Core Points - The company announced that its subsidiary, Huangshi Honghe Electronic Materials Technology Co., Ltd., has received an invention patent from the National Intellectual Property Administration [1] - The patent is for a device and method to prevent wire center offset, with patent number ZL 2021 1 1138941.8, applied for on September 27, 2021 [1] - The patent is valid for twenty years from the application date, indicating a long-term investment in core technology [1] Summary by Categories Patent Details - Patent certificate number: 8187051 [1] - Patent application date: September 27, 2021 [1] - Patent authorization announcement date: August 22, 2025 [1] - Patent owner: Huangshi Honghe Electronic Materials Technology Co., Ltd. [1] - Inventors: Pan Siteng, Jia Xiaoyan, Li Jinlong, Qi Jiangbo [1] Impact on Company - The acquisition of this patent reflects the company's important core technology and enhances its intellectual property system [1] - The patent is not expected to have a significant impact on the company's recent operations but will improve its technological competitiveness [1]

Group 1 - The core stock price of Aishi Chuang as of August 25, 2025, is 45.62 yuan, with a slight increase of 0.01 yuan from the previous trading day [1] - The stock opened at 45.20 yuan, reached a high of 46.72 yuan, and a low of 45.15 yuan, indicating a trading range of 3.44% for the day [1] - The trading volume was 159,100 hands, with a total transaction amount of 729 million yuan [1] Group 2 - Aishi Chuang operates in the semiconductor, Fujian, and glass substrate sectors, focusing on the research, production, and sales of new electronic materials such as sputtering targets and evaporation materials [1] - The company's products are widely used in flat panel displays, semiconductors, and solar cells [1] Group 3 - On August 25, the stock experienced rapid fluctuations, with a drop of over 2% within 5 minutes at 9:36 AM, followed by a rebound of over 2% within 5 minutes at 9:43 AM, indicating active market trading [1] - On the same day, the net outflow of main funds was 109 million yuan, accounting for 2.1% of the circulating market value [1] - Over the past five trading days, the cumulative net outflow reached 418 million yuan, representing 8.06% of the circulating market value [1]

Summary of the Conference Call for Shihua Technology Company Overview - **Company**: Shihua Technology - **Industry**: Electronic Materials and Optical Products Key Financial Performance - **Revenue**: In the first half of 2025, revenue reached 534 million yuan, a year-on-year increase of 56.87% [2][3] - **Net Profit**: Net profit was 193 million yuan, up 86.38% year-on-year, with a net profit margin of 36% [2][5] - **Gross Margin**: Overall gross margin stood at 55.62%, consistent with the previous year, while the gross margin for optical materials improved due to scale effects and cost reduction [2][4] Business Segments Performance - **Electronic Materials**: Revenue from electronic materials was 337 million yuan, a 44% increase year-on-year [2][3] - **Optical Business**: Revenue from optical business was 197 million yuan, showing a significant growth of 166% year-on-year, with optical materials accounting for 37% of total revenue, up from 24% the previous year [2][3] Research and Development - **R&D Investment**: R&D expenditure increased by 21% year-on-year, amounting to 28.52 million yuan [6] - **Project Updates**: The IPO fundraising project for functional materials has been completed, and the Zhangjiagang project is expected to be finalized by October, contributing to revenue [6] Market Outlook - **Consumer Electronics**: The consumer electronics business is expected to maintain a growth rate of 10% to 20% for the year [7] - **Optical Business Growth**: The polarizer-related business is growing rapidly, with significant potential in the SCF module business, particularly with projects involving Samsung [9] Future Projects and Capacity Expansion - **Capital Increase Projects**: The capital increase project focuses on optical display film materials, including polarizer protective films, with an expected additional output value of approximately 1.4 billion yuan by the end of 2027 or early 2028 [12] - **Production Capacity**: The company plans to expand production capacity by 210 million square meters for polarizer protective films [12] Product Structure and Market Capacity - **Optical Product Categories**: The optical business is divided into four categories: OLED-related ICF modules, polarizers, and other optical materials, with polarizers being the fastest-growing segment [9][10] - **Market Capacity**: The company is optimizing its product structure to meet market demand and enhance performance [8] Operational Efficiency - **Production Lines**: The company has four production lines for optical materials, with two lines operating at full capacity and two new lines starting to ramp up production [11][32] - **Capacity Limitations**: Current production capacity is fully utilized, and future growth will depend on efficiency improvements [31] Profitability Trends - **Gross Margin Expectations**: The gross margin for optical products is expected to exceed 30% in 2026, with new business segments projected to maintain a gross margin of around 40% [26][27] Strategic Partnerships and Customer Engagement - **Collaboration with Major Clients**: The company has established partnerships with major polarizer manufacturers and is focusing on enhancing its competitive edge in protective films [17] Conclusion - **Growth Expectations**: While the company has shown strong growth in the first half of 2025, it is anticipated that the growth rate may moderate in the second half due to base effects and production capacity constraints [38][39]

Core Viewpoint - CCL (Copper Clad Laminate) is experiencing a price surge, with major manufacturers like 建滔积层板 issuing price increase notices, followed by second-tier companies such as 宏瑞兴 and 威利邦 [1] Group 1: Price Increases and Market Dynamics - 建滔积层板 announced a price increase of 10 yuan per sheet for products like CEM-1/22F/V0/HB/FR-4 starting August 15 [1] - 威利邦 and 宏瑞兴 also followed suit, with 威利邦 raising prices by 5 yuan per sheet due to rising copper prices, and 宏瑞兴 increasing prices by 10 yuan for various copper-clad laminates [1] Group 2: CCL and PCB Cost Structure - CCL is a core material for PCBs, accounting for 30% of the total PCB cost, with overall raw material costs making up 60% of PCB expenses [2] - The cost structure of CCL includes significant contributions from copper foil (42.1%), resin (26.1%), and fiberglass (19.1%) [3] Group 3: Demand Drivers and Supply Constraints - The rapid development of AI technology is driving strong demand for AI servers, which in turn boosts PCB demand [4] - The PCB industry is experiencing simultaneous increases in volume and price, leading to supply shortages in high-end materials such as LowDk electronic cloth and HVLP copper foil [5] Group 4: Key Material Suppliers - Recommended companies for AIPCB upstream materials include: - Electronic Cloth: 宏和科技 and 中材科技 [8] - Copper Foil: 铜冠铜箔, 德福科技, 隆扬电子, 嘉元科技, and 方邦股份 [8] - Electronic Resins: 东材科技, 圣泉集团, 宏昌电子, and 同宇新材 [8] - Functional Fillers: 联瑞新材 [8] - PCB-specific Electronic Chemicals: 天承科技 [9] - Copper Balls/Oxidized Copper Powder: 江南新材 [9]

Financial Performance - Company reported total revenue of 537 million yuan for the first half of 2025, an increase of 73.79% year-on-year [1] - Net profit attributable to shareholders reached 193 million yuan, up 86.38% year-on-year [1] - In Q2 2025, total revenue was 281 million yuan, a year-on-year increase of 59.95%, with net profit of 106 million yuan, up 69.93% [1] - Gross margin stood at 55.62%, a decrease of 0.61% year-on-year, while net margin increased by 7.25% to 35.98% [1] - Total operating expenses were 44.23 million yuan, accounting for 8.24% of revenue, down 37.61% year-on-year [1] - Earnings per share increased by 85.0% to 0.74 yuan, and operating cash flow per share rose by 88.31% to 0.77 yuan [1] Accounts Receivable - Company has a significant accounts receivable balance, with accounts receivable amounting to 99.05% of net profit [1][3] Business Model and Capital Efficiency - Company’s return on invested capital (ROIC) was 14.33% last year, indicating strong capital returns [2] - Historical median ROIC since listing is 16.87%, with the lowest ROIC recorded in 2023 at 11.52% [2] - Business performance is heavily reliant on capital expenditures, necessitating careful evaluation of capital projects [2] Fund Holdings - Major funds holding the company’s shares include Southern Economic Outlook Mixed A and Southern Potential New Blue Chip Mixed A, both newly entering the top ten holdings [4] - The largest fund, Southern Economic Outlook Mixed A, has a scale of 731 million yuan and has seen a 55.9% increase in the past year [4] Product Overview - Company specializes in functional electronic materials and high-performance optical materials, used in consumer electronics, automotive electronics, and medical electronics [5] - Upcoming product line includes functional adhesives with properties such as high adhesion, sealing, and optical characteristics [5]

Group 1 - Yunnan Hanfang Kunyue Electronic Materials Co., Ltd. has been established with a registered capital of 50 million RMB [1] - The legal representative of the company is Zhou Ding [1] - The company's business scope includes manufacturing electronic special materials, synthetic materials, non-metallic mineral products, special ceramic products, and power electronic components [1] Group 2 - The company is also involved in the research and development of new materials technology and electronic special materials [1] - Additional services offered by the company include technical services, development, consulting, and technology transfer [1] - The company is authorized to engage in import and export activities related to goods and technology [1]

Group 1 - A new company, Tepli High (Hubei) Electronic Materials Co., Ltd., has been established with a registered capital of 10 million RMB [1] - The legal representative of the company is Ma Haibo [1] - The company's business scope includes manufacturing, sales, and research of electronic specialized materials, as well as various related services and products [1] Group 2 - The company is involved in the manufacturing and sales of semiconductor device specialized equipment and industrial automation control systems [1] - It also engages in the sales and production of chemical products, excluding hazardous chemicals [1] - The company has a wide range of activities including import and export of goods, and sales of various products such as packaging materials, lubricants, and metal materials [1]

Meeting Overview - The fourth meeting of the fourth supervisory board of the company was held on August 22, 2025, in accordance with legal and regulatory requirements [1] - All three supervisors participated in the voting, with no dissenting or abstaining votes [2] Financial Reporting - The supervisory board approved the company's 2025 semi-annual report and its summary, confirming that the report accurately reflects the company's operational status without any false statements or omissions [1][2] - The report will be published on the designated information disclosure website on August 23, 2025 [2] Fund Management - The supervisory board reviewed and approved the management of the company's fundraising, confirming compliance with relevant regulations and no misuse of funds [2][3] - The semi-annual profit distribution plan was deemed compliant with legal and regulatory standards, reflecting the company's commitment to shareholder returns [2][3] Project Completion and Fund Allocation - The board agreed to conclude certain fundraising projects and permanently allocate surplus funds to working capital, aligning with regulatory requirements and supporting subsidiary operations [4][5] Foreign Exchange Derivatives - The supervisory board approved the company's and its subsidiaries' engagement in foreign exchange derivative transactions, which are seen as beneficial for financial stability and risk management [4][5] Asset Pool Business - The board consented to the company's and its subsidiaries' asset pool business, aimed at enhancing the efficiency and returns of bill assets without affecting core business operations [5][6]

Meeting Information - The company will hold its fourth extraordinary general meeting of shareholders on September 16, 2025, at 14:30 [1] - The meeting will include both on-site and online voting options for shareholders [2] Voting Procedures - Online voting will be available from 9:15 to 9:25 and 9:30 to 11:30 on the same day, with an extended period until 15:00 for other voting methods [2] - Shareholders can choose either on-site or online voting, but not both; the first vote will be considered valid in case of duplicate voting [2] Agenda Items - The main proposal to be discussed is regarding the completion of certain fundraising projects and the permanent allocation of surplus funds to working capital [3][10] - The voting results for this proposal will require separate counting for minority investors [3] Attendance Registration - Registration for on-site attendance requires specific documentation for both corporate and individual shareholders [4] - Remote shareholders can register via mail or fax by submitting a completed registration form by September 12, 2025 [4] Contact Information - The company has provided contact details for inquiries related to the meeting [5]

Core Viewpoint - The company has proposed a profit distribution plan for the first half of 2025, which includes a cash dividend of 0.10 yuan per 10 shares, reflecting its commitment to returning value to shareholders while ensuring compliance with relevant regulations and maintaining operational stability [1][2][4]. Summary by Sections Profit Distribution Plan - The company reported a net profit of 69.7535 million yuan for the first half of 2025, with the parent company achieving a net profit of 47.3626 million yuan [1]. - As of June 30, 2025, the cumulative distributable profit for the parent company was 127.1401 million yuan, while the consolidated financial statements showed a cumulative distributable profit of 266.5275 million yuan [1]. - The proposed cash dividend is based on a total share count of 1,057,686,823 shares after the repurchase of 1,887,375 shares, ensuring that every 10 shares will receive a cash dividend of 0.10 yuan (tax included) [1][2]. Decision-Making Process - The profit distribution plan was approved by the company's fourth board meeting and the fourth supervisory board meeting, confirming its compliance with the Company Law, Securities Law, and relevant regulations regarding cash dividends [3][4]. - The supervisory board agreed that the profit distribution plan aligns with the company's dividend policy and reflects a positive return to investors, confirming its legality, compliance, and rationality [4]. Additional Notes - The company plans to adjust the total cash dividend amount if there are changes in the total share capital before the implementation of the plan, maintaining the distribution ratio [2]. - The company aims to potentially increase the mid-term dividend based on actual performance, provided that the net profit attributable to shareholders is positive and cash flow supports normal operations [2].