Summary of Yuan Zheng Technology Conference Call Company Overview - **Company**: Yuan Zheng Technology - **Year**: 2024 - **Main Revenue**: 1.82 billion RMB, up 21% from 1.5 billion RMB in the previous year [3] - **Net Profit**: 340 million RMB, doubled from 170 million RMB in the previous year [3] - **Device Shipment**: 300,000 units, a 50% increase from 200,000 units in the previous year [3] Key Financial Highlights - **Revenue Composition**: - Equipment Sales: 1.34 billion RMB (73% of total revenue), with a gross margin of 50% [5] - Software Revenue: 170 million RMB received, expected to exceed 200 million RMB in 2025 [5] - Data and Service Revenue: 24 million RMB [5] - **International Market Contribution**: 72% of total revenue from overseas, with the US accounting for 40% and growing by 35% [6] - **Profitability Goals for 2025**: Targeting over 500 million RMB in profit, with a 25% increase in per capita income [12] Strategic Initiatives - **Future Strategy**: - Stabilize equipment sales and expand into new energy devices and robotics [9] - Transition towards becoming a software company with increased focus on AI applications [10] - Maintain high dividend payout (approximately 80% in 2024) and stock buybacks [10] - **Response to Tariff Challenges**: - Establishing a large warehouse in the US and adjusting product pricing [7] - Implementing a dual-track sales system to mitigate tariff impacts [19] - Exploring assembly plants in Mexico or Canada [19] Data Asset Utilization - **Data Connectivity**: Over 370 million vehicles connected, with 3.3 million active devices weekly [8] - **Diagnostic Reports**: 1.7 billion cumulative reports generated, enhancing value-added services [8] Market Performance and Competition - **Global Market Position**: Strong presence in domestic markets, with significant growth in North America and Europe [31] - **Competitive Strategy**: Focus on product functionality and technological innovation rather than price competition [32] Software and Data Business Growth - **Projected Growth**: Software and data revenue expected to double to 50 million RMB in 2025 [26] - **Revenue Logic**: Software income driven by device sales and active usage, with significant overseas demand [29] Future Outlook - **Management Confidence**: Positive outlook for future financial performance despite market challenges [40] - **Long-term Strategy**: Continued focus on dividends and stock buybacks to enhance shareholder value [40]

智通财经APP获悉，元征科技(02488)就美国关税政策对公司影响及应对措施发表说明称，公司产品中， 软件产品、远程诊断和数据服务不受此次美国关税调整影响，部分硬件设备销往美国市场。整体而言， 此次美国关税调整对公司影响非常有限。公司通过提前增加美国本土备货库存、运用智能算法和AI技 术精准定价、在低关税区域寻找优质代工厂合作等措施使得影响降至最低，保障公司稳健运营与持续发 展。 01 关税政策对公司的影响 公司产品涵盖汽车诊断和汽车维修硬件设备、软件产品、远程诊断和数据服务等，均为汽车后市场必需 品，受经济周期波动影响小。其中，软件产品、远程诊断和数据服务不受此次美国关税调整影响，部分 硬件设备销往美国市场。整体而言，此次美国关税调整对公司影响非常有限。 02 公司已采取及拟采取的应对措施 前瞻性备货，保障供应 自2024年中，公司便察觉潜在贸易风险，逐步增加美国本土备货库存。当前，美国备货库存产品可满足 未来6个月销售需求，确保政策波动期美国市场供货稳定。 善用智能算法和AI技术，合理调价 本次关税政策使行业整体面临产品价格上升压力，公司将适时合理调整产品在美销售价格，经前期沟 通，多数客户对此表示理解。 ...

2024 2024 目錄 | ���� | | --- | | ���� | | | | ���� | | ���� | | | | | | | 頁次 | | --- | --- | | 公司簡介 | 2 | | 管理層討論及分析 | 3 | | 董事、監事及高級管理人員 | 8 | | 企業管治報告 | 12 | | 環境、社會及管治報告 | 23 | | 董事會報告書 | 35 | | 審計報告 | 42 | | 合併資產負債表 | 47 | | 資產負債表 | 49 | | 合併利潤表 | 51 | | 利潤表 | 52 | | 合併現金流量表 | 53 | | 現金流量表 | 55 | | 合併權益變動表 | 57 | | 權益變動表 | 59 | | 財務報表附註 | 61 | | 財務概要 | 238 | | 公司資料 | 239 | 二零二四年年報 1 公司簡介 深圳市元征科技股份有限公司（「本公司」）成立於 1992 年，2002 年在香港創業板上市（股票代碼 8196），2011 年 轉至香港主板上市（股票代碼 2488）。本公司是中國較早致力於汽車診斷、檢測、養護、輪胎設備研發生產的高新 ...

Summary of Yuan Zheng Technology Conference Call Company Overview - **Company**: Yuan Zheng Technology - **Year**: 2024 - **Total Revenue**: 1.8 billion RMB, up 21% from 1.5 billion RMB in 2023 [3][4] - **Net Profit**: 340 million RMB, nearly doubling from 170 million RMB in 2023 [3][4] Key Financial Performance - **Revenue Breakdown**: - **First Half**: 880 million RMB - **Second Half**: 950 million RMB, 8% increase quarter-over-quarter [3] - **Profit Growth**: - First Half: 150 million RMB - Second Half: 190 million RMB, 23% increase quarter-over-quarter [3] Product Performance - **Diagnostic Equipment**: - Total units shipped: 300,000, a 50% increase from 200,000 units in 2023 [5] - Overseas shipments: 90,000 units, up 53% [5] - E-commerce channel growth: 90% [5] - **CVD Equipment**: Shipments decreased by 10% [5] - **Tire Pressure Monitoring Devices**: Total shipments reached 680,000 units, a 50% increase from 450,000 units [6] Revenue Composition - **Hardware Sales**: 1.34 billion RMB, up 27%, with a gross margin of 50% [4][7] - **Software Revenue**: 170 million RMB, up 32% [4][7] - **Data Services Revenue**: 11 million RMB, nearly 100% gross margin [4][7] Regional Performance - **Overall Regional Revenue**: 1.05 billion RMB, up 24% [10] - **North America**: Fastest growth at 35% [10] - **Domestic Market**: 13% growth, accounting for 28% of total sales [10] Strategic Initiatives - **High Dividend Policy**: 280 million RMB in dividends for 2024, 80% payout ratio [4][13] - **Remote Diagnosis Business**: 1.4 million transactions, total transaction value close to 950 million RMB [4][22] - **Future Growth Areas**: Focus on software and data services, with expectations for significant growth in 2025 [8][12] Market Outlook - **Remote Diagnosis Market Potential**: Current annual revenue of 1 billion RMB, projected to reach over 50 billion RMB [24] - **Software and Data Services**: Expected to be key growth drivers, with software revenue projected to increase significantly [19][47] Challenges and Considerations - **CVD Equipment Decline**: Shift towards high-end equipment impacting lower-end sales [5] - **Market Competition**: Continuous R&D and partnerships with major automotive manufacturers are crucial for maintaining competitive advantage [31] Future Development Focus - **Product Innovation**: Introduction of new products in the electric vehicle sector and enhancements in software capabilities [18][38] - **Sales Strategy**: Emphasis on maintaining hardware margins while expanding software and data service revenues [46][47] Conclusion Yuan Zheng Technology has demonstrated strong financial performance in 2024, with significant growth in both revenue and net profit. The company is strategically positioned to capitalize on emerging opportunities in software and data services, while also maintaining a robust hardware sales foundation. The focus on innovation and market expansion will be critical for sustaining growth in the competitive automotive diagnostics industry.

Financial Performance - Revenue for the year reached RMB 1.882 billion, an increase from RMB 1.598 billion in the previous year, representing a growth of approximately 17.7%[6] - Net profit for the year was RMB 341.3 million, up from RMB 168.9 million, indicating a year-over-year increase of about 102.1%[6] - Earnings per share (EPS) increased to RMB 0.8165 from RMB 0.3932, reflecting a growth of approximately 108.0%[6] - The company's main business revenue for the current year is ¥1,824,507,041.15, an increase of 20.6% compared to ¥1,513,039,475.79 from the previous year[24] - The net profit attributable to shareholders was approximately RMB 339.51 million, a significant increase of 101% compared to the previous year[34] - The net profit margin improved to 18%, an increase of 7 percentage points year-on-year[48] - The company's net profit for 2024 is projected to be RMB 341 million, an increase of RMB 172 million from RMB 169 million in 2023, primarily driven by a gross profit increase of RMB 209 million[58] Dividends and Shareholder Returns - The company declared a final dividend of RMB 0.45 per share[3] - The board proposed a final dividend of RMB 0.45 per share based on the company's performance this year[49] Cash Flow and Assets - Cash flow from operating activities generated a net amount of RMB 391.4 million, compared to RMB 163.6 million in the previous year[7] - The company reported a significant increase in cash and cash equivalents, ending the year with RMB 540.1 million compared to RMB 610.7 million at the beginning of the year[7] - The total cash outflow for the year was RMB 71 million, with cash and cash equivalents at the end of the period amounting to RMB 540 million[59] - Total assets increased to RMB 1.997 billion from RMB 1.855 billion, marking a growth of about 7.6%[4] - Total liabilities decreased to RMB 752.8 million from RMB 780.4 million, a reduction of approximately 3.5%[5] Research and Development - Research and development expenses rose to RMB 201.5 million, up from RMB 172.7 million, indicating an increase of about 16.5%[6] - The company received 108 authorized invention patents in the year, with R&D personnel accounting for approximately 50% of the total workforce[55] - The company has increased R&D expenses by RMB 29 million, reflecting a commitment to innovation despite rising sales expenses[58] Business Strategy and Growth - The company plans to continue expanding its market presence and investing in new technologies and products to drive future growth[3] - The company achieved overseas business revenue of approximately RMB 1.3 billion, accounting for 70% of total revenue, marking a historical high[48] - The company aims to enhance overseas business scale and significantly increase revenue from hardware, software, services, and data[57] - The company has initiated three major strategies: ADS, AAS, and EVS, achieving positive results in the current year[53] - The company plans to integrate AI technology into the automotive industry, transitioning from a manufacturing enterprise to an intelligent enterprise[56] Customer and Market Insights - The company reported a customer purchase amount of approximately RMB 170 million for software, setting a new record[48] - The company connected over 370 million vehicles globally through automotive diagnostic equipment, with over 3.3 million active terminals generating an average of one million diagnostic reports daily[51] - The top five customers contributed approximately RMB 556 million in revenue, accounting for about 30% of total revenue, up from 23% in 2023[61] Inventory and Receivables - The total accounts receivable at the end of the period is ¥338,104,292.27, an increase of 33.4% from ¥253,486,065.93 at the beginning of the period[26] - Inventory at the end of the period is ¥239,654,937.55, an increase of 5.8% from ¥227,819,392.82 at the beginning of the period[30] - The total accounts payable at the end of the period is ¥201,536,543.97, an increase of 23.0% from ¥163,898,887.83 at the beginning of the period[31] - The company has provided a bad debt reserve of ¥30,685,482.54, which is an increase from ¥25,549,487.67 in the previous period[26] Accounting and Compliance - The company will implement new accounting standards starting January 1, 2024, which are expected to have no significant impact on the financial statements for the current reporting period[20] - The company has assessed its ability to continue as a going concern and found no significant doubts regarding its ongoing viability[1] - The company has maintained consistent accounting policies across all subsidiaries included in the consolidated financial statements[15] - The company has provided credit terms ranging from 30 to 210 days to its customers based on their credit history and relationship[25] Cost Management - The company reduced the ratio of main business costs to revenue by 4% and lowered the proportion of four expenses (management, R&D, sales, and financial expenses) to main business revenue by 3%[48] - The leverage ratio improved to 0.61 in 2024 from 0.73 in 2023, indicating a better capital structure[60] Subsidiaries and Acquisitions - The company has added 7 subsidiaries through acquisitions and investments during the reporting period[62]

Company and Industry Summary Company Overview - The company is recognized as having the largest inventory of segment equipment globally, with a significant portion of its revenue derived from overseas and e-commerce, accounting for approximately 70% of total sales revenue, particularly strong in cross-border e-commerce in the second half of the year [1][2][3]. Financial Performance - The company reported a total shipment of approximately 300,000 units for the year, an increase of nearly 100,000 units compared to the previous year, which had 200,000 units shipped [1][2]. - Cash flow is reported to be strong, with cash receipts exceeding 200 million RMB in December, marking the highest monthly cash inflow since the company's inception [1][2][3]. - The company anticipates achieving a revenue target of 2.5 billion RMB for the month, driven by overseas sales and cross-border e-commerce, which contributed over 10 million USD [1][2][3]. Strategic Adjustments and Future Outlook - The strategic adjustments made since the previous year have been deemed successful, contributing significantly to business growth [1][2][3]. - The company plans to achieve a revenue target of 2.5 billion RMB for the upcoming year, with expectations to ship 1 million units, reflecting a focus on increasing production and sales volume [5][12]. - The company is preparing for future growth by conducting extensive training sessions in the domestic market, particularly for new energy maintenance equipment, with plans for over 10,000 training sessions [6][7]. Product and Market Development - The company is set to launch a high-end ADAS (Advanced Driver Assistance Systems) automatic calibration device, which is considered one of the most advanced globally [6][7]. - There is a focus on software revenue, which is expected to contribute significantly to overall income, with software margins reported at 100% due to low associated costs [11][12]. - The company aims to enhance its product offerings, including new energy and tire-related equipment, to capture market share and drive revenue growth [6][12]. Profitability and Revenue Structure - The company has maintained a high net profit margin, with expectations for continued improvement in profitability driven by a favorable product mix and increased software sales [8][9]. - The revenue structure indicates that approximately 40% of total income may come from software, with the remainder from equipment sales, highlighting the importance of software in the overall business model [11][12]. Key Risks and Considerations - The company acknowledges potential challenges in maintaining profitability due to varying product prices and market conditions, particularly in the DIY segment, which has seen a decline in unit sales [9][12]. - The focus on overseas markets is seen as a critical strategy for sustaining growth, with expectations that traditional equipment sales will primarily come from international markets [12]. This summary encapsulates the key points from the conference call, highlighting the company's performance, strategic direction, and market outlook.

Investment Rating - The report assigns a "Buy" rating for the stock with a 6-month target price of HKD 10.75, representing a significant upside from the current price of HKD 5.58 [3] Core Business and Strategy - The company focuses on high-margin diagnostic and diagnostic upgrade products, leveraging its X-431 product line which represents advanced domestic diagnostic technology [3] - It has established connections with over 300 million vehicles globally through diagnostic devices, holding a 70% market share in China and generating 800,000 daily diagnostic reports [3] - The company is transitioning to a light-asset model, cutting low-margin product lines and focusing on R&D, brand building, and flexible production adjustments [3] - It is expanding into the new energy vehicle (NEV) market with products like SDS, EVS, and AAS, covering the entire lifecycle of NEVs with over 90% customer satisfaction [3] Financial Performance and Growth Drivers - H1 2024 gross margin increased by 7 percentage points to 47%, driven by higher overseas and software revenue contributions [4] - Overseas revenue surged 90% YoY to CNY 629 million in H1 2024, accounting for 63% of total revenue, up from 42% in 2022 and 45% in 2023 [4] - Software revenue grew 49% YoY in 2023 to CNY 127 million, with paid software customers increasing by 106% and software upgrades by 72% [5] - The company expects net profit to reach CNY 300 million in 2024 and CNY 390 million in 2025, with a current PE ratio of 6x and 5x respectively [6] Market Position and Competitive Advantages - The company is a pioneer in the automotive aftermarket, with over 30 years of experience and a comprehensive product portfolio covering diagnostics, maintenance, and lifting equipment [12] - It has a strong R&D team with hundreds of patents and a global presence, including R&D centers in the US, Germany, Japan, and South Korea [12] - The company has transitioned into the vehicle networking space with its golo series, establishing a leading position in the industry [13] - It is exploring the commercial value of automotive big data and has built a blockchain-based automotive data ecosystem [14][16] Industry Trends and Opportunities - The automotive aftermarket is benefiting from the increasing NEV penetration and the corresponding demand for diagnostic and maintenance services [3] - The US aftermarket is dominated by independent repair shops, which account for 70% of the market, providing a significant opportunity for the company's diagnostic products [41] - In China, the aftermarket is shifting from 4S shops to third-party repair shops, with NEV adoption driving industry reshuffling and creating new opportunities [44][45] - The industry is trending towards intelligence, new energy, and connectivity, with the company well-positioned to benefit from these trends [47][48] Product Evolution and Innovation - The company has streamlined its product portfolio, reducing hardware products by 74.36% and focusing on high-margin software and services [28] - It has launched the X-431 EV MAX, a comprehensive diagnostic device for NEVs, and is building a "sales + service + car management" ecosystem for NEVs [29] - The company's super remote diagnosis system leverages 5G technology to enable remote vehicle diagnostics, reducing costs and improving efficiency for repair shops [35] - Its diagnostic products cover over 95% of NEV models, with advanced features like battery pack analysis and fault code reading [34]

Financial Performance - Revenue for the first half of 2024 reached RMB 999.046 million, a 38.5% increase compared to RMB 721.153 million in the same period of 2023[4] - Net profit attributable to the parent company's owners was RMB 152.453 million, a 134.3% increase from RMB 65.037 million in the first half of 2023[4] - Basic earnings per share (EPS) for the first half of 2024 was RMB 0.367, up from RMB 0.150 in the same period of 2023[4] - Revenue for the first half of 2024 was 999 million RMB, a 39% year-on-year increase, with net profit of 152 million RMB, up 134%[30] - Net profit attributable to parent company shareholders was 152,453, with basic earnings per share of 0.367[19][23] - The company's gross profit margin for the main business increased to 47.3% from 38.5% year-on-year, and the net profit margin rose to 15.3% from 9.0%[35] Assets and Liabilities - Total assets as of June 30, 2024, were RMB 1,913.627 million, a 3.1% increase from RMB 1,855.219 million at the end of 2023[1] - Total liabilities as of June 30, 2024, were RMB 788.408 million, a slight increase from RMB 780.380 million at the end of 2023[3] - Total equity attributable to the parent company's owners was RMB 1,120.852 million as of June 30, 2024, a 5.0% increase from RMB 1,067.228 million at the end of 2023[3] - Total assets increased by 3% to 1,914,000,000 yuan, primarily due to an increase in construction in progress, while total liabilities increased by 1% to 789,000,000 yuan, mainly due to an increase in accounts payable[38] Cash Flow and Dividends - Cash and cash equivalents decreased by RMB 95.714 million in the first half of 2024, ending at RMB 515.018 million[5] - The company's operating activities generated a net cash inflow of 71,000,000 yuan, primarily from sales revenue, while investment activities resulted in a net cash outflow of 61,000,000 yuan, mainly for capital expenditures and acquisitions[40][41] - Financing activities resulted in a net cash outflow of 107,000,000 yuan, primarily due to the distribution of final dividends and repayment of bank loans[42] - The company has decided to distribute an interim cash dividend of RMB 0.20 per share (before applicable taxes), with H股 dividends to be paid at HKD 0.2185 per share[55] - The average exchange rate for the week prior to the dividend declaration (August 2 to August 8, 2024) was HKD 1 to RMB 0.91517, or RMB 1 to HKD 1.0927[55] - The record date for determining H股 shareholders entitled to the cash dividend is August 29, 2024, with the share transfer registration suspended from August 24 to August 29, 2024[55] - The company has appointed Bank of China (Hong Kong) Trustee Limited as the receiving agent for H股 dividends, with dividend checks to be mailed by September 13, 2024[55] Research and Development - R&D expenses for the first half of 2024 were RMB 90.270 million, a 9.9% increase compared to RMB 82.105 million in the same period of 2023[4] - The company obtained 56 invention patents in the first half of 2024, with R&D personnel accounting for 50% of total employees[33] Inventory and Accounts - Inventory as of June 30, 2024, was RMB 249.233 million, a 20.3% increase from RMB 207.176 million at the end of 2023[1] - Accounts receivable as of June 30, 2024, were RMB 220.540 million, a 3.3% decrease from RMB 227.937 million at the end of 2023[1] - Accounts receivable increased to 266,090 from 253,486, with a bad debt provision of 45,550, resulting in a net amount of 220,540[15][16] - Inventory increased to 249,233 from 207,176, with finished goods accounting for 205,647, up from 160,680[17] - Accounts payable increased to 210,610 from 163,899, with 197,952 due within one year[18] Overseas Business and Strategic Initiatives - Overseas business revenue reached 629 million RMB, accounting for 63% of total revenue, driven by smart algorithms and AI technology[30] - The company's super remote diagnostic service generated 5 million RMB in revenue within three months, with a 187% year-on-year growth[30] - The company has connected with over 350 million vehicles globally, with 3.1 million active diagnostic device terminals and nearly 1.5 billion diagnostic reports[31] - The company launched three strategic initiatives: AI Diagnostic Service (ADS), AI Auto Service (AAS), and Electric Vehicle Service (EVS), with 33 EVS stations established in China and expansion in 6 overseas countries[32] - The company plans to expand overseas business, increase super remote diagnostic transaction volume, and develop LAUNCH AI to significantly boost overseas revenue, software revenue, service revenue, and data revenue[34] Customer and Supplier Relationships - The company's top five customers accounted for approximately 26% of total revenue, with the largest customer contributing about 9% of total revenue[48] - The company's top five suppliers accounted for approximately 68% of total procurement, with the largest supplier contributing about 26% of total procurement[48] Impairment and Costs - Credit impairment increased by approximately 15 million yuan, mainly due to assessments based on the aging and recovery rates of receivables[36] - Asset impairment increased by approximately 25 million yuan, with 15 million yuan attributed to inventory impairment for older product lines and the remaining from goodwill impairment based on expected future cash flows[36] - The company aims to establish digital and intelligent customer relationships and continue to reduce internal operating and product costs through AI and advanced tools[34]

Summary of Conference Call Transcript Company or Industry Involved - The transcript involves a company discussing its financial performance, specifically focusing on gross margin trends. Core Points and Arguments - The company experienced a significant increase in gross margin during the half-year period, indicating improved profitability and operational efficiency [1]. Other Important but Possibly Overlooked Content - The discussion suggests a proactive approach to addressing financial performance, with an emphasis on engaging with stakeholders for further communication and clarification [1].

Dividend Declaration - The company declared an interim cash dividend of RMB 0.20 per share before applicable taxes, with H-share dividends amounting to HKD 0.2185 per share[2] - The average exchange rate for the dividend declaration period was 1 HKD to RMB 0.91517, or 1 RMB to HKD 1.0927[3] - The dividend payment will be processed by Bank of China (Hong Kong) Trust Co., Ltd., with checks mailed to H-share holders by September 13, 2024[3] - The company will suspend H-share transfer registration from August 24 to August 29, 2024, to determine eligible shareholders for the cash dividend[3]