JCET’s Global Manufacturing Strategy Produces Records for Revenue and Profit in Q3

October 30, 2020

By JCET Group

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Q3 2020 Financial Highlights:

Revenue was RMB 6.79 billion. On a comparable basis, taking into account the accounting change in revenue recognition, it was an increase of 11.2% year on year (see note).
Generated RMB 1.48 billion cash from operations, up 171.3％ year on year. With net capex investments of RMB 0.69 billion, free cash flow for the quarter was RMB 0.79 billion.
Net profit was RMB 0.40 billion, a record high in the company’s history.
Earnings per share was RMB 0.25, as compared to RMB 0.05 in Q3 2019.

Note: During the reporting period, we optimized the business model for the purchase and sale of certain packaged products, of which JCET Group no longer bears the general inventory risk on the main raw materials. In accordance with PRC GAAP, both revenue and costs of goods sold were recorded on the net basis and decreased by RMB 1.05 billion respectively. This change had no impact on the company’s net profit. Assuming that revenue was still recognized by the gross method (should be recorded on the net basis according to PRC GAAP), it would be RMB 7.84 billion, an increase of 11.2% over the same period last year.

SHANGHAI, Oct. 30, 2020 /PRNewswire/ — JCET Group Co., Ltd. (Shanghai Stock Exchange code: 600584), a world leading provider of semiconductor microsystem integration packaging and testing services announced financial results for the third quarter 2020, ended September 30, 2020. Revenue was RMB 6.79 billion and net profit was RMB 0.40 billion, showing steady revenue growth and continued improvement in profitability. JCET has achieved revenue of RMB 18.76 billion and net profit of RMB 0.76 billion through the first three quarters, both representing record highs for the company.

JCET has continued to grow its strategic partnerships with global industry leading semiconductor manufacturers by accelerating the growth of high volume production capacity of advanced assembly and test processes and engaging in robust market strategies. These initiatives have led to improvements in key financial metrics.

Mr. Li Zheng, Chief Executive Officer of JCET Group, said, “By expanding the integration of the resources in each of our worldwide operations, we have accelerated the growth of our production capacity for devices designed for key applications in the 5G, high-performance computing and high-end storage markets. Additionally, the technical services capabilities of each of our global factories have been enhanced significantly due to the continued improvements driven by our company’s world-class management team.”

Ms. Janet Chou, Chief Financial Officer of JCET Group, said, “With strong execution and operational discipline, JCET delivered record profit in the third quarter of 2020. We remain committed to driving profitable growth and cash generation. Given the improved liquidity position and healthier balance sheet, we will continue to invest in critical technologies to strengthen our core competencies.”

About JCET Group:

JCET Group is a leading global semiconductor system integration packaging and test provider, offering a full range of turnkey services that include semiconductor package integration design and characterization, R&D, wafer probe, wafer bumping, package assembly, final test and drop shipment to vendors around the world.

Our comprehensive portfolio covers a wide spectrum of semiconductor applications such as mobile, communication, compute, consumer, automotive and industry etc., through advanced wafer level packaging, 2.5D/3D, System-in-Packaging, and reliable flip chip and wire bonding technologies. JCET Group has two R&D centers in China and Korea, six manufacturing locations in China, Korea and Singapore, and sales centers around the world, providing close technology collaboration and efficient supply-chain manufacturing to customers in China and around the world.

CONSOLIDATED BALANCE SHEET (Unaudited)	RMB in millions

	As of
ASSETS	Sep 30, 2020	Dec 31, 2019
Current assets
Currency funds	2,248	2,569
Derivative financial assets	3	4
Accounts receivable	3,851	3,350
Receivables financing	85	68
Prepayments	201	188
Other receivables	11	11
Inventories	3,138	2,731
Current portion of non-current assets	56	137
Other current assets	194	501
Total current assets	9,787	9,559
Non-current assets
Long-term receivables	30	40
Long-term equity investments	941	972
Other equity investments	491	517
Investment properties	97	100
Fixed assets	17,970	17,799
Construction in progress	1,176	1,664
Intangible assets	556	587
Goodwill	2,159	2,214
Long-term prepaid expenses	0	1
Deferred tax assets	124	128
Other non-current assets	1	1
Total non-current assets	23,545	24,023
Total assets	33,332	33,582

CONSOLIDATED BALANCE SHEET (CONTINUED) (Unaudited)	RMB in millions

	As of
LIABILITIES AND EQUITY	Sep 30, 2020	Dec 31, 2019
Current liabilities
Short-term borrowings	5,797	9,098
Derivative financial liabilities	42	161
Notes payable	487	958
Accounts payable	5,212	4,618
Receipts in advance	0	113
Contract liabilities	30	0
Employee benefits payable	777	586
Taxes and surcharges payable	116	53
Other payables	217	235
Current portion of long-term liabilities	2,510	1,827
Total current liabilities	15,188	17,649
Non-current liabilities
Long-term borrowings	2,680	1,585
Bonds payable	1,022	0
Long-term payables	714	1,216
Long-term employee benefits payable	2	1
Deferred income	365	337
Deferred tax liabilities	158	156
Total non-current liabilities	4,941	3,295
Total liabilities	20,129	20,944
Equity
Paid-in capital	1,603	1,603
Surplus reserves	10,242	10,242
Accumulated other comprehensive income	232	429
Specialized reserves	122	122
Unappropriated profit	994	231
Total equity attributable to owners of the parent	13,193	12,627
Minority shareholders	10	11
Total equity	13,203	12,638
Total liabilities and equity	33,332	33,582

CONSOLIDATED INCOME STATEMENT (Unaudited)			RMB in millions, except share data

	Three months ended		Nine months ended
	Sep 30, 2020	Sep 30, 2019	Sep 30, 2020	Sep 30, 2019
Revenue	6,787	7,047	18,763	16,196
Less: Cost of sales	5,631	6,209	15,863	14,507
Taxes and surcharges	11	9	28	26
Selling expenses	59	71	175	199
Administrative expenses	252	265	687	814
Research and development expenses	277	227	768	576
Finance expenses	179	223	482	657
Including: Interest expenses	131	220	433	589
Interest income	12	7	31	20
Add: Other income	17	31	97	217
Investment income / (loss)	(1)	5	(8)	1
Including: Income / (loss) from investments in a ssociates and joint ventures	(1)	5	(8)	2
Gain / (loss) on the net position hedging	6	0	1	0
Gain / (loss) on changes in fair value of financial assets	28	0	28	0
Credit impairment (loss is expressed by “-“)	(1)	2	(7)	(6)
Asset impairment (loss is expressed by “-“)	0	(1)	(25)	(15)
Gain / (loss) on disposal of assets	33	7	42	14
Operating profit / (loss)	460	87	888	(372)
Add: Non-operating income	3	0	3	1
Less: Non-operating expenses	10	0	18	4
Profit / (loss) before income taxes	453	87	873	(375)
Less: Income tax expenses	55	10	108	(194)
Net profit / (loss)	398	77	765	(181)
Classified by continuity of operations
Profit / (loss) from continuing operations	398	77	765	(181)
Classified by ownership
Net profit / (loss) attributable to owners of the parent	398	77	764	(182)
Net profit / (loss) attributable to minority shareholders	0	0	1	1
Add: Unappropriated profit at beginning of period	598	(116)	231	143
Less: Other reductions	2	0	2	0
Unappropriated profit at end of period (attributable to owners of the parent)	994	(39)	994	(39)

CONSOLIDATED INCOME STATEMENT (CONTINUED) (Unaudited)			RMB in millions, except share data

	Three months ended		Nine months ended
	Sep 30, 2020	Sep 30, 2019	Sep 30, 2020	Sep 30, 2019
Other comprehensive income, net of tax	(354)	241	(197)	199
Comprehensive income attributable to owners of the parent	(354)	241	(197)	199
Comprehensive income not be reclassified to profit or loss	(10)	0	(10)	0
Change in the fair value of other equity investments	(10)	0	(10)	0
Comprehensive income to be reclassified to profit or loss	(344)	241	(187)	199
Comprehensive income using the equity method	0	0	0	0
Cash flow hedge reserve	(1)	(1)	1	4
Exchange differences of foreign currency financial statements	(343)	242	(188)	195
Total comprehensive income	42	318	567	18
Including:
Total comprehensive income attributable to owners of the parent	42	318	566	17
Total comprehensive income attributable to minority shareholders	0	0	1	1
Earnings per share
Basic earnings per share	0.25	0.05	0.48	(0.11)
Diluted earnings per share	0.25	0.05	0.48	(0.11)

CONSOLIDATED CASH FLOW STATEMENT (Unaudited)			RMB in millions

	Three months ended		Nine months ended
	Sep 30, 2020	Sep 30, 2019	Sep 30, 2020	Sep 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from the sale of goods and the rendering of services	6,468	6,695	19,360	16,651
Receipts of taxes and surcharges refunds	105	139	528	297
Other cash receipts relating to operating activities	244	69	767	277
Total cash inflows from operating activities	6,817	6,903	20,655	17,225
Cash payments for goods and services	4,241	5,200	13,584	12,376
Cash payments to and on behalf of employees	856	911	2,644	2,699
Payments of all types of taxes and surcharges	81	173	313	411
Other cash payments relating to operating activities	159	74	482	377
Total cash outflows from operating activities	5,337	6,358	17,023	15,863
Net cash flows from operating activities	1,480	545	3,632	1,362
CASH FLOWS FROM INVESTING ACTIVITIES
Cash receipts from returns of investments	6	37	6	103
Cash receipts from investment income	0	2	0	2
Net cash receipts from disposal of fixed assets, intangible assets and other long-term assets	38	30	65	45
Other cash receipts relating to investing activities	0	0	0	20
Total cash inflows from investing activities	44	69	71	170
Cash payments to acquire fixed assets, intangible assets and other long-term assets	726	627	2,062	2,157
Total cash outflows from investing activities	726	627	2,062	2,157
Net cash flows from investing activities	(682)	(558)	(1,991)	(1,987)

CONSOLIDATED CASH FLOW STATEMENT (CONTINUED) (Unaudited)			RMB in millions

	Three months ended		Nine months ended
	Sep 30, 2020	Sep 30, 2019	Sep 30, 2020	Sep 30, 2019
CASH FLOWS FROM FINANCING ACTIVITIES
Cash receipts from borrowings	1,418	2,350	9,950	10,843
Other cash receipts relating to financing activities	0	1,103	0	1,880
Total cash inflows from financing activities	1,418	3,453	9,950	12,723
Cash repayments for debts	2,311	3,407	10,452	12,613
Cash payments for distribution of dividends or profit and interest expenses	120	232	425	669
Other cash payments relating to financing activities	206	51	491	766
Total cash outflows from financing activities	2,637	3,690	11,368	14,048
Net cash flows from financing activities	(1,219)	(237)	(1,418)	(1,325)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	(48)	37	(33)	43
NET INCREASE IN CASH AND CASH EQUIVALENTS	(469)	(213)	190	(1,907)
Add: Cash and cash equivalents at beginning of period	2,525	2,512	1,866	4,206
CASH AND CASH EQUIVALENTS AT END OF PERIOD	2,056	2,299	2,056	2,299