Ladies and gentlemen, thank you for standing by, and welcome to MINISO Group Holding Limited's Earnings Conference Call for the Third Quarter of Fiscal Year 2021 that ended March 31, 2021. 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 Investor Relations. Please go ahead, Eason.

Thank you, Jason. Hello, everyone, and thank you all for joining us on today's call. The 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. Guofu Ye, 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 continuing, I would 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 measure reported under the International Financial Reporting Standard in the Company's earnings release and filings with the SEC. During the Q&A session, please repeat your questions in Chinese if asked in English; management will answer in Chinese, and I will translate them into English. With that, I will now turn the call over to Mr. Ye to give you a business update. Please go ahead, sir.

Hello everyone. For the March Quarter of 2021, MINISO recorded a revenue of RMB2.23 billion, up 37% year-over-year and in line with the Company's guidance. Our domestic businesses delivered a combined revenue of RMB1.79 billion, up 75% year-over-year and 12% compared to the same period of 2019. In today's conference call, I will share the major developments we have achieved for both MINISO and TOP TOY this quarter. For MINISO, our domestic operations continued to deliver an encouraging recovery this quarter. While occasional cases of COVID-19 in early January resulted in shutdowns for certain stores, we took a number of measures and launched a series of new products in the following months to achieve a healthy recovery. As a result, domestic operations of MINISO brand recorded a revenue of RMB1.72 billion, up 71% year-over-year and 12% compared to the same period of 2019. We added 44 new MINISO stores in China during the quarter, with more than 90% of new stores located in Tier-3 and below cities. During the past 12 months, we made significant progress in executing our strategy to penetrate into lower-tier cities, with 70% of new stores located in Tier-3 and below cities. We notice that nearly all key operating metrics for MINISO stores such as average ticket size, conversion rate, and cross-selling rate are similar in lower-tier cities compared to Tier-1 and Tier-2 cities, while rental expenses are more attractive, providing a better ROI for our retail partners in the long term. As of March 31, less than 40% of our stores were located in lower-tier cities. As lower-tier cities accounted for more than 70% of China's consumer spending, nearly 60% of GDP, and contributed two-thirds of the country's economic growth. Going forward, we see a lot of opportunities in lower-tier cities and will continue to unlock new market opportunities there. As for overseas operations, revenue was RMB441 million, down 28% year-over-year and 5% quarter-over-quarter. During the same period of the previous year, COVID had not fully erupted. However, during this quarter, many countries have experienced major setbacks on the path to pandemic recovery, especially in Southeast Asia and Latin America, where many of our overseas stores are concentrated. In these areas, many countries have continuously reported new records in case numbers and adopted stricter control measures. By the end of March, 228 overseas stores were temporarily closed and many others were forced to reduce business hours due to the impact of COVID-19, resulting in the year-over-year revenue decline. Nevertheless, we have made encouraging progress in our overseas market expansion. The number of overseas stores increased by 29 in this quarter, surpassing the net increase of 20 in the same period in 2020, demonstrating our overseas partners' confidence in MINISO's long-term competitiveness. The net increase in new stores came mainly from countries in the Middle East and Europe, where the pandemic recovery went well. This includes Spain, where we opened six new stores during the quarter. In January, MINISO opened its first store in Porto, the second largest city in Portugal, which was the 94th overseas market we have entered. The mission of MINISO is to provide global consumers with high-quality and affordable lifestyle products. In this quarter, we continued to focus on products and innovation, so I'd like to share additional details on this front. First of all, in product development, we focus on strategic new categories. In this quarter in China, sales of strategic new categories such as toys and snacks increased significantly year-over-year. Specifically, sales of toys were up nearly twofold year-over-year, in which building blocks were up more than threefold. Sales of snacks were up 104% year-over-year, in which sugar-candy sales increased by 168% year-over-year. Second, we kept innovating our business. Take our first theme store Fashion Mask Store as an example; its sales in a single day exceeded RMB10,000, which is a very encouraging number for a vertical retail store and provided us with confidence and experience in expanding theme stores into other categories. We will transplant this new successful business to other cities in the near future. Let me give you another example. During the pandemic, we proactively leveraged innovative ways such as live streaming to distribute merchandise to overseas partners; it has been proven to be quite effective in promoting the recovery of overseas business, with two live streaming events in this quarter generating revenues of RMB150 million. Third, we strengthened our IP advantage by successively launching products with new IP partners such as Chip and Dale, Tsum Tsum, Heaven Official's Blessing and Bilibili during this quarter. So far, we have fully covered six major IP sectors such as Global Trendy IPs, ACG IPs, Chinese traditional IPs, creative art toys IPs, sports and gaming IPs, and have solidified MINISO's position as the leading IP player in the industry. On the operational side, we have been dedicated to improving the efficiency of MINISO stores by introducing information systems and detailed tactics over the past several years. For example, the average number of employees per store in China dropped from 10 a few years ago to 6 in the last quarter and dropped further by nearly 10% during this quarter, effectively reducing the cost burden of our retail partners. MINISO's omni-channel strategy continued to be well executed during this quarter, and we continued reaching and activating members through various ways such as private traffic operations and giving incentives such as coupons in WeChat Mini Program to improve retention and repurchase rates. As of March 31, members who had made at least one purchase during the past 12 months were about 30.2 million, an increase of 2 million sequentially and nearly 8 million from the end of June 2020. As a result of the above-mentioned measures, revenue contribution from online channels exceeded 10% for the first time in this quarter, with eCommerce contributing RMB171 million or 7.7% of net revenues, and O2O contributing about RMB70 million or 3.1% of net revenues. Now I'd like to share more about TOP TOY. As the first new business incubated under X strategy, this is TOP TOY's first full quarter. We continue to see healthy trends in each aspect of its operation, including optimization of its economic model, expansion of product categories, improvement of omni-channel strategy, and positive initial results of IP strategy. The first DreamWorks store of TOP TOY has been in operation for five months; our team has been refining its business model. So far, we have opened four DreamWorks stores, each of which has created a very good opening performance among peers, giving us great confidence in the success of DreamWorks stores. At the same time, we are also testing smaller stores such as collection stores as well as flash stores and will continue to review TOP TOY's operations on a dynamic basis; we will provide more updates on next quarter's call. TOP TOY is committed to building the world's largest and most comprehensive collection shop of art toys. To achieve this, it has been adopting a multiple category strategy to expand the addressable market of art toys while reducing reliance on any single category. In this quarter, we added sculptures as the eighth category of TOP TOY to enrich its product line. Garage kits, building blocks, and assembly Gundam were the three rising categories favored by consumers during the quarter, and their revenue contributions continued to increase. So far, TOP TOY has about 2,500 SKUs, increased from 1,500 when it got started. In terms of channels, TOP TOY has been building its omni-channel capabilities since day one. Today it covers 15 cities in China with 25 offline stores. Meanwhile, it plans to open roboshops and the first overseas store within this year. In terms of online channels, it has accumulated more than 300,000 members in its WeChat Mini Program. In addition, it opened its Tmall flagship store in late April and will cooperate with other eCommerce giants such as JD.com and Douyin to open more stores. On April 28th, TOP TOY held a themed branding event in Shanghai to introduce its proprietary IPs such as Twinkle, Tammy, and Yoyo. I would like to take this opportunity to share TOP TOY's IP strategy. We estimate 30% of TOP TOY's products will be through self-owned IPs or through cooperation with IP partners, and the other 70% will be through third-party IPs. Proprietary and exclusive IPs, because of their originality and uniqueness, are much easier to communicate with fans, have higher gross margin, and enable TOP TOY to build competitive advantages. To focus on IP development, TOP TOY has cooperated with nearly 300 designer and supplier partners, including talented designers such as Kow Yokoyama, Japan's top designer. The March quarter was MINISO's first full quarter as a public company. We have experienced accelerating recoveries in domestic operations and profitability as we continued to focus on product innovation. TOP TOY continues to achieve new milestones as we continue to sharpen our business model, products, sales channels, and proprietary IPs. Looking forward in 2021, MINISO will continue to penetrate further into China's lower-tier cities by opening more stores and capturing greater market share in these high ROI regions. Meanwhile, we will continue monitoring the pandemic recovery in overseas markets carefully and rapidly adapt our expansion plan as necessary to embrace its recovery. This concludes my part of the business update. I will now turn the call to our CFO for a financial review.

Thank you. I will start my remarks with a review of the March quarter financial results and then provide additional color regarding the June quarter. Please note that I will be referring to non-IFRS measures, which have excluded share-based compensation expenses. Revenue was RMB2,229 million, representing a year-over-year increase of 37% and a quarter-over-quarter decrease of 3%. The year-over-year increase in revenue was driven by the recovery of our domestic operations, which increased 75% to RMB1,788 million. Within our domestic operations, revenues of MINISO offline stores were RMB1,544 million, an increase of 69% year-over-year; revenues of eCommerce were RMB171 million, an increase of 86% year-over-year. In overseas markets, revenue declined by 28% year-over-year, as compared to a decline of 51% year-over-year in the previous quarter. The quarter-over-quarter decrease was mainly due to seasonality and the influence of the pandemic. Our business is subject to seasonal fluctuation, typically with stronger performance in the December quarter than in the March quarter. However, we took several effective measures such as launching more popular products to boost sales and penetrating further into lower-tier cities in China in this quarter; the sequential decline of revenue was only 3%, compared with the sequential decline of 11% in the March quarter 2019, which represented a normalized seasonality before the pandemic. Gross profit was RMB627 million, an increase of 19% year-over-year and decreased slightly quarter-over-quarter. Gross margin was 28.1%, the highest in the past four quarters since the outbreak of the pandemic, showing a positive sign of our continued business recovery. Gross margin was 32.4% a year ago and 28.0% a quarter ago. As we have explained in the last quarter, the fluctuations in gross margin were due to changes in our revenue mix. The year-over-year decrease was due to a decrease in revenue contribution from our more profitable overseas operations, which was 19.8% of net revenues in this quarter as compared to 37.3% a year ago. The sequential increase in gross margin was mainly attributable to an increase in revenue contributions from our higher-margin online channels such as eCommerce and O2O in this quarter despite the decrease in revenue contribution from our overseas operations, which was 20.1% of net revenues a quarter ago. Selling and distribution expenses were RMB275 million, an increase of 18% year-over-year, but a decrease of 10% quarter-over-quarter. The year-over-year increase was attributable to increased logistics expenses, which were in line with the recovery of our business during this quarter, and the increased marketing expenses as we continue to strengthen brand recognition for MINISO and TOP TOY. The quarter-over-quarter decrease was primarily due to decreases in marketing-related expenses and personnel-related expenses such as payroll and travel expenses caused by seasonality. G&A expenses were RMB157 million, an increase of 29% year-over-year and flat quarter-over-quarter. The year-over-year increase was primarily due to increases in personnel-related expenses and IT expenses. We took measures to reduce G&A expenses when the COVID-19 pandemic broke out during the same period of 2020, such as trimming down personnel-related expenses and IT expenses, resulting in a low comparison base for these expenses. Turning to our profitability, operating profit was RMB161 million, increased by threefold year-over-year and twofold quarter-over-quarter. The year-over-year improvement in operating profit was primarily due to our business recovery in China, while the quarter-over-quarter improvement was due to reductions in operating expenses and other net income or loss, which was a loss of RMB55 million in the previous quarter but an income of RMB8 million in this quarter. Adjusted net profit was RMB149 million, an increase of 10% year-over-year and 77% quarter-over-quarter. Adjusted net margin was 6.7%, the highest in the past four quarters since the outbreak of the pandemic, compared to about 8.3% a year ago and 3.7% a quarter ago. Basic and diluted earnings from continuing operations per ADS were both RMB0.4, compared to RMB0.76 a year ago and RMB0.08 a quarter ago. Adjusted basic and diluted earnings per ADS were RMB0.52, compared to RMB0.44 a year ago and RMB0.28 a quarter ago. Turning to our balance sheet, as of March 31, 2021, the combined balance of the Company's cash, cash equivalents, restricted cash, and other investments was RMB7 billion, compared to RMB6.9 billion a quarter ago. This increase was primarily due to cash flow generated from operations. Turning to working capital, turnovers of inventories and trade receivables remain flat sequentially. Looking ahead into the June quarter of 2021, we expect our total revenue to be between RMB2.3 billion and RMB2.5 billion, which represents an increase of 48% to 61% year-over-year. As we continue to operate in a time of significant uncertainty in regard to the timetable of pandemic recovery in our overseas markets, we remain cautious in our sales outlook in these markets. However, we are encouraged by our efficient working capital management, steady recovery of gross margin, and disciplined investment into new businesses, all of which have laid a solid foundation for us to deliver consistent, strong financial performance and long-term shareholder value. 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. Our first question is from Michelle Cheng from Goldman Sachs.

I have three quick questions for management. First one is the Company introduced a new retail platform strategy, and we successfully developed TOP TOY. So can management share the thought about the future development and also the experience we can learn from TOP TOY development? And second question is about the overseas recovery. So on one hand, we control the inventory and the expansion. But have we reviewed the overseas distributor's financial situation and the business environment, and how this will impact our expansion in the future? And thirdly, for the domestic business, we have been expanding aggressively in the low-tier city. Can you share with us the operational situation for those stores opened in the past few quarters, and also how do we see the business opportunities in the lower-tier city going forward? Thank you.

[Foreign Language]

Okay, Michelle, thank you for the question. For your first question on X strategy, we certainly have some new categories, but our TOP TOY has gained preliminary success at this moment.

[Foreign Language]

Okay, Michelle, for your second questions, regarding overseas, I think these questions need to be analyzed case by case. Now we had more than 1,700 stores, and in terms of overseas distributors, the top 10 distributors accounted for more than 60% of our overseas stores. So the concentration is quite high and stable. Please note, for these big distributors, they are absolutely comfortable at this moment. But outside the very strong cash position and shareholder structure and our cost control abilities, our adjustment shows that there's no big risk for these big distributors. For the smaller ones, absolutely, some of them will face even bigger difficulties. As we showed before, now we have 80 distributors in our overseas market. Certain distributors' financial difficulties will not influence the whole big picture of our overseas market. If you look at the positive four-quarters performance of our overseas business, no matter in revenue or in net income, I think the most difficult time has passed, and we even see some, in some of our overseas markets, some distributors are accelerating their expansion at a pace such as Italy and Portugal, which we have entered during the first and second quarter this year, and for example, this country alone has opened six stores in the first quarter. So that answers your second question.

[Foreign Language]

For the third question on lower-tier cities, first of all, we think MINISO's product and our model is very competitive in lower-tier cities. As Mr. Zhang mentioned just now, key operating metrics such as average sale price and cross-selling rate are also favorable. In terms of addressable market, MINISO has entered about less than 300 cities in China; but within Tier 3 and Tier 2 alone, there are 270 more cities available. The addressable market is substantial. In terms of sales potential, MINISO stores can generate sales of RMB3 million to RMB4 million annually, and the payback period can be within six to eight months.

The next question is from Lucy Yu from Bank of America. Please go ahead.

The first question is about membership. We have committed members for a while. What have we learned from this big data? And how are we going to utilize this data to help with our operations? Second question is about the GMV recovery in China and the overseas market in April and May? How should we think about the recovery trajectory for the second half? Third question is about TOP TOY. What is their store opening plan for this year, as well as more operating metrics? Thank you.

[Foreign Language]

Okay, Lucy, thank you for your question. For your question on members, by the end of this quarter, we have accumulated data regarding our members, and we are using various approaches to outreach and activate them. In terms of average sales price, members' spending is double that of non-members, and in terms of repurchase rates, ordinary customers buy 1.5 times each year versus three times for members. The importance of membership has been increasing over the past year, and we will make more efforts to improve that. For example, we managed our members in distinct stages last quarter to carry out more targeted marketing to increase retention and repurchase rates.

[Foreign Language]

Let me provide a quick update on our business in China and overseas markets. In April and May, we had two public holidays in China, which resulted in a strong sales increase during these two holidays. However, after the holidays, we saw a quick decrease, leading to normal sales levels. We believe that the overall recovery in China remains at approximately 95%. In the overseas market, by the end of last month, as April 30, the overseas market is slightly worse than at the end of March. We have more than 300 store temporary shutdowns due to stricter COVID control measures in the countries. For those stores still in business, the recovery rate was over 5% lower than last month. Regarding the second half of this year, we see stable growth and recovery in China, while the situations overseas remain uncertain. In places like India, where we have 150 stores, 90 remain closed. In more developed countries like the U.S., we see a good recovery trend, but we only have just over 30 stores there, so the impact remains significant.

[Foreign Language]

Regarding TOP TOY, our store opening plan remains unchanged with guidance for 90 to 100 stores by the end of the calendar year. Our DreamWorks store's monthly sales have been stable at RMB2 million, while Type C stores are testing with monthly sales stabilizing around RMB600,000. We have gathered strong interest from our retail partners to open TOP TOY stores, and we have received positive feedback and proposals from them.

There are no more questions in the queue. This concludes our question-and-answer session. I'd like to turn the conference back over to management for any closing remarks.

Okay. Thank you again for joining us today. If you have any further questions regarding MINISO, please feel free to contact me and the IR team, and our contact information can be found on today's press release. We will see you next quarter; have a good day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.