Cogobuy Announces 2021 Annual Results

Net Profit Achieves High Growth of 120.0% to RMB 412.4 Million

HONG KONG, April 1, 2022 /PRNewswire/ -- Cogobuy Group ("Cogobuy" or the "Company", stock code: 400.HK; with its subsidiaries (the ''Group'')), a technology services company focusing on serving the global chip industry and artificial intelligence ("AI") and internet of things ("IoT", together "AIoT") ecosystem, is pleased to announce its unaudited consolidated results for the Year ended December 31, 2021 ("2021" or the "Year").

Financial Highlights of the Full Year of 2021

The continued expansion of 5G development and application scenarios has caused demand for chips to surge, significantly increasing and supporting the Group's revenue. The chip business achieved a higher growth during the Year. The Company's net profit and revenue both increased significantly, with net profit growing faster than revenue. As of December 31, 2021, the Group's net profit was approximately RMB 412.4 million, a YoY increase of 120.0%; revenue was approximately RMB 9,452.4 million, a YoY increase of 52.8%; gross profit was approximately RMB 933.4 million, a YoY increase of 33.6%. The increase in gross profit margin was mainly attributable to the change in the Company's sales mix. The services provided by the Group cover areas with higher gross profit margins, including V2X, smart homes, AI surveillance and other markets. During the Year, the Group's profit attributable to equity shareholders of the Company was RMB 296.2 million, a significant YoY increase of 140.4%; the Company's cash and bank balances including short-term bank deposits and pledged deposits was RMB 519.3 million. The Group's bank loans were RMB 405.3 million. Basic common shares outstanding were 1,412,766,732, weighted average number of ordinary shares for the purpose of diluted earnings per share were 1,393,448,000.

Following technology's trend towards the creation of a 5G industry ecosystem and widespread digital transformation, the Group has formed a "Comtech and IngDan" platform to better serve the "Chips-Devices-Cloud" ecosystem along the entire AIoT industry chain, with the goal of supporting long term, sustainable income for the Group. "Comtech" focuses on the application design and distribution of IC chips to AIoT enterprises in China. Meanwhile, "IngDan" focuses on the R&D and sales of proprietary products, as well as customized application design, which include related support services for modules, devices, and cloud, to further develop AIoT module customized solutions. Through the two business platforms, the Group is creating a closed loop of "Chips-Devices-Cloud" ecosystem along the AIoT value chain, and provides services for the five main AIoT verticals: V2X, Smart Home, Robotics, Smart Manufacturing, and Smart Medical, so as to promote the comprehensive and sustainable development of the Group.

Strong Growth Momentum of the Chip Business

5G's large-scale and rapid development is further driving the comprehensive application of chips. In 2021 global chip sales volume was 1.15 trillion pieces, with a YoY increase of 26.2% to US$555.9 billion. The Semiconductor Industry Association (SIA) predicts global chip sales will increase by 8.8% in 2022.^[1] Comtech's chip business also benefited directly and grew rapidly, with a significant YoY increase of 93.3% in revenue. "Comtech" maintains connection 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 ten thousands of AIoT hardware companies downstream, while also providing chip application development solutions and sales services. As 5G continues to empower digital transformation across many industries, the demand for chips will continue to drive rapid growth for the Group's chip business.

Participated in the building of OpenHarmony ecosystem and Launched the First OpenHarmony Product

During the Year, "Comtech" became a platinum-level donor to the OpenAtom Foundation, and committed to creating an independent and controllable OpenHarmony industrial ecosystem and industry standards with technology giants such as Huawei. OpenHarmony promotes information security and the independent and controllable core technology industries in China, and facilitates the standardization of AIoT and technology applications in various industries. OpenHarmony is a core operating system software incubated and operated by the OpenAtom Foundation, which is widely used in various smart devices and will become the mainstream standard for AIoT in the future. The Group actively participated in the building of OpenHarmony ecosystem, and continuously improved the Group's AIoT application technology services, leading to new opportunities for the Group's business.

During the Reporting Period, the Group successfully launched the first Smart BMS battery management system based on a combination of domestic chips and OpenHarmony solutions, which are mainly used in the smart battery products of new energy vehicles, electric motorcycles, and the industrial power system. As a result, the performance and safety of power batteries are now greatly improved and further diversified communication transmission functions and cloud real-time data management have been implemented, to further achieve lower power consumption and better intelligent applications. This first product laid the foundation for the integration of the Group's chips application and OpenHarmony solutions, helping the Group to develop the AIoT industry chain market.

Spin-off and Separate Listing of "Comtech" on A Shares

The Company obtained approval from The Hong Kong Stock Exchange Limited for the spin-off and separate listing of "Comtech" on A shares in Mainland China, which will further expand the Group's development in the domestic capital market. As the domestic chip market gains strong support from national policies, "Comtech" is preparing for the A share listing. After the completion of the Proposed A Share Listing, the Company will remain the ultimate controlling shareholder of "Comtech", and its financial results will still be consolidated into the Company, which will facilitate the sustainable growth of the Group's performance. Moreover, in order to give investors a clearer understanding of the main business of "Comtech" and "Cogobuy Group", the Company plans to change its name from "Cogobuy Group" to "Ingdan Inc.". The proposed name change of the Company has been approved by the Board and will be subject to shareholders' approval at the annual general meeting in June 2022.

Strengthening the Layout of iPaaS Services

The applications of 5G and AI are only becoming more extensive, and the demand for digital innovation and transformation in various industries is rising, which further promotes the accelerated development of "Chips-Devices-Cloud" with AIoT application technologies. The technology integration of iPaaS (Integration Platform as a Service) has become one of the most important parts of digital transformation. The iPaaS platform service automates business processes and makes it easier to share data across applications. According to IndustryARC Report, the global iPaaS market is expected to reach US$6.1 billion in 2025, representing a CAGR of 36.4% from 2020 to 2025.^[2] The Group has long recognized the opportunities and provided iPaaS services such as technology integration solutions, marketing solutions and distribution services to core technology suppliers in the "Chips-Devices-Cloud" ecosystem along the AIoT value chain through the two business platforms of "Comtech" and "IngDan". These iPaaS services covers five main AIoT verticals: V2X, Smart Home, Robotics, Smart Manufacturing, and Smart Medical, helping the Group capture the blue ocean market of iPaaS in China.

The Group actively deployed in the five main AIoT verticals and continues to explore opportunities in the iPaaS market. During the Year, the Group worked with different AIoT suppliers to formulate various solutions for chips and technology integration, and successfully built high-end equipment in different fields. These include 4K video endoscopes and ultrasound diagnostic systems for high-end medical equipment in the smart medical field, intelligent security systems for smart city construction, and a WIFI-BT wireless solution that empowers the intelligent transformation of TV, achieving intelligence and high efficiency for various industries. By leveraging its technological expertise in integrating upstream and downstream industrial supply chain resources, the Group has empowered the implementation of more iPaaS projects, and laid a solid foundation to further expand the Group's domestic iPaaS service market, which brings strong growth momentum for the Group.

V2X is one of the most important application scenarios in the implementation of 5G and AIoT, and it has driven a significant increase in demand for automotive semiconductors. According to the report by Omdia, semiconductor chips used in EV are 2.9 times more prevalent than those of traditional internal combustion EVs, and the automotive semiconductor industry will grow at a CAGR of 12.3% by 2025.^[3] The Group has captured the huge market opportunity of V2X, and cooperated with various chip manufacturers, module suppliers, and automobile manufacturers. During the Year, the Group, together with the world's leading FPGA suppliers and technology enterprises, jointly created a hardware acceleration engine of LiDAR's 3D cloud data to empower the smart transportation field. With the surging wave of V2X, the Group will further develop and invest in the V2X market to consolidate its competitiveness in the field of V2X, and facilitate the steady development of the Group.

Outlook

Mr. Jeffrey Kang, CEO of Cogobuy Group, said, "2021 was the first year of China's '14th Five-Year Plan', and the national policy strongly supported — and continues to support — the development of technology. The government has introduced a number of favorable policies for the chip and 5G industries, which have led to a continuous increase in demand for chips. The Group also took advantage of favorable policies and market developments to maintain rapid growth in our business during the Year. In order to fully cover the needs of AIoT industry chain, the Group's iPaaS technology integration service has successfully promoted the implementation of multiple intelligent projects and achieved new breakthroughs for our business.

By joining the OpenAtom Foundation, we are committed to embedding OpenHarmony into a wide range of AIoT products with billion dollars market opportunities. In order to further the development of the application technology services field, the Group joined hands with Chinasoft International Ltd to launch a complete 'OpenHarmony +' solutions platform in early 2022, as well as an OpenHarmony collaborative innovation platform to form a comprehensive technical service capability.

The potential of chip development is viewed favorably by the market, which makes the Group's chip business a favorite of financial institutions. 'Comtech', a subsidiary of the Group, has received strong financial support from eight financial institutions. In particular, the Bank of China (Shenzhen) granted a credit facility of RMB300 million in early 2022, which fully affirmed the development potential of the Group's chip business and helped the Group deploy in the trillion-level chip industry market.

Looking forward, the rapid development of 5G and the explosive growth of AIoT applications will drive the continued increase in demand for chips, which will enable the Group's chip business to continue to grow rapidly. The chip business is expected to continue to be the core driver of the Group's growth. The Group will also continue to strive towards high-quality development, capture opportunities arising from the domestic 5G process and policy dividends, and actively explore the growth potential of the chip market. Through continuous improvement of the Group's business and services, and the use of the dual-platform development model, the Group is committed to creating a closed loop of "Chips-Devices-Cloud" ecosystem along the AIoT value chain and covering the entire 5G industry chain, which will promote the rapid growth of our business, as well as bring greater value returns to 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 visit www.cogobuygroup.com