HollySys Automation Technologies, Ltd. (NASDAQ:HOLI) Q1 2020 Earnings Conference Call - Final Transcript

Nov 13, 2019 • 08:00 pm ET

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HollySys Automation Technologies, Ltd. (NASDAQ:HOLI) Q1 2020 Earnings Conference Call - Final Transcript

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Executive
Baiqing Shao

control solution to urban heat supply network, which is the first project of this kind for Hollysys.

In chemical business, we have officially completed the milestone Zhong'an coal-chemical project and they will continue to provide maintenance and other services afterwards. The project is one of the largest MAV-DCS projects for Hollysys and we provided total solution covering the integration of up to ten systems including control system, asset management system, alarm system, gas detection system etc.

In the petrochemical industry, with our DCS and SIS being certified by CCS, China Classification Society earlier this year, we are better qualified in providing control solution in offshore oil related business. Our strategic relationship with CNOOC, China National Offshore Oil Corporation proceeded further as we signed several contracts with them in providing control solution to their offshore oil platform this quarter.

Besides market penetration through the newly-built projects, we have kept leveraging on our nation-wide network to respond to the aftersales demand of different industries, especially as the control products are approaching the end of life cycle. We maintained close relationship with our existing customers through various types of aftersales service, while also exploited the opportunity in obtaining new clients through replacement and upgrade project, especially in the chemical and petrochemical industries.

We are also building up our capability in providing more comprehensive solution covering full life cycle of the project. With the recently completion of the acquisition of a small pharmaceutical and chemical design institute, we are able to get involved in potential projects at earlier stage in the future for better opportunities.

In our smart factory solution, following our previous breakthrough contract in the power industry, we have signed several contracts this quarter with both existing and new customers from the chemical industry. Such will be long-term cooperation so as to turn their production smart comprehensively step-by-step. We have also broadened with our industrial software solution matrix, as we launched a new solution that help to optimize emission control and signed the first contract with a client from the power industry.

Rail business finished the quarter with revenue and contract at $44.6 million and $21.0 million, recording 11.5% and 70.6% year-to-year decrease respectively. In the high-speed railway business, the bidding pace of CRC has not met the expectation of the marketer. We continued to provide aftersales service on our high-speed railway signaling system -- signaling products covering software upgrade, spare parts sales, maintenance and replacement.

Meanwhile, we are also actively preparing ourselves for new products and service in the aftersales high-speed railway market. In the inter-city high-speed rail business, we signed contracts to provide ATP with automatic train operation function to the Pearl River Delta region. In subway business, the subway line for the new Beijing Daxing Airport commenced business operation in September, with Hollysys being the provider of SCADA solution that supports driverless operation.

Going forward, our rail business will continue to adhere to the diversity strategy for stable and healthy growth and to improve our local service network for