AEHL

Good morning, and good day. Welcome to the Antelope Enterprise Holdings First Half 2024 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to David Rudnick of Precept Investor Relations. Please go ahead.

Thank you, Drew. Good morning ladies and gentlemen and good evening to those of you who are joining us from China. Welcome to Antelope Enterprise Holdings First Half 2024 Earnings Conference Call. With us today are Antelope Enterprise's Chairman and Chief Executive Officer, Mr. Will Zhang; and his Chief Financial Officer, Mr. Edmund Hen. Before I turn the call over to Mr. Zhang, I would like to address forward-looking statements that may be discussed on the call. Forward-looking statements involve risks and uncertainties and include, among others those regarding revenue, operating expenses, other income and expense, taxes and future business outlook. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements. The company claims the Safe Harbor protections for such forward-looking statements as contemplated under the Private Securities Litigation Reform Act of 1995. Please refer to the documents filed with the Company with the SEC. Specifically, the most recent reports on Forms 20-F and 6-K, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements. We assume no obligation to update any forward-looking statements or information, which speak as of their respective dates. And now it's my pleasure to turn the call over to Antelope Enterprise's Chairman and CEO, Mr. Will Zhang, and Antelope Enterprise's CFO, Mr. Edmund Hen. Antelope Enterprise's [Sabrina Hsu] (ph) will be translating for CEO, Will Zhang. Mr. Zhang, you may proceed.

[Foreign Language] All right. Thank you David. On behalf of the company, I would like to welcome everyone to our first half 2024 earnings conference call. [Foreign Language] Revenue for the livestreaming e-commerce business segment came in at $43.4 million for the six months, modestly lower than the $44.6 million in revenue recorded for the six months of 2023. This slight decline was due to a loss of a few major clients and a change in business strategy to secure a larger number of mid-tier clients to help to mitigate the risk of retaining major clients. We had engagements with more than 70 clients in the first half of 2024, represents an increase of nearly 20 clients compared to the same period in 2023. [Foreign Language] Our majority-owned KylinCloud subsidiary provides turnkey livestreaming marketing and broadcasting services to consumer brand companies by matching consumer brand products with the appropriate the hosts and influencers. We have a tremendous market opportunity ahead of us and believe that we have the resources, infrastructure and team culture to achieve sustained growth in the B2C ecosystem. [Foreign Language] In an important strategic development for the company, we recently announced that we are planning to enter the energy field in the third quarter of 2024 and are going to launch this business in Texas to meet the rapidly growing needs of the computing power industry. [Foreign Language] We believe that our new positioning in the energy supply sector is extremely timely to meet the high expected demand for energy due to the growth of these sectors. [Foreign Language] With that, I would like to turn over the call to the company's Chief Financial Officer, Mr. Edmund Hen, who will discuss the company's first half earnings results in more detail. Thank you so much.

Thank you, Mr. Zhang. I’ll now move on to a more detailed discussion of our financial results for the six months ending June 30, 2024. Revenue for the six months ended June 30, 2024, was $43.5 million, a decrease of $1.1 million or 2.6% from $44.6 million for the same period of 2023. The decrease in revenue was due to the loss of a few of the livestreaming business major clients in the current period. [This] (ph) propelled a change in business strategy to focus on securing a larger number of mid-tier clients to mitigate the risk associated with an over concentration of major clients. In the first half of 2024, we had business engagements with more than 70 clients which represented an increase of nearly 20 clients compared to the same period of 2023. Gross profit for the six months ended June 30, 2024 was $3.5 million, a decrease of $3.3 million or [46.7%] (ph) as compared to $6.8 million for the same period of 2023. The decrease in gross profit was due to the decrease in revenue and an increase in the cost of goods sold in the current period. For the first half of 2024, gross profit margin was 8% for the livestreaming ecommerce business as compared to a gross profit margin of 15.3% for the first half of 2023. Selling and distribution expenses for the six months ended June 30, 2024 were $3.1 million, a decrease of $4 million or 55.9% as compared to $7.1 million for the same period of 2023. The [increase] (ph) in selling and distribution expenses was due to decreased advertising and promotion expenses of $3.5 million and decreased commission expenses of $0.5 million. Administrative expenses for the six months ended June 30, 2024 were $6.9 million, an increase of $1.3 million or 22.8% as compared to $5.6 million for the same period of 2023. The increase in administrative expenses was due to an increase in stock compensation expense of $0.8 million, the $0.5 million increase in professional service expenses. Loss from continuing operations before taxation for the six months ended June 30, 2024 was $6.5 million, an increase of $1.1 million or 19.3% as compared to a loss from continuing operations before taxation of $5.5 million for the same period of 2023. The increase was due to the decrease in gross profit in the current period as compared to the same period of 2023, as well as an increase in administrative expenses which was partly offset by a decrease in selling and distribution expenses. Loss per basic share and fully diluted share from continuing operations for the six months ended June 30, 2024 were $0.96 as compared to loss per basic and fully diluted share of $3.38 for the same period of 2023. Turning to our balance sheet. As of June 30, 2024, we had $2.3 million in cash and cash equivalents, an increase of $1.8 million or 333.2% compared to $0.6 million as of December 31, 2023. As of June 30, 2024, working capital was $5.8 million and the current ratio was 2.6 times. Shareholders' equity as of June 30, 2024, was $18 million, as an increase of $3.6 million or 25.2% as compared to $14.4 million as of December 31, 2023. Moving to our business outlook. We own a majority position of a livestreaming ecommerce business, Hainan Kylin Cloud Services Technology Company Limited, and aim to launch an energy supply business in the third quarter of 2024. Kylin Cloud’s SaaS systems platform strategically matches hosts and influencers to consumer brand products which results in increased sales for those companies. In the last few years, livestreaming ecommerce has comprised an ever-increasing percentage of China's ecommerce sales which we expect to continue in the years ahead, spurred by a consumer ecosystem that includes a young demographic and their high-usage rate of mobile devices. We believe that Kylin Cloud is unique in the livestreaming space, since it utilizes advanced analytics that matches hosts and influencers to consumer brand products which facilitates unique content for higher conversion rates as compared to traditional ecommerce. In the current period, the business strategy of the livestreaming business was modified to focus on securing a larger number of mid-tier clients to mitigate the risk associated with an over-concentration of major clients. Since some of these new clients are still in the beginning stages of collaboration and their business volume has just started to grow, it will take time for the new mid-tier clients to develop and increase their sales volume. In the first half of 2024, the livestreaming business had business engagements with more than 70 clients, which represented an increase of nearly 20 clients compared to the same period in 2023. In an important strategic development for the company, we recently announced plans to enter the energy field through the production of electricity using natural gas generators in Texas. This electricity would then be transmitted directly to rapidly growing computing sectors, who requires high amounts of energy. Compared to conventional methods, this method eliminates intermediary steps like transmission to the power grid and processing by public utilities, which will result in lower energy losses and higher efficiency. Given the strong market demand, the Company believes it has a runway for significant growth in the near future. The business outlook reflects the Company's current and preliminary views and is based on the information currently available to us which are subject to change, and is subject to risks and uncertainties, as well as risks and uncertainties identified in the Company’s public filings. At this point, we would like to open up the call to any questions pertaining to our first half 2024 financial results. Operator, please?

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Steve Silver with Argus Research. Please go ahead.

Thanks operator. And thank you for taking my questions. I was hoping you could provide some color about how the company made the strategic decision to enter the energy supply field.

All right. Thank you for the questions. [Foreign Language]

[Foreign Language] Let me begin by saying that the US Energy Information projects that electricity demand in the United States will increase to record highs in 2024 and 2025, largely driven by demand from large scale computing facilities. [Foreign Language] The IEA, as it is known, also said that global data center electricity demand is on its way to double from 2022 to 2026 with AI playing a major role in that increase. Most of us know that data centers support everything from financial transactions to social media to government operations, it is extremely energy intensive to train AI models. The IEA has predicted that in two years, data centers could consume the same amount of energy as Sweden or Germany. [Foreign Language] Data centers need continuous and stable supply of energy to operate. And that's where we come in because we have developed such a model. We think that we are entering this market at exactly the right time to provide a cost-effective and stable means of providing electricity to data centers and those companies in need of computing power.

Okay. That’s helpful. Thank you so much. And one follow-up. You've mentioned being cost-effective in your model. Is there any detail you can provide about the business model in terms of how it is supposed to be cost-effective and designed to be a stable source of energy for your customers.

All right. Thank you so much. [Foreign Language]

[Foreign Language] So we're located close to the natural gas production site, which allows us to minimize transportation costs and avoid the cost of compression, transportation and storage. Also, we strategically positioned close to our customers as well to greatly minimize standing transportation costs there as well. Therefore, we can supply electricity to customers in a very cost effective way. [Foreign Language] We closely monitor the market for natural gas and believe that we have a good model to project the right time to secure natural gas for our business. We currently own four generators that convert natural gas into electricity and plan to launch this business in the fourth quarter of this year.

[Operator Instructions] This concludes our question-and-answer session. I would like to turn the conference back over to David Rudnick for any closing remarks.

Thank you, Drew. On behalf of the entire Antelope Enterprise management team, we'd like to thank all of you for your interest and participation on this call. This concludes Antelope Enterprise's first half 2024 earnings call. Thank you very much.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning, and welcome to the Antelope Enterprise Holdings First Half 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to David Rudnick of Precept Investor Relations. Please go ahead.

Thank you, Drew. Good morning, ladies and gentlemen, and good evening those of you who are joining us from China. Welcome to the Antelope Enterprise Holdings' first half 2023 earnings conference call. With us today are Antelope Enterprise's Chairman and Chief Executive Officer, Mr. Will Zhang; and Chief Financial Officer, Mr. Edmund Hen. Before I turn the call over to Mr. Zhang, I'd like to address forward-looking statements that may be discussed on the call. Forward-looking statements involve risks and uncertainties and include, among others, those regarding revenue, operating expenses, other income and expense, taxes, and future business outlook. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements. The company claims the Safe Harbor protections for such forward-looking statements as contemplated under the Private Securities Litigation Reform Act of 1995. Please refer the documents filed by the company with the SEC, specifically, the most recent reports on Forms 20-F and 6-K, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements. We assume no obligation to update any forward-looking statements or information, which speak as of their respective dates. And now, it's my pleasure to turn the call over to Antelope Enterprise's Chairman and CEO, Mr. Will Zhang, Antelope Enterprise's CFO, Mr. Edmund Hen. My communications colleague, [Lynn Burstein] (ph), will be translating for CEO, Will Zhang. Mr. Zhang, you may proceed.

[Foreign Language] [Interpreted] Thank you, David. On behalf of the company, I would like to welcome everyone to our first half 2023 earnings conference call. I am extremely proud of the achievements of our Kylin Cloud team as our first half revenue is up 172.5% as compared to the same period last year. Our revenue for our livestreaming ecommerce business came in at $44.2 million for the six months, modestly higher than our top line pre-announcement. Further, if not for certain non-cash expenses, we would have recorded positive operating income for our livestreaming ecommerce segment for the period. As a first mover in the livestreaming ecommerce space in China, Kylin Cloud provides turnkey livestreaming marketing and broadcasting services to consumer brand companies by matching consumer brand products with the appropriate hosts and influencers. We believe that Kylin Cloud has the core competencies to increase its market share in the periods ahead in what we believe is an evolutionary sales channel and as we continue to engage as a pure play in the sector. We believe that we have a tremendous market opportunity ahead of us and are confident that Kylin Cloud's unique approach will continue to redefine the ecommerce livestreaming landscape. I am genuinely excited about our value proposition for our customers, and I'm confident that we will create value for our shareholders as well. With that, I would like to turn over the call to the company's Chief Financial Officer, Mr. Edmund Hen, who will discuss the company's first half earnings results in more detail. Thank you.

Thank you, Mr. Zhang. I will now move on to a more detailed discussion of our financial results for the six-month ending June 30, 2023. Revenue for the six-month ended June 30, 2023 was RMB309.3 million, or US$44.6 million, a 161.5% increase from our RMB118.2 million, or US$18.3 million, for the same period of 2022. The increase in revenue was due to RMB305.9 million, or US$44.2 million, in revenue generated from our livestreaming ecommerce business, a 172.5% increase from RMB112.3 million, or US$17.3 million, for the same period of 2022. Our livestreaming ecommerce business constitute 99% of first half 2023 total revenue as compared to 83% for the same period of 2022. Gross profit for the six-month ended June 30, 2023 was RMB47.2 million, or US$6.8 million, as compared to RMB1.9 million, or US$0.3 million, for the same period of 2022. The increase in gross profit was due to RMB52 million, or US$7.5 million, in gross profit generated from our livestreaming ecommerce business, a 1,591.4% increase from RMB3.1 million, or US$0.5 million, for the same period of 2022. For the first half of 2023, our gross profit margin was 17% for the livestreaming ecommerce business as compared to gross profit margin of 2.7% for the first half of 2022. Other income for the six months ended June 30, 2023 was RMB2.8 million, or US$0.4 million, as compared to RMB1.7 million, or US$0.3 million, for the same period of 2022. For the first half of 2023, we had RMB0.5 million in interest income, income of RMB1.2 million attributable to forgiveness of a loan by an affiliate of a shareholder of the company, a government grant of RMB0.3 million and other income of RMB0.8 million. Selling and distribution expenses for the six months ended June 30, 2023 were RMB49.2 million, or US$7.1 million, as compared to RMB1.9 million, or US$0.3 million, for the same period of 2022. The increase in sales and distribution expenses was primarily due to an increase in travel expenses of RMB0.1 million, an increase in commission expenses of RMB2.6 million, and an increase in advertising and promotion expenses of RMB44.6 million. Administrative expenses for the six months ended June 30, 2023 were RMB38.7 million, or US$5.6 million, as compared to RMB6.4 million, or US$1 million, for the same period of 2022. Loss from continuing operations before taxes for the six months ended June 30, 2023 for our livestreaming business was RMB73,000 for the first half of 2023, as compared to an income from continuing operations before taxes of RMB7.4 million, or US$1.1 million, for the first half of 2022. Loss per basic share and fully diluted share from the continuing operation for the six months ended June 30, 2023 were RMB23.44, or US$3.40, as compared to loss per basic and fully diluted share of RMB5.14, and US$0.79, for the same period of 2022. Turning to our balance sheet. As of June 30, 2023, we had a cash and bank balances of RMB3.1 million, or US$0.4 million, compared with RMB3.9 million, or US$0.6 million, as of December 31, 2022. As of June 30, 2023, out total outstanding bank loan amounts were nil, and we had a notes payable of RMB9.3 million, or US$1.3 million. As has been properly announced over the last two years, we enacted a corporate transformation to pivot towards high-growth technology areas, which included the acquisition of livestreaming ecommerce business. In December 2022, our Board of Directors unanimously agreed to divest its legacy ceramic tile building materials business. On December 30, 2022, we entered into an agreement to sell our legacy ceramic in exchange for a 5% unsecured promissory note with a principal amount of US$8.5 million. The note will mature in four years and the 5% and principal amount on the note is to be paid in four annual installments. A special meeting of the company's shareholders was held on February 21, 2023, where the shareholders approved for the sale of this business. And on April 28, 2023, the transaction closed. Moving to our business outlook. We operate a livestreaming ecommerce business through our Kylin Cloud subsidiary, which comprises virtually all Antelope Enterprise ongoing business operations. The SaaS+ system platform strategically matches appropriate hosts and influencers to consumer brand products which results in increased sales for these companies. For the six months end June 30, 2023, Kylin Cloud generated 99% of the company's total revenue. Kylin Cloud provides a one-stop solution for consumer product companies to utilize the growing sales channel of livestreaming ecommerce since it heightens consumer engagement and can build brand loyalty through rich content and online interaction. We view ecommerce livestreaming as especially important since traditional ecommerce can be challenged in terms of its ability for brands to stand out and build personal connections with consumers. Kylin Cloud's social media hosts and influencers build trust with consumers which increase brand awareness and which drives product sales and increased margins. In the last few years, livestreaming ecommerce has comprised an ever-increasing percentage of China's ecommerce sales which we expect to continue in the years ahead, spurred by a customer ecosystem that includes a young demographic and their high usage rate of mobile devices. We believe that Kylin Cloud is unique in the livestreaming space since its utilization of advanced analytical -- analytics that matches hosts and influencers to consumer brand products which facilitates unique content for higher conversion rates as compared to traditional ecommerce. We believe that we will be able to capitalize upon this market opportunity in the periods ahead and will grow at a rate that is higher than ecommerce livestreaming sector. The business outlook reflects the company's current and preliminary views and is based on information currently available to us, which are subject to change, and is subject to risks and uncertainties, as well as risks and uncertainties identified in the company's public filings. At this point, I would like to open up the call to any questions pertaining to our first half 2023 financial results. Operator, please.

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Howard Flinker with Flinker & Company. Please go ahead.

[Foreign Language] I have one question. [Foreign Language] At quarter-end, [Foreign Language] how many shares outstanding?

In the half year-end, right?

Yes.

We have about 2.5 million after this reverse split -- recent reverse split.

2.5 million exactly?

Around that number. You may check with the public filing later today.

Okay. You'll file a 10-Q or a 20-F or a 6-F, I don't know, I forget what it's called, is that correct?

6-K.

Oh, 6-K. Okay. It sounds as if you're making progress, and it's been a long fight, and good for you.

Thank you.

[Foreign Language]

Thank you.

[Operator Instructions] The next question comes from William Gregozeski with Greenridge Global. Please go ahead.

Hi. I was curious, do you look at a certain metric for revenue for influencers? You guys always post the number of influencers you have in your company profile in the press releases. I was just curious if you look at any metrics for revenue, like average revenue that an influencer brings in, or how do you view the value of each influencer?

Excuse me, may I have your question rephrased? One, I understand is about -- your question is about related to revenue. Please rephrase your question for me so that will maybe make us easier to understand. Thank you.

Yeah. You disclosed in all of your press releases the number of influencers you have. I was curious how you look at the value of each influencer? If it's revenue per influencer, or how you guys view that?

Yeah, the influencer is actually the people registered in our SaaS system. So, the more the influencer, that means we have more potential to generate the future revenue. That means more people is helping our platform -- for our livestreaming business and more people will contribute to our livestreaming in our platform.

Right. I'm asking is there a certain metric you look at to see the value of each influencer? So, as you went from 300,000 to 400,000 in the current press releases, should we expect that revenue to keep increasing at a relatively similar rate going forward as you bring influencers on?

Because we -- our business, we still share very small market share in this livestreaming business. So, we're expecting more and more these influencers will join our platform, and so that -- and also the revenue will make -- the influencer will contribute in a significant amount to our revenue. And at this point, it's very difficult to calculate the metrics between the influencer and the revenue. But the thing is, the more influencers join our platform, we believe that the revenue will also goes up in a significant manner.

Okay. And you've had gross margin improvement. Do you expect to see that going forward? And is there kind of a number you're shooting for to reach, whether it's this year or in the next few years?

Yes, you are correct. We're expecting the gross margin will -- goes up in the coming period and years. Also, as I mentioned, we are still in a very early stage in this livestreaming area and we believe that there's still a lot of room, a number of room to grow in our gross margin.

Okay. Is there any rough number you guys are targeting that you're aiming to reach for, or is it just flow increases?

At this moment, as I mentioned, we're still at a very early stage. So, it is very difficult for us to estimate the mature gross margin in the future growth. But we believe that the current stage does not reflect the whole picture for the business.

Okay. All right. Great quarter. Thank you.

Thank you very much.

This concludes our question-and-answer session. I would like to turn the conference back over to David Rudnick for any closing remarks.

Great. Thank you. On behalf of the entire Antelope Enterprise management team, I want to thank all of you for your interest and participation on this call. This concludes Antelope Enterprise's first half 2023 earnings conference call. Thank you very much.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.