Summary of Hengtong Optic-Electric Conference Call Company Overview - **Company**: Hengtong Optic-Electric - **Date**: First half of 2025 Key Points Industry and Company Performance - **Overall Revenue Growth**: Approximately 20% increase in revenue for the first half of 2025 [2][6] - **Core Business Segments**: - **Marine Energy and Communication**: Steady growth with a significant increase in orders [2][4] - **Smart Grid**: Maintained steady development with high order backlog [2][7] - **Industrial and New Energy Intelligence**: Significant growth with ongoing expansion projects [2][8] Market Dynamics - **Marine Business**: Anticipated industry turning point in Q2 2025, with increased market penetration expected [2][4] - **Order Backlog**: Current order backlog is stable at approximately 7.5 billion yuan [2][10] - **Smart Grid Projects**: Focus on expanding aluminum and aluminum alloy new energy projects to meet domestic demand [2][7] Product Development and Innovation - **AI-Driven Technology**: Focus on high-end products such as multimode and hollow-core fibers, with hollow-core fiber loss values reaching ≤ 0.2 dB/km [3] - **Specialty Fiber Growth**: Specialty fibers now account for about 20% of revenue, with significant applications in data centers and communication networks [15][31] Financial Metrics - **Gross Margin**: Marine energy and communication gross margin decreased by 2-3 percentage points, currently between 30% and 35% [27][28] - **Revenue Structure**: Smart grid and industrial new energy segments account for over 50% of total revenue, with smart grid at approximately 40% [12][29] International Expansion - **Overseas Market Growth**: Overseas business accounted for 50% of total optical communication revenue, showing a continuous growth trend [13][30] - **Global Presence**: Operations in various regions including Brazil, South Africa, Germany, and India, with a focus on North American AI data center market [17][20] Future Outlook - **Strategic Focus**: Continued emphasis on marine cables, liquid cooling products, and traditional business growth [36][42] - **Market Confidence**: Strong confidence in future growth in marine energy and communication sectors, with ongoing project developments [21][41] Additional Insights - **Liquid Cooling Technology**: Development of silent liquid cooling products aimed at addressing energy consumption and heat dissipation in data centers [24][25] - **Project Pipeline**: Significant project approvals across multiple provinces, indicating robust future growth potential in marine energy [11][21] This summary encapsulates the key insights and developments from Hengtong Optic-Electric's conference call, highlighting the company's performance, market dynamics, product innovations, and future strategies.

Group 1 - The Hainan Provincial Government has issued a three-year action plan (2025-2027) to accelerate the construction of a modern industrial system with distinctive advantages, focusing on the high-quality development of the deep-sea industry [1] - The plan emphasizes the cultivation of emerging marine industries, enhancing marine technology innovation capabilities, and establishing a "smart ocean" innovation hub [1] - The report highlights the importance of deep-sea technology as a core emerging industry, with coastal provinces actively supporting the development of marine equipment, energy, and aquaculture sectors [1] Group 2 - The marine economy is being catalyzed by continuous policy support since 2025, with the government prioritizing the development of marine economy and establishing national marine economy demonstration zones [2] - The potential of the marine economy is significant, with marine communication serving as a foundational infrastructure for future integrated networks, including 6G [2] - The report indicates that offshore wind and solar power generation is a necessary trend, and there is substantial growth potential in deep-sea aquaculture and marine tourism sectors [1][2]

Core Viewpoint - Hengtong Optic-Electric has secured significant contracts in the marine energy sector, with a total bid amount of 1.509 billion yuan, reflecting its strong competitive position and technical capabilities in the energy interconnection field [1][2][3]. Group 1: Project Wins and Financial Impact - The company has recently received project award notifications or signed contracts for marine energy projects, with a total bid amount of 1.509 billion yuan, which accounts for 2.52% of its audited revenue for 2024 [2][3]. - As of March 2025, Hengtong Optic-Electric has an order backlog of approximately 18 billion yuan in the energy interconnection sector and about 8 billion yuan in marine communication business [1][3]. - The company expects that the execution of these projects will positively impact its future operating performance and enhance its brand influence in the global marine energy sector [3]. Group 2: Business Growth and Revenue - In 2024, the marine energy and communication business achieved revenue of 5.738 billion yuan, a year-on-year increase of 69.6% [1][6]. - The company has experienced continuous revenue and net profit growth from 2021 to 2024, with revenues of 41.27 billion yuan, 46.46 billion yuan, and 47.62 billion yuan, representing year-on-year growth rates of 27.44%, 12.58%, and 2.49% respectively [5][7]. - In the first quarter of 2025, the company reported revenue of 13.268 billion yuan, a year-on-year increase of 12.58% [7]. Group 3: Financial Health - As of March 2025, the company had cash and cash equivalents of 11.86 billion yuan, with a total debt ratio of 53.03% [1][8]. - The company has a strong repayment capacity, with short-term borrowings of 8.363 billion yuan and long-term borrowings of 2.922 billion yuan, showing a decreasing trend in long-term debt [8].

Group 1 - The report indicates that there are 372 unicorn companies in China, with Jiangsu province having 49, and Suzhou ranking fourth nationally with 21 unicorns, an increase of two positions from the previous year [1] - Suzhou's unicorn companies are concentrated in strategic emerging industries, including autonomous driving, new energy, biomedicine, and artificial intelligence, leveraging core competencies in technological originality, industrial synergy, and global market reach [1] - Suzhou has established a comprehensive nurturing system for enterprises, categorized into technology-based SMEs, high-tech enterprises, gazelle companies, unicorns, and listed companies, leading the province with 32 provincial unicorns, 220 potential unicorns, and 486 gazelle companies [1] Group 2 - Hengtong Huahai is the largest marine communication system integrator and network service provider in China, offering solutions for transoceanic communication, underwater observation networks, and offshore oil and gas platforms, with several research and development platforms [2] - Denglin Technology is the first GPU company in China to achieve large-scale commercial deployment, focusing on the development of domestically produced high-performance AI chips, with products applied in edge and cloud computing scenarios [2] - Pufei Kete aims to empower small and micro logistics with technology, establishing a nationwide "door-to-door" transportation system with over 210 parks, 14,000 dedicated routes, and 10,000 outlets [2] - Jiusi Intelligent is a leading global autonomous driving technology company with R&D and operational centers in Beijing, Singapore, and the United States, offering scalable L4 autonomous driving solutions [3]

Core Viewpoint - Jiangsu Hengtong Optic-Electric Co., Ltd. is focused on high-quality development and strategic investments in core industries such as communication and energy, leveraging opportunities in new infrastructure, carbon neutrality, and digital transformation to enhance its market competitiveness and operational efficiency [5][6][29]. Meeting Agenda - The company will hold its annual shareholder meeting on May 20, 2025, to discuss the reappointment of the external auditor, Lixin Certified Public Accountants [2][3]. Company Performance - In 2024, the company achieved a revenue of 59.984 billion yuan, representing a year-on-year growth of 28.57% in net profit, amounting to 2.769 billion yuan [5][6]. - The net profit attributable to shareholders, excluding non-recurring gains and losses, was 2.576 billion yuan, reflecting a growth of 26.74% [5]. Strategic Focus - The company is actively investing in the telecommunications and energy sectors, providing leading products and solutions in optical communication, smart grids, and marine energy [5][6]. - The company is enhancing its global industrial and marketing network, positioning itself as a leading provider of information and energy interconnection solutions [5][6]. Technological Advancements - The company has established a "world lighthouse factory" for intelligent manufacturing in the optical communication sector, integrating advanced technologies such as 5G and AI to optimize production processes [7][8]. - The company is focusing on the development of high-end optical fibers and special products, achieving significant advancements in low-loss optical fibers and marine optical fibers [8][9]. International Expansion - The company has expanded its presence in various regions, including Europe, South America, and Southeast Asia, through acquisitions and the establishment of production bases [9][24]. - The acquisition of j-fiber GmbH has strengthened the company's capabilities in special optical fiber production, enhancing its competitive edge in the global market [9][24]. Environmental Commitment - The company is committed to sustainable development and has implemented an ESG management system to promote green manufacturing and energy management [28][29]. - The company has received multiple awards for its efforts in environmental sustainability and corporate governance [28][29]. Future Outlook - The company aims to continue its strategic transformation towards becoming a global leader in marine energy interconnection solutions while expanding its market presence in telecommunications and energy sectors [15][24]. - The company plans to enhance its technological capabilities and maintain a strong focus on innovation to meet the growing demands of the digital economy [30][31].