Comba Telecom Systems Holdings Limited

Morning, ladies and gentlemen. On behalf of Comber Telecom Systems Holdings Limited, I would like to welcome you all for joining today's 2023 Any Results Investor Presentation video conference. In today's meeting, there will be a presentation followed by a Q&A section. During the Q&A section, if you would like to raise questions to the management, please click on the raise hand button and wait for further guidance from our moderator. Today we have four senior management joining us from Hong Kong and Guangzhou. From Hong Kong, may I introduce... The Chairman, Mr. Huo Donglin The Executive Director and Group CFO, Mr. Ken Cheung Mr. Zhang Feihu and Executive Director and Senior Vice President of the Group, Ms. Huo Xinru, 即行董事兼集团高级副总裁, Huo Xinru 女士 And from Guangzhou, may I introduce 以及在广州会场出席的管理层友, The Executive Director and President of the Group, Mr. 徐慧君, 即行董事兼集团总裁,徐慧君先生 Now, may I invite Mr. Ken Chang, Executive Director and Group CFO, to present the financial highlights for 2023. Mr. Chang, please. Thank you. Good morning, everyone. Thank you for joining Comba 2023 Financial Result Briefing.

During 2023, we record revenue at 5.98 billion, a 6% year on year drop. The drop is due to the slowdown of Chinese mainland operators deployment in 5G. Gross profit has decreased by about 210 million to 1.66 billion. Gross profit margin has decreased by 1.6 percentage point. This is because of the competition in certain target market has intensified. OPEX increased slightly by 2.1% as sales and marketing costs has increased after COVID restricted travel has opened up. pre-tax profit at 54 million, about 81.6% drop from last year. The main drop is mainly because of the decline in gross profit. Net profit at 6.7 million. Overall OPEX operating costs as a percentage of revenue has decreased slightly to 30.5%. Tax expense decreased significantly by 75% due to a large drop in a deferred tax asset. Interest expense decreased by 9.4%. During 2023, we used a healthy operating cashflow to pay down the debt. As a result, interest bearing debt has come down by roughly about 546 million. As a result of that, interest expenses have come down. Other expenses have gone up by 12.9%. AR provision at peak during 2023. peak of the longer data AR has a higher provision ratio. R&D expenses come down by 13.5%. During the 5G mid to late cycle, our efficiency of R&D has increased. And mean expenses come down slightly by 0.4%. Sales and marketing increased by 3.1% as the COVID restricted travel opened up. Net cash at 853 million increased by 9.1% year on year. Total asset decreased by about 11%, while total liability has decreased by 15.6%. Net asset has come down slightly by 3.9% to 3.58 billion. NAV per share is $1.29. Looking at our key financial indicators, inventory turnover day is 117 days, increased by three days. AR turnover days, has come down by four days to 225 days. And this is notably a decline over the last few years. AB turnover day has declined by 24 days to 325 days. Cash conversion cycle is still healthy at about 17 days. One thing worth highlighting is our operating cash flow is healthy at 493 million. compared to 499 million a year ago is still a very healthy level. Gross giving ratio at 8.5% come down dramatically from about 12.7% a year ago. Debt to asset ratio similarly also has come down by about 3.2% to 59.3%. our yield at 0.2%. So this chart illustrate the interest bearing debt and our giving ratio over the last five years. So as we can see five years ago, our interest bearing debt is as high as close to 1.8 billion Hong Kong dollar. And five years later, And today at the end of 2023, the interest rate bearing debt has come down to close to 800 million Hong Kong dollar. And again, the giving ratio has come down dramatically from about 16.6%, around 16% five years ago to about 8.5% at the end of 2023. Over the last 10 years, our company has been recording positive operating cash flow, except one year. Despite we have some fluctuation in our P&L, nine years out of 10 years record operating, positive operating cash flow. So let us look at our business breakdown by customers. So first of all, domestically in Chinese mainland market, the three major operators account for around 38% of total revenue. China Mobile, China Unicom has about 27% and 26% of decline. China Telecom has about 0.7% decline. while China Tower has about 34.6% increase year over year. One thing worth highlighting is our international market. International customers and core equipment makers currently make up 40% of our total revenue. And this segment has increased by close to 10% year over year. And the driver of the international market is Asia Pacific, which increased by 27.4%. America increased by 15.5%. Others decreased by 6.6%. ETL decreased by roughly about 1.8% year over year. Let us look at our business segment. antenna subsystem, this segment has decreased by 15.7%. Network system has increased by 6.5%. And one point worth highlighting is within the network system, the international market, which represent about 43.5% of the network system has increased significantly year over year by 50%. Service decreased by 6.8%. And our wireless transmission business, which currently account for 8.3% of total revenue, increased by 42.6% year over year. Okay, my financial section. is ended here, and I will pass it to Mr. Xu, our president of the group. Thank you.

Thank you, Mr. Chang. May I now invite Mr. Xu Huijun, executive director and president of the group, to present the industry development and complete our look. We would like to invite Mr. Xu Huijun, the CEO and president of the group, to introduce the industry and company. Please, Mr. Xu.