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 ending June 30, 2021. At this time all participants are in a listen-only mode. After the managements' 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 Investor Relations. Please go ahead, Eason.

Thank you, Monroe. Hello, everyone, and thank you all for joining us on today's call. The company has announced its corporate financial results earlier today and earnings release is now available on the Investor Relations website at ir.miniso.com. Today, you will hear from our Chairman and CEO, Mr. Guofu Ye, who will start the call with an overview of our business. He will be followed by our CFO, Mr. Saiyin Zhang, who will address our financial results in more detail before we take your questions. Before continuing, I'd like to refer you to the safe harbor statement in our earnings press release, which also applies to this call as we will 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 measures reported under the international financial reporting standards 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.

[Foreign Language] Hello, everyone. On this call, I will five 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. [Foreign Language] We closed fiscal year 2021 with a solid fourth quarter. Revenue was RMB2.4 billion, up 59% year-over-year and within company's guidance. Adjusted net profit was RMB145 million, up 242% year-on-year. In terms of regions, domestic revenue was RMB1.95 billion, up 43% year-over-year. Overseas revenues were RMB526 million, up 179% year-over-year in terms of business units MINISO, our flagship business recorded a revenue of RMB2.36 billion, up 57% year-over-year accounting for 95% of our total revenue. Meanwhile our business recorded a revenue of RMB110 million, up 136% year-over-year. [Foreign Language] MINISO experienced a tough operating environment in June quarter as the rapid spread of the Delta variant triggering a new round of pandemic in Guangdong province and some overseas markets. In China, thanks to strong measures taken by the government. The spread of the pandemic was effectively limited in Guangdong and completely withdrawn by early July. As a result, domestic operations of MINISO brand recorded a revenue of RMB1.83 billion, up 39% year-over-year. Revenue from international operations in this quarter was RMB526 million, up 179% year-over-year although the overall situation was better than that of the same year in 2022 for our international operations. Some of our overseas such as those in there experienced a revenue decline sequentially in this quarter due to the impact of Delta variant. Our distributor countries, on the other hand, experienced revenue increase sequentially despise lower than expectation. [Foreign Language] 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…

Thank you. I will start my remarks with a review of 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 excluded share-based compensation expenses. Revenue was RMB2.07 billion, increased by 59% year-over-year and 11% quarter-over-quarter and above the midpoint over the company's guidance range of RMB2.3 billion to RMB2.5 billion. The year-over-year increase was primarily driven by the growth of the company's domestic operations and a recovery of international operations. Revenue generated from the company's domestic operations was RMB1.95 billion, increased by 43% year-over-year. Revenue generated from domestic operations of the MINISO brand was RMB1.83 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 the company's international operations was RMB526 million, increased by 179% year-over-year, reflecting the recovery of the company's international operations from the same period of 2020. From a quarter-over-quarter perspective, revenue from company's domestic operations increased by 9% driven by a sequential growth over 60% in MINISO’s offline sales in China and a sequential growth of 15% in e-commerce business due to June 18 Mid-Year Shopping Festival. Revenue from international operations increased by 19% sequential. According to the National Bureau of Statistics in China in the first half of 2021, retail sales of supermarket, convenience store, department store and a 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’s growth sales increased by 54% and 8% separately, better than the industrial average. And it was achieved against the background of the pandemic resurgence in Guangdong…

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.

[Foreign Language] So two questions for management. One is can you just please share the quarter-to-date trend for both China and a few like important international market situation. And secondary for TOP TOY, management mentioned that the gross margin upside will come from better product mix. So, can you share with us the IP development and other product mix enhancement strategies going forward? Thank you.

[Foreign Language] Okay, thank you for the questions Michelle. In terms of the pandemic influences our mass business, so this round of pandemic began at around July 2020s, although we have taken active measures such as to increase our online promotions and other strategies to deal with it. It has somehow impacted 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. And for tier-2, the impact is estimated to be more than 20% and for tier-3, it's below 10%. And we currently estimate that the overall impact for the GMV is about 15% for our domestic business. And in terms of province or regions, the most impacted were provinces such as Zhangzhou, Henan and Honan. For these three provinces, [indiscernible] loss was about 30% to 40% of its daily online level. And we currently estimate that the impact of the – that impact nearly one month on overall performance is diminishing with the – strict control by the government and the overall impact is diminishing to as the pandemic is gradually brought under control. And the based on the past experience in China, it usually takes about four to five days to control the whole situation. And we believe at this time that it will happen for this round of pandemic two. [Foreign Language] In terms of the recovery in overseas markets in June quarter, the overall recovery rate was about 55% compared with the same period in 2019. And the recovery rate was about 55% in April, 60% in May and respectively. In terms of region, Asian market, our largest of the market is our – about 40% of overseas…

The next question comes from the line of Lucy Yu from Bank of America. Your line is open. Please go ahead.

[Foreign Language] So, considering that COVID-19 is going to be lasted for at least relatively longer time, so how should we think about the development in both domestic market as well as overseas market, especially in terms of marketing and the channel development? And also, in terms of new retail format development, is there any update that could be shared with us? And the second question is on the margins, GP margin declined or contracted a little bit on Q-on-Q basis. So, can we break that down into promotion activities and inventory clearance? So how much of the margin contraction is due to each factor? And going into the next quarter, which is September quarter, how should we think about a margin trends? Thank you.

[Foreign Language] This is Steven and I’ll address your first questions. Channel expansion, for our online business, we have experienced a rapid growth during the past one, two years, and now it's around revenue contribution is about 12%, but if we look at the past one or two years the year-over-year growth was more than 100%. So as an important part of our omni-channel strategy that will lead in invest into online continuously including our outdoor business, DTC, e-commerce and so on. The e-commerce ecosystem has changed a little bit a lot in the past year or two such as live streaming, showing and quite show. And we are also actively following up on this thing, but we will not burn cash by GMV as we share in our platform, instead, we will insist our profitable and health redevelopment of our business. So, it has been, and so it will be – for example we are more focused digitalization here to reach and active all users in a lower cost, but more efficiently.

[Foreign Language] Hi, Lucy. This is Guofu Ye. And in terms of our customers about a new business, as we share that our vision is to become a global leading new retail platform. So, we definitely had some source and some internal integration and so on. But we do not think that this is a blind time to sell and we'll definitely share more when we have some major announcement on this. [Foreign Language] Hi, Lucy. In terms of your questions on GP margin, in this quarter, as we explained that the two reasons have resulted a sequential decline versus the Mid-Year Shopping Festival. We have increased promotions to maintain our market share. And the second is due to the pandemic in Guangdong and we have made some inventory clearance to tackle the challenges. So, overall, these two reasons have decreased our GP margin of about 1.5%. And if we look at the next quarter, the September quarter for e-commerce, we do not see any influence in this side because there were no major investors during this quarter. But for the second that the pandemic, since late July, the pandemic broke from Nanjing has spread in many provinces in China. So, we estimated that based on past experience, it's going to be completely controlled at least 45 days. And so, in short term, we see some gross margin pressure here. And we will continue to do some inventory clearance to tackle this Nanjing pandemic. So, 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 during the past several quarters. Thank you.

Okay. Thank you. The next question comes from Jerry Yang from CITIC. Please go ahead.

[Foreign Language]

[Foreign Language] Hey, Jerry. This is Guofu Ye. Thank you for question. In terms of your question on product, the revenue contribution of our 11 categories are relative – evenly distributed and relatively stable. During the past two years, categories such as toys and snacks have grown rapidly. For example, sales TOP TOY is 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 [indiscernible] revenue share now reached about 10%, compared to 7% in the same period of 2020. If we look at the category structure, the 11 categories, the structure, they are relatively stable. And we do not see the change in the future. But we do think that there exist opportunities in some categories such as toys and – such as toys and snacks one-year ago. In the future, we do not think – we do think that culture and creative products will have their markets because young people love it. And this is the same for personal health products, and for IT products, which we are very good at. As we showed earlier in my prepare remarks, sales of IP products increased 59% compared to the same period in 2019 and accounting for 25% of our sales. Thank you.

[Foreign Language] Okay. I'll translate to myself. This is Rebecca from Haitong International. And I just have one question about MINISO oversea business. And could you please assure that our current revenue mix of three overseas models, they directly operated distribution and a franchise. And also, could you please give us more color on the resulting setters and trend of the distributors? Thanks.

[Foreign Language] Hi, Rebecca, thank you for a question. This is Saiyin. Now in terms of GMV, our distributor market usually account for 60% to 70% similar with its share of our other stores and subsidiary countries account for, now another 30% to 40%. And before the COVID-19 such as in the second quarter of 2019 that the GMB in our subsidiary companies share was about 30%, but in the – in this quarter, in the June quarter; one, because of the delta variants, GMV in our countries accounted for only. And in terms of revenue, this quarter, it's 70%, 30%, so the 70% is from distributor country. And in terms of merchandise delivery amounts of distributor order. So in the first seven months, one, total shipment order decreased 30% to 40% compared the same period 2019; and increase about 60% compelled to the same period in 2020. And as you mentioned, our overseas distributors as our CEO shared in prepared remarks that we have with many strong overseas partners in our overseas markets. And 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. So, these major distributors, they are very – they have strength. Our cash position in shareholding structure power. So, we do believe that we are more resilient at all the difficulty times during the pandemic. And this is also true that our user market is stable. Okay. Thank you.

Okay. Thank you everyone. Thank you once again for joining our conference call today. So, if you have other questions, please do not hesitate to contact me or the investor relations team, and our contact information can be found on today's press release. So, we will see you next quarter. Have a nice day bye-bye.