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Noah Education Holdings Ltd. (



F2Q12 Earnings Call

February 28, 2012 8:00 AM ET


Dong Xu – Chairman, CEO and Chief Strategy Officer

Dora Li – CFO



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Good morning and good evening, ladies and gentlemen. Welcome to the Noah Education Holdings Ltd Second Quarter Fiscal 2012 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Following management’s prepared remarks, there will be a Q&A session. As a reminder, this conference is being recorded.

Joining the conference today are Dong Xu, CEO; and Ms. Dora Li, CFO. After the U.S. markets closed yesterday afternoon, Noah issued a press release announcing its second quarter fiscal year 2012 financial results. The release is available on the Company’s IR website at along with a presentation for today’s call. This call is also being broadcast live over the internet.

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Before management’s presentation, I would like to refer to the Safe Harbor statement in connection with today’s conference call. This call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including certain expectations and goals which are subject to numerous assumptions and risks.

Forward-looking statements involve known and unknown risks and uncertainties, many of which are beyond our control, which may cause actual results to differ materially from any future results or achievements implied by such forward-looking statements. The Company’s actual results could differ materially from those contained in the Risk Factors section of the Company’s fiscal prospectus and recent filings filed with the Securities and Exchange Commission. Unless required by law, the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

I would now like to turn the conference over to Noah’s Chairman and CEO, Mr. Dong Xu. Mr. Xu, you may begin.

Dong Xu

Thank you for joining us today on our second quarter fiscal 2012 earnings call. I hope you had a chance to read our earnings press release. I am delighted to report another profitable and robust performance in the second quarter. The quarterly revenue up 113% year-over-year, exceeding the high end of our guidance by 21%. Excluding one-off items, we saw a positive operating income and a positive net income of RMB5 million which is the second consecutive profitable quarter.

The strong performance demonstrates the effectiveness of our strategy in delivering a broad education set of offering and we have been rewarded with a strong across the board performance in our businesses. By focusing on kindergarten, private primary and secondary schools and supplemental education services, we place ourselves in a unique position to come through growth prospects in an industry resilient to economic uncertainty. We advocate the principal of lifelong education and our strategic direction aims to excellently capture this opportunity.

Kindergarten is a vital entry point for students to begin their journey to open wider and more facility lifelong education. With the acquisition of Yuanbo, we have established a solid foothold in kindergarten services. We continue to see a rising demand for high quality pre-school education. And our kindergarten services are good place to further blossom our offerings as our students seek high education success all the way [ph].

Looking forward, we expect to see continued organic growth from the expansion of our three business services, and increasing progress with reinvestment to ramp up our new schools and kindergartens to enhance utilization and operational performance. The strong organic growth will be complemented by acquisitions which continue to drive further expansion in the federation of our growth. We remain highly confident that our visible and sustainable business model will enable us to maintain a position in the education market throughout 2012 and into the future.

Dora Li, our CFO will walk you through our financial and operational performance as well as guidance for the next quarter. Dora, please.

Dora Li

Thank you Mr. Xu. As Mr. Xu just mentioned, we are very pleased to see more continued strong momentum into the second quarter of fiscal 2012 with both top line and bottom line showing strengths. Turning to the detailed financial results for the second quarter of fiscal year 2012, as they are available in our earnings release, I would like to highlight a few key financial metrics with you. All numbers will be in RMB unless otherwise stated.

On slide four, net revenue for the quarter was up 113% year-over-year. The strong growth was mainly driven by organic developments of existing Wentai Education and Little New Star businesses, and a full-quarter revenue contribution from Yuanbo Education. If you recall, Yuanbo Education only started to contribute to our top line in August during our July to September quarter.

The revenue growth was higher than our guidance and was also partly due to the fact that the forecast is not factored in 1Q revenues as it only finalized all items in the second quarter. For the quarter, Wentai accounted for 54% of net revenues. Little New Star accounted for 23% and Yuanbo 22%.

On slide five, starting this quarter we will report our revenue in terms of business services namely, kindergarten, primary and secondary schools and supplemental education. Revenues from the kindergarten services this quarter was RMB23 million, up 315% year-over-year, accounting for 50% of net revenue. Revenues from primary and the secondary school services was RMB15 million, up 57% year-over-year, and accounted for 33% of net revenues. Revenues from supplemental education services was RMB7 million, up 21% year-over-year and accounted for about 17% of net revenue.

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