Core Viewpoint - The company, Fujian Tianma Technology Group Co., Ltd., anticipates a significant loss for the fiscal year 2025, with projected net profit attributable to shareholders ranging from -180 million to -120 million yuan, indicating a downturn compared to the previous year [1][2]. Performance Forecast - The performance forecast period is from January 1, 2025, to December 31, 2025 [1]. - The expected net profit attributable to shareholders for 2025 is projected to be between -180 million and -120 million yuan, representing a loss compared to the previous year's net profit of 26.03 million yuan [2]. - The anticipated net profit, excluding non-recurring gains and losses, is expected to be between -200 million and -140 million yuan [1][2]. Previous Year Performance - In 2024, the net profit attributable to shareholders was 26.03 million yuan, with a net profit of 9.85 million yuan after excluding non-recurring gains and losses [2]. Reasons for Performance Change - The decline in performance is attributed to macroeconomic fluctuations, cyclical adjustments in the industry, and intensified market competition. Additionally, an increase in supply expectations due to a bumper harvest of Japanese eel fry has led to a downward trend in sales prices for live and grilled eel, placing the eel industry in a low point [4]. - Despite maintaining a stable output of live eels and grilled eel product sales, the company faces pressure on product sales prices and rising production costs due to the cyclical downturn in the industry. The feed sector is also experiencing declining gross margins due to market structural adjustments and increasing competition, compounded by rising period expenses and asset impairment provisions, resulting in a temporary loss for the company [4].

Core Viewpoint - Tianma Technology (603668.SH) is expected to report a net loss attributable to shareholders of the listed company ranging from -180 million to -120 million yuan for the fiscal year 2025, indicating a decline compared to the previous year [1] Financial Performance - The projected net profit excluding non-recurring gains and losses for 2025 is estimated to be between -200 million and -140 million yuan [1] - The company is facing a challenging financial outlook due to macroeconomic fluctuations, cyclical adjustments in the industry, and intensified market competition [1] Industry Context - The eel industry is currently in a downturn, with a decrease in sales prices for live eels and grilled eel products due to an expected increase in supply from Japan's abundant eel fry production in 2025 [1] - The company has experienced losses in both the farming and grilled eel food segments as a result of these industry challenges [1] Operational Insights - Despite the adverse market conditions, the company has managed to maintain stable output of live eels and sales volume of grilled eel products [1] - However, the company is facing pressure on product sales prices and rising production costs, leading to a decline in gross margins for the feed segment [1] - Increased operating expenses and provisions for asset impairment have also contributed to the company's projected losses for the year [1]

Core Viewpoint - Tianma Technology expects a significant net loss for the fiscal year 2025, projecting a loss between 120 million to 180 million yuan, compared to a net profit of 26.03 million yuan in the same period last year [1] Financial Performance - The company anticipates a net profit attributable to shareholders, excluding non-recurring gains and losses, to be a loss between 140 million to 200 million yuan for 2025 [1] Industry Context - The company cites macroeconomic fluctuations, cyclical adjustments in the industry, and intensified market competition as contributing factors to its financial outlook [1] - The eel industry is currently experiencing a downturn, with a decrease in sales prices for live eels and grilled eels due to an expected increase in market supply from a bumper harvest of eel fry in Japan [1] - Both the farming sector and the grilled eel food segment are facing losses during this low point in the industry [1]

Core Viewpoint - Tianma Technology has announced an annual performance forecast indicating a significant expected net loss for 2025, primarily due to macroeconomic fluctuations, industry cyclical adjustments, and intensified market competition [1] Financial Performance - The company anticipates a net profit attributable to shareholders of between -120 million to -180 million yuan for 2025, with a non-recurring profit forecast of -140 million to -200 million yuan [1] - This represents a substantial decline compared to the previous year's profit of 26.03 million yuan [1] Industry Context - The eel industry is currently experiencing a downturn, influenced by an increase in supply expectations due to a bumper harvest of eel fry in Japan, leading to a downward trend in sales prices for live and grilled eel [1] - The company is facing losses in both the farming and grilled eel food sectors due to these market conditions [1] Operational Challenges - Despite maintaining a steady output of live eels and grilled eel product sales, the company is under pressure from declining product prices and rising production costs [1] - The feed segment is also experiencing reduced gross margins due to market structural adjustments and increasing competition [1] - Additional factors contributing to the expected losses include increased operating expenses and provisions for asset impairment [1]

Group 1 - The company expects a net loss attributable to shareholders of 120 million to 180 million yuan for the year 2025, compared to a net profit of 26.03 million yuan in the same period last year [1] - The anticipated net profit, excluding non-recurring gains and losses, is projected to be a loss of 140 million to 200 million yuan for 2025 [1] - The company is facing challenges due to macroeconomic fluctuations, cyclical adjustments in the industry, and intensified market competition, leading to a downturn in the eel industry [1] Group 2 - The increase in supply expectations due to a bumper harvest of eel fry in Japan is contributing to a downward trend in sales prices for live eels and grilled eels [1] - Both the farming sector and the grilled eel food segment are experiencing losses during this low point in the eel industry [1]

Core Viewpoint - The Guangdong Eel Cultural Festival aims to promote eel as a healthy and delicious food option for families, encouraging its integration into daily meals and expanding its market presence [4][9][40]. Group 1: Event Overview - The Guangdong Eel Cultural Festival and the first "Eel Journey: Enjoying Flavors" tasting event were launched at Shunde Shunfeng Mountain Park, focusing on family participation [4][3]. - The event features eel tasting, nutritional education, and interactive experiences, allowing parents and children to appreciate the health benefits and flavors of eel [5][12]. Group 2: Industry Development - Shunde has a 40-year history of eel farming and is a core area for the Guangdong eel industry, which is advancing in standardization and branding [8][9]. - The festival serves as a showcase of industry achievements and a proactive effort to tap into the family consumer market [9][40]. Group 3: Nutritional Benefits - Eel is rich in DHA and EPA, beneficial for children's cognitive development and cardiovascular health in middle-aged and elderly individuals, earning it the titles of "water ginseng" and "soft gold on the table" [12][13]. - The improvement in farming technology and the maturity of the industry chain have made eel more accessible to consumers, breaking down barriers to its consumption as a high-end ingredient [14][40]. Group 4: Marketing and Promotion - The festival invited Hong Kong celebrity Lin Weichen to promote the event through live streaming and interactive tasting, enhancing the visibility and appeal of Shunde eel products [20][23]. - The promotional model combining celebrity influence with industry efforts has effectively increased the event's reach and impact, revitalizing the market for eel [24][23]. Group 5: Economic Impact - The eel industry in Shunde maintains over 30,000 acres of farming area, with an annual output exceeding 30,000 tons and an export value of 3.5 billion yuan, accounting for over 20% of the national total [45][46]. - The push for eel to enter daily consumption is seen as a means to sustain industry growth and enhance farmers' income, with future efforts focusing on brand building and community engagement [51][54].

Core Viewpoint - Tianma Technology has become the global leader in eel stock, but this achievement comes at a significant cost, reflected in its high short-term debt of 2.7 billion yuan and a total debt of 6.6 billion yuan, raising concerns about its financial stability and ability to manage cash flow effectively [1][8][10]. Financial Performance - In the first three quarters of 2023, Tianma Technology reported a revenue of 4.5 billion yuan, a slight increase of 0.11% year-on-year, while net profit attributable to shareholders was 70.78 million yuan, up 1.96% year-on-year. However, excluding one-time gains, the net profit decreased by 11.93% [4]. - The company's operating cash flow for the first three quarters of 2023 was 6.75 million yuan, a decline of 39.24% compared to the previous year [7]. Debt and Liquidity Concerns - As of the third quarter of 2023, Tianma Technology's total liabilities reached 6.6 billion yuan, with interest-bearing debt at 4.46 billion yuan, a year-on-year increase of 23.54%. The current ratio stands at 0.91, significantly below the industry safety line [8][10]. - The company's asset-liability ratio is at 69.73%, which is considerably higher than the industry average, indicating a potential "interest swallowing profit" cycle [10]. Investment in Eel Farming - Despite financial pressures, Tianma Technology has aggressively invested in eel farming, purchasing eel fry at a historic low price of 7.8 yuan per fry, totaling 812 million yuan in the first half of 2025, a 390% increase from 166 million yuan in 2024 [5]. - The company has built a complete industrial chain from eel feed research and development to farming, processing, and sales since its establishment in 2005 [2]. Market Dynamics and Risks - The eel farming industry is characterized by unstable profitability, heavily reliant on wild fry capture, which is subject to environmental factors and declining wild eel populations [12]. - The mismatch between farming capacity and output is evident, as Tianma Technology has not met its annual output targets since 2021, leading to increased inventory levels and potential price impacts [15][16]. Business Structure and Challenges - Concerns have been raised about the authenticity of Tianma Technology's closed-loop business model, with overlapping identities between customers and suppliers, which could indicate potential conflicts of interest [17]. - The company's feed business, which accounts for 70% of its revenue, is under pressure due to declining demand and increased competition, with feed revenue dropping by 16.11% year-on-year in the first half of 2023 [18]. Future Outlook - The eel market in Japan, which consumes 70% of the world's eels, is still recovering and does not match its peak levels from 2000. The pricing of Chinese eels is significantly lower than that of Japanese products, limiting profit margins [20]. - Regulatory risks are also looming, as proposals to list all eel species under Appendix II of the Convention on International Trade in Endangered Species could disrupt the eel trade in East Asia [20].

Summary of Tianma Technology Conference Call Company Overview - **Company**: Tianma Technology - **Period**: January to September 2025 - **Revenue**: 4.503 billion CNY, a slight increase year-on-year - **Net Profit**: 70.7814 million CNY, a year-on-year increase of 2% [2][4] Key Financial Highlights - **Q3 Revenue**: 1.53 billion CNY, a year-on-year increase of 2.7% - **Q3 Net Profit**: 10.56 million CNY, a year-on-year decrease of 20% [2][4] - **Eel Farming Revenue**: Approximately 130 million CNY in Q3, a year-on-year decrease of 46% due to increased self-use [2][4] - **Food Business Revenue**: Approximately 110 million CNY in Q3, a year-on-year increase of 53% with grilled eel sales of 1,128 tons, up 67% [2][4] - **Special Aquaculture Feed Sales**: 38,200 tons in Q3, a year-on-year increase of 42%, with revenue of approximately 352 million CNY, up 32% [2][5] - **Specific Materials Sales**: 302,800 tons in Q3, a year-on-year increase of 3.15%, with revenue of 863 million CNY, a slight increase of 0.32% [2][5] Debt and Financial Management - **Debt Levels**: Significant, including short-term loans of 2.6 billion CNY, accounts payable of 1.4-1.5 billion CNY, and long-term loans of 400-500 million CNY [2][8] - **Debt Repayment Strategy**: Plans to repay debt through self-generated funds, industry funds, and stable bank cooperation [2][8][12] Market and Production Strategy - **Eel Seedling Supply**: Anticipated decrease in Japanese eel seedlings in 2026; increased stocking in 2025 to ensure stable future supply [3][10] - **Sales Strategy**: Implementing a "big fish for small fish" strategy to optimize inventory and ensure stable production and sales [10][14] - **Production Measures**: Focus on ecological pond farming to manage high-density breeding challenges [29][30] Segment Performance - **Special Aquaculture Feed**: Q3 revenue of 382 million CNY with a net profit of over 1.1 million CNY; however, overall sales have declined year-on-year [6][5] - **Specific Materials**: Q3 revenue contribution of 900 million CNY with a net profit of over 13 million CNY [6] - **Eel Farming**: Q3 revenue contribution of 130 million CNY but currently facing a loss of 2.7 million CNY [6] - **Food Segment**: Q3 revenue contribution of 100 million CNY with a net loss of 800,000 CNY [6] Future Outlook - **Market Expansion**: Plans to expand into the Korean market and enhance the global marketing network for live eel [3][4][11] - **Production Goals**: Targeting an output of 20,000 tons for the year and 30,000 tons for the next year [17] - **Export Goals**: Aiming for a minimum of 3,000 tons of live eel exports in 2026 [21][27] Competitive Advantages - **Technological Edge**: Strong R&D capabilities to meet Japanese market standards, including specialized product development [28] - **Brand Building**: Focus on establishing a strong brand presence and improving consumer awareness of eel products [22][24][26] Conclusion - **Strategic Positioning**: Tianma Technology is focusing on optimizing its production and sales strategies while managing significant debt levels. The company is well-positioned to leverage its technological advantages and expand into new markets, ensuring a stable supply of products and enhancing its competitive edge in the aquaculture industry [2][3][4][10][12][22][28]

Core Insights - The export of grilled eel from Shunde has seen significant growth, with orders increasing over 20% in the first three quarters of the year compared to the previous year, and a 30% increase in the Japanese market [1] - Shunde is a major contributor to China's eel production, accounting for 41.2% of the national output, with an annual export of grilled eel representing 20% of the country's total [1] - The Japanese market is projected to import 22,523 tons of Chinese grilled eel in the 2025 eel year, marking a 9.8% increase and the highest level in five years [1] Industry Development - Shunde's eel industry has thrived due to advanced farming techniques and a digitalized supply chain, transforming the eel into a symbol of agricultural technology in China [2] - Eels are sensitive to environmental factors, making large-scale farming challenging; however, Shunde has innovated by using natural ponds instead of traditional cement pools, significantly improving survival rates [3] - The local farmers in Shunde developed their own feed formulas, reducing costs from 8,000 yuan to around 5,000 yuan per ton, breaking the technological monopoly of Japan and South Korea [3] Technological Advancements - Smart farming systems are standard in Shunde's eel farms, allowing real-time monitoring of water quality and automatic adjustments to maintain optimal conditions [4] - The integration of advanced technology in the processing of grilled eel ensures high precision in maintaining freshness and quality, with the entire process taking only 90 minutes [5] - Blockchain technology has been introduced to provide traceability for each eel, allowing consumers to access detailed information about the product's journey from farm to table [6] Market Expansion - Shunde's eel industry has expanded its market reach by developing various processed eel products, including canned eel and snacks, which are sold through e-commerce platforms [5] - The combination of IoT and cold chain logistics has enabled Shunde's eel products to achieve a premium price, with a 40% markup in markets like Hong Kong and Macau [6] - The industry has successfully created a closed-loop system that connects feed production, smart farming, processing, and distribution, enhancing the overall value chain [6]

Core Viewpoint - The company, Tianma Technology, reported steady growth in its revenue and net profit for the third quarter and the first three quarters of the year, driven by its focus on the eel industry and the expansion of its aquaculture and food segments [1][2][3] Financial Performance - In Q3, the company achieved a revenue of 1.53 billion yuan, a year-on-year increase of 2.71% - For the first three quarters, the total revenue reached 4.50 billion yuan, with a slight year-on-year growth of 0.11% - The net profit attributable to shareholders was 70.78 million yuan, reflecting a year-on-year increase of 1.96% [1] Business Segments - The aquaculture and food segments are the main contributors to the company's revenue, with significant growth in smart aquaculture and eel sales, achieving historical highs in output [1] - The company has established a scale advantage in seedling, feed, aquaculture technology, and management, with eel output reaching 13,486 tons in the first three quarters, including 3,983 tons in Q3 [1] - The company has adopted a dual strategy for eel seedlings, focusing on Japanese eels while also incorporating American eels, leading to the highest national levels in both seedling input and stock [1] Global Expansion - The company is expanding its global export routes for live eels, successfully entering markets in Japan and South Korea [2] - The food segment is experiencing rapid growth, expanding from Japan into markets in Russia, Europe, the Middle East, and North America, indicating a significant expansion trend [2] Strategic Development - The company is diversifying its product matrix from a single export-oriented eel product to a range of offerings, including grilled eel, rice balls, snacks, and various eel preparations, enhancing its market presence [2] - The establishment of a subsidiary in Tokyo and the launch of the "Reward Eel" brand are steps taken to align with international consumer markets, amplifying brand value [2] Industry Outlook - The food segment's growth is supported by rising demand for quality seafood and the expansion of domestic and international markets, providing a stable raw material source for the food segment [3] - The company is transitioning from a focus on scale to structural improvement and from raw material attributes to consumer attributes, enhancing profitability and growth certainty [3] - The integrated business model centered on the eel industry strengthens the company's resilience and growth potential, with expectations for improved operational quality as both aquaculture and food segments continue to expand [3]