Summary of Zhongkong Technology Conference Call Industry and Company Overview - **Company**: Zhongkong Technology - **Industry**: Automation and Industrial AI Key Points and Arguments 1. **Strategic Transformation**: Zhongkong Technology is transitioning from a traditional DCS supplier to an automation product solution provider, with a focus on industrial AI business. The TPT business achieved over 100 million in revenue in the first half of the year, with significant order growth but not yet achieving scale effects [2][3][4]. 2. **Project Acquisitions**: Despite a slowdown in the overall growth of the process industry, Zhongkong secured important projects, including major orders from PetroChina and Sinopec, and participated in national smart pipeline construction [2][5]. 3. **International Expansion**: The company made significant progress in overseas markets, including projects with Indonesia's Smart and Algeria's national oil company, which supports sustainable business development [2][6]. 4. **Industrial Data Alliance**: Zhongkong established an industrial data alliance and invested in Cyberin, focusing on comprehensive data governance to lay a foundation for industrial AI development [2][7]. 5. **TPT2 Model Deployment**: The TPT2 model is designed for online and platform-based deployment, addressing quality, safety, efficiency, and cost issues through data analysis and intelligent generation [2][11]. 6. **Revenue Decline**: In the first half of 2025, Zhongkong's revenue decreased by 9%, and net profit also declined due to the strategic transformation initiated in 2024 [3][4]. 7. **AI Integration**: The company is undergoing a large-scale AI-native reconstruction, with over 70% of traditional industrial software products being redeveloped, leading to new orders worth 140 million [4][19][20]. 8. **Subscription Model Growth**: The software subscription and annual fee subscription models have gained traction, with significant revenue generated from these new business models [3][4][40]. 9. **Future Development Strategy**: Zhongkong is focusing on the next 30 years of development, aiming to find new leading opportunities in automation solutions and industrial AI [2][8][9]. 10. **Market Potential**: The industrial AI market in China is expected to reach 200 billion, with significant opportunities for growth in the automation sector [31]. Additional Important Content 1. **AI for Manufacturing**: The company aims to enhance the intelligence level of the manufacturing industry through AI, targeting over 50,000 process industry clients, with 36,000 already using their products [18][31]. 2. **Product Innovations**: The UCS (Unified Control System) was launched, significantly improving communication and processing capabilities, and is being integrated with TPT for enhanced smart control [25]. 3. **Profitability Impact**: The introduction of embodied AI for manufacturing is expected to significantly enhance profitability by improving production efficiency and reducing operational costs [26][27]. 4. **Challenges in Transformation**: The main challenge faced during the transformation is the shift in mindset among employees and clients, which is crucial for aligning with the company's strategic direction [51]. 5. **Subscription Revenue**: The subscription revenue from industrial software is projected to be 650 million, with TPT contributing 310 million [49]. This summary encapsulates the key insights from Zhongkong Technology's conference call, highlighting the company's strategic direction, market opportunities, and challenges faced during its transformation.