Ladies and gentlemen, thank you for standing by, and welcome to MINISO's recording of the earnings conference call for the first quarter of fiscal year 2022 that ended June 13, 2022. At this time, all participants are in a listen-only mode. After the management's 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 speaker today, Mr. Eason Zhang, Director of Capital Markets. Please go ahead, Eason. Thank you. Hello, everyone, and thank you all for joining us. We have announced our quarterly financial results earlier today, and earnings release is now available on our investor relations website at ir.miniso.com. Joining us today are our Founder and CEO, Mr. Jack Ye, and CFO, Mr. Steven Zhang. 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'll discuss non-IFRS measures today, which we have explained and reconciled to the most comparable measures reported on the International Financial Reporting Standards in the company's earnings press release and filings with the U.S. SEC and Hong Kong Stock Exchange. With that, I'll now turn the call over to Mr. Ye. Please go ahead. Thank you. Hello, everyone, and welcome to MINISO Group June quarter 2022 earnings conference call. This marks the last quarter of our fiscal year 2022, and the first time we have announced results as a dual primary listed company in the U.S. and Hong Kong. Thanks to the efforts of our dedicated team, we completed our listing in Hong Kong on July 13 this year. Our listing in Hong Kong was an important arrangement from the perspective of protecting the interests of our existing shareholders and proactively responding to the evolving regulatory environment. We believe it will also provide us with more broader financial channels to drive the company's future development, help us expand our shareholder base, and promote the sustainable healthy development of our business. On behalf of the company, I'd like to express my gratitude to each and every employee for their dedication, and to our investors who have always cared for and supported MINISO. Going forward, we're confident that we'll create long-term value for shareholders by enabling everyone to better enjoy life's little surprises. As we have repeatedly emphasized in our earnings conference calls over the past few quarters, value retailers are capable of passing through economic cycles. Our business model has demonstrated great resilience despite the pandemic weighing on our near-term results. During this quarter, we have been promoting our brand upgrade efforts in China, and the gross margin of our domestic operations in the June quarter increased by about 3% from the same period of last year, as we have launched a new portfolio of high gross margin consumption-based products. During this quarter, the domestic offline retail sector faced unprecedented challenges. We focused on driving the recovery of our overseas business, which achieved nearly 50% year-over-year growth in revenue and accounted for 34% of the company's total revenue, the highest since the outbreak of the pandemic in early 2020. Benefiting from these two drivers, our overall gross margin reached a record high of 33.3% in this quarter. 过去一段时间，公司业绩表现充分说明全球化的业务布局使得公司在面对国内疫情不确定性的挑战时，具有更大的灵活性。随着海外直营业务经营杠杆的进一步释放，结合我们的降本增效工作，本季度公司调整后净利润2.2亿元，同比增长57%，环比翻倍。净利润率为9.6%，创近十个季度新高，基本接近疫情前的水平。 Our recent business performance demonstrates that our globalized presence has given us much greater flexibility when facing pandemic-related uncertainty in China. As we continue to unleash the operating leverage of our directly operated overseas business and further our efforts to reduce costs and improve efficiency. Our adjusted net profit increased by 57% year-over-year to RMB 220 million in the June quarter, which is double the figure from the prior quarter. Our adjusted net margin reached its highest level of the past 10 quarters at 9.6%, returning to a level similar to what we have achieved before the pandemic. 下面我从业务板块为大家详细介绍本季度的业务开展情况。 Next, I'll share in detail the development of our respective business segments during the quarter. 首先是MINISO国内业务。本季度国内业务总收入为14.1亿元，其中线下业务收入12.8亿，去年同期分别为18.2亿和16.3亿。 First I'll cover our domestic operations. Revenue in this quarter was RMB 1.41 billion, of which revenue from offline business was RMB 1.28 billion, which compared to RMB 1.82 billion and RMB 1.63 billion in the same period last year, respectively. 公司估计本季度由于国内疫情而损失的GMV约人民币七亿元左右，对应的会计收入损失超过人民币四亿元。具体来看，四到五月份公司销售额同比下降近三成，最直接的影响因素是商场客流量下降。由于政府采取严格的管控措施，很多商场无法营业。四月份全国平均有超过三百八十家MINISO店铺无法营业，占比12%。五月份下降了一百家左右，占比仍然接近9%。进入六月，随着重点城市陆续开放，商场人流开始恢复，许多门店逐渐恢复正常营业。暂时闭店数量也下降至平均六十家左右，六月公司销售额恢复至去年同期水平的94%。其中一二线城市恢复接近于90%，三线以下城市比去年同期增长1%。 We estimate that the GMV lost due to the impact of the pandemic was about RMB 700 million, and the corresponding loss of accounting revenue was over RMB 400 million. More specifically, our sales decreased by nearly 30% year-over-year in April and May as a result of the reduced traffic to shopping malls, many of which were unable to operate due to local government restrictions. In April, an average of 380 or 12% of MINISO stores in China were unable to operate. The number was down by about 100 in May, but still accounted for nearly 9% of our stores. Going into June, as key cities gradually reopened, shopping mall traffic recovered rapidly and many stores resumed normal operations. Temporary store closures were further down to 60 or 2% of our stores. Our sales in June recovered to 94% of the level from the same period last year. That figure was nearly 90% in Tier 1 and Tier 2 cities, whereas in Tier 3 and below cities we saw a year-on-year growth of nearly 1%. 本季度电商收入1.3亿元。电商业务作为线下渠道的重要补充，销售规模目前并不是我们最重要的指标，我们更重视业务的盈利能力。最近一年以来，通过合理控制流量费用，电商业务盈利能力不断地增强。 E-commerce revenue in quarter was RMB 130 million. As an important complement to our offline channels, revenue itself is not the most important KPI for e-commerce. Instead, we focus more on its profitability, which has been increasing over the past years through our reasonable control of traffic acquisition costs. 疫情爆发近两年以来，MINISO合伙人模式展现出了巨大的韧性。由于加盟商无需承担存货风险，且总是能够及时收到店铺营业分成，经营资金的压力小于其他零售加盟模式。本季度，在疫情造成巨大冲击之下，我们的业务拓展团队仍然完成了国内MINISO门店净增加29家的成绩。同时，关店率控制在1.1%左右，低于过去八个季度的水平。从2022全年来看，国内闭店数量同比减少了接近40间。 The MINISO Retail Partner model has demonstrated great resilience during pandemic outbreak. As MINISO retail partners face minimal inventory risk and always receive their revenue share on time, the working capital pressure is much lower than in other franchising models. This quarter, despite the tremendous pressure of the pandemic, our business development team still added 29 stores on net basis and contained the quarterly store closure ratio to about 1.1%, the lowest level of the past eight quarters. In the fiscal year 2022, the number of store closure in China decreased by 40 compared with the prior year. 由于一、二线城市疫情防控更为严格，本季度国内新开门店几乎全部来自于三线及以下城市。在2022年剩下四个月时间内，我们会根据国内疫情发展动态调整开店节奏，降低加盟商的经营风险。 As the control measures was stricter in tier one and tier two cities, new MINISO stores in China in this quarter came entirely from tier three and below cities. For the remaining four months of 2022, we'll dynamically adjust the store opening pace according to pandemic development in China to lower operational risk of MINISO retail partners. 第四是MINISO海外业务。本季度收入7.8亿元，同比增长近50%。其中对代理商发货收入同比增长超过30%。来自直营市场业务收入增长，同比增长接近70%。 Moving on to MINISO overseas operations. Revenue for June quarter was about RMB 780 million, an increase of almost 50% year-on-year. Revenue from our distributor business model increased by more than 30% year-on-year. Revenue from our directly operated business model increased by about 70% year-on-year. 本季度海外市场同店销售延续了良好的恢复趋势，销售额同比增长了52%，并且恢复到了2019年同期90%以上。其中代理市场销售同比上涨了45%，恢复到2019年同期接近于100%的水平。直营市场销售额同比增长近80%，恢复到2019年同期水平的80%左右。 During the June quarter, the overseas market sustained good recovery momentum. Overall sales increased by 52% year-over-year, and recovered to over 90% over the same period in 2019. Sales in our distributor markets increased by 45% year-over-year, and have already recovered to nearly 100% of the same period in 2019. While sales in our direct operated markets increased by nearly 80% year-over-year, and have recovered to 80% over the same period in 2019. 从重点地区来看，欧洲市场销售额同比增长近40%，是2019年同期的两倍以上。北美市场销售额同比增长近170%，较2019年同期增长43%。拉美市场销售额同比增长近60%，较2019年同期增长20%以上。中东及北非市场销售额同比增长近30%，较2019年同期增长近60%。不含中国在内的亚洲市场销售额同比增长超过50%，恢复至2019年同期的近60%。亚洲国家也是全球目前唯一还没有恢复到疫情前的地区。从重点国家来看，美国和加拿大销售额同比增长近170%，墨西哥超过50%，印度增长近三倍。 By regions, sales in Europe increased by nearly 40% year-on-year, and more than double that in the same period in 2019. Sales in North America increased by nearly 170% year-on-year, up 13% from the same period in 2019. Sales in Latin America increased by nearly 60% year-on-year, up more than 10% from the same period in 2019. Sales in the Middle East and North Africa increased by nearly 30% year-on-year, up 60% from the same period in 2019. Sales in Asian countries, excluding China, increased by over 50% year-on-year, recovering to nearly 60% of the same period in 2019. Asian countries, excluding China, is so far the only market that has not fully recovered to pre-COVID-19 levels in sales. By country, sales in both, you know, the U.S. and Canada increased by nearly 170% year-on-year. Mexico increased by over 50%, while India nearly tripled. 我们在这个季度进入了名创优品全球第一百零五个市场，并且净增加到五十七个海外门店。去年同期净增加为三十五个。海外市场已经步入了后疫情时代。在代理商强劲的需求增长下，我们在今年适当加快了海外开店节奏。虽然部分海外市场因为俄乌冲突和地缘政治紧张等原因，对于代理商的开店计划造成一些延迟，但我们依旧有信心二零二二年海外开店数量会大幅超过二零二一年。 MINISO entered its 105th market in June quarter, and added 57 overseas stores on net basis, compared to 35 stores in the same period last year. The overseas market has entered the, you know, the post-pandemic era, and with the strong demand growth from distributors, we have sped up the pace of opening overseas stores this year. Although due to the Russia-Ukraine conflict and the geopolitical tension, which has delayed some of our distributors' store opening plans, we are still confident that the number of new overseas stores opened in the calendar year of 2022 on net basis will be significantly higher than in 2021. 在当前海外市场通胀高企的大环境下，消费者会更加重视性价比。这对于我们来说是个很好的市场机会。我们坚持产品为王，将继续加强海外设计力量。目前正有序地将国内商品团队派到海外，进一步透视我们在产品设计和研发本土化方面的能力。目前海外主要市场已经初步具有了7-1-1的产品上线能力。下一步，我们将重点打造海外私盘货，拉美、北美、东南亚和欧洲，为当地消费者提供更好的、更多更好的商品。我们将继续依靠中国强大的供应链管理能力，做好中国供应链出海的故事。 Under the current high inflation environment in overseas markets, consumers tend to look for more value, which creates great market opportunities for us. We adhere to the product is king philosophy, and will continue to enhance our overseas design capacities by sending our domestic product teams overseas to further strengthen our product design capabilities and develop localized products. At present, we have built preliminary capabilities to launch products in a 7-1-1 manner in major overseas markets. Our next focus is on Latin America, North America, Southeast Asia, and Europe, where our goal is to provide more and more localized products to consumers there. We'll continue to leverage China's strong supply chain capabilities and benefit from exporting the Chinese supply chain overseas. 我们坚持精耕细作，已经陆续在部分海外市场推出MINISO门店形象3.0项目，提升门店终端形象、视觉竞争力。我们积极协助海外代理商调整运营策略。例如，在西班牙市场，代理商正从前以旅游景点商圈为中心，逐渐转移至大力拓展社区性商圈，从而减少对于游客依赖，取得了良好的成效。 As we continue to cultivate in overseas markets, we have launched the MINISO Store Image 3.1 Project to improve the visual competitiveness of our stores in some of these markets. We also proactively assist overseas distributors in refining their operating strategies. Taking our distributor in Spain as an example, it has achieved improved performance by shifting its focus from tourist areas to local communities to reduce reliance on tourists. 接下来是TOP TOY的业务。本季度，TOP TOY仍然按我们的既定战略继续稳步发展。从收入上来看，TOP TOY线下业务收入同比增长43%，线上业务占比提升至15%。 Next, let's talk about TOP TOY. We continue to execute our established strategy in quarter and made steady progress. Overall revenue of TOP TOY increased by 43% year-on-year, while its online business contributed 15% of revenue in this quarter. 受疫情影响，TOP TOY开展了适量的促销活动。本季度产品毛利率接近42%，虽然较上季度略有下降，但仍然处于非常健康的水平。更重要的是，与我们一以贯之的战略规划相一致。TOP TOY的独家产品和第三方产品比例更加合理。本季度独家产品销售贡献接近20%，独家产品毛利率稳定在60%以上。 In response to the pandemic in China, TOP TOY stepped up some promotional campaigns. As a result, its merchandise gross margin was about 42% in June quarter, which although lower than the previous quarters, is still a healthy level. More importantly, the sales mix between TOP TOY's proprietary products and third-party products has been moving towards a more reasonable level, matching our consistent product strategy. Proprietary products accounted for nearly 20% of TOP TOY sales, and the gross margin of proprietary products remained over 60%. 回顾2022年财年，公司的主要运营指标处于健康的增长状态。整体门店数净增长514个，增长率为11%，年收入超过100亿元，同比增长11%。毛利超过30亿元，同比增长26%。毛利率达到30.4%，同比增加3.6个百分点。调整后净利润7.2亿元，同比增长51%。净利润率7.2%，同比增加了近两个百分点。 Looking back over the 2022 fiscal year, our key operating metrics have demonstrated that we are in a healthy growth space. We added 514 stores on net basis, representing 11% year-on-year growth. Revenue exceeded RMB 10 billion, up 11% year-on-year. Gross profit exceeded RMB 3 billion, up 26% year-on-year. Gross margin reached 30.4%, up 3.6 percentage points year-on-year. Adjusted net profit RMB 720 million, up 51% year-on-year. The net margin was 7.2%, up nearly 2 percentage points year-on-year. Looking forward to the 2023 fiscal year, we are still optimistic about future revenue and profit growth despite continued uncertainty from the pandemic. This positive outlook comes from our long-term confidence in China's economic development, our unchanged ambition for offline retail business, and our consistent determination to achieve globalized development. Lastly, as you may have noticed, we issued a heartfelt letter of apology last week, in which we mourned over the inappropriate marketing tactic in our early days before becoming a listed company, and announced a correction plan. In the future, as a dual primary listed company, we will strictly comply with the regulations of both exchanges, which creates a greater level of compliance requirements for the company. Going forward, we'll continue to raise our compliance standards to govern our operations to guarantee the sustainable success of our core business. That concludes my prepared remarks. I will now turn the call over to Saiyin Zhang for financial review. Please. Hello, everyone. Thank you for joining us today. I will walk you through the financial results of June quarter, as well as the full fiscal year 2022. Please be noted that all the numbers are in RMB, unless otherwise stated. I will also refer to some non-IFRS measures, which exclude share-based compensation expenses. Revenue in June quarter reached RMB 2.3 billion, above the midpoint of our guidance range, which was RMB 2.1 billion-RMB 2.4 billion, which implies a better than expected performance in our domestic operation in June. Revenue from China was RMB 1.5 billion, including RMB 1.4 billion from MINISO brand, and RMB 95 million from TOP TOY brand, and RMB 28 million from others. Of this, revenue from MINISO brand experienced a year-over-year decline of 23%, consistent with the decline trend of GMV and offline traffic to shopping malls. Revenue from TOP TOY increased by 33% year-over-year. During this quarter, TOP TOY's sales was significantly impacted by the outbreak of Omicron virus due to the concentration of stores in Tier 1 and Tier 2 cities. As we have concluded in the previous call in May, although the impact of pandemic on short-term performance is inevitable, we continued to follow our established strategy and made a steady performance in refined TOP TOY's business model, products, and omni-channel strategy. For our overseas markets, its revenue increased by 49% year-over-year to RMB 785 million. If we look at the financial year 2020, the year-over-year increase in revenue was also above 50%, which demonstrated the recovery trend of our overseas operation is very clear. For full fiscal year 2022, total revenue reached RMB 10.1 billion, an increase over 11% from fiscal year 2021. Revenue from our domestic operation was RMB 7.4 billion, increased by 2% from a year ago. Of this, revenue from domestic operation increased by 15% in the first half of fiscal year 2022, and decreased by 10% in the second half due to the spread of Omicron in China. Revenue generated from TOP TOY was RMB 447 million, representing an increase of 355% year-over-year. Gross profit in June quarter was RMB 772 million, representing an increase of 21% year-over-year. Gross margin was 33.3% compared to 25.8% in the same period of 2021. There were three reasons for the year-over-year increase in gross margin. First, it was primarily due to a revenue mix change. This quarter, we have seen overseas market contribute 34% of total revenue. It's the highest level since the December quarter of 2019. Secondly, we launched a more profitable product in relation to MINISO's strategic brand upgrade in this quarter. The third reason is about the inventory clearance activity last year, that aimed to take over the negative impact of the pandemic in Guangdong. For full year, gross profit was RMB 3.1 billion, up 26% year-over-year. Gross margin was 30.4% compared to 26.8% in the fiscal year 2021. Selling and distribution expense in June quarter was RMB 346 million, representing an increase of 31% year-over-year. The year-over-year increase was primarily attributed to, first, increased logistics expense in relation to our recovering international operations. Second, increased personnel related expense. The third, increased license expense in relating to our newly launched IP products, partly offset by our saving in promotion and advertisement expense due to our reduced marketing effort in China to tackle the resurgence of the COVID-19. For the full year, selling and distribution expense was approximately RMB 1.4 billion, representing an increase of 29% year-over-year. The year-over-year increase was primarily attributed to, first, increase of personnel related expense. Second, increased license expense in relating to our enlarging IP library and enriching offering of IP products. The third, increased promotion and advertisement expense, mainly connecting to a strategic brand update of MINISO in China. G&A expense in June quarter were RMB 180 million, representing a decrease of 5% year-over-year. The year-over-year decrease was primarily due to decreased personnel related expense. For full year, G&A expense were RMB 785 million, representing an increase of 19% year-over-year. The year-over-year increase was primarily due to, first, increased depreciation and amortization expense, mainly related to the land use right of the company's headquarters building project. The second, increased personnel related expense, which were partly offset by decrease of office operating expense as a result of expense control measure taken by the company to tackle the resurgence of the COVID-19 in China. Turning to profitability. Operating profit in June quarter was RMB 272 million, representing an increase of 45% year-over-year. Operating margin was 11.7% compared to 7.6% a year ago. For full fiscal year 2022, operating profit was RMB 882 million, representing an increase of 120% year-over-year. Operating margin was 8.7% compared to 4.4% in the fiscal year 2021. Adjusted net profit in June quarter was RMB 223 million, representing an increase of 57% year-over-year. Adjusted net margin was 9.6%, compared to 5.7% in the same period of 2021. For full year, adjusted net profit was RMB 723 million, representing an increase of 51% year-over-year. Adjusted net margin was 7.2%, compared to 5.3% in fiscal year 2021. Adjusted basic and diluted earnings per ADS in June quarter were RMB 0.72, up 50% year-over-year. For full year, adjusted basic and diluted earnings per ADS were RMB 2.40 and RMB 2.36 respectively, representing an increase of 43% and 40% year-over-year respectively. Turning to cash position. As of end of June, we had a cash position of RMB 5.8 billion. On August 17, 2022, our board of directors approved a special cash dividend in the amount of approximately $53.5 million or RMB 360 million, up 20% year-over-year. Our capital allocation strategy in the future will balance new growth opportunities and our commitment to bring stable returns to shareholders. Turning to working capital. Turnovers of inventory and trade receivable remain stabilized. As a newly listed company on The Stock Exchange of Hong Kong, we follow the common practice adopted by the public company in the Hong Kong market, and we will no longer provide guidance on revenue growth going forward. That being said, as we approach the last month of the September quarter, we have observed encouraging sales recovery in China, which has stabilized at a healthy level during the past several weeks. Looking forward into the coming quarter, we expect our bottom line performance will further normalize because of our disciplined execution of brand upgrades and the steady recovery of overseas operations. Thank you. This concludes our prepared remarks. 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. Please go ahead. My question is about the brand upgrade. Our brand upgrade actually drive the gross margin quite significantly in the past quarters. Can management comment on our strategies in the second half and what's the gross margin upside and whether there's any related operating expenses for the brand upgrade? Thank you. Okay. Thank you, Michelle Cheng, for your question. This is Jack Ye. For questions, you know, as we have communicated in our, you know, last call back in March, our MINISO's brand strategic upgrade will account from three ways in product, in channel, and in marketing. In terms of products, we will continue to improve the gross margin of newly launched products, especially those consumer interest-based consumption products in our regular base as planned. As mentioned just now, you know, as our domestic gross profit margin increased by about 3% year-on-year this quarter to about 54%, from nearly 51% last year. Our current plan is that by the end of fiscal year 2023, which is, you know, this time next year, we plan to have, you know, improved our gross merchandise margin by another 5 percentage points to close to 60%. In terms of channels, we plan to systematically optimize offline business and profitability in the tier 1 to 2 cities and to help our retail partners to reduce operational risk. In terms of marketing We originally had, you know, a marketing plan in the September quarter as we communicated. The budget was around RMB 50 million or so. However, considering the current domestic situation of the pandemic, and its possible outbreak, strict control measures will continue for some time. We have decided to, you know, delay or postpone these marketing campaigns and to save a part of the cost, and this will have positive impact on profit in September quarter. I hope this helped answer your question. Thank you. Thank you. The next question is from the line of Anne Ling from Jefferies. Operator, please go ahead. Now let me translate in English. You know, just regarding your letter, you know, to the public, you know, regarding like, you know, minimize some of these, like, you know, sort of quote, unquote, you know, the Japanese influence. What exactly, you know, is the strategy, you know, regarding like, you know, how you will change in terms of the operation? Our concern is that, you know, whether all these changes will impact, you know, your image or your performance, or your, like, you know, your brand equity. You know, from the consumer's angle, both for overseas as well as the domestic side. I would like to get more information about what's your, what is your plan. Thank you. Okay. Now, let me translate in English. me translate in English. You know, just regarding your letter, you know, to the public, you know, regarding like you know MINISO some of these like you know sort of quote, unquote you know the Japanese influence. What exactly you know is the strategy you know regarding like you know how you will change in terms of the operation? Our concern is that you know whether all these changes will impact you know your image or your your performance or your like you know your brand equity. You know from the consumer's angle, both for overseas as well as the domestic side. I would like to get more more information about what's your what is your plan. Thank you. This recovery from sales in China mainly come from the recovery from, you know, the foot traffic to shopping malls. While our ASP remain, you know, growth or low single digits. In terms of overseas markets, if you look at in July and the first three weeks of August, the total GMV in our overseas distributors, it's increased by about 30%-40% on a year-over-year basis. If you look at our directly operating business, the year-over-year growth was even higher, about 50%. Thank you for your question. Is there any additional cost involved in the, in this, like, you know, exercise? Thank you. This is Steven. Let me quickly translate for Steven. For internal control measures, you know, there will be some, but we do not think that it will increase our related expense significantly and will not impact our earnings. Thank you. Thank you. Thank you. The next question is from the line of Lucy Yu from Bank of America Merrill Lynch. Line open. Please go ahead. Thank you, Lucy. This is Jack. I will cover this question. In terms of question on the store expansion in overseas markets, we have to say that currently we see a strong demand from our overseas distributors and the pipeline is also strong. But we also have to be frankly speaking that the Russia-Ukraine conflicts and, you know, the evolving you know, geopolitical risk in some of overseas markets are now impacting in different ways and aspects to our overseas distributors' store opening plans. Some of them have, you know, delayed their store expansion plan in this quarter. If you look at past several years, from fiscal year 2020 to fiscal year 2022, our overseas markets net added 275, 121, and 163 stores. We are now quite confident that in fiscal year 2023, the net addition of our stores in overseas markets as a whole will be significantly higher than that in 2022. Thank you. Thank you once again for joining us today. If you have any further questions, please contact me or Investor Relations team. Our contact information can be found on today's press release. We will see you next quarter. Have a nice day.