Summary of Xiongdi Technology Conference Call Company Overview - **Company**: Xiongdi Technology - **Date**: October 23, 2025 Key Points Financial Performance - **Net Profit**: Achieved a net profit of 6.71 million RMB, a year-on-year increase of 108.05% [2][3] - **Cumulative Net Profit**: Total net profit reached 18.38 million RMB, up 71.16% year-on-year [2][3] - **Deducted Non-Recurring Profit**: Net profit excluding non-recurring items grew by 302% year-on-year, totaling 13.93 million RMB [2][3] - **Operating Cash Flow**: Net operating cash flow increased by 119.03% year-on-year, amounting to 14.49 million RMB [2][3] Revenue Growth - **Revenue**: Third-quarter revenue was 127 million RMB, a 5.96% increase year-on-year; cumulative revenue for the first three quarters was 338 million RMB, up 5.63% [3] - **Contract Liabilities**: Significant growth in contract liabilities due to customer prepayments, primarily from overseas clients, indicating future revenue potential [2][5] Business Model and Contracts - **Burkina Faso Project**: A five-year operational contract expected to contribute approximately 40 million RMB annually, marking a shift to a volume-based charging model [2][6] - **International Expansion**: Actively expanding into overseas markets, including projects in Mali and Malawi, with a focus on West Africa centered around Ethiopia [2][7] Market Dynamics - **High Margins in Overseas Markets**: Overseas market gross margins are close to 50%, higher than domestic margins, with adjustments based on country risk [2][8] - **Security Document Market**: The market has high entry barriers and few competitors, allowing Xiongdi Technology to gain market share through partnerships and experience accumulation [2][9] Product and Technology Innovations - **MLP Anti-Counterfeiting Technology**: The introduction of MLP multi-layer anti-counterfeiting technology enhances product competitiveness, particularly in electronic passport upgrades driven by ICAO [4][14] - **Overall Solutions**: Transitioning from hardware to comprehensive solutions has significantly increased contract values and market space [10] Future Outlook - **Order Growth**: Continued rapid growth in overseas orders is expected, driven by the renewal cycle of security documents and the increasing replacement of European companies by Chinese firms [11][12] - **Market Size**: The global security document market is substantial, with major companies generating billions in revenue, indicating significant growth opportunities [16] - **2026 Projections**: Anticipated continued growth in order scale and market expansion based on current trends in contract liabilities [17] Domestic Market Challenges - **Domestic Business Performance**: The domestic market for smart governance and transportation has seen declines due to fiscal constraints, but efforts are being made to mitigate these impacts through diversification [18][21] - **Postal Equipment Opportunities**: High potential in postal equipment business due to automation and efficiency improvements, with plans to extend technology into more sectors [19] Emerging Technologies - **Quantum Technology**: The company has made initial investments in quantum computing and communication, with future applications expected in privacy protection [22] International Business Development - **Historical Growth**: The company has a history of international project involvement since 2008, with significant revenue recovery post-pandemic, and expects overseas revenue to surpass domestic revenue in the coming years [23][24] Conclusion Xiongdi Technology is experiencing robust financial growth, driven by strategic international expansion, innovative product offerings, and a strong market position in the security document sector. The company is well-positioned for future growth, particularly in overseas markets, while also addressing challenges in the domestic landscape.