Absen's net profit turned from profit to loss in 2020; Jiawei New Energy plans to sell 100% equity of Jinchang Xipo for 280 million yuan

Absen's net profit attributable to parent company shareholders turned from profit to loss in 2020

Absen disclosed its annual report on April 10. The company achieved a total operating revenue of RMB 1.642 billion in 2020, a Year-on-year (YoY) decrease of 24.69%; the net profit attributable to shareholders of the Listed company was -RMB 71.1494 million, a Year-on-year (YoY) decrease of 166.34%, compared to RMB 110 million in the same period last year, failing to maintain profitability.

Absen stated that, affected by the pandemic, to adapt to changes in the international and domestic economic situation and market environment, the company quickly adjusted its market strategy and rapidly launched the CD337 Plan to accelerate development in the Chinese market, building its distribution channels across 337 prefecture-level cities in China. Through strategic depth breakthroughs, industry resource layout, breakthroughs in key industries, and rapid replication of experience, it enhances competitiveness and output in segmented industries.

During the reporting period, the main reasons for the changes in the company's performance are as follows:

1. Revenue declined, with the company's overall revenue decreasing by approximately RMB 538 million Year-on-year (YoY) in 2020. Affected by the pandemic, traditional advertising and stage/rental businesses in the international market saw a sharp drop in procurement in the short term, while the company's Revenue has historically been mainly derived from the international market.

2. Re-enter and focus on the Chinese market by proactively reducing gross profit margin. To increase product market share and strive to bring Absen's high standards and high-quality products and services from Europe, the United States, and Japan back to the Chinese market, the company has adjusted its sales structure and proactively reduced its gross profit margin.

3. The CD337 project led to an increase in the expense ratio. Amid a decline in overseas markets, the company quickly adjusted its strategy and rapidly launched the CD337 plan, extending China's (Sales) channels to 337 prefecture-level cities nationwide. The CD337 project required significant human and material resources, resulting in cumulative additional expenses of nearly RMB 50 million.

4. Continuously increase various strategic investments. This includes product R&D tailored to different markets, especially the Chinese market, IT system construction, and talent acquisition in areas such as product management, product R&D, marketing planning, and sales management, which has a certain impact on the net profit attributable to shareholders of the listed company.

During the reporting period, the Company achieved total domestic display orders of approximately RMB 1.03 billion. In recent years, the scale of the Company's domestic display orders has continued to grow rapidly. In addition, the Company has long been dedicated to Micro LED technology R&D. In early 2021, Absen globally launched its first Micro LED display products based on its proprietary HCCI technology, showcasing Absen's years of technological research achievements. Absen's full range of Micro LED displays includes 8K, 4K, and 2K LED displays, suitable for various ultra-high-definition display scenarios.

For the international market, the company focuses on developing commercial display dealer channels, increases investment in online marketing campaigns, and supports overseas dealers in organizing and conducting local marketing activities.

Absen's main business is the R&D, production, and sales of LED full-color displays. The company's LED full-color display products include fine-pitch screens, rental screens, stage creative screens, outdoor large screens, stadium screens, etc. During the reporting period, there were no significant adverse changes in the company's core business or core competitiveness.

Absen stated that over the next three years, the company will continue to deepen its focus on the display industry, ensure its current market position in international markets is maintained, invest more resources, and reposition and strategize for the Chinese market. The approach will be neither overly aggressive nor sluggish; it will allow for offensive moves when advancing and defensive stability when retreating, steadily achieving the company's phased strategic goals.

Jiawei New Energy plans to sell 100% equity of Jinchang Xipo

On the evening of April 7, Jiawei New Energy issued an announcement stating that its wholly-owned subsidiary, Jiangsu Huayuan New Energy Technology Co., Ltd. (hereinafter referred to as "Huayuan New Energy"), holds 100% equity in Jinchang Zhenxin Xipo Photovoltaic Power Generation Co., Ltd. (hereinafter referred to as "Jinchang Xipo" or the "Target Company"). Huayuan New Energy now intends to transfer 100% equity in Jinchang Xipo to Gansu Huadian Fu New Energy Co., Ltd. (hereinafter referred to as "Huadian Energy").

The consideration for the transfer of the target equity is RMB 279.7606 million (including RMB 76.8109 million already invested in construction in progress for the three phases of the 75MW grid-parity project). An initial payment of RMB 202.9497 million will be made for this transaction, with the remaining RMB 76.8109 million to be paid in installments based on project progress as construction for the three phases of the 75MW project proceeds.

According to the announcement, the target company Jinchang Xipo owns a 200 MW photovoltaic power generation project, of which 125 MW has been commissioned. The electricity tariff for Phase I (100 MW) is RMB 0.9/kWh, and for Phase II (25 MW) it is RMB 0.8/kWh. Additionally, the quota for the third phase (75 MW), a grid-parity project, has been issued and is under construction.

Jiawei New Energy stated that this transaction will help the company improve cash flow, seize the huge opportunities for new energy business development during the "14th Five-Year Plan" period, integrate and optimize existing resource allocation, enhance the overall competitiveness of the listed company, align with the company's long-term development plan, and serve the interests of all shareholders and the company. Upon completion of this equity transfer, Huayuan New Energy will no longer hold equity in Jinchang Xipo.

Jiawei New Energy has three major business segments: smart lighting, photovoltaic power, and lithium battery energy storage. Its product range is gradually expanding from new energy consumer products to new energy industrial products and services.

In 2020, under the dual pressures of the pandemic and the trade war, Jiawei New Energy promptly adjusted its business strategy, further optimized its customer and product structure, resulting in a steady increase in product gross margin, a significant reduction in period expenses, and a substantial rise in operating profit. The net profit attributable to shareholders is expected to reach RMB 23 million to RMB 33 million. Analysis indicates that this asset disposal will further revitalize Jiawei New Energy's existing potential Industry, and the company's performance is expected to continue to improve.