Hailiang Education Group Inc.

Good day, ladies and gentlemen. Thank you for standing by and welcome to the Hailing Education Group's first quarter of the fiscal year 2021 earnings conference call. During today's presentation, all parties will be in listen-only mode. This conference is being recorded today, Tuesday, December 1st, 2020. Joining us today from Hailing Education Group are the company's chairman and CEO, Mr. Jen Wei Chen, the company's vice president, Mr. Peng Fang, the company's chief financial officer, Mr. Zhenru Yu, and the company's board secretary, Mr. Lido Chu. I would like to remind our listeners who are on this call, management's prepared remarks contain forward-looking statements which are subject to risks and uncertainties, and management may make additional forward-looking statements in response to your questions. Therefore, the company claims the protection of safe harbor for forward-looking statements as contained in the Private Security and Litigation Reform Act of 1995. Hailing Education is under no obligation to update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise. At this time, I would like to turn the call over to Mr. Junwei Chen, the company's chairman and CEO. Mr. Chen, please go ahead.

Thank you operator and everyone for joining Hainan Education Group's first quarter of fiscal year 2021 Early Conference call today. Starting from this fiscal year, the company will resume the release of quarterly reports, hoping to gradually improve the transparency of the company, fully protect the rights and interests of investors. and keep more investors updated with the company's latest development and competitive advantages. I am very pleased to announce that Heilian Education, with its strong bright image, excellent education quality, and our continued progress in executing and innovating our growth strategy, still achieved outstanding results in the first quarter of fiscal year 2021, reducing the temporary disruptions and the short-term impact on our business by the COVID-19 pandemic. In the first quarter of fiscal year 2021, we recorded revenue of RMB $298.5 million, or US dollar $44 million, up 29.8% year on year. We generated $263.1 million, or $38.8 million, from primary, middle, and high school educational services, up 36.1% year-on-year. The net profit attributable to the company's shareholders was $26.9 million, or $4 million, compared with a net loss of maybe 50.3 million for the same period last year. The net profit attributable to the company's shareholders margin was 9%. Comparing with the net loss attributable to the company's shareholders margin was 6.7% for the same period last year. Demonstrating high-end education's significant profitability, Thank you for your continued support to the company. Next, I will turn the call over to Andrew, our vice president, who will summarize our first quarter of fiscal year 2021 business operation results on behalf of the management team. Andrew, please go ahead.

Thank you, Dr. Chen, and good morning, everyone. On behalf of the management team, I will start with a summary of first quarter of fiscal year 2021 operation and several key initiatives for this quarter. The first quarter of fiscal year 2021 was a critical period for enrollment of new students. As of September 30th, 2020, our school network has expanded to 42 schools 13 of which were affiliated schools that we sponsored, and 29 of which were managed schools that we provided the education and management services to. The aggregate number of students enrolled in our affiliated schools was 26,869, up approximately 10.8% year-on-year. The aggregate number of students enrolled in both our affiliated and managed schools was 72,846, up approximately 9.5% year-on-year. For our primary, middle, and high school educational services, we added three affiliated schools to our school network, namely Lanzhou Hailiang Experimental School, Hailiang Overseas Chinese School, and Wuhu Hailiang Experimental School, all of which started their first year of enrollment for the 2020 to 2021 school year in the first quarter of fiscal year 2021. As of September 30, 2020, there were 568, 828, and 409 students enrolled in these three schools, respectively. The company also acquired Jinhua Hai Liang Foreign Language School and completed the transfer of sponsorship in September 2020. As of September 30, 2020, 739 students enrolled in Jinhua Hai Liang Foreign Language School, an increase of 164 students from last year. As of September 30, 2020, the number of students enrolled in the basic educational programs of our affiliated schools was 21,607, up by 11.6% year-on-year, and the number of students enrolled in the international programs of our affiliated school was 5,262, up by 7.6% year-on-year. The increase in the number of students enrolled in our schools shows that the company's effective response measures during the COVID-19 pandemic have been recognized by the public, and also thanks to the company's diversified curriculum business. especially our efforts in integrating international education resources with Chinese education systems. Our growth should also be attributed to the company's strong insight into market opportunities and our ability to resist systematic risks when making important decisions. At the same time, the company intends to promote the development of high-quality education through the power of technology. and is committed to improve management efficiency and teaching and learning quality by creating systems such as smart campus and smart classrooms. We have established an education R&D team with rich experiences in education and IT application development. We are cooperating with top-tier universities and industry leaders in China in terms of technology and products. and will continue to upgrade smart campus and smart classrooms with rich application scenarios. At present, more than 50 educational technology systems are used in various application scenarios in order to further standardize and intelligentize our management and teaching activities. Moreover, we have a team of teachers and educational staff with rich experiences As of September 30, 2020, there was an aggregate of 2,441 teachers and educational staff in our affiliated schools, which included 14 Golden Olympiad competition training coaches, 12 exceptional teachers, 154 senior teachers. At the same time, we have more than 500 staff who graduated from double first-class universities to take key positions in teaching and management. Now let's move on to educational training services. Due to the outbreak of COVID-19, online education has become an indispensable learning resource. Heilong education relied on strong teaching and research ability to deeply integrate the latest technology with education. We have officially launched online educational training services across all subjects and all stages in the summer of 2020. The online educational training services used Cloud classrooms as a carrier make full use of internet concepts, AI smart technology, and the big data tools to deliver an interactive teaching experiences. The teaching quality has been widely recognized by our students and their parents. In the first quarter of fiscal year 2021, our online educational training services have served 10,415 students As of November 15, 2020, we have served a total number of 28,424 students online during fiscal year 2021. Driving the company's development and innovation in new business model, offline educational training services are also in a steady state of development. We expect that offline training campuses will be opened in all Heilong education schools in the future. Revenue generated from study trip services declined in the first quarter of fiscal year 2021. It was mainly due to restriction on travels because of COVID-19, which affected our study trip services in fiscal year 2021. We are actively building up new revenue sources for our study trip services, starting from the weekend parent-child camp, setting up online sales channels, and gradually expanding our customer base of non-Kai Liang students with high-quality study trip products and services. As of September 30, 2020, there were two new managed schools in Suchian City, Jiangsu Province, namely Xiamen Road School and Fuming Avenue School. These two schools include the primary and middle school programs. In recent years, the company, through continuous accumulated experiences, has gradually provided the education and management services to manage the schools in an intelligent and standardized way. And these services include academic management, brand culture, and logistic management. The company's operation and management capabilities have improved year by year. In the future, the company will continue to develop rapidly through the asset-light model and provides more extensive and high-quality services to a variety of public and private schools. Looking forward, we will continue to strictly monitor the guidance for COVID-19 from health authorities to ensure the health and safety of our students, faculty, and staff. Meanwhile, we will continue to build a one-stop comprehensive service platform for primary, middle, and high school education. in order to provide students with high-quality education and management services and vigorously develop additional education services, such as online and offline educational training services, study trip services, and overseas study services. Thank you again for all your support and attention. Next, I will turn the call over to Thomas, our CFO, who will summarize our first quarter of fiscal year 2021 financial results on behalf of the management team. Thomas, please go ahead.

Thank you, Andrew, and good morning, everyone. Next, on behalf of the management team, I would like to summarize some of the key financial results in the first quarter of fiscal year 2021. For the first quarter of fiscal year 2021, our revenue was 298.5 million RMBs, or $44 million, increased by 29.8%. from 229.9 million RMBs. Our gross profit was 44.5 million RMBs or 6.6 million US dollars compared with a gross loss of 3.5 million RMBs. Our net profit was 25.5 million RMBs or 3.7 million US dollars compared with a net loss of 19.4 million RMBs. Our gross profit margin was 14.9%. Our net profit margin was 8.5% compared with a gross loss margin of 1.5% and net loss margin of 8.4% respectfully for the same period of last year. Our net profit attributable to companies shareholder was 26.9 million RMBs or 4 million US dollars compared with a net loss of contributable to companies shareholder of 15.3 million RMBs Basic and the diluted earning per share were 0.07 RMBs or 0.01 US dollars compared to basic and diluted loss per share of 0.04 RMBs for the same period of last year. Our revenue mainly derived from primary, middle, and high school educational services, educational training services, study trip services, and education and management services. Revenue from primary, middle, and high school basic education program was 179.4 million RMBs or 26.4 million U.S. dollars, an increase of 33.9% from 134 million RMBs for the same period of last year. Revenue from primary, middle, and high school international program was 83.8%. 7 million RMBs or 12.3 million US dollars, an increase of 41.1% from 59.3 million RMBs for the same period of last year. The increase was mainly due to the increase in the number of students enrolled and increase in the average tuition charged in both programs. Besides, as 2019 and 2020 school year extended from June of 2020 to July of 2020, due to the impact of COVID-19 deferred revenue as of June 30th, 2020 was recognized the revenue in the first quarter of fiscal year 2021. Revenue from educational training services was 19.8 million RMBs or 2.9 million US dollars, an increase of 120% from 9 million RMBs for the same period of last year. mainly due to the great expansion of online educational training business in the summer of fiscal year 2021. Revenue from study trip services of 1.8 million RMBs or 0.3 million US dollars, a decrease of 91.5% from 21.1 million RMBs for the same period of last year. Mainly due to the restriction on travel, because of COVID-19, which affect study trip services in the first quarter of fiscal year 2021. Revenue from education and management services was 11.9 million RMBs or 1.8 million US dollars, an increase of 164.4% from 4.5 million RMBs for the same period of last year, mainly due to the increase in the number of managed schools Other revenue mainly represented the revenue derived from overseas study consulting services, hotel management services, and other revenue of 1.9 million RMBs or $0.3 million, and it was flat for the same period of last year. Cost of revenue was 254 million RMBs or $37.4 million, an increase of 8.9% from $233.3 million for the same period of last year. The increase are primarily due to the increase in compensation level of employees and the increase in the number of employees and the partially offset by the decrease in the cost related to study trip services resulting from outbreak of COVID-19. Selling expense was 9.4 million RMBs or 1.4 million US dollars, an increase of 56.7 from 6 million for the same period of last year. The increase was primarily due to the rapid expansion of online training business for the first quarter of fiscal year 2021. As a result, we recognize 1.4 million RMBs or $42 million for the student enrollment reward on online training business in the current period. Excluding the above impact, our selling expense as percentage of total revenue kept steady compared with the same period of last year. Administrative expenses was 14.8 million RMBs or 2.2 million US dollars, a decrease of 10.8% from 16.6 million RMBs in period of last year, which was primarily due to the reduction in administrative expenses resulting from liquidation of Jiamxi Haibo Education Management Company Limited and a decrease in the professional fees. Other income of 18.2 million RMBs or 2.7 million US dollars, an increase of 19.7% from 15.2 million over the same period of last year. Primarily due to an increase in government grant subsidies, we received From the local government, my finance income was 7.6 million RMBs or 1.1 million US dollars, a decrease of 6.2% from 8.1 million RMBs for the same period of last year. Finance cost of 0.3 million RMBs or 0.04 million US dollars, a decrease of 91.9% from 3.7 million for the same period of last year. The decrease of finance cost was primarily due to the reduction in the interest on the lease liabilities. Income tax expense was 20.6 million RMBs, or $3 million, compared with $13 million from the same period last year, which was driven by the growth of taxable profits. Besides, as of the school starting in September, our school provided and recognized revenue from primarily primary, middle, and high school educational service only from September during the first quarter, while fixed cost and expenses was recognized on the accrual basis, which resulted in the net loss for our school. Therefore, the combined effective tax rate for the first quarter was higher than nominal tax rate. Now, A quick summary of our balance sheet and cash flow as of September 30th, 2020, we have cash and the cash equivalent of 676.7 million RMBs or 99.7 million US dollars compared with 515.3 million RMBs as of June 30th of 2020. Net cash provided by operating activity was one point 0279 billion RMBs or 151.4 million US dollars, an increase of 48.9% from 690.2 million RMBs for the same period of last year. The increase was mainly due to an increase in the amount of tuition received. Net cash used in investing activities was 854.9 million RMBs or 125.9 million US dollars compared with 735.5 million RMBs for the same period of last year. The increase was mainly due to the payment of acquisition of Tsinghua Highland Foreign Language School and the increase of terms deposit placed with the related party finance entities compared with the same period of last year. The net cash used in the financing activity of 11 million RMBs or 1.6 million US dollars compared with 51.2 million RMBs for the same period of last year. The decrease was mainly due to no dividends paid to non-controlling interest in the current period. And the last then repayment to the related party compared to the same period of last year. Now I would like to turn the discussion over to operator for any questions.

We will now 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 headset before pressing the keys. To withdraw your question, please press star, then 2. Our first question comes from Leo Li, a private investor. Please go ahead.

Hi, Mr. Guan. Can you hear me? Yes, we can. Hi, Mr. Guan. I'll ask in Chinese. I have a question. I saw that our company's first quarter training section has a very good increase in revenue. So I want to know about our company's future development plan for this education training section. Thank you.

Thank you for your question. HaiLiang Education has been training outside of the school since the beginning of this year. Our thinking about education and training is different from that of other first-tier brands such as XinDongFang and HaoWeiLai. In this situation, they have done a lot of training. XinDongFang is also trying to set up a school. Hai Liang Education now has established a school. We are now trying to conduct training. Today's Hai Liang Education, our seven provinces have schools. Almost all of our schools are local schools. So if Hai Liang Education wants to conduct training today, it is also around our Hai Liang has a school to conduct our training. So there are a lot of advantages. The first one may be that our local brand is already very famous. Second, we have very good teachers. Third, we have very good local government relations. We have very good sales channels, and so on, which can supplement our training. So, in the future, we will quickly set up our training points in all the places where we have a large number of schools. Then we started to try this year. We are in Hangzhou, in Shaoxing, in Jiangsu, and we are starting to set up our training points. And because there is such a mode of operation, there is a school negative energy, all our training points can achieve this profit and loss balance in the year. It can be imagined that the profit and loss balance can be achieved in the year. And our development speed, this year we expect there will be five school districts, next year there may be 20, and later there may be 50. We want to turn all the places with a large number of schools into such a training institution at the top of local large-scale education. It can even be a way of monopoly. This is our offline part. Then there is the online education part. Then why is the financial report of this year so beautiful? One of the core reasons is because of the rapid development of online education. Of course, this is also due to the COVID-19 pandemic, which forced the rapid development of online training outside the school. Then the idea of doing online development, along with a lot of who to learn from, along with a lot of this kind of big The development of other online education is different. We mainly do localization, which is an online brand that is regionalized. For example, with a large number of communities such as Zhuji, In the future, we are going to involve a large number of schools in Zhuji to do all of our training. As you all know, 70% to 80% of our online costs are actually used for marketing and sales. But because of the localization of HLM education, we are using our local private teachers and local education brands. In this way, our current marketing costs can be controlled below 20%. So you can see that most of the online companies are actually burning money and losing money. But in the first year of sea education, we started to do online training. Our net profit can basically reach about 50%. So I think this kind of online model is the best model in the future. So now today's sea education is an example of a lease. We lease the whole lease. 200,000 primary and secondary school students. Even if our conversion rate is 20% to 30%, if we use local capital and brands, then in the future, we will have nearly 200,000 people. So you can see the situation in this quarter. In the first quarter of 2021, we had 10,000 people. As of now, we have nearly 30,000 students who have submitted their report. And all of them have been paid. We can imagine that the online education sector will be very stable in the future. Therefore, the development of mass education in the education and training sector will be very promising. It will also support our report, which will be more beautiful in the future. This is my answer. I don't know if you are satisfied with it.

Operator, I have no further questions. Thank you.

Thank you. Our next question comes from Fiona Shen. Please go ahead.

Well, good morning, management. This is Fiona Shen. I'm a private investor. First, I want to say congratulations for maintaining the strong growth financial performance for the first quarter. I have a quick question for companies to financial officer Thomas. Could you please tell us more about the reason of the great improvement in financial results? Thanks.

Thank you for your question, Fiona. Let me answer it. Our revenue increased by 29.8% from the same period of last year, mainly due to the steady growth of our revenues. from primary, middle, and high school educational services resulting from an increase in the number of students enrolled, an increase in the average tuition charged, and impact on the deferred revenue recognized mentioned before. Besides, we have achieved a great expansion of our online educational training business in the summer of fiscal year 2021. Our gross profit margin was 14.9% for the first quarter of fiscal year 2021 compared with the gross loss margin of 1.5% for the same period of last year. The growth was mainly due to the profitability of primary, middle, and high school education services improved and the proportion of study trip services with the low growth margin. decline due to the impact of COVID-19. Thank you for your question.

Thank you.

Operator.

Our next question comes from Bella Wang, a private investor. Please go ahead.

Okay. Thank you, operator. Good morning, management. First, congratulations on the company's remarkable results. However, I have noticed that the revenue of study trips has decreased seriously. So I want to know if the company has any measures to improve this business. Thank you.

Okay. Well, I would like to answer this question. This is Lee Tao-Chu, the board secretary. Our revenue from study trip services does not have a certain percentage of decline. It was mainly due to the restriction of the travel because of COVID-19, which affects the study trip services in our fiscal year 2021. But from the perspective of the operation of study trip services, we did take some measures to improve the situation under the pandemic. We are actively seeking changes. For example, starting from the weekend parents' child trip, setting up online sales channels and gradually expanding CN customer with high quality study trip products and services. Especially the weekend parent child trip had launched eight times and had been highly recognized by the student parents. So meanwhile, aiming at the strategic development of the education camp for study trip services, we have consolidated the resources of the company to establish educational camp-based, such as Hailiang Xianju Study Trip camp-based and there are other educational camp-based that are exploiting cooperation and development. In addition, we also reached a strategic cooperation with the Tourism Institute of Zhejiang recently. We jointly constructed a campus practical training and research-based school enterprise cooperative development course and other cooperation methods, combining the resource of the school enterprise parties to reach consensus of supply and demand. During this pandemic period of keeping a low profile, we'll lay out a solid foundation for the high-quality talent required for the layout of our study trip services. Thank you. Okay, thank you for the question.

Our next question comes from Ashley He, Champ for Investment. Please go ahead.

Thank you, Operator. Good morning, Management. I'm glad to communicate with you at this earnest conference call. I'm more concerned about the enrollment profitability of the newly added affiliated schools in this new school year. Could you please give us a brief introduction? Thank you.

Thank you for your question. It's Andrew here, and I will take this question. Our enrollment performance is relatively good in the new school year. As of September 30, 2020, our affiliated schools enrolled about 27,000 students, an increase by about 11% year-over-year. In the total student enrollment of about 73,000 in our affiliated and managed schools. up by approximately 9.5% year-on-year. In addition, we added the three affiliated schools to our school network, namely Lanzhou-Hai Liang, Hai Liang-Huaqiao, Wuhu-Hai Liang, all of which started their first year of enrollment for the 2020 to 2021 semester year in the first quarter of fiscal year 2021. As of September 30, 2020, the students enrolled in these schools were 568, 828, and 409, respectively. The new enrollments in these three schools have far exceeded our expectations. The company also acquired the Tsinghua Hai Liang Foreign Language School and completed the transfer of sponsorship in September 2020. As of September 30, 2020, about 739 students enrolled in Tsinghua Hai Liang Foreign Language which is an increase of 164 students comparing the same period of last year. The increase in the number of students enrolled in our schools proved that this company's effective response measures during the COVID-19 pandemic have been recognized by the public, and the company has successfully seized the development opportunity brought by the negative impact of the COVID-19 pandemic on the education industry and the public's philosophy of education. These four schools are expected to generate a revenue of about 100 million in the upcoming fiscal year. At the same time, above mentioned, four new schools have also enlarged our total capacity from 25,000 to about 32,000, representing a total capacity increase of about 26%. With current enrollment of 27,000 students in our affiliated schools, we still have approximately over 4,600 vacancies to provide sustainable revenue growth. That's my response to your question. Thank you.

Thank you.

Our next question comes from Adam Chang, a private investor. Please go ahead.

Hello, management. My name is Adam Chang. Congratulations. I'm the individual investor after the question. So we have noticed that the increase in the educational service revenue was in part due to the recognition of the deferred revenue of the last fiscal year, considering the impact of the COVID-19. So how is the increase of the revenue and average tuition regardless of the impact of the pandemic? Thank you.

I am the CFO. Let me answer this question. The revenue of 36.4 million RMB has been deferred for the first quarter of fiscal year 2021 due to the pandemic of COVID-19. Strip the impact out. Our revenue from primary, middle, and high school educational services was increased by 17%. And the annual tuition fee increased by 11.2% compared to the same period of last year. And I hope that answers your question, operator.

Our next question comes from Michelle Irwin from Universe Securities. Please go ahead.

Hi, this is Michael Irwin, Universe Securities. associate a few questions. So first one is, are there any updates on the international platforms with COVID-19 still circulating the globe?

I beg your pardon? Can you repeat the question, please?

Are there any updates on the international platforms with COVID-19 still circulating the globe?

Okay, so you were referring to our responses to COVID-19 about our international program, right? Yes. Okay. Yeah. To answer your question, I think that we have been successfully responded to the change of overall circumstances under the COVID-19 and the latest changes of the international politics. Though the overall students enrolled under international programs in in the whole country had some fluctuation in the past few months. But for Hai Liang, we still achieved a very good or positive outcomes during the students recruiting process in the past quarter. As a result of that, now we have about 5,200 students enrolled in our international programs. which is slightly better than our previous expectation. The main reason behind that is Hai Liang's successful promotion of our international programs across the regions that we have presence in, and also it is the result of Hai Liang's approved academic results among our among the parents of our students who still had confidence of Hai Liang and decided to continue to send their children to our schools for international programs. Yeah, hopefully that can address your question.

Okay, and with the start of the new semester, are there going to be any changes moving forward throughout the school year?

Sorry, the reception is still a bit weak. Can you repeat your question?

With the start of the new school semester, are there going to be any changes moving forward throughout the school year?

No. For the upcoming semester, we didn't foresee any significant changes of the enrollment of our students on the international programs.

also on the regular domestic program.

Sorry, can you speak loudly and clear? It's a bit vague here.

Are there any changes for the domestic programs at all, not just the international?

No, we didn't see any changes in the mix between domestic programs versus the international programs.

I also saw that there was some CBA matches playing in one of your gyms. Has that increased the awareness of how they are on the national level?

Well, we have established some strong relationship with our partners outside China, namely in US, Canada, Australia, and the UK. In the past few years, we have continued to send excellent graduates from our school networks to these countries. So among the universities in these countries, I think Hai Liang's academic results and the brand has been well recognized. And on top of that, in the past couple of years, Hai Liang has recruited more than 200 international students from overseas countries to study in our international students' school with the purpose of sending these students to Chinese universities. And in the past academic year, some of them have been admitted to like top universities in China, for example, like Peking University. So we believe that from both directions, Hai Liang's brand has been recognized by both Chinese parents as well as parents from some overseas countries.

Thank you.

Thank you for your question.

Our next question comes from Ivy Wang, Univest and Securities. Please go ahead.

Thank you. This is Ivy from the University. Thank you for the meeting today, and congratulations on your performance for the last quarter. I have several questions. The first one is about our online educational platform, Meio Online. So could you tell me how well does this online platform perform, and any more detail on how well it competes with other more established online learning platforms? Thank you.

Okay, thanks for your question regarding the Ming You. I believe a large portion of this question has already been covered by Dr. Chen, but unfortunately that question was delivered in Chinese, but I can recap some of his responses to this question. Yes, in the past quarter, Mingyu, our educational training brand, has delivered a very successful performance and had a very good contribution to the overall financial performance in the last quarter. It actually continued to deliver strong performance in its three offline training centers. by providing services to more than 20,000 students. And on top of that, we have launched our online training platform during the summer of 2020. And in the past four and a half months, since July, this online platform has successfully provided the services to students of over 28,000 students. So as a result of that, we believe that the start of Mingyo has been very well under expectation. And we expect that Mingyo will continue to grow in the upcoming year and form an important part of our overall performance in fiscal year 2021. And regarding your second part of the question, to compare MENU against the other leading online education platforms, I believe that we have very different business models. First, we actually started our business based on the offline K-12 schools, meaning that we have already established a very good brand in the regions that our school network has already had presence in. As a result of that, we don't have to spend a significant portion of our revenue in customer procurement, meaning that our sales and marketing expenses has been relatively low comparing to these companies. In our first quarter, though, these online training services, this online training platform is very new, but the customer acquisition cost is roughly 15%, 1.5% of the total revenue, much lower than many of our competitors. The second point I want to say is that our K-12 schools are mostly located in the third or fourth tier cities, where the market is still pretty... new for all of these online training platforms. So they haven't spent much resources in these regions, meaning that we still have a first mover advantages in these regions. The third point I want to mention is that for the current K-12 online training business, I believe that the services that the parents are demanding is pretty like different across different regions. The parents are expecting the online training platforms to give their children a kind of specially designed or tailor-made services which is particularly suitable to the local educational system or the local high school entrance exams. This is something that the national online education platforms doesn't have. The fourth point I want to mention is the teacher's resources. In the lower tier cities in China, the good and reputable teachers are mostly teachers that have connections or working in the K-12 schools instead of the full-time online training platform employees. So we have the advantages of having the best teachers to teach our students and to provide these training services in our underlying market. So these are the various competitive strengths that I can think of. And as a result of that, though this part of business is pretty new to the company, but in the first quarter that has just passed, this platform has already break even in terms of the, on the P&L side. which is also very unique among our peers. Yeah, that's my question to the Minyou business.

Yeah, thank you for the detailed explanation. We will look forward to the development. And another question about Minyou is that since the audience are just at a license from students from primary schools. So what measures are placed to make sure our teaching quality? Thank you.

Sorry, can you repeat your question? I missed the last part of your question.

Sorry. So since the audience are at a license, so what kind of measures are placed to make sure our teaching quality? Thank you.

Okay. So for our Minyo services, we actually had several measures to ensure that we had standardized and excellent quality of such training services. For example, we had hired the best teachers in the local region. Some of the teachers were ex-employees of our K-12 schools who are very familiar with the local education and examination systems. The second point is that we had actually organized the training service to a a very specialized and a tailor-made way. We had a small size of the class to provide like high quality services to the students. The class size is typically around 20 to 30 and we have about two teachers for each of these class so that every children are well taken care of. These are just the two examples of the measures that we have been taken to ensure the quality of these training services.

Yeah, okay. Thank you for all your answers, and that's all my questions. Thank you.

Seeing no further questions, let me turn the call over to Mr. Lito Chu, the company's board secretary, for closing remarks.

Okay. Operator. On behalf of our containment management team, I would like to thank everyone again for joining us today for our conference call. Additionally, I would like to remind you that certain statements by HLM during this meeting may consist forward-looking statements which are made under the safe harbor provisions of U.S. private security dedication reform as of 1995. All statements other than statements of historical facts in this announcement are forward-looking statements. including but not limited to the following. General economic conditions in China. Competition in the education industry in China. The expected growth of the Chinese private education market. Chinese governmental policies relating to private education, no services and providers of such services. Health epidemics and other outbreaks in China. The company's business plans. The company's further business developments. Result of operation and financial condition. Expected changes in the company's revenue and certain costs or expense items. Its ability to raise additional funding. Its ability to maintain and grow its business. Variability of operating results. Its ability to maintain and enhance its brand. Its development and introduction of new products and services. the number of students entrusted by the school, the successful integration of appointed companies, technologies, and actors into its portfolio of software and services, marketing and other business development initiatives, dependence on key personnel, the ability to attract, hire, and retain personnel who possess the technical skills and experience necessary to meet the requirements of its clients. and disability to protect its intellectual property, the outcome of outgoing or any other further litigation or arbitration, including those relating to copyright and other intellectual property rights, and other recent details in the company's filing with the U.S. Securities and Exchange Commission. Highland education may also meet recent or oral fault working standards. in its periodic reports to the SEC, in its annual reports to shareholders, in press releases and other written materials, and in oral statements made by its officers, directors, or employers to third parties. Statements that are not historical facts, including statements about high-level education, beliefs, and expectations, are looked forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, whether known or unknown, and are based on current expectations and projections about further events and financial trends that companies believe may affect its financial conditions, result of operations, business strategy, and financial needs. Investors can identify those forward-looking statements by words or phrases such as may, will, will make, will be, expect, anticipate, aim, estimate, intend, plan, release, potential, contiguous, endeavor to, is unlikely to, or other similar expressions. Further information regarding those or other is included in our annual report on Form 28 and other filings with the SEC. All information provided in this press release is as of the date of this press release, and Highland Education undertakes no obligation to update any forward-looking things, except it may be required under a particular law. If you have any questions, please contact us through email at ir at highlandeducation.com or reach us at our IR console at sendinvestorrelations at tina.shall at sm-ir.com. Management will respond to your questions as soon as possible. We appreciate your interest and support in Highland Education and look forward to speaking with you again next time. Operator, please go ahead. Thank you.

Thank you again for attending the Highland Education Group's first quarter of fiscal year 2021 earnings conference call. This concludes our call for today, and we thank you all for listening in. Goodbye.