Summary of the Conference Call for Hongfa Technology Co., Ltd. Company Overview - **Company**: Hongfa Technology Co., Ltd. - **Industry**: Relay and electrical components manufacturing Key Points and Arguments Business Performance - Overall business growth for the first half of 2025 was approximately 1% [2] - Significant growth in the new energy vehicle sector, with high-voltage direct current relay shipments reaching 2.6 billion, a year-on-year increase of over 40% [2][5] - High-voltage control box shipments grew nearly 200%, driven by competitive advantages and new model adoptions [2][3] - Home appliance business achieved revenue of 1.6 billion, a year-on-year increase of 5.8% despite fierce competition [4] Market Dynamics - European market for high-voltage direct current relays showed rapid growth, with increasing revenue contribution due to accelerated electrification [2][13] - Industrial relay market experienced a recovery with a year-on-year shipment increase of 26.9%, driven by demand from new energy-related industrial clients [2][15] - Low-voltage switch products saw slight growth, with component sales up about 10%, but complete equipment sales declined by approximately 20% due to real estate sector impacts [4][6] Future Outlook - Company remains optimistic about future growth, particularly in the new energy vehicle sector, with plans to expand high-voltage common rail modules [7] - High-voltage control box business expected to reach a scale of 800 to 1,000 million in the next one to two years [12] - Continued focus on optimizing business segments to adapt to global market changes and enhance operational efficiency [7] Regional Performance - Overseas markets, especially Europe and the U.S., showed significant demand increases for industrial relays [16] - The company is expanding its overseas production capacity, with ongoing projects in Indonesia and Germany [20] Product Development - New products such as capacitors, fuses, and current sensors have shown promising market performance, particularly in the automotive sector [8] - Connector business faced fluctuations but entered new markets like energy storage and satellite communication [9] Financial Metrics - Gross margin maintained between 35% and 40%, with expectations of stable profitability in the second half of the year [10] - The company anticipates overcoming rising labor and material costs with a target of around 10% growth [10] Challenges and Risks - The company faced challenges in the low-voltage switch product segment due to real estate market impacts [4][19] - The North American market showed pressure in the current sensor and electric meter segments, although growth in charging equipment and data centers was noted [19][29] Strategic Initiatives - Plans to enhance automation and cultivate cross-national production management talent to support long-term growth [21] - Expansion of production facilities in Indonesia and Germany to bolster global competitiveness [20][22] Conclusion - Hongfa Technology Co., Ltd. is positioned for continued growth in the new energy vehicle and industrial relay markets, with strategic initiatives aimed at enhancing operational efficiency and expanding market presence. The company remains vigilant about market challenges while leveraging its competitive advantages in product offerings.