Summary of Key Points from Conference Call Records Industry Overview - The mechanical industry is experiencing a comprehensive upward trend, with various segments at different stages of growth [1] - The AI-related industry chain, including AIDC, PCB, 3C equipment, and smart logistics, is a focus for the Huatai Securities mechanical team for the second half of this year and next year [2] Company-Specific Insights Ice Wheel Environment - Ice Wheel Environment is expected to achieve over 700 million yuan in profit this year, with approximately 30%-35% coming from AI-related business [3] - The overall growth rate for the company may reach 25%-30% next year, with AI business expected to account for 45% [3] - Current valuation is around 15 times next year's profit, with a potential market cap increase to 19-20 billion yuan, indicating about 40% growth potential [3] Lian De Co., Ltd. - Lian De Co., Ltd. is benefiting from AI performance, with projected revenue of 1.6-1.7 billion yuan and profit of about 320 million yuan next year [4] - The current valuation is below 20 times, with potential to rise above 30 times as AI revenue share becomes clearer [4] - Recent stock performance has been affected by a share reduction announcement and market doubts about capacity realization [5] - Despite recent stock performance, the long-term investment opportunity remains strong due to high industry barriers and demand from the U.S. and domestic construction orders [6][7] New Flag Micro-Assembly - New Flag Micro-Assembly's expansion plan is expected to bring significant performance elasticity, with high profit margins and substantial valuation flexibility [9] Dazhu CNC - Dazhu CNC is expected to benefit from the AI PCB trend, with anticipated order volume reaching 10 billion yuan and a profit margin of about 40% [10] Quick Intelligent - Quick Intelligent operates in high-value-added businesses in the semiconductor and 3C fields, with a valuation corresponding to 22-23 times by 2026, indicating significant space and valuation elasticity [10] Industry Challenges and Risks New Energy Equipment - The new energy equipment sector is in a downward cycle, with declining contract liabilities and inventory indicators signaling reduced orders [12] - The photovoltaic equipment industry is currently profitable, but cash flow may deteriorate in the second half of 2025, with no signs of order recovery [13] Lithium Battery Equipment - The lithium battery equipment sector is performing strongly, with leading companies like CATL driving industry expansion [15] - The solid-state battery sector is impacting the lithium battery equipment landscape, providing opportunities for smaller equipment companies [16] Industrial Automation - The industrial automation sector has shown mixed results, with leading companies performing well while second-tier companies face challenges [18] - A recovery is anticipated in the fourth quarter of this year and into 2026 [18] Investment Recommendations - The Huatai Securities mechanical team recommends focusing on AI-related companies, including Ice Wheel Environment, Lian De Co., Ltd., and others in the mechanical sector [2] - Attention should also be given to the engineering machinery sector, which is expected to see a recovery driven by domestic and international demand [24][26] - The textile equipment sector is facing challenges due to tariffs, but companies like Jack and Huashu Technology are showing resilience [27][28] - The X-ray equipment sector is showing signs of recovery, with companies like Meiya Optoelectronics and Yirui Technology performing well [29] Conclusion - Overall, the mechanical industry and its related sectors present various investment opportunities, particularly in AI and engineering machinery, while also facing challenges in new energy and textile equipment sectors.

Core Viewpoint - The acceleration of overseas expansion by listed companies is driven by policy support, technological innovation, and globalization strategies, with overseas business becoming a significant growth driver for performance [1] Group 1: Overseas Business Performance - In the first half of the year, 3,019 A-share listed companies reported overseas business revenue totaling 4.90 trillion yuan [1] - Companies with overseas business revenue exceeding 100 billion yuan include China National Petroleum Corporation, BYD, Midea Group, and Luxshare Precision [2] - BYD reported sales of 464,300 new energy vehicles overseas, a year-on-year increase of 128.25% [2] - Haier Smart Home achieved overseas sales revenue of 85.23 billion yuan, accounting for 46.88% of total revenue, with a year-on-year growth of 10.52% [3] Group 2: Market Expansion Strategies - The "going out" strategy of listed companies has evolved from merely exporting products to a more integrated approach involving local market penetration [3] - Localized teams are essential for meeting local demands and enhancing competitiveness in overseas markets [3] Group 3: Diversified "Going Out" Models - Companies are diversifying their overseas strategies to include production, technology, and capital expansion [4] - For instance, Sailun Group plans to invest 291 million USD in a tire production facility in Egypt, while BYD is set to establish a CKD factory in Malaysia [4] - Jiangsu Hengrui Medicine is collaborating with Merck Group for the commercialization of a drug, receiving an upfront payment of 15 million euros [4] Group 4: Capital Expansion - Hangzhou Guoli Microelectronics acquired 100% of Belgian company LUCEDA for 40 million euros, marking a significant move in capital expansion [5]

Investment Rating - The report maintains a "Buy" rating for the mechanical equipment industry, particularly highlighting investment opportunities in PCB equipment and undervalued high-growth engineering machinery [1]. Core Insights - The PCB equipment sector is expected to benefit significantly from the increasing demand for high-end HDI boards driven by AI computing server needs, with a projected market value growth of 33% year-on-year in 2024 [2][3]. - The engineering machinery sector is poised for sustained performance due to a cyclical upturn, with domestic excavator sales increasing by 22.3% year-on-year in the first half of 2025 [4]. - The oil service equipment market is entering a performance realization phase, driven by high demand in the Middle East, with projected revenue growth for leading companies like Jerry and Neway [5]. Summary by Sections PCB Equipment - Major PCB manufacturers are planning significant expansions in high-end HDI production capacity, with investments exceeding 60 billion yuan from companies like Shenghong Technology and Huadian [2]. - The global HDI board market is expected to grow at a rate of 18.8% in 2024, significantly outpacing the overall PCB industry growth of 5.8% [2][3]. - Key equipment segments to watch include drilling, exposure, and plating, with specific companies like Dazhu CNC and Xinqi Microelectronics highlighted for their roles in these areas [3][20]. Engineering Machinery - The domestic market is expected to maintain a 2-3 year upturn, with significant sales growth in excavators and loaders, supported by improved funding and replacement logic [4]. - The performance of leading companies such as Sany Heavy Industry and XCMG is expected to continue improving, with notable revenue and profit growth reported [4]. - The upcoming large-scale infrastructure projects, such as the Yarlung Tsangpo River project, are anticipated to further boost demand for engineering machinery [25][26]. Oil Service Equipment - The oil service equipment sector is experiencing a boom due to high demand in the Middle East, with significant investments projected in energy projects [5][38]. - Companies like Jerry and Neway are expected to see substantial revenue growth, with Jerry's revenue growth projected at 49% in Q2 2025 [5]. - The market for oil service equipment in the Middle East is expected to reach a scale of over 100 billion USD, indicating significant growth potential for Chinese companies [5][38].

Core Viewpoint - The company has demonstrated strong financial performance in the first half of 2025, with significant growth in net profit and sales across various business segments, particularly in traditional and emerging markets [2][3]. Financial Performance - The company achieved a net profit of 1.23 billion yuan, representing a year-on-year increase of 25.05% - The non-recurring net profit reached 1.146 billion yuan, up by 27.01% - The gross profit margin improved by 0.22 percentage points, and the return on equity increased by 0.99 percentage points [2]. Business Segments - The traditional earthmoving business generated revenue of 11.7 billion yuan, growing by 17% - Loader revenue increased by over 20%, with electric loader global sales surging by 193% - Excavator revenue rose by 25%, with domestic and overseas sales increasing by 31% and 22% respectively, leading to a market share increase of 1.6 percentage points domestically and 0.5 percentage points globally [2]. Overseas Market Performance - The company achieved record highs in overseas product sales, major client revenue, overall income, and net profit in the first half of the year - The overseas gross profit margin improved by 1.5 percentage points, with significant growth in emerging markets such as South Asia, Indonesia, and Central Asia, exceeding 40% [3]. Strategic Goals - The company announced its 14th Five-Year Plan, aiming for 60 billion yuan in revenue by 2030, with international revenue accounting for over 60% and a net profit margin of no less than 8% - The strategy focuses on core earthmoving machinery, development of mining equipment, industrial vehicles, and emerging businesses [4]. Investment in Indonesia - The company plans to invest 500 million yuan in a high-level manufacturing plant in Indonesia, expected to be operational by 2026 - This facility aims to meet the demand in Southeast Asia and mature markets in Europe and North America [5]. Financial Outlook - The company noted an increase in accounts receivable and a decline in operating cash flow, primarily due to overseas expansion and installment sales credit policies - The outlook for the second half of 2025 remains positive, with expectations of continued growth in the domestic construction machinery industry and favorable conditions in emerging markets [6].

Financial Performance - The company achieved an operating revenue of 18.181 billion CNY in the first half of 2025, a year-on-year increase of 13.21% [2] - Domestic revenue reached 9.658 billion CNY, growing by 15.69%, while overseas revenue was 8.523 billion CNY, up by 10.52% [3] - The international business accounted for 46.88% of total revenue, providing a solid foundation for the company's development [3] - Net profit attributable to shareholders was 1.230 billion CNY, reflecting a growth of 25.05% [3] - The gross profit margin increased by 0.22 percentage points, and the return on equity rose by 0.99 percentage points [3] Business Segments - Traditional earthmoving business revenue was 11.7 billion CNY, with a growth of 17% [3] - Loader revenue grew by over 20%, and electric loader sales surged by 193%, leading the industry in electrification [3] - Excavator revenue increased by 25%, with domestic and overseas sales rising by 31% and 22% respectively [3] - Emerging business segments, including industrial vehicles and lifting machinery, also showed significant profit growth [3] International Expansion - The company is accelerating its global layout, with overseas sales and net profit reaching historical highs in the first half of 2025 [4] - The overseas gross profit margin improved by 1.5 percentage points, with revenue from major industry clients increasing [4] - Emerging markets, particularly in South Asia, Indonesia, and Central Asia, saw growth rates exceeding 40% [4] Strategic Goals - The company aims to achieve a revenue target of 60 billion CNY by 2030, with international revenue exceeding 60% and a net profit margin of no less than 8% [5] - Key strategies include focusing on core earthmoving machinery, developing mining equipment, and enhancing global operational capabilities [5] Market Outlook - The Chinese engineering machinery industry is expected to continue its growth recovery in the second half of 2025, driven by equipment renewal cycles and increased investments in infrastructure [10] - The European market is anticipated to show slight recovery due to accelerated infrastructure projects and rising electrification [10] - Despite uncertainties in overseas markets, emerging markets are expected to maintain stable growth, supported by political and economic stability [10]

Core Viewpoint - LiuGong (000528) has established a regular communication arrangement with institutional investors, emphasizing its commitment to transparency and strategic execution to achieve its 2030 goals [1] Group 1: Investor Communication - The company actively communicates with various institutional investors through performance briefings, analyst conference calls, regular roadshows, invited research, and machinery brand exhibitions [1] - LiuGong adheres to regulatory requirements while engaging with both domestic and foreign institutional investors [1] Group 2: Strategic Goals - The company believes that strong strategic execution, leading product technology, and practical actions will ensure the timely achievement of its 2030 strategic objectives [1] - LiuGong is committed to enhancing shareholder value over the long term [1]

Financial Performance - The company reported a total revenue of 18.181 billion yuan for the first half of 2025, representing a year-on-year increase of 13.21% [1] - The net profit attributable to shareholders reached 1.23 billion yuan, up 25.05% year-on-year [1] - The gross margin improved to 22.32%, an increase of 1.0% compared to the previous year [1] - The net profit margin slightly increased to 6.34%, up 0.11% year-on-year [1] - The company's accounts receivable reached 12.877 billion yuan, a 24.25% increase year-on-year [1] Market Outlook - The domestic market for earthmoving machinery is expected to continue its growth momentum, with overall sales of excavators and loaders projected to achieve double-digit year-on-year growth [7] - The international market faces challenges due to global trade protectionism, but there is potential for gradual recovery in 2026 [7] - The company aims to enhance its brand and market influence in Europe through improved sales and channel networks, as well as ESG initiatives [8] Strategic Initiatives - The company is focusing on a comprehensive strategy that includes full solutions, full automation, and full internationalization to drive growth [6] - The management emphasizes the importance of cash flow and debt management, with a current ratio of monetary funds to current liabilities at 48.76% [4] - The company is committed to maintaining a healthy competitive environment in the electric loader market, advocating for innovation and product quality as key to sustainable development [9]

Group 1 - The core viewpoint highlights the transformation of Liuzhou into a hub for "artificial intelligence + manufacturing," showcasing advanced smart factories and automation in traditional industries like automotive and machinery [1][3]. - Liugong Machinery Co., Ltd. has implemented automated production lines and intelligent logistics systems, achieving high levels of automation and efficient material flow, with an average of one loader produced every five minutes [3][5]. - The sales of Liugong's new energy loaders have exceeded expectations in the first half of the year, significantly surpassing industry forecasts, indicating strong growth in emerging markets and successful expansion into mature markets like Europe [3][5]. Group 2 - SAIC-GM-Wuling has initiated the "125 Project" to accelerate the electrification and intelligent transformation of its new energy vehicles, aiming to create a comprehensive ecosystem for electric and hybrid vehicles [3][5]. - In Indonesia, SAIC-GM-Wuling has sold over 40,000 new energy vehicles, achieving a market share of over 37%, making it the most popular Chinese automotive brand in the region [5]. - Liuzhou is enhancing the integration of artificial intelligence with manufacturing through various initiatives, including the release of 39 AI application scenarios, promoting the practical application of AI technology in various industries [5].

Investment Rating - The investment rating for the company is "Buy" with a target price not specified [6][17]. Core Views - The company reported a stable performance in its H1 2025 results, achieving revenue of 18.181 billion yuan, a year-on-year increase of 13.21%, with a net profit of 1.23 billion yuan, up 25.05% year-on-year [1][5]. - The company aims to achieve a revenue target of 60 billion yuan by 2030, with international revenue accounting for over 60% and a net profit margin of no less than 8% [4]. Financial Performance Summary - In H1 2025, the company achieved a gross margin of 22.32%, a slight increase of 0.22 percentage points, while the net profit margin was 6.34%, up 0.01 percentage points [1]. - The company’s domestic revenue was 9.658 billion yuan, increasing by 15.69%, while international revenue reached 8.523 billion yuan, up 10.52% [1]. - The company’s net profit forecast for 2025-2027 is adjusted to 1.7 billion, 2.36 billion, and 3.31 billion yuan, representing year-on-year growth rates of 28.4%, 38.7%, and 39.9% respectively [5]. Business Segment Performance - The engineering machinery segment showed solid growth, with loader sales revenue increasing by over 20% year-on-year, and excavator sales revenue up by 25% [2][3]. - The company’s international business experienced counter-cyclical growth, with sales volume growth significantly exceeding the industry average, and the market share of earth-moving machinery products increased by 1 percentage point [3]. Strategic Development - The company is accelerating its globalization efforts, with over 400 overseas distributors and more than 1,300 service points established [3]. - The company has approved investments of 500 million yuan in Indonesia for a manufacturing plant and 150 million reais in Brazil for a financing leasing company [3][4].

Group 1 - Recently, Zhongheng Rui'an (Beijing) Asset Management Co., Ltd. was established, with Wei Mingwei as the legal representative [1] - The company's business scope includes asset management services using self-owned funds, engaging in investment activities with self-owned funds, and leasing construction machinery and equipment [1] - The company is wholly owned by Liugong [1]