MemeStrategy (2440) H1 2024 earnings summary

Executive summary

• H1 revenue fell 82.4% YoY to RMB31.050m as IoT projects were delayed; telecom equipment and private 5G sales were nil, gross profit was RMB1.325m and net loss was RMB30.742m.

• Adjusted net loss, excluding equity-settled share-option expenses, was RMB25.933m versus adjusted net profit of RMB12.178m in H1 2023.

• Priorities include diversifying industrial customers, upgrading the Universal IoT Platform with AI and big data, and tightening receivables collection, credit-risk controls and cost management.

Financial highlights

• Revenue was RMB31.050m versus RMB176.744m; cost of sales was RMB29.725m versus RMB149.541m, and gross profit was RMB1.325m versus RMB27.203m.

• Administrative expenses rose 86.9% YoY to RMB26.0m, driven by R&D costs of RMB12.5m, higher share-option expense and dismissal compensation.

• Financial-asset impairment losses increased to RMB6.5m from RMB1.7m; receivables aged over one year increased 33.5% versus December 31, 2023.

• Cash and cash equivalents fell from RMB33.2m at December 31, 2023 to RMB14.1m at June 30, 2024, mainly due to RMB18.1m operating cash outflow.

Outlook and guidance

• 2024 outlook flags macro volatility, stronger information and telecom competition, and faster technology shifts; government measures may support PRC IoT market growth.

• Plans include pursuing private 5G opportunities in manufacturing, transport, environmental protection and energy, and broadening the industrial IoT customer base.

• Plans include extending the Universal IoT Platform for industrial IoT applications and incorporating AI and big data capabilities.

• Management plans prudent development, stronger risk controls, receivables collection and cost management to support operating cash flow.