Summary of the Conference Call for Huali Technology Company Overview - **Company**: Huali Technology - **Industry**: Amusement and Gaming Equipment Key Points and Arguments Business Performance - Huali Technology's domestic business has been under pressure due to macroeconomic conditions and a slow recovery in consumer spending, particularly in the amusement sector [3][4] - Positive signs include a stabilization in the pricing of tokens used in amusement parks, indicating a reduction in harmful price competition [4] - The company plans to focus on its strengths in simulation machines, particularly music and racing machines, and will also target mid-to-low-end markets to increase market share [5] Domestic Market Challenges - The domestic market remains challenging, with expectations of continued pressure in 2025 compared to 2024 [11] - The company is reducing the number of new store openings and seeking light-asset management partnerships to adapt to the current market conditions [11] International Market Growth - Huali Technology sees overseas markets as a key growth driver, with significant performance in the U.S. and Southeast Asia [7] - The company is expanding its ODM and OEM business, particularly with Japanese clients seeking to rebuild their supply chains post-pandemic [8] Product Development and IP Strategy - The company launched new products, including the second generation of Pokémon cards and a female-oriented card machine, which have performed well despite recent public relations challenges [9][12] - Huali Technology aims to increase its penetration in the market by expanding the number of stores carrying its products, currently reaching around 2,000 stores [9][43] - The company plans to allocate approximately 30% of its new product launches to non-traditional channels to broaden its audience [43] Financial Updates - Huali Technology raised approximately 150 million yuan through a recent fundraising round, primarily to invest in the Pokémon IP and other established franchises like Marvel [27] - The company anticipates increasing its machine deployment from 2,000-3,000 units to potentially 4,000-5,000 units in 2026 due to the new funding [27] Market Trends and Consumer Behavior - The company notes a shift in consumer behavior, with amusement parks moving away from price wars to improve service quality and upgrade facilities [39] - There is an expectation of a gradual recovery in equipment demand as the market stabilizes, with potential improvements in the second half of 2026 [40] Future Outlook - Huali Technology plans to maintain a focus on overseas expansion and increasing the number of machines deployed in the domestic market [47] - The company is cautious about the performance of its products in the domestic market, particularly in light of recent public relations issues affecting the Pokémon brand [15][49] R&D and Product Innovation - The company has significantly increased its R&D team, now comprising around 100 members, to enhance product development capabilities [35] - Huali Technology aims to release 5-10 new products annually, with a focus on maintaining a competitive edge in the card machine sector [36] Conclusion - Huali Technology is navigating a challenging domestic market while seeking growth opportunities abroad. The company is committed to product innovation and expanding its market presence through strategic investments and partnerships.

Group 1 - The company plans to raise a total of 148.6 million yuan through a simplified procedure for issuing shares to specific targets, with a maximum of 300 million yuan and not exceeding 20% of the company's net assets at the end of the last fiscal year [2][3] - The total investment for the projects funded by this issuance is 189.29 million yuan, with 148.6 million yuan allocated from the raised funds [3][12] - The primary project involves the investment in anime card equipment, aiming to enhance market coverage and operational efficiency, thereby increasing profitability and consolidating the company's leading position in the industry [3][4] Group 2 - The project is deemed necessary due to the growth in the gaming and entertainment industry in China, driven by rising consumer spending and policy support, creating opportunities for innovative consumption spaces [4][5] - The company has evolved from manufacturing gaming equipment to providing comprehensive services, focusing on operational capabilities and international IP introduction to drive sales of derivative products [5][6] - The anime IP derivative products business is based on successful models from Japan, with the company planning to expand into overseas markets, starting with a pilot operation in Japan [6][9] Group 3 - The company has established strategic partnerships with global gaming firms, enhancing its competitive edge and enabling the launch of popular gaming equipment [7][10] - The domestic card market is vibrant, with a strong growth trend, and the company aims to capitalize on this by increasing the deployment of anime card equipment [7][9] - The project is supported by favorable national policies that encourage the development of the gaming and entertainment industry, providing a conducive macroeconomic environment [8][17] Group 4 - The project is expected to yield a post-tax internal rate of return of 21.44% and a payback period of 4.46 years, indicating good economic benefits [14] - The company plans to use 42 million yuan of the raised funds to supplement working capital, which is essential for supporting rapid business growth [15][16] - The successful implementation of the fundraising plan is expected to enhance the company's financial status, improve its risk resistance, and increase its future financing capabilities [16][17]