Core Viewpoint - The recent half-year report of Leike Electric shows a significant decline in net profit attributable to shareholders, raising concerns among investors, especially following the announcement of executive share reductions [2][3]. Financial Performance - In the first half of the year, Leike Electric reported a revenue of 4.781 billion yuan, a slight increase of 0.65% year-on-year, while the net profit attributable to shareholders was 428 million yuan, representing a decline of 29.01% [3][4]. - The overall gross margin decreased to 23.2%, down 1.7 percentage points year-on-year, with specific declines in the gross margins of health cleaning appliances and garden tools, as well as motor and precision components [3][4]. Cost Structure - Sales expenses grew significantly, reaching 249 million yuan, a year-on-year increase of 23.71%, with service fees constituting the largest portion [4]. - The increase in costs is attributed to the impact of U.S. tariffs, higher personnel expenses, and increased packaging and transportation costs due to components being produced in China [4][5]. International Expansion - To mitigate the challenges posed by tariffs, Leike Electric is accelerating its overseas factory construction, with investments totaling 150 million USD in production bases in Vietnam and Thailand [5][6][7]. - The company has completed the overseas production of home appliances for the U.S. market and plans to launch its automotive parts factory in the third quarter [5][8]. Financial Strategy - Leike Electric's cash and short-term borrowings have both increased by nearly 30%, with cash holdings reaching 6.103 billion yuan, primarily in bank deposits [10][11]. - The company has adopted a strategy of borrowing while maintaining high cash reserves, which has raised regulatory inquiries regarding the potential for idle funds and debt repayment risks [11][14]. Interest Income and Economic Context - The company's interest income, which has been a significant contributor to net profit, is under pressure due to narrowing interest rate differentials between the U.S. and China, with a reported decline of 23.27% in the first half of the year [22][23]. - The recent decision by the Federal Reserve to lower interest rates may further impact Leike Electric's profitability model [23].