Summary of Zhongzi Technology Conference Call Industry Overview - Zhongzi Technology holds the highest market share in the natural gas catalyst market, estimated at 30%-40%, with the fastest growth driven by increased sales of natural gas heavy-duty trucks. Gasoline catalysts account for approximately 30%, while diesel catalysts represent 15%-20% [2][4][5] - The company is positioned to benefit from the upcoming National VII emission standards and the divestment of certain catalyst businesses by BASF, which will enhance domestic production rates [2][6] Key Points and Arguments Revenue and Product Segmentation - In the first three quarters of 2025, Zhongzi Technology achieved nearly 1.2 billion yuan in revenue, primarily from mobile pollution source catalysts, including natural gas, diesel, and gasoline catalysts [4] - The sales performance of natural gas heavy-duty trucks exceeded expectations, significantly boosting the growth of natural gas catalysts [4] Market Trends and Standards - The National VII standard is expected to increase the per-vehicle catalyst usage by 30%-50%, providing a market opportunity for the company to adjust its offerings based on emission regulation upgrades [2][7] - The company is focusing on both passenger and commercial vehicle sectors, with a notable supply of gasoline catalysts to range-extended hybrid electric vehicles [6] Fixed Source Emission Management - Zhongzi Technology is concentrating on industrial VOC management, having initiated pollution control projects in regions like Hebei, collaborating with major companies such as PetroChina and Sinopec [2][8] Hydrogen Fuel Cell Development - The company has begun generating sales revenue from its hydrogen fuel cell business, with a production line capable of producing 100 kg of platinum-carbon catalysts annually. However, the end-market remains immature, leading to relatively low sales volumes [9][10] - Collaborations with companies like Dongfang Electric and SAIC are in place, with five hydrogen fuel cell engine models already secured [10][11] Energy Storage Business Model - The energy storage business includes selling energy storage cabinets in overseas markets and engaging in Energy Management Contracting (EMC) in domestic markets, primarily in the Sichuan-Chongqing region [3][12] - The EMC projects have a total installed capacity of approximately 20-30 MW, generating about 5 million yuan in stable cash flow monthly, with an investment payback period of 7-9 years and a profit margin exceeding 40% [3][12][16] Composite Materials and Future Projects - The composite materials business is expected to reach operational status by the end of 2025, targeting aerospace and civilian drone markets [3][17] - The carbon valley industry VOCs catalyst is anticipated to contribute to performance by 2026, while solid-state batteries are still in the experimental phase [3][17] Future Outlook - The company is optimistic about future revenue and profit growth, primarily driven by catalyst business and large orders from key clients like Weichai, as well as collaborations with automakers such as Changan and Li Auto [20] - New business investments may exert some pressure, but overall profit is expected to improve as these ventures begin to contribute to revenue [20]

Core Insights - The report highlights the significant contribution of vehicle emissions to air pollution, with motor vehicle NOx emissions accounting for over 34% of the national total, and heavy-duty trucks responsible for 80% of motor vehicle NOx emissions [1][2] - Major cities like Beijing, Shenzhen, and Chengdu see motor vehicle emissions contributing over 40% to PM2.5 pollution, indicating a severe situation for vehicle exhaust management [1][2] Emission Standards and Regulations - The European Commission proposed the Euro 7 emission standards in November 2022, set to replace Euro 6, with implementation timelines for light and heavy vehicles outlined [3] - The transition from Euro 6 to Euro 7 provides a forward-looking guide for the development of China's National 7 (国七) standards, with stricter limits on heavy vehicle emissions and new requirements for non-exhaust pollutants [3] Market Opportunities - The National 7 standards are expected to create a market space exceeding 200 billion yuan in the automotive after-treatment sector from 2027 to 2030, driven by the need for new components and system upgrades [4][5] - Key areas of focus for new components under the National 7 standards include cold start emissions reduction, nitrogen oxide reduction, and monitoring system upgrades [4] - The projected incremental market space for automotive after-treatment is estimated at 244.2 billion yuan in 2027, increasing to 733.1 billion yuan by 2030 [5] Recommended Companies - Companies with strong technological capabilities and broad product layouts in the after-treatment sector are recommended for investment, including Yunyi Electric, Aikelan, Zhongzi Technology, and Weifu High-Tech [5]