Earnings Call: H1 2021

Aug 27, 2021

Good morning, ladies and gentlemen. On behalf of Kumble Telecom System Holdings Limited, I would like to welcome all of you joining today 2021 Interim Results Investor Presentation Video Conference. Today, today. There will be a presentation followed by Q and A section. In the Q and A section, for investors who are interested in raising question, Please click on the raise hand button located at the bottom of the screen in your Zoom. Zheixiong Kimo, Your Xia Founder, Zhu Xiaong Anxian. May I now take this opportunity to introduce the senior management joining us today, and they are from Hong Kong and Guangzhou. Cixi Huodong Lin Xianshan. And from Guangzhou, we have the Executive Director and President of the Group, Mr. Today. The Executive Director and Group CEO, Mr. Ken Chong. Clients. And the Executive Director and Senior Vice President of the Group, Mr. Huoxing Ru. Today. May I now pass the floor to Mr. Ken Chong, the Executive Director and Group CFO, to present the financial highlights for the first half of twenty twenty one. Mr. Cheng, please. Good morning, everyone. Thank you for joining our 1st half twenty twenty one results to the meeting. First of all, let me illustrate our first half result on the headline number. The revenue in the first half of twenty twenty one is HKD2.42 billion, Which was up by 8% year on year. Basically, all business segments, except antenna, went up. Particularly, we have seen our overseas market has been up strongly. Overseas market is roughly about 25% of total revenue, and including our ETR revenue, It's up by about 26% year on year. The revenue on mainland, which is about 65% of the total, Gross profit is down by HK45,600,000 at 6.8 to RMB 1,000,000. Gross profit margin down by 4.2 percentage point to 28.2 percent because of Two reasons. 1st is the raw material cost has been increasing. And second of all is because of the COVID situation has been persistent. A lot of our operating related COGS, for example, like transportation, flights cost has been increasing. And also the operating loss at the first half is RMB72.5 million, today. Income tax at HK26.9 million dollars The loss attributable to shareholder is HK89 point to HK3 $1,000,000 which was down from a profit in the same year ago, The same period last year and the loss is difficult by two reasons. First of all, because the gross profit Okay. Let's look at the OpEx. To. The OpEx as a percentage of revenue is about the same as last year at around 35.9%. Basically, all operating costs have come down except selling expenses and R and D expenses. For example, finance cost has been down by 48.1 percent because as In general, market interest rate has come down and we have a better balance on the loan portfolio. 2nd is income tax has been down by 31.2%. Other expenses because of the decrease in the provision of, account receivable, the other expenses was down by 8.9%. Admin expenses was down by 7.6%. Selling expenses was up by about 21%. This is because we increased the respective sales and distribution expenses and channels to strengthen the business development. And last of all, the R and D expenses is up by around 47.4%. This is because as the 5 gs technology enter the stage of in-depth development, the prospect of new application scenario and models are promising, Let us look at our balance sheet item. Net cash is HKD559 million Which was up by HK37.8 million dollars total asset at HK11.2 billion dollars up by 3.1 percent Total liability, dollars 6,600,000,000 up by 4.9%. Net asset It's RMB 4,100,000,000 up by 1.2%. NAV per share is RMB 1.50 today. If we look at our turnover day, basically inventory turnover day, AR turnover day as well as to. AP turnover day have come down. Although, if we look at the absolute number on inventory And as well as account receivable, we have seen some increase year on year. On the inventory side, we are actually building More as we have won some centralized procurement on antenna, which will to. We have a recovery in the China business, particularly in the second half, as a result of those inventory actually building up. And in spite of this, the inventory turnover day has come down. As well, I think we have a better AI turnover as As well as, AP Turnover Day. And as a result, the cash conversion cycle is still at a healthy level at around 34 days. Gross reading ratio is 12.4%. It's down by 1.1% compared with 1 year ago. Today. If we look at our interest bearing debt and gross gearing ratio, we have seen our gearing ratio at Basically, the lowest level over the last 5 years at about 12.4%. And right now, our finance cost as a percentage of interest bearing debt is around 1.5% And compared with a year ago, it's about 2.5%. And this is because we have a better loan portfolio between mainland China and Hong Kong and as well we have a better balance on long term as well as Let us look at our revenue by customers. So the 3 major operators account for about 35 percent of total revenue, which was down by about 8.9% year on year. China Tower account for about 8.9 percent of total revenue, which is up by 24.2%. International revenue has become the major driver Which was up by about 12.12 percent year over year. Other customers And particularly the other customers like the ETL, which account for 4.3% of our total revenue It's up by 34.2%. So the only segment which will start is China Mobile, our to the customer segment. But later on, we will explain that we have recently won decentralized procurement Business segment divided by revenue divided by business, we have seen that All the business segments, except antenna, have all gone up. First of all, our network system Has gone up by 27.3 percent year on year. If we look at the to. Mainland, domestic market versus international market, we actually have seen the international market side, which Account for roughly about 36% of Network Systems segment, which was up by about 82.9% Yeah, becoming the major driver to drive the network system to produce the growth in the first half of the year. The service sector increased by about 14.5%, wireless transmission, Which is up by about 24.7 percent. And antenna segment which was down by about 13.4%. But again, if we look at the breakdown between the mainland China market as well as international market, today. So, this is our financial net profit and losses over the last 10 years. Currently, I would like to say that our financial position has been sound and healthy. And second of all, at the end of June, we also have won some centralized procurement, which And from now, I will turn the time to our President, Mr. Xu Huijin, and he will further explain on the strategy as well as on this assignment. Thank you. Thank you, Ken, for our presentation. So now may I now invite Mr. Shihui Jun, the Executive Director and President of the Group to present the industry development and company outlook.