Aug 24, 2018
Executives
Kathy Bian - Vice President, Corporate Finance Albert Chen - Chief Financial Officer
Analysts
Michael Schmitz - Jayhawk Capital Peter Halesworth - Heng Ren Kent McCarthy - Jayhawk China Fund
Operator
Welcome everyone to Global Cord Blood Corporation’s Earnings Conference Call for the Fiscal Year of 2019 First Quarter. All participant lines will be placed on mute during the presentation.
After which, there will be a question-and-answer session. Now, I would like to introduce Ms.
Kathy Bian, VP of Corporate Finance to begin the presentation.
Kathy Bian
Thank you, Anna. Good morning, everyone.
Welcome to our first quarter fiscal 2019 earnings conference call. A press release discussing our financial results has already been published and a copy is available on our company’s website.
During the call, our management team will summarize corporate developments and financial highlights for the quarter. A question-and-answer session will follow.
Before we begin, please note that today’s discussion will contain forward-looking statements that are subject to certain risks and uncertainties and actual results could be materially different from these forward-looking statements. Kindly refer to our SEC filings for detailed discussions of potential risks.
In the interest of time, we will begin with our CEO’s remarks followed by a detailed report of the fiscal 2019 first quarter financials given by our CFO, Mr. Albert Chen.
Our management will be available to answer questions during the Q&A session. Today, on behalf of CEO, Tina, I will read her prepared remarks.
Let’s begin our presentation. Good morning, ladies and gentlemen, investors and analysts.
Welcome to our fiscal 2019 first quarter earnings conference call. During the reporting period, the escalating U.S.-China trade tensions and the sluggish capital market in China continued to overshadow consumer sentiment towards cord blood banking.
In order to defend against such challenging macroeconomic conditions, we put more assets into educating and growing our addressable market. Even though it became more difficult and took more time of concert a prospect line into a revenue-generating client, we are glad to announce that after the strong run-up in the past few quarters, we are seeing positive signs that new subscriber number is stabilizing at current levels.
We are also delighted to report that we recruited 20,601 new subscribers, which is in line with our quarterly targets. During the reporting quarter, Guangdong continued to be the key driver of client growth.
By end of the quarter, our cumulative subscriber base has surpassed 682,000 further strengthening our leading status. Looking ahead to the remainder of fiscal 2019, we believe that the near-term outlook will remain unexciting as active macroeconomic news continued to dominant headlines.
We remained agile and ready to adjust our sales and marketing strategy as well as development capabilities to cope with different scenarios. As we proactively further our penetration in our local markets, we will stay alert to the changes in developments of the entire value chain related to cord blood hematopoietic stem cells in both domestic and international markets.
In addition, we continued to skew for appropriate opportunities in the cord blood related healthcare and treatment sales aiming to provide our clients with more comprehensive health, protection and services. This concludes my remarks regarding our fiscal 2019 first quarter results.
Thank you for your ongoing support of GCBC. I will now turn the call over to our CFO, Mr.
Albert Chen to review our first quarter financial performance in greater detail.
Albert Chen
Good morning everyone. Thank you for joining our call today.
In the first quarter, revenue increased by 4.3% year-over-year to RMB234 million, mainly driven by the increase in storage revenue. Accumulated subscriber base increased to over 682,000 by the end of June 2018.
And the first quarter storage revenue increased by 17% year-over-year to RMB90 million. Storage revenue now accounted for 39% of total revenues, up from 34% of last year.
As mentioned in our CEO remarks, we have successfully recruited 20,601 new subscribers even during this trouble time. As a result first quarter processing revenue amounted to RMB143 million and Guangdong division remained the key driver.
First quarter gross profit increased by 6% year-over-year to RMB191 million. Gross margin added up from 80% last year to 82% in the reporting quarter as storage fees represent a larger portion of total revenue mix and our cost saving efforts payoff.
As a result of the enhanced gross margin and lower operating expenses, operating income increased by 15% year-over-year to RMB95 million. Operating income before depreciation and amortization and share based compensation expense are reasonably referred to as non-GAAP operating income increased by 18% year-over-year to RMB109 million.
Depreciation and amortization expense in the first quarter remained steady at RMB13 million. Non-share based compensation expense was reported in the reporting quarter.
Non-GAAP operating income margin increased to 46% in the reporting quarter. In the reporting quarter, sales and marketing expense was RMB51 million as compared to RMB44 million last year.
The increase was mainly due to lower sales and marketing expenses of last year led by the reversal of share based compensation expense. Sales and marketing expense as a percent of revenue were 22% in the reporting quarter.
General and administrative expenses for the first quarter decreased to RMB41 million from RMB50 million of last year, largely due to the absence of share based compensation expense. G&A expenses as a percent of revenue was 18% in the reporting quarter.
Low interest expense occurred in the reporting quarter whereas RMB3 million interest expense was reported last year which was related to convertible notes that were fully converted in April of 2017. In the first quarter RMB9 million in unrealized holding loss for equity securities was recognized as other expenses under the new accounting standard, while the same item was reported as other comprehensive loss last year.
In the first quarter of last year unrealized holding loss for equity securities was RMB12 million. Due to the increasing operating income and the absence of interest expense which were partially offset by the unrealized holding loss for equity securities under the new accounting standard presentation, net income attributable to the company’s shareholders for the first quarter increased to RMB74 million from RMB69 million of last year.
Net margin for the reporting quarter was 31%. Basic and diluted earnings per ordinary share for the first quarter, was RMB0.61.
These are the highlights of the first quarter results. And we are now happy to take any questions that you may have.
Kathy Bian
Hi, Anna. We can go to the Q&A session now.
Thank you.
Operator
Thank you. [Operator Instructions] Your first question comes from Mike from Jayhawk Capital.
Your line is now open. Please go ahead.
Michael Schmitz
Hi, Albert and Kathy. I wanted to just get a couple of detailed breakdown by province for the subscribers and the payment plan breakdown if you would?
Albert Chen
Hi, Mike. In terms of new subscriber breakdown by geographical regions, that actually was largely similar to the fourth quarter of last year.
So new subscribers from Guangdong accounted for approximately 62% of total new subscribers and about 19% came from Beijing and the other 19% came from Zhejiang. So that’s the new subscriber mix breakdown in terms of geographical region.
In terms of payment plan, about 55%, 56% new clients choose normal payment approximately 42% of new subscribers choose upfront payment and roughly about 2% of clients choosing others like paying everything within the 6 years timeframe.
Michael Schmitz
Okay, great. And then my other follow-up question on that was in terms of the agreement with Golden Meditech and the new majority owner, there was a net profit guarantee for this calendar year of RMB432 million which was about $65 million for the profit guarantee and I know that there is some adjustments that are made under that calculation, because it’s not – it doesn’t fall below U.S.
GAAP necessarily, but do you have any comment on whether or not you guys will you think you will be – you are on pace to meet that target?
Albert Chen
Well, first of all, Mike, the performance undertaking is between Golden Meditech and the new owner as you rightfully pointed out. And I think this is – I think profit undertaking is focusing on the calendar year of 2016, 2017, 2018, if I am not mistaken.
So the catalog is slightly different. And also as you rightfully pointed out that as it is actually under a different gap and with substantial adjustment in there.
And for that type, we don’t know we actually make the profit undertaking from Global Cord perspective is not really our responsibility, but at least based on the guidance that we provide in our June earnings call, I think we are progressing on track in achieving our new subscriber target for fiscal 2019.
Michael Schmitz
Okay, thank you.
Operator
Thank you. Your next question is from Peter who is a Private Investor.
Your line is now open. Please go ahead.
Peter Halesworth
Hi, sorry to correct that, it’s Peter Halesworth from Heng Ren. I just like to ask when the last visit was to the U.S.
that was in 2011, which was 7 years ago…
Kathy Bian
I am sorry, Peter, we hear you on and off.
Albert Chen
Do you mind repeating question again, Peter?
Peter Halesworth
Yes, can you hear me now?
Kathy Bian
You are not quite clear.
Peter Halesworth
Is this better?
Kathy Bian
Yes. Please go ahead, Peter.
Peter Halesworth
Yes. So the last visit according to your website to the U.S.
to meet investors was in 2011 that was 7 years ago. And Albert Chen, correct me if I am wrong, if you were a sell-side analyst and I wonder how you would have rated a company that hadn’t visited investors for 7 years?
You also list one analyst that is covering the company from ROTH Capital however, he has a different take. He doesn’t cover your company and he doesn’t publish anything about your company.
So, the Investor Relations effort has been abominable and needs to change, you need to start to act like a public company. If you look like a private company or is that enacting just like the company did prior enduring about buyout offer from the previous Chairman and the share price is signaling that another low bid is coming.
So now is the time to make a commitment and show shareholders that we care and we will invest in the value and creating value for shareholders. I wish to hear that commitment today.
Albert Chen
Peter, I appreciate your comment. I think the website may actually not be entirely up-to-date in terms of our travel plan.
Actually, my latest visit was in February of 2018 after we attended a JPMorgan conference. We also did road shows and also we may actually, we are also planning on another visit coming to U.S.
very soon. So, on the routine business, we now meet with investors doing tools in U.S.
1 or 2 times a year, but if you are interested in meeting, please send us your contact and so that we can actually reach out to you when we arrive in U.S.
Peter Halesworth
Right. Well, all my information is with the company and I appreciate that update.
And also what is being done by Investor Relations to gain coverage by sell-side analysts currently you have zero analysts covering the company?
Albert Chen
That also is a very good comment as well. We actually are cultivating several relationships at this stage.
And if you have come across any interesting ideas or analysts who indicated their interest in covering China related public companies in U.S., do send them our way.
Peter Halesworth
You have an Investor Relations person, are they pursuing these and what is the status?
Albert Chen
Working very hard on that, I mean I am looking at – looking very hard on that, but as you know I mean analysts like to take things at their own pace, so obviously more help is on that. So, again I mean we continue to push and also I will hope that our investors as well as our shareholders will also help us in this crusade to gain more coverage as well.
But you rightfully pointed out that we should do more work and do more outreach to analysts as well.
Peter Halesworth
Okay, I will go back into the queue.
Operator
Thank you. Your next question comes from Jeff, who is a Private Investor.
Jeff your line is now open please go ahead.
Unidentified Analyst
Yes. Albert, I have reached out on four different occasions via e-mail to your Investor Relations and as Peter pointed out on the previous call it doesn’t seem to appear that you are running that deal like a public company, because I haven’t been able to get a response from you in four different thrives, I have left several voice mails and so if that’s your efforts towards current investors, I can only imagine the efforts towards potential or possible investors.
So I would also like to know – number one, I would like a response and number two, I would like to know specifics about what you are planning on doing going forward. I also would like to know what appears to be excess cash on the balance sheet, is there any intentions of issuing a dividend and I was quite frankly embarrassed by the any significant amount of the $0.08 dividend and I would like to know what the plans are going forward with respect to dividends and if there is any consistent plans to go forward with those dividends?
Kathy Bian
Hello Jeff, this is Kathy. Maybe I will answer your first question first sir.
Unidentified Analyst
I am sorry.
Albert Chen
Jeff, may I confirm your last name is Smith.
Unidentified Analyst
Yes.
Albert Chen
Okay.
Kathy Bian
Okay. So regarding your first question, actually we have received your multiple e-mails and on each occasion, we have replied, but somehow there is technical issue and we always receive a bounce back from e-mail system that it is beyond our own.
So we have actually sent you a letter letting you know our response. But I do apologize if you don’t get a response in time.
But I suspect you probably will receive our letter in due time and maybe...
Albert Chen
We are using the address on your website to send mail to you, so you should be able to get that.
Unidentified Analyst
I also lifted my phone and never received a call back?
Albert Chen
Yes, because we normally do that in writing. Yes.
So Jeff and also the answer to your question is with respect to dividend I am glad that you raised the questions. I want to take this opportunity to clarify couple of points.
First of all as you all are aware that we have recommended and declared a dividend when we reported our fourth quarter results. Even though we cannot guaranty that a similar dividend will be made in the upcoming year, because the Board hasn’t approved it yet, but with that being said, I just want to make sure that investor and the investment community is aware that it is our intention to have a stable dividend policy.
So the dividend which we declared in the fourth quarter of fiscal year 2018 is not meant to be a one-time thing. And the Board will not rule out the possibility of adjusting that dividend payment going forward.
However, I mean like I pointed out in the beginning of our statement is that even though we have not guaranteed our payment it is our intention to have a stable dividend policy. So I hope this will kind of clear the air a little bit.
Unidentified Analyst
Thank you.
Operator
Thank you. Your next question comes from Kent from Jayhawk China Fund.
Your line is now open. Please go ahead.
Kent McCarthy
Hey, Kathy. Hey, Albert.
Hey, couple of questions. But first, do appreciate the dividend, appreciate the comment about being a stable dividend, I do think there is some confusion for U.S.
investors, New York Stock Exchange, stable dividend we usually report to our ongoing quarterly dividend, when you say stable dividend policy, do you mean you will only be paying a dividend once a year or is it still subject with the Board, can you clarify on the stable dividend comment?
Albert Chen
The intention is obviously to have a recurring dividend payment supported by a dividend policy. But with that being said, the next dividend payment has not been approved, so yet which is why we cannot announce it, but it certainly is the intention to have recurring dividend payment.
Kent McCarthy
Recurring quarter?
Albert Chen
I wouldn’t go that far, I mean, recurring rate will be a fair statement.
Kent McCarthy
Okay.
Albert Chen
But I just want to make sure that it is not the intention that we do a dividend one-time only, this is definitely not the intention.
Kent McCarthy
I am just trying to point out of course we hope for a stable quarterly dividend, because I think in the U.S. it’s usually quarterly, I know in Hong Kong though it’s often annually and sometimes with a semi-annual interim dividend, but just from the U.S.
investors I am hoping you will go to a quarterly dividend. Second thing is more a comment, I know it’s tough for you guys with Sanpower, with House of Fraser going bankrupt in Brookstone and they are publicly listed a share going through 38 to 10 and the share is being restricted and the Chairman saw on the airplane and obviously they have got major financial problems.
I think it caused confusion in the stock price here since they are in charge of the SPV, but I am hoping you can clarify the SPV that owns a share, they would not – they would lose everything if the stock is below $10.50. I mean, I can make that comment public information, but is there anything you probably can’t, there is anything you can do to alleviate investors’ concerns about the majority shareholders’ financial problems or any kind of clarification you can make or maybe a broader question would be how concerned are you guys about the share price and when you go on a roadshow, I am sure you are going to get this question about Sanpower, anyway, any information you can give us on that?
And then I have one technical question after that.
Albert Chen
Obviously, as you pointed out, there has been some lot of developments with respect to Sanpower side, but as you know, Sanpower basically is not directly a shareholder of the company. From a legal structure standpoint, is it PRT domicile fund, which actually own the shares and Sanpower has made 1 of the 2 GB in the fund.
So in terms of all the shares, it is actually just the fund that actually owns our shares not Sanpower. So now with that being said it would be if you rightfully pointed out with the transaction concerning the House of Fraser as well as Brookstone, there has been a lot of speculation going on, but at least what we can offer to investor is that from Global Cord perspective, our operation remain intact and we continue to achieve our various operational and financial targets.
So from Global Cord perspective, our operation remained relatively intact and secured and we continue to maintain our operational independence, I think that is very important as well.
Kent McCarthy
I know I made some talk for you guys dealing with that, so sorry about that. My last question….
Albert Chen
Some investors do raise that question. So, it’s a fair comment, Kent.
Kent McCarthy
Great. And then my last comment is obviously I have been pretty rough on the company for not buying back shares and I do understand that and maybe I didn’t understand the significance, I know it’s very difficult with current currency situation, but again given that the stock has been dislocated I think primarily due to this concern over Sanpower, all of this news that came out on Sanpower in July, mechanically I am not saying you guys want to do a share repurchase or a tender, but mechanically could it be done under – in the current situation by going to a bank and putting RMB on deposit and getting dollars and I also noticed I also – if it can’t be done is it cohesively expensive.
I mean, could you trust the mechanics of a company with RMB if you want to repurchase shares in light of the current situation in China with currency controls and again I apologize that we maybe not understanding the magnitude of decision right now, are there external currency control issues?
Albert Chen
Well, I mean as you know moving RMB and converting RMB into foreign currency always require a SAFE approval. In fact just in times we are obtaining state approval will be tough, but there are also times we are obtaining SAFE approval is relatively easy.
I think it is the fair comment to say that now its definitely not a time where telling SAFE approval is something that can be done relatively straight forward way. So I think this is definitely not time where I will describe converting RMB into U.S.
dollars is easy, so I will make that comment.
Kent McCarthy
I mean, if it was missing with the stock at $1 or so above cash, would you consider a tender offer if it was easier if it was something you could do with have you guys – would you consider for a share repurchase?
Albert Chen
Our positions with respect to capital allocation has always been to get into consideration and shareholders’ interest development need of the companies as well as the fruit of development plan of the companies. To a certain extent of the Board including myself has been remained relatively open in terms of capital allocation positions.
This is also evident by the fact that we have started making dividend payments and declarations in June of this year. I think we will definitely discuss this topic from time to time.
I am now in a position to say no what you just mentioned.
Kent McCarthy
Okay. Well, thank you.
Good luck with everything.
Albert Chen
Thank you for your comments Kent.
Operator
Thank you. Your next question comes from Al who is also a Private Investor.
Your line is now open. Please go ahead.
Unidentified Analyst
Hi, I am a UK based shareholder and I did say Kathy I appreciate the response I want to obviously watch the share price sync somewhere in the sympathy with the House of Frasers and I think we see that more closely here, the correlation was very, very high, I guess I am listening to the call, I have a couple of questions so starting with one which is a level of detail, Albert can you tell me how much cash is on the balance sheet and how much of that – how do you analyze that as cash per share, so I am looking for two numbers, the gross cash on the balance sheet and the cash per share?
Albert Chen
Gross cash on the balance sheet is approximately RMB4.4 billion. It’s major component derived from the deferred revenue as you know that actually accounted for about RMB2.2 billion roughly give or take.
And so if you take the gross amount and just simply divide by the number of shares outstanding following the dividend allocations I think it’s about 121 million shares outstanding.
Unidentified Analyst
Okay. And then a follow-up is just for my notice, what is the annual cash flow – what is the free cash or the positive cash flow that comes in this year?
Albert Chen
Sorry, do you mind repeating the questions again.
Unidentified Analyst
What’s the annual operating cash flow? What’s the free cash flow that comes in this year?
Albert Chen
Well, I mean, for the first quarter, our cash flow is probably I think about RMB175 million if I am not mistaken, that’s the operating cash inflow.
Unidentified Analyst
And that’s for one quarter?
Albert Chen
Yes.
Unidentified Analyst
Okay. And so then what percentage of the cash flow is the actual dividend?
Albert Chen
Then you will be making reference to the prior year which is fiscal year 2018.
Unidentified Analyst
That will decline.
Albert Chen
Yes. If I am not mistaken roughly about RMB70 million out of the RMB260 million attributable to the shareholders, so that’s kind of like 50, so it’s like 20%.
Unidentified Analyst
And so do you have investment opportunities for the other 80% as opposed to a sense that it might be better off and I realized it’s a follow-on to some of the other questions, but I am quite curious as to how you think of that cash coming in and what your thoughts are to invest that in?
Albert Chen
Lot of investment takes two-folds. Investment taking into the opportunity to enhance our cost, our service portfolio or our opportunity to allow us to expand our services geographically, so that’s two-folds in terms of capital that can be used for investment.
Is that your question?
Unidentified Analyst
Yes. How would it be used?
In other words, you have a lot of cash on the balance sheet above the deferred revenue? You are bringing – you started a dividend and a dividend policy would be great.
You are bringing in 80% more cash than the dividend without a clear understanding of how that’s going to be used and I only say there is no clear understanding about how it would be used is because there is so much other cash on the balance sheet that’s not being used.
Albert Chen
The capital deployment in terms of our resources in hand will mainly look at couple of areas. For example, expensing opportunities as we just mentioned a moment ago, in terms of absence of expansion opportunities and maybe reallocation and giving capital back to shareholders is also one of the possibility, which is part of the reason why we start doing dividends and those will be the two primary areas, including we are using existing capital to continue to manage your existing market, but [indiscernible].
Unidentified Analyst
Alright. So, there is no clear investment opportunities right now, there is nothing that would absorb cash within your operating expansion, so strength forward expansion either in more sectors, we are bringing on more clients, there is no real clear use of cash within your planning in the next we say 3 to 12 months.
Albert Chen
That actually is not entirely, because if you look at our, for example, our CEO remarks, you noted that we have mentioned about our potential expansion opportunities now given the fact that there are several things that going on for a while, which hasn’t been materialized yet, but if there is any opportunity that will materialize I think which is a stage where we can now to definitely announce it. I try to ask the question like valid maybe confidentiality in the thinking, sorry.
Unidentified Analyst
Okay. No, no, that’s helpful, given us some insight.
As follow-on to one of the earlier questions about how you manage Investor Relations and deal with shareholders. The other thing that doesn’t come through and this maybe because I am sitting in London and we are even a smaller investor that is in the U.S.
I think a very clear statement even on the phone today that the truly cares about their global shareholder base and will organize a visible plan to address that shareholder base and increase the shareholder base. I think that in and of itself will be a very valuable statement from the company and hopefully from the board.
So as the board actually states and creates clarity around an outreach program to increase the investor base, there is reasons for that, not just because the stock has suffered in sympathy with House of Fraser or Sanpower, but given the value of the company getting that stock price up allows you to use cash and they are completely in sympathy. And it also allows you to use the spot down the road as a currency for other opportunities.
And so it’s a virtual circle returning cash to shareholders raises the stock price which allows you to use the stock for many other things. And I think a starting point would be a clear statement from the board that shareholder value is very important and then publish an outreach program.
And a follow-up question to that is what banks are you engaged with now that would help you and what plans would you use to use those things? So that’s a longwinded question.
I look to hear first would you consider and can you ask the board to make a statement about shareholder value? And can you publish a outreach program and what banks do you plan to work with?
Albert Chen
Well, we will certainly take your comment in mind and we will definitely be – because the outreach program itself, right now we have been doing it on an ongoing basis. If there is a particular bank would you think we should consider engaging, I mean, I am open to all recommendations.
Right now, we are more focusing on 1 or 2 U.S. based out banks yes, I should be able to say that.
So, not so much on the European side though, but more U.S. based bulk tracker bank to help us reach out to investors.
But your comment is valid and I think at some point where we are definitely were for me taking it back, it’s important to discuss about it.
Unidentified Analyst
Thank you.
Operator
Thank you. Your next question comes from Patrick [indiscernible] Group Management.
Your line is now open. Please go ahead.
Unidentified Analyst
Good morning, Albert. Little on time.
I actually was with you on your road show, I don’t even know how many years ago when we were selling the stock at $6 a share, it’s sort of embarrassing that I am sitting here today talking about a $7 stock. But I think Al, I want to commend Al for lot of his comments, they were excellent comments, I hate to say it, but generally your conference calls, you guys talk about well we will take this to the board, we will take that to the board, I hate to say it, you don’t ever come back with a plan and that’s why we are sitting in this dismal situation.
It’s sort of crazy that we have a stock trading at $7 when we have whatever we have in cash, but being this reoccurring, it’s very clear to that, all the stockholders are basically continuing through your thought for simple things to do and would magically have a big impact on your stock price. It’s not because we think it might work, we have seen it work time and time again.
So I think it’s time that the board really get active with the shareholders and give us a plan. Clearly, you need a quarterly dividend plan that needs to be meaningful, which should be percentage of the cash that you are actually bringing in quarterly, because at this point, you have so much cash on your balance sheet, but you just did something pretty relatively simple to do, it would have a profound impact on your stock.
And as Al had pointed out if your stock grows up you have new currency, did you – should you want to do any kind of acquisitions and other things that people certainly take publicly traded stock as long as it’s a stock that’s respective and at this point clearly our stock has zero weeks back in the marketplace. I don’t have to really tell you all the ways you need to fix it, because you just heard 20 or 30 of them from people that really know what they are talking about that are sophisticated investors.
So I hope that I don’t get on a conference call a quarter from now and your press hiding behind the Board. The Board needs to get active, they need to get out in front it’s embracing the way they have done this company to-date.
I would say operationally you guys should be commended, you have done a beautiful job in executing operating plan and you have absolutely failed with shareholder relations. So I think at this time it’s clear that the way the Board has been acting has been to the demise of your stock.
And it’s time that we don’t hide behind the Board, it’s time that Tina if she is going to be doing acquisitions she gives us some clear guidance of what she is doing. So we understand where she might be in there in that plan.
And we need to focus on the most important thing which is our shareholder value. I hope I am not having this discussion as I have said three months from now.
Clearly we need a quarterly dividend. They should be announcing a dividend.
It should be a meaningful dividend, does it mean that if things change inside your business you can’t change that dividend plan. But we have way too much cash on our balance sheet.
And what we really need to do is focus on getting the shareholder price up, the fact that it’s $1 up from the price that we had when we went public, I don’t remember how many years ago. I was a young man when we went public.
I am an old man now. So it’s truly embracing.
That’s really just a comment in general obviously getting into the mechanics of the dividend, I am assuming getting a dividend through the mechanics of giving a dividend, can you speak to that how, is there any challenge in from a regulatory standpoint in doing a dividend?
Albert Chen
Well, I mean – Pat, thank you for your comment. Once again that I have pointed already on in the call, it is our intention there is no guarantees of this definitely our intention to ensure that the payment, dividend payment is a recurring item.
And but we will not rule out the possibility that we will adjust the dividend payment going forward. With that being said, also according to my prior comments, there was a time where I gained money, China is relatively straight forward.
If I am comparing now versus the straight forward time period this is certainly not a straight forward as it used to be. I guess that’s how I would like to answer your question.
Unidentified Analyst
Okay. So can you convert your currency to cash and actually have it in cash or excuse me in U.S.
currency instead of renminbi if – can you actually have it on your balance sheet as U.S. currency?
Albert Chen
You just have to get the regulatory approval to convert upon being…
Unidentified Analyst
Okay. If you – but it could sit there for future dividends, if you convert it at the correct time to U.S.
currency, correct, you have to convert it and then hand it out right away, you can convert it and have some in renminbi and some in U.S. currency on your balance sheet, correct?
Albert Chen
I think when you get SAFE approvals of converting your currency, the conversion that government has served the purpose.
Unidentified Analyst
Well, let’s say it was for our future dividends or a stock repurchase that you wanted to have U.S. currency, so you can do it at your – at times that you chose to do it.
Albert Chen
That will be not the way I have seen being done in the past that I guess there is no asking.
Unidentified Analyst
Yes. We should probably explore that.
So you have U.S. currency on your balance sheet and therefore you can act swifter towards the stock repurchase and dividend.
Clearly, we should love buying our stock at $7 a share. I assume that we would now and – try to buy 5 million shares.
We wouldn’t be looking at $7 price any more, that will be quite a bit higher. But anyhow those are the types of things that a responsible Board does.
And I shouldn’t be probably having give advice on how to do these things, but I clearly feel at this point probably we need to see results. We need to see some things improve.
All of clearly the phone call you have a bunch of frustrated shareholders. And it really is sort of sad that we are sitting here all being so frustrated when we have a company that’s operating so well and performing so poorly in the stock market.
Albert Chen
Thank you for complementing our operation authorities. Thank you.
Unidentified Analyst
Yes. You guys have been a great operator and it should be commended.
But we shouldn’t be sitting here having, but obviously it’s been 100% of your questions of frustrated shareholders trying to figure out what is the Board going to do, what is the leadership going to do and in the meantime good quarter-after-quarter. So it’s important that we hear a plan as Al said.
Al, you did a great job, I don’t know you, but you did a great job on your questions today. And hopefully the Board is really listening and not taking us as well, we are just going to have the same old funny conference call 3 months from now.
Anyhow, good job on running the company Albert. We got an A there and we have an outstanding shareholder relationships, so we need to get rid of the outs and get that to be an A and everybody will be smiling.
Albert Chen
Alright. Thank you.
Operator
Thank you, Patrick. At this point there appears to be no further questions.
I will now turn the call back to Ms. Kathy Bian.
Please go ahead.
Kathy Bian
Thank you, Anna. This concludes our earnings conference call for the fiscal 2019 first quarter.
Thank you all for your participation and ongoing support. You all have a great day.
Thank you.
Operator
Ladies and gentlemen, that does conclude our conference for today. Thank you all for participating.
You may all now disconnect.