- Riding On Favourable Policies while
- Creating Strong Synergies in Principal Businesses
- Successfully Turnaround to a Profit
IBO Technology Company Limited (IBO Technology, or the Company, together with its subsidiaries, the Group; HKG: 2708) is pleased to announce its unaudited interim results for the six months ended 30 September 2021 (the Period).
During the Period, the Group achieved a successful turnaround and recorded a profit attributable to owners of the Company of approximately RMB4.37 million (six months ended 30 September 2020: loss attributable to owners of the Company of approximately RMB15.45 million). Revenue significantly increased from approximately RMB190.67 million of the same period last year to approximately RMB266.28 million. Attributable to the increase in the number of customers, the Group had a strong performance in multiple businesses, among which intelligent terminal products sales and software development businesses achieved approximately 22.4% and approximately 255.9% year-on-year increases in revenues respectively. The Group’s gross profit increased by 50.0% to approximately RMB66.85 million for the Period (six months ended 30 September 2020: approximately RMB44.56 million). Gross profit margin was 25.1%, representing an increase of 1.7 percentage points as compared with 23.4% of the same period last year. The Board of Directors did not recommend the distribution of interim dividends.
Huge growth potential benefitted from favorable policies
At this critical time when the global industry is upgrading from industrialization to digitalization, PRC has clearly proposed a “Digital China” construction strategy to seize the technological pioneering advantage in the next era. The “14th Five-Year Plan” puts forward initiatives to strengthen the innovative application of key digital technologies, accelerate digital industrialization, develop and expand emerging digital industries such as artificial intelligence, big data, blockchain, cloud computing, network security, etc., and enhance the strength of other industries including communication equipment, core electronic components and key software, thus building 5G-based application scenarios and industrial ecology.
According to the Ministry of Industry and Information Technology of the PRC (MIIT), the construction of a 5G network for 10 key industries will be the focus to form 20 major and typical industrial application scenarios. Meanwhile, the central government also strives to facilitate the development of the 5G industry and introduced multiple policies including the “5G Application “Sailing” Action Plan (2021-2023)” and the “Notice on Accelerating the Development of 5G”, while 5G network construction and 5G industry application are expected to enter a golden period of growth. It is predicted in the “White Paper on 5G Development and Its Economic and Social Impacts” that the economic output directly attributable to 5G technology will reach RMB3.3 trillion in 2025.
Information technology application innovation (“ITAI”) industry has been one of the key technological aspects in the construction of “Digital China”. The vigorous promotion of the development of the ITAI industry facilitates the transformation of the PRC enterprises and the construction of a more comprehensive information technology industry chain for partaking in international competition in the next few decades. The year 2020 was considered to be the first year for the development of the PRC’s ITAI industry, and ITAI projects across the country were widely rolled out, and a phenomenal trend emerged in the ITAI industry. In the next three to five years, the ITAI industry will enter a golden period of growth. The PRC’s IT industry will see an unprecedented wave of replacement by domestic production in the fields of basic hardware, basic software and industrial application software. According to the data of Guan Yan Tian Xia, the market size of the ITAI industry is expected to reach RMB1.3 trillion in 2025 in a steady pace.
Underpinned by favorable national policies, the demand for the Group’s three business segments – 5G (communications equipment and private network solutions), ITAI IT (terminal products and industrial solutions) and Internet of Things (IoT) (products and solutions) have increased significantly. Leveraging the synergy among these three major business segments in terms of technologies, supply chains and markets, the Group integrated and innovated 5G, ITAI IT and IoT technologies, providing one-stop digital solutions for customers in different industries, so as to capitalize on the opportunities offered by the national policies and market.
Promising revenue attributable to synergies from the Group’s multiple business segments
Intelligent terminal products sales business remained as the main source of the Group’s income, accounting for 77.5% of total revenue. During the Period, the Group was committed to developing, producing and selling customized IoT intelligent terminal products to customers. Benefitting from a rapid recovery in economic activity and favorable national policies, both domestic 5G and IoT industries experienced rapid growth, driving the increasing demand for the Group’s 5G pico base station series and sales of Radio Frequency Identification (“RFID”) products. As the number of customers increased, the number of orders for 5G pico base station series products and RFID products increased sharply. Revenue of the Group’s intelligent terminal products sales business was approximately RMB206.26 million during the Period, representing a year-on-year increase of approximately 22.4%
Based on analysis and assessment of customers’ needs, the Group provides comprehensive and customized system solutions to its customers by applying IoT and related technologies, including overall system planning, development and design, procurement of system equipment, integration of software and hardware devices of the system, system implementation, trial operation and system management and maintenance, etc. Given that the revenue of the system integration business was derived from one-off projects and the revenue fluctuated as compared with that of other segments, revenue from the Group’s system integration business was approximately RMB0.02 million (six months ended 30 September 2020: approximately RMB2.39 million).
In line with the business and management requirements of customers, the Group plans and designs the software system framework and function list in order to provide customized software application development services. The software development business accounted for 20.6% of the Group’s total revenue. In addition to maintaining long-term and strategic relationships with existing customers, the Group also actively explored new customers to expand its customer base and drive sales. During the Period, the Group’s software development business continued to expand with revenue of approximately RMB54.92 million, representing a significant increase of approximately 255.9%, becoming the fastest-growing business of the Group during the Period.
For system maintenance services, the Group provides system maintenance services for both software and hardware of information systems encompassing maintenance and management for system devices, database maintenance, daily monitoring on the systems and system upgrades. The segment accounted for 1.9% of the Group’s total revenue. During the Period, the Group’s system maintenance services maintained a steady growth and recorded a revenue of approximately RMB5.08 million, representing a year-on-year increase of approximately 16.8%
Heading to a golden period of growth while capitalizing on favorable policies and industrial development opportunities as well as optimizing the business strategic layout
While industrial digitalization and ITAI industry are both undergoing fast development, the Group makes good use of its shrewd market acumen and timely optimize its business strategic layout and focuses on three major segments, including providing 5G communication equipment and private network solutions, ITAI IT terminal products and industrial solutions, IoT products and solutions, as well as industrial digital solutions. Developing multiple businesses with synergies, the Group has seen satisfactory development progress. Benefitted from favorable policies and industry development opportunities, the three major businesses are expected to witness accelerated growth.
The 5G construction in the PRC is under rapid development, 5G small base stations and DAS system construction boom shall be seen during the second half of 2021 to 2025. The sales of 5G products (including pico base stations and DAS system) and 5G private network solution is expected to gain substantial growth in the next two to three years, thanks to the strong market demand. The Group has obtained the telecommunications equipment network access license issued by the MIIT which covers the 5G frequency bands operated by the three major operators, namely China Mobile, China Telecom and China Unicom, making the Group one of the few companies possessing 5G pico base station network access license and enjoying the first-mover advantage.
The Group has built a 5G communication private network for the “5G Digitalised Factory” for a mega iron and steel corporation and gained experience in 5G+ industrial Internet project. Also, the Group successfully expanded the business of application of 5G+ technology into the culture, entertainment and sport sector by entering into a cooperation agreement concerning 5G technology application for e-sports stadiums under a famous e-sports brand with Shenzhen Alba Culture and Sports Development. Based on the successful experience in previous projects, the Group will widely partner with telecommunication operators, customers, integrators and suppliers in the industry to gather industry resources, so as to actively establish a highly cooperative 5G industrial application ecosystem, allowing the parties to create a win-win situation. It is the Group’s goal to enlarge its market coverage and market share through enriching and deepening the integrated application of 5G with vertical industries, promoting the construction of a private network in 5G industry, and extending the market for the sales of the Group’s 5G product series.
The central government has incorporated the ITAI industry into the national development strategy and proposed the “TWO (the party and the government) + EIGHT (other eight industries such as finance and telecommunications) development system” approach. With the successful demonstration of the party and the central government in the market, important industries such as finance, telecom, electricity and transportation have gradually started the application of ITAI products and projects. Keeping up with times and riding on the current trend, the Group will give full play to its technological advantages, accelerate the development of IT basic hardware business such as domestically produced notebook computers and mobile terminals, focus on industries such as electricity, finance, communications and education where ITAI products and projects are applied in priority, step up efforts in marketing and strive for more market shares.
Being a leading digital solutions provider, the Group will continue to consolidate its market resources and continue to make efforts in the fields of 5G (communication equipment and private network solutions), ITAI IT (terminal products and industry solutions) and the IoT (products and solutions). In view of the close interconnection among the three major business segments in terms of underlying technologies, application technologies, supply chains, markets and business models, etc., the Group can promote collaborative and mutual development among the businesses. Besides, while solidifying its existing market and business in the PRC, the Group will actively identify suitable merger and acquisition targets that can create strong synergies with its existing principal businesses, making every effort to seize global market opportunities and actively exploring high-quality overseas projects, in hopes of enhancing its competitiveness and building a good image as a Chinese brand in the world.
About IBO Technology Company Limited
IBO Technology Company Limited (HKG: 2708), a leading digital solutions provider, is principally engaged in providing 5G communication equipment and private network solutions, ITAI terminal products and industry solutions, IoT products and solutions, as well as industrial digital solutions in the PRC. The Group’s businesses mainly cover four areas, namely (i) intelligent terminal products sales; (ii) system integration; (iii) software development; and (iv) system maintenance services. With nearly 20 years of penetration in the IoT industry, the Group serves customers from both the public and private sectors in the PRC, including government authorities, large-scale state-owned enterprises and private enterprises.
For more details, please visit: http://www.ibotech.hk/