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Yangtze Optical Fibre and Cable Joint Stock Announces 2017 Annual Results Revenues Hit a Record High With 27.8% Net Profit Increased Significantly by 78.0%

Financial Highlights:

Ø  Revenue was RMB10,366.1 million (2016: RMB8,111.5 million), increased by approximately 27.8% (2016: 20.4%).

Ø  Gross profit and gross profit margin were RMB2,789.2 million (2016: RMB1,682.6 million) and 26.9% (2016: 20.7%), respectively.

Ø  Profit before interests (financial expenses) and tax (“EBIT”) was RMB1,525.0 million (2016: RMB905.5 million), increased by approximately 68.4% (2016: 20.9%).

Ø  NetProfit was RMB1,234.58 million (2016: RMB693.70 million), increased by approximately 78.0% (2016: 26.0%).

Ø  The Group’s revenue from domestic business increased by approximately 24.3% (2016: 19.3%), when compared with the prior year. The Group’s overseas revenue increased by approximately 65.0% (2016: 32.7%), when compared with the prior year.

(March 13, 2018 )Yangtze Optical Fibre and Cable Joint Stock Limited Company (“YOFC” or “the Company”, stock code: 6869)is pleased to announce the consolidated results of the Company and its subsidiaries (the “Group”) for the year ended 31 December 2017 (the “Period”). 

During 2017, whilst consolidating its advantage in optical fibre preforms, optical fibres and optical cables, and maintaining its leading position in domestic telecommunications market, the Group had also been deepening the internationalisation strategy and constantly expanding in overseas markets. Meanwhile, the Group continued to extend to both upstream and downstream of the industry chain, actively expand diversified services, promote its new products and increase the scope of customers and market place enthusiastically.During 2017, the Group’s revenue reached another year of record highto approximately RMB10,336.1 million, increased by approximately 27.8% as compared to 2016 of approximately RMB8,111.5 million. The Group reported a gross profit of RMB2,789.2 million, increased by approximately 65.8% as compared to 2016 of approximately RMB1,682.6 million.The Group’s EBIT increased significantly from RMB905.5 million in 2016 to RMB1,525.0 million in 2017, representing an increase of approximately 68.4%. The Group’snetprofit amounted to approximately RMB1,234.58million, increased by approximately 78.0% as compared to 2016 of approximately RMB693.70 million.Basic earnings per share was RMB1.86 per share (2016: RMB1.05 per share), which was calculated based on the weighted average number of shares issued.

By product segment,a total revenue of approximately RMB4,702.9 million was contributed from our optical fibre preform and optical fibre segment, representing a growth of 15.5% as compared to 2016 of approximately RMB4,073.1 million and accounting for 45.4% (2016: 50.2%) of the Group’s revenue; while a total revenue of RMB5,034.9 million was contributed by our optical fibre cable segment, representing a much higher growing momentum of 40.6% as compared to 2016 of approximately RMB3,580.7 million and accounting for 48.6% (2016: 44.1%) of the Group’s revenue.The substantial growth in the Group’s total revenue was mainly due to the optimization of 4G infrastructure construction and FTTH by the three State-owned Telecommunication Operators and the ongoing national initiatives such as “Broadband China”, “internet plus” announced by the PRC government, which provided positive catalysts and brought additional momentum, in particular, the demand for optical fibres and optical fibre cables.A total revenue of approximately RMB628.3 million was contributed by others, representing an increase of 37.3% as compared to 2016 of approximately RMB457.7 million and accounting for 6.0% (2016: 5.7%) of the Group’s revenue. The increase was mainly attributable to the increase in income from RF cables significantly growing by 98.3% as compared with 2016.

By geographical segment,a total revenue of approximately RMB9,205.8 million was contributed by domestic customers, representing an increase of 24.3% (2016: 19.3%) as compared to 2016 of approximately RMB7,408.5 million and accounting for 88.8% of the Group’s revenue. During 2017, the domestic revenue for optical fibre cables grew by 34.5% while the optical fibre preforms and optical fibres grew by 15.3%. For overseas market,a total revenue of approximately RMB1,160.3 million was reported in 2017, representing an substaintial increase of 65.0% (2016: 32.7%) as compared to 2016 of approximately RMB703.0 million and accounting for approximately 11.2% of the Group’s revenue.The growth in overseas revenue was mainly driven by optical fibre cables, which showed an increase of 78.0% in revenue.During 2017, the Group had achieved strong business development in both domestic and overseas telecommunications operator markets which is one of the key stimulators for the significant growth in the Group’s revenue.

In 2017, the Group achieved remarkable financial results whilst earning distinguished performances and recognition.After many years, the Company won the Class Two Award of National Science and Technology Progress again, and Class One Award of Science and Technology of China Institute of Electronics, which endorsed the leading position of the Company in terms of technology. We were the only one in the industry that won the National Quality Award and won the ICQCC International Quality Management Group Gold Award successively. We were repeatedly covered by authoritative media programs such as “News Report”, “Dialogue” of CCTV. We successfully held CRU Global Optical Fibre and Cable Conference consecutively, which continued to enhance the influence of the quality brand. At the same time, the Company won the “Best Supply Guarantee Award” at Huawei’s core partner conference and was endorsed and recognized many times by provincial and municipal companies of China Mobile, China Unicom and China Telecom.

In 2017, major countries and telecom operators around the world had announced 5G construction and commercial plans, and 5G technology standards were gradually launched. In 2018, 5G will move from the laboratory to the actual deployment. It is expected that it will realise the scale for commercialization in the coming two to three years. The investment in global communications infrastructure construction will remain high, and the demand for optical fibre and optical cable will continue to be strong.In the face of strong market demand, the Group had seized the opportunity to deploy strategic layout ahead.In 2017, the Group had newly built and expanded production capacities in Qianjiang, Lin’an, Lanzhou and Shenyang. The autonomy and flexibility in supply had increased significantly. In 2018, the Group is planning to implement the Phase II and Phase III projects of YOFC Qianjiang Science and Technology Park, and further facilitate the implementation of smart manufacturing projects, which will consolidate production capacity and optimize supply capacity. At the same time, with its sound brand influence and production capacity layout, the Company won the first share bid in the central purchasing of optical fibre and optical cable by China Mobile in January 2018. China Mobile is the largest customer in the global optical fibre and optic cable industry. It was the third consecutive time that the Company won the first share bid in the central purchasing of optical fiber and optical cable, which laid a solid foundation for reinforcing its market position of the Group and creating good operating performance.

While maintaining its position in the domestic market, the Group will continue to deepen its internationalization strategies.On the one hand, we will continue to tap into countries along the “One Belt One Road” initiatives, so as to explore high-potential markets, seek suitable partners, and improve the layout of overseas operations. On the other hand, we strengthened the operation of overseas sales entities, focused on marketing localization and sales to end customers, so as to promote the continued rapid growth of overseas sales. In 2018, the Group will continue to implement the innovation-driven development strategy and upgrade the proprietary developed VAD and OVD process level and industrialization scale. We will coordinate the use of three major process capabilities, develop new products with market potential, and provide customers with the best products and solutions. At the same time, a series of smart manufacturing projects will be implemented in an orderly manner, which will reduce production costs and improve customized demand response capabilities. Furthermore, the Company will also use its best endeavours to explore new scopes such as submarine cables, actively tap into new growth points, thereby facilitating the sustainable growth of the Group’s revenue and profits.In terms of capital operations, the Company is proceeding with the initial public offering and listing of A shares. If successfully implemented, the Company will become the first company in the industry and Hubei province to be publicly listed on t6wo stock markets. In the future, we will be able to fully capitalise on the advantages of the financial markets of Hong Kong and Mainland, so as to create value for shareholders and promote the realization of strategic goals.

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