Industry Overview - The domestic tool industry is currently characterized by low concentration, with a shift towards a stable development cycle and intensified competition among existing players [2] - Market share is gradually concentrating towards industry leaders, prompting companies to transition from single tool suppliers to integrated solution providers [2] Strategic Initiatives - The company is focusing on providing customized metal cutting solutions, leveraging its integrated offerings of "equipment + tools + services" [2] - Long-term service agreements have been signed with several industry benchmark clients for customized cutting line modifications and tool support services [2] Impact of Raw Material Prices - The company is addressing the impact of rising raw material prices (e.g., tungsten, high-speed steel) by enhancing supply chain management and optimizing supplier systems [3] - Metal cutting tools account for 2%-4% of production costs, with end-users prioritizing quality and brand over price [3] SMS Acquisition Integration - The integration of SMS has progressed smoothly, with key assets and personnel successfully transferred, except for routine property registration in Germany [4] - SMS was incorporated into the company's financial statements as of June 2025 [4] Localization of SMS Products - The company is advancing the localization of SMS core products, aiming to optimize costs while maintaining performance and quality [4] - Key technical drawings have been successfully localized, and local supplier selection is underway for parts procurement [4] Collaboration with Tiangong International - The partnership with Tiangong International focuses on creating a closed-loop ecosystem from materials to equipment and process applications [5] - Joint development of specialized powder high-speed steel materials is ongoing to enhance product performance and reduce costs [5] SMS Order Fulfillment and Revenue Recognition - The order delivery cycle for SMS products is typically 6 to 8 months, with revenue recognized upon delivery and acceptance by the customer [6] R&D Progress on Robotic Grinding Machines - The development of specialized grinding machines for robotic screws is progressing well, utilizing a modular development strategy to accelerate the process [6] - The primary technical goal is to significantly reduce processing time for specific components to enhance market competitiveness [6]