Summary of the Conference Call for Yongding Co., Ltd. Industry Overview - The optical fiber and cable industry is experiencing a supply-demand mismatch, driving prices upward. The price for G.652.D has risen to 80-90 RMB per core kilometer, while A2 optical fiber has increased to 260 RMB. This price increase cycle is expected to last for 24-36 months, extending until June 2028 [2][5]. - The demand for optical fibers is projected to increase tenfold year-on-year by 2026, driven by major internet companies like Alibaba [2]. Company Insights Business Segments - Yongding Co., Ltd. has established a comprehensive industrial chain in the optical communication sector, covering everything from optical preform, fiber, cable, to modules and laser chips. The company also operates in the electric sector, focusing on traditional communication cables, automotive wiring harnesses, overseas power engineering, and superconducting power [3]. - The company plans to double its optical preform capacity from 450 tons to 950 tons by Q3 2026 and increase its optical chip production from 40 million to 70 million units by the end of 2026 [2][3]. Market Position and Trends - The company is one of the few in China that masters four major processes for optical preforms (MCVD, PCVD, VAD, OVD) and has a strong R&D capability for various specialty fibers [4]. - The demand for G.652.D and G.654.E (A2) fibers is robust, with the latter expected to dominate the company's output structure, currently at over 70% [4][16]. Future Outlook - The company is optimistic about the profitability of its optical communication business, especially with the rise of AI technologies and new demands from sectors like drones. The superconducting business is also expected to see significant growth due to increasing demand for controlled nuclear fusion projects [3][12]. - The company anticipates that the current price increase cycle will be sustained, with G.652.D prices stabilizing around 100 RMB per kilometer and A2 prices slightly increasing to around 260 RMB [4][5]. Production and Capacity Expansion - The company is executing an expansion plan for its optical preform capacity, which is expected to be completed by Q3 2026. The production is currently prioritized towards higher-margin products for data centers and drones [11]. - The optical chip business has gained significant attention, with plans to expand production capacity to 70 million units by the end of 2026. The company has successfully entered the supply chains of major domestic optical module manufacturers [6][20]. Challenges and Strategic Responses - Supply chain challenges are evident, particularly with the rising costs of raw materials like silicon tetrachloride and germanium tetrachloride, although the impact on production costs is manageable [16][19]. - The company is actively addressing potential bottlenecks in equipment supply, particularly for auxiliary testing devices, while ensuring that core production equipment is sufficient for its expansion plans [9][20]. Conclusion - Yongding Co., Ltd. is well-positioned in the optical fiber and cable industry, with a strong focus on expanding its production capacity and enhancing its market position through strategic investments and product development. The company is optimistic about future growth driven by technological advancements and increasing market demand.

Investment Rating - The report assigns an "Accumulate" rating for the company, indicating a positive outlook for the stock over the next 6 to 12 months [2][5]. Core Insights - The company demonstrates a solid development trend with a robust "full industry chain" foundation and dual-driven growth from "optical communication" and "superconducting materials" [3]. - The company has established a vertical integration capability from basic materials to high-end optoelectronic devices, supported by two core high-tech subsidiaries focusing on optical chips and high-temperature superconducting materials [3]. - The report anticipates significant revenue growth driven by the increasing demand for optical fibers and chips, particularly in AI and data center applications, with projected revenues of 46.9 billion, 56.5 billion, and 70.62 billion yuan for 2025-2027, respectively [5][6]. Financial Projections - Revenue and profit forecasts for the company are as follows: - 2023A: Revenue of 4,345 million yuan, net profit of 43 million yuan - 2024A: Revenue of 4,111 million yuan, net profit of 61 million yuan - 2025E: Revenue of 4,690 million yuan, net profit of 331 million yuan - 2026E: Revenue of 5,650 million yuan, net profit of 169 million yuan - 2027E: Revenue of 7,062 million yuan, net profit of 278 million yuan [2][5]. - The company expects a significant increase in net profit in 2025 due to investment income from joint ventures, with a projected growth rate of 439% [5]. Business Segments - The optical communication segment is expected to see substantial growth, with revenue projections of 32.5%, 40.0%, and 32% for 2025-2027, driven by the demand for optical modules [6]. - The superconducting materials segment is anticipated to experience a surge in demand starting mid-2026, with revenue growth rates of 15.0%, 35.0%, and 65.0% for 2025-2027 [6]. - The automotive wiring harness business is expected to stabilize after a downturn, with projected revenue growth of 4.5%, 4.0%, and 4.5% for 2025-2027 [6]. Market Position - The company has a strong competitive position in the optical chip market, leveraging its IDM model to meet the growing demand for high-speed optical modules [3]. - The report highlights the company's strategic partnerships with key players in the industry, enhancing its market penetration and product development capabilities [3].

Investment Rating - The report assigns an "Accumulate" rating for Yongding Co., Ltd. (600105.SH) [2][5] Core Views - Yongding Co., Ltd. demonstrates a solid development trend with a robust full industry chain foundation and dual-driven growth model through its subsidiaries focusing on optical chips and high-temperature superconducting materials [3][5] - The company is expected to benefit significantly from the increasing demand for optical communication products driven by AI development and the application of superconducting materials in cutting-edge fields like nuclear fusion [3][5] Financial Summary - The company’s projected revenue for 2023A is 4,345 million yuan, with a growth rate of 3% year-on-year. Revenue is expected to increase to 4,690 million yuan in 2025E and 5,650 million yuan in 2026E, reflecting growth rates of 14% and 20% respectively [2][5] - The net profit attributable to the parent company is forecasted to be 43 million yuan in 2023A, with a significant increase to 331 million yuan in 2025E, followed by a decrease to 169 million yuan in 2026E, and a recovery to 278 million yuan in 2027E [2][5] - Earnings per share (EPS) is projected to be 0.03 yuan in 2023A, increasing to 0.23 yuan in 2025E, then decreasing to 0.12 yuan in 2026E, and recovering to 0.19 yuan in 2027E [2][5] Business Segments - **Optical Communication**: The company plans to increase its production capacity significantly, with an annual production capacity of 950 tons of optical fiber preform and 36 million optical fibers, driven by the anticipated demand surge in the optical module market [3][6] - **Superconducting Materials**: The company’s subsidiary, Eastern Superconducting, is expected to see a substantial increase in demand for second-generation high-temperature superconducting materials, particularly in nuclear fusion projects, with revenue growth projected at 15% in 2025, 35% in 2026, and 65% in 2027 [6][5] - **Automotive Wiring Harness**: This segment is expected to stabilize after experiencing a downturn, with projected revenue growth of 4.5% in 2025, 4.0% in 2026, and 4.5% in 2027 [6] - **Power Engineering**: Revenue from this segment is expected to grow steadily, with increases of 5.0% in 2025, 4.5% in 2026, and 5.0% in 2027 [6] Valuation Metrics - The report indicates a P/E ratio of 1000.6 for 2023A, decreasing to 130.8 in 2025E, and further to 256.4 in 2026E, reflecting the company's evolving earnings profile [2][5] - The P/B ratio is projected to be 15.4 in 2023A, slightly decreasing to 13.8 in 2025E and stabilizing at 14.4 in 2026E [2][5]

Market Performance - On January 8, the controllable nuclear fusion sector saw a collective surge, with companies like Far East Holdings achieving three consecutive daily limits, and others such as Hongxun Technology, China First Heavy Industries, and China Nuclear Engineering experiencing two consecutive daily limits [1] Events - The 2026 Nuclear Fusion Energy Technology and Industry Conference is scheduled to be held in Hefei, Anhui from January 16 to 17, 2026, with participation from top global research institutions, leading enterprises, and financial institutions to accelerate industry chain collaboration and results transformation [3] - On January 7, 2026, Energy Singularity announced the successful operation of the world's first full high-temperature superconducting Tokamak nuclear fusion experimental device, achieving 120 seconds of steady-state long-pulse plasma operation, marking a significant milestone for commercial companies [3] - TAE and Trump Media Technology Group announced a merger, creating the world's first publicly listed nuclear fusion company, with plans to start construction of a utility-scale fusion power plant in 2026 [3] - In late December 2025, the Hefei Institute of Plasma Physics and Fusion New Energy in Anhui collectively won projects worth 521 million yuan, including four projects exceeding 50 million yuan, with various companies winning orders for core components [3] Institutional Insights - In the context of major power competition, controllable nuclear fusion has become a strategic focus, with China's National Development and Reform Commission emphasizing the need for technological breakthroughs in nuclear fusion, indicating a shift from basic research to engineering and industrialization [4] - The industry has seen a significant acceleration in project wins, with the Hefei Institute and Fusion New Energy winning over 1 billion yuan in contracts, primarily for core components like magnets and power supplies [5] - The industry is entering a phase of engineering feasibility verification, with strong demand and supply driving order volumes. The global power demand is expected to grow exponentially due to AI capabilities, highlighting the importance of controllable nuclear fusion as a "ultimate energy" source [5] - The global nuclear fusion equipment market is projected to reach an average annual scale of 266 billion yuan by 2035, with domestic projects expected to invest 145.6 billion yuan, benefiting various segments of the supply chain [5]

Group 1: Economic Trends - The consumption market is experiencing a structural divide, with significant increases in home appliance sales driven by "trade-in" policies, while clothing sales are struggling with only a 4.9% growth rate [4] - The Shanghai government has introduced subsidies for office equipment for tech companies, leading to a surge in upgrades among employees [1] - The international gold price has risen by 18% over the year, prompting a shift in investment focus from mutual funds to gold ETFs among employees [5] Group 2: Technological Advancements - Shanghai Superconductor's new facility has increased its production capacity from 100 kilometers to 15,000 kilometers annually, showcasing rapid advancements in technology [4] - The AI model developed by a local company is set to enhance productivity by automating tasks such as meeting minutes and code optimization, indicating a strong potential for growth in the tech sector [7] Group 3: Policy and Investment Climate - The Federal Reserve's decision to lower interest rates by 108 basis points has led to a significant increase in foreign investment in A-shares, with a reported doubling of foreign account opening requests [8] - The Shanghai government is optimizing the tech innovation ecosystem, with expedited processes for company relocations and extended tax relief for small businesses [8] Group 4: Consumer Behavior - There is a noticeable shift in consumer spending habits, with a decline in discretionary spending on items like coffee, while essential goods such as food have seen moderate price increases [1] - The trend of community group buying for affordable fruits has emerged as a cost-saving strategy among consumers [1]

Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the **controlled nuclear fusion industry**, specifically the **magnet segment** which holds a significant value share in the overall investment landscape. The ITER project allocates approximately **30%** of its total investment to magnets, with potential increases to **40%** for high-temperature superconducting (HTS) technologies [1][3]. Core Insights and Arguments - **Investment Potential**: 2025 is anticipated to be a pivotal year for investments in controlled nuclear fusion, with capital expenditures expected to expand rapidly from **2025 to 2028**. This will lead to active bidding across the entire industry chain, benefiting companies with secured orders [1][5]. - **Technological Advancements**: Low-temperature superconducting (LTS) technology is currently mature, while HTS is viewed as the future direction, with companies like **West Superconductor** and **Shanghai Superconductor** leading in their respective fields. HTS is expected to reduce device size and costs significantly [1][3][4]. - **Market Dynamics**: The recent bidding activity has been robust, with a notable **$4 billion** project in November, indicating that market expectations are being met and the industry is progressing steadily [6]. Company-Specific Insights - **West Superconductor**: This company has established a leading position in the LTS sector, maintaining a gross margin above **30%** and benefiting from substantial orders due to the BEST project. Their products have been certified internationally and are crucial for nuclear fusion applications [7][8]. - **Shanghai Superconductor**: Recognized as a global leader in HTS wire production, the company has a production capacity exceeding **1,000 meters** and has secured contracts for significant international fusion projects, achieving a gross margin over **60%**. Plans for further capacity expansion are underway [13][14][15]. Risks and Challenges - The controlled nuclear fusion industry faces uncertainties, including project advancement risks, policy changes, and insufficient funding. Investors are advised to closely monitor these variables as they could significantly impact industry development [2][17]. Additional Noteworthy Content - The transition from first-generation copper oxide to second-generation rare earth metal oxides in HTS materials is noted for its higher critical temperatures and stronger current-carrying capabilities, indicating a promising future for these materials in fusion applications [10][12]. - The competitive landscape includes other companies like **Yongding Co.** and **Lianchuang Optoelectronics**, which are also making strides in HTS and LTS technologies, respectively [16]. This comprehensive overview highlights the significant investment opportunities and technological advancements within the controlled nuclear fusion industry, while also addressing the inherent risks that investors should consider.

Investment Rating - The industry investment rating is maintained as "Recommended" [1] Core Insights - The National Development and Reform Commission (NDRC) has emphasized increasing efforts in nuclear fusion technology, indicating a strategic shift from basic research to engineering and industrialization [8][10] - Trump Media Technology Group has reached a merger agreement with TAE Technologies, valuing the deal at over $6 billion, with plans to construct the world's first commercial nuclear fusion power plant by mid-2026 [10][11] - The Chengdu quasi-ring symmetric stellarator project has successfully completed its main structure, expected to operate by 2027, filling a significant gap in China's stellarator research [12] Industry Overview - The total market capitalization of the industry is approximately 331.83 billion yuan, with 121 listed companies [4] - The industry has shown a 3.1% absolute performance over the last month and a 5.1% performance over the last six months [4] Investment Recommendations - Recommended companies include Hezhong Intelligent and Lianchuang Optoelectronics, with a suggestion to pay attention to Guoguang Electric [3][35] - The nuclear fusion sector is expected to see significant capital expenditure growth, with an estimated investment of 146.5 billion yuan in major domestic projects over the next 3-5 years [7][30] - The magnet segment holds a high value proportion, with recommendations to focus on Xibu Superconductor, Yongding Co., and Jingda Co. [35][42] Market Trends - Recent bidding activity has shown a total of 5.21 billion yuan in awarded projects, indicating a robust growth trajectory in the nuclear fusion sector [17][21] - The market has experienced significant stock price movements, with top gainers including Zhongtung High-tech and Zhongke Technology, each rising by 18% in the last half of December [30][33]

Group 1: Application of Superconducting Tapes - Superconducting tapes have diverse applications including controlled nuclear fusion, high-temperature superconducting cables, superconducting maglev trains, magnetic resonance medical devices, and scientific research [1] - The focus is on high-temperature superconductors, which operate above -196 degrees Celsius, offering advantages such as significantly reduced cooling costs, zero energy transmission loss, broader application scenarios, and more compact equipment [1] - High-temperature superconductors are essential materials for applications requiring high magnetic fields, such as controlled nuclear fusion and accelerator magnets [1] Group 2: Company Strategies for Profitability - The company emphasizes risk control and cost reduction to maintain a healthy profit status [1] - It prudently adjusts its expansion plans in response to market changes, aiming to lower financial risks through continuous technological iterations and the introduction of more efficient solar cell products [1] - Upgrading and optimizing the information management system enhances overall operational efficiency and management performance, thereby reducing comprehensive management costs [1] Group 3: Disclosure Information - The activity does not involve any undisclosed significant information [2]

Core Viewpoint - The nuclear energy industry is experiencing significant positive developments, with major projects like the successful grid connection of the "Hualong One" nuclear power unit and advancements in thorium-based molten salt reactors, indicating a promising future for the sector [3][4]. Group 1: Company Performance - Yongding Co., Ltd. has seen its stock price surge nearly 280% year-to-date and approximately 450% over the past 15 months, driven by the positive sentiment in the nuclear energy sector [4]. - Despite the stock price increase, the controlling shareholder, Yongding Group, has been reducing its stake, selling 3.0165 million shares for over 48 million yuan, raising concerns about the company's ability to sustain its high market valuation [6][10]. - In the first three quarters of 2025, Yongding reported revenue of 3.63 billion yuan, a year-on-year increase of 22.1%, breaking a long stagnation in revenue growth [10]. Group 2: Profitability Analysis - The company's net profit for the same period reached 330 million yuan, a staggering increase of 474.3%, with the non-recurring net profit soaring by 613.7%, suggesting a one-year profit equivalent to seven years [8][10]. - However, the majority of this profit (96.66%) stemmed from investment income, primarily from real estate ventures, raising questions about the sustainability of its core business [10][11]. - Excluding investment income, the company's remaining profit was only 11 million yuan, down from 31 million yuan the previous year, indicating a decline in operational performance [11][12]. Group 3: Business Segments - Yongding's main business lines include optical communication and power transmission, with automotive wiring harnesses being the largest revenue source, projected to generate 1.206 billion yuan in 2024, accounting for nearly 30% of total revenue [26]. - The power engineering segment, which is heavily reliant on overseas projects, is expected to generate 1.041 billion yuan in 2024, but its profitability is unstable due to project dependency [33]. - The high-temperature superconducting wire segment, while seen as having significant potential, has underperformed compared to peers, with revenue of only 586 million yuan in 2024, representing 14.24% of total revenue [38]. Group 4: Market Position and Challenges - The optical communication business, despite the industry's growth, has seen a revenue decline of 7.8% to 428 million yuan in the first half of 2025, failing to capitalize on the overall market expansion [51]. - The company faces significant competition in the high-temperature superconducting market, with its performance lagging behind competitors like Western Superconducting, which reported a net profit of 546 million yuan in the same period [42][44]. - Overall, Yongding's narrative reflects a company that has been buoyed by market trends but lacks substantial operational performance to justify its stock price, raising concerns about its long-term viability [53][54].

Core Insights - The production of Hastelloy C276, a critical material previously monopolized by Western countries, has been successfully scaled to ton-level production in China, significantly reducing costs and procurement times for nuclear fusion projects [3][10] - The Chinese BEST project is set to achieve nuclear fusion power generation by 2030, three years ahead of the EU's ITER project, which is facing significant delays and budget overruns [3][9] Group 1: Material Breakthrough - The research team at the Chinese Academy of Sciences has developed a purification technology that achieves medical-grade purity for Hastelloy C276, surpassing imported materials [5] - The team has successfully rolled out a 2000-meter long strip of this ultra-thin material, which can withstand extreme conditions and maintain high strength [5][7] Group 2: Project Acceleration - The completion of the base installation for the BEST device has been expedited due to the availability of domestically produced materials, allowing for a significant reduction in construction time [7] - The use of domestic superconducting materials has enabled the project to avoid long import delays, facilitating a faster assembly of core components [7][9] Group 3: Competitive Landscape - China's complete industrial chain for nuclear fusion technology, from material production to energy conversion systems, positions it favorably against Western competitors, who are struggling with technical and budgetary issues [9][10] - The advancements in superconducting materials and construction efficiency have led to a 30% reduction in construction costs and a threefold increase in power density for the BEST project [9] Group 4: Strategic Implications - The breakthroughs in Hastelloy C276 have broader applications beyond nuclear fusion, impacting sectors such as aerospace, chemical engineering, and marine engineering [10] - The Chinese government is investing over 300 billion yuan in fusion energy technology, indicating a strategic move to secure a leading position in future energy solutions [10][11]