Q3 2022 CBAK Energy Technology Inc Earnings Call
Okay.
Good day, ladies and gentlemen, thank you for standing by and welcome to CPA AK energy Technology's third quarter, 2022 earning conference call.
Currently all participants are in listen only mode.
Later, we will conduct a question and answer session and instructions will follow at that time.
As a reminder, we are recording today's call.
If you have any objections you may disconnect at this time.
Now I will turn the call over to Charlie Investor relation ductile she'd be AK energy Mr. Lee. Please proceed.
Thank you operator, Hello, everyone welcome to see that energy third quarter 'twenty 'twenty earnings conference call. Joining us today are Mr Hill, Our Chief Executive Officer, Mr. Youre, not pay our interim Chief Financial Officer, Mr. Huang, Our vice President and Mr children Genoa.
General engineer missed this year.
Our interpreter, we released early results earlier today. The press release is available on the company's IR website at IR autopsy bad Dot com as well as from Newswire services.
A replay of this call will be available in a few hours.
Syed.
Before we continue please note that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995.
But one can statements involved in children risks and uncertainties as such the company's actual results may be materially different from the expectations expressed today further information regarding these and other risks and uncertainties is included in the company's public filings with the SEC.
The company doesn't assume any obligations to update any forward looking statements, except as required under applicable laws.
Also please note that unless otherwise stated all figures mentioned during the conference call are in U S starts with that let me now turn the call Richard our CEO . Mr. Conveyed necessarily were spent in Chinese and I watch it.
That his comments into English go I haven't studied.
Quick question.
Uh huh.
Alright.
Thank you Doug.
And again hopefully.
Yeah.
Thank you and Hello, everyone. Thank you for joining our earnings conference call today.
Okay.
Alright.
Thank you Donna.
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Our young shallow <unk> syndrome trial.
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In the third quarter, we managed to maintain our strong momentum in the growth of revenues in Q3, our revenues grew by over five times to approximately $47 $7 million in the first nine months of this year, our revenues have reached approximately $200 million.
Representing an increase of about seven times compared to that in the same period of last year.
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<unk> shutdown or you don't.
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Bobby.
The significant increase of revenues was Saturday actually would get you to astonishing gross up our toy business in a booming market in the third quarter revenues from our Patriot business, which about $25 $8 million up by roughly a 170% in the first.
Nine months revenues from the page for each sector surprisingly increased it by 167, 7% to approximately $66 $6 million.
Based on this issue.
While much without one.
Now, we're caught up so and I'm sure Tom.
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So again some go down.
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You might see.
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Hi, as you quantify you about China.
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Jonathan I'll, even put out one trillion each one in Chicago.
And so you can work with them on there John .
And then of course, you got to go.
Yeah, we're trying to achieve.
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Yeah, Shaun it's only gone down a phone call.
That doesn't go away.
Equally.
Tom.
In addition to our dedication to stabilizing and increasing revenues from the energy storage segment, we vowed to have really explored EV and EV markets. A few months earlier, we announced to enter into an agreement with <unk> group.
One of the biggest L. EV manufacturers in China, and if EV manufacturing units Gmail, such cooperations brings our synergy called lithium batteries on an increasing number of Evs. Meanwhile, we ask do you attribute developing larger synergy called bakeries in an attempt to increase our shares into E. B L.
<unk> and energy storage markets in this conference call I will introduce our progress in both business development and product research and development to our shareholders and investors.
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Well my friend Bill what are you Tanya 19.
Charlotte Tampa, Washington.
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Donald Trump.
Good morning.
Sudan, Portland Champion times, yes.
So that's one.
First our preferred the progress we have made with respect to business development as of September 30th our three major manufacturing centers, respectively in Derby in Nanjing, and Shaoxing received orders was approximately $100 million.
The weighted delivery such orders will support rapid rapid growth of our revenues in the coming reporting periods and approves that our target market is extremely hot right now as of now.
The capacity of Pos of our production line can no longer satisfy the increasing demand for our products and tissue.
Okay. Thank you Don my shoulder nights are out or that you can share.
<unk> children, and Oh, darn sure lung colon or acute homes in Nashville.
Hi, Sam Barbour Archrock.
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Yeah. Thank you Omar essentially.
And then Jay you can push it.
Hi, Josh.
Okay.
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In Q2.
No we can't.
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Womens home are you partnering with regards to who don't watch how should your net neutral from park <unk> corner.
Some final thoughts.
Yeah Cai.
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Sure Anthony.
Oh, Hi, Paul Bowers for total that Nike over that time period.
So you don't Cook with a tumor.
In the third quarter, we announced that we have.
Pain in order with approximately $29 3 million from a leading European provider of heating cooling and renewable energy assistance. This is not the first time, we received an order from this client.
As of the date of this conference call. This European client order of about 60 million euros, our bakery products. In fact, we started approaching this client in 2018 after lengthy negotiations silver rounds of talks and complexion of supply chain duty reduced works our partnership eventually.
Brings us high value orders this year.
It demonstrates that our product quality is trusted and testable and bonus which are patients on our marketing efforts will eventually pay off.
Condition.
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<unk> essentially.
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Sure.
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In addition to the rapid growth in our energy storage business, we have been dedicated to developing much more clients from the EV and EV markets as of September 30, our cooperation with <unk> group and Gmail had already brought us orders worth about $4 3 million.
We are very glad to see our 321 for all Patriots being applied in the electric vehicle is manufactured by <unk> group, we have confidence that we will be taking much more orders from the beast.
Besides with respect to our cooperation with <unk> module.
We had supply beta repair products worth about $2 7 million Chinese again in the third quarter up by 80% compared to the number disclosed in the last quarter, we expect to see the number continue growing in near future in tissue.
From my heart that opinion, a con call.
Continuing on components.
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So im sure you would hear something else with high.
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And you cannot trust your country.
Are you trying to show a long term potential to turn.
Yeah.
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Hey, you should go up and down sorry, Austin attention without question Shaun.
<unk> essentially what are you trying to tell.
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<unk> yeah.
Suddenly unless you give them that.
<unk> corridor.
I'm not sure she the woman.
So that's why so much issue.
This year, we're also announced a strategic partnership with wealth and power a China based company that has a broad global sales network to develop the Indian market with the Indian government publishing subsidy program. The Indian market is believed to have the potential to grow into one of the biggest EBIT markets.
Whereas empower has a huge global network with a focus on India markets, our partnership with Doug will introduce our suites, one for all bakeries that country.
As of September 30.
While some power had order page for esports about 380000, Chinese given some virus considering that we have been entering into to punish it for only one month and.
And that we are in a new market for business development, taking orders from them substantially grow our competence and tissue.
So on cholesterol when was that.
What type of a format.
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Sure Tom.
With that Shannon.
For mentally coupled our current talks Hawaii future.
300, <unk> I'm going to sound way.
Hopefully that equaled one time I'm comfortable.
Jim Doug Chiang Alpha Bank guarantee.
Sure Mike.
Overall, we achieved.
Factory progress in business development, we managed to maintain a good partnership with our major European clients in the energy storage market and reach corporation with big brands into EV and EV market, we never stop our endeavor to explore new market opportunities and expect to bring more exciting news regarding <unk>.
New partnerships and orders to our investors and shareholders interest rate.
Thank you and pop culture.
<unk> gone down.
Jan Falcon.
Shoot.
<unk> Bank, yes Cowboy <unk>.
Sure Bob.
While material.
Got it yes.
Not even against the Chi Fong.
Or maybe do one trial of R&D <unk> <unk>.
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Millions ensure current calling them now.
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So downtown Miami essentially go through China.
<unk> current products should help firm up.
In terms of all of our efforts in product research and development, we have been investing resources and capital in developing larger sized cylindrical batteries.
We made significant progress in the development of sodium <unk> in the third quarter. We completed the pilot production of 267 O N suite through one four or sodium ion base rates. We are now in the process of testing and optimization.
To increase the energy density as.
As we say in previous conference calls.
Sodium <unk> beta and Markit has a great potential with an estimated market size was about billions of doors, we expect to take a lead in the market to become one of the first groups of companies that can mass produce sodium ion batteries. We hope that this could help us occupy more market shares in tissue.
Great question Jamie.
Hi, Yang Fong, She also combo chip.
You guys didn't go.
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Potentially yes.
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To sum up with successfully make satisfactory progress in both business development and product research and development we.
We invested to develop sodium I'm bakeries, and larger size and integral base rates and hope to increase our competitiveness.
That raw materials prices do inflated and that would mean continuous capital investments to expand our capacity at cost by increasing demand at <unk>.
It resulted in a small net loss. However, we still firmly believe our profits will be significantly increased as raw materials price drops to a reasonable level caused by increasing capacities from raw material producers.
Also our capacity expansion will gradually generate more profits.
Our focus in near future will still be on ramping up our marketing efforts continuing our capacity expansion plan and promoting a research and development OXXO again on bakeries and larger sites eligible bakeries.
And tissue.
And I would tell him that.
All right.
Okay great.
Our goal with our title Gotcha.
Now, let me turn the call over to our interim CFO <unk> <unk>, who will provide details on our financial performance.
Okay.
Thank you Mr. <unk> and thank you Ella landfill, John Paul Today, I will now go OLED, our key financial results.
Third quarter of 2000 attended to further show details of our financial results. Please refer to our earnings press release.
Well manage the Truman.
Momentum in the increase of sales of our battery and battery material products.
The high cost of raw materials, and that we will get to in lives and expand our capacity however reduced other proceeds.
Mr. Eddie mentioned.
We remain confident in the future girls of other profits as long at more raw material.
<unk> of the two bigger capacity and our capacity expansion is completed.
Also increased significantly our investment in research and development and sales and marketing efforts to develop new lodges.
Linda.
No.
And to give our clients in that market.
Moving on to our results.
In the third quarter, our not our not revenues surged batch of several hundred percent to 57 7 million.
From the same period the upturn attended one.
Primarily due to growing sales in our pathway products and battery materials.
Specific.
Specifically not revenues from our battery business.
By about 170% from let them serve out of <unk>.
Cost of revenues was.
So I've just got upon reminding us dollar in the third quarter at by style hanger that searches for our president John listen share beds in the progress here.
Gross profit was.
The <unk> $5 million.
In the third quarter.
Presenting an increase of 206 president from the prior year.
Gross margin was 6% comparative is present in the same period of 2021 as raw material costs.
As noted earlier, we have signed a long term contract with certain suppliers expanded into round much yoga fitness.
Got it.
Rich and negotiation with our clients to tackle the past half.
And they expect the price of raw.
Materials to <expletive> Weil.
<unk> T is being added by the industry.
Our operating expenses rose by <unk>.
14, 8% to four PON to $9 million, primarily due to corrosion head count in Alberta.
Thank you facility and the acquisition of our battery material that is within that although they search and development expenses increased by.
There's one plant.
31% to two punch fermenting us dollars sales and marketing expenses increased by.
<unk>, 4% to their own client edge melting that solid.
General and administration expenses decreased by 13% to one 9 million U S dollars.
This does inquisitor, our operating expenses were held only.
Edge plus 6%.
Relative to our revenues in the quarter compared with.
Okay perfect.
Periods of 2021.
Our change in fair value of warrants 0.9, mainly U S dollars compared to our 10-K.
We mainly U S dollars in the prior year Lastly reported a net loss R. J Bill.
Let's go to shareholders of feedback allergy.
$290 during the quarter.
In parallel to not Inc income.
It does go to shareholders.
Tom.
And does <unk> what however.
Hey.
Back to the item of change in fair value, we had a net loss attributable to shareholders of slip back Alan J L. A plant nine mainly yes dollars deals Dubai.
Okay.
So six to eight 6% from the rates It may last dollar last year.
That concludes our prepared remarks now.
Now open the call for questions.
Operator, Please go ahead.
Thank you, ladies and gentlemen, well now begin the question and answer session.
If you wish to ask a question. Please press star one and one on your telephone.
We have one question.
Please standby.
<unk>. Please go ahead.
Randy Haugh Hidalgo Centinela quick answer that question Jimmy yet.
Order backlog, Lunary, Suvari junkie and Uhm OEM data.
As a woman so quick ones have been in the <unk> cohort at <unk>.
Cohort you Jesse Geiger, you know anyway, with what happens with Adobe in civil we keep a quote on the <unk>.
Okay I have the first question.
I am glad to hear that the company has received all days was nearly 60 million euros from a major European clients in the past nine months, but the specific name of this company was not disclosed could you tell me the reason behind it and what it does.
<unk> Corporation that this company further expanded in the future.
So when Jason Wang song quite IHOP.
Hello.
Please also.
So again.
And ultimately you die.
Hey, Julien.
Rafi, Tianjin and general demand from any of your funding requirements.
Inventory at Honda.
Whereas in the damn sure we are going to grow.
Thank you.
Dave.
Dr Shaw.
Sure.
Hey, Bonnie.
Can email issue.
John This is Earl.
EMEA Shelby will know cohort Tampa Amit.
People go on then.
Cohort Schindler bedrock.
Egypt, Saudi with interactive data still being shallow issue.
No.
So I think that once in a colloquial way its issue the quota.
Anything cohort Zankel hall, realizing entertain them.
Reaching one two.
And talk a little Thunder.
Okay.
Well I'll take the floor. This is a client with clients is a famous company in Europe that witnessed rapid growth in the past few years and we as a major supplier for battery products in order to help the client.
Clients to maintain stability in the supply chain, we need to we need to ensure that this.
Cooperation is confidence.
Confidentiality and we.
And this is also a very good way for us to ensure all at <unk>.
Competitive edge in the whole market. So please understand that we cannot disclose the name of this company.
Talking about our future cooperation potential with this company I can tell you that we have reached an agreement and we are going to continuously expand our future our future cooperation in the coming years and we believe that.
The orders that they placed at all company won't see a big increase.
Sure.
Okay sounds good.
<unk>.
Well, it's really does for us with all that kind of big ones both avenues.
I agree.
Uh huh.
Selling <unk> and if so are those areas where things are quiet.
Yeah.
Sure well equity holes that you talked about some of those are annualized fees from any EMA hesitate kind of UV, how you view the move into <unk>.
Cynthia Aegean with help us from a new unit tissue.
I noticed that most of the company's revenue still comes from energy storage and pin pad incompatible Jim although the revenue of EV and <unk> is growing rapidly. The total amount is still relatively small how do you see the.
Phil.
Revenue composition of the company do you think the energy Star reached settlement will still occupy a vast majority of the income.
Do you expect a proportion of our EV and EV to grill, and even one day, possibly surpass that of the energy Star range.
So what <unk> is all in Appalachia.
Hum.
Great.
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So with tinder, but that would be the ones you know.
Andre.
Bob.
Finally may and June .
Jonathan Jojo will maintain the ROE target.
Changing the launcher Talladega train onshore Gulf et cetera.
Donnelley on lithium done now.
Yes sure.
Hurtado cohort.
Cohort connecting directly tissue to Sundar.
Hello Leo.
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Yes.
Let's do that.
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So it gives us another tilda.
Tissue.
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<unk> attrition assumption style women under took entrepreneurial.
Yes.
Especially the Thunder.
Now, we will have a longer kind of yes.
Yes, I'm sorry, yes.
Michelle has been done Tokyo Amanda <unk>.
Several things are certainly tissue that function. So that's helpful.
Good evening.
Mhm.
Okay.
This question is concerning the revenue and the propulsion of EV and <unk> well as Mr. Lee just mentioned, we already have pent big four days from EV and EV manufacturers and this is a very good signal and we believe that.
The orders that we received from them will continuously grille in the future and at the same time. We are also making unremitting efforts to develop new customers and we believe we are going to see big progress next year.
And then for next year, we have confidence that we will see the increase of the amount of <unk> that we get from depth car many of which are rich and the proportion of easy and our EV propulsion revenue from even our EV well also see big growth.
Dan Yes of course, the business of our energy storage will also be on the rise in the future. So we believe that.
<unk> ended the prospect for both.
Then just storage and for.
And our EV will be both promising and at the same time, we will see the growth of the propulsion of AV EV and EV in the future steadily.
Yeah.
Paul the Fe content.
So as of December one so a woman eligible quick answer to that yet.
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That's all the way into the mortgage space.
With little incentive it into the shale gas is helpful yields within India.
Welcome to the Wheeler has it that says liquidity or 92 days GTO Savannah, which you know.
Yes.
Okay. Thank you for your answer and that still have a third question.
<unk> is developing sodium I am better east, we believe that the top.
Target markets of sodium I'm better reach kind of overlap with the existing target market lithium iron phosphate.
How does the company plan to tap the potential of sodium and better in the future and what is your strategic plan can you share with age. Thank you.
Two enhancing kinzel appetizer.
No.
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Just wondered.
Could you remind me the engine upon inclusiveness agility and Jonathan.
A pleasure to Indiana.
Yeah.
I assume that <unk> is essential when we bought <unk> <unk> okay.
Thank you John .
Until then Youtube and shipping pneumonia tumor.
Campbell.
Yes.
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Even though a few months ago, maybe the gym membership.
Hi, Paul this is not easy.
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And I'm.
Sure, we'll do that through now.
Uh huh.
On Monday.
Sure.
Turning to cornerstone capabilities, including one that we should think about whether it is on a truck.
And do you think the option.
Even though the trojans genre on equity.
Ginger will then be leased in June .
The Eagle Ford crude corn oil now.
Sure.
Thank you Lindsey good.
You guys really equal.
You can assume the content will be.
She is the non either 100 leads the Yahoo exposure.
And at least most of them now have would be <unk> or funds you did not reach the <unk> Suzhou Felicia one are equal.
Good to know.
Okay.
T J.
No.
Okay.
Okay. So.
Mr. Tim will answer this question.
Yeah.
Sure that's the application of sodium ion batteries and the lithium iron phosphate.
Similarly in some cases, however, according to our experience in the generation of a new projects or new system will not fully replaced the old one that is a lithium ion phosphates in our case and let me share with you our strategic.
Plan for sodium ion batteries as we know it enjoys some stress that just in compare at all by other similar products. For example, it enjoy it you can have very good effects in the low temperature conviction and it is more.
More easier to assess indeed sodium elements and then the cost for it.
Set the course for sodium <unk> is also low it that's why we plan to use the sodium ion battery are these projects in the storage market.
As the passenger vehicles.
Actually those L. E V go short distance strip or in the northern area, where the <unk> picture is really relatively low. So we are going to develop this.
Sodium and better re as a good supplement to lithium and better rates. It will become a new product line for our company, but it doesn't mean, we are going to.
We aren't going to replace it replaced the lithium ion battery by the sodium better rate or in another way or in the other case, we are not going to give up some good research of sodium and better but you just because lithium ion battery has its own advantages.
Just to say, we are going to deep importance to both kind of better reach and we are going to develop sodium and better reach to expand our product portfolio and also to increase the product called the reach.
Sure.
Please note that cumulatively that well, whether it's a critical issue when we figure out those union.
Susan's answer.
Shimon.
Any thoughts in total sort of agreement with Jimmy This increase with an increase of 40 acre DOCSIS, which it well.
A woman Egypt, that's agenda again hit us.
Great that sounds of weakness of the puzzle as well.
I mean, you're you're entitled to Kevin Mclaughlin, our controller.
Two quick ones, the ASIC inquiry with Savannah yourself, the whole consulting charter Horton agree with you, it's increasingly with Alethia, Hi, Yaacov <unk> Synthes Yahoo email.
Tissue.
Mhm.
Okay, well I have the last question. The final question, well I am very glad to share that.
The Companys revenue has increased tremendously although the adjusted net profit attributable to the parent company is still in the lowest but the size of lowest has been greatly reduced we understand that the price of the raw materials. This is still high but.
According to your judgment do you think the price of raw materials. It will fall down next year, and what kind of impact.
Impact will it bring to the profitability of your company and if the company's adjusted net loss attributable to the parent company expected to decline further or even 10 loss into profits.
So what do you see in page along with that.
Okay.
Uh huh.
Oh, that's just yet.
The mall to rule on lung Jacob. Thank you do we have the team Joe go ahead Josh.
<unk> a woman does C&I James Lee range of that.
Annuity Jacob <unk>.
The <unk> show in Palo Verde unit.
Without that number Michelle tied out Hangzhou ship.
Well begin.
I'll tell our chocolate Elisa.
The law.
John Please.
I need a job like John Jacko, how should you go with that.
Pinch hitting that you'll just Sean Johnson and you got to ship.
That show a mansion Yang yet.
Chaco all elementary out times U S social Jack.
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No matter, how much of that kind of 119, Yankee and get out there doing that.
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Yeah, No doubt Union you also as Sean Chow AR, So you're just yet, though your two new woman.
Also Linda some jobs.
Uh huh.
Yeah.
Yeah.
Yeah.
Okay as you can see from that.
The financial performance of this all of the third quarter of this year. The profitability is Ono rice, how advair as we know this year, we are still greatly impacted affected I mean by the increase of the raw material and although some of the Roma.
You really have witnessed declines in the.
Price how advair demand.
Raw materials or is that just the cost of that lithium carbonate.
The catch sold.
It hasn't declined and in contrast, even increased a little bit.
Why we have increased the.
Shale.
So our product with an aim to offset the increase of the price of the raw material show for those old days that is going to ship in the future I mean in the rest of this year and in the next year well see an increase in kind of in terms of its price.
It will be higher than the price that we offer to the customers in the past several months. So we believe that for next year.
The profits of our company will have an increase.
Yeah.
Although fit our culture.
Do you see that equivalent continued growth projects just yet.
Okay. So that's it for all my questions I'd like to thank all the speakers for answering my questions and I am looking forward to the further development and progress of the company.
Yes.
Thank you for your question.
As a reminder.
One one if you wish to ask a question.
Okay.
Yeah.
There are no further question in the queue, let me turn call back to Mr. Li for closing remarks.
So let me close with tissue.
That's all the time that didn't have that kind of equity.
Four months, United Kingdom, frankly, I'm, calling in Fremont.
Thank you operator, and thank you all for participating in today's call and for your support we appreciate your interest and look forward to reporting to you again next quarter on our progress.
Okay.
Thank you all again this concludes the call you may now disconnect.
Yeah.
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
Yes.
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