5.233 billion yuan in revenue

On March 29th, HGTECH Co., Ltd. released its 2018 annual report. According to the report, in 2018, HGTECH's operating income was 5.233 billion yuan, a year-on-year increase of 16.79%. The net profit attributable to the parent company was 284 million yuan, a year-on-year decrease of 12.51%. Operating net cash flow of RMB 46.85 million, maintaining a net operating flow for six consecutive years. Among them, the optical communication business revenue was 2.17 billion yuan, a year-on-year increase of 22.09%.

Seize the 5G opportunity

HG Genuine is a core subsidiary of HGTECH, who focuses on 5G pre-transmission, intermediate transmission and backhaul network construction needs, focusing on 25G, 50G, 100G, 200G high-rate optical module products, providing a complete solution. The company's first 5G optical module order has been successfully delivered, becoming the first company in China to receive orders for Huawei's 5G optical modules. Grasping the “window” of the digital communication market, the first digital high-end product 400G QSFP-DD SR8 optical module was introduced, which solved many design difficulties in signal integrity, optics, COB key process, heat dissipation and reliability. The company initiated the establishment of Elite Optronics to extend the optical communication industry chain, and the 10G optical chip was successfully mass-produced. The 25G optical chip and device have been optimized.

Optical communication business growth

During the reporting period, the company passed lean production, process control, improved production efficiency, achieved a large share of delivery on the client side, and rapidly increased production capacity. HG Genuine achieved a 22.09% increase in annual sales revenue. HG Genuine launched a global network marketing layout in the active optical module business, seized the opportunity of data center customers to introduce new suppliers, and further expanded the share of customer deposits. Sales revenue increased by 27% year-on-year. Under the leadership of the company's strategy, in 2018, the introduction of new products such as 100G optical modules, PON products and 25G series of 5G predecessors will be accelerated. Among them, the growth rate of wireless network services is remarkable, and optical module products are firmly grasping the opportunity of 5G market construction, and successfully obtained the first domestic single-chip 5G optical module. In 2018, the global market share of wireless products increased by another 10%, and the industry advantage further expanded.

The data center business continued to increase R&D investment. The 400G QSPF-DD SR8/FR4/DR4/AOC successfully achieved the first sample. The annual sales revenue increased by 183% during the reporting period. In the field of access network business, the company established Chengdu R&D subsidiary. During the reporting period, it realized the development and mass production of 10G PON full range of products, and the sales scale increased significantly. The intelligent terminal business continued to maintain the world's leading position in ONT product shipments, completing the self-developed ONT, AP, set-top box product hardware and software development work, and realizing self-research capacity building. The total delivery volume of ONT products was significantly improved compared with the previous year, and the total sales revenue increased by 19% compared with the same period of the previous year. However, due to the continuous sharp increase in raw material prices, the overall gross profit level of smart terminal products decreased compared with the same period of the previous year, and the gross profit margin of the company's optical communications business declined overall. The company terminated the construction of the “Intelligent Terminal Industry base Project”, and the remaining raised funds amounted to RMB 463.09 million, which was used for “development and expansion projects for 5G and data center optical modules.