Good day, ladies and gentlemen. Thank you for standing by, and welcome to CBAK Energy Technology's Fourth Quarter and Full Year 2021 Earnings Conference Call. [Operator Instructions] Now I will turn the call over to Mr. Thierry Li, Investor Relations Director of CBAK Energy. Mr. Li, please proceed.

Thank you, operator, and hello, everyone. Welcome to CBAK Energies fourth quarter and full year 2021 earnings conference call. Joining us today are Mr. Yunfei Li, our Chief Executive Officer; and Mrs. Xiangyu Pei, our Interim Chief Financial Officer. We released results earlier today. The press release is available on the company's IR website at ir.cbak.com.cn as well as from Newswire services. A relay of this call will also be available in a few hours on our IR website. On the call with me today are Mr. Yunfei Li, our Chief Executive Officer; and Mrs. Xiangyu Pei, our Interim Financial Officer; Mr. Xiujun Tian, our General Engineer; Mr. Wenwu Wang, our Vice President; and Mrs. [ Yang, ] our interpreter. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the Company's actual results may be materially different from the expectations expressed today. Further information regarding these and other risks and uncertainties is included in the company's public filings with the SEC. The company doesn't assume any obligation to update any forward-looking statements except as required under applicable laws. Also, please note that unless otherwise stated, all figures mentioned during the conference call are in U.S. dollars. With that, let me now turn the call over to our CEO, Mr. Yunfei Li. Mr. Li will speak in Chinese and I will translate comments in English. Go ahead, Mr. Li.

Thank you, and hello everyone. Thank you for joining our conference call. 2021 was a significant year for CBAK Energy as we make major achievements in multiple fronts. We continue to strengthen our competitive advantages through innovative technology and product developments, as scheduled we [ scale ] up our production capacity to capitalize on increasing battery demand for light electric vehicles and electric vehicles. Specifically, we began production of lithium ion batteries at our new facility in Nanjing and expanded capacity at Dalian facility. We believe this development will bring long term benefit that will extend far into the future. Moreover, we brought in materials for lithium ion batteries with an acquisition of 81.56% equity in Zhejiang Hitrans Lithium Battery Technology Corporation to build out and enhance our battery product ecosystem. The transaction will not only have crucial strategic benefits with a secure stable supply of raw materials even amid rising material costs, but we also expect will help us generate greater revenues and an even better financial performance in 2022. In 2021, we continued to see higher revenues from high-power lithium batteries, which grew 46% to $33.3 million. The merging of Hitrans also added revenues of $17.8 million from December to bring our total net revenues in 2021 to $52.7 million, up 40% from the previous year. This increase was from the effective execution of our growth strategy, which boosted our expansion in the battery storage market and based on. Next, let me dive into our recent developments in technology and products that we strive to become a major battery supplier for top LEV producers. Following the completion of shakedown test, we quickly launched a commercial production model 26700 battery and model 32140 battery. The formal one is applicable to 2-wheel electric vehicles while the latter serves LEV and…

Okay. Thank you, Mr. Yunfei and Thierry, and thank you, everyone, for joining our call today. I will now go over our key financial results for the fourth quarter and full year of 2021. For the full details of our financial results, please refer to our earnings press release. In 2021, we continued to expand revenue and gross margin levels that are driven by stronger sales of batteries for a interruptible suppliers and our EVs, as well as, the addition of the material business brought by the acquisition of Hitrans. We also turn to profitability in 2021 from a loss in the previous year. Notably, we continued to invest in new [ head count ], new business, as well as, research and development to jump further growth. We believe the investments combined with our strong financial position and powerful battery product ecosystem will propel us towards long-term profitable growth. Moving on to our results. In the fourth quarter of 2021, net revenues surged 80% to USD 27.8 million from the same period of 2020, primarily due to strong sales of high-power lithium batteries and additional revenues from the battery materials brought by the acquisition of Hitrans from November 26, 2021 to December 31, 2021. For the full year 2021, net revenues were up 40% to USD 52.7 million, of which [ USD 34 million ] was from high-power lithium batteries, which grew 49% year-over-year and USD 17.8 million was from Hitrans since its acquisition. Cost of revenues was USD 26.8 million in the fourth quarter and USD 47.6 million for the full year 2021, up 86% and 36%, respectively from the previous year. Gross margin was 3.7% in the fourth quarter compared with 6.8% in the same period of 2020, as raw material cost growth. Still in 2021, our gross…

[Operator Instructions] Our first question comes from the line of Laura Liu from Stone Street Group.

Due to the conflict between Russia and Ukraine, the price of cobalts and nickel has increased sharply. How will this impact the raw material production in Hitrans and the production of lithium ion batteries in CBAK Energy, and what measures do the 2 companies have in place to cope with the rise in metal price?

With regard to battery business, the materials [ we got ] in most orders and shipments of CBAK Energy are lithium ion phosphate and the price rise of cobalt and nickel has little influence on our products. In terms of material business, the estimation of a rise in metal price does have some impact, but the company can navigate by taking various measures, for example, given that the shelf life of nickel, cobalt and manganese is quite long compared with other the metal. We have replenished the stock when the price is low and we have replenished to quite a high level so we can lock the production profits and also build a linkage between the sales price and material price. And with all these measures, we can mitigate the impact on our material business and even make some profit from it. And on the other hand, now batteries are scarce resources in the market, and the customers can basically digest the price increase caused by the external factors after we communicate with them, they can understand and they also told us that the impact on the material preparation and sales is acceptable to them.

Laura, do you have any follow-up questions?

I have a second question. How do you see the electric vehicle or electric vehicle battery markets in 2022?

So due to the price increase of raw material, we did see some impact to the market. However, if we have a look at a long-term market development potential, we can see that the whole market is turning into electrification. And -- but we also have to admit that the conflict between Russia and Ukraine together with some geopolitical issues, the price fluctuation is quite huge. However, we are happy to see that the consumers can digest and understand and also they can absorb the pressure brought by the price increase of raw material. And if we have a look at the battery industry and EV industry in China, we can see that there is a big increase, a double or even triple increase in the domestic EV market, including we see a sharp increase in the sales of some major car manufacturer companies like Tesla and BYD [ e6 ]. And if we have a look at the AOO passenger cars, we can see that no matter the sales are at the high end or medium end or low end, our sales amount ranked -- always ranked top 3. And last year, in terms of AOO passenger cars in terms of the sales volume, the total EV consumer vehicle in the sales, we also -- we also occupied #1 and #2 in the market. So if we look into the future, we can see that the EV market still maintained a rapid growth momentum. And in terms the market demand for battery will also increase correspondingly. And all this market situation are in line with our industrial layout and our market positioning. Yes. I want to add some more information according to the it -- according to the industrial institution and data from the platform, it is estimated that the sales volume of new energy vehicles will reach $4.8 million and $4.4 million at home and abroad, respectively, in 2022. And if we have a look at the demand for power battery, it is estimated to reach 450 gigawatts. Besides that in terms of light electric vehicles, the sales volume of electric 2 wheelers in China amounted to $48 million in 2021, and the penetration rate of lithium battery was 25%. And in 2022, with the implementation of new national standards, the weapon of electric vehicle will accelerate the reshuffle of the light electric vehicle industry and the industry will become more consolidated, and it will be featuring lithium battery in power, electrification, intelligence and long range. And if we add all this together, we will see that the lithium battery of light electric vehicles were also developing rapidly in car sharing, [indiscernible], fast-charging sector. So we believe that the market prospects will be promising in the future, in 2022.

The next question comes from the line of Karl Birkenfeld from [ ATIS ].

Okay. That's American Trust Investment Services, Karl Birkenfeld, in New York. The question I have is -- the first question I have is as the lockdowns in COVID adversely affected your production facilities in Dalian and Nanjing. And that's my first question -- has it affected those facilities.

Okay. Since the outbreak of COVID-19 in the beginning of 2020, it has been over 2 years now. But if we have a look at China, we have to say that there is no major impact in our production facilities in both Dalian and Nanjing, although we did underwent -- undergo some shutdown. However, it didn't last long. So it didn't exert a big impact on our production. And if we look at this issue from the perspective of customer needs during this past 2 years, we witnessed a sharp increase in the need for new energy vehicle and lithium batteries. That is why our orders have been increasing. So we have to say that there is no impact -- no negative impact in -- from the perspective of consumer needs.

My second question, I think was answered in the previous person question. And that was the material cost increase in the lithium batteries. I guess, you guys are passing the increased costs on to your consumers to keep the margins the same?

Okay. So we are going to answer this question from 2 different business segments. First of all, let's have a look at our material business. As our material business stands at the upstream of the industrial chain. So it is more easy for us to pass the price increase to the median or the low end? And if we have a look at the second segment that is our battery business. Battery business, we spend in at medium end. And then for the passing over of the price increase, it will be a little bit slower. There would be some latency in it. So for -- due to the increase of the price of lithium carbonate, there will be some impacts in our battery business. And we are going to see an influence starting from Q4 of 2021, and then also in this year, we're going to see a passing down of the price increase to the downstream gradually.

[Operator Instructions] We have a follow-up question from the line of Laura Liu from Stone Street Group.

Okay. So I have a question concerning the strategic priority of the company in 2022. Could you give us some updates?

So if we have -- to answer this question, I'm going to say that there were 2 areas of priorities that we will pay special attention to in the year 2022. First of all, we are going to try to maintain our advantages in the traditional business, including energy storage and LEV, we will try to maintain a rapid growth in this area. And besides that, we will also try to research and develop more high-end products. And secondly, we will also try to gain more customers, especially big customers in our vehicle business. And this year, we are going to focus in and centering on these strategies, so as to ensure that these 2 priorities will be well attended. And in terms of product line allocation, we will try our best to promote the construction and operation of Nanjing Phase II projects and also try to accumulate more market needs to ensure that after the expansion of capacity, our products will well meet the needs of the customers, the medium and big customers. And I also want to add that according to our business strategy, actually, our energy storage business have witnessed big growth, especially that we have gained a lot of orders from the overseas markets. And our order scheduling has been met until 2023 already. And we will also try to attend more 2 wheeler and LEV customers not only overseas, but also in the domestic market. And we will also try to grow our business in LEV especially in some business with big profits like batteries, [ whopping ] and battery charging. And for Nanjing, we will also have the plan to develop the large cylindrical batteries, which we believe will be suitable for the AOO and AO passenger cost. So we will share our best to make all this priority well implemented.

So just I want to add more points. So as the previous speaker just mentioned about that our orders have been received until 2023. That is to say that now the supply has outperformed -- the demand has outperformed the supply -- exceeds the supply. And in 2021, we used 1 year to expand the production capacity of our Dalian and Nanjing facilities, which have put us in a very good position to provide enough production capacity, and on the other hand, we have already gained sufficient orders. And all these 2 favorable conditions will lead to -- which we believe are outstanding financial performance in the year 2022. And we will try our best to make good use of the existing capacity, and we will also have a close look at the market needs and to decide whether to expand -- further expand our capacity in Nanjing or Dalian or not. So what I've been talking about is our battery business. If we have a look at our material business, after the acquisition of Hitrans, we have well integrated the upstream and downstream supply chain. And given that the price of raw material has been increasing, the acquisition will also well positioned us in favorable position. And I believe that our material business will also highlight in our major business in 2022. So with all these -- adding all these factors together, I believe that the performance of our company in 2022 can be well anticipated. We have confidence in it.

Do you have any further questions?

I have no more questions.

Thank you. Seeing no more questions in the queue, let me turn the call back to Mr. Yunfei Li for closing remarks.

Thank you all for joining this meeting, and we're looking forward to providing you more updates in the next quarter's meeting.

Thank you all again. This concludes the call. You may now disconnect.