Q3 2021 Hywin Holdings Ltd Earnings Call
[music].
Good morning, and good evening, ladies and gentlemen, thank you for standing by and welcome to highways Holdings limited.
Fiscal 2021 earnings conference call well at this time all participants are in a listen only mode. We will be hosting a question and answer session. After the amendment. She was prepared remarks I'll now turn the call over to your first speaker today, Mr. Nick <unk>, Vice President of high wind hurting piece.
Go ahead Sir.
Thank you operator, Hello, everyone on the call.
With me today.
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<unk> financial results on our company IR website.
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Please note. This call may contain forward looking statements made pursuant to the safe Harbor provision for the private Securities Litigation Reform Act on like 95.
These forward looking statements are based on management's current extra for patients I know observations.
And bolt on on the risks uncertainties and other factors not on.
On the company's control, we can make all actual results performance or achievements of the company to be materially different from the results performance.
For patients implied by these forward looking statements.
We thought for the Safe Harbor statements in the company's earnings release for more details.
I will now turn the call over to the director and appeal of hiring holdings I don't want again.
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Hello, everyone welcome and thank you all for joining today's call for hiring unaudited financial results for the third quarter.
So we've got plenty of money what.
Our listing on NASDAQ was a major milestone in our corporate journey, we are committed to creating long term value for our clients I think buses on looking forward to earning your trust through our performance put them on.
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Hi.
During the third quarter for physical yet put it on to what China continues its strong economic recovery.
With the acceleration of investments on our financing activities.
It provides us a supportive backdrop with wealth management sector.
Experienced things like global volatility for public 1.
On to Chinese high net worth playing the bumps on buy it on the high quality.
Mhm services on that.
Challenge is that wealth manager both of them.
They live our robust investment advisory on a holistic solution.
We were able to meet the challenges on the cheap exceptional punished for Covid.
Focusing on the core elements of our strategy for.
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Paula our tablets and to drive innovation and efficiency through technology.
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During the quarter for fiscal year 'twenty 1.
We achieved all time highs in both net revenue and net income.
Net revenues were 4.
$403 million.
<unk> reported a 6.5% on GAAP nothing.
Net income attributable to shareholders was renminbi fixed at 187 million, increasing 19, 7.6 of the fence yeah on GAAP.
We believe that strong financial performance is on lateral results of a meticulous execution of a good growth strategy vs.
For the proven once again this quarter.
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Hold on a funding went up.
Although for months, especially for 'twenty 1.
Our total client had grown to a historical high of a 124000 and for this rate increasing 13.5 per cent.
This was made possible by our efficient client acquisition.
So on client servicing skills.
While our active clients in the quarter reached a new record on plenty of nice Loveland and sick people, increasing 4.7 defense you're on.
The gross and client activity was it driven by our use of data analytics to shop, implying segmentation flying profiling, implying meets discovery.
The average transaction ticket size applies for privacy brake products during the quarter increased 14, 5% young yet for renminbi Threep on 3.8 million demonstrating the increased efficiency in our clients' asset allocation.
They continue the growth in our client base was also supported by our high quality research and advisory services our E.
It wasn't a device for clients across asset classes on a call.
But on the strategy has been proven through market cycles and is trusted by our clients.
During the quarter, we hope to 480 for online and offline events with more than 13000 high net worth clients in attendance.
April we unveiled our 11 on the allocation whitepaper entitled a new strategy for new context.
White paper has been rather by more than 35 thousands of our clients today.
That's a testament to our intellectual leadership.
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During the quarter.
I forget transaction value of wealth management products reached renminbi plenty, 1.7 per year increasing.
Increasing $22.5 per cent for you on yet.
Notably the transaction value for private pay rate products during the quarter reached historical high of renminbi quantity on 1 billion growing 53, 2% year on year the grow.
Well supported by our expanding product range rigorous due diligence and its ability to accurately Calvin Klein needs through the excellent digital sales platform.
During the quarter, we added more products to our public on menu. We also kicked off collaboration with additional asset manager.
Our scope for a call for the full range of product tenants on investment strategy for them.
At quarter, our transaction volume for public feed grade for products with Renminbi 158 billion a decrease of 65 per cent yeah on yet however, our transaction value for private security bonds increased by more debt 116 times to rich renminbi $500.2 million.
These numbers reflected the migration, we think the liquid side for momentum proof of mutual fund performance proved and probable.
These are the trends encouraged by our loans and investment philosophy.
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During the quarter, our total operating costs increased 75, 8% year on year.
To renminbi 371 per year.
Gross throw out the old revenue for the same periods.
I would continue to efficiently day with results of our transition towards a flat nimble organizational structure.
For example, we established 2 regional headquarters in the Greater Bay area on the Bahar come on with the ring to increase responsiveness for regional trends accelerate decision, making on a promote cross selling among local team.
In addition, we have been very effective at the guidance operations with our specialists convention, which combined expertise with accountability.
While we continue to deploy technology in all procurements resource allocation and efficiency trucking for further optimize costs.
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During the quarter, our relationship managers continue to raise that productivity.
Congrats on body part of Richardson moniker for Renminbi, 17, 6.7 million, increasing by 72 per cent year on year.
Net revenue per British manager exceeded renminbi 219, thousands representing a substantial increase of 58, 3% you on debt.
These efficiency gains were powered by our excellent training regime.
Graduate transition of our compensation practices towards our long term equity based system. It can 19, the entrepreneurial passion of our people.
In addition will continue for upgrading the functionality of our technology platform to enhance client needs discovery and expand sales touch points for us.
For boosting the productivity of our relationship manager.
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Next I would like to share some exciting recent developments.
In March we signed a strategic collaboration agreement with a V. P Bank a company listed on the streets box change.
<unk> heightened client with a global wealth solutions.
And April hiring was voted the best wealth manager of going to China out of the wealth briefing 8 took where they're trying to put people on the web.
It May wind, Inc. Both China's largest financial information provider. They got on publishing hiring research institutes 3 calls to a debt scribal, who are mostly professional investors.
These achievements attributes for hiring leadership position in China's wealth management sector.
Our operational excellence on a commercial success.
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For the world and so for periods of recovery on adjustments.
The bond between clients and as the wealth managers has grown closer on strong day.
Today high weighted combining for them with excellence delivering.
Delivering value in addition to scale on liberating success in China for build a global problems.
So I did it by client insights back for by technology on the powered by our pass on people.
For the confidence in delivering high quality and sustainable growth throughout economic cycles. Thank you now I'd like to pass on to our CFO because so we view our country results for the third quarter of fiscal yes, probably is on the wall.
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Hello, and thank you for joining us today people like per seats. Please note all numbers presented.
Rent and good job on that for the third quarter of fiscal year ended March 31st plenty plenty of them well.
Well all of the comparison on a potential changes all year on GAAP unless stated otherwise.
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We achieved strong growth during the quarter on solid total net revenues increased by $46.05 you on yeah. The renminbi 400 fixed for $3 million.
Gross was probably driven by our wealth management services, which increased revenue by 49, 9% yeah on debt to renminbi 426 million.
Growth for the segment was mostly due to increase the volume and privacy rates for product.
Net revenues from insurance brokerage services, where renminbi plenty of $5.77 billion decreasing by 14, 7% year on year.
Mostly due to travel restrictions related to the COVID-19 pandemic.
Net revenue from aftermarket services for renminbi 5 on streets with volume.
Increasing by 265, 5% year on year on client interest in offshore funds on a Monday continue for growth.
Net revenue from other substrates for renminbi, $6.2 million, mostly from technology consulting and other value added services.
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For the quarter total operating costs and expenses for renminbi $371 million, increasing by 35, 8% year on year inline.
In line with our net revenue growth.
Looking at the breakdown of compensation of benefits increased by 37.5 per cent.
Sales and marketing expenses increased by 21, 7%.
General and administrative expenses increased by $19.4 per cent for these changes well in line with our revenue growth.
Income from operations increased by 115, 3% year on yet for <unk>.
<unk> be 90.182 million, while net income increased by 97, 6% year on year for Renminbi 61.87 million.
Basic and diluted earnings per ADR.
Both renminbi 2 for 6 comp.
Compared to when it would be 1 to 5 in the same.
Period for physical yet for the plenty each ideas represent 2 of the company's ordinary share.
As for our balance sheets, we have renminbi $404 million on cash cash equivalents and restricted cash as of March 30 for 'twenty..1 competitor was renminbi 188 million for June 30, plus day 20.
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But on a charter excuse me not GAAP.
Finally, I'd like to share our anticipation for the coming quarter.
For the fourth quarter of the current fiscal year ended June 30, 'twenty 'twenty 1.
We expect our net revenues to be between Renminbi 480 million Renminbi 510 million net.
This forecast only reflects our current and preliminary view on the market on the op.
On the conditions, which are subject to change.
Looking ahead, we expect to continue to expand our client franchise, a hunk of our products on services empower our people deploy technology on increased operational efficiencies on.
On the creates substantial and sustainable value for our clients and shareholders. Thank you.
This concludes our prepared remarks for the day operator, we're now ready to take questions. Thank you.
Thank you, ladies and gentlemen, weird for now begin the question and answer session.
If you wish to ask a question. Please press star 1 on your telephone and likes for your name to be announced if you wish to cancel your request. Please press the pound for Husky went on.
Asking question. Please state your question in Chinese first then.
Immediately repeat your question in English for the convenience of everyone in the call. Once again, if you wish to ask a question. Please press star 1 on your telephone keypad.
Our first question comes from.
Your line of Antonio Chang for B O C. I. Please ask a question.
Share by anytime says Hey, I want on how it goes on contracting Patterson for himself not what Ty Shay book on how to think on me at $10 a day.
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I think that's a tag saturated market like China, how is highly.
Can you touch on what results are you want to achieve.
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Okay.
Hi, Susan.
I will translate for the C L.
Uh Huh I want to say that for hiring hang on.
Energy is not a tool for the.
A way to structure our business.
Technology is the lens through which we find our clients on tons on get to know their needs and improve our operations.
Suddenly we use technology to find applies for our digital platform, we broadened our interface with a high net worth population in China and increase the efficiency of flying conversion. We also use technology to on sand appliance reconstruct client profiles on a map flying needs with the Frac I mentioned informed.
By using diagnostic tools.
Per filing provides the basis for our highly tailored solutions in there.
We do technology to service deposits would you integrated online and offline engagements qinghong informational content on the dry the procurement and supply needs.
Of course, we also used technology to improve operations.
Pelican on transparency generated from data help us manage protests.
On the call.
Our next question.
Thank you. Your next question comes from Anthony <unk> from J P. Morgan. Please ask your question.
And how long ago on phone guys in insurance average loans yet.
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Tony its self interest from us.
So how do we have a child achieved.
For high growth in Chinese wealth management market. So how do you plan to system for HEICO and in years to come please.
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Thanks for the asking for that for now.
Hi, Susan.
Although we know China has more than 2 million high net worth individuals animals on renminbi, 2 hungry trillions of personal wealth.
The future market will continue to grow at a 50% payout against coupon.
Hiring have had a 16, yes for continuous growth on that.
With data from multiple economic cycles.
We have a day with a physical network of them all of them for hunting 71 service centers in more than 8 pitches in China nearly 1600 releases for monitoring our strong digital platform on a 120000 high net worth clients.
Moving on the successful wealth management business, we will accelerate the build outs of our asset management business in both onshore and offshore locations to increase the weighting of recurrent income on the diversified revenue sources.
We will also continue to expand our credit offerings strengthen advisory capability on income investment management expertise. We will also promote cross selling on upselling to increase our share applying volume.
Meantime, we continue doesn't make for great progress in our digital transformation or digital.
Infrastructure digital interfaces, how the day live.
That's excellent experiences for clients efficiency gains for our team on the commercial volume for the club interest.
We will scale up our Hong Kong vigilant on.
2 distinctly and for new offshore market Chinese.
Chinese walls is rapidly globalizing on hiring is well placed to be the bridge.
Thank you.
Next question.
Thank you on next question comes from Joshua True from Rothschild and company. Please ask your question.
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For the net margin has been relatively weak.
For 2 market for some of your peers. So our question is.
With momentum in past lives.
Net revenue for changes that could help improve the net profit margin.
For medium term thank you.
Yeah.
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Yeah.
Thank you.
We expect continued momentum in our revenue growth the weighting of high margin products in our wealth business is expected to increase on the revenue from our aftermarket business are also expected to rapidly scale up.
Meanwhile, our digital transformation to deliver efficiency came on at the productivity of relationship managers continues to grow.
The marginal cost of our business continues to decrease.
Nickname for things improvements on the cost income ratio on a well create substantial profit growth from our operations.
But we make a nurturing our people and advocating on our clients generate tremendous intellectual capital on the branding value. These are crucial foundation followed commercial success.
It will continue for making smart investments and reap areas. Thank you.
Questions.
Thank you. Your next question comes from Joseph <unk> from <unk>. Please ask your question.
Hi, This is Joseph Chan of cartilage and on wealth management in place on Hong Kong.
And the C or just about non mentioned about the strategic cooperation agreement with the V. P. Pang with respect what are the benefits of this co op for tie up thank you.
I will take this question.
Oh really by our partners.
Particularly European public Bank statement for the expertise and global custody execution Fund advisory on the wall.
Planning.
Through the recently executed cooperation we now behind you for BP banks brokerage trading on a custodian platform.
Accounts on the implement investment strategies for our high net worth playing in the offshore space.
So if we'd be buying patents provide a credit so hiring plan for <unk>.
Paul to that portfolio construction April impolitic financing on it even real estate purchases in some global locations.
The cooperation between hiring on the BP bonds will meet clients' demands for integrated onshore and offshore proposition.
Also reflects the appetite of global financial institution for the China market.
Actually just 2 weeks ago, the Shanghai government published a major policy announcements on the plan to build a Shanghai input global hub for us.
Management's rig plan includes support for managers for global asset managers coming to China, but also for Chinese ophthalmology channel, ensuring the ultra market.
Hi, we will look for opportunities for walkways, a leading global asset manager to capture opportunities on the body.
Thank you for with it.
Our next question.
Thank you next question comes from <unk> Singh from the OCI. Please ask your question.
And how that changed your guidance on the gross share.
A question on the hanging in Chicago for holiday.
Oh I know you don't buy on my Triangle tell you if I'm going on too.
Oh sure.
Oh gosh I'm on a notional vishal on them.
So I'm glad someone got hands on potentially.
And she does on you know kind of what you're saying on.
On competing for a pencil.
On the.
For Taco Bell with her knocking on garden Chicago's on platforms.
Thank you bye for now on page on 1 of the harsh about yet I just wonder if.
Frankly, what's on balance sheet also tornado culture about Oh, we.
Oh, Okay I'm going on.
Hi.
Now on more water it sounds on the call here.
But I just don't know.
On like ours.
Uh huh.
Oh, well knows that's a lot of our rationale for lines of business advantage.
I don't think there is a client.
Does it take a paradox on.
According to third party probably for lack.
You'll recall that we can't do that to ease on Atlanta Alopecia Ultra high net worth population except for.
Yes sure.
I'll go through is that non tech.
Great.
And on the phones that are craving for accuracy on the phones, Oh I'm grateful for that.
Martha.
So do we have some policy changes.
Thank you.
Thank you Shelly.
I'll take a shot.
It's a very good question, Charlie you correctly pointed out that.
At this moment the bulk of the products our clients.
Transact through us or you know the real estate.
They buy fixed income products.
I think for sure because its way for the portfolio of any pilots or applying itself like a wedding cake.
Boston is a fixed income people love the certainty on our cash flow on top of it people gradually build liquid alpha mutual funds.
A liquid loans on alpha private equity venture capital on hedge funds.
Hiring is in a very advantageous position because we're being with the planning for 2016 yet for.
Our 120000 clients they have always known us as a robust reliable delivering what we promise that's a feature of our fixed income centric proposition for the big deposits, but now leveraging the same client relationships on a gradually expanding our spectrum of our products.
And the building up our other vital skills in more asset classes I think it's a matter of time I'm actually very quickly clients would bring more business to us on it will be in even stronger position to do truly multi asset class allocation.
Gross private and public.
Equity and fixed income and of course across on for offshore to answer a question. If we have a client weighted shifts and his 16 years of a broken Charles it's actually pretty easy to expand our product spectrum, I know youre going to see us Brexit.
Great. Thank you. Our next question comes from Sandy Mehta from evaluate research. Please ask your question.
Yes, congratulations on the strong earnings performance as well as execution.
The wealth management.
Business accelerated this quarter you were up 50 per cent and you mentioned that privately raised products.
We have been doing really well.
Do you get higher margins on that.
Is that and can you talk about what specific products are selling really well aware of the customer interest in what sort of products. Thank you.
Thank you.
Well find yourself on a whole.
Guangzhou, Guangdong Lgs concert sell women's on boarding Valkyrie balance.
I think we are essentially not T belt heightened on September 12th not possible, we thought on the sidewalk cohort papers on get simulator time to Uh huh.
Touch on lousy shop that simple with Huntington degree somebody on to cheat.
For me on late in the Tempe that al Cook with us because she wants change momentum getting back to you for that.
Uh huh.
We cannot Duane friends on the timeframe you can go on what machine cohort of Heathrow paid out late on a cohort of Heathrow and I too am chimney and benefits from Fuji.
You can't go on hand for sure that TTM for Asia, and we're now in Chicago.
Yeah, Hi for granting Eagle on a neuroscience out moving term, who should really have a tendency to get to the permanent injunction on them.
Thank you. So you don't want non counting to cook, who that partner for the shoot out the door. He told you you know you're free to Hum.
<unk> now shipping new suddenly becomes how cool it seems oh.
And so she comes on to the kidney Kenny Mckenzie social channel no matter if on the entire amount 1.2 on that to the on door Thompson, the Egypt and Turkey.
Moving nationally for Copel is doing on chimney made it for something to 3 months I think I'm. Good I'm sure. When he goes into cohort 2 for when we get on T V.
Mike Hogan on Grand Mesa.
<unk> not really cool to Cushing partner for free at 1 way to come out so he spends on time for Glenn in Gooseneck.
For many producers sure Cindy she's not mosquito.
Do you Cook with a huge hole.
Well on the way in cohort cumulative percentage.
No not come to me on that 1.
How would you typically on Chicago.
Non cool now.
Just on Cooper to switch over time, or how do you weigh small looming and of course it sounds on the door. So he joined us on Lehigh anytime financial each dosing cohort later on.
Thank you should kind of be in Boston for the payment for.
Cohort 2 and continue on at the strategic.
Thank you I worked for.
On a pay for the CEO.
To answer your question, Yes of course.
<unk> noted.
On the rates of product.
Currency very popular with our clients on the main thing of the bit low, but we do believe I know we're already witnessing flying leads are rapidly diversifying and expanding our product universe to meet them very importantly high wing cost allocation methodology is based on 3 pillars.
Firstly the first of all we are very good macro economic research. So we have on our house view on the market the asset classes and we tend to be right under 2 we also focus on the.
The policy.
On the macro regulations.
So that we position our client portfolio with full size and very importantly, we think client needs on not necessarily overview on the parent for themselves. So we understand the Cline, we know the Mi and we anticipate for the need for a possible for the client as well.
Kitchen process based on such policy reading on the client on spending the 3 pillars, our agitation methodology will support expansion of our fitness interface with our clients.
Thank you.
Great. Thank you I show no further questions at this time I'd like to hand, the conference back to management team for the closing remarks.
Okay.
Okay and thank you for everyone.
1 for attending today's call it for you.
For any further questions on inquiry see feel free to contact us.
At our IR website.
We very much look forward to speaking with all of you at our next earnings call on this.
We wish you a very good day. Thank you.
Thank you, ladies and gentlemen that does conclude our conference for today. Thank you for participating you may all disconnect.
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