Golden Heaven Group Holdings Ltd.

Good day, ladies and gentlemen. Thank you for standing by and welcome to Golden Heaven Group Holdings Limited's first half of fiscal 2023 earnings conference call. During today's presentation, all parties will be in a listen-only mode. This conference call is recorded today, Thursday, August 3rd, 2023. If you have any objections, you may disconnect at this time. Joining us today from Golden Heaven Group Holdings Limited are the company's Chief Executive Officer and the chairman of the board of directors, Ms. Guang Jin, and the company's chief financial officer, Ms. Jingjiang Zhang. Ms. Jin will give an overview of the company's performance, and Mr. Gong will share details of the company's financial results. After that, we will conduct a question-and-answer session to take your questions. During the question-and-answer session, Ms. Jin and Mr. Gong will deliver their answers in Chinese, and the company's representative will be providing corresponding English translations. Before we continue, I would like to remind you that some information discussed in this call will contain forward-looking statements with the means of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Delegation Reform Act of 1995. These forward-looking statements involve known and unknown risks and uncertainties. The company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events and circumstances, changes in expectations, except as may be required by law. Although the company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct. and the company calls on its investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect future results of the company's registration statement and its other filings with the SEC. With that, I would like to turn the call over to Ms. Jin, the company's Chief Executive Officer and Chairman of the Board of Directors. Her opening remarks will be delivered in English by the company's IR representative. Ms. Jin, please go ahead.

Thank you, Mr. Chairman. Hello, everyone. It's my pleasure to meet you all for the first time through a phone call. Thank you all for coming to the Jinshe Le Yuan Group's financial report call in the first half of the fiscal year 2023. In today's phone call, I will summarize our performance in the past half year. Then our chief financial officer, Mr. Gong Jingguang, will share the financial performance of the company. Finally, it's our Q&A session. Thank you, operator. Hello, everyone. Thank you for joining Golden Tavern Group Holding Limited's first half of fiscal year 2023 earnings conference call today. On our call today, I will give an overview of our business performance. Then, our chief financial officer, Mr. Gong, will share the details of the company's financial review. Lastly, we will conduct a Q&A session to take your questions. After years of hard work in our team, the Golden Threads Group was listed on NASDAQ in April 2023. This is an important milestone in the history of the company's development, representing that the company has entered a new stage of development. Over the past few years, the development of each industry has been affected by the epidemic. We have always insisted on focusing on the development strategy of small and medium-sized cities to maintain the company's stable operation. We enlisted on NASDAQ in April 2023, making a key milestone for our company as a result of our team's years of hard work and commitment to our shareholders. This also indicates that the company has entered a new stage of development. In the past few years, almost all industries, ours included, have been affected by the COVID-19 pandemic. We always adhere to the development strategy of focusing on small and medium-sized cities, which allows us to maintain stable operations. 我们的收入还是实现了强劲的同比增长。 同时,我们不但改善运营管理, 注重成本优化,提升服务质量,提高消费者满意度。 这些都为我们迎来了更多的游客。 Thanks to our strategy planning and lessened COVID-19 travel restrictions in China in late 2022, We seized the opportunity of recovery in a timely manner. While the fluctuation of translation from RMB to US dollar has caused a decrease, discounting the impact of growing currency translation, we actually realized a strong year-over-year revenue growth in our functional currency RMB, beating the microeconomic challenges. We are seeing more visitors as our parts return to normal operations, and we keep enhancing management and operations to control cost, improve efficiency, and enhance visitors' satisfaction. 我们期待看到更多的年轻人和他们的家人朋友来我们的游乐园和水上乐园游玩。 我们将尽自身最大的努力为游客们带来愉悦的游园体验。 As the tourism and entertainment industries are recovering, we expect an increasing number of tourists, especially during the summer holidays. We look forward to seeing more young people and their friends and families visit our amusement and water parks. We will make every effort to ensure they enjoy their visit. We are mapping our strategic initiatives to improve the environment and facilities of our amusement parks, leveraging our parks' good geographic locations and fun rides and attractions. We are well-positioned for even stronger business growth, which we believe will translate into greater shareholder value. 感谢大家对我们的大力支持。 接下来由首席财务官龚先生来回顾公司这段时间的财务表现。 有请龚先生。 Thank you for your continued support for us. Next. I will turn the call over to our Chief Financial Officer, Mr. Gong, for the closer review of our operational and financial results. Mr. Gong, please go ahead.

Thank you, Ms. Jin. Good morning, everyone. On behalf of the management team,

I will provide a brief financial overview of the first half of fiscal year 2023.

Our total revenue in our reporting and functional currency, RMB, increased for the six months ended March 31, 2023. The slight decrease in revenue in U.S.

dollars was due to the impact of exchange rate changes. For the convenience of the readers, our press release contains translation of RMB into U.S. dollars.

Our revenue is mainly derived from sales of in-par recreation,

and rental income. For the first half of VCQ year 2023, revenue from sales of in-park recreation increased RMB 7.9 million compared to the same period in 2022. Such increase was mainly attributable to the revival of consumer demand and recovery of the amusement park industry as a whole, leading to an increase in visitors after China lessened the COVID-19 travel restrictions in late 2022.

Rental income increased RMB70,000

compared to the same period last year. Such increase was mainly due to the increase in monthly rental income from the Children's Castle Project, which was increased by Yueyang Company from October 2022. Growth profits from sales of in-park recreation increased RMB 7.1 million compared to the same period in 2022, primarily due to increased revenue from higher visitor numbers. As amusement parks largely return to normal operations, during the period as a result of the reduced COVID-19 restrictions in China. The profit margin of sales of in-part recreation remains stable, with a modest increase to 71.4% for the six months and March 31, 2023, from 74% for the same period of last year. As a result of enhanced operation and a relatively stable cost of revenues, To control the cost of the operation, we focus on improving the whole process, cost control, and delicacy management.

In the first half of 2023, the cost of the operation decreased by 9.6% to $403 million. The main change is the increase and decrease in the cost of the operation. In this period, the cost of the operation increased by about $59 million. Operating expenses down by 6.69% to around $4 million.

For the first half of fiscal year 2023, many attributable to an increase of approximately $0.6 million in GNA expenses and a decrease of about $1 million in selling expenses. The increase in GNA expenses in this period was due to an increase of around $0.6 million in consulting fees. mainly consisting of attorney fees, audit fees, and brokerage fees in relation to the company's recent ITO. The decrease in selling expenses was attributable to a decrease of about $1 million in advertising fees.

In the first half of 2023, our other members dropped 88.67% to $47,490, 這主要是由於處置財產和設備的減少。 Our order extends down 88.7% to $47,490 for the first half of 2023.

It was primarily attributable to a decrease in the disposal of property and equipment. 截至2023年3月31號的6個月,

Net income increased by about 2% to around $7.4 million for the six months ending March 31, 2023. Such change was the result of the combination of the change as discussed above. As of March 31, 2023, our cash and cash payments are estimated at $28.26 million. Our operating capital is estimated at $1,664 million. Our share of equity is estimated at $5,880 million. Last year, our cash and cash payments were estimated at $2,245 million. Our operating capital is estimated at $8,420 million. Our share of equity is estimated at $4,961 million.

As of March 31, 2023, we had a cash and cash equivalents of about $28.3 million, working capital of $16.6 million, and total shareholders' equity of $58.8 million. Compared to cash and cash equivalents of around $22.5 million, working capital of $8.4 million and total shareholders' equity of about $49.6 million, respectively, as of March 31, 2022.

Now, I would like to turn the call over to the operator for questions and answers session. Operator, please.

Yes, thank you. At this time, we will begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble the roster. And the first question comes from Oscar Tracy, a private investor.

Thanks for your presentation and congratulations on your recent IPO. I've noticed I've got two questions here for you. Could you share some insight about how the proceeds from this IPO are being spent to support your strategic initiative? And what door might this open up for your future projects? Thank you.

This investor's question is about the company's first public stock. Please share with us how this listing revenue will be used to support the company's strategic development and what development opportunities it will bring for the company in the future. After the company was listed, on June 11, 2023, it began to be fully upgraded to the six original areas under it. It is expected to be completed by the end of September. We have started a comprehensive upgrade of our six parks since June 11, 2023, and this upgrade is expected to be completed by the end of September this year. This move is expected to further improve visitors' experience and safety. Also, we are currently negotiating with several potential partners and plan to acquire one to two new targets this year. At the same time, we are also looking to hire senior managers with successful experience in the industry, aiming to improve the company's internal control management capability after introducing new executives. In addition, we plan to expand into overseas markets, acquire accident overseas targets, and introduce overseas advanced management experience and amusement projects. That's my answer to your question. Thank you.

Thank you. I have another question here. I also noticed that your net income has gone up by roughly 12%, which is really impressive. So what are the key factors that contributed to this big increase, and what will be the future strategies in place to maintain this growing trend going forward?

Thank you. 这个问题是关于公司的净收入大幅增长了约12%, Please talk about the reasons behind this rapid growth. What are the strategies to maintain this growth trend? The rapid growth of the company's net income is mainly due to the open policy of the Chinese epidemic, which has made China's travel dependence recover. The operating conditions of the six original areas under the company have recovered to the corresponding level before the epidemic. China's leaky COVID-19 restrictions have led to a recovery in its tourism industry. Because of this, the operations of our six parts have all returned to the pre-academic level. In the future, the company expects to develop new parts in prefectural-level cities with rich tourism resources and certain cities with high resident income and optimize and upgrade non-permanent complex parts to be comprehensive. That's my answer to your question. Thank you.

Thank you. And the next question comes from Anna Robano, also a private investor.

Yes, hi. I also have two questions here. I believe the Children's Castle project rental payments have started to generate revenue for you. Are there any other similar projects in the pipeline that are expected? to generate additional rental income in the future? 这个问题由我来回答。

This question is taken by our CFO, Mr. Gong. Yes.

During China's Labor Day holiday, the company hosted a series of circus performances in our six parks. We plan to gradually restart the collection of store rents in the parks. We also plan to hold a series of events, such as food festivals and art exhibitions, and add non-powered parks, go-karts, and other projects. We believe this will generate additional rental income. Thank you. That's my answer.

Thank you. So my next question is, given the increasing attention on the Chinese consumer market, what insight can you share from your recent consumer data, particularly with regard to amusement parks visitors, you know, their preferences and habits? How is Golden Heaven Group, you know, leveraging such data to enhance your service and attract more visitors?

This question is based on the attention of the Chinese consumer market. In recent consumer data, especially in terms of the habits and habits of tourists in the amusement park, what opinions can the management level share? How can the Golden Park Group use this data to improve services and attract more tourists? I will answer this question. Although the Chinese consumer market is constantly upgrading, The question is taken by our CEO, Ms. Jin. Although China's consumer market is constantly upgrading, the high housing prices in first- and second-tier cities are putting pressure on people, and the cost of living is also high. leading to limited disposal income and time. However, third and fourth tier cities have a relatively concentrated population, less pressure from housing prices, relatively more disposable income per capita, and more guaranteed leisure time, resulting in better performance of the same equipment, compared with provincial capitals. Our parks are located in prefecture-level cities with rich tourism resources. The parks are all in the central gardens and scenic spots of the local cities with convenient transportation, access to local tourism resources, and capability to attract to a risk. That's my answer. Thank you.

Thank you. And the next question comes from Kathleen Smith, a private investor.

Oh, hi there. I have two questions for the company today. So my first question is with the easing of COVID-19 restrictions in China, So how is Golden Haven Group planning to ensure the safety of your park visitors? And furthermore, what's the impact this is going to have on the company's both operational and revenue in the short term to the mid-term? Thank you.

As mentioned earlier, we have started a comprehensive upgrade of our six parts on June 11 this year and it is expected to be completed by the end of this September. This move is expected to further improve the tourist experience and safety. 中国的疫情开放政策 China's lifted COVID-19 restrictions have led to a recovery in China's tourism, and the operations of our six parts have all returned to the pre-epidemic level. That's my answer to the question. Thank you.

Thank you. So my last question is, there seems to be a discrepancy between the company's revenue results reported in the U.S. dollars and RMB due to the currency exchange rates. So could you please discuss the hedging strategies you have in place to minimize this currency risk? Thank you.

This investor's question is about the exchange rate. Due to the exchange rate,

The question is taken by our CFO, Mr. Gong. At present, our operating locations are all in mainland China, and the functional currency is RMB.

Since the company's financial report currency is translated into U.S. dollars, exchange rate fluctuations mainly affect U.S. dollar statements, and the exchange rate has no impact on the company's actual operations. Thank you. That's my answer.

Thank you. And this concludes the question and answer session. I would like to return the call to Mr. Gong for any closing comments.

I think our closing remarks will be conducted by our CEO, Ms. Jin. Ms. Jin, please go ahead. Thank you all for attending our press conference. We look forward to seeing you next time. Thank you very much.

Thank you again for attending Golden Heaven Group Limited's first half of fiscal year 2023 earnings conference call. This concludes our call today, and we thank you all for listening in. Goodbye.