Summary of the Conference Call for 诺禾致源 (Nuohe Zhiyuan) Company Overview - **Company**: 诺禾致源 (Nuohe Zhiyuan) - **Period**: January to September 2025 Key Financial Metrics - **Total Revenue**: 15.81 billion CNY, up 4.05% year-on-year [2][3] - **Q3 Revenue**: 5.41 billion CNY, up 3.47% year-on-year [3] - **Overseas Revenue**: 7.92 billion CNY, up 4.1% year-on-year, accounting for 50.09% of total revenue [2][3] - **Q3 Overseas Revenue**: 2.58 billion CNY, down 0.48% year-on-year [3] - **Domestic Revenue**: 7.89 billion CNY, up 4% year-on-year [2] - **Q3 Domestic Revenue**: 2.82 billion CNY, up 7.37% year-on-year, and up 8.61% quarter-on-quarter [5] - **Gross Margin**: 41.9%, down 0.7 percentage points year-on-year [10] - **Net Profit**: 1.16 billion CNY, down 10.17% year-on-year, with a net profit margin of 7.31% [11] - **R&D Investment**: 56.1 million CNY in Q3, focusing on emerging fields [12] Revenue Breakdown by Market - **Americas**: Q3 revenue down 12% due to changes in research funding and policy impacts [4] - **EMEA**: Q3 revenue down 12%, affected by project completion and funding transitions [4] - **Europe**: Q3 revenue up 19%, indicating strong performance [4] - **Customer Segmentation**: 70% of revenue from universities and research institutions, 30% from hospitals and enterprises [6] Product and Service Performance - **Life Sciences Research Services**: Revenue of 5.52 billion CNY, up 6.21% year-on-year [7] - **Monitoring and Sequencing Platform Services**: Revenue of 7.7 billion CNY, up 3.23% year-on-year, but Q3 revenue down 3.42% [7] - **Emerging Business Contributions**: Approximately 32% of total revenue, up 4 percentage points year-on-year, with a growth of about 20% [8] R&D and Innovation - **R&D Focus Areas**: Single-cell genomics, spatial genomics, proteomics, metabolomics, epigenetics, and long-read sequencing [12][18] - **AI Integration**: Progress in AI applications, particularly in omics data analysis and virtual cell modeling [20][28] Market Challenges and Strategies - **Domestic Market Competition**: Increased competition leading to a 30% price drop; company aims to reduce competition through mergers and acquisitions [16][23] - **Geopolitical Impact**: U.S. market affected by geopolitical tensions, but the company maintains strong relationships in key regions [21] - **Cash Flow Management**: Operating cash flow was negative 87 million CNY for the first nine months, but turned positive in Q3 at 77 million CNY [14] Future Outlook - **Expansion Plans**: Continued investment in overseas markets, including new laboratories in Singapore and Europe [30] - **Focus on NGS and AI**: Anticipated growth in NGS applications and AI integration to enhance research capabilities [24][28] Additional Insights - **Customer Base Growth**: Stable customer structure with a slight increase in contributions from universities and research institutions [6] - **Cash Flow Volatility**: Short-term fluctuations in cash flow due to proactive risk management strategies [14] - **Regulatory Environment**: Ongoing adjustments to align with changing policies in the domestic and international markets [26][27]

Core Viewpoint - The company announced a provision for asset impairment totaling approximately 24.53 million yuan to reflect its financial status and operational results as of September 30, 2025 [2] Financial Assessment - The company conducted a comprehensive evaluation of its financial assets, inventory, and long-term assets to determine potential impairment losses [2] - The impairment provision was made in accordance with the "Enterprise Accounting Standards" and the company's accounting policies and estimates [2] Meeting Announcement - The fourth meeting of the fourth board of directors is scheduled for October 23, 2025, to review the asset impairment provision proposal [2]

Core Viewpoint - The company announced a meeting on October 23, 2025, to review and approve the proposal for asset impairment provision, reflecting a cautious approach to asset evaluation as of September 30, 2025 [1] Financial Impact - The total amount of impairment provision recognized is approximately 24.53 million yuan, which includes credit impairment losses of 24.36 million yuan and asset impairment losses of 0.17 million yuan [1] - This impairment provision will reduce the company's pre-tax profit by 24.53 million yuan for the first three quarters of 2025, consequently decreasing the owner's equity at the end of the reporting period [1] - The data presented is unaudited and will be confirmed by annual audit [1] Governance - Both the board of directors and the audit committee have agreed to this impairment provision [1]

Core Insights - The company reported a revenue of 1,040,082,062.05 yuan for the first half of 2025, representing a year-on-year growth of 4.36% [1] - The net profit attributable to shareholders of the listed company was 78,729,618.47 yuan, showing a year-on-year increase of 1.03% [1] Financial Performance - Revenue for the first half of 2025: 1,040,082,062.05 yuan, up 4.36% year-on-year [1] - Net profit for the first half of 2025: 78,729,618.47 yuan, up 1.03% year-on-year [1]

Core Viewpoint - The announcement details the share reduction results of the shareholders of Nuohe Zhiyuan, specifically Beijing Zhiyuan Hegu Investment Management Center and Beijing Nuohe Hegu Investment Management Center, outlining their shareholding changes and reduction plans [1][3]. Shareholding Situation Before Reduction - Before the reduction plan, Zhiyuan Hegu held 47,106,622 shares, accounting for 11.32% of the total shares of Nuohe Zhiyuan. Nuohe Hegu held 12,564,672 shares, representing 3.02% of the total shares. Together, they held 59,671,294 shares, which is 14.34% of the total shares, all acquired before the company's initial public offering and set to be tradable from April 15, 2024 [2]. Reduction Plan and Implementation Results - On March 20, 2025, Nuohe Zhiyuan disclosed a reduction plan, where Zhiyuan Hegu and Nuohe Hegu planned to reduce a total of up to 12,486,000 shares, representing 3% of the total shares. This included a maximum of 4,162,000 shares through centralized bidding (up to 1%) and 8,324,000 shares through block trading (up to 2%). As of July 15, 2025, they had reduced 2,898,677 shares through centralized bidding (0.70% of total shares) and 5,179,000 shares through block trading. The total reduction completed was 8,077,677 shares, or 1.94% of total shares, with a reduction price range of 12.83 to 14.99 yuan per share, totaling 110,264,756.78 yuan. Post-reduction, they held a combined total of 51,593,617 shares, which is 12.40% of the total shares [3].