Puyi Inc. (NASDAQ:PUYI) Q4 2023 Earnings Call Transcript

Puyi Inc. (NASDAQ:PUYI) Q4 2023 Earnings Call Transcript September 26, 2023

Operator: Ladies and gentlemen, welcome to Puyi Inc.’s Fiscal Year 2023 Earnings Conference Call. At this time all participants are in a listen-only mode. Following Management’s prepared remarks, there’ll 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 would like to turn the meeting over to your first speaker today, Ms. Jing He, Puyi’s General Manager of Financial Reporting Department. Thank you. Please go ahead.

Jing He: Thanks, operator. Good evening. Welcome to our earnings conference call for the fiscal year 2023. Our annual report on Form 20-F has been uploaded to the website of U.S. Securities 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 Securities 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 outlined in our filings with the SEC, including our 20-F.

We do not undertake any obligation to update these forward-looking statements, except as required under the applicable law. Joining us today are our Chairman of the Board and Chief Executive Officer, Mr. Yong Ren and Chief Financial Officer, Mr. Anlin Hu. Mr. Yong Ren will first walk you through our business and financial conditions of the fiscal year 2023. And then together with Mr. Hu, he will answer your questions after the prepared remarks. Now I will turn the call over to Mr. Ren.

Yong Ren: [Foreign Language] Good evening, everyone. Welcome to our 2023 fiscal year earnings conference call. Here with me is our Chief Financial Officer, Mr. Anlin Hu. First of all, I will give you an overview of our financial and operational conditions for the fiscal year 2023. Then I will discuss briefly our business outlook for the future. Finally, we’ll have a question-and-answer section to answer any questions you may have. Now let me present an overview of our operational results and business initiatives in the fiscal year 2023. In fiscal year 2023, influenced by various factors such as strict control measures due to the COVID-19 pandemic in late 2022, the trade tension between U.S. and China and the geopolitical conflicts, the economic situation has been complex and challenging.

The capital market has shown a volatile trend, resulting in a lack of investor confidence and relatedly risk overall investment sentiment. Against this backdrop, our management team has adhered to the principle of good management in the fiscal year 2023. On the one hand, we focused on our core business, and rigorously develop institutional business with transaction value of our public raised fund products contributed by institutional clients exceeding RMB5 billion, representing a year-on-year growth of approximately 266%. On the other hand, we explore the demand of high-net worth clients and expanded family office business by promoting insurance premium trust products. As of June 30, 2023, we had assisted an aggregate of 366 affluent family clients to set up trust accounts with entrusted assets of RMB4.1 billion through our trust consulting service.

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Q&A Session

Furthermore, we continuously work on reducing costs and increasing efficiency while enhancing professional skills by providing internal training. In the fiscal year 2023, we were able to reduce our operating cost by 34% compared to the previous year, and our operating loss also reduced by 28% as well. Our main business operations and strategy during the fiscal year 2023 are reported as follows. Firstly, we focus on our core business of distributing market-oriented funds to individual investors and strengthen our professionalism to meet individual investors’ needs. On the one hand, by accompanying investors through the uncertainties, we aim to strengthen long-term relationships with them. Since January 2023, China has entered a post-academic era, but the expected economic range rise did not come as expected, followed by a poor economic and capital market performance, which has affected investor confidence.

To address this issue, we adhere to investment education of long-term investment mechanism to boost our clients’ investment sentiment. At the same time, collaborating with outside the sectionals, we introduced our investment advisory service to our clients to improve analysts of our fund product portfolios to reduce product volatility under the current weak market performance and to stabilize our clients’ investment sentiment. We are pleased to see that after carrying out these initiatives, we have gained trust and praise of our clients. As of June 30, 2023, most of our clients grew whole portfolio products, were willing to purchase our investment advisory service, which could bring us new source of revenue growth. On the other hand, we have enriched our fund product lineup and implemented precise marketing strategies.

We deeply understood the importance of enhancing our own investment research capabilities and providing more from products to meet the diverse needs of investors. In terms of public raised fund products, we further expanded our public raised fund product portfolios by increasing the number of public fund companies we source products from, which increased from 89 as of June 30, 2022, to 103 as of June 30, 2023, including a total of approximately 7,646 public raised fund products. In addition, we added two new fund product portfolios according to the needs of clients in the market, including the automatic redeem product, the target yield product, which automatically redeems when reaching the target profit rate and smart regular investment product, a smart product, which periodically advise investors to contribute different amounts of investments based on the current market condition.

Through the new products bringing new investment strategy, these two differentiated and customized products meet the needs of clients and stabilize the balance of public related fund products. And regarding private related fund products, we have further enhanced the diversity of our private fund strategies, particularly by timely launching convertible bonds and commodity future strategies based on market demand. These strategies can capture profit opportunity for clients in volatile market conditions. Secondly, we upgraded the institution transaction platform based on our core transaction system to achieve breakthrough and growth of institutional business. Institutional investors possess characteristics such as large capital size, stable investment and high platform stickiness, gaining favor from institutional investors plays an important role in the next phase of the development for our company’s public raised fund business.

In the fiscal year 2023, we have increased investment in the transaction platform designed for institutional investors based on our core system and have attracted a number of institutional investors. We believe that the upgrade and construction of the institutional transaction platform will soon bring returns to the growth of the public raised fund business. In fiscal year 2023, our institutional business in the financial institution market achieved a breakthrough. We currently have institutional clients covering most types of financial institutions, including banks, insurance companies, security companies, future companies and trust companies. In the fiscal year 2023, the transaction value of public raised fund products contributed by institutional clients exceeded RMB5 billion.