Summary of International Precision Engineering Conference Call Company Overview - **Company**: International Precision Engineering - **Key Business Segments**: Bearings and superhard materials Industry Insights Bearings Business - **Military Bearings**: - Market share: 90% - Annual revenue: 400-500 million RMB - Gross margin: 45%-50% [2][4] - **Wind Power Bearings**: - Expected revenue by 2025: 800 million RMB (doubling from 400 million RMB in 2024) - Gross margin: 20%-25% [2][4] - **Precision Machine Tool Bearings**: - Revenue: approximately 100 million RMB - Gross margin: around 30% [2][3] Superhard Materials Business - **Core Product**: Ultra-light material molds - **Annual Revenue**: 600-700 million RMB - **Gross Margin**: approximately 60% - **Applications**: Primarily in the semiconductor industry (60%-70% of revenue), with remaining applications in automotive, photovoltaic, and other sectors [2][5]. Emerging Business Areas - **Commercial Aerospace**: - Products include bearings for satellites and rockets. - Estimated value of satellite bearings: 100,000-200,000 RMB each. - Estimated value of rocket bearings: 700,000-800,000 RMB each. - Gross margin: over 40% [2][6]. - **Humanoid Robotics**: - Focus on cross-roller bearings. - Current business volume: several million RMB, primarily with client BlueDai Technology. - Gross margin: approximately 30% [2][6]. - **Diamond Functional Applications**: - Products include heat sinks, window pieces, and acoustic films. - Primarily targeted at the defense sector, with positive feedback from clients. - Expected annual revenue: over 10 million RMB [2][6]. Financial Projections - **CVD Furnace Expansion**: - Target: 500+ furnaces by the end of 2025, increasing to 700+ by the end of 2026. - 20%-30% of capacity allocated for diamond functional applications [3][22]. - **Revenue from Diamond Functional Applications**: - Expected to contribute 60-70 million RMB in total revenue, with 10-20 million RMB from functional applications [22]. Market Dynamics - **Competition in Commercial Aerospace**: - High technical barriers make it difficult for new entrants to compete in satellite and rocket bearings [9]. - **Price Sensitivity**: - Limited ability to raise prices due to the nature of clients being primarily state-owned enterprises [13]. Challenges and Opportunities - **Cost Reduction in Diamond Products**: - Key to expanding applications in civilian markets, particularly in data centers and high-performance chips [20][21]. - **Technological Integration**: - Challenges in integrating diamond heat sinks with existing devices and optimizing production processes [25]. Conclusion - International Precision Engineering is strategically positioned in high-margin sectors such as military and aerospace bearings, while also exploring growth in superhard materials and robotics. The company is focused on expanding its production capacity and enhancing its product offerings to meet future market demands.

Core Insights - The concept of "new quality productivity" is deeply embedded in the economic structure, driving industrial transformation and innovation in listed companies [2][9] - Over 2,200 A-share companies have included "new quality productivity" in their 2024 annual reports, indicating a widespread commitment to optimizing traditional industries and fostering emerging sectors [2][9] Traditional Industry Transformation - Companies are not starting from scratch but are innovating existing industries through new technologies and paradigms, addressing challenges like capacity overflow and homogenized competition [2][4] - Examples include Jack Technology's shift towards AI sewing machines and humanoid robots, and Hengsheng Energy's entry into the diamond production sector through its subsidiary [3][4] Emerging Industry Ecosystem - Under the dual drive of policy and market forces, listed companies in strategic emerging industries like new energy and materials are moving from single-point innovations to systemic capabilities [5] - Sunshine Power's 7.8GWh project in Saudi Arabia set an industry record by completing production and delivery in just 58 days, showcasing the rapid advancement in the energy sector [5] Future Industry Strategic Positioning - Companies are investing in advanced fields such as quantum technology, biomanufacturing, and 6G to secure technological leadership [7][9] - For instance, Chuangyuan Xinke is actively involved in 6G core technology development, while Kexai Biotech is focusing on bio-based materials to replace traditional fossil-based products [7][8] Overall Industry Trends - The transformation narrative of listed companies is characterized by three clear paths: traditional industries innovating through engineering advantages, emerging industries building cluster ecosystems, and future industries positioning themselves through advanced R&D [9][10] - The valuation paradigm in capital markets is shifting, with company value increasingly defined by technological barriers, industry ecosystem positioning, and future potential rather than just current profits [9][10]

Core Viewpoint - The International Carbon Materials Conference showcased Hengsheng Energy's subsidiary Huamao Technology, highlighting its advancements in CVD diamond technology and its strategic positioning within the energy, environmental, and industrial sectors, marking a potential second growth curve for the company [1]. Group 1: Technology and Product Performance - Huamao Technology focuses on the MPCVD method for high-end diamond production, establishing a solid technological barrier with 17 core patents, achieving a functional diamond material yield rate exceeding 90% and cultivated diamond yield rate above 80%, significantly higher than industry averages [2]. - The company's core products, including cultivated diamonds and semiconductor heat sink plates, demonstrate competitive performance, with cultivated diamonds available in sizes from 7×7 to 20×20, achieving G color and VS-VS1 clarity, and heat sink plates exhibiting thermal conductivity of 2200W/mK for single crystal and 1200W/mK for polycrystalline [3]. Group 2: Capacity and Investment - Huamao Technology plans to invest approximately 1.2 billion yuan to establish a project for 2.6 million carats of wide bandgap semiconductor single crystal diamonds and cultivated diamonds, with 200 new MPCVD devices already in production, aiming to become a core supplier of CVD diamonds in China [4]. Group 3: Market Strategy and Trends - The company adopts a dual-driven strategy focusing on functional materials and consumer-grade diamonds, targeting high-value markets in thermal management and jewelry, with a significant opportunity in the growing demand for CVD diamonds in various high-tech applications [5]. - In the consumer diamond sector, Huamao Technology is launching themed products and experiences to attract younger consumers, with cultivated diamonds priced at 1/5 to 1/10 of natural diamonds, aligning with the environmental values of the Z generation [6]. - The global cultivated diamond market is projected to grow significantly, with a forecasted compound annual growth rate of 49% for China's cultivated diamond exports from 2026 to 2030, and the diamond thermal management market expected to expand from $0.5 billion to $15.24 billion by 2030, indicating substantial growth potential [7].

Group 1 - The first phase of the Yibin Technology Industrial Park is expected to be fully operational by 2025 [2] - The second phase of the new high-power MPCVD single crystal diamond project will have some equipment ready for use by 2026 [2] - The equipment from the second phase will primarily produce cultivated diamond roughs, diamond heat sinks, and diamond optical window pieces, with the current market for diamond heat sinks and optical windows still developing [2]

Core Viewpoint - The company Guojijinggong (002046.SZ) announced that the Yibin Technology Industrial Park (Phase I) construction project is expected to be fully operational by 2025, while the new high-power MPCVD single crystal diamond project (Phase II) will have some equipment ready for use by 2026 [1] Group 1 - The Yibin Technology Industrial Park (Phase I) is projected to be fully operational by 2025 [1] - The new high-power MPCVD single crystal diamond project (Phase II) will have some equipment available by 2026 [1] - The equipment from the Phase II project will be used to produce cultivated diamond rough, diamond heat sinks, and diamond optical window pieces [1] Group 2 - The market for diamond heat sinks and diamond optical window pieces is still developing, resulting in limited market capacity [1] - Currently, the majority of products produced by existing equipment are cultivated diamond rough [1]