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spk02: Good day and welcome to the H1 2022 Bond Natural Life Limited Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. 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 Sophie Zhang of Investor Relations. Please go ahead.
spk01: Thank you, Operator. Thank you all for joining us for Bond's 2022 Half-Year Financial Results Conference Call. At 8 a.m. today, Bond issued a press release announcing the 2022 Half-Year Financial Results. A copy of the release can be found on the SEC.gov. Please note that this call is being recorded live and will be available for replay. I ask that you please take a moment to review our forward-looking statements. During the call, we will be making forward-looking statements about the company's performance and business outlook. These statements are based on how we see things today and contain elements of uncertainty. For additional information concerning the factors, they can cause actual results to differ materially from our forward-looking statements. Please refer to our cautionary statement and risk factors stated in today's press release. Joining me on the call today are the chairman and CEO of the company, Mr. Richard Hu, CFO, Mr. Zhengchao Li, COO, Ms. Yingchun Xue, and CMO, Ms. Wenjun Chen. I will now turn the call over to our chairman and CEO, Mr. Hu, who will be speaking in Chinese and a colleague, Bowen Bai, will translate his opening remarks into English. Mr. Hu, please go ahead. Mr. Hu, can you start? Okay.
spk05: First of all, thank you, Sophie. And thank you all for attending our press conference today. First of all, Thank you, Sophie, and thank you for joining us today.
spk04: I will begin today's call by providing an overview of our business performance during the first half of 2022. Sophie will then provide a detailed overview of our 2022 half-year financials, highlighting the financial performance of each product category.
spk05: Tianmei Biotech is a company in the natural health and personal care industry that provides key active ingredients solution solutions to natural disasters. We purchase natural raw materials from the farm through our processing and collection, and make it into various types of chemical raw materials for commercial use. We have three types of products. Our customers include some In China and Asia, there are very famous brands, such as Tong Yitang, Liangmianjie, Jipai, and Antijiao. At the same time, our clients also include some brands in Europe and the United States, such as IFF, Mass, Simrush, Freedom, and ACS International, etc.
spk04: Now I'll turn to the slide. I'd like to briefly introduce our company for those who are new to our story. Ball Natural Lab is a bio-ingredient solution provider in the natural, health, and personal care industry. We sell raw materials from farms and then process and break down the natural plants into natural chemicals that can be used commercially for their biomanagement applications. We have three product categories. Fragrance Compounds. health supplements, and bioactive food ingredients. Fragrance compounds are used in fragrances that go into consumer fragrance, oral care, detergents, and et cetera. Health supplements are powdery drinks, prebiotics, probiotics, and et cetera. Bioactive food ingredients are used in food preservatives and health supplements as well. Our customers include very well-known names in Asia. For example, , , , and . And our clients also include some of the biggest household names in the U.S. and Europe, like International Flavors and Frequencies, , , Frito, and ACS International.
spk05: Now, let's take a look at the seventh page. I will briefly introduce our production base and the production system of the corn factory in Xi'an. Currently, we have two production bases in Xi'an, which are almost 90% of our headquarters in Xi'an. At the same time, our corn factory is the only one in Xi'an. It is expected to open in September this year. The first stage of the corn factory is mainly used to rapidly expand the production of raw materials and physical materials to meet the current market and customer demand. The second stage of the production line is mainly used to develop new products such as company natural doctors and functional individual care equipment. The first stage of the corn factory can be used to produce raw materials and physical materials Now to the flat side.
spk04: I would like to briefly discuss our manufacturing facilities and competitors. We currently have two facilities outside of Xi'an, China. Both are located within 90 minutes from the company's headquarters. Regarding our reserve production facility, human plants, the building construction is not complete and it is expected to deliver near-term production. The first phase of human plants is to increase the production capacity, the fragrance compounds, and bioactive food ingredients to meet the existing market and customer demand. The second phase of the expansion is for the company's new proprietary products, including natural prebiotics and functional personal care products. The new construction is expected to increase our production capacity of fragrance compounds and bioactive food ingredients by 200%, representing a 150% analyzed growth potential in revenue.
spk05: I would like to introduce the development progress of our specialized products in the eighth month. After the great efforts of our research team over the years, we are very happy to be able to increase the health products of our nutrition health care series on the basis of traditional business. First of all, we have received our first female individual nursing brand, Thank you. I would like to introduce a series of medical products based on broccoli. As our first specialty product with vegetable-based vegetables, it will provide us with an extra growth power. According to research, about 56% of Chinese people are infected with humerogen. We also plan to develop other cross-sectional vegetable series products. We plan to introduce immune system We look forward to pushing these products into the market and feel very optimistic about the market opportunities and income potential of our specialized products.
spk04: In this slide, I would like to introduce the progress of our proprietary product development. Thanks to the tremendous and decadent efforts of our R&D team, we are excited and proud to be able to add our first products that are new and innovative to our nutraceutical line on the solid foundation of our legacy compound business. First of all, we have received the initial purchase order for our first female personal care product, Feather Pure. which is an all-natural product with no antibiotics for against harmful chemical additives or harmful side effects. The product can regulate microbial balance of female reproductive system also with antibacterial and anti-inflammatory function. We expect Better Pure to bring approximately $3 million in revenue in the next two years. Secondly, we would like to introduce our new broccoli-based probiotic powdery drink. As our first proprietary product of the cruciferous vegetable-based health supplement series, it will provide an additional growth driver for us. According to the research, approximately 56% of the Chinese population were infected by H. pylori bacteria that can cause digestive disease. Our new probiotic powder drink could potentially inhibit the proliferation of H. pylori and regulate the microbial balance of one's digestive system. In addition to the powder drink, we are also expecting to develop other consumer products in the cruciferous vegetable-based series. We plan to introduce immune system booster in soft gel capsules, digestive house booster in soft gel capsules, We lost the product. Leave aid products for mid-age and elderly. We look forward to bringing our products to the market and are optimistic about the market opportunities and revenue potential from our proprietary consumer products.
spk05: Okay. Next, I will introduce the company's expansion strategy for the next year. B, 中端产品线扩张。 Three. Four. Five. In slide 9, I will provide an overview of our growth strategies in that six months to one year. Firstly,
spk04: The company will continue to look for opportunities to expand our business operations and local raw material on a global level, especially in the United States, Japan, and Europe. Next, we are expecting putting more effort in product line expansion as well. In the following years, the company will introduce two to three new raw material categories in order to expand our sales in the health market and become more competitive. In addition to that, the company will also continue to focus on the regulation technology of human microorganisms and develop new products targeting on the digestive system health, cardiovascular and cerebrovascular health, metabolic health, and immune health. At present, some products have been tested and will be launched soon, including products helping gastroenteritis, sleeping, and memory issues. In the end, the company is expecting to carry out two to three mergers and acquisitions in the following years as well. And these acquisitions will improve our capabilities in value manufacturing, technology, and sales network expansion.
spk05: Next, let's move on to the 10th page. With that, I will now turn the call over to Sophie. She will walk you through our financials. Thank you, Mr. Hu. I'm Sophie, and I will review the 2022 half-year financials with you.
spk01: And our CFO, Mr. Lee, will be available for the Q&A session if you have questions regarding the financials. Before I reveal the numbers, let me remind you that all figures I discussed are for this reporting period, the first half of 2022, unless I state otherwise. Additionally, any year-over-year comparisons to the March 31st of 2021. So let's go over our 2022 half-year financial results. I will begin with an overview of our consolidated results on slide 11. In the first half of 2022, Bond generated approximately $13.7 million in revenue, up 17% over last year. These increases were primarily driven by the increase in the average selling price of the three product categories. The selling price of frequent compounds, powder drinks, and bioactive food ingredients increased by 64.1%, 11.2%, and 79.2% as we raised our selling price in response to the rising raw material costs and market change as affected by COVID-19 and the shortage of the principal raw material due to the abnormal weather. The sales volume of bioactive food and ingredients also increased by 47.5%, although the selling price was raised from about 33,000 kilograms to about 49,000 kilograms. Due to strong customer demand and our sales effort to promote sales of milk fissile extracts with benefit to protect liver and lower blood sugar. In addition, the sales volume of health supplements decreased by 37.5% to 130,000 cases. mainly due to the shortage of our raw material, which suffered abnormal weather in the second half of 2021, along with disruption of logistics caused by COVID-19. At the same time, our gross profit for the first half of 2022 was approximately $4 million, increased by 19.6%, which was mainly driven by strong category growth from fragrance compounds and bioactive food ingredients. Both sales volume and average selling price are moving in the right direction, partially offset by the supply chain package contribution from health supplements. Government subsidies received in the form of a grant and recognized as other operating income totaled about $542,000 and $447,000 in the first half of 2022 and 2021, respectively. This is an example of continuing support from government to high-tech companies like Ball Natural Life. Net income in first half of 2022 increased from $2.3 million to $2.5 million, increased by 10.2%. Diluted earnings per share was $0.3 compared to the $0.4 for the same period in 2021. In this slide, I will dive deeper into the financial performance of each of our product categories. Beginning with Frequency Compounds, revenue generated from Frequency Compounds increased by 24.9% from $6 million to $7.4 million. As I mentioned previously, the revenue growth of Frequency Compounds were primarily driven by the average order size and the average selling price of our products. Although there's a rise in the raw material costs due to supply chain and dynamic challenges, with our advanced technology and our ability to secure such supply, we are able to increase our average selling price and maintain our profitability in fragrance compounds. Next, our health supplements. Powder drink segments decreased by 28.5% from 4.7 million to 3.3 million. Decrease from health supplements was mainly due to the decrease in sales volume. It was caused by the raw material shortage in the second half of 2021 and the logistics disruption caused by COVID-19. Revenues from bioactive ingredients increased 171.8% compared to the same period of 2021 from 1.1 million to 2.9 million. As we mentioned about The increase in revenues from bioactive ingredients was primarily due to volume growth and higher average selling price. Overall, the increase in total sales revenue from unit price increases in frequent compounds and bioactive ingredients, as well as volume increase in bioactive ingredients, offset the negative impact of supply chain shortage in dietary supplements. Thus, we are pleased with the overall financial performance of our product categories. Now turning to the slide 13, I would like to discuss the regional breakdown of our sales and the dynamic that influenced our results. Despite the global supply chain challenges, in 2021, revenue generated from domestic China was 13.1 million, achieving a 22.4% increase in sales, which represents approximately 95.7% of our total revenue. for the first half of 2022. Overseas sales was approximately $600,000, representing about 4.3% of the total revenue. Due to COVID-19, global logistics have been disrupted, so we shifted our sales strategy by directing more marketing efforts to promote our products to large domestic enterprises customers. rather than export sales to overseas customers. We believe that with the commissioning of Yumen plant, we will be able to accelerate the revenue growth in both the domestic and international sectors to meet the increasing demand from our customers. In slide 14, I will go over to the key subsequent events after half year 2022. In May 2022, Our third production site, Inland Plants, has completed the building structure of the facility as scheduled and forecasted to commence around September 2022. In June 2022, the company launched a new cruciferous vegetable-based probiotic powder drink. And also in June 2022, the company appointed Jeffrey Guzzi as the new independent director to its board of directors and as chair of the audit committee. I will now turn the call over to Mr. Hu for closing remarks, and then we will start the Q&A session. Mr. Hu, you may begin your closing remarks.
spk06: Okay.
spk05: Thank you, Dr. Su. I would also like to thank everyone for attending my BOA 2020 Business Meeting. At the end of today's introduction, I would like to thank our company Yuanfeng for its unwavering efforts, and thank our loyal customers for their trust in us. We believe that the company's technology, business model, and growth strategy will help CYA maintain a strong growth trend and gain
spk01: Thank you, Sophie, and thanks again, everyone, for joining us today. Before I wrap up today's presentation, I would like to first recognize our employees for their tireless efforts and thank our loyal customers for their trust in us. We are confident that our R&D capabilities business model and strategy would enable us to gain more market share and maintain our growth momentum. With that, before we open to the call to our questions, I would like to note that for any questions directed to the management in China, we will translate both their questions and their answers. If you want to ask your questions in Chinese, please also ask it in English for the benefit of the listeners. Please also note that we will only be able to respond to the questions about our financial and operating results. With that, we are now open for calls for questions. Operator?
spk02: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touch-tone phone. If you are 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. Our first question comes from Brian Hartspand, a private investor. Please go ahead with your question.
spk03: Hi. Can you hear me? Okay. Okay, thanks. So I just have a few questions here. But first, congrats on another good quarter. I just have a few questions. My first is that I noticed the average selling prices of your products are trending up, which is a good sign. Can you please elaborate what the driver is behind it? And also, can we expect the same trend going forward for the second half of the year?
spk06: Thank you, Brian. Let me transition to a question. Hello, Mr. Hu and Mr. Li. The first question for Mr. Hu is that he noticed that The average price has increased. This is also a relatively positive trend. He wants to know if this trend can be maintained in the second half of this year. Or what is the situation? Let me answer this.
spk05: From the first half of this year, from the whole sales situation, We should maintain a relatively good increase in the price of the entire sales unit. This is from our general position. If we can answer this in a more confident way, this price can be maintained at least in the second half of the year. And we think there should still be a certain possibility that it can be higher than before. Because there are two meanings to this. First of all, a very simple basic situation is that global inflation and consumer prices are only rising. This is the biggest basic background. All things in the past year, especially in the past six months, have become more expensive. This is the first. The second is that the natural cost of the whole world China China China Thank you, Mr. Hu.
spk06: So here's the answer coming from the chairman and CEO, Mr. Richard Hu. There's two drivers behind our price improvement. Number one is with the backdrop of global inflation in our business, there's no exception. So the price has been going up. Secondly, the supply chain disruption also further, you know, further push the price up to our raw material and also our selling products. So we do believe we have, we have demonstrated ourselves that we were able to pass through the price increase to our customer effectively. For the remainder of this year, we feel confident that we will continue maintain such price increases. And there's also possibly additional room to improve our pricing power.
spk03: Okay. Okay. Thank you. And so what's your guidance for the fiscal year 2022? That's my next question, and then I have one more after.
spk06: Okay, let me translate that. Mr. Hu, Mr. Li, the second question is... There are always three questions. This is the second one. The second question is to understand if we have a general range of expectations for the entire year's financial performance. For example, income during this period.
spk05: Mr. Li, please answer this question. Hello, everyone. Let me answer this question. Our financial indicators for the first half of this year are about 17% higher than that of last year. However, compared to last year, Thank you. Thank you. Okay, so the answer coming from the common set for
spk06: So for the first fiscal half, our revenue and net income both grew approximately 17%. We feel comfortable that such growth will continue for the remainder of the second half. Obviously, we are not growing as fast as we used to due to the impact of COVID-19 and also supply chain disruption. But we're still very optimistic with, you know, we're going to still be growing at a decent growth rate.
spk03: Okay. Okay. Thank you. And then the last question is, you know, will your third plan be up and running on schedule? And what can investors expect in terms of revenue and earnings contribution from that plan?
spk06: Okay. Thank you, Brian. Let me translate the question again. Okay.
spk05: Our third factory, the corn factory, according to the plan, we should be in September, and then enter this production. And then according to our current record, it should be basically normal. That is, we are in the process of planning. In September, it will be able to enter this normal production. For our entire sales, The growth of raw materials will bring a growth of 200% of our raw materials business, and a growth of 150% of our overall sales. After the first stage of production, we expect to bring back half of our total supply, that is to say, bring back a 100% reduction in production capacity and a 75% increase in sales and income. This is our current budget for the jade factory. I would like to reflect on it.
spk06: Okay, okay. The answer is coming from the common chairman, CEO, Mr. Richard Hu. So our third production facility in Yumen is scheduled to be up and running and ramping up in September as we planned. The overall contribution in terms of production capacity and revenues are 200% and 150% respectively. So the plant will be coming in production in two stages, pretty much one year each. So in year one, we expect 100% increase to our production capacity and also 75% in revenue contribution. And in year two, we can expect similarly 100% production capacity incremental and also 70% revenue additional contribution to our revenues.
spk03: Okay, thank you very much.
spk02: Okay, thank you. This concludes our question and answer session. I would like to turn the conference back over to Sophia Zhang for any closing remarks.
spk01: Thank you, Operator. On behalf of BOM, we want to thank you for your interest and participation in this call. If you would like to speak with us further, please contact either Maggie or Sophie. The contact information is listed at the end of the press release. Thank you. Paul Breeder.
spk02: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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