Investment Summary

The interim revenue of FY2018 increased by 11.4% y.o.y. mainly due to the price hikes
of some of its products, and the sales volume of mid- to high-end products also increased.
The ASP during the period has increased by 13%, while the sales volume was slightly
affected by the mark-up, decreased by only 1.5% . During the period, GPM increased
significantly by 2.5 ppt to 36%. According to the management team, the overall business
performance including indicators like sales volume and GPM of 2H was worse than that
in 1H, which was due to the weak macro economy and the company`s strategy of not
joining the price war of the industry. The total sales volume of FY2018 was worse than
the market (0.8% decline for industry sales), and the market share has also fallen from
27% in 2017, but still in the leading position. The company`s FY2019 sales target is to
keep constant of that of in FY2018. There will be fewer chance of another round of price
hikes. But as it will continue to develop mid- to high-end business, ASP is expected to
have a low single-digit growth every year In the next three to five years.