Group 1 - The company, 聚合顺, confirmed the procurement of a centralized control system from 利时公司 for its production workshop [2]

Core Insights - The company, HeLiShi Group, is a leading global supplier of intelligent system solutions, focusing on autonomous innovation and research and development [1] - HeLiShi Group concentrates on three main sectors: industrial intelligence, transportation intelligence, and food and drug intelligence, providing customized overall solutions, stable and reliable products, and full lifecycle services [1] - In 2025, HeLiShi will launch the XMagital intelligent system, which is the first of its kind in China, integrating production control and management into a unified system [1]

Company Overview - Hollysys Automation Technologies Ltd. is a leading provider of automation control system solutions in China, with operations in eight other countries and regions throughout Asia [2] - The company specializes in integrated solutions for industrial automation and rail transportation, offering a full spectrum of automation hardware, software, and services [2] - As of June 30, 2023, Hollysys has completed over 45,000 projects for approximately 23,000 customers across various sectors, including power, petrochemical, high-speed rail, and urban rail [2] Merger Announcement - Hollysys expects to complete its merger transaction with a buyer controlled by Ascendent Capital Partners by July 25, 2024 [1] - All necessary approvals have been obtained, and the company anticipates satisfying all closing conditions by the expected closing date [1] - Following the merger, Hollysys intends to delist its shares from the NASDAQ Global Select Market on or shortly after the closing date [1] Ascendent Capital Partners - Ascendent Capital Partners is a private equity investment management firm based in Hong Kong, managing assets for global institutional investors [3] - The firm has a strong track record in executing innovative private equity investments and generating robust risk-adjusted returns for its investors [3] - Ascendent focuses on building long-lasting relationships with entrepreneurs and management teams through in-depth collaboration [3]

Core Viewpoint - Hollysys Automation Technologies Ltd. is set to complete a merger transaction with a buyer controlled by Ascendent Capital Partners, having received all necessary PRC approvals [1][2]. Company Overview - Hollysys is a leading provider of automation control system solutions in China, with operations in eight other countries across Asia [3]. - The company specializes in integrated solutions for industrial automation and rail transportation, offering a full range of automation hardware, software, and services [3]. - As of June 30, 2023, Hollysys has completed over 45,000 projects for approximately 23,000 customers in various sectors, establishing a strong market position [3]. Transaction Details - The merger transaction will close upon meeting specific conditions, including maintaining a certain level of net cash and cash deposits by the company's subsidiaries [2]. - Upon completion, Hollysys's ordinary shares will be delisted from the NASDAQ Global Select Market [2]. - Ascendent and Hollysys are working to expedite the closing of the transaction [2]. Ascendent Capital Partners Overview - Ascendent Capital Partners is a private equity investment management firm based in Hong Kong, managing assets for global institutional investors [4]. - The firm has a strong track record in executing innovative private equity investments and providing advisory services to entrepreneurs and management teams [4].

Company Overview - Hollysys Automation Technologies Ltd. is a leading provider of automation control system solutions in China, with operations in eight other countries and regions throughout Asia [4] - The company specializes in integrated solutions for industrial automation and rail transportation, offering a full spectrum of automation hardware, software, and services [4] - As of June 30, 2023, Hollysys has completed over 45,000 projects for approximately 23,000 customers across various sectors, establishing leading market positions in power, petrochemical, high-speed rail, and urban rail [4] Recent Developments - Hollysys appointed Vocation HK CPA Limited as its independent registered public accounting firm, effective May 28, 2024, following a thorough evaluation process approved by the board and audit committee [1] - Vocation replaces Union Power HK CPA Limited, which resigned due to the health condition of their managing partner and not due to any disagreements with Hollysys [2] - The company is progressing towards closing a merger agreement with a buyer controlled by Ascendent Capital Partners, reaffirming their commitment to the transaction [3]

Core Viewpoint - Hollysys Automation Technologies Ltd. is undergoing a going private transaction with Ascendent Capital Partners, and the CEO's recent share sale does not impact this process or the company's operational plans [1][2]. Company Overview - Hollysys is a leading provider of automation control system solutions in China, with operations in eight other countries across Asia [3]. - The company specializes in integrated solutions for industrial automation and rail transportation, offering a full range of automation hardware, software, and services [3]. - As of June 30, 2023, Hollysys has completed over 45,000 projects for approximately 23,000 customers in various sectors, establishing a strong market position [3].

Financial Performance Highlights - Total revenues for the first nine months of fiscal year 2024 were $597.1 million, an increase of 2.5% compared to the prior year period [1] - Gross margin was 31.0%, down from 33.4% in the prior year period, while non-GAAP gross margin was 31.2%, compared to 33.6% [1] - Net income attributable to Hollysys was $49.7 million, a decrease of 38.8% year-over-year [1] - Diluted earnings per share were $0.80, a decrease of 38.9% compared to the prior year period [1] Third Quarter Financial Highlights - Total revenues for the third quarter were $173.5 million, an increase of 3.5% compared to the same period last year [2] - Gross margin improved to 28.9%, up from 26.8% in the prior year, with non-GAAP gross margin at 29.1% [2][9] - Net income attributable to Hollysys was $3.9 million, a decrease of 66.2% year-over-year [2] - Diluted earnings per share were $0.06, down 68.4% from the prior year [2] Operational Achievements - Hollysys was recognized as one of the Top 50 Brands in China's Automation and Digitalization Industry for 2024 [4] - The company received AAA-level rating for integrated implementation in intelligent manufacturing system solution providers [4] - Hollysys secured national high-tech enterprise accreditation for the sixth consecutive time, demonstrating its innovation capabilities [4] Segment Performance - In the Industrial Automation segment, revenues were $117.4 million, accounting for 67.6% of total revenues for the third quarter [11] - Rail Transportation segment revenues were $40.0 million, representing 23.1% of total revenues [11] - Mechanical and Electrical Solutions segment revenues were $16.1 million, making up 9.3% of total revenues [11] Cash Flow and Balance Sheet - Net cash used in operating activities for the third quarter was $37.4 million [19] - As of March 31, 2024, total cash and cash equivalents were $697.9 million [20] - Days sales outstanding (DSO) increased to 183 days from 176 days in the prior year [20] Contracts and Backlog - Hollysys achieved $240.4 million in new contracts for the third quarter, with a backlog of $992.2 million as of March 31, 2024 [16][18]

Financial Performance - Total revenues for the first half of fiscal year 2024 were $423.6 million, an increase of 2.1% compared to the prior year period [1] - For the second quarter, total revenues were $223.7 million, a decrease of 8.6% compared to the same period last year [2] - Gross margin for the first half was 31.9%, down from 36.1% in the prior year [1] - The second quarter gross margin was 29.5%, compared to 39.6% in the same quarter last year [2] - Net income attributable to Hollysys for the first half was $45.8 million, a decrease of 34.3% year-over-year [1] - In the second quarter, net income was $14.1 million, a decrease of 70.7% compared to the prior year [2] - Diluted earnings per share for the first half were $0.74, down 33.9% from the previous year [1] - For the second quarter, diluted earnings per share were $0.23, a decrease of 70.5% year-over-year [2] Operational Highlights - The company achieved $495.2 million in new contracts for the first half of fiscal year 2024, with a backlog of $962.2 million as of December 31, 2023 [26] - In the Industrial Automation segment, the company was recognized for its innovation and development capabilities, receiving multiple awards [4] - The company successfully signed contracts in the chemical and petrochemical sector, including a significant project for carbon fiber precursor production [5] - In the smart factory sector, contracts were signed for intelligent manufacturing control platforms for titanium and lithium carbonate production [6][7] - The company maintained its market position in rail transportation automation, contributing to several key projects including high-speed rail upgrades [8] Cash Flow and Balance Sheet - For the first half of fiscal year 2024, net cash provided by operating activities was $88.3 million [1] - The total amount of cash and cash equivalents increased to $747.5 million as of December 31, 2023, from $650.4 million at the end of the previous quarter [31] - Days sales outstanding (DSO) was 146 days for the first half, compared to 144 days in the prior year [31] - Inventory turnover days remained stable at 74 days for the first half [31] Segment Performance - Revenues from the Industrial Automation segment accounted for 59.5% of total revenues in the first half, while Rail Transportation Automation contributed 29.4% [13] - Integrated solutions contracts revenue decreased by 0.6% to $330.2 million for the first half [12] - Service revenue increased by 18.2% to $69.7 million for the first half, indicating growth in this area [12]

Financial Performance - Total revenues for the first half of fiscal year 2024 were $423.6 million, an increase of 2.1% compared to the prior year period[1]. - Gross margin for the first half was 31.9%, down from 36.1% in the prior year period[2]. - Net income attributable to Hollysys for the first half was $45.8 million, a decrease of 34.3% compared to the prior year period[2]. - Total revenues for the second quarter were $223.7 million, a decrease of 8.6% compared to the prior year period[3]. - Net income attributable to Hollysys for the second quarter was $14.1 million, a decrease of 70.7% compared to the prior year period[4]. - Total revenues for the six months ended December 31, 2023, were $423.6 million, a 2.0% increase from $414.8 million in the same period of the prior fiscal year[16]. - Gross margin decreased to 31.9% for the six months ended December 31, 2023, down from 36.1% in the same period of the prior fiscal year[16]. - Net income attributable to Hollysys was $45.8 million for the six months ended December 31, 2023, a decrease of 34.3% from $69.6 million in the same period of the prior fiscal year[20]. - Total net revenues for the three months ended December 31, 2023, were $223.723 million, a decrease of 8.3% compared to $244.731 million for the same period in 2022[38]. - Net income attributable to Hollysys Automation Technologies Ltd. for the three months ended December 31, 2023, was $14.139 million, down from $48.243 million in the prior year, a decline of 70.7%[38]. - The company reported a basic net income per share of $0.23 for the three months ended December 31, 2023, compared to $0.79 for the same period in 2022[38]. - Diluted earnings per share decreased to $0.74 for the six months ended December 31, 2023, down from $1.12 in the same period of the prior fiscal year[21]. Revenue Breakdown - Integrated solutions contracts revenue for the first half decreased by 0.6% to $330.2 million[15]. - Service revenue for the first half increased by 18.2% to $69.7 million[15]. - Revenue from integrated solutions contracts was $180.518 million, down from $188.929 million year-over-year[38]. - Revenue from services decreased to $33.803 million from $43.788 million, reflecting a decline of 22.8%[38]. - Gross profit from integrated solutions contracts for the three months ended December 2023 was $38,131 thousand, down from $58,178 thousand in the same period of 2022, a decrease of 34.5%[53]. - Non-GAAP gross profit from integrated solutions contracts for the three months ended December 2023 was $38,457 thousand, compared to $58,515 thousand in the same period of 2022, a decline of 34.2%[53]. Expenses - Selling expenses increased by $7.0 million, or 24.2%, to $36.1 million for the six months ended December 31, 2023, compared to $29.0 million for the same period of the prior fiscal year[17]. - General and administrative expenses decreased by $8.1 million, or 24.9%, to $24.4 million for the six months ended December 31, 2023[18]. - Research and development expenses increased by $8.8 million, or 23.4%, to $46.6 million for the six months ended December 31, 2023[19]. - Research and development expenses increased to $28.270 million from $20.431 million, reflecting a rise of 38.5% year-over-year[38]. - Total operating expenses for the three months ended December 31, 2023, were $52.241 million, compared to $48.993 million in the same period last year, an increase of 2.5%[38]. Cash Flow and Assets - Total net cash inflow for the six months ended December 31, 2023, was $135.3 million, with net cash provided by operating activities at $88.3 million[32]. - Total current assets increased to $1,561,350 thousand as of December 31, 2023, up from $1,500,001 thousand as of September 30, 2023, representing a growth of approximately 4.3%[42]. - Cash and cash equivalents increased to $747,507 thousand as of December 31, 2023, from $650,413 thousand as of September 30, 2023, reflecting a growth of approximately 14.9%[42]. - Total liabilities rose to $605,465 thousand as of December 31, 2023, compared to $565,761 thousand as of September 30, 2023, indicating an increase of about 7%[43]. - Total stockholder's equity reached $1,242,466 thousand as of December 31, 2023, up from $1,199,767 thousand as of September 30, 2023, representing an increase of approximately 3.6%[44]. - The company’s total assets increased to $1,848,900 thousand as of December 31, 2023, from $1,766,488 thousand as of September 30, 2023, indicating a growth of approximately 4.6%[44]. - Accounts receivable, net of allowance for credit losses, increased to $352,399 thousand as of December 31, 2023, from $308,788 thousand as of September 30, 2023, reflecting a growth of about 14.1%[42]. Contracts and Projects - Hollysys signed a contract for a 60,000-ton energy grade titanium material intelligent manufacturing control platform project[9]. - The company won the bid for the power supply system project of Jurong Regional Line in Singapore[12]. - The company has cumulatively completed over 45,000 projects for approximately 23,000 customers across various sectors as of June 30, 2023[35]. - Hollysys continues to focus on enhancing operational safety and efficiency through its proprietary technology and integrated automation solutions[35]. Non-GAAP Measures - The company utilized non-GAAP financial measures to provide additional insights into its operating performance, which include non-GAAP net income and gross profit metrics[47]. - Non-GAAP gross margin for the three months ended December 2023 was 29.7%, compared to 39.7% for the same period in 2022, reflecting a decline of 10 percentage points[51]. - Non-GAAP net income attributable to Hollysys for the three months ended December 2023 was $14,551 thousand, down from $49,520 thousand in the same period of 2022, a decline of 70.7%[55]. - Non-GAAP basic earnings per share for the three months ended December 2023 was $0.23, down from $0.81 in the same period of 2022, a decline of 71.6%[57].

Core Viewpoint - Ascendent Capital Partners has successfully received overwhelming shareholder approval for its acquisition of Hollysys Automation Technologies Ltd., indicating strong support for the transaction and the company's governance standards [1][2]. Group 1: Acquisition Details - Approximately 86.94% of shareholders voted in favor of Ascendent's acquisition proposal at the Extraordinary General Meeting [1]. - The acquisition price is set at US$26.50 per share in cash for all outstanding shares of Hollysys that Ascendent does not currently own [1]. - Approximately 76.95% of shareholders participated in the voting, highlighting the competitive value offered to them [1]. Group 2: Management and Governance - Leon Meng, Chairman and CEO of Ascendent, emphasized the importance of the vote as a milestone for Hollysys and its stakeholders, praising the Special Committee for a transparent sale process [2]. - The EGM also resulted in the approval of the appointment of Guanghua Miao, Ding Wei, and Dennis Demiao Zhu to the board of directors of Hollysys [2]. Group 3: Company Background - Ascendent Capital Partners is a private equity investment management firm based in Hong Kong, managing assets for global institutional investors, including sovereign wealth funds and pensions [3]. - The firm is advised by BNP Paribas Securities Corp, Morrison & Foerster LLP, Appleby, and Zhong Lun Law Firm [4].