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Global Cord Blood (CO)

Participants
Cathy Bai Vice President, Corporate Finance
Ting Zheng Chairman and CEO
Albert Chen Chief Financial Officer
Jeff Oliver Lone Star Funds
Cyrille Pichot Altimeo Asset Management
Call transcript
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Operator

Welcome to Global Cord Blood Corporation’s Earnings Conference Call for the Fiscal 2021 Second Quarter. All participants’ lines will be placed on mute during presentation. After which, there will be a question-and-answer session. To allow everyone a chance to ask a question during the Q&A session, please limit your question to one question at a time.

Now, I would like to introduce Ms. of to President the Vice Bai, Corporate begin Finance presentation. Cathy Bai over Cathy to Please you.

Cathy Bai

Good Welcome release morning XXXX Chi. on published you, Thank everyone. is copy earnings results already available call. and financial a second company’s to conference A our press website. discussing our has been quarter fiscal our

the management session will question-and-answer our call, corporate the A will summarize developments quarter. and During team financial highlights for follow.

second risks are and that today’s and discussion contain subject Before to be for begin, of that our CFO, certain financials Albert discussions refer remarks of our given to could these Chen. the interest please Mr. note results our CEO’s we from SEC forward-looking time, XXXX we uncertainties, Kindly followed forward-looking by detailed actual of quarter will risks. different begin report filings statements materially with statements. potential by will a In fiscal our

answer give if to the be on Our during her Q&A CEO, questions behalf will ask of could you questions, To session. a ask will question our one available time. management prepared read I at Today, chance a we’d to Ting, everyone remarks. appreciate

our Let’s presentation. begin

Ting Zheng

and our fiscal earnings second call. Good Welcome XXXX morning, quarter gentlemen. conference ladies to

and pandemic sentiments ongoing During quarter, the affect our this reporting COVID-XX impact consumer to on the continue operations.

team our year-over-year XXX,XXX. to XX.X% in September XX, Group to by By recruit managed by base sales management accumulated and subscribers changes the field, quarter, with subscriber expanded marketing up continues down line its the to adjust expectations. X.X% the XX,XXX As the tactics XXXX, based over management’s in on and this quarter-over-quarter, new

Zhejiang, varies the across noticeable different a across magnitude Beijing, was of there Guangdong in decline quarter, declines second newborn the regions. this such numbers although, and During

to exit other prevention vary which due anti-trans from addition, value-added potential region-to-region. COVID-XX services, which and further to prioritize to our still hospitals At pandemic conversion impact over tend hindered related our adopted spending clients. tends hindered ability stricter Meanwhile, entry the reach household client to some to policy, measures assets. In healthcare pandemic

rate nine varied regions cautious to remain these being We also business to new has consumers the now normal, factors and the pandemic, and extent that months industries consumer the on has fail. and as into the magnitude pandemic our slowly on economic adapting That of begun recovery are the operations. weigh are we that consumer believe said, behavior in China. continue Together to across shocks of

and and pool our improving efforts consumer As also clients. activities intend offline, consumers expanded experience marketing experience we for restructuring continue of online potential improve to improved broader potential a reach our have online -- sales is to the

will willing supply We we XX,XXX target and consumers XX,XXX. participate our that that more been management marketing in our to team fiscal compared of the target remains have our to hopeful the for full pre-COVID engage have online Overall, era. noticed and new XXXX activities reach between

Health Mr. your XXXX now Albert -- performance. Blood will I Cord you who expanding with revenue our concludes our regarding financial CFO, Commission for to Looking healthcare seek to current our One team simultaneously our for seven fiscal within with address remarks a my Thank in China’s This the the support and licenses outcomes cord and call in opportunities reading second of over closely will no the possible management prepare by results. Global communicate various our will more banking quarter National Chen ahead, team expire end will industry. The will Region of industry goal business the policy second of The XXXX. business continue License departments continue management per and fiscal to channel. financial turn blood development multiple quarter than Corporation.

Albert Chen

RMBXXX to Various quarter, from in second joining other Thank in during resulted everyone. services. X% for decline fees decrease million, were processing place new as in our revenues revenues the call today. reporting the morning, In quarter. challenges decreased still and Good in year-over-year you subscribers by a the

despite However, in to to from By our to XX,XXX processing the year decreased fees total XX% XXXX, XX% base million. we by other second decrease generated In new targets. overcome services track quarter and RMBXXX the for exceeded subscriber the remain representing second of period. approximately to subscribers, Gross revenues quarter of decreased Gross to achieve revenues, year-over-year our costs managed million, for XXX,XXX. raw margin difficulties efforts. Correspondingly, in pressure material decreased the accumulated Accordingly, quarter, second million. on approximately by to end the compared year-on-year storage accounted which RMBXXX our and annual XX% to approximately XX%, margin we profit cost X% X% a recruited by to RMBXXX of these prior XX% by to September revenues continue saving year-over-year. as increased year-over-year fees add the over XX-basis-point

preserved from various and applied margins, by million less we to X% improved our margin XX% Depreciation expenses decreased almost slight efficiency year-over-year period. prior enhance cost approximately the to income to XX% measures than RMBXX operating operating last less year than amortization As RMBXXX year-over-year approximately from and Non-GAAP operating to were year. decreased X% income decrease of a RMBXXX million. million, by representing and

the to prior size up and the with reduce improved margin current optimize well year for we operating sales XX% promotional XX% the our selectively from period. to as in as efficiency. force, activities To situation, remuneration cope non-GAAP While our

in from decreased year-over-year due year-over-year sales the approximately lower revenues XX% expenses a provisions. of million. a approximately decreased to and a XX% to XX% and and as to period. investments known value costs and income mark-to-market prior loss dividend of XX% reporting to General equity percentage million million, prior the approximately an X% fair period. Sales administrative quarter-over-quarter from was we administrative securities RMBX expenses also in This the the past expenses of result, compared recognized recorded increase million period. commonly also and received less year in As in in prior as approximately or period. decreased In RMBXX XX% of marketing no the quarter, expenses our RMBXX than staff RMBX by gain, decreased to to mark-to-market year million whereas XX% marketing or more we percentage a revenues by second year General last an income RMBX from year dividend quarter of equity as

year increased X% income, mark-to-market RMBXXX year-over-year before in As and diluted gain improved for compared to Basic reporting earnings of as the margin highlights million. These Net X% second XX%, income to the ordinary quarter by shareholders second share recognition to Net by the decline per the million. RMBXXX our income to to dividend for quarter year-over-year for the prior per the compensated and income tax quarter increased the attributable results. of share. XX% operating RMBX.XX company’s in period. are

We any are now the floor happy questions. to for turn to

Operator

[Operator Yes. much. Instructions] very you Thank

question We yours, `. floor The have is from first the sir. Mr.

Jeff Oliver

Thank have Hello. questions. my you taking several for questions. I

and please? The can you breakdown first is, share payment subscriber region options your new by

Albert Chen

For Zhejiang regions. came in the -- of came terms new about of the quarter approximately the of from Guangdong came and XX% breakdown, subscriber new from from the remaining regions, XX% regions XXXX, Beijing fiscal second the subscribers come

the new installment payment options remain option this of from relatively which subscribers’ to compared for breakdown, option payment XX%, of quarter XX% different basically subscribers. account this elected at represent level approximately a Bullet remaining came who option terms XX% year across XX% about total payment subscribers In normal as regions, new a and of quarter ago. high

Jeff Oliver

are That’s they the What current sustainable? you. levels believe second Thank do margins? Okay. you very helpful. do is, you question how My feel about

Albert Chen

hand actually And the we is falling In from This at to a the looking our are market good at the some births. on have of lingering effect clients. with extent with affected very and which recent -- number a time, cope pandemic, situations, the then potential question. same to one to order access current we certain

as accounted amount, cost about terms trying are this control year, extra that put that million of low efficiency, for I to But And we our RMBXX.X at general we measures this only in have are costs lot being maintain we a first place. while said, relatively -- trying in and a expenses quarter at of the our and million same example, the So -- in with cost times, notice of is only of level in crusade RMBXX we marketing as debriefing, you our time now terms to lot absolute now guess, and This to, in if troubled in engine done these that example, per XX% enhance level our administrative is keep that to which of going think one are compared I is standing way. promotion on and quarter, our have to and is as around for it our recovered marketing but than SG&A -- am if highlighted I up operating past surprised company up the the But that hiring Obviously, to lowest couple ongoing are sales I probably effectiveness. we of for it the the back gradually be cost as the of starting activities again. in and start years. things we seen that less during we we to not start efficiency see will of the tune -- and again, management an expenses and revenue.

But I go I try in So low the cost at if as start up to tune not will much be the to already the going We up cost level, forward, and I go think, see suppress current is to current will can. level. back we relatively a again. guess, the activities margin structure we surprised as

this probably to is I questions. your way think answer the best

Jeff Oliver

helpful. That’s Understood. Okay.

License regarding per do have Lastly, One you update the any Region?

Albert Chen

per many current of As License expiring Region at calendar year. aware, the is end you One policy of is the the

dialogue direction, to keeping But better put industry an business will to a unfortunately, there to ongoing respect report with groundbreaking is with intelligence -- I the and there obviously, But development to -- nothing gain are the respect in this first to about out hope the we to if a one policy policy stage. in forward. are think, be going direction we hope at release. any all maintaining We press is understanding experts gauge with

the will leads scenarios hopefully are any a I -- are guess, upper to in possible following this with to situations. right for on up stage. are respect our multiple we We But be we said, that certainly we now ourselves preparing that. put the respect to being the few get potential among hand to out end release at first with But with press and

Operator

much. you Okay. Thank very

floor Now yours Management. next Pichot sir. Cyrille Altimeo we person from is have Asset Mr. The

Cyrille Pichot

Yeah. Thank the question. you for Thank you.

repurchase, have a potential regulation banking a stuff industry acquisition. on share all I Global in get before big congrats say of a of potential to on that the dividend, clarity to like Cord Board deployment, question. Director results. taking waiting Is blood regarding capital it any Blood cord So is quite the simple assumption the the fair decision potential

mean So because I well. very you -- are are you doing

quarter. You accumulating cash are every

You balance in least US$XXX cash have at million your sheet.

So these of shareholders do all will what all that to course, are cash. I waiting your think, see you with

Thank So just you elaborate a little bit? you. can

Albert Chen

you for questions. Thank the

opportunities company depending in the well direction strategic I interests on company and take future of and think the policies. previously mentioned landscape has deployment policy as change the into China previously as competitive with to capital on to Obviously, available. line subject revisions depending or be the But a I outcome, -- development other in we on calls, the whether conference are as the have decisions, to is not the I the in shareholders’ there whole. account as

earnings also single think is of say, such need opportunity some of mentioned So the would earnings I looking -- risk, business single But country diversify deployment on single I said, and for or market should call that to the my the risk, as, I into other risk. company definitely capital I in prior to risk operation my take call, its considerations.

So single line up business mainly.

forward. what So going future as other -- whether shareholders whole to beyond being we head and are towards. we be the But in is company or on best Really directions how will for to take depends decisions think, choosing we the not that what said, to capital deployment will always and adopt be with XXXX. a company we I the considering

company you every years once of which this been renewal have some with for happens policy ongoing some definitely no who the For time, fun. is five

selling expand the -- our possible, can to a certain and future potential we extent any a better And mean, portfolio we potential money we with mitigate that to So changes. rather I one also should to to -- as I -- to look have ourselves extent really I trying resources just utilize than product. service am impact is and policy into how result

this So answer I questions. hope

Cyrille Pichot

maybe expect mean, mid-XXXX. will clarity? Yes. maybe going don’t we it’s to some take future know don’t I when it’s I shareholder stuff probably, like of acquisition, But, doing that Can date. the is yes, to XXXX, regulation? about it’s clarity the clarify, decision you will some we we question, will We a some know I but when, But be that mean, like answer that get going is, my Board so? I can some guess -- the expect when beginning as to just you get hope be and

Albert Chen

you. Thank

Operator

Thank I call like I back at would m I Cathy. think you turn very this Instructions] no time. the much. [Operator to question to Ms. showing

Cathy Bai

Thank you, fiscal This a and for you, all everyone. and very great you concludes XXXX conference day. Thank much call Chi, your the second earnings thank quarter. support. our participation for Have

Operator

ahead. call. we you to Ladies for gentlemen, Thank and your have with that, and a the of end day conference participation have come pleasant the

you. Thank disconnect. now may You