XChange TEC.INC (XHG) 2020 Q2 法說會逐字稿

Good morning, ladies and gentlemen. And thank you for standing by for Q&K's First Half Fiscal Year 2020 Earnings Conference Call. (Operator Instructions) As a reminder, today's conference call is being recorded.

早安，女士們，先生們。感謝您出席 Q&K 2020 財政年度上半年收益電話會議。 （操作員說明）提醒一下，今天的電話會議正在錄音。

I will now turn the meeting over to your host for today's call, Mr. Rene Vanguestaine. Please proceed, Rene.

現在我將會議交給今天電話會議的東道主雷內·範格斯坦先生。請繼續，雷內。

Thank you, AJ. Hello, everyone, and thank you for joining us today. Qingke's first half fiscal year 2020 earnings release was distributed earlier today and is available on our IR website at ir.qk365.com as well as on GlobeNewswire services.

謝謝你，阿傑。大家好，感謝您今天加入我們。青科 2020 財年上半年收益報告於今日稍早發布，可在我們的投資者關係網站 ir.qk365.com 以及 GlobeNewswire 服務上取得。

On the call today from Qingke, we have Mr. Chengcai Qu, Chief Operating Officer; and Mr. Frank Sun, Chief Financial Officer. Mr. Qu will review the business operations and company highlights. He will do the prepared -- he will deliver the prepared remarks in Chinese, and Mr. Sun will deliver the same content in English. Mr. Sun will then discuss the financials and guidance. If you have any questions or require any further information, please write to the company's IR department at ir@qk365.com at any time following this call.

今天，我們請來了青客的電話，營運長屈成才先生；孫先生，財務長。曲先生將回顧業務運營和公司亮點。他會做好準備工作──他會用中文發表準備好的講話，孫先生會用英文發表同樣的內容。隨後，孫先生將討論財務狀況和指引。如果您有任何疑問或需要任何進一步信息，請在本次電話會議後隨時寫信給公司的 IR 部門：ir@qk365.com。

Before we begin, I'd like to remind you that this conference call contains forward-looking statements as defined in the Securities Exchange Act of 1934 and the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance or achievements to differ materially from those in the forward-looking statements.

在我們開始之前，我想提醒您，本次電話會議包含 1934 年《證券交易法》和 1995 年《美國私人證券訴訟改革法》中定義的前瞻性陳述。和當前市場和經營狀況，以及涉及已知或未知風險、不確定性和其他因素的事件，所有這些因素都難以預測，其中許多因素超出了公司的控制範圍，可能導致公司的實際結果、業績或所取得的成就與前瞻性陳述中的內容有重大差異。

Further information regarding these and other risks, uncertainties or factors are included in the company's filings with the U.S. SEC. The company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.

有關這些和其他風險、不確定性或因素的更多資​​訊包含在該公司向美國證券交易委員會提交的文件中。除適用法律要求外，本公司不承擔因新資訊、未來事件或其他原因而更新任何前瞻性聲明的義務。

It is now my pleasure to introduce our Chief Operating Officer, Mr. Qu. Mr. Qu, please go ahead.

現在我很高興向大家介紹我們的營運長曲先生。曲先生，請講。

Thank you, Rene.

謝謝你，雷內。

(foreign language)

（外語）

[Interpreted] Thank you, Rene. And thanks, everyone, for joining our earnings call today.

[翻譯]謝謝你，雷內。感謝大家今天參加我們的財報電話會議。

(foreign language)

（外語）

[Interpreted] With that, I will go back to our prepared remarks regarding our operating key points in the first half of the year.

[解讀]接下來，我回到我們準備好的關於上半年經營要點的演講。

(foreign language)

（外語）

[Interpreted] During the first half of fiscal year 2020, due to the impact of the COVID-19 pandemic, our average occupancy rate decreased to 87.7% from 90.9% in the first half of 2019. Therefore, we continue to pursue our defensive strategy.

[解讀]2020財年上半年，由於COVID-19大流行的影響，我們的平均入住率從2019年上半年的90.9%下降至87.7%。

As the pioneer in China's long-term apartment rental market, we have the most experience managing our business through the economic cycle. Our experience tells us that during economic downturns, especially facing this pandemic, consolidating our internal resources, further improving operating efficiency and focusing on asset quality improvement is much more important than aggressive expansion.

身為中國長租公寓市場的先驅，我們擁有最豐富的經濟週期管理經驗。我們的經驗告訴我們，在經濟下行時期，特別是面對這次疫情，整合內部資源，進一步提高經營效率，專注於改善資產質量，比激進擴張更為重要。

We believe that as the industry weeds out weaker players through the economic downturn and the pandemic, the industry will become more mature and rational with the remaining companies pursuing growth based on asset quality and operating efficiency. We believe we will be able to capture abundant opportunities based on our substantial competitive advantages when the time comes.

我們相信，隨著產業在經濟下行和疫情影響下淘汰弱勢企業，產業將變得更加成熟和理性，剩下的企業將在資產品質和營運效率的基礎上追求成長。我們相信，到時候，我們一定能夠憑藉強大的競爭優勢，抓住大量機會。

Benefiting from the abovementioned strategies, our net revenues for the period increased by 6.5% year-over-year, while non-GAAP adjusted EBITDA was negative CNY 72 million compared with a loss of CNY 93 million in the same period of fiscal year 2019.

受惠於上述策略，我們當期淨收入年增6.5%，而非GAAP調整後的EBITDA為負7,200萬元人民幣，而2019財年同期虧損9,300萬元。

(foreign language)

（外語）

[Interpreted] Such results demonstrate our ability to weather economic downturns. We owe such resilience to our strategic positioning. Our focus is on the market segment with monthly rental below RMB 2,000, which accounts for approximately 80% of the market in China. Geographically speaking, we are focused on Yangtze mega-city cluster centered around Shanghai, which is a strategic region of China with vibrant growth.

【解讀】這樣的成績證明了我們抵禦經濟衰退的能力。我們的韌性歸功於我們的策略定位。我們的重點是月租2000元以下的細分市場，約佔中國市場的80%。從地理位置來看，我們將重點放在以上海為中心的長江特大城市群，這是中國充滿活力的戰略區域。

(foreign language)

（外語）

[Interpreted] Although the long-term apartment rental industry will not be spared from challenges related to the broader economic pressures and the impact of COVID-19, we should still recognize that it is still a [nice] industry. As the central government makes housing policy a priority nationwide such as housing for living, not for speculation and allowing renters to enjoy the same rights as homeowners, both the supply and demand in the rental housing market are on the rise in China. We believe that the highest quality industry leaders will be able to increase their market share meaningfully in the next stage of our industry development.

[解讀]儘管長租公寓產業也無法倖免於更廣泛的經濟壓力和COVID-19影響所帶來的挑戰，但我們仍然應該認識到它仍然是一個[好的]產業。隨著中央政府將住房政策放在全國範圍內的優先位置，例如“房子是用來住的、不是用來炒的”，讓租房者享有與業主同等的權利，中國租賃住房市場的供給和需求都在上升。我們相信，最優質的行業領導者將能夠在我們行業發展的下一階段有意義地增加他們的市場份額。

(foreign language)

（外語）

[Interpreted] As China's first long-term apartment rental platform listed in the U.S., we will continue to strengthen our technology and management capabilities to further improve our user experience while scaling our business with the aim to become the standard setter for China's long-term rental industry.

【解讀】作為中國首家在美國上市的長租公寓平台，我們將在擴大業務規模的同時，不斷強化技術和管理能力，進一步提升用戶體驗，成為中國長租公寓的標準制定者。

(foreign language)

（外語）

[Interpreted] Now I will pass the call over to our CFO, Frank, to discuss our financial results. Thank you.

[解釋] 現在我將把電話轉給我們的財務長弗蘭克，討論我們的財務表現。謝謝。

Thank you, Mr. Qu. Now let's go over the first half of fiscal year 2020 financial results in details. We believe year-over-year comparisons are the best way to review our performance. All percentage changes I'm going to give will be on that basis. Once again, please note that all figures I mentioned will be in RMB unless otherwise stated.

謝謝曲先生。現在讓我們來詳細回顧一下2020財年上半年的財務表現。我們相信逐年比較是檢視我們績效的最佳方式。我將給出的所有百分比變化都將在此基礎上進行。再次請注意，除非另有說明，我提到的所有數字均以人民幣為單位。

Total net revenues increased 6.5% to CNY 627 million. Breaking this down, rental service revenue increased 6% to CNY 556 million from CNY 525 million in the same period of last year, mainly driven by an increase in leased-out rental unit nights, that's partially offset by a decrease in average monthly rental after discount for rental prepayment due to COVID-19 pandemic.

總淨收入成長 6.5%，達到 6.27 億元。具體來看，租賃服務收入從去年同期的 5.25 億元增長 6% 至 5.56 億元，主要是由於出租單位夜數的增加，但部分被租賃服務後平均月租金的下降所抵消。肺炎(COVID-19) 疫情影響，預付租金折扣。

Net revenues from value-added services and others increased by 12% to CNY 71 million from CNY 64 million in the same period of last year, primarily due to an increase of revenues from broadband Internet and utility services, which is in line with the increase in leased-out rental unit nights, that's partially offset by a decrease in revenue from indemnity as a decreased number of tenants and landlords terminated their leases with us before expiration of the lock-in period, and we forfeited their deposits or received compensation from them for such termination.

增值服務及其他淨收入由去年同期的人民幣6,400萬元增長12%至人民幣7,100萬元，主要是由於寬頻網路和公用事業服務收入的增長，與增幅一致在出租單位的夜數中，這被賠償收入的減少部分抵消，因為在鎖定期到期之前租戶和房東終止與我們的租約的數量減少，並且我們沒收了他們的押金或從他們那裡獲得了賠償對於此類終止。

Total operating costs and expenses were CNY RMB 1,080 million compared with CNY 815 million in the same period of last year. That's primarily due to an increase in impairment losses, operating costs and G&A expenses, partially offset by a decrease in selling and marketing expenses, pre-operation expenses and research and development expenses.

營業成本及費用總額為人民幣10.8億元，去年同期為人民幣8.15億元。這主要是由於減損損失、營運成本和一般管理費用的增加，部分被銷售和行銷費用、前期營運費用和研發費用的減少所抵銷。

In particular, operating costs increased to CNY 682 million from CNY 632 million for last year, that's generally in line with our revenue growth.

特別是，營運成本從去年的 6.32 億元增加到 6.82 億元人民幣，這與我們的收入成長基本一致。

Selling and marketing expenses decreased to CNY 41 million from CNY 56 million in the same period of last year, primarily due to cost saving efforts.

銷售及行銷費用從去年同期的人民幣5,600萬元減少至人民幣4,100萬元，主要是由於成本節約的努力。

G&A expenses increased to CNY 65 million from CNY 52 million in the same period of last year, mainly due to an increase in expenses related to our IPO and share-based compensation.

一般及行政費用從去年同期的人民幣5,200萬元增加至人民幣6,500萬元，主要是由於我們的IPO和股權激勵相關費用增加。

Pre-operation expenses decreased to CNY 13 million from CNY 28 million in the same period of last year, primarily due to fewer rental units being developed in the first half of fiscal year 2020, in contrast to the expansion in the same period of fiscal year 2019.

開業費用從去年同期的人民幣2,800萬元減少至人民幣1,300萬元，主要是由於2020財年上半年開發的租賃單位減少，而同期的擴張則有所減少2019.

Impairment losses increased to CNY 250 million from CNY 21 million in the same period of last year, that's primarily due to provisions we provided for the impact of COVID-19 pandemic on our business.

減損損失從去年同期的人民幣2,100萬元增加至人民幣2.5億元，主要是由於我們針對COVID-19大流行對我們業務的影響提列了撥備。

All in all, loss from operations increased to CNY 453 million from CNY 227 million in the same period of last year, mainly due to all the factors I just mentioned.

總而言之，經營虧損從去年同期的2.27億元增加到4.53億元，主要是我剛才提到的所有因素造成的。

Interest expenses net increased to CNY 62 million from CNY 45 million in the same period of last year, that's primarily attributable to the increased average balance of capital leases and other financing and bank borrowings compared with the same period of last year.

利息支出淨額由上年同期的4,500萬元增加至6,200萬元，主要是由於資本租賃及其他融資及銀行借款平均餘額較上年同期增加所致。

Fair value change of contingent earn-out liabilities was gain of CNY 97 million compared with the loss of CNY 30 million in the same period of last year.

或有收益負債公允價值變動為收益0.97億元，去年同期為虧損0.30億元。

Loss before income taxes increased to CNY 417 million from CNY 302 million in the same period of last year.

所得稅前虧損由去年同期的3.02億元增加至4.17億元。

Adjusted EBITDA was negative CNY 72 million compared with negative CNY 93 million in the same period of last year.

調整後 EBITDA 為負 7,200 萬元人民幣，而去年同期為負 9,300 萬元。

As of March 31, 2020, we had cash and cash equivalents of CNY 126 million and a restricted cash of CNY 9 million. Basic and diluted loss per share were both CNY 0.34 compared with a basic and diluted loss per share of CNY 0.96 during the same period of fiscal year 2019.

截至2020年3月31日，我們擁有現金及現金等價物1.26億元人民幣，限制性現金900萬元人民幣。每股基本虧損和稀釋每股虧損均為0.34元人民幣，而2019財年同期基本每股虧損和稀釋每股虧損為0.96元。

This concludes our prepared remarks. Thank you all for joining us.

我們準備好的演講到此結束。感謝大家加入我們。

Rene, over to you now. Rene, over to you.

雷內，現在交給你了。雷內，交給你了。

Yes. Thank you, AJ. In closing, on behalf of the Qingke management team, we'd like to thank you for your participation in today's call. If you require any further information or are keen to visit us in China, please don't hesitate to let us know. This concludes the call. Good night all.

是的。謝謝你，阿傑。最後，我們謹代表慶客管理團隊感謝您參加今天的電話會議。如果您需要任何進一步的資訊或渴望來中國訪問我們，請隨時告訴我們。通話就此結束。大家晚安。

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

謝謝。女士們、先生們，今天的會議到此結束。感謝您的參與。你們現在可以斷開連結了。謝謝。