Summary of Ningbo Huaxiang Conference Call Company Overview - **Company**: Ningbo Huaxiang - **Industry**: Automotive Parts Key Points Customer Structure and Performance - Significant adjustment in customer structure with nearly half of revenue coming from self-owned brands, reducing reliance on traditional high-end brands, enhancing performance stability [2][4] - Self-owned brand revenue grew from 6 billion RMB last year to an expected 14 billion RMB next year [2][5] - The company has shifted from high-end brands like Mercedes, BMW, Audi, and Volkswagen to a more balanced customer base, with no single customer exceeding 20% of revenue [4][20] Financial Performance and Future Outlook - The company expects quarterly profits to reach approximately 350 to 400 million RMB starting Q3 2025, following the divestment of European loss-making operations [2][7] - Projected profit for 2026 is around 1.6 billion RMB, with a current low valuation of about 9 times earnings [3][9] - Anticipated revenue for this year is between 28 billion to 30 billion RMB, with a profit margin improvement expected as domestic revenue increases [3][19] Business Expansion and Product Development - Actively expanding product categories, particularly in interior and exterior parts, with plans to enter seating and chassis components [2][6] - Recent fundraising plans aim to raise 2 to 3 billion RMB, with significant investments in factories and R&D for smart chassis technology and humanoid robots [28][29] Robotics Business Strategy - Strong strategic focus on robotics, including a partnership with Zhiyuan, taking over their Shanghai manufacturing facility [10][11] - New management incentives include allocating 30% of shares in the newly formed Huaxiang Robotics to management, aiming to attract specialized talent [12][13] - The company is positioned to leverage its existing technology in automotive parts for humanoid robot development, enhancing its competitive edge [17][18] Valuation and Market Position - Current valuation is low, with a P/E ratio of about 9, compared to over 20 for leading robotics companies, indicating significant upside potential [9][14] - Expected to reach a market cap close to 30 billion RMB if valuation normalizes [14][34] Profitability and Dividend Policy - Anticipated annual profit recovery to 1.5 to 1.6 billion RMB post-European business divestment, with a stable dividend policy of at least 20% of distributable profits [21][23] - The company has maintained a dividend payout ratio above 40% in recent years, reflecting strong cash flow [21][22] Global Operations and Market Dynamics - The company has a global footprint with operations in North America, Mexico, and Europe, gradually divesting from loss-making European operations [16][24] - North American operations are expected to turn profitable, contributing positively to overall performance [25] Long-term Goals - Long-term revenue target is approximately 40 billion RMB with net profit margins improving to around 7% [33][34] - The company aims to enhance its market position through strategic partnerships and product innovation in the robotics sector [30][32]

Group 1: Investor Relations Activity - The investor relations activity was categorized as a specific audience survey [3] - The event took place on May 16, 2025, at the company's workshop and conference room [3] - Attendees included representatives from Huayuan Securities, Zheshang Securities, Changjiang Securities, Lianchu Securities, and Zhongshan Securities [3] Group 2: Product Classification and Business Development - The company revised its product classification to better reflect its business situation, now categorizing products into six groups: precision transmission systems, automotive window systems, automotive vision systems, body electronics, automotive thermal management, and others [4] - The adjustment was made to align with the company's strategic development and customer application areas [4] Group 3: Production Capacity and Market Demand - The company is experiencing high production capacity utilization due to strong demand in the new energy vehicle market, with current orders putting pressure on production [4] - To meet future demands, the company is innovating in mold design and manufacturing processes while accelerating the construction of fundraising projects [4] Group 4: Core Technology in Production - The company's core product, "automotive high-strength precision injection gears," has achieved key technological breakthroughs in strength and precision, meeting the lightweight and low-energy consumption requirements of the automotive industry [4] - The production process utilizes innovative plastic gear tooth shape design methods, classified as advanced foundational processes in the industry [4] Group 5: Financial Performance - In the first quarter of 2025, the company reported revenue of 72.91 million yuan, reflecting a year-on-year growth of 44.24%, continuing the growth trend from 2024 [5] - The company is currently stable in its development, with future performance updates to be disclosed as required by listing regulations [5]

Group 1: Investor Relations Activity Overview - The investor relations activity was an earnings briefing held on May 14, 2025, via the "Investor Relations Interactive Platform" [3] - Key attendees included the Chairman, Vice Chairman, and other senior executives of the company [3] Group 2: Financial Performance and Growth Strategies - Revenue from new energy vehicle-related products is expected to continue increasing, with a focus on expanding customer base and investment in this sector [5] - The company’s workforce increased from 384 employees in June 2024 to 452 employees by December 2024, marking a growth of 17.68% [6] - The company has successfully exported products to countries including Germany, France, Poland, Mexico, and Thailand, with plans to expand further [7] Group 3: Research and Development - R&D expenses grew by 16.78% in 2024, with significant breakthroughs in precision injection mold design, including 2 authorized invention patents and 1 software copyright [8] - Revenue from automotive window system components increased by 60.54%, driven by the rapid growth of the new energy vehicle market [8] Group 4: Production Capacity and Efficiency - Current capacity utilization is high, with ongoing projects expected to significantly enhance production capacity [9] - The implementation of WMS and MES systems has led to substantial improvements in production efficiency, contributing to the company's recognition as a smart factory in Zhejiang Province [10] Group 5: Product Composition - In 2024, sales of new energy vehicle components accounted for 30% of total sales, including precision transmission systems, automotive window systems, automotive vision systems, body electronics, and automotive thermal management products [11]

Core Viewpoint - The company plans to acquire 28.2461% of Oufeiy Microelectronics through a combination of issuing shares and cash payment, which is expected to constitute a significant asset restructuring but will not lead to a change in control or a restructuring listing [1][3]. Group 1: Transaction Details - The company intends to purchase 28.2461% equity of Oufeiy Microelectronics and 48.9281% equity of Jiangxi Jinghao Optics, but the latter transaction has been halted due to disagreements on pricing [2]. - The share issuance price for the acquisition is set at 10.63 yuan per share, which is not less than 80% of the average trading price over the previous 60 trading days [2]. Group 2: Financial Performance - For the year 2024, the company reported total revenue of 20.437 billion yuan, a year-on-year increase of 21.19%, with a net profit attributable to shareholders of 5.8 million yuan [4]. - The company invested 1.591 billion yuan in R&D in 2024, representing a 10.08% increase and accounting for 7.79% of total revenue [4]. - Oufeiy Microelectronics reported net profits of 238 million yuan and 280 million yuan for the years 2023 and 2024, respectively [4]. Group 3: Strategic Implications - The acquisition will enhance the company's control over important business areas, allowing for better strategic alignment and implementation [5]. - Oufeiy Microelectronics possesses strong technical capabilities in fingerprint recognition modules, optical sensing modules, and PC touchpads, which will synergize with the company's strategic goals [5].