Summary of Haierong Cold Chain Conference Call Company Overview - **Company**: Haierong Cold Chain - **Industry**: Cold Chain and Refrigeration Equipment Key Points Financial Performance - In Q2 2025, Haierong's frozen domestic sales revenue decreased by 40% year-on-year, while export revenue increased by 52%, driven by product structure optimization and higher gross margins in export business [2][5] - The company maintains a full-year revenue growth forecast of 7%-16%, currently achieving approximately 13% [3][18] - Cash flow remains strong, with expectations for the trend to mirror the first half of the year [3][17] Business Segments Performance - Domestic cold storage revenue grew by 36% year-on-year in Q2 2025, benefiting from deeper collaborations with clients in the beverage sector [2][6] - Supermarket cabinet sales saw a nearly 50% increase in domestic revenue and a 61% increase in export revenue, attributed to enhanced cooperation with existing clients and new application scenarios [2][5] - Smart cabinet domestic revenue surged by 240%, driven by increased investments from downstream brand clients, although overseas market growth is limited due to 5G infrastructure and mobile payment challenges [2][5][21] Market Trends and Outlook - The North American market experienced a 29% decline in sales in H1 2025 due to tariff policies, with expectations for this trend to continue into H2 [2][8][9] - The domestic frozen market is not expected to see a significant turning point in H2 2025, but the likelihood of further substantial declines is low due to previous downturns [2][10] - The company is optimistic about the domestic cold storage business over the next three to five years, supported by strong product competitiveness and established client relationships [6][7] Competitive Landscape - The company maintains a stable position among major clients like Yili and Mengniu, despite the introduction of other suppliers [11] - The overall industry demand has decreased significantly, but Haierong has increased its market share among smaller clients, maintaining its industry position [12] Regional Performance - In H1 2025, revenue growth in Asia (excluding China) was 37%, accounting for 58% of total export revenue, while North America saw a 29% decline [13] - The European market is expected to grow slowly due to cultural differences and competition, while the Southeast Asian market, particularly Indonesia, is viewed as a key growth area due to favorable economic conditions [19] Gross Margin and Product Strategy - The improvement in gross margin is primarily due to the optimization of product structure, with the frozen export business having the highest gross margin [15] - The domestic cold storage business's gross margin reached 13% in Q2 2025, with expectations for gradual improvement [16] Future Strategies - The company is developing products suitable for local networks and payment methods in overseas markets to address current limitations [21] - There are no specific growth targets provided for individual product categories, only an overall revenue guidance [20] Additional Insights - The company is actively working on the construction of its factory in Indonesia, which is expected to alleviate tariff impacts once operational [4][9] - The cash flow situation has improved due to reduced accounts receivable and effective collection efforts [17]

Investment Rating - The report maintains a "Strong Buy" rating for the company with a target price of 18 CNY, indicating an expectation to outperform the benchmark index by over 20% in the next six months [2][16]. Core Views - The company reported a revenue of 1.79 billion CNY for H1 2025, representing a year-on-year increase of 12.9%, and a net profit of 220 million CNY, up 10.4% year-on-year. In Q2 2025, revenue reached 880 million CNY, a 20.0% increase year-on-year, with net profit at 120 million CNY, reflecting a 36.6% year-on-year growth [2][9]. - The revenue growth is attributed to a recovery in export demand and an increase in market share among certain clients, despite a weak domestic demand for frozen cabinets. The company expects a rebound in domestic sales next year after several quarters of pressure [9][10]. - The company's profitability improved, with a gross margin of 27.9% in Q2 2025, up 0.4 percentage points year-on-year, driven by a higher proportion of exports. The net profit margin for Q2 2025 was 13.2%, an increase of 1.5 percentage points year-on-year [9][10]. - The report highlights a positive outlook for the company's growth trajectory, with expectations for continued improvement in operations and revenue growth driven by successful client acquisition in the refrigerated cabinet segment and the establishment of overseas production lines [9][10]. Financial Summary - The company is projected to achieve total revenue of 31.98 billion CNY in 2025, with a year-on-year growth rate of 13.0%. The net profit is expected to reach 401 million CNY, reflecting a growth rate of 13.4% [5][10]. - Earnings per share (EPS) estimates have been adjusted to 1.04 CNY for 2025, 1.27 CNY for 2026, and 1.47 CNY for 2027, with corresponding price-to-earnings (P/E) ratios of 13, 11, and 10 respectively [9][10].

Investment Rating - The investment rating for the company is "Buy-A" with a target price of 17.28 CNY for the next six months, corresponding to a 17X PE for 2025 [6]. Core Views - The company has shown significant improvement in operational performance, with a revenue increase of 12.9% year-over-year (YoY) to 1.79 billion CNY in H1 2025 and a net profit increase of 10.4% YoY to 220 million CNY [2]. - The company is expected to maintain a good growth trend in revenue, driven by the expansion of its customer base and increasing market share in the global commercial refrigeration market [3][4]. Financial Performance Summary - In Q2 2025, the company achieved a revenue of 880 million CNY, reflecting a 20.0% YoY growth, and a net profit of 120 million CNY, which is a 36.6% YoY increase [2][3]. - The company's gross profit margin improved by 0.4 percentage points YoY, and the net profit margin increased by 1.6 percentage points YoY in Q2 2025 [3]. - Operating cash flow for Q2 2025 increased by 240 million CNY YoY, primarily due to rapid revenue growth [4]. Future Earnings Estimates - The projected earnings per share (EPS) for 2025, 2026, and 2027 are 1.02 CNY, 1.14 CNY, and 1.28 CNY respectively [4][5]. - The company is expected to achieve a revenue of 31.8 billion CNY in 2025, with a net profit of 3.9 billion CNY [5][12].

Investment Rating - The report maintains a "Strong Buy" rating for the company, with a target price of 13.2 CNY [2][10]. Core Views - The company's revenue for 2024 is reported at 2.83 billion CNY, a decrease of 11.7% year-on-year, while the net profit attributable to shareholders is 354 million CNY, down 14.4% year-on-year. However, Q4 2024 shows a revenue increase of 2.1% year-on-year, and a net profit increase of 42.6% year-on-year [2][10]. - For Q1 2025, the company achieved a revenue of 910 million CNY, an increase of 6.7% year-on-year, while the net profit decreased by 9.2% year-on-year [2][10]. - The company is expected to see a recovery in performance due to the lifting of import quotas in Indonesia and potential growth in the U.S. market [10]. Financial Summary - **2024 Financial Performance**: Total revenue of 2.83 billion CNY, net profit of 354 million CNY, and a gross margin of 27.8%, down 1.9 percentage points year-on-year [5][10]. - **2025 and Beyond Projections**: Expected revenue growth of 10.5% in 2025, with net profit projected to increase by 6.5% [5][10]. - **Earnings Per Share (EPS)**: Projected EPS for 2025 is 0.98 CNY, increasing to 1.22 CNY by 2027 [5][10]. Market Performance - The company has shown resilience in a challenging market environment, with a focus on expanding its overseas markets and maintaining a stable operational performance [10]. - The report highlights that the company is committed to a dividend payout ratio of no less than 50% for 2025, indicating confidence in future cash flows [10].