GenScript Biotech Corporation 2025 Investor Day CEO Remarks Sherry Shao 11/12/2025 Make People and Nature Healthier through Biotechnology 1 Disclaimer Forward-Looking Statement This presentation may contain certain "forward-looking statements" which are not historical facts, but instead are predictions about future events based on our beliefs as well as assumptions made by and information currently available to our management. Although we believe that our predictions are reasonable, future events are inhere ...

Summary of Key Points from the Conference Call Industry Overview - The focus is on China's economic outlook and the upcoming 15th Five-Year Plan (FYP) for 2026-2030, following the 14th FYP's performance and targets. Core Insights and Arguments 1. **14th FYP Performance**: Most targets of the 14th FYP are expected to be met by the end of 2025, except for the carbon emission intensity reduction goal, which is likely to be missed due to weaker nominal GDP growth [2][8][10] 2. **15th FYP Implicit GDP Growth Target**: The government is anticipated to set a slower implicit GDP growth target of 4.5-5.0% for the 15th FYP, down from 5.0-5.5% in the previous plan [3][12][13] 3. **Long-term Economic Goals**: China aims to raise GDP per capita to approximately $14,000 by 2025 and double real GDP by 2035, necessitating a nominal GDP growth rate of 6-8% [3][13][14] 4. **High-Quality Growth**: The new FYP will prioritize high-quality growth driven by innovation, with R&D spending expected to grow at over 7% CAGR, increasing its share of GDP from 2.7% in 2024 to 3.2% by 2030 [4][19][20] 5. **Boosting Consumption**: The new FYP will emphasize boosting domestic consumption, aiming to increase the share of total consumption in GDP to 58-60% by 2030, up from 56.6% in 2024 [5][24][25] 6. **Investment in People**: The government plans to invest more in social safety nets and education, promoting people-centric urbanization and increasing fiscal spending on healthcare and social insurances [5][29] 7. **Decarbonization Goals**: China aims for a 25% share of non-fossil energy in total energy consumption by 2030, up from 20% in 2024, despite challenges in meeting previous carbon intensity reduction targets [6][41][42] 8. **Fiscal Reform**: The new FYP is expected to accelerate fiscal reforms, including broadening the personal income tax base and addressing local government revenue mismatches [6][42] Additional Important Insights 1. **Challenges Ahead**: China faces significant challenges, including trade frictions, a property downturn, and aging demographics, which could hinder economic growth [9][10] 2. **Opening Up Strategy**: The new FYP is likely to further open China's service sector to foreign investment and support Chinese companies in expanding globally [6][36] 3. **Anti-Involution Campaign**: The government will likely intensify its anti-involution campaign, focusing on creating a unified national market and curbing irresponsible local government investments [30][31] 4. **Consumer Confidence**: Measures to boost household income and consumer confidence will be critical for achieving the consumption targets set in the new FYP [24][29] This summary encapsulates the key themes and insights from the conference call regarding China's economic strategy and the anticipated direction of the 15th Five-Year Plan.

Investment Rating - The report maintains a cautious outlook on the Chinese economy, forecasting real GDP growth at 4.0% for 2025 and 3.5% for 2026, down from previous estimates of 4.5% and 4.0% respectively [2][3]. Core Insights - The macroeconomic outlook for China has shifted from optimism in Q1 to pessimism due to US tariff increases, with recent manufacturing PMI declines indicating potential economic weakness [2][3]. - The Chinese government is adopting a "reactive" approach to economic management, focusing on conservative and selective policy stimulus rather than aggressive fiscal spending [2][17]. - The report highlights four key implications of tariff-related issues for the Chinese economy, including the need for significant policy easing only in response to notable macroeconomic deterioration, the deflationary impact of US tariffs, challenges in strengthening trade ties with other countries, and the necessity for measures to bolster domestic demand and consumption [2][32][33]. Summary by Sections Economic Outlook - The narrative of the Chinese macro economy has changed significantly, with Q1 benefiting from AI-induced optimism and strong exports, but recent tariff increases have led to a decline in market sentiment and manufacturing PMIs [3][9]. - The report notes that the US tariffs are expected to have a deflationary effect on China, with CPI and PPI inflation forecasts of 0% and -1.6% for 2025, respectively [32]. Policy Response - The April Politburo meeting indicated a lack of significant new stimulus measures, emphasizing employment stabilization over aggressive growth initiatives [9][18]. - Policymakers are increasingly conservative in utilizing fiscal space, focusing on targeted measures such as consumer loans and administrative adjustments rather than broad fiscal transfers [18][22]. Trade Relations - The report discusses the complexities of US-China tariff negotiations, highlighting significant differences in negotiation styles and a lack of trust, making a near-term deal difficult [13][16]. - It also notes that while the Chinese government aims to strengthen trade ties with other economies, achieving this will be challenging due to existing trade imbalances and competitive pressures [33][38]. Domestic Economic Shifts - Rising trade tensions are likely to push China towards a more consumption-driven economy, with a focus on domestic demand rather than external markets [38]. - The report suggests that reforms aimed at boosting local consumption and enhancing the social safety net may gain political support in light of ongoing economic challenges [38].

Financial Data and Key Metrics Changes - The company reported full-year revenues for 2024 with a 90% annual growth, meeting its guidance [27] - Total revenue for the fourth quarter of 2024 increased by 14% year-over-year [27] - Net income for the fourth quarter was RMB331 million, a decrease of 42% year-over-year, while total net income for 2024 was RMB1,582 million, down 24% compared to the previous year [37][39] Business Line Data and Key Metrics Changes - In the Financial Services segment, total loan volumes reached RMB15.4 billion in Q4 2024, a 32% year-over-year increase, with full-year loan volumes at RMB53.6 billion, up 49% from 2023 [11][28] - The Insurance Brokerage business saw total premiums of over RMB4.4 billion in 2024, down 10% year-over-year, with a significant decline in life insurance sales [20][29] - The consumption and lifestyle segment's revenue dropped 25% year-over-year to RMB298 million in Q4 2024, while full-year revenue was over RMB1.9 billion, up 36% year-on-year [30] Market Data and Key Metrics Changes - The company reported a stable number of borrowers at 1.6 million, growing 14% year-over-year [11] - Monthly active users on the Yixianghual platform reached 4.5 million in Q4 2024, a 27% year-over-year increase [12] Company Strategy and Development Direction - The company aims to enhance customer acquisition through AI-driven analytics and partnerships with platforms like Douyin [48] - There is a focus on expanding international business, particularly in the Philippines, with plans to replicate success in other regions [15][52] - The company is investing heavily in AI development, with R&D expenses totaling RMB412 million in 2024, a 177% increase year-over-year [17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the improving macro environment and plans to increase the repeat borrowing rate to 70% [47] - The company expects revenue for 2025 to be between RMB5.5 billion to RMB6.5 billion, indicating a healthy net profit margin [41] Other Important Information - A cash dividend of US$0.22 per ADS is expected to be paid on or around May 15, 2025 [24] - The company has repurchased 5.2 million ADRs, totaling approximately US$17.9 million under the 2022 share purchase program [40] Q&A Session Summary Question: What changes will the company make with the relaxed regulations in China? - Management plans to drive up the repeat borrowing rate and enhance customer acquisition through AI-driven analytics and partnerships with various platforms [47][48] Question: What are the long-term goals for the overseas business? - Management is optimistic about the international market potentially matching the domestic market in scale and aims to make international business a meaningful revenue contributor in the next few years [52]