Release Date: September 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Antelope Enterprise Holdings Ltd (AEHL, Financial) reported revenue of $43.4 million for the first half of 2024, engaging with over 70 clients, an increase of nearly 20 clients compared to the same period in 2023.
- The company is strategically shifting its business model to focus on securing a larger number of mid-tier clients to mitigate the risk of over-reliance on major clients.
- Antelope Enterprise Holdings Ltd (AEHL) plans to enter the energy supply sector in Texas, aiming to meet the growing demand for energy in the computing power industry.
- The company has increased its cash and cash equivalents to $2.3 million as of June 30, 2024, a significant rise from $0.6 million as of December 31, 2023.
- Antelope Enterprise Holdings Ltd (AEHL) has a strong market opportunity in the livestreaming e-commerce sector, leveraging advanced analytics to match hosts and influencers with consumer brand products for higher conversion rates.
Negative Points
- Revenue for the first half of 2024 decreased by $1.1 million or 2.6% compared to the same period in 2023, primarily due to the loss of a few major clients.
- Gross profit for the first half of 2024 was $3.5 million, a decrease of $3.3 million or 48.7% compared to the same period in 2023.
- Gross profit margin for the livestreaming e-commerce business dropped to 8% in the first half of 2024 from 15.3% in the same period of 2023.
- Administrative expenses increased by $1.3 million or 22.8% to $6.9 million for the first half of 2024, driven by higher stock compensation and professional service expenses.
- Loss from continuing operations before taxation increased by $1.1 million or 19.3% to $6.5 million for the first half of 2024, compared to the same period in 2023.
Q & A Highlights
Q: Can you provide some color about how the company made the strategic decision to enter the energy supply field?
A: The US Energy Information Administration projects that electricity demand in the United States will increase to record highs in 2024 and 2025, largely driven by demand from large-scale computing facilities. Global data center electricity demand is expected to double from 2022 to 2026, with AI playing a major role. Data centers need a continuous and stable supply of energy to operate, and we believe we are entering this market at the right time to provide a cost-effective and stable means of electricity to data centers and companies in need of computing power. (Will Zhang, Chairman & CEO)
Q: You've mentioned being cost-effective in your model. Can you provide details about how it is designed to be a stable source of energy for your customers?
A: We are located close to the natural gas production site, which minimizes transportation costs and avoids the cost of compression, transportation, and storage. We are also strategically positioned close to our customers to minimize transportation costs further. We closely monitor the natural gas market to secure it at the right time. We currently own four generators that convert natural gas into electricity and plan to launch this business in the fourth quarter of this year. (Will Zhang, Chairman & CEO)
Q: What was the reason for the decrease in revenue for the first half of 2024?
A: The decrease in revenue was due to the loss of a few major clients in our livestreaming e-commerce business. This prompted a change in our business strategy to focus on securing a larger number of mid-tier clients to mitigate the risk associated with an over-concentration of major clients. (Edmund Hen, CFO)
Q: Can you elaborate on the gross profit margin decline for the first half of 2024?
A: The gross profit margin for the first half of 2024 was 8%, compared to 15.3% for the same period in 2023. This decline was due to a decrease in revenue and an increase in the cost of goods sold. (Edmund Hen, CFO)
Q: What are the key factors contributing to the increase in administrative expenses?
A: Administrative expenses increased by $1.3 million or 22.8% compared to the same period in 2023. This increase was primarily due to an increase in stock compensation expense of $0.8 million and a $0.5 million increase in professional service expenses. (Edmund Hen, CFO)
Q: How has the company's client base changed in the first half of 2024?
A: In the first half of 2024, we had business engagements with more than 70 clients, representing an increase of nearly 20 clients compared to the same period in 2023. This shift is part of our strategy to focus on mid-tier clients to mitigate the risk of over-reliance on major clients. (Will Zhang, Chairman & CEO)
Q: What is the company's outlook for the livestreaming e-commerce business?
A: We believe that livestreaming e-commerce will continue to grow as it comprises an increasing percentage of China's e-commerce sales. Our Kylin Cloud subsidiary uses advanced analytics to match hosts and influencers with consumer brand products, resulting in higher conversion rates compared to traditional e-commerce. (Edmund Hen, CFO)
Q: Can you provide more details on the new energy supply business?
A: We plan to enter the energy field by producing electricity using natural gas generators in Texas. This electricity will be transmitted directly to computing sectors, eliminating intermediary steps like transmission to the power grid and processing by public utilities, resulting in lower energy losses and higher efficiency. (Will Zhang, Chairman & CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
