Cogobuy Announces 2018 Annual Results

HONG KONG, March 28, 2019 /PRNewswire/ --

Cogobuy Group ("Cogobuy" or the "Company", stock code: 400.HK; with its subsidiaries (the ''Group'')), a company focusing on IC component trading and artificial intelligence and internet of things ("AIoT") business services in China, is pleased to announce its audited consolidated results for the year ended December 31, 2018 (the "Year").

Financial Highlights of the Full Year of 2018

The Group's "AIoT Business Service Platform + IC Component Trading Platform dual business model" continued to facilitate the Group's business development. This dual business model has taken the form of an AIoT ecosystem through which the Group provides services such as AIoT solutions and electronic component sales for various applications including smart cars, smart homes, smart healthcare, robotics, and customized AIoT chips. The industry transformation riding on 5G created new opportunities for this AIoT ecosystem.

In 2018, the Company recorded total revenue of RMB5,534.8 million, a YoY decrease of 42.4%, mainly attributable to an increase in a loan interest rate following a change in US interest rates. As a result, the Group adjusted its business structure and reduced certain IC components businesses which relied heavily on bank credit facilities. The decrease in revenue was also attributable to the partial disposal of EZ Robot, Inc. ("EZ Robot"). The Group's present share ownership of EZ Robot is under 50%, and its sales are no longer consolidated into the Group's revenue. Profit attributable to equity shareholders of the Company was approximately RMB293.2 million, a YoY decrease of 2.9%.

On December 31, 2018, the Company recorded cash and bank balances including short-term bank deposit and pledged deposits amounted to RMB1,317.8 million. Bank loans was RMB1,125.9 million as of December 31, 2018. Basic common shares outstanding were 1,455,555,000, and diluted common shares outstanding were 1,467,955,000.

AIoT Business service Platform

As the 5G era approaches, the Internet of Things ("IoT") and artificial intelligence ("AI", and together, "AIoT") have increasingly penetrated various industries, creating higher demand for a wide range of chips. As a leading AIoT Business Service Platform in China, INGDAN.com is using its first-mover advantage to provide AIoT technology solutions and supply chain services for various industries. INGDAN.com is also exploring new business models and applications by analyzing the customer service data from existing business segments to form a big data of supply chain. To date, the number of companies registered on INGDAN.com's AIoT ecosystem has exceeded 38,000; they include chip companies, AI computing companies, module companies, technical solutions providers, IC components companies, high procurement demand IoT projects, and upgrade demands from traditional electronics manufacturers. The ecosystem covers intelligent security, smart cars, smart homes, robotics, smart healthcare products, and new materials. In 2018:

• The Group successfully incubated its IoT project, EZ Robot. EZ Robot is now a leader of the domestic robotics industry, and provides AI robot hardware technology solutions and supply chain services to various industries. Currently, EZ Robot mainly serves manufacturers from food industries and electronics.
• INGDAN Japan serves as a platform for resource sharing, with more than 10 Japanese technology companies including Toyota, and is introducing Japan's core technologies in chips and materials to China.
• The INGDAN Lab's K-system successfully developed the SLAM AI module for robotic vacuums, which also use Allwinner's R16 chip. The new vacuums officially entered mass production.
• INGDAN.com's strategic partner, Beijing Unisound Information Technology Co., Ltd. ("Unisound"), successfully developed an AI chip into a module with the help of the INGDAN.com platform. The Group also utilized Unisound's first AIoT chip, "Swift", to customize smart speaker and smart home technology, and capitalized on Unisound's Full-Stack technology, products, and service capabilities to accelerate the commercialization of more AIoT projects on the INGDAN.com platform.

IC Components Trading Platform

The arrival and development of 5G and IoT have dramatically increased the demand for IC components and chips. In 2018, the Group strengthened its industry advantages and resources in IC component marketing and sales trading. The Group partnered with over 50% of the world's top 100 chip suppliers, such as Intel, and expanded its cooperation with dozens of first-and second-tier domestic chip suppliers. In 2018, the Group:

• Collaborated with Littelfuse, a global leading provider of circuit components and circuit protection products, in China's chips and base station systems, and contributed to Wuhan Hongxin's 5G application with RAN and critical components;
• Signed an agency agreement with Huawei's Hisilicon Semiconductor to represent the sales of all of its products to promote their applications in smart homes, IoT, and security;

In addition, the auto industry has made a dramatic shift towards smart cars and networking. Cogobuy prepared for this opportunity by gradually making smart cars one of its key business development areas, and continues to penetrate the smart car market through partnerships with different companies.

In 2018, just name a few, the Group:

• Extended its sales representation to all STMicroelectronics products and began providing services including promotions, sales, and industrial applications of technologies for its products in autonomous driving and AI applications;
• Assisted Microchip Technology Inc., the world's leading supplier of microcontrollers and analog semiconductors, in commercializing automobile headlights for Shanghai East China Automobile.

With the deployment of 5G technologies making the IoT era a reality, various network devices are also experiencing explosive growth, driving increasing demand for AIoT chips. The Group also completed its transition from an IC component sales and marketing platform, to a more diversified, business services, investment, and strategic sales platform serving the electronics industry in China.

Outlook

Mr. Jeffrey Kang, CEO of Cogobuy Group, said "Our Company has been one of the leading domestic electronic components B2B sales and service providers in China. Since the strategic adjustment of our business at the end of 2017, the Company has integrated all of its business segments and launched our 'AIoT Business Service Platform + IC Component Trading Platform dual business model'. In 2018, we completed our strategic changes and put our intelligent hardware supply chain at the core of our service. With INGDAN's cloud-based architecture, we've also accumulated supply chain big data which enables us to provide one-stop supply chain solutions to smart car, robotics, and AI hardware and IoT companies.

According to the "White Paper on Economic and Social Impact of 5G" issued by China Academy of Information and Communications Technology under the Ministry of Industry and Information Technology of China, 5G will indirectly drive growth in China's GDP of more than RMB419 billion in 2020. In 2030, the indirect GDP of 5G will increase to RMB3.6 trillion. With 5G equipment and applications, the scale of the IoT market will grow significantly and more industries will rely on big data. Data from the IDC Research Institute indicates that global IoT spending will grow at a CAGR of 13.6% from 2017 to 2022 forecast period, and is expected to reach US$1.2 trillion by 2022. And according to Gartner's forecast, the number of global IoT devices will reach 25 billion units in 2021.

The AI hardware and IoT markets present tremendous business opportunities. The Group expects to consolidate INGDAN.com's position as the nation's leading AIoT enterprise service provider, covering all emerging core industries in China, including 5G communication devices, smart cars, smart homes, and security. We will also continue to deepen and consolidate the channel resources on the INGDAN.com platform. Based on the Microsoft Azure platform, INGDAN.com will enable the intelligent upgrading of the traditional security and medical industries. Looking ahead, the Group will continue to collaborate with more upstream and downstream enterprise remittance platforms to build a leading AIoT service platform for the AIoT industry.

In addition, the Group proactively extends its collaborations with the companies and projects in smart car related industries and develops smart car AI hardware and IoT solutions. Through the ecosystem and labs formed by INGDAN.com and Toyota, the Group facilitates Chinese start-up companies' becoming a part of Toyota's global supply chain, promoting faster growth of smart car-related businesses on INGDAN.com.

INGDAN.com is the core of the Group's business development and we expect INGDAN.com's contribution to our total revenue to increase. INGDAN.com will implement three monetization strategies: (i) the sale of smart hardware, such as chips and AI modules, to AIoT enterprises; (ii) providing customized chip design, AI modules, supply chain finance and other industrial chain services; and (iii) the realization of gains from our equity investments in AIoT technology companies.

5G devices are currently at a very early stage, but as 5G base stations become more extensive and the network is built out, all of China's industries will experience a digital, smart evolution. Upgrades of devices and applications will also present tremendous opportunities for the Group. With our leading position in chip supplies and the large number of companies already registered on our incubation platform, our IC business and roadmap are set to benefit greatly from the roll out of 5G devices and applications. The rapid development of 5G and AIoT has provided the Group with the core driving force for growth. Meanwhile, with the recovery of bank credit and the accelerated growth of INGDAN.com's customized chip business, we are confidence of our business prospects for 2019."

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 are 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.

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About Cogobuy Group

Cogobuy Group 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 Cogobuy.com, an IC Components Direct Sales Platform, and INGDAN.com, the leading AIoT Business Service Platform. Cogobuy's AIoT ecosystem connects cloud computing and AI core technologies with the Group's expertise in edge computing, machine learning, and deep customization. With the ecosystem, the Group aims to provide AIoT solutions to vertical industries such as smart cars, smart homes, robotics, and customized AIoT chips.

For further information, please refer to the Company's website at https://www.cogobuy.com/

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