Summary of the Conference Call Company and Industry Overview - The company is focused on the rapid development of AI technology and has adjusted its business strategy to concentrate resources on core enterprises like Shenghong, particularly in the HDI and mechanical drilling sectors [2][3] - The company’s existing products, GB200 and GB300, have established a dominant market position, with nearly all large-scale production being supplied by the company [2] Key Points and Arguments - The company is leveraging ultra-fast laser technology to address challenges posed by M9 material processing, which has been widely applied in Apple products [2][5] - The company plans to expand its product lines to include exposure, forming, laminating, and testing, aiming to maximize value in AI scenarios [2][6] - By 2030, the PCB market value is expected to rise to $100-200 billion, driven by the AI industry, potentially doubling the size of the original market [2][8] - The company anticipates mass production of ultra-fast laser technology by mid-2026, with significant demand expected from the AI market [2][9] Financial Performance and Market Position - The company has shown steady performance improvements year-on-year and quarter-on-quarter, establishing a solid foundation for long-term growth [3] - Currently, 80% of the company's revenue comes from drilling equipment, with plans to transition into a high-end equipment supplier [4][14] - The company maintains a gross margin of approximately 50% and aims to enhance precision and efficiency in its products [21] Technological Developments - The transition from CO2 lasers to ultra-fast lasers is aligned with industry trends, with expectations for mass production to begin in 2026 [7] - The complexity of PCB drilling processes has increased significantly in AI applications, necessitating more advanced equipment to handle higher density and thickness [11] - CCD backup drilling equipment has shown strong market performance, with sales expected to account for 40%-50% of the required drilling machines in AI scenarios [12] Competitive Landscape - New entrants in the PCB field have not significantly impacted the existing market structure due to their lack of understanding of PCB-specific requirements [15] - Major technology companies continue to invest heavily in the industry, indicating a positive long-term outlook despite short-term market fluctuations [16][17] Future Outlook - The company is optimistic about the AI market's growth, with expectations of significant increases in equipment demand and value as technology evolves [22] - Collaboration with key clients like Pengding is crucial, with ongoing advancements in ultra-fast laser drilling machines expected to deepen these partnerships [19] - The company is transforming into a high-end equipment supplier, focusing on producing more technically demanding products and expanding its presence in the core supply chains of leading enterprises [20]

Group 1: Company Performance - In the first half of 2025, the company achieved operating revenue of 238,183.32 million yuan, a significant increase of 52.26% compared to the same period last year [4] - The net profit attributable to shareholders reached 26,327.17 million yuan, reflecting an impressive growth of 83.82% year-on-year [4] Group 2: PCB Industry Trends - The PCB industry is expected to grow by 7.6% in revenue and 7.8% in production in 2025, driven by strong demand for AI servers and switches [6] - From 2024 to 2029, the compound annual growth rate (CAGR) for capacity in the PCB sector is projected to be 22.1% for high multilayer boards and 17.7% for HDI boards [6] - The global PCB market is anticipated to reach nearly 100 billion USD by 2029, while the domestic market is expected to hit 50 billion USD [7] Group 3: High Multilayer Board Market - The demand for high multilayer boards is increasing due to the rapid growth of data and the adoption of 112/224Gbps SerDes designs in AI servers and high-speed switches [8] - The need for advanced drilling technology, such as CCD six-axis independent drilling machines, is rising to meet the higher precision and quality requirements for AI PCB products [9] - The company has developed a CO2 laser drilling machine that meets the high-quality processing needs for large-diameter and cross-layer blind holes [10] Group 4: HDI Market Situation - The demand for HDI boards is rapidly increasing in AI smartphones, AI PCs, automotive electronics, and optical modules [11] - The company is upgrading its CO2 laser drilling machines and high-resolution imaging systems to meet the shrinking feature sizes of HDI products [11] - New laser processing solutions have been developed to achieve high precision in micro-hole drilling and shaping, gaining recognition and orders from downstream customers [12]

Core Viewpoint - Dazhu CNC has achieved significant growth in 2024 after two consecutive years of declining revenue and profit, with a revenue increase of 104.56% and a net profit increase of 122.20% compared to the previous year [2][3] Financial Performance - In 2024, Dazhu CNC reported a revenue of 3.343 billion yuan and a net profit of 301 million yuan [2] - For Q1 2025, the company continued its growth trend with revenues of 960 million yuan and a net profit of 117 million yuan, representing year-on-year increases of 27.89% and 83.60% respectively [2] - Despite the growth, the company's performance has not yet returned to pre-spin-off levels, as the net profit for Q1 2025 is still 66 million yuan lower than the same period in 2022 [5] Market Dynamics - The growth in Dazhu CNC's performance is primarily driven by a recovery in downstream demand, particularly in the electronics sector, which is closely linked to the PCB manufacturing industry [3][4] - The global electronic terminal market is expected to grow at a rate of 4.9% in 2024, with AI infrastructure demands significantly contributing to this growth [3] - The PCB industry is projected to maintain a compound annual growth rate of 5.2% from 2024 to 2029, with expectations for better performance in 2025 compared to 2024 [3] Margin and Cash Flow Concerns - The company's gross profit margin has dropped below 30% for the first time since 2020, falling to 28.11% in 2024, with significant declines in Q1 and Q3 [8][9] - The decline in gross margin is attributed to increased competition in mature product categories, particularly drilling equipment [9] - Despite revenue growth, the net cash flow from operating activities decreased by 262 million yuan year-on-year to 155 million yuan in 2024, and further declined to -335 million yuan in Q1 2025 [9] Strategic Initiatives - Dazhu CNC is planning to list on the Hong Kong Stock Exchange to raise funds for overseas expansion, with a focus on enhancing its international presence [2][11] - The company has reported an increase in overseas revenue from 5.35% in 2023 to 10.83% in 2024, indicating a strategic shift towards international markets [11] - Ongoing projects related to PCB specialized equipment production and technology development are progressing, with significant investments already made [12]