HLG - Earnings call transcript Q2 2021 | Hailiang Education Group Inc

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Operator

Good day, ladies and gentlemen. Thank you for standing by. And welcome to the Hailiang Education Group's Second Quarter and First Half of Fiscal Year 2021 Earnings Conference Call.

During today's presentation, all parties will be in a listen-only mode. This conference has been recorded today, Wednesday, March 10, 2021.

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

Junwei Chen

the fiscal our of our Hailiang will Group, for and Thank you, overview quarter everyone call give operator, half conference an introduce details note of Financial numbers operational Mr. the Lee, for Inc.'s today's Education all the and this the Officer, call share today. Board Chief XXXX in in first today, year. year of earnings financial are review. will RMB. and Secretary, of I call Ms. On and quarter our presented operational Qiu, the second highlights joining the performance second the this Then first will that half Litao Deborah fiscal quarter. of Please company's company's

questions. Lastly, session we Q&A will a take your to conduct

the which net continues XX% of year. period and by to million, XXXX XXX.X our XX.X% RMB same XXX of year RMB same for million attributable shareholders leave XXX for the RMB the first In XXX.X from of from company's the hurdles The to period million, the RMB million of was COVID-XX last revenue year of which impact to financial the we for increased half of increased fiscal the fiscal year. a line by our last are profit announce pleased recorded Although results half with XXXX, second we first the are expectations. business across in in globe, quarter

and of gain education we market and improving profitable future. education on in middle and ancillary more high school leaders shareholders will of primary, that the China, share for market one As long-term services drive we in the growth focusing the are confident the quality services

Litao you Next, company's quarter. operational Qiu, Board share Secretary, will Mr. our of the this with highlights

Litao Qiu

Thank Chen. you, Dr.

for necessary for talent the Army talents, will attract Hailiang such to as careers, teacher Cadre supply, it is provide also logistic integrate not a Academy better existing to but to training talents. only teachers supply. platform management Education's bottleneck academy, academy and cultivating excellent and talent development fully development Education talents, and comprehensively rapid for talent talents. teachers This of the will the institutional Now, efficiency Hailiang the of new knows thus let's turn cultivation, in of talents for the technology company are talent first actively cycle concepts, We the company's of forming attract loop talents To build that closed brand a the believe the the of teaching development. supply the life in to that by from and talents We vitality second quarter. Education Hailiang ecosystem to some rapid the company's terms delivering in culture and achievements a training pool and the outstanding platform of management the retain is solves improve all-round technology talent society. Hailiang Education an of spirit inseparable efficient future. development become of talent management

management provide efficiently XXX management company development Academy the Education. and trainees those For to schools, new can for of dispatch to to trainees support strong the Cadre example, expanded plan Hailiang according now has the talent development Army the XXX the the

worth such software Education technology developing Education mentioning all as guide reproducible is unique school school running has detailed school expansion running running standards. school with guarantee covering integrated In is ethically core has campus addition, practical growth. Education's to established the of cooperate a segments, and a companies size smart Hailiang quality created well-known Hailiang selections, recruitment and that platform. and high new, develop methods, Hailiang It student with and stable

the only technology as platform, improve integrated homeschool level Thank our teaching co-education. guarantee more of plus network. existing an XXXX The continued provide is perceptual models. the three Hailiang Things and school teacher dimensional teaching the exercise, company. collection teacher in electronic strategic traditional Based the and future. XG will community the system Hailiang but training dynamically to and Internet training, the completed and Taking staff promote automated AI of with to an information adjust ecological into of supports, not the will quality elements and innovative education the launched service second of the expansion These home application growth plan recent we management use through algorithm in of you for platform, homework cloud its technological the example, in the your Hailiang new and Education's data technological continuously technology, the company be education scientifically and Education's the system devices, the intelligence under through will solutions. is school the rapid in all-round teaching Turning year education standardization school, non-sensing and fiscal teaching years. intelligent quarter and direction system, on and a data of those also education communication the precise launched of support of continue school company various analyzed to the schools management achieve

who XX and and functions. Welcome skills tax I call to working accounting, and Financial tax accounting, experience over newly strategy Lee, and will Hailiang global Education join Deborah our with global firms strong finance, the to lead our Lee, leadership advisory turn Next, Ms. will over team. again, years' the Officer Deborah Chief appointed has

the ahead. share go behalf operation fiscal will first of and team. company's Deborah, XXXX quarter Now, year financial and of of the the management half she reviews second please on the

Weixin Xie

ancillary a services, high morning, key trip and our management financial On services. half and consulting operational education Good quarter everyone. and provide company I introduction. nice behalf services, summary of provides of the such you of services, first overseas team, management study and education middle the the education for XXXX. and education Qiu, services, second review Mr. fiscal as primary, services, you, training the Thank for The with school and will

our in that increase school aggregate managed XX network, students which The as we we For school of managed XX of XXXX, sponsored a total was affiliated December of schools XX,XXX, XX, and of and of schools. were number enrolled both X.X%. schools, affiliated an had XX we

of XXX,XXX, XX.X% The and enrolled an XXXX, and XX,XXX was education international tuition annualized X.X% XX, fees of X.X% programs international For and of of in schools basic affiliated XX,XXX X.X% increase average increase of the respectively. and schools, education an a students and X,XXX number RMB respectively. as RMB and basic was December

the managed we XX,XXX as For schools, had XX, December students XXXX. of

performance, market private students' operational the and growth. schools educational consulting education training their training, we to and to performance developing and schools learning technology enhance services. XXXX more overseas improve continue of experience its plus provide first fiscal seen managed public also utilizing their academic study To efficiency in education model. and improve our year and exponential We We the quarter business have trips, academic the launched online

and served the of For training. half fiscal XX,XXX student the attended attendance, XX,XXX year business training students online XX,XXX XXXX, students the educational online which attended first of our training our

continue fiscal training XXXX of will online We future and year for years. growing the the rest expect

five to also during training We XXXX plan and centers open to more year total. XXXX on-site at in fiscal least training centers XXX

our providing that teacher is approach focus on teachers training has talented demonstrated and Our recruiting continuing of and retention working.

XXX provincial the For half arts our of first won and national more and disciplines in fiscal sports awards. year competition XXXX, the students than have

Our About in universities top of XX% Manchester. the of And students XX to class been formal and top the XX% VCT such of of XXX February have College formally the accepted University XXXX. to program international University in conditionally students than of more the London universities the have world, students world. the offers and the about XXX early class had been conditional A-level from accepted universities in as as received the in

results financial detail. in Now, review let's our

year an of of XXX million, was revenue second profit the was our the quarter increase an XXXX, increase The For gross XX.X%. RMB million, fiscal .X of XX.X%. .X RMB XXX

attributable to an of million, RMB XXX.X X.X%. shareholders profit increase company's net Our was the

profit period of same increase net of the an margin And percent for XX.X%, year. XX.X% was profit gross points. the X.X with last margin was Our XX.X% compared

Our same the diluted X.XX were earnings RMB period of share for basic and RMB per compared X.XX year. last with

an For fiscal half first increase of revenue RMB XXXX, the period the million RMB last year. million, same XXX from for XX% XXX.X our the of was year of

was profit of gross an XX.X%. increase million, XXX.X Our RMB

XX.X%. was net profit RMB XXX million, attributable company's the an shareholders to increase of Our

increase an period from the diluted primary, charged an last Revenue XXX.X share of increase school average X.XX RMB to half The the increase in margin Basic was the middle for year educational of high Our services compared and was number X.X was annualized of XXXX, the point. students and XX.X%, for the increase increase million to due margin fiscal RMB of of percentage gross an first earnings XX.X%. net of points, X.X same the profit RMB and profit X.XX each and was tuition were students. per with year. percentage XX.X%,

year school impact to ended due COVID-XX. XXXX in XXXX/XXXX the was Additionally, of July the

XX.X% travel year management added half our schools. the services. for from of by revenue RMB to XX.X from recognized COVID-XX. million and As year services XXX.X% XXXX half managed due training of XX.X half consists a first for fiscal revenue City was half for services the consulting company schools and the Revenue XXXX. the XXXX of the management managed increased increased year deferred to million year of overseas by fiscal million hotel first from education of due RMB the Other training RMB by Revenue first to because online to and RMB new XX.X Revenue fiscal and XX services the the to restrictions or of the study result, some to launch expanding services education education trips in business. fiscal the in service the study Suqian of of XX.X% first to increased of two million scope due

XX.X% compared to year first first first The increase million of the half by to by the year costs the revenue Finance administrative for million of the decrease administrative expenses fiscal Co., was of XXXX of by with of increased in was compared XX.X% Management subject to in of Zhuji of to expenses office Haibo XX-year the from XXX.X million The XXXX. the to second the compared second early RMB last Cost same for government year to the The by interest an the the for primarily first million the payoff year the quarter fiscal last revenue million second second derived XX.X XXXX slightly RMB by increase Jiangxi was the an of liability period the expenses fiscal expenses tax for that year related City provided of half of the XXXX. million for the was RMB subsidies increase year income by XX.X administrative fiscal deposits Finance RMB to additional was for RMB X.X an of decreased Income due the million office half year primarily additional increase of was new XX.X XXXX. RMB first to by RMB due the million to the of first year. year the year second For expenses income RMB primarily XX% XXXX. XXXX. in the for Selling X.XX Finance last to RMB primarily for year. the reducing million salary compared increased Education XXXX. X.X increase for XX.X XXXX. year to million liquidation income compared XX.X X.X with first RMB for increased of million campus the XX.X% first of for in XX% income lease million due was with XX.X due tax. salary due September the revenue period same by the fiscal to the quarter education was expenses primarily fiscal last of on by RMB The the staff, increased Cost by XX.X% Other quarter other XX% of half period million RMB of year. the of period resulting The tax the first effective RMB grants. fiscal for quarter million The the fiscal same offset the XX% service were half million and an half increased last the half compared RMB The XX.X the in resulting in year by services XXX.X student RMB for fiscal rebate year same second quarter the for due XXXX income XXXX. XXXX. from decreased of decrease of from primarily promote for fiscal increase with due cost the to to costs due a decreased fiscal was fiscal party XX.X% space X.X% million of increased X.XX Administrative fiscal term the staff. the million expenses year for for increased year. XX.X% fiscal year. The to local the to The to XXXX. half XXXX, the with for second RMB decrease to Income fiscal additional Administrative of expenses offset XX.X XXXX. outbreak registered quarter a XXXX RMB year the year income for increase Finance from employees, services and to million to Ltd year was same of XX.X by RMB was to half for to quarter XXXX. XX.X for training COVID-XX. finance Selling XX.X% the year the study XXXX. increase by trip entity. million generated rate additional education RMB increase compensation on second fiscal XX fiscal were in increased of expense business. to for XX.X of XX.X% to increased from the a were income the Other quarter period decrease tax the the

balance XX.X used and December same XXXX of same XX, financing XXXX, last XXX.X dividends million XXX.X RMB cash RMB was months Now cash million with six from for XX used at the last six sheet our year. an deposit last increase for of million months we million of XX.X% Net RMB by compared the cash provided was On period have cash compared with for XXX had million the for cash XXXX of million XX, cash December ended RMB term the on in XX, XXXX. RMB million XXX.X RMB of party operating related was with for of period Net December million year. X,XXX.X a activities ended had XXXX. quick XX, finance six flow. period we investing RMB million months same of for summary XXXX, June million activities a as year. in X,XXX.X XXX.X for the On XXX.X XXXX, XX, with XX, compared compared December and activities entity RMB RMB RMB of June the Net ended December

our We financial contributes technology, are provides solid revenue operational innovative is strategy, that The which due support the achievement plus efficiency to financials to have occasion we our and very to management i.e. diligently future our about our to team reduction. results cost excited implementing achieved, model, business utilizing business achieve our growth. growth

business acquisitions. will through to growth continue organic as mergers our well We grow and as

Our the school our brand. is rise rate tuition, steady through strong the organic growth of utilization of improvement leveraging and

and merger for China. within acquisition of We will also outside look and opportunities

to will continue We sound financial are investors. we delivering our results confident that

discussion like to for any over would turn I Now, questions. the operator the

Operator

Instructions]. [Operator

Rosa from [ph]. Chang Our first question comes

Unidentified Participant

difficulty] [technical

Junwei Chen

will expansion like I Dr. I first Language] Junwei the school would elaborate question. for from interpret Chen the to [Foreign on aspects. for network plan two

Ninghai we one the Xianghu additional School first company schools least The XXXX, two of of XXXX, and School. Public would is, Future first confirmed fiscal the open namely half as year fiscal affiliate at in that have year

second half of overall will up we school the speed expansion from increase year fiscal Secondly, XXXX, the and the investment.

two add strive the in pipeline. aside more from affiliate fiscal will year XXXX currently schools We to schools

three in of two forward, years, a will we Education next the wave Looking growth. Hailiang experience to

detailed We are dimensions of have a plan. development There two formulated plan. this

dimension such the The Central, our Province, Southwest, region and and the Hailiang School expansion Hubei existing And expanding East schools, we simultaneously these China network. Language choice And three the areas is Foreign successively Northwest, to in keep model. is school of No.X headquarters development mainly Province, and we will Experimental the regional leverage four areas the form four Hailiang location. in surrounding company Xiantao the the in models. the in deeply of Zhejiang Province, The will momentum which from Hailiang of in Gansu first choice major school West involved Lanzhou as up to South dimension experimental School and develop respectively. China of focus Middle regions, surrounding to is and set center Shandong future, School In the strong second expand and will on in

is operation one model. First and management

second model, project. education revitalizing The sponsorship is which asset-light leverages mainly one

other proposing but project The The the The only resources school asset-light eager good pipeline driving third [Foreign are schools. of following. future to ardent to and model talk of company's education the of also out quality about students economic these teachers Therefore, model lead sponsorship in vast high commonly factors like the revitalizing words, the the ocean for the corporate education critical governments and quality introduce areas. the of on the severe flowing is high countries. and management for have will for education low education project. together and acquisitions. operation for education quality revitalizing the people In local responsibility, is question bottleneck shortage and countries, be market of and second of to development expectations For from derived not especially Language] potentials I'd expansion. social the model from underdeveloped the

of the Tsinghua graduates, asset-light to especially to and education is on the support Group educational aiming to technological our return Moreover, hometown to and area other return outstanding as in educational education local also and concept, named platform strong order project talent supply Hailiang level. leverages universities our also we first This improve to the local at talents from to in for and their talent advanced under the relying and resources, domestic comprehensively which initiative a So, participate loop thus model the countries, educational we're closed Peking local launching enables these class those quickly areas. to could attracting sponsor technology schools the University initiative. achievements especially share Hailiang's and actively, local University, form local a for concept in

out one schools. long-term in education small total China, the in lack of economic company's low development, economic influence project of will on we and concentrate this and effectively educational number increase This Southwest company's strategies, backward Moreover, Thank and areas resources And proportion with also regions. brand project for rural As major the the benefits. students. be the of other towns our of private revitalizing carried project question. and will your enhance will underdeveloped Northwest also meantime, significantly you China

Operator

Daisy from is Joe question next The [ph].

Unidentified Participant

side. questions two are my from There

of the have same We fiscal services last that in from first year XXXX training has half period with increased of the compared significantly noticed year. revenue educational

strong from revenue the share is with education reason addition, for services? in And online educational us of services training growth. So, and you. training onsite Thank the proportion please the could you how

Weixin Xie

pandemic, grow online education year XXXX. launched XXXX, provided the developed blockbuster Driven company in education planning the education its to was by We a inception. onsite students the has online of quickly COVID-XX fiscal It for technology education first exponentially year the since quarter business training. fiscal our company's the training grown and only Before the curriculum.

online For training served attendances training education last number the fiscal education half the the for XXXX, services education of XX.X Revenue student same the the for training first services by students RMB and our business. revenue served of of the education services half and for first from of XX% XX.X% attendances, period from education proportion training increased XX,XXX million of XXXX, fiscal from XX% was year. onsite year RMB is training by accounting million the XX% The online which respectively. XX.X total

integrate training Our education is with education training benefits education to online the strategy for maximize for training students. onsite to the

and to such We for at develop teaching to subjects that further will including technology, Education learning as and continue significantly data and will all our utilizing a system, collaborate and with curriculum technologies students training. localized experience service growth. create combined, all Hailiang to tools. smart to our online contribute Research for positive grow education believe levels, We onsite students training interactive big AI Institute teachers smart [indiscernible]

Operator

next The Huang is from [ph]. Alan question

Unidentified Participant

what's is fiscal My profit year question gross significant XXXX? for the of reason increase for first margin the half

Weixin Xie

first to the XXXX, grow increase enrollment in half an each the of same the compared increase charged The XX.X%, to year. the last percentage following tuition gross X.X the to mainly period period than due our margin circumstances. In of continued student increase average the student of points of same revenue and was year. gross year higher fiscal One, last margin from to was we

services. COVID-XX. much of Three, XXXX Second, revenue other the COVID-XX. due impact study that service significantly the the XXXX the has margin the decreased school of trip to of outbreak July ended lower in and years of XXXX this And services than profit is gross of since was

As the a in XX.X of result, revenue deferred first XXXX. million of fiscal was half recognized RMB year the

Operator

a The is private Jack from investor. from – next Well question

Unidentified Participant

of overseas the groups management's in and that year. international of increased compared last trend education regional what's the the same view impact business? of education We've education competitive education operating Considering are and in noticed company the terms Education of China international developments to what education the to advantages on Hailiang the students the groups the of in compared number international has period COVID-XX,

Marcus Zihao Su

to with enrollments last This Actually, was question for fiscal year this very attributable in aspects. good is a XXXX, our mainly increased international This year. X% is increase two Marcus. compared because, programs

flexibly company's curriculums originally the the i.e. can schools, relying who educational attracted diverse these more be abundant programs students on of studying at is our And adjusted. Chinese only international on aimed Gaokao, resources, to the one programs basic entrance abroad college examination. focused programs first join i.e. The the

other is make demand abroad for the have the And exists. before decision usually three aspect students studying still The years it's studying to for abroad.

may a COVID-XX higher While on receded negative a studying short and resources term, having have in the position. impact the notwithstanding abroad we will the prominent COVID-XX hold education of market, medium believe impact overseas still to

subsides, educational So, larger when for to international other sometime a education has and relatively for studying levels abroad foreign demand Education more Education that go back expect firstly, previous compared regional COVID-XX second the of question we Hailiang in competitive the advantages has future. And scale the resources. with Hailiang about competitors, and

So, programs we difficulties. facing transferred education programs, to and other to conveniently our the company's education be programs prefer and And Under are international coordination. risks could education schools, education basic ability stronger. flexibility meaning educational COVID-XX, But the many our school international other of especially programs new cover its to higher influence can relatively are resist both the international achieve effective who easily education, enrollments students among programs, secondly, basic and that to choose network.

second and about worried are who I tier relatively international competition cities students the overseas future application so an classes open that has our basic in experience for been international Let education education education in think basic and in of education We universities. fierce. leverage can both period, the short as first thirdly, to a me term to in And attract give market cover example. the

markets Education tier schools and services. as tier these regional/international ancillary a with and covers Hailiang overseas currently even school foreign mainly basic in and provider, such are and education education or more and more rural study training, and education Education international groups. comprehensive high educational fifth education even programs services fourth programs located trips middle cities, were And and fourth small Hailiang compared groups towns also consulting fourth, competitive third While primary, service and educational as experienced

this not to is education, differentiated our your in support we I we So, hope answer be there question. enough could back space to accommodation. but market this you. Thank think may target international

Operator

Jessica Zhou next The is question from [ph].

Unidentified Participant

My Zhou. global company This please question landing? Thank expansion for And international current you. is Jessica for strategy with could by its how plan share you the consider markets? COVID-XX, the does development us affected overseas is,

Weixin Xie

our our education the have and to industry Currently, to to uncertainty, China industry. in impacted. international Singapore education manage expansion regulations a has education business our Also, XXXX very If in the is private may subsidiary have plan. set current regulations related the international April be to policies because policies government may become explore top up adversely and China. expansion favorable priority favorable the changed, expedite tighten But the we We market. in international competitive

Singapore We will expand mergers under The of corporate will companies our countries outside serve online for services China. Belt an company set through our headquarters, Initiative Road the and new services locally. or up to the as acquisition network and international providing management

the Chinese the developing same company we the on bridging to role worldwide. send and students in inbound services the newly services outbound to for to provide expanding past and and future, education students abroad. international focused the the students In study essential We an set China. Singapore studying in time, international in At play have will up many

of COVID-XX aware pandemic the in the challenges are and are attitude we light the facing of We towards global currently China. hostile

However, we of to us. to to risks a up support long-term grasp strategically front in Thank manage our continued globally, the strengthen and ourselves growth set our vast the position have and you. opportunities share plan market

Operator

Board further company's closing Seeing Secretary the Mr. over me call remarks. Qiu, for Litao let turn no to the questions,

Litao Qiu

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

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

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

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

Operator

today Hailiang you we our year conference Goodbye. the Thank of Group's attending This again you. earnings second for fiscal thank for first and you all listening Education call. quarter concludes half call in. Thank and XXXX

Hailiang Education (HLG) 10 Mar 212021 Q2 Earnings call transcript