Q3 2021 Global Cord Blood Corp Earnings Call
Welcome everyone to global cord Blood Corporation's earnings conference call for the fiscal year 2021 per quarter.
All participant lines will be placed on mute during the presentation.
After which there will be a question and on sections.
To allow everyone. The chance to ask a question during the Q&A session. Please.
Please limit yourself to one question at the time.
Now I would like to introduce beach cash.
If you buy VP of corporate finance, the peaking the presentation. Please.
Thank you IRA.
Good morning, everyone.
Welcome to our fiscal 'twenty 'twenty, one third quarter earnings conference call.
A press release discussing our financial results has already been published and the copy is available on our company's website.
During the call our management team will summarize corporate developments and financial highlights for the quarter.
A question and answer session will follow.
Before we begin please note that today's discussion will contain forward looking statements that are subject to certain risks and uncertainties and actual results could be materially different from these forward looking statements.
Kindly refer to our I T SEC filings for detailed discussions of potential risks.
In the interest of time, we will begin with our Ceo's remarks.
Followed by a report of our fiscal 2021 third quarter financials, given by our CFO Mr. Albert Chen.
Our management will be available to answer questions during the Q&A session.
To give everyone a chance to ask questions. We'd appreciate if you could ask one question at the time.
Today on behalf of all of C O Tina I will read her prepared remarks.
Let's begin our presentation.
Yeah.
Good morning, ladies and gentlemen, welcome to our third quarter of fiscal 'twenty 'twenty, One earnings conference call.
During the reporting quarter.
As the COVID-19, pandemic persisted and the coast the all net of partial lockdown.
Hospitals in our operating markets continue to restrict access.
Meanwhile, newborn numbers continue to trend downwards.
These combined factors continue to put pressure on client conversion.
Despite these challenges communities continue to adapt to various pandemic measures.
And the management team continues to refine the group's resource deployment, while adjusting sales and marketing strategies.
As a result.
We managed to recruit 17008.
802, new subscribers this quarter.
In line with <unk> expectations.
By the end of December 2020.
The accumulated subscriber base had surpassed 882 thousands.
During the third quarter.
National Health Commission announced the new policy that no cord blood banking license applications will be accepted in 2021.
With no further regulatory details provided.
Despite the uncertainties surrounding regulation of the cord blood banking industry in China.
Our past accomplishments have laid a solid foundation in regards to market education and awareness.
Thereby enabling the public you know operating markets to be more knowledgeable on the existing and potential medical benefits of cord blood stem cells.
Under the current circumstances, we are determined to maintain our quality of service.
Johnson, our Brent name and solid of Phi and expand our hospital channels.
As we invigorate, our frontline teams and continue to penetrate existing markets.
At the same time, we will maintain our dialogues with the regulatory bodies as we continue to source and screen new opportunities for business development to expand our market called the reach and lines of service.
Looking ahead.
The year of ox generally does not have a material effect on the overall the downtrend in newborn numbers.
However.
Based on our observations in the past year.
We must remain cautious as the COVID-19 pandemic continues to impact short term newborn numbers.
On frontline client access and conversion.
All things considered the management team recommend keeping the annual new subscriber target for fiscal 'twenty 'twenty, one and the range of 62000 to 67000.
This concludes my remarks regarding all of our fiscal 'twenty 'twenty, one third quarter.
Actual results. Thank you for your ongoing support I will now turn over the core to our CFO, Mr. Albert Chen to.
Address our financial performance for the reported quarter.
Yeah.
Yeah.
Good morning, everyone.
Thank you for joining our call today.
In the third quarter.
Revenues decreased by 13% year over year two.
Two of approximately 291 million renminbi.
As the decline in new subscribers led to a decrease in revenues from processing fees and other services.
Yeah.
Due to the ongoing COVID-19 impact and fewer new bonds now operating market.
The group recruited 17802, new subscribers in the reporting of quarter.
Representing the decrease of 24% yield for you.
Consequently.
Revenues generated from processing fees and other services decreased by 24 per cent year over year.
Two 165 million renminbi.
Which accounted for approximately 57% of total revenues compared to 65% in the prior year period.
By the end of December 2020 hour of accumulated subscriber base exceeded 882000.
Accordingly.
Storage fees revenues for the third quarter increased by 8% yields of year to approximately 126 million renminbi.
Yeah.
Gross profit in the third quarter decreased by 13%.
For year to approximately 246 million renminbi.
While gross margin remained largely stable at 85 per cent.
That is because the general cost reduction due to lower volumes were offset by higher raw material and labor costs.
Okay.
Operating income for the third quarter decreased by approximately 19% year over year.
Two 124 million renminbi.
And the operating margin was 43 per cent compared to 46 per cent of last year.
Depreciation and amortization expenses for the reporting quarter were approximately 12 million renminbi.
Similar to the prior year period.
Non-GAAP operating income decreased by 17% you of a year.
To approximately 136 million renminbi.
Yeah.
Non-GAAP operating margin was 47% in the reported quarter.
Yeah.
Research and development expenses in the third quarter increased two 9 million renminbi.
From 6 million of renminbi in the prior year period.
As we continue to support ongoing research efforts and launch of New research initiatives.
During the reporting quarter.
Higher advertising and promotional expenses were partially offset by lower staff for being reiteration as we trimmed it down our sales force head count.
As a result, so its a matter of the expenses was down by 9% year over year.
And as a percentage of revenue and now represent approximately 24 per cent of revenue as compared to 23 per cent.
Of last year.
Okay.
Yeah.
General and administrative expenses decreased by more than 8% yield for year 244 million renminbi.
Mainly due to reduced staff costs and professional fees.
But partially offset by higher provisions.
Yeah.
General and administrative expenses as a percentage of revenue was 15 per cent compared to 14 per cent of last year.
Yeah.
In the third quarter, we recognized an approximately 6 million renminbi increase inside of value of equity securities or mark to market gain.
As compared to a mark to market gain of 8 million renminbi of last year.
Yeah.
All in all.
Income before income tax for the third quarter decreased by 19% yield for year to approximately 139 million renminbi.
Income tax expense for the third quarter was two.
21 million renminbi.
Net income attributable to the company's shareholders decreased by approximately 20% you if the year to 117 million renminbi.
Net margin for the third quarter was 40%.
Basic and diluted earnings per ordinary share for the reporting quarter was 96 cents renminbi.
These are the highlights of our third quarter results. We are now happy to turn to the flow for any questions.
Yeah.
Yeah.
Thank you management, we're navigating a question and answer sections.
If you have a question.
Zero one on your telephone keypad now.
Sure.
If you'd need to and so please present zero too.
So once again, please press zero one on your telephone keypad now to ask the questions.
Yeah.
[noise].
Yeah.
Yeah.
Our first question is sending the value investment principals.
Yeah.
Yes, good evening now that the Covid AR is has receded quite a bit.
Do you expect the subscriber growth going forward to pick up thank you so much.
Yeah.
Thank you for the questions.
Yeah.
I think the the the current market situations reflect couple of.
The issue, which we need to address.
Obviously, the overall impact with respect to Covid has subsided substantially save for the fact that there is still many many outbreak here and there on the NAS, which kind of depressing two of certain extent, but.
The challenges that we're facing right now is related to the hospital access, which really is pushing all of us away from a lot of normal client interactions.
And in order to address those we have.
We have migrate to our online platform and rely on a lot of additional marketing initiatives to maintain.
To maintain active in terms of client recruitment of.
But right now I think it will be.
Too early to tell as to when life will be going back to normal.
In another words, it it'll be hard to speculate as to when we will be able to regain of.
Normal access via our hospital channel. So that is obviously and the uncertainty that we are facing and we're trying our very best to address those issues.
The other issue, which has had which has more to do with the macro environment is the overall number of babies born in.
Beijing, Guangdong and Zhejiang are still in the downtrend and obviously the impact is somehow mitigated all all offset by for example of factors such as globalized I'm not good, but I would say I mean urbanization.
Which is which help to ease the pain of little but as we pointed out in our CEO remarks, we are not extremely optimistic with respect to the number of babies born in the year of the ox So I guess.
Right now we are.
Currently it's two ticking of relatively cautious approach and in terms of our in terms of outlook. Obviously, we will update our full year guidance when we announce the out for your results in June.
But right now I think.
We are.
We are optimistic I mean, we are cautiously optimistic that's probably the best way to put it.
Yeah.
Our next question Sunil Mitchell.
The T Mo management.
Yeah.
Hello, and thank you for taking my question. So you have to do a small question.
The first one is regarding potential acquisition I mean did you because you are looking at sort of an acquisition. You know you just talked to you the sort of a few years ago that as.
As of two day, there is nothing announced regarding the potential acquisition do you expect that potentially you're really relying on something in the near future.
It would be maybe good for it to diversify your business in terms of geographic in the business also and my second question is regarding cash to the markets.
As you perfectly know.
Okay.
Yeah.
Good evening for Tomorrow, I'm terribly sorry for interrupting. Unfortunately, we want the April could get the company name before it was cut off if you could just give that to me I can send you back into the conference as quickly as possible.
Mr Brown.
Okay.
The good and cautious to get the secondary listing thank you.
Thank you for the questions with respect to the.
M&A initiatives there are currently.
We are looking at several interesting opportunities right now.
Obviously this may still be too early to tell whether those opportunities will be materialized I don't anticipate debt where at least we haven't reached the stage that we all of that we.
Intend to entered into any definitive agreements, but we are certainly looking at something quite interesting Ah right now and it basically involves diversify our expanding our service portfolio of I should say.
A fair to say fair to say with respect to the capital market plan. Obviously, there is brews and regulation from the prior administrations with respect to the but for the targeting some U S listed issuers of foreign.
Issue of listen and U S. I should say so we're also monitoring the situations.
To answer a question in the short is that right now we don't have any immediate plans to seek a separate listing somewhere else I'm sure. We will keep that option the open for the time being.
Yeah.
Yeah.
Our next question is Ken knowledge of some size.
That's fun.
Hmm.
Hello. Thank you for taking my question can you. Please share your new subscriber breakdown by region and payment options during the quarter as well. Thank you.
Yeah.
Thank you for the questions.
In terms of <unk>.
New subscriber geographical breakdown approximately 68% of all of new subscribers signed up in the third quarter.
Where we book derived from our Guangdong market.
22% came from Zhejiang.
And the remaining 10% of came from Beijing.
Yeah.
Yeah.
In terms of payment option breakdown.
The upfront payment accounted for approximately 41 per cent of our total new subscribers signed up in the third quarter of fiscal 2021.
Normal payment options about 27%.
And on the options plus installment accounts for the basically the balance.
Yeah.
Yeah.
Okay.
Yeah.
As a reminder, please go ahead of zero one on your telephone keypad now to ask the questions.
Yeah.
As a reminder, please press zero one on your telephone keep on now to ask the questions.
Yeah.
Currently no more questions. So now I'll pass back the time to Kathy. Thank you.
Thank you Evan.
This concludes our earnings conference call for the fiscal 'twenty 'twenty, one third quarter.
You all very much for your participation and ongoing support have a great day.
You may now disconnect.
Thank you.