China's grwoing professional class: an interview with atai's cfo - Perkins Diesel Engine Manufactur

Can you give us a broad overview of ATA's business? ATA is the leading provider of computer-based testing services inChina. We offer comprehensive services for the creation anddelivery of computer-based tests based on our proprietary testingtechnologies and test delivery platform. Our computer-based testingservices are used for professional licensure and certificationtests in various industries, including information technology,banking, teaching, securities, insurance and accounting. Our testcenter network comprised 1,951 authorized test centers locatedthroughout China as of June 30, 2009, which we believe is thelargest test center network of any commercial testing serviceprovider in China.

Combined with our test delivery technologies,this network allows our clients to administer large-scalenationwide tests in a consistent, secure and cost-effective manner.We have delivered over 30.7 million tests including 20.6 millionbillable tests since we commenced operations in 1999, and in June2008 we delivered tests to approximately 470,000 test takers over asingle weekend for the China Banking Association. What areas of testing are most important for ATA"s currentbusiness and what areas does ATA see the biggest potential forgrowth or expansion? Currently, majority of our revenues comes from the financialindustry. We have continued to benefit from the large-scaleimplementation of computer-based testing for the banking,securities and futures industries in China. Our first quarter 2010results are very close to the top end of our guidance due to strongtest-taker volume for tests we delivered for the China BankingAssociation and the Securities Association of China. Although theglobal financial crisis affected the overall Chinese economy in thesecond half of calendar year 2008 through the first half ofcalendar year 2009, we did not experience declines in our testingservices attributable to the crisis.

Our net revenues from testingservices provided to the China Banking Association, the SecuritiesAssociation of China and the China Futures Association grew to anaggregate of RMB108.9 million in the fiscal year ended March 31,2009 from RMB55.9 million in the fiscal year ended March 31, 2008.The number of tests delivered for these three clients increased to2.4 million in the fiscal year ended March 31, 2009 from 1.1million in the fiscal year ended March 31, 2008. This increase wasdue to increased regulatory requirement for new licensure programsas well as strong voluntary demand from industry professionals toseek professional qualification as a differentiator in a tightenedjob market. In the near term, we expect the financial industry will continue tobe a major market for us, and we also expect increasing revenuecontribution from TOEIC and HR Select. This March, the company signed an agreement of cooperation withEducational Testing Services (ETS), the world"s largesteducational research and assessment organization, whereby ATA willbe the exclusive agent for ETS"s Test of English forInternational Communication (TOEIC®) business in China.

Thisimportant strategic alliance between ATA and ETS will providemillions of Chinese English language learners with access to highquality testing services using ATA"s proven testingtechnology and broad distribution reach, and will help establish anauthoritative assessment standards framework for professionalEnglish in China. For our first quarter 2010 ended at June 30,2009, the TOEIC contributed RMB6.4 million to net revenue in ourfirst full quarter as distributors, with average revenue per testof RMB237, the highest average revenue per test among all of ATA'stests. In March, the company launched personnel selection solution HRSelect to assist enterprises in China to achieve low-cost, highefficiency, high precision talent evaluation and selection. HRSelect is an innovative and comprehensive solution for talentselection based around ATA " s testing service.

Through intelligent resume analysis, thesolution can screen, filter and manage eligible resume data througha process that is flexible, fast and accurate. The core of HRSelect solution is the bundling of test tools designed aroundcompetency models, providing enterprises with our market leadingtest service to assess and select the right candidate,systematically reducing risk of wrong hiring. In developing thissolution ATA has conducted research on 150,000 different job skillsets, covering several areas of competency, including IT, foreignlanguages, finance, accounting, management, and legal. ATA has alsocooperated with leading institutions such as ETS and SHL to set uptest items covering 600 positions with 1,000 evaluation modules andtest item bank containing millions of test questions.

So far, wehave registered 10,000 companies with trial accounts and expect tostart generating revenue from HR Select in the second quarter offiscal year 2010. ATA was named the master distributor in China for the Test ofEnglish for International Communication ("TOEIC") for EducationalTesting Service ("ETS"). What are ATA"s projections for the overall market size forthis test and will ATA be able to maintain the average revenue pertest around the 230RMB area? The Test of English for International Communication (TOEIC) is "anEnglish language test designed specifically to measure the everydayEnglish skills of people working in an international environment."TOEIC is also called Business TOFEL in China. Though TOEIC onlyentered the Chinese market in 2002, it has become a major Englishtest title in China for professionals who look for jobs atreputable and high paying international companies.

There are about70,000 people participating in the TOEIC test every year in China.We believe this number has room to grow as TOEIC volume in Korea isapprox 2 million people a year. With over 100 million Chinesestudying English on an annual basis and using Korea as a leadingindicator, we believe there is substantial growth potential forthis leading English assement test title in the Chinese market. In February of this year ATA acquired JDX Holdings limited, can yougive us some general background on JDX and how ATA sees thisbusiness fitting into future development of the Company? On February 28, 2009, ATA completed the acquisition of the entireequity interest of Beijing Jindixin Software Technology CompanyLimited, or Beijing Jindixin, and its parent company, JDX HoldingsLimited. The acquisition is expected to expand our business byallowing us to market test delivery services to test sponsors thatare using software developed by Beijing Jindixin. JDX and itssubsidiaries have developed strong relationships with manygovernment entities and state owned enterprises to help them withcomputerized test management and question database software.However, without the test service technologies to operate tests,they do not have any delivery capabilities.

With the integration ofJDX into ATA, we expect to generate customer synergies by offeringtest delivery services to JDX"s customers. What areas if any does ATA see strong competition and can you giveus more insight into the importance of your national network of1951 testing centers? The Company has the largest network of test centers with 1,951locations in China, which combined with its E-testing platformallows us to deliver secure, cost-effective, accurate,easy-to-manage large scale tests simultaneously to multiplelocations. There are currently no other commercial test serviceproviders other than ATA. The reason is these test centers serve asa significant entry barrier.

It takes up to 3 months to installclient software, optimize this software, run and re-run trial testsbefore each center is fully authorized to become commerciallyoperational. Therefore, it takes a long time to accumulate a centernetwork of this scale, and without this scale, one cannot get theselarge nationwide test contracts. The reason is that large scaletest sponsors in China require broad geographic access: if a testtaker in a remote province or city wants to register and take agovernment standardized test, then we have to have a location thereavailable. Is ATA looking to further expand this national network of testingcenters or is increasing utilization more important going forward? Current utilization rate is approximately at 7% on peak test volumeand we are running well under full-capacity. However, we do needthis number of centers to win contracts because of the need to makethe tests accessible to candidates throughout China.

We do plan toadd 10-20 test centers per year from this point on to continue toexpand our reach and provide more locations and more convenience totest takers in China. Despite a surge in tests delivered in your most recent quarter,revenue per test decreased, is this just cyclical or this more of aresult of a different mix of tests being offered? It is seasonal as higher revenue tests generally are offered in theJune and December quarters and revenue per test are generallyhigher in these quarters. However, we may also offer very low ARPTtitles from time to time depending on customer needs and that willhave an effect on our mix. For example, in the June 30, 2009quarter, we offered banking tests at RMB 65 one of the highestrevenue per test, but we also offered 500,000 tests for provincial educational testat approx. RMB 1 that dragged the quarter"s asp down comparedto the same period in the previous year.

As both number of tests delivered and average revenue per test arekey metrics for ATA"s business what initiatives are beingimplemented to see growth for both these metrics? The key growth driver for ATA is number of tests delivered. In thiscase, we work with our existing customers to increase publicawareness of these test titles" availability. In addition, wework with our customers to add new test titles every year as jobskills become more specialized. For example, we have recentlyworked with the securities industry to introduce the Fund SalesProfessional test title to address the growth of professionals inthis specialized area.

The largest opportunity remains the testingmarket that has yet to computerize. Over 95% of tests conducted inChina are on a paper and pencil basis so we work closely withclients such as Ministry of Finance, Health, Justice to turn theirexisting paper exams into computer format to be serviced by ATA. We generally do not have price movements for titles we areservicing already. However, we do expect average revenue per testwill continue to increase in the long term due to mix as we addmore test targeting accountants, doctors and lawyers that tend to have higher average prices. In addition, volumeincrease in TOEIC would significantly increase our ASP as thistitle carries a very high revenue per test.

I am an expert from generatordieselengine.com, while we provides the quality product, such as Perkins Diesel Engine Manufacturer , Generator Cummins Engine, Generator Cummins Engine,and more.

Related Articles - Perkins Diesel Engine Manufacturer, Generator Cummins Engine,

Email this Article to a Friend! Receive Articles like this one direct to your email box! Subscribe for free today!