Core Viewpoint - The company addressed the decline in gross margin during an online investor communication, attributing it primarily to the impact of the international trade environment and various cost increases associated with its OEM business expansion in Thailand [1] Group 1: Financial Performance - The fluctuation in gross margin is mainly influenced by the international trade environment [1] - The company's operating costs have risen significantly due to various factors, including the acceleration of production capacity in Thailand and the immature overseas supply chain [1] Group 2: Operational Challenges - The company is experiencing increased costs and expenses across various segments due to the expansion of its OEM business [1] - Additional losses are attributed to the transitional phase of ramping up production, which has not yet stabilized [1]

Financial Performance - In Q1 2025, the company achieved revenue of RMB 5.353 billion, a year-on-year increase of 12.34% [2] - Net profit attributable to shareholders was RMB 762 million, a decrease of 3.25% year-on-year [2] - The company sold 49 million pairs of sports shoes in Q1 2025, reflecting an 8.24% year-on-year growth [2] - Gross margin in Q1 2025 decreased by 1.19% compared to Q4 2024, primarily due to the ramp-up of new factory operations [2] - Net margin in Q1 2025 decreased by 1.02% compared to Q4 2024, mainly due to the decline in gross margin [2] Workforce and Production Capacity - As of March 2025, the employee count was approximately 184,000, a 17% increase from March 2024 [2] - The company accelerated the construction and production pace of new factories to meet rising capacity demands [2] - New factories are currently in the efficiency ramp-up phase, impacting overall gross margin [4] Customer and Market Dynamics - Some customers requested priority production and shipment for U.S. orders, but overall shipment schedules remained stable [2][3] - The company has not seen significant changes in customer order patterns compared to previous periods [8] - The average selling price increased due to changes in customer and product mix [9] Future Outlook - The sports shoe industry has significant growth potential, especially in developing countries [5] - The company maintains a multi-client model to adapt to market dynamics and meet diverse customer needs [5] - Future production capacity will expand with new factories in Vietnam and Indonesia, with the latter expected to produce over 60 million pairs annually [6][7] Dividend Policy - The company emphasizes shareholder returns, with cash dividends in 2021 accounting for approximately 89% of net profit [10] - The cash dividend ratio for 2024 is projected to be around 70% of net profit, balancing shareholder interests with capital expenditure needs [10]