NiSun Intl Enterprise Development Group Co, Ltd

Good day, and welcome to the NASUN International Investor Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Spring Liu. Please go ahead.

Good afternoon, everyone, and morning to my colleagues in China. Welcome to NASUN International Enterprise Development Group's Investors Conference Call. My name is Spring Liu. and I serve as the investor relationship directors of the company. It's a great pleasure for me today to host today's call. So we will discuss the financial results for the six months ended June 30, 2024. And before I start, I would like to extend a warm welcome to all our shareholders and potential investors joining us today. So on this call are also our chief executive officer, Mr. Liu, and our chief financial officer, Ms. Liang. Mr. Liu has served as a director since September 2020 and as our CEO since May 2024. Mr. Liu received a bachelor's degree in international business in 2012 from Shandong University of Technology. He is an experienced businessman, proficient in management skills and across border trade. Ms. Liang has been our CFO since August 2019. Ms. Liang obtained her bachelor degree in accounting in January 2010. So first of all, I would like to provide a cautionary statement regarding forward-looking information. as this conference call may include forward-looking statements within the meaning of Section 27A of the Security Act of 1933 as amended and Section 21E of the Security Exchange Act of 1934 as amended. These forward-looking statements are based on the current expectation of the management of Nathan International and are subject to a number of risks and uncertainties including, but not limited to, changing market conditions, competitive factors, and other risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These forward-looking statements are based on certain assumptions and analysis made by the company in light of their experience and their perception of historical trends, current conditions, and expected future developments. as well as other factors that the company believes are appropriate under the circumstances. However, whether the actual result will conform to these expectations and predictions is subject to a number of risks and uncertainties, many of which are beyond the control of the company. The company undertakes no obligation to publicly update any overlooking statement whether as a result of new information, future events, or otherwise except as required by law. All statements in this conference call that are not historical facts are forward-looking statements. So first of all, let me give you some brief introduction of the company. I'm sure you have some understanding or maybe familiar with the company already. Mason International is a technology-driven provider of integrated supply chain solutions. Founded in 2012 and headquartered in Shanghai, China, they operate primarily within China. Our business is built on two main revenue streams, one from services, including financial solutions for small and medium-sized enterprises, I will call it SMES, and supply chain financing. And the other revenue stream is from our supply chain trading business. Since entering the financial services market in 2019 through our subsidiaries and VIEs in China, we have provided a broad range of technology-driven services customized financing solutions to SMEs, helping them gain improved access to capital. These services, facilitated by financial institutions in China, allow us to offer risk-free support as we only earn fees based solely on financing amounts arranged for our clients. Additionally, we provide direct banking solutions to smaller banks and financial institutions to aid in managing their direct banking products. Our FinTech online platform enhances asset allocation and financial planning services for institutional and individual investors, optimizing their risk control and asset management to reduce investment risks. Our technology is backed by big data, AI, IoT, and blockchain technologies. We are well positioned to support the growth of SMEs and the wider industry. In January 2020, we launched our integrated supply chain financing solution through digital platforms, becoming directly involved in the sales transaction. Our supply chain financing solution services include supply chain financing, trade financing, and the receivables financing. Our multi-tiered supply chain financing solutions package both Core Enterprise and SMES, combining financial and operational support within our client supply chain processes. Our AI-driven platform Streamline these services by matching upstream suppliers with downstream customers, offering operational efficiency and enhanced trading terms across China. The company maintains a very strong relationship with all supply chain players, including suppliers, logistics partners, and distribution channels. that our services span across multiple regions in China. Since the launch of our supply chain financing solution business, we have connected with supply chain participants from different sectors through our supply chain platforms and developed high-quality customers in multiple industries, especially in agriculture and commodities. As our supply chain financing business grew substantially in size, we introduced our supply chain trading operations in 2021. Leveraging our technology and customer network, we build compatibilities in procurement, logistics, inventory management, and warehouse. Our intelligent matching systems use AI to link suppliers with customers. ensuring efficient transactions from procurement through to delivery. Now let's discuss our financial performance for the first half of 2024. For the six months ended June 30, 2024, total revenue rose by 52% to $192.5 million, compared to $126.9 million in the same period last year. The supply chain trading business saw significant growth, with revenue increasing by 114% to $142.1 million from $66.2 million in the same period last year. driven by our growing market share in the gold trade trading sector. However, revenue from SME financing services decreased by 16% to $48.5 million from $58 million in the same period last year, primarily due to challenging financing market conditions resulting from China's economic slowdown. Additionally, revenue from supply chain financing solutions dropped by 30% to $1.9 million from $2.7 million in the same period last year for similar reasons. That said, we are beginning to see signs of economic turnaround following the government's recent stimulus measures, and management remains optimistic about the future of both of our SME financing and supply chain financing business as conditions improve. Cost of revenue increased by 64% to $175.3 million from $107.1 million in the same period last year, primarily due to the expansion of the lower margin supply chain trading business. Growth profit decreased by 13% to $17.2 million from $19.8 million in the same period last year, with growth margin narrowing to 9% from 15.6% in the same period last year. While the supply chain trading business operates with lower margins, it creates valuable synergies with our high-margin supply chain financing services. We are actively seeking opportunities to improve profitability in this area by focusing on higher-margin products and expanding into new markets. Operating expenses declined by 31% to $5.7 million from $8.2 million in the same period last year. largely due to a reduction in selling expenses, which fell by 69% to $0.8 million from $2.6 million in the same period last year, primarily driven by lower revenue from SME financing solutions, which resulted in a reduction in related channel promotion expenses. G&A expenses also fell by 14%, to $4.7 million from $5.5 million in the same period last year, owing to enhanced cost control. On the other hand, R&D expenses increased by 27% to $0.5 million from $0.4 million in the same period last year, primarily due to the amortization of technology service fees associated with the platform technology acquired by the company in June 2023. Net other income decreased $1.2 million from $2.4 million in the prior year, driven by reduced investment income following a drop in short-term investments. On the six months ending June 30, 2024, Net income totaled $10.3 million, down from $11.4 million a year earlier, primarily due to a lower gross profit. Earnings per share were $2.61, compared to $2.87 in the same period last year. Our cash provision as of June 30, 2024, was $47.8 million, down from $114.6 million at the end of 2023. The primary driver of this decline in cash was an increase in advances to suppliers, which is a strategic investment that will support future growth in sales and earnings. Additionally, a decrease in accounts payable contributed to the cash reduction. Both of these factors reflect our commitment to scaling the business efficiently and positioning ourselves for continued expansion in the second half of 2024 and into 2025. Looking ahead, we remain focused on restoring shareholder value and rebuilding investor confidence. We believe that our stock is significantly undervalued, and we are pleased to share that our largest shareholders increased their stake by approximately $1 million during the first half of the year. Additionally, we have approved a new $15 million share buyback program, which reflects the management confidence in the company's future. We intend to begin repurchasing shares as soon as the trading window opens in the next couple of days. Thank you all for your continued support, and with that, we welcome any questions during the Q&A session. Operator, please open the questions. Thank you.

Thank you. If you would like to signal with questions, please press star 1 on your touchtone telephone. If you're joining us today using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that is star 1 if you would like to signal with questions. And our first question will come from Andy Gold with Gold Capital Ventures.