CBAK Energy Technology Limited

Good day, ladies and gentlemen. Thank you for standing by, and welcome to CBAG Energy Technologies' fourth quarter and full year 2024 earnings conference call. Currently, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session, and instructions will follow at a time. As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time. Now I'll turn the call over to Yiqin Tian, IR Specialist of CBAG Energy. Ms. Tian, please proceed.

Thank you, operator, and hello, everyone. Welcome to CBAK Energy's earning conference call for the fourth quarter and full year 2024. And joining us today are Mr. Zhiguang Hu, or Jason, Chief Executive Officer of CBAK Energy. Mr. Siri Li, Chief Financial Officer and the Company Secretary, our General Engineer, Mr. Shujing Tian, and Yvonne, who will help with our integration, will join us for the Q&A section. We released our results earlier today. The press release is available on the company's IR website at ir.cbak.com.cn, as well as from the Newswell services. A replay of this call will also be available in a few hours on our IR website. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Security Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today. Further information regarding this and other risks and uncertainties is included in the company's public filings with the SEC. The company does not assume any obligations to update any forward-looking statements, except as it requires under applicable laws. Also, please note that unless otherwise stated, all figures mentioned during the conference call are in US dollars. With that, let me now turn the call over to our CEO, Mr. Zhiguang Hu, please go ahead, Jason.

Hello, everyone. Thank you for joining our earnings conference call for the first quarter and the full year of 2024. I'm pleased to present the performance of our battery business for the fourth quarter and the full year of 2024. Now the revenues for the battery segment increased modestly by 2.7%, reaching 136.59 million for the year. Despite the moderate growth in revenue, our gross profit margin for the battery segment surged by 37.58%, rising from 31.58 million to 43.05 million. The gross profit margin of the battery segment expanded significantly to 31.5% compared to 23.75% in 2023, marking an impressive increase of 7.7 percentage points year-over-year. We reported a net income of our battery segment of 19.43 million for the year 2024 compared to 13.97 million in 2023, marking an impressive increase of 39.08%. As we have consistently emphasized over the past few quarters, this is exceptionally outstanding growth, profit and net income figures are particularly noteworthy given the prevailing challenge and downturn in the broader new energy sector. While many of our competitors, including prominent Chinese battery manufacturers, are experiencing declining profit, our performance stands in stark contrast. As communicated in previous price release, demand for battery, especially the Model 32140 large cylindrical cell, remain exceptionally strong. Our current production capacity in Nanjing is fully booked, which means net revenues are likely to remain steady unless additional capacity becomes available. To address this demand, we are in the process of commissioning two new production lines for the model 32140 in Nanjing, expected to be operational by the end of 2025, the expansion will add 3 GWh of production capacity. Additionally, we are upgrading our Dalian facilities. We currently manufacture the older model, 2026, since 2006. A new product line will be introduced to produce the larger model, 40135 cylindrical battery. adding another 2.3 GWh of capacity. This upgrade is also anticipated to be completed by the end of 2025. With this expansion and upgrades, we are confident in our ability to achieve substantial revenue growth starting in 2026. I would also like to provide our investors and shareholders with an overview of our current and future product portfolio. We have two primary product lines manufactured at our Dalian and Nanjing facilities. The model 26600 along with its variant model 26700 and model 32140. Both the model 26600 and 26700 and model 32140 are the perfect identical cells. The model 26600, 26700 series developed in 2006 as the world's first default phase cells continue to hold a significant position in the market. While this model may be considered outdated in certain aspects, they remain popular in specific segments, particularly in the home energy storage and portable power supply market. across Europe and the United States, we anticipate a gradual decline in sales for this model. However, they are expected to contribute to a portion of our net revenues. Additionally, we foresee a shift among major customers from this legacy model to larger sales formats, such as the Model 32140 and the upcoming model 4T135. The models 32140 are flagship product manufactured at our Nanjing facilities. It's widely utilized in the portable power supply sector and is rapidly gaining traction in the LEV sector, particularly for two and three wheelers vehicles. According to the market research, our 32 140 cells per month, 19% of global market share with demand for outpacing our current production capacity. As previously mentioned, we are preparing to launch a new large cylindrical cell. The model 40 135, this model is designed to serve the portable power supply and home energy storage sectors. We expected a number of our existing customers for the model 2016 to transition to this new model. Once model 40135 enters mass production by the end of this year, we anticipate a substantial increase in net revenue for our Dalian facilities. Looking ahead, our production portfolio will consist of will consist of small cylindrical cells model 26600-26700 from Dalian and large cylindrical cells model 40135 from Dalian and model 32140 from Nanjing, enabling us to meet the diverse needs of our customers effectively. As always, we will also provide an update on our announced client as March 10, 2025, the total value of orders received but not yet delivered at our major production bases in Dalian and Nanjing has reached RMB 126.96 million, approximately 17.54 million. Our accumulated order volume with PowerAuth now stands at approximately RMB 87.05 million, about 12.03 million. Well, our total orders with the Wisman Group has reached Euro 213 million, approximately 231.2 million. Additionally, our order value with Jinpeng Group has grown to RMB 75 about 10.44 million. Notably, our key clients, Anker, has placed order totaling RMB 448 million, approximately 61.82 million. Since the beginning of our collaboration, we believe that the demand from some of these customers in 2025 will likely increase significantly. I would also like to provide a summary of our current production capacity and the planned expansion to offer our investors and shareholders a clearer perspective. At present, our Dalian facilities have an annual capacity of 21 hours for the model 26 is 5.0 and 26 is 700. Well, our landing facility has a capacity of 1.3 GWh for the model 32140. As previously reported, we are in the process of expanding our capacity by adding 2.3 GWh for the model 40135 at our Dalian facility and the 3 GWh for the model 32140 at our Nanjing facilities. By the end of 2025, our total production capacity for cylindrical cells is expected to reach 7.6 GWh. However, it is important to know that it will take time for the newly added production lines to ramp up to full capacity. This means that we may not achieve the full . Nonetheless, the design of this expanded capacity underscores the substantial potential for growth and scalability, offering our investors a promising outlook for the future. Overall, we have successfully sustained strong momentum in our battery business by maintaining a higher growth profit margin and outperforming most of our competitors in terms of net profitability. We are confident that the battery segment will remain profitable in 2025, in addition We are actively upgrading our product portfolio and expanding production capacity to address the surging demand. With the new capacity coming online, we anticipate another phase of significant growth in 2026. Now let me turn the call to our CFO, Jerry Li.