Financial Data and Key Metrics Changes - Total sales for Q1 FY26 were $54.6 million, up from $53.7 million in Q1 FY25, representing a 1.6% increase [2][7] - Excluding healthcare, net sales increased by 6.8% [7] - Consolidated gross margin improved to 31.0% from 30.6% year-over-year [8] - Operating income increased to $1.0 million from $0.3 million in the prior year [9] - Net income for Q1 FY26 was $1.9 million compared to $0.6 million in Q1 FY25, with diluted earnings per share of $0.13 versus $0.04 [9][10] - EBITDA for Q1 FY26 was $3.3 million, up from $1.7 million in the prior year [10] Business Line Data and Key Metrics Changes - PMT sales increased by 2.8% overall, and by 10.5% excluding healthcare, driven by semiconductor wafer fab customers [7][12] - Canvas sales rose by 8.3% due to improved market conditions in Europe [8] - GES sales decreased by 10.2% year-over-year, primarily due to the non-recurrence of a large EV locomotive order [8][13] - The wind segment within GES grew by 86.1% year-over-year, supported by new customers and global expansion [14] Market Data and Key Metrics Changes - The company reported strong demand in RF and microwave applications, particularly in military and drone technology [16][17] - Approximately 70% of GES sales are currently in North America, indicating significant growth potential in international markets [18][39] Company Strategy and Development Direction - The company is focusing on engineered solutions and expanding its global footprint to manage tariff impacts [5][17] - Strategic initiatives include the Energy Storage System program and partnerships to enhance product offerings [16][18] - The company is optimistic about growth in project-based business despite market uncertainties [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver sustainable value and improve profitability [29] - The company is navigating uncertainties related to tariffs and market conditions while pursuing growth opportunities [17][18] - Positive indicators in the semiconductor wafer fab equipment market suggest continued growth [27] Other Important Information - The company generated positive operating cash flow for six consecutive quarters, with a cash position of $35.7 million [5][10] - Capital expenditures for Q1 FY26 were $1.0 million, with expectations for a total of $4 to $5 million for the year [11][40] Q&A Session Summary Question: Status of Ultra 3000s on GE's approved vendor list - The engineering team has signed off, awaiting final signatures from GE's legal team, expected soon [31][33] Question: Semi-fab sales growth sustainability - Q1 of last year was a low point; growth is expected to continue into Q3 and Q4 based on forecasts [34][35] Question: Sales outside the U.S. for wind rotors - Sales are growing internationally, with orders received from Australia, India, France, and Italy [38][39] Question: CapEx expectations for the year - Estimated CapEx is in the $5 million range, slightly higher than last year [40][42] Question: Details on non-recurring gain affecting operating income - The $0.9 million gain was from a confidential contractual settlement [51][52] Question: Insights on repower initiatives and operating leverage - Repowering initiatives are expected to support growth; operating expenses are anticipated to remain controlled [56][63] Question: Outlook for the RF business - The RF tube business remains stable, with growth seen in the semi-fab equipment manufacturing sector [65][66]

Summary of Conference Call on Greater China EV and EV Battery Industry Industry Overview - **Industry**: Greater China Electric Vehicle (EV) and Energy Storage System (ESS) Battery Market - **Key Players**: CATL, CALB, EVE Core Insights 1. **ESS Demand Surge**: - Total ESS order volume in China reached 26GW/69GWh in August, reflecting a year-over-year increase of over 500% [1] - Demand remains strong post "531" rush installation of wind and solar projects, supported by improved returns from independent ESS projects [1] 2. **Future Demand Projections**: - ESS battery demand is expected to remain solid from 2025 to 2030, driven by strong policy support in China and growth in overseas markets [2] - China's NDRC and NEA set a target to increase cumulative installed capacity of new-type energy storage to 180GW by 2027, up from 97GW as of July 2025 [2] 3. **Price Trends**: - ESS battery prices have declined by 45-70% from 2022 to the first half of 2025, but a mild rebound is anticipated due to rising demand and tighter supply [3] - Stable average selling prices (ASP) for EV batteries are expected, with less discounting to auto OEMs amid anti-involution trends [3] 4. **Earnings and Price Objective Adjustments**: - EPS and price objectives for major battery companies have been lifted due to demand growth and supportive policies: - CATL: 2025-27E total battery shipment raised by 3%/3%/2%, EPS increased by 3%/4%/3% [4] - CALB: 2025-27E total battery shipment raised by 9%/14%/17%, EPS forecast increased by 14%/19%/19% [4] - EVE: 2026-27E total battery shipment raised by 7%/6%, EPS forecast increased by 8%/10% [4] 5. **Valuation Changes**: - Price objectives for key companies: - CALB: New PO of 35, up from 24, representing a 27.3% upside [7] - CATL-A: New PO of 467, up from 389, representing a 26.2% upside [7] - EVE: New PO of 85, up from 70, representing an 18.4% upside [7] Additional Insights 1. **Technological Advancements**: - CATL launched the Shenxing Pro battery, a lithium iron phosphate battery designed for the European market, featuring high safety and performance standards [18] - CATL's sodium-ion battery has passed certification and is set for mass production by the end of 2025, offering advantages in energy density and lifecycle costs [19] 2. **Market Share and Production**: - CATL held a 43.2% domestic market share in July, with planned production of 69.5GWh in September, indicating strong demand for ESS batteries [20] 3. **Earnings Revisions**: - Overall earnings for 2025-27E have been revised upwards by 3%/4%/3% due to higher revenue forecasts and improved ASPs for both EV and ESS batteries [21] 4. **Quarterly Earnings Expectations**: - Earnings are expected to rise 34% YoY in 3Q25 and 35% YoY in 4Q25, reflecting strong demand and operational efficiency [24] 5. **Valuation Methodology**: - Valuations for CATL-H were derived from DCF and EV/EBITDA methodologies, with a new fair value of HK$570, up from HK$475 [25][26][27] This summary encapsulates the key points from the conference call regarding the Greater China EV and ESS battery market, highlighting demand trends, pricing dynamics, earnings adjustments, and technological advancements.

Summary of Key Points from ICCSINO Expert Call on Energy Storage Systems (ESS) Industry Overview - **Industry**: Energy Storage Systems (ESS) - **Company**: ICCSINO Core Insights 1. **Global ESS Battery Shipment**: - In the first half of 2025, global ESS battery shipments reached **258 GWh**, representing a **106% year-over-year increase**. - Projections for global ESS battery shipments are **550 GWh** in 2025 and **650 GWh** in 2026, indicating growth rates of **57%** and **18%** respectively [2][3]. 2. **ESS Battery Demand**: - Demand for ESS batteries has been revised upward for 2025 due to strong orders in **Northwest China** and lower battery prices. - Emerging markets, particularly **Australia** and **Southeast Asia**, are experiencing robust demand, with shorter delivery times of approximately **6-8 months** compared to **1 year** in traditional markets like the US and Europe [3]. 3. **China ESS Battery Pricing**: - The price of ESS batteries in China has increased by approximately **Rmb 0.02/wh** for leading producers during June to July 2025, driven by high utilization rates and strong orders [4]. 4. **Overseas ESS Battery Pricing**: - The price disparity between Chinese and overseas ESS battery cells is primarily due to higher warranty fees in overseas markets. - Prices in the US, Europe, and Australia range from **Rmb 0.9-1.0/wh**, yielding gross profit margins of over **40%**, while prices in the Middle East and Southeast Asia are lower at **Rmb 0.5-0.6/wh**, resulting in **10-20%** gross profit margins. - Expectations indicate a potential decrease in overseas ESS battery system prices, particularly in Europe and Australia, due to increased competition and lower entry barriers [5]. 5. **US Market Dynamics**: - With capacity additions from Korean battery producers, it is anticipated that the market share of Chinese ESS battery producers in the US may decline starting in **2026** [6]. 6. **Sodium-Ion Battery Outlook**: - The adoption of sodium-ion batteries in the ESS market is expected to be slower than previously anticipated due to high costs [6]. Additional Important Insights - The strong demand in emerging markets and the upward revision of demand forecasts highlight significant growth potential in the ESS sector, particularly in regions with favorable pricing and shorter delivery timelines. - The competitive landscape is evolving, with potential pricing pressures in overseas markets that could impact profit margins for producers. - The anticipated decline in market share for Chinese producers in the US market underscores the importance of monitoring competitive dynamics and technological advancements in the battery sector.

Company Overview - Microvast is a $1.25 billion provider of lithium-ion battery solutions for transportation, heavy equipment, and energy storage, with sales growing at 23% to $467 million this year [1][10] - The company is projected to cross $600 million in topline revenue next year, representing a 29% growth, with profits expected to nearly double to $0.24 [1][10] Competitive Positioning - Microvast specializes in advanced battery components and systems primarily for electric commercial vehicles and utility-scale energy storage solutions, with manufacturing facilities in China and Germany [3] - The company has installed over 31,000 battery systems in 34 countries, showcasing its experience in battery development [4] - Microvast's product portfolio includes lithium titanate oxide (LTO), lithium iron phosphate (LFP), and nickel manganese cobalt (NMC) battery chemistries, catering to a wide range of applications [5] Partnerships and Collaborations - Microvast has formed partnerships with various companies, including Evoy for electric boats, Gaussin for electric and hydrogen-powered trucks, and REE Automotive for commercial EV platforms [7][8][9] - The company collaborates with General Motors, receiving a $200 million grant from the U.S. Department of Energy to advance domestic battery technology [11] - R&D partnerships with BMW and Argonne National Laboratory further enhance Microvast's innovation capabilities [12] Financial Performance - Microvast reported a 43% year-over-year revenue surge in Q1 2025, achieving $116.5 million in revenue and a net profit of $61.8 million, with gross margins improving to 36.9% [14] - The revenue guidance for 2025 projects growth between $450 million and $475 million, supported by a robust backlog of $351 million [15] Market Potential - The total addressable market (TAM) for Microvast is substantial, driven by the global shift toward electrification in transportation and energy storage, with the commercial vehicle market expected to exceed $20 billion [16] - The company has achieved a 108% revenue increase year-over-year in the EMEA region, indicating strong market capture [16] Competitive Landscape - Microvast faces competition from established leaders like Tesla, LG Chem, and BYD, as well as innovative startups focused on advanced battery solutions [17][18] - Despite the competition, Microvast differentiates itself through proprietary technology, a diverse product portfolio, and strategic partnerships with automotive OEMs [18] Investment Outlook - With a price/sales valuation of less than 3x and a turn to profitability, Microvast appears to have solid upside potential in a market worth many tens of billions [19]