Bright Scholar(US:BEDU)2020-04-29 18:43Financial Data and Key Metrics Changes - Revenue for Q2 FY2020 increased by 72.4% to RMB 877 million, while revenue for the first half of the fiscal year rose by 70.5% to RMB 1,975 million [7][12] - Gross profit grew by 104% for the quarter and 74.6% for the first half, with gross margin up 5.5 percentage points to 35% for the quarter [16][18] - Net income increased by 683% for the quarter and 49.7% for the first half, with adjusted net income up 92.7% to RMB 61.7 million for the quarter [7][18] - Adjusted EBITDA rose by 209.4% to RMB 152.5 million for the quarter, with an adjusted EBITDA margin of 17.4% [18] Business Line Data and Key Metrics Changes - Domestic K-12 segment, including international and bilingual schools, showed solid growth with over 20% top line growth for both the quarter and six-month period [12][13] - International school revenue increased by 22.1% for the quarter, driven by a 19.3% rise in student enrollment [12][13] - Bilingual school revenue grew by 20.9% for the quarter, attributed to a 12.1% increase in student enrollment [13] - Kindergarten revenue increased by 21.3% for the quarter, with a 22% rise in student enrollment [13] Market Data and Key Metrics Changes - Revenue from overseas schools reached RMB 297.2 million for the quarter, accounting for 33.9% of total revenue, with a 46.6% growth in revenue from overseas schools in the first half [14] - Average number of students in overseas schools was 3,300 for the quarter, reflecting the inclusion of new schools [14] Company Strategy and Development Direction - The company is focusing on implementing strategic initiatives to drive organic growth and achieve synergies with acquired businesses [9][10] - Plans to open Fettes College Guangzhou and accelerate Online Merge Offline (OMO) initiatives in response to COVID-19 [9][10] - Collaboration with Country Garden to operate 53 kindergartens and seven schools, with a total capacity of approximately 30,000 students [10] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the unprecedented uncertainty due to COVID-19 but expresses confidence in the company's operational strength and financial resources to navigate challenges [11] - The company is taking aggressive cost containment actions to minimize the impact of lower revenue growth while targeting to achieve its originally planned margins [19] Other Important Information - Cash and cash equivalents totaled RMB 2,433.4 million as of February 29, 2020, showing a slight increase from the previous quarter [20] - Capital expenditure for the six months ended February 29, 2020, was approximately RMB 81.7 million, up 84.3% compared to the same period last fiscal year [20] Q&A Session Summary Question: Key assumptions in revised guidance regarding kindergarten and overseas education services - Management conservatively accounted for 2.5 months of kindergarten closures and potential revenue shortages in boarding and meal fees due to school closures [23][24] Question: Margin trend outlook for the second half - Management is targeting to reduce cost structures aggressively to offset lower revenue, aiming to achieve and potentially exceed originally targeted blended margins [30][32]