Antelope Enterprise Holdings Limited

Morning and good day. Welcome to the Antelope Enterprise Holdings first half 2024 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to David Rudnick of Precept Investor Relations. Please go ahead.

Thank you, Drew. Good morning, ladies and gentlemen, and good evening to those of you who are joining us from China. Welcome to Antelope Enterprise Holdings' first half 2024 earnings conference call. With us today are Antelope Enterprises Chairman and Chief Executive Officer, Mr. Willis Xiong, and his Chief Financial Officer, Mr. Edmund Henn. Before I turn the call over to Mr. Xiong, I would like to address forward-looking statements that may be discussed on the call. Forward-looking statements involve risks and uncertainties and include, among others, those regarding revenue, operating expenses, other income and expense, taxes, and future business outlook. Actual future performance outcomes and results may differ materially from those expressed in forward-looking statements. The company claims to safe harbor protections for such forward link statements as contemplated under the private serious litigation form act of 1995. These are further documents filed by the company with the SEC. Specifically, the most recent reports informs 20F and 6K, which identify important risk factors that could cause action results that differ from those contained in the forward link statements. We assume no obligation to update any forward link statements or information which speak as of their respective dates. And now, it's my pleasure to turn the call over to Antelope Enterprises Chairman and CEO, Mr. Will Zhang, and Antelope Enterprises CFO, Mr. Edmund Henn. Antelope Enterprises Sabrina Xu will be translating for CEO, Will Zhang. Mr. Zhang, you may proceed.

Mr. Zhang, you may speak.

Okay. Thank you, David. I would like to welcome everyone to the 2024 financial year, the first half of the financial report call meeting.

All right, thank you, Deva. On behalf of the company, I would like to welcome everyone to our first half 2024 earnings conference call.

Revenue for the live streaming e-commerce business segment came in at

$43.4 million for the six months, modestly lower than the $44.6 million in revenue recorded for the six months of 2023. This slight decline was due to loss of a few major clients and a change in business strategy to secure a larger number of mid-tier clients to help to mitigate the risk of retaining major clients. We had engagements with more than 70 clients and the first half of 2024 represents an increase of nearly 20 clients compared to the same period in 2023. All majority-owned Kailin Cloud subsidiary provides turnkey live streaming marketing and broadcasting services to consumer brand companies by matching consumer brand products with the appropriate hosts and influencers. We have a tremendous market opportunity ahead of us and believe that we have the resources, infrastructure, and team culture to achieve sustained growth in this B2C ecosystem. 作为公司一项重要的战略发展,我们最近宣布,我们计划在2024年第三季度进军能源领域,并将在德克萨斯州启动这项业务。 In an important strategic development for the company, we've recently announced that we're planning to enter the energy field in the third quarter of 2024 and are going to launch this business in Texas to make the replica rolling maze of the computing power industry.

We believe that 我们在能源供应领域新定位非常及时,可以满足由于加密货币,挖矿和人工智能数据中心的增长而产生的高预期能源需求。 We believe that our new positioning in the energy supply sector is extremely timely to meet the high expected demand for energy due to the growth of this sector. 支持

我将电话转给公司首席财务官Adam Han先生。 他将更详细地讨论公司上半年的盈利结果。 谢谢。 With that, I would like to turn over the call to the company's chief financial officer, Mr. Edmund Han, who will discuss the company's first half earnings results in more detail. Thank you so much.

Thank you, Mr. Trump. I will now move on to a more detailed discussion of our financial results for the six-month ending, June 30, 2024. Revenue for the six-month end, June 30, 2024, was $43.5 million, a decrease of $1.1 million, or 2.6%. from $44.6 million for the same period of 2023. The decrease in revenue was due to the loss of a few of the live streaming business major clients in the current period. It propelled a change in business strategy to focus on securing a large number of mid-tier clients to mitigate the risk associated with an over-concentration of major clients. In the first half of 2024, we had the business engagements with more than 70 clients, which represented an increase of nearly 20 clients compared to the same period of 2023. Gross profit for the six-month end, June 30, 2024, was 3.5 million U.S. dollars. a decrease of US$3.3 million or 46.7 percent as compared to US$6.8 million for the same period of 2023. The decrease in gross profit was due to the decrease in revenue and an increase in the cost of goods sold in the current period. For the first half of 2024, gross profit margin was 8 percent for the live streaming e-commerce business as compared to a gross profit margin of 15.3% for the first half of 2023. Selling distribution expenses for the six month end of June 30th, 2024 were 3.1 million US dollars, a decrease of 4 million US dollars or 55.9% as compared to $7.1 million for the same period of 2023. The increase in selling and distribution expenses was due to decreased advertising and promotion expenses of $3.5 million and decreased commission expenses of $0.5 million. Administrative expenses for the six-month end June 30, 2024, were $6.9 million, an increase of $1.3 million, or 22.8 percent, as compared to $5.6 million for the same period of 2023. The increase in administrative expenses was due to an increase in stock compensation expenses of $0.8 million, a $0.5 million increase in professional service expenses. Loss from continuing operations before taxation for the six-month end, June 30, 2024, was $6.5 million, an increase of $1.1 million, or 19.3% as compared to a loss from continuing operations before taxation of $5.5 million, or the same period of 2023. The increase was due to the decrease in gross profit in the current period as compared to the same period of 2023, as well as an increase in administrative expenses, which was partly offset by a decrease in selling and distribution expenses. Loss per basic share and fully diluted share from continuing operations for the six-month and June 30, 2024 were $0.06, as compared to loss per basic and fully diluted share of $3.38 for the same period of 2023. Turning to our balance sheets, as of June 30, 2024, we had $2.3 million in cash and cash equivalents, an increase of $1.8 million, or 333.2%, compared to $0.6 million as of December 31, 2023. As of June 30, 2024, Breaking capital was $5.6 million, and the current ratio was 2.6 times. Shareholders' equity as of June 30, 2024, was $18 million, as an increase of $3.6 million, or 25.2% as compared to $14.4 million. as of December 31, 2023. Moving to our business outlook. We own a majority position of a live-streaming e-commerce business, Hainan Clean Cloud Services Technology Company Limited, and aim to launch an energy supply business in the third quarter of 2024. In CloudSense, platform strategically matches, hosts, and influences to consumer brand products, which results in increased sales for those companies. In the last few years, live streaming e-commerce has comprised an ever-increasing percentage of China's e-commerce sales, which we expect to continue in the year ahead. birthed by a consumer ecosystem that includes a young demographic and a high usage rate of mobile devices. We believe that clean cloud users are unique in the live streaming spaces since it utilizes advanced analytics that matches hosts and influences to consumer brand portals. which facilitates unique content for high conversion rates as compared to traditional e-commerces. In the current period, the business strategy of the live streaming business was modified to focus on securing a large number of mid-tier clients to migrate the risk associated with an over-concentration of major clients. Since some of these new clients are still in the beginning stage of collaboration and their business volume has just started to grow, it will take time for the new mid-tier clients to develop and increase their sales volume. In the first half of 2024, the live streaming business had a business engagement with more than 70 clients, which represented an increase of nearly 20 clients compared to the same period in 2023. And in an important strategic development for the company, we recently announced plans to enter the energy field through the production of electricity using natural gas generators in Texas. This electricity would then be transmitted directly to Berkeley growing computer sector, which requires a high amount of energy. Compared to conventional methods, this method eliminates intermediary steps like transmission to power through and processing by public utilities, which will result in low energy losses and high efficiency. Given the strong market demands, the company believes it has a runway for significant growth in the near future. The business outlook reflects the company's current and preliminary views and is based on the information currently available to us, which are subject to change and subject to risks and uncertainties, as well as risks and uncertainties identified in the company's public findings. At this point, we would like to open up the call to any questions pertaining to our first half 2024 financial results. Operator, please.

We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed, and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Steve Silver with Argus Research. Please go ahead.

Thanks, Operator, and thank you for taking my questions. I was hoping you could provide some color about how the company made the strategic decision to enter the energy supply field.

All right, thank you for the questions. John, we are now entering the Q&A section. Steve wants to know why the company will make strategic decisions in the field of energy supply.

Okay, I will answer now. First, the U.S. Energy Information Agency predicts that the U.S. electricity demand will hit a historical high in 2024 and 2025. Let me begin by saying that the U.S.

energy information projects that electricity demand in the United States will increase to record highs in 2024 and 2025, largely driven by demand from large-scale computing facilities. 国际能源署也表示,

The electricity demand of the Global Data Center will be doubled between 2022 and 2026. Among them, AI will be the main driving force for growth. Most of us know that the Data Center supports all aspects from financial transactions to social media to government operations. Training AI models requires the consumption of a large number of energy. The international energy index predicts The IEA, as it is known, also said that global data center electricity demand is on its way to double from 2022 to 2026, with AI playing a major role in that increase.

Most of us know that data centers support everything from financial transactions to social media to government operations. It is extremely energy intensive to train AI models. The IEA has predicted that in two years, data centers could consume the same amount of energy as Sweden or Germany. 数据中心需要

Data centers need a continuous and stable supply of energy to operate, and that's where we come in.

because we have developed such a model. We think that we're entering this market at exactly the right time to provide a cost-effective and stable means of providing electricity to data centers and those companies in need of computing power.

Okay, that's helpful. Thank you so much. And one follow-up, you've mentioned being cost-effective in your model. Is there any detail you can provide about the business model in terms of how it's supposed to be cost-effective and designed to be a stable source of energy for your customers?

All right. Thank you so much.

Thank you.

So we're located close to the natural gas production site, which allows us to minimize transportation costs and avoid the costs of compression, transportation, and storage. Also, we strategically positioned close to our customers as well to greatly minimize any transportation costs there as well. Therefore, we can supply electricity to customers in a very cost-effective way.

We closely monitor the market for natural gas and believe that we have a good model to project the right time to secure natural gas for our business.

We currently own four generators that convert natural gas into electricity and plan to launch this business in the fourth quarter of this year.

Thank you very much.

Thank you, Steve.

Again, if you have a question, please press star then 1. This concludes our question and answer session. I would like to turn the conference back over to David Rudnick for any closing remarks.

Thank you, Drew. On behalf of the entire Antelope Enterprise Management team, we'd like to thank all of you for your interest and participation on this call. This concludes Antelope Enterprise's first half 2020 for earnings call. Thank you very much.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.