Earnings call transcript Q2 2023

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Operator

Good morning, and good evening, ladies and gentlemen. Thank you for standing by, and welcome to Hywin Holdings' First Half of Fiscal Year 2023 Earnings Conference Call. At this time, all participants are in a listen-only-mode.

Before we start, I refer you to the safe harbor statement and the company's earnings release, which also applies to the conference call today as our management will make forward-looking statements.

On the call today are the company's Director and CEO, Madam Wang Dian; and CFO, Mr. Lok. Lawrence review XXXX. for will of first company's year fiscal the Wang the performance half Madam Mr. translate Madam will Lok for Wang, then Mr. the Lok discuss financials. will

We question-and-answer remarks. will a the be prepared management's session after hosting

of You to XXXX the IR may company's of at our results on ir.hywinwealth.com. refer website fiscal first financial year half

CEO Wang, now please I'll and the Madam Holdings, over call Hywin turn proceed. Wang Director to of Dian. Madam

Wang Dian

on today's earnings everyone, fiscal significant call welcome updates Hywin I On for year achieved will first company's Hello, fiscal of to financial company's turn provide the Lawrence first main and Language] the performance. I over Holdings 'XX [Foreign progress review call of the half XXXX. After details to and results Mr. call, that, to will across the the each we the CFO, first have the Lok, regarding half business of our segments. greater provide

of a fed rate COVID-XX the in In China's valuation. related in XXXX, a Language] for deep challenges presented from and lockdowns and hikes financial economic correction China's second stability, [Foreign asset domestic flexibility resulting interest of the half overall series U.S.

shore but Since the Chinese somewhat, clients. growth the economic remains of more net investment the in time and has necessary improved has pandemic private corporate confidence Mainland passed to high up households now, worth

efforts, risk including this and data, our factors high-quality market and is, client management. these manufacturing measures, performance consumption, steady including period. confidence in changes to economic of and these order progress advice evidence have solid into at and to achieved we in product account of market proactive our adjustments investment China's financing. improvements therefore, we in have waiting our more to to of Hywin, matrix reporting Thanks reinforcement social Taking implemented respond see in

first X.X%. on billion, transaction past our half as China's First, the segment, in value. captured to quarters, Wealth clients' RMBXX.X billion, our rise a our the our Hywin transaction of few product movements savings year in these harbor safe value wealth period XXXX, over rate year-on-year steady XX.X Hywin's of for continued needs growth growth characterized a RMB which, In a rate transaction during has of Management return, asset-backed became year-on-year management to of investment Amongst asset-back [Foreign fiscal up year-on-year, XXXX. a products great has by household XX.X% market value Language] reached increased

products RMBXXX These our On our for of the Transaction against XX.X% our value transaction proactive other hand, year-on-year results our million. increased declined have by backdrop capital equity private equity clients XX.X% fund in for to assets market NAV. our products reflect value to of million. and declined RMBXXX adjustments product advice volatility and hedge public devaluation a shelf to by private venture have and year-on-year

Language] [Foreign our Next, to business. asset management on

investment investment client performance. strong segment first increased capabilities to and Hywin's RMBX.X by reflected client XXX.X% research, AUM half outstanding XXXX. Our are in the under billion year-on-year management service also asset management in of management assets fiscal our

worth discretionary high AUM management RMBX.X now years EAM, discretionary billion. exceeding management X asset management ultra of International's for through growth, this i.e. with Specifically, asset flagship clients of our investment external management net Hywin services service, become have

into European and one The the markets. and service combines execution, model, in a model management accounts, mainstream which EAM investment solution client custody business holistic U.S. is

harbors management accounts to industry great AUM For for for to wealth only one EAM This does, total third in that roughly X% industry. Asia of industry's the however, still example, potential imply compared in Europe, the the EAM X% Asia.

the and benefiting market and intellectually management service After flexible open EAM driven Asian the to high-quality and sophistication will clients which positioned coverage and and market EAM, base is over asset advantage client is safe, broad Asian sticky believe in continue of markets time. client capture share, we increase, our reinforced model be an first-mover our from growth architecture, to team, rapid Hywin's

Cayman Funds develop AUM client's variety million. Hywin to exceeding Language] RMBXXX currently [Foreign a also strategies steadily stable continued International's of offering with returns attractive across and

segment work asset building with our Funds will to apart offerings. in-house the become for active to Funds from as nurturing now world's by a we services. is management strategies, up platform engine has and index-based Cayman a for Cayman management well managers our growth as asset by franchise Our our Hywin top future, second continue EAM now the expand In

Limited HKLPFA Chair. council standing Kong International's further also and International have in recognized the Fund XXXX, achievements been On investment of Hywin the Association, selected Hywin [ph] industry the recently. Partnership Hong XX Vice February as

began CNCB Investments we for International, development Hong Insurance, further with the of institutions as Life into such promote such, to SPDB and a regional the China of work domicile to International. managers. global As members Kong association leading alternatives other Haitong

regime a the strategic of lead, between sectors, East HKLPFA office and in channel family investor banking also Hywin investors HKLPFA Middle funds feeder-funds additional up assigned including and as has piloting towards private synergies capital cetera. the exit series for et projects the to to secondary setting the vehicles and promoting at Asia,

Pacific International offices X, XX our Language] and these and at made the family Office team top services. was our list XXXX, in Hywin's Hywin's Family benchmark Magazine the management [indiscernible] Wealth Management in forum for the Private in by Ceremony. year Wealth XXXX awards a Pacific [Foreign wealth the the Asia China has Management to as in develop Family Forum The capabilities continue the of of excellence diversify. services hosted Family Awards continued to Wealth Xth to Office On included Family on have Asia Next, also January Office region.

addition of Hong promoted as family offer in sets of Hywin Hong markets first via As our services have expand of the Hong Kong roll we SAR Chinese office government. Kong our to fab worldwide now institutions the providers efforts to to out Mainland, an Chinese-funded in the presence a one office [ph] across earliest explore Kong, to example by the industry's services and consistent sought family As one overseas

to the management specializes services single-family ultra services - which to year, wealth family needs governance, net provide Hywin health this to management. planning for tax value-added value-added and legal and Club their in Club, clients. cycles, operations, office includes client spanning addition, high life across which corporate management and addresses worth families Hywin The Hywin from In established

a the Hywin in year, customized Hong this Chengdu Shanghai, trip Club ultra In first a ambitions private top Hywin Kong in also to Shenzhen put and of global managers, banks developed core equity of shows high-end [ph] promote quarter on team road for clients. to and order Beijing, Recently, its network with to resources and its Club's worth the meet group net and trust. of private high

We of key discussed some in [Foreign just segments. have highlights Language] our

Next, we on highlights discuss will operations.

First, business fiscal in the our continue momentum. first also reflect client our half metrics. of to development XXXX Client operations year

As total of active, Repeat up reached XX.X%, X.X% reached of average rate million. were product number year-on-year. year-on-year our XXXX, December a of increase value clients XX,XXX RMBX.X equity nearly per to XXX,XXX, investment X.X%. amounted private transaction those, XX, Of transaction

[Foreign highlights our coverage network. Language] key Some on

our IA support from team, capabilities offer NAV-based XX to at expanded public its growth. in our has team the relationship managers team, more the during year further Hywin's XXXX with an management year-on-year distribution upgraded we first revenue and our also product investment reflecting products of fund with professional fiscal half reaching X.X%. further division total further expect growth branches a market NAV-based elevated relationship Our the X,XXX number Mainland diversify advisory of and

other Greater terms XX, Yangtze as centers footprint had Area, high In covering across Hywin Delta, a distribution and XXXX, XXX the of XX Bay as with River same net of we Today, clients. Rim, concentrations our the Central of have high worth December the regions cities the and Bohai wealth regions presence XXXX Western solid

Hong plus management the Area. Hywin Bay implementation connect recent in together Greater area area in the cross-border further demand to industry wealth links development. in the reopening the of In the wealth regional addition, we Chinese is believe opportunities strengthening In the Greater capture context, this that Mainland, this Bay with will create continued Bay Kong's management for with with Greater

[Foreign our Next, technology. Language]

experience upgrade service its to setup, financial on-premises cloud adopting greener designed better gives Hywin to most experience. to cloud, a high-quality our applications has strategy migrated the of clients which computing also Our greater secure, was more a operational technological hybrid efficiency. now provide a achieve client technologies and mature cloud

one-stop gives system Pat wealth Officially is Yourpayton This AlloMaster platform fully improve clients' post sales funds in control specialized help to fund managers all well of client the fund portfolios, personalized to XXXX, XXXX. investment online, also aims with Hywin trading holdings, institutional risks. live marketing analysis of opportunity Zewaytong more for of [ph] fund service construction officially client's designed and platform trade fulfill efficiency a needs, as provide integrated to Separately, launched our our institutional which performances, as [ph] went relationship Invest comparison scenario-based the fund and system support help management allocation investment services. to our operational asset in of

[Foreign Language] Next Health Hywin segment. is our

Our long-standing many acquiring clients Management Since strategy. industry gave and XXXX, of Hywin to us Compassion entered In expand announced health the services. health relationships our dual and into Center. management platform officially opportunity plus with Grand management Sincerity Health then, we the Infinity health wealth our Holdings Doctor, by Life

is differentiated in-house Health competencies of high-end first-class medical health health The in Hywin and we own is China. care create health together the high-end paradigm combine management core vision to strategic resources. our new a international and Hywin examinations of as management with Health

evaluation health a AI-based system platform. digital health and an developed also has Health Hywin management

refine We our for to examination our further as business, data both well higher-end us customize business, will client to as our health continue management solutions will our clients. allow from medical which

ourselves visits fiscal Health families at RMBXX,XXX, number with In health from and management reached creating visit an million of Hywin we and above clients average. new examination from competitive for trust RMBX,XXX of price well totaled RMBXX.X X,XXX by believe Number Hywin them achieved and medical clients. the are of earning which the was providing number we examinations half Through per comprehensive with more client Hywin of Total first Health, million. XXXX, of Health XX,XXX clients clients of fiscal average is average while with a at health of revenue management also their health our an moat revenue RMBXX.X X,XXX industry revenue safeguards.

Well, we development, ESG are very Language] committed welfare businesses environmental [Foreign also our protection. efficiency, remains growing sustainable Hywin and strongly to improving public focused and on operational

the employees, received report, Hywin our first practices long-term the media efforts shareholders, XXXX creating clients, December stakeholders. In from for well-known responsible year, ESG we for public in recognition other our last a of responsibility in industry, The award Paper social value the corporate our and Chinese released and

corporate We welfare. to creating society also equal our further diversified working through to enhancing employees in back environment and an remain public for the governance, given our efforts committed and continued

and a Hywin. XXXX conclusion, was In for of Language] year [Foreign resilience modest growth

platform wealth management China's the into to gives As we management, believe value for into of ahead to dual as health add new as sentiment well Taking also as our us investor management XXXX, reenergize as to we great look Chinese additional as industry rebalance. a in there second well is stockholders. clients, leg believe serve a of leadership wealth we opportunity advantage our create our entry economy for growth a

Lawrence Lok

Wang, for today. Madam us you, joining you and Thank thank

our terms, otherwise renminbi in Before financial are we stated, please all or year-on-year. begin unless numbers detailed that note made discussion, while comparisons financial presented today

months the In revenues XXXX, XX.X%. net RMBX.X December up our X billion, were XX, ended total

of increase similar Looking RMBXXX million especially was of Management in growth half primarily strong characteristics the Management XX.X%. market shares our value income which was first due for to XXXX, fiscal at Revenue fixed products, Wealth the our up asset-backed transaction services revenue products. investment our segment products, The with in breakdown. private Wealth for

this period, more pendulum products. such believe offer products equity NAV-based This hedge as in We investment products going this investor way funds forward. as private fixed more this During products competitors significantly could like actually appetite recover and products China year. a asset-backed swing other income our model could categories. business the over across believe sentiment favored is this versus in strength We we or

Revenue Management which It surging million, during increased segment from XXX.X% XX.X%. months attributed million, period. our revenue the X is the by from to $XX.X also worth mentioning was is our other demand Asset to products mainly RMBXX.X insurance financial up that for COVID

Management EAM industry. to we us, for a Asset by continues leader Funds and increases mainly business, our in driven our a in be Cayman market AUM. believe are in segment business our high-growth We

was quarter first Hywin consolidate XXXX. X losses Health's revenue and segment after minus net completed Last of the we initial RMBXX.X acquisitions in health respectively. million, where is for Health This year, and months Hywin X million we businesses. integrating financials were the and in our the transforming we stage RMBXX.X

breakeven. reach revenue from further before businesses drive health We to expect our growth they

cost and Compensation the to to expenses was is line in growth. to benefits side, increased months million, for good is operating were million, Sales business RMBXXX.X increased million. with expenses volume expenses and cost million, and marketing On XX.X%. the total which XX.X% due X RMBXXX.X cost which cost control up RMBXX.X RMBXXX.X Health-related our X.X% measures. and

to health, in expenses million, RMBXXX.X mainly due in deployment our well continued as our General as and increased XX.X% administrative investment to technology.

from operations up XX.X%. RMBXXX.X million, the months income was Our in X

Our up X.X%. period RLMBXX.X year-on-year. was million, Operating reported was net income this flat for X.X%, margin

Our earnings months per per ADS a ADS basic basis. on for and RMBX.XX on was ADS the basis X RMBX.XX a per diluted

also healthy. remains sheet balance Our

As hand. growth. RMBXXX.X cash This solid pursue us and gives cash had million equivalents further XX, we restricted on of XXXX, to cash December in a foundation and

balance risks. achieving and good we financial demonstrated macro strength in In this We distribution believe metrics model. client and a and showed our period our in results growth business managing conclusion, strong reporting between resilience

shows and marks reporting Hywin in period. was into same new leadership time, this exciting us. highlight also business a period At Our again international entry the once Health an market for this

Thank Operator, we This now you, prepared take today. for concludes ready are remarks everyone. to questions. our

Operator

you. Thank

[Operator from Nomura. of question-and-answer Chow Pon. the session. ask Please Our your question from Pon line question, We begin first Instructions] will now [ph] the comes

Unidentified Analyst

strategy on with [Foreign transaction you. Language] the is the more recent us about last year? My from company's and you congrats as same tell value Thanks Thank management product that comparing can the increase the saw period we question results.

Wang Dian

Wang. [Foreign translate Language] Madam Jonathan you, me [ph] Thank Let for

believe in a high So adjustments. that lot transaction approach value right? although market So a a know, We had - solid, mix yes, whole, were equity quite value that you in to was transaction said, our we and with XXXX, you're do this in increase product as we volatility right in modest in our has our XXXX. proactive

we - inclined or in were In shorter year, product our or quite volatility recommending more were more products. NAV cautious lower onboarding that market visible which returns. clients products, of speaking, secondary last generally have, the We see second half market products NAV-based actually did or duration to or

Looking market there XXXX. forward, rebound is though, I general think that significantly sentiment in could a

more think for for speaking, be still seen, I data looking of largely evidence are to confidence. more strengthen people sort waiting to Although this

secondary linked or funds of one enhanced I this or markets our think for NAV-based secondary strategies year example, increase, I we So our allocation or our is markets guess, exposure will to products more funds. index products, quant

doing we we also drawdown, in is also handling a track have the to what think attention pay or managers our to I - think what And as - lot drawdowns. we have in as of to pay the this, think I records product what attention well clients fund will

to vertical. In as our such high-end or terms and and of focus to manufacturing onshore more the tends equity, on we'll care continue sectors, health certain - strategy That's private pharmaceutical on side.

example, or offshore equity, continued course, Hong for very or - diversification year, I and the our private a side, as high we you. with EAM are given emphasize On product clients Kong-based emphasis Hong this think will diversification our risk strategies Thank market Kong risk we diversified. put or may overseas volatilities, on management our and management insurance on risk and and well. of But

Operator

Thank you.

the Our of Shang. [ph] you question comes China next Ro CITICs. Please from question, from line Ro Shang ask

Unidentified Analyst

year-on-year. X.X% the marginally income XX.X%, [Foreign Language] I this net period Thanks. specify the increased only saw company's this? please the Could by Thanks, management by for for while reasons total increased team. revenue you

Lawrence Lok

Language] [Foreign question. Okay. Yes. Okay. this answer I'll

earnings revenue earnings says think of media I U.S. of that per net terms. EP ADS, because actually U.S. year a media for our out renminbi it's And think ADS the So - think But income. you this looking pickup. know, pulling more but And flat some reported depreciation it dollar Actually, year-on-year basis, - the in our right, of I correct dollar to was fell. at is say I is headlines actually, I thanks our and on some fell.

with this on several But question I maybe handle to I think - - points. want so

want was and on that million Health about RMBXX more talk the from because First in to side losses our I'll period, point. of we earnings recorded first. Hywin I Wealth flat all, explain this the of this Management primarily

period. actually Our in profitability the this side Wealth on Management increased

year-on-year. Our operating to which in this X.X% period, XX.X% rose margin was up

and Due this were side. we as we actually went scale margin period strong therefore, cetera, in the marketing Management in et cost increase a during digital control sales during the Wealth cost back lockdowns, on to COVID realize and the able operating to more and savings and our

in a consolidation ever things, would to one. on consolidate, the first of Now the began of the offer that's points. is Passion right? side Sincerity that acquisitions the Compassion One only I Life Infinity and [ph] time of begin made - Health we you September, in Hywin this three actually XXXX So we right, know, Chengdu right and couple period is and

reporting the for these - acquired is year that's what So not businesses. we reflecting necessarily are entire half some of

an The acquisitions. acquired together still second were of acquisition time the phase and point right, integration, transforming post is and post businesses we three initial in

So business efficiency is I operating fine still say our would the in health tuned. being

think reporting of for And based shut in actually was down, the basically make I just COVID, numbers of because period. last our amount what financial was I wanted clinics were to a on the because right, you then because business significant reported lockdowns, see results distorted the of health the the of point

a million you Hywin I on of So the Hywin RMBXX results And forward, representation going should Health. period question reporting answers a in true will be. behind what's happy the see - next from in of XXXX, that of losses the hope sort more right, what Health your

Operator

you. Thank

question, Sandy. your comes Evaluate Our Please Sandy line the next of from from ask Research. question Mehta

Sandy Mehta

on Congratulations the Yes. results. very strong

what can forward? business And do breakeven the progression your a health going results? also, on previous the sort health what growth base, you. comment on you towards of care. reporting follow-up is Thank expect you the on - do from When comments small expect Just you care

Lawrence Lok

Thank you, Hi. Sandy.

Okay.

take this So well. I as will question

the the said not I well, I as here step think But - we initial integrating really, have acquisitions. to etcetera, lot post normal the think are a acquired, last very that's think we business. natural approach, all, is - just On unifying this and we don't unifying question what yet. we - service a we're your specific I very but doing an in I that first number well. cetera. that some And I'm still And we know, now, and unifying is year, in I we're breakeven, the obviously, you that did are what think, And I but one, out lot quarter is on our as transforming, friction, a putting of as of management of here system want there - the this year. doing here phase first say of et clinics

we think we comfortable see will are I it's - I to could on could to us the level, well, saying hope we breakeven losses for exactly be be that's think on say a when per think early in profitability. I narrowing and narrowing clinic But they that perhaps right?

three period right, period was this Sincerity were consolidation for business the right? September the in see has be know, side, and the only Life is been in to closed growth it's since because because Infinity right, - reporting large clinics months, you it's on period, Hywin heavily I period distorted, really increase, the Health right, next then again, Compassion. revenue, right, And in a the reporting think very reporting the and Because what would interesting, likely

the traffic. a wealth dive the is business. high we wanted really management client us model give of side, I I into health very side. do the There's client ultimately, we health right, and health examination side, point business a business I more volume, thing we one there clients. services that And right, on the between high-end And believe And on really for quite think to So is deep lot we the acquisition, great very is - personal as significant profiles health our that larger medical larger our health the out can then management And and our very synergies, well. amount in to think confident. are growth,

then this volume lot think will of to out growth lot think, So that will And a we yes, up, there's a breakeven a are lot wrap that we when a business of synergies we get I get models. be in very more these coming of and in to confident businesses. critical there's we health to complementary the and

Operator

Thank all Right. questions. for you your

I'll are conference like management As no the closing back to to there further questions for this our remarks. time, hand at

Lawrence Lok

again Thank for Okay. joining you us.

We please our free contact website. through forward IR If speaking call. to us in any look good to next you questions, Have have a feel day. the

Operator

the This Thank concludes conference call. you.

your You lines. you. Thank may disconnect now

Wang Dian	Chief Executive Officer
Lawrence Lok	Chief Financial Officer
Sandy Mehta	Evaluate Research

Hywin (HYW) 23 Mar 232023 Q2 Earnings call transcript