FHS - Earnings call transcript Q2 2021 | First High-School Education Group Co., Ltd.

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Operator

Good day, ladies and gentlemen. Thank you for standing by, and welcome to the First High-School Education Group First Half 2021 Earnings Conference Call. Currently, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time.

As a reminder, we are recording today's call. Instructions]. [Operator

turn Group. to Ms. will of Wang, call Blueshirt the Wang the I Susie over Director Now please proceed.

Susie Wang

And first conference operator. High-School you, hello to Welcome Thank the Education Group half call. earnings XXXX everyone. First

Joining of and Financial Zhu Officer Chief Benjamin press We Relations. are released us Liu, earlier [ph], call Head release today. Mr. The A will today Lillian Shaowei, IR Executive Zhang ir.diyi.top Officers; Investor Co-Chief is also the available as at replay on of Newswire from website. website a this the in well services. be our available few company's as on results IR hours

of continue, please we provisions contain Safe discussion will Harbor forward-looking Act statements of the Before Securities XXXX. that under Private the note made U.S. today's Reform Litigation

inherent involve statements uncertainties. and risk Forward-looking

operations our to will Mr. me our figures conference With Zhang. CEO, let in financial call Co-CFO will will call translate Please materially now filings company's expectations please assume does SEC. and [indiscernible] other as Also risks our not stated Co-CFO speak highlights. English. note the actual from forward-looking statements law. Further regarding Zhang our in be that over all that turn Benjamin to required included with Chinese to mentioned any that, public is except under obligation Mr. may results After in Chinese the the these applicable then different go information otherwise such RMB. company's unless ahead the and and update today. are any the expressed during company and discuss comments As Mr. his The Zhu uncertainties

Shaowei Zhang

or our half improving the with driving of improved translated number healthy to existing while environment, student XXXX, growth million earning conference expansion, total growth Hello, everyone. Thank our revenue. for rate Facing you further regulatory call utilization operational of committed we year-over-year tough RMBXXX.X rolls for top-line remain today. rapid into to enrollments with In XX.X% our schools. first joining

school new During provinces, had repeater program three school programs, programs, middle school programs new in school program. service new eight we public period, school opened Gaokao management multiple X and new this high including X X

September of a XXXX with Shanxi XX.X% students as Region, Inner Chongqing, XX Province, compared Mongolia XX,XXX of of Yunnan across province, XX, with XXXX. school total Sichuan province, over province programs XX.X% Guizhou Shaanxi X, rate we running the As province, are to of December Autonomous utilization and

school of Gaokao our operating approximately XX.X%. with middle public we with forward Gaokao total look we with program X,XXX students students. programs solidify provinces of guidelines, services school of schools over leading we with First, a students operating with in approximately private a are repeater and of We're programs for And and China's cooperating Complying utilization students utilization a provide relevant position to with school to rate are eight a X,XXX total school further over rate thirdly, over local of government repeater programs utilization school over total X XX%. poor multiple of school and XX.X% XX XX,XXX school high-school X,XXX high total in sectors. and rate management approximately of as regulatory

We strong also with expand markets into geographical aim demands. to new

beds X,XXX September, to to XX secure into an lease highlighting, have operated school entered programs, we for student to is constructed particular next also into fully worth to newly a Sichuan facilities year. high-school the school that agreement with example over entered premises In and addition, school we agreements in One province. capacity more late sponsor opening in

Sichuan primarily our changing due we operation to in demand This Province, high-schools. and strong As was marks arrangements. importantly, entrance brand aim difficulties the to was and school leased and the environment, market owners’ name designed large into amid previously with to satisfy similar agreement recently leased for our premises operating K-X the where regulatory education the explore high-school us business

existing strengthen program public-school all will in high-school live our confident education combination repeater, management private China's meaningful up strong teaching the services. Fuhang region a Future especially also Long-Spring supporting expansion This network. milestone further Company opportunities high-school Sichuan acquisition quality to Capital, demands and Limited Plus. and in to enhancing This quality jointly China's aiming June education entire education high China's and services. Plus for school in sectors. Gaokao On our operating school stake for full-time rapid allow services to technology-driven progress Beijing resources Education achieved or business program. our We program central providing private and school of announced announced high strategic X, market in for and position needs. Technology there set We're highly in Beijing education for Gaokao. Gaokao above and Gaokao Long-Spring the Therefore, school repeater improve private further we for leading our a This fund mid-September, repeater We dedicated with will repeater competitiveness premium will AI our partnership company an are our goals Future the XXXX, majority believe online programs. further of western overall empower in and is system, high-school system the us school where company, we

to company will confident to beyond serve. our to sector. continue education education companies that the mission. we the company the see growth, current education ahead, our that premium believe We will and in student provide important and very potential responsibility the will China reach at a educational education play each in the will steady satisfy We're continue quality role parent in market and that authentic investing and and technology services Looking

turn Thank provide you. over the our call our CFO, now, performance. let me business will who Okay, on Benjamin, and financial to details

Benjamin Zhu

Thank Thank joining today. you, Mr. for everybody Zhang. call our you

team, [Indiscernible]. through in myself position co-CFO. matters. would capital This executive will Before our to our like can guy first the enable on the focus our half He This to XXXX, the growth will member I for markets new assume of a help highlights to arrangement go strategy. myself announce financial of I

Unidentified Company Representative

friend Templeton an High-School Banker States the Investment University management join Prior I Washington bachelor's I [ph] Columbia, and First from Director of received I it am participated First at and longtime an Security, honor at University. fully in duties worked to my Education. various China Investment Canada. Capital, process. an difficulty], as from underwriting Innovative also United [technical company I British George to Investment degree joining Hi, Mutual of and IPO MBA accounting in team as Manager Northwestern and High-School, the entire its is

and High-School's operation and streamline with top-line As First a drive to further team, I our look closely Zhu forward to working Mr. growth.

just understand we assure devoted our firms shareholder everyone creating will importance the Lastly, of value. fully be I doing be to that. And in

Benjamin Zhu

myself allow our go please of financial Now, for first highlights half this the year. to through

business Before which unless I are in is RMB stated percentage go year-over-year are website. into in All our details, please our IR otherwise Detailed numbers otherwise. press contained analysis presented note available is specified. on unless presented release, earnings our

for total revenue revenue RMBXXX total million the value, was period the As increased was our while million. by last RMBXXX XX%, fiscal

agreements are payment government period period Well, And Well, million and revenue we over increased period, from million. government were decreased payments arrangement. the serious from governments fiscal bond. cooperative customers RMBX fiscal the month cooperative from for In last noticed the the RMBXX XX%. were extended some relevant decrease XX financial was they to largely million. This million the about by revenue last local For income was that delayed us. thus delayed was facing primary cause difficulties RMBXXX RMBXXX by the revenues

for programs, conservative did the we basis. account these payments we accrual For revenue as cash delayed not on them our a basis. Instead, recognized

a on XX, Fortunately, RMBX payment we September delayed million. received of such

due of the and increased boarding existing Our new the existing Three, schools. students total number revenue driver tuition increased our in by to students. opening the enrollments most primary in schools increase fees due to of schools. greater higher Two, our student increased average was of fee one, enrollments our

As At in either authorities for the environment. RMBXXX picked the our this This education by million was year-over-year. of primarily and of year, due children school Gaokao we of cost Gaokao were XX% the But our plan. network China the are Network down School leased high opening K-X plan. revenue, output on of increased and premise to our such beginning top opened increase overstocking and regulation facilities. school the local cost either file authorities school up And slows education expansion revenue the

Our openings pillar school facilities. privately called to new overtopping idled funded and leased

gross for this expenses, the last resulted profits, decreased million. relatively efficiency especially from staff fiscal a gross for gross due year half XX% by the compared in higher margin schools of existing the was to new increased one, first school the Two, million, our the period. RMBXX with operating last raise as primarily margin As The lower XX%, period our fiscal from schools. decrease X% described above. in Gross increase profit RMBXX cost our was for cost than with revenue cost was

for As XXX% were expenses. and increased fiscal expenses the administrative general by General RMBXX from our million, RMBXX and period million. administrative last

passage amount two of from one, related RMBXX warrant expenses incurred of which expense last include the While additional of by And amount the was related we mainly deriving one-off entities in same million. happened value the million. RMBXX increase got of million this this of period. RMBX expenses final This and RMBXX IT acquired million

period increased aggressive our were the year. This million. the RMBX plan selling million, increase activities from primarily to for expenses of the at fiscal expenses, As opening the beginning by due selling market the school and to last addition XX% in and marketing made the this marketing was RMBX

XXX% by fiscal one period distribution grants, our process distributed by This layered in attendance. the in government the increase year, Two, line for were this second some due previous government grants the school in new and As last in was of years government were our million made year. RMBX increase from government such as the the subsidies of RMBX increased million. the government to our usually students with half grant increase the

million September million, which same loss in the our amounting was Such interest excess, XXX% in for interest happened income RMBX expenses RMBXX used rule on million. period. expense not and plan government other last million for our for interest the the to the was million RMBX mainly the from million the million. period. Also with the fiscal to the to net a million. original which delayed amounting one-off related RMBX amounting public Such other into RMBX our last amounted RMBXXX and equity RMBXX plan and was financing item period purchase incurred RMBXX The to expense amounting listing million by fiscal Net was of interest XX, incurred net loss. from we increase last by RMBX to arrangement As received huge increased last the volume both payments loss was of compared by

and net fiscal expense these address received the will we net comparable by XX% income be of period. payment, first year the the of increased half As a compared million the income last RMBXX with

That presentation our thank to for is concludes you you. my Here your And prepared time. remarks.

open Operator, now call Let's the please go questions. ahead. for

Operator

[ph]. [Operator Instructions] from We question you. Thank take Long Please go ahead. our will first Lin

open. is line Your

Unidentified Analyst

good for management Yeah, question. Thank hi. evening you Hello, my taking

So high-school outlook, school especially on regulations about the education the my How guidelines. regulation it first half afterschool the beyond? and is impact of and second like should implications company's education said business the the follow that seems similar the tutorial on in recent growth the would part the strategy of question or XX So company. also the

afterschool the the tutorial how school the like half. for So seems impacts in than for tutorial seems the -- It's just school? high the school slower school expansion expected first that your that openings for wondering capacity

Just That's for half? second first capacity or plan change question. my strategy any expansion the in wondering there's if you. the any Thank change

Shaowei Zhang

question the I'll translate. and answer will chairman the help Okay,

regulations impact current schools. also not the the Gaokao have impact material high-school, So, not senior repeater does on and

X%, For current some regulation. degree it's current at of are clarified. is provinces, at than example, as for XX%. impacted these is Therefore, is affected, some XX%. district much XX%, up provinces been some provincial XX%, provinces many provinces, Thank in X%, controlled you. by Hunan proportion schools and has at lower for and not And such some counties but private level privatization the in proportion the private The which is controlled

the the So we schools regulation virtually a for X answer this the lot question, also and process approval due you. lower. is spoke, for stopped. But private promoting to license the is minus moreover, which is for the education approval K-X that authorization regulation, the education And of thank PRC,

Unidentified Analyst

you. Thank

up follow have just I So on that.

your growth does XX% thinks like about in year-over-year year on for -- no mean half. what since there's you new the mean your So expansion opened to XX% business mature your first impact Also, it the ‘XX of about remains capacity unchanged. revenue doesn't the company Like guidance full plan? schools X

especially what's to school? my of wondering, your many you. you high- How schools in the for on follow the up. half open the the second Thank do half? So second tutorial year, the expansion plan? tutoring plans What's -- school just plan That's

Benjamin Zhu

From the our our opened measurement newly schools number original plan. viewpoint, we with year, think our increase this compared for

So we quick for we also revenue seek full the acquisition But will targets. think decrease. this actively think be potential literally we year, we also total

that So we hopefully, a answer. is This can in my growth. we acquisition year by think we revenue keep think second succeed is this, the target, if half the strong we

Unidentified Analyst

you. Thank

student part first enrollment? percentage that What So in in first half my And XX.X% compared second the of second about comes of tuition of the in increase percentage per XXXX? your from -- first growth the comes the question the half. What the the what half comes tuition is revenue year is your -- average growth student half from with of of from growth tuition increase?

Benjamin Zhu

revenue a students’ increase derived mainly and total fee Our number increase the fees. from and boarding tuition

current as know our for XX%. increased by statistics, over As student you enrollment our

which tuition is answer. year, our in keep same school think the with the discussed financial fee tuition our fee this enrollment, fee, last As my increase rate increase report, large for were new still Certainly, the boarding That for we year is for XX%. keep percentage increase. student a the

Unidentified Analyst

Okay, thank you.

the the Technology the talk new acquisition you in you -- Beijing like contribution half? from to that aim make to include the -- it about your second will up Education do revenue made Tomorrow you acquisition, revenue acquisition more recently growth the Does So, companies? Plus Future like the plan an or acquire

Benjamin Zhu

acquisition our first release, this Besides in earnings we potential press in the this, targets. seeking year other are As acquisition. half actually actually, we three completed disclosed companies'

year, acquisition So this we networks. school second a half high other can hopefully the in complete

Bond the As potential capital raise for the this acquisition. our purpose, Growth in one set equity up the Yes. Education we mid-September partnership with fuel to

Unidentified Analyst

Okay.

So your company's kind complement or your will look How existing what acquisitions, supplement for company of for? do companies new business? your

Unidentified Company Representative

So during the the for really we look factor. process, acquisition technology

or classroom our service to the reduce company provide of teaching teaching also for Beijing can and issues reduce help the Plus, Future increase and service. that and also entire the teacher is online across similar kind example, our network the our For quality can cost. This in schools service to of shortage the board help

regulators school's the national using to developed provide technology to actual is how usage schools. example actually promotion resources a human level, few better actual in also lot provided able from enhance save technology used From is in technology and being So capital. physical the gave level, and schools currently to of a the

in we believe able So schools. also technology actual our for is fashion use the where to provide same

all which ability allow across Thank sector. you. recruit and is provinces and lot classroom overcast example and process, their from Beijing us to schools. in human XD another So resource excellent the our teacher teacher were teachers helped able a -- We our

Unidentified Analyst

you. Thank

Unidentified Company Representative

That question. answers the

Unidentified Analyst

will And back my to That's you. helpful. questions. all very get I That's queue. Thank

Operator

will next We TF Instructions] take ahead. Securities. [Operator Please from question the go

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Operator

go will Securities. Huawei [Operator We from next take Instructions] [ph] ahead. now the question Please

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Operator

There are queue. to I further call questions no will hand Susie. in now the back

Susie Wang

you, to Well, quarter you and thank interest reporting and your to guess I thank call again We Thank for support. else look operator. operator. forward for progress. participating on everyone you appreciate our your and the next

Operator

Thank you ladies you Thank that will your conclude today's call. for and conference participation gentlemen.

disconnect. now may You

First High-School Education (FHSEY) 28 Sep 212021 Q2 Earnings call transcript