Summary of Nuwei Co., Ltd. Conference Call Company Overview - Nuwei Co., Ltd. primarily operates in the oil and gas sector, with traditional oil and gas business accounting for 85% of its operations. The global oil and gas industry capital expenditure remains stable at $600-700 billion, providing a solid foundation for growth opportunities in the Middle East market, particularly benefiting from increased capital expenditure by Saudi Aramco [2][3][7]. Key Points and Arguments Oil and Gas Business Performance - Nuwei's oil and gas valve business covers upstream extraction, midstream storage, and downstream refining. The company has seen strong growth due to increased investment across the Middle East oil and gas value chain and a favorable marine engineering market [3][5]. - The company holds a small market share globally but has significant room for growth, especially in the Middle East, where Saudi Aramco's capital expenditure is expected to rise [3][7]. - Nuwei's revenue from overseas markets is increasing, with projections indicating that marine engineering will account for 15-20% of total orders by 2024 [3][9]. Non-Oil and Gas Business Expansion - To mitigate oil and gas cycle fluctuations, Nuwei is actively expanding into non-oil and gas sectors, such as water treatment and nuclear power, which contributed 13% to overall orders in 2024 [2][5]. - The water treatment and power markets are both valued at over $10 billion, presenting substantial growth opportunities for the company [2][5]. Natural Gas Investment in the Middle East - The Middle East holds approximately 35% of global natural gas reserves, and countries in the region are investing in natural gas power generation to address future fossil fuel demand risks [6][7]. - The region's investment in LNG supply chains is expected to grow, driven by increased demand for electricity and natural gas due to data center developments [6][7]. Market Share and Competitive Position - Nuwei's market share in Saudi Aramco is currently below 3%, but there is potential for growth as product quality and service levels improve [7][8]. - The company has successfully penetrated overseas markets due to oil price volatility, increased demand for cost-effective solutions, and enhanced supply chain security [8][10]. Marine Engineering and Shipbuilding Prospects - Nuwei's marine engineering segment is projected to grow significantly, with FPSO and LNG transport vessel valves expected to account for 15-20% of total orders by 2024 [9][10]. - The company has a market share of approximately 10% in FPSO orders, with significant growth potential as demand is forecasted to reach $650 million annually from 2025 to 2027 [9][10]. Emerging Business Developments - Nuwei has been expanding its water treatment business, focusing on wastewater treatment and seawater desalination, with a projected order intake of 300 million RMB in 2024 [12][13]. - The company is also entering the data center market, having secured a project with Google in Europe valued at approximately €2 million [12][13]. Nuclear Power Sector Engagement - Nuwei has over a decade of experience in the nuclear power sector, with orders expected to double in 2025. The company plans to expand its product offerings to include ball and butterfly valves [15][16]. - Participation in international projects, such as those in the UK, is expected to enhance Nuwei's market presence and contribute to overall revenue growth [15][16]. Additional Important Insights - Nuwei's traditional business is expected to maintain a compound annual growth rate (CAGR) of over 20%, with projected profits of approximately 1.5 billion RMB in 2025 [3][16]. - The company aims to achieve a revenue target of 10 billion RMB by 2028, with a commitment to maintaining a high dividend payout [16].

Financial Data and Key Metrics Changes - Adjusted earnings per share for Q2 2025 were $1.73, reflecting an 8% growth year over year when normalized for asset sales and retirements [10] - For 2025, adjusted EPS was $4.42, representing an increase of 48% on the same basis [10] - Adjusted EBITDA for Q2 was $900 million, while adjusted net income was $339 million [22] - Free cash flow before growth was $914 million for Q2 and $1.207 billion for 2025, exceeding the same periods in 2024 by $251 million [25][26] Business Line Data and Key Metrics Changes - Texas segment produced $512 million of adjusted EBITDA in Q2 2025, an improvement of over 1320% from the same period in 2024 [24] - East segment contributed adjusted EBITDA of $99 million in Q2 2025, driven by higher margins from the natural gas business [24] - Smart Home business achieved an adjusted EBITDA of $255 million in Q2 2025, with record customer retention at over 90% [25] Market Data and Key Metrics Changes - The company announced long-term retail power agreements with a data center operator for an initial 295 megawatts, with potential growth to one gigawatt [8][14] - The Texas residential virtual power plant (VPP) program exceeded expectations, increasing the 2025 target from 20 megawatts to 150 megawatts of curtailable capacity [20] Company Strategy and Development Direction - The company is focused on expanding its footprint in attractive power markets, including PJM and ERCOT, through acquisitions and strategic partnerships [11][12] - The T.H. Wharton project is on track for mid-2026 completion, supporting reliability and strengthening the Texas grid [17] - The company is actively working to expand its data center agreements and has over 4 gigawatts of joint development agreements and letters of intent across multiple sites [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver value to shareholders and reaffirmed full-year financial guidance across all key metrics [7][29] - The management highlighted the strong execution in each segment, driven by expanded margins and favorable weather [23] - The company is optimistic about the long-term demand for additionality in power supply, particularly for data centers [92] Other Important Information - The company closed the Rockland acquisition during the quarter, integrating Texas assets into its portfolio [11] - The Texas Senate Bill 6 was signed into law, providing new tools to support reliability and improve long-term planning in the ERCOT market [18] Q&A Session Summary Question: Can you talk about the structure of the 295 megawatts agreement? - Management views it as a C&I contract with premium margins, longer duration than average C&I contracts, and various mechanisms to protect margins [35] Question: What is the line of sight to convert the four gigawatts to actual ESAs? - Management is optimistic but does not want to predict specific timelines due to complexities involved [48] Question: How is the VPP opportunity shaping up? - Early results show strong uptake, but management is cautious about making long-term projections based on initial momentum [82] Question: What is the difference between the new contract and other C&I contracts? - The new contract offers a longer duration and premium pricing, providing assurance for customers [62] Question: What is the current outlook for power prices in Texas? - Management sees potential upward movement in power prices driven by large industrial loads and tight grid conditions [93]