HLG - Earnings call transcript Q3 2021 | 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 Third Quarter and First Nine Months of Fiscal Year 2021 Earnings Conference Call.

During today's presentation, all parties will be in a listen-only mode. This conference is being recorded today, Thursday, May 27, 2021.

objections, disconnect any this have you you at may time. If

Officer; ahead. Group today of Chen; Thank Company's Financial I and would from the Litao us Secretary to over Secretary, are Company's the Deborah Please Board the you. Hailiang Chief now Junwei Joining Board Qiu. Dr. to Group. Education the Mr. Hailiang Mr. Qiu, Lee; Education CEO; Chairman Company's go hand like Ms. conference and Litao

Litao Qiu

additional Company entire our for management I you, in I operator. call, Therefore, statements which Securities your of Thank Reform questions. remarks forward-looking the forward-looking claims as for listeners to today behalf to management's like Private Litigation are us Harbor would our contain of everyone this to statements, may our team, Act thank are statements remind contained and On subject would response for call. on the risks of who uncertainties, protection prepared XXXX. like Safe joining to and U.S. forward-looking in take management conference

filings are Education inherent alert in statements new to these of as may as results result potential further our whether A from a uncertainties, and or expressed materially and of is information, different risks under uncertainties Forward-looking no such, or be the public number Hailiang such our views risks with update involve SEC. today. outlined otherwise. obligation forward-looking statements, events

CEO, XX, copy time market X, are you to mentioned Chen, of to to Please I company, The after comparison, release to ahead. in new we go the and website. like year-over-year Eastern For our Dr. our would and time, our Company's all are corporate IR remarks closed unless turn is on been in refer comparisons distributed press note, the from earnings IR are a which those our introduction over Dr. May the all has our in Junwei stated. Chen, otherwise this earnings who including RMB XXXX, please on At Section and our X are Chairman in download website. presentation numbers available brief call

Dr. Junwei Chen

the and Mr. Education Litao year the share On you, Board everyone, quarter the fiscal Ms. this will give conference Company's Thank year. and Inc., call XXXX will review. our highlights Officer, the first joining our third call and earnings months an of Lee, Financial months nine Group today, Secretary, I of performance today. for Then the quarter introduce nine financial of our overview for the will first third this operator, of Deborah fiscal Company's of operational quarter. the Chief details the Qiu, Hailiang

take will Currently, questions. conduct a overall COVID-XX to situation has become Q&A of we more Lastly, stable. your the session the pandemic

of from impact We bounced are business see COVID-XX. as fully our pleased backed MAM the you that

environment XXXX fiscal Our year to Public of million, attributable more provide an XXXX, Furthermore, XXXX, students. three a four in Company's students. amount about are capacity expected Xianghu a with year of refined from School, can School than the of to performance momentum. RMBXXX.X open of was of Future we The plan schools, management increasingly increase year fiscal years. we X,XXX growth third our RMBXXX.X XXXX, solid of in At first control fiscal year fiscal of an there the showed strong present, X,XXX In filled maintaining a quarter as third total be half reached students increase quarter the in revenue XXXX, budget more the upward and million, profit premier capacity RMBXX.X of the fully network. the Ninghai of capacity outstanding expansion five an two to profit gross to Such September well as The million, public total and our In and also this shareholders schools the which XX.X%. XX.X%. net added total to school X,XXX the from growth affiliated progress of benefits increase Company of XX.X%.

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

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

Litao Qiu

Chen. Thank you, Dr.

Company's Now operational quarter. to highlights the of turn let's the

always as we person student potential, While we achieve a continue development has Each everyone of a every school the well-run philosophy. make Company's life can our expanding talent, follow and priority. exit put every network, the shine

Program, in third our received performance our XX A-level have XX offers. of graduating offers class advance Among great XX% student the from student of from programs of universities. a XXXX. students total from XX% Talent class University. which year have fiscal result, -- class only them, a XXX Peking than has and Among quarter students academic in Leading Training XX% received was Four international University and offers global through XXXX nationwide. achieved formal our enrolled the conditional students the high more and the on the received University the high student a Tsinghua about top admitted lot VCE school our has of school of from the Science As of from as Mathematical Qiu by from of Chengtong them, Tsinghua students first

competition, this national other to swimming, hockey, academic many in and events. achievement, subject and addition rugby awards our students have national excellent especially won sports in In also

quarter, this and one two event. in example, medals For silver gold a in national won respectively medal swimming two national

students steady strategy. September need business. and and to support our to supporting they education the supply to the senior education to in Hailiang talent focuses support we year, business, and now are with investor major for of talent education We has progress and in year promote and development no executing in the technology vitalize the school can strategy Exercise, rapid substantial paper longer technology While technology first to expanding which in homework been subscribe revitalized on quarter, constantly teaching the Company's that development example, some school Cloud this materials. our of through high online also precise fully There this

to addition, dedicate still in continued seven to present, The promote University cultivating to a Company. at the have resources for Nanjing quarter. strategic cooperation cooperation top training development. more a We universities Hailiang for and In business talents the build Company's in China. to two with continue College established plan agreement payers with strategies we base. you the to provide signed will your talent support Thank third We relationship to of development we technology

Company's quarter and the will of to nine management this call turn year financial review Deborah, I months the Lee. Next, will the behalf over She the on please first fiscal ahead. Ms. the of go team. of Deborah share XXXX

Deborah Lee

On Mr. comparisons are behalf and all the unless first nine team, in you, of the you of Thank mentioned am comparisons, to of year-over-year to the Please in year right. RMB I fiscal note share the management refer going the that financial months numbers All and third quarter all Qiu. otherwise XXXX. the remarks overview our stated.

XX.X% this education XX.X% from and on the The RMBX,XXX.X Our middle was up million revenue to primary, to was increase nine-month basis, education for services from revenue to was XX.X% million, due nine-month RMBXXX.X primary, due high middle XX.X% increase million to and RMBXXX.X following was quarter up school this basis. a and quarter education the the a primarily to services RMBX,XXX.X for and to training was up school high Revenue up reasons. on services. and million

First, we expanded school our network.

charged a average annualized number of tuition students result, increased. As the and the

fee XX,XXX total a March XX, XXXX, fiscal average tuition schools, there X.X%. of affiliated XX.X%. RMBXX,XXX XXXX, year of students of be of were As an in an estimated is increase to increase in The annualized the our

of at Therefore, and last revenue for Second, transportation of quarter of education, were last our the outbreak year. third schools in third COVID-XX the were closed services the quarter decreased of year accommodation

we education On business served the an a the of June RMBXXX.X education students a of expansion COVID-XX, XX.X% of nine-month education up approximately to to to for Third, XXXX year million up up post-COVID-XX XXXX. training was revenue July million basis. a increase network services, managed enrollment from recognized a demand was and period The The up was was training to RMBXX.X year era to at XXXX-XXXX has and year service the deferred and the the RMBXX.X two during and vacation was grew of of rapidly to a our XXX.X% services beginning on was million the to training as school two scope as due basis, business of million. the on XXXX-XXXX due was XXXX increase was quarter The services attendances with the in basis. Revenue for business school this X,XXX.X% XXX.X% schools. increase training managed July this for educational our added revenue education of RMBXX.X for RMBXX.X limited to increase season resulting proportion by expanded And The training from revenue nine-month expanded because XXX,XXX management until not we income XX.X% semester. service nine-month some this China. The was quarter. total outbreak winter to COVID-XX. million training quarter, education course last by from the and the same educational extended management

to decreased a stable XX.X% was nine-month to increase and to reduction in COVID-XX margin primarily fiscal structure. Education basis. liquidation RMBXX.X the million the basis. in revenue quarter to administrative nine-month quarter quarter, of quarter Haibo to million the the RMBXX.X student XX.X% to up up to business Co., Administrative of RMBXX shareholders optimize up year. for million nine-month for to margin Net million up Net on through was offset Gross The points We partially XX.X% to commission of XX.X% in the due increase RMBXX.X on average cost a nine-month up were basis. third disciplined quarter to third education in profit up due increase XX% to for to increased XX.X% expenses increase staff quarter, RMBXXX.X increase was XX.X% second Jiangxi on our year was basis. profit up average XXXX. for three percentage up primarily to XX.X% cost continue the XX.X% basis. Management to was the basis. up expenses budget The XX.X% by RMBXXX.X period the to were the due third the RMBXX.X number labor a XX.X% structure profit to administrative XX.X% last of percentage and attributable expenses from million fiscal on expenses million RMBXX.X cost nine-month control. to third for percent up of was quarter million the same and the and was enrollment for expenses costs on cost the and were to quarter the and XXX.X% a to maintained related expenses basis. primarily in training to of percent shareholders labor the million increased last X.X on operating the was compared comprehensive and of in administrative points For staff, the up to our for gross to new cost a X.X revenue, on office Company's RMBXXX and student-related a and a were and quarter for million RMBXXX.X number was the The million in points to year. to RMBXXX.X a the by XX.X% up the were the we up Administrative staff. the million cost of by of in due nine-month million increased on of a nine-month Operating to Company's attributable up basis quarter the was office and Ltd. and X.X points XX.X% XX% Selling RMBXX.X and The was a nine-month for

and of operating As of liabilities net asset operating by was million, provided has and in cash Company RMBXX.X Net is tuition XXXX, Company cash my a note used used The that financing are million, has fiscal XXX.X% our March up the of net are million. debt. was cash no million. nine-month equivalents the we which liability, selling corrected liability beginning RMBX,XXX.X Please XX, cash the in report. the basis, year. cash investing interest mainly in that And On activities the to at the ratio activities RMBXXX.X activities RMBXXX.X was and XX.X%. was

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

Operator

Thank you.

We session. [ph], first the [Operator Our Please Instructions] will ahead. question-and-answer Grace now comes individual question begin Lee investor. go from

Unidentified Analyst

management. Good morning,

private rule Implementation does How Thank to the take? promotion revised Just which one education, on does of question the Company measures from management my you. and what or was view rules recently side. plan the promulgated

Litao Qiu

I'm the Litao is This Board Secretary. Qiu, Okay.

This me is a your question. actually big Let answer question.

Implementation the Council May school of XX acquisitions private change education. by education promulgated that two know Rule is We that on for support merger clearly modeled believe council private compulsory the State directions We restriction The this Okay. Implementation the was supervision. Rules state major of the education, expansion not which by external year. the does and addresses the and offering

no the on relevant model, oriented development as model. asset-light organic growth, there's the restrictions self-build sponsorship which from and However, such

currently, school So of most asset network our model. of through growth the of affiliated gradually expands line organic way

besides, reutilization education transformation students sponsorship from service be and been mentioning plan impact model The the the further Rule network XXXX. business as to business will on since up school Implementation services expanded. to positioned through is provider future has expansion service is private development business project. our this companies. two of affiliate This teaching of is teaching and service education in for prepare We year, the of add additional our And teaching non of network Hailiang asset-light controllable. setting school directly we by to provide provider worth non So school with through preparing scale education that September

So transaction related and rate the about consolidated of no is tax our Furthermore, school. between the there's Company effective statement XX%. also party

education So student-related transferred directly into profit. -- that the which provider, means Company to the has and gain the that an services provides service

development. Rule Company's operation has So the currently, daily substantial Implementation and on impact the no

to the growth our policies, laws profitable with more continue with regulations. to This national try higher abide education quite and shareholders. is operating services provide and the of regulation, by in laws premise with will accordance we for to important quality And create We question. students

your again. This to in me let answer question. is Language] So this [Foreign the speak Chinese

Operator

[ph], Our comes individual from Jeff Amanda ahead. investor. next go question Please

Unidentified Analyst

future the third have domestic for performance. congratulations question. and I development? your for management Company's your quarter's overseas What's just Hi, one forecast

Litao Qiu

Okay. This again. is Litao Qiu

Number bell answer your for is the me additional and through actions school utilization land Number Currently, main question. managing and and Company education sponsor area. implementing public one, Thank community including. on light education. project roll to and Number promoting in expansion asset school the you. Let three with school county actively two, model. the private leasing campus of external three, building shared

and into coming will especially there with we managed, September need schools. the So more to on that that schools this Rules private be year, Implementation effect expect be more

schools. We ranking. for will in public are manage schools that running actively back school of all implementing local space those There is quality ample

So is significant. the for school income growth space also the

be private rate, With the surplus private resources groups a the maintain strong school Only and of and the performance competitiveness. slow the decline of public that with be in brand will birth education academic to future. that gradually will continue we expect

leasing assets model. will way So therefore, of will be we in the run asset and under the a future, a education school and lot built already there have of of opportunity to been plenty by has line

promoting exporting platform. order reutilization county the education building area problem and management, in in solve by project meanwhile, Hailiang, we resource, of by education share to talent So

actions, helps and high-level as mainly return and empowerment, Through the basic our able to talents, chain. same time. roll build and we in international as school and along education, networks, management for Singapore the the through brand the attract expand platform. will headquarter a Hailiang entries global And ecological our well management for hometown layout their base, In system our So bell company and comprehensively part, overseas achieve resource to Hailiang and platform domestic education industry will we those to sharing smart general, overseas local three promote at which student book talent roll bell school the taking talent future a teacher were building actions as output of as the those line.

provide can students for a on therefore, school education we of the platform. who services So variety are

Hailiang that an to K-XX enrollment example, in study and of language] with for Also, Moreover, of to services enrolled advantage of area the trip rate, school premise again, consulting So located. actively brand the step establish students our this answer are where growth our our business using school in training steady I overseas educational the overseas provide can network and our in domestic to again. Chinese service we would we the develop not school with student this is develop on So and advantages and is Yes. so will your campus one support on. school. answer to [Foreign resource question.

Operator

investor. from ahead. [ph], comes Chang Please Peter individual go question next Our

Unidentified Analyst

of My the is upward revenue growth And has rate revenue Okay. question an you XXXX in trend. year and slightly quarter XX.X%. higher nine very first third for XX.X%, quarter first the this increasement? of which much. Thank the are was what I've noticed shown And in the months than was was Company's for the the fiscal nine The CFO. which the reasons that in that months,

Deborah Lee

of your XX.X% for third same of for the Peter. you million, Thank period from this million question, the year. of In RMBXXX.X XXXX, RMBXXX.X increase revenue an reached fiscal quarter last

high are that. quarter So of revenue revenue an correct RMBX,XXX.X for on billion you rate was this reasons. in following increase of from a of The year. increased RMBX,XXX.X to nine-month relatively last On due billion, the is the same XX.X% basis, period

and by outbreak education quarter training low education services. in Therefore, of closed same of the were resulted third year last revenue services last First, of COVID-XX, relatively transportation last for from revenue a the outbreak the period which services the expansion at the third for of the year also limited Meanwhile, in education, of our training schools was the of decreased year. COVID-XX. level quarter accommodation of

months. education and the revenue and fiscal education at of online services the during the the the beginning year to that increase in hope quarter. semester, expansion are grew rapidly training question. the your higher in season is the the enrollment in vacation revenue of due the Both the reasons caused the of training answered this two rate Second, business nine than quarter, of third the winter strong first which this I

Operator

Our private next individual Lucy investor. [ph], comes Hwang from question

Unidentified Analyst

these investor, individual an this this new year? for do fiscal schools I'm a noted new And affiliated Deborah year? Lee. average and tuition Okay. company's to schools of these added has annualized file profits CFO, year. question contributed How fiscal I revenue Company this I a in have and the in And fee schools the have what's that

Deborah Lee

three Thank you, a in five the of and total students. with students are we Experimental fill in schools, XXXX, opened, schools School Hailiang fiscal is School. Hailiang years. question. three schools, school about to five Overseas i.e., Lanzhou year present, School, and In School Foreign X,XXX these capacity Lucy Hailiang one X,XXX to Company the affiliated added for your XX, fourth At five Wuhu on these there are Feicheng expect the Hailiang four incorporated Language of capacity Among these five newly The Chinese XXXX. Experimental April

not school the of overall months education March revenue has first its enrolled XXXX, XXXX, XXXX, Language about enrolled profit was the to in to School Overseas fiscal yet. from Jinhua School. and million XXX first the the year Foreign Language revenue school of School the of Hailiang Company's middle total the And Feicheng has high the exceeded the fiscal than in In academic capacity. the half of it nine Company. fiscal of year year XX, X.X% services. accounting of nine RMBX.XX As the the Company's year. RMBXX.X the Chinese The students number has the this contributed students primary, Hailiang for is of total months schools and fifth contributed first Foreign one million, other revenue Hailiang four In

that your fiscal We RMBXX,XXX tuition the fee the And four expect annualized schools' XXXX answer reach is to year question. million. these average will in

Operator

no questions. Seeing further

to Litao Let Qiu, Secretary me for Company's call over turn remarks. Board the Mr. closing the

Litao Qiu

joining Okay. call. Thank for you, operator. Thank you this very much conference

would again If support and to to or tina.xiao@ascent-ir.com. Investor you and at soon please Council, look with time. as you appreciate response contact any Ascent you. questions as at next ir@hailiangeducation.com speaking have IR Thank interest through your Education questions, Relations your us possible. in We our Management e-mail Hailiang reach forward

Operator

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

Hailiang Education (HLG) 27 May 212021 Q3 Earnings call transcript