Concord Medical Services Holdings Ltd (CCM) 2016 Q2 法說會逐字稿

Good morning and good evening, everyone. Welcome to Concord Medical's first-half 2016 earnings conference call. With us today are Dr. Jianyu Yang, Chairman and Chief Executive Officer of Concord Medical, Mr. Kong Yap, Chief Financial Officer of the Company, and Ms. Fang Liu, IR Manager of the Company. (Operator Instructions). I must advise you that this conference is being recorded today, Thursday August 25, 2016. I would now like to hand the conference over to your first speaker today, Ms. Fang Liu. Thank you. Please go ahead.

大家早安，晚上好。 歡迎參加 Concord Medical 2016 年上半年收益電話會議。 今天與我們一起出席的有協和醫療董事長兼首席執行官楊建宇博士、公司首席財務官葉江先生以及公司投資者關係經理劉芳女士。 （操作員說明）。我必須通知您，本次會議將於今天（2016 年 8 月 25 日星期四）進行錄製。 謝謝。 請繼續。

Hello, everyone. The Company's results were released earlier today and are available on the Company's investor relations website, as well as on the respective wire services. Before we continue, please note that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

大家好。 該公司的業績於今天稍早發布，可在該公司的投資者關係網站以及各自的通訊服務上查閱。 在我們繼續之前，請注意，今天的討論將包含根據 1995 年《私人證券訴訟改革法案》的安全港條款做出的前瞻性陳述。

Forward-looking statements involve inherent risks and uncertainties and, as such, our results may materially differ from the views expressed today. Further information regarding those and other risks and uncertainties is included in our registration statements and on Form 10-K and other documents filed with the SEC. Concord Medical does not assume any obligation to update any forward-looking statements except as required under applicable law.

前瞻性陳述涉及固有風險和不確定性，因此，我們的結果可能與今天表達的觀點有重大差異。 有關這些以及其他風險和不確定性的更多資訊包含在我們的註冊聲明以及向 SEC 提交的 10-K 表和其他文件中。 除適用法律要求外，Concord Medical 不承擔任何更新任何前瞻性聲明的義務。

At this time I'd like to turn the call over to our Chairman and CEO, Dr. Yang. Please go ahead.

現在我想把電話轉給我們的董事長兼執行長楊博士。 請繼續。

(Interpreted). Hello, everyone. Welcome to the Concord Medical first-half 2016 earnings conference call.

（解釋）。 大家好。 歡迎參加 Concord Medical 2016 年上半年收益電話會議。

In the first half of this year, our revenue and profits received some headwinds due to internal and external factors, and we have taken initiatives in cutting costs and expenses to lower the impact. During the second quarter of 2016, we are glad to see our loss was apparently decreased quarter over quarter.

今年上半年，受內部和外部因素影響，我們的收入和利潤受到一定影響，我們採取了主動削減成本和費用的措施來降低影響。 2016年第二季度，我們很高興看到我們的虧損逐季大幅減少。

In Q2, our total revenue fell by [25.7%] than the same period last year, with the loss of RMB18 million. Since late last year, industrial regulation has started restricting our original business model of collaborating with military hospitals.

第二季度，我們的總營收比去年同期下降了[25.7%]，虧損1,800萬元。 從去年年底開始，產業監管就開始限制我們原先與軍隊醫院合作的業務模式。

At the same time as we initiated the business model transformation since 2014, former centers are gradually closing and the Company was focused on the planning and construction of our wholly owned hospitals. Both the deteriorating regulatory environment and the strategic transformation remain the main factors contributing to the revenue decrease.

在我們自2014年開始進行業務模式轉型的同時，原有的中心逐漸關閉，公司專注於獨資醫院的規劃和建設。 監管環境惡化和策略轉型仍然是收入下降的主要因素。

Concord Cancer Hospital, which we acquired in Singapore last April, was keeping restructuring to a new stage of business and treatment process, brought obviously -- obvious net loss. We are delighted to see patients from Mainland China have started to visit our hospital and receive most advanced treatment approach and chemotherapy since this March. We will be able to provide better oncology service with further collaboration between Concord Cancer Hospital and MD Anderson Cancer Center, MDACC for short, on treatment, technology, knowhow and branding.

我們去年四月在新加坡收購的康科德癌症醫院正在不斷重組，進入業務和治療流程的新階段，帶來了明顯的淨虧損。 我們很高興看到自今年三月以來，來自中國大陸的患者開始來我們醫院接受最先進的治療方法和化療。透過康科德癌症醫院和MD安德森癌症中心（簡稱MDACC）在治療、技術、專業知識和品牌方面的進一步合作，我們將能夠提供更好的腫瘤服務。

At the same time, we achieved inspiring achievements on our strategic reformation as an upgraded version of our original business model, the Meizhongjiahe network of wholly owned imaging, diagnosis and renal therapy hospitals is gradually implemented. The first hospital under this chain, Datong Meizhongjiahe Cancer Hospital, has opened preliminary since May. Datong Hospital will join the local social insurance coverage and provide high-quality cancer diagnosis to local patients at Datong and Shanxi Province.

同時，我們的策略轉型取得了令人振奮的成果，作為原有業務模式的升級版，美中嘉禾全資影像、診斷、腎臟病治療醫院網絡逐漸落實。 旗下首家醫院－大同美中嘉和腫瘤醫院已於5月開始試營運。 大同醫院將加入當地社會保險，為大同和山西省當地患者提供高品質的癌症診斷。

Followed on Datong project, we have also accelerated the planning of the network of independent radiotherapy hospitals and imaging diagnosis centers by expanding our next step to cities such as Wuxi, Heze, Nanchong and Shanghai. Learning from the experience of Datong Hospital, we will further optimize the processes of establishing level-two specialty cancer hospitals, such as site selection, government approval, decoration, environment assessment and lessons application.

繼大同計畫之後，我們也加速了獨立放療醫院和影像診斷中心網路的規劃，下一步將拓展至無錫、菏澤、南充、上海等城市。 借鏡大同醫院的經驗，進一步優化腫瘤二級專科醫院建設的選址、政府審核、裝修、環境評估、經驗教訓等流程。

The other planned premium medical institutions in Mainland China, Shanghai Concord Cancer Hospital and Guangzhou Concord Cancer Hospital, are progressing steadily in this quarter. Although the planned construction dates have been put back due to the delay in governmental approvals, we will try our best to make sure the successful establishment of both hospitals by accelerating the pace of construction and the preparation work.

中國內地其他規劃中的優質醫療機構上海協和腫瘤醫院和廣州協和腫瘤醫院本季進展順利。 雖然由於政府審批的拖延，原計劃建設日期有所推遲，但我們將盡力加快建設和籌備工作的步伐，確保兩所醫院的順利落成。

Chinese economy has entered into new normal stage. Facing new challenges from the regulatory environments, we will continue to execute our development strategies in the long run, steadily expand our network of Meizhongjiahe hospitals and diagnostic imaging centers, fully leverage our strategic partnership with MDACC to establish high-level hospitals and solidify our leadership in cancer specialty medical management.

中國經濟進入新常態。 面對監管環境的新挑戰，我們將繼續執行長期發展策略，穩步拓展美中嘉河醫院及影像診斷中心網絡，充分利用與MDACC的戰略合作夥伴關係，打造高水準醫院，鞏固領先地位癌症專科醫療管理。

We will make full use of our accumulated medical resources and academic skills to adopt the international standards and to advance the cancer treatment and diagnosis in China, serve the Chinese patients with [might and main].

我們將充分利用我們累積的醫療資源和學術能力，與國際接軌，推動中國的癌症治療和診斷，為中國患者服務。

This concludes my comments. Thanks for listening. At this point, I'd like to turn the call over to our CFO, Mr. Kong Yap, to review our financial performance.

我的評論到此結束。 感謝您的聆聽。 現在，我想將電話轉給我們的財務長 Kong Yap 先生，以審查我們的財務業績。

Okay. Thank you, Dr. Yang. Welcome, everyone, to our call. First, I would like to review the highlights of our first-half 2016 financial results. Please note that all financial currency amounts mentioned in this presentation will be in RMB, except those which will be specifically identified in other currencies or format.

好的。 謝謝楊醫生。 歡迎大家來電諮詢。 首先，我想回顧一下我們 2016 年上半年財務表現的亮點。 請注意，本簡報中提及的所有金融貨幣金額均以人民幣為單位，除非特別以其他貨幣或格式註明。

For the first half of 2016, total revenues were RMB254.6 million, a 21.7% decrease from RMB325.2 million in the same period last year. Total net revenues is composed of net revenues from the network business of RMB246.7 million and from Concord Cancer Hospital of RMB8 million.

2016年上半年，總收入為人民幣254.6百萬元，較去年同期的人民幣325.2百萬元下降21.7%。 總淨收入包括來自網路業務的淨收入人民幣2.467億元和來自協和腫瘤醫院的淨收入人民幣800萬元。

Gross profit was RMB101.6 million, representing a 33.9% decrease from RMB153.6 million in the first half of 2015. The gross profit margin for the first half of 2016 was 39.9% compared to 47.2% for the same period last year.

毛利為人民幣101.6百萬元，較2015年上半年的人民幣153.6百萬元下降33.9%。

Net loss attributable to ordinary shareholders for the first half of 2016 were RMB50.4 million. This consists of RMB32.2 million in Q1, RMB18.2 million in Q2, compared to net incomes of RMB65.1 million for the same period last year.

2016年上半年歸屬於普通股股東的淨虧損為人民幣5,040萬元。 其中第一季淨利為人民幣 3,220 萬元，第二季淨利為 1,820 萬元，而去年同期淨利為 6,510 萬元。

Net loss is composed of net loss from the network business of RMB20.4 million and from Concord Cancer Hospital of RMB30 million.

淨虧損包括網路業務淨虧損人民幣2,040萬元及協和腫瘤醫院淨虧損人民幣3,000萬元。

Basic and diluted loss per American Depositary Share, or ADS for short, in the first half of 2016 were both RMB1.15 or $0.17, compared to basic and diluted profit per ADS of RMB1.45 and RMB1.44 respectively in the same period last year.

2016年上半年，每股美國存託股票（簡稱ADS）基本虧損和稀釋虧損分別為人民幣1.15元和0.17美元，而去年同期每股美國存託股票基本利潤和稀釋利潤分別為人民幣1.45元和人民幣1.44元年。

Adjusted EBITDA non-GAAP was RMB68.6 million for the first half of 2016, representing a 49.1% decrease from RMB134.8 million in the same period last year.

2016年上半年調整後EBITDA（非美國通用會計準則）為人民幣6,860萬元，較去年同期的人民幣1.348億元下降49.1%。

And now let me present our financial results for the first half of 2016 by segment. Let's start with our network business. Net revenues from the network business were RMB246.7 million, a 22.2% decrease from the net revenues, RMB317 million in the first half of 2016 -- 2015, sorry, attributable to the closure of certain cooperative centers in our network of centers during the past years and the changes in the revenue-sharing split according to the contracts signed within the Company and our public hospital partners.

現在讓我按部門介紹我們 2016 年上半年的財務表現。 讓我們從我們的網路業務開始。 網路業務淨收入為人民幣 246.7 百萬元，比 2016 年上半年淨收入人民幣 317 百萬元下降 22.2% - 2015 年，抱歉，由於我們的中心網絡中的某些合作中心在 2015 年關閉。與公立醫院合作夥伴簽訂的合同，過去幾年的收入分配變化。

Cost of revenues of the network business was RMB170.9 million (sic - see press release "RMB137.9 million"), a 12.7% decrease from RMB157.8 million in the first half of 2015. Since 2015's Q4, the network business has continued facing uncertainties in the regulatory environment. Our revenues and profits of the original network business were still under pressure.

網路業務的收入成本為人民幣170.9 百萬元（原文如此- 參見新聞稿「人民幣137.9 百萬元」），較2015 年上半年的人民幣157.8 百萬元下降12.7%。網路業務持續面臨監管環境的不確定性。 原有網路業務收入和利潤仍面臨壓力。

As of June 30, 2016, the Company operated a network of 123 cooperative centers in 52 cities in China and had entered into agreements to establish one additional center.

截至2016年6月30日，公司在中國52個城市營運123個合作中心網絡，並已簽訂協議增設1個中心。

Gross profit from the network business was RMB108.8 million, representing a 31.7% decrease from RMB159.2 million in the first half of 2015.

網路業務毛利為人民幣108.8百萬元，較2015年上半年的人民幣159.2百萬元下降31.7%。

The gross profit margin for the first half of 2016 was 44.1% compared to 50.2% for the same period last year. The decrease was mainly due to the closure of certain collaborative centers in our network of centers during the past years and the changes in the revenue-sharing split according to the contracts signed between the Company and our public hospitals partners, bringing more significant decrease in revenues than in cost.

2016年上半年毛利率為44.1%，去年同期毛利率為50.2%。 減少的主要原因是過去幾年我們中心網路中的某些協作中心關閉，以及根據公司與公立醫院合作夥伴簽訂的合約的收入分成比例發生變化，導致收入下降更為顯著比在成本上。

As of June 30, 2016, the Company had bank credit lines totaling RMB3.5 billion, equivalent to $546.6 million (sic - see press release "$524.6 million"), of which RMB1.1 billion, which is $168.9 million, was utilized.

截至2016年6月30日，本公司擁有銀行授信額度總計35億元人民幣，折合5.466億美元（原文如此－參見新聞稿「5.246億美元」），其中已動用11億元人民幣，折合1.689億美元。

Going forward, we will continue to make greater efforts to improve the cost efficiency in our centers and we are still -- and we will selectively transform some of the existing centers into freestanding fully owned centers to minimize the negative impact of the downturns of our original network business.

展望未來，我們將繼續做出更大的努力來提高我們中心的成本效率，並且我們仍然會選擇性地將一些現有中心轉變為獨立的全資中心，以盡量減少我們原有中心的低迷帶來的負面影響。

We are pleased to have announced the primary opening of our Datong Hospital in May and we are accelerating our pace of expanding the Meizhongjiahe freestanding hospital network throughout China.

我們很高興地宣布大同醫院於五月正式開業，並且我們正在加快在中國擴展美中嘉和獨立醫院網絡的步伐。

Now let me turn to the financial summary of our Concord Cancer Hospital in Singapore, which is a high-end privately owned, for-profit oncology hospital with 31 beds. The financial results of the hospitals were consolidated to our financial results starting from Q2 2015.

現在讓我談談我們新加坡協和癌症醫院的財務摘要，這是一家高端私人營利性腫瘤醫院，擁有 31 張床位。 從 2015 年第二季開始，醫院的財務表現併入我們的財務表現。

In the first half of 2016, net revenues for the hospital business were RMB8 million. Cost of service of the hospital business for the first half of 2016 were RMB15.2 million.

2016年上半年，醫院業務淨收入為人民幣800萬元。 2016年上半年醫院業務服務成本為1,520萬元。

Gross loss from the hospital business was RMB7.2 million in the first half of 2016.

2016年上半年醫院業務毛虧損為人民幣720萬元。

The hospital has started receiving patients from China since Q1 2016 for the latest immunotherapy treatments. With the support and guidance from MD Anderson, in short MDACC, we also started renovations in Concord Cancer Hospital in Singapore to update the facilities and to expand the radiotherapy services.

該醫院自2016年第一季起開始接收來自中國的患者接受最新的免疫療法。 在 MD Anderson（簡稱 MDACC）的支持和指導下，我們也開始對新加坡 Concord 癌症醫院進行翻修，以更新設施並擴大放射治療服務。

A linear accelerator will be installed in these hospitals to better serve patients from South Asia, as well as from Mainland China. In July, the Board received going private's non-binding proposal from buyer parties, including Mr. Jianyu Yang, Chairman and Chief Executive Officer of the company; Morgancreek Investment Holdings Company Limited, an investment vehicle controlled by Mr. Yang; and Blue Ocean Management Limited.

這些醫院將安裝直線加速器，以更好地服務來自南亞和中國大陸的患者。 7月，董事會收到買方（包括公司董事長兼執行長楊建宇先生）提出的私有化非約束性提案； Morgancreek Investment Holdings Company Limited，楊先生控制的投資工具；及藍海管理有限公司。

The buyer party proposed to acquire all of the outstanding class A ordinary shares and ADS of the Company that are not beneficially owned by the buyer's party and their affiliates at a prize of $1.73 per class A ordinary share or $5.19 per ADS. Currently the Board is carefully reviewing the proposal in consultations with its legal and financial advisers and will determine the course of the actions that it believes is in the best interest of the Company's shareholders.

買方提議以每股 A 類普通股 1.73 美元或每股美國存託股 5.19 美元的價格收購並非買方及其關聯方實益擁有的公司所有已發行 A 類普通股和美國存託股。 目前，董事會正在與其法律和財務顧問協商，仔細審查該提案，並將確定其認為符合公司股東最佳利益的行動方案。

And that concludes our prepared remarks. Thank you for your attention. And now we would like to open up to questions. Operator, please go ahead. Thank you.

我們準備好的發言就到此結束。 感謝您的關注。 現在我們想提出問題。 接線員，請繼續。 謝謝。

(Operator Instructions). There are no further questions at this time. Please continue.

（操作員說明）。 目前沒有其他問題。 請繼續。

Once again, thank you for joining us today. Please don't hesitate to contact us if you have further questions.

再次感謝您今天加入我們。 如果您還有其他疑問，請隨時與我們聯繫。

Thank you for your continued support. Have a good day.

感謝您一直以來的支持。 祝你有美好的一天。

Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.

女士們、先生們，今天的會議到此結束。 感謝您的參與。 你們都可以斷開連線。

Portions of this transcript that are marked (interpreted) were spoken by an interpreter present on the live call. The interpreter was provided by the Company sponsoring this Event.

此文字記錄中標記（翻譯）的部分是由現場通話中的口譯員說出的。口譯員由贊助本次活動的公司提供。