Core Viewpoint - Amway Co., Ltd. has officially become a supplier for New Balance, marking a significant milestone in its international recognition and market expansion efforts [1] Group 1: Partnership Details - The partnership with New Balance will commence in 2024, following extensive evaluations including raw material quality control, laboratory development, and production capacity [1] - New Balance conducted an on-site inspection of Amway in March 2025 and completed the supplier audit by June 2025 [1] Group 2: Product Offering - Amway will primarily supply eco-friendly functional polyurethane synthetic leather and composite materials for New Balance footwear [1] Group 3: Strategic Implications - This collaboration highlights Amway's technological and comprehensive management capabilities, enhancing its brand image and facilitating entry into international markets [1]

Core Insights - The new energy vehicle (NEV) market in China is experiencing rapid growth, with a projected retail sales increase of 5.5% in 2024, reaching 22.89 million units, and NEV retail sales expected to grow by 40.7% to 10.89 million units, achieving a penetration rate of 47.61% [1][4] Group 1: Market Dynamics - The growth in the NEV market is driven by policies such as trade-in and scrappage incentives, which stimulate sales [1] - Domestic brands like Li Auto, NIO, and Hongmeng Zhixing dominate the mid-to-high-end NEV market, leveraging the demand for natural leather materials in vehicle interiors [1][2] Group 2: Company Performance - Hongxing Automotive Leather has successfully gained supplier qualifications from major brands like Li Auto and NIO, enabling bulk supply of automotive interior leather [2] - The company reported a 20.22% revenue increase in its automotive interior leather business for 2024, reaching 720 million, with a gross margin improvement of 4.43 percentage points to 34.34% [4] - The subsidiary Hongxing Automotive Leather achieved a net profit of 149 million, a 50.98% increase year-on-year, driven by sales growth and improved gross margins [4] Group 3: Competitive Advantages - The company possesses a full-process leather manufacturing capability, allowing for effective resource integration and strong bargaining power in raw material procurement [3] - Hongxing Automotive Leather's involvement in the early design stages of new vehicle models enhances its ability to meet customer demands for high-quality leather materials [3] Group 4: Future Outlook - The company is well-positioned to benefit from the high-end automotive interior trend, with expectations for rapid growth in production and sales [2][4] - The acquisition of Hongxing Automotive Leather allows the company to capitalize on the burgeoning NEV sector, potentially establishing a second growth curve [5]

Core Viewpoint - The luxury goods industry is increasingly focusing on the commercialization of rare materials, including synthetic leather made from extinct species, to enhance exclusivity and sustainability [1][2][6]. Group 1: New Material Development - A new type of leather, created using synthetic biology techniques to replicate dinosaur skin, is expected to enter the market by the end of this year [3][5]. - The technology for this leather is developed by BSF Enterprise PLC's subsidiary, Lab-Grown Leather Ltd., in collaboration with VML and The Organoid Company, utilizing DNA from extinct species like Tyrannosaurus rex [5][6]. Group 2: Product Characteristics and Market Strategy - The dinosaur leather is anticipated to possess qualities superior to modern leather, such as increased durability and wear resistance [6]. - Initial applications will focus on accessories, with a flagship luxury fashion item targeted for launch by the end of 2025, followed by potential expansion into other sectors like the automotive industry [6]. Group 3: Production Methodology - Lab-Grown Leather Ltd. employs a unique "scaffold-free" tissue engineering technique, allowing cells to construct natural structures without additives, resulting in a product that closely resembles traditional leather [7]. - This method produces leather that is flawless, wrinkle-free, and scar-free, significantly reducing waste during production [7].

Financial Performance - In Q1 2025, the company reported revenue of 600 million, a year-on-year increase of 5%, with a net profit attributable to shareholders of 20 million, down 45% year-on-year, and a non-recurring net profit of 20 million, down 49% year-on-year [1] - For Q4 2024, the company achieved revenue of 900 million, a year-on-year increase of 24%, with a net profit attributable to shareholders of 30 million, up 150% year-on-year, and a non-recurring net profit of 30 million, up 21% year-on-year [1] - The total revenue for 2024 was 3 billion, a year-on-year increase of 9%, with a net profit attributable to shareholders of 140 million, down 24%, and a non-recurring net profit of 130 million, down 26% [1] Dividend and Management Changes - The company plans to distribute a cash dividend of 1.5 yuan per 10 shares (including tax), expecting a total payout of 40 million, resulting in a payout ratio of 31% [2] - Wu Meili resigned as the secretary of the board but continues to serve as the vice president, while Zhang Liang has been appointed as the new secretary of the board [2] Product Performance - Revenue from leather for shoes and bags in 2024 was 2 billion, a year-on-year increase of 8%, accounting for 68% of total revenue, with a gross margin of 18%, down 2 percentage points [3] - Revenue from automotive interior leather was 700 million, a year-on-year increase of 20%, accounting for 24% of total revenue, with a gross margin of 34%, up 4 percentage points [3] - Revenue from second-layer leather collagen products was 100 million, down 1% year-on-year, with a gross margin of 10%, down 2 percentage points [4] Regional Performance - Revenue from East China was 1.9 billion, a year-on-year increase of 8%, accounting for 65% of total revenue, with a gross margin of 22%, up 1 percentage point [5] - Revenue from South China was 600 million, down 1% year-on-year, accounting for 21% of total revenue, with a gross margin of 22%, down 2 percentage points [5] - Revenue from overseas markets was 300 million, a year-on-year increase of 97%, accounting for 10% of total revenue, with a gross margin of 21%, up 5 percentage points [5] Subsidiary Performance - The subsidiary Hongxing Automotive Leather reported a net profit of 150 million, up 51% year-on-year, attributed to increased sales and improved gross margin [6] - Lianhua Leather reported a net loss of 10 million, down 62% year-on-year, primarily due to increased financial expenses and exchange losses [6] Profit Forecast Adjustment - Based on the performance in 2024 and Q1 2025, the company has adjusted its profit forecast for 2025-2027, expecting net profits attributable to shareholders of 150 million, 180 million, and 230 million respectively [7] - The earnings per share (EPS) are projected to be 0.5, 0.6, and 0.8 yuan for 2025-2027 [7]

Group 1: Overseas Sales Performance - In 2024, the company achieved significant growth in overseas sales, with revenue reaching 286 million CNY, an increase of 96.65% compared to the previous year [2] - In Q1 2025, overseas sales continued to grow, achieving approximately 100 million CNY, representing a 315% increase year-on-year [3] Group 2: Automotive Interior Leather Business - The automotive interior leather segment generated revenue of 727 million CNY in 2024, reflecting a year-on-year growth of 19.8% [3] - The company is focused on deepening market strategies and aligning with the supply chain needs of brand automotive manufacturers to expand its customer base [3] Group 3: Future Market Expansion - The company plans to continue expanding its overseas market presence to enhance overall profitability [2] - The subsidiary, Hongxing Automotive Leather, aims to secure new models from existing clients while targeting new customers [3]

Group 1: Market Trends - Consumer preferences have shifted towards comfort, functionality, and fashion, leading to a decline in demand for traditional business leather shoes [2] - The demand for natural leather products has decreased domestically, while the overseas market shows signs of recovery, particularly in Europe and the U.S. [2] Group 2: Financial Performance - In 2024, the company achieved a revenue of CNY 2.95 billion, a year-on-year increase of 9.32%, but net profit decreased by 23.97% to CNY 142 million [3] - In Q1 2025, revenue reached CNY 627 million, a 5.04% increase year-on-year, while net profit fell by 45.31% to CNY 18.94 million [3] Group 3: Production and Supply Chain - The company acquired full ownership of a Vietnamese company to enhance production capabilities and meet local supply chain demands [4] - The leather business for shoes and bags is seasonal, with higher revenues expected in the second half of the year; however, domestic demand has weakened [4] Group 4: Automotive Leather Business - The automotive leather segment is expected to grow in 2025, with new customer acquisitions and increased model specifications compared to the previous year [5] - Natural leather remains preferred for mid-to-high-end vehicles due to its luxury attributes, despite the presence of alternative materials like PU and microfiber [6] Group 5: Trade and Tariff Impact - The U.S. has temporarily paused additional tariffs on products exported from Vietnam, which currently does not directly impact the company's operations [6]

Group 1: Market Trends and Consumer Preferences - Recent changes in consumer preferences emphasize comfort, functionality, and fashion, leading to a decline in traditional business shoe demand and a decrease in the demand for natural leather products in China [2] - The overseas market, particularly in Europe and the U.S., shows stable demand, with a recovery in orders from foreign brands boosting export market demand [2] Group 2: Financial Performance - In 2024, the company achieved a revenue of CNY 2.95 billion, a year-on-year increase of 9.32%, while net profit attributable to shareholders was CNY 142 million, a decrease of 23.97% compared to the previous year [3] - In Q1 2025, the company reported a revenue of CNY 627 million, a year-on-year increase of 5.04%, with net profit of CNY 18.94 million, down 45.31% from the same period last year [3] Group 3: Automotive Leather Demand - The demand for automotive interior leather is growing due to the increasing use of natural leather in mid-to-high-end domestic electric vehicles, with the company’s subsidiary, Hongxing Automotive Leather, supplying major brands like Li Auto and NIO [2][4] - Despite being in the off-season for automotive consumption, Hongxing Automotive Leather's sales are expected to maintain stable growth due to new model deliveries in the second half of 2025 [3] Group 4: Competitive Advantages - Hongxing Automotive Leather holds a leading position among domestic automotive interior leather suppliers, benefiting from stable supply, production flexibility, and responsive service [4] - The company has established partnerships with several well-known automotive brands, focusing on high-end models that demand superior leather quality [4] Group 5: Capacity and Procurement Strategy - Hongxing Automotive Leather has significant room for capacity expansion to meet increasing sales, with plans for gradual production increases based on customer sales forecasts [5] - The company is managing the impact of increased import tariffs on U.S. raw hides by diversifying procurement channels from South America, Europe, Australia, and domestic markets [5] Group 6: Brand Collaborations - The company successfully entered the international supply chain of Adidas, indicating its capability to meet international standards in product development, quality, and customer service [6] - The contribution from overseas brands, particularly Adidas, is expected to significantly boost overall revenue in 2025 [5] Group 7: Other Business Performance - Baotai Leather reported a revenue increase of 1.31% in Q1 2025, with notable profit growth driven by the rising demand and prices for second-layer leather due to market trends [7]