Core Viewpoint - The US-Japan Trade Agreement officially took effect on September 15, 2025, with the US imposing a 15% baseline tariff on nearly all Japanese imports, impacting various sectors including automobiles and electronics [3][4]. Summary by Sections Tariff Adjustments - The current US tariff rule states that if the existing tariff is below 15%, it will be adjusted to 15%. If it is equal to or above 15%, it will remain at 15% [3]. - The tariff on Japanese automobiles has been reduced to 15% as of September 16, 2025 [3]. Specific Product Tariffs - For electronic products, the original tariff rate of 0-5% has been increased to 15%. Aerospace products will no longer be subject to "reciprocal tariffs," and tariffs on steel, aluminum, and copper have been standardized to 15% [4]. - However, steel and aluminum products will continue to be subject to a 50% tariff under Section 232 [5]. Impact on Trade - Japan's exports to the US have seen a continuous decline for three months, with the rate of decline increasing, attributed to the US government's tariff policies [5]. - The delay in implementing the new tax rate is estimated to increase the burden on Japanese automakers by 100 billion yen, approximately 3 billion yen per day [8]. Refund Mechanism - The US Customs and Border Protection (CBP) has confirmed that importers can receive refunds for tariffs paid that exceed 15% for goods imported after August 7, 2025 [6][10]. - Importers can submit a post-summary correction application for estimated duties not yet liquidated, and for cleared imports, they can protest under US Code Title 19, Section 1514 for refunds [9][10].

Group 1 - The U.S. will impose a 15% baseline tariff on nearly all Japanese imports starting from August 7, 2025, as part of the U.S.-Japan Trade Agreement [1] - The current tariff rules state that if existing tariffs are below 15%, they will be raised to 15%, while tariffs at or above 15% will remain unchanged [2] - The tariff on Japanese automobiles will be reduced to 15%, while electronics will see an increase from 0-5% to 15% [2] Group 2 - Japan's exports to the U.S. have seen a continuous decline for three months, with the rate of decline increasing, attributed to U.S. tariff policies [3] - The Trump administration previously imposed a 25% tariff on Japanese automobiles and a 10% tariff on most other goods, with steel tariffs rising to 50% [4] - The U.S. has expanded the 50% tariff on steel and aluminum imports to include 407 additional products [5] Group 3 - Importers can apply for refunds on overpaid tariffs through a post-summary correction application for estimated duties not yet liquidated [5] - For cleared imports, importers can protest under U.S. Code Title 19, Section 1514 to request refunds [5] - These refund measures apply to Japanese products entering the U.S. on or after August 7, 2025 [5]

Investment Rating - The report maintains a "Buy" rating for the company, indicating a strong performance relative to the market [7]. Core Views - The company's Q1 2025 revenue decreased to 1.7 billion yuan, down 55.4% year-on-year, with a net profit of 30 million yuan, down 79.2% year-on-year, which was below market expectations [1][7]. - The decline in revenue is attributed to delays in product deliveries and changes in the consolidation scope of subsidiaries, but a recovery in revenue is expected as product deliveries resume [7]. - The gross margin improved to 26.61%, up 7.46 percentage points from the previous year, while the net margin decreased to 0.43%, down 3.60 percentage points due to increased expense ratios [7]. - High levels of inventory (21.279 billion yuan) and contract liabilities (1.577 billion yuan) are expected to convert into revenue, supporting future growth [7]. - The company is positioned as a leading player in the aerospace electronics sector, benefiting from increasing demand in the aerospace and unmanned systems markets [7]. - Profit forecasts for 2025-2027 are maintained at 611 million, 772 million, and 1.018 billion yuan respectively, with corresponding PE ratios of 45, 36, and 27 [7]. Financial Data and Earnings Forecast - Total revenue for 2025 is projected at 15.381 billion yuan, with a year-on-year growth rate of 7.7% [3]. - The net profit for 2025 is estimated at 611 million yuan, reflecting an 11.5% year-on-year growth [3]. - The gross margin is expected to stabilize around 22.0% for 2025, with a gradual increase in subsequent years [3]. - The company’s return on equity (ROE) is projected to improve from 2.9% in 2025 to 4.5% by 2027 [3].