Summary of Xinxiang Richful Lube Additive Conference Call Company Overview - **Company**: Xinxiang Richful Lube Additive - **Industry**: Specialty Chemicals, specifically lubricant additives - **Market Cap**: Rmb15.9 billion (approximately US$2.24 billion) [5] Key Financial Performance - **Q3 2025 Results**: - Revenue growth: 11% YoY - Net profit growth: 13% YoY, slightly above expectations due to lower SG&A expense ratio - Over 9M 2025, net profits grew by 15% YoY, slightly below Wind consensus of 19% [1][2] Sales and Production Insights - **Sales Volume**: Approximately 40-50k tons in Q3, up from 40k tons in Q2 - **Sales Composition**: - 30% from single additives (SA) - 70% from additive packages (AP) - 60% of sales derived from overseas markets [2] - **Joint Venture**: Planned JV with Farabi Downstream Company in Saudi Arabia, investing US$246 million to build production facilities for SA and AP, aimed at expanding global market reach [2] Growth Opportunities - **OEM Certification**: Progress on OEM certification for AP used in diesel-engine vehicles, which represents about 80% of the total addressable market (TAM) in this subsegment, indicating significant growth potential for 2026 and beyond [2] - **Industrial Applications**: Certification achieved for AP used in construction machinery in China [2] Market Outlook - **Guidance**: The company did not provide specific guidance for future earnings [3] - **Valuation**: Maintained a "Buy" rating despite limited visibility on near-term earnings, indicating confidence in future global market share gains [4] Financial Projections - **12-Month Price Target**: Rmb80.00 - **Current Price**: Rmb55.06 as of October 28, 2025 - **Forecasted EPS**: - 2025E: Rmb3.03 - 2026E: Rmb3.61 - 2027E: Rmb4.39 [6][8] Risks and Challenges - **Downside Risks**: - Slower-than-expected growth in China's lubricant additives market - Increased penetration of electric vehicles (EVs) in heavy-duty trucks - Higher scrap rates of EVs - Lower industrial demand for lubricant additives - Intense pricing competition in domestic and overseas markets - Policy risks, including potential trade wars [12] Investment Highlights - **Forecast Returns**: - Price appreciation: 45.3% - Dividend yield: 2.6% - Total forecast stock return: 47.9% [9] Conclusion - Xinxiang Richful Lube Additive is positioned for growth with a strong focus on expanding its global footprint through strategic partnerships and certifications, despite facing several market risks. The company's financial performance in Q3 2025 aligns with expectations, and the outlook remains positive for future growth opportunities in the lubricant additives sector.