On April 1st, JASIC published its financial results for 2022, which showed a 1.38% year-over-year dip in the total operating revenue and a 12.04% decrease in the net profit attributed to shareholders. The overall financial performance was not up to expectation due to the further aggravated macroeconomic downturn. However, JASIC took several measures to mitigate the impact and maintained a relatively stable operation.

2022 Overall Financial Performance

JASIC total operating revenue reached RMB1.23 billion ($177.03 million*) in 2022, a 1.38% decline compared to last year.

Period	2020	2021	2022
Total operating revenue	1,020,262,386.15	1,249,347,145.27	1,232,096,018.40

Operating income declined significantly by 11.72% YoY to RMB200.13 million. Total profits substantially decreased by 12.65% YoY to RMB198.25 million. Net profit attributable to shareholders fell by 12.04% YoY to RMB176.34 million. Earnings per share declined by 12.20% to RMB0.36 compared to the prior-year period.

Period	2020	2021	2022
Operating income	192,372,599.64	226,695,124.83	200,133,493.68
Total profits	188,598,663.38	226,964,100.10	198,246,636.01
Net profit attributable to shareholders	162,547,422.34	200,473,971.95	176,341,147.69
Earnings per share	0.34	0.41	0.36

The decline in revenue was primarily due to the weak market demand and intensified competition within the industry. The decline in profit was caused by the increase in raw material price and sales promotion cost.

2022 Overseas Sales Performance

Export sales total revenue reached RMB610.51 million($87.72 million*), showing a 3.12% increase year over year. And the operating cost rose to RMB406.57 million, up 4.15% compared to 2021.

Period	2020	2021	2022
Operating revenue	465,978,549.93	592,055,711.56	610,506,776.58
Operating cost	288,236,143.43	390,388,299.45	406,574,686.03

The increase in revenue can be attributed to several factors, including timely adjusted sales strategies, new product launch and exhibitions, effective communication with key accounts, and some breakthrough in the sales of several regional markets.

Risks and Solutions

Here are some significant risks and related solutions for the company’s operations.

1. The risk of economic downturn
World trade has been impeded by negative factors such as the international economy slowdown, trade protectionism, inflation, geopolitical frictions and weakening global trade momentum. To manage the downsides of economic downturn, JASIC will optimize the distribution channel construction, conduct market research, strengthen product management and promotion, implement product diversification and invest in technological innovation, new product development and product upgrades to meet the changing market demands.

2.Accounts receivable risk
Due to economic downturn and weak market demands, some dealers are struggling with capital turnover, resulting in an increase in the balance of accounts receivable and the risk of bad debt loss. To avoid such risk, JASIC will improve the management of payments to ensure the safety of company assets.

3.Procurement cost fluctuation risk
Commodity prices are uncertain in the long term, affected by factors such as global economy recovery dynamics, geopolitical risks and currency policies at home and abroad. The uncertainty makes it hard to execute effective control of procurement cost. To face the challenges, JASIC has established a strategic material management task force to adjust material inventory in a timely manner and speed up the localized sourcing process of key components. JASIC has also established partnerships with suppliers and implemented supply chain diversification to minimize the cost fluctuation risk.

4.Foreign exchange risk
The fluctuations in RMB exchange rate will have an impact on the company’s gains and losses. To mitigate the risk, JASIC will keep a close eye on the foreign currency trend, maintain a reasonable holding of foreign currency assets and choose proper exchange hedging tools.

*exchange rate at the end of 2022: US$1 = CNY 6.96