Jerry He – Chief Executive Officer Dora Li – Chief Financial Officer Ruby Yim – Investor Relations Council.

Sheng Zhong – Morgan Stanley Ivy Luo – Macquarie Marilyn Mo – Indus Capital Zhang Hi Yu – CICC.

Good morning and thank you for standing by for Bright Scholar's Fiscal First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question-and-answer session. Today's conference is being recorded.

I would now like to turn the meeting over to your host for today's conference Ms. Ruby Yim, Investor Relations Council..

the Company's goals and strategies; it's future business development, financial condition, results of operations; its ability to retain and grow its customer base and network of schools; the growth of and trends in the markets for its services in China; the demand for and market acceptance of its brand and services; competition in this industry in China; relevant government policies and regulations relating to the corporate structure, business industry; fluctuations in general economic and business conditions in China.

Certain information regarding this and other risks is included in the Bright Scholar filings with the Securities and Exchange Commission. Bright Scholar undertakes no duty to update any forward-looking statement except as required under applicable law. During this call we will be referring to GAAP and non-GAAP financial measures.

We use certain non-GAAP measures as supplemental measures to review and assess our operating performance.

These non-GAAP financial measures have limitations as analytical tools and investors should not consider them in isolation or as a substitute for net income attributable to Company or other consolidated statements, comprehensive data prepared in accordance with the U.S. GAAP.

Please note that all numbers are in RMB and all comparisons refer to year-over-year comparison unless otherwise stated. And with that I will turn the call over to our CEO, Jerry He.

Jerry?.

Thanks, Ruby, and thanks to everyone who is joining us today to review our 2018 first fiscal quarter results. I would like to take this opportunity to wish everyone a happy New Year filled with happiness, health and success.

For those who are new to our company, we have included in our earnings presentation a brief corporation introduction from slides 3 to 6, which you can download from our IR website. Again all numbers are in RMB and all comparisons refer to year-over-year unless otherwise stated.

Let’s start today’s call with the highlights of our performance for the first fiscal quarter 2018 and then share some update, key initiatives and developments before turning over the call to Dora to provide a more detailed review before we take your questions. So, now turning to highlights of our performance in Slide 8.

Bright Scholar began fiscal 2018 with another quarter of exceptional growth at both the top and bottom line.

Compared to the first fiscal quarter of 2017 revenues up to 23% while operating income grew over 27.6%, adjusted EBITDA increased by 28.6%, adjusted net income up 42%, EPS, earnings per share, increased 67% and the margin further expanded in the first quarter of 2018. Let’s look at the detailed breakdowns for the respective segment on Slide 9.

The top-line growth of our respective business segment continued to expand for the quarter. As the international schools, bilingual schools and the kindergartens grew over 16.5% 29.2% and 20% respectively. Complementary education services also grew roughly at 49%.

Slide 10 shows more details of our schools operation and enrollment increased as market demand for quality education remains – it is sitting strong. As of November 30, 2017, we have 34,163 students, 3,533 teachers in 60 schools with total capacity increased by about 20% over year-over-year to 27,887.

The average student enrollment for the first fiscal quarter 2018 was 33,916, an increase of 16.3% as compared to the first fiscal quarter 2017 with blended utilization at 29%. Turning to Slide 11, pricing across all our business segments further optimized to deliver a solid top-line growth in this fiscal first quarter.

We will maintain a competitive pricing across our network of schools to further drive organic growth of our business.

Business and operational front, we continue to progress our important strategic initiatives to expedite expansion and drive profitable growth and I would like to update you before handing over to Dora to discuss the financial results of the quarter in more details.

First, the rapid expansion of network has never been more critical to our business success. We currently expect to open 12 new schools during fiscal 2018 with 8 commenced operations during the fiscal quarter.

In December 2017, we had entered into an agreement to acquire 75% equity interests in of five kindergartens to further strengthen our foothold in Hubei province of China. We currently expect to complete the acquisition by the end of second fiscal quarter.

As of January 23, 2018, we have a total of 60 schools including 6 international schools, 16 bilingual schools and 38 kindergartens covering 80 provinces in China. We also provide a total capacity of over 27,800 seats.

The guidance to operate 12 new schools are well on track with remaining four kindergartens scheduled to open around in the second and third quarter of fiscal quarter. Upon completion, we will further expand our capacity to about 29,500 seats by the end of fiscal 2018.

Secondly, our continued success and ability to deliver high level of organic growth is based upon providing our students with the best possible education and then support to have them pursue top university admission.

As of the release today, 31% of the students in the 2018 graduating class of our international school have received over 250 offers from global top 50 institutions, including two from the University of Chicago and three from Oxford and Cambridge.

We anticipate growing a proportion of our student body receiving offers from these elite institutions and a continuous improvement in student grades across all age groups in this academic year.

Third, we could not have furthered our success without the support of our senior business and academic leaders and the ongoing improvement in the retention of top which are critical building blocks to our long-term and sustainable business growth. On December 15, 2017, the Board has approved 2017 ESOP plan.

We granted share options to purchase approximately 900,000 Class A ordinary shares of the Company or 17% of the total reserved and our partner share incentive plan to school principals and management team members with a resting period varying from three to five years. Total dilution impact is less than 1% on a fully converted basis.

Additionally, we are making pleasing progress on training initiatives for our headmasters and teachers. Since last quarter, 39 headmasters from our schools have attended the principal management program operated by UCL and 150 key staff and teachers attended management training seminars conducted by leading domestic institutions.

As for acquisitions, in addition to recent acquisitions of the kindergartens, we are actively engaged in pursuing investment opportunities in schools, college counseling, test preparation and actual recruitment activities and hope to be in a position to share the exciting developments throughout the fiscal year of 2018.

Acquisitions are an important element of our growth. We have not seen any change in the overall acquisition environment and we remain confident in our ability to generate significant additional growth through this strategy. So at this point I would like to turn the call over to Dora to discuss our financials. Dora please..

Thank you Jerry. Please be reminded that all numbers are in RMB and all comparisons refer to year-over-year comparisons unless otherwise stated. Please also refer to our earnings press release for detailed information of our comparative financial performance on a year-over-year basis. Please turn to slide 14.

Our revenue for the quarter was RMB465.2 million, up 23%, revenues from international school for the quarter was RMB174.6 million, up 16.5% as compared to RMB149.9 million in the same period last fiscal year.

Revenue from bilingual schools for the quarter was RMB155.5 million, up 29.2% as compared to RMB120.4 million in the same quarter last fiscal year. Revenue from kindergartens for the quarter was RMB106.2 million up 20% as compared to RMB88.5 million in the same period last fiscal year.

Revenue from our complementary education services for the quarter was RMB28.9 million, up 49% as compared to RMB19.4 million in the same period last fiscal year. On Slide 15, cost of revenue for the quarter accounted for 53.4% of total revenue as compared to 58.8% in the same quarter last fiscal year.

Teaching staff costs, the primary cost contributor, was 37.9% of total revenue for this quarter as compared to 40.8% in the same period last fiscal year. Average student teacher ratio was 9.6 for November 30, 2017 as compared to 9.4 at the same period of last year. On Slide 16, gross profit for the quarter was RMB216.8 million, up 39%.

Gross margin, at 46.6% as compared to 41.2% in the same quarter of last year. For international schools, gross profit up 47.1% to RMB85.6 million for the quarter with gross margin improved from 38.8% to 49%. For bilingual schools, gross profit up 37.8% to RMB67.4 million, for the quarter with gross margin improved from 40.6% to 43.3%.

For kindergartens, gross profit up 23.4% to RMB52.7 million for the quarter with gross margin improved from 48.2% to 49.6%. For our complementary education services gross profit up 79% to RMB11.1 million, for the quarter with gross margin improved from 32% to 38.4%.

On Slide 17, adjusted SG&A expenses for the quarter accounted for 17.3% of total revenue as compared to 13% in the same quarter last year.

The increase in SG&A expenses was primarily due to the increase in compensation and benefits paid to additional general and administrative staff to support our business expansion after our IPO and an increase in marketing fees for brand promotion and professional services to support the growing business as a listed company.

Continuing on Slide 18, adjusted EBITDA for the quarter was RMB161.4 million, up 28.6% adjusted EBITDA margin was 34.7% as compared to 33.2% in the same quarter of last year. Adjusted net income for the quarter was RMB119.1 million, up 42% adjusted net margin was 25.6% as compared to 22.2% in the same period of last year.

Please refer to the table in Slide 19, for the condensed income statement and Slide 20 for the reconciliation for SG&A, EBITDA and net income on a GAAP to a non-GAAP basis. A quick note on our cash and bank balance on Slide 21 as of November 30, 2017.

The Company’s cash and cash equivalents and restricted cash totaled RMB1,618.5 million or $244.9 million as compared to RMB1,896.7 or $287.9 million as of August 31, 2017.

With the positive industry trend, encouraging regulatory environment and a full-year outlook for the business, we are reaffirming our guidance for fiscal year 2018 with a recap in Slide 24. For the fiscal year 2018, ending August 31, 2018, again the guidance is on revenue from organic growth and not from acquisitions.

We expect our total revenue to be between RMB1,630 million and RMB1,660 million, which is an year-over-year organic growth between 23% and 25%. We also expect average student enrollment to be between approximately 34,300 and 35,000, representing a year-over-year increase between 15% and 18%.

The Company also expects 12 new schools opening for fiscal year 2018. The [indiscernible] revenue from acquisition of the five new kindergartens will be disclosed upon completion of the transaction around the end of second fiscal quarter 2018.

Again, the guidance is based on the current market conditions and reflects the Company's current and preliminary estimates of market and operating conditions and customer demand, which are all subject to change. This concludes my financial update. Now I will turn the call back to Jerry for his closing remarks..

investing in substantial school capacity and service offering expansion to capitalize on demand; providing market leading and academic outcome driven education services; innovative and premium quality service that we hope will continuously meet, if not exceed, customer expectations and maintain our focus on operational efficiency improvements and cost management disciplines.

With a strong conviction and imminent and differentiated roadmap for K-12 education and a growing diverse executive team, I'm pleased – very much looking forward to continuing our strong performance in the remainder of fiscal 2018 and deliver substantial long-term growth and return to our shareholders. This ends our presentation.

We would like now to open the call to your questions. Operator please..

We will now begin the question-and-answer session. [Operator Instructions] The first question will come from Sheng Zhong of Morgan Stanley. Please go ahead. Your line is open if you wish to ask a question..

Yeah. Hi, Jerry, Dora. Thank you for taking the question. And happy New Year to you. So my first question is in – the SG&A cost in this quarter seems to be high and you mentioned there was a lot of promotion.

Can you give some more color on what kind of key activities in this quarter and what your outlook of the spending on the marketing activities? And secondly, is that you have an agreement to acquire five kindergartens.

Can you give us some color on the acquisition like the kindergarten, the current operating status and the variation [ph] range? And more importantly, can you provide your view on your M&A strategy along – in the future? Thank you..

Hi, Zhong, it’s Dora. I’ll take your first questions on the SG&A and I’ll turn your second questions to Jerry regarding M&A.

In terms of SG&A expenses for this quarter, because last fiscal quarter we are a non-listed company and we have very few G&A – I mean general and administrative staff at the headquarter level and also there's no listing company or there’s isn’t [ph] fee.

So this quarter as a listed company we have more team build up on the headquarter level to support the growing of our whole business. So the compensation and the salary increase compared to the same quarter last year. And also in terms of marketing, we do have more expenses this quarter compared to same quarter last fiscal year.

In terms of detailed activities, we have built up a marketing team to help the enrollment promotion activities with each respective [indiscernible] schools. That's the majority we are spending on the marketing right now. Yes, I will turn it back to Jerry..

To add to that, the marketing expense as a percentage of revenue is very small, even with a significant increase in comparison, but you are still looking at – on Page 17, that's only a 0.3% of revenue. So it's really not that big an increase. Most of the increase is really coming from the staff costs. As a percentage of revenues that's more than 2%.

That's because last year that was before the IPO, so there was a lot of – we hired a number of senior executives to support our growth. The second question is really about the acquisitions. It's five kindergartens, as we mentioned in our script. In terms of the size of the business, it is near full capacity, over 90% utilization.

In terms of revenue, it's about – last year, I want to talk about that, last year it was about – it was over RMB40 million for last calendar year..

Yes, and for the SG&A, can we get some guidance on next quarter and full-year? And for the M&A, is it possible to give us some color on the possible variation range? Thank you..

For SG&A I think this is – because this is after the IPO I think that's probably set the stage for the rest of the year, except that typically for the second half of the year revenue is higher than the first half of the year, so you have the seasonality. So, as a percentage of revenue it's probably about the same or slightly lower.

And also there is a – for the full year it's basically where we are today. And also for the acquisition and valuation, we are not disclosing the full financials right now. But we are very selective and also we know the China market is very hard but we are very disciplined about how much we pay. So in this particular case it's a very good rate.

So we're probably going to tell you the numbers when it's closed and it's a very good price, I have to say. And also we continue to look at in terms of where we look at it it’s a scale, which means just like the acquisition we just did, it's a fully utilized business with very stable grounding in the profits.

And we are actually looking at an industry integration of images to cover. We mentioned about the test prep, the counseling and also the after-school children and business as well. And also we continue to look at acquisitions overseas as well..

Thank you very much. That's very helpful..

Thank you..

The next question will come from Ivy Luo of Macquarie. Please go ahead..

Thank you, Jerry. Thank you, Dora for taking my question. I have two questions here. One is that I noticed that your bilingual school tuition fee actually increased 10% year-over-year.

So just can you give us more color on the tuition fee increase for the bilingual school and what is the plan going forward? Where do we see the tuition could potentially go to? And my second question is related to kindergarten.

Just wondering what is the salary level or average salary level of your kindergarten teacher and what's the like average annual increase in their salary? Thank you..

The first question is about price increase. You noticed that it's very true that our increase in bilingual schools was higher than other segments because there are more mature schools in that segment. Once they are mature a lot of times there's a long waiting list, so we are more aggressive in terms of price increase.

In some cases there is a more than 10:1 ratio so we can increase price without losing much students. But for kindergartens and also international schools, especially for international schools, other than the first school we opened all the other five are relatively new.

Since they are in the ramp-up stage we are less aggressive on price increases and we focus on recruiting students. So you're probably going to see the trend will continue in terms of the segments. The second question is about – I'll ask Dora to take that..

Your second question regarding the salary in our kindergarten sector. We did have a rough landscape. For our kindergartens – although our kindergartens, most of them are located in second or third tier cities, we pay on an average basis.

We pay RMB7,000 to RMB8,000 per month to our kindergarten teachers and to the caretakers somewhere around RMB4,000 per month..

So, if you look at a comparison for our kindergarten teachers versus our peers, in some cases it's like double what they are paying..

Thank you. Very helpful, thanks and Happy New Year..

Thank you..

Thank you..

[Operator Instructions] The next question will come from Marilyn Mo of Indus Capital. Please go ahead..

Hello, hi, Jerry. Hi Dora. .

Hi, Marilyn..

I have a question on – hi, on ESOP. So that expenses will be recorded in the second quarter.

Is that right? And how much will be the roughly the expenses?.

Yes, in terms of timing, yes, we will generate the ESOP expenses option now starting from second quarter based on what – the timing for the Board approving. We are – currently we are still engaged third-party professionals to do a fair value of the cost for the ESOP.

But in terms of the total shares to be vested, in 2018, they will be 32% of the total shares to be vested for the whole year and then 2019 somewhere around 23% of total shares and then 2020 will be 26%. And 14% for 2021 and the remaining 7% shares will be vested in 2012. The exact cost is still being evaluated by the third-party professional team..

Okay..

Just keep in mind – just to add to that, just keep in mind even after three to five years fully converted, the dilution is still less than 1%..

Yes, yes. Yes, I think it's very reasonable. Maybe it should be more. Thank you..

It's only about 17% of the class. We probably are going to have second and third batch coming later – this is first batch..

Okay, will that be like every year we have ESOP plan or every two years, three years?.

No, the Board approved 5% – I think it was last – when was that? That’s 2016, I think it was – but that's kind of reserved. So we intend to use the next two years to implement the plan.

So we would expect that it will be – if there are more, for example, senior executives join the Board and other talents, then we intend to maybe give some incentive to the e-commerce as well. So, we reserved 5.2 million shares, but we are using less than 1 million at this point in time..

Thank you.

And could I know that how many people participated in this plan, the current plan? How many employees are covered?.

This time –.

We have 60 school masters and somewhere – for the headquarters probably somewhere around close to 30 from the headquarter level and also some from 11..

So it’s basically about 90 to 100 people in total..

Yes, somewhere around 90 people..

90 people, okay. Thank you..

Yes. Majorities will be the school masters and principals..

Yes, I understand. Thank you. That’s all my question..

Thank you..

[Operator Instructions] The next question comes from Zhang Hi Yu of CICC. Please go ahead..

Hello, Jerry, Dora, happy New Year. This is Zhang Hi from CICC. I just have a quick question about the policy of international schools and bilingual schools, especially about curriculum and textbook, any update we can have would be very helpful. Thank you..

As you know the new Private Education Promotion Law was supposed to be implemented by September last year, 2017, and of course it didn't really work out that way, so the provisional level Department of Education is trying to come with some more detailed policy about implementing the law. In the independent regions we see some of the drafts.

But how exactly it's implemented still remains to be seen. But in terms of the curriculum, it's very clear from grade one to nine you are going to have to – everybody's going to have to do the international curriculum, except the 100% foreign passport holder's international school.

So for most of our schools we’re going to do – we’re going to follow the Chinese curriculum with their textbooks as well. But for high school it's not required. So that's presumably what should happen. But again, we still wait for a clear signal from the respective local governments for next steps..

Anymore we heard from the Guangdong province authorities?.

No, not really..

Not really?.

We basically weighed in because it's kind of – for us it's very – it's kind of difficult for us to try and figure out what the government wants us to do. So we are going to just wait for further instruction from the government. Clearly this is what we should do. Then we are just going to follow their instructions.

But we haven't received anything from the government yet, so we are staying put, not to do anything prematurely..

Okay, thank you. Happy New Year..

Thank you..

Thank you..

[Operator Instructions] The next question is a follow-up from Marilyn Mo of Indus Capital. Please go ahead..

Thank you. Yes. I want to – a small question about the tax rate because for this quarter our tax rate actually lowered.

So what's the guidance for the whole year?.

I think we have discussed about the blended tax rate before. After we are doing the tax planning we are expecting for the full year the blended tax rate will be between like 15% to 20% following this range..

15% to 20%? Okay, good. Thank you..

Thank you..

Just to add to that, some of the local government are coming – I mean, provision of governments are coming in vast that lowering the tax rate for schools. For example, I heard about in Hubei province is lowering that to 15%. Now currently it's at 25%. There are also other provinces may be following that.

But again, it's unclear at this point in time but it's possible to be lower if the government decides to lower the tax rate..

The next question is a follow-up from Ivy Luo of Macquarie. Please go ahead..

Hey, Jerry, Dora, thank you for taking my question again. Just a very quick follow-up. I was just looking at our full-year guidance that's like 23% to 25% year-over-year and the one you kind of found at the low-end. Is there any color that we can share in regard of this? Thank you..

I will take that question. Typically as we continue in the fiscal year the next three quarters we have higher revenue – sorry, higher enrollment than the first quarter, because you continue to get student enrollment especially for the kindergartners. So that's why for the year you start at the lower end but it gradually will increase over time.

Also on top of that, for the complementary education services and versus the camps, you will have more in the second half. Also the camps are in the second quarter and the fourth quarter of the fiscal year..

Okay, thank you..

[Operator Instructions] This concludes today's question-and-answer session. I would now like to turn the conference back over to Jerry He for any closing remarks..

Okay. Thank you very much for joining this conference. Feel free to contact us if you have any further questions. I wish everyone a good day. Thank you..

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines. Have a great day..