Summary of Tianzhen Co., Ltd. Conference Call Company Overview - **Company**: Tianzhen Co., Ltd. - **Industry**: PVC and RPET flooring materials Key Points and Arguments 1. **Production Capacity and Recovery**: In 2024, Tianzhen adjusted its production capacity and processes, leading to a rapid recovery in traditional PVC business with a month-on-month compound growth rate of approximately 10%. By December and January, shipment volumes reached twice that of the previous year's first half, averaging about 1,000 containers per month [2][4][6] 2. **Impact of Legislation**: In 2023, due to the "Saxony-Frank Act," 95% of Tianzhen's orders in the U.S. were held up. The company has since adjusted its production layout (building factories in Thailand and the U.S., optimizing the Vietnam plant) and communicated with U.S. customs to gradually restore orders [2][7][8] 3. **Revenue Goals**: The company aims for a total revenue of 2 billion yuan for the year, with core customers like Mohawk and Jia Duo Bao gradually returning to order levels. The focus this year is on establishing channels for Mohawk and Jia Duo Bao to lay the groundwork for market expansion next year [2][3][9] 4. **Customer Recovery**: Mohawk's procurement has exceeded pre-pandemic levels, accounting for 40%-50% of total shipments. Other clients like Jia Duo Bao are in the process of recovering, while over twenty small clients have not yet returned to pre-2019 levels [2][9] 5. **Tariff Policy Impact**: The direct impact of U.S.-China tariff policies on Tianzhen is limited as its U.S. business has shifted to Vietnam and Thailand. However, the company must remain flexible in response to potential tariff adjustments in Southeast Asia [2][13] 6. **Production Base Overview**: Tianzhen has four major production bases: China (15 million square meters/year), Vietnam (30 million square meters/year, transitioning to PET), Thailand (30 million square meters/year, with new capacity expected), and the U.S. (initially 7-8 million square meters/year, with a total of 20 million square meters planned) [5][15] 7. **New Product Launch**: The RPET new product has been successfully promoted in the U.S. market, with approximately 600 containers delivered in January and positive sales feedback. The company expects to add 400-500 new product categories [2][6] 8. **Future Growth Expectations**: The company anticipates continued growth in the coming months, with core customers gradually returning. The goal is to achieve around 2 billion yuan in revenue for the year [2][9] 9. **Market Dynamics**: The company plans to maintain terminal market premiums within 10% by reducing PVC raw material costs, thus expanding market space. There are currently no acquisition plans, but capital expenditures for PET projects and new factory constructions are still needed [5][19] 10. **Investment in Production Bases**: Capital investments include approximately 200 million yuan in China, 400 million yuan in Vietnam, 200-300 million yuan in Thailand, and 6 million USD (about 400 million yuan) in the U.S. [18] Additional Important Information - **Customer Order Progress**: Some customers are taking a cautious approach to ordering, leading to slower progress. Complex internal processes in large enterprises also contribute to delays [10][11] - **Market Acceptance of New Products**: The acceptance of new products in overseas markets is still being evaluated, but initial feedback is positive, with several new colors added to the product line [16] - **Potential Tariff Adjustments**: If Vietnam imposes tariffs, the Thai factory may gain a competitive advantage. The industry heavily relies on the U.S. market, making it unlikely for all production to shift back to the U.S. [14]