Summary of Zhejiang Supor Co. (002032.SZ) Earnings Call Company Overview - **Company**: Zhejiang Supor Co. - **Industry**: Cookware and small kitchen appliances Key Financial Results - **1H25 Performance**: Total revenue of Rmb11,478 million, net profit of Rmb940 million, representing a year-over-year growth of +5% and flat net profit [1][4] - **2Q25 Performance**: Revenue and net profit declined by -5% and -17% year-over-year, respectively, indicating a significant drop compared to expectations [1][4] - **Domestic Revenue**: Grew by +3% year-over-year, consistent with 1Q performance, but below expectations due to limited impact from trade-in stimulus [1][3] - **Export Performance**: Mild decline in exports in 2Q, down from mid-teens growth in 1Q, attributed to a higher base and tapering contribution from front-loaded orders [1][3] Margin Analysis - **Margin Pressure**: Management highlighted ongoing margin pressure from exports due to tariffs and lower sales volume, alongside intense domestic competition [1][3] - **Gross Margin**: Expected to remain under pressure year-over-year, particularly in the overseas market due to tariff impacts [4][9] Market Outlook - **Domestic Market**: Management anticipates continued positive growth in the domestic market, although the boost from trade-in stimulus may weaken [3][4] - **Product Strategy**: Increased offerings in entry-level products to compete in a crowded market, while also launching innovative higher-margin products [3][4] - **Overseas Market**: Maintained targets for related-party transactions with SEB, with sales to the US primarily from cookware produced in Vietnam [3][4] Capital Expenditure and Dividends - **CAPEX Guidance**: Management plans disciplined capital expenditure despite capacity expansion in Vietnam, aiming to maintain healthy factory utilization rates [4][9] - **Dividend Policy**: Guidance for a high dividend payout ratio of 50-80%, though previous years' 100% payout is not guaranteed [4][9] Investment Thesis and Risks - **Investment Thesis**: Supor is viewed as a leading player in the cookware and small kitchen appliances sector, with potential for revenue and margin growth driven by product innovation and market recovery [7][9] - **Target Price**: Revised 12-month target price set at Rmb62, down from Rmb64, based on a discounted P/E valuation approach [4][9] - **Key Risks**: Include sluggish consumer demand, failure to launch popular new products, and challenges in expanding into the premium segment [9][10] Financial Projections - **EPS Estimates**: Revised down by 6% for 2025E-2027E to reflect the latest results [4][5] - **Revenue Growth Projections**: Mild domestic growth acceleration expected in 2H25, with slightly positive export growth anticipated [4][9] Conclusion - The earnings call highlighted challenges faced by Supor in both domestic and overseas markets, with management focusing on balancing growth and profitability through strategic product offerings and disciplined financial management. The outlook remains cautiously optimistic, with potential for recovery in the second half of the year.

Where do we go from here. Because this has been a choppy year. But is the worst over in terms of the risk priced into the markets, given all that we're seeing geopolitical risk risks tied to the fiscal situation.This is the environment where one needs to justify it. They'll have because of the uncertainty rather than the direction. But and of course, it did work out this time as I mean, it does work out, you know, almost always.But it did work out, you know, compared to other approaches to hedging that eith ...