Comba Telecom Systems Holdings Limited

Good morning, ladies and gentlemen. On behalf of Combo Telecom Systems Holdings Limited, I would like to welcome all of you joining today's 2021 Interim Results Investor Presentation video conference. Today, there will be a presentation followed by a Q&A section. In the Q&A section, for investors who are interested in raising questions, please click on the raise hand button located at the bottom of the screen in your Zoom. May I now take this opportunity to introduce the senior management joining us today, and they are from Hong Kong and Guangzhou. They are the chairman, Mr. Fok Donglin. And from Guangzhou, we have the executive director and president of The Good, Mr. Xu Huijun. The executive director and group CEO, Mr. Ken Cheung. An executive director and senior vice president of the group, Mr. Huo Xinru. May I now pass the floor to Mr. Ken Chang, the Executive Director and Group CEO, CFO, to present the financial highlights for the first half of 2021. Mr. Chang, please. Good morning, everyone. Thank you for joining Comber first half 2021.

result meeting. First of all, let me illustrate our first-half result on the headline number. The revenue in the first half of 2021 is HK$2.42 billion, which was up by 8% year-on-year. Basically, all business segments except antenna went up. Particularly, we have seen our overseas market has been up strongly Overseas market is roughly about 35% of total revenue and including our ETL revenue is up by about 26% year-on-year The revenue on mainland which is about 65% of the total in RMB term is down by 7.8% and in Hong Kong dollar term is flat Gross profit is down by $45.6 million at $681 million. Gross profit margin down by 4.3%. percentage point to 28.2% because of two reasons. First is the raw material cost has been increasing. And second of all is because of the COVID situation has been persistent. A lot of our operating related COGS, for example, like transportation, flights cost has been increasing. and also the operating loss at the first half is 72.5 million, income tax at 26.9 million. The loss attributable to shareholder is 89.3 million Hong Kong dollar, which was down from a profit in the same year ago. in the same period last year. And the loss is measurable by two reasons. First of all, because the gross profit was down. And second, the OPEX was up, which I will explain in the later slide. Okay, let's look at the OPEX. The OPEX as a percentage of revenue is about the same as last year at around 35.9%. Basically, all operating costs have come down except selling expenses and R&D expenses. For example, finance cost has been down by 48.1% because as in general market interest rate has come down and we have a better balance on the loan portfolio. Second is income tax has been down by 31.2%. Other expenses because of the decrease in the provision of account receivable. the other expenses was down by 8.9%. Admin expenses, because of the increase in the operating efficiency and the tighter cost control, admin expenses was down by 7.6%. Selling expenses was up by about 21%. This is because we increased the respective sales and distribution expenses and channels to strengthen the business development. And last of all, the R&D expenses is up by around 47.4%. This is because as the 5G technology enter the stage of in-depth development, the prospect of new application scenario and models are promising, and we are increasing the R&D expenses on those areas. Let us look at our bond sheets item. Net cash is 559 million, which was up by 37.8 million Hong Kong dollar. Total asset at 11.2 billion, up by 3.1%. Total liability, 6.6 billion, up by 4.9%. Net asset is 4.1 billion, up by 1.2%. NAV per share is $1.50 per share. If we look at our turnover day, basically inventory turnover day, AR turnover day, as well as AP turnover day have come down. If we look at the absolute number on inventory as well as account receivable, we have seen some increase year on year. On the inventory side, we are actually building more as we have won some centralized procurement on Antenna, which will lead us a recovery in the Antenna business, particularly in the second half, as a result on those infantry when they're building up. And in spite of this, the infantry turnover day has come down. As well, I think we have a better AI turnover as well as AP turnover day. And as a result, the cash conversion cycle is still at healthy level at around 34 days. Growth speeding ratio is 12.4%. It's down by 1.1% compared with one year ago. Debt to asset ratio is around 59%. If we look at our interest-bearing debt and growth speeding ratio, we have seen our giving ratio at basically the lowest level over the last five years at about 12.4%. and right now our finance cost as a percentage of interest-bearing debt is around 1.5% and compared with a year ago it's about 2.5% and this is because we have a better loan portfolio between mainland China and Hong Kong and as well we have a better balance on long-term as well as the short-term debt Let us look at our revenue by customers. So the three major operators account for about 35% of total revenue, which was down by about 8.9% year on year. China Tower account for about 8.9% of total revenue, which is up by 24.2%. International revenue has become the major driver and which was up by about 12.12% year over year. Other customers and particularly the other customers like the ETL which account for 4.3% of our total revenue is up by 34.2%. So the only segment which was done is China Mobile in our customer segment. but later on we will explain that we have recently won the centralized procurement and we will be seeing a more promising recovery later on. Business settlement divided by revenue divided by business, we have seen that All the business segments except antenna have all gone up. First of all, our network system. has gone up by 27.3% year on year. If we look at the mainland domestic market versus international market, we actually have seen the international market side, which accounted for roughly about 36% of network system segment, which was up by about 82.9%. becoming the major driver to drive the network system to produce the growth in its first half of the year. The service sector increased by about 14.5% wireless transmission. which is up by about 24.7% and Tenno Settlement which was down by about 13.4%. But again, if we look at the breakdown between the mainland China market as well as international market, we have seen international market actually has gone up by about 12%. So this is our financial net profit and loss result over the last 10 years. Currently, I would like to say that our financial position has been sound and healthy. And second of all, at the end of June, we also have won some centralized procurement, which should be producing more promising result for us in the second half of the year. And from now, I will turn the time to our president, Mr. Shih-Hui Jin. And he will further explain on the strategy as well as on the business side.

Thank you. Thank you, Kenz, to our presentation. So now may I now invite Mr. Xu Huijun, the executive director and president of the group, to present the industry development and company outlook. Hello, everyone. My introduction includes three parts.