Summary of the Conference Call on the Konjac Industry and Yizhi Konjac Company Industry Overview - The konjac planting area in China is approximately 2 million acres in 2025, mainly distributed in Yunnan, Guizhou, and Sichuan provinces, often in intercropping patterns [2][4][5] - The konjac plant requires specific altitude and climate conditions, typically growing in mountainous areas, with a growth cycle that can last up to five years [2][6][7] - The market for konjac, particularly in health food sectors, is expanding due to its recognized health benefits, including weight loss and cholesterol reduction [2][12] Company Profile - Yizhi Konjac is a leading enterprise in the konjac industry, with two subsidiaries and a chairman recognized as a national talent [2][10] - The company has maintained a net asset return rate of approximately 12.3% over the past three years, with a post-listing price-to-earnings ratio of 27 times and a price-to-book ratio of 3.79 times [2][10] - In 2024, the company reported revenue of 617 million yuan and a net profit of 86.7 million yuan, with a significant increase in Q1 2025 revenue to 150 million yuan and net profit of 22.7 million yuan [4][15] Market Dynamics - The price of konjac raw materials increased by approximately 80% in 2024, affecting cash flow due to rising procurement costs [4][17][15] - The demand for konjac-related food ingredients surged in 2024, driven by health trends and the popularity of brands using konjac as a raw material [3][27] - The planting area is expected to increase by 10% to 15% in 2025, but adverse weather conditions could impact overall yield [28] Product and Application - Yizhi Konjac focuses on mid-to-late stage technology research and development, deep processing, and brand operation, with products including konjac hydrophilic colloids, konjac foods, and beauty products [2][10][13] - The company is recognized for its global sales leadership in purified konjac powder and collaborates with several well-known enterprises [2][10][14] - The konjac powder has a shelf life of 18 months, while finished products can last up to 24 months [19] Future Strategy - The company aims to expand its market share in health foods and enhance its product offerings, focusing on the extraction of glucomannan from konjac [16][32] - Future growth is expected to be driven by deep processing trends, increasing market concentration, and enhanced trade acceptance [16] - The company plans to strengthen its research and development capabilities and expand into new product categories, including jelly, pudding, and health supplements [16] Competitive Landscape - Yizhi Konjac holds a significant position in the global market, with an annual production capacity of 10,200 tons, accounting for approximately 12% of global sales [22] - The company faces competition from other domestic firms, but the top three companies collectively hold over 20% of the global market share [22] Conclusion - The konjac industry is poised for growth, driven by health trends and increasing consumer awareness. Yizhi Konjac is strategically positioned to capitalize on these trends through innovation and market expansion efforts [2][10][16]

Investment Rating - The report maintains an "Outperform" rating for the North Exchange market [5] Core Insights - The North Exchange has entered the "920 era," marking the emergence of the first ST companies [1] - The North Exchange's total number of listed companies is 265, with a total market capitalization of 737.724 billion and a circulating market capitalization of 441.839 billion, reflecting a quarter-on-quarter increase of 5.2% and 4.3% respectively [1][11] - The North Exchange 50 Index experienced a significant rebound, ending the month with a 4.72% increase, while other major indices declined [2][30] - The report highlights that 16 out of 22 industries on the North Exchange saw gains, with notable increases in beauty care, transportation, food and beverage, textiles, and agriculture, with median increases exceeding 15% [2][35] Market Overview - The North Exchange's trading volume for April was 30.945 billion shares, with a total transaction value of 630.962 billion, representing a quarter-on-quarter decrease of 14.4% and 20.2% respectively [1][17] - The average daily margin balance for April reached 5.262 billion, remaining at a historically high level [22] - As of April 30, the North Exchange 50 Index's price-to-earnings ratio (PE-TTM) was 45.31, placing it in the 99.79th percentile over the past two years [24][27] Industry Performance - The highest median price-to-earnings ratios by industry were recorded in the computer sector at 111, followed by telecommunications at 110, construction materials at 91, light industry manufacturing at 74, and social services at 72 [24][27] - The report indicates that 23 stocks reached historical highs in price during the month, with Huaguang Yuanhai achieving a remarkable 65.42% increase [2][39] Company Announcements - In April 2025, 232 companies on the North Exchange released their annual reports, with Jinbo Biological reporting the highest earnings per share at 8.27 yuan [3][12] - The report notes that there were no new listings in April, but one new stock, Tiangong Co., was issued [3][11] Policy and Important Events - The North Exchange introduced several policies in April 2025 related to refinancing, trading management, broker performance evaluation, and delisting supervision, marking a strategic move towards market independence and specialization [3][14]

Summary of the Conference Call for Hubei Yizhi Konjac Biotechnology Co., Ltd. Company Overview - Hubei Yizhi Konjac Biotechnology Co., Ltd. specializes in the konjac industry with two wholly-owned subsidiaries: Hubei Yizhi Jiaxian Biotechnology Co., Ltd. and Hong Kong Yizhi Gongying International Co., Ltd. [3] - The company offers over 300 products across three main categories: konjac hydrophilic colloids, konjac food, and konjac beauty products. [3] - In 2024, the company achieved revenue of 617 million yuan and a net profit of 86.72 million yuan, with a total asset return rate of 11.05% and a net asset return rate of 14.15%. [3][5] Industry Insights - The konjac industry has experienced a growth rate of 26% over the past decade, driven by increasing demand for healthy food and low-calorie ingredients in the new tea beverage market. [3][6] - The company is recognized as the global leader in konjac powder sales by Frost & Sullivan and has 24 valid patents and 28 invention patents. [3][4] Financial Performance - The company reported a significant increase in revenue and net profit in 2024 compared to previous years, with a healthy financial status indicated by a debt-to-asset ratio of 21.10% and an interest coverage ratio of 163.20 times. [5] - However, operating cash flow decreased due to a decline in raw material procurement, resulting in a negative cash flow of -68.68 million yuan. [5] Market Demand and Trends - The demand for konjac products is robust, particularly in the food, cosmetics, and health supplement sectors, with notable growth in the new tea beverage and beauty markets. [3][8][16] - The potential market for konjac food in China could reach 56 billion yuan if consumption levels increase. [10] Competitive Advantages - The company possesses several core competitive advantages, including production capacity, full industry chain coverage, and strong technical support. [7] - The production capacity includes 10,200 tons of hydrophilic colloids, 25,000 tons of vegetarian products, and 80,000 tons of tea beverage materials. [4][7] Collaborations and Partnerships - The company has established partnerships with major brands such as Wei Long, San Zhi Song Shu, and Mi Xue Bing Cheng, enhancing its market presence and product offerings. [14][20] - The collaboration with Wei Long began in the second half of 2024, focusing on cost control and flavor innovation. [14][15] Inventory and Supply Chain - The total inventory increased from 280 million yuan at the end of 2024 to 439 million yuan in 2025, primarily due to rising raw material prices and increased quantities. [24] - The company collaborates with upstream cooperatives and primary processing plants to secure raw material supply through equipment leasing and technical support. [17] Future Strategies - The company plans to upgrade the quality of konjac powder products and expand downstream processing capabilities to create a series of health products rich in dietary fiber. [12] - Future production capacity is expected to reach 80,000 tons, with gradual expansion based on market demand. [13][23] Challenges and Outlook - The company anticipates that raw material prices will remain high in the short term, impacting profit margins, but plans to stabilize gross margins through cost-plus pricing methods. [18] - Long-term net profit margins are expected to fluctuate due to competition in the leisure food sector, but the company aims for a sales growth target of at least 20% annually. [19][30] Social Responsibility and Sustainability - The company is committed to social responsibility and sustainable development, currently applying for national-level green factory certification and has passed Apple CSR bronze certification. [31]