Summary of the Conference Call for Huali Technology Company Overview - **Company**: Huali Technology - **Industry**: Amusement and Gaming Equipment Key Points and Arguments Business Performance - Huali Technology's domestic business has been under pressure due to macroeconomic conditions and a slow recovery in consumer spending, particularly in the amusement sector [3][4] - Positive signs include a stabilization in the pricing of tokens used in amusement parks, indicating a reduction in harmful price competition [4] - The company plans to focus on its strengths in simulation machines, particularly music and racing machines, and will also target mid-to-low-end markets to increase market share [5] Domestic Market Challenges - The domestic market remains challenging, with expectations of continued pressure in 2025 compared to 2024 [11] - The company is reducing the number of new store openings and seeking light-asset management partnerships to adapt to the current market conditions [11] International Market Growth - Huali Technology sees overseas markets as a key growth driver, with significant performance in the U.S. and Southeast Asia [7] - The company is expanding its ODM and OEM business, particularly with Japanese clients seeking to rebuild their supply chains post-pandemic [8] Product Development and IP Strategy - The company launched new products, including the second generation of Pokémon cards and a female-oriented card machine, which have performed well despite recent public relations challenges [9][12] - Huali Technology aims to increase its penetration in the market by expanding the number of stores carrying its products, currently reaching around 2,000 stores [9][43] - The company plans to allocate approximately 30% of its new product launches to non-traditional channels to broaden its audience [43] Financial Updates - Huali Technology raised approximately 150 million yuan through a recent fundraising round, primarily to invest in the Pokémon IP and other established franchises like Marvel [27] - The company anticipates increasing its machine deployment from 2,000-3,000 units to potentially 4,000-5,000 units in 2026 due to the new funding [27] Market Trends and Consumer Behavior - The company notes a shift in consumer behavior, with amusement parks moving away from price wars to improve service quality and upgrade facilities [39] - There is an expectation of a gradual recovery in equipment demand as the market stabilizes, with potential improvements in the second half of 2026 [40] Future Outlook - Huali Technology plans to maintain a focus on overseas expansion and increasing the number of machines deployed in the domestic market [47] - The company is cautious about the performance of its products in the domestic market, particularly in light of recent public relations issues affecting the Pokémon brand [15][49] R&D and Product Innovation - The company has significantly increased its R&D team, now comprising around 100 members, to enhance product development capabilities [35] - Huali Technology aims to release 5-10 new products annually, with a focus on maintaining a competitive edge in the card machine sector [36] Conclusion - Huali Technology is navigating a challenging domestic market while seeking growth opportunities abroad. The company is committed to product innovation and expanding its market presence through strategic investments and partnerships.