Summary of Conference Call for New Coordinates Company Overview - New Coordinates has achieved its highest quarterly revenue ever in the first half of 2025, with Q2 revenue exceeding 200 million yuan, showing significant year-on-year and quarter-on-quarter growth [3][22] - The company’s net profit reached a record high of 77 million yuan, with a healthy gross margin maintained [3] Industry and Market Dynamics - The overseas revenue of New Coordinates has surpassed domestic revenue for the first time, accounting for over 51% of total revenue, primarily due to the efforts of overseas subsidiaries since 2022 [2][3] - The commercial vehicle and commercial engine business segments have increased in proportion, indicating an optimization of the company’s business structure [2] Customer Structure and Market Share - BYD still accounts for over 10% of New Coordinates' revenue, although this has slightly decreased; Volkswagen accounts for approximately 40%-50% globally, with foreign markets making up two-thirds of this [2][4] - The commercial vehicle segment has seen nearly 20% growth, with revenue exceeding 70 million yuan, mainly driven by overseas markets and clients such as MAN and Caterpillar [4][10] - The Mexican subsidiary has shown significant revenue growth, enhancing profitability through scale effects and automation improvements [16] Product Development and R&D - New Coordinates established a dedicated subsidiary for four-cylinder engine research and development with a registered capital of 500 million yuan, aiming to enter small-scale production in the second half of the year [6][30] - The company has made progress in developing new products, particularly in the valve train and precision components, with the "other" category (mainly high-pressure pumps and parts) showing rapid growth [8][9] Future Outlook and Seasonal Factors - The company anticipates a slight slowdown in performance in Q3 and Q4 due to seasonal factors, with new projects from Chery, Great Wall, and others expected to gradually contribute to growth [7][22] - The heat management system's stainless steel component business is expected to ramp up in the second half of the year [7] Financial Performance and Growth Projections - The revenue growth rate for the first half of 2025 was around 20%, with expectations for the full year to be around 10% [22][24] - Traditional business is projected to maintain approximately 10% growth in the coming years, supported by ongoing projects and customer orders [24] Strategic Initiatives and Competitive Position - New Coordinates is focusing on high-performance alloy steel materials instead of traditional carbon steel to meet the automotive industry's stringent quality requirements [21] - The company has secured a project with Rolls-Royce, enhancing its brand effect and potential for high-end customer orders [26][27] Challenges and Risks - The company faces challenges in maintaining growth due to potential slowdowns in key clients like BYD and seasonal impacts on performance [22][23] - The commercial vehicle market remains a significant growth area, but the company’s market share in this segment is still relatively low compared to passenger vehicles [12][13] Conclusion - New Coordinates is positioned for growth with a strong focus on overseas markets and new product development, although it must navigate seasonal fluctuations and competitive pressures in the automotive industry [2][7][12]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of —— yuan over the next six months [1]. Core Insights - The company is actively expanding its growth opportunities in the screw rod sector and has shown strong revenue and profit growth in recent quarters [7]. - The company reported a revenue of 680.28 million yuan for 2024, representing a year-on-year increase of 16.63%, and a net profit attributable to the parent company of 211.61 million yuan, up 14.76% year-on-year [7]. - The company is focusing on enhancing its profitability and has achieved a gross margin of 51.9% in 2024, with a net margin of 32.3% [7]. Financial Performance Summary - **Revenue Forecast**: The company expects revenues to grow from 680.28 million yuan in 2024 to 1,507.60 million yuan by 2027, with compound annual growth rates (CAGR) of 32.4% [2][12]. - **Net Profit Forecast**: The net profit is projected to increase from 211.61 million yuan in 2024 to 490.86 million yuan in 2027, with significant growth rates in the coming years [2][12]. - **Earnings Per Share (EPS)**: EPS is expected to rise from 1.55 yuan in 2024 to 3.60 yuan in 2027 [2][12]. - **Return on Equity (ROE)**: The ROE is forecasted to improve from 15.72% in 2024 to 21.09% in 2027 [2][12]. Business Segment Performance - **Valve Transmission Group**: Revenue from this segment is expected to grow from 500.17 million yuan in 2024 to 1,009.46 million yuan by 2027, with a gross margin of 56% by 2025 [9]. - **Cold Forged Precision Wire**: This segment is projected to see revenue growth from 40 million yuan in 2024 to 190.44 million yuan in 2027, with an improving gross margin reaching 10% by 2027 [9]. - **Overseas Business Growth**: The company has reported a 47% year-on-year increase in overseas revenue, driven by new projects and increased production capacity [7]. Strategic Initiatives - The company is investing approximately 500 million yuan in establishing a new joint venture focused on precision transmission components, which is expected to enhance its market position in the screw rod sector [7].