked with the pharmacies to help us to better -- to do a better job in assortment, in pricing. And also, the last point with the supply base, obviously, we have built a very strong supply base with more than 500 globally renowned or locally domestically renowned pharmaceutical companies, and that is a great base for us to-date. But as we speak, each day, we are making progress. And we believe in our supply base is going to be critical. That is why we are really investing heavily in making sure that our supply base will be stronger and stronger with each quarter. So I'll hand the last question from Xipeng Feng to [indiscernible] the Tencent partnership.

Okay. Let me share the partnership with Tencent. [indiscernible] and the Tencent health view of strategic partnership in jointly providing technology-based services to our customers, including the pharmaceutical companies as well as pharmacies. So we will jointly explore new digital solutions in -- especially in the sales field as well as integration of smart pharmaceutical sales software services solutions aiming to improve the efficiency of pharmaceutical sales and facilitate the digital transformation of the entire industry. So we definitely leverage Tencent technology advantages in cloud computing, Big Data, Artificial Intelligence and the Consumer Internet services to support our intelligence drug store retail, data center and smart pharmaceutical sales software. So those are the major contents of our partnership that we are already in the process of defining joint projects.

Thank Xipeng. I hope that answers your questions.

Your next question comes from [ Loren Kai ] from HSBC.

I have 2 questions. First, I would like to ask about how should we think about the company's top line growth in the next few quarters and what are the key drivers, especially for B2B business? And my second question is, can you -- can management share more details on your digital marketing tool, the Telescope? And can you share your current strategies and goals towards digital marketing business?

Okay, Loren. This is Haihui. And let me take your questions. And for your first question regarding the growth; firstly, we will continue to upgrade our supply chain and we will establish the direct and strategic partnership with more domestic and also international pharmaceutical companies, bringing in more and more [ selection ] with lower and lower cost to our downstream customers. And secondary, we will enhance our digital marketing platform. I will talk about that in your second question to help pharmaceutical companies to commercialize their new products to pharmacies, clinics and eventually to patients and customers. So our B2B business is becoming a platform to effectively link pharmaceutical company with both pharmacies, clinics and with all the end users. In 2022, the volume of China pharmacy retail has exceeded RMB 600 billion. It is a big, big market. We believe that we have enough room to further expand our business volume of course with a healthy market. And on your second question regarding our digital marketing tool the Telescope. Telescope actually serves as a lens for pharmaceutical companies. Actually, when I sit in the office in Shanghai or Beijing, they are able this tool, Telescope allows them to gain the more direct and comprehensive view of their product sales and also their pricing dynamics real-time. By leveraging advanced data analytics and also market insights this tool enables pharmaceutical companies to analyze sales patterns and also to identify pricing opportunities also to make adjustments and make data-driven decisions to optimize their strategies. With this tool pharmaceutical company can access the performance of their products in real-time. Currently it is T+2 -- T+2 days and identify market trends and adjust their marketing campaign accordingly. These tools not only provide a clearer understanding of the market landscape, but also assist in forecasting demand, refining pricing strategies and also maximizing their sales and profitability. Thank you, Loren. Hope I answer your questions.

Yes, that's very clear and congratulations for attending profitable this quarter.

Your next question comes from Zoe Bian from Citi.

May I check how much of the growth of your topline growth in the first quarter came from COVID-19-related products. And yes, and we also know you have taken many measures to reduce cost. What's your latest guidance on breakeven.

I will take the first question. Definitely, the COVID-19-related products, especially in December last year and also this January this year has becoming so popular in this country. Definitely, it brings some of the upside in our business. But from a percentage wise, it's still not that big. So overall, I think in these, from March this year, launched COVID-19-related [indiscernible] becoming much, much more -- the trend has been decreased. So everything has gone back to normal from March.

Yes. With regards to driving cost down and reducing operational expenditure -- if you look at our cost base, we have 3 buckets of expenses, right? So first of all, is our fulfillment and secondly is our sales. And thirdly, it's the G&A. Given that we founded the company on the basis of being efficient because we don't have that much resources or connections. And obviously, we must be a very efficient operator. And if you look at the last few quarters, our cost to fulfill has steadily coming down, and we believe there is still so much we can do to bring down -- to further bring down the fulfillment cost. And with regards to the sales, if you look at our detailed financial report today is about 2.4% in Q1. And we believe that the percentage of expenditure on sales is going to be further reduced, and our internal goal is actually 2% within this year. And of course, in the meantime, we'll also use our technology to make our head office more efficient to really automate a lot of those work, especially with AI's availability, and our tech team is aggressively looking into it and many projects actually are on trial right now, and we should expect that the G&A cost is going to go down. And obviously, you're asking about the breakthrough event, just let me give you this picture, right? So even at our current scale, which is RMB 13.5 billion last year and would be RMB 3.7 billion in the first quarter we believe if we -- like we -- our total OpEx is 6.3% in Q1, considering during the Chinese New Year we are really paying our people with paying rental, we're paying all those expenses. You've got to shut down the operation for probably 3 weeks or so. That's 6.3%. In some of the months, we can actually bring it down to the 5% range. And we believe even without the COVID, even without the outliers and if we do RMB 20 billion in sales, we are very confident we can bring down the total OpEx to a 5% range. Let's say, if we grow the business to RMB 30 billion, and we are very confident we'll operate at sub-5 level. We're talking about a 4% something. And imagine if we continue to grow our margin, let's say, our margin grows to ideal 8% to 9% that means our bottom line is going to be around 5%. And we have are different to really some of the retail businesses, although people miss read-outs as just a pure distributor, but we are far from a distributor, we're a technology company. And we believe that a 5% net margin is actually -- our net profit is actually quite achievable given time. And as I said before, we want to be an operator that is going to be very efficient, but that's not enough. We aspire to be the most efficient operator in the whole industry.

Your next question comes from [ Kevin Wang ], Private Investor.

Thanks for sharing and towards a fantastic season, and you make a great progress. My question regarding [indiscernible] oh, sorry, there are some echo. My question is regarding ongoing consolidation mergers and franchising the downstream pharmaceutical industry, along with the competitors going for IPO, what does the company perceives future B2B competition, although the company is strengthening its relationship with downstream customers and establish its own competitive advantage.

That's a very good question. So our major customers are pharmacy chains. For example, in China, the top 1 [indiscernible] were already serving 95 of them. So we believe that the consolidation will play in our favor. So our established reputation very strict quality control and transparent supply chain will help us gain the trust from our B customers and pharmaceutical companies. And at the same time, as you mentioned that the ongoing consolidation merger franchising, certainly will change the whole competitive landscape. So in this case, we have to continue to strive for differentiation and innovation. This is what we have mentioned in the [indiscernible] speech that on our due development, for example we build this project Telescope. This industry is more value and can provide to sponsor companies to help them gain market insights and market their products through our retail channels. Also -- and also mentioned the 1 Health program, we provide to our existing B customers [indiscernible] solutions and services. This industry is how we can empower the efficiency and the customer stickiness. I hope that answers your question.

Your next question comes from [ Stephanie Lee ] from [ Civic Investments ].

This is Stephanie from Civic Investment and congratulations on the growing revenues. And I have 2 questions. The first one is how was the cash flow situation in the first quarter for the company? And what's the current cash position? And the second question is what are the company's plans for its OEM product in the future? Thank you.

Thank you Stephanie for the question. Yes, we have achieved a non-GAAP operating income in the first quarter, which means we're no longer burning cash operation level. It's good news for us. Additionally, we've been managing cash very carefully in terms of working capital. You can see that our accounts payable date is around 45 days. And then our inventory days is about 30 days, 30-plus days. So give us a lot of free cash. We are improving our efficiency and continue to build our scale, which means we are able to negotiate a better trading terms with our suppliers. So if you look at the cash flow statement you will see the negative cash flow for the first quarter, but that's mainly because we received a lot of advance from customers in December when the corporate retail restrictions were lifted. So a lot of customers pay advance to us in order to get medicines. But in terms of operations, in first quarter, we've been cash positive. At the end of quarter end, the cash and cash equivalents we see cash and shorting investment amounted to RMB 878 million. So we believe that we have sufficient cash reserves to support our business expansion. I will leave the second question on OEM.

The question of EMM, yes where we are [indiscernible]. Regarding the question on OEM, yes, we are working with some of the leading pharmaceutical companies in China to OEM or private label products. And there are a couple of private label registered in 111, [indiscernible] our trends to our customers and also from Jan for individual stores, customers and also some more, for example, like lane for dietary supplements and -- by Q1 this year, we already launched more than 70 prime label SKUs. And more and more things are already in our pipeline. Most of these products have been well affected by our downstream customers. And as you may know, private label products have been a very, very important margin contributor for those top chain stores in China. But for our customers, which are most small and medium stores and small and media stores or individual stores they don't have the luxury and capability to establish their own brand. So [indiscernible] become a very attractive solution for them.

Your next question comes from [ Adam Frank ] from [ Grace Capital ].

Here is Adam Frank from Grace Capital. Congrats to our performance in last quarter. And I have 2 questions. But first, what's the current progress of company privatization while second is may ask if the company has any new technological development and supply chain [indiscernible] supply chain process in recent times.

Yes. Let me take the first question on the going private. Our understanding is the going private process is still ongoing. The special committee formed by 3 Independent Directors is still working with the [indiscernible] Group. So we shall make all the necessary disclosures in due course as required by the SEC requirements. That's our answer on the growing private questions. Dr. Luke can talk about technology.

Okay. Let me take the question on technology and tuition new development. Let me just use a few examples. In fact, Junling mentioned, the Telescope -- project Telescope, right, that uses data intelligence. And smart sourcing now used by thousand pharmaceutical companies and chain pharmacies, that uses a lot of AI tools to help all the [indiscernible] stores source effectively and optimally. And we also have an internal tool called the [indiscernible] system, use Big Data, help us assortment management. A very important part of our growth came from our improved selection and out-of-stock inventory management. Regarding supply chain management, let me also give 2 examples. One is the transshipment, right now, we already have 11 warehouses and across the country, we transship products amongst the warehouses to use fulfillment cost. And also, we have Junling mentioned the joint venture warehouses. We mostly -- we leverage partners resources to facilitate our revenue growth at the same time to improve the availability and improve the time -- the shipment time to customers. I hope this answer your question.

There are no further questions at this time. In closing, on behalf of the entire 111 management team, we'd like to thank you for your interest and participation in today's call. If you require any further information or have any interest in visiting 111 in Shanghai, China, please let the company. Thank you for joining us today. This concludes the call.