Core Viewpoint - Chutianlong (003040) has experienced significant stock price fluctuations, with a recent increase of 9.63% and reaching a near one-year high, indicating strong market interest and potential growth opportunities [1][2]. Trading Information Summary - Chutianlong was listed on the stock market's "Dragon and Tiger List" for the second time in five trading days due to a daily price fluctuation of 15% and a cumulative price deviation of 20% over three consecutive trading days [2][6]. - The company recorded two instances of trading halts due to price increases, with no instances of price drops during the week [1]. Shareholder Changes - On June 9, Chutianlong announced that Wenzhou Yima Enterprise Management Center (Limited Partnership) reduced its holdings by 2,617,800 shares, representing 0.5677% of the total share capital, during a period when the stock price increased by 9.72% [3][5]. - Following the reduction, Wenzhou Yima's shareholding dropped below 5%, no longer qualifying as a major shareholder [3][5]. Institutional Research Highlights - Chutianlong has successfully implemented multiple pilot projects for digital RMB in collaboration with eight secondary operating institutions and Huawei [4]. - The company has developed a comprehensive digital RMB product matrix, providing integrated software and hardware solutions to clients, generating sales revenue [4]. - Chutianlong is focusing on expanding its overseas business and has increased research and development in international communication and financial products since 2024 [4]. Company Announcements Summary - Wenzhou Yima plans to continue reducing its holdings in Chutianlong over the next 12 months, with a maximum of 13,834,079 shares to be sold [5][6]. - The reduction in holdings by Wenzhou Yima has resulted in a decrease in the combined shareholding of the controlling shareholder and its concerted actions from 51.11% to 50.54% [5].

Core Viewpoint - New Henghui (301678.SZ) has initiated its subscription with an issue price of 12.80 yuan per share and a price-to-earnings ratio of 17.76 times, focusing on integrated circuit services including chip packaging materials and testing services [1] Company Overview - New Henghui is an integrated circuit enterprise engaged in the research, production, sales, and packaging testing services of chip packaging materials [1] - The company's main business segments include smart card business, etched lead frame business, and IoT eSIM chip packaging and testing services [1] Smart Card Business - The smart card business is the company's traditional core segment, focusing on the development, production, and sales of flexible lead frame products essential for smart card chip packaging [2] - The company has established long-term partnerships with several well-known security chip design manufacturers and smart card manufacturers, ensuring a broad application of its products in communications, finance, transportation, and identity recognition sectors [2] - The company adopts an integrated operating model, producing its own key packaging materials to ensure low-cost, high-quality supply, enhancing delivery capabilities and profit margins [2] Market Position and Competition - The flexible lead frame industry has high entry barriers, with only three major manufacturers capable of stable mass supply globally, positioning New Henghui as the second-largest player in the market [2] - The company has an annual production capacity of approximately 2.374 billion smart card modules, making it one of the main suppliers in China [2] New Business Segments - The etched lead frame and IoT eSIM chip packaging businesses were newly developed in 2019, with significant investment in technology leading to successful mass production and sales [3] - The company has built a solid customer base among quality semiconductor packaging manufacturers, laying a good foundation for future business growth [3] - The eSIM technology is crucial for the IoT industry, and the company is leveraging its advantages in traditional SIM card packaging to establish specialized factories for eSIM chip packaging and testing [3] Financial Performance - The company reported revenues of approximately 548 million yuan, 684 million yuan, 767 million yuan, and 414 million yuan for the years 2021, 2022, 2023, and the first half of 2024, respectively [4] - Net profits for the same periods were approximately 101 million yuan, 111 million yuan, 153 million yuan, and 101 million yuan [4] - Detailed financial data shows revenue growth from 548.03 million yuan in 2021 to 766.73 million yuan in 2023, with net profit increasing from 100.72 million yuan to 153.33 million yuan during the same period [5]

Group 1: Digital Currency Business Progress - The company is a pioneer in the digital RMB ecosystem, collaborating with 8 second-tier operating institutions and Huawei to develop a comprehensive solution for various scenarios, including cross-border applications and government subsidies [3] - The "Chutianlong Digital RMB Smart Contract Platform" has been successfully implemented in multiple pilot projects across the country, providing digital RMB products and technical services for major events like the Winter Olympics and the Service Trade Fair [3] - Future plans include expanding scenarios, deepening technology, and enhancing cross-border cooperation to promote the application and development of digital RMB [3] Group 2: Revenue Model and Product Matrix - The company has established a comprehensive digital RMB product matrix that includes hardware products like digital wallets and terminals, as well as software services such as system platform development and operational services [4] - This integrated solution aims to generate sales revenue by providing a combination of hardware and software services to clients [4] Group 3: Stablecoin and International Business - The company is actively exploring the implementation of digital currency bridges, smart contract designs, and cross-border settlement optimizations while maintaining a focus on stablecoin technology and market trends [5] - Currently, the company's overseas business is relatively small, but it has increased efforts in developing international communication and financial product projects to enhance its market share and brand recognition [6][7] Group 4: eSIM Business Development - The company is advancing its eSIM and eSE product offerings in various sectors, including mobile communications and smart transportation, while also pursuing external investments to rapidly expand its eSIM business [7] - The ongoing international expansion strategy is expected to lead to more project implementations in embedded security products and innovative financial services [7]

Group 1: Company Overview and Market Position - The company operates in the smart card industry, which has a market capacity that is stabilizing but facing saturation in traditional applications. However, new applications in IIoT, AIoT, and eSIM are driving growth [1] - The gross margin for the smart card business is approximately 20%, positioning the company at a medium level within the industry [1] - The company is transitioning towards the super SIM card sector to enhance value and market space [2] Group 2: Competitive Advantages - The company is the first in the industry to offer a one-stop service, integrating the entire supply chain from chip application development to end-user delivery, which enhances product consistency and customer loyalty [2] - Over 60% of the company's product sales are international, with established partnerships with global leaders like THALES and IDEMIA, showcasing strong global operational capabilities [2] - The company has a robust project delivery and local service capability, having secured contracts with major Chinese telecom operators [2] Group 3: Semiconductor Business Development - The company entered the power semiconductor packaging materials sector in 2019, leveraging its existing technology to tap into a high-potential market [3] - Future plans include accelerating production of thermal management products and expanding customer bases in the power module sector [3] Group 4: Research and Development Investment - The company maintains a consistent investment in R&D, focusing on core technologies and optimizing resource allocation based on market feedback and financial status [4] - R&D personnel compensation is a significant portion of the R&D budget, with ongoing employee stock ownership plans to incentivize innovation [4] Group 5: Overseas Market and Production Capacity - Overseas operations account for over 60% of revenue, with production facilities in India and Indonesia achieving utilization rates of 70%-80% and 80%-90%, respectively [5] - The company emphasizes local production to enhance responsiveness to customer needs [5] Group 6: Customer Stability and Risk Management - The smart card business remains the primary revenue source, with a high customer concentration. Long-term agreements with major clients mitigate dependency risks [6] - The revenue share from the top five customers decreased from 87.92% in 2023 to 77.75% in 2024, indicating diversification efforts [7] Group 7: Liquid Cooling Business - The company has developed liquid cooling products with integrated designs that enhance efficiency and reliability, targeting high-performance computing needs [7] - The products are in the final stages of preparation for mass production, with a focus on meeting the rising demand in AI and data center markets [7] Group 8: Smart Security Business - The company is leveraging its expertise in digital information security to develop smart security solutions, particularly in transportation safety [8] - Current efforts are focused on market promotion, with ongoing exploration of business models [8] Group 9: Challenges and Opportunities - Key challenges include rapid technological changes and market entry risks for new businesses, which could impact production efficiency and competitiveness [9] - Opportunities exist in the growing demand for efficient cooling and packaging materials in AI and high-performance computing sectors, with potential for rapid growth [9] Group 10: Chip Production and Partnerships - The company primarily sources smart card chips externally, with some proprietary chips for internal use and external sales [10] - The company has not yet established a partnership with Huawei in the liquid cooling sector but remains open to future collaborations [10] Group 11: Acquisition Strategy - The company is cautious about pursuing acquisitions, focusing on long-term stability and evaluating potential targets within the industry [10] Group 12: Risk Disclosure - The company acknowledges risks associated with new product development, including technological, market, and validation risks, and commits to timely information disclosure [12]

Financial Data and Key Metrics Changes - The company reported a total revenue of CAD286 million for 2024, an increase of CAD9.5 million or 3% year over year [21] - Adjusted EBITDA for the year was CAD53.1 million, a decrease of CAD2.5 million compared to the prior year [29] - Free cash flow improved significantly to CAD1.6 million in Q4 2024, compared to a negative CAD15.5 million in the prior year [31] - The net loss for Q4 2024 was CAD25.4 million, an improvement from CAD33.6 million in the prior year [27] Business Line Data and Key Metrics Changes - IoT connectivity revenue for Q4 2024 was CAD56.5 million, up 2% year over year, representing 77% of total revenue [20] - IoT Solutions revenue declined 2% year over year to CAD16.8 million, accounting for 23% of fourth quarter revenue [20] - Non-GAAP IoT connectivity margin increased by 300 basis points year over year to 59.3% [21] - Non-GAAP IoT Solutions margin improved by 1,500 basis points year over year to 48.1% [21] Market Data and Key Metrics Changes - Total connections at the end of Q4 2024 were 19.7 million, an increase of 1.2 million year over year [6] - Average revenue per user (ARPU) for Q4 was $0.97, down from $0.99 in Q4 2023 [24] - The company closed $29 million in total contract value (TCV) in Q4 2024, with 68% related to IoT connectivity [10] Company Strategy and Development Direction - The company is focused on operational excellence and has launched several AI projects to drive efficiency and support profitable growth [7] - The strategic focus is on profitable growth and recurring connectivity revenue, which increased by CAD24.5 million or 12% year over year [6] - The company plans to shift from TCV to estimated annual recurring revenue (EARR) to better reflect its recurring revenue business model [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2025, expecting revenue growth driven by IoT connections and improvements in adjusted EBITDA and free cash flow [34] - The company is cautious about potential impacts from evolving tariff policies but believes its recurring revenue model provides insulation against external pressures [34] - The outlook for 2025 includes revenue guidance of CAD288 million to CAD298 million, reflecting a 2% year-over-year growth [35] Other Important Information - The company has seen significant activity in its IoT connectivity pipeline, particularly in connected health and logistics [14] - The IoT market is expected to grow rapidly, with the number of connected devices projected to surpass 96 billion by 2030 [16] - eSIM adoption is accelerating, with the market expected to grow from 368 million units in 2024 to 1.6 billion by 2030 [17] Q&A Session Summary Question: Drivers of connections and ARPU changes - Management noted that the increase in connections was primarily from low ARPU cases, which contributed to the decline in ARPU [40][41] Question: Market development and demand - Management indicated that while low ARPU use cases contributed to growth, there are also opportunities in higher-margin areas like connected health and retail [43] Question: Revenue guidance and pricing dynamics - Management explained that the conservative revenue guidance reflects a focus on profitable growth and the exit from unprofitable contracts [46] Question: Delay in 10-K filing - Management clarified that the delay was due to specific audit items and expects to be on time for future filings [53] Question: Balance sheet restructuring - Management is open to exploring options for balance sheet improvement but is focused on operational performance [56] Question: Guidance specifics for 2025 - Management indicated that IoT Solutions revenue is expected to remain flat, with a focus on improving gross margins [64] Question: AI and eSIM integration - Management highlighted ongoing discussions with customers about leveraging AI for better decision-making and the growing importance of eSIM technology [79]

Financial Data and Key Metrics Changes - The company reported total revenue for Q4 2024 of CAD 73.3 million, an increase of CAD 0.8 million or 1% year over year [20] - Adjusted EBITDA for Q4 was CAD 14 million, an increase of CAD 0.2 million or approximately 1.1% compared to the prior year [27] - Free cash flow for Q4 was positive CAD 1.6 million, a significant improvement from negative CAD 15.5 million in the prior year [30] - For the full year 2024, total revenue increased CAD 9.5 million or 3% to CAD 286.1 million [21] - The net loss for Q4 was CAD 25.4 million, an improvement from CAD 33.6 million in the prior year [26] Business Line Data and Key Metrics Changes - IoT connectivity revenue for Q4 was CAD 56.5 million, up 2% year over year, representing 77% of total revenue [20] - IoT Solutions revenue declined 2% year over year to CAD 16.8 million, accounting for 23% of total revenue [20] - For the full year, IoT connectivity revenue increased 12% to CAD 226.9 million, representing 79% of total revenue [21] - Non-GAAP IoT connectivity margin was up 300 basis points year over year to 59.3% [21] - Non-GAAP IoT Solutions margin increased 1,500 basis points year over year to 48.1% [21] Market Data and Key Metrics Changes - Total connections at the end of Q4 were 19.7 million, an increase of 1.2 million year over year [6] - Average revenue per user (ARPU) for Q4 was $0.97, down from $0.99 in Q4 2023 [23] - The company expects the IoT market to grow rapidly, with connected devices projected to surpass 96 billion by 2030, growing at a CAGR of over 20% [15] Company Strategy and Development Direction - The company is focused on operational excellence and has launched several AI projects to drive efficiency and support profitable growth [7] - The shift from total contract value (TCV) to estimated annual recurring revenue (EARR) is aimed at better illustrating the recurring revenue business model [11] - The company is committed to delivering innovative high-value solutions that drive growth and success for customers [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about 2025, expecting revenue growth driven by IoT connections and improvements in adjusted EBITDA and free cash flow [34] - The company is mindful of evolving tariff policies that could create uncertainty for customers, but believes its recurring revenue model provides insulation against these pressures [34] - Guidance for 2025 includes revenue in the range of CAD 288 million to CAD 298 million, reflecting a 2% year-over-year growth [35] Other Important Information - Operating expenses in Q4 increased by CAD 4.8 million or 9.7% year over year, primarily due to unrealized foreign exchange losses [25] - The company plans to continue focusing on profitable growth while rationalizing unprofitable contracts and product lines [47] Q&A Session Summary Question: What were the drivers of connections and ARPU? - Management noted that the increase in connections came from low ARPU cases, which were not present for the full quarter, leading to a decrease in ARPU [40][41] Question: Is the low ARPU indicative of market development? - Management indicated that while low ARPU cases contributed to growth, they are not the only source of demand, with growth also seen in connected health and retail sectors [44] Question: What is the guidance for 2025 regarding hardware? - Management stated that they do not expect significant growth or decline in IoT Solutions, and they are moving away from lower-margin hardware deals [63] Question: Are customers slowing down their deployments? - Management has not seen a slowdown in customer demand but is being cautious due to potential tariff impacts [71] Question: How does AI factor into product evolution? - Management highlighted active conversations with customers about using AI to leverage collected data for better decision-making and new revenue streams [80] Question: What are the debt coverage targets? - Management indicated there is no specific target for debt coverage but emphasized a focus on improving cash flows and potentially paying down debt as cash flow improves [83]

F o u r t h Q u a r t e r 2 0 2 4 E a r n i n g s P r e s e n t a t i o n April 30, 2025 1 Disclaimers Forward-Looking Statements This presentation includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. KORE's actual results may differ from their expectations, estimates and projections and consequently, you should not rely on these forward-looking statements as predictions of future events. Forward-looking statements ...