Good day, ladies and gentlemen. Thank you for standing by, and welcome to CBAK Energy Technology's Fourth Quarter and Full Year 2022 Earnings Conference Call. Currently, all participants are in listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time. Now, I'll turn the call over to Thierry Li, Investor Relations Director of CBAK Energy. Mr. Li, please proceed.

Thank you, operator, and hello, everyone. Welcome to CBAK Energy's fourth quarter and full year 2022 earnings conference call. Joining us today are Mr. Yunfei Li, our Chief Executive Officer; Mrs. Xiangyu Pei, our Interim Chief Financial Officer; Mr. Xiujun Tian, our General Engineer; and Jennifer, our interpreter. We released earlier -- 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 replay of this call will also be available in a few hours on our IR website. 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 his comments into English. Go ahead, Mr. Li.

[Foreign Language] [Interpreted] Thank you, and hello, everyone. Thank you for joining our earnings conference call today. We have just released the financial report for Q4 and the full year of 2022. We are proud to present to our shareholders and investors the tremendous growth we have achieved in sales revenues. The company's revenue has grown by 3.7 times from $52.67 million in 2021 to $249 million in 2022, which is a remarkable achievement. Thanks to the continuous trust and support from our major clients as well as the success we have achieved in expanding our overseas markets, our battery business has grown rapidly. In 2022, the annual revenue of our battery segment reached approximately $94.72 million, a remarkable increase of 1.76 times year-on-year. In our previous announcements, we mentioned receiving orders from various important clients, some of whom we could not name due to confidentiality reasons. However, the fact that our revenue has increased by almost 4 times indicates the long-term trust and satisfaction of these clients with our products and services. In fact, the order amount from these previously announced clients is still growing. In this conference call, I will provide an update on these clients. Currently, we are actively expanding our production capacity to meet the high demand in our industry. I will also update our shareholders and investors on the construction stages of our new factory in Nanjing. Firstly, let me update the total amount of orders awaiting delivery in our company. As of March 31st of this year, the three main production bases located in Dalian, Nanjing and Shaoxing have received orders totaling approximately $180 million that are yet to be delivered. This backlog of orders will support the company's high revenue growth in the future. We have reasons to hold a highly optimistic forecast…

Okay. Thank you, Mr. Li, and thank you, everyone, for joining our call today. I will now go over our key financial results for the fourth quarter and the full year of 2022. For the full details of our financial results, please refer to our earnings press release. We continued to maintain a strong momentum in the increase of sales of our battery and battery material products. As mentioned by Mr. Li, high cost of raw materials and the need to invest in and expand our [Technical Difficulty], however, with big clients making orders and price of raw materials declining in this year, we are very confident in the future growth of our profits. In 2022, our revenues and gross profit grew, reflecting the successful of our marketing strategies. We increased significantly our investments in research and development to both develop new large cylindrical lithium battery and sodium battery products. Meanwhile, we managed to slightly reduce our sales and marketing expenses and the general and administrative expenses. To increase our sales revenues while to reduce our related expenses will be helpful in the long run to deliver a better financial results. Moving on to our results. In the fourth quarter, our net revenues surged by 95.9% to $54.4 million from the same period of 2021. In the full year, our net revenues grew by 372% to $248.7 million. The significant growth in our revenues was contributed by several factors. First, on the EV market, our product has improved features and higher quality, which become more attractive to EV manufacturers. Besides the downspeed market for electric vehicles continued to grow in 2022, leading to an increase in demand for EV battery products. On the LEV market, thanks to a huge increase in market demand, we successfully sell more batteries to LEV…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] First question comes from the line of [Tian Xiao] (ph) from IBM. Please ask your question, Tian.

[Foreign Language] [Interpreted] So the first question is from IBM. I am glad to see the rapid growth of the company's revenue, and I've also noticed that the company suffered from some losses in profit. Can you give us more details in this regard? The management also mentioned that there has been a significant decrease in raw material prices, and do you think the company will be able to control its production cost in 2023?

[Foreign Language] [Interpreted] So, thank you for your question. And according to our report we made just now, in 2022 due to the price fluctuation in lithium carbonate, that is one of the key raw materials of our product, the gross margin of our company witnessed a decline compared to the figure in 2021. And on the other hand, if we have a look at the operation expenses of our company, we can see that we increased a lot in our input in the R&D. In 2022, our investment in R&D amounted to $106.3 million. It's almost -- it's more than double that of the amount of 2021. And this sector also lead to a reduction in our profit. And in the future, we will still be committed to the continuous input in the R&D in our high-quality battery products so as to maintain a leading position in the industry. On the other hand, we have been committed to the optimization of our production processes with an aim to reduce the production cost. And in addition, we also make our efforts in improving the management structure so as to improve the operation efficiency. So, if you have a look at the specific figures of 2022, our revenue realized a 3.7-fold of increase. And if we have a look at the operations loss, actually it shrinked to some extent by 1.8%. So, if we have a look at 2023 with the price of raw material returning to a normal level and also with the optimization of our management structure, we believe that our profitability will be further increased. That's it.

[Foreign Language] [Interpreted] Okay. Thank you for your question, and I have -- sorry, thank you for your answer, and I have another question. Just now the senior management spoke of sodium battery. Can you walk us through the application scenarios and the market size of sodium battery? In particular, can you give us an update on its popularity in the Chinese market? Is the company currently in a leading position in sodium batteries? Thank you.

[Foreign Language] [Interpreted] Okay. So, this is a very good question. First of all, I'd like to answer the question about the popularity of sodium battery in the Chinese market. In the past three years, we all noticed that the price of lithium-ion battery fluctuated a lot, and it is mainly because of the fluctuation of the lithium carbonate. It increased multi fold in the past three years. And actually, this kind of fluctuation in price exerted a negative impact in its -- in the markets. However, if we have a look at sodium battery, on the one hand, it enjoys a more stable price; and on the other hand, it is easier to assess, it has a better accessibility. And besides that, its performance in low temperature condition is also superior that will be -- that makes it a good product to be used in vehicles, especially in winter when the temperature is low, we can say that its performance is even better than the lithium battery in the low temperature condition. So, given the low price and the stability in price, we believe that the popularity of sodium battery will even grow in the market in the future. So, we expect billions of dollar market size for sodium battery. And in addition, the decline in the popularity of lithium battery will also, in another hand -- on another hand, creates a market opportunity for sodium battery. And we expect the market to further expand in the future. And if you ask me about the development status of sodium battery in our company, while we have already finished three generations of development and we have sodium battery projects, such as the 26700 and 32140. And for the latter one, we have already come up with products that is 130 watts per kilogram. And we have already cooperated with our partner to put this product on the vehicle, and in the coming future we're going to promote the mass production of this products, and will use them more and more in the vehicles. That's it for the answer. Thank you for your question again.

All right, thank you. [Operator Instructions] We have a follow-up question from the line of Tian Xiao. Please ask your question, Tian.

[Foreign Language] [Interpreted] Okay. Thank you for [answering still] (ph). I have another two questions. The first one, the company has experienced significant revenue growth in both EV and LEV sector. And since most of the company's revenue still comes from the energy storage business, will EV and LEV continuing to grow rapidly in the future, especially after sodium battery is put into mass production?

[Foreign Language] [Interpreted] Okay. The question goes to Mr. Li.

[Foreign Language] [Interpreted] Okay. Yes. So -- yes, you're right. You mentioned that most of the revenue comes from energy storage. And what is the reason behind it? If you have a look at the products of -- products that is -- are manufactured in Dalian plant, that is our product 26650 and 26700, here you're right, the sales -- in the sales revenue, the energy storage does take up a large proportion. However, if we have a look at the Nanjing facility, it is the plant that mainly produce 32140, and this product hasn't been mass produced until last year. A lot of OEM companies are still doing the certification at the moment. However, our sales have already amounted to $50 million already. So -- and after the vehicle manufacturers pass the certification, and after the increase of our production capacity, let's say at second half of this year, we believe that our production capacity will better meet the demands of the customers and they will place more order with us. So, we will better supply our LEV and EV customers in the second half of the year. So, we have the reason to believe the sales volume of LEV and EV in the LEV and EV markets will continue to grow. And if you talk about the impact of when sodium battery put into production, well, the priority of our business this year is to do R&D and production, and we will also send samples to our customer and help them to pass the certification. And then, for next year, we believe that more of our products will be put into mass production, and they will be put in the vehicles. So that's the answer to question number three. You said you have another question, right?

[Foreign Language] [Interpreted] Yes, in the previous several conference calls, the company mentioned that it is developing larger cylindrical batteries. Is there any information about the development progress that can be shared with investors?

[Foreign Language] [Interpreted] Yes, indeed, in the past two years, we have been doubled -- doubling our efforts in the development of large cylindrical batteries, especially the 46th series. We have already finished the prototype -- a design and trial production -- and trial -- and shakedown test. And then, the test results indicate that this prototype can reach the design objective. And then, now we have finished the prototype B in terms of -- we have already finished the mode development, and now we are in the process of developing the manufacturing process. And we expect that it will be put into mass production in the near future. And we -- at the same time, we have been also developing other products under this 46 series, for example, 120. And then, for -- there were two other sites that is 50 volts and 100. I would believe that these two types of products will be a very suitable products for the household energy storage. This seems to be the golden dimension -- golden size for household energy storage and will also present a better price performance ratio. It is in the most superior than those products with a big market share at present. So, we believe that this product will enjoy a great -- a promising future. That's it for the answer. Thank you.

[Foreign Language] [Interpreted] Okay. Now I have finished all my questions. Thanks a lot for the answers.

Thank you. Our next question comes from the line of [Steve Cole from eSeis] (ph). Please ask your question, Steve.

Now, congratulations to your immense revenue growth. Regarding the current liabilities and the negative cash flow in the past years, do you believe there will ever be serious liquidity issues in the near future if the cost of revenue does not come down?

[Foreign Language] [Interpreted] So, thank you for your question. We can answer this question from two dimensions. First of all, if we have a look at the operation cash flow, actually, the cash flow brought by our product -- with our production capacity can -- is sufficient. All we can say, the cash brought by our existing business is sufficient. Both last year and this year, we have carried out the calculation and we -- according to the results of the calculation, the revenue booked by both the battery business and the material business can sufficiently support our cash flow. And then, if -- on the other hand, if we have a look at the expansion of our production capacity, we actually have some revenue of financial support coming from different sources. The first one is the local government where our production facilities are based in. Actually, we have again great support from the local government. They give us some policy incentives to support us. And secondly, we also gained support from the banks in China. And thirdly, in the U.S. capital market, both domestic investors and overseas investors expressed their great interest in our products, and now we are having a lot of talks with them and we believe they can also give us supplies in -- sorry, support in the financial -- in finance. That's it for the answer. Thank you for your question again.

Thank you. Steve, do you have any follow-up question? All right. Thank you. [Operator Instructions] All right. Seeing no further questions in the queue. Let me turn the call back to Mr. Yunfei Li for closing remarks.

[Foreign Language] [Interpreted] Thank you, operator, and thank you all for participating on today's call and for the support. We appreciate your interest, and look forward to reporting to you again next quarter on our progress.

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