Group 1 - Hainan Huatie held its 17th meeting of the 5th Board of Directors on September 4, 2025, to review the proposal regarding the authorization of board members [1] - For the year 2024, Hainan Huatie's revenue composition is as follows: operating leasing accounts for 96.92%, other businesses for 1.71%, and processing and sales for 1.37% [1] - As of the report date, Hainan Huatie has a market capitalization of 19.7 billion yuan [1]

Core Viewpoint - The company reported significant pressure on revenue and profit in the first half of 2025, leading to a downward revision of performance expectations and an "overweight" rating adjustment [1][2] Financial Performance - In H1 2025, the company achieved revenue of 4.35 billion, a year-on-year decrease of 10.8%, with EBITDA at 1.97 billion, down 2% year-on-year, and net profit at 0.035 billion, a decline of 86.8% [1] - The expected net profit for 2025-2027 is revised to 0.53 billion, 0.63 billion, and 0.75 billion, reflecting year-on-year changes of -40%, +17%, and +20% respectively, with corresponding PE ratios of 6.4, 5.5, and 4.6 [1] Business Segmentation - Revenue from operating leasing, engineering technology, asset management, and other services was 2.27 billion, 1.14 billion, 0.95 billion, with year-on-year changes of +19.5%, -41.5%, and -8.2% respectively [1] - The overall gross margin for the company was 21.6%, a decrease of 10.4 percentage points year-on-year, primarily due to rental price fluctuations [1][2] Regional Performance - Domestic revenue (including Hong Kong and Macau) was 3.75 billion, down 21.8%, while overseas revenue reached 0.6 billion, up 719.8%, increasing the overseas revenue share to approximately 14% [2] - The company managed 195,500 units domestically and 16,400 units overseas, with overseas asset management size around 4.3 billion [2] Cost and Efficiency - The sales, management, and financial expense ratios were 5.57%, 11.95%, and 9.22%, showing slight increases year-on-year [2] - The company reported a financial asset and contract asset impairment reversal of 0.19 billion, contributing to a net profit margin of 0.8%, down 4.7 percentage points year-on-year [2] Strategic Developments - The company completed an 80% acquisition of Dongqing on May 30, with a valuation based on 6 times adjusted EBITDA, enhancing its market share in Malaysia [2] - The company plans to expand into 3 to 5 new countries in the second half of 2025 [2]

Group 1: Operating Lease Services - Operating lease services refer to the business activities of transferring tangible or intangible assets for use without changing ownership during an agreed period. It can be categorized into tangible asset operating lease services and real estate operating lease services [1] - Advertising space on real estate is leased to other units or individuals for advertising purposes, subject to value-added tax (VAT) under real estate operating lease services [1] - Leasing advertising space on tangible assets like aircraft and vehicles is subject to VAT under tangible asset operating lease services [1] - Services such as vehicle parking and road tolls are also classified under real estate operating lease services for VAT purposes [1] - When taxpayers lease land to others through operating leases, it is subject to VAT under real estate operating lease services [1] Group 2: Financing Lease Services - Financing lease services involve leasing activities with financing characteristics and ownership transfer features. The lessor purchases tangible or intangible assets based on the lessee's specifications and leases them, retaining ownership during the contract period [2] - The lessee has the right to purchase the leased asset at its residual value after paying the rent upon contract expiration, regardless of whether the lessor sells the asset to the lessee [2] - Financing lease services can be divided into tangible asset financing lease services and real estate financing lease services [2] Group 3: Sale and Leaseback Financing - Sale and leaseback financing refers to the process where the lessee sells an asset to a financing leasing company for financing purposes and then leases the asset back from the leasing company [4] - In this arrangement, the ownership and associated risks of the asset do not fully transfer at the time of sale [4] Group 4: Transportation Lease Services - Voyage chartering is when a transportation company completes a specific voyage for the charterer and charges a lease fee [7] - Time chartering involves leasing a vessel with crew to another party for a specified period, charging a daily lease fee regardless of operation [7] - Wet leasing is when an airline leases an aircraft with crew to another party for a specified period, charging a lease fee while the fixed costs are borne by the lessee [9] - Dry leasing is when an airline leases an aircraft without crew, charging a fixed lease fee without bearing operational costs [10] Group 5: Construction Equipment Rental Services - Rental of construction equipment can involve leasing with or without operators [10] - The VAT treatment varies based on whether operators are included in the rental agreement [10] Group 6: Venue Rental Services - Long-term or short-term rental of serviced apartments with accompanying services is subject to VAT [12] - Hotels, inns, and other accommodation services providing meeting venues and related services are also subject to VAT [12]