Summary of Zhongkong Technology Conference Call Industry and Company Overview - **Company**: Zhongkong Technology - **Industry**: Automation and Industrial AI Key Points and Arguments 1. **Strategic Transformation**: Zhongkong Technology is transitioning from a traditional DCS supplier to an automation product solution provider, with a focus on industrial AI business. The TPT business achieved over 100 million in revenue in the first half of the year, with significant order growth but not yet achieving scale effects [2][3][4]. 2. **Project Acquisitions**: Despite a slowdown in the overall growth of the process industry, Zhongkong secured important projects, including major orders from PetroChina and Sinopec, and participated in national smart pipeline construction [2][5]. 3. **International Expansion**: The company made significant progress in overseas markets, including projects with Indonesia's Smart and Algeria's national oil company, which supports sustainable business development [2][6]. 4. **Industrial Data Alliance**: Zhongkong established an industrial data alliance and invested in Cyberin, focusing on comprehensive data governance to lay a foundation for industrial AI development [2][7]. 5. **TPT2 Model Deployment**: The TPT2 model is designed for online and platform-based deployment, addressing quality, safety, efficiency, and cost issues through data analysis and intelligent generation [2][11]. 6. **Revenue Decline**: In the first half of 2025, Zhongkong's revenue decreased by 9%, and net profit also declined due to the strategic transformation initiated in 2024 [3][4]. 7. **AI Integration**: The company is undergoing a large-scale AI-native reconstruction, with over 70% of traditional industrial software products being redeveloped, leading to new orders worth 140 million [4][19][20]. 8. **Subscription Model Growth**: The software subscription and annual fee subscription models have gained traction, with significant revenue generated from these new business models [3][4][40]. 9. **Future Development Strategy**: Zhongkong is focusing on the next 30 years of development, aiming to find new leading opportunities in automation solutions and industrial AI [2][8][9]. 10. **Market Potential**: The industrial AI market in China is expected to reach 200 billion, with significant opportunities for growth in the automation sector [31]. Additional Important Content 1. **AI for Manufacturing**: The company aims to enhance the intelligence level of the manufacturing industry through AI, targeting over 50,000 process industry clients, with 36,000 already using their products [18][31]. 2. **Product Innovations**: The UCS (Unified Control System) was launched, significantly improving communication and processing capabilities, and is being integrated with TPT for enhanced smart control [25]. 3. **Profitability Impact**: The introduction of embodied AI for manufacturing is expected to significantly enhance profitability by improving production efficiency and reducing operational costs [26][27]. 4. **Challenges in Transformation**: The main challenge faced during the transformation is the shift in mindset among employees and clients, which is crucial for aligning with the company's strategic direction [51]. 5. **Subscription Revenue**: The subscription revenue from industrial software is projected to be 650 million, with TPT contributing 310 million [49]. This summary encapsulates the key insights from Zhongkong Technology's conference call, highlighting the company's strategic direction, market opportunities, and challenges faced during its transformation.

Core Insights - The conference focuses on the global launch of new products by Zhongkong Technology and the innovative development of industrial AI [1] Group 1 - The event highlights the importance of industrial AI in enhancing operational efficiency and driving innovation within the industry [1] - Zhongkong Technology aims to showcase its latest advancements and solutions in the field of industrial AI [1] - The conference serves as a platform for industry leaders to discuss trends, challenges, and opportunities in the industrial AI sector [1]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company is experiencing short-term pressure on performance, but it is making strategic breakthroughs in industrial AI and robotics, which are expected to open long-term growth opportunities [1][4] - The company is a leader in process industrial intelligent manufacturing and is expected to benefit from equipment upgrade policies and overseas expansion opportunities [4][6] Financial Performance Summary - In the first half of 2025, the company achieved operating revenue of 3.83 billion yuan, a year-on-year decrease of 9.92%, and a net profit attributable to the parent company of 354 million yuan, down 31.46% year-on-year [5] - The company’s exchange loss was 13.40 million yuan, compared to a gain of 3.01 million yuan in the first half of 2024 [5] - After excluding the impact of exchange losses, the adjusted net profit was 294 million yuan, a decline of 25.82% year-on-year [5] Revenue and Profit Forecast - The revised profit forecast for 2025-2027 is 1.12 billion, 1.29 billion, and 1.55 billion yuan respectively, with EPS projected at 1.41, 1.63, and 1.96 yuan per share [4][8] - The current stock price corresponds to P/E ratios of 36.8, 31.9, and 26.5 for the years 2025, 2026, and 2027 respectively [4][8] Market Opportunities - The demand for process industrial equipment is continuously increasing, with significant growth in the energy, building materials, and paper industries, showing year-on-year increases of 9.32%, 82.58%, and 77.56% respectively [6] - The company is expanding its international strategy, achieving significant breakthroughs in regions such as Southeast Asia, the Middle East, and Central Asia, with notable progress in certification for core products in Saudi Arabia [6] Industrial AI and Robotics Development - The TPT software has entered a phase of large-scale application, generating revenue of 117 million yuan in the first half of 2025, with over 110 successful projects implemented in various industries [7] - The robotics business is also growing rapidly, with revenue of 110 million yuan in the first half of 2025 and new orders totaling 200 million yuan, surpassing the entire performance of 2024 [7]

Core Viewpoint - Zhongkong Technology Co., Ltd. is accelerating the development of emerging businesses such as industrial AI and robotics, which are expected to become the main growth drivers for the company in the future [1][2]. Financial Performance - In the first half of 2025, the company achieved operating revenue of 3.83 billion yuan and a net profit attributable to shareholders of 354 million yuan [1]. Industrial AI Development - The company is advancing its "AllinAI" strategy, integrating and upgrading industrial AI technologies, and has made significant progress in the development and application of the TPT time-series model, which has been deployed in over 110 real production scenarios [2]. - The launch of TPT2, a global first industrial agent generation platform based on a time-series hybrid expert model, marks a significant upgrade from the previous TPT, enhancing the efficiency of intelligent application development [2]. Robotics Business - The company is focusing on the "AI + platform + hazardous source inspection and operation, supply chain logistics, humanoid robot equipment" strategy to promote the large-scale application of process industrial robot solutions [2]. - The new generation intelligent inspection robot ARAMCOBOTGEN2, developed in collaboration with Saudi Aramco, has entered the deployment phase, and the industry’s first flying shuttle robot has been successfully delivered to Sinopec [3]. International Expansion - The company is actively pursuing a global strategy, achieving positive results in Southeast Asia, the Middle East, Africa, Central Asia, Latin America, and North America, including landmark projects with major industry players [4]. - The company has entered the supplier lists of significant enterprises such as PEMEX and CEMEX, and has reached key milestones with leading companies like Petrobras and Suzano [4]. Competitive Advantage - With over 30 years of technical accumulation in the process industry, the company has established strong data resources and industry insights, creating significant competitive barriers [4]. - The company's distributed control system (DCS) has maintained the number one market share in China for fourteen consecutive years, serving over 37,000 customers and deploying more than 100,000 control systems, accumulating approximately 100EB of industry data resources [4].

Financial Performance - Company reported total revenue of 3.83 billion yuan for the first half of 2025, a decrease of 9.92% year-on-year [1] - Net profit attributable to shareholders was 354 million yuan, down 31.46% year-on-year [1] - Gross margin was 32.08%, a decline of 3.47% compared to the previous year [1] - Net margin decreased to 9.29%, down 24.59% year-on-year [1] - Total receivables reached 3.71 billion yuan, an increase of 25.12% year-on-year, with receivables accounting for 332.24% of net profit [1][4] Business Model and Strategy - Company relies heavily on research and development to drive performance, focusing on industrial automation and safety management [3][6] - The introduction of the TPT model aims to enhance proactive risk management in the energy and chemical sectors [6][11] - Company is expanding its industrial IoT technology to facilitate smart transformation in process industries [7][8] Recent Developments - Company launched the Plantbot robot solution, which has shown significant application results in hazardous environments [9] - TPT model has been successfully implemented in various industries, achieving substantial operational efficiency improvements [10][11] - Upcoming release of TPT 2.0 aims to integrate multiple technologies for enhanced decision-making capabilities [10] Market Position and Investor Interest - Major funds have increased their holdings in the company, indicating positive market sentiment [5] - Analysts project the company's performance for 2025 to reach 1.211 billion yuan, with an average earnings per share of 1.53 yuan [4]

Core Insights - The company reported a total operating revenue of 3.83 billion yuan, representing a year-on-year decrease of 9.92% [1] - The net profit attributable to shareholders was 354.08 million yuan, down 31.46% compared to the previous year [1] - The company is focusing on advancing new businesses with high prospects and potential, specifically in industrial AI and robotics [1] Financial Performance - Total operating revenue for the reporting period was 3.83 billion yuan, a decline of 9.92% year-on-year [1] - Net profit attributable to shareholders was 354.08 million yuan, reflecting a decrease of 31.46% year-on-year [1] Business Development - The company is prioritizing the development of industrial AI and robotics, which are seen as high-potential areas [1] - Revenue from industrial AI products (TPT business) was 116.62 million yuan [1] - Revenue from robotics products was 110.15 million yuan [1]

Core Insights - The 2025 Zhongkong Technology global product launch and industrial AI innovation conference was successfully held in Hangzhou, introducing the TPT2 model, a revolutionary industrial AI tool tailored for process industries [1][2] - TPT2 is based on industrial time-series data and features strong generalization and closed-loop application capabilities, marking a significant advancement in industrial AI [1][3] Group 1: TPT2 Model Features - TPT2's core value lies in three aspects: intensive empowerment, expert-level interaction, and full-link closed-loop capabilities [1] - It utilizes the SCOPES capability matrix to disrupt the traditional "one scenario, one model" development approach, enabling root cause identification and precise predictions through conversational interaction [1][3] - The model supports a full process loop of "perception-recognition-decision-execution," overcoming technical bottlenecks in less human and unmanned production [1][3] Group 2: Industry Impact and Collaboration - Zhongkong's founder, Chu Jian, emphasized that TPT2 is not merely a generic model but is deeply integrated with industrial scenarios to address key issues such as safety, quality, cost, efficiency, and low carbon [2] - The establishment of the "Industrial AI Data Alliance" was announced, involving over 130 industry leaders to promote data sharing, value co-creation, and ecological construction [2] - The alliance aims to facilitate standardized governance of industrial data and cross-scenario circulation, enhancing the pre-training and application of industrial large models [2] Group 3: Performance and Future Outlook - TPT2 has demonstrated a prediction accuracy of 99.79% in a project with PetroChina, generating an annual net profit exceeding 3.15 million yuan per furnace [3] - The company maintains a stable R&D expense ratio of over 10%, with a projected R&D investment of 978 million yuan in 2024, reflecting a year-on-year increase of 7.7% [3] - TPT2 is expected to tap into a market space exceeding 10 billion yuan in the process industry, driving the evolution of industrial software towards open collaboration [3]

Group 1 - The company has revised its articles of association, changing "shareholders' meeting" to "shareholders' assembly" and removing references to the "supervisory board" and "supervisors" [1] - The revisions do not involve substantial changes to other provisions of the articles of association, which include adjustments to clause numbering and punctuation that do not affect the meaning [1] - The revised articles will take effect after approval by the shareholders' assembly and will be disclosed on the Shanghai Stock Exchange website [1] Group 2 - The company plans to revise and establish certain governance systems to enhance internal governance mechanisms, in accordance with relevant laws and regulations [2] - These proposed revisions have been approved by the company's sixth board of directors and will require approval at the second extraordinary shareholders' meeting in 2025 to take effect [2] Group 3 - The company announced an increase in the estimated amount for daily related party transactions for 2025, which requires approval from the shareholders' assembly [3][4] - The increase in daily related party transactions is necessary for the company's normal operations and will be priced based on market rates, ensuring no harm to the company's independence or shareholder interests [4][20] Group 4 - The company has approved an increase in the estimated amount for daily related party transactions by 26,250 million yuan, bringing the total estimated amount for 2025 to 268,700 million yuan [6][7] - The independent directors and audit committee have reviewed and approved the increase, confirming it aligns with the company's operational needs and complies with legal regulations [7] Group 5 - The company plans to use up to 3 billion yuan of temporarily idle self-owned funds for entrusted wealth management to improve fund utilization efficiency and increase returns for shareholders [22][24] - The investment will be made in safe, liquid financial products, with a focus on maintaining the safety of funds and not affecting the company's normal operations [24][30] Group 6 - The company has conducted a special report on the storage and actual use of raised funds for the first half of 2025, confirming compliance with relevant regulations [57] - The total amount raised from the initial public offering was 1,755.41 million yuan, with a net amount of 1,637.32 million yuan after deducting issuance costs [58] - As of June 30, 2025, the actual use of raised funds was 1,679.30 million yuan, with a remaining balance of 19.91 million yuan [58]

Group 1 - The company held its 14th meeting of the 6th Board of Directors on August 29, 2025, via communication, with all 7 directors present [3][4] - The Board approved the 2025 semi-annual report and its summary, confirming that the report reflects the company's financial status and operating results accurately [4][5] - The Board also approved a special report on the storage and actual use of raised funds for the first half of 2025, ensuring compliance with relevant regulations [8][9] Group 2 - The company evaluated the execution of its "Quality Improvement and Efficiency Enhancement" action plan for the first half of 2025, aligning with the Shanghai Stock Exchange's initiatives [11] - The Board approved the cancellation of 883,500 shares from the 2024 restricted stock incentive plan due to unmet performance criteria [13][14] - The Board agreed to increase the estimated amount for daily related party transactions for 2025 to 262.5 million yuan [16][17] Group 3 - The Board approved the initiation of a cash pool business to enhance centralized fund management and reduce overall funding costs [19] - The company will use up to 3 billion yuan of temporarily idle self-owned funds for entrusted wealth management to improve fund utilization efficiency [21] - The Board agreed to change the accounting currency for its Singapore subsidiary to provide more reliable financial information [23][24] Group 4 - The Board proposed to cancel the supervisory board and transfer its powers to the audit committee of the Board, with relevant governance documents to be revised accordingly [30][55] - The company plans to amend its registered capital from 790.591256 million yuan to 791.189527 million yuan following the completion of the third vesting period of the 2021 restricted stock incentive plan [56][57] - A second extraordinary general meeting of shareholders is scheduled for September 19, 2025, to discuss the proposed changes [34][39]

Group 1: ETF Performance Summary - The Food and Beverage ETF (code: 515170) has seen a recent increase of 2.51% over the past five days, with a current PE ratio of 21.23 and a total of 6.93 billion shares, reflecting an increase of 97.5 million shares and a net inflow of 22.623 million yuan [2] - The Gaming ETF (code: 159869) has experienced a rise of 3.36% in the last five days, with a PE ratio of 44.76. It currently holds 5.38 billion shares, which is an increase of 96 million shares, but has seen a net outflow of 31.64 million yuan [2] - The Sci-Tech Semiconductor ETF (code: 588170) has had a modest increase of 0.73% over the past five days, with a total of 3.9 billion shares, an increase of 16 million shares, but a net outflow of 52.415 million yuan [2] Group 2: Cloud Computing ETF Insights - The Cloud Computing 50 ETF (code: 516630) has shown a significant increase of 6.58% in the last five days, with a high PE ratio of 128.37. The total shares have decreased to 4.0 billion, down by 2 million shares, and it has experienced a net outflow of 4.995 million yuan [3]