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spk06: Good morning and welcome to the Candy Technologies Third Quarter 2021 Financial Results Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touch-tone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Kewalua. Please go ahead.
spk04: Thank you, operator. Hello, everyone. Thank you all for joining us on today's conference call to discuss Candice's results for the third quarter of year 2021. Earlier today, we issued a press release covering the results. You can find the press release on the conference website as well as from Newswire Services. On the call with me today are Mr. Hu Xiaoming, Chief Executive Officer, and Ms. Alan Lin, Chief Financial Officer. Mr. Hu will deliver prepared remarks in Chinese, which I will then translate. After that, we will have a Q&A session. 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 reaction results may be materially different from the expectations expressed today. Further information regarding these and other risks and uncertainties is included in the company public findings with the SEC. The company does not assume any obligation to update any forward-looking statements except as required under applicable law. 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, Hu Xiaoming. Go ahead, Mr. Hu.
spk00: Thank you, Ke Wang. Hello, everyone. Welcome to today's meeting. I am very happy to share and report on the performance of CANDI Group in the third quarter. The most important highlight of this quarter is the growth of business income in electric scooters, electric scooters, and related parts, which has achieved better results.
spk07: Our core capabilities and large-scale market opportunities. We found that the electric motor vehicle business is very suitable.
spk00: So we invested a lot of resources to quickly develop the business. Our results today show that our initial decision was wise.
spk04: Thank you, Kewa. Hello, everyone, and welcome to our conference call today. I'm happy to share our business and the financial results for the third quarter. The most important highlight of the quarter was the impressive growth of revenue in the electric scooter, electric self-balancing scooter, and associated parts line of business. This segment accounted for nearly 40% of total quarterly sales. growing approximately 600% over the same period last year. These strong results reflect the strategic initiative we undertook a year ago when COVID was depressing the EV market. We looked for opportunities with big addressable markets in which we could leverage our core capabilities. The scooter business was a great fit and we directed substantial resources to quickly pursue it. Our results today testify to the wisdom of this approach.
spk00: Thank you. Thank you. Right?
spk04: Leading consultants McKinsey and the company estimate that by 2030, the micro mobility market, including e-scooters and electric self-balancing scooters, will reach annual sales of 200 to 300 billion US dollars in the United States alone. Entering this segment was always in our strategic plan, but the COVID crisis accelerated both our entry and the growth of the industry. because they reduce contact points and encourage social distancing. Micromobility vehicles such as e-scooters and electric self-balancing scooters are a natural and less risky alternative to the public transportation such as local buses and subways. Amid public transportation shutdowns during COVID, demand became urgent for micromobility vehicles and associated parts.
spk00: And the flexibility and simplicity of satellite mobile market transportation means that this kind of transportation is faster than any other way. So in the third quarter, when the Deltar virus caused regional outbreaks all over the world, Moreover, the flexibility and simplicity of micro mobility vehicles means that this mode of transportation can rebound faster than others. In the third quarter,
spk04: When Delta variant regional outbreaks were occurring around the world, we saw the strategic advantage of pursuing this opportunity in e-scooters and electric self-balancing scooters and associated parts.
spk00: We can see that consumers, including ATVs, UTVs, and other models, The demand for non-track vehicles is constantly rising. As we mentioned at the last phone call, in view of the market's expectation for high-performance pure electric four-wheeled UTVs, we have developed the K23 all-closed pure electric four-wheeled multi-use UTV. This type of car, we have already Looking at other lines of business, battery pack sales decreased, which impacted overall sales of electric vehicle parts.
spk04: We were constrained by supply chain tension affecting the whole industry and by the restructuring of our pure easy business. Off-road vehicle sales declined versus last year, but were up 25% sequentially, accounting for more than 40% of total revenue. Consumer demand for off-road vehicles, including ATV, UTV, and other models is increasing. We mentioned last quarter that our analysis of market interest in high-performance electric four-wheel drive UTVs led us to develop the model K32. The K32 is an intelligent, fully enclosed, pure electric four-wheel drive multi-purpose UTV. Prototypes of the K32 were delivered to the U.S. for display last month, and initial feedback from dealers was positive. We plan to formally launch the K32 soon.
spk00: This is the best time for capital flow. This kind of capital flow level has opened up many new opportunities for us. So in the third quarter, we have increased annual expenses for some of the four opportunities. It takes time for pure electric vehicles and related businesses to adjust and recover. But we are confident that with the adjustment of related businesses, Looking at our financial position,
spk04: In the third quarter, we received the final payment from Gili of our sale of 22% position in the Fengsheng joint venture. At the end of the quarter, we had a working capital of about $289 million, the best liquidity status in our history. This level of liquidity capital opens many new opportunities for us, so we boosted our R&D spending in the third quarter. Restructuring and recovery of our pure EV and related businesses will take time, but we believe that as we finish the reset of these businesses, our electric vehicles and EV-associated product lines will again achieve solid growth. A recovery in EV combined with the strong growth of e-scooters and huge potential for off-road vehicles makes us excited and confident about our future.
spk00: Let's now start the Q&A session. Qiwa will take any English questions.
spk04: and translate for me, and I'll see if Alan will answer in English. Operator, please go ahead.
spk06: We will now begin the question and answer session. To ask your question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster.
spk07: The first question today comes from Frank Blatterman, who is a private investor. Please go ahead.
spk02: Good evening, Mr. Hu. My two questions involve the EV part of Candy's business. Number one, is the factory on Hainan Island presently active in making cars? And if so, How many employees are actually making cars there? Question number two, the K23 and K27 were originally introduced to the United States over a year ago, but presently can only be sold as neighborhood electric vehicles with a reduced maximum speed. Have they been upgraded and approved for highway travel in the U.S. at this time? Are they presently in production? When do you expect them to be shipped? Will it be before the end of the year?
spk07: Cool.
spk04: Mr. Hu, he has two questions. The first question is whether the factory is actively producing cars. If so, how many employees are working there to produce cars? The second question is that our K23 and K27, these two cars, were introduced to the American market more than a year ago. But at present, only the low-speed models of these two cars Thank you for your question.
spk00: We are still adjusting our pure electric vehicles. Because in the past few years, the electric vehicles produced by Condi were all produced by Geely. This year, we have completely quit our cooperation with Geely. So we need to cooperate with new partners for related products. Currently, related products are handling and reporting product announcements to the country. Related products... This is the first question. The second question is that the K23 and K27 high-speed vehicles have not yet met the requirements of the U.S. DOT. At present, it is not possible to estimate when this kind of DOT requirement will be met. Because the U.S. market requirements for safety and energy are much higher than those of China and Europe. So first of all, thank you so much for your questions.
spk03: As for the first question, at present, the production of the EV product is still being adjusted and fine-glued in our factory. As you may know, in the past few years, the electric vehicles produced by Candy we have used the Geely's production qualifications. Since this year, we completely withdrew from the cooperation with Geely, and we tried looking for other partnerships in our production. Currently, we are filing the product announcement to the state government for those EV products, and we can only go into the mass production after development product announcements and qualifications are in place. As for the second question regarding the K23 and K27, at that moment, the regular models have not yet the DOT requirements for the safety standards. We are still working on the improvement. However, currently, we cannot really provide a very accurate estimate of when the requirements will be met. As you may know, such requirements for the safety standards in the U.S. is much higher for airbag safety and other standards, much higher than those in China and European countries. Currently, there's not any Chinese company have their EV meeting such safety standards in the U.S. We are working very hard to achieve this goal.
spk07: And thank you. Thank you.
spk06: Our next question comes from Ratna Vajra with RainGrade Consulting. Please go ahead.
spk05: Yes, good day Mr. Hu and everybody on the call. I was wondering since it has been brought up before. Are you still contemplating a share buyback? And since I understand there was a board resolution to authorize this, what share price would be inducing such a buyback?
spk04: Thank you for your question.
spk00: Thank you for your question.
spk03: Yes, we are considering such process and based on the market development and condition, we will execute the share buyback at the appropriate moment and condition. Thank you.
spk05: So, adding on to Frank Platterman's question, by what time do you expect to have a production license for EVs? 根据上一个投资人物的问题,我们预计我们的工厂什么时候可以开始进行全电动车汽车的生产?
spk00: Thank you for your question. It should be like this. It should start to sell in March or April next year.
spk07: When will the factory start to produce?
spk04: It will start to sell in March or April next year. Okay.
spk07: It will start to sell in China.
spk03: So as for your question, we expect that until March or April of next year, 2022, we will kick off the mass productions and sales of our EV models for the domestic market.
spk07: Thank you.
spk06: Our next question comes from George Cariacos, who's a private investor. Please go ahead.
spk01: Hi, thanks for taking my questions. You can correct me if I'm wrong. I see the focus in candy. It's shifting to the sports equipment as an EV. Nevertheless, it's a heavy competition coming from inside China and outside China for the EV sector. My question is what appropriate focus or ways can be taken in advance to eliminate this competition or to be one of the competitors with the heavy competition coming in the market for the EV or is your focus is going towards the sports models?
spk07: Thank you.
spk04: I'm sorry, can you repeat the first part?
spk01: Yeah, is your focus is the the sports equipment for the ev since i see most of the revenue coming from the ev equipment as sports equipment more than 40 percent and or your focus is is the car and what appropriate steps you take in to eliminate the competition or the heavy competition coming in the market okay
spk04: His question is, he said, based on our current sales income, our e-scooter, balanced skateboarding vehicles have gained a lot of weight. He wanted to ask if our future business center will be on these balanced skateboarding vehicles. If not, if we are on the electric scooters, how will we face the market?
spk00: This question is a good one. The balanced yellow horse car and the balanced car are our supplement. But in the end, we still focus on the electric car. We will do some segmented market for the electric car. One is that in the extreme market, we will do the network car market. This is because our technology is relatively advanced when it comes to switching power. We switch to this network car. If our business goes well, we will have a fair share of the head market in March. In addition, that is to say, that is to say, UTV and that three-wheeled car are all-terrain vehicles. So now it's all over the world. It's already from It used to be gasoline. Now it's all changed. It's slowly becoming like... Because of the demand for carbon monoxide and carbon emissions, it will all become electric. So we will continue to make all-wheel-drive cars and UTVs and other cars that used to be gasoline, these cars that used to be gasoline, will all be made into pure electric cars. Thank you for your question. It's a really great one for us. So first of all, as for the scooters, it's
spk03: adding as like a supplemental to our business. However, our focus is always on the EV and related products. So in the EV market, we are trying to divide into two streams. One is in such a competitive market, we try to focus in the car-holding platform, especially for the domestic market. With our advanced battery swap technology, you definitely, you know, event be facilitating the market and meeting all the demands from the car handling platform users. So we expect there will be mass productions from our such models that facilitate the car handling platform with the battery swap in next April or May, I mean March or April in 2022. Apart from our focus on the car handling platform, We also try to enter the market for the electronic, UTV, and ATV. As you may know, currently, primarily of those models for the UTV and ATV are using gasoline. Because of the upcoming requirements and standard for the emission limit, most of the models will shift to electronic mode. With our technologies, we try to enter this market and try to be one of the pioneer and advanced market suppliers in a couple of years. So that's our plan and goal.
spk07: And thank you again for your question. Again, if you'd like to ask a question, it is star then one, star then one to ask a question.
spk06: There being no questions at this time, this will conclude our question and answer session. I would like to turn the conference back over to Xiao-Ming Hu for any closing remarks.
spk00: Thank you again for attending today's conference call.
spk04: We are confident that we are going closer to the multiple targets spreading over EV products that we swap business. e-scooter, and market expansion. Look forward to sharing with you more positive news in our next call.
spk07: The conference has now concluded.
spk06: Thank you for attending today's presentation. You may now disconnect. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. The conference has now concluded. Thank you for attending today's presentation. You may now
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