CBAK Energy Technology Limited

Good day, ladies and gentlemen. Thank you for standing by, and welcome to the CBAK Energy Technologies third quarter 2024 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 will turn the call over to Yixian Tian, I am a specialist of CBAK Energy. Ms. Jiang, please go ahead.

Thank you, operator, and hello, everyone. Welcome to CBAK Energy's earning conference call for the third quarter 2024. And joining us today are Mr. Zhiguang Hu, or Jason, chief executive officer of CBAK Energy, Mr. Thierry Li, chief financial officer and the secretary of the board, Our general engineer, Mr. Xu Juntian, and Ivan, who will help with our integration, will join us for a Q&A session. We released our results earlier today. The press release is available on the company's IR website at ircpak.com.cn, as well as from the Newswell services. A replay 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 US Private Security Education 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 filings with the SEC. The company does not assume any obligation 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. dollars. With that, let me now turn the call over to our CEO, Mr. Zhiguang Hu. Please go ahead, Jason.

Hello, everyone. Thank you for joining our earnings conference call for the third quarter of 2024. I'm pleased to report on the performance of our battery business for the third quarter and the first nine months of this year. Although the net revenue from our battery business slightly declined to $33.5 million in the third quarter, the overall revenue of the battery business in the first three quarters achieved year-on-year growth of 18.4%, reaching $114 million. This is quite remarkable considering the general pressure and a downturn in the entire new energy industry. The main reason for the decline in the net revenue from our battery business in the third quarter was a one month suspension of the production line of our Dalian facility in September. As the production line has been operating at a full capacity since the beginning of the year, The continuing operating production line resulted in an exceptionally high energy cost and needed to be suspended for refurbishment. We would like to provide a closer look at the revenue breakdown in our battery business. The revenue from battery for energy storage sector reached $33.46 million, a 25% decrease compared to the previous year. EV battery contributes $333,000, a decrease of 17% compared to the same period last year. Battery for light electric vehicles, including two wheelers and three wheelers, brought in $4.9 million, a year-on-year increase of 341%. Overall, our battery business remains focused on energy storage market, supplemented by our endeavor to continue exploring the light electric vehicle market with the increase in order from our Indian and Vietnamese customers. We believe that the revenue proportion of light electric vehicles will gradually increase. Our battery business has maintained a high gross profit margin, reaching 34.3% in the first three quarters of this year, an increase of 15.2% compared to the same period in 2023. This growth margin figure is higher than that of most competitors, including some well-known. This year, our battery business achieved a net profit $11.68 million in the first quarter, $7.89 million in the second quarter, and once again created a net profit of $2.04 million in the third quarter. When our competitors are suffering industry-wide downturn, we managed to make three consecutive quarters of net profit of approximately 21.6 million dollars. As usual, we will also provide an update on the announced clients. As of November 1, 2024, the total amount of orders received but not yet delivered at our major production bases in Dalian and Nanjing reached RMB 59.61 million, approximately virtually $38.38 million. As of November 1, 2024, our accumulated Order amount with PowerAuth has reached approximately RMB 80.65 million, about $11.35 million. Our orders with Wisma Group has reached up to Euro 213 million, about $233 million. As for Jinpeng Group, our accumulated orders value has reached approximately RMB 67.01 million, about $9.42 million. In addition, our important clients Anker has made order of RMB 321 million approximately $45.12 million since our collaboration. These customers have a stable relationship with us and some of them are encouraging and pushing us for the establishment of our overseas factories and are willing to place orders in advance to help facilitate our move to expand overseas. Our Dalian facility has long been profitable. In Q3, we are pleased to see our 19th Factory also achieved profitability. The 19th Factory, which started operation and manufacturing the new model 32140 large cylindrical battery at the end of 2021, have only been in business for less than three years. Originally, we anticipated that 19Factory would have to suffer net losses for a three-year period. Thanks to the hard work of our team, the 19Factory has successfully become profitable ahead of schedule. More importantly, the production line at our 19Factory are currently operating at a full capacity due to high demand. prompting us to accelerate our capacity expansion plan. As of now, we have signed a procurement contract with the equipment supplier and plan to add a new production line that will enable compatible production of model 32140 and 4135 battery in the second phase of manufacturing. with an estimated capacity of approximately 1.5 GWh for model 32140 and 1.5 GWh for model 4135. We anticipate equipment installation in the fourth half of next year, followed by mass production in the second half. Furthermore, with respect to our R&D efforts, we are steadily advancing the development of new battery model. As just reported, we will soon be able to mass produce the model 4135 large cylindrical battery. The model 4135 large cylindrical battery have a strong market demand in applications such as large electric vehicles and energy storage. Additionally, We successfully developed the TABLIS model 26650 cylindrical battery and started the mass production in Dalian. The product has a characteristic of 25C discharge rate and performs really well in applications that require rapid energy release. Besides, the TABLIS 26650 cell can be charged from 0 to 100% in just 15 minutes, which is a great practical significance for applications that require fast charging and discharging, such as drones that stop power supply and data center. Currently, we are one of the few companies in the market with the ability to mass produce this tablet's model 26,000 battery. Overall, we successfully maintain the strong momentum in our battery business by maintaining a high growth profit margin and sustaining net profits. Considering the current high demand for our model 32140 cells produced at our Nanjing factory and newly added capacity for our new model 4135 cells, we will accelerate the pace our capacity expansion to drive continued revenue growth. Now, let me turn the call to our CFO, Jiewei Li.