Summary of Conference Call on Storage Industry Trends Industry Overview - The conference call focuses on the storage industry, particularly the enterprise storage segment in China, and the impact of supply chain dynamics and geopolitical factors on market conditions [1][2][3]. Key Points and Arguments Supply Chain Dynamics - Huawei has secured over 60% of its storage capacity from Yangtze Memory Technologies and Changxin Memory Technologies, allowing it to maintain favorable pricing and resource access compared to other customers [1][2]. - The domestic AI construction is driving a continuous increase in enterprise storage demand, with a conservative market growth estimate of 10%-20% for 2026 [1][4]. - Storage prices have seen extreme increases of 10-20 times since early 2025, with expectations for a slow upward trend in 2026, but no repeat of drastic price jumps [1][5]. Demand Characteristics - Demand cannot be generalized; it varies by enterprise. Huawei's unique position allows it to benefit from lower storage costs despite market price surges [2][3]. - Other major cloud service providers (CSPs) like BAT are more focused on supply stability and are not averse to using overseas products due to limited capacity from domestic suppliers [2][3]. Domestic Production and Policy - There is a push for increased domestic production, but achieving 100% localization is challenging due to the concentration of upstream sources and equipment sanctions [3][12]. - Current domestic production capabilities are estimated to reach 90%-95% of overseas manufacturers in terms of performance and warranty, but there are still gaps in power consumption and long-term reliability [1][12]. Future Demand Trends - The long-term demand for enterprise storage is expected to remain stable, driven by the practical application of AI technologies in various sectors [4][5]. - The growth in enterprise-level DRAM and NAND demand for 2026 is conservatively estimated at 10%-20%, influenced by previous price increases and supply uncertainties [5][11]. Pricing and Supply Challenges - The supply chain is characterized by a mix of direct orders from original manufacturers and resource sharing among competitors to ensure delivery, leading to increased channel costs [1][7]. - Original manufacturers may adjust supply arrangements, potentially leading to "breach of contract" scenarios where they demand price adjustments post-order [9][10]. Inventory and Stock Management - Some manufacturers have stockpiled inventory from 2025, which may lead to apparent growth in 2026 through inventory release rather than new production [11]. - In a tight supply environment, customers may relax specifications to utilize available products, indicating a shift in purchasing behavior [11][12]. Market Outlook - The pricing dynamics in 2026 are expected to be closely linked to overseas contract prices, with domestic prices typically reflecting a slight discount [18][19]. - The potential for significant price increases is limited, with expectations for gradual adjustments rather than drastic spikes [20][21]. Conclusion - The storage industry is navigating complex supply chain challenges, geopolitical influences, and evolving demand patterns, with a cautious outlook on pricing and production capabilities in the near future [1][2][3][4][5].

Investment Rating - The report assigns a "Buy-A" rating to the company with a target price of 211.57 CNY, based on a 30x PE for 2026 [4]. Core Insights - The company is positioned as a leading storage solution provider in China, leveraging an integrated R&D and packaging model to build competitive barriers [1]. - The storage industry is entering a super cycle driven by rapid growth in downstream demand and domestic substitution, particularly in AI-driven enterprise storage [2]. - Advanced packaging technology is expected to drive growth, with the global advanced packaging market projected to grow from 46.8 billion USD in 2023 to 78.6 billion USD by 2028, at a CAGR of 10.9% [3]. Summary by Sections Company Overview - The company was established in 2010 and specializes in semiconductor storage solutions, including embedded storage, PC storage, automotive-grade storage, enterprise storage, and mobile storage, along with advanced packaging services [1][13]. - The company has a stable shareholding structure, with significant participation from the National Integrated Circuit Industry Investment Fund [16][17]. Industry Dynamics - The storage market is expected to reach approximately 184.84 billion USD in 2025, with a year-on-year growth of 11.7% [35]. - The demand for storage is being driven by the recovery of the PC market, the rebound in smartphone sales, and the rapid development of electric vehicles and smart driving technologies [40]. Financial Performance - The company’s revenue is projected to grow from 3.59 billion CNY in 2023 to 21.19 billion CNY by 2027, with a CAGR of 42% from 2020 to 2024 [9][27]. - The net profit is expected to turn from a loss of 624 million CNY in 2023 to a profit of 3.32 billion CNY in 2027 [9]. Product and Market Positioning - The company has developed a comprehensive product matrix covering embedded storage, PC storage, enterprise storage, industrial storage, and mobile storage, catering to various applications [59]. - The company has established partnerships with major clients such as OPPO, VIVO, Meta, and Google, enhancing its market position [25][29]. R&D and Competitive Advantage - The company has significantly increased its R&D investment, from 45 million CNY in 2019 to 447 million CNY in 2024, supporting its technological innovation and product upgrades [28][32]. - The integrated R&D and packaging model has enabled the company to respond quickly to customer needs and maintain a competitive edge in the market [32].

Core Viewpoint - Jiangbolong (301308.SZ) is positioned as a global leader in the semiconductor storage industry, showcasing its systematic technological capabilities across key areas such as chip design, firmware algorithm development, memory design, and packaging manufacturing [1] Group 1 - The company has made significant breakthroughs in enterprise storage, high-end consumer storage, overseas business expansion, and self-developed main control chips [1] - Jiangbolong is enhancing its global comprehensive competitiveness through multi-dimensional efforts [1]

Core Viewpoint - The company has been continuously expanding its product matrix since its listing, introducing new storage module products such as embedded storage and enterprise-level storage, with some products already in mass production and successfully integrated with key customers [1] Group 1: Product Development - The company has launched new storage module products, including embedded storage and enterprise-level storage [1] - Some of the new products have achieved mass production and have been successfully introduced to key customers [1] Group 2: Market Strategy - The company is increasing its investment in PCIe SSDs in line with its business development plans and market demand [1] - The client base for PCIe SSDs has expanded to include several well-known manufacturers, with stable shipments already occurring [1]

Group 1 - The DRAM market is experiencing significant price increases due to the discontinuation of older process DRAM products by manufacturers, with expectations of a 20%-50% quarter-on-quarter price increase in Q4 2025 [1][3] - Nanya Technology's contract price surged by 70% in Q3 2025 and is expected to rise by another 50% in Q4 2025, while Winbond's prices increased by 60% in Q3 2025 and are projected to rise by 20% in Q4 2025 [1][3] - The market is facing a supply-demand imbalance as major manufacturers exit the niche DRAM market, leading to continued price increases throughout the year [1][4] Group 2 - The NAND flash market is seeing rising prices driven by increased capital expenditures from domestic internet companies, with Alibaba investing 38.6 billion yuan in AI and cloud infrastructure in Q2 2025 [2] - The demand for enterprise-level storage applications is expected to grow significantly due to the acceleration of AI applications, with a potential price increase in the storage market anticipated in Q4 2025 [2] - The NOR Flash market is also expected to see price increases in Q4 2025 due to healthy supply-demand dynamics, with double-digit percentage increases likely [4] Group 3 - The niche storage market is experiencing price increases due to structural shortages, with companies like Winbond, Nanya Technology, and Macronix showing consistent revenue growth since 2025 [4] - Customized storage solutions are gaining traction, with companies that have a first-mover advantage likely to benefit from the industry wave [4] Group 4 - Investment recommendations include focusing on niche storage companies such as Zhaoyi Innovation, Puran, and Jucheng, as well as module manufacturers and storage supporting chip companies [5]

Group 1: Optical Components and Storage - Fuzhicheng Technology has seen a stock increase with its subsidiary Fuchuang Optoelectronics focusing on optical components for lithography machines [2] - Major US storage companies have reached historical highs, while Taiwanese manufacturers have fully booked DDR4 production capacity for Q4 [2] - Demingli specializes in enterprise-level storage solutions for servers, data centers, and cloud computing [2] Group 2: Tourism and Robotics - Yunnan Tourism is one of the few comprehensive tourism listed companies in Yunnan, collaborating with Zhejiang Human Machine Center to develop core technologies for tourism scene robots [2][3] - Public companies like Gongyuan and Xinyang Technology are investing in robotics and automation solutions for various industries [3] Group 3: Defense and Energy - Guorui Technology is involved in the information project for the C919 large aircraft [4] - Tianwo Technology's subsidiary is a key player in national defense product research and production [4] - Companies like Ganfeng Lithium are making progress in solid-state battery research, covering critical areas such as sulfide electrolytes and lithium metal anodes [4] Group 4: Real Estate and Film Industry - Shahe Holdings focuses on real estate development and sales [6] - Wanda Film is a leading cinema investment and operation brand in China, while Bona Film has a comprehensive layout in the film industry [6] Group 5: Marine Economy and Mining - The National Development and Reform Commission is working on the "14th Five-Year" marine economy development plan [7] - Companies like Deyun Holdings are expanding mining operations, increasing annual extraction capacity significantly [7]

Group 1 - Company provides cooling systems for packaging lithography machines for Shanghai Micro Electronics Equipment Group, with a revenue increase from 625.83% to 756.71% [2] - Company offers lithography objectives, contributing to the optical industry [2] - Major US storage leaders have reached historical highs; Taiwanese manufacturers have fully booked DDR4 production capacity for Q4 [2] - Company’s enterprise-level storage is primarily used in servers, data centers, and cloud computing [2] - Huawei plans to launch the world's strongest super node in Q4, with a computing power scale of 8192 cards [2] - Company is a leading player in the global fiber optic cable industry, with advanced hollow core technology [2] - Company’s Micro TEC products have been validated by leading enterprises and are now in mass production [2] - Company is expanding its business in the energy storage sector through precision box systems [2] Group 2 - Company’s controlling shareholder has changed to Yang Gongyi Fan [3] - Company develops chips using the CK802 32-bit core architecture from Pingtouge [3] - Company’s photoresist substrate products are currently in the customer engagement phase [3] - Company has signed a strategic cooperation agreement with Suzhou Nengda to jointly develop flexible electronic skin [3] - Company focuses on the development of intelligent cleaning robots based on a skateboard chassis [3] - Company invests in smart elderly care robot projects, integrating AI with home care [3] Group 3 - Company is a hardware supplier for Leju Robotics [4] - Company participates in the information technology project for the C919 large aircraft [4] - Company is a leading cinema investment and operation brand in China [4] - Company has signed a strategic cooperation framework with Huawei to collaborate in network, cloud computing, and big data [4] Group 4 - Company is a major player in the historical cultural scenic area development, managing several national 5A scenic spots [5] - Company is the second-largest shareholder of Tianke He Da, which is a global leader in SiC chip manufacturing [5] - Company’s main products include silicon carbide crystal growth furnaces [5] - Company has seen price increases in express delivery services across multiple regions [5] Group 5 - Company has been awarded a project for intelligent cockpit domain controllers, with a total amount of approximately 5.6 billion [6] - Company is a leading construction firm in Xinjiang with comprehensive qualifications [6] - Company’s controlling shareholder has changed to Yang Gongyi Fan [6] - Company is deeply involved in AI computing server connections and assembly for Apple hardware [6] Group 6 - Company has a long-standing partnership with Huawei on smart water projects [7] - Company’s subsidiary has mining rights for a gold mine, with an expanded mining scale approved [7] - Company produces silver ion antibacterial fabrics using SILVER+ technology [7]

Market Overview - The market experienced a pullback after a previous rally, with all three major indices closing lower. The Shanghai and Shenzhen markets had a trading volume of 2.52 trillion yuan, an increase of 83.2 billion yuan from the previous trading day. Over 3,300 stocks declined, indicating a broad market weakness [1][7]. - The Shanghai Composite Index fell by 0.12%, the Shenzhen Component Index decreased by 0.43%, and the ChiNext Index dropped by 1.09% [1]. Sector Performance - The non-ferrous metals sector showed strong performance, with stocks like Shengda Resources and Northern Copper hitting the daily limit. Other notable gainers included Yunnan Copper and Jiangxi Copper [2]. - The storage chip sector also saw gains, with Demingli reaching the daily limit. The demand for storage solutions is driven by limited capacity and higher-than-expected demand from data centers, which account for 55% of Micron's revenue [3][5]. - The financial and liquor sectors collectively declined, reflecting a broader market trend of weakness in these areas [1]. Commodity Prices - On September 11, London Metal Exchange (LME) prices for basic metals rose across the board, with LME aluminum up by 2.06% to $2,679.00 per ton, LME zinc up by 0.64% to $2,905.00 per ton, and LME copper up by 0.44% to $10,057.00 per ton [2][6]. Investment Insights - According to Guosen Securities, the recovery in the non-ferrous metals industry is not a broad-based rally but rather a structural opportunity shaped by macro liquidity, industrial policies, and geopolitical factors. Investors are advised to focus on supply-demand balance changes and sector-specific trends rather than betting solely on the industry cycle [2]. - The storage chip market is entering a clear upward trend, supported by increased enterprise-level storage demand and seasonal inventory replenishment in consumer electronics [3][5]. Individual Stock Movements - In the computing hardware sector, stocks like Fangzheng Technology and Jingwang Electronics saw consecutive gains, while others like Xinyi Sheng and Zhongji Xuchuang experienced declines of over 4% [5]. - The short-term trading sentiment has improved, with a 60% success rate for stocks achieving consecutive gains. Low-priced stocks are attracting more active capital, indicating potential for short-term speculative trading [5].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of 129.10 RMB [4][6]. Core Insights - The company achieved a record high quarterly revenue of 59.39 billion RMB in Q2 2025, benefiting from improved terminal demand and a healthier inventory level in the downstream market [1][2]. - The gross margin improved to 14.82% in Q2 2025, reflecting effective cost control measures and a recovery in storage prices [1][2]. - The company is expected to see continued growth in its enterprise storage and overseas business, with a positive outlook for storage prices in the second half of 2025 [3][4]. Summary by Sections Financial Performance - In 1H25, the company reported revenue of 101.96 billion RMB, a year-over-year increase of 12.80%, but a significant decline in net profit to 0.15 billion RMB, down 97.51% year-over-year [1][2]. - Q2 2025 revenue was 59.39 billion RMB, up 29.51% year-over-year and 39.53% quarter-over-quarter, with a net profit of 1.67 billion RMB, reflecting a 20.55% decrease year-over-year but a 209.73% increase quarter-over-quarter [1][2]. Business Growth - The Lexar brand's overseas business grew by 31.61% year-over-year in 1H25, while Zilia's revenue increased by 40.01% year-over-year, indicating strong international demand [2]. - The enterprise storage segment saw a remarkable 138.66% year-over-year revenue growth in 1H25, with Q2 2025 revenue reaching 3.74 billion RMB, up 17.24% quarter-over-quarter [2]. Market Outlook - The report anticipates that storage prices will continue to rise in the second half of 2025, driven by production cuts from major suppliers like Samsung and Micron, as well as seasonal demand in consumer electronics [3]. - The company is expected to benefit from increased capital expenditures in data centers by major clients like ByteDance and Alibaba, which will drive demand for its enterprise storage products [3]. Valuation Adjustments - Revenue forecasts for 2025-2027 have been revised upward to 241.6 billion RMB, 275.0 billion RMB, and 303.6 billion RMB, respectively, reflecting a 6.2%, 3.0%, and 2.7% increase from previous estimates [4]. - Net profit forecasts for the same period have also been increased significantly, with expected profits of 10.5 billion RMB, 13.5 billion RMB, and 15.1 billion RMB, representing increases of 56.7%, 23.0%, and 19.4% [4].

Investment Rating - The report maintains a "Buy" rating for the company [4][11]. Core Views - The company is positioned as a leader in storage solutions and is enhancing its layout in advanced wafer-level packaging [4]. - The company has shown strong revenue growth in Q2 2025, with a year-on-year increase of 38% and a quarter-on-quarter increase of 54% [5][6]. - The company is expected to benefit from rising storage prices, with significant price increases projected for various memory products in Q3 2025 [8]. - The company is focusing on high-end product development and has a strong R&D investment strategy, which is expected to enhance its competitive edge [11]. Financial Summary - Total shares outstanding: 461.27 million [2] - Circulating shares: 317.30 million [2] - Market price: 64.07 CNY [2] - Market capitalization: 29,553.29 million CNY [2] - Revenue forecast for 2023A: 3,591 million CNY, with a growth rate of 20% [4]. - Projected revenue for 2024A: 6,695 million CNY, with a growth rate of 86% [4]. - Projected net profit for 2025E: 461 million CNY, with a growth rate of 186% [4]. - Projected EPS for 2025E: 1.00 CNY [4]. - Projected P/E ratio for 2025E: 64.2 [4]. Market and Industry Analysis - The company has a strong market position in embedded storage, PC storage, automotive-grade storage, and enterprise storage, ranking among the top domestic storage manufacturers [8]. - The company is implementing a one-stop solution for storage and wafer-level advanced packaging, which is expected to enhance its competitiveness in the market [10]. - The company has successfully launched its first domestically developed main control chip, which is expected to cater to various applications, including smart wearables and automotive [10].