Shulou(Shulou.com)11/24 Report--

According to the news on the morning of November 30, Beijing time, Huihe today announced the company's fourth quarter and full-year results of fiscal 2022. According to the report, Huihe's fourth-quarter net revenue was $7.871 billion, up 7% from $7.354 billion in the same period last year (up 12% year-on-year, excluding exchange rate changes) and up 13% from $6.951 billion in the previous quarter. The net loss was $304 million, compared with a net profit of $2.553 billion in the same period last year and $409 million in the previous quarter The diluted loss per share was $0.23, compared with $1.91 per diluted share in the same period last year and $0.31 per diluted share in the previous quarter.

Huihe's fourth-quarter revenue and adjusted earnings per share exceeded Wall Street analysts' expectations, and their outlook for revenue and adjusted earnings per share in the first quarter of fiscal 2023 also exceeded expectations, driving its shares up more than 2 per cent in after-hours trading in the US stock market.

Main results for the fourth quarter: for the quarter ended October 31, Huihe posted a net loss of $304 million, or 23 cents per diluted share, which was much lower than in the same period last year. In the fourth quarter of fiscal 2021, Huihe's net profit was $2.553 billion, or $1.91 per diluted share.

Excluding certain one-time items (not in accordance with GAAP), Huihe's adjusted net income for the fourth quarter was $755 million, compared with adjusted net income of $688 million in the same period last year, and adjusted diluted earnings per share was $0.57, compared with adjusted diluted earnings per share of $0.52 in the same period last year, which exceeded analysts' expectations. On average, 16 analysts had expected Huihe's adjusted earnings per share to reach 56 cents a share in the fourth quarter, according to data provided by Yahoo Finance.

Huihe's fourth-quarter net revenue was $7.871 billion, up 7 per cent from $7.354 billion in the same period last year (12 per cent year-on-year, excluding currency changes) and 13 per cent from $6.951 billion in the previous quarter, also exceeding analysts' expectations. On average, 14 analysts expect revenue of $7.42 billion in the fourth quarter, according to the survey.

Huihe's fourth-quarter gross profit was $2.593 billion, compared with $2.419 billion in the same period last year, and the gross profit margin was 32.9%, unchanged from the same period last year. Excluding certain one-time items (not in accordance with US GAAP), Huihe's adjusted gross profit in the fourth quarter was $2.602 billion, compared with $2.428 billion in the same period last year, and the adjusted gross profit margin was 33.1%. Compared with 33.0% in the same period last year.

Huihe posted an operating loss of $339 million in the fourth quarter, compared with an operating profit of $350 million in the same period last year, and an operating loss rate of 4.3 per cent, compared with an operating margin of 4.8 per cent in the same period last year. Excluding certain one-time items (not in accordance with US GAAP), Huihe's adjusted operating profit was $902 million in the fourth quarter, compared with $717 million in the same period last year, and the adjusted operating margin was 11.5 per cent, compared with 9.7 per cent in the same period last year.

Fourth quarter results by departments: Huihe's Intelligent Edge (smart edge) business had net revenue of $965 million in the fourth quarter, up 18% from $818 million in the same period last year, and 23% year-on-year, excluding exchange rate changes. The operating margin of the smart edge business was 13.3% in the fourth quarter, compared with 10.9% in the same period last year.

Huihe's high-performance computing and artificial intelligence (HPC & AI) business had net revenue of $862 million in the fourth quarter, down 14 per cent from $999 million in the same period last year, and 11 per cent year-on-year, excluding currency changes. The operating margin of the high-performance computing and artificial intelligence business was 3.5% in the fourth quarter, compared with 14.2% in the same period last year.

Huihe's computing business had net revenue of $3.737 billion in the fourth quarter, up 16% from $3.224 billion in the same period last year, and 22% year-on-year, excluding exchange rate changes. The computing business had an operating margin of 14.7% in the fourth quarter, compared with 9.4% in the same period last year.

Huihe's storage business had net revenue of $1.305 billion in the fourth quarter, up 4 per cent from $1.257 billion in the same period last year, and up 6 per cent year-on-year, excluding currency changes. The storage business had an operating margin of 15.9% in the fourth quarter, compared with 13.8% in the same period last year.

Huihe's financial services division posted net revenue of $857 million in the fourth quarter, roughly unchanged from $858 million in the same period last year, with a 6 per cent year-on-year increase excluding currency changes. The financial services division had an operating margin of 11.1% in the fourth quarter, compared with 14.1% in the same period last year. The financial services division's net portfolio assets in the fourth quarter were about $12.5 billion, down 6 per cent from the same period last year and up 1 per cent year-on-year, excluding exchange rate changes. The business posted a return on equity of 18 per cent in the fourth quarter, down 6 percentage points from the same period last year.

Huihe's investment and other businesses had net income of $303 million in the fourth quarter, compared with $353 million in the same period last year.

Other financial information in the fourth quarter: Huihe's total costs and expenses in the fourth quarter were $8.21 billion, compared with $7.004 billion in the same period last year. Of this total, the cost of sales was $5.278 billion, compared with $4.935 billion in the same period last year; R & D expenditure was $515 million, compared with $502 million in the same period last year; sales, general and administrative expenses were $1.262 billion, compared with $1.28 billion in the same period last year; amortization of intangible assets was $7300, compared with $7800 in the same period last year Goodwill impairment expenses were $905 million, compared with no such expenses for the same period last year; transformation costs were $184 million, compared with $197 million for the same period last year; disaster expenses were-$1 million, compared with $10 million for the same period last year; mergers and acquisitions and other related expenses were-$6 million, compared with $2 million for the same period last year.

Huihe's cash flow from business operations in the fourth quarter was $3 billion, unchanged from the same period last year. Huihe's free cash flow in the fourth quarter was $2 billion, an increase of $1.9 billion compared with the same period last year.

In the fourth quarter, Huihe returned $282 million in cash to shareholders in the form of dividends and share buybacks.

Huihe's Board of Directors has declared a regular cash dividend of US $0.12 per common share, which will be paid on January 13, 2022 to shareholders of record up to the close of business on December 14, 2022.

Main results for fiscal year 2022: Huihe's net revenue in fiscal 2022 was $28.5 billion, an increase of 3% compared with fiscal 2021, and 5% year-on-year growth excluding exchange rate changes, which exceeded analysts' expectations. On average, 18 analysts had expected Huihe's revenue to reach $28.01 billion in fiscal 2022, according to data provided by Yahoo Finance.

Huihe posted a net profit of $868 million in fiscal 2022, compared with $3.427 billion in 2021. Huihe's diluted earnings per share in fiscal 2022 were 66 cents, compared with 58 cents a share in 2021.

Excluding certain one-time items (not in accordance with GAAP), Huihe's adjusted net profit was $2.664 billion in fiscal 2022, compared with $2.602 billion in fiscal 2021. Excluding certain one-time items (not in accordance with GAAP), Huihe's adjusted diluted earnings per share in fiscal 2022 was $2.02, compared with adjusted diluted earnings per share of $1.96 in fiscal 2021, which also beat analysts' expectations. On average, 19 analysts had expected Huihe's adjusted diluted earnings per share to reach $2 per share in fiscal 2022, according to data provided by Yahoo Finance.

Huihe's gross profit margin for fiscal 2022 was 33.4%, down 30 basis points from fiscal 2021. Excluding some one-time items (not in accordance with GAAP), Huihe's adjusted gross profit margin for fiscal year 2022 was 33.9%, the same as in fiscal year 2021.

Huihe's cash flow from business operations in fiscal 2022 was $4.6 billion, down $1.3 billion from fiscal 2021, while free cash flow was $1.8 billion, an increase of $200 million compared with fiscal 2021.

Throughout fiscal year 2022, Huihe returned $1.1 billion in cash to shareholders in the form of dividends and share buybacks, accounting for more than 60 per cent of Huihe's cash flow.

Performance outlook: performance outlook for the first quarter of fiscal 2023: Huihe expects revenue for the first quarter of fiscal 2023 to reach between $7.2 billion and $7.6 billion, with an average forecast range of $7.4 billion, exceeding analysts' expectations. According to data provided by Yahoo Finance Channel, 14 analysts had expected average revenue of Huihe to reach $7 billion in the first quarter.

Huihe also expects diluted earnings per share in the first quarter of fiscal 2023 to be between 32 cents and 40 cents per share, and between 50 cents and 58 cents per share, not adjusted in accordance with GAAP, with an average forecast range of 54 cents, exceeding analysts' expectations. According to data provided by Yahoo Finance Channel, 16 analysts had expected average earnings per share of Huihe to reach 49 cents per share in the first quarter.

Not in accordance with GAAP, Huihe did not take into account the after-tax impact of approximately $0.18 per share in its estimates of adjusted diluted earnings per share for the first quarter of fiscal 2023, which is mainly related to equity incentive expenses, transition costs and intangible amortization expenses.

Outlook for fiscal year 2023: Huihe expects diluted earnings per share to be between $1.38 and $1.46 per share in fiscal 2023, and between $1.96 and $2.04 per share, not in accordance with GAAP, with an average of $2.00, below analysts' expectations. On average, 19 analysts had expected Huihe to earn $2.03 a share in fiscal 2023, according to data provided by Yahoo Finance.

Not in accordance with GAAP, Huihe's estimates of diluted earnings per share for fiscal year 2023 did not take into account the after-tax impact of approximately $0.58 per share, which was mainly related to equity incentive expenses, intangible asset amortization expenses and transformation costs.

Huihe also reiterated its forecast for free cash flow of between $1.9 billion and $2.1 billion in fiscal year 2023 and promised to return at least $500m in cash to shareholders in the form of share buybacks in fiscal year 2023.

Share price reaction: Huihe shares fell $0.09, or 0.58%, to close at $15.46 in regular trading on the New York Stock Exchange. Huihe shares rose 31 cents, or 2.01 per cent, to $15.77 in after-hours trading as of 05:13 est on Tuesday (06:13 Beijing time on Wednesday). In the past 52 weeks, the highest price of Huihe is $17.76 and the lowest price is $11.90.

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