Greetings and welcome to Fuwei Films’ Fourth Quarter and Full Year 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded.

I would now like to turn the conference over to your host today, Shiwei Yin. Please proceed, sir. Thanks, Sonia.

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 our businesses. 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..

[Operator Instructions] Hello, everyone and thank you for joining us today. Oversupply in the BOPET plastic films market persisted in 2018. While this impacted the Company's results, we are pleased that our revenues and gross margins continued to grow.

Sales of specialty films increased 37.7% year-over-year and accounted for 44.6% of our total revenues in 2018. We believe that our focus on innovation will enable the Company to expand end-user product applications and attract new clients and expand relationships with existing customers.

We are encouraged by positive trends in revenues and gross margins which we expect to enable us to better navigate the industrial and economic landscape ahead. Now Zengyong will review to our financial results for the fourth quarter and full year of 2018, then we’ll begin the Q&A session..

Thank you, Mr. Yong. I will now provide you with an overview of our key financial numbers in the fourth quarter and full year 2018. Then we will offer some updates on our operations, followed by the management Q&A.

Revenues for the fourth quarter of 2018 were RMB90.1 million or US$13.1 million, compared with RMB78.8 million in the fourth quarter of 2017, an increase of RMB11.3 million, or 14.3%. Sales volume accounted for a decrease of RMB7.3 million while the increase of average sales price caused an increase of RMB18.6 million.

Sales of specialty films for the fourth quarter of 2018 were RMB39.8 million or US$5.8 million, or 44.1% of total revenues, compared with RMB32.3 million or 40.9% of total revenue in the fourth quarter of 2017. The increase was mainly attributable to increase in sales volumes and average sales price compared to the prior year.

Sales in China for the fourth quarter of 2018 were RMB80.8 million, or US$11.8 million, or 89.7% of total revenues, compared with RMB67.5 million or 85.6% of total revenues in the fourth quarter of 2017. Sales volume accounted for a decrease of RMB3.4 million while the increase of average sales price caused an increase of RMB16.7 million.

Overseas sales for the fourth quarter of 2018 were RMB9.3 million or US$1.4 million, or 10.3% of total revenues, compared with RMB11.3 million or 14.4% of total revenues in the fourth quarter of 2017. Sales volume accounted for a decrease of RMB3.9 million while the increase of average sales price caused an increase of RMB1.9 million.

Gross profit for the fourth quarter of 2018 was RMB21.3 million or US$3.1 million, representing a gross margin of 23.7%, compared with a gross profit of RMB11.6 million, representing a gross margin of 14.7% in the fourth quarter of 2017.

Operating expenses for the fourth quarter of 2018 were RMB19.0 million or US$2.8 million compared with RMB16.7 million in the fourth quarter of 2017. Operating profit for the fourth quarter of 2018 was RMB2.4 million or US$0.3 million, compared with an operating loss of RMB5.1 million in the fourth quarter of 2017.

Net loss attributable to the Company for the fourth quarter of 2018 was RMB3.5 million or US$0.5 million, compared with net loss attributable to the Company of RMB10.1 million in the fourth quarter of 2017. Basic and diluted loss per share was RMB1.1 or US$0.15, compared with basic and diluted loss per share of RMB3.1 in the fourth quarter of 2017.

Moving now to financial results for the year ended December 31, 2018. During fiscal year ended December 31, net revenues were RMB333.5 million, US$48.5 million, compared to RMB290.7 million during the same period in 2017, representing an increase RMB42.8 million or 14.7%.

The increase of average sales price caused an increase of RMB53.9 million and the reduction of sales volume factor made a decrease of RMB11.1 million.

In 2018, sales of specialty films were RMB148.8 million, US$21.6 million or 44.6% of our total revenues as compared to RMB108.1 million or 37.2% in 2017, which was an increase of RMB40.7 million, or 37.7%, as compared to the same period in 2017.

The increase of average sales price caused an increase of RMB7.1 million and the increase of sales volume factor made an increase of RMB33.6 million. Sales in China in 2018 were RMB288.1 million, or US$41.9 million, or 86.4% of total revenues, compared with RMB235.1 million or 80.9% of total revenues in 2017.

Sales volume accounted for an increase of RMB5.9 million while the increase of average sales price caused an increase of RMB47.1 million. Overseas sales were RMB45.4 million or US$6.6 million, or 13.6% of total revenues, compared with RMB55.6 million or 19.1% of total revenues in 2017.

The increase of average sales price caused an increase of RMB6.4 million and the reduction of sales volume factor made a decrease of RMB16.6 million. Our gross margin was 16.4% for the year of 2018, as compared to a gross margin of 9.3% in 2017. Our average unit sales price increased by 19.3% compared to last year.

The unit sales cost increased by 10.0% due to the price increase of main raw materials. Consequently, the increase in sales price exceeded that cost of goods sold per unit in product during 2018 compared with 2017, which contributed to the increase in our gross profit.

Our operating expenses during the year ended December 31, 2018 were RMB66.0 million, an increase of RMB5.0 million, or 8.2%, as compared to 2017. Net loss attributable to the Company for full year 2018 was RMB22.2 million or US$3.2 million, compared with a net loss of RMB46.0 million in 2017.

Basic and diluted loss per share for the year ended December 31, 2018 was RMB6.79 or US$0.99. Net cash provided by operating activities was RMB25.4 million for the year ended December 31, 2018 as compared to net cash provided by operating activities of RMB10.8 million for the year ended December 31, 2017.

Cash and cash equivalents on December 31, 2018 was RMB8.9 million or US$1.3 million, compared with RMB13.0 million as of December 31, 2017. 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, we'll be happy to answer your questions, where we require your patience as we translate question and answer. Sonia, lets begin the Q&A..

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