Summary of 德昌股份 Conference Call Company Overview - 德昌股份 specializes in small home appliance OEM and automotive motor businesses, with over 85% of its revenue coming from small appliance OEMs, serving clients like TTI, Shakunija, and HOT [4][5] Industry Insights - The small home appliance OEM business is projected to grow at a compound annual growth rate (CAGR) of 40% from 2020 to 2024, reaching approximately 1.386 billion yuan, driven by new client orders from HOT and Shakunija [2][6] - The automotive motor business, focusing on EPS (Electric Power Steering) motors, is expected to expand from 200 million yuan in 2023 to 400 million yuan, with a projected CAGR of over 50% for the next three years [2][13] Key Points Small Appliance OEM Business - The growth strategy involves expanding both client base and product categories, transitioning from component manufacturing to full machine OEM since partnering with TTI in 2007 [5] - Revenue from small appliances surged from 375 million yuan in 2020 to 1.386 billion yuan in 2024, reflecting a strong demand from new clients [6] - HOT's supply scale is expected to reach approximately 700 million yuan in 2024, with a year-on-year growth rate of 40%, and is projected to maintain double-digit growth in 2025 [9][10] - Shakunija has emerged as the fastest-growing client, significantly contributing to revenue growth [11] Automotive Motor Business - The EPS penetration rate reached 93% in 2021 and continues to rise, with domestic brands gaining market share due to technological advancements and cost advantages [13] - The automotive motor business is expected to see a significant increase in profitability, with gross margins projected to rise from single digits in 2022 to over 20% by 2024 [13][14] Financial Performance - The company experienced a slight decline in profit margins in the first half of 2025 due to capacity transfer and tariff impacts, but margins are expected to improve in the second half as production ramps up [3][15] - The overall revenue growth for the next three years is anticipated to exceed 20%, with a current valuation of around 16 times earnings, indicating potential for recovery [15] Additional Insights - The company has proactively shifted production capacity overseas to mitigate tariff impacts, with approximately 30% of production now in Vietnam and a new factory in Thailand expected to produce 5 million units annually [2][7] - The collaboration with TTI remains strong, with expectations for stable orders and potential for increased order concentration in the future [8] - The automotive motor segment is positioned for significant growth, with a focus on high-performance steering systems and a shift towards domestic production to replace Japanese brands [13] This summary encapsulates the key insights and projections regarding 德昌股份's business operations, market positioning, and financial outlook, highlighting the company's strategic initiatives and growth potential in both the small appliance and automotive sectors.

Core Viewpoint - The company plans to establish production bases in Indonesia and Thailand to enhance its global layout in response to the US-China trade tensions [8] Group 1: Company Overview - Hubei Xiangjiang Electric Appliance Co., Ltd. has submitted its IPO prospectus to the Hong Kong Stock Exchange, attracting market attention [1] - The company operates primarily through ODM/OEM models, focusing on the R&D, design, production, and sales of electrical and non-electrical household products [1] - The client base includes numerous well-known global brands such as Walmart, Telebrands, and SEB, leveraging extensive industry experience and strong manufacturing capabilities [1] Group 2: Market Performance - The company has been recognized as one of the "Top Ten Kitchen Small Appliances Export Enterprises" by the China Chamber of Commerce for Import and Export of Machinery and Electronic Products for two consecutive years [2] - As of 2023, the company ranks as the tenth largest in China's kitchen small appliance industry with a market share of 0.6% [2] - The company achieved significant export volumes in specific products, such as electric kettles, capturing approximately 21.4% and 32.3% market shares in the US and Canada, respectively [2] Group 3: Financial Performance - The company has shown strong growth in financial performance, with revenues projected at RMB 1,096.965 million, RMB 1,188.321 million, and RMB 1,501.510 million for the fiscal years 2022 to 2024 [2] - Net profits for the same period are expected to be RMB 80.261 million, RMB 121.462 million, and RMB 140.425 million [2] - The revenue growth is attributed to the expansion of the customer base, increased market share, and timely introduction of new products [3] Group 4: Risks and Challenges - The company faces potential risks during the IPO process, including currency risk due to export sales being primarily denominated in USD while costs are mainly in RMB [4] - Despite recording net foreign exchange gains of RMB 14.4 million, RMB 9.9 million, and RMB 16.7 million from 2022 to 2024, future exchange rate uncertainties may adversely affect financial performance [5] - The industry is characterized by intense competition, with numerous participants and significant product homogeneity [6] - New entrants may capture market share through innovative products or lower costs, posing a threat to the company's market position if it cannot continuously improve product quality and reduce costs [7] Group 5: Future Development Strategy - The company's future development strategy includes establishing production bases in Indonesia and Thailand to mitigate risks associated with US-China trade tensions [8] - However, overseas production facilities may encounter risks such as political and economic instability, local labor market conditions, and trade barriers, which could lead to increased costs and delivery delays [9] - The company possesses advantages such as brand client relationships and strong financial performance, but it also faces significant challenges that require careful evaluation of its investment value [9]