CBAK Energy Technology Inc (CBAT) 2025 Q2 法說會逐字稿

Good day ladies and gentlemen.

Thank you for standing by and welcome to CBAK Energy Technology's second-quarter and first half of 2025 earnings conference call.

(Operator Instructions)

As a reminder, we are recording today's call.

Now I will return the call over to Irina, IR specialist of CBAC Energy. Irina, please proceed.

Thank you, operator, and hello everyone. Welcome to CBAK Energy's earnings conference call for the second quarter and the first half of 2025. And joining us today are Mr. Zhi Guanghu or Jason, Chief Advoy Officer of CBAK Energy, Mr. Lee, Chief Financial Officer and company secretary, and event who will help with our interpre will join us for the QA section.

We released our results earlier today. The press release is available on the company's IR website at IR.c.com.cn.

As well as from the news services.

A reply of this call will also be available in a few hours on our website.

Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the US Private Security Litigation Reform Act of 1,995.

Forward-looking statements involve inherent risk and uncertainties.

As such, the company's actual results may be materially different from the expectation 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 required under the 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 earning conference call for the second quarter and first half of 2025.

As discussed last quarter, our Dalian for are undergoing a transition from model 26 to 20, a small format battery that had been in use for nearly two decades to model 4,135, a much larger and a more advanced model that enjoys a strong market popularity. This transition has led to a sharp decline in Dalians.

Net revenues and the gross profit, given that we operate to major battery production base, and the downturn in Dalian significantly impact our consolidated results.

Meanwhile, our Nanjing facility are facing supply constraint due to surging demand for our model 32 140 cells. Phase one of our Nanjing plant, we began.

Operation in 2021 is already running at full capacity.

We reported last quarter that phase 2.

And underrate. However, its completion has been delayed by a few months to Q4, limiting our ability to fulfill additional pending orders.

In short, Dalian is building a new production line for model 4fi cells.

With all existing and prospective customers currently testing samples and awaiting mass production, Nanjing is operating at full capacity and unable to accommodate further demand until phase two comes online.

Since both the model 4,135 production and Nanjing phase two expansion are expected to beri in Q3 to Q4, we anticipate a strong recovery in our consolidated result by year end.

This situation is explains the slow down in our performance over the past two quarters. As of June 30, 2025, we reported.

Net revenue of $40.52 million down 15% from $47.79 million in the same period of 2024.

The primary The driver of the decline was a sharp reduction in sales to customers in the in the residential energy storage market we had.

Previously purchased large volume of model 26 0 sales.

So in this segment filed by 44.8% year over year.

As a result, the com composition of our largest customer has shipped with significant growth in order from leading player in the possible power supply sector and to manufacturers in India's 2 and 3 wheelers market. Our strategy moving forward is to continue targeting high quality European and the American. Am American customers for our model 20,600, 32, 140 and the upcoming 4,135 sales.

Well, further expanding our market share in India and the the portable power supply industry with our model 3,214 140 and 40,135 products.

We had previously decided in partnership with our customer to relocate part of our manufacturing manufacturing lines overseas in response to US tariffs on Chinese products. However, we have temporarily paused our Malaysian product we see as a short term solution. And know that governments of both countries are currently engaged in active negotiation to reach an agreement.

We believe it is prudent to monitor the outcome of these talks before committing to any major invitement.

That said, establishing battery cell production capacity in the US remains a one element of of our long term strategy.

We continue discussion with potential partners to determine the most cost effective approach to realizing this plan.

Now let me turn the call to our CFO Jerry Lee.

Thank you, Jason.

As Jason just mentioned, our net revenues declined primarily due to our strategic transaction from a small format battery model to a larger, more advanced model.

Alongside this revenue decline, we reported net losses attributable to CA Energy shareholders of $3.07 million and total net losses of 3.36 million. Of these, the battery segment accounted for $2.07 million in net losses while our raw materials production unit high trends reported net losses of 1.06 million.

Despite the weaker performance in our battery segment, high trends deliver a notably improved result. Net revenues for high trends reached approximately 19.43 million, up 59.36% from 12.19 million in the same period of 2024. Its net losses narrowed by 32.02%. From 1.56 million in Q2 last year to 1.06 million in the same period this year.

This improvement reflects high sustained efforts to expand its market presence.

In the 2nd quarter and first half of 2025, the unit successfully secures several new customers, driving growth in raw materials sales. Furthermore, a modest decline in raw material price prices during the first half of 2025 stimulated customer demand and encouraged additional order placements.

Looking ahead, we firmly believe that with the completion of our product portfolio upgrade and phase 219 project by year end combined with Hran's continued expansion into new high quality customers and the ongoing recovery in the raw material prices. The financial performance of both hydrans and our bay segment will see a strong rebound in the near future.

Thank you. We will now open the floor for the Q&A section. Operator, please go ahead.

(Operator Instructions)

Brian Lantier from Sacks Small caps research. Please go ahead. Your line is open.

Great, good evening, gentlemen. I wonder if you could talk a little bit about the competitive landscape right now and if you're experiencing any pricing pressures or if customers are really focusing on the products and the availability of your products.

I think, the price for first, the issue is the price. As now the battery tech technology.

Develop very quick and every year the the performance such as capacity increased.

Why the battery cell capacity increased because the high capacity can reduce the cost and the market right now is very sensitive for the cost. So CBAK transfer small battery to a large larger battery cell. To reduce the cost to meet the market requirement.

And the volume actually now the market volume is increased very quick too because now for for the market now need a battery.

Such as consumer market and the two wheels, 3 wheels, two wheels, 3 wheels market and electric vehicles. So the The volume increase is very big.

Okay.

Thank you for that. Sorry, let me add some points. I think following what Jason just commented, right now, because, most of the leading battery players in China are producing prismatic sales, which has a much lower cost advantages over our.

Technical route. However, right now, as you may know that all the, manufacturers for cyrical sales are actually trying their best to upgrade their product to a much larger battery model. So actually, the larger your battery, will be actually the lower, the better cost effective, your battery is going to be. So, our strategy is just to keep, Investing in the R&D programs to try to produce a larger size of our batteries. The project of 4,135 is the one that we are currently investing. It's a major upgrade from 26,650.

The size will be much larger, which means there is some cost that will be effectively lower than our current product. In the future, as we always say, we are also investing in the R&D of the of the series 46, which will be much larger than all the current products we have.

We believe that, with the time being and with all our R&D programs. Going very well, we will eventually have a very cost effective products in the market, and that product would target that all major customer market that values, the value that they would just pay attention, pay great attention to the cost, including the two wheeler and three wheeler markets that Jason just mentioned.

Great, yeah, I, my next question was going to be on the 46 series cells. Where do you stand in that development and when do you think best case scenario you could actually be producing something like a 46 950 or something along those lines?

Actually, now we, yeah, we make the research and development for 46 series from already more than 2 years. And then we our target, we will achieve the map production of 46 series now at the end of next year.

And yeah.

Yeah, let me at some point, as Jason just say, we have already spent enough time on the R&D of a Series 46. We have probably a couple of actual models to choose 46,120 or 46,950. A lot of the models to choose actually depend on our major customers preference.

I think the key elements determining when we're going to mass produce, the Series 46, is actually the capital, because right now the equipment and production line for Series 46 is is extremely expensive at this moment, unless we have securing. Significant orders from our customers, otherwise, we will be very cautious about investing into this expensive production line, considering, especially considering we have already two expansion projects at hand, a project for 4,135 and a project for 302 140. If we have a choice, we would like to complete a fundraising and then proceed with the construction of a production level 46. Otherwise, we prefer, the completion of the current two project first.

What were there specific factors that caused the delay in the Nanjing expansion? Was it tied to uncertainty around possibly expanding in Malaysia first, or just, or was it difficulty securing equipment? If you have any color around what caused that delay, I'd appreciate it.

Hoon.

What I saw.

Let me respond to this question. I think the major issues causing the delay of our Nanjing project actually comes down to our equipment supplier. Some of our major equipment suppliers face, problems, sending over their equipment.

So there, so it's just, as a result, we have a probably a couple of months of delay. We don't think we're going into any legal tussles with these suppliers because that would cause much longer delays. We are going to resolve these problems very soon. So expectedly we are going to, I think we're going to complete the expansion for this phase by the end of this year.

Great and just the housekeeping, have you been active? Have you disclosed yet if you've been active under the $20 million dollar buyback and if you have how much capacity is still available under that buyback?

Well, yes, after we announced the stock buyback, program, we do, we did spend certain cash buying our stock back. I think we have so far spent about, roughly, we need to check the number but roughly between 1.3 to, $1.5 million at this moment and the stock price was pushed up. Above like one doors, I think it's still strongly underestimated our company, but we will see how the market goes and determine when we're going to buy the stock back again because the program is a one year long program.

Okay, great.

Thank you for the update. I appreciate it.

Thank you.

Thank you.

Once again, if you wish to ask a question, please press 11 on your telephone.

Thank you, seeing no more questions in the queue, let me turn the call back to Jason for closing remarks.

Thank you, operator, and thank you all for participating in today's call and for your support.

We appreciate your interest and look forward to reporting to you again next quarter on our progress.

Thank you.

Thank you all again. This concludes the call. You may now disconnect.