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spk01: Ladies and gentlemen, welcome to Puyi Incorporated's fiscal year 2021 earnings conference call. At this time, all participants are in listen-only mode. Following management's prepared remarks, there will be a question and answer session. For your information, today's conference call is being recorded. This conference call is also being broadcasted live over the internet and will be available for replay purposes on the company's website. I'd like to turn the meeting over to your first speaker today, Ms. Jun He, Puyi's General Manager of Financial Reporting Department. Thank you. Please go ahead.
spk00: Thank you, Operator. Good evening. Welcome to our earnings conference call for the fiscal year ended June 30, 2021. Our annual report on Form 20F has been uploaded to the website of U.S. Security and Exchange Commission earlier today and is also available on our IR website. Before we continue, please note that the discussion today will contain forward-looking statements made under the safe harbor provisions of the United States Private Security Litigation Reform Act of 1995. The accuracy of these statements may be impacted by a number of risks and uncertainties that could cause our actual results to differ materially from those projected or anticipated. Such risks and uncertainties include, but not limited to, Those highlighted in our filing with the SEC, including our 20F, we do not undertake any obligation to update this forward-looking information, except as required under the ethical laws. Joining us today are our Chief Executive Officer, Mr. Yong Ren, and Chief Financial Officer, Mr. Annie Hu. Mr. Ren will walk you through our business and financial conditions of the fiscal year 2021, and he, together with Mr. Hu, We'll answer your questions after the prepared bill mark. Now, I will turn the call over to Mr. Ren.
spk02: Good evening, everyone. Welcome to the annual business release meeting of Puyi 2021. Today, I will host the meeting with the Chief Financial Officer, Mr. Guanlin. First of all, I will introduce the business structure and financial situation of Puyi 2021 and talk about the future of Guanlin. Later, we will have a Q&A session to answer your questions.
spk00: Good evening, everyone. Thank you for joining us today on the earnings conference call for the fiscal year ended June 30, 2021. Here with me is our Chief Financial Officer, Mr. An Ning Hu. We will begin today's call with an overview of our financial and operational results for the fiscal year 2021, followed by a brief discussion for our business outlook for the fiscal year 2022. We will take your questions after the report.
spk02: It increased 47.7% compared to last year, and the revenue from public fund products is rising again. From 488.9 million yuan in the same period last year, it increased 163.4% to 1.3 billion yuan. In the report period, we mainly achieved the following progress.
spk00: First, let's take a look at our business development in the fiscal year 2021. In the past fiscal year, in light of the continued spread of COVID-19 epidemic, we achieved significant business growth as our management worked diligently with all of our employees. Our total net revenue reached RMB 191.2 million, US dollar 29.6 million, representing an increase of 47.7% over last year. In particular, the income generated from public-raised fund products hit a new record, which rose from RMB 48.8 million in the fiscal year 2020 to RMB 128.5 million, U.S. dollar 19.9 million in the fiscal year 2021, representing a significant increase of 163.4%. In the past fiscal year, we mainly made the following progress.
spk02: 1. Persistence in product comprehensive optimization. The supply of public funds continues to grow. The sales of public fund products from 2020 to 2020 increased by 2.6 million, and grew by 68.5% to 44.2 million in 2021. The sales of public fund products from 2020 to 2020 increased by 68.9% to 171 million in 2021. The total number of customers who invest in public-private group products is 430,000, which accounts for 97.4% of the total number of customers who trade public-private fund products. At the same time, the sales volume of public-private fund group products is 1.19 billion yuan, which accounts for 69.8% of the total sales volume of public-private fund products. In addition to the group products independently developed and managed by the company's investment team, recently, we and China's top public-private fund First, we focused on sales of standardized products, and our business of public-raised fund products continued to grow rapidly.
spk00: The number of clients of our public raised fund products increased significantly by 68.5%, from more than 260,000 as of June 30, 2020, to more than 442,000 as of June 30, 2021. And the aggregate transaction value of our public raised fund products increased significantly by 148.9%, from approximately RMB 6.9 billion in the year ended June 30, 2020 to approximately RMB 17.1 billion, U.S. dollar 2.6 billion in the year ended June 30, 2021. In particular, more than 430,000 clients invested in public-raised fund product portfolios accounting for approximately 97.4% of the total number of clients of our public raised fund products. I think the line is breaking. Let me repeat. In particular, more than 430,000 clients invested in public raised fund product portfolios. accounting for approximately 97.4% of the total number of clients of our public raised fund products. Meanwhile, the transaction value of our public raised fund product portfolios reached approximately RMB 11.9 billion, accounting for approximately 69.8%. of the total transaction value of our public-raised fund products. In addition to the public-raised fund products, portfolios developed and managed by our in-house investment. Okay. The line is okay now. Okay. In addition to the public raised fund product portfolios developed and managed by our in-house investment and research team, we started cooperating with top public raised fund managers in China, such as China Asset Management, Southern Asset Management, and Argonne Industrial Fund to develop diversified and rewarding portfolios of public raised fund products for us. Leveraging their strong investment and research capabilities, all of the above-mentioned products receive positive feedback from the market.
spk02: We have built many cities in Guangzhou, Dongguan, and Shenzhen. We are a professional financial advisor.
spk00: Second, we accelerate the professionalism and specialization of our sales team and achieve our target in the construction progress of our branch office. The progress of enhancing our sales team mainly included the following two aspects. On one hand, in order to adapt to the transformation of the wealth management market to standardize product model, We have launched branch office in economically developed cities in China and recruited professional financial advisors having industrial resource and specialization in wealth management. This professional specialized team of financial advisors aim to provide competitive wealth management service of family financial assets, comprising many portfolios of funds and insurance recommendation. for the emerging middle class and affluent individuals and families, leveraging the strong support from our technology operations and product investment and research team. By August 2021, we have established branch office in Guangzhou, Dongguan, Shenzhen, and other cities, and recruited a team of more than 200 professional in-house financial advisors.
spk02: We continue to promote the division and management We also launched a digital upgrade to the social media mode of the general customer. We rely on the app ecosystem, public number, video number, and other new media platforms to assist the general customer in opening digital and community-based online activities.
spk00: On the other hand, we continue to classify our SIG clients into ordinary SIG clients, elite SIG clients, and financial advisors, which were under multi-level management and cooperation. A number of elite SIG clients with high productivity and expertise stand out. and have become a strong driving force for our professionalism process. Meanwhile, we have also started digital upgrade of our SIG clients' social e-commerce platform to achieve more efficient multi-level marketing strategy. Empowered by new media such as mini program app, WeChat public account, and WeChat video account, we assisted our SIG clients in launching digital and social online activities so as to achieve a more comprehensive companionship for the client of our SIG clients. Third, we enhance our capability of digital operations to achieve more comprehensive client service. In the past fiscal year, we have initiated a series of upgrades of information technology infrastructure, including the setup of big data analyst platform and smart operations platform. to equip ourselves with multi-dimension operating tools such as automatic grouping of multi-level clients, attachment of different packs to different clients, big data collection and storage from multi-platforms, as well as visualized data trucks. These upgraded operating tools can ensure more accurate and efficient communication between our clients and us. which in turn increase our clients' level of satisfaction and the rate of clients' retention and conversion. Fourth, we continue to invest in the construction and upgrade of technology platforms to increase efficiency and reduce costs. The construction and upgrade of information technology infrastructure have been vital in increasing service capability in financial industry. In the past fiscal year, we have implemented the following three initiatives. for our information technology infrastructure.
spk02: First, we have continually to optimize our core transaction system of public-raised fund products.
spk00: which enable online transactions by clients and simplify repeat purchase and investments.
spk02: Second,
spk00: We launched a new comprehensive full-cycle online transaction system for privately-raised fund products in December 2020, which simplified our sales process and increased transaction efficiency of our privately-raised fund products, thus reducing our operating costs.
spk02: Continue to optimize the financial system of Li Caishi by Li Caishi. This system integrates comprehensive asset configuration service and education learning system. We continue to optimize the iFinancial Planner app, which is embedded with professional solution models for family financial asset allocation.
spk00: and adaptation system for both financial advisors and SIG clients. Our financial framework focuses on improving the level of activity and stickiness of our financial advisors and SIG clients, achieving the multi-level operation and management of financial advisors and SIG clients, and empowering financial advisors and SIG clients to provide our clients with scientific, customized family financial asset allocation service.
spk02: Second, we will briefly discuss our financial condition for the fiscal year 2021. In the past fiscal year,
spk00: Net revenues increased year-on-year by 47.7%, from RMB 129.5 million to RMB 191.2 million, U.S. dollar 29.6 million. Now let's turn to each individual business line. First is the wealth management business. In 2021,
spk02: The revenue from financial management and operations is RMB1.8 billion, which has grown by 65.9% compared to last year's RMB1.1 billion. Among them, public fund and public fund combination, in 2021, the revenue was RMB1.3 billion, which has grown by 163.4% compared to last year's RMB4880.9 billion. The growth is mainly due to the rapid growth in the sales scale of public fund products and the rapid growth in the volume of the Japanese dollar.
spk00: First business line, our wealth management service. Net revenues generated from our wealth management service increase year-on-year by 65.9% from RMB 106.4 million. to RMB 176.6 million, USD 27.4 million. In particular, net revenues generated from distribution of public-raised fund products increased year-on-year by 163.4%, from RMB 48.8 million to RMB 128.5 million, USD 19.9 million. Such increase was primarily due to an increase in commission income including management fee as a result of the significant increase in the distribution and the accumulated balance of the transaction value of public raised fund products. Net revenues generated from distribution of privately raised fund products increased year-on-year by 7.2%, from RMB 44.5 million to RMB 47.7 million, U.S. dollars 7.4 million. The increase was primarily due to the increase in commission income, including management fee of privately raised fund products, partially offset by the decrease in performance space fee. Net revenues generated from distribution of other financial products were RMB 300,000, US dollar 46,000, representing a 97.7% year-on-year decrease from RMB 13.1 million. The decrease was primarily because we have focused on distribution of fund products and ceased to offer new exchange-administered products since October 2019. and we received management fee in the past fiscal year from the existing products only.
spk02: Second, next is the asset management business. In 2021, the asset management business income was RMB1346.4 million, which was reduced by 41.5% compared to last year's RMB2,303.3 million. The reduction was mainly due to the reduction in the value of this period of floating performance. Our asset management product has grown from RMB 8.5 billion on June 30, 2020 to RMB 11.2 billion on June 30, 2021. As our asset management size gradually grows, we are confident that our asset management revenue will gradually grow in the future.
spk00: And second business line, our asset management service. Net revenues generated from asset management service for the past fiscal year where RMB 13.5 million, US solar 2.1 million, representing a 41.5% year-on-year decrease from RMB 23 million. This decrease was primarily due to a decrease in performance-based carry interest income. However, our AUM significantly increased to RMB 1.1 billion, US 0.2 billion as of June 30, 2021. from RMB 0.8 billion as of June 30, 2020. We are confident that the continued increase of IUM is expected to result in organic growth in our future income.
spk02: And last but not least,
spk00: Let's elaborate on our strategy planning on outlook for the fiscal year 2022. As the epidemic has been brought under control, China's economic has gradually returned to the track of stable growth. According to the government's common prosperity policy of increasing the income of low-income groups and expanding middle-income groups in the 14th five-year plan from 2021 to 2025, the number of middle-class and affluent individuals and families in China will increase with certainty. As the company focuses on providing wealth management services for emerging middle-class and affluent populations, we have met a historical period of development opportunities.
spk02: In the next session, the company will further focus on sales organization construction, products, and technology operations.
spk00: 不断打造和强化公司的核心竞争力 具体如下 In the next fiscal year, we will focus on sales organization construction, products, technology operations, and other aspects, and constantly build and strengthen our core competitiveness as follows 一,聚焦销售队伍职业化及专业化 一手抓好城市分公司的建设
spk02: First,
spk00: we will focus on the professionalism and specialization of our sales force. On one hand, to continue to construct our branch office, and on the other hand, to achieve professionalism of our SIG clients. The construction of branch office is one of the key measures for us to promote the professionalism of our sales force. In the next fiscal year, our business focus is to continuously strengthen the professional capability of the established branch office to support the financial advisors and improve our overall operation and service capability. We will focus on the improvement of the delivery performance of our branch office and the level of professionalism of financial advisors instead of the number of branch office and financial advisors. In the short term, the construction of branch office and financial advisors team will incur significant expenditures. which will adversely affect the company's operating cash flow and profits. However, our management agrees that this initiative is one of the core strategies for the company to achieve transaction value of RMB 100 billion in the future, and our management will implement this strategy firmly and effectively.
spk02: For the general customer channel, the core criteria are compliance, efficiency, and professionalism. On the one hand, we will gradually eliminate their cooperation with customers who are not active and have poor service capacity. On the other hand, we will select a group of capable and willing general management customers from the existing customers. Through technology, investment, operation, training, etc., we will try to train these people to become
spk00: For the sales channels of SIG clients, we will optimize the existing SIG client team to achieve better compliance, efficiency, and professionalism. On the one hand, we will gradually terminate our cooperation with SIG clients with no productivity and weak service capability. On the other hand, we will select a group of capable and proactive elite SIG clients from the existing SIG clients to cultivate them into professional, specialized financial advisors with the capability of financial asset allocation for enabling systems such as science and technology, investment and education, operation and training.
spk02: 二,聚焦公司数字化转型,持续加强IT科技建设及数字运营中心建设, At the end of June 30, 2021, the company has already released the 5.0 and ILETS 2.0 fund. In the future, in addition to continuing to improve the listing system, the company will focus on the construction of institutional business systems, investment business systems, and asset configuration verification systems. At the same time, we will take advantage of the existing technology operations capabilities and try to open up SaaS cooperation with external channels.
spk00: Second, we will focus on digital transformation and continue to strengthen the construction of information technology and digital operating center. As of June 30, 2021, we have upgraded Pui Fund app to 5.0 version and iFinancial Planner app to 2.0 version. In the future, in addition to continuing to improve the above systems, we will focus on the construction of institutional business system, investment advisory business system, and asset allocation consultation system. At the same time, we will start to use the existing technology operation capability to empower external partners and try to start software as a service cooperation with external channels.
spk02: In terms of digitalization, the company will On the other hand, through customer behavior analysis, let the company respond more accurately to the customer's personal needs in products and services.
spk00: In terms of digital construction, we will rely on the established digital operation center and leverage the digital intelligent operation system. On the one hand, to effectively empower financial advisors to gain insights into client needs and improve their professional capability to achieve more efficient client acquisition. And on the other hand, to analyze client behavior for big data analysts to more accurately respond to the individual needs of clients.
spk02: In order to better match their risk preference, they insist on buying and investing. The company will firmly put the company's wood combination as the company's special product. In terms of public wood, through three years of polishing, the company's public wood combination management team has shown their professional investment ability. Next, the company will determine to use the public wood combination of the independent management team as the main product. First, we will focus on feature portfolio products to measure differentiated financial needs of
spk00: middle-class families and cooperate with top financial institutions to strengthen our investment and research capability. Our core client base is emerging middle-class and affluent population whose financial risk appetite is relatively medium and low. In order to better match their risk appetite, we, as an independent buy-side investment advisor, will unswervingly take product portfolios of public-raised fund products and fund of funds of private-raised fund products as our featured products. In terms of public-raised fund products, after three years of polishing, our management team for public-raised fund products has demonstrated strong professional investment and research capability for sound performance of our product portfolios. In the next fiscal year, we determined to focus on publicly raised fund product portfolios developed by our in-house team and supplement by external channels. In terms of privately raised fund products, we determined to focus on the distribution of fund of funds developed by the leading fund managers such as CICC, Guojin, and China Merchants. At the same time, we will continue to enhance our capability to achieve the management of our existing private interest fund of funds products and develop more Puyi-featured private interest fund of fund products. We will always be client-oriented, adhere to our mission of advance with financial advisors, and become the wealth gatekeeper of middle class and a foreign family in China, and continue to create value for our clients, financial advisors, and shareholders. This ends for the prepared remark. Now we are open for questions. Operator, please.
spk01: As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound or hash key. Please stand by while we compile the Q&A roster. Once again, if you wish to ask a question, please press star one on your telephone and wait for a name to be announced. Once again, if you wish to ask a question, it's star 1 on your telephone keypad. There are no further questions at this time. Please continue, presenters.
spk00: There's no question at this time. There is something wrong with our lines today. We are very sorry for your inconvenience. We will upload the full transcript on our website. So if you're interested, please go to our website for the full transcripts. There is no other comments. Thank you, everyone, for attending our fiscal year 2021 earnings call. If you have any further questions, please feel free to contact us. Thank you very much. Operator.
spk01: Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.
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