Summary of Key Points from the Conference Call Company Overview - **Company**: 易实精密 (Yishi Precision) - **Year**: 2025 Core Industry and Company Insights - **Industry**: Automotive parts and precision metal processing - **Key Actions**: - Focus on both organic growth and external mergers and acquisitions to strengthen sales foundation [2][4] - First acquisition in the automotive parts sector to expand process technology [2][4] - Establishment of a joint venture in Slovenia with a total investment not exceeding €10 million, aimed at enhancing international competitiveness [2][6][13] Strategic Initiatives - **Acquisition**: Successfully acquired 通义合公司 (Tongyihe Company) to extend capabilities in the metal parts sector, integrating design, processing, and assembly services [4][10] - **Overseas Expansion**: - Slovenia chosen for its strategic advantages, including proximity to Austria and a skilled workforce [16] - Plans to enter the Indian market for machining and stamping operations, leveraging local partnerships [15][19] - U.S. market strategy led by Austrian partner Mark, avoiding Mexico due to instability [17] Technological Advancements - **High-Speed Stamping and Bending**: Utilizes Biller equipment, holding a significant market share domestically, and gradually expanding into Europe [7][8] - **Precision Stamping**: Differentiates from traditional stamping by handling thicker materials and achieving higher precision [9] Market Dynamics - **Metal Parts Industry Potential**: Recognized as essential across various sectors including automotive, robotics, and aerospace, with a focus on diversifying processing techniques [11] - **Emerging Industries**: Interest in humanoid robotics and semiconductor sectors, with ongoing research and development efforts [21][22] Financial and Operational Performance - **Production Capacity**: Expected to reach full production capacity by the end of 2025, with significant investments in new machinery [32][33] - **Client Base**: Major clients include Volkswagen and Bosch, with expectations of increased collaboration and project volume [36][37] Future Outlook - **Strategic Focus for 2025**: Emphasis on consolidating the precision metal processing sector, expanding product categories, and enhancing global competitiveness through both organic and external growth strategies [40] - **Investment Plans**: Potential investments in South Carolina or North Carolina, with a focus on local customer bases [18] Additional Considerations - **Surface Treatment Business**: New surface treatment facility established to improve quality control and cost efficiency [35] - **Technological Barriers**: Focus on maintaining competitive advantages through innovation and technology development in high-barrier sectors [24]

Investment Rating - The investment rating for the company is "Accumulate" (maintained) [5] Core Views - The company is focusing on expanding its customer base in the field of air suspension and enhancing its precision stamping technology to promote the localization of reducer flexible wheels [5] - In Q1 2025, the company achieved revenue of 80 million yuan and a net profit attributable to shareholders of 15.04 million yuan [6] - The company has established itself as a supplier for well-known automotive parts manufacturers, including Tyco Electronics and Bosch [6] - The company signed a strategic cooperation agreement with Konghui Technology to broaden its product line and is expected to achieve mass production of the third-generation welding ring line in 2025 [6][9] - The company plans to acquire 51% of Tongyihe Precision Technology to enhance its development and manufacturing capabilities in precision stamping [6][9] - The establishment of a joint venture in Slovenia aims to enhance overseas layout and local supply capabilities [6][9] Financial Summary - The company forecasts revenue growth from 276 million yuan in 2023 to 609 million yuan in 2027, with a compound annual growth rate (CAGR) of approximately 22.91% [8] - The net profit attributable to shareholders is projected to increase from 52 million yuan in 2023 to 100 million yuan in 2027, reflecting a CAGR of 25.37% [8] - The earnings per share (EPS) is expected to rise from 0.44 yuan in 2023 to 0.86 yuan in 2027 [8] - The company maintains a healthy return on equity (ROE), projected to reach 23.54% by 2027 [8]

Investment Rating - The report maintains a "Buy" investment rating for 易实精密 (836221.BJ) [2][12] Core Views - 易实精密 plans to acquire 51% of 通亦和精工科技 for a maximum price of 1.6 billion yuan, with performance commitments for net profits of 28 million, 32 million, and 36 million yuan for the years 2025 to 2027 [5][12] - The acquisition aims to enhance the company's metal forming process chain and create synergies that will accelerate growth [5][8] - The company is focusing on developing a new manufacturing process for harmonic reducer flexible wheels, which is expected to lower production costs [9][10] Summary by Sections Company Overview - 易实精密's current stock price is 20.94 yuan, with a total market capitalization of 2.4 billion yuan and a total share count of 116 million [2] Market Position - 通亦和 specializes in precision molds and stamping parts, holding 20 patents, including 3 invention patents [6][7] - The company has established long-term relationships with major clients such as 佛吉亚 and 麦格纳宏立 [6] Acquisition Details - The acquisition of 通亦和 is structured in three payment phases: 50%, 20%, and 30%, contingent on performance milestones [5] - The acquisition is expected to integrate supply chain resources, enhancing procurement capabilities and customer bases [8][9] Financial Projections - Revenue forecasts for 易实精密 are 400 million, 510 million, and 610 million yuan for 2025, 2026, and 2027 respectively, with net profits projected at 68 million, 83 million, and 100 million yuan [12][14] - The company anticipates a steady growth rate in revenue and net profit, with a net profit margin of approximately 17.1% in 2024 [14][15]

Group 1: Investor Relations Activity Overview - The investor relations activity was conducted online on June 27, 2025, with participation from various securities and investment firms [3][4]. - Key attendees included the company's Chairman and General Manager, Xu Aiming, and the Board Secretary and Financial Officer, Zhang Wenjin [4]. Group 2: Company Performance and Future Outlook - The company reported stable overall operations in the first half of 2025, with a positive development trend expected to accelerate in the second half due to new projects and production lines coming online [4]. - The first production line of the newly established subsidiary, Mark Surface Treatment Technology (Nantong) Co., Ltd., is expected to commence operations by the end of August 2025, with a second line following by the end of October 2025 [5]. Group 3: Acquisition and Technological Advancements - The acquisition of Tong Yi He Precision Engineering Co., Ltd. is anticipated to enhance the company's technical capabilities and profitability, with no significant overlap in customer bases, thus promising substantial synergy [6]. - The company is collaborating with precision component manufacturers to develop key components for harmonic reducers and planetary gear reducers, aiming to accelerate the domestic replacement process for these critical parts [7][8]. Group 4: International Expansion - The establishment of a joint venture in Slovenia is a strategic move to meet customer demands and expand the company's overseas presence, targeting existing clients like Bosch and Continental Automotive, while also seeking new customers in the European market [9]. - The Slovenian facility will focus on automotive parts, catering to both traditional fuel vehicles and new energy vehicles, utilizing advanced manufacturing techniques [9].