Cogobuy Announces 2018 Interim Results

Press Releases

Aug 28, 2018

HONG KONG, Aug. 28, 2018 /PRNewswire/ — 

Highlights of the interim results for the six months ended June 30, 2018:

  • Success in implementation of AIoT Business Service Platform + IC Component Trading Platform dual business model” – profit attributable to equity shareholders of the Company increased by 657.2% as compared to the second half of 2017 to approximately RMB239.0 million; Non-GAAP profit attributable to equity shareholders of the Company amounted approximately RMB180.7 million, a significant increase of 223.4% as compared to the second half of 2017.
  • INGDAN.com’s AIoT ecosystem has registered over 38,000 companies on its platform to date.
  • The Group strengthened its partnerships with emerging chip companies, and built new relationships with leading chip makers in China, Europe, and Japan.
  • In June 2018, the Group entered an agreement to acquire 40% of GIPP Corporation. GIPP Corporation will be responsible for the overseas management and operation of about 100,000 patents from over ten top-tier Japanese technology companies including Sony and Toyota, etc., and providing business development advisory using INGDAN.com’s wide industry resources.
  • In May 2018, the Group signed an agreement with Europe’s largest microelectronics research center to jointly build a microelectronics innovation center with INGDAN.com in Shenzhen, for world-class chip design, manufacturing, and application.

Cogobuy Group (“Cogobuy” or the “Company”, stock code: 400.HK; with its subsidiaries (the ”Group”)), a platform providing artificial intelligence and internet of things (“AIoT”) in China, is pleased to announce its unaudited interim results for the six months ended June 30, 2018 (the “Period”).

Financial Highlights of the First Half of 2018
The implementation of “AIoT Business Service Platform + IC Component Trading Platform dual business model” corporate development strategy launched in Q4 2017 has been successful. During the Period, due to the adjustment of the Company’s business structure, reduction in dependence on external funds, and a greater focus on quality to support long-term growth, the Group recorded total revenue of RMB2,961.2 million, a decrease of 51.6% year on year and a decrease of 15.2% as compared to the second half of 2017. Direct sales and INGDAN.com respectively generated 94.2% and 5.8% of the total revenue. Since a significant portion of INGDAN.com’s profits it from business services and investment, INGDAN.com’s contribution to the Group’s profits is far greater than the foregoing percentage of revenue it generated. Meanwhile, INGDAN.com’s new profit model helped drive profit attributable to equity shareholders of the Company to approximately RMB239.0 million, a decrease of 11.6% year-on-year and representing a significant increase of 657.2% and compared with the second half of 2017. Non-GAAP profit attributable to equity shareholders of the Company amounted approximately RMB180.7 million, a significant increase of 223.4% as compared to the second half of 2017. During the Period, the Company’s gross profit margin was 7.5%. If the profit from the gain on INGDAN.com’s incubated project were included, the Company’s gross profit margin would have been at 13.6%.

With the high growth and rising commercialization of new technologies in China, including the Internet of Things (“IoT”) and artificial intelligence (“AI” and together, “AIoT”), demand for chips is becoming more diversified. As a leading AIoT Business Service Platform in China, INGDAN.com is using its first-mover advantage to grow the available resources along the AIoT industry chain. During the Period, the number of companies registering on INGDAN.com’s AIoT ecosystem exceeded 38,000; they included chip companies, AI computing companies, module companies, technical solutions providers, and IoT projects — which often have high procurement demands, especially for smart cars, smart homes, robotics, smart healthcare and new materials. In the first half of 2018, EZ Robot, Inc. (“EZ Robot”) incubated by INGDAN.com has become the first successful case of INGDAN.com industrialization.

The Group is gradually transitioning away from its IC component sales and marketing platform, to a more diversified, business services, investment, and strategic sales platform serving electronic companies in China. Cogobuy expects AIoT downstream projects will become the growth drivers for chip sales in China. In the first half of 2018, INGDAN.com enhanced its AIoT business services by upgrading the IngDan Lab into a Center for AIoT Hardware Innovation to better engage world-class AI researchers, as well as developing new patented AI modules. INGDAN.com has now expanded its presence in emerging industries such as robotic vacuums, payments via facial recognition, smart warehouse robotics, smart cars, and smart medical devices. The Company has also established strategic partnerships with chip manufacturers for blockchain and edge computing applications to build more synergies for INGDAN.com.

According to China Semiconductor Industry Association, sales of China’s IC industry in the first quarter of 2018 reached RMB115.3 billion, an increase of 20.8% year-on-year. In the midst of the US-China trade conflicts, domestic IC chips substitution has become an irreversible trend. The Group has been well prepared for such trend and started establishing partnerships with domestic chip manufacturers since 2013. To date, the Group maintains long-term partnerships with 36 domestic leading chip suppliers to capture the market opportunities of domestic chip substitution, while also continues to build strong relationships with first-tier international chip suppliers, to better fulfill market demand for diversified chip types. Meanwhile, riding on national policies, vertical industry applications for IoT, AI, and 5G technologies are expected to grow at a fast pace. The Group’s “AIoT Business Service Platform + IC Component Trading Platform dual business model” strategy facilitated the Group’s AI module sales and its AIoT business services in the first half of 2018. During the Period, revenue generated from INGDAN.com represented 5.8% of the Group’s total revenue. Its role in sustaining the Group’s long-term growth in the fast-growing industries of chip sales has becoming prominent.

As at June 30, 2018, the Group’s cash and bank balances (including pledged deposits) were RMB2,075.7 million. The number of basic ordinary shares outstanding was 1,456,354,000, and diluted common shares outstanding was 1,459,569,000.

Business Highlights

  • In view of the rising trade tensions between China and the U.S., the Group is actively entering into partnerships with leading, non-U.S. chip manufacturers. In May 2018, the Group signed an agreement with Europe’s largest microelectronics research center to jointly build a microelectronics innovation center with INGDAN.com in Shenzhen, for world-class chip design, manufacturing, and application. The center has been successful in customizing chips for AIoT companies in sensing technology, sensor networks, communications, ultra-low power technologies, and ultra-low frequency radios.
  • In June 2018, the Group entered an agreement to acquire 40% of GIPP Corporation. GIPP Corporation will be responsible for the overseas management and operation of about 100,000 patents from over ten top-tier Japanese technology companies including Sony and Toyota, etc., and providing business development advisory using INGDAN.com’s wide industry resources. The GIPP Corporation will help introduce Japanese companies with core technologies into China, to further enrich INGDAN.com’s resources.
  • In April 2018, with the Group’s proprietary technology based on the R16 chip technology from Allwinner, the IngDan Lab’s K-system successfully developed the SLAM AI module for robotic vacuums, which officially entered into mass production. The Group continues to cooperate with Allwinner to optimize its SLAM technology to enhance its technical advantages. Furthermore INGDAN.com’s strategic partner, Unisound, successfully developed an AI chip into a module with the help of INGDAN.com platform and released one of the world’s first AI chips implemented in IoT industry, validating Cogobuy’s leadership in domestic IC industry.

Outlook
Mr. Jeffrey Kang, CEO of Cogobuy Group said, “Since implementing our new business strategy and corporate adjustments at the end of last year, Cogobuy has integrated all of its business segments into two major platforms, running our IC components direct sales through Cogobuy, and providing our AIoT business services through INGDAN.com.

Under the new ‘AIoT Business Service Platform + IC Component Trading Platform dual business model’, INGDAN.com realized its three monetization strategies in the first half of 2018: first, the sale of smart hardware, like chips and AI modules, to AIoT enterprises; second, the provision of customized chip design, proprietary AI modules, supply chain finance and other industrial chain services to generate revenue; third, realization of gain from equity investments in AIoT technology companies it incubated. EZ Robot is the first successful case for industrialization through INGDAN.com.

Overall, through INGDAN.com’s support for IoT, AI, and chip companies, the Group has gradually transformed from component sales and marketing platform to a business service platform. As we move forward, we will strive to provide multi-dimensional services for AIoT companies, including AI solutions, supply chain management, and intellectual property core design. With the emergence of technologies like IoT, Big Data, and Cloud Computing, and the deepened integration of information technology and industrial manufacturing, demand for chips and AI modules is poised to reach new highs. As the leading provider of IC components and customized chips, Cogobuy will play an increasingly important role. We have focused particularly on our partnerships with chip companies in emerging fields, and strengthening synergies between our IC components trading and INGDAN.com.

According to statistics from the China Semiconductor Industry Association, the value of ICs imported in 2017 was US$260.1 billion. At present, more than half of the world’s top 100 chip manufacturers are partner suppliers of the Group. Having established long-term cooperative relationships with 36 leading domestic chip manufacturers, covering the majority of large chip manufacturers in China, the Group believes that it is well positioned for the growth of domestic IC companies in China. Through such impeccable resources on the industry chain, the Group aspires to facilitate China chip development and expects its chip business to maintain growth against the backdrop of the U.S.-China trade conflicts.

The Company believes that the new development strategy will reduce the Group’s dependency on external funds, and help it avoid potential business risks brought by the slow recovery of banking facilities. Looking forward to the second half of the year, the Company will continue to rely on its own funds to promote the industrialization of INGDAN.com, and focus on quality to lay solid foundations for sustainable profits. In addition to EZ Robot, which focuses on robotics, INGDAN.com will continue to provide growth drivers as it rolls out other projects in the fields of customized chips, blockchain hardware and smart cars, etc. in 2019. The Group’s business is expected to further grow in the second half of 2018 as stimulated by blockchain hardware and 5G demands.”

Caution Statement
The information contained in this document has not been independently verified. No representation, warranty or undertaking, express or implied, is made by the Company or any of its affiliates, advisers or representatives as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of such information or opinions presented or contained herein. The information contained in this document should be considered in the context of the circumstances prevailing at the time, is subject to change without notice and the Company makes no undertaking to update the information in this document to reflect any developments that occur after the date of the presentation. It is not the Company’s intention to provide, and you may not rely on these materials as providing, a complete or comprehensive analysis of the Company, or its financial or trading position or prospects. Neither of the Company nor any of its affiliates, advisers or representatives accept any responsibility or have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document.

This document may contain statements that reflect the Company’s current intent, beliefs and expectations about the future as of the respective dates indicated herein. These forward-looking statements are not guarantees of future performance and are based on a number of assumptions about the Company’s operations and factors beyond the Company’s control and are subject to significant risks and uncertainties, and accordingly, actual results may differ materially from those described in these forward-looking statements. Neither the Company nor any of its affiliates, advisers or representatives has any obligation, nor do they undertake, to update these forward-looking statements for any events or developments including the occurrence of unanticipated events that occur subsequent to such dates.

About Cogobuy Group
Cogobuy Group is headquartered in Shenzhen, with offices and branches across major cities in China, including Hong Kong, Shanghai, Beijing, Wuhan, Chengdu, Nanjing, Hangzhou and Xi’an, as well as overseas branches in the Singapore, Israel and Japan. The Group operates an IC Components Direct Sales Platform, Cogobuy.com, and INGDAN.com and strives to foster the development of an AIoT ecosystem that connects cloud computing and AI core technologies with the Group’s expertise in edge computing, machine learning and deep customization. With the ecosystem, the Group aims to provide AIoT solutions to vertical industries such as smart cars, smart homes, robotics and customized AIoT chips. For further information, please refer to the Company’s website at http://www.cogobuy.com/

For investor and media enquiries
Please contact Ms. Wanyee Ho / Ms. Amy Guo at ir@cogobuy.com.

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SOURCE Cogobuy Group

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