CBAK Energy Technology, Inc.

Q4 2022 Earnings Conference Call

4/11/2023

spk05: Ladies and gentlemen, thank you for standing by and welcome to CBAC Energy Technologies' fourth quarter and full year 2022 earnings conference call. Currently, all participants are in listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time. Now, I'll turn the call over to Terry Lee, Investor Relations Director of Seabank Energy. Mr. Lee, please proceed.
spk09: Thank you, operator, and hello, everyone. Welcome to Seabank Energy's fourth quarter and full year 2022 earnings conference call. Joining us today are Mr. Yunfei Li, our Chief Executive Officer, Mrs. Yuna Pei, our Interim Chief Financial Officer, Mr. Xiu Juntian, our General Engineer, and Jennifer, our Interpreter. We released results earlier today. The press release is available on the company's IR website at ir.cbac.com.cn, as well as from Newswire Services. A relay of this call will also be available in a few hours on our IR website. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today. Further information regarding these and other risks and uncertainties is included in the company's public firings with the SEC. The company doesn't assume any obligations to update any forward-looking statements, except as required under applicable laws. Also, please note that unless otherwise stated, All figures mentioned during the conference call are in US dollars. With that, let me now turn the call over to our CEO, Mr. Yunfei Li. Mr. Yunfei Li will speak in Chinese and I will translate his comments into English. Go ahead, Mr. Yunfei Li. Please go ahead, Mr. Yunfei Li.
spk04: Thank you, Jerry. Hello, everyone. Thank you for attending today's conference call.
spk09: Thank you and hello, everyone. Thank you for joining our earnings conference call today.
spk04: We just released the financial report for the fourth quarter and the whole year of 2022. We are very proud to show our huge growth in sales to investors and shareholders. The company's revenue has increased by 3.7 times from $5,267 million in 2021 to $2.49 billion in total.
spk09: We have just released the financial report for Q4 and the full year of 2022. We are proud to present to our shareholders and investors the tremendous growth we have achieved in sales revenues. The company's revenue has grown by 3.7 times from $52.67 million in 2021 to $249 million in 2022, which is a remarkable achievement. Wei Zhonglin, please go ahead.
spk04: Thanks to the continuous trust and support from our major clients, as well as the success we have achieved in expanding our overseas markets,
spk09: our battery business has grown rapidly. In 2022, the annual revenue of our battery segment reached approximately $94.72 million, a remarkable increase of 1.76 times year-on-year. Feizonglin, please go ahead.
spk04: We previously announced the orders of several major customers or potential important customers. Although due to the confidentiality of the company's supply chain customers, We have not disclosed the names of some major customers, but we can see from nearly four-fold sales growth throughout the year that these customers' trust in the order and product quality of the company is long-term and continuous. In fact, most of the total order volume in the customers who have announced these announcements is still increasing. In this phone call, I would like to focus on the customer list we have announced in the past year. In our previous announcements, we mentioned receiving orders from various important clients
spk09: some of whom we could not name due to confidentiality reasons. However, the fact that our revenue has increased by almost four times indicates the long-term trust and satisfaction of these clients with our products and services. In fact, the order amount from these previously announced clients is still growing. In this conference call, I will provide an update on these clients. Currently, we are actively expanding our production capacity to meet the high demand in our industry. I will also update our shareholders and investors on the construction status of our new factory in Nanjing. Thank you very much.
spk04: First of all, I would like to update the total amount of orders that the company is currently handling. As of March 31, 2023, we have received three major production bases in Dalian, Nanjing and Shaoxing respectively. The total amount of pre-payment orders has reached a scale of 12.35 billion RMB. The pre-payment orders of this scale will support the company's continued increase in sales revenue over the next period of time. We believe that there is a reason for the situation in the market management in 2023 to have highly optimistic predictions. In fact, due to the market sales fire, Currently, some of the company's products are in a state of supply and demand. This is also the reason why we are actively expanding the company's production capacity.
spk09: Firstly, let me update the total amount of orders awaiting delivery in our company. As of March 31st this year, the three main production bases located in Dalian, Nanjing, and Shaoxing have received orders totaling approximately $180 million. they are yet to be delivered. This backlog of orders will support the company's high revenue growth in the future. We have reasons to hold a highly optimistic forecast for the sales performance in 2023. In fact, due to the hot market demand, some of our products have been in short supply for a very long time. This is why we are actively expanding the company's production capacity. In May 2022,
spk04: The company received a big order from a global leading European cold and heat system manufacturer. This company has more than 100 years of history. It has 140,000 employees worldwide. It has more than 70 countries and regions in the world. It is the largest customer of our company. As of December 31, 2022, The total order volume of this client in 2022 has reached 72410,000 euros, which is about 7.88 million dollars. In fact, we have been in contact with this client since 2018. After a long time of contact, they were afraid that the supply volume had been banned for investigation. The other party also began to place orders in large quantities this year, and the future cooperation has also been deeply communicated. We believe In 2023, the company will receive a larger amount than in 2022. Due to the current competitive market of new energy, we chose not to publicly disclose the name of the customer in order to protect the key customers of the company. The huge growth of our revenue and the large order volume of the customer will also match. In the future, we will publicly announce to customers in real time
spk09: In May 2022, we announced that we received orders from a leading European provider of heating, cooling and renewable energy systems. With over a century of history and more than 14,000 employees globally, this client is currently our largest customer. As of December 31, 2022, their order amount has reached 72.41 million euros. equivalent to $78.85 million. We have been in talks with this client since 2018 and after an extensive period of negotiations and supply chain due diligence. They have placed high value orders since 2022 and agree on further collaboration with us in 2023. We anticipate that they will place even larger orders this year. In order to protect our key client information and due to the intense competition in the new energy market, we have chosen not to reveal their identity at this time. Nevertheless, the significant increase in our revenue is consistent with the order amount we announced from this client. We will disclose the name when the time is right in the future. This is my message.
spk04: In addition to the high-speed growth, We are also actively developing customers in the field of electric vehicles and light vehicles. In 2022, we signed a framework agreement with the world's largest light vehicle manufacturer, Jinpeng Group, as well as its related parties and sellers. As of December 31, 2022, Jinpeng Group and its related companies have issued an order amount of 4.811 million RMB in the company, We also used our 32140 battery on the electric car of Jinpeng Group. This has a very important promotion effect on the future electric car market of the company. Our cooperation with Jinpeng is still continuing, and the number of orders received from the customer will continue to increase. In addition, in the cooperation with Azba and Dafa Motors in the past, we have already supplied about In addition to the rapid growth in the energy storage sector,
spk09: actively developing customers in the EV and LEV fields. In 2022, we signed a framework agreement with the world's largest light electric vehicle manufacturer JingPeng Group and its affiliated company, Gmail. As of December 31, 2022, JingPeng Group and Gmail have placed orders worth of approximately $7 million At the same time, our 32140 batteries have also been applied to Jingpeng Group's electric vehicles, which is very helpful to the company's future expansion in the electric vehicle market. Our cooperation with Jingpeng Group is still continuing, and it is expected that the total amount of orders received from this customer will continue to increase in the future. Besides, with respect to our cooperation with Diehard Motors, which is a subsidiary under Toyota, we had supplied battery packed products worth of about 2.7 million RMB in 2022. In February this year, the project team from Daihatsu Motors paid a visit to our 19th factory to see our production line. Our management team communicated with the visitors about our future collaboration. We expect to see the order amount continue growing in the near future.
spk04: From a general point of view, the company is making rapid progress in customer opening. In addition to stabilizing our European customers in the energy business, we have also achieved cooperation with large customers in the electric vehicle and light electric vehicle market. Currently, the company has some other important international well-known customers who are in the process of mass supply or deepening communication. We want to announce our cooperation and corresponding amounts to the capital market in real time. The company has maintained an optimistic attitude towards the market situation in 2023.
spk09: The company has made significant progress in terms of customer development. In addition to maintaining a stable partnership with our major European clients in the energy storage business, we also managed to form partnerships with major players in the electric vehicle and light electric vehicle markets. Besides, the company is supplying products to several other internationally renowned clients. and we will announce this corporation and corresponding order amounts to the capital market when it is appropriate. The company maintains an optimistic outlook for 2023. Thank you.
spk04: We mentioned earlier that the company's current production line has been announced. In 2020, we opened our Nanjing project with the local government in Nanjing. By the end of 2021, our Nanjing Project 171 project was successfully launched. Currently, Yixi Factory is investing in more production lines. It is expected to achieve 2GW of production capacity by 2023. In 2022, we have already started the construction of the second stage of Nanjing project. Currently, the steel structure and foundation construction of the second stage project has been completed. We expect to complete 6GW of production capacity by 2023-2024. As mentioned earlier, the company's current production line is in high demand.
spk09: In 2020, we partnered with the local government in Nanjing to launch our Nanjing project. By the end of 2021, the first phase of our Nanjing project was successfully put into operation. We are now adding more production lines to the first phase and expect to achieve a production capacity of 2 GWh by 2023. In 2022, we started the construction of the second phase. Currently, the steel framework and infrastructure construction of the second phase have been completed. we expect to complete the first stage construction and achieve a production capacity of approximately 6 GWh by 2023 to 2024, and then add another capacity of 6 GWh annually until the total production capacity of the second phase reaches 18 GWh. After the completion of the second phase construction, the company will have a production capacity of up to 20 GWh in Nanjing, Together with our mature Dalin base, we believe that the capacity by then is expected to meet the demands of the vast majority of customer orders.
spk04: In terms of R&D, the company's current focus is on nanoparticle battery. In China, nanoparticle batteries have become the market for all kinds of lithium-ion batteries. The leading companies in the lithium-ion battery market have released their own nanoparticle battery products. At present, we have completed the pre-production of 2070032140 battery. The company is expected to officially release NaCl battery products and sell them abroad at the end of this year. We also want to become one of the first companies in the world to complete NaCl battery production. The NaCl battery market is huge and will be widely used in the energy storage field of low-speed electric vehicles. On our R&D efforts, we currently focus on sodium ion batteries.
spk09: Sodium ion batteries have become a highly contested market in China, drawing interest from a variety of leading lithium battery producers. A few leading firms have released their own sodium ion battery products. Our company has recently completed the test production of 26700 and 32140 sodium ion batteries, with expected formal product release and sales by the end of this year. By then, we will be among the earliest companies worldwide to mass-produce sodium batteries. Given the immense potential of sodium ion batteries to be widely applied in light electric vehicles, energy storage solutions, and beyond, sodium battery products are expected to quickly establish a market sizable of at least hundreds of billions of RMB or tens of billions of dollars in the near future, thus becoming a supplement to the lithium battery market. We encourage our shareholders and investors to maintain your attention on our company and upcoming launch of our sodium ion battery product. Thank you.
spk04: In 2022, the company has made a significant improvement in the research and development of the sales market. The company not only made a great breakthrough in big order orders, but also sold 3.7 times more than before. It is also expected to become one of the first companies in the market to produce sodium ion batteries. In 2022, the company has made significant progress in both research and development and sales.
spk09: Our sales revenue increased by 3.7 times, and we will become one of the earliest companies in the market to achieve mass production of sodium batteries. Currently, the company has a huge amount of orders waiting to be delivered. We also manage to maintain a good relationship with our major European customer, and we are also supplying products to several internationally renowned clients. Relevant information will be released at the appropriate time.
spk04: Most of the time in 2022, the price of raw materials rose too quickly. In 2022, the price of carbon dioxide was tripled. It greatly affected the company's profit level. With the release of raw material companies, the price of carbon dioxide has dropped rapidly from the beginning of 2023. We believe that as the price of raw materials drops rapidly, the company will have a major breakthrough in terms of profit in 2023. The price of lithium carbonate, a key raw material, skyrocketed in the most of 2022 by about 300%, which affects our profitability. However, along with the new capacity put into use by each raw material producer, the price of lithium carbonate declines quickly.
spk09: We believe that a quick decrease of raw material price will help us increase profits this year. The successful market development, decline of raw materials price, and unveiling of our sodium batteries together give us sufficient reasons to be optimistic about our financial performance in 2023. Thank you.
spk04: Next, let's have Mr. Pei introduce the company's financial performance to the investors.
spk09: Now, let me turn the call over to our interim CFO, Yuna Pei, who will provide details on our financial performance.
spk06: Okay. Thank you, Mr. Li, and thank you everyone for joining our call today. I will now go over our key financial results for the fourth quarter and the full year of 2022. For the full details of our financial results, please refer to our earnings press release. we continue to maintain a strong momentum in the increase of sales of our battery and battery material products. As mentioned, the high cost of raw materials and the need to invest in and extend our profits. However, with big clients making orders and price of raw materials declining in this year, We are very confident in the future growth of Star Profits. In 2022, our revenues and gross profits grew, reflecting the success of our marketing strategies. We increased significantly our investments in research and development to both develop new large cylindrical lithium batteries and sodium battery products. Meanwhile, we managed to slightly reduce our sales and marketing expenses and the general and administrative expenses to increase our sales revenues, while to reduce our related expenses will be helpful in the long run to deliver a better financial result. Moving on to our results. In the fourth quarter, our net revenues surged by 95.9% to 54.4 million from the same period of 2021. In the full year, our net revenues grew by 372% to $248.7 million. The significant growth in our revenues was contributed by several factors. First, on the EV market, our product has improved features at higher quality, which become more attractive to EV manufacturers. Besides, the downstream market for electric vehicles continued to grow in 2022. leading to an increase in demand for EV battery products. On the LEV market, thanks to a huge increase in market demand, we successfully sell more batteries to LEV manufacturers. More importantly, our large cylindrical lithium battery 32140 batteries have gradually been accepted by key players in the EV and LEV markets. leading to the significant growth. On the energy storage market, the increase in sales of batteries for uninterruptible supplies in 2022 can be attributed to a combination of factors, including growing demand for renewable energy sources and our development of reliable products. Additionally, our focus on research and development has allowed us to develop innovative and reliable energy storage products at a competitive pricing. As we continue to invest in R&D and improve our product offerings, we expect to remain a leader in the energy storage industry and see continued growth in sales. Cost of revenues was $50.7 million in the fourth quarter, up by 89% from the same period in the previous year. Cost of revenues for 2022 was $230.6 million, up by $380.7 million. 4.9% from 2021. The increase in cost of revenues was in line with the increase of net revenues. Our gross profit was 3.78 million US dollars in the fourth quarter, representing an increase of $260 3% from the same period in the prior year. Gross profit for 2022 was 18.1 million US dollars representing an increase of 254.1% from 2021. Gross margin was 6.7% from fourth quarter and 7.3% for 2022, compared with 3.75% and 9.7% in the same period of 2021. Gross profit margins slightly decreased in 2022 largely due to increasing cost of battery raw materials in the year. Along with the decline of raw material price from 2023, our gross profit margin will recover and increase this year. Our operating expenses rose by 84.7% to $12.6 million for both quarters, and 75.9% to $109 million for 2022. The increase in operating expenses in 2022 was primarily due to our commitment to increase our investments in the research and development efforts and the impairment charge on hedges, property, plant and equipment as well as goodwill. Within that, our research and development expenses increased by 36.7% to 2.6 million for the fourth quarter and by 101.6% to 10.6 million for 2022. Sales and marketing expenses decreased by 12.8% to $2 million for 2022. And general and administration expenses decreased by 12.3% to $3.8 million for the fourth quarter and by 2.9% to $9.7 million for 2022. Even with the increasing R&D investments and the occurrence of impairment charges, our operating expenses were held only 11.9% relative to our revenues in 2022 compared with 31.9% in the same period of 2021. Our operating loss in the fourth quarter was $8.8 million, increased by 52.6% from the same period of 2021. Operating loss in 2022 was $11.5 million, reduced by 1.8% from point seven million dollars in 2021. Our change in fair value of warrants in fourth quarter was one million dollars decreased by 78 percent from the same period of 2021. The change in fair value of warrants for 2022 was 5.7 million dollars compared to 61 million in the prior year. Thus, we recorded a net loss attributable to shareholders of feedback energy of $10.7 million. So for the fourth quarter, compared to net income attributable to shareholders of feedback energy of $9.16 million. The net loss attributable to shareholders of feedback energy was $9.45 million for 2022 compared to net income attributable to shareholders of $61.49 million in 2021. That concludes our prepared remarks. Let's now open the call for questions.
spk05: Operator, please go ahead. Thank you. We will now begin the question and answer session. To ask a question, please press star 11 on your telephone and light for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.
spk01: Once again, if you wish to ask your question, please press star 1 1 on your telephone keypad.
spk05: First question comes from the line of Tian Xia from IBM. Please ask your question, Tian.
spk08: So the first question is from IBM.
spk07: I am glad to see the rapid growth of the company's revenue, and I've also noticed that the company suffered from some losses in profits. Can you give us more details in this regard? The management also mentioned that there has been a significant decrease in raw material prices, and do you think the company will be able to control its production cost in 2023?
spk09: Mr. Pei, please answer this question.
spk06: Okay, thank you for your question. First of all, as we mentioned in the report, due to the strong fluctuation of the price of carbon dioxide in our plant-based raw materials in 2022, this has led to a decrease in our profit margin in 2021, which has affected part of our profit source. In terms of cost, we have the largest investment in R&D cost. The R&D cost in 2022 is US$1063 million, which is more than double what it was in 2021. This is another reason for us to gain profits. In the future, we will continue to work on the development of higher-quality electrical products to ensure that our products are always in the lead in the industry. So... So thank you for your question.
spk07: And according to our report we made just now, in 2022, due to the price fluctuation in lithium carbonate, that is one of the key raw materials of our products, The growth margin of our company witnessed a decline compared to the figure in 2021. And on the other hand, if we have a look at the operation expenses of our company, we can see that we increased a lot in our input in the R&D. In 2022, our investment in R&D amounted to $106.3 million. It's more than double of the amount of 2021. And this factor also leads to a reduction in our profits. And in the future, we will still be committed to the continuous input in the R&D in our high-quality battery products so as to maintain a leading position in the industry.
spk06: In addition, we have been trying to optimize our production process to reduce production costs and strengthen the management structure of the company. We hope to continuously improve the efficiency of our operations. So, in general, the company's operating income in 2022 has increased by 3.7 times under the same conditions. Our operating losses are reduced by 1.8%. On the other hand, we have been committed to the optimization of our production processes.
spk07: with an aim to reduce the production cost. And in addition, we also make our efforts in improving the management structure so as to improve the operation efficiency. So if you have a look at the specific figures of 2022, our revenue realized a 3.7 fold of increase And if we have a look at the operation loss, actually it shrinks to some extent by 1.8%. So if we have a Look at 2023, with the price of raw material returning to a normal level, and also with the optimization of our management structure, we believe that our profitability will be further increased. That's it.
spk08: Thank you very much for your answer. Okay, thank you for your answer. And I have another question. Just now, the senior management spoke of sodium battery.
spk07: Can you walk us through the application scenarios and the market size of sodium battery? In particular, can you give us an update on its popularity in the Chinese market? Is the company currently in a leading position in sodium batteries? Thank you.
spk02: To answer this question, I would like to answer a question about the current hot issue of lithium-ion batteries in the Chinese market. Due to the rise in the price of lithium-ion mines for three consecutive years, it has doubled the price of lithium-ion mines. In this way, the price fluctuation of lithium-ion batteries is very unfriendly to the entire reaction of the market. At this time, the NAD battery has undergone a very good development. The price of NAD is relatively stable and easy to acquire. So now in China, the popularity of NAD is very high. At the same time, NAD has a high rate of use and a good low temperature performance. Car use and in this especially in the winter, it is better to put it in a deeper place than that. In addition, it is based on the price of Na in the petrochemical market. One is stable and the other is price low. It will also have a better performance. So there is also a period in our report that Na's market will have a green market. In fact, the price of Li has recently dropped a bit, but it has no effect on the heat of Na. If the price of Li is still high, it will actually give NAD a higher market share. So now it is a hot issue in the current market of NAD. Regarding the progress of NAD in our company, we have now developed three generations of NAD batteries, including the 26700 one that was just announced in our report, as well as the product of 32140, which is 130 watts per kilogram. Okay, so this is a very good question.
spk07: First of all, I'd like to answer the question about the popularity of sodium battery in the Chinese market. In the past three years, we all noticed that the price of lithium-ion battery fluctuated a lot, and it is mainly because of the fluctuation of the lithium carbonates. It increased multiple folds in the past three years. And actually, this kind of fluctuation in price exerted a negative impact in the market. However, if we have a look at sodium battery, on the one hand, it enjoys a more stable price. And on the other hand, it is easier to assess. It has a better accessibility. And besides that, its performance in low temperature conditions is also superior. That makes it a good product. to be used in vehicles, especially in winter when the temperature is low, we can say that its performance is even better than the lithium battery in the low temperature condition. So given the low price and the stability in price We believe that the popularity of sodium battery will even grow in the market in the future. So we expect a billion dollar market size for sodium battery and in addition the Decline in the popularity of lithium battery will also, on the other hand, create a market opportunity for sodium battery, and we expect the market to further expand in the future. And if you ask me about the development status of the sodium battery in our company, well, we have already finished three generations of development. And we have sodium battery projects such as the 26700 and 32140. And for the latter one, we have already come up with projects that have 130 watts per kilogram and we have already cooperated with our parts now to put this product on the vehicle and in the coming future we're going to promote the mass production of these products and we'll use them more and more in the vehicles. That is for the answer. Thank you for your question again.
spk05: All right. Thank you. Once again, to ask a question, please press star 1 1 on your telephone.
spk01: We have a follow-up question from the line of Tian Xia.
spk05: Please ask your question, Tian.
spk08: Okay. Thank you very much. I'm sorry. I have two more questions. I hope you can answer them. Okay, thank you for your answer, but still I have another two questions. The first one,
spk07: The company has experienced significant revenue growth in both EV and LEV sectors, and since most of the company's revenue still comes from the energy storage business, will EV and LEV continue to grow rapidly in the future, especially after sodium battery is put into mass production?
spk09: This question is for Mr. Yun to answer. It's about the future of our company in the field of electric vehicles and clean energy.
spk07: Okay, the question goes to Mr. Li.
spk04: As Mr. Li mentioned, most of our current revenue comes from energy storage. The main reason for this is that our product is mainly for sales. The sales of Dalian is relatively large. Because Dalian's products, such as 26650 and 26760, are mostly used in the energy storage business. So Dalian's sales are relatively large. They are all in the energy storage sector. Our Nanjing product, 31140, was only launched last year. After the launch, some factories are also in the process of certification. But last year, we already had nearly 50 million sales. Because our production capacity is limited, many factories, although they have been certified, are afraid to release orders. They are still waiting for our production capacity to be released. I think that in the second half of the year, when our other production line reaches production and can meet the needs of our customers, We will have more electric vehicles and light electric vehicles customers. We will supply them. So I think in the second half of the year, the sales of electric vehicles will increase. Specifically, that battery will bring a lot of growth after investment. Thank you.
spk07: Okay. Yes. So, yes, you're right. You mentioned that most of the revenue comes from energy storage. And what is the reason behind it? If you have a look at the products of a product that are manufactured in Dalian plant, that is our product 26650 and 26700. Yeah, you're right. the sales, in the sales revenue, the energy storage does take up a large proportion. However, if we have a look at the Nanjing facility, it is the plant that mainly produced 32140, and this product hasn't been mass produced until last year. A lot of OEM companies are still doing the certification at the moment. However, our sales have already amounted to 50 million US dollars already. So after the vehicle manufacturers pass the certification and after the increase of our production capacity, let's say at the second half of this year, we believe that our production capacity will better meet the demand of the customers and they will place more order. in with us so we will better supply our leb and ev customers in the second half of the year so we have the reason to believe the sales volume of lev and ev in the lev and ev markets will continue to grow and if you talk about the impact of when not a sodium battery put into production. Well, the priority of our business this year is to do R&D and production, and we will also send samples to our customer and help them to pass the certification. And then for next year, we believe that more of our products will be put in the into mass production, and they will be put in the vehicles. So that's the answer to question number three. You said you have another question, right?
spk08: Yes.
spk07: Okay.
spk08: Thank you very much. I have one last question. Thank you. In the past phone calls, you mentioned that you are developing larger primitive batteries.
spk07: In the previous several conference calls, the company mentioned that it is developing larger cylindrical batteries. Is there any information about the development progress that can be shared with investors?
spk09: Mr. Tian, please answer this question. Okay, thank you.
spk02: In recent years, the company has been developing a large-capacity battery. We have already announced that our 46 series of 35A products have been completed and the test has reached the target of our A-type design. Our current progress is that different designs have been frozen, and different products have been opened and completed. Now we are in the process of developing and designing in a public way. This product will be launched in the near future. We are currently developing other series of 4.6, such as 4.6.120, which is a 25-inch product, as well as a larger 50-inch product. Because in the domestic market, a product with a capacity of 25, 50, and 100 is more suitable for the domestic market. The two products we developed will be of a golden size in this market. The future is expected to have a higher cost-performance ratio. Even some products that already occupy a large market share in the modern market will have a higher cost-performance ratio. This product is promising in the future.
spk07: Yes, indeed. In the past two years, we have been doubling our efforts in the development of large cylindrical batteries, especially the 46 series. We have already finished the prototype design and trial production and trial and shakedown test and then the test results indicate that this prototype can reach the design objective and then now we have finished the prototype in terms of we have already finished the mold development and now we are in the process of developing the manufacturing process and we expect that it will be put into mass production in the near future. And at the same time, we have been also developing other projects under this 46 series, for example, 120. And then there were two other sites, that is 50, both, and 100. I would believe that these two types of projects will be a very suitable project for the households energy storage. This is seen to be the golden dimension, golden size for household energy storage and will also present a better price performance ratio. It is even more superior than those products with a big market share at present. So we believe that these products will enjoy a great a promising future. That's it for the answer. Thank you.
spk08: Okay, now I have finished all my questions.
spk07: Thanks a lot for the answers.
spk05: Thank you. Our next question comes from the line of Steve's goal from Ava.
spk01: Please ask your question, Steve. Congratulations to your immense revenue growth.
spk03: Regarding the current liabilities and the negative cash flow in the past years, do you believe there will ever be serious liquidity issues in the near future? The cost of revenue does not come down.
spk07: We just heard that our revenue has increased, obviously increased, but we also realize that there will be problems with cash flow. Will you worry that in the future, if the basic cost cannot be lowered, we will have a problem with cash flow? President Pei, please answer this question.
spk06: Okay, thank you for your question. uh uh uh uh uh uh uh uh So thank you for your question. We can answer this question from
spk07: First of all, if we have a look at the operation cash flow, actually the cash flow brought by our production capacity is sufficient. or we can say the cash brought by our existing business is sufficient. Both last year and this year, we have carried out the calculation, and according to the results of the calculation, the revenue brought by both the battery business and the material business can sufficiently support our cash flow. And then, on the other hand, if we have a look at the expansion of our production capacity, we actually have some revenue of financial support coming from different sources. The first one is the local government where our production facilities are based in. Actually, we have gained great support from the local government they give us some policy incentives to support us. And secondly, we also gain support from the banks in China. And thirdly, in the US capital markets, both the domestic investors and overseas investors expressed their great interest in our projects. And now we are having a lot of talks with them, and we believe they can also give us supplies, sorry, support the financial in finance that's the simple answer thank you for your question again thank you please do you have any follow-up questions
spk05: All right, thank you. So as a reminder, to ask a question, please press star 1, 1 again on your telephone keypad.
spk01: All right, seeing no further questions in the queue, let me turn the call back to Mr. Yunfei Li for closing remarks.
spk09: Thank you, operator, and thank you all for participating on today's call and for your support. We appreciate your interest and look forward to reporting to you again next quarter on our progress.
spk05: Thank you all again. This concludes the call. You may now disconnect.
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