CBAK Energy Technology, Inc.

Good day, ladies and gentlemen. Thank you for standing by and welcome to the Seabank Energy Technologies first quarter 2023 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 any time. Now, I'll turn the call over to Terry Lee, Investor Relations Director of Seabank Energy. Mr. Lee, please proceed.

Thank you, operator, and hello, everyone. Welcome to CBAC Energy's first quarter 2023 earnings conference call. Joining us today are Mr. Sunfei Li, our chief executive officer, Mrs. Yuna Pei, our interim chief financial officer, Mr. Xiujun Tian, 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 IAM 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 forwarding statements except as required under applicable laws. Also, please note that unless otherwise stated, all figures mentioned during the conference call are in U.S. storage. With that, let me now turn the call over to our CEO, Mr. Junfei Li. Mr. Li will speak in Chinese, and I will translate his comments into English. Go ahead, Mr. Li. Thank you, Jerry.

Hello, everyone. Thank you for attending today's call.

Thank you, and hello, everyone. Thank you for joining our earnings conference call today. You may go ahead.

We just released the first quarter's financial report in 2023. With our materials, the price of raw materials has dropped significantly, and our overall revenue has dropped. But in terms of our main business, Li-ion, we are still satisfied with the results of the general market adjustment. Our battery business revenue has reached $29.6 million, which is 97.1% higher than before. The battery consumption in the energy field is 258.2 million yuan, which is 72.9%. The battery consumption in the light electric vehicle field is 1.97 million yuan, which is 2,117.2%. The battery consumption in the car industry is 1.82 million yuan, which is 5,890 times higher than last year. We have not only achieved growth in the main business sales, but also made great progress in the main business profit margin. In the first quarter, our battery profit margin reached 10.85% and increased by 4.31%. We believe that with the gradual release of existing production capacity and the continuous improvement in production efficiency, our future profit margin will have greater room for growth.

We have just released our financial results for the first quarter of 2023. Regrettably, our total revenues have declined as a result of reduced revenues from our materials division, stemming from a significant fall in the price of raw materials. Despite the current market conditions, we have achieved satisfactory results in our primary business, which involves selling lithium batteries. In particular, our battery business generated revenues of $29.6 million, representing a 97.1% increase from the same period last year. Among these revenues, $25.82 million came from batteries used in energy storage applications, which is a 72.9% increase while $1.97 million came from batteries used in light electric vehicles, reflecting an impressive growth of 2,117.2%. Moreover, revenues from batteries used in electric vehicles reached $1.82 million, marking a remarkable increase of 5,889.8 times compared to the same period last year. In addition to achieving significant revenue growth, we have also witnessed a significant improvement in our gross profit margin. For our battery business, the gross profit margin in the first quarter reached 10.85%, representing an increase of 4.31 percentage points from the previous year. We are confident that our gross profit margin will continue to improve in the future as our capacity gradually releases and production efficiency continuously gets improved. Mr. Ming.

First of all, as usual, I would like to update the total amount of orders delivered by the company. As of April 30, 2023, we have received the total amount of orders delivered by the main production base in Dalian, Nanjing and Shaoxing has already reached a scale of about 12.91 billion RMB. This number has increased compared to the number revealed in our last phone call. The opening of new customers and the new orders of old customers are all going smoothly. We want to continue to focus on the market revenue in 2023, especially our main business,

As usual, I would like to begin by providing an update on the total value of orders that we have received but are yet to fulfill. As of April 30, 2023, the combined value of pending orders across our three main production facilities situated in Dalian, Nanjing, and Shaoxing has reached roughly $187 million. This figure has risen since our previous earnings call, suggesting a favorable development in our efforts to acquire new customers and secure new orders from existing ones. We maintain a high level of optimism regarding our market revenue prospects for 2023, particularly with respect to the revenue generated from our primary business operations, which is the sales of lithium batteries.

In terms of customer orders that have been disclosed in the past, Jinpeng Group and its related parties and sellers are working closely with us to further increase our sales in REV and EV. As of April 30, 2023, Jinpeng Group and its related parties have already issued orders of 20310,000 yuan in 2023. According to public information, We entered the top 15 in the first to second month of the first quarter of the year due to the data of the capacity of the power battery. We hope that after consolidating the existing base in the energy field, we will continue to recruit REV and EV market forces. As for the cooperation between Azeba and Dafa Motors, as of April 30th, we received a total of about 3.58 million orders this year.

Our revenues from the LEV and EV sectors have continued to grow as a result of further collaboration with Jingpeng Group and its affiliated Gmail. As of April 30, 2023, Jingpeng Group and its affiliates had placed orders worth RMB 20.31 million since 2023. As a result, we had consecutively ranked among the top 15 LFP lithium battery suppliers in China in terms of installed capacity for EV and LEV applications in January and February, according to publicly available data. After consolidating our existing foundation in the energy storage field, our aim is to continue our efforts towards the LEV and EV markets. As of April 30th, we had also received orders totaling approximately RMB 3.58 million this year from our cooperation with Azapa and Daihatsu Motors, and we expect to further promote the cooperation with Daihatsu Motors in the future. Thank you, sir.

In terms of the cooperation between the European companies that we have previously disclosed, both parties have completed the in-depth discussion of further cooperation in this year. Based on the strong desire of both parties to continue cooperation, we expect that the conference will soon announce the details of the cooperation this time. With the deepening and further stabilization of the cooperation between the two parties, we expect that the amount of orders from the European companies this time will be greater than before.

We have had in-depth discussions with our major European clients, as we previously disclosed, to further our collaboration for this year. Both parties have expressed a strong willingness to continue working together, and we expect to announce details of the agreed deal soon. As our cooperative relationship deepens and becomes more stable, we anticipate receiving larger orders from this European client than we have in the past.

In addition, we also disclosed our cooperation with Ximinghai in April. Ximinghai and its sub-brand Brody are currently the top three companies in the global mobile energy market. Our cooperation with Ximinghai and Brody began in March 2022. So far, we have received about 36.85 million orders.

In addition, we announced in April our collaboration with PowerOAK, a company that ranks among the top three global players in the portable power supply market through its subsidiary brand, Blue TTI. Our partnership with PowerOAK and Blue TTI started in March 2022. and we have received orders worth approximately $5.35 million so far. POWER-OAK is expected to place orders on a monthly basis, indicating that the order volume of our collaboration with POWER-OAK is expected to continue increasing. Thank you.

The cooperation with Ximinghai has helped us successfully open up the global mobile storage market. This market is also one of the key markets that the company is currently very concerned about.

We have been able to enter and expand in the global market for portable power supplies mostly through our collaboration with PowerOK, which is also one of the key markets that the company is paying close attention to. At present, we are actively reaching out to the top clients in this market and are hopeful to present our investors and shareholders with better cooperation projects and order information. Thank you.

In terms of the production of our NaCl battery, we have received inquiries from a number of investment institutions and prospective customers. We plan to hold a NaCl battery product launch conference soon. I also hope that investors and shareholders will pay attention to our announcement information. As we said at the phone conference of the last quarter, NaCl battery is currently one of the key interests of many battery companies. After NaCl battery mass mass production, it is expected to be very fast, and we are looking forward to the hydrogen battery used in new electric vehicles. Later, it will cause great pollution to the environment,

We have received inquiries from several institutional investors and potential clients about the status of our sodium ion batteries. In the near future, we plan to hold a product launch event for our sodium ion batteries and hope that our investors and shareholders will stay tuned for our announcements. As we mentioned in our previous earnings call, sodium ion batteries are currently a major focus for many battery companies. Once produced on a large scale, sodium ion batteries are expected to replace lead acid batteries that are widely used in light electric vehicles, which have a negative environmental impact. Our development of sodium ion batteries not only positions us to enter the market worth about tens of billions of dollars, but also reflects our commitment to environmental responsibility. Thank you.

In terms of the progress of the second phase of our project in Nanjing, some of our factories have already completed the seal. This part of the factory is expected to be in use by the end of this year. We are also actively preparing for the opening day of investors.

In terms of the progress of our Nanjing Phase 2 project, we have completed the roof-sealing of some of our factories and expect them to be operational by the end of this year at the earliest. We are also making active preparations for an investor day, and will invite all investors and shareholders to visit our company at an appropriate time to walk through our 19 projects. Once we are ready, we will release relevant information about the investor day. 您继续。 接下来有请我们的 CFO 裴总给投资者介绍一下公司的财务表现。 Now let me turn the call over to our interim CFO, Yuna Pei, who will provide details on our financial performance.

Okay, thank you, Mr. Zili. And thank you everyone for joining our call today. I will now go over our key financial results for the first quarter 2023. For the full details of our financial results, please refer to our earnings past release. We have maintained a strong momentum in the sales of our battery products. We are optimistic for this year. Given that we have reached an agreement with our major European clients and made a progress in developing clients in the global portable power supply market. Our growth margin from our primary business, this has also recovered to 10.85% as our new capacity releases and our production efficiency has improved. We are confident that the growth margin for our battery business will continue to grow. Moving on to our financial performance, we experienced a 47% decrease in net revenues in the first quarter, dropping to $42 million from the same period in 2022. The main cause of the This decline is a drop in our materials business, which has been negatively impacted by the fluctuating price of materials. On the other hand, we had a strong performance in our business of lithium battery fields, achieving revenues of 29 million US dollars, which represents a substantial an increase of 97%. Among these revenues, $25.8 million were from batteries used in energy storage applications, representing a growth of 72.9%. $1.97 million came from batteries used in light electric vehicles, showing an impressive increase of 2,117%. Additionally, revenues from businesses in electric vehicles were 1.8 million US dollars, which is an exceptional growth of 5,889 times compared to the same period last year. This significant improvement in our primary business are very encouraging. We expect the positive momentum to continue, and we are confident that we will achieve better results this year. The cost of revenues in the first quarter was $39.25 million, which represents a decrease of of 47% from the same period in the previous year. The reduction in cost of revenues was consistent with the decline in net revenues. In the first quarter, our growth profit decreased by 45% on year two, $2.9 million. While the growth margin slightly increased to 6%. from 6.6% in the same period last year. This was largely due to the significant increase in gross profit margin of our battery business. The gross margin for our battery business was 10.8% up by 4.3% percentage points prior to the previous year. They are often takes time. You know, the first quarter of this is expensive because it's by two, three, two, five, one, two, seven, nine, nine, 10, two, three, two, three, two, three, two, five, to 2.8 million US dollars. This and marketing expenses . However, . In the first quarter, we reported an operating cost of $2.88 million last year, which increased by $115.8 million from the same period in 2022. The change, if there was or wasn't, in the cost of culture was $85,000. uh, uh, uh, uh, uh, uh, uh, uh, uh, at zero points for many last dollars in the service of the previous year. Excluding the change in fair value of ATOM, when you add the math loss of the shareholder to the feedback energy of one point for the first quarter, compared to the math loss of the shareholder to the feedback energy of one point in the next meeting,

Thank you. To ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster.

Again, to ask a question, press star 1 1. Our first question comes from Hoy Fan from TPG. Your line is open. First of all, I would like to thank the management for accepting my question.

Congratulations on the company's performance in the first quarter. I have two questions. The first one is about the large battery business of the company. Because the company has made a lot of progress in this regard. Then I would like to ask the company's customers to introduce the large battery in terms of environmental protection and what are the benefits of the hydrogen battery. Then my second question is about the investor opening day that the management introduced just now. And then this opening day, will the company welcome investors to visit the scene? And then this, uh, you just mentioned the project of Nanjing 2. What is the current construction and equipment delivery situation like? If investors arrive, what kind of progress can be seen? Thank you.

Okay, so first of all, I'd like to thank you for taking my question and also want to congratulate you for your strong performance in the first quarter of the year. I have two questions. The first one is that it seems that sodium battery is about to be put into production. Can you tell us what benefits sodium ion batteries as a replacement of lead acid battery can bring to the environmental protection? And my second question is that you just mentioned the company has the plan to launch an investor day at an appropriate time. Are investors all welcome to visit the company on this investor day? What's the progress of the construction and equipment installation in the Nanjing phase 2 project? If we pay a visit to the production facility on the investor's day, what can we see on site? Thank you.

Let me answer the first question. First of all, the氢-acid battery belongs to the liquid battery. The氢-acid battery of the liquid battery is more likely to spread than that of the flat battery. Also, the氢-acid battery belongs to the heavy hydrogen. It has a very strong pollution against soil and water sources. When it gets into the human body, it will cause blood clots, and it will cause colorectal disease, and it will affect the health of the human body, and it will seriously harm the life of the human body. The amount of nitrogen in nature is very large, and the distribution is also very wide. In our daily life, a lot of food contains a lot of nitrogen. Na itself is an indispensable element in the human body. So Na is a very friendly element to the human body and nature. So Na electricity, as far as we know, is the second choice of the green environment. So we believe that Na's promotion will be a real step towards the development of green new energy. Okay, so Mr. Ting is going to address the first question. Well, let's have a look at the difference between lead acid

battery and sodium ion battery for lead acid batteries they are liquid state battery compared with sodium ion battery liquid battery is easier to spread and it is as a heavy metal it can cause pollution through soil and water And if lead enter into human body, it may cause poisoners. It can also lead to some diseases in human beings. And if a human being intake a large amount of lead it may even pose a threat to the life to the safety of this person however if we have a look at sodium ion battery there is a large storage of net of sodium in our nature and actually it is also a very common ingredient or a very common element in our food It is even regarded as an indispensable element to human beings. So we can say sodium is very friendly to human beings and sodium ion battery is very friendly to nature. And if we can use sodium battery, then we can really embark on a journey towards green development. And we believe that it is a very good supplement to the lead acid battery. It is not only environmentally friendly, but also it is economically competitive in the industry. That's it for the answer for the Q&A.

Mr. Fei, please answer the second question.

As I mentioned in the introduction, we will be welcoming investors on the opening day in the near future. We welcome investors and shareholders to come to the event. We will also promote I would like to welcome investors and shareholders to visit our site. As for the construction of the second phase of Nanjing, I will make a brief report. The second phase of Nanjing is the first phase of the second phase. We have a factory building of eight blocks. It will be built in June. The entire factory area OK.

With regard to the second question concerning Investors' Day, while we do have the plan to organize an Investors' Day event in the near future, we extend a sincere welcome to all the shareholders and investors to pay a visit to our production center. facility and to join us on the investors day. And on that day, we'll also invite the media to do the publicity and to do a media campaign for us. And if you would like to know the progress for the construction of Nanjing second phase project, I will be very happy to give you more updates. So for there will be a building that is designated to be a kilowatt battery production facility. And the construction will be finished by June this year. And by then, the 18 gigawatt hour supporting factories will also be completed at the time. And we already send specification of our equipment to the suppliers and we are about to send them the bidding documents very soon. So if you pay a visit to our production facilities on the investors day, we believe that you will see our factories are all ready for the installation of equipment by then. And once again, we would like to extend an invitation to all the shareholders and investors. You are more than welcome to visit us.

One moment for our next question.

We have a question from Seiko Wu from TPG. Your line is open.

Hello, thank you. My question is, the company's battery business has been growing very fast these years. Currently, from the structure point of view, it is still growing relatively fast in the energy sector. What are our company's predictions for the future battery business?

Okay, we noticed that the battery business of the company has grown very rapidly in recent years, especially the energy storage segment. How do you see the composition of revenue from the battery business in the future? To what extent Can the share of revenue from LEV and EV business increase?

In terms of our business results in the first quarter, our current sales revenue structure remains mainly in the energy sector, and the vehicle sector is the main one. The sales revenue in the energy sector accounts for more than 80% of our total sales revenue. Based on the existing reserve orders and the current production capacity, We expect that this year's sales structure will continue to remain in this state. But according to our results in the first quarter, the sales income in the car industry has also grown significantly. Our sales income in the EV and LEV industries has reached $3.7 million in the first quarter. With the release of new production capacity in Nanjing, So, yes, you're right. From the sales revenue of the first quarter, we can see that

energy storage business segment does occupy a big proportion of our sales revenue and the revenue from the EV and LEV occupies a secondary position. And if we have a look at the revenue composition, we can see that the revenue from energy storage takes up about or more than 80% of our total revenue. So based on the orders that we have in hand and as well as the production capacity, it is estimated that this year we are still going to maintain similar revenue composition, just similar to the first quarter. But if we have a deeper dig or if we dive deeper into the figure of the first quarter, we are also very happy to see that the sales revenue of the LEV from the LEV and EV also witnessed a substantial growth if we compared with the previous year we achieved a 3.7 million US dollars sales value in EV and LEV and we believe that with the increase of the production capacity in our non-gene production facility next year, as well as the continuous efforts that we're going to put in the EV and LEV markets. We predict that next year we're going to see an explosive growth in our LEV and EV revenue.

Thank you. Seeing no more questions in the queue, let me turn the call back to Mr. Yunfei Li for closing remarks.

Thank you, operator, and thank you all for participating in today's call and for your support. We appreciate your interest and look forward to reporting to you again next quarter on our progress.

Thank you all again. This concludes the call.

You may now disconnect. you Thank you. Thank you. Thank you. Thank you.

Good day, ladies and gentlemen. Thank you for standing by and welcome to the Seabank Energy Technologies first quarter 2023 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 any time. Now, I'll turn the call over to Terry Lee, Investor Relations Director of Seabank Energy. Mr. Lee, please proceed.

Thank you, operator, and hello, everyone. Welcome to Seabank Energy's first quarter 2023 earnings conference call. Joining us today are Mr. Sunfei Li, our Chief Executive Officer, Mrs. Yuna Pei, our Interim Chief Financial Officer, Mr. Xiujun Tian, 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.cvac.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 U.S. storage. With that, let me now turn the call over to our CEO, Mr. Junfei Li. Mr. Li will speak in Chinese, and I will translate his comments into English. Go ahead, Mr. Li. Thank you, Jerry.

Hello, everyone. Thank you for attending today's call.

Thank you, and hello, everyone. Thank you for joining our earnings conference call today. You can continue.

We just released the first quarter of the financial report in 2023. Due to our materials, the business was affected by the decline in the price of raw materials, which led to a decline in our overall revenue. However, in terms of our main business, LiZhengChi sales, we are still satisfied with the results under the general adjustment of the market. Our battery business revenue reached $29.6 million. 182,000 US dollars. Compared to last year, it has increased by 5890 times. We have achieved growth not only in terms of main business sales, but also in terms of main business profit. In the first quarter, our battery profit reached 10.85% and increased by 4.31%. We believe that with the gradual release of existing production capacity,

We have just released our financial results for the first quarter of 2023. Regrettably, our total revenues have declined as a result of reduced revenues from our materials division, stemming from a significant fall in the price of raw materials. Despite the current market conditions, we have achieved satisfactory results in our primary business, which involves selling lithium batteries. In particular, our battery business generated revenues of $29.6 million, representing a 97.1% increase from the same period last year. Among these revenues, $25.82 million came from batteries used in energy storage applications, which is a 72.9% increase while $1.97 million came from batteries used in light electric vehicles, reflecting an impressive growth of 2,117.2%. Moreover, revenues from batteries used in electric vehicles reached $1.82 million, marking a remarkable increase of 5,889.8 times compared to the same period last year. In addition to achieving significant revenue growth, we have also witnessed a significant improvement in our gross profit margin. For our battery business, the gross profit margin in the first quarter reached 10.85%, representing an increase of 4.31 percentage points from the previous year. We are confident that our growth profit margin will continue to improve in the future as our capacity gradually releases and production efficiency continuously gets improved.

First of all, as usual, I would like to update the total amount of orders delivered by the company until April 30, 2023. We have received three main production bases in Dalian, Nanjing, and Shaoxing, but the amount of orders still being delivered has reached a scale of about 12.91 billion RMB. This number has increased compared to the number revealed in our last phone call. The development of new customers and the new orders of old customers are all going smoothly. As usual, I would like to begin by providing an update on the total value of orders that we have received but are yet to fulfill.

As of April 30, 2023, the combined value of pending orders across our three main production facilities situated in Dalian, Nanjing, and Shaoxing has reached roughly $187 million. This figure has risen since our previous earnings call, suggesting a favorable development in our efforts to acquire new customers and secure new orders from existing ones. We maintain a high level of optimism regarding our market revenue prospects for 2023, particularly with respect to the revenue generated from our primary business operations, which is the sales of lithium batteries.

Thank you. In terms of the customer orders that have been disclosed in the past, XINPEN Group and its partners and sales representatives are working closely with us to further increase our sales in REV and EV. Until April 30, 2023, JINPENG Group and its partners have already issued a $20310,000 order in 2023. According to public information, we entered the top 15 in the first to second month of the first to second month of the first to second month of the first to second month of the first to second month of the first to second month of the first to second month of the first to second month of the first to second month of the first to second month of the first to second month of the first to second month of the first to second month of the first to second month of the first to second month of the first to second month of the first to second month of the first to second month of the first to second month of the first to second month of the first to second month of the first to second month of the first to second month of the first to second month of the first to second month of the first to second month of the first to second month of the first to second month of the first to second month of the first to second month of the first to second Our revenues from the LEV and EV sectors have continued to grow as a result of further collaboration with Jingpeng Group and its affiliated Gmail.

As of April 30, 2023, Jingpeng Group and its affiliates have placed orders worth RMB 20.31 million since 2023. As a result, we had consecutively ranked among the top 15 LFP lithium battery suppliers in China in terms of installed capacity for EV and LEV applications in January and February, according to publicly available data. After consolidating our existing foundation in the energy storage field, our aim is to continue our efforts towards the LEV and EV markets. As of April 30th, we had also received orders totaling approximately RMB 3.58 million this year from our corporation with Azapa and Daihatsu Motors, and we expect to further promote the corporation with Daihatsu Motors in the future. Thank you, sir.

Regarding the cooperation we have previously disclosed, the two parties have completed the in-depth discussion on further cooperation this year. Based on the strong desire of the two parties to continue cooperation, we expect to announce the details of the cooperation this time very soon. With the deepening and further stabilization of the cooperation relationship between the two parties, we expect that the amount of orders from this time will be larger than before.

We have had in-depth discussions with our major European clients, as we previously disclosed, to further our collaboration for this year. Both parties have expressed a strong willingness to continue working together, and we expect to announce details of the agreed deal soon. As our cooperative relationship deepens and becomes more stable, we anticipate receiving larger orders from this European client than we have in the past.

In addition, we also disclosed our cooperation with Ximinghai in April. Ximinghai and its sub-brand Brody are the top three companies in the global mobile energy market. Our cooperation with Ximinghai and Brody began in March 2022. So far, we have received about 36.85 million orders.

Additionally, we announced in April our collaboration with PowerOAK, a company that ranks among the top three global players in the portable power supply market through its subsidiary brand, Blue TTI. Our partnership with PowerOAK and Blue TTI started in March 2022. and we have received orders worth approximately $5.35 million so far. POWER-OAK is expected to place orders on a monthly basis, indicating that the order volume of our collaboration with POWER-OAK is expected to continue increasing. Thank you.

The cooperation with Ximinghai has helped us successfully open up the global mobile storage market. This market is also one of the key markets that the company is currently very concerned about.

We have been able to enter and expand in the global market for portable power supplies mostly through our collaboration with PowerOK, which is also one of the key markets that the company is paying close attention to. At present, we are actively reaching out to the top clients in this market and are hopeful to present our investors and shareholders with better cooperation projects and order information.

In our case, we have received inquiries from several investment institutions and prospective customers. After a short time, we plan to hold a product launch event. We also hope that investors and shareholders will pay attention to our announcement information. As we said at the phone conference of the last quarter, NaCl battery is currently a key interest of many battery companies. After NaCl battery mass mass production, it is expected that it will be very fast, and we are looking forward to the hydrogen battery currently used in new electric vehicles. Later, it will cause great pollution to the environment,

We have received inquiries from several institutional investors and potential clients about the status of our sodium ion batteries. In the near future, we plan to hold a product launch event for our sodium ion batteries and hope that our investors and shareholders will stay tuned for our announcements. As we mentioned in our previous earnings call, sodium ion batteries are currently a major focus for many battery companies. Once produced on a large scale, sodium ion batteries are expected to replace lead acid batteries that are widely used in light electric vehicles, which have a negative environmental impact. Our development of sodium ion batteries not only positions us to enter the market worth about tens of billions of dollars, but also reflects our commitment to environmental responsibility. Thank you.

In terms of the progress of our second project in Nanjing, some of our factories have already completed the seal. These factories are expected to be in use by the end of this year. We are also actively preparing for the opening day of investors.

In terms of the progress of our Nanjing Phase 2 project, we have completed the roof sealing of some of our factories and expect them to be operational by the end of this year at the earliest. We are also making active preparations for an investor day, and will invite all investors and shareholders to visit our company at an appropriate time to walk through our 19th project. Once we are ready, we will release relevant information about the investor day. 您继续。 接下来有请我们的CFO裴总给投资者介绍一下公司的财务表现。 Now let me turn the call over to our interim CFO Yuna Pei, who will provide details on our financial performance.

Okay, thank you, Mr. Zili. And thank you everyone for joining our call today. I will now go over our key financial results for the first quarter 2023. For the full details of our financial results, please refer to our earnings test release. We have maintained a strong momentum in the sales of our battery products. We are optimistic for this year. given that we have reached an agreement with our major European clients and made progress in developing clients in the global portable power supply market. Our growth margin from our primary business based on the sales has also recovered to 10.85% as our new capacity releases and our production efficiency gets improved, we are confident that the growth margin for our battery business will continue to grow. Moving on to our financial performance, we experienced a 47% decrease in net revenues in the first quarter, dropping to 42 million US dollars from the same period in 2022. The main cost of the This decline is a drop in our materials business, which has been negatively impacted by the fluctuating price of materials. On the other hand, we had a strong performance in our business of lithium battery cells, achieving revenues of 29 million US dollars, which represents a substantial an increase of 97%. Among these revenues, $25.8 million were from batteries used in energy storage applications, representing a growth of 72.9%. $1.97 million came from batteries used in light electric vehicles, showing an impressive increase of 2,117%. Additionally, revenues from businesses in electric vehicles were 1.8 million U.S. dollars, which is an expected growth of 5,889 times compared to the same period last year. This significant improvement in our primary business are very encouraging. We expect the positive momentum to continue, and we are confident that we will achieve better results this year. The cost of revenues in the first quarter was $39.25 million, which represents a decrease of 47% from the same period in the previous year. The reduction in cost of revenues was consistent with the decline in market revenues. In the first quarter, our gross profit decreased by 45% on year two, $2.9 million. While the gross margin slightly increased to $6.2 million, from 6.6% in the same period last year. This was largely due to the significant increase in gross profit margin of our battery business. The gross margin for our battery business was 10.8% by 4.3% percentage point prior to the previous year. We are optimistic that the long-term care will pass quickly. During the first quarter, our auditing expenses declined by 13% to $5.7 million at first.

This was due to a reduction in the retention of mental health services, which extended the

to 2.6 million dollars. This and marketing expenses . However, . In the first quarter, they reported an operating cost of $2.88 million, which increased by $115.8 million from the same period in 2002. The change in the arrival of the law in the first quarter was $85,000 million. uh, uh, uh, uh, uh, uh, uh, uh, zero point and four million US dollars in the period of the previous year. Excluding the change in fair value of ATOM, where you had the net loss of critical shareholder of feedback energy of one point and four million US dollars for the first quarter. Compared to the net loss of critical shareholder of feedback energy of one point and nine million US dollars,

Thank you. To ask a question, please press star 11 on your telephone and wait 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.

Again, to ask a question, press star 11. Our first question comes from Hoy Fan from TPG. Your line is open.

First of all, I would like to thank the management for accepting my question. Congratulations on the company's performance in the first quarter. I have two questions. The first one is about the battery business of the company. Because it seems that the company has made a lot of progress in this regard. Then I would like to ask the company to introduce the battery in the environment protection aspect. What are the advantages and disadvantages of the hydrogen battery? Then my second question is about the investor opening day that the management introduced just now. And then this opening day, will the company welcome investors to visit the scene? And then this, uh, you just mentioned the project of Nanjing 2. What is the current construction and equipment delivery situation like? If the investors arrive, what kind of progress can be seen? Thank you.

Okay, so first of all, I'd like to thank you for taking my question and also want to congratulate you for your strong performance in the first quarter of the year. I have two questions. The first one is that it seems that sodium battery is about to be put into production. Can you tell us what benefits sodium ion batteries as a replacement of lead acid battery can bring to the environmental protection? And my second question is that you just mentioned the company has the plan to launch an investor day at an appropriate time. Are investors all welcome to visit the company on this investor day? What's the progress of the construction and equipment installation in the Nanjing phase 2 project? If we pay a visit to the production facility on the investor's day, what can we see on site? Thank you.

Let me answer the first question. First of all, lead-acid battery is a liquid battery. Lead-acid batteries are more likely to spread in the case of liquid batteries than in the case of liquid batteries. And lead is a heavy metal. It has a very strong pollution to soil and water sources. When it gets into the human body, it will cause blood clots, and it will also cause colorectal disease, which will affect the health of the human body, and it will seriously harm the life of the human body. The amount of nitrogen in nature is very large, and the distribution is also very wide. In our daily lives, a lot of food contains a lot of nitrogen. Na itself is an indispensable element in the human body. So Na is a very friendly element to the human body and nature. So Na electricity, as far as we know, is the second choice for the green environment. So we believe that Na's promotion will be a real step towards the development of green new energy. Okay, so Mr. Ting is going to address the first question. Well, let's have a look at the difference between lead acid

battery and sodium ion battery. For lead acid batteries, they are liquid state battery. Compared with sodium ion battery, liquid battery is easier to spread. As a heavy metal, it can cause pollution through soil and water. and if lead enters into human body, it may cause poisoners. It can also lead to some diseases in human beings and if a human being intake a large amount of lead it may even pose a threat to the life to the safety of this person however if we have a look at sodium ion battery there is a large storage of net of sodium in our nature and actually it is also a very common ingredient or a very common element in our food It is even be regarded as an indispensable element to human being. So we can say sodium is very friendly to human being and sodium ion battery is very friendly to the nature. And if we can use sodium battery and battery, then we can really embark on a journey towards green development. And we believe that it is a very good supplement to the lead acid battery. It is not only environmental friendly, but also it is economically competitive in the industry. That's it for the answer for the Q&A. Mr. Fei, please answer the second question.

As I mentioned in the introduction, we will be welcoming investors on the opening day. We welcome investors and shareholders to come to the event. We will also promote the event We also welcome investors and shareholders to come to our site. As for the construction of Nanjing 2F, I will make a brief report. Nanjing 2F is the first phase of the 2F. We have a factory with 8 JWh. It will be built in June. And the entire factory area We are now sending the device to all the suppliers. We are preparing to send the bidding documents to the suppliers in the near future. OK.

With regard to the second question concerning Investors' Day, while we do have the plan to organize an Investors' Day event in the near future, we extend a sincere welcome to all the shareholders and investors to pay a visit to our production center. facility and to join us on the investors day. And on that day, we'll also invite the media to do the publicity and to do a media campaign for us. And if you would like to know the progress for the construction of Nanjing second phase project, I will be very happy to give you more updates. So for there will be a building that It's designated to be a kilowatt battery production facility, and the construction will be finished by June this year. And by then, the 18 gigawatt hour supporting factories will also be completed at the time. And we already sent the specification of our equipment to the suppliers and we are about to send them the bidding documents very soon. So if you pay a visit to our production facilities on the investors day, we believe that you will see our factories are all ready for the installation of equipment by then. And once again, we would like to extend an invitation to all the shareholders and investors. You are more than welcome to visit us.

One moment for our next question.

We have a question from Seiko Wu from TPG. Your line is open.

Hello, thank you. My question is, the company's battery business has been growing very fast these years. Currently, from the structure point of view, it is still growing relatively fast in the energy sector. What are our company's predictions for the future battery business? Will there be any predictions?

Okay, we noticed that the battery business of the company has grown very rapidly in recent years, especially the energy storage segment. How do you see the composition of revenue from the battery business in the future? To what extent Can the share of revenue from LEV and EV business increase?

Let President Pei answer this question.

Thank you for your question. Based on the results of the first quarter, our current sales revenue is still mainly in the energy sector and the vehicle sector. The sales revenue in the energy sector accounts for more than 80% of our total sales revenue. Based on the existing reserve orders and current production capacity, We expect that this year's sales structure will continue to maintain this status. However, according to the results of the first quarter, the sales income in the vehicle sector has also improved significantly. In the EV and LEV sectors, Thank you.

so yes you're right from the sales revenue of the first quarter we can see that energy storage business segment does occupy a big proportion of our sales revenue and the revenue from the EV and LEV occupies a secondary position and if we have a look at the revenue composition we can see that the revenue from energy storage takes up about or more than 80% of our total revenue. So based on the orders that we have in hand and as well as the production capacity, it is estimated that this year we are still going to maintain similar revenue composition, just similar to the first quarter. But if we have a deeper dig or if we dive deeper into the figure of the first quarter, we are also very happy to see that the sales revenue from the LEV and EV also witnessed substantial growth. If we compared with the previous year, we achieved a US$3.7 million sales value in EV and LEV. And we believe that with the increase of the production capacity in our non-gene production facility next year, as well as the continuous efforts that we're going to put in the EV and LEV markets, we predict that next year we're going to see an explosive growth in our LEV and EV revenue.

Thank you. See no more questions in the queue. Let me turn the call back to Mr. Yunfei Li for closing remarks.

Thank you, operator, and thank you all for participating in today's call and for your support. We appreciate your interest and look forward to reporting to you again next quarter on our progress.

Thank you all again. This concludes the call. You may now disconnect.