Good day and welcome to the H1 2022 Bon Natural Life Limited Earnings Conference Call. All participants will be in listen-only mode. . Please note that this event is being recorded. I would now like to turn the conference over to Sophie Zhang of Investor Relations. Please go ahead.

Thank you, operator. And thank you all for joining us for Bon's 2022 half year financial results conference call. At 8 am today, Bon issued a press release announcing the 2022 half year financial results. A copy the release can be found on sec.gov. Please note that this call is being recorded live and it will be available for replay. I ask that you please take a moment to review our forward-looking statements. During the call, we'll be making forward-looking statements about the company's performance and business outlook. These statements are based on how we see things today and contain elements of uncertainty. For additional information concerning the factors that can cause an actual result to differ materially from our forward-looking statement. Please refer to our cautionary statement and risk factors stated in today's press release. Joining me on the call today are the Chairman and CEO of the company, Mr. Richard Hu; CFO, Mr. Zhenchao Li; COO, Ms. Yingchun Xue; and CMO, Ms. Wenjuan Chen. I will now turn the call over to our Chairman and CEO, Mr. Hu, who will be speaking in Chinese and my colleague, , will translate his opening remarks into English. Mr. Hu, please go ahead.

Thank you, Sophie. And thank you for joining us today. I will begin today's call by providing an overview of our business performance during the first half of 2022. Sophie will then provide a detailed overview of our 2022 half year financials, highlighting the financial performance of each product category. I'd like to briefly introduce our company for those who are new to our story. Bon Natural Life is a bio-ingredient ingredients solution provider in the natural health and personal care industry. We sell some raw materials from farms and then process and break down the natural plants into natural chemicals that can be used commercially for their abovementioned applications. We have three product categories, fragrance compounds, health supplements and bioactive food ingredients. Fragrance compounds are used in fragrances that go into consumer fragrance, oral care, detergents and et cetera. Health supplements are powdery drinks, prebiotics probiotics and et cetera. Bio-active food ingredients are used in food preservatives and health supplements as well. Our customer include very well-known names in Asia. For example, Tong Ren Tang, Liangmianzhen, Jing Brand and Angel Yeast. And our clients also includes some of the biggest household names in US and Europe, like International Flavors & Fragrances, Mars Wrigley, Symrise, Fridal and ACS International. Now turning to slide 7, I would like to briefly discuss our manufacturing facilities and capacity. We have two facilities outside of Xi'an, China. Both are located within 90 minutes from the company headquarter. Regarding our reserve production facility, Yumen Plant, the building construction is now complete and it is expected to September this year to deliver near term production. The first phase of Yumen Plant is to increase the production capacity for fragrance compounds and bio-active food ingredients to meet the existing market and customer demand. The second phase of…

Thank you, Mr. Hu. I'm Sophie and I will review the 2022 half year financials with you. And our CFO, Mr. Li, will be available for the Q&A session if you have questions regarding the financials. Before I reveal the numbers, let me remind you that all figures discussed are for this reporting period, the first half of 2022 unless I state otherwise. Additionally, any year-over-year comparisons is to the March 31 of 2021. So let's go over our 2022 half year financial results. I will begin with an overview of our consolidated results on slide 11. In the first half of 2022, Bon carried approximately $13.7 million in revenue, about 17% over last year. These increases were primarily driven by the increase in the average selling price of the three product categories. The selling price of fragrance compounds, powder drinks and bioactive food ingredients increased by 64.1%, 11.2% and 79.2% as we raise our selling price in response to the rising raw material costs and market change as affected by the COVID-19 and the shortage of the principal raw material due to abnormal weather. The sales volume of bioactive food ingredients also increased by 47.5%, although the selling price was raised from about 33,000 kilograms to about 49,000 kilograms due to strong customer demand and our sales efforts to promote sales of milk thistle extract, with benefit to protect liver and lower blood sugar. In addition, the sales volume of health supplements decreased by 37.5% to 130,000 cases, mainly due to the shortage of our raw material, which suffered a normal wet weather in the second half of 2021, along with disruption of logistics caused by COVID-19. At the same time, our gross profit for the first half of 2022 was approximately £4 million, increased by 19.6%, which was…

Thank you, Sophie. And thanks again, everyone for joining us today. Before I wrap up today's presentation, I would like to first recognize our employees for their tireless efforts and thank our loyal customers for their trust in us. We are confident that our R&D capability, business model and strategy will enable us to gain more market share and maintain our growth momentum. With that, before we open the call to our questions, I would like to know that for any questions directed to the management in China, we will translate both their questions and their answers. If you want to ask your questions in Chinese, please also ask it in English for the benefit of the listeners. Please also note that we will only be able to respond to the questions about our financial and operating results. With that, we are now open for calls to your questions. Operator?

. First question comes from Brian Hartzband, private investor.

I just have a few questions here. But, first, congrats on another good quarter. A few questions. My first is that I noticed the average selling prices of your products are trending up, which is good sign. Can you please elaborate what the drivers behind it and also can we expect the same trend going forward for the second half of the year?

Here's the answer coming from the Chairman and CEO, Mr. Richard Hu. There's two drivers behind our price improvement. Number one is, with the backdrop of global inflation, our business, there's no exception. So, the price has been going up. Secondly, the supply chain disruption also further push the price up to our raw material and also our selling product. So, we do believe we have demonstrated ourself that we were able to pass through the price increase to our customer effectively. For the remainder of this year, we feel confident that we will maintain such price increases and there's also possibly additional room to improve our pricing power.

What's your guidance for the fiscal year 2022? That's my next question. And then I have one more after.

The answer coming from Zhenchao Li, the company's CFO. So, for the first fiscal half, our revenue and net income both grew approximately 17%. We feel comfortable that such growth will continue for the remainder of the second half. Obviously, we're not growing as fast as we used to do to the impact of COVID-19 and also supply chain disruption. But we're still very optimistic with – we're going to still be growing at a decent growth rate.

The last question is, will your third plant be up and running on schedule and what can investors expect in terms of revenue and earnings contribution from that plant?

The answer is coming from the company Chairman and CEO, Mr. Richard Hu. as we planned. The overall contribution in terms of production capacity and revenues are 200% and 150%, respectively. So, the plant will be coming in production in two stages, pretty much one year each. So year one, we expect 100% increase to our production capacity and also 75% in revenue contribution. In the year two, we can expect similarly 100% production capacity incremental and also 70% additional contribution to our revenues.

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

Thank you, operator. On behalf of Bon, we want to thank you for your interest and participation in this call. If you would like to speak with us further, please contact either Maggie or Sophie. The contact information is listed at the end of the press release. Thank you. Operator?

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