Summary of Tian Gong International Conference Call Industry and Company Overview - **Company**: Tian Gong International - **Industry**: Steel manufacturing, specifically focusing on tool steel, titanium alloys, and new materials Key Points and Arguments 1. **Profitability Recovery**: Tian Gong International's tool steel segment has shown signs of recovery, with gross margins exceeding last year's levels due to rising raw material prices and increased sales of die-casting tool steel. This trend suggests potential growth in performance for the second half of the year [2][4][7] 2. **Titanium Alloy Business Challenges**: The titanium alloy segment is currently under pressure, primarily due to only one model of the iPhone 17 utilizing titanium alloy, leading to a decline in performance. However, projections indicate that by 2026, two new iPhone models will adopt titanium alloy, potentially increasing order volumes to 2,000 tons [2][8][9][24] 3. **High Nitrogen Steel Development**: High nitrogen steel is highlighted as a promising new material, with samples sent to Jiangsu Runfu for military applications. The company is also developing high-boron steel and low-activation steel for nuclear fusion, expanding the application space for powder metallurgy special alloys [2][6][25] 4. **Powder Metallurgy Breakthroughs**: The company has achieved significant advancements in high nitrogen steel using powder metallurgy techniques, reaching nitrogen content of 2,000 ppm with plans to increase it to 4,000 ppm. This development aims to reduce reliance on imported high nitrogen steel [2][13] 5. **3D Printing Technology**: While 3D printing is recognized as a future trend, its current impact on titanium alloy demand is limited. The company is exploring this technology but notes that traditional machining processes still dominate [2][17] 6. **Market Dynamics**: The overall market for high carbon steel is approximately 100,000 tons annually, with significant reliance on imports in China. The introduction of domestic high nitrogen steel could lead to price reductions in the market [12][21] 7. **Future Growth Areas**: The company anticipates growth in titanium alloy usage starting in 2025, with projections of reaching 2,000 tons by 2026. Additionally, advancements in nuclear fusion materials and new high-end steel products are expected to contribute to growth, although production capacity for powder metallurgy needs to be increased to 10,000 tons [5][25] 8. **Pricing and Profitability Outlook**: Current pricing for titanium alloy is around 210,000 RMB per ton, with future revenue expectations based on planned production capacity indicating potential income of 800 million RMB from titanium alloys alone [26] Other Important Insights - **Material Performance**: High nitrogen steel is noted for its superior strength and corrosion resistance, making it suitable for high-end equipment manufacturing and potentially replacing traditional bearing steels [5][20][21] - **Production Capacity Challenges**: The company has not provided specific performance guidance but acknowledges the need to enhance production capacity for new materials to meet anticipated demand [24][25] - **3C Product Manufacturing**: The company currently produces 3C products primarily through CNC machining, with a yield rate of 10% to 20%, and is considering a shift towards 3D printing to improve efficiency [16] This summary encapsulates the key insights from the conference call, highlighting the company's current challenges, future opportunities, and strategic developments in the steel manufacturing industry.

Investment Rating - The report does not provide a specific investment rating for the company [5] Core Views - The company, Tiangong International, reported a steady performance in 1H25, with revenue decreasing by 7.1% year-on-year to RMB 2.34 billion, primarily due to overseas export business disruptions and the impact of tariffs [2] - Despite the revenue decline, the net profit attributable to shareholders increased by 10.4% year-on-year to RMB 200 million, with a net profit margin improvement of 1 percentage point [2] - The company is focusing on high-end manufacturing through powder metallurgy technology, which is expected to drive future growth [8] Financial Performance Summary - Revenue for 1H25 was RMB 2.34 billion, down from RMB 2.52 billion in 1H24 [9] - Gross profit margin decreased by 3.2 percentage points, attributed to a higher sales proportion of lower-margin titanium alloy products [2] - The company’s main revenue sources include tool steel, high-speed steel, cutting tools, and titanium alloy, with tool steel accounting for approximately 66.1% of total revenue [8] Business Segment Performance - Tool steel revenue was RMB 1.15 billion, high-speed steel revenue was RMB 390 million, cutting tools revenue was RMB 400 million, and titanium alloy revenue was RMB 350 million [8] - Domestic revenue for tool steel grew by 4.7% year-on-year and 21% quarter-on-quarter, while high-speed steel domestic revenue increased by 14.1% year-on-year and 33.7% quarter-on-quarter [8] Strategic Developments - The company has signed a strategic cooperation framework agreement with Heng Erda, expecting to supply at least 100 tons of powder high-speed steel annually starting in 2026 [8] - The company is innovating in high-nitrogen steel production, which has applications in humanoid robots and other fields, with successful deliveries to partners [8] - Plans are in place to develop key materials for nuclear fusion, with significant market potential identified [8]

香 港 交 易 及 結 算 所 有 限 公 司 及 香 港 聯 合 交 易 所 有 限 公 司 對 本 公 告 的 內 容 概 不 負 責，對其準確性或完整性亦不發表任何聲明，並明確表示，概不對因本公告全部 或任何部份內容而產生或因倚賴該等內容而引致的任何損失承擔任何責任。 Tiangong International Company Limited （於開曼群島註冊成立的有限公司） 天 工 國 際 有 限 公 司* （股份代號：826） 在雙方共同努力下，繼續深化合作，共同加速推進本集團的鋸切工具專用粉末高 速鋼材料（ M42、M51等 ）（ 以下簡稱「鋸切工具專用材料」）在鋸切工具產品領域應 用的研發、測試與運用，不斷建立行業優勢地位，實現技術升級與進口替代。 恒而達將以自有鋸切工具生產線為本集團新材料提供驗證測試場地和設備支援， 並基於其數十年的生產工藝經驗及終端使用者使用資料積累，從合金成分優化、 生產工藝改進、產品性能提升等維度為本集團提供持續技術支援，協助完善其材 料研發體系。 – 1 – 為支援本集團該項業務的快速發展，在本集團鋸切工具專用材料通過恒而達的驗 證測試後，恒而達同意在保障供應鏈平穩 ...

Group 1 - Heng Er Da (300946.SZ) signed a strategic cooperation framework agreement with Tian Gong International (00826) to collaborate on the application of powder high-speed steel and high-nitrogen steel in planetary roller screw manufacturing [1][2] - Tian Gong International is the only global manufacturer of a full range of powder products, with its powder steel certified by the North American Die Casting Association (NADCA), breaking a 30-year monopoly held by European and American companies [1] - Heng Er Da will purchase no less than 100 tons of cutting tool materials annually from Tian Gong International for five years starting in 2026, totaling at least 600 tons [1] Group 2 - Tian Gong International's self-developed high-nitrogen alloy TPMDC02A was delivered to Jiangsu Runfu Power in early July for mass production of planetary roller screws, making it the first domestic company to apply high-nitrogen steel in this area [2] - The collaboration aims to enhance the precision and yield of Heng Er Da's rolling components, addressing the issues of low processing efficiency and high costs in domestic screw manufacturing [2] - This partnership marks a commercial milestone for Tian Gong International's powder steel and high-nitrogen steel technologies, highlighting its strategic positioning in the humanoid robot and high-end equipment sectors [2]