Ladies and gentlemen, thank you for standing by, and welcome to MINISO Group Holding Limited earnings conference call for the fourth quarter of fiscal year 2021 that ended June 13, 2021. At this time, all participants are in a listen only mode. After the management prepared remarks, we will conduct a question and answer session. Please note this event is being recorded. Now, I'd like to hand the conference over to your host and speaker today, Mr. Eason Zhang, Director of Investor Relations. Please go ahead, Eason. Thank you, [Monru]. Hello, everyone. Thank you all for joining us on today's call. Company has announced its quarterly financial results earlier today. An earnings release is now available on our investor relations website at ir.miniso.com. Today, you will hear from our Chairman and CEO, Mr. Ye Guofu, who will start the call with an overview of our business. He will be followed by our CFO, Mr. Steven Zhang, who will address our financial results in more detail before we take your questions. Before we continue, I'd like to refer you to the safe harbor statement in our earnings press release, which also applies to this call, as we'll be making forward-looking statements. Please also note that we will discuss non-IFRS measures today, which we have explained and reconciled to the most comparable measure reported under the International Financial Reporting Standard in the company's earnings release and filings with the SEC. With that, I will now turn the call over to Mr. Ye. Please go ahead, sir. [Non-English content] Hello, everyone. On today's call, I will first give you an update on our operations in June quarter and full fiscal year 2021, and then share our development strategy for the full year 2022. [Non-English content] We closed fiscal-year 2021 with a solid fourth quarter. Revenue was RMB 2.47 billion, up 59% year-over-year, and within the Company's guidance. Adjusted net profit, RMB 145 million, up 242% year-over-year. In terms of regions, domestic revenue was RMB 1.95 billion, up 43% year-over-year. Overseas revenue was RMB 526 million, up 179% year-over-year. In terms of business units, MINISO, our flagship business, recorded a revenue of RMB 2.36 billion, up 57% year-over-year, accounting for 95% of total revenue. Meanwhile, other business recorded a revenue of RMB 110 million, up 136% year-over-year. [Non-English content] MINISO faced a tough operating environment in June quarter as the rapid spread of the Delta variant triggered a new round of pandemic in Guangdong Province and some other overseas markets. In China, thanks to strong measures taken by the government, the spread of the pandemic was effectively limited in Guangdong and completely controlled by early July. As a result, domestic operations of the MINISO brand recorded a revenue of RMB 1.83 billion, up 39% year-over-year. Revenue from international operations in the quarter was RMB 526 million, up 179% year-over-year. Although the overall situation was better than that of the same period in 2020 for our international operations, some of our overseas subsidiaries, such as those in India, experienced a revenue decline sequentially in this quarter due to the impact of the Delta variant. Our distributor countries, on the other hand, experienced a revenue increase sequentially, despite being lower than expectations. [Non-English conent] In China, we added 127 MINISO stores during this quarter, compared to a net decrease of two stores and a net addition of 38 stores during the same period of 2020 and 2019 respectively. We should give credit to the support of our retail partners here. By the end of June, we had 820 retail partners, increased by 80 year-over-year, with each partner having 3.5 MINISO stores on average, flat year-over-year. Despite resurgences of the pandemic in China could bring short-term pressure, MINISO's long-term potential in China remains unchanged. As we continue to unlock new opportunities in China's low-tier cities, 50% of new stores were from this market in this quarter. We have many cities in our list to be entered or to further develop. [Non-English content] We opened 35 new stores in overseas markets on a net basis this quarter, 40% of which were located in Europe. In Italy, MINISO opened three stores consecutively in April, attracting lines of consumers who waited outside the stores for a long time. This is the latest example of MINISO's initial success in European markets, as represented by Italy, France and Spain and so on. We look forward to continue to serve European customers with MINISO's relaxing shopping environments and fun shopping experience. We also entered three other markets in this quarter besides Italy, marking our entry into 98 overseas markets. [Non-English content] During this quarter, the average number of store suspensions in overseas markets was about 300, compared to 200 in the previous quarter, mainly due to the spread of the Delta variant this quarter. On the other hand, suspended stores were at a quarterly low of 205 by the end of June, down from 228 a quarter ago. However, the recent resurgences of the pandemic since July is expected to continue to impact international operations. [Non-English content] We have adopted several measures to assist our overseas partners in tackling the new challenges caused by the pandemic resurgences. First of all, we have connected them to local channels such as supermarkets and online channels to boost sales, clear inventory and get cashback. For example, Morocco and Thailand set up flash stores, while in the Philippines, we cooperate with supermarkets. Our specialized team has enabled operations in about 50 overseas markets to move part of their sales online by providing useful suggestions. Secondly, we launched a new business process management system this quarter, which helps distributors better integrate the whole business process with its standardized and visualized features. This system has helped improve overall efficiency and satisfaction of distributors. Thirdly, by allowing the use of credit tools such as letter of credit for payments to help relieve a part of distributors' cash flow pressure. Last but not least, we continue to help distributor partners control their costs in areas such as improving average employee output and negotiating more favorable rent reductions. [Non-English content] As we pointed out on our last call, MINISO has cooperated with many strong partners in its overseas markets who have strengths in cash position, shareholder background and bargaining power, now more resilient to the uncertainties caused by the pandemic. We remain confident about MINISO's long-term prospects in overseas markets. Our strengths in supply chain, products, retail know-how and business model remain outstanding. We'll continue to cooperate with overseas partners to overcome the challenges together. [Non-English content] Move to our online business. E-commerce revenue was around RMB 200 million, up 136% year-over-year, mainly attributable to the June 18 Mid-Year Shopping Festival. In total, online business, including e-commerce and O2O, contributed 12% of our total revenue. As of June 30th, members who had made at least one purchase during the past 12 months were about 33 million, up 49% year-over-year and 10% sequentially. [Non-English content] We continue to expand our IP library, and this quarter has seen great success in our cooperation with top IPs such as Toy Story, the NBA, and Minions, with IP sales up 79% and 59% over the same period in 2020 and 2019, separately. [Non-English content] In addition, we plan to leverage MINISO's global store network to introduce more popular products such as blind box to overseas markets. As the first step, we have achieved encouraging results in Southeast Asia and Middle East in this quarter. For example, in its first five days in Singapore, sales of blind box accounted for more than 20% of total store sales. We will test more markets in Europe and Latin America by this year. [Non-English content] Now TOP TOY. First of all, channel expansion on track. During this quarter, TOP TOY opened four stores, bringing its total store to 33 by the end of June, including six Dream Factory stores and 27 collection stores. [Non-English content] Just last weekend, the Art Toy Museum, co-branded by TOP TOY and Shenzhen Wenheyou, celebrated its grand opening, bringing TOP TOY stores to a grand total of 54 and recorded total sales of more than RMB 1 million in its first day. We are also preparing for TOP TOY's first Art Toy Carnival Exhibition with the China International Comics Festival in Guangzhou in early October. This 10,000 sq m exhibition will include top brands such as Bandai, will be a great opportunity for us to both promote TOP TOY and accumulate the relevant experience. [Non-English content] Secondly, TOP TOY's business model is improving. With its rapid expansion in this quarter, TOP TOY's revenue increased by more than 180% sequentially. TOP TOY is still in early stage of capacity building and brand promotion, and its gross margin level has huge room to improve. Going forward, we expect that TOP TOY's gross margin will improve while its operating leverage will be gradually released, driven by the expansion of its scale and the maturity of its proprietary IPs. [Non-English content] Thirdly, we continue to upgrade our product structure as planned. TOP TOY's proprietary products, including six of its proprietary IPs, now account for more than 5% of its total SKUs, with higher gross margin than those of third-party products. Our proprietary IPs launched just three months ago have gradually caught on in the market. For example, sales of Twinkle and Damo T umbler have stabilized within our top 10 SKUs. The sales of Tammy's Daily Series stabilized within TOP 20. [Non-English content] Move on to fiscal year 2021. Despite the continuous impact on global retail industry caused by the pandemic, we still recorded a positive growth with revenue reached RMB 9.07 billion. Domestic revenue was RMB 7.29 billion, up 21% year-over-year, and overseas revenue was RMB 1.78 billion, down 39% year-over-year. In this year, we continued our overseas expansion, adding an additional 121 MINISO stores in overseas market and entering our 98th overseas market despite the great uncertainty caused by the pandemic. We also continue to seize the market potentials in China's larger cities. With 60% of the 406 new MINISO stores in China being located in this market segment. Additionally, we successfully completed our initial public offering, unveiled our X strategy, and launched TOP TOY. We are moving towards our vision of becoming a Leading Global New Retail Platform. [Non-English content] Looking ahead into the fiscal year 2022, we remain committed to pursuing the following strategies. Firstly, we'll continue to expand and upgrade our store network and refine our business model. Secondly, we'll continue to focus on product and supply chain as well as the introduction of more popular products to fully leverage our strengths in product design and cost control. We'll also continue to execute our IP strategy and expand our IP library to fully utilize the brand awareness and appeal of top IPs. Thirdly, we will continue to deepen consumer engagement and drive the omni-channel experience. We'll also improve our ability to operate private traffic through mini programs, DTC capabilities, launching products exclusive online, and improving our recommendation algorithm. Fourthly, we'll continue to closely monitor the pandemic development and adjust our business plans dynamically. By continuing to cooperate with our overseas partners in various aspects, we'll help them save energy for future development. Finally, we'll continue to leverage our strengths and core capabilities to explore new business opportunities. [Non-English content] This concludes my prepared remarks. I now turn the call to our CFO for financial review. Thank you. I will start my remarks with a review of the June quarter financial results, and then provide additional color regarding the September quarter. Please note that I will be referring to non-IFRS measures, which have exclude share-based compensation expenses. Revenue was RMB 2.47 billion, increased by 59% year-over-year, and 11% quarter-over-quarter, and above the midpoint of the company's guidance range of RMB 2.3 billion-RMB 2.5 billion. The year-over-year increase was primarily driven by the growth of the company's domestic operations and the recovery of international operations. Revenue generated from the company's domestic operation was RMB 1.95 billion, increased by 43% year-over-year. Revenue generated from domestic operation of MINISO brand was RMB 1.83 billion, increased by 39% year-over-year. Mainly driven by a year-over-year increase of 14% in average store count and a year-over-year growth of 23% in average revenue per store in China. Revenue generated from company's international operations was RMB 526 million, increased by 179% year-over-year, reflecting recovery of company's international operation from the same period of the 2020. From quarter-over-quarter perspective, revenue from company's domestic operations increased by 9%, driven by a sequential growth over 6% in MINISO's offline sales in China, and a sequential growth over 15% in e-commerce business due to June 18th's Mid-Year Shopping Festival. Revenue from international operation increased by 19% sequential. According to National Bureau of Statistics of China, in the first half of 2021, retail sales of supermarkets, convenience store, department store, and the special store increased by an average of 22% compared to the same period of the 2020, and then 7% compared to the same period of 2019. Over the same period, MINISO Group sales increased by 54% and 8% separately, better than the industrial average. It was achieved against the background of the pandemic resurgence in Guangdong Province, which last for nearly 50 days. During that day, the estimated loss in GMV was about RMB 50 million. Gross profit was RMB 639 million, increased by 68% year-over-year, and 2% quarter-over-quarter. Gross margin was 25.8% as compared to 24.4% a year ago, and 28.1% a quarter ago. The year-over-year increase of gross margin was primarily due to an increase in revenue contribution from the company's international operation, which typically has a higher gross margin than the company's domestic operations. Revenue from international operation account for 21% of the company's total revenue, compared to 12% in the same period in 2020. The quarter-over-quarter decrease was mainly attributed to increased promotion activity during the June 18th Mid-Year Shopping Festival. Second, inventory clearance in certain cities that aimed to tackle the negative impact caused by the reoccurrence of the pandemic in Guangdong Province. Selling and distribution expense was RMB 264 million, increased by 15% year-over-year, but a decrease by 4% quarter-over-quarter. The year-over-year increase was primarily attributable to increased personnel related expense and marketing expense, as with the year-over-year revenue growth and the brand awareness improvement for both MINISO and TOP TOY. The quarter-over-quarter decrease was primarily attributed to rental deduction related to COVID-19 in certain international markets. G&A expense were RMB 188 million, increased by 59% year-over-year and 20% quarter-over-quarter. The year-over-year increase was primarily due to, first, increase in personnel related expense and IT expense for our new initiatives such as TOP TOY. Second, we took necessary measures to reduce our general and administrative expense to tackle the challenge caused by the pandemic during the same period of 2020, resulting a lower comparison base for this expense. The quarter-over-quarter increase was primarily due to increased professional service fee. Turning to our profitability. Operating profit was RMB 188 million compared to a loss of RMB 30 million in the same period of 2020, and a profit of RMB 161 million in the previous quarter. The year-over-year improvement in operating profit was primarily due to our business recovery, both in China and overseas market. While the quarter-over-quarter improvement was due to the reduction in foreign exchange loss and a credit reversal in this quarter. Adjusted net profit was RMB 145 million, increased by 242% year-over-year and flat quarter-over-quarter. Adjusted net margin was 5.9% compared to about 2.7% a year ago, and 6.7% a quarter ago. Adjusted basic and diluted earnings per ADS were both RMB 0.48 in this quarter compared to RMB 0.16 a year ago and RMB 0.52 a quarter ago. Turning to our balance sheet. As of June 30, 2021, the combined balance of company's cash equivalents, restricted cash and other investments was RMB 6.88 billion, compared to RMB 2.86 billion a year ago. Turning to working capital. Turnover of inventories and trade receivables remained flat sequentially. The board of directors has approved a dividend of about RMB 300 million, and I want to take this chance to share the company's capital allocation strategy here. When deciding the total amount of the dividends, we have considered the level of profitability that we have achieved in fiscal year 2020 and could have achieved in fiscal year 2021 without the pandemic. Our capital allocation strategy in the future will prioritize new growth opportunities such as new strategic initiatives and new store expansion. We will also remain committed to bring return to shareholder through anticipated dividend payments. Looking ahead into September quarter of 2021, we expect our total revenue to be between RMB 2.45 billion and RMB 2.65 billion, which represent an increase of 18%-28% year-over-year. The latest resurgence of the pandemic from Nanjing in China has spread to several provinces and is still evolving. The company currently estimates that its sales will continue to be pressured by the lingering effect of the pandemic in short time, which will lead to a reduced traffic or even the temporary closure of the company's stores. We will continue to focus on those elements of the business that are under our control, such as product innovation, inventory management, operating efficiency and omni-channel strategy to drive sales and protect margins. This concludes our prepared remarks for today. Operator, we are now ready to take questions. Thank you. We will now begin the question and answer session. Your first question today comes from the line of Michelle Cheng from Goldman Sachs. Go ahead. [Non-English content] [Non-English content] [Non-English content] So two questions for management. One is, can you please share the quarter to date trend for both China and a few important international market situation? Secondly, for TOP TOY, management mentioned that the growth margin upside will come from better product mix. Can you share with us the IP development and other product mix enhancement strategies going forward? Thank you. [Non-English content] Thank you for your question, Michelle. In terms of the pandemic influence our mass business. This round of pandemic began at around July 20th. Although we have taken active measures such as to increase our online promotions and other strategies to deal with it has somehow impact our business. Based on our track recently, the influence is across the board in the three tier cities. For Tier 1 cities, the estimate loss in GMV for those influenced stores were about 10% of its daily normalized level. For Tier 2, the impact is estimated to be more than 20%. For Tier 3, is below 10%. We currently estimate that the overall impact for the GMV is about 15% for our domestic business. In terms of province or regions, the most impacted were provinces such as Jiangsu, Henan and Hunan. For these three provinces, the estimated GMV loss is about 30%-40% of its daily normalized level. We currently estimate that the impact of the past nearly one month on overall performance is diminishing with the strict control by the government. The overall impact is diminishing, too, as the pandemic is gradually brought under control. Based on the past experience in China, it usually takes about four to five days to control the whole situation. We believe at this time that it will happen for this round of pandemic, too. [Non-English content] In terms of the recovery in overseas markets. In June quarter, the overall recovery rate was about 65% compared with the same period in 2019. The recovery rate was about 55% in April, 60% in May, and 60% in June. In terms of region, Asian market, our largest overseas market, is about 40% of overseas stores there has lagged behind peers. The overall recovery rate there during June quarter was about 35%-40% of its pre-COVID level in the same period in 2019. For Latin America, our second largest. With about 50% of our stores there, the recovery rate was about 60%. On the other hand, we have seen strength in other markets such as Middle East and North Africa, and Europe too. For Middle East and North Africa, the recovery rate was about 70%, and for Europe it was about 77%. These two areas saw strong growth in GMV too. For Middle East and North Africa, it increased about 2% compared to the same period of 2019. Europe as a whole increased to 77%. These two areas, again, they are our emerging markets and we temporarily do not have many stores there. In terms of countries, if we look at the top 10 countries in terms of sales, Mexico recovered to around 70% from the same period in 2019. While Asian countries, including our subsidiary countries such as Indonesia and India, were about 50% and 75% respectively. The Gulf countries such as Saudi Arabia, which saw a 64% increase over the same period in 2019. Israel, which saw a 51% increase, and Morocco, which saw a 29% increase. An increase in the number of stores. Overall, these areas I mentioned just now, the recovery rate is still well below 80%. [Non-English content] Before your second question, Michelle Cheng, on TOP TOY. In terms of sales per store. Our Dream Factory stores, we are not talking about four stores in our last call, but we have eight now. Beyond that, we have more than 40 Collection stores now. Their average performance is quite stable. For Dream Factory monthly sales stabilized at RMB 2 million, and for Collection stores, it's stabilized at RMB 600,000. Overall, average sales per TOP TOY store is more than RMB 900,000. In terms of product, so far we have cooperated with about 200 suppliers and developed more than 3,300 SKUs of popular products, and nearly 500 of them have been sold out. About 80% of sales of TOP TOY now is contributed by its top 120% best sellers. As we shared before, TOP TOY now has eight categories and more than 120 sub-categories. In terms of consumption of consumers, let me share two figures. First is ASP. Every ticket size for TOP TOY is relatively high at maybe about RMB 150, while DreamWorks can be as high as RMB 200. The second is TOP TOY, like MINISO, has strong holiday backs. For example, this year we had six public holidays in the first half, accounting for 16% of all days. Its revenue contribution during these six holidays was about 30%. For our proprietary IPs, now we have six SKUs with gross margin of about 60%. The average revenue of our proprietary SKUs is four times that of TOP TOY's average. During this quarter, we also launched our Yifanshang function mini program, that was a huge success. For example, we launched three to four SKUs every month, with each of their sales triple the average of TOP TOY's. The turnover is extremely high, it is extremely fast, that can be sold out within 10 minutes after launch. All in all, we estimate that our proprietary products, including our proprietary IPs, co-branding IPs, and exclusive IPs, will account for 20%-25% of total SKUs in one year and 30%-40% in two years. Merchandise gross margin for TOP TOY is now at 43%, compared to less than 40% six months ago, mainly due to increased revenue contribution from proprietary products and our improved bargaining power with suppliers. Previously, all of our third-party products, such as Gundam toys, action figures were all purchased in small quantities. In the second half, this will change. The percentage of the large orders will increase. Will TOP TOY's merchandise gross margin. Thank you. The next question comes from the line of Lucy Yu from Bank of America. Line is open. Please go ahead. [Non-English content] Considering that the COVID-19 is going to be lasted for at least a relatively longer time. How should we think about the development in both domestic market as well as overseas market, especially in terms of marketing and channel development? Also in terms of new retail format development, is there any update that could be shared with us? The second question is on the margins. GP margin declined or contracted a little bit on a Q on Q basis. Could we break that down into promotion activities and inventory clearance? How much of the margin contraction is due to each factors? Going into next quarter, which is September quarter, how should we think about the margin trend? Thank you. [Non-English content] Hi Lucy, this is Steven. I will address your first questions on channel expansion. For our online business, we have experienced rapid growth during the past one, two years. Now its revenue contribution is about 12%. If you look at the past one or two years, the YoY growth will boast more than 100%. As an important part of our omni-channel strategy, we will definitely invest into online continuously, including our O2O business, DTC, e-commerce and so on. The e-commerce ecosystem has changed a lot in the past year or two years, such as live streaming, Douyin and Kuaishou. We are also actively following up on this trend. We will not burn cash to pile up GMV as we shared in our past call. Instead, we will insist on a profitable and healthy way to develop our online business. It has been and so it will be. For example, we are more focused on digitalization here to reach and activate our users in a more low cost but more efficient way. [Non-English content] Lucy, this is Ye Guofu here. In terms of your questions about a new business, as we shared that our vision is to become a global leading new retail platform. We definitely have some source and some internal incubation and so on. We do not think that this is the right time to share. We'll definitely share more when we have some major development on this. [Non-English content] Hi, Lucy. In terms of your questions on the GP margin. In this quarter, as we explained, there are two reasons have resulted a sequential decline. First is the 618 Shopping Festival. We have increased promotions to maintain our market share. The second is due to the pandemic in Guangdong, and we have made some inventory clearance to tackle the challenges. Overall, these two reasons have decreased our GP margin of about 1.5%. If you look at the next quarter, the September quarter, for the e-commerce, we do not see any influence in this side because there were no major shopping festivals during this quarter. For the second, the pandemic. Since late July, the pandemic from Nanjing has spread in many provinces in China. We are assuming that based on past experience, if it is going to be completely controlled, it can take at least 45 days. In short term, we see some GP margin pressure here. We will continue to do some inventory clearance to tackle this Nanjing pandemic. We estimate that the GP margin for the September quarter, maybe it will improve sequentially from this quarter, but it will be still lower than our normalized CapEx during past several quarters. Thank you. Okay. Thank you. The next question comes from Jerry Wong from CITIC. Please go ahead. [Non-English content] Thanks for taking our question. I would like to know about the changes in category structure of MINISO since one and what's the proportion of each category such as the food, blind box, technical branded good and etc., and which category will be highlighted in the future. Thank you. [Non-English content] Hey, Jerry, this is Ye Guofu. Thank you for your question. In terms of your question on product. The revenue contribution of our 11 categories are relatively evenly distributed and are relatively stable. During the past two years, categories such as toys and snacks have grown rapidly. For example, sales of toys now account for about 7.9%, and sales of snack account for about 8.9%. Another category, personal care, was the star of the first half of 2021, with its revenue share now reached about 10%, compared to 7% in the same period of 2020. If you look at the category structure, the 11 categories, the structure, they are relatively stable. We do not see big change in the future. We do think that there exist opportunities in some subcategories, such as toys and snacks one year ago. In the future, we do think that cultural and creative products will have their markets because young people love it. This is the same for personal care products and for IP products, which we are very good at. As we shared earlier in my prepared remarks, sales of IP products increased 59% compared to the same period in 2019 and accounting for 25% of our sales. Thank you. [Non-English content] Loud and clear. [Non-English content] [Non-English content] Okay, I'll translate myself. This is Rebecca from Haitong International. I just have one question about MINISO overseas business. Could you please share the current revenue mix of three overseas models, they directly operated distribution and franchise? Also, could you please give us more color on the restocking centers and the trend of the distributors? Thanks. [Non-English content] Hi Rebecca, thank you for your question. This is Steven. Now, in terms of GMV, our distributor markets usually account for 60%-70%, similar with its share of our overseas stores and subsidiary countries account for another 30%-40%. Before the COVID-19, such as in the second quarter of 2019, the GMV in our subsidiary countries, their share was about 30%. In this quarter, in the two quarter of 2021, because of the Delta variants, GMV in our subsidiary countries accounted for only 20%. In terms of revenue this quarter, it's 70/30, so the 70% is from distributor country. In terms of merchandise delivery amounts of distributor order, in the first seven months, one, total shipment order decreased 30%-40% compared to the same period in 2019, and increased about 60% compared to the same period in 2020. As you mentioned, our overseas distributors, as our CEO shared in prepared remarks that we have cooperate with many strong overseas partners in our overseas markets. If I remember right, the CR-10, that means the concentration rate of our top 10 distributors in our international operations, has been stabilized at 60% during the past few years. These major distributors, they have strengths in cash position, in shareholding structure, in bargaining power. We do believe that we are more resilient all the difficult times during the pandemic. This is also proof that our major market is stable. Thank you. Okay, thank you everyone. Thank you once again for joining our conference call today. If you have further questions, please do not hesitate to contact MINISO's investor relations team, and our contact information can be found on today's press release. We'll see you next quarter. Have a nice day.