Gates Industrial (NYSE:GTES) 2025 Conference December 03, 2025 02:10 PM ET Speaker0Good to go. All right. Good afternoon, everyone. Welcome to the Fireside Chat with Gates Corporation here. I'm Clay Williams from Goldman Sachs. And with us from Gates are Brooks Mallard, Executive Vice President and Chief Financial Officer, and Rich Kwas, Vice President of Investor Relations and Strategy. Brooks, Rich, thanks for joining us today.Speaker1Absolutely.Speaker0Yeah. So to get us started, we'll dig in on the 2026 ...

Core Viewpoint - Songlin Technology's stock price has shown significant volatility, with a year-to-date increase of 62.98%, but recent trading indicates a slight decline in market performance [1][2]. Financial Performance - For the period from January to September 2025, Songlin Technology reported revenue of 1.852 billion yuan, a year-on-year decrease of 15.49%, and a net profit attributable to shareholders of 159 million yuan, down 50.53% year-on-year [2]. - The company has distributed a total of 709 million yuan in dividends since its A-share listing, with 526 million yuan distributed over the past three years [3]. Stock Market Activity - As of November 12, Songlin Technology's stock price was 29.50 yuan per share, with a market capitalization of 12.771 billion yuan [1]. - The stock has experienced a trading volume of 17.5857 million yuan, with a turnover rate of 0.14% [1]. - The company has appeared on the "Dragon and Tiger List" once this year, with a net buy of -40.5122 million yuan on September 10 [1]. Shareholder Information - As of September 30, the number of shareholders for Songlin Technology was 9,084, an increase of 35.32% from the previous period, while the average circulating shares per person decreased by 26.10% to 46,758 shares [2]. Business Overview - Songlin Technology, established on May 11, 2004, and listed on August 26, 2019, specializes in the research, production, and sales of bathroom accessories, including showers, shower systems, faucets, hoses, and related components [1]. - The company's main business revenue composition is as follows: smart kitchen and bathroom business accounts for 83.99%, health business 11.90%, and others 4.10% [1]. Industry Classification - Songlin Technology is classified under the light industry manufacturing sector, specifically in home goods and bathroom products, and is associated with concepts such as robotics, smart home, mid-cap, medical beauty, and C2M [2].

Group 1 - The core viewpoint of the news is that Songlin Technology has shown significant stock performance, with a year-to-date increase of 67.35% and a recent rise of 2.23% in intraday trading [1] - As of November 11, the stock price is reported at 30.29 CNY per share, with a total market capitalization of 13.113 billion CNY [1] - The company has experienced a net inflow of main funds amounting to 2.643 million CNY, with large orders contributing significantly to the buying activity [1] Group 2 - Songlin Technology's main business includes the research, production, and sales of bathroom accessories such as showers, faucets, and related components, with smart kitchen and bathroom products accounting for 83.99% of revenue [1][2] - For the first nine months of 2025, the company reported a revenue of 1.852 billion CNY, a year-on-year decrease of 15.49%, and a net profit of 159 million CNY, down 50.53% year-on-year [2] - The company has a total of 9,084 shareholders as of September 30, 2025, reflecting a 35.32% increase from the previous period [2] Group 3 - Since its A-share listing, Songlin Technology has distributed a total of 709 million CNY in dividends, with 526 million CNY distributed over the past three years [3]

Company Overview - Xiamen Songlin Technology Co., Ltd. was established on May 11, 2004, and listed on August 26, 2019. The company is located at 298 Yangguang West Road, Haicang District, Xiamen, Fujian Province. Its main business involves the research, production, and sales of bathroom accessories such as showers, shower systems, faucets, hoses, lifting rods, and components [1]. Financial Performance - For the period from January to September 2025, Songlin Technology achieved operating revenue of 1.852 billion yuan, a year-on-year decrease of 15.49%. The net profit attributable to the parent company was 159 million yuan, down 50.53% year-on-year [2]. - Since its A-share listing, the company has distributed a total of 709 million yuan in dividends, with 526 million yuan distributed over the past three years [3]. Stock Performance - As of November 7, Songlin Technology's stock price increased by 2.08%, reaching 29.97 yuan per share, with a trading volume of 28.32 million yuan and a turnover rate of 0.23%. The total market capitalization is 12.974 billion yuan [1]. - Year-to-date, the stock price has risen by 65.58%, with a 3.45% increase over the last five trading days, a 2.69% decrease over the last 20 days, and a 3.56% increase over the last 60 days [1]. - The company has appeared on the "Dragon and Tiger List" once this year, with the most recent appearance on September 10, where it recorded a net buy of -40.51 million yuan [1]. Shareholder Information - As of September 30, the number of shareholders for Songlin Technology was 9,084, an increase of 35.32% compared to the previous period. The average circulating shares per person decreased by 26.10% to 46,758 shares [2]. Business Segments - The company's main business revenue composition includes: smart kitchen and bathroom business at 83.99%, health business at 11.90%, and other segments at 4.10% [1]. - The company operates within the light industry manufacturing sector, specifically in home goods and bathroom products, and is associated with concepts such as robotics, smart home, medical beauty, mid-cap, and C2M [2].

Core Viewpoint - Songlin Technology is a leading domestic manufacturer of bathroom accessories, focusing on R&D, production, and sales, with a strong technical foundation and scale advantages [1] Group 1: Business Performance - In Q3 2025, Songlin Technology achieved revenue of 1.852 billion yuan, ranking 5th in the industry, lower than the top competitor Arrow Home's 4.472 billion yuan and Jianlin Home's 3.723 billion yuan [2] - The main business segments include smart kitchen and bathroom with 2.532 billion yuan (83.99%), health business with 359 million yuan (11.90%), and others with 124 million yuan (4.10%) [2] - The net profit for the same period was 159 million yuan, ranking 2nd in the industry, only behind Jianlin Home's 349 million yuan [2] Group 2: Financial Ratios - As of Q3 2025, the asset-liability ratio of Songlin Technology was 25.57%, down from 34.38% year-on-year and lower than the industry average of 33.64%, indicating good debt repayment capability [3] - The gross profit margin for the same period was 33.12%, a decrease from 35.39% year-on-year but still above the industry average of 25.54%, reflecting strong profitability [3] Group 3: Shareholder Information - As of September 30, 2025, the number of A-share shareholders increased by 35.32% to 9,084, while the average number of circulating A-shares held per household decreased by 26.10% to 46,800 [5] - The company has entered the robotics field, establishing a product system under the platform "Songlin Robotics," focusing on care service robots and logistics service robots [5] Group 4: Executive Compensation - The chairman and general manager, Zhou Huason, received a salary of 2.2178 million yuan in 2024, an increase of 142,500 yuan from 2023 [4]

Core Points - The stock price of Songlin Technology has increased by 63.09% this year, with a recent rise of 6.15% over the last five trading days [2] - The company has a market capitalization of 12.779 billion yuan and a trading volume of 39.95 million yuan as of October 28 [1] - The main business revenue composition includes 83.99% from smart kitchen and bathroom products, 11.90% from health-related products, and 4.10% from other sources [2] Financial Performance - For the first half of 2025, Songlin Technology reported a revenue of 1.14 billion yuan, a year-on-year decrease of 21.23%, and a net profit of 93.09 million yuan, down 57.92% year-on-year [3] - The company has distributed a total of 709 million yuan in dividends since its A-share listing, with 526 million yuan distributed in the last three years [4] Shareholder Information - As of June 30, 2025, the number of shareholders decreased by 18.04% to 6,713, while the average circulating shares per person increased by 22.02% to 63,272 shares [3] - Hong Kong Central Clearing Limited has exited the list of the top ten circulating shareholders [4]

Core Viewpoint - The Urumqi Market Supervision Bureau in Xinjiang is actively implementing a "practical action" approach to conduct special law enforcement inspections on liquefied gas filling stations, ensuring safety and price stability in the gas supply sector [1] Group 1: Regulatory Actions - The bureau focuses on key areas such as price disclosure, gas cylinder filling, storage, recycling, and inspection during its comprehensive checks on liquefied gas filling enterprises [1] - Inspections include verifying the public display of liquefied gas sales prices to ensure compliance with regulations and stability [1] - The bureau checks the calibration status of gas filling measuring instruments to ensure accurate filling volumes [1] Group 2: Safety Measures - Comprehensive inspections are conducted on liquefied gas cylinders, pressure regulators, and hoses to ensure they have quality certificates and CCC certification, preventing safety incidents due to quality issues [1] - The enforcement personnel pay special attention to the implementation of pre- and post-filling inspection protocols to ensure safety and control [1] - The bureau has completed a full coverage inspection of key components such as pressure regulating boxes and connecting pipelines for three pipeline gas companies, identifying and rectifying three safety hazards [1]

Core Viewpoint - The article focuses on the delivery and value breakdown of liquid cooling systems in NVIDIA's GB200 and GB300 server racks, highlighting the differences in design and component value between the two models [2]. Liquid Cooling Server Rack Components - The liquid cooling server rack includes several key components such as manifolds, cooling distribution units (CDUs), pumps, water tanks, plate heat exchangers, and cooling towers [5][6][8][9]. Value Breakdown of Liquid Cooling - The article emphasizes the importance of understanding the architecture of GB200 to facilitate the value breakdown analysis [21]. - For GB200, the demand for large cold plates is 45 units, while GB300 requires 117 units of small cold plates [22]. - The value of a large cold plate in GB200 is $650, whereas a small cold plate in GB300 is valued at $240 [23]. Supplier Dynamics - The supplier landscape for cold plates has shifted significantly from GB200 to GB300, with Cooler Master becoming the primary supplier for GB300, capturing over 55% of the market share [24][25]. - The production process for GB300's liquid cooling plates involves more integration steps compared to GB200, indicating a more complex supply chain [25]. Component Pricing - The price of hoses for GB200 is $1,200 per cabinet, while for GB300, it has increased to between $1,800 and $2,000 per cabinet [26]. - The price of quick disconnects (QDs) has also increased from $45 per pair in GB200 to $55 per pair in GB300 [28]. Technological Upgrades - The quick disconnect technology has evolved from UQD in GB200 to NVUQD in GB300, with a significant change in the supplier base, reducing the share of European and American companies [29]. - The CDU supplier model has transitioned from a single authorized supplier for GB200 to a more diversified supplier base for GB300, enhancing market responsiveness [30]. Profit Margins - The gross margin for CDUs is approximately over 50%, while for cold plates, manifolds, and quick disconnects, it is around 30% [30].

Core Insights - Springlight Technology (603657) reported a total revenue of 1.251 billion yuan for the first half of 2025, representing a year-on-year increase of 39.61% [1] - The net profit attributable to shareholders reached 7.3787 million yuan, up 83.73% year-on-year [1] - The company's accounts receivable increased significantly, with a year-on-year growth of 36.54% [1] Financial Performance - The gross margin was 10.6%, down 7.22% year-on-year, while the net profit margin was 0.39%, a decrease of 13.12% [1] - Total sales, management, and financial expenses amounted to 85.2196 million yuan, accounting for 6.81% of revenue, which is a 9.94% increase year-on-year [1] - Earnings per share (EPS) increased by 66.67% to 0.05 yuan, with operating cash flow per share at 0.38 yuan, up 15.91% year-on-year [1] Business Model and Market Position - The company's return on invested capital (ROIC) was 0.97% last year, indicating weak capital returns [2] - The historical median ROIC since the company went public is 14.21%, suggesting better investment returns in the past [2] - The company's performance relies heavily on research and marketing efforts, necessitating further investigation into these drivers [2] Cash Flow and Receivables - The cash flow situation is concerning, with cash and cash equivalents to current liabilities at only 49.25% and the average operating cash flow over the past three years to current liabilities at 11.7% [2] - Accounts receivable have reached 5503.29% of profit, indicating potential liquidity issues [2] Growth and Production Insights - The company anticipates revenue growth from both existing customers and new client acquisitions [3] - The Malaysian subsidiary CGH is projected to generate approximately 210 million yuan in revenue for 2024 [3] - The domestic OEM business has been a significant contributor to revenue growth in the first quarter of 2025 [3] Stock Incentives - The company has recently completed the final phase of its 2022 stock incentive plan and currently has no ongoing stock incentive programs [4]

Summary of Conference Call on Liquid Cooling Technology in the Automotive Sector Industry Overview - The liquid cooling technology is benefiting from the development of AI and the push from operators, with a projected market space of approximately 150 billion yuan by 2026, including hundreds of billions for core components such as CDU, cold plates, and manifolds [1][6][13] - The Chinese automotive industry has established a presence in the thermal management of new energy vehicles, which synergizes with server liquid cooling technology, particularly in key components like electronic water pumps, power batteries, and hoses [1][7] Key Points and Arguments - The electronic water pump market is experiencing rapid growth, with the server liquid cooling sector demanding higher standards. The market for electronic water pumps in server liquid cooling is expected to reach 5 billion yuan by 2026, accounting for 50% of the new energy vehicle electronic water pump market [1][8] - Core components of the liquid cooling market are primarily dominated by foreign enterprises, but domestic companies are gradually participating in the supply chain for cold plates, CDU, and quick connectors, indicating potential growth opportunities [1][9] - The liquid cooling technology is gradually replacing air cooling as the mainstream thermal management solution for power batteries, with companies like Yinlun and Xiangyu Technology already beginning to ship liquid cooling products [1][10] Market Trends and Future Outlook - The liquid cooling market is expected to exceed 20 billion yuan by 2025 and approach 100 billion yuan by 2026, with a growth rate steeper than that of optical modules [2][4] - The demand for electronic water pumps, referred to as the "heart" of the liquid cooling sector, is increasing, which will drive growth in power and quantity [5][12] - The liquid cooling market is assessed based on the value of individual cabinets, with the NVIDIA GPU300 NVR72 cabinet valued at approximately 100,000 to 120,000 USD. The core components include cold plates (35%), CDU (40%), manifolds (10%), and quick connectors and hoses (15%) [6] Competitive Landscape - Companies like Feilong and Zhongding have advantages in high-power, long-life, and compact electronic water pumps, while others like Chuanhuan and Suliang have competitive advantages due to their mass production experience [4][11] - The supply situation varies across different categories of automotive components, with foreign companies leading in liquid cooling, while domestic companies are beginning to gain traction [9][12] Investment Opportunities - The liquid cooling technology has gained significant attention since 2023, especially following the AI boom, with major operators planning to achieve a 50% penetration rate in the coming years [13] - 2025 is anticipated to be the year of liquid cooling implementation, presenting important and certain investment opportunities as the industry accelerates [13][15] - Companies like Feilong, Yinlun, and Xiangxing Technology are actively expanding their overseas markets and are expected to benefit from the trends in the liquid cooling industry [14][15]