Summary of Eddie Precision's Conference Call Company Overview - Eddie Precision specializes in high-end hydraulic components (main pumps, main valves, travel motors, swing motors) primarily used in excavators, accounting for over 50% of the company's overall business [2][5][6]. Industry Insights - The excavator market experienced a growth rate of approximately 16% in the first half of 2025, while Eddie Precision's high-end hydraulic components grew by 30%-40%, attributed to increased market share among OEMs and enhanced core competitiveness [2][5][6]. - The hydraulic breaker, Eddie Precision's second-largest business segment, constitutes about 35% of the company's operations. Its growth was limited in the first half of 2025 due to low operating rates of large excavators in China, but overseas exports performed well [2][7]. Key Products and Performance - **Travel Motors**: This is Eddie Precision's leading product, with the company being the only domestic supplier to OEMs, resulting in a continuous increase in market share [2][6]. - **Hydraulic Breakers**: These are widely used in mining, municipal engineering, and hydropower projects. The demand for hydraulic breakers is significant, especially in complex geological environments [3][5]. - **Overall Growth**: Hydraulic components saw an overall growth of 30%-40% in the first half of 2025, driven by domestic substitution of imports and increased market share among OEMs [2][6]. Financial Performance - The gross profit margin for hydraulic components and hydraulic breakers was stable at around 30%-32% [12][13]. - The company has faced pressure to reduce prices from OEMs, but has managed to maintain profitability through automation and process improvements [13]. International Expansion - Eddie Precision's overseas sales account for approximately 20%-25%, with major markets including the USA, Russia, the Middle East, India, and Southeast Asia. Caterpillar in the USA is the largest customer, accounting for over 20% of sales [14][15]. - A new factory in Thailand is expected to start production in September or October 2025, aiming to increase overseas sales to 50% within the next three to five years [14]. New Business Ventures - Eddie Precision is incubating new industries, including industrial robots and RV reducers, which previously incurred annual losses of about 50 million yuan but are now showing improvement [8][10]. - The company aims for each new venture to achieve over 100 million yuan in sales and break even [8][9]. - The new products are expected to have a broad customer base across various manufacturing sectors, relying on both distribution and direct sales [17]. Challenges and Future Outlook - The company anticipates continued strong growth in the hydraulic components sector, with expectations of maintaining robust performance in the next couple of years [2][6]. - The focus on automation and process improvements is expected to enhance overall profitability as the company scales up its operations and diversifies its product offerings [13][16].