Comba Telecom Systems Holdings Limited

Good morning, ladies and gentlemen. On behalf of Comber Telecom Systems Holdings Limited, I would like to welcome all of you joining the 2023 Interim Results Investor Presentation video conference. In today's meeting, there will be a presentation followed by a Q&A session. If you wish to ask questions during the Q&A session, please click the raise hand button and wait for further guidance from us. Today, we have four senior management joining us from Hong Kong and Guangzhou. From Hong Kong, may I introduce... The Chairman, Mr. Fok Tung-Ling. The Executive Director and Group CFO, Mr. Ken Chang. Mr. Fok Tung-Ling. and Executive Director and Senior Vice President of the Group, Ms. Huo Xinru, and from Guangzhou, may I introduce the Executive Director and President of the Group, Mr. Xu Huijun, Now, may I invite Mr. Ken Chang, Executive Director and Group CFO, to present the financial highlights for the first half of 2023. Mr. Chang, please.

Good morning, everyone. Here I'm going to present the 2023 interim result for the Comma Group. Revenue for the first six months is $3.2 billion, gone up by about 6.1% compared with the interim result a year ago. Basically, the revenue are driven by all our business units. Gross profit is flat at about 848 million. Gross profit margin at 26.3%, slightly down by one and a half point. This is because of two reasons. One is because of the product mix. And second is because we have a slight inventory provisions. Operating expenses at 639 million decreased by 14% compared with a year ago. And again, we have been exercising our cost control for some time. Profit before tax at 179 million, pretty much more than double compared with a year ago. income tax at 56 million, gone up from about 23 million a year ago. This is because of two reasons. One is our profit before tax has gone up. And second, we also have an adjustment in the deferred tax asset in the network group, compound network group. The net profit to shareholder is 112 million, got up by 24% compared with a year ago. Net profit margin at 3.5% compared with 3% a year ago. We propose to pay dividend per share at 1.2 Hong Kong cents and the payout ratio is roughly about 30%. Operating expenses has gone down overall. at 28.3% compared with 28.7% a year ago. Pretty much the major category of expenses have come down. For example, admin expenses, selling expenses, R&D expenses in absolute amount has come down and also in relative terms. Finance cost has gone up in general is because the interest rate has gone up. However, one point worth noting is that we actually have been actively paying down our debt in the first half of the year. Pretty much we actually have paid up more than 700 millions of capital of debt in Hong Kong. So in the second half of the year, we actually expect the finance costs to come down in the second half. And as well, in a later slide, I will present our capital structure, including the dealing ratio and also liquidity ratio, et cetera, has hugely improved. Income tax, as explained earlier, has gone up. Art expenses has gone up. This is because of the provision for the AR has increased. in that cash position at 1 billion, increased by 44% compared with a year ago. Net asset at 3.6 billion, down by 4%. The total asset in general has gone down because of the FX, pretty much because the RMB depreciation, because the most of the asset in China and as well in the overseas as the RMB depreciate against the Hong Kong dollar. We also see some asset depreciation. NAV at $1.31. In general, most of the financial matrixes for the company has hugely improved. For example, inventory turnover day has come down by 15 days to 99 days. Account receivable turnover days has come down by 30 days to 218 days. Account payable days has come down by 66 days to about 300 days. Cash conversion cycle is still very healthy, pretty much only at about 12 days. One important point is to demonstrate the healthiness of the group is the operating cash flow. The operating cash flow in the first half is $526 million. compared with 95 million a year ago, which is a huge improvement. Wealth giving ratio at 9.7%. And this is also worth noting, as mentioned earlier, in the first half, we actually have actively paying down the debt. So the dealing ratio as defined as the interest rate and debt divided by total asset actually has come down dramatically. Debt to asset ratio at 61%, ROE at 6.1%. So this chart illustrate the fact that our gain ratio has come down dramatically over the last five years. For example, about five years ago, the interest-bearing debt is about 2 billion. Now it's actually down less than a billion. and on the other hand, the net cash, pretty much from five years ago to roughly about 100 million to right now more than a billion. As well, Our sort of the balance sheet or the cashflow actually has been, can be illustrated by the trend of the operating cashflow. Over the last 10 years, we only have one negative operating cashflow year in back in 2020. And the first half alone, we record more than 500 million of the operating cashflow. So let me also illustrate the business by the revenue by customers and also by business. So let us look at our customers. So the three operators, they have a different sort of rise and falls in the first half of the year. China Unicom has gone up by 31%. in the first half. China Telecom, pretty much flat. And China Mobile, because since the 2021, they actually have increased a lot of the centralized procurement. And over the last two years actually has been quite heavy on that. And the first half actually has come down in the first half by about 26%. Planet Kawa increased by 31%. International market now represent about 40% of our total revenue has gone up by 26.8%. This is the major sort of driving our revenue in the first half. The other business is worth noting that our lounge operator, which we hold about 51%, and this operation in Hong Kong dollar term has the revenue has come down. However, in the local currency term, ETL revenue actually has gone up by around 30%. And if you look at the loss in ETL actually has also narrow quite dramatically compared with a year ago. So let us also look at the revenue by businesses. As mentioned, pretty much the revenue are all driven by all businesses. We also have the positive growth from all the businesses. So antenna business has gone up by 2.3%. International market within the antenna business has gone up by 36%. Network system gone up by 1.7% and international market within the network system has gone up by 19.2%. Services increased by 0.3% and it's worth noting that our wireless transmission business has gone up by 60%. and our business actually gone up by 60%. So if we look at only the wireless transmission business, which account for 8.8% of our total revenue, has gone up more than double. So this is the highlight from my side. I will pass my time to our president, Mr. Hsing-Hui Jin, on the industry overview, as well as the business development.

Thank you, Mr. Chang. Thank you, Mr. Chang. May I now invite Mr. Xu Huijun, Executive Director and President of the group, to present the Industry Development and Company Outlook.