Good day, ladies and gentlemen, and welcome to the Fuwei Films Fourth Quarter 2019 Earnings Conference Call. [Operator Instructions].

At this time, it is my pleasure to turn the floor over to your host, Mr. Shiwei Yin. Sir, the floor is yours. .

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

Before we start, I want to remind you that certain statements 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 know 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. A 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. .

On the call today is Mr. Yong Jiang, Corporate Security. Before I walk you through our financial results, Mr. Jiang will deliver his opening remarks. Sir, please go ahead. .

[Foreign Language].

[Interpreted] Thank you for joining us today. And despite persisting oversupply in the BOPET plastic films market, our revenues and gross margins continue to grow. Sales of specialty films increased by 9.1% year-over-year and accounted for 48.4% of our total revenues in 2019.

Our gross margin increased by 8.5 percentage points to 24.9% for the year of 2019 as compared to 16.4% in 2018. .

We believe that our focus on innovation will enable the company to extend and use our product applications and attract new clients and expand relationships with existing customers. We're encouraged by positive trends in revenues and gross margins, which we expect to enable us to better navigate in the industrial and economic landscape we have. .

Now I will read to you our financial results for the fourth quarter and full year of 2019. Revenues for the fourth quarter were RMB 86.8 million or USD 12.5 million compared with RMB 90.1 million in the fourth quarter of 2018, a decrease of RMB 3.3 million or 3.7%.

Sales volume accounted for an increase of RMB 3.2 million, while the decrease of average sales price caused a decrease of RMB 6.5 million. Sales of specialty films for the fourth quarter were RMB 47.7 million or USD 6.9 million or 54.9% of total revenues compared with RMB 39.8 million or 44.1% of total revenue in the fourth quarter of 2018.

Sales volume accounted for an increase of RMB 10.9 million while the decrease of average sales price caused a decrease of RMB 3.0 million. .

Sales in China for the fourth quarter of 2019 were RMB 81.4 million or USD 11.7 million or 93.8% of total revenues compared with RMB 80.8 million or 89.7% of total revenues in the fourth quarter of 2018. .

Sales volume accounted for an increase of RMB 7.0 million while the decrease of average sales price caused a decrease of RMB 6.4 million. Overseas sales for the fourth quarter of 2019 were RMB 5.4 million or USD 0.8 million, or 6.2% of total revenues compared with RMB 9.3 million or 10.3% of total revenues in the fourth quarter of 2018. .

Gross profit for the fourth quarter of 2019 was RMB 31.0 million or USD 4.5 million, representing a gross margin of 35.7% compared with a gross profit of RMB 21.3 million, representing a gross margin of 23.7% in the fourth quarter of 2018. .

Operating expenses for the fourth quarter of 2019 were RMB 15.7 million or USD 2.3 million compared with RMB 19.0 million in the fourth quarter of 2018.

Net profit attributable to the company for the fourth quarter was RMB 10.3 million or USD 1.5 million compared with net loss attributable to the company of RMB 3.5 million in the fourth quarter of 2018. .

Basic and diluted profit per share was RMB 3.17 or USD 0.46 compared with basic and diluted loss per share of RMB 1.06 in the fourth quarter of 2018..

[Audio Gap].

results. Net revenues were RMB 335.6 million, USD 48.2 million compared to RMB 333.5 million in 2018, representing an increase of RMB 2.1 million or 0.6%. The decrease in average sales price caused a decrease of RMB 0.8 million, which was more than offset by the increase in sales volume factor caused an increase of RMB 2.9 million. .

In 2019, sales of specialty films were RMB 162.4 million, USD 23.3 million or 48.4% of our total revenues as compared to RMB 148.8 million or 44.6% in 2018, which was an increase of RMB 13.6 million, or 9.1% higher than 2018. .

The increase of sales volume led to an increase of RMB 14.3 million, offset in part by the decline in average sales price which caused a decrease of RMB 0.7 million. .

Overseas sales were RMB 47.6 million, USD 6.8 million or 14.2% of total revenues compared with RMB 45.4 million or 13.6% of total revenues in 2018. The increase of average sales price caused an increase of RMB 0.6 million and the decrease (sic) [increase] in sales volume caused an increase of RMB 1.6 million..

[Audio Gap].

Net profit attributable to the company for full year 2019 was RMB 11.4 million or USD 1.6 million compared with a net loss of RMB 22.2 million in 2018. .

Basic and diluted earnings per share for the year ended December 31, 2019, was RMB 3.48 or USD 0.50. .

Net cash provided by operating activities was RMB 54.4 million for the year ended December 31, 2019, as compared to net cash provided by operating activities of RMB 25.4 million for the year ended December 31, 2018. .

Cash and cash equivalents at year-end was RMB 60.9 million or USD 8.7 million compared with RMB 8.9 million as of December 31, 2018. .

In conclusion, we would like to thank our shareholders for their continued loyalty and support. I believe we are well positioned to face the current challenges and are committed to providing value to our shareholders and customers. We'll keep you informed of our progress. .

With that, Mr. Jiang will be happy to answer your questions. .

[Operator Instructions] We'll go first to [ Joe Morra ]. .

Yes. Well, that's very good results. And I was curious about the cash flow for the fourth quarter.

How much cash was generated from operations? And a follow-up on that, do you have any plans for the cash that you're generating for the company?.

What is the question? Do you incline for -- the first part first. .

[Foreign Language].

[Interpreted] [Joe], so the annual cash flow from operation was RMB 54 million, and we didn't -- we're not breaking down by the quarter. .

What was it for the 9 months? I suppose we could subtract from the 9 months report. .

[Foreign Language].

[Interpreted] Okay. [Joe], so the cash flow for operations for the first 9 months is about RMB 36 million. So the difference is the number that you're looking for. It's about [RMB 18 million]. .

Okay. Very good.

And any plans, lastly for cash?.

Do you like -- what's the use for that cash?.

Yes. .

[Foreign Language].

[Interpreted] [Joe], so as you may know -- so the company, we are -- after a couple of years of challenging situation, we are starting to turn things around.

So while you see that we are starting to generate positive cash flow again, which is good as you pointed out, but we're being prudent with that, and we're planning to use that cash to consolidate -- to strengthen our balance sheet, our financial situation. And also we'll need that cash to run our operation.

And specifically, that means to expand our customer and also product base. .

[Foreign Language].

[Interpreted] And also one other factor, obviously, as the elephant in the room, so to speak, is the huge uncertainty that's created by the COVID-19 virus. So obviously, we would need that cash as sort of a reserve in case of uncertainty down the road. .

And also with your competitive situation given the health crisis, has that changed relative to your competitors in terms of getting out of the crisis in terms of your supply chain and your market share?.

[Foreign Language].

[Interpreted] [Joe], so given the tremendous uncertainty as a result of the virus, directly, what we are seeing is that demand for products was down in first quarter in China. And we've probably seen that across the world as well.

And then on top of that, as we have mentioned in our release and also during on the call is that the overall demand and supply situation in our specific industry at this moment in time is that there's still more supply than demand..

So in response to all these external factors, our policy is to -- is threefold. Number one, and we will continue to increase the development of differentiated products. And this is going to be a focus of our work.

And this was the focus of our work in 2019 and going into -- and in 2020, this will continue to be a focus because differentiated products is where we believe that we may have an edge over our competitors. And also where there might be higher margins. .

And then the second fold is that we are trying to take advantage of the low oil price right now to stock up on some raw material. And then the third one is that we're going to expand in the international markets, such as Japan and Europe given the crisis. .

[Operator Instructions] And with no other questions signaled, I'll turn the conference back to management for any additional or closing comments. .

Thank you for joining us on today's call. We look forward to being in touch with you and keep you updated on our progress. Have a nice day. .

Thank you. Ladies and gentlemen, that will conclude today's call. We thank you for your participation. You may disconnect at this time, and have a great day. .

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.].