Fuwei Films (Holdings) Co., Ltd.

Okay, ladies and gentlemen, and welcome to the Fooey Films third quarter 2020 earnings conference call. All lines have been placed on a listen-only mode, and the floor will be open for your questions and comments following the presentation. At this time, it is my pleasure to turn the floor over to your host, Mr. Shai-Wei Yin. Sir, the floor is yours.

Let me remind you that today's call is being recorded. A replay of this call will be made available shortly after the conclusion of today's call. Before we start, I would like to remind you that certain statements that are not of historical facts made during the course of this conference call about future events and projected financial results constitute forward-looking statements that are made pursuant to the Safe Harbor Provisions of the Department of Securities and Education Reform Act of 1995. You should know that a company's action results may differ materially from those projected in these statements due to a variety of factors affecting the business or subjective risks and uncertainties. Discussion of the factors that may affect future results is contained in our filings with the U.S. Securities and Exchange Commission. We undertake no obligation to correct or update any forward-looking statements provided as a result of new information, future events, or changes in our expectations. is Mr. Yong Jiang, Corporate Secretary. Before I walk you through our financials, Mr. Jiang will deliver his opening remarks. Sir, please go ahead. Mr. Jiang, please.

Thank you, Mr. Secretary. Hello, everyone. Thank you for attending today's meeting. Although we are still facing a serious economic environment and uncertainty in the market, and the outbreak of COVID-19 has brought great shock. However, what makes us happy is that we have enough orders The sales revenue is stable, and the sales volume of the special model continues to grow, accounting for 64.6% of the total revenue. In addition, we have achieved a net profit of 6.0% in a row. We believe that this is due to the continuous innovation and development of the company, and the implementation of different strategies to help the company expand its market and customers. We will continue to work hard, To environment and the outbreak of the COVID-19 pandemic which has caused significant and adverse effects on the global economy,

Our orders remain solid and sales are relatively stable. Sales of specialty films increased continuously, which accounted for 64.6% of our total revenues during the quarter. In addition, we maintained profitability for six consecutive quarters. We believe these results benefit from our commitment to innovation and differentiated marketing strategy, which have expanded the end-user applications of our film products. We will continue with these efforts and expect that they will enable the company to capitalize on new opportunities despite challenging industry and economic conditions. Our financial results for the third quarter and first nine months of 2020. Quarter were RMB $84.3 million, U.S. $12.4 million, compared to RMB $79.6 million during the same period in 2019-20. representing a year-over-year increase of RMB 4.7 million, or 5.9%. The decrease of average sales price caused a decrease of RMB 3.2 million, and the sales volume increase caused an increase of RMB 7.9 million. Specialty firms were RMB 54.4 million, U.S. 8.0 million, or 64.6% of total revenues, as compared to RMB 40.6 million, or 51.0% in the same period, 2019. representing a year-over-year increase of RMB 13.8 million, or 34.0 percent, as compared to the same period in 2019. The sales price caused a decrease of RMB 2.0 million, and the increase in the sales volume caused an increase of RMB 15.8 million. RMB 7.8 million, or U.S. 1.1 million, or 9.2 percent of total revenues. total revenues in the third quarter of 2019. Price caused a decrease of RMB 0.6 million and the decrease in sales volume resulted in a decrease of RMB 3.2 million. RMB 36.0 million, US 5.3 million for the third quarter Margin rate of 43.7% as compared to gross profit of RMB 21.6 million and a gross margin rate of 27.1% for the same period in 2019. Margin rate increased by 15.6% point compared to the same period 2019. Third quarter where RMB 20.9 million, US 3.1 million, which was RMB 4.6 million, or 28.2% higher than the same period in 2019. Due to the change of accounting estimate, it's caused with the increase of accrual depreciation of the third production line. The company during the third quarter was RMB 13.5 million, US 2.0 million compared to a profit, actually go to the company of RMB 3.4 million during the same period in 2019, representing an increase in profit of RMB 10.1 million. Months results highlights. Net sales during the first nine months were RMB 250.4 million, RMB 36.9 million, compared to RMB 248.8 million during the same period in 2019, representing an increase of RMB 1.6 million or 0.6%, mainly due to the increase in sales volume. Specialty funds were RMB 142.4 million, U.S. 21.0 million, or 56.9% of total revenues as compared to RMB 114.7 million, or 46.1% in the same period 2019. 27.7 million, or 24.1% as compared to the same period last year. That's caused a decrease of RMB 6.0 million and the increase in sales volume caused an increase of RMB 33.7 million. Last nine months were RMB 21.1 million, U.S. 3.1 million or 8.4% of total revenues compared with RMB 42.2 million or 16.9% of total revenues in the same period in 2019. Lower than the same period in 2019. The decrease in sales volume resulted in a decrease of RMB 21.6 million, and the increase of average sales price caused an increase of RMB 0.5%. The $100.2 million, U.S. $14.8 million for the first nine months ended September 30, 2022. representing a gross margin of 40.0% as compared to a gross margin of 21.2% for the same period in 2019. Correspondingly, gross margin increased by 18.8%. Sales decreased by 0.9% compared to the same period last year, while the average cost of goods sold decreased by 24.7%. The first nine months were RMB 54.7 million, U.S. 8.1 million, compared to RMB 44.9 million in the same period in 2019, which was RMB 9.8 million, or 21.8% higher than the same period in 2019. This increase is a challenge of accounting estimate, which caused the increase of accrual depreciation of the fair production line. The company during the first nine months was RMB $40.5 million, U.S. $6.0 million compared to net profit attributable to the company of RMB $1.0 million during the same period in 2019, representing an increase of RMB $39.5 million from the same period in 2019 due to the factors described above. And the restricted cash totaled RMB $88.8 million, U.S. $13.1 million as of September 30th. 2020. Total shareholder's equity was RMB 248.7 million, U.S. 36.6 million. We encourage shareholders for their continued loyalty and support. We believe we are well-positioned to face the current challenges and are committed to providing value to our shareholders and customers. We will keep you informed of our progress. We'll be happy to answer your questions. and we'll translate each question and answer. Jess, please begin the Q&A.

Thank you. Ladies and gentlemen, it is star one if you have a question or comment. Star one on your telephone keypad. Okay. So far, I have not had anyone signal, but again, it is star 1 if you have a question or comment at this time. And we do not have any questions signaled. I'll turn the conference back for any additional or closing comments.

Today's conference call, we look forward to being in touch with you and keep you updated on our progress in the future. Thank you and have a nice day.

Ladies and gentlemen, that will conclude today's call. We thank you for your participation. You may disconnect at this time and have a great day.