Core Viewpoint - Xiamen Tungsten's proposed fundraising of up to 4 billion yuan for various projects has attracted scrutiny from the Shanghai Stock Exchange, which has issued an inquiry regarding the rationale behind the fundraising scale and its necessity for the company's operations [1][4]. Fundraising Details - The company plans to raise no more than 4 billion yuan through a stock issuance, with funds allocated for the expansion of hard alloy cutting tools, construction of a 1,000 billion meter photovoltaic tungsten wire production line, and the development of the Bobo County Yuma Po tungsten-molybdenum mine, as well as for working capital [2][4]. - The distribution of the raised funds includes 1 billion yuan for the hard alloy cutting tools expansion, 1.05 billion yuan for the photovoltaic tungsten wire project, 750 million yuan for the tungsten-molybdenum mine, and 1.2 billion yuan for working capital [2]. Project Implementation - The hard alloy cutting tools expansion project will involve the purchase of advanced equipment and is expected to achieve an annual production capacity of 2 million overall cutting tools, 30 million indexable inserts, and 1.7 million superhard tools, primarily serving sectors such as aerospace, general machinery, new energy, and medical equipment [3]. Regulatory Scrutiny - The Shanghai Stock Exchange has raised questions regarding the necessity of the fundraising projects, the funding methods through non-wholly owned subsidiaries, and whether other shareholders will proportionately contribute to project funding [4]. - The exchange also inquired about the rationale behind the new production capacity, market competition, major customers, and the company's ability to absorb the new capacity [4]. Financial Performance - Xiamen Tungsten's revenue for 2020, 2021, 2022, and Q1 2023 was 18.964 billion yuan, 31.852 billion yuan, 48.223 billion yuan, and 8.562 billion yuan, respectively, with net profits of 956 million yuan, 1.695 billion yuan, 2.183 billion yuan, and 653 million yuan [5]. - In the first half of this year, the company reported a revenue of 18.730 billion yuan, a year-on-year decrease of 22.47%, and a net profit of 791 million yuan, down 12.88% year-on-year [5][6]. Future Outlook - The exchange has requested explanations for the fluctuations in revenue and net profit, the sustainability of future growth, and the reasons behind the continuous decline in gross margin [6].

Core Viewpoint - The company has experienced rapid growth over the past five years primarily driven by energy new materials, and it anticipates that tungsten and rare earth deep processing and applications will be the main growth drivers in the next five years [1][3]. Group 1: Business Strategy and Focus Areas - The company will focus on the application of magnetic materials in new scenarios such as rare earth permanent magnet motors, industrial robots, and humanoid robots, with related products currently under development [4]. - The company plans to transition from a traditional sales model of hard alloy cutting tools to providing comprehensive solutions and services, potentially through mergers and acquisitions to accelerate business growth [4]. - The company aims to enhance its resource assurance rate from the current 20% to 70% in the future [5]. Group 2: Technological Development and Market Position - In the energy new materials sector, the company will focus on solid-state battery technology and hydrogen energy technologies, having already developed lithium sulfide technology [5]. - The company recognizes the importance of recycling in all its industries, as they involve rare strategic metals [5]. - The company has strategically positioned itself to minimize impacts from current international trade challenges, with an export revenue of approximately 5.4 billion yuan, accounting for 16% of its main business income [5]. Group 3: International Expansion and Investment - The company has invested in an 800-ton hard alloy bar project in Thailand, aimed at the U.S. and ASEAN markets, with a total investment of about 190 million yuan and an average return on investment exceeding 20% [5]. - The company is currently advancing the construction of a second phase project in Thailand, having acquired 130 acres of land to expand hard alloy production and develop tungsten powder, tungsten carbide, CNC blades, and complete tool businesses [6].

Financial Data and Key Indicator Changes - In 2023, the company's operating revenue was approximately 394 billion, a decrease of 18.3% year-on-year, while the net profit attributable to shareholders was 16.02 billion, an increase of 10.75% year-on-year, marking the best performance since its listing in 2002 [4][14][6] - For the first half of 2024, the net profit attributable to shareholders was 10.15 billion, representing a year-on-year growth of 28% [6] Business Line Data and Key Indicator Changes - The battery materials segment saw revenue drop from 286 billion in 2022 to 171.4 billion in 2023, while the tungsten-aluminum business increased from 126 billion to 155.7 billion [15][14] - The rare earth business revenue decreased from 59 billion to 51.7 billion, and the real estate segment reported a significant impairment loss of 3 billion [15][14] Market Data and Key Indicator Changes - The company holds the largest tungsten resources in A-shares, with a self-sufficiency rate of 36.6% for tungsten ore, which is higher than its competitors [20] - The market capitalization as of August 1, 2024, was 240 billion, with a static P/E ratio of 15, the lowest in the industry [7][8] Company Strategy and Development Direction - The company is pursuing a "dumbbell strategy," balancing low-risk defensive assets with high-risk growth assets, focusing on tungsten and new energy businesses [1] - A new round of fundraising was initiated to raise 35.3 billion for projects related to tungsten and photovoltaic materials, aligning with national industrial development directions [9][11] Management Comments on Operating Environment and Future Outlook - Management noted that the performance in 2023 was achieved despite a downturn in the new energy business, indicating resilience [6] - The company expects to enhance its market position in the photovoltaic tungsten wire sector, with production capacity projected to reach 2000 billion meters by 2026 [35] Other Important Information - The company is actively divesting from its real estate business, which has already yielded 1.45 billion in investment income in the first half of 2024 [44] - The integration of rare earth separation business with China Rare Earth Group has led to a significant decline in revenue and profit from this segment [43] Q&A Session Summary Question: What is the current status of the Dahu Lake tungsten mine project? - The Dahu Lake project has been included in Jiangxi Province's key construction projects for 2024, and preliminary preparations have begun, including mining license updates and feasibility studies [26] Question: How is the company addressing the downturn in the new energy materials sector? - The company is focusing on developing next-generation new energy materials and has seen some improvement in the second quarter of 2024 compared to the first quarter [39]