Summary of Longxin General's Conference Call Company Overview - Longxin General's total revenue for 2024 reached 12.69 billion yuan, with motorcycle business accounting for 75% and general machinery business contributing 3.54 billion yuan, representing 21% of total revenue [2][3] - The company is transitioning from OEM to developing its own brands, with self-owned high-end brand revenue in the first half of 2025 growing by 42.43% year-on-year to 2.334 billion yuan, making up 24% of total revenue [2][5] Industry Insights - The global ATV market is expected to grow to approximately 15 billion USD by 2028, with a compound annual growth rate (CAGR) of about 4% [4][15] - The Chinese motorcycle engine market is recovering, with sales expected to increase by 10.6% in 2024 to 16.08 million units [4][16] - The general machinery market in China is expanding, with production increasing from less than 500,000 units in 2000 to over 30 million units in 2023, making China a key production base [18][19] Financial Performance - Longxin General's net profit is projected to be 2 billion yuan in 2025 and may reach 2.5 billion yuan in 2026, indicating a relatively low valuation at around 15 times earnings [4][24] - The company has seen a significant recovery in profits in 2024 after a decline from 2018 to 2021, with goodwill impairment issues largely resolved [8] Market Performance - Longxin's high-end motorcycle brand, Wujing, performed well in the European market, generating 1.021 billion yuan in sales in 2024, accounting for 6% of total revenue [2][5] - The company has shifted from low-displacement motorcycles to high-end brands, with market share in Spain increasing from 4.2% in 2024 to 6.6% in the first eight months of 2025 [2][14] Competitive Landscape - Longxin General is addressing competition issues with Zongshen Power through equity restructuring, expected to be completed by the end of 2026 [2][7] - The company has a strong technical foundation in engine manufacturing, with over 200 models and partnerships with international brands like BMW [12][17] Strategic Initiatives - Longxin General plans to enhance its high-end brand through technological innovation and international collaboration, while also focusing on resolving competition issues to improve operational efficiency [11] - The company is implementing a "one plus N" strategy for overseas market expansion, focusing on core markets like Italy and Spain before expanding to surrounding regions [13][14] Future Outlook - The company aims to maintain a compound growth rate of about 10% in its communication business, despite slower growth [22] - Longxin General's future market value could reach 40-45 billion yuan based on distribution valuation methods, indicating significant upside potential from its current market cap of just over 30 billion yuan [4][24]

Core Viewpoint - Longxin General (603766.SH) announced the transfer of 49.9988% equity in Zhuhai Longhua Helicopter Technology Co., Ltd. and 66% equity in Zunyi Jinye Machinery Casting Co., Ltd. for a total of approximately 105.6 million yuan, marking a significant step in the company's asset divestiture strategy, albeit at a high cost of expected losses totaling 75.89 million yuan [2][3][4]. Group 1: Asset Transfer Details - The transfer of Zhuhai Longhua's equity was executed at a symbolic price of 1 yuan, reflecting the deteriorating asset value, with an anticipated loss of 36.22 million yuan for the company in 2025 [3][4]. - Longxin General has provided a total of 69.89 million yuan in loans to Zhuhai Longhua, which is at risk of being unrecoverable due to the company's negative net asset status of -67.35 million yuan [4][5]. - The transfer of Jinye Machinery was conducted at a significant discount of 68.31%, with a total equity value of 234 million yuan, resulting in an expected loss of 39.67 million yuan for 2025 [5][6]. Group 2: Strategic Focus and Performance - Longxin General has been pursuing a strategy to focus on its core business since 2021, gradually divesting non-core assets, with the recent transfers marking an acceleration in this process [6][7]. - Despite the short-term losses from asset divestiture, the company's core business has shown strong performance, with a revenue of 14.557 billion yuan in the first three quarters of 2025, a year-on-year increase of 19.14%, and a net profit of 1.577 billion yuan, up 75.45% [6][7]. - The company’s motorcycle business generated 10.714 billion yuan in revenue, reflecting a 14.91% increase, while the general machinery segment saw a 42.54% growth [6][7].

Group 1 - The core viewpoint of the report is that Longxin General (603766.SH) is rated "outperform" by Guosen Securities due to its strong position in the motorcycle and general machinery sectors and its global expansion efforts [1] - Longxin General is making significant strides in the motorcycle market, particularly with its Wujie motorcycle brand entering European and South American markets [1] - The all-terrain vehicle segment is expected to maintain rapid growth, contributing positively to the company's overall performance [1] Group 2 - The overseas expansion of motorcycle engines is anticipated to boost export revenue, enhancing the company's financial outlook [1] - The general machinery products are characterized by high cost-performance ratios, suggesting a potential recovery in business operations [1]

Investment Rating - The report assigns an "Outperform the Market" rating for the company, with a reasonable valuation range of 15.80 to 16.70 CNY per share, indicating a potential upside of 10% to 17% from the current price of 13.68 CNY [7][4]. Core Insights - The company is transitioning from OEM to developing its own brands, particularly focusing on the high-end motorcycle brand "Wujin" and expanding into global markets, especially Europe and South America [16][19]. - The motorcycle and general machinery sectors are the main business areas, with motorcycle revenue expected to grow significantly, while general machinery is anticipated to recover [22][21]. - The company has undergone a significant restructuring, with a new major shareholder, which is expected to stabilize operations and enhance profitability [33][21]. Summary by Sections Company Overview - The company has a diversified product line including motorcycles, engines, ATVs, and general machinery, with a strong focus on the "motorcycle + general machinery" business model [21][30]. - The company aims to become a global motorcycle enterprise, with motorcycle and general machinery revenues projected to account for 75% and 21% of total revenue, respectively, by 2024 [21][4]. Market Expansion - The "Wujin" motorcycle brand is making significant inroads into the European and South American markets, with a market share exceeding 5% in Spain and growing brand recognition in Italy and other regions [2][4]. - The global ATV market is expected to grow to 15 billion USD by 2028, and the company is leveraging its engine technology to enhance its product offerings in this segment [2][4]. Financial Performance - The company forecasts substantial revenue growth, with expected revenues of 19.69 billion CNY in 2025, representing a 17.1% increase from the previous year [5]. - Net profit is projected to reach 1.91 billion CNY in 2025, reflecting a 70.2% year-on-year growth, with earnings per share expected to increase to 0.93 CNY [5][4]. Valuation and Profitability - The report anticipates a recovery in profitability, with net profit margins improving from 2.8% in 2021 to 6.3% in 2024, driven by reduced impairment losses and increased sales of high-end motorcycles [44][42]. - The company's valuation metrics indicate a PE ratio of 15.4 in 2025, suggesting a favorable investment opportunity compared to historical averages [5][4].

Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected relative price increase of over 20% against the market benchmark within the next six months [2][18]. Core Insights - The company reported a revenue of 14.557 billion yuan for the first three quarters of 2025, representing a year-on-year increase of 19%. The net profit attributable to shareholders was 1.577 billion yuan, up 75% year-on-year, while the net profit excluding non-recurring items reached 1.529 billion yuan, an increase of 81% [3][6]. - The motorcycle segment generated sales revenue of 10.714 billion yuan in the first three quarters, a growth of 14.91%. The "Wuji" series products achieved sales of 3.035 billion yuan, up 24.87%, with exports reaching 1.718 billion yuan, a significant increase of 86.92% [4][5]. - The general machinery business saw a revenue of 3.384 billion yuan in the first three quarters, marking a 42.54% increase. The third quarter alone contributed 1.199 billion yuan, a 27% year-on-year growth [5]. Financial Performance Summary - The company's gross margin for Q3 2025 was 18.8%, an increase of 1.15 percentage points year-on-year, attributed to a higher proportion of self-owned brands, which accounted for 26% of total revenue [5]. - The report forecasts net profits for 2025-2027 to be 1.903 billion, 2.374 billion, and 2.774 billion yuan, respectively, with growth rates of 70%, 25%, and 17% [6]. - The projected price-to-earnings (P/E) ratios for 2025-2027 are 15x, 12x, and 10x, respectively, indicating a favorable valuation trend [6].

Core Viewpoint - The company reported significant growth in revenue and net profit for the first nine months of 2025, indicating strong operational performance and effective brand strategies [6][7]. Financial Performance - For the period from January to September 2025, the company achieved operating revenue of 14.557 billion yuan, a year-on-year increase of 19.14% [6]. - The net profit attributable to shareholders was 1.577 billion yuan, reflecting a substantial year-on-year growth of 75.45% [6]. - The overall gross profit margin was 18.89%, showing a stable increase compared to the previous year [6]. Product Sales - Motorcycle products generated sales revenue of 10.714 billion yuan, up 14.91% year-on-year [6]. - The "Wujie" series products achieved sales of 3.035 billion yuan, marking a 24.87% increase [6]. - Exports of the "Wujie" series reached 1.718 billion yuan, a remarkable growth of 86.92% [6]. - General machinery products recorded sales of 3.384 billion yuan, representing a 42.54% increase [6]. Brand Development - The company has focused on developing its own brand business, resulting in sales revenue of 3.796 billion yuan from its proprietary brands, which is a 28.49% increase year-on-year [7]. - The proprietary brands accounted for 26.08% of the company's total revenue, an increase of nearly 2 percentage points year-on-year [7]. - The share of proprietary brands in motorcycle product revenue was 35.43%, up nearly 4 percentage points year-on-year [7]. Legal Matters - The company is involved in ongoing litigation regarding receivables, with a balance of 671 million yuan and a provision for credit impairment losses of 607 million yuan [8]. - The company has initiated legal proceedings against 27 distributors for contract disputes, with some cases already resulting in favorable judgments [8]. Shareholder Information - The controlling shareholder, Chongqing Zongshen New Intelligent Manufacturing Technology Co., Ltd., has pledged 100% of its shares, totaling 504.172 million shares, which is 24.55% of the company's total equity [11]. - The company is monitoring the situation closely and plans to reduce the pledge ratio to below 80% by 2025 [11]. Competition Issues - The controlling shareholder and related parties are working to resolve competition issues within the motorcycle and general machinery sectors [12]. - The company is accelerating internal asset integration to address these competitive overlaps [12].

Core Viewpoint - The company has achieved significant growth in revenue and profit in the first half of 2025, driven by its operational strategies focused on optimizing existing resources and breaking through new markets [1] Financial Performance - In H1 2025, the company reported total revenue of 9.752 billion, a year-on-year increase of 27.21%, and a net profit attributable to shareholders of 1.074 billion, up 82.26% [1] - In Q2 2025, total revenue reached 5.106 billion, with a year-on-year growth of 16.83%, and a net profit of 567 million, reflecting a 70.99% increase [1] Motorcycle Business - The motorcycle segment generated sales revenue of 7.273 billion in H1 2025, marking a 23.14% year-on-year increase [3] - The complete motorcycle products achieved sales revenue of 5.872 billion, up 23.25%, with exports contributing 645 million, a growth of 34.29% [4] - The high-performance VOGE series saw sales revenue of 1.980 billion, increasing by 30.23%, with exports reaching 1.190 billion, a remarkable 83.31% growth [4] All-Terrain and Three-Wheel Vehicles - The all-terrain vehicle segment reported sales revenue of 273 million, a significant increase of 44.76% [5] - The three-wheeler series generated sales revenue of 879 million, up 38.68%, with domestic sales growing by 4.55% and exports soaring by 87.57% [5] General Machinery Business - The general machinery segment achieved sales revenue of 2.185 billion in H1 2025, reflecting a robust growth of 52.82% [7] - The household generator products saw a remarkable sales increase of 142.01% [7] - The lawn machinery segment, particularly the riding lawnmower, experienced a sales revenue growth of 94.22% [7] Channel Development and Smart Manufacturing - The company is actively investing in channel development and enhancing smart manufacturing capabilities, aiming to establish a differentiated brand presence [8] - The sales network has expanded to over 2,000 dealers across more than 90 countries, with a strong focus on both domestic and international markets [9] - The company is integrating advanced technologies such as cloud computing and IoT into its manufacturing processes, significantly improving operational efficiency and market responsiveness [9] Investment Outlook - The company is expected to maintain strong fundamentals with excellent overseas performance, particularly in high-displacement motorcycles and all-terrain vehicles [8] - Projected net profits for 2025, 2026, and 2027 are 1.793 billion, 2.088 billion, and 2.495 billion respectively, with corresponding PE ratios of 14.5, 12.5, and 10.4 [8]

Core Viewpoint - Longxin General (隆鑫通用) demonstrates robust operational performance with significant revenue and profit growth in the first half of 2025, driven by strong sales in high-end self-owned brands and general machinery products [2][3][5]. Financial Performance - In the first half of 2025, Longxin General achieved operating revenue of 9.752 billion yuan, a year-on-year increase of 27.21% [2][3]. - The net profit attributable to shareholders reached 1.074 billion yuan, reflecting a year-on-year growth of 82.26% [2][3]. - The company reported a comprehensive gross margin of nearly 19% and a net profit margin of 10.98%, an increase of 3.41 percentage points year-on-year [5]. Business Segments - The motorcycle segment generated sales revenue of 7.273 billion yuan, up 23.14% year-on-year, accounting for 74.58% of total revenue [5]. - High-end self-owned brand revenue reached 2.334 billion yuan, a 42.43% increase, representing about 24% of total revenue [5]. - The general machinery segment saw sales revenue of 2.185 billion yuan, a remarkable growth of 52.82% [5]. Market Expansion - Longxin General's international sales accounted for 67.87% of total revenue in the first half of 2025, with foreign revenue reaching 6.619 billion yuan, a year-on-year increase of approximately 36.6% [6]. - The company has established a sales network covering over 90 countries and regions, with more than 2,000 dealers [6]. Research and Development - Longxin General invested a total of 1.162 billion yuan in R&D over the past two and a half years, with a workforce of nearly 1,600 in R&D teams [7]. - The company holds 1,556 valid patents, including 340 invention patents, enhancing its technological capabilities [7]. Financial Health - As of June 30, 2025, Longxin General's asset-liability ratio stood at 43.38%, with cash reserves of 8.574 billion yuan, a year-on-year increase of 51.03% [7]. - The net cash flow from operating activities reached 1.822 billion yuan, a significant increase of 159.29% year-on-year [7].

Group 1 - The company reported a revenue of 9.752 billion yuan for the first half of 2025, representing a year-on-year increase of 27.21% [1] - The net profit attributable to shareholders reached 1.074 billion yuan, up 82.26% year-on-year, with basic earnings per share of 0.5231 yuan, also reflecting an 82.26% increase [1] - The net cash flow from operating activities surged to 1.822 billion yuan, marking a significant increase of 159.29% year-on-year [1] Group 2 - The company's strategic focus on "stock optimization and incremental breakthroughs" has led to steady growth and quality improvement in performance [1] - The comprehensive gross profit margin reached 19%, showing a stable upward trend [1] - Revenue from high-end self-owned brands amounted to 2.334 billion yuan, a year-on-year increase of 42.43%, accounting for 24% of total revenue, becoming a core driver of performance growth [1] Group 3 - The motorcycle business generated sales revenue of 7.273 billion yuan, reflecting a year-on-year growth of 23.14%, with export earnings reaching 645 million USD, up 34.29% [1] - The high-end VOGE series products achieved sales revenue of 1.980 billion yuan, with a growth rate of 30.23%, and export sales revenue of 1.190 billion yuan, increasing by 83.31% [1] Group 4 - The company expanded its domestic sales network to 1,053 outlets and established 1,292 overseas points, with a focus on Europe, Argentina, and Malaysia [2] - The motorcycle engine business reported sales revenue of 1.222 billion yuan, a growth of 35.77%, with sales of engines above 250cc increasing by 71.81% [2] - The general machinery segment achieved sales revenue of 2.185 billion yuan, up 52.82%, with household generator revenue increasing by 142.01% [2]

Core Viewpoint - The article discusses the bankruptcy restructuring of Longxin Group and the legal actions taken by its former actual controller, Tu Jianhua, who claims his interests have been harmed during the restructuring process [2][14]. Group 1: Background Information - Tu Jianhua was once a billionaire and the actual controller of Longxin Group, which controlled four listed companies at its peak: Longxin General (603766.SH), Fenghua Shares (600615.SH), Hanhua Financial (3903.HK), and Qihe Environmental (0976.HK) [2][11]. - Longxin Group was included in China's top 500 enterprises for 18 consecutive years [2]. Group 2: Bankruptcy Restructuring Process - On January 30, 2022, Chongqing Fifth Intermediate People's Court accepted the bankruptcy restructuring application for Longxin Group and thirteen other companies due to debt defaults [4]. - The restructuring plan was approved by the court on November 21, 2022, after a creditors' meeting [7]. - The total asset valuation of the thirteen companies was assessed at 10.825 billion yuan, with a confirmed debt of 36.76 billion yuan, indicating insolvency [8][9]. Group 3: Legal Actions and Claims - Tu Jianhua filed a lawsuit against the restructuring managers, claiming damages for not being able to enjoy the restructuring rights associated with his shares in Longxin General [14]. - He is seeking compensation of approximately 30.89 million yuan for losses incurred due to the restructuring process [14]. - The lawsuit highlights concerns over the management's decision to change the restructuring plan from a comprehensive approach to a segmented sale without proper approvals [14]. Group 4: Changes in Control - As of December 27, 2024, the control of Longxin General was transferred to Zongshen Group, led by Zuo Zongshen, marking a significant shift in ownership [15][16]. - The establishment of a new holding company, New Longxin Holdings, which was supposed to grant Tu Jianhua a 5% equity stake, has been rendered void due to the asset restructuring [12].