Cogobuy Announces 2019 Interim Results

HONG KONG, Aug. 28, 2019 /PRNewswire/ --

Highlights of the Interim Results for the Six Months Ended June 30, 2019:

• The accelerating commercial application of 5G technology drove higher adoption of AIoT technologies and services, resuming growth in the Group's core business.
• For the six months ended 30 June 2019, the Group's total revenue was RMB2,671.2 million, a decrease of 9.8% YoY, primarily due to the disposal of EZ ROBOT, INC. (''EZ Robot'') in the first half of 2018. As a result of the disposal, the Company no longer consolidates the results of EZ Robot in its financial statements. For illustration purposes only, if the Company consolidated EZ Robot's results, the Group's revenue in the first half of 2019 would have increased 6% YoY.
• During the Period, the Group's INGDAN.com continued to capture new opportunities from the Internet of Things ("IoT") space and speed up the development of the growing Vehicle-to-Everything ("V2X") space. It entered a strategic agreement with Toyota and introduced a number of suppliers into Toyota's certified supply chain system, bringing billion-dollar opportunities to its ecosystem.

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 and internet of things ("AIoT") business service in China, is pleased to announce its unaudited interim results for the six months ended June 30, 2019 ("the first half of 2019" or the "Period").

Financial Highlights of the First Half of 2019

The Group's "AIoT Business Service Platform + IC Component Trading Platform" dual business model continued to benefit the growth of Group's business. INGDAN.com disposed of EZ ROBOT, INC. (''EZ Robot'') in the first half of 2018 and no longer consolidates EZ Robot's results in the Group's financial statements. Therefore, the Group recorded total revenue of RMB2,671.2 million, a YoY decrease of 9.8%, in the first half of 2019. For illustration purpose only, if the Company consolidated EZ Robot's results, the Group's revenue for the six months ended June 30, 2019 would have increased 6% over the same period of the previous year.

During the Period, Non-GAAP profit^[1] attributable to equity shareholders of the Company amounted to approximately RMB66.4 million, a YoY decrease of 63.3%. Profit attributable to equity shareholders of the Company amounted to approximately RMB 38.0 million, representing decrease of approximately RMB201.0 million or approximately 84.1% as compared with approximately RMB239.0 million for the corresponding period of 2018. For illustration purpose only, if the Company excluded the RMB181.8 million one-off gain from the disposal of EZ Robot and consolidated its results in its financial statements for the Period, profit attributable to equity shareholders and Non-GAAP profit attributable to equity shareholders in the first half of 2019 would have increase 2% over the same period the previous year.

For the six months ended 30 June 2019, the Company's cash and bank balances including short-term bank deposits and pledged deposits was RMB778.7million. The Group's bank loans totaled RMB942.4 million. Basic common shares outstanding were 1,440,760,000; diluted common shares outstanding were 1,452,556,000.

Mr. Kang Jingwei, Jeffrey (''Mr. Kang''), the chairman, chief executive officer and executive Director of the Company, has entered into a compensation agreement (the ''Compensation Agreement'') with each of the placees of the conditional placing of the Company's shares issued or allotted under the general mandate granted to the Directors in September 2016 (the ''Placing''). For further details of the Compensation Agreement, please refer to the announcement of the Company dated 1 September 2016 in relation to the Placing. Even though the net proceeds from the share placement was solely for the Company, Mr. Kang is required to compensate the Company's investors under the original agreements. Mr. Kang has reached agreements with the investors that he will use his own assets, including his shares of the Company, to satisfy the compensate obligation. Hence, it is expected that his shareholding may decrease from the current 48% to no less than 30% over the next two years. Mr. Kang will remain the Group's largest shareholder of the Company, and his control over the Company and the business operations of the Company will not be affected.

In spite of the increasing significant downward pressure on the global economy since the start of the year, both high technology and new economy companies continued to be the main drivers of Chinese economic growth. The Group has been optimizing its business growth through actively promoting its AIoT ecosystem since the strategic adjustment to its current dual business model. At such, the Company has established extensive cooperative partnerships with upstream and downstream enterprises, and enabled customers and partners to capture opportunities from the growing artificial intelligence industry.

The Opportunities of 5G Infrastructure

With the Ministry of Industry and Information Technology of the People's Republic of China officially issuing 5G commercial licenses to China's three leading telecommunication operators and the China Broadcasting Network Corporation in June 2019, China has entered a new era of 5G commercialization. As an industry leader in IC component trading with good relationships with global leading semiconductor factories, Cogobuy is well positioned to capture the 5G market opportunity. In its cooperation with Datang Telecom and China Unicom, Cogobuy's proprietary technologies and customized solutions are empowering the Group to capture opportunities from 5G related market. According to estimates from market research firm MarketsandMarkets, the global 5G market will grow from US$539.3 billion in 2020 to US$1232.7 billion in 2025 with a compound annual growth rate ("CAGR") of 18%, with new network equipment and applications being the first to benefit from 5G. IDC, another research firm, forecasts the market value of some 5G infrastructure including 5G and 5G-related network infrastructure like 5G RAN, 5G NG core, NFVI, and routing and fiber backhaul will grow from US$0.528 billion in 2018 to US$26.0 billion in 2022 with a CAGR of 118%.

Vigorously Developing the Business of Vehicle-to-Everything

5G infrastructure does not only provide Cogobuy with great opportunities, but also creates a wide variety of AIoT uses and brings the vision for IoE closer to reality. Among 5G vertical industry applications, Vehicle-to-Everything ("V2X") is considered to be the field with the greatest potential. MarketsandMarkets predicts the V2X global market will reach US$99.6 billion in 2025, with a CAGR of 17.9%, while the China market is estimated to reach RMB200 billion.

Development of V2X will benefit the production of chips, modules, intelligent terminals, and other areas of its business. Therefore, the Group sped up the formation of its V2X value-chain alliance with chip manufacturers, module suppliers, and car manufacturers in the first half of 2019, including forming strategic partnership with Toyota, in order to develop commercial deployment of V2X in 2020. In December 2018, the Ministry of Industry and Information Technology of the People's Republic of China announced the "V2X Industry Development Action Plan", setting a target penetration rate of V2X users at a minimum of 30% by 2020. It also requested that the installation rate of Driver Assistance Systems (L2) on new cars reach over 30%, and assembly rates of V2X terminals on new cars reach over 60% by 2020. These measures are expected to bring Cogobuy huge market opportunities.

• The Group's INGDAN.com platform entered a strategic cooperation with Toyota, the largest global vehicle supplier, to establish the "Toyota INGDAN.com Innovation Platform" (the "Innovation Platform") smart car ecosystem in China. The Group successfully introduced various vehicle suppliers into Toyota's supply chain certification system, which will help facilitate the adoption of Chinese smart car projects by globally leading companies, contribute to China's automotive industry, and secure the Group's advanced position in the V2X industry.
• The Group made a strategic investment 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. The investment will enable the Group to provide industry chain services and further strengthen its position in the emerging V2X market. Services by Locoway include testing and installation of ADAS and DMS for some of the bus companies in Hong Kong and China, as well as providing intelligent driving solutions for automotive clients with AI and big data collection needs.

Outlook

Mr. Jeffrey Kang, CEO of Cogobuy Group, said, "As 5G technology enters the commercial phase, it is unlocking the full industrial potential of AIoT. As one of the earliest leaders in AIoT enterprise services, we have established extensive cooperative relationships with upstream and downstream enterprises along the industry chain. After nearly two years of deployment, the Group has successfully transformed from an IC component trading platform to an AIoT business services provider for Chinese smart enterprises, providing consulting services that cover technologies, supply financing, and sales and marketing. We are continuing to focus on three monetization strategies: first, the sale of smart hardware such as chips and AI modules to AIoT enterprises; second, the provision of customized chip designs, proprietary AI modules and AIoT technologies; as well as supply chain finance and other industrial chain services to generate revenue.

Following the issuance of the relevant licenses, China's 5G development has entered the construction phase. Together with AIoT, 5G has embodied new and huge application scenarios and markets. All of China's industries will experience a digital, smart evolution, with upgrades that are being motived by 5G and AIoT in the next two years, which will create huge opportunities for Cogobuy. Being the leading chip and AloT service platform company, we work closely with 50% of the world's 100 largest semiconductor suppliers and dozens of first-and-second-tier China domestic chip manufacturers. Our chip business is expected to grow in the second half of the year.

Cogobuy and INGDAN.com, the business services platform under our flagship brand, are set to benefit from the market opportunities brought by the roll out of 5G and AIoT applications. Looking ahead to the second half of 2019, we expect our chip business in particular will experience growth benefitting from the roll out of 5G and AIoT applications

Cautionary 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 [email protected].

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SOURCE Cogobuy Group