Summary of Fuda Co., Ltd. Conference Call Company Overview - **Company**: Fuda Co., Ltd. - **Date**: October 22, 2025 Key Points Financial Performance - **Q3 Revenue**: Achieved 476 million yuan, a year-on-year increase of 21.9% [3] - **Net Profit**: 75.26 million yuan, nearly 60% year-on-year growth [3] - **Excluding Non-recurring Items**: Net profit close to 72 million yuan, up 58.14% year-on-year [3] - **Q2 Investment Income**: 12 million yuan, not present in Q3, affecting sequential data [2][3] Response to Client Order Decline - **Market Share Increase**: Adjusted product structure to increase market share among other clients, e.g., market share in Seris increased from 30% to 70%, and in Chery from 20% to over 40% [4] - **Gross Margin Impact**: Slight decline in gross margin due to capacity ramp-up and reduced client orders, but overall net profit margin remained stable [2][5] Future Outlook - **Q4 Expectations**: Anticipates recovery in revenue and profit, with gross margin expected to improve back to H1 levels [2][7] - **Client Penetration Plans**: Current market share among major clients is close to 65%, with plans to gradually increase this and expand new client base [6] Business Segment Performance - **New Energy Electric Drive Gear Business**: Experienced a loss of approximately 23 million yuan in H1, but revenue normalized in Q3 due to client structure adjustments [8] - **Long Board Products**: Achieved production capacity since July, with significant improvements in product consistency and precision, currently operating nearly 70 units [9] Strategic Developments - **Reverse Planetary Roller Screw**: Completed audits and batch quotations for major clients, awaiting order confirmations [10] - **Production Capacity**: Currently has a capacity of 30,000 sets, with plans for cautious expansion based on demand [11] - **Collaboration with Domestic Automakers**: Engaging in technical exchanges with domestic main engine manufacturers for robotics applications [12] Investment and Financing - **Future Investments**: Plans for external investments to enhance capabilities, particularly in robotics, while maintaining a cautious approach to avoid blind investments [15][16] - **Convertible Bond Issuance**: Applied for issuance in July, indicating confidence from the controlling shareholder [19] Risk Management - **2026 Performance Outlook**: Despite challenges in 2025, expects to adjust client and capacity structures, with confidence in achieving growth in 2026 [18] Technology and Product Development - **Micro Screw Products**: Developing a 3.5 mm differential screw and working on a 1 mm screw for linear joints, currently in R&D phase [13] - **Cycloidal Gear Technology**: Longboard Technology is leading the development of national standards for cycloidal reducers, with a strong patent reserve [17] Additional Insights - **Market Trends**: Changes in design philosophies among overseas manufacturers may provide Fuda with competitive advantages in certain product lines [10]