This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
11/18/2024
Greetings and welcome to the Kennedy Technologies third quarter 2024 financial results call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Kiwa Luo, Investor Relations Manager for Kennedy Technologies. Thank you. You may begin.
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 2024. Earlier today, we issued a press release covering those results. You can find the press release on the company's website as well as from Newswire Services. 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 filings with the SEC. The company does not assume any obligation to update any forward-looking statement except as required under applicable law. Additionally, unless otherwise stated, all figures mentioned during the conference call are in U.S. dollars. Before we continue, I would like to introduce the team joining me on today's call. Joining us are Dr. Xueqing Dong, our newly appointed chairman of the board, Mr. Feng Chen, our new chief executive officer, and Mr. Alan Lin, our chief financial officer. Mr. Chen will deliver his prepared remarks in Chinese, which I will translate afterwards. Following that, we will have Q&A session, where our chairman, Dr. Dong, will also participate. With that, let me now turn the call Over to our CEO, Mr. Feng Chen. Go ahead, Mr. Chen. 大家好,感谢大家参加今天的会议。 我是康迪科技集团新任CEO陈峰。 在分享公司第三季度的业绩之前,我想感谢董事会的信任,并向我们的团队和历任领导致以敬意。 他们的努力为康迪创造了今天的发展机遇。
Good day, everyone, and thank you for joining us.
I'm Feng Chen, the newly appointed CEO of Candy Technologies Group. Before we dive into our Q3 results, I want to thank our board for their trust and recognize the dedication of our team and the leadership of my processors whose efforts have positioned Candy for the opportunities ahead. It is a privilege to lead this company as we work together to navigate challenges and unlock new growth.
Compared to the same period last year, $36.4 million has been reduced. In the previous nine months, the income was $8,980 million, with a decline of 5.7%. Non-road vehicles and related components are still the main source of income. In the third quarter, the income was $2,750 million, with a decline of 9.2%. In the previous nine months, the income was $8,150 million, with a decline of 1%. This year, our revenue temporarily declined as a result of changes in the sales model for our fully electric off-road vehicles.
Third quarter revenue was $29.9 million, decreased from $36.4 million in the same period of 2023. While nine-month revenue totaled $89.8 million, a decrease of 5.7% year-over-year, off-road vehicles and associated parts remained the primary revenue source in Q3, contributing $27.5 million. down 9.2% from the prior year quarter, while revenue from the second month for the first nine months left 1% to $81.5 million. To address these challenges, the new management team has developed a detailed growth plan for 2025 to 2029, recently approved by the board, which aligns with our current position. With this planned execution, we are confident that all business segments are well positioned for stronger growth and new opportunities.
has been widely recognized by consumers and has established a stable cooperation relationship with important customers such as Los. In particular, we have recently launched a golf cart with a joint name with NFL 32 teams and sold exclusively at Los. This has further improved the influence of the Condi brand. In the future, we will continue to use technology innovation, product upgrade and channel expansion to fully play our own advantage and increase market share.
The all-electric off-road vehicle segment holds tremendous potential for Candy. Over the past few years, we have established a strong foundation, advancing our technology, expanding product offerings, and strengthening our market presence. Our golf carts and other models are not only highly competitive, but also well-received by consumers. Partnerships with key clients like Lowe's have fostered our reach. And the recent launch of our NFL branded golf carts, featuring all 32 NFL teams and sold exclusively at Lowe's, has further elevated the candy brand. Looking ahead, we will continue leveraging our technological innovation, enhancing our product portfolio. and strengthening our distribution network to expand our market share.
Amid the complexity of today's global economic landscape,
we remain mindful of the pressures from trade tensions. Our 2025 to 2029 growth plan incorporates proactive measures, including establishing U.S.-based production lines for golf carts, utility vehicles, and lithium batteries. These facilities will enable faster deliveries, improved after-sales support, and closer proximity to key North American markets. In parallel, we will continue to expand internationally, targeting growth in Southeast Asia, the Middle East, Europe, and other regions, supported by a competitive and diversified product portfolio. 在应对国际市场变化的同时,我们也明确了国内市场的布局
First of all, it is the expansion in the field of smart travel. As smart travel gradually becomes the mainstream choice of Chinese consumers, the potential of this market is huge. We will grab the huge business opportunities in this field and strive to have a place in the field of smart travel. In addition, we will fully utilize the manufacturing advantages of smart charging devices and the experience of charging operation to provide smart charging devices and charging operation services to domestic charging giants.
Even as we adapt to changes in international markets, we are focused on growing in China. To start, we are targeting the fast-growing smart mobility sector, which is really taking off with Chinese consumers, and we are aiming to build a strong presence there. On top of that, we will use our expertise in manufacturing battery swapping equipment and running battery swapping operations to support major providers in China. Our goal is to position Candy as a top supplier and operator in China's battery swapping market, paving the way for even more growth.
Based on the opportunity of the future, our stable financial situation provides the company's future growth with the necessary resources and stable security. As of September 30, 2024, the company holds $2.6 billion in cash and cash and other household items, limited cash, short-term investment and regular savings, to achieve strategic goals, and to establish a solid foundation. In addition, the company has repurchased 148,000
Building on the opportunities ahead, our strong financial position provides the resources and stability needed for future growth. With $260 million in cash, cash equivalents, restricted cash, short-term investments, and certificates of deposits, As of September 30, 2024, we are well positioned to pursue our strategic objectives. Our share repurchase program, which has already seen 1,480,786 shares repurchased at an average price of $2.49, underscores our confidence in the company's future.
As we move forward, we will stay focused on effective execution and sound strategies to support steady growth and shareholder value.
With a clear plan and solid foundation, we are prepared to navigate challenges and make progress towards our goals.
现在开始问答环节,我和董学勤董事长将一起回答大家提出的问题。 科娃和林正明先生会提供翻译,请看提问。 Now, we will move on to the Q&A session.
Together with Chairman Dr. Xueqing Dong, I will answer your questions. Ms. Kewa and Ms. Alan Lane will provide translation. Please go ahead and ask your questions. Operator, please go ahead. Thank you.
Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Our first question comes from the line of Mike Pfeffer with Oppenheimer and Company. Please proceed with your question.
Thanks for taking my questions. A few weeks ago you had the back-to-back press releases on the same day announcing the generational restructuring of the Candy C-Suite and Board of Directors. And the second one was titled Candy Technologies Board Approves Several Major Initiatives and New Management's 25 to 2029 Projected Growth Plan. For a dozen years, shareholders have been asking management to accept the norm of the vast majorities of the U.S., NASDAQ-listed companies, and begin giving guidance as well as longer-term forecasts, both integral if a company has any hopes of attracting accredited stock analysts. The five-year detailed forecast, particularly with the disclosure of previously unknown five additional profit centers, was a pleasant surprise. Maybe you could translate that and I'll continue, please.
Okay. And this is a big surprise. The second one is even more surprising because it is the first time in more than ten years that the market has released a five-year growth plan. And then these are also shareholders who have always hoped that the management can be like the vast majority of Nasdaq listed companies, be able to provide a long-term prediction of the performance of the market. After all, this is a key point that attracts the attention of professional analysts. 那这五年的预测呢,很详细,特别是在这之前,公司从未披露一个新的增长的利润中心,这对于市场是很大的惊喜。 接下来他有几个问题。 Please go ahead. Okay, regarding analysts, Candy has never had sell-side analyst support, primarily due to never having used a retail broker investment banking group to raise money.
The three prior financings since inception were done using a single independent investment banker who retained two to three transactional brokers. The difference is that sell-side analysts work for brokers that sell stocks and stock ideas to clients. Transactional brokers buy blocks of newly registered stock for their accounts, usually to cover prior short sales and a discount to the market. They mainly make their money by covering the original short As in most cases, they take a large chunk of the three-plus-year stock purchase warrants that they use. Maybe you can just translate that, please. 我们一直没有分析师的关注,很大的一个原因是在过去我们从来都没有真正的雇佣一个全方位的投行来给我们融资。
We have always used the same small investment bank. They don't have a comprehensive service. They only cover a few bankers. Every time, the financing is through a few fixed funds, including a three-year-old turbine. The fact that you put out five-year forecasts is comforting to analysts, brokers, clients, savvy investors, compared to only one year if a company misses its guidance the first year.
The analyst doesn't, and investors are not too concerned and look forward to the next year. With this background, a few questions. Go ahead.
Please start your question.
Okay. So in that you put out this five-year forecast without giving quarter-to-quarter and full-year revenues and earnings guidance, it creates suspicion that the longer-term guidance is just pure guess. Is it the company's intention to give full year guidance for full year 2024 and subsequently for Q1 2025 and the full year?
This makes people doubt that your long-term prediction may just be a guess. Will the company plan to provide a financial prediction for the next year and every quarter? The development plan for the new management city from 2025 to 2029 is seriously studied and repeatedly discussed.
After considering the external environment and the development trend of the entire market, as well as the advantages of the company and the various factors of the existing resources, this plan shows the confidence of our entire management team in the strategic direction of the company, as transparent as possible, to help everyone understand the short-term and long-term goals of our entire 2025-2029 growth plan. As for the annual guidance, we will disclose the facts based on the development of the company.
So thank you for your questions. The 25 to 29 projected growth plan prepared by the new management was actually done with careful research and rounds of multiple discussion internally, taking into consideration of various factors, such as the external environment of the economy and the market, and we developed the trends, as well as our own edges, advantages, and existing resources. This plan demonstrates our management team's confidence in the company's strategic direction, and it helps the investors to understand the company's short-term plan and long-term plan, and it goes in the 25 to 29 growth plans, and we try to present the plan as transparent as possible. As for the Q1-25 and then the whole-year plan and the guidance, we would disclose in due course based on the company's development and our own assessment. Thank you.
I'd just like to add, in addition to earnings and revenue guidance, investors would receive it well if the company would also announce off-road vehicle unit delivery guidance or at least break out unit sales each quarter in the earnings announcement. That information was usually historically published in 8Ks and 10Ks. Anyway, thanks for your time.
He also wants to ask, in addition to the forecast for income and profit, can the company also provide a forecast for the amount of delivery of non-traffic cars, or at least provide sales data in detail in our financial reports? This information is also what investors want to know. Usually, these data will be disclosed in the previous 8K and 10K documents.
Okay. 这个我们也会根据公司的发展事实来进行披露的。 Thanks for your questions.
And we will also disclose such information in a timely manner based on the development and company's assessment. Thank you.
Thank you. Our next question comes from the line of Arthur Porcari with Corporate Strategies Incorporated. Please proceed with your question.
Thank you. Before my questions, I want to welcome the new management and also thank Mr. Hu for a 17-year quasi-retirement from chairman of the board and 20 years of executive service and leadership to Candy and also a true pioneer of all electric vehicles in China. On to current business. Next month, Candy will have its annual shareholders meeting for the past 2023. In fact, the 2023 proxy materials have now started to arrive. While most of the issues are boilerplate, one in particular is not boilerplate. Management is asking shareholders to vote to allow a new 10 million shares to be authorized to reload its 15-year stock option plan as the prior active 2008 plan had finally been fully activated. Employee stock options are usually issued and authorized by shareholders as rewards for outstanding performance. In a public company, a good bit of that performance has to do with stock appreciation. I'm curious. Now, here's my first question. Does management really expect any shareholders to happily reward management by voluntarily providing a possible 12% increase in shares while the stock is trading at its 15-year low, down 94% of its all-time high? I can assure you shareholders will not be happy. particularly since the company's product distribution base is at an all-time high and growing rapidly, and the company's at its strongest cash and fundamental position of all times. This connect can only be blamed on management, not operationally. They're doing a great job there, but public company management of a NASDAQ company. I'm sorry I left you with a lot there, Q. Hopefully you can carry it. Okay.
First of all, this question, before we start, he wanted to thank Mr. Hu for his 17 years of contribution to the company, and thank him for his leadership. And then he said that he saw that the company had revealed in the information of the shareholders' meeting that the company would have a problem to solve. We hope that shareholders can authorize 10 million shares to be used in the employee stock extraction plan. Because the old plan in 2008 has been fully distributed, so this new issue requires shareholders to authorize it. Employee stock extraction is usually used as a reward for the performance of the employee. But in listed companies, these rewards are largely based on the performance of stock growth. OK.
Over the past three conference calls, I and other U.S. market professionals have addressed this, but in return, we've only received, quote, we will look into it, but nothing further. Hopefully, the new match will pay more attention because there is a solution to this problem, particularly with candy sitting on $260 million in cash and only $25 million in short-term debt and assets that are probably worth, well, book value is $5 a share, but assets that work probably better. 50% more than that because of depreciation of the $300 million in facilities that they have. Basically, what I'm going to do here, since you've answered a lot of questions in the opening, which I congratulate you also, that's new. Usually, the opening goes right into questions, and we don't get an overview from management. We got it this time, so that's great. Go ahead and tell them that, and then I'll go into some of the question areas.
This meeting, our opening statement is very detailed. Usually, this opening statement is very brief. We are also very happy to hear it. In the past several phone calls, I have mentioned that the stock price is constantly decreasing. And the management level is always more perfunctory. They say we will take a step forward, we will take a step forward. But they have never paid attention to action. Now the company... Go ahead with your question.
Okay, well, a lot of this is going to be basically just informational purposes. One more time, because like I said, a lot of questions are answered, but I'll try to make this quick. For the past three years, investor conference call, the issue was raised that Kenny should take advantage of his foolish selling at massive discounts. I should say the past three conference calls. Discounts to cash in book value by filing an F-14 stock tender for at least 10 million shares. The price initially discussed in the prior calls was put in around a $3 area. On each occasion, a response by management has been to be effective. We'll look at that, but nothing further. If management wants to fix this and send a signal to Wall Street, do the right thing and create this a win-win-win for all loyal but severely penalized shareholders and incentive for all shareholders to be in favor of the management stock option request. Go ahead and pass that on.
Please send everything and start your questions.
Okay. You want me to start over again or just take it from there?
No. What's your question?
I said basically this is more for informational purposes because you've answered a lot of questions already. So there doesn't really have to be a question right there yet. Okay.
Okay. to submit an F14 stock acquisition proposal to buy back at least 10 million shares. The price discussed in the previous telephone meeting was about $3 per share, and the response from the management level was that we would consider it, but there was no response afterwards. If the management really wants to do something right and create a double situation for us loyal and now severely punished shareholders, and at the same time hope that the shareholders will fully support the equity plan of the stock, then this is the best solution for the shareholders to benefit and the company's stock price to be improved.
Okay, what I'm going to suggest is truly a win-win-win for all loyal but severely penalized shareholders and incentive for all shareholders to be in favor of the stock auction request they're asking for in this proxy. Now is the time to do something proactive, accretive to all shareholders and the company value, and that's to quickly file the F-14 tender offer at $2.50 and $3.00 a share using only 10% of Candy's cash. Or even bank borrowing. A few years ago, Candy had bank borrowings as high as $75 million, at the same time only $50 million in cash. So here is the upsides for all involved. Pass that on to them, and then I'll do the rest.
So I think this is the best time to submit such an F-14 return suggestion. You can return 10 million shares between $2.5 and $3. Okay. The win for the shareholders would be an immediate double in stock price appreciation
plus free Wall Street publicity, which will bring the undervalued focus on candy by the immediate huge stock percentage jump, showing new investors just how undervalued candy really is. Secondly, for the company, you want to go ahead and pass that?
Okay, first of all, the first advantage is the advantage to the shareholders. After this kind of operation, the stock price will double immediately. Okay. For the company, with its current $5 share book value, every share bought by the company at $2.50, or half the price of the book value, not only drops the outstanding share count,
but it also increases the remaining shareholder's equity for each additional remaining shares by $2.50 a share. And the third way... Okay, and finally, for management and the company, if the company buys back 10 million shares, then the 10 million options they're requesting would initially show a 12% reduction in the issued outstanding, but it will ultimately flatten out to no more shares than we have today.
So my really only question out of all this was, will the company finally pay attention to the ways of Wall Street
It seems like that's what they've forgotten in this company. We've been here for 17 years, undervalued the whole time, and so my question is, will they finally pay attention to Wall Street and get U.S. advisors, and I don't mean PetroCo, I'm sorry to say, get U.S. advisors who can help them along that line? I can give them some advice as well. I've been with the company 17 years, as you well know, and 51 years as a Wall Street professional. That's my question, and that's all I have to say.
I'm going to eat yeah I'm going to eat yeah I'm going to eat Because now the company has been forgotten in Wall Street.
There was a question in there.
Thank you for your question. First of all, we want to talk about the equity incentive plan. The equity incentive is what we attract residents. and encourage excellent employees. The combination of repurchase and equity incentive plans can balance the interests of shareholders and companies to a certain extent to ensure the rationality of the stock structure and the optimization of the circulation of shares. We understand the concerns of some shareholders about the effect of dilution. We will continue to work to balance this point to the maximum extent to realize the value of shareholders. Regarding your proposal F-14 stock repurchase, we understand that this is also the expectation of many shareholders. In the past telephone meetings, the management team has indeed mentioned the possibility of saving money to consider repurchasing. The reason is that such measures need to combine market conditions, the long-term development strategy of the company, and the efficiency of capital use, etc. We are not avoiding such suggestions, but are evaluating the best. Currently, First of all, thank you very much for your sharing and your thoughts.
about your questions, we will address them all together. First of all, regarding the equity incentive plan, it is an important approach for us to attract, retain, and motivate our outstanding employees. The combination of the shared buyback program and then the equity incentive plan can balance the interest of the shareholders and the company to a certain extent. basically to ensure the rationality of the equity structure and the optimization of the numbers of the outstanding shares. We understand that some shareholders are concerned about the dilution effect, so we will continue to work hard to balance this and maximize the shareholder value. Regarding the handover or the share buyback program you mentioned, we understand this is the expectation of many investors and shareholders. Management did mention in the past that we will carefully consider the possibility of the share buyback and repurchase because such measures need to be combined with the market conditions, our long-term development strategy, and then the capital efficiency. We are not trying to avoid such suggestions, of course, but we are comprehensively evaluating the optimal solution. At present, We are cautious about every investment to maximize the long-term returns for the shareholders of the company. As for the further action arrangements, we will consider executing in the most beneficial way for the company and the shareholders, including the possible share buyback while ensuring the financial health and appropriate market conditions. Thank you.
Actually, I said I was finished. One last comment. I'm glad to hear that the satellite Mr. Who was involved in that call, that response right then. But seriously, it doesn't get any cheaper than this. I've been in this business 51 years, and I've never seen a stock get down to where it was trading at 40% of cash in a bank. Not a company that wasn't effectively going out of business. So I hope you will take my advice to at least further discuss the situation outside a conference call. I can make the introduction to people that can help you with this. Hope you will take that advice. There's no reason for this stock to be trading at a 15-year low, while everything else is closer to its all-time high. Thank you very much, and again, thank Mr. Hu. He's been a great pioneer with this company over the years. Innovator of the year in China for EVs in 2014. K17 was the car of the year for all of China in 2015, and Candy was the first company in China to ever do 25,000 units in one year, back also in 2015. So it has a heritage of being very successful in the past. Hopefully, we'll continue it. Thank you.
He said, I really hope that the company will not only do surgery, but will be able to contact me after the conference. I will introduce the company. So it's, it's, to solve the current situation. Once again, I would like to thank Mr. Hu for his contributions to the company in recent years. In 2014, he became the most innovative person in China in terms of electric vehicles. In the same year, the K17 also received a bonus from the company. In 2015, Condi Thank you. Operator, we are ready to take next question. Thank you. Our next question comes from the line of Frank Blatterman,
Private investor, please proceed with your question.
Yes, and a good evening to those in China. My question is, is there anything in the contract that dissolves the joint venture between Candy and Geely that prohibits Candy from entering the electric car business now or in the future? That's my question.
My question is, at that time, Candy and Geely Thank you very much. Thank you.
Thank you. Our next question comes from the line of Steve Miller, private investor. Please proceed with your question.
Good morning, Kiwa. The bulk of my questions deal with your two October press releases, and I'll sort of work my way through those with questions. In your October press release, you made reference to autonomous driving technologies and projected that China's ride-hailing market is expected to experience significant growth. You then said that candy will expand its presence within the smart mobility business industry, a phrase I note you included again in today's press release, by your plan to acquire an established company in, excuse my pronunciation, Hangzhou Honghu. Do you want to go ahead and translate that?
Uh-huh.
I'm sorry, please say one more time, you referenced the press release that we issued in October, right?
Yes, you issued two press releases in October. They made reference to autonomous driving technologies and also ride hailing, et cetera. And you basically said in those press releases that they would be facilitated by your acquisition of Hangzhou Hanghu.
Please go ahead.
Okay, my question is explain going forward what Candy's business will have to do with autonomous and ride hailing. And examples would be helpful. And how, if at all, is Hangzhou Honghu currently involved in those areas?
My question is, in the future, how will the county develop what we call autonomous driving and ride-hailing? How do you say ride-hailing? um um
So first of all, about our potential target,
the card holding platform. Right now, the company is in the stage of due diligence to understand more about the company of this target. The progress is going smoothly. However, there's no written argument or contract in place yet. So we have no too much information to be disclosed for the time being. Thank you.
Okay, Alan. In the October press releases, you made reference that Candy's business would have something to do with autonomous and ride-hailing. Is that correct?
In those press releases, you provided projections for what you call your smart mobility solutions business. And it went from annual revenue projected of $24.37 million in 2025 to...
a higher number by 2029. And so I guess my question is, what exactly is the business that Candy will be involved in that will be generating those revenues and profits that you mentioned in those releases? And can you provide greater color how you arrived at those numbers, considering that currently you have none of that business?
Thank you.
Taiwan Taiwan
So basically, this smart mobility solution business plan includes the map, the smart dispatching system, the customer service support, the resource integration, and the operation management as well as the driver management, etc., It basically provides a one-stop technology and operation service for all the scenarios for those commuting and transportation companies. So far, Hong Kong has served nearly 100 of those transportation companies covering more than 200 cities across the country, processing over millions of the orders every day, and helping millions of the drivers to have their works By covering everything from driver screening to economic guarantee, it ensures the safety and reliability of those transportation services.
And what is the status of the Honghu acquisition? 现在跟收购鸿湖的这件事情进展到什么程度了?
We believe that we answered that question at the beginning that led us to the phase. So we are in the due diligence stage at the moment for this target Honghuo.
The process goes smoothly. However, there's no imminent written document or contract in place yet. So at the moment, we cannot disclose further information. Thank you.
Why have we seen no information about the purchase in the media or even statements from Hong Hu that they've even agreed to be acquired or will have anything to do with candy? 为什么在这个公共的网站上没有看到红胡发出
Currently, since our bill of diligence is being processed, it's a quiet period for both sides.
So that's why neither side had disclosed too much information about this deal.
Okay, and then did you indicate that until a purchase does go forward, there's currently no other contractual relationship between Candy and Honghu?
Can you explain that before the political contract was signed, there was no contractual relationship between Candy and Honghu?
Yes, your understanding is correct.
Okay. And then in one of the October press releases, you said Candy will be focusing on expanding two main business lines, electric off-road vehicles and lithium battery production in North America, Europe, and at least you said Southeast Asia. From what I've read about lithium batteries, technology is quickly changing. What gives you the confidence that you can compete with others on lithium battery production, that you can develop new technology, especially with larger companies with greater resources that have research and development?
In the news in October, I saw that the company said that the next step will be in non-computer vehicles and batteries. It will be powerful and it will expand to Europe and Southeast Asia. What confidence do you have? Why do you think you can compete with many big companies? They have many years of research and high technology. What do you think you can compete with them? Do you have confidence to take on a certain market share?
First of all, we are based on China's excellent supply side cost advantage. Secondly, our Condi products have been recognized by consumers in the U.S. market. Our products are very competitive. Even in this market, in the U.S. market, traditional giants also have very strong competitiveness. So we are very confident in our products. Therefore, from another perspective, we are currently in the market outside of the United States, including Europe, we have also started product sales. The current market performance proves that our products still have competitiveness. So we think this is not a
We don't believe that will be a big issue to us because from two perspectives, one of them is we have excellent supply chain in China that can ensure our production progress in a proper order. Second of all, our products are well received in the U.S. market and they are competitive even to some other big brand products. Other from the U.S. market, like European and Southeast Asia region, we have started also ourselves in those areas as well. So we believe that, you know, ourselves and production will be going smoothly without any large issues.
Your press release said that in 2025, you plan to invest $100 million in the U.S. to establish a lithium battery manufacturing and battery pack facility. will you be exporting those products out of the United States to other locations around the world?
uh uh
As for the battery factory, we're going to invest in U.S. Primarily, the plan is to supply to those of the North America market.
because of our needs and ourselves. So basically, and for other regions of U.S. and North America, our primary plan is to supply those products with the battery pack produced in China.
Okay. And then over the years, your battery swap revenues have been minimal, to say the least. We've heard of no alliances that Candy has with major car manufacturers or ride-hailing firms anywhere. Yet in your October press release, you gave projections of sales as well as revenues and stated that Candy aims to establish itself as a strategic supplier and a leading force in this sector. Do you want to go ahead and translate that, Kiva?
Okay. We have never disclosed that we are cooperating with a head company, a head supplier, or a management company. In October, we mentioned in the news that we will lead the market in the exchange of electricity technology, and we also gave a more detailed sales, income, and profit prediction. Go ahead.
Okay. So my fellow shareholders are asking, what makes you think that your battery swap business is going to suddenly change when it hasn't in the past? What are your projections based on? What are we not seeing or being told?
First of all, I would like to say that Condi Technology Group has accumulated a lot of years in the field of power exchange, especially in the side of power exchange. It has a lot of patents and has been engaged in this business for many years. Secondly, with the rapid decline in electricity costs in recent years and the gradual success of power exchange technology, The market has begun to mature gradually. It already has a large-scale commercialization basis. China has several single-city profit-sharing models in China, including Chongqing. So we think that now is the time for the exchange market to enter the military. Thank you.
So first of all, as you may know, our company, Candy, has been involved in the battery swap business for a long time. We've accumulated a lot of experiences and knowledge as well as the patents from the last years and decades. So right now, we believe that's a good time to start. entering the market because, as you may know, now the battery cost has been dropping gradually in the last few years. And then in China, a few cities have actually been implementing the battery swap process, such as Chongqing and some other big cities. And then we also are in touch with a few leading companies in the battery swap in the field. We believe that we will have quite a material market share in the upcoming years. And that's based on our, you know, our expectation as well as our analysis and experience in the market and the discussion with peers. Thank you.
Is the 300,000 government accredited ride-hailing program in China from four years ago that you were involved with, is that still alive? Is it a factor in your projections? Isn't that going to expire in 2025?
We mentioned before that the $300,000 government-serious network car project is still in progress. Will it disappear in 2025 because of what was mentioned four years ago? Does this have anything to do with the five-year plan we are pushing now?
We will continue to promote these contents according to our 2025-2029 development plan. Please pay attention to the subsequent progress of the company. The above is the new project.
So primarily our, the upcoming business operation and models will follow our 25 to 29 project goal plans. So please stay tuned for any further updates and developments. Thank you.
Okay. And is the battery swap business going to stay in China? And will the units be customizable for other, for a wide variety of different manufactured vehicles?
So first of all, the basis of the battery swap is definitely being promoted and implemented in China for the time being. And we are targeting to those companies operating the battery swap businesses and services, but not really the car production manufacturer. So that's our biggest model for the battery swappers.
Okay, and then in one of the October press releases, you had given revenue and sales projections for your off-road electric vehicles, which shareholders were glad to see after so many years of not willing to divulge that kind of information. And on average, it seems like your revenues or your projections are conservative, that they mainly average around $6,000 per vehicle, but you're still able to keep a 30% margin. Does that sound about right?
Yeah, the revenue projection is indeed quite conservative. Then you mentioned about the average price of $6,000. Eventually, from the product mix,
of the priority of the high-end and low-end models. So $6,000 is rather average price. And then the average gross margin of the gross carbon margin of 30% is expected to be achievable. Thank you.
Okay. And those projections for those off-road electric vehicles, I assume that is worldwide and not only in the U.S.?
I just want to confirm what you gave us. The figures we mentioned are for the overall sales in total, not just focused on the U.S. market, but overall, globally. Okay.
And then finally, again, from your October press release,
You had indicated that you plan to invest $30 million in 2025 to establish a production line in the U.S. for various off-road vehicles, etc. Do you plan to build that from scratch, or do you plan to lease the facility and then customize it? 还有继续就是在10月份的新闻里面,你提到要会
uh, uh, uh, uh,
So basically, our preliminary plan for the site location will be selected around a Dallas region in Texas. But then the whole set up
will be based on the multiple considerations such as the policy report of the local government, the infrastructure, the labor cost, et cetera. So right now, we don't have a concrete plan of the setup yet, and based on management prudent evaluation, we will announce it after you get finalized. Thank you.
Okay. And until that facility is ready, will all U.S. production be handled by your partner Hartford in Taiwan?
When the U.S. facilities are completed, will we still rely on our companies in Taiwan to produce them? This company will consider the cost of the two bases and various
Once our site in the U.S.
is finalized, we will still consider the cost and the policies and other different infrastructure and the supply chain out and the logistics from the two sites, from Harvard in Taiwan and then the site at our taxes.
Okay, I guess I'm not, I don't understand.
So it's going to take a while until the... Yeah, we will basically consider multiple, you know, factors, as I mentioned. The costing, the logistics, the infrastructure, and then the supply chain, and then other factors where we consider both sides. So it's not like we have, we don't have the very final determination yet, and we'll announce later on, you know, when the time is right.
Okay. My questions obviously derive from the fact of the possible or pending tariffs on Chinese manufactured vehicles, including golf carts. And on previous earning calls, you had indicated that 90% of the golf carts were manufactured by Candy in China. So what I'm wondering is that now that I understand it from your In fact, I think he even put out a press release that Taiwan is now manufacturing candy off-road vehicles. Are they manufacturing that 90% or are they getting those parts from China?
Okay. We've talked about it before. 90% of our non-commercial products are produced in China. Of course, this is based on future developments. Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan
So for the process flow right now, it's basically around 40% is done at Hartford, and then the rest is taken care by the Tandy, including all China facilities.
So is that
I guess my basic question is can you assure shareholders and potential investors that the planning that you've done to date that is making this arrangement with Hartford in Taiwan pending the completion of the facility in the U.S., that it's not going to have a significant, that if tariffs are in fact or additional tariffs are imposed, that those won't be a significant negative factor to your business going forward? 我问这个问题,我只是想,就是你是否能够给我们打个定心丸,就是我们跟哈托福的这么一个合作的模式,以及我们即将要在美国来修建工厂,来本地来生产,
We don't want the increasing tariffs to affect our sales, our numbers, and our business. We don't want it to have a negative impact. I can give you a clear answer. As long as the tariffs are affected,
Taiwan Taiwan Taiwan Taiwan
Yeah, in order to address the current concern, it's true that for those, the products that have the large impact by the tariffs, we will work together with our hearts in Taiwan in order to mitigate this issue. And then when our facilities and production line in the U.S. is set up in the future, we will then have more of the production to be carried out in the U.S. side as well. Okay, great. So basically, yeah, that's an impact.
Okay. And then according to my own due diligence, and feel free to correct me if I'm in error, Hartford, your partner in Taiwan, has exported one shipment of golf carts, and that was back on August 13th. The last shipment of golf carts from Candy Electric Vehicle Hainan Company arrived on October 20th. The last Twitter post from either of Candy's Twitter sites was on October 29th. Do you want to go ahead and translate that, Kewa?
I just want to get this right. You asked that based on your due diligence, you saw the last shipment from Hartford to the U.S. was in August 13th. And then from Kennedy, you saw shipment from August 20th. And on the Twitter, you saw there was a shipment coming on October 29th. No.
Let me try again. So Hartford has sent one shipment to the U.S., and that was on August 13th. Okay. And then the last shipments from China, from Candy Electric Vehicle Hainan Company, who sends most of your golf carts, those arrived on October 20th. Okay.
Okay.
Okay.
Just go ahead. I did.
Well, then I also added, I noted that the last Twitter post from either of Ken's sites was back on October 29th. Today is, what, November 18th. So go ahead and translate that first.
Okay. He said he saw it. Yes. Okay. Please go ahead. So my first question is, why has there been only one shipment from Hartford and that was over two months ago?
So the shipment you are
Noctil is actually only a trial production that will ship composite to U.S. At that time, as you may know, the tariff policy was not really finalized until late September. So the shipment you mentioned was just for trial production purposes because it takes multiple rounds of adjustments in terms of the quality control, the compliance, and different other factors of consideration. That's why there's only one shipment we have from Taiwan to the U.S. in the past, back in August. Once the production in Harvard has become more optimal and regulated, there will be more shipments you know, to be carried out from Harvard to U.S. in the future.
Okay, and then U.S. imports apparently have paused because the last one was back on October 20th. Are sales in the U.S. being made from your existing inventory in the U.S.? 那你们现在美国的销售就是从上一次进来的这个货柜里面的产品来进行销售的吗?
Um, so
So the shipment you mentioned, actually right now is the sales of that particular product is still underway, along with our other products of the inventory.
I'm sorry, I don't understand.
So... Basically the sales of that shipment is underway.
Okay. And speaking of existing inventory, last year I know you had a fairly high inventory. that you reported. Can you give us any kind of an update on where your inventory levels are at the moment?
So for the inventory levels, I think you did the best if you can refer to the financial statements that have been included in the earnings release of the 6K. They can give you the most accurate information. Thank you.
Okay. And can you give us a sort of a status update on the proposed Candy America spin-off IPO? Can you basically tell us what are the factors that are keeping it from going forward today? What needs to happen?
Can you tell us about the progress of the Candy America IPO? What is preventing the IPO from moving forward?
The relief process was being proceeded based on the market conditions and then the company development.
And further disclosure will be presented based on the regulation and requirement by the SEC. Thank you.
Okay. Has Candy filed any complaint with the SEC, FINRA, or the NASDAQ with regard to trading of its stock?
Wait, wait. Say one more time about FINRA and talk about trading?
Yeah. Has the company filed any complaint with the SEC, FINRA, or the NASDAQ with regard to trading of its stock?
公司是否有向NASDAQ或者金融監管局或者证监会来去投诉我们目前的股票交易情况?
Kevin, can you say that again?
I don't understand. It means whether our company has complained to SEC, NASDAQ, or the Financial Supervisory Board about our current stock trading situation. Which part of the situation?
Why did they complain?
Because they might think that our stock trading is abnormal. Can you ask him again? Okay. We're trying to understand why you think the company should file a complaint to the FINRA at CCN NASDAQ.
I don't know. Yes, I don't have much of a life, but I watch your stock trade every day, and the service seems rather odd, and the stock is sitting at $1.20. Anyway, let me just ask one other question, or just two other questions, and I'll be done. In the past, when I'm talking about international expansion for your off-road products, and on past earning calls, when asked, when Mr. Hugh replied, he usually would reply as if you were just basically testing the waters in different locations. Could you provide any I guess guidance or more color in terms of what your business plan is for international expansion. I know in the last couple of days we've noticed or I or some other shareholders have noticed a lot more activity in South Africa as well as the UK. And I just wondered if you could expand on how you're going to be approaching your expansion in Southeast Asia, of course here in Thailand, in the EU and other locations.
Okay. He just asked a question. He said he doesn't know why. He thinks he sees the company's stock at $1 every day. He thinks it's strange. He thinks this transaction is abnormal. So he asked if the company has the same idea. So he asked the supervision department to ask questions. He said it doesn't matter if you don't answer. It doesn't matter. He has two more questions. The first one is that the company in the past We have talked about some international market expansion plans. Mr. Hu always thinks that we are still testing the waters to see how the situation is. Currently, some shareholders have seen the company in South Africa and in the UK. I want to know more about the expansion of our company's international market.
We are now in the UK, Germany, Austria, Switzerland, the Black Mountains, Slovakia, Romania, the Netherlands, South Africa, and some countries in Southeast Asia have already started to sell. I believe next year,
We have actually started some trial cells in the European region, such as the UK, Germany, Austria, Switzerland, Montenegro, Slovakia, Romania, and the Netherlands. And also some parts in the Southeast Asia. We believe that there will be a certain cell volume to be brought up next year.
Okay, and finally, I understand that now that you're in BVI that there is no requirement that any officers or directors report purchases of Candy's shares. The stock traded last week as low as $1.20. There's no indication of any insider buying for the past several years, including this year. To the candy company folks on this call and listening to this call, is $1.20 not low enough to entice you to make an insider buy? What kind of a message do you think that sends to shareholders that insiders seem to have no interest to buy candy shares under $2 as low as $1.20?
My last question is, I know that now the company is a B-wide company.
The company actually is still working on the stock buyback program as planned, and then we are setting up another upcoming program. But the process is still underway.
Yeah, I'm not talking about the company. I'm not talking about the company buyback program. I'm talking about insider buying.
Okay, and let me rephrase. The plan we mentioned is actually addressing the buyback plan by the management and the insider. And so such a plan is underway.
Great. Thank you very much. Appreciate it. Thank you for taking my questions.
Thank you. Thank you. Our next question comes from the line of John Ritter, private investor. Please proceed with your question.
Hello, thank you for taking my questions. I have a statement to make, and then, Q, you can translate it, and then I'll get into a couple of questions, not many. As management's aware, the stock's at $1.25, and it's been trading at a new 15-year low virtually every day since hitting the new low. Yet it is by far the strongest fundamental position, both in sales growth potential and cash, and overall financial condition it's ever been. The stock has been trading under cash value for the last three quarters. Now it's at less than 40% cash value and 25% shareholder equity. As discussed on the last conference call, the replacement value of Candy's multiple facilities in China alone, though carried on the books only at a depreciated $92 million, would be over $300 million, which if liquidated would raise the book value to about $7 a share. Since the announcement of the new management team, the stock has dropped another 22%. Thank you.
My question is about the stock price of Condi. Currently, the stock price of Condi is $1.3 per share. This is not only the lowest price in the past 15 years, but also the lowest price in history. But whether it is in sales growth potential or cash reserves or the overall financial situation, it is actually very strong. The stock price in the past three seasons has always been lower than the company's cash value. The current price is even less than 50% of the cash value and only 25% of the shareholder power. According to the discussion at the last phone conference, the company in China Go ahead.
So what is management's opinion as to why the stock has dropped so low? And please don't tell me it's just market forces. What is your opinion? Why do you think the stock is trading at now today another 15-year low, especially since you published such an incredibly bullish five-year forecast just six weeks ago? 我想问一下这管理层你们认为就是真正
There are many factors affecting the stock price. For example, the results of the U.S. election may lead to an increase in the friction of the international trade market. The Japanese market will put these uncertainties into consideration in advance. Sometimes it will be pessimistic, so the company's stock price is seriously underestimated. But we believe that with the development plan of the new management process, the company's stock price will return to a reasonable range.
Well, there are many factors that will affect the stock price. For example, the result of the U.S. election may lead to some sort of increased friction in the international trade markets. And the capital market, we can see that those uncertainties, you may see that they are the so-called pricing effect. You know, so they are included in the pricing already in the stock price. And sometimes they are rather pessimistic. So that's why the company's price is seriously underestimated at the moment.
So to someone who watches this stock, Rick, relatively closely, it seems quite clear that a multimillion share seller, ignorant of how stocks trade in the U.S., has really destroyed the morale and buying enthusiasm of U.S. investors for this stock. since there are only two reported holders of multi-million share positions, that being Mr. Hu and Olin Rice, and they're certainly not selling because they would have to report sales, plus they're involved in the company. So therefore, any selling is likely coming from Chinese holders who have received shares totaling between $5 and $10 million, mainly through candy acquisitions of their companies going back a decade. And since the company has an active 10B5 share purchase program, Has there been any effort to contact these suspected large sellers with a single bid to buy their whole block? Because there's no restriction under 10b-5 for negotiated block purchases.
big sellers are selling millions of stocks. This is a very serious blow to the confidence of U.S. investors in condo stocks. There are some reasons, including the fact that only two reports hold hundreds of shareholders, one is Mr. Hu, and the other is Olin Rice. And they all play an important role in the company, so they should not sell stocks, because their sales must be disclosed. But it seems that the people who sell these stocks are likely to come from Chinese shareholders. So it can be speculated that these Chinese shareholders may have acquired the shares that their company traded through Condi many years ago. In total, it is about 5 million to 10 million shares. Since the company already has a active 10B5 share, We don't have the information that you guessed.
So based on the statement that is based on your assumption of speculation observation, we currently do not have those information on hand. We are not sure about, you know, how that comes from. So we have no comments on that. 接下去我们会了解一下相关的情况。 And, of course, if there's any further development in the market, we'll try to get the information so we can be more sure about the development in the stock market.
Okay. So with the share repurchase program currently in place, in the third quarter you purchased 58,000 shares. Right now the stock being what it is, Is there some reason that you're not purchasing more? Are you waiting for the stock to go lower to get an even better price? Because this is insanity. You want to be efficient with your capital. Then don't you think you ought to be buying as much as you could possibly get at this price? And then my other question is, what price range does management feel the stock should be trading in? If it's not $1 to $1.25, Where do you all think it should be trading at?
We believe that the stock price is seriously totally undervalued. However, we are not in the position to comment the minimum price it's currently trading.
So no comment on that. Thank you.
Okay, I get that, but you're certainly in a position to accelerate the buyback. I think you all need to take real seriously how demoralized your shareholder base is and start taking some actions to rectify this problem. That's all I've got to say. Thank you.
He said, I understand, but I think you can have the initiative to speed up the company's repurchase plan. Operator, we can take next question. Thank you. Our next question comes from the line of Steve Silver with Argus Research. Please proceed with your question.
Hi, and thanks for taking the questions. On last quarter's call, a lot was made about the excitement and the momentum about the launch of the golf carts through Lowe's. I'm just curious as to whether there's been any feedback about the market reception to that launch, given the fact that it's now a couple of months out. Maybe if sales of the Lowe's partnership have met expectations so far. Thank you.
In a press conference last week, we talked about the launch of the golf cart by Lowe's to the NFL. I'd like to know how the sales have responded in the past few months. Do you think there's any feedback on whether Lowe's and Lowe's We are all satisfied with the progress of sales.
We launched this joint version of the car with Lowe's. Currently, we are selling exclusively at Lowe's. The sales feedback is very good. The customer evaluation is also very good. We are also very happy to cooperate with Lowe's. Thank you.
As for the NFA products, the reception from the customer in the market is pretty good, and we're working well with Lowe's on this business. Thank you.
Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to management for any final comments.
Thank you again for joining today's conference call. If you have any further questions, please don't hesitate to contact our IR consultant, Gary at BlueShirtGroup.co, or you can contact us at IR at CandyGroup.com. We look forward to updating you on our next earnings call. This concludes our call for today. Thank you very much. You may now all disconnect.
Thank you. You may now disconnect your lines. This concludes today's call.