Summary of the Conference Call for Xince Standard Company Overview - Xince Standard was established in 2000 and is headquartered in Shenzhen, being one of the earliest institutions engaged in testing services in China. The company was listed on the Shenzhen Stock Exchange's Growth Enterprise Market in January 2021. [3] Financial Performance - In 2024, Xince Standard reported revenue of 720 million yuan, a year-on-year increase of 6.7%, and a profit of 176 million yuan, up 7.7% year-on-year. [2][3] - The revenue structure includes: - Automotive testing: 40% - Electronic and electrical product testing: 23% - Laboratory equipment: 24% - Other segments include consumer goods and health & environmental testing. [2][3] Automotive Testing Business - The automotive testing business includes reliability testing (mechanical vibration, smoke corrosion, climate simulation), electromagnetic compatibility testing, and physicochemical analysis (VOC, carbon, odor, formaldehyde detection). These tests are primarily non-mandatory R&D tests for automotive components. [4][5] - The gross margin for the automotive testing business has maintained between 68% and 70%. [2][7] Growth Phases - **2019-2020**: Slow growth phase with revenue growth of 12.8% and -4.6%, and profit growth of 11.5% and -19%. [6] - **2021-2023**: Rapid growth phase with profit growth of 33%, 47%, and 39% respectively, driven by capacity expansion and increased demand for new energy vehicles. [6][7] - **2024-2025**: A slowdown in revenue and profit growth due to price competition in the new energy vehicle sector, with a profit decline of 1.7% in Q3 2024 and revenue/profit declines of 8% and 9% respectively in Q1 2025. However, a recovery was noted in Q2 2025 with revenue growth of 10.5% and profit growth of 11.8%. [8] Robotics Sector - In February 2025, Xince Standard announced its entry into the robotics sector by forming a joint venture with Guangdong Wali Technology, focusing on the R&D, manufacturing, and sales of testing robots, industrial robots, and service robots. [9] - The company leverages its existing technology and customer base, including clients like Xiaopeng and Li Auto, to promote its robotics products. [9] Financial Metrics and Market Position - As of the first half of 2025, the gross margin was 69.1%, a slight decrease of 2.6 percentage points year-on-year. [10] - The company has completed a new employee stock ownership plan and its convertible bonds have reached conditions for forced redemption, which may exert short-term pressure on stock prices. However, the overall valuation remains near the industry average. [10] Future Focus Areas - Key future focus areas include the status of military-related business orders expected to impact performance from Q4 2024 to H1 2025, and the progress of the robotics business, including potential industry catalysts and the company's own mergers, acquisitions, or technological collaborations. [11][12]