Summary of Kaerun Co., Ltd. Conference Call Company Overview - **Company**: Kaerun Co., Ltd. - **Industry**: Bag and Apparel Manufacturing Key Points Bag Business Performance - The bag business benefits from growth in new clients such as VF and Uniqlo, offsetting some impacts from overseas tariffs, with expected stable revenue growth for the year [2][3] - Core clients Nike and Decathlon are expected to see a slowdown in growth in 2025, but significant recovery is anticipated in 2026 [2][5] - The bag segment achieved a 13% growth in the first half of 2025, with high single-digit growth expected in the second half [3] - New client acquisition includes Adidas, with plans to expand production capacity in Indonesia to support future order growth [2][3] Apparel Segment Insights - The apparel segment operates through a controlling stake in Jiale, benefiting from Indonesia's rise as a global textile manufacturing hub [2][3] - Current capacity utilization for the apparel segment is around 50%, with a focus on improving efficiency over the next two years [3][4] - Major clients in the apparel segment include Uniqlo (40%-50% share), Adidas (30%), PUMA, and MUJI [8] Growth Projections - The printing paste segment is expected to grow by 30%-50% in 2025, with continued strong growth anticipated in 2026 due to operational efficiencies in Indonesia [6] - IT clients account for less than 20% of revenue, with low growth rates, while smaller clients like Liquid, Tuler, and Uniqlo show significant growth potential [7] Client Dynamics - Nike and Decathlon, the top two clients in the bag business, account for nearly half of the bag revenue, with low single-digit growth expected in 2025 but a strong recovery forecasted for 2026 [5] - VF has shown double-digit growth, becoming a significant contributor to revenue [5] Capacity Utilization and Management - Bag capacity utilization exceeds 90%, while apparel capacity is around 50% due to multi-SKU order impacts [10] - Future strategies include lean management to enhance efficiency without rushing into new capacity investments [10] Margin and Cost Management - Most clients have agreed on tariff cost-sharing, with only a few requesting price reductions, leading to a minor impact on margins [11] - Overall margin is expected to improve through optimized factory management and increased production efficiency [11] R&D and Product Development - The company is focusing on fabric R&D, particularly in sports synthetic fibers, with plans to enhance capabilities in this area [12] Xiaomi Collaboration - Issues with Xiaomi's bag sales on JD.com have been resolved, with expectations for at least single-digit growth in the To C business in the upcoming quarters [13][14] - Xiaomi plans to launch higher-end flagship products, which may enhance market position [13] Brand Development - The 90 Points brand faced revenue declines due to external factors, but operational performance remains stable [15] - Future efforts will focus on product development and expanding overseas markets to drive growth [15] Sales Channel Insights - The 90 Points brand has a total volume of less than 200 million, with online sales accounting for about half of total sales [16] - Offline channels are expected to grow faster than online, reflecting better performance in the current market environment [16]

Core Viewpoint - Huakang Co., Ltd. has terminated its acquisition of Henan Yuxin Sugar Alcohol Co., Ltd. after a year of planning, citing significant changes in the market environment since the initial planning phase [1][3]. Group 1: Acquisition Details - The acquisition was initiated on October 26, 2024, with a transaction price of approximately 1.098 billion yuan, which would have made Yuxin Sugar Alcohol a wholly-owned subsidiary of Huakang [3]. - Yuxin Sugar Alcohol is recognized in the functional sugar alcohol industry, with high production technology and significant xylitol capacity, contributing to Huakang's competitive advantage in the domestic and international markets [3]. Group 2: Financial Performance - Huakang's revenue for 2024 was 2.808 billion yuan, a slight increase of 0.93% year-on-year, while the net profit attributable to shareholders decreased by 27.72% to 268 million yuan [4]. - In the first three quarters of 2025, the company achieved revenue of 2.959 billion yuan, a year-on-year increase of 40.52%, but the net profit attributable to shareholders fell by 9.91% to 168 million yuan [4]. Group 3: Future Growth Strategies - The company is focusing on the release and digestion of its own production capacity, particularly through the construction of a 2 million-ton corn deep processing health food ingredient project in Zhoushan, Zhejiang [5]. - The first phase of the project, with a capacity of 1 million tons, has been completed, and the company is gradually increasing production efficiency [5]. - To improve profitability, the company needs to focus on high-growth application scenarios, optimize its product matrix, and strengthen supply chain collaboration to reduce costs [5].

1. Report Industry Investment Rating - The investment rating for the propylene industry in 2026 is "Neutral" for single - side trading [2][11] 2. Core Viewpoints of the Report - In 2026, the fundamental pressure on propylene's market is difficult to change, with prices expected to oscillate weakly, refinery profits shrinking, and PDH profits gradually contracting. Although the demand increment from downstream propylene projects in 2026 is greater than the propylene production capacity increase, most downstream projects are scheduled for the fourth quarter. Therefore, the supply - demand situation will remain loose in the first half of the year, and attention should be paid to the PL03 - 05 inter - period reverse arbitrage opportunity. With the peak of downstream production capacity coming in the second half of the year, propylene inventory may gradually be reduced [2][11] 3. Summaries According to Relevant Catalogs 3.1 Market News and Important Data - **New Capacity**: 2026 is still a propylene production capacity expansion period in China, but the growth rate is expected to slow down compared to 2025. The expected new propylene production capacity in 2026 is 7.36 million tons, with a nominal capacity growth rate of 9.3% (the actual capacity growth rate weighted by the commissioning time is about 4.4%), significantly lower than that in 2025 [6][25] - **Supply Pattern**: In 2025, China's propylene industry was in a rapid capacity expansion period, with new production capacity reaching 9.485 million tons, intensifying the market supply pressure. The supply in the Shandong market remained loose [6][35] - **Import - Export Pattern**: In 2025, China's propylene imports generally decreased, and the import dependence gradually declined. The cumulative import volume from January to October was 1.8349 million tons, a year - on - year increase of 14.96%, and the cumulative export volume was 26,900 tons, a year - on - year decrease of 61.67%. The import dependence is expected to further decline [7][53] - **Demand Increment**: The propylene demand converted from downstream new projects in 2026 is 8.24 million tons, with a nominal growth rate of 9.57%. However, due to the concentration of downstream projects in the fourth quarter, the weighted actual demand growth rate may be only 3.86%, lower than the actual growth rate of new propylene production capacity. The inventory pressure will persist in Q1 - Q2, and the inventory may gradually be reduced in the second half of the year [7][116] 3.2 Market Analysis - In 2025, propylene supply was at a high level, with high upstream inventory and continuous price pressure. The core factor was the lack of obvious highlights in terminal demand. In the short term, there was no obvious sign of demand improvement. In the first half of 2026, the focus was on digesting the existing high inventory, but the supply remained loose. Attention should be paid to the positive feedback from PDH device maintenance [8] 3.3 Propylene 2025 Market Review - The domestic propylene spot price showed a downward trend in 2025, affected by supply - demand and cost factors. The price trend can be divided into four stages: a decline from the beginning of the year to early June, a short - term increase from late June to early August, a sharp decline from October to early November, and a weak rebound at the end of the year [17] - The propylene futures price showed a fluctuating downward trend, affected by the loose supply - demand situation and weak international oil prices. The game between warehouse receipt registration and delivery was an important factor affecting the futures price [18] 3.4 2026 China Propylene Commissioning Situation - From 2021 - 2025, the compound growth rate of propylene production capacity was 11.97%, with 9.485 million tons of new capacity in 2025, a growth rate of 13.6%. In 2026, the new capacity is expected to be 7.36 million tons, with a nominal growth rate of 9.3% (actual growth rate about 4.4%), lower than that in 2025 [25] 3.5 Propylene Supply Pattern and Production Profit Analysis - In 2025, the propylene supply was loose due to capacity expansion. The low - point of propylene operation mainly occurred in mid - to - late May, affected by PDH device maintenance. The profit of major refineries and PDH devices was compressed, which dragged down the operation rate, while the coal - based operation was less affected by profit [35][49] 3.6 Propylene Import - Export Pattern Analysis - In 2025, China's propylene imports decreased, and the import dependence declined. The import window remained closed, and the domestic price advantage was obvious. The import dependence is expected to further decrease [53] 3.7 Propylene Upstream Raw Material Propane Pattern Analysis - The price of propane had a significant impact on the profit of domestic PDH devices. In 2025, the propane price fluctuated greatly, affected by factors such as Sino - US tariffs, market demand, and supply. The price decline in the second half of the year compressed the profit of PDH devices and led to a decline in the operation rate [70] 3.8 Propylene Downstream Pattern Analysis - **Downstream Profit and Demand**: In 2025, the profit of propylene downstream products shrank, and the demand support was weak. Downstream factories mainly purchased propylene on a rigid - demand basis, putting downward pressure on the propylene price [86] - **2026 Downstream Commissioning Situation**: In 2026, the commissioning pace of propylene downstream projects slowed down. The converted propylene demand from downstream new projects was 8.24 million tons, with a nominal growth rate of 9.57%. However, the weighted actual demand growth rate may be only 3.86%, lower than the actual growth rate of new propylene production capacity. The inventory pressure will persist in the first half of the year and may be reduced in the second half [109][116] 3.9 Propylene and Downstream Inventory Situation and Outlook - In 2025, the propylene inventory remained high, and the high - production growth rate may continue in 2026. The inventory pressure of propylene and its downstream products such as PP and acrylonitrile will persist in the first half of 2026, but the PP inventory may be reduced in the first half of 2026 due to the slowdown of new capacity commissioning [117]

Core Viewpoint - The company has approved a proposal to issue H-shares and list on the main board of the Hong Kong Stock Exchange, aiming to raise funds for business development and expansion [1] Group 1: H-Share Issuance - The company will issue H-shares with a maximum scale of 15% of its total share capital [1] - The issuance will be conducted through a combination of public offering in Hong Kong and international placement [1] - The company may exercise an over-allotment option based on market conditions [1] Group 2: Fund Utilization - The raised funds will be allocated for business development, including global strategy, technology research and development, and capacity expansion [1] Group 3: Approval Process - The issuance and listing matters are subject to approval by the company's shareholders [1]

Group 1 - The article discusses the upcoming 2025 Lithium Battery Industry Annual Conference and the Lithium Battery Golden Tripod Award Ceremony, highlighting the theme "New Cycle, New Ecology, New Technology" [2] - The event is scheduled for December 18-19, 2025, at the Venus Hall of the Venus Royal Hotel in Shenzhen, with an expected attendance of over 1,200 in-person participants and 30,000 online viewers [2] - The conference is organized by Qidian Lithium Battery and its affiliated entities, marking the 10th anniversary of Qidian Research [2] Group 2 - CATL's battery system capacity utilization reached 89.86% in the first half of 2025, with some production lines operating at 110% capacity, indicating a strong demand that exceeds supply [3] - In response to market demand, CATL has initiated a major expansion strategy since 2025 [4] - A new project, the LY9, has been signed for construction in Liyang, Jiangsu, with an annual production capacity of 60GWh and a total investment of up to 10 billion yuan [5] Group 3 - CATL has been continuously expanding its production capacity in Liyang since its establishment in 2016, with significant investments totaling over 40 billion yuan across multiple projects [14] - The company plans to achieve a total production capacity of over 1TWh by 2026, with approximately 700GWh in China and 300GWh overseas [15] - The LY7 project, which is part of CATL's expansion, has achieved rapid construction and is expected to produce 30GWh annually [12]

Cost Management - The total cost of pig farming in October 2025 is approximately 11.3 CNY/kg, showing a decrease of nearly 0.3 CNY/kg from the previous month, primarily due to reduced period expenses and improved production metrics [4] - About one-third of the company's production lines have costs below 11 CNY/kg, indicating a feasible path to further cost reduction [5] - The company aims to replicate successful management practices across different production lines to minimize cost variance and enhance overall efficiency [5] Slaughtering and Meat Processing - The company slaughtered over 22 million pigs from January to October 2025, with an expected year-on-year doubling of slaughter volume [6] - The meat processing segment is experiencing increased customer loyalty and service capability, contributing to stable product pricing [6] - Future plans include expanding slaughter capacity, optimizing customer structure, and enhancing operational efficiency through digital management [6] Disease Prevention - A comprehensive disease prevention system has been established, including physical barriers and smart monitoring technologies to ensure pig health [7][8] - The company emphasizes standardized processes and staff training to enhance disease control measures [8] Market and Pricing Outlook - Government policies and market adjustments are improving the supply-demand situation in the pig market, promoting stable and reasonable pricing in the long term [9] - The company focuses on cost leadership to maintain positive cash flow during potential low-price periods, ensuring long-term operational stability [9] Piglet Sales and Costs - The cost of weaned piglets has decreased from approximately 270 CNY/head at the beginning of the year to around 230-240 CNY/head recently [10] - The company plans to innovate piglet sales strategies based on market demand and customer needs, aiming for stable supply and competitive pricing [11]

Core Viewpoint - The battery industry is increasingly focusing on upstream investments to secure key resources, with companies like Ningde Times and Tianhua New Energy forming strategic partnerships to enhance supply chain stability and meet growing market demand [1][2][3]. Group 1: Company Transactions and Partnerships - Tianhua New Energy announced a transfer of 108 million unrestricted shares to Ningde Times for a total price of 2.635 billion yuan, which represents 12.95% of Tianhua's total shares [1]. - After the transaction, Ningde Times will hold 13.54% of Tianhua New Energy, becoming a significant strategic shareholder [1]. - This is not the first collaboration between the two companies; Ningde Times previously held 0.59% of Tianhua and has been involved in joint ventures such as Tianyi Lithium Industry, focusing on lithium hydroxide production [2]. Group 2: Industry Trends and Capacity Expansion - Major battery manufacturers, including Ningde Times, are actively expanding their upstream resource integration to ensure stable supply chains amid increasing demand for lithium resources [4]. - Ningde Times is expanding its production capacity across multiple locations, with significant expansions planned in Jining, Guangdong, and other regions, including an expected addition of over 100 GWh of energy storage capacity by 2026 in Jining [5]. - The lithium market has seen a price recovery, with lithium carbonate prices rising from around 60,000 yuan/ton to over 70,000 yuan/ton since the second half of the year [7]. Group 3: Future Market Outlook - Analysts predict that global lithium carbonate production could reach approximately 1.37 million tons by 2025, with China contributing about 70% of this output [7]. - The demand for energy storage and power batteries is expected to grow significantly due to favorable policies and market conditions, leading to a sustained high demand for lithium resources [7]. - The lithium supply-demand balance is anticipated to shift towards tight equilibrium between 2025 and 2028, with lithium prices expected to stabilize between 80,000 and 100,000 yuan/ton by 2026 [7].

Investment Rating - The report maintains a "Buy" rating for the company, indicating a strong performance relative to the market [8]. Core Insights - The company has signed an agreement to acquire 100% equity of Shandong Energy Equipment Group's high-end support manufacturing company for an assessed value of 345 million yuan, which is expected to enhance its integrated layout in the equipment manufacturing sector and reduce procurement costs [6]. - For the first three quarters of 2025, the company reported total revenue of 104.96 billion yuan, a year-on-year decrease of 11.64%, and a net profit attributable to shareholders of 7.59 billion yuan, down 39.15% year-on-year [8]. - The company’s coal production and sales volume increased year-on-year, while coal prices decreased. In the first three quarters of 2025, the production of commercial coal reached 135.89 million tons, up 6.94% year-on-year, and sales volume was 126.44 million tons, up 2.64% year-on-year [8]. - The company completed the acquisition of a 51% stake in Northwest Mining, which is expected to add significant coal resources and further expand production capacity [8]. Financial Summary - The company’s projected total revenue for 2025 is 144.96 billion yuan, with a year-on-year growth rate of 4.2% [7]. - The estimated net profit for 2025 is 10.16 billion yuan, reflecting a year-on-year decrease of 32.5% [7]. - The earnings per share (EPS) for 2025 is projected to be 1.01 yuan, with a gross profit margin of 29.3% [7]. - The company’s return on equity (ROE) is expected to be 12.4% in 2025 [7].

Core Insights - The company, Yabo Xuan, is experiencing rapid growth in its performance, with a saturated production capacity and plans to release new capacity ahead of schedule [4][5][6] Financial Performance - In the first three quarters of 2025, the company achieved operating revenue of 419 million yuan, a year-on-year increase of 55.9%, and a net profit attributable to shareholders of 48.72 million yuan, up 36.59% [5] - The third quarter alone saw operating revenue of 169 million yuan, representing an 86.75% year-on-year increase and a 10.38% quarter-on-quarter increase [5] - The significant growth in performance is attributed to the rapid increase in automotive electronics orders and deepened cooperation in the industrial control sector [5][6] Production Capacity and Expansion - The company has been operating at full capacity and is constructing a new factory that is more than twice the size of the old one, with over 100 million yuan invested in construction [5][6] - The new factory is expected to be operational by the end of this year, which will enhance manufacturing capabilities and allow for a shift from standardized production to customized services [6] Research and Development - The company has consistently increased its R&D expenses for seven consecutive years, with a year-on-year growth of over 35% in the latest quarter [6] - Yabo Xuan holds a total of 54 patents, including 15 invention patents and 39 utility model patents, with 16 new patents added this year [6] Market Position and Strategic Development - The company has successfully entered the supply chains of leading automotive manufacturers and deepened collaborations in the industrial control sector following its listing [10] - Since its listing, Yabo Xuan has maintained a high dividend payout ratio exceeding 70%, significantly above the industry average [10] - The company plans to continue optimizing its dividend strategy while ensuring capacity expansion and R&D investment [10]

Group 1: Investor Relations Activities - The investor relations activity was conducted on November 27, 2025, with participation from various financial institutions and analysts [2] - The meeting was held online via Tencent Meeting and offline in Zhongshan [2] Group 2: Impact of Tariff Policies - The increase in U.S. import tariffs will raise costs for customers exporting to the U.S., but will not affect exports to non-U.S. regions [2] - Historically, tariffs have been borne by brand customers (importers), ultimately passed on to consumers [2] - The company is focused on cost optimization across the supply chain in response to tariff impacts [2] Group 3: Factory Operations and Profitability - The first factory in Indonesia achieved profitability in Q3 2025, with management confident in its future performance [2][3] - The company is adjusting management practices to leverage Indonesia's advantages in labor supply and cost [2][3] - The company has three out of four new factories achieving profitability targets in Q3 2025 [3][5] Group 4: Capacity Utilization and Planning - The company maintains flexible capacity utilization, adjusting based on order demand and factory stages [4] - Future capacity expansion is planned, with a focus on new factories in Indonesia [5] - The company aims to keep capacity utilization high by managing production schedules and workforce [4][5] Group 5: Average Selling Price and Revenue - Average selling price fluctuations are influenced by customer and product mix changes [6] - The company employs a diversified brand strategy to optimize customer and product structures, impacting average selling prices [6] Group 6: Dividend Policy - The company has a strong focus on shareholder returns, with cash dividends in 2021 accounting for approximately 89% of net profit [7] - In 2023, cash dividends represented about 44% of net profit, with a projected 70% for 2024 [7] - The company has accumulated significant undistributed profits (approximately 9 billion RMB as of September 2025) and aims to maintain or increase dividend payouts [7]