Summary of Huabao New Energy Conference Call Company Overview - **Company**: Huabao New Energy - **Industry**: Energy Storage Solutions Key Points Financial Performance - In 2023, Huabao New Energy experienced a revenue decline of **27.7%** and reported a loss, primarily due to inventory destocking [2][3] - The company expects to complete inventory destocking by the first half of 2024, with new products projected to account for **75%** of sales in the second half of 2024, driving significant market share growth [2][4] - Revenue growth is anticipated to be **65%** in Q2 2025, although net profit margin is expected to drop to single digits due to high tariffs [2][10] Product Lines - Huabao New Energy's product lines include: 1. **Portable Energy Storage**: Core business, primarily in the US and Japan, used for outdoor activities and emergency backup [7][8] 2. **Mobile Home Energy Storage**: Suitable for household power supply, priced lower than large home storage systems, also focused on the US and Japan [7][8] 3. **Balcony Solar Storage**: Targeted at the European market, designed for energy savings through photovoltaic systems [7][8] Market Dynamics - The portable energy storage market is growing rapidly, with Huabao holding approximately **10%** global market share, and over **30%** in the US online market [14] - The balcony solar storage industry is in a growth phase, with Germany's relaxed policies stimulating market demand, potentially creating a market space of **$10-20 billion** annually [5][13] - The mobile home storage market is projected to generate **$4 million** in revenue this year, with expectations to reach **$15 million** next year [19] Regional Performance - The US market accounts for about **50%** of the company's environmental performance business, while Japan accounts for **30%** and Europe has increased from **5%** to **10%** in market share [11] - The European market has seen a doubling in growth due to the introduction of new products and recruitment of specialized talent [11][13] Future Outlook - Revenue is expected to grow by **50%** from 2025 to 2026, with profit margins anticipated to recover to over **8%** [6][21] - The company plans to enhance its product line to meet diverse market demands in the US, Japan, and Europe, aiming to improve profit margins and solidify its industry position [9][22] Tariff Impact - High tariffs significantly impacted profit margins in Q2, but a reduction to **40.7%** in Q3, along with cost control measures, is expected to improve profitability [21] - The release of Southeast Asian production capacity is anticipated to further reduce costs and improve net profit margins [21] Conclusion - Overall, Huabao New Energy is positioned for significant growth, driven by strong brand power, effective new product launches, and resolution of tariff issues, indicating a positive future performance outlook [22][23]

Core Viewpoint - Huabao New Energy's revenue growth significantly improved in Q2 2025, with a focus on new product performance and profit elasticity, maintaining a "Buy" rating [1] Revenue Growth by Region - In H1 2025, revenue growth rates by region were as follows: North America +43%, Asia (excluding China) +32%, Europe +106%, and other regions +86% [1] - It is anticipated that Q2 2025 revenue growth in North America, Asia (excluding China), and Europe will improve sequentially compared to Q1 [1] Market Demand and Inventory - The European market is experiencing improved demand following inventory destocking, while North America and the Asia-Pacific markets are expected to see continued market share growth driven by new products [1] Revenue Growth by Channel - In H1 2025, revenue growth rates by channel were: independent websites +55% and offline retail +46%, compared to Q1 growth rates of +42% and +30% respectively [1] Revenue Growth by Product - In H1 2025, revenue growth rates by product were: portable energy storage +39% and photovoltaic solar panels +53% [1] Future Outlook - The company is optimistic about the increase in market share for portable energy storage due to differentiated advantages of new products (extremely portable products) and the gradual contribution of mobile home storage products [1] - Profit margins are expected to marginally recover due to ongoing cost reductions, diminished negative impacts from tariffs, and an increased proportion of new products [1]

Core Viewpoint - Huabao New Energy has shown significant revenue growth in Q2 2025, with a focus on new product performance and profit elasticity, maintaining a "Buy" rating [2]. Revenue Performance - In H1 2025, the company achieved revenue of 920 million yuan, representing a year-on-year increase of 64.9%. However, the net profit attributable to shareholders was 38 million yuan, down 14.41%, and the net profit excluding non-recurring items was 10 million yuan, down 63% [2]. - Revenue growth in different regions for H1 2025 was as follows: North America +43%, Asia (excluding China) +32%, Europe +106%, and other regions +86% [3]. Product and Market Insights - The company expects continued revenue growth driven by new products and an increase in overseas production capacity. The portable energy storage and solar panel segments saw revenue growth of 39% and 53%, respectively, in H1 2025 [3]. - The company anticipates that the share of portable energy storage products will increase, particularly with the gradual contribution of mobile home storage products [3]. Profitability and Cost Structure - The gross margin for Q1 and Q2 2025 was 44.2% and 39.9%, respectively, reflecting a year-on-year decline due to high tariffs impacting costs [4]. - The overall expense ratio showed improvement, with Q2 2025 expenses increasing primarily due to sales and management costs, while financial expenses rose due to decreased interest income [4]. Future Earnings Forecast - The revised profit forecasts for 2025-2027 are as follows: net profit of 384 million yuan in 2025, 596 million yuan in 2026, and 772 million yuan in 2027, with corresponding EPS of 3.08, 4.78, and 6.19 yuan [2]. - The current stock price corresponds to a PE ratio of 19.3 for 2025, 12.4 for 2026, and 9.6 for 2027, indicating potential for growth based on new product launches and market expansion [2].