Summary of Soft Control Co., Ltd. Conference Call Company Overview - Soft Control Co., Ltd. specializes in lithium battery equipment, providing both wet and dry process equipment. The wet process is already in use with domestic customers, while the dry process is in discussions with universities and potential clients. The solid-state battery production lines are currently small-scale, mostly in laboratory or pilot testing stages, with some actual transaction contracts signed with domestic clients [2][6]. Key Points and Arguments Industry and Market Position - The company provides front-end equipment for lithium batteries, including material conveying, mixing, and coating, with an investment of approximately 20 million to 30 million yuan per GWh, accounting for about 20% of total investment [2][8]. - Soft Control's main clients include top domestic companies such as CATL, EVE Energy, Guoxuan High-Tech, and BYD [3]. - The company has a competitive edge in material conveying, while competitors like Hong Kong Technology excel in mixing [4][5]. Technical Challenges and Developments - The dry process for solid-state battery production faces significant technical challenges, including material uniformity, fiberization avoidance, hydrogen sulfide leakage, and precision temperature control during rolling [9]. - Currently, very few companies in China are capable of mass-producing solid-state batteries using the dry process, with most still in the research or small-scale testing phase [9][12]. Future Outlook and Orders - Orders for lithium battery equipment are primarily in pilot or mass production stages, with a production line capacity reaching 0.5 GWh, mainly targeting end users [2][11]. - The company anticipates an increase in orders for wet process solid-state batteries in the second half of this year and into next year, as discussions with clients progress [11]. Global Expansion and Strategy - Since 2024, Soft Control has actively expanded into overseas markets, leveraging the group's extensive global network to enhance local service capabilities [10][11]. - The company aims to meet international customer demands and further develop its global business [11]. Financial and Operational Insights - The delivery cycle for traditional lithium battery equipment typically spans 12 to 18 months, while rubber machinery has a shorter cycle of about 6 to 9 months [7][17]. - The company maintains a stable order situation in the rubber machinery sector, with expectations for steady performance through the first half of next year [13]. Research and Development - Soft Control invests approximately 4% to 5% of its total revenue in R&D annually, continuously introducing new products and processes to support future order growth [23]. Additional Important Information - Solid-state batteries are primarily used in sectors that prioritize safety and endurance over cost, such as drones, while their application in the electric vehicle market remains limited due to high costs [12]. - The company’s rubber machinery orders are expected to peak around 2025-2026 before gradually declining, influenced by the tire industry's investment trends [13].

Report Summary 1. Core View The report analyzes the cost support levels of nickel prices under different processes to understand the main drivers of the recent decline in nickel prices and provide a reference for future trends. Currently, the RKEF + converter route for producing pure nickel is in a slight loss, while the oxygen-enriched side-blowing and wet processes still have some profit. In the short term, the cost of the relatively high-cost RKEF + converter route serves as the marginal support line for nickel prices. The decline in nickel prices below this cost line is mainly due to weak downstream demand, low valuations in the middle and downstream sectors, and market expectations of a decline in ore prices [2][6][13]. 2. Summary by Section Fire Process - **Production Routes**: The main routes for producing high-grade nickel matte using the fire process are the RKEF + converter route represented by Tsingshan and the oxygen-enriched side-blowing route represented by Zhongwei, both using high-grade nickel ore as the main raw material [5]. - **Ore Price Increase**: The price of 1.6% grade nickel ore in Indonesia has risen from about $33.4/ton at the beginning of the year to $52.9/ton, a increase of 58.4%, driving up the cost of high-grade nickel matte [5]. - **Cost Analysis**: The cost of producing refined nickel by the RKEF + converter process is highly correlated with the price of nickel pig iron (NPI), with an additional processing cost of $25,000 - $30,000. Currently, the median cost of producing high-grade nickel matte by the RKEF + converter process in Indonesia is about $13,000/metal ton, corresponding to a domestic integrated high-grade nickel matte production cost of about 121,000 yuan/ton, showing a loss. The oxygen-enriched side-blowing process has relatively lower costs, about $2,000/metal ton lower than the RKEF + converter process, with a domestic integrated high-grade nickel matte production cost of about 105,000 yuan/ton, still having some profit [6]. Wet Process - **Production Growth**: The HPAL wet process uses low-grade nickel ore as raw material, with obvious cost advantages. Since 2024, the production of MHP in Indonesia has increased rapidly, with the highest monthly production reaching 40,500 tons of nickel metal. It is expected that the annual production of MHP in Indonesia will reach 489,000 tons of nickel metal in 2025 [8]. - **Cost Increase**: Short - term sulfur shortages have led to a slowdown in MHP marginal production. The current cost of MHP in Indonesia has risen to about $11,800/metal ton, equivalent to an integrated MHP cost of about 112,000 yuan/nickel. Considering by - products, the actual cost may be lower [10]. 3. Investment Rating The provided content does not mention the industry investment rating.

Core Viewpoint - The lithium battery industry is experiencing an urgent demand for innovation in processes and equipment, with companies racing to adopt new technologies like dry electrode processes and solid-state batteries to capture market share and disrupt existing market structures [4][6]. Group 1: Dry Process Technology - The success of dry process technology is not merely about equipment but requires a systemic innovation involving materials, processes, and equipment [5]. - The goal of Qingyan Electronics is to control the density fluctuation of dry film to within 0.3%, matching the top levels of wet coating machines [5]. - By 2027, it is expected that dry electrode technology will enter a phase of industrialization, with more companies investing in production lines [5][24]. Group 2: Industry Challenges and Developments - Companies like Guoxuan High-Tech are facing significant challenges in engineering and scaling up production lines for semi-solid batteries, indicating that adjustments to existing wet production lines are insufficient [6]. - The dry process offers clear advantages, such as eliminating solvents, which leads to cost reductions and environmental benefits, while also improving electrode density and energy density [7]. - The integration of multiple production steps into a streamlined process significantly reduces production and investment costs, as seen in Tesla's adoption of this technology [7]. Group 3: Qingyan Electronics' Position - Qingyan Electronics has demonstrated three core advantages: deep technical roots from Tsinghua University, strong industry collaboration, and leading scale validation with the first fully automated dry electrode production line of 0.1 GWh launched in April 2025 [8]. - The company has achieved a material discharge rate of 99.5%, significantly higher than the industry average of about 95%, which is crucial for batch stability and precision [9]. - Qingyan's second-generation equipment has improved the uniformity of film density, targeting a fluctuation control of 0.3%, which is a leading level compared to wet coating machines [10]. Group 4: Market Trends and Future Outlook - The demand for dry process technology is particularly strong among automotive manufacturers, driven by cost considerations and the influence of companies like Tesla [22]. - The market for dry process technology is expected to grow, with both new production lines and retrofitting of existing wet lines being viable options, although the immediate focus is on new capacity [23]. - The anticipated timeline for large-scale industrialization of dry electrode technology is set for 2027, marking a pivotal year for the industry [24].