Summary of Shaanxi Huada's Conference Call Company Overview - **Company**: Shaanxi Huada - **Industry**: Aerospace and Defense, New Energy Vehicles Key Points Financial Performance - In the first half of 2025, Shaanxi Huada's revenue increased both year-on-year and quarter-on-quarter, but profits did not reach the previous year's levels due to several factors including price fluctuations in the industry, increased R&D expenses, and rising raw material costs, particularly for copper and gold, which affected plating costs [3][4][19] - The gross margin declined due to a higher proportion of high-value orders from Huawei, which increased from 8%-10% to approximately 15% [6][3] Market Demand and Orders - Overall order volume increased, peaking in March and April, and remained higher than the same period last year, indicating stable market demand [2][3] - The company has seen a growth in orders compared to the previous year, although specific growth figures have not been disclosed [17] Strategic Acquisitions and Collaborations - The acquisition of Huajin Company has created synergies in business, customers, and products, particularly in power modules and distribution management systems, enhancing integrated and systematic product development [2][4][5] - Shaanxi Huada is actively involved in the commercial aerospace sector, with contracts in place for satellite supply, including a contract with Huawei worth several hundred thousand [4][13] New Energy Vehicle Initiatives - The company is expanding into the new energy vehicle sector, currently working on obtaining the 16,949 certification to provide integrated solutions, although short-term revenue contributions are expected to be minimal [7][11] - The intelligent sensor business under Huaxing has made progress in the civilian sector, generating over 20 million yuan in revenue from supplying pressure sensors to the Wanjie Seres [8] Industry Trends and Future Outlook - The commercial aerospace sector is expected to see significant changes in the second half of the year, with increased launch activities and funding [13][20] - The military satellite sector is anticipated to experience a rapid development phase over the next two to three years, driven by national strategic priorities [20] - Shaanxi Huada aims to capture approximately half of the expected satellite launch volume by 2027, with ongoing projects to enhance production capabilities [18] Challenges and Responses - Rising precious metal prices have prompted the company to explore alternative materials and adjust production processes to mitigate cost pressures [19] - The company is focusing on platform-based strategies for internal and external growth, including potential acquisitions to enhance technological capabilities [24][25] Customer Base and Market Position - Major military clients include various research institutes, with a focus on maintaining competitive relationships in the defense sector [23] - The company is concentrating on domestic market expansion while previously exporting some products through alternative channels [24] Conclusion - Shaanxi Huada is navigating a complex landscape of rising costs and changing market dynamics while strategically positioning itself for growth in both the aerospace and new energy vehicle sectors. The company is leveraging acquisitions and collaborations to enhance its product offerings and market reach, with a positive outlook for future performance.