Comba Telecom Systems Holdings Limited

Good morning, ladies and gentlemen. On behalf of Camber Telecom Systems Holdings Limited, I would like to welcome you all for joining today's 2024 interim results investor presentation video conference. In today's meeting, there will be presentation followed by 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 Guangzhou, may I introduce... The chairman, Mr. Fok Tung-Ling. And from Hong Kong, may I introduce... The Executive Director and President of the Group, Mr. Xu Huijun. The Executive Director and Group CFO, Mr. Ken Chang. And Executive Director and Senior Vice President of the Group, Ms. Hu Xinru. Now, may I invite Mr. Ken Chang, Executive Director and Group CFO to present the financial highlights for the first half of 2024. Mr. Chang, please. Good morning, everyone.

I would like to illustrate our financial performance in the first half of 2024. Revenue for the group is 2.34 billion Hong Kong dollar compared with one year ago is down by 27%. This is because global telecom operators have slowed down their capex. Gross profit down by 26.7%. Gross profit margin increased by 0.3 points to 26.6%. This is due to, first of all, our competitiveness of new product. And second is we have enhanced the efficiency and have done sufficient cost down. Operating expenses have come down by 7.4%. profit before tax has swing from profit into loss of 120, 142 million loss. Income tax has come down substantially, net profit to shareholder has also swing from profit into loss of 150 million loss. So let me illustrate our operating expenses. So overall, although the operating expenses have come down by 7.4%, as mentioned before, it hasn't offset the decrease in the gross profit as well as the revenue. So as a percentage of total revenue, it has increased from 28.3% a year ago into 35.4%. in the major categories of the costs like finance costs, income tax, other expenses and admin expenses have all come down. Particularly finance costs, it has come down by 55% because number one, the overall bank borrowings have come down substantially and subsequently the borrowing costs has also come down. Although, as we all know, the interest rate has been hovering at a high level. Income tax has come down substantially. Other expenses have come down as the provision for account receivable has decreased. Admin expenses has come down slightly. The two categories has gone up is selling expenses and R&D expenses. selling expenses has gone up slightly as we strategize to focus on efficient and profitable projects. R&D expenses has gone up as we continue to enhance our product competitiveness, as we continue to invest in R&D. In terms of our cash position, is $883 million in terms of net cash, which is down by about 14% compared with a year ago. Total asset, $8.7 billion. Total liability, $5.2 billion. And net asset is $3.3 billion. NAV per share is $1.19. because revenue has come down. So the overall turnover days also has gone up due to the denominator effect. Inventory turnover day has gone up by 33 days into 132 days. AR turnover days is 260 days. AP turnover day has been longer than AR turnover day at 364 days. As a result, our cash conversion cycle is healthy at around 28 days. Two operating matrix worth mentioning. Number one is our operating cash flow is very healthy. Although we record a loss, our operating cash flow has been positive. And the first half is 157 million. Number two is our gross gain ratio defined by the interest rate bearing that divided by total asset. It's around 10%, which is only a slight increase compared with a year ago. That to asset ratio has also come down slightly into around 60%. So if we look at our... borrowing over the last five years. Although we record a loss, the borrowing in the first half is still at the low level, roughly about 890 million. And gain ratio as mentioned is around 10%. So we believe our financial status as defined by our borrowing and borrowing cost has been healthy. Over the last 10 years, nine out of 10 years, we have positive operating capital. Although sometimes we dig into the loss. So let us look at our revenue by business. If we look at the three major operators in China, they currently account for 36% of total revenue. If we include China Tower as well, so roughly three major operators plus tower is about 45%. And they have different rises and declines. For example, China Mobile and China Unicom has come down by about 32% and 76% respectively. while China Telecom and China Tower has gone up by 41% and 5.2% respectively. International business, which now become a big chunk of our business is representing about 42% of the total revenue. And this part of the business is down by 24% overall. ETL, which is the third largest operator, we hold 51% stake, has a slight decrease in revenue. Although in local currency term, the revenue actually has gone up. So let's look at the revenue by business. So we see that... the major decline in the business in the first half is the antenna and the subsystem. While domestic China has gone down by 36%, while international business for the antenna has gone down by 46%. while network is the opposite. Although network system also has come down by 26%, international business has only come down by 7.7%. While domestic China business has come down by 39%. Services has come down by 15.7%. And one thing worth highlighting is our wireless transmission business. currently representing 12.4% of the total revenue and has gone up by 4.2% year over year. So I conclude the financial part and I will pass the time to Mr. Xu Huijin, who is the president of our group.

Thank you, Mr. Chen. May I now invite Mr. Xu Huijun, Executive Director and President of the Group to present Industry Development and Company Outlook. We would like to invite Mr. Xu Huijun, Director and President of the Group, to introduce the industry prospects and company prospects.