Fuwei Films (Holdings) Co., Ltd.

Good day, ladies and gentlemen, and welcome to the Sway Film fourth quarter 2020 earnings conference call. All lines have been placed on a listen-only mode, and the floor will be open for questions and comments following the presentation. If you should require assistance throughout the conference, please press star zero on your telephone keypad to reach a live operator. At this time, it is my pleasure to turn the floor over to your host, Sway Nguyen. Sir, the floor is yours.

Thank you, Dagmar. Thank you. And let me remind you that today's call is being recorded. A replay of today's call will be made available shortly after the conclusion of the call. Before we start, I would like to remind you that certain statements that are not of historic 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 private security litigation reform act of 1995. You should know that the company's actual results may differ materially from those projected in these statements due to a variety of factors affecting the business. Forwarding statements of subjective risks and uncertainties and 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 forwarding statements provided as a result of new information, future events, or changes in our expectations. Joining us on today's call is Mr. Yong Zhang, Corporate Secretary. Before I walk you through our financial highlights, Mr. Zhang will deliver his opening remarks. Sir, please go ahead.

Hello, everyone. Welcome to today's meeting. In 2020, the company's revenue and net profit continued to increase. The total sales revenue increased by 26%. In 2020, the total sales revenue was 60.8%. In 2020, the net profit was 40.6%. It has increased by 25.7% compared to 2019. We believe that the company will be able to handle the future industry and economy better in the near future. We believe that continuous innovation and development can help the company expand the scope of medium-term product sales, attract new customers, Hello, everyone, and thank you for joining us today.

In 2020, our revenues and course margins continue to grow. Shows of specialty films increased by 26.0% year-over-year and accounted for 60.8% of our total revenues for the year. The gross margin increased by 15.7 percentage points to 40.6% for the year of 2020, up from 24.9% in 2019. We're encouraged by positive trends in revenues and gross margins, which expect us to enable us to better navigate the industrial and economic landscape ahead. We believe that our focus on innovation will enable the company to expand end-user product applications and attract new clients and expand relationships with existing customers. Now I will read you highlights of our financial results for the fourth quarter and full year of 2020. Revenues for the fourth quarter of 2020 were revenue for RMB $86.4 million or U.S. $13.2 million compared with RMB $86.8 million in the fourth quarter of 2019. A decrease of RMB $0.4 million or 0.5% says volume can afford a decrease of RMB $2.4 million while the increase of average sales price caused an increase of RMB $2.0 million. Sales of specialty films for the fourth quarter were RMB 62.3 million, or U.S. 9.5 million, or 72.1% of total revenues, compared with RMB 47.7 million, or 54.9% of total revenue in the fourth quarter of 2019. Sales volume accounted for an increase of RMB 15.5 million, while the decrease of average sales price caused a decrease of RMB 0.9 million. Sales in China for the fourth quarter were RMB 80.5 million, or U.S. 12.3 million, or 93.2% of total revenues, compared with RMB 81.4 million, or 93.8% of total revenues in the fourth quarter of 2019. So the volume accounted for decreased for RMB 3.3 million, while the increase of average sales price caused an increase of RMB 2.4 million. Overseas sales for the fourth quarter were RMB 5.9 million, or U.S. 0.9 million, or 6.8% of total revenues, compared with RMB 5.4 million, or 6.2% of total revenues in fourth quarter of 2019. Shows volume accounted for an increase of RMB 1.0 million, while the decrease of average sales price caused a decrease of RMB 0.5 million. First profit of the fourth quarter was RMB 36.5 million, or US 5.6 million, representing a gross margin of 42.2%, compared with a gross profit of RMB 31.0 million, representing a gross margin of 35.7% in the fourth quarter of 2019. Operating expenses for the fourth quarter were RMB $60.6 million or U.S. $9.3 million compared with RMB $15.7 million in the fourth quarter of 2019. The increase was mainly due to the increased loss on incurrence of assets held for sale. Net loss attributable to the company for the fourth quarter was RMB 20.9 million, or US $3.2 million, compared with net profit attributable to the company of RMB 10.3 million in the fourth quarter of 2019. Basic and diluted loss per share was RMB $6.39, or US $0.98, compared with basic and diluted profit per share of RMB $3.17 in the fourth quarter of 2019. Moving down to four-year results. During the fiscal year ended December 31, 2020, net revenues were RMB $336.8 million or U.S. $51.6 million compared to RMB $335.6 million in 2019, representing an increase of RMB $1.2 million or 0.4%. The decrease in average sales price caused a decrease of RMB $0.5 million, which was more than offset by an increase of RMB $1.7 million that resulted from the increase in sales volumes. First profit for the year was RMB 136.7 million or U.S. 21.0 million up from RMB 83.6 million in 2019. Our average unit sales price decreased by 0.2% compared to last year. The unit sales cost decreased by 21.0% due to the price decrease of main raw materials. Operating expenses during the year were RMB 115.3 million or U.S. 17.7 million an increase of RMB 54.8 million or 90.6% compared to 2019. The increase was mainly due to the increased loss on impairment of assets held for sale. Net profit attributable to the company for full year was RMB 19.6 million or US 3.0 million up from a net profit of 11.4 million in 2019. Basic and diluted earnings per share for the year was RMB 6.1 or U.S. $0.92 up from profit per share of three RMB and $0.48 a year ago. Net cash provided for operating activities was RMB $117.5 million, or U.S. $18 million for the year ended December 31, 2020, as compared to net cash provided for operating activities of RMB $54.4 million for the year ended December 31, 2019. Cash and cash equivalents on December 31st, 2020, with RMB $113.4 million, or U.S. $17.4 million, compared with RMB $60.9 million as of December 31st, 2019. With that, Mr. Chang, we'll be happy to answer your questions. We'll require your patience as we translate each question and answer. Dagma? Dagma, we're ready for the Q&A.

Thank you. The floor is now open for questions. If you do have a question, please press star one on your telephone keypad at this time. Questions will be taken in the order they were received. If at any time your question has been answered, you can remove yourself from the queue by pressing one. Again, ladies and gentlemen, if you do have a question, please press star one on your telephone keypad at this time. And it doesn't look like we have any incoming questions. Again, ladies and gentlemen, if you do have a question, please press star one. Okay. There are no incoming questions.

Okay. Well, in conclusion, we would like to thank our 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. Thank you. Have a nice day.

Thank you. This concludes today's conference call. We thank you for your participation. You may disconnect the lines at this time, and have a great day.