First High-School Education(FHSEY)

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First High-School Education Group Co., Ltd. (FHSEY) H1 2024 Earnings Call Transcript
2024-09-18 13:57
Summary of First High-School Education Group H1 2024 Earnings Conference Call Company Overview - **Company**: First High-School Education Group Co., Ltd. (OTCQB: FHSEY) - **Conference Call Date**: September 18, 2024 - **Period Covered**: First Half of 2024 (H1 2024) Key Financial Highlights - **Total Revenues**: RMB 151 million, a decrease of 6.7% from RMB 161.9 million in H1 2023 [9] - **Revenues from Customers**: RMB 151.1 million, an increase of 8.2% from RMB 139.6 million in H1 2023, driven by increased student enrollment [10] - **Revenues from Government Cooperative Agreements**: Zero, compared to RMB 22.3 million in H1 2023, due to tightened fiscal budgets of government entities [10] - **Cost of Revenues**: RMB 98.9 million, stable compared to RMB 98.7 million in H1 2023 [11] - **Gross Profit**: RMB 52.3 million, a decrease of 17.3% from RMB 63.2 million in H1 2023, with a gross margin of 34.6% compared to 39% in H1 2023 [11] - **Total Operating Expenses**: RMB 49.2 million, significantly increased from RMB 23.6 million in H1 2023 [11] - **Net Income from Continuing Operations**: RMB 4.2 million, a decrease of 88.9% from RMB 37.6 million in H1 2023 [12] - **Adjusted Net Income**: RMB 10.1 million, a decrease of 72% from RMB 36.7 million in H1 2023 [13] Core Issues and Challenges - **Decline in Revenue**: The company faced a decline in revenue primarily due to the absence of income from government cooperative contracts and increased general and administrative expenses [5][6] - **Government Payment Issues**: Local governments have tight budgets, leading to delays in payments and prioritization of operational needs over educational contracts [6][7] - **Renegotiation Efforts**: The company is attempting to renegotiate contracts with local governments to reduce the number of publicly sponsored students, which would also help in cost reduction [7] Operational Insights - **Student Enrollment**: As of September 1, 2024, total enrollment was 35,151 students across 23 school programs, reflecting strong brand engagement [7] - **Investment in Human Resources**: Significant investments were made in human resources to enhance hiring, performance evaluation, and supervision, alongside the development of a new HR system [8] - **IT Upgrades**: The company is upgrading its IT capabilities to incorporate digitalization into the education process [8] Strategic Outlook - **Focus on Quality Education**: The company is refining its business model to ensure high-quality education services and solid academic performance [9] - **Exploration of New Opportunities**: There is an ongoing effort to innovate and explore new opportunities to remain competitive in the education sector [9] Conclusion - The First High-School Education Group is navigating significant challenges in revenue generation due to government funding issues while simultaneously investing in human resources and technology to enhance operational efficiency and educational quality. The company remains focused on renegotiating contracts and exploring new growth opportunities in the education sector.
First High-School Education(FHSEY) - 2023 Q4 - Annual Report
2024-05-13 20:02
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 20-F (Mark One) ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 19 ...
First High-School Education(FHSEY) - 2023 Q4 - Earnings Call Transcript
2024-04-26 15:14
First High-School Education Group Co., Ltd. (OTCQB:FHSEY) Q4 2023 Results Conference Call April 25, 2024 8:00 AM ET Company Participants Tommy Zhou - CFO Operator Good day, ladies and gentlemen. Thank you for standing by and welcome to the First High-School Education Group Fiscal Year 2023 Unaudited Financial Results Earnings Conference Call. Currently all participants are in the listen-only mode, and later we will conduct a question-and-answer session. [Operator Instructions]. Now, I will turn the call ove ...
First High-School Education(FHSEY) - 2023 Q3 - Earnings Call Transcript
2023-11-27 13:31
First High-School Education Group Co., Ltd. (OTCQB:FHSEY) Q3 2023 Earnings Conference Call November 27, 2023 7:00 AM ET Company Participants Tommy Zhou - Chief Financial Officer Conference Call Participants Operator Good day, ladies and gentlemen. Thank you for standing by and welcome to the First High-School Education Group Third Quarter 2023 Unaudited Financial Results Earnings Conference Call. Currently all participants are in the listen-only mode and later we will conduct a question-and-answer session. ...
First High-School Education(FHSEY) - 2022 Q4 - Annual Report
2023-04-30 16:00
Regulatory Environment - The company faces uncertainties related to compliance with PRC laws and regulations, which could adversely affect its operations and financial results [39]. - Regulatory changes in China, particularly regarding private education, may materially impact the company's business structure and financial condition [48]. - The company is subject to increased regulatory scrutiny, which may add uncertainties to its business operations and share price [38]. - The corporate structure may face regulatory challenges under PRC laws, particularly regarding foreign investment in the education sector [119]. - The Alleviating Burden Opinion restricts foreign capital from controlling or participating in academic after-school tutoring institutions, impacting the company's operational flexibility [120]. - The PRC government has adopted regulatory actions that may challenge the validity of the company's contractual arrangements, potentially leading to a decline in the value of its ADSs [133]. - The company is subject to PRC regulations that limit the ability to pay dividends or make other distributions, which could adversely affect growth and investment opportunities [143]. - The PRC legal system presents uncertainties that could limit the company's ability to enforce its contractual arrangements [137]. - The company may face scrutiny by PRC tax authorities regarding its contractual arrangements, which could lead to increased tax liabilities [139]. - The company must comply with various government regulations, which may increase operational costs and affect profitability [155]. Financial Performance and Risks - The company has a limited operating history of 10 years, with most schools established in or after 2017, making it difficult to predict future financial performance [42]. - Tuition income accounted for 80.2%, 77.4%, and 82.3% of total revenues for 2020, 2021, and 2022, respectively, while boarding fees accounted for 5.1%, 5.7%, and 2.2% [54]. - The company may not be able to maintain or increase tuition levels without adversely affecting demand for its education services [54]. - The company may face fines ranging from one to five times the income collected if it operates without the necessary permits [69]. - The company has not paid enterprise income tax for revenues generated from formal education services for its nine schools, which may lead to potential tax liabilities [187]. - If classified as a PRC resident enterprise, the company could face a 25% enterprise income tax on global income, impacting non-PRC shareholders [188]. - The discontinuation of preferential tax treatment could increase the effective tax rate and reduce net profit [186]. - The company may incur significant time and resources to comply with tax obligations related to indirect transfers, which could adversely affect financial condition and operations [193]. Operational Challenges - Newly established schools have not yet reached full capacity, resulting in lower utilization rates, which may adversely affect business growth and profitability [43]. - The company may be unable to attract and retain a sufficient number of students, which is critical for its continued success [59]. - The company faces challenges in attracting and retaining qualified teachers and principals, which is crucial for maintaining education quality and brand reputation [72]. - The company has experienced steady growth since 2014 but faces risks in managing future growth effectively [52]. - The cooperative arrangements with local governments may be subject to changes that could affect the company's operations and profitability [62]. - The company has outsourced meal catering services since September 2017, raising concerns about food quality and potential health violations [77]. - A significant portion of the company's schools are not in compliance with fire safety regulations, which could lead to operational disruptions [86]. Corporate Governance and Structure - The dual-class share structure allows Class B ordinary shares to have 20 votes per share, while Class A ordinary shares have one vote per share [225]. - Mr. Shaowei Zhang and Ms. Yu Wu own 37.94% of total issued shares and control 92.30% of voting power due to the dual-class structure [226]. - Future issuances of Class B ordinary shares may dilute the voting power of Class A ordinary shareholders [226]. - The concentration of Class B shares may discourage changes in control, potentially depriving other shareholders of premium opportunities during a sale [227]. - Negative commentary from shareholder advisory firms regarding corporate governance could adversely impact the value of the ADSs [228]. Market and Economic Conditions - The company has lost control over affected entities providing compulsory education since September 1, 2021, leading to the classification of these operations as discontinued [41]. - The company recorded share-based compensation of RMB177.8 million in 2018, which may increase future expenses related to share-based awards [103]. - The company is vulnerable to health pandemics, such as COVID-19, which could materially affect its business operations [106][107]. - The company faced higher operating costs due to increased spending on COVID-19 related prevention and testing equipment, resulting in a slight increase in cost of revenues compared to 2020 [108]. - The company experienced temporary closures of schools due to COVID-19 outbreaks, adversely impacting student admission campaigns in 2021 and 2022 [108]. - The trading price of the ADSs has been volatile, influenced by market conditions and the performance of other Chinese companies listed in the U.S. [220]. - The lack of an active trading market for the ADSs may limit liquidity, affecting the ability to sell shares at attractive prices [217]. Compliance and Data Protection - The company is subject to new cybersecurity and data protection regulations, which may require compliance measures that could impact operations [172]. - The Personal Information Protection Law, effective November 1, 2021, imposes strict rules on handling personal information, which the company must adhere to [173]. - Failure to comply with data protection regulations could lead to government enforcement actions, fines, and operational suspensions [174]. - The company has implemented measures to ensure compliance with privacy regulations, but risks of data breaches remain [175]. Future Outlook and Strategic Plans - The company plans to expand operations by entering partnerships with local governments, establishing new schools, and acquiring additional schools [51]. - Future acquisitions may be complicated by regulatory uncertainties related to the Private Education Law, which could adversely affect business growth [70]. - The company is continuously assessing the impact of relevant regulations and may need to restructure its corporate structure or unwind contractual arrangements to comply [125]. - The company has not received permission from Chinese authorities to list on U.S. exchanges, creating uncertainty for future capital raising efforts [150].
First High-School Education(FHSEY) - 2022 Q3 - Earnings Call Transcript
2022-11-06 14:51
First High-School Education Group Co., Ltd. (FHS) Q3 2022 Earnings Conference Call November 2, 2022 8:00 AM ET Company Participants Tommy Zhou – Chief Financial Officer Conference Call Participants Operator Good day, ladies and gentlemen. Thank you for standing by and welcome to the First High-School Education Group Third Quarter 2022 Unaudited Financial Results Conference Call. Currently, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will ...
First High-School Education(FHSEY) - 2022 Q3 - Quarterly Report
2022-09-29 16:00
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐ Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐ FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934 For the month of September 2022 Commission File Number: 001-40150 Firs ...
First High-School Education(FHSEY) - 2022 Q2 - Earnings Call Transcript
2022-09-08 14:52
Financial Data and Key Metrics Changes - In the first half of 2022, the company's revenue from continuing operations increased by 20.9% to RMB 211.4 million, net income rose to RMB 42.7 million, and adjusted net income increased by 282.1% to RMB 42.7 million compared to the same period in 2021 [7][37][38] - Gross profit was RMB 90.0 million, an increase of 32.6% from RMB 67.9 million in the first half of 2021, with a gross margin of 42.5%, up from 38.8% [34][37] Business Line Data and Key Metrics Changes - The company admitted 7,963 students for the class of 2022, reflecting a 9.6% increase from 7,268 students in the previous year [9] - Revenue from government cooperative agreements surged by 318.9% to RMB 31.2 million, driven by more consistent government grants [32] Market Data and Key Metrics Changes - Tuition collection was approximately 92% completed, indicating strong cash flow from student payments [21] - The company opened three new schools in September 2022, expanding its operational footprint [24][25] Company Strategy and Development Direction - The company aims to further reduce leverage to maintain a safer financial position amid global recession concerns while ensuring growth [20] - There is a strategic focus on expanding into vocational education, with plans to sign a long-term management service contract for a vocational school in Kunming [28][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued revenue growth due to increased student enrollments and expanded service offerings [8][11] - The company expects total revenue for the fiscal year 2022 to be between RMB 440 million to RMB 460 million, representing a year-over-year increase of 10% to 15% [38] Other Important Information - General and administrative expenses decreased by 36.6% to RMB 35.7 million, attributed to improved cost control and the elimination of nonrecurring IPO-related expenses [16][36] - The company has no current plans to go private, emphasizing its commitment to remaining a public entity and rewarding investors [46][48] Q&A Session Summary Question: Is there any plan to go private? - The company has no plans to go private, aiming to reward investors and improve its valuation [46][48] Question: When will dividends be paid to shareholders? - Dividends are planned to be paid within the next two to three weeks, pending regulatory approvals [51]
First High-School Education(FHSEY) - 2022 Q2 - Quarterly Report
2022-06-29 16:00
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934 For the month of June 2022 Commission File Number: 001-40150 First High-School Education Group Co., Ltd. (Exact name of registrant as specified in its charter) No. 1-1, Tiyuan Road, Xishan District, Kunming, Yunnan Province 650228, The People's Republic of China (Address of principal executive offices) Indicate by check ...
First High-School Education(FHSEY) - 2022 Q1 - Earnings Call Transcript
2022-05-18 14:23
First High-School Education Group Co., Ltd. (FHS) Q1 2022 Earnings Conference Call May 18, 2022 8:00 AM ET Company Participants Tommy Zhou - Chief Financial Officer Conference Call Participants Operator Good day, ladies and gentlemen. Thank you for standing by and welcome to the First High-School Education Group First Quarter 2022 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 ...