Summary of Huazi Technology Conference Call Company Overview - **Company**: Huazi Technology - **Industry**: New Energy and Environmental Protection - **Date**: October 28, 2025 Key Points Financial Performance - In Q3 2025, Huazi Technology reported revenue of **1.54 billion** yuan, a slight increase year-on-year, but net profit decreased with a loss of **180 million** yuan [3][6] - The company aims to turn a profit for the full year despite Q3 losses, primarily due to delays in revenue recognition from overseas projects [2][3] Business Segments - The new energy business accounts for over **90%** of total operations, including lithium battery intelligent equipment, hydropower, and energy storage systems [3] - The company has a strong order backlog, with total orders exceeding **8 billion** yuan as of September 2025, including new orders from Ningde Times worth several hundred million yuan [4][6] Inventory and Contract Liabilities - Inventory stands at **2.08 billion** yuan, an increase of nearly **700 million** yuan year-on-year, attributed to the implementation of large orders [5] - Contract liabilities are over **1.4 billion** yuan, up **600 million** yuan from the beginning of the year, mainly due to increased advance payments [5] Cash Flow - Operating cash flow improved to over **1.8 billion** yuan in 2025, compared to **1.5 billion** yuan last year [6] - The net cash flow for the first three quarters was a loss of **16 million** yuan, significantly better than the **440 million** yuan loss in the same period last year [6] Q4 Revenue Expectations - Q4 revenue is projected to be between **1.6 billion** and **1.7 billion** yuan, with significant contributions expected from the Cambodia project (over **900 million** yuan) and the Changsha base [7] - The company is optimistic about achieving profitability in Q4, especially from high-margin overseas projects [7] Order Structure - The current order backlog totals approximately **9 billion** yuan, with **3 billion** yuan from lithium battery equipment and **5 billion** yuan from new energy and storage products [9] - Notable projects include a **400 million** yuan integrated fire-solar-storage project in Mongolia and a **1 billion** yuan project in Cambodia [9] Profitability of Domestic vs. Overseas Orders - Overseas orders have a gross margin of about **25%**, significantly higher than the domestic margin, which is in the low teens [11] - The company aims for overseas revenue to account for over half of total income in the next five years, up from the current **10%** [11] Market Conditions - The energy storage market is experiencing intense price competition, with prices in some regions dropping below cost [12] - Despite rising raw material costs, the pressure on prices has not fully transmitted to the end market yet [12] Future Development Plans - The company plans to enhance its capabilities in solid-state battery production, with a pilot line expected in 2026 [14] - Huazi Technology is focusing on partnerships for high-pressure equipment rather than developing it entirely in-house [21][22] - The company aims for **5 billion** yuan in revenue in 2026, with half expected from overseas markets [25] Strategic Initiatives - The company is actively involved in the Yalong River hydropower project, focusing on auxiliary facilities [24] - Huazi Technology is also restructuring its environmental protection business to create better investment opportunities [25] Conclusion - Huazi Technology is positioned for growth with a strong order backlog and strategic focus on high-margin overseas projects, despite current challenges in profitability and market competition. The company is optimistic about achieving its annual profit target and expanding its international presence in the coming years.