Core Insights - Uzbekistan generates 14 million tons of municipal waste annually, with a recycling rate of only 5% [1] - The potential value of recyclable materials from paper, plastics, rubber, glass, and textiles is estimated at 1 trillion soums (approximately 790 million USD) [1] - There is significant development potential in the recycling of construction, chemical, electronic, technical waste, and industrial oils [1] Environmental Tax Measures - The government plans to impose an ecological tax on batteries, accumulators, vehicles, lubricants, packaging products, tires, rubber tubes, and glass products in the first phase [1]

Investment Rating - The report maintains a "Strong Buy" rating for the company [1][3]. Core Views - The company reported a strong performance in Q2 2025, with revenue and net profit attributable to shareholders increasing by 11.19% and 15.35% year-on-year, respectively. The domestic sales improved sequentially, while overseas markets continued to show strong growth [1][6]. - The company is expected to see continued improvement in profitability in H2 2025, driven by domestic sales recovery and ongoing expansion in overseas markets, particularly in the Middle East and Southeast Asia [1][6]. - The projected net profit for 2025-2027 is estimated at 1.65 billion, 1.85 billion, and 2.05 billion yuan, with corresponding EPS of 1.90, 2.13, and 2.36 yuan, respectively [1][6]. Financial Performance - For H1 2025, the company achieved a total revenue of 7.899 billion yuan, a year-on-year increase of 10.1%, and a net profit of 799 million yuan, up 15.66% year-on-year. The Q2 figures were 4.105 billion yuan in revenue and 429 million yuan in net profit, reflecting a strong performance [1][6][8]. - The gross margin improved to 26.19% in Q2 2025, an increase of 2.27 percentage points year-on-year, primarily due to lower raw material costs [1][6]. - The company’s total revenue for 2023 is projected at 13.581 billion yuan, with a growth rate of 6%, and is expected to reach 19.999 billion yuan by 2027, with a growth rate of 9% [2][14][15]. Market Expansion - The company is actively expanding its overseas market presence, with a new subsidiary established in Indonesia to enhance its market share [1][6]. - The overseas revenue for H1 2025 was 3.462 billion yuan, representing a year-on-year growth of 22.59%, indicating strong demand in international markets [1][6]. Cost Management - The company has effectively managed costs, leading to a stable expense ratio and improved net profit margin, which reached 10.5% in Q2 2025, an increase of 0.38 percentage points year-on-year [1][6].

Core Insights - The company reported a revenue of 1.949 billion with a year-on-year growth of 5.46% and a net profit of 176 million, reflecting a year-on-year increase of 17.29% [1] Group 1: Business Performance - The company continues to deepen its packaging business, enhancing new productivity through the exploration of existing high-end customer potential and ensuring stable supply to key clients [1] - The company is actively expanding its client base to include world-class enterprises and leading companies in various domestic and international sectors, further strengthening its packaging business [1] - The strategic direction focuses on a domestic base as the mainstay while promoting mutual benefits between domestic and international bases, accelerating the increase of overseas production capacity [1] Group 2: Research and Development - The company has implemented measures such as establishing R&D design awards to stimulate team innovation and enhance core competitiveness through the application of new technologies and designs [2] - As of the end of the reporting period, the company and its subsidiaries hold a total of 922 national patents, including 183 invention patents, and are key contributors to 45 national/industry packaging standards [2] - The company is exploring the application of AI technology to improve R&D design efficiency, with successful registrations of its AI platforms for copyright [2]

Investment Rating - The investment rating for the company is "Accumulate" (maintained) [1] Core Views - The company reported a slight decline in revenue, waiting for a bottom reversal, maintaining the "Accumulate" rating. In the first half of 2025, the company achieved revenue of 980 million yuan, a year-on-year decrease of 7.2%, while net profit attributable to the parent company was 77 million yuan, a year-on-year increase of 26.9% [5] - The company is a leading brand in the marinated food industry, and with the recovery of external demand, store expansion is expected to resume [5] Financial Performance Summary - In Q2 2025, the company achieved revenue of 540 million yuan, a year-on-year decrease of 10.7%, and a net profit of 33 million yuan, a year-on-year increase of 16.1% [5] - The company’s revenue from various product lines in the first half of 2025 was as follows: fresh products 600 million yuan (-10.9%), packaged products 19 million yuan (-29.2%), slaughter processing 41 million yuan (+54.2%), rice products 31 million yuan (-1.4%), testing and other businesses 0.15 million yuan (-23.0%) [6] - As of the end of Q2 2025, the company had 2,898 fresh product stores, with a net closure of 762 stores in the first half of the year [6] Cost Control and Profit Growth - The gross margin for Q2 2025 was 29.3%, a year-on-year decrease of 0.8 percentage points, attributed to a decline in sales volume and increased depreciation [7] - The sales expense ratio for Q2 2025 was 11.0%, a year-on-year decrease of 2.8 percentage points, due to controlled promotional expenses and reduced labor costs [7] - The net profit for Q2 2025 benefited from controlled promotional expenses, increasing by 16.1% [7] Financial Forecasts - The company is expected to achieve net profits of 80 million yuan, 110 million yuan, and 120 million yuan for the years 2025, 2026, and 2027, representing year-on-year growth of 90.5%, 36.7%, and 10.4% respectively [5] - The current stock price corresponds to P/E ratios of 116.1, 84.9, and 76.9 for the years 2025, 2026, and 2027 respectively [5]

Financial Data and Key Metrics Changes - In Q1 2026, net sales decreased by 1.3% to $5.8 million compared to $5.9 million in the same period last year, a decline of $78,000 [5] - Gross profit increased by 20% to $1.8 million, with a gross profit margin of 30.5%, up from 25% in the prior year, reflecting improved production efficiencies [5][6] - The operating loss was reduced to $753,000 from $1 million in the previous year, while the net loss improved to $926,000 or $0.13 per diluted share, compared to a net loss of $1.2 million or $0.17 per diluted share in the prior year [6] Business Line Data and Key Metrics Changes - Bulk spirulina and bulk azathiothin sales saw significant increases of 484% and 849% respectively, indicating a renewed demand for US-sourced materials in the ingredients channel [3][4] - Packaged product sales, however, declined by 12%, impacting overall sales performance [4] Market Data and Key Metrics Changes - The company reported a shift in sales mix, with a notable increase in bulk ingredient sales, while packaged products faced a decline [3][4] Company Strategy and Development Direction - The company remains focused on long-term strategies, including enhancing brand value through storytelling, strengthening relationships in e-commerce and bulk ingredient markets, and prioritizing sustainable cash flows [4] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the team's resilience amid ongoing macroeconomic challenges and highlighted progress in executing the company's strategies [4] Other Important Information - The company reported cash of $383,000 and negative working capital of $255,000, compared to $257,000 and $302,000 respectively in the prior year [6] Q&A Session Summary - No questions were received during the call [7]

Financial Data and Key Metrics Changes - The company achieved a record second quarter performance with a 13% increase in sales volume, 10% growth in net sales, and 20% growth in net income year over year [4][10] - Net sales for the second quarter were $124 million, up 10.1% from $112.6 million in the prior year quarter, driven by a 13% volume growth [10] - Net income increased by 19.8% to $11.1 million from $9.2 million in the prior year quarter, with a net income margin of 8.9% compared to 8.2% a year ago [14] Business Line Data and Key Metrics Changes - Sales to chain accounts and distributors increased by 11.4%, while online sales rose by 6.8% [10] - Retail channel sales turned positive with a 1.9% increase [10] - The company improved operating cost leverage, saving $1 million in online shipping and marketing costs [9] Market Data and Key Metrics Changes - The company is diversifying its sourcing, reducing reliance on China to just 10% in the second quarter, and expanding sourcing across other Asian countries and Latin America [5] - Strong business trends are expected to continue, particularly in California, with new business wins from large national chains scheduled to begin shipping in the third and fourth quarters [6] Company Strategy and Development Direction - The company is focused on accelerating top-line growth and profitability through product innovation and strategic expansion [8] - A new distribution center near the Chino headquarters is now fully operational, enhancing logistic capabilities and enabling faster delivery times [6] - The company is maintaining its full-year 2025 guidance for net sales, gross margin, and adjusted EBITDA margin, pending potential impacts from additional tariff changes [16] Management's Comments on Operating Environment and Future Outlook - Management noted that currency pressure is starting to ease and that the company is well-positioned for continued profitable growth [5][9] - The company expects net sales for the third quarter to increase by approximately 9% to 10% over the prior year quarter [16] - Management anticipates a sequential decline in gross margin for the third quarter due to tariffs, with recovery expected in the fourth quarter [22][25] Other Important Information - The company generated operating cash flow of $9.8 million in the second quarter and ended with $116.8 million in working capital [15] - A quarterly dividend of $0.45 per share was approved, payable on August 27, 2025 [16] Q&A Session Summary Question: Why was pricing negative in the quarter, and what should be expected for the second half? - Management indicated that they are currently holding on to pricing with minor increases in certain categories, and they expect pricing to be close to breakeven in the second half [20][21] Question: What are the factors contributing to the sequential decline in gross margin? - Management explained that the impact of new sourcing will be felt in the fourth quarter, while the third quarter will still reflect higher tariff costs from the second quarter [22][24] Question: What trends are being observed in July, particularly regarding customer buying behavior ahead of August tariffs? - Management reported strong sales trends in July, especially from national chain accounts, with double-digit sales increases in California [27] Question: What is the outlook for online sales growth in the second half of the year? - Management believes online sales will continue to grow, with expectations of returning to double-digit growth in the fourth quarter due to new platforms being added [35][37] Question: What is the company's stance on M&A activity? - Management stated they are still looking at M&A opportunities, focusing on strategic acquisitions that enhance product lines or market share [38][40]

Financial Data and Key Metrics Changes - The company reported that sales, operational cash generation, and EBITDA were in line with expectations for the quarter [10][11] - Net debt remained stable at $13 billion, with net leverage increasing to 3.1 times due to a reduction in last twelve month EBITDA to $4.2 billion [28][29] - Cash costs declined compared to the first quarter, driven by stronger operational performance and lower fixed costs [25][26] Business Line Data and Key Metrics Changes - Brazilian operations saw stronger sales volumes and lower costs compared to Q1, with EBITDA growth year-over-year [12][13] - U.S. operations experienced a 3% price increase quarter-over-quarter, driven by product mix and better commercial location [13] - The paper and packaging business in the U.S. is expected to deliver positive EBITDA in Q3, with lower costs and higher production volumes anticipated [16][58] Market Data and Key Metrics Changes - In Brazil, print and write demand rose 6% year-over-year, with domestic sales also increasing by 6% [14] - Uncoated wood free paper demand remained stable in North America and Latin America but declined by 10% in Europe [14] - The U.S. market for boxboard demand was stable, while demand for SBS boards increased by 1% [15] Company Strategy and Development Direction - The company is focusing on competitiveness and cost reduction, with an emphasis on executing existing deals rather than pursuing new M&A initiatives [10][11] - A deal with Eldorado is expected to provide an internal return of around 20%, allowing for increased production at the Ribba's mill without significant investment [6][42] - The company plans to maintain a focus on deleveraging and improving operational competitiveness [10][88] Management's Comments on Operating Environment and Future Outlook - Management noted that the cash cost trend is expected to continue decreasing in the upcoming quarters [10][25] - The company is monitoring market dynamics closely, particularly in light of recent price corrections and supply-demand imbalances [22][72] - Management expressed confidence in the recovery of order intake in China and the potential for price increases due to supply constraints [22][23] Other Important Information - The company has built inventories in the U.S. to mitigate the impact of 50% import duties imposed by the U.S. government [17] - The company is planning to redirect the majority of its exports from the U.S. to other regions [17] - The company maintains a healthy amortization schedule with more than six years of average maturity [28] Q&A Session Summary Question: What are the changing dynamics in the pulp scenario that allowed for the $20 price increase for Asia? - Management noted high order intake levels in China since June, indicating a supportive market environment for price increases [32][34] Question: Can you elaborate on the internal rate of return of the deal with Eldorado? - The internal rate of return is expected to be around 20%, driven by optimized harvesting and reduced operational costs [40][42] Question: What is the expected normalized production level if pulp prices remain below $550 per ton? - The company has a detailed analysis on production costs and has decided to reduce production to maintain profitability [46][47] Question: What are the main opportunities identified in the U.S. packaging market? - The company is expanding its market reach and has seen significant growth in cup stock sales, indicating strong opportunities for profitability [60] Question: How are negotiations regarding the 10% tariff on U.S. exports going? - The company successfully negotiated that customers will bear the 10% tariff, ensuring that Suzano will not absorb this cost [97] Question: What is the status of the Kimberly Clark acquisition? - Dedicated teams have been established to plan the carve-out of the new joint venture, with the project progressing as planned [98]

Core Viewpoint - The company is establishing a partnership to enhance its core competitiveness in the paper and packaging sector by introducing state-owned capital and insurance funds through the transfer of equity stakes in its subsidiaries [1][2]. Group 1: Partnership and Financial Details - The company plans to transfer 100% equity of its subsidiary Guangdong Shanying and 36.56% equity of Xiangheng Creative Packaging for a total consideration of 2.977 billion yuan, forming a partnership with Xinsengli Investment [1]. - The total scale of the partnership is 2.978 billion yuan, with the company holding a 99.97% stake [1]. - After the transfer, long-term investors will hold a combined 25.09% stake in the partnership, while the company will retain a 74.84% stake, maintaining control over the partnership [1]. Group 2: Business Performance and Strategy - Guangdong Shanying and Xiangheng Creative are considered high-quality assets, with projected revenues of 3.019 billion yuan and net profits of 25.138 million yuan for 2024 [2]. - The company has been optimizing its asset structure and actively introducing strategic investors to enhance its financial strength and risk resilience [2]. - The company is transitioning from a capital-driven growth model to a high-return operational growth model, having completed its national strategic layout for the paper-making sector [3]. Group 3: Production and Investment Focus - The company has established a diversified raw material channel and reported a production increase of 6.71% in the paperboard sector and 3.59% in the packaging sector for 2024 [3]. - The company announced plans to set up a partnership with its subsidiary to invest 100 million yuan in products closely related to industrial scenarios, aiming to reduce costs and improve efficiency in its paper and packaging industry [3].

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $1,213 million with an adjusted EBITDA margin of 15.3% for the second quarter [5][15] - Net sales exceeded $7,900 million, showing mid-single-digit growth in adjusted EBITDA compared to the same period last year [15][16] - Strong adjusted free cash flow of $387 million was noted, reflecting improved financial performance [15] Business Line Data and Key Metrics Changes - North America segment achieved net sales of $4,800 million with adjusted EBITDA of $752 million and an adjusted EBITDA margin of 15.8%, showing significant margin improvement due to higher selling prices and operational efficiencies [16][18] - EMEA and APAC segment reported net sales of $2,800 million with adjusted EBITDA of $372 million and an adjusted EBITDA margin of 13.4%, despite a challenging market [19] - Latin America segment delivered net sales of $505 million with an outstanding adjusted EBITDA margin of over 23%, indicating strong demand growth in certain countries [20] Market Data and Key Metrics Changes - North American box volumes decreased by 4.5% on a same-day basis, aligning with the company's value-over-volume strategy [18] - EMEA and APAC faced headwinds from energy and labor costs, with flat corrugated box volumes on a same-day basis [19] - Latin America showed a nascent improvement in demand, particularly in Argentina, Colombia, and Chile, despite a 1.9% decline in box volumes [20] Company Strategy and Development Direction - The company is focused on optimizing its operations and has identified at least $400 million in synergies from the integration of Smurfit Kappa and WestRock [7][23] - A disciplined investment approach is being maintained, with $1 billion already invested in system improvements [12] - The company aims to be the go-to innovative sustainable packaging partner, emphasizing value, quality, and service [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the North American business, noting significant improvements and a strong operational focus [25] - The European market is expected to recover, with management believing they are close to a low point despite current pricing challenges [25][39] - Latin America is viewed as a high-growth potential region, with ongoing pricing initiatives to offset negative currency impacts [20][26] Other Important Information - Fitch upgraded the company's long-term debt rating to BBB+ with a stable outlook, reflecting confidence in its business quality and long-term prospects [6][22] - The company declared a quarterly dividend of $0.04 per share, demonstrating confidence in its cash-generative ability [21] Q&A Session Summary Question: Details on loss-making contracts in North America - Management indicated that approximately 40% of plants have moved from loss to profit, with ongoing efforts to improve profitability [32][34] Question: Current status of loss-making contracts - About 60% of loss-making contracts remain, with expectations that many will transition to profitability over the next year [37][38] Question: Impact of tariffs and consumer confidence - Management noted that tariffs have been largely absorbed by consumers, with no significant changes expected in import/export flows [49][51] Question: Future demand expectations - Management anticipates a seasonal pickup in demand but is not baking in significant improvements for the second half of the year [72][73] Question: Clarification on volume assumptions - The company expects flat volumes in the second half compared to the first half, with no significant deterioration anticipated [90]

Group 1: Market Overview - The cultural and creative toy industry is experiencing a positive trend, driven by national cultural confidence and the Z generation becoming the main consumer force[3] - The market size of the national tide economy reached 2.05 trillion yuan in 2023, with expectations to exceed 3 trillion yuan by 2028, reflecting a growth rate of 9.44%[3] - The Chinese cultural and creative product market is projected to grow at a compound annual growth rate (CAGR) of 35.11% from 2020 to 2024, surpassing the global average of 19.79%[3] Group 2: Company Performance - Taohuxue's revenue in 2024 was 516 million yuan, with a year-on-year decline of 2.96%, while its net profit was 28.06 million yuan, down 18.32%[32] - Baixinglong's revenue in 2024 reached 592 million yuan, reflecting a year-on-year increase of 10.21%, but its net profit decreased by 10.53% to 41.23 million yuan[38] - The median price-to-earnings (P/E) ratio for the North Exchange's consumer service sector increased from 53.2X to 53.4X this week[45] Group 3: Investment Insights - The median market capitalization of consumer service companies on the North Exchange rose from 123.92 billion yuan to 124.65 billion yuan, indicating a positive market sentiment[48] - 68% of consumer service companies on the North Exchange saw their stock prices increase, with notable gainers including Guoyi Bidding (+70.62%) and Guangzi International (+24.71%)[43] - The overall consumer industry P/E ratio median decreased from 70.6X to 68.1X, suggesting a slight contraction in valuation[53] Group 4: Risks and Challenges - Potential risks include macroeconomic fluctuations, market competition, and statistical data inaccuracies[68]