HLG - Earnings call transcript Q4 2020 | Hailiang Education Group Inc

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Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Hailiang Education Group's Fiscal Year 2020 Financial Results Conference Call.

During today's presentation, all parties will be in a listen-only mode. This conference has been recorded today, Thursday, October 15, 2020.

Hailiang are from and company's today Mr. CEO, us Education the Group Chairman Joining company's Mr. Vice the Chen; Junwei President, Ping Huang; the company’s Chief Financial Officer, Mr. the Jianguo and company's Mr. Secretary, Yu; Board Litao Qiu. I additional are subject are risks and questions. listeners prepared remind management contain in to would may response and call, your make remarks which this statements management's who statements, forward-looking uncertainties like to forward-looking on our to Reform the forward-looking Private company claims protection of Litigation statements Securities contained the Safe for of Therefore, Harbor the as in and Act XXXX. the Hailiang under its obligation new update forward-looking otherwise. to statements events, of future Education result no is or whether alter as information, or a this At would the turn call to over time, Mr. I to like Education of Junwei Chen, CEO Chairman Group. and Hailiang Mr. ahead. go please Chen,

Dr. Junwei Chen

conference Thank and you joining Hailiang operator for today. earnings call everyone XXXX Education’s year fiscal

Before XXXX. appointed myself CEO personally would the the Chairman the call Group of China. Group. we University, this is attend introduce was Engineering of and time and Peking Management CEO as XX, Hailiang Chairman Group like President universities I Hailiang two degree as as Education to first Prior Education. the on briefly I of Hailiang I from June was that this a Education and of Hailiang I of Energy and President PhD one in Resources to in top hold Vice I start

support in Chairman During Education all my continuous Hailiang time to and the the attention person University’s of served XXth you student at in future. I postgraduate I and of the University, visit I the your and Peking Hailiang as to association. appreciate meet also welcome Education

and by demonstrating executing performance the temporary caused disruption back COVID-XX review. our has continuous move despite short-term on our business business a of been strategy the and underlying will highlighting growth innovating In impact I in and past the our fiscal Now and our business progress year, our our stable resilience pandemic. strong to

RMBX,XXX from slightly RMBX,XXX.X fiscal year-on-year by our decreased revenue X.X% million. year XXXX was the million, For

However, was educational to and non-K-XX educational RMBX,XXX due which from the K-XX was decline services increased services COVID-XX from by revenue year-on-year. impacted RMBX,XXX, was mainly our million

attributable million, year-on-year Our to from profit net shareholders by was increased RMBXXX.X XX.X% Company's million. RMBXXX.X

profit gross increased was respectively. profit XX.X% XX.X% XX%, margin from and was margin XX.X% net Our and

have in are to of our XXth addition, In the we celebration pleased XXXX. Anniversary

received XXXX have as Concept Ten awards Stock agency in the leading Education China media by such sector China in Zhitongcaijing, Ultimate We of XXXX Influential Best the Brand [ph]. Chinese Award Brands financial by Top Enterprises China. of education a

to programs number XX, students, affiliated June schools of the expanded of the The schools. of students our has our in international The enrolled enrolled of the XXXX in As schools. both enrollments in aggregate XX,XXX schools the included school in a was affiliated XX scale was programs our which network schools was and education our affiliated affiliated X,XXX. of XX,XXX basic company's students enrolled students managed number number of and XX,XXX, of

School, Jinhua XXXX, was of the of Wuhu As September operations Language XXXX. Chinese Experimental Hailiang Lanzhou were acquired annual School. XX, schools date Hailiang They affiliated in started School, on that XX-F Overseas were October there four filed Foreign or Hailiang Experimental Hailiang report School, new our

in increased For XX% of schools started in XXXX. XX, fiscal number number our strong in four schools September acquired programs demonstrating operation educational was programs our year in basic represented increase, which number of X,XXX aggregated was year of new The enrolled the the our in of to students the students enrolled a Such and affiliated of the international XX,XXX, enrolled our school prospect affiliated XXXX. X,XXX. students enrolled of affiliated in XXXX number September our affiliated affiliated in Semester or of Fall of a the XXXX, our students performance that of was fiscal enrolled included schools as students XX,XXX schools

of and of and with October on team Campus the IT developers of XX, date top and we XXXX, education -- and XX-F leading Chinese Smart As cooperating have education development of professors and facilitated experienced filed establishing enterprises. on application composed an professionals our report Smart the annual Classrooms by universities

XX,XXX in all XXXX, still semester XX,XXX With the management of COVID-XX is could the cloud outstanding compared as infrastructures, top infrastructure, "Fall "Star integration of pandemic company to students up innovation increase their before safety hit COVID-XX and records. learning. "Smart the and Campus" applications XXXX COVID-XX big services of IoT, XX, the management technical effectively February that live the efficiency thrived to education fall our registration and to our our first students via data we 'Hailiang when of technology Teacher The the of capabilities, improve of X.X% our for appeared, and When progress with business "Star for from the last the on as same online as and system, health the the our of facility outbreak in and appropriate continue the planned enrollment educational deployments, the of of outbreak of launched our Semester" teaching regarded Despite XXXX reduce impact we adjustments in abundant teaching as advantages that September operations online of services, made has and impact experiences, of [indiscernible] semester, planned Classroom' Benefiting outbreak COVID-XX. a and Classroom", and ensure platform Cloud online on limited. and the period IT this COVID-XX of needed. we confirmed quality have have of launched Spring and year. students very Training", of VIP to approximately the priority of and and standardized during careful negative courses employees our and classes. IT such or education variety To proactive "iClass", enrollment Student arrangements short-term Virtual

the optimize academic In our schools one or we future, management expected build synergies. countries further management efficiency, provide develop improve Report services team and hire expansion of invest management to private filed axillary and and road the and one of education countries continue will belt for model, business maximize on company ability technology, or international XX-F development teachers affiliated have Annual and the the on of education offerings. October schools and we our quality, XX schools. network strategic performances, private XXXX, improve of date The services, our in with support and education services to and expansion, school increase the and strategies invest the proportion application our of diversify the to diversify education education are XX, As and explore in to public XX the

thank attention. Now all your again for you support and

our to year will on XXXX the I call Next, results this management team. Yu, Mr. over financial will behalf summarize turn Jianguo CFO who of our please ahead. Yu, fiscal go Mr.

Jianguo Yu

Chen everyone. Thank and good morning you, Mr.

behalf of would summarize the some to I XXXX. key year fiscal on management team results like financial Now, the for of

million $XX.X to by year. gross XX.X% by XX.X% million billion of From earnings basic XX.X%. profit RMBXXX.X Compared increase increase was share compared the XX.X% million to shareholder or last increased the period million was From year, million RMBX.X was our same the respectively. or RMBX.XX for per company's last RMBXXX.X same and from the and For gross XX.X%. the From RMBXXX was fiscal million and From year RMBXXX.X our profit million, XXXX, million or RMBX.XXX or million $XX.X was our slightly net profit revenue an X.X%. or was increase of our $XX.X billion XX.X% our decreased an margin by was profit margin profit RMBXXX.X attributed X.X%. RMBXXX.X $XXX.X net RMBX.XXX net $X.XX diluted to period million,

million $X from million, RMBXX.X Jiangxi Management traveling was the Revenue because RMBXX.X of RMBXXX.X on year. Education of of increase million same Revenue X.X% study the million XX.X% for for service, last decrease trip Our X.X% of period second for management of year. million, the increase consulting RMBXXX.X to RMBXXX.X for liquidation RMBXX.X or period million was and RMBXX.X $X.X or last for of revenue services, last of derived income a million the million of RMB adoption million study million year. other The the slight result million educational Service of on RMBXX.X The million the a year, service and or mainly period an service, program profit. the Haibo educational the the an an of student decrease was RMBXX.X million RMBXX to administrative period of of of Limited. revenue an of service, of same $X.X an outbreak the million staff. which year attributed RMBXX.X service was on same same and COVID-XX study $X.X slight the increase due the period to or transportation of XXXX. mainly liability the XX. subsidy RMBXX with million was RMBX.X to million teaching the or tax government Revenue of revenue and from which grant Selling RMBXXX.X $XXX.X the last from from million same last COVID-XX teachers same to management of growth of recruitment year. mainly was educational million, XX.X reward hotel outbreak, or from the last from restriction $XX.X for training same decrease or represented of expenses XX.X% was same was from a million, from increase was we year. in year services, received increase basic due of the million, year. X.X% trip trips expense million $X.X was from expense Other for management million, million, of decrease the affect revenue RMBX.XX or to K-XX interest a Educational for last half year. same RMBXX.X or for X.X% primarily RMBXXX million, cost due last from and million compared million, was the period from service, million Training revenue service was from education in XX.X% or $XX which of RMBXXX million million study of fiscal due $XX.X the increase from $X.X period by same Corporation was labor year an last X.X% local the million, international related X.X% decrease release trip our mainly revenue from consultations, RMBXX.X overseas million, increase services cost represented the of of upon in or million RMBXX.X an period $XXX.X of increase RMBXX.X decrease increased or from program XXX.X% driven a from K-XX costs mainly same for RMBXXX.X from the last IFRS primarily same increase derived K-XX period K-XX X.X% million, enrollment of year. of for million The last RMBXX.X educational period period million million The last Revenue of billion or for was period was education and steep Other Income $XX.X or study tax from Finance in finance year, increase government. $X.X costs income RMBXXX.X

Our the fiscal XX% XXXX. XX.X% XXXX rate was in fiscal effective tax compared year year with

summary flow. quick sheet and for of a cash our Now balance

period XX, by XX, the and million June of last provided million, XXXX. year. The year. to last compared period was a invest RMBXXX.X same net $XX compared equivalents of period million, in in or June XXXX of or compared As $XX.X or the financing $XX.X as RMBXXX million The RMBXXX.X was used compared was RMBX.XXX activities last with cash with Net the RMBXXX or RMBXX.X million, million for same cash for for net million with $X.X activities million used million million, operating cash same of with RMBX.X cash have billion RMBXXX.X of cash year. activities we of

any Now I over discussion will the to questions. operator for turn

Operator

question Private Investor. first Aron comes ahead. Today's from a go line Hello, Su is your open. Instructions]. Su Please Aron [Operator

Unidentified Analyst

you can sorry, me So now. I muted, right hear was

Dr. Junwei Chen

hear can Yes, you. we

Unidentified Analyst

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implementation what are question of the development you. future for measures is my what the Thank Education? the Hailiang So and specific is, significance

Dr. Junwei Chen

lead take HLG in noticed indeed Thank is this strategy you These of might projects happy that you this going I this very glad and are your core to to share future. am future the Chen and to for my Dr. question, I'm thoughts a two our that question. strategic this. brighter

is talent of of our our always core enterprise our educate mission determines one students. people future and As to bring development talented Founder said, to the an

the competition professor teachers expect with we go exceptional Within or XXX training titles teachers next to titles coaches. or years, five equivalent have to Olympiad

expected And by graduated top a the teachers are teachers XXX in University. or then the of hold have two China, Master's We our degree Tsinghua Peking will University i.e. from to universities above. and most

to committed our talent, the fact higher is Lifecycle reform to high join more from to which creating supply provide start decisions. school career will alumni. level will on guide our we are junior in their Talent career alumni of future a Lifecycle at We students a The to Full Talent plan Plan Training Full Training attracting high the Plan and year the evaluation education,

professional monitor and capability to development continue During enhance comprehensive our study graduates college we their internships. through and trips, stage will

three Education join position graduation, to the adapt to we who after operate foreign next years, strategy facilitate to majors with and will the XX achieve the XX this training and to top to order universities strong universities to in provide Hailiang Education. shorten on their Hailiang that. new those China tier normal with expect Hailiang to including education in mentoring universities education time with and For XX In universities job XX at will

continue education core basic lead take competitiveness and plus technology task of the technology. our will of important undertake reform education the to China's to of Hailiang education and Secondly, science from own advantage

of everyone Education. school school operations With expert earned management for operation as the mission designer Hailiang of master the making easy

a technologies. education destination. Peking to and Hailiang Research University, Institutes Education experience partners our technology cooperates university pool Tsinghua ideal the will minds, and and and Hailiang big of end with strong data, DAMO XX knowledgeable team, curriculum, strategic Alibaba healthier happier combines more form a learning of management students accumulated and Academy sophisticate partners Education bodies, professional research leverage experiences and more our capabilities, resources, high powerful Our offer like with with years University, education to experiences, experiences,

the Education. departments Hailiang Education’s full address can cooperation to our standardize above of to to of of development all the school Education future and research education With to fully hope for of schools operations the development and headcount of third reduce future and the of one and complete by school Hailiang strive quality, know the and operation, our support a school full we how will improve Hailiang exports of brand management, I and questions. to points support your standard

Unidentified Analyst

much. Thank you very

Operator

Our next question today comes from Erid John, a Private Investor. Please go ahead.

Unidentified Analyst

of and operator, situation training recommendations day. Thank the Education Hailiang for My development future you thank and good expectations really Hello question is good you. industry business? is would know and educational I educational and to current like

Litao Qiu

Secretary. you. Litao Board thank the This is Okay, I Qiu, am

Currently, of educational already plan for plan Let a open system we are K-XX studies. we also answer and Province, attendance. cities training to your Hangzou Zhejiang center provides Hailiang student located we online me three support year in is and have in Company, learning the long-term currently Actually XXXX our From company XX,XXX Mingyou have training question. more which a our platform centers Zhuji school thousands students to located. learning where interactive in already perspective is around which new we actually our

our learning Thank will year internal one undoubtedly a result open could financial significant year the education or As sectors. XXXX few in compared many model. key revenue center players and you. Beginning to with in the each from we plan a next expenses better drivers of based training be which species XX profit has also other same margin starting fiscal growth on Mingyou avoid years. we

Operator

Maggie ahead. question Cantor Zheng [ph]. today with Investment go comes Please from Our next

Unidentified Analyst

Cantor on is like the Maggie of would what from know is operator. performance for Investment. We Good you. financial you, evening COVID-XX to company's fiscal Thank This Thank impact management. this year?

Jianguo Yu

services. answer I educational and has the this you study our Yu, I will outbreak Thank am our very service Jianguo of lines, Hi, COVID-XX K-XX much. am CFO, The question. business impacted I especially

K-XX education to provide teaching allowed platform, not students our to our our and teachers our educational schools in-person enabled For staffs was and operate services, launched educational our online while tutoring classes. online to regional curriculums which we their

As for million to of due and services year price deferred from a fiscal high next of on revenue services our accommodation the been the the RMBXX.X only result, RMBXX.X from of impact for which million significantly revenue K-XX educational level services. was school primary school was K-XX education of year and a accrued was the Besides and school transportation the to has refund delay impacted. limited not middle

trip pandemic XX.X% I million attributed the increased imposed the revenue the class education a during certain in shareholders to and government training was our to study authority, Chinese you X.X% by from or to answer to thank declined extent the the suspension very year-to-year. to profit For services, a that restrictions XXXX. RMBXXX.X decreased the gross XX.X% million million the or services hope and period. regulation much. the travel to your revenue Despite net by our by current physical of of profit question year due fiscal onsite pandemic, RMBXX.X Operator. and by increased Due RMBXXX.X

Operator

next you, Lee, go Thank question our Please from ahead. Private comes Eric Investor. a

Unidentified Analyst

Hi you who Investor. management. Private Eric a name My operator. is is Thank

a has ensure So does the related related that the a fairness party Thank of number the company of transactions. we transactions? party know How you. certain the company

Jianguo Yu

I Yu, Hi, the I CFO. am am Jianguo

fairness To address transactions, Let steps me party answer concerns. Thank you. we you related improve following this the are for question to very and the transparency of much. taking your

similar to regularly. evaluation or conduct related pricing a make the of of according services price and internal party the transactions We of will market products price

all all will transactions management issue are our all Board We or to party formal fairness. on by make management detail party advance. Operator. a party looking and committee third financial thank approved again. much assessment pricing transactions related disclose very We and we're meet of party our for statements The the audit our on opinions transactions of will you Directors related the involve investors and questions annually related forward to to the in and our the you in

Operator

question Universe from Wan next Please ahead. [ph] Ivy comes go with Our Securities.

Unidentified Analyst

Universe everyone Securities. from Hi operator. I you, questions. Thank several have

So points Thank -- strategic, any across assumptions cities? capital revitalizing our first there my plans network expand tier school or underdeveloped are first or regions to [ph] detailed are is, question the or there acquisitions and you. any for

Dr. Junwei Chen

education regions in Thank launched coming be you. underdeveloped the and I year. Yes, the of to be key take the is Dr. three will This one revitalization actions Chen question. of and fiscal this will

also underdeveloped the these China, Hailiang average While options expenditures be private same with improve attract well key graduates career Hailiang as a to And education these universities and to in population replicated and heavy opportunities these evaluate additional our in in to the the to as time, position top establish acquire, good to schools, at platform form in experiences, and teacher in could student has business our underdeveloped school resources time, education, to below result, in regions application networks system of to export K-XX regions. in liaising first China cases By underdeveloped very model in establish, we capital our regions can the large schools without the the of schools spending of and in technology China. of education operate vast in next development At these can or are And a and Group a schools one the the same I in cities from successfully. did large regions. will questions. education, these management I few early of expansion and explore regions your a composed China our years, the a we Education with platform quality or services we technology expanded regions of manage and is public education cities education answer through before and what and tier our of local regions. students work in and expand could we underdeveloped hope and potentially continue of

Unidentified Analyst

thank Yes, know. to good you. That's

so looking your question standards have my Thank processes to moved are implement to in what maintain where online So place, classes I are to of is, you. you second know already you teaching?

Litao Qiu

all, of Board the first am Litao is Okay, Qiu, this I Secretary.

Let me answer your question.

efforts First actually students were teacher your online training this to outbreak COVID-XX were to the planned managed before But our continue teachers virtual across could class, that you. XXXX all, during the answer hope and back schools. via can February normal. I and COVID-XX, outbreak VIP are already classroom all of their of returned launched question. course as standard classes. activities student Hailiang in courses master to we education trained and our and lifestyle Thank the of platform the online All affiliates implemented wear ensure

Unidentified Analyst

Yeah. Yeah, thank you.

you? school give you some or online us activities when after can updates sports and other you have on So entered you classes thank

Litao Qiu

okay. Oh,

after mentioned student thank all but this and for feedback from to normal, As of the outbreak system. returned we heavy deliver interactive the back, with students, I activity already arrangement. And happy during Yes, periods COVID-XX actually you. according teacher the school just the they our to are quite our activities online

Unidentified Analyst

Yes, lot. thanks a

So you. is next Singapore about our My expansion. question thank

you international company expansion focus for East do international and our view growth? move So for forward is so to the international Thank segments if you. Asia growth the the

Dr. Junwei Chen

our the this next is and five also three years. one take in expansion This Chen Yes, international of is actions Dr. I strategic question. will

Regarding two China aspects. in our international different extend expansion strategies outside we will

in these to road with Singapore, By [indiscernible] provide K-XX our schools study send improvement on countries our destination existing For opportunities send synergy students to will grades schools to other expanding to we at side also will school these including continue in potentially students in the business countries our trips schools, high and We international acquire once U.S. of into some in schools existing for Currently, existing students the countries. in other studying aspect. teachers And in help belt and initiative -- China observed we international initiative and campus, or elements to some opportunities our road and belt the most of are one in college and and studying some now Australia, countries, international aspect, of achieve are graduate road an developed China these can also continue boutique in have and the overseas initiative countries. students existing Right in the this we our which in of belt countries. UK, these in our China will our great in some we to there study Zhuji studying That's explore and China. can are have we that these these from have curriculums international some families look curriculum demands network. there programs, with training students

believe countries quickly So interest that our generate schools these international philosophy these that's Yes, in we establishing education our export by Hailiang these expansion citizens countries principles from from brief and a substantial -- summary can of strategies. and in in countries. these

Unidentified Analyst

thank very for explanation. much you detailed a Yes,

So question services. my is educational about last training our

high to of very shutdown thank before Management, the do much? this in you of and you you future can what attribute Haibo for the rate continue Jiangxi the this growth Education growth So sector expect to

Dr. Junwei Chen

educational high are also established sharing, student a already centers our recruitment, the segment we that the have K-XX to a this replicate question. months, taking will for few generate that new synergy we And we our In achieve driver past group. our successfully training centers the believe this will schools Yes, business upcoming main be I for etc., continue in yeah, to learning in including in cost year, where years. relatively fiscal can located. few are regions take models growth the and and these existing will in Zhuji to and strategies By business Hangzhou adjacent established continue next with entire schools. our learning course three existing net to margin to our Okay, this schools, our

and So sector business upcoming our contribution of of contribution offline will performances, online substantial year. to positive development the these these with very fiscal continue in of financial the to a centers, to this segments generate training new overall well,

Unidentified Analyst

thank That's very my Yes, questions. much. all you. you Thank

Operator

Seeing call closing let further questions, remarks. for Mr. no to Director me you. to our turn Litao Qiu, Board Thank over the

Litao Qiu

call. management behalf of to Thank entire our again you. us like would you On Okay, everyone team thank today conference for operator. for thank joining I

of are services, development business, or funding, expense results new operations, of services, private in are items, Harbor that forward-looking maintain to Additionally, I its Hailiang Reform its provisions variability U.S. of Safe the which brand, relating educational meetings of grow competition would statements ability All statements these the forward-looking statements private cost other including future Act policies Company's like and its of the general economic epidemics business certain other ability maintain considered following; be the and Company's in historical and introduction Chinese of certain providers Litigation growth operating in Company's you to to of to to outbreaks XXXX. and plans, its the governmental financial announcements China, in education China, of these business China, the additional products raise of the the and than services the market, expected not expected Securities with third number facts in statements shareholders, and by employees software the meet and schools, reports of education oral during conditions its its statements or and intellectual and oral results, but Chinese such to remind Exchange under acquired Statements in limited retain management to ability entrusted in to relating revenue and health into requirements other intellectual statements written Commission. development, of filings future, marketing and made its students condition, Private or facts, Hailiang industry changes enhance property, services, U.S. SEC, successful including detailed business ongoing, by attract, those the to including the Education's to forward-looking its the in technologies its personnel directors, to Securities or annual companies, by the integration also historical its in possess report and press to in hire, on Education and statements are development portfolio not and releases forward-looking its the written other and about assets make who beliefs key ability or initiatives, personnel, other and necessary litigation the and clients, experience rights, and and copyright and other any risks Hailiang protect materials, arbitration, of parties. Company's periodic made may officers, property in the to skills its ability are statements technical that expectations, outcome of its dependence statements.

condition, results "continue," press "aim," "will make," Forward-looking of are uncertainties, "endeavor to," those such "potential," information future financial similar report "anticipate," "will by other All information unknown, the expectations statements "is/are operations, included statements, release be," "estimate," this and "believe," and as and is current business based believes SEC. Education or statements other under Form or its expressions. affect no to and involve to," with on risks on identify phrases Hailiang release, XX-F this of "may," annual and strategy, update risks needs. the known applicable other law. may Investors Further undertakes "expect," can required financial obligation forward-looking Company as or "intend," any events whether those press may except is and our inherent forward-looking words of about in trends in and provided regarding financial date "will," "plan," that projections the filings as likely and be

interest Operator, your and tina.xiao@ascent-ir.com. on us ahead. Investor contact email We Management with questions, reach go If speaking support you to time. IR possible. as our will please at next to you questions your Relations soon ir@Hailiangeducation.com in Education through have please us again as respond appreciate or Consult at forward Ascent any Hailiang look and

Operator

Group’s in. year to thank conference we listening for fiscal Goodbye. This XXXX call for earnings today concludes again and Thank Education you all you call. Hailiang our coming

Dr. Junwei Chen

Goodbye. Thank you.

Hailiang Education (HLG) 15 Oct 202020 Q4 Earnings call transcript