Weijia Dai - Investor Relations Yong Jiang - Corporate Secretary.

Greetings, and welcome to Fuwei Films Second Quarter 2017 Earnings Conference Call. At this time, all participants will be in a listen-only mode. A question-and-answer session will follow the formal presentation [Operator Instructions]. I would now like to turn the conference over to your host, Weijia Dai. Thank you. You may begin..

Thank you. Let me remind you that today's call is being recorded. A replay of this call will be made available shortly after the conclusion of today's call.

Before we start, I would like to remind you that certain statements that are not of historical facts made during the course of this conference call about future events and projected financial results constitute forward-looking statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

You should note that the Company's actual results may differ materially from those projected in these statements due to a variety of factors affecting the business. Forward-looking statements are subject to risks and uncertainties. Discussion of the factors that may affect future results is contained in our filings with the U.S.

Securities and Exchange Commission. We undertake no obligation to correct or update any forward-looking statements provided as a result of new information, future events or changes in our expectations. Joining us on today's call is Mr. Yong Jiang, Corporate Secretary. Before I walk you through our financial results, Mr.

Jiang will deliver his opening remarks and I will translate Mr. Jiang's remarks. Sir, please go ahead..

Hello everyone. And thank you for joining us today. While we continue to face strong competition from emerging and incumbent players in the marketplace, which has led to oversupply relative to demand in the marketplace, we are encouraged by positive trends in the sales of specialty films and overseas sales.

The second quarter financial results reflect encouraging results in net revenues, which was largely attributable to the increase in sales volume in these sectors.

We believe our commitment to innovation and R&D has expanded our end-user applications that will enable the Company to capitalize on these opportunities despite challenging industry and economic conditions. Now, Weijia will read to you our financial results for second quarter of 2017. Then I will begin the Q&A session..

Now, I will provide you with an overview of our key financial numbers in second quarter 2017, then I will offer some updates on our operations followed by the management Q&A.

Net sales during the second quarter ended June 30, 2017 were RMB70.1 million or $10.3 million compared to RMB59.3 million, during the same period in 2016, representing an increase of RMB10.8 million or 18.2%. The increase in average sales price caused an increase of RMB7 million and the sales volume increase caused an increase of RMB3.8 million.

In the second quarter of 2017, sales of specialty films were RMB25.6 million or $3.8 million or 36.5% of our total revenues as compared to RMB23.5 million or 39.7% in the same period of 2016, which was an increase of RMB2.1 million or 8.9% as compared to same period in 2016.

The increase on average sales price caused an increase of RMB0.3 million and increase in sales volume caused an increase of RMB1.8 million. The increase was largely attributable to the increase in sales volume.

Overseas sales were RMB15.8 million or $2.3 million, or 22.5% of total revenues compared with RMB11.2 million or 18.9% of total revenues in the second quarter of 2016. The increase of average sales price caused an increase of RMB1.9 million and increase in sales volume caused an increase of RMB2.7 million.

Our gross profit was RMB5 million or $0.7 million for the second quarter ended June 30, 2017, representing a gross profit rate of 7.2% as compared to a gross profit rate of 9.5% for same period in 2016. Correspondingly, gross profit rates decreased by 2.3 percentage points compared to the same period in 2016.

Our average product sales price increased by 11.1% compared to the same period last year, while the average cost of goods sold increased by 13.9% compared to the same period last year.

Consequently, the amount of increase in cost of goods sold was greater than that in sales revenue during the second quarter ended June 30, 2017 compared with the same period in 2016, which resulted in a decrease in our gross profit.

Operating expenses for the second quarter ended June 30, 2017 were RMB14.2 million or $2.1 million as compared to RMB 14.5 for the same period in 2016.

Net loss attributable to the Company during the second quarter ended June 30, 2017 was RMB11.6 million or $1.7 million compared to a net loss attributable to the Company of RMB10.2 million during same period in 2016, representing an increase of RMB1.4 million for the same period in 2016.

Basic and diluted net loss per share was RMB3.57 or $0.53 and RMB3.12 for the three months period ended June 30, 2017 and 2016 respectively. Total shareholders' equity was RMB241.2 million or $35.58 million as of June 30, 2017, compared with RMB265.2 million as of December 31, 2016.

As of June 2017, the Company had 3,265,837 basic and diluted ordinary shares outstanding. Net sales during the six months period ended June 30, 2017 were RMB138 million or $20.5 million compared to RMB121.5 million in the same period in 2016, representing an increase of RMB16.5 million or 13.6%.

The increase in average sales price caused increased of RMB12.6 million and increase in sales volume caused increase of RMB3.9 million.

In the six months period ended June 30, 2017, sales of specialty films were RMB47.3 million or $7 million or 34.3% of our total revenues as compared to RMB45.3 million or 37.3% in the same period of 2016, which was an increase of RMB2 million or 4.4% as compared to the same period in 2016.

The increase in the sales volume caused an increase of RMB1.8 million and increase in average sales price caused increased of RMB0.2 million. Overseas sales during the six month ended June 30, 2017 were RMB29 million or $4.3 million, or 21% of total revenues compared with RMB23.7 million or 19.5% of total revenues in the same period in 2016.

This was RMB5.3 million higher in the same period last year. The increase in sales volume resulted in an increase of RMB2.5 million and increase in average sales price caused an increase of RMB2.8 million.

Our gross profit was RMB8.8 million or $1.3 million for the first six months ended June 30, 2017, representing a gross margin of 6.4% as compared to a gross margin of 9.2% for the same period in 2016. Correspondingly, gross margin decreased by 2.8 percentage points.

Our average product sales price increased by 10% compared to the same period last year, while average cost of goods sold increased by 13.5% compared with same period last year.

Consequently, the amount of increasing cost of goods sold was higher than that in sales revenue during the six months ended June 30, 2017 compared with the same period in 2016, which resulted in a decrease in our gross margin.

Operating expenses for the six months ended June 30, 2017 were RMB28 million or $4.1 million compared to RMB29.5 million in the same period in 2016, which was RMB1.5 million lower than the same period in 2016. The decrease was mainly due to decreased allowance for doubtful accounts receivable.

Net loss attributable to the Company during the first half of 2017 was RMB23.8 million or $3.5 million compared to net loss attributable to the Company of RMB22.3 million during the same period in 2016, representing an increase of RMB1.5 million from the same period in 2016 due to the factors described above.

In conclusion, we would like to thank our shareholders for their continued loyalty and support. We believe we are well positioned to face the current challenges and are committed to providing value to our shareholders and customers. We will keep you informed of our progress. With that Mr. Jiang will be happy to answer your questions.

We require your patience as we translate each question and each answer. Operator, please begin the Q&A..

Operator:.

Thank you for joining us on this conference call. We look forward to being in touch with you and we'll keep you updated about our progress. Thank you..

Thank you. This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation..