Cogobuy Announces 2021 Interim Results

September 1, 2021

Net Profit Increased Significantly by 45.4% to RMB172.4 Million

Highlights of the Interim Results for the Six Months Ended June 30, 2021:

The continuous developments of innovative technologies and applications during 5G era have further intensified the demand for semiconductor chips, and the Group’s chip business has grown substantially during the period, with a significant increase of 45.4% in net profit to approximately RMB172.4 million. The Group’s profit attributable to equity shareholders of the Company was approximately RMB110.5 million.
The revenue was approximately RMB3,927.3 million in the first half of 2021, a YoY increase of 19.7%; gross profit was approximately RMB344.6 million, a YoY increase of 35.3%.
The Group’s chip business, "Comtech" continued to grow, with a significant increase of 67.6% YoY in revenue. "Comtech" gained strong interest among institutional investors, Guangdong Industrial Development Fund made another investment of approximately RMB150 million during the Period to support our business for high growth returns.
With the strong support from Shenzhen government, "IngDan Academy" was officially launched to train chip application technology talents for the trillion-RMB domestic chip market.

HONG KONG, Sep. 1, 2021 — Cogobuy Group ("Cogobuy" or the "Company", stock code: 400.HK; with its subsidiaries (the ”Group”)), a technology service company focusing on serving global chip industry and artificial intelligence ("AI") and internet of things ("IoT", together "AIoT") ecosystem, is pleased to announce its unaudited interim results for the six months ended June 30, 2021 ("the first half of 2021" or the "Period").

Financial Highlights of the First Half of 2021

With the rapid development of the global 5G construction, the demand and development of electric vehicles (EV) and smart medical industries, Cogobuy’s business has been directly benefited from a strong demand in semiconductor chips with a continuous acceleration of performance during the Period. The Company’s net profit and revenue both recorded significant increases, especially the growth rate of net profit was faster than revenue.

For the six months ended 30 June 2021, the Group’s net profit was approximately RMB172.4 million, a YoY increase of 45.4%; revenue was approximately RMB3927.3 million, a YoY increase of 19.7%; gross profit was approximately RMB344.6 million, representing a YoY increase of 35.3%. The increase in gross profit margin was contributed by change in sales mix which sales in new markets such as, V2X, smart homes, AI surveillance, etc. had a relatively higher gross margin than those of the traditional IC components. During the period, the Group’s profit attributable to equity shareholders of the Company amounted to approximately RMB110.5 million. For the six months ended 30 June 2021, the Company’s cash and bank balances including short-term bank deposits and pledged deposits was RMB659.5 million. The Group’s bank loans were RMB187.5 million. Basic common shares outstanding were 1,416,184,732; weighted average number of ordinary shares for the purpose of diluted earnings per share were 1,401,384,000.

In order to provide a full spectrum of services for the 5G industry chain, Cogobuy Group has formed a development model of "Comtech and IngDan" to create a closed loop of "Chips-Devices-Cloud" ecosystem along the AIoT value chain, and to bring sustainable income for the Group. "Comtech" is a technology services platform for the chip industry, which focuses on the application design and marketing services of IC chips to AIoT manufacturers in China. Meanwhile, "IngDan" provides a platform for AIoT technology and services that focus on the research and development and sales of proprietary products, as well as developing customized technical solutions, which include bundles of software, hardware, and core components. Targeting V2X and 5G applications will bring more new impetus to the Group’s development.

Chip Business Continued to Grow with 5G Development

Large and continuously expanding chip market benefits from the accelerated expansion of 5G technology applications. IC Insights, Inc. expected that the sales of the global chip market will increase significantly by 24% YoY in 2021^[1], resulting in the continuous growth of Comtech’s chip business with a significant increase of 67.6% YoY in revenue. The Group has long recognized the huge potential of the chip market. "Comtech" maintains distribution or cooperation agreements with over 50% of global high-end chip suppliers and many leading domestic chip companies, allowing it to serve over a hundred global high-end chip suppliers upstream, and thousands of AIoT hardware companies downstream, while providing them with chips application development solutions and sales services. The popularization and application of 5G to various industries for intelligent upgrade has intensified the demand for chips and the support of technology application, providing a sustainable business growth momentum for the Group in the future.

Received Additional Capital Injection from Investors

Following the successful capital injection by 19 institutional investors to "Comtech" in 2020, Guangdong Industrial Development Fund under Guangdong Utrust Fund Management, which belongs to Guangdong’s largest provincial integrated financing platform, further invested approximately RMB150 million for an equity interest of 4.92% of "Comtech" during the Period. The investment from the investors will aid Comtech’s continued growth in the rapidly growing 5G market and the trillion-RMB domestic chip market. Upon completion of the transaction, the Group’s ownership of "Comtech" is approximately 62.42%.

iPaaS Services

With the acceleration of the popularization of AI and 5G technologies, the application of AIoT is promoted and has led to the digital transformation of various industries. This ultimately brings more business opportunities to Cogobuy. According to the "Global Smart Commerce", the global AIoT market is expected to reach US$482 billion in 2022, representing a CAGR of 28.6%. ^[2]

The Group continues to be optimistic about the huge demand in AIoT market and the derived demand for technology integration iPaaS (Integration Platform as a Service) services will surge continuously. The iPaaS platform service is to automate business processes and make it easier to share data cross applications. Through the combination of "Comtech" and "IngDan", the Group has integrated upstream and downstream industrial supply chain resources, to provide the "Chips-Devices-Cloud" ecosystem along AIoT value chain with iPaaS services, which included technology integration solutions, marketing solutions and distribution services for the 5 main AIoT verticals including V2X, Smart Home, Robotics, Smart Manufacturing and Smart Medical. As the Group has actively established its presence in the AIoT, it has accumulated a large number of "ecological customers". In order to fully expand the domestic iPaaS service market, the Group leveraged its big data analytics and integration solutions to provide iPaaS services to its customers.

The Group has been actively building the EV and V2X business and engaged in in-depth cooperation with different modules and smart terminal suppliers. With the expansion of the smart transportation market, the demand for FPGA chips from the V2X has surged, and the global market size of FPGA is expected to reach US$12.5 billion in 2025^[3]. During the Period, the Group, together with the world’s leading FPGA supplier and technology enterprises, jointly created the hardware acceleration engine to meet the demand for road situation detection and real-time processing under different scenarios. The smart transportation market is growing and the Group’s business in the field of V2X is expanding;
The application of chips in intelligent security system has become the key to smart city construction in the future. Therefore, the Group leverages its own industrial and technological advantages to provide chip application related to security solution for smart security enterprises in collaboration with a world-renown chip supplier. The fourth generation of large-scale prototype verification system with the largest capacity of FPGA chips was successfully co-launched by the Group and the domestic leading provider. This system provides the highest logic density for chips and hence strengthens the security of intelligent security system. Through the joint efforts of various parties, the Group will be able to implement more iPaaS projects and promote the business development of the Group;
With the rapid development of OTT large-screen Internet, IngDan and technology companies jointly created WIFI-BT wireless solution with stable signal and high throughput, and achieved the maximization of chip performance and the optimization of terminal demand on the basis of application. The performance demand for wireless communication from OTT industry equipment will be satisfied effectively and the traditional TV will be empowered with intelligent transformation as a part of the development trend of smart home.

Acquisition of EZ Robot to Create a Comprehensive AIoT Service Platform

With the rapid development of the popularization and application of 5G, the market demand for AI continues to increase. In order to further expand the Group’s business development in AI and robotics, the Group acquired EZ Robot Group at a consideration of HK$180 million. Taking AI modules with independent intellectual property rights as the core, EZ Robot is engaged in AI technology research, building an AI hardware product and robot application platform, providing robots related products companies with overall solutions and supply chain services. The Group believes that the combination of EZ Robot and AI technology will enhance the performance and market competitiveness of the Company.

IngDan Academy Trained IC Application Technology Talents

The global supply of chips is in a shortage and the professionals in chips are also in short supply. As a leading enterprise in the domestic chip industry, the Group has been committed to cultivating talents in chip application technology. "IngDan Academy", a subsidiary of Shenzhen Ingdan Institute of Microelectronics, and Shenzhen Public Training and Management Service Center for Skilled Talent jointly held public vocational skills program during the period. Through the Group’s resource advantages in the chip industry, it introduces world-leading technologies to provide comprehensive chip technical training program for students. The Group will continue to promote the training of professionals in chips to facilitate the development of the chip application industry.

Outlook

Mr. Jeffrey Kang, CEO of Cogobuy Group, said, "The continuous developments of innovative technologies and applications in the 5G era have led to an increase of market demand for chips and AIoT services. The Group has always seized important market opportunities and continued to maintain the growth momentum of business during the period.

In addition to actively planning for the chip industry market, the Group also provides iPaaS technology integration services for the AloT industrial chain, so as to create a closed loop of "Chips-Devices-Cloud" ecosystem along the AIoT value chain, and provide a full spectrum of services for the 5G industry chain. In line with the national policy of chip technology breakthrough and application, the Group actively promoted the development of the industry through training talents in chip technology, and strengthened the supply of chip applications in different fields driven by 5G. The Company will achieve higher returns from the comprehensive development of the chip business.

Looking ahead, the combination of 5G and AI will open up an era of intelligence. The technological applications of AloT "Chips-Devices-Cloud" will be continuously innovated and developed, which will further increase the demand for chips. The Group will continue to seize the potential market growth brought by 5G technology, and keep abreast of the development of the industry. The Group’s business and services are continuously optimized to cover the entire 5G beneficiary industries which include the V2X, smart manufacturing and big data, etc. The Group is committed to becoming the world’s leading technology integration service enterprise in the AIoT industry, as well as creating greater returns for the Group and its shareholders."

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 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 (stock code: 400.HK), a technology services company serving the global chip industry and artificial intelligence and Internet of Things ("AIoT") ecosystem, 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 Singapore, Israel, and Japan. The Group is comprised of two companies operating a dual-platform model: Comtech, a technology services platform for the chip industry, and IngDan, a platform providing AIoT technology and services. Together, the two platforms form a closed loop of "Chips-Devices-Cloud" ecosystem along the AIoT value chain. For further information, please refer to the Company’s website at http://www.cogobuygroup.com/