Hywin Holdings Announces Unaudited Financial Results for the First Half of Fiscal Year 2023
Transaction value and net revenue sustained growing momentum despite volatile market
AUM increased by 114.3% as Hywin’s EAM business demonstrated its attractiveness to ultra-HNW clients
SHANGHAI, China, March 23, 2023 (GLOBE NEWSWIRE) — Hywin Holdings Ltd. (“Hywin” or the “Company”) (NASDAQ: HYW), a leading independent wealth management service provider in China, today announced its unaudited financial results for the first half of fiscal year 2023 ended December 31, 2022.
First Half of Fiscal Year 2023 Highlights
- Total revenues increased by 17.6% to RMB1,036.0 million (US$148.8 million) from RMB881.3 million in the same period of 2021, primarily due to an increase in transaction value of the products distributed on the Company’s platform.
- Aggregate transaction value of wealth management products distributed on the Company’s platform increased by 6.9% to RMB40.1 billion from RMB37.5 billion in the same period of 2021, mainly attributable to an increase of transaction value in asset-backed products.
- Income from operations increased by 15.5% to RMB102.1 million (US$14.7 million) from RMB88.4 million in the same period of 2021, attributable to the increase in net revenue and improved operating efficiency.
- Net revenues from asset management business increased by 79.4% to RMB16.2 million (US$2.3 million) from RMB9.0 million in the same period of 2021, primarily due to an increase in assets under management.
- Assets under management for asset management business increased by 114.3% to RMB7,013.4 million as of December 31, 2022, from RMB3,272.8 million as of December 31, 2021.
- Number of clients1 increased by 8.7% to 146,418 as of December 31, 2022 from 134,656 as of December 31, 2021.
- Number of active clients2 increased by 3.9% to 36,742 in the six months ended December 31, 2022 from 35,366 in the same period of 2021.
- Strong nationwide coverage: We maintained a strong, nationwide footprint with 1,738 relationship managers and 177 wealth planning centers across 88 cities in China as of December 31, 2022.
| 6 months ended, | 6 months ended, | 6 months ended, | Change | |||
| 12/31/2021 | 12/31/2022 | 12/31/2022 | ||||
| RMB’000 | RMB’000 | USD’000 | ||||
| Total Revenues | 881,256 | 1,035,984 | 148,833 | 17.6 | % | |
| Income from Operations | 88,390 | 102,059 | 14,662 | 15.5 | % | |
| Net Income | 70,362 | 70,582 | 10,140 | 0.3 | % | |
| Assets Under Management | 3,272,810 | 7,013,429 | 1,007,011 | 114.3 | % | |
Hywin Health
- Our new Hywin Health business segment comprises Beijing iLife 3 Technology Co., Ltd. and Sincerity and Compassion Health Management Center, which we acquired during this reporting period, as well as Grand Doctor Medical Co., Ltd., which we acquired in January 2022.
- In light of these acquisitions, Hywin Health currently operates 5 high-end clinics in Shanghai, Beijing, Chengdu and Chongqing. Hywin Health’s business model comprises (i) high-end medical examination services and (ii) health management services.
- During the reporting period, we were in initial phase of integrating Hywin Health into our existing operations and transforming the business model of Hywin Health.
- Number of Hywin Health clients3 was 28,763 as of December 31, 2022.
- Number of medical examination visits was 4,936, which generated revenue of RMB12.4 million in the first half of fiscal year 2023.
- Number of health management service clients was 1,178, which generated revenue of RMB25.9 million in the first half of fiscal year 2023.
- Net revenues were RMB38.3 million (US$5.5 million) in the first half of fiscal year 2023.
- Net loss was RMB24.2 million (US$3.5 million) in the first half of fiscal year 2023.
A summary of the operating results of Hywin Health’s business segment is as follow:
| 6 months ended, | 6 months ended, | |||
| 12/31/2022 | 12/31/2022 | |||
| RMB’000 | USD’000 | |||
| Net Revenues | 38,304 | 5,503 | ||
| Operating Costs and Expenses | ||||
| -Hywin Health costs | (26,152 | ) | (3,757 | ) |
| -Sales and marketing expenses | (9,395 | ) | (1,350 | ) |
| -General and administrative expenses | (26,320 | ) | (3,781 | ) |
| Other (expenses)/income | (634 | ) | (91 | ) |
| Net Loss | (24,197 | ) | (3,476 | ) |
Ms. Wang Dian, Chief Executive Officer and Director of Hywin, commented, “We are encouraged by Hywin Wealth’s solid performance and strong financial and operational results in the first half of fiscal year 2023, which demonstrated its resilience in the face of macro uncertainties and softening capital markets, as well as COVID-19-related challenges in China through the end of 2022. Meanwhile, we continued to make strong progress on a number of fronts during this period. Hywin Wealth’s total client base increased by 8.7% year-on-year to 146,418 as of the end of the first half of fiscal year 2023, a record high, and the repeat investment rate from existing clients remained high at 80.5%. As for Hywin Health, net revenues in the first half of fiscal year 2023 were RMB38.3 million. Leveraging the unique strengths of our dual-platform business model and our proactive responses to evolving customer demands, supported by our strategic product sourcing capabilities, differentiated services and advanced digital infrastructures, our efforts are bearing fruit. We are confident that we will unlock further growth potential as we continue to execute our strategies.”
Mr. Lawrence Lok, Chief Financial Officer of Hywin, stated, “This reporting period demonstrated resilient revenue growth, improved net income, strong cost control, and strong liquidity position. It is encouraging to see impressive top-line growth, with revenue increasing by 17.6% year-on-year to RMB1,036.0 million in the first half of FY2023, despite a slight decrease of 0.1% in overall operating margin to 9.9% after factoring in results from Hywin Health. Hywin Health comprises all of our health management-related strategic acquisitions completed last year. Hywin Health’s operating loss was RMB23.6 million in this period, as we were in the initial stage of integrating and transforming our health businesses. Excluding this, the operating margin of Hywin Wealth was 12.6%, up 2.6% compared to the same period of fiscal year 2022. We exhibited strong cost control capabilities and focused on profitability. Our disciplined execution also enabled us to balance between achieving business growth and managing macro risks. We will continue to improve operational efficiency while seeking new clients and new business opportunities going forward.”
First Half of Fiscal Year 2023 Financial Results
Net Revenues
Total net revenues in the six months ended December 31, 2022 increased by 17.6% to RMB1,036.0 million (US$148.8 million) from RMB881.3 million in the same period of 2021.
- Net revenues from wealth management services in the six months ended December 31, 2022 increased by 13.4% to RMB970.2 million (US$139.4 million) from RMB855.4 million in the same period of 2021, in line with our increase in transaction value.
- Net revenues from asset management services in the six months ended December 31, 2022 increased by 79.4% to RMB16.2 million (US$2.3 million) from RMB9.0 million in the same period of 2021, primarily due to an increase in assets under management.
- Net revenues from health management services in the six months ended December 31, 2022 were RMB38.3 million (US$5.5 million).
Operating Costs and Expenses
Total operating costs and expenses in the six months ended December 31, 2022 increased by 17.8% to RMB933.9 million (US$134.2 million) from RMB792.9 million in the same period of 2021, in line with our increase in net revenues.
- Cost of compensation and benefits in the six months ended December 31, 2022 increased by 16.6% to RMB576.2 million (US$82.8 million) from RMB494.1 million in the same period of 2021, in line with the increases in the number of relationship managers and transaction value.
- Cost related to Hywin Health business segment in the six months ended December 31, 2022 was RMB26.2 million (US$3.8 million).
- Sales and marketing expenses in the six months ended December 31, 2022 increased by 4.8% to RMB182.6 million (US$26.2 million) from RMB174.2 million in the same period of 2021, due to increased marketing and sales activities, including new marketing and sales activities relating to health management services.
- General and administrative expenses in the six months ended December 31, 2022 increased by 21.4% to RMB146.2 million (US$21.0 million) from RMB120.5 million in the same period of 2021, primarily due to increased personnel expenses in research, investment and financial advisory, as well as new expenses related to health management services.
Income from Operations
As a result of the foregoing, income from operations in the six months ended December 31, 2022 increased by 15.5% to RMB102.1 million (US$14.7 million) from RMB88.4 million in the same period of 2021.
Net Income
Net income in the six months ended December 31, 2022 increased by 0.3% to RMB70.6 million (US$10.1 million) from RMB70.4 million in the same period of 2021.
Earnings per ADS
Basic earnings per ADS in the six months ended December 31, 2022 was RMB2.52 (US$0.36), compared with RMB2.51 in the same period of 2021.
Diluted earnings per ADS in the six months ended December 31, 2022 was RMB2.43 (US$0.35), compared with RMB2.43 in the same period of 2021.
Each ADS represents two of the Company’s ordinary shares.
Balance Sheet
As of December 31, 2022, the Company had RMB574.9 million (US$82.5 million) in cash, cash equivalents, and restricted cash, compared with RMB660.4 million as of June 30, 2022. The decrease was mainly attributable to cash used in Hywin Health-related acquisitions and a decrease of investors’ deposit in the restricted cash account.
As of December 31, 2022, the company had RMB363.1 million (US$52.1 million) in property and equipment, RMB 109.0 million (US$15.6 million) in intangible assets and RMB 293.1 million (US$42.1 million) in goodwill compared with RMB325.1 million in property and equipment, RMB 33.5 million in intangible assets and RMB 75.2 million in goodwill as of June 30, 2022. The increase was mainly attributable to the consolidation of newly acquired Hywin Health companies.
As of December 31, 2022, the company recorded RMB191.6 million (US$27.5 million) in operating lease right of use as the company adopted the Accounting Standards Update (“ASU”) 2016-02, Lease (Topic 842) to primarily represent various facilities under non-cancelable operating leases expiring within one to ten years.
As of December 31, 2022, the company had RMB21.7 million (US$3.1 million) in deferred tax liability compared with RMB3.4 million as of June 30, 2022, the increase was primarily due to the acquisition of Beijing iLife 3 Technology Co., Ltd.
Recent Developments
On February 22, 2023, Hywin International, a wholly-owned Hong Kong subsidiary of Hywin Holdings, was elected as the Vice Chair of the Hong Kong Limited Partnership Fund Association (HKLPFA), in recognition of Hywin’s intellectual leadership in alternative asset management and its contributions to the Hong Kong-domiciled private equity industry.
On January 9, 2023, Hywin Family Office team was named as one of the “Top 50 China Family Office of the Year” at the 7th Asia Pacific Wealth Forum and won the 2022 International Private and Family Wealth Management Awards from the Wealth Management magazine. The award has set a benchmark for excellence in wealth management in the Asia Pacific region.
On December 14, 2022, Hywin Holdings released its first sustainability report, showcasing its progress and commitment to sustainability over 17 years. The report outlines Hywin’s contributions to society, industry, clients, shareholders, and employees, and highlights achievements in corporate governance, societal impact, innovation, client services, and talent development. The report also charts a roadmap for Hywin’s sustainable growth.
Conference Call Information
The Company’s management team will hold a Direct Event conference call on March 23, 2023, at 8:00 A.M. Eastern Time (8:00 P.M. Beijing Time on the same day) to discuss the financial results. Details for the conference call are as follows:
| Event Title: | Hywin Holdings First Half of Fiscal Year 2023 Earnings Conference Call |
| Registration Link: | https://register.vevent.com/register/BIf227d9cab41a4a72bdcaa5618aa99375 |
All participants must use the link provided above to complete the online registration process in advance of the conference call. Upon registering, each participant will receive a set of participant dial-in numbers, the Direct Event passcode, and a unique access PIN, which can be used to join the conference call.
A live and archived webcast of the conference call will also be available at the Company’s investor relations website at http://ir.hywinwealth.com.
Exchange Rate
This press release contains translations of certain RMB amounts into U.S. dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from RMB to U.S. dollars in this press release were made at a rate of RMB6.96464 to US$1.00, for figures on the balance sheet as of December 31, 2022, RMB6.96075 to US$1.00 for figures on the income statement for the six months ended December 31, 2022.
About Hywin Holdings Ltd.
Hywin (NASDAQ: HYW) is a leading independent wealth management service provider in China focusing on providing asset allocation advisory services and comprehensive financial products to high-net-worth clients. The Company’s primary services are wealth management, asset management, other comprehensive financial services, and health management services. Wealth management is currently the Company’s largest business segment, in which its onshore and offshore solution platforms serve clients across generations. The Company also offers integrated and high-end medical examination and health management services to high-net-worth clients in China, and aims to become a dual-platform serving clients across market cycles and life cycles. For more information, please visit https://ir.hywinwealth.com.
Safe Harbor Statement
This press release contains statements that may constitute “forward-looking” statements pursuant to the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “anticipate,” “estimate,” “forecast,” “plan,” “project,” “potential,” “continue,” “ongoing,” “expect,” “aim,” “believe,” “intend,” “may,” “should,” “will,” “is/are likely to,” “could” and similar statements. Statements that are not historical facts, including statements about the Company’s beliefs, plans, and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. Further information regarding these and other risks is included in the Company’s filings with the SEC. All information provided in this press release is as of the date of this press release, and the Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
Investor Contact:
Hywin Holdings Ltd.
Email: ir@hywinwealth.com
Media contact:
ICR, LLC
Email: HywinPR@icrinc.com
| HYWIN HOLDINGS LTD. CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | |||||||||
| (In thousands, except for per ADS data and percentages) | |||||||||
| (unaudited) | |||||||||
| 6 months ended, | 6 months ended, | 6 months ended, | Change | ||||||
| 12/31/2021 | 12/31/2022 | 12/31/2022 | |||||||
| RMB’000 | RMB’000 | USD’000 | |||||||
| Net Revenues | |||||||||
| -Wealth management | 855,417 | 970,157 | 139,376 | 13.4 | % | ||||
| -Assets management | 9,033 | 16,203 | 2,328 | 79.4 | % | ||||
| -Hywin Health | – | 38,304 | 5,503 | N/A | |||||
| -Other | 16,806 | 11,320 | 1,626 | (32.6 | )% | ||||
| Total Revenue | 881,256 | 1,035,984 | 148,833 | 17.6 | % | ||||
| Operating Costs and Expenses | |||||||||
| -Compensation and benefits | 494,127 | 576,173 | 82,775 | 16.6 | % | ||||
| -Hywin Health Costs | – | 26,152 | 3,757 | N/A | |||||
| -Share-based compensation | 4,020 | 2,804 | 403 | (30.2 | )% | ||||
| -Sales and marketing expenses | 174,248 | 182,553 | 26,226 | 4.8 | % | ||||
| -General and administrative expenses | 120,471 | 146,243 | 21,010 | 21.4 | % | ||||
| Total Operating Costs and Expenses | 792,866 | 933,925 | 134,171 | 17.8 | % | ||||
| Income from operations | 88,390 | 102,059 | 14,662 | 15.5 | % | ||||
| Other (expenses)/income | |||||||||
| -Interest income, net | 1,562 | 549 | 79 | (64.9 | )% | ||||
| -Other non-operation income, net | 7,837 | (4,559 | ) | (655 | ) | (158.2 | )% | ||
| Total Other Income | 9,399 | (4,010 | ) | (576 | ) | (142.7 | )% | ||
| Income before tax | 97,789 | 98,049 | 14,086 | 0.3 | % | ||||
| Income tax expense | 27,427 | 27,467 | 3,946 | 0.1 | % | ||||
| Net income | 70,362 | 70,582 | 10,140 | 0.3 | % | ||||
| Less: net loss attributable to non-controlling interests | – | 2,033 | 292 | N/A | |||||
| Net income/(loss) attributable to shareholders | 70,362 | 68,549 | 9,848 | (2.6 | )% | ||||
| Other comprehensive Income | |||||||||
| -Foreign currency translation (loss)/gain | (597 | ) | 2,456 | 353 | (511.4 | )% | |||
| Comprehensive Income | 69,765 | 73,038 | 10,493 | 4.7 | % | ||||
| Profit attributable to shareholders | 70,362 | 70,582 | 10,140 | 0.3 | % | ||||
| Income per ADS | |||||||||
| Income per ADS basic | 2.51 | 2.52 | 0.36 | 0.4 | % | ||||
| Income per ADS diluted | 2.43 | 2.43 | 0.35 | 0.0 | % | ||||
| HYWIN HOLDINGS LTD. CONSOLIDATED BALANCE SHEETS | |||
| (unaudited) | |||
| 6/30/2022 | 12/31/2022 | 12/31/2022 | |
| RMB’000 | RMB’000 | USD’000 | |
| ASSETS | |||
| Current assets | |||
| Cash and cash equivalents | 525,136 | 535,615 | 76,905 |
| Restricted cash | 135,242 | 39,297 | 5,642 |
| Accounts receivable, net | 564,374 | 593,830 | 85,264 |
| Due from related parties, net | 66,103 | 36,103 | 5,184 |
| Inventories | – | 10,741 | 1,542 |
| Deposits, prepayments and other current assets | 51,204 | 58,240 | 8,363 |
| Total Current Assets | 1,342,059 | 1,273,826 | 182,900 |
| Non-current assets | |||
| Property and equipment, net | 325,112 | 363,130 | 52,139 |
| Long term investment | 1,000 | 1,000 | 144 |
| Intangible assets, net | 33,548 | 108,969 | 15,646 |
| Goodwill | 75,194 | 293,123 | 42,088 |
| Long-term prepayments | 5,774 | 6,311 | 906 |
| Deferred tax asset | 725 | 725 | 104 |
| Operating lease right-of-use assets | – | 191,588 | 27,509 |
| Total Non-current Assets | 441,353 | 964,846 | 138,536 |
| Total Assets | 1,783,412 | 2,238,672 | 321,436 |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||
| Current Liabilities | |||
| Commission payable | 83,205 | 93,399 | 13,411 |
| Accounts payable | – | 28,794 | 4,134 |
| Advance from customers | – | 42,381 | 6,085 |
| Investors’ deposit | 132,154 | 27,457 | 3,942 |
| Income tax payable | 120,151 | 147,461 | 21,173 |
| Due to related parties | 36,172 | 36,622 | 5,258 |
| Borrowings | 2,000 | – | – |
| Consideration payable | 15,300 | – | – |
| Other payable and accrued liabilities | 390,828 | 472,011 | 67,773 |
| Operating lease liabilities | – | 63,215 | 9,077 |
| Total Current Liabilities | 779,810 | 911,340 | 130,853 |
| Non-current liabilities | |||
| Commission payable-non current | 1,289 | 1,052 | 151 |
| Deferred tax liability | 3,400 | 21,693 | 3,115 |
| Operating lease liabilities, non-current | – | 119,975 | 17,226 |
| Total Non-current Liabilities | 4,689 | 142,720 | 20,492 |
| Total Liabilities | 784,499 | 1,054,060 | 151,345 |
| Mezzanine equity | |||
| Redeemable noncontrolling interest | 30,600 | 30,600 | 4,394 |
| Total Mezzanine equity | 30,600 | 30,600 | 4,394 |
| Shareholders’ Equity | |||
| Ordinary shares | 36 | 36 | 5 |
| Additional paid-in capital | 510,390 | 512,508 | 73,588 |
| Statutory reserves | 100,926 | 128,297 | 18,421 |
| Accumulated gain | 348,503 | 389,682 | 55,952 |
| Noncontrolling interest | – | 112,575 | 16,164 |
| Other comprehensive income | 8,458 | 10,914 | 1,567 |
| Total Shareholders’ equity | 968,313 | 1,154,012 | 165,697 |
| Total Liabilities, Mezzanine equity and Shareholder’s equity | 1,783,412 | 2,238,672 | 321,436 |
_____________________________
1 Clients are those who had conducted at least one transaction with the Company.
2 Active clients are those who purchased products distributed by the Company during the specified period or those who maintained as holders of the Company’s products within the given period.
3 Clients are those who have used our health management services at least once.
4 China Foreign Exchange Trade System USD/RMB mid-point rate on December 31, 2022.
5 An appropriately weighted average exchange rate for the reporting period.
