Q4 2019 Earnings Call
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1653 008.
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First name David last name Brown.
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Thank you Sir your line a little bit police on hold until the conference begins.
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If you require any ferger assistance. Please press star Zero I would now like to hand, the conference over to Speaker today, David Rudnick go ahead. Please.
Thank you Carlos.
Good morning, ladies and gentlemen, and good evening as those of you were joined us from China.
Welcome to China ceramics second half in fiscal year end 2019 earnings conference call, but that's what are your China ceramics, Chief Executive Officer is Muslims won and see financial Officer Mr. Edmund Hen.
Before turning the call over to Miss won or what to address world extends to maybe discuss Nicole public statements involve risks and uncertainties and include among others is regarding revenue operating expenses other income and expense taxes and future business outlook actual future performance how come soon results may differ materially from those expressed in forward.
These statements the company claims the safe Harbor protections for such building statements. That's contemplated under private Securities Litigation Reform Act of 1995.
Please refer the documents filed by the company with the FCC specifically the most recent reports on forms 20-F, and 6K, which identify important risk factors that could cause actual results to differ from those can team and the forward looking statements. We assume no obligation to update any forward looking statements or information, which speak as of their respective team.
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And now it's my pleasure to turn the call over to turn ceramic CEO is my sung hwan and trying to ceramic CFO Mr. had been hit several biopsy terrific premise won't Miss long you May proceed.
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Thank you David on behalf of the company I would like to welcome everyone to our second half in fiscal year end 2019 earnings conference call.
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During the second half with 2019, we continued to experience challenging market conditions as we did in the same period of 2018. However, as the result of they have a 15% average price decrease of our products in October 2019, our revenue increased modestly in the second half of 29.
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For fiscal year 2019.
We utilized production facilities capable of producing 12.4 million square meters of ceramic tiles per year on of our effective total annual production capacity of 51.6 million square meters of ceramic tiles.
Just sit with our practices in past quarters, we maintained a rare to see utilization of existing plant capacity based on the current market environment to keep our operating costs low.
We intend to bring additional capacity online as the business environment improves.
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In December 2019, a novel strain up Corona virus was reported and on China, which the World Health organization has declared a global pandemic offend demicks disrupted supply change and affected production and sales across a range of industries in China as a result of corn jeans facility closures.
Loveland logistics restrictions and related public health waters. Consequently.
I've experienced a significant adverse effect on our business from the pandemic and the first four months of Tony Tony Although our manufacturing plants are now fully operational all production was halted due to the pandemic for most of the month of February.
The disruption of normal business activity has resulted in a reduced demand for our products as evidenced by a high number of purchase order cancellations, which have resulted in reduced sales.
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However, try to long term, we believe that are building materials sector will continue to benefit from growth in the real estate sector. Due to continued urbanization and it's important to China's domestic growth further we believe that local governments will take measures to stimulate property sales and pent up.
Consumer demand for residential properties due to the Corona Burris will ultimately benefit our building materials sector.
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With that I would like to turn over the call to the company's Chief Financial Officer, Mr., Edmund Hen, who will discuss the Companys second half of 2019 earnings results in more detail. Thank you.
Thank you Ms. Forum.
Oh, no will fall into a more detailed discussion.
Financially sells for the six months and ending December 31st 2019.
Well refer new for the six lungs, and a few sandoz suitor for his 2019.
Well, its RMB 250.2 medium or you're starting to turn to 1.4 million.
So far close truth percentage increase from RMB 42.6 million.
All yours photo turns your point Eightmillion.
For the same period 2018.
So you have for Union Christine Russell.
Stuart you so trying to 5.5% increase in our sells for him to 6.3 million square meters.
Our mattel's.
For the second six month.
Well 2000 more action.
A number that you find median square meters and so on the trials for the same purely actually goes against you.
Offset by.
The 610% to Chris and average selling price to RMB turn you fall.
And your Sodastream, calling for one for the six seconds six bounce off 2000 auction.
From our him be truncate, calling six or you're still in a 4.5.
For the same period until 2018.
Gross profit for the six month and December So do post 2000 luncheon.
Oh, sorry, I'm being 66 million.
Oh, Yes dollar my point 4 million.
From brother to a gross loss self RMB.
Well, the ussix million or you'll start to assist concept for media.
For the same period of 2018.
The gross profit margin.
44% us from procure throws it should 0.3% cross lost margin for the same period of 2018.
Other income for the six month answer to December 30, Onest 2009 <unk>.
Most RMB 7.5 medium or against all at 1.1 meeting.
The same tow chose us for the same favorite ops without centric Tim.
Other income probably do you, calling sizzle run totally income.
A couple neither is chips the five using a one off the production lines.
Yes handle the forest city pursuant to an excuse me as contract.
Selling and distribution expenses for the fixed function and the team assembled here for us. So those are my team.
For RMB 5.6 million or your stone, though not point 8 million.
Slightly increase RMB 5.3 medium.
For U.S. dollar.
No point 8 million for that same period of 2008 Kim.
Administratively expenses.
For the six months and December 30, Onest 2019.
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As compared to RMB 7.5 million.
Or U.S. dollar 1.1 billion.
Well the same period, all 2008 Kim.
Seeing Kristina administrative expenses.
Was primarily due to.
The increase.
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Hello, everyone related expenses from our new incorporate the entities.
Bad debt expenses for the six month ended December.
So the first 2019.
I'm told a reversal that that RMB 125.2 million.
Yes, or no 17.8 million.
Yes, compared to two bad debt expense.
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210.1 medium or you're still in the U.S.
Or you will start up through a coupon 6 million.
For the same period of 2018.
We recognized a loss allowance.
Playing expanded crooked loss.
If I make sure process.
Hi, I'm already on our trade receivables.
Which are subject true imperilment under international financial reporting standards.
VP of this out.
We have undertaken a population measures.
Sure so bad debt expense going forward.
We will continue to review of Crdit Frothiness, hopefully a child horsepower customers.
Continuous the tester, our trade you basically those earnings neutral coming physical Kurt.
Net profit for the six month to answer December 30, Onest 2019.
It's RMB Andre Twothree upon set the medium or U.S. dollar 26.1 media.
That's compared to three net loss of RMB stronger and four to 6.8 million.
The U.S. dollar 50.6 million.
Well the same period on 2018.
The increase in net income was mainly due to increasing gross profit and the reversal about that expense.
Profits per basic share and 40000 to share for the six month and December 30, Onest 2019.
Carl M.B., especially 0.67 or you're still in a 4.36.
As compared to two loss per basic and fully target to share of RMB 75.95, or your startup you'd have important oh seven.
For the same parallel to adults 18.
Just apatow plus RMB 8 million.
Or U.S. dollar 1.1 media for the six months and December 31st two dozen arching.
And just to for non cash.
<unk> as compared to two adjusted EBITDA, how far RMB 10.2 medium.
For the same period of 2008 Kim.
Turning shop, adding shifts.
That's helped December so your first.
2000 auction, we had a cash and bank balances of RMB 8.2 million.
Oh, U.S. dollar 1.2 million.
As compared with RMB 9 million or Youre, starting at 1.3 million.
So December 31st 2018.
Our self December 31st 2019.
Oh, you Infantry true most 217 piece, that's compared to 217 days.
That's helped December 31st 2018.
Are you increase.
In the inventory turnover face was primarily it's you too.
The 27% Christian our sales volume.
For fiscal year 2019.
That's compared to two fiscal year 2018.
And the reference and the reversal off and you infantry.
Impairment prohibition you in physical 2019.
Our trade abusive proposed Charles.
And that's how failure at the tax.
As of December 31st 2019.
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Compared with 233 days as of December 30, Onest 2018.
So if you Chris Im sure you piece, if it goes Charles River worse.
Hi, Meridian due to the improved to collection of our trade receivables.
Okay, I've always held for.
That's helpful value added tax.
Was 13 days ESOP December 31st two dozen right Jim.
Further with Frenchie six taste.
Our self December 31st year, 2000, and Tim.
Yeah, fresh Charles Birthdays force within to normal Crdit permit one to four months grounded by supplies.
In terms, how far plant utilization encompass.
Where are you hit us plus capacity capable of producing 6.4 million square meters also army towels.
For the six month ended December 31st with Us and margin.
And the Troponin for me it in square meters, Oh, sorry, Mike How's false Jewsikow 2019, I was hoping for a total annual production capacity of 51.6 million square meters.
Our Hengda facility has an annual production capacity of 22.8 million square and interest.
Oh, selling mattel's I say results.
Two oh furnaces huffing being put out hope use at the facility.
The coming to utilize production capacity at our Hengda facility capable of producing 2.9 million square meters I'll start my colleagues for the six month and December 31st two dozen margin.
Our hanging there tend to depress it he has an annual production capacity of 28.8 million square meters.
Interest could our leasing out 10 million square meters approach to shouldn't capacity to is our property.
Reuse.
And reduced just thought utilize our production capacity at all hands of even faster he kept.
Capable of producing 3.5 million scrimmages.
For me to house for six months after December 31st 2000 arching.
We view that the laugh a little capital expenditures throughout the year and make.
And just one subject to market conditions.
Although business conditions are subject to change.
Yeah anticipates mode, just therefore kibodeaux expenditures for.
Trying to try and other then.
Those associated with Primo upgrades.
Small repairs and.
The maintenance property equipment.
Moving on to our business outlook.
In an effort to both to cells in October 2000, arching pretty Chris to pricing, how far are selling mattel's proto by an official for 10%.
That's a result.
Sales for the only increased by 26% into second half on 2000 arching.
Just curious how to you in a 5.3% being Christie and sells for the six month at December 31st 2000 action.
On a year over year basis.
We view it does this encouraging is it.
Second.
Seeing no that.
So actually improving market conditions for the six months tribute since you Chris in our product pricing effect the.
The demand for such Fotis.
Conversely.
In July two adults 18, we decreased.
The pricing of our ceramic tiles protests are not very short term person.
Oh sales volume decline rich evidence.
Deteriorating market conditions.
In order to supplement and.
Span our current market rich.
In 2019.
On a supply funds.
Sure and Terra ceramic tiles market in southeast Asia.
To capitalize appalling being Chris to laugh all the regions Neo building construction, while you're climate condition may get an ideal fit for many of our ceramic tiles told us.
Although this effort was.
Temporarily health due to the Corona Ribas Penn.
Correct.
Yeah.
Redeploy that this strategy is to go to diversify our business by generating revenue outside of China.
A key elements healthiest diversifies diversification strategy is to close to our R&D efforts.
Other to expand our markets.
Last year, we developed a new types of Us Army Carlos.
Besides the to cool temperatures building rich and fully tested and certified as planned for this summer.
Your target to southeast Asia and buckets.
Yeah, I also focus appalling diversifying our operations capacities to feel our girls.
Be formed a new subsidiary.
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Regimen and consulting co Ltd.
Which provides capital to suffer.
One thing that includes onsite training and on my problem solving to maintain computer system.
Internet connectivity and gay shouldn't troubleshooting and repair asking it.
And to provide although overall tenneco supports.
Although we expect this subsidiary to contribute only a modus I'm all for for new introduction and trying to.
Will you be live.
Yes venture purpose and say subs trends show girls section.
Could lead to Atish into a high technology accruals opportunities.
Because of.
The significant.
Uncertainties surrounding to covert nitin academic.
So we like the financial impact on the year 2000, and trying to you.
And not be personably asserting that at this time.
Pandemic disrupt the supply chains and a further production ourselves across a range over the industry in China.
That's a result of currencies Tri city coasters.
Software not just to.
Restrictions every they really the public health orders.
Although manufacturing campus capabilities have resumed normal operations.
Oh production was held for most helpful.
The most all February and our logistic function asked you are lacking due to certain regions and remain the coal just through April.
Consequently, we anticipate that all ourselves all adobe obvious and their currency reduced.
For the first full months <unk> 2000 trends you.
As compared to the same period of 2000 Arjun.
As reported.
Trying to us.
Let me declined 6.8% in the first quarter on 2000 trend.
Following many years so high calls.
Although effect trees across China, happy and read Stockton.
And you obviously international global market Australian locked on your business has been.
That's not yet.
Returned to normal.
It remains to be seen.
Well I can only recovery in China, you would look like for the restaurants with us and trying to.
And was stimulus program to Centro common Mike and that.
In terms of plastic and construction sectors.
The de leveraging of China poverty developer.
The continuing into adoption trends. She has occurred in 2019 due to limited borrowing and resulting cash flow issues.
Oh, so new home sales declines biased I mean.
Actually person from a year ago during the pre bonus without.
Turning to prevail China's blockbuster.
Potential buyer were not able to abuse properties.
However, only south data indicate that.
And so I'll.
Email has already resulted in substantial buying activities as consumers and gay and you go to secure.
Properties in China's major cities.
In addition, some risk corrective measures have been loosening in different cities. So we're supposed to housing markets.
Yes, purest thing though.
China through Astec sector has been you Syrians Oh for a time and has been a key troffer.
I'm trying to us.
One of my girls.
Notwithstanding the up all references to macroeconomic challenges.
You bet, if that the long term fundamentals of real estate and construction sectors.
Remained intact and these fundamentals.
I will emerge.
That's business conditions normalize.
China's urbanization chain continues to underpin guess economic girls.
And the need for housing leads to a sustained demand flower buildings.
Cheerios protest you paid if oh, we have a competitive advantage you now et cetera due to our innovation.
Then name recognition.
And our ability to meet customer needs.
Yes. This has held up pretty fast.
The Companys current and preliminary your views and you space on the information currently available to us.
The trust subject to change any subject to risks and uncertainties I saw us risks and uncertainties identified it into some of these public filings.
At this point.
Well I'd like to open up the core to any questions pertaining to our second half and physical year end 2019 financial results.
Operator please.
Thank you at this time I would like to remind everyone in order to ask your question you could simply press star one thing or telephone keypad again that star and then the number one your telephone keypad Q4, a question. If you would like to withdraw. Your question you could think you press the pound or hashed tea.
We have a question from the line of Howard Flinker go ahead. Your line is open.
I don't have a question what are you eat.
Sure.
Well you mean.
Hello.
Oh Sunday.
She can I just want I wish all of you could help I don't have anything special to say thank you.
Well. Thank you. Thank you for your.
Greetings [noise].
Thank you very much smaller Sheila.
Doing well through Oh, santini, unless you only need it.
Yeah, Youre, how trendy David there.
Thank you very much yeah, I hope your family say very healthy again stay safe exactly everybody. Thank you very much Stacey thank.
Thank you. Thanks to thank you. Thank you again, if you would like to ask a question you could take a press star one your telephone keypad.
And that star in the number one your telephone keypad to Q4, a question and the pound or hash key to withdraw your question.
Mhm.
And who don't have a question on Q I would like to hand, the call back to David Rudnick David.
Thank you.
On behalf of the entire China ceramics management team and want to thank all if you're interested in participating on this call. This concludes China ceramics second half fiscal year end 2019 earnings call. Thank you.
Thank you everyone you may now disconnect.
Thank you.
Okay.
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