Highlights of the annual results for the year ended 31 December 2019:
- The Company recorded total revenue of RMB5,854.2 million in 2019, a YoY increase of 5.8%, gross profit was approximately RMB565.6 million in 2019, a YoY increase of 32.5%. Non-GAAP profit attributable to equity shareholders of the Company was RMB193.6 million. For illustration purpose only, if the financial impacts of the disposal of EZ Robot in 2018 were excluded, the net profit of the Group for the year ended 31 December 2019 would have increased approximately 25% as compared to the corresponding period in 2018, and revenue of the Group for the year ended 31 December 2019 would have increased approximately 19% as compared to the corresponding period in 2018.
- To further optimize the development of the Company’s business, Cogobuy reorganized its subsidiary structure in the second half of 2019. The new “Ingdan Innovations + Ingfin Services” dual business model created through the reorganization removed previous obstacles from overlapping businesses, and further enhanced profitability.
- During the Year, 5G commercialization drove the development of the Internet of Everything (“IoE”). Cogobuy actively seized the opportunity to develop its IC business with full strength. The Group entered a strategic cooperation with Toyota, one of the largest global vehicle suppliers, to establish a smart car ecosystem in China.
- Looking ahead to 2020, the acceleration of 5G construction and China new infrastructure spending will bring significant market opportunities for Cogobuy, and especially its IC business. “Ingdan Innovations'” chip and AI Industrial base was selected as one of the “Shenzhen major Project Plan 2020″ by Shenzhen National Development and Reform Commission.
HONG KONG, March 31, 2020 /PRNewswire/ — Cogobuy Group (“Cogobuy” or the “Company”, stock code: 400.HK; with its subsidiaries (the ”Group”)), a company focusing on IC component trading and artificial intelligence (“AI”)and internet of things (“IoT”, together “AIoT”) business services in China, is pleased to announce its audited consolidated results for the year ended 31 December 2019 (“2019” or the “Year”).
Financial Highlights of the Full Year of 2019
In spite of global political instability and increased downward pressure on the China’s economy in 2019, the Group succeeded in capturing several opportunities arising from the first year of accelerated 5G construction and infrastructure in China. The Group’s business performance is recovering gradually after a business transformation initiative over the past few years, and this year saw organic growth in the revenue from its core businesses. For the year ended 31 December 2019, revenue of the Group amounted to approximately RMB5,854.2 million, a YoY increase of 5.8%. Gross profit was approximately RMB565.6 million in 2019, representing a YoY increase of 32.5%. During the Year, Non-GAAP profit attributable to equity shareholders of the Company amounted to approximately RMB193.6 million. The Company profit attributable to equity shareholders of the Company and amounted to approximately RMB110.1 million.
For illustration purposes only, if the financial impacts of the disposal of EZ Robot during the six months ended 30 June 2018 were excluded, the net profit of the Group for the year ended 31 December 2019 would have increased approximately 25% as compared to the corresponding period in 2018, and revenue of the Group for the year ended 31 December 2019 would have increased approximately 19% as compared to the corresponding period in 2018.
For the year ended 31 December 2019, the Company’s cash and bank balances including short-term bank deposits and pledged deposits was RMB279.7 million. The Group’s bank loans were RMB180.7 million. Basic common shares outstanding were 1,430,088,000; diluted common shares outstanding were 1,443,927,000.
In order to further optimize the development of the Company’s business, Cogobuy reorganized its subsidiary structure in the second half of 2019, integrating its two primary businesses—IC sales and AIoT service business—under Ingdan Innovations, and the development and sales of the Company’s proprietary products, financing, and other enterprise services under Ingfin Services (the “IFS”). This effectively consolidated our overlapping IC sales and AIoT businesses. Upon completion of the reorganization, the Company will hold 75% of Ingdan Innovations and 100% of IFS, and both operations will continue to be consolidated into the Company’s financial statements.
Ingdan Innovations leverages a network of over 50% of global IC suppliers including the world’s top 100 suppliers and the top domestic chip companies. It also provides technology application solutions to upstream chip suppliers by promoting their products and technologies’ applications using its INGDAN.com online technology platform (“INGDAN”) and data analysis capabilities. Meanwhile, IFS focuses on developing proprietary products for different industries, including the Internet of Vehicles, smart homes, artificial intelligence surveillance, etc. IFS will also seek investment opportunities in high-quality startups within the Company’s AIoT ecosystem, to improve the Group’s overall strategic position and generate investment income.
As 5G technology rapidly develops, relevant network construction and device production, as well as the application of internet of things “IoT” and AI, will further enhance the demand for chips. The Group’s new “Ingdan Innovations + Ingfin Services” dual business model will therefore be able to accommodate demand along the entire 5G supply-chain, and create vital catalysts to the Group’s business in the future.
Cogobuy will directly benefit from China’s new infrastructure construction
Cogobuy is expected to directly benefit from China’s new infrastructure construction mainly in science and technology infrastructure construction including 5G infrastructure, data centers, AI, and the Industry of Internet. As at the end of 2019, over 100 countries/regions in the world have launched investments in 5G networks, and 5G has become the centerpiece of China’s new infrastructure. A report published by the China Academy of Information and Communications Technology (“CAICT”) estimated that the accumulated investments in 5G new network construction will reach RMB1.2 trillion in the next 5 years. At the same time, 5G network construction will enhance application investments and network upgrading within the upstream and downstream players along the industry chain, as well as for different industries. CAICT forecasted that the investment in upgrading of existing network will reach RMB500 billion by 2025, while 5G network construction will also stimulate application investments worth RMB3.5 trillion in different industries. With 2020 being the starting year of the 5G era, 5G infrastructure is set to grow immensely with the support of various government policies. This will create enormous market opportunities for Cogobuy’s IC business.
Cogobuy’s business covers the entire 5G construction value chain, providing products such as communication chips, modules, antenna and radio frequency products. Investments in 5G infrastructure will strongly boost the Group’s business, for instance, growth in the Group’s 5G network gateway communication devices business is expected to grow significantly in 2020. Additionally, new infrastructure segments such as big data and cloud services, Industry of Internet, and AI are also expected to drive growth within the Group’s IC business in the future.
Entering the era of 5G commercialization and IoE, driving growth in Cogobuy’s IC business and its development of Vehicle to Everything (“V2X”)
As an enterprise service platform, dedicated to sales of IC and related products and providing services to AIoT sectors in China, Ingdan Innovations collaborates with over 50% of global IC suppliers including the world’s top 100 suppliers and the top domestic chip companies. In the new era of 5G and IoE, Ingdan Innovations’ IC business will enhance the Group’s profitability.
V2X has also been positioned to become a new growth driver for the Group. Since 2018, the growth rate of IoT devices worldwide has maintained a strong momentum, with over 7 billion connected devices and a growing penetration rate, according to a report published by China Economic Information Service, IoT applications such as V2X, smart city, Industrial IoT, and others, are rapidly becoming reality, of which V2X is regarded as the most prominent segment within 5G vertical industry applications. According to the China Society of Automotive Engineers, the rate of sales for new V2X-enabled vehicles in China will reach 80% and 100% by 2025 and 2030 respectively, with the market over RMB1 trillion. According to the “5G Economic and Social Impact White Paper” published by CAICT, the Chinese V2X industry investment in communication devices and services will reach RMB12 billion by 2030. The Group is optimistic about the potential of V2X and has already developed and invested in the V2X market through IFS. The Company also established the V2X value-chain alliance with chip manufacturers, module suppliers, and car manufacturers in order to prepare in advance for the commercialization of V2X. During the Year, the Group’s V2X business layout includes the following:
- The Group entered a strategic cooperation with Toyota, one of the largest global vehicle suppliers, through INGDAN.com to establish a smart car ecosystem in China to help introduce various vehicle suppliers into Toyota’s supply chain certification system, enable the adoption of Chinese smart car projects by globally leading companies. This strengthened Cogobuy’s business in the V2X market.
- Group strategically invested in Locoway, a Hong Kong-based service supplier specialized in in-depth research and development for automatic safe driving smart terminals, including Advanced Driver Assistance Systems (“ADAS”) and Driver Monitoring Systems (“DMS”) as well as providing hardware, software, and services for smart cars. Services by Locoway include testing and installation of ADAS and DMS for several bus companies in Hong Kong and China, as well as providing AI and data-based intelligent driving solutions for automotive clients.
Mr. Jeffrey Kang, CEO of Cogobuy Group, said, “To enhance Cogobuy’s profitability and consolidate overlapping businesses, we completed our business reorganization at the end of 2019, integrating our two primary businesses—IC sales and AIoT—under Ingdan Innovations, and the development and sales of the Company’s proprietary products, financing, and other enterprise services under IFS. This has prepared Cogobuy for new opportunities and provided a more distinct business positioning.
The 5G industry is set to grow rapidly in the coming years, and it is expected that demand for IC and modules from the upstream and downstream of the industry will continue to increase. The Group plans to penetrate the 5G industry chain, and to accommodate the strong market demand of IC components brought by 5G construction and device production in the future. Ingdan Innovations collaborates with over 50% of global IC suppliers including the world’s top 100 suppliers and the top domestic chip companies. With our quality products and services, we have succeeded in strengthening collaborations with long-term customers, enhancing customers’ loyalty, and expanding and strengthening Cogobuy’s current customer list. Additionally, the Group will focus on investing and developing V2X business through IFS and increase investment in R&D of IFS in order to expand its proprietary products. We will actively seek different strategic investors’ collaboration for Ingdan Innovations, as well as grow its cooperation with leading AIoT hardware and software companies to expand solutions for INGDAN’s Internet technology platform. The Group will enrich its AIoT ecosystem and further discover new profit drivers.
Looking ahead to 2020, although the COVID-19 outbreak has had a severe impact on the world’s capital markets, it, on the other hand, has hastened the implementation of new government infrastructure policies worth RMB25 trillion. The new infrastructure policy includes seven segments such as 5G network infrastructure, AI, IoT, big data, and new energy automotive, etc. creating important opportunities for the Chinese 5G and AIoT industries. As 5G technology develops and matures, the future will become an era for AI, high-performance cloud applications, and IoE. The need for device upgrades will drive greater demand for IC and AIoT chip solutions. The Group, through Ingdan Innovations, will provide enterprises with chip application solutions and drive the development of a “chip-devices-cloud” big data ecosystem in order to capture business opportunities from China’s 5G transformation.
In addition, the Shenzhen National Development and Reform Commission recently included Ingdan Innovations’ chips and artificial intelligence industrial base in its new investment plan, the “Shenzhen Major Project Plan 2020”. The AI industrial base covers the entire industrial chain of chip design, manufacturing, application, marketing, and data services. It has the ability to transform innovative ideas into intelligent hardware products, and serve as the basis for a “chip-devices-cloud” intelligent hardware ecosystem. The AI industrial base will serve two core business areas: (1) semiconductor chips and (2) AIoT, and drive the development of a “chip-devices-cloud” big data ecosystem. We believe the repositioned “Ingdan Innovations + Ingfin Services” new dual business model will help us prepare for the demand arising from the growth and development of 5G.”
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.
 Net profit attributable to equity shareholders add share-based compensation costs, amortization of intangible assets and its related deferred taxation effect.
 As disclosed in the Company’s interim results announcement for the six months ended 30 June 2018, the Company disposed of its 51% equity interest in EZ Robot in such period, which led to a one-off gain of RMB181.8 million recorded in its results for the six months ended 30 June 2018. As a result of such disposal, the Company no longer consolidates the results of EZ Robot in its consolidated financial statements, which also has an impact on the Group’s profits for the year ended 31 December 2019.
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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 U.S., Singapore, Israel, and Japan. Following a major business restructuring in 2019, the Group merged its chips sales and artificial intelligence and internet of things (“AIoT”) services under its “Ingdan Innovations” business unit, and merged its R&D and IoT product financing and corporate services, previously operated by a series of companies under INGDAN.com AIoT Business Service Platform, into its “Ingfin Services” business unit, forming a new “Ingdan Innovations + Ingfin Services” dual business model. For further information, please refer to the Company’s website at https://www.cogobuy.com/
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SOURCE Cogobuy Group
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