Summary of the Conference Call for Dewel Company Overview - Dewel reported a revenue of 270 million yuan and a net profit of 21.05 million yuan for Q1 2025, with a year-on-year decline of 5.36%, 25.4%, and 21.36% respectively, primarily due to slow growth in industry capital expenditure, intense market competition, and rising costs [2][4][3] Financial Performance - For the fiscal year 2024, Dewel achieved a revenue of 1.124 billion yuan and a net profit of 85.6 million yuan, with a year-on-year decline of 7.12%, 39.9%, and 39.7% respectively, attributed to weak global economic recovery and cautious capital expenditure from oil companies [3] - Management expenses increased by 9.67% due to higher personnel costs and acquisition-related expenses, while R&D expenses decreased by 9.83% [3] - The gross margin for the main business decreased by 3.56 percentage points, influenced by stagnant order prices and rising costs [3] Product Segmentation - In 2024, the revenue breakdown by product category was as follows: - Deep-sea equipment components: 42% of revenue, gross margin of 33% - Wellhead components: 37% of revenue, gross margin of 8% - Fracturing components: 18% of revenue, gross margin of 12% - Drilling components: 4% of revenue, gross margin of 18% - Deep-sea equipment orders accounted for nearly 60% of new orders in 2025, indicating a potential improvement in profitability [2][5] Strategic Acquisitions - Dewel completed the acquisition of 100% of HME in Singapore, aiming to enhance capacity and achieve synergies, with expected revenue and profit growth of approximately 20% this year [2][11] - The Singapore subsidiary reported a revenue of 18 million yuan in Q1, with a full-year target of 240 million yuan, and an expected net profit margin of 15-20% [12][13] Market Dynamics - The share of orders from Shanghai increased from 40% last year to 60% this year, indicating a growing concentration of domestic market demand [3][10] - The deep-sea oil and gas demand remains stable, with decreasing extraction costs and advancements in exploration technology, positioning Dewel favorably for future growth [9] Pricing Strategy - Dewel has gradually increased product prices since December 2024, with significant price hikes for deep-sea products and limited increases for wellhead products [16][18] - The overall average price increase is limited, as some products are bound by fixed-price agreements [17] Project Development - Dewel is advancing its fundraising projects, having completed key stages such as equipment installation and product design, with clients showing strong interest in the new factory [8] - The company is focusing on high-end valve and piping component manufacturing, with plans to expand into aerospace and nuclear power sectors [8] Challenges and Future Outlook - The company faces challenges related to rising costs, including labor and depreciation, which have contributed to a decline in overall gross margin [4] - Dewel is committed to optimizing its pricing strategy and enhancing operational capabilities at the Singapore facility to improve market competitiveness and achieve long-term growth [24]