Equity Research: Liancheng Numerical Control (920368.BJ)

Date: March 11, 2026
Ticker: 920368.BJ (Beijing Stock Exchange)
Sector: Photovoltaic Equipment / Semiconductor Manufacturing Equipment
Rating: BUY-B (Initiation)
Current Price: CNY 44.63 (as of Mar 10, 2026)
Target Price Implied Valuation: Based on 2027E earnings recovery trajectory.

Executive Summary

Liancheng Numerical Control (Liancheng NC) stands at a critical inflection point, transitioning from a period of severe domestic cyclical headwinds to a phase of strategic global expansion and technological diversification. While the company’s 2025 financial performance reflects the broader distress in the Chinese photovoltaic (PV) manufacturing sector—characterized by acute overcapacity and suppressed capital expenditure among downstream clients—we identify a compelling contrarian investment opportunity driven by three core pillars: (1) Superior Overseas Execution Capability, (2) Technological Moat via Legacy IP Integration, and (3) Anticipated Domestic Cycle Bottoming.

On February 26, 2026, Liancheng NC released its 2025 preliminary earnings results, reporting revenue of CNY 2.19 billion (-61.4% YoY) and net profit attributable to shareholders of CNY 78.29 million (-77.0% YoY). These figures align with prior guidance, confirming that the worst of the earnings contraction has been priced in. The decline was primarily driven by the slowdown in domestic PV equipment demand and prudent impairment provisions. However, beneath the surface of these headline numbers lies a robust structural shift in the company’s business model.

Unlike many peers who remain heavily exposed to the saturated domestic market, Liancheng NC has successfully cultivated a differentiated international footprint. Through its wholly-owned subsidiaries in the United States and Vietnam, and leveraging the legacy technology of KAYEX (acquired in 2013), the company possesses unique "soft power" in intellectual property and "hard power" in localized manufacturing. The ability to deliver full-turnkey silicon ingot production lines in North America—exemplified by the completed delivery to Hanwha Qcells’ North American facilities—positions Liancheng as a primary beneficiary of the global reshoring trend in solar manufacturing, particularly under the protective umbrella of policies like the U.S. Inflation Reduction Act (IRA).

We initiate coverage with a BUY-B rating. Our thesis is predicated on the expectation that domestic replacement orders will stabilize in 2025-2026, while overseas revenue contributions will accelerate, driving a significant margin expansion and earnings rebound. We forecast net profits of CNY 80 million, CNY 230 million, and CNY 763 million for 2025, 2026, and 2027, respectively. At the current share price of CNY 44.63, the stock trades at approximately 134x 2025E P/E, which compresses rapidly to 44x in 2026E and an attractive 13x in 2027E as earnings normalize. For institutional investors with a medium-to-long-term horizon, the current valuation offers an asymmetric risk-reward profile, capturing the upside of the next global PV capacity cycle while mitigating downside risk through diversified geographic exposure.

Key Takeaways

1. Financial Performance: Navigating the Cyclical Trough

The 2025 fiscal year represented a challenging environment for the entire PV equipment supply chain in China. Liancheng NC’s financial results reflect this macroeconomic reality but also demonstrate management’s discipline in cost control and asset quality maintenance.

1.1 Revenue and Profitability Analysis

• Revenue Contraction: The company reported total operating revenue of CNY 2.19 billion in 2025, a significant year-over-year decline of 61.4%. This contraction is not idiosyncratic to Liancheng but mirrors the broader industry trend where downstream cell and module manufacturers drastically reduced capital expenditures (CapEx) due to prolonged periods of low utilization rates and negative margins.
• Net Profit Decline: Net profit attributable to the parent company stood at CNY 78.29 million, down 77.0% YoY. The disproportionate drop in profit relative to revenue indicates operating leverage working in reverse, compounded by one-time or non-recurring charges.
• Impairment Provisions: A key driver of the profit decline was the company’s adherence to prudent accounting principles. Management recognized necessary asset impairment losses amidst the industry downturn. While this depresses current earnings, it cleans up the balance sheet, reducing the risk of future write-downs and providing a clearer baseline for future growth.

1.2 Margin Resilience Amidst Volume Pressure

Despite the sharp drop in top-line revenue, gross margins have shown resilience and even slight improvement trends, indicating a shift in product mix towards higher-value-added solutions.
* Gross Margin Trend: The gross margin improved from 26.8% in 2023 to 28.7% in 2024, and is estimated at 30.1% in 2025. This expansion is attributed to:
1. A higher proportion of overseas sales, which typically command better pricing power than the fiercely competitive domestic market.
2. Sales of high-tech auxiliary equipment and consumables (such as graphite thermal field components) which carry higher margins than standard crystal pulling furnaces.
3. Strict cost management and optimization of the supply chain.

1.3 Cash Flow and Balance Sheet Health

• Operating Cash Flow: In 2025, operating cash flow was negative at CNY -232 million, primarily due to the timing of receivables and inventory adjustments during the demand slump. However, we project a strong reversal in 2026, with operating cash flow expected to turn positive to CNY 1.05 billion, driven by the collection of outstanding receivables from previous large orders and improved working capital efficiency.
• Liquidity Position: The company maintains a healthy liquidity position. As of September 30, 2025, cash and cash equivalents were sufficient to cover short-term obligations. The debt-to-asset ratio has decreased from 68.6% in 2023 to an estimated 44.7% in 2025, significantly de-leveraging the balance sheet and providing financial flexibility for future R&D investments or potential M&A activities.

(Source: Shanxi Securities Institute Estimates)

2. Strategic Pivot: The Overseas Growth Engine

The most distinctive feature of Liancheng NC’s investment thesis is its successful pivot to international markets. While domestic competitors are engaged in a race to the bottom on price, Liancheng is capturing value in high-barrier overseas markets.

2.1 Localized Manufacturing Footprint

Liancheng has moved beyond simple export models to establish deep, localized operational capabilities. This strategy mitigates geopolitical risks, reduces logistics costs, and enhances customer service responsiveness.

• Vietnam Subsidiary: The company has established a wholly-owned subsidiary in Vietnam, which serves as a crucial hub for Southeast Asian and global supply chains.

  • Capacity: The facility boasts a monthly production capacity of nearly 100 single-crystal furnaces.
  • Vertical Integration: Crucially, the Vietnam base includes a dedicated graphite processing workshop. This allows for the precision manufacturing of key thermal field components, including graphite heaters, shields, electrodes, and bolts.
  • Strategic Advantage: This integration enables a "one-stop-shop" model, supplying both the core equipment (furnaces) and high-margin consumables (graphite parts). This locks in recurring revenue streams and strengthens customer stickiness, as clients prefer single-source suppliers for critical process components to ensure compatibility and warranty support.

• United States Subsidiary: The U.S. entity is not merely a sales office but a center for technical adaptation and compliance. It plays a pivotal role in navigating the complex regulatory landscape of the North American market, including meeting local content requirements for IRA subsidies.

2.2 Intellectual Property and Technological Heritage: The KAYEX Legacy

A often-underappreciated asset on Liancheng’s balance sheet is its ownership of the KAYEX brand and technology.

• Acquisition Background: In 2013, Liancheng’s U.S. subsidiary acquired the single-crystal furnace division of KAYEX, a business unit formerly owned by SPX Corporation (a Fortune 500 company). KAYEX had over 70 years of history in crystal growth technology.
• Strategic Value:
  1. Brand Recognition: In Western markets, the KAYEX brand carries significant prestige and trust, particularly among legacy semiconductor and high-end PV manufacturers. This lowers the barrier to entry compared to unknown Chinese brands.
  2. IP Portfolio: The acquisition granted Liancheng access to a vast portfolio of patents and proprietary know-how related to crystal pulling processes. This "soft power" is critical in avoiding intellectual property disputes in stringent jurisdictions like the U.S. and Europe.
  3. Proven Track Record: The technology underpins the success of major global players. Notably, it assisted LONGi Green Energy in becoming a global PV leader. This proven scalability validates the technology’s reliability for large-scale industrial deployment.

2.3 Turnkey Project Execution Capability

Liancheng has demonstrated the ability to execute complex, large-scale projects abroad, moving from selling individual machines to delivering entire production lines.

• Hanwha Qcells Case Study: The company successfully completed the delivery of a silicon ingot segment turnkey line for Hanwha Qcells in North America.
  • Significance: Hanwha Qcells is one of the largest solar manufacturers globally and a key beneficiary of U.S. manufacturing incentives. Winning this contract validates Liancheng’s technical competence, project management skills, and ability to meet the rigorous quality and timeline standards of Tier-1 international clients.
  • Replicability: This success serves as a reference case for other potential clients in the U.S., Europe, and India who are building new capacity. It proves that Liancheng can handle the systemic integration challenges of overseas projects, including local labor coordination, regulatory compliance, and after-sales service infrastructure.

2.4 Market Opportunity: Global Reshoring and Trade Barriers

The global PV landscape is fragmenting due to trade protectionism. The U.S. and Europe are actively incentivizing domestic manufacturing to reduce reliance on Chinese supply chains.
* U.S. Inflation Reduction Act (IRA): Provides substantial tax credits for domestically produced solar components. This has triggered a wave of new factory announcements in the U.S.
* European Net Zero Industry Act: Similar initiatives in Europe are driving demand for local equipment suppliers.
* Liancheng’s Position: As a supplier with existing U.S. manufacturing presence and non-Chinese IP heritage (via KAYEX), Liancheng is uniquely positioned to serve these new factories. It can potentially qualify as a "local" or "friendly-shore" supplier, bypassing some of the tariffs and political scrutiny faced by pure-play Chinese exporters.

3. Domestic Market: Signs of Stabilization and Renewal

While the overseas narrative provides the growth alpha, the domestic market provides the volume beta. The Chinese PV industry is undergoing a painful but necessary consolidation phase.

3.1 Capacity Clearing and Supply-Demand Rebalancing

• Current State: The domestic market is characterized by severe overcapacity, leading to plummeting prices for polysilicon, wafers, cells, and modules. Many smaller, less efficient manufacturers are facing bankruptcy or exit.
• Impact on Equipment Demand: New capacity expansions have virtually halted. However, this creates a floor for equipment demand. Once the excess capacity is cleared and profitability returns for leading manufacturers, CapEx will resume.
• Timeline: We anticipate the domestic market to bottom out in 2025-2026. The "clearing" process is accelerating due to policy guidance against low-quality expansion and financial pressure on indebted firms.

3.2 The Replacement Cycle Catalyst

Beyond new capacity, a significant driver for Liancheng’s domestic revenue will be the equipment replacement and upgrade cycle.
* Technological Iteration: The PV industry is rapidly transitioning from P-type (PERC) to N-type (TOPCon, HJT) technologies. Older PERC lines are becoming economically obsolete.
* Retrofitting Opportunities: Liancheng’s equipment, particularly its crystal pulling furnaces, can often be upgraded or retrofitted to support newer, larger wafer sizes (e.g., G12, M10) and higher efficiency processes.
* Order Visibility: We expect orders for domestic renovation and upgrades to begin recovering in late 2025 and accelerate in 2026. This provides a steady baseline of revenue even before new greenfield projects restart in earnest.

4. Valuation and Investment Logic

4.1 Earnings Forecast and Recovery Trajectory

Our financial model assumes a V-shaped recovery in profitability, driven by the mix shift to higher-margin overseas sales and the normalization of domestic volumes.

• 2025E (The Bottom): Revenue of CNY 2.19 billion, Net Profit of CNY 77 million. This year represents the trough. Margins are supported by overseas sales, but absolute profit is low due to low volume and impairments.
• 2026E (The Recovery): Revenue grows modestly by 5.0% to CNY 2.30 billion, but Net Profit surges by 198.6% to CNY 230 million. This disproportionate profit growth is driven by operating leverage, reduced impairment charges, and higher contribution from high-margin overseas projects.
• 2027E (The Expansion): Revenue jumps by 58.3% to CNY 3.64 billion, with Net Profit reaching CNY 763 million (+231.4% YoY). This assumes a full recovery in domestic CapEx and continued strong growth in international markets as new factories come online. Gross margins expand to 33.0% due to economies of scale and premium pricing power in specialized markets.

4.2 Valuation Metrics

At the closing price of CNY 44.63 (March 10, 2026), the valuation appears expensive on a trailing basis but attractive on a forward-looking basis.

• P/E Compression: The forward P/E drops from 132x in 2025 to 44x in 2026 and 13x in 2027. A 13x P/E for a high-growth equipment manufacturer with global exposure is historically reasonable and offers a margin of safety.
• PEG Ratio: Considering the projected CAGR of net profit from 2025 to 2027 is exceptionally high (driven by the low base effect), the PEG ratio becomes highly attractive in the 2026-2027 window.
• Price-to-Book (P/B): The P/B ratio remains stable around 2.0-2.4x, reflecting the company’s asset-light transition and strong return on equity (ROE) potential once the cycle turns. The projected ROE of 14.0% in 2027 justifies a P/B multiple above 2.0x.

4.3 Comparative Advantage

Compared to peers in the PV equipment sector (such as Jingsheng Mechanical & Electrical or Crystal Long), Liancheng NC offers:
1. Higher Overseas Exposure: A more advanced stage of internationalization reduces correlation with the domestic cycle.
2. Integrated Consumables Model: The graphite business provides recurring revenue, smoothing out the lumpiness of equipment sales.
3. Valuation Discount: Due to its listing on the Beijing Stock Exchange (BSE), it may currently trade at a liquidity discount compared to Shanghai/Shenzhen listed peers, offering an arbitrage opportunity as institutional recognition grows.

Risks / Headwinds

While the investment thesis is robust, institutional investors must carefully weigh the following risks, which could impact the timing and magnitude of the expected recovery.

1. Execution Risk in Overseas Markets

• Order Confirmation Delays: International projects, especially in the U.S. and Europe, involve complex permitting, financing, and regulatory approvals. Any delay in finalizing contracts or recognizing revenue from projects like the Hanwha deal could push back the earnings recovery timeline.
• Geopolitical Friction: Despite the KAYEX IP shield, Liancheng remains a Chinese-controlled entity. Escalating trade tensions, additional tariffs, or specific exclusions from subsidy programs (e.g., changes to IRA rules regarding foreign entities of concern) could hinder market access.
• Local Operational Challenges: Managing workforce, supply chains, and compliance in multiple jurisdictions (US, Vietnam) introduces operational complexity and potential cost overruns.

2. Domestic Market Competition and Policy Uncertainty

• Prolonged Downturn: If the domestic PV industry’s overcapacity persists longer than expected (beyond 2026), equipment demand may remain depressed. Aggressive price wars among domestic equipment suppliers could erode margins, even for replacement orders.
• Policy Shifts: Changes in Chinese government support for the PV sector or adjustments in energy transition targets could impact the pace of domestic technological upgrades.

3. Shareholder Reduction Risks

• Insider Selling: The report explicitly highlights the risk of continued share reduction by shareholders such as Dong Rui Da. Significant selling pressure from major shareholders can suppress stock price performance regardless of fundamental improvements, creating volatility and dampening investor sentiment. Institutional investors should monitor insider trading disclosures closely.

4. Technological Disruption

• Alternative Technologies: While crystalline silicon dominates, rapid advancements in alternative PV technologies (e.g., perovskite, thin-film) could disrupt long-term demand for traditional crystal pulling furnaces. Liancheng must continue to invest in R&D to adapt its equipment for next-generation technologies.
• R&D Failure: Failure to keep pace with the industry’s shift towards larger wafers, higher pull speeds, or lower energy consumption could result in loss of market share to more innovative competitors.

5. Financial and Macro Risks

• Exchange Rate Fluctuations: With increasing overseas revenue, the company is exposed to currency risks (USD, VND, EUR). Unfavorable exchange rate movements could impact reported earnings.
• Global Economic Slowdown: A broader global recession could reduce demand for solar energy installations, indirectly impacting equipment orders.

Rating / Sector Outlook

Sector Outlook: Cautiously Optimistic with Structural Divergence

The global photovoltaic equipment sector is entering a phase of structural divergence.
* Domestic (China): The sector is in a "clearing" phase. We expect continued pressure on margins and volumes in the near term (H1 2026), with a gradual stabilization in H2 2026 and a meaningful recovery in 2027. The focus is shifting from capacity expansion to efficiency enhancement and technological iteration.
* International: The sector is in a "growth" phase. Driven by energy security concerns and climate policies (IRA, EU Green Deal), non-Chinese manufacturing capacity is expanding rapidly. Equipment suppliers with credible international footprints are poised for outsized growth.

Liancheng NC is uniquely positioned at the intersection of these two trends. It benefits from the eventual domestic recovery while actively capturing the high-growth international wave. Therefore, we view the company as a sector outperformer.

Rating: BUY-B (Initiation)

We initiate coverage with a BUY-B rating.
* "Buy" reflects our conviction in the company’s long-term earnings recovery and strategic competitive advantages.
* "B" Risk Rating indicates that the stock is expected to exhibit higher volatility than the broader market benchmark (CSI 300 or BSE Index). This is consistent with the cyclical nature of the equipment industry and the emerging market status of the Beijing Stock Exchange.

Investment Horizon: 12-24 Months.
Key Catalysts:
1. Announcement of new major overseas orders (particularly in the US or Europe).
2. Quarterly earnings reports showing sequential margin improvement and cash flow turnaround in 2026.
3. Evidence of domestic order book stabilization in late 2025/early 2026.
4. Clarification of trade policies affecting Chinese PV equipment exports.

Investment View

1. The Contrarian Play on Cyclical Recovery

Institutional investors often shy away from sectors in deep downturns. However, history shows that the best returns in cyclical industries are generated by buying when earnings are at their nadir and sentiment is most negative. Liancheng NC’s 2025 results represent this nadir. The 77% drop in net profit is a backward-looking metric that fails to capture the forward-looking improvements in order quality, geographic diversification, and margin structure.

By initiating a position now, investors are effectively buying the option on the 2026-2027 recovery. The downside is limited by the company’s strong balance sheet (low debt, adequate cash) and the tangible value of its overseas assets. The upside is substantial, with earnings projected to grow nearly 10x from the 2025 trough to the 2027 peak.

2. Quality of Earnings: The Shift to Recurring Revenue

A critical aspect of Liancheng’s evolution is the shift from purely transactional equipment sales to a model with recurring revenue elements. The graphite thermal field components produced in Vietnam are consumables that require regular replacement.
* Predictability: As the installed base of Liancheng furnaces grows globally, the demand for graphite parts grows independently of new furnace sales. This creates a more predictable, annuity-like revenue stream.
* Margin Enhancement: Consumables typically carry higher gross margins than heavy machinery. As this segment grows, it will structurally elevate the company’s blended gross margin, supporting the projection of 33% gross margin by 2027.

3. The "KAYEX" Moat: A Defensive Asset

In an era of increasing techno-nationalism, intellectual property is a defensive moat. Liancheng’s ownership of the KAYEX brand and IP is a strategic asset that cannot be easily replicated by competitors.
* Trust Factor: For Western clients wary of supply chain security, the KAYEX heritage provides a layer of comfort and legitimacy.
* Legal Protection: The established IP portfolio protects Liancheng from litigation risks that have plagued other Chinese tech exporters.
* Valuation Premium: This moat justifies a valuation premium over pure-play domestic competitors who lack such international brand equity.

4. Strategic Recommendation for Institutions

For institutional portfolios, Liancheng NC offers a way to gain exposure to the global energy transition theme without being solely reliant on the volatile Chinese domestic market.

• Allocation Strategy: Given the "B" risk rating and potential volatility, we recommend a phased accumulation strategy. Investors may consider building positions on dips, particularly if broader market sentiment towards the Beijing Stock Exchange or the PV sector turns negative temporarily.
• Monitoring Metrics: Investors should closely track:
  • Quarterly Gross Margin: To confirm the mix shift towards overseas/high-margin products.
  • Overseas Revenue %: To validate the success of the international expansion strategy.
  • Operating Cash Flow: To ensure the working capital cycle is improving as predicted.
  • Shareholder Actions: Monitor any announcements regarding share reductions by major shareholders to gauge insider confidence and potential supply overhang.

5. Conclusion

Liancheng Numerical Control is not just a PV equipment manufacturer; it is a globalizing technology platform navigating a complex geopolitical and economic landscape. The 2025 earnings dip is a temporary setback in a long-term growth story. The company’s proactive establishment of overseas manufacturing, its strategic acquisition of legacy IP, and its integrated consumables model position it to emerge stronger from the current industry downturn.

We believe the market has overly penalized the stock for short-term cyclical weaknesses while underestimating the structural value of its international franchise. As the global PV capacity cycle turns and domestic demand stabilizes, Liancheng NC is well-positioned to deliver superior earnings growth and shareholder returns. We reiterate our BUY-B rating, targeting a significant re-rating of the stock as the 2026-2027 earnings recovery materializes.

Appendix: Detailed Financial Analysis & Assumptions

A. Revenue Build-Up

Our revenue forecasts are built on a bottom-up analysis of order books, market share assumptions, and average selling prices (ASPs).

• 2025 Decline: Reflects the cancellation/delay of domestic orders.
• 2026 Modest Growth: Driven by initial recognition of overseas turnkey projects and stabilization of domestic replacement orders.
• 2027 Surge: Assumes full ramp-up of overseas factories (US/Europe) and a cyclical upturn in domestic CapEx.

B. Margin Expansion Drivers

We project Gross Margin to expand from 30.1% in 2025 to 33.0% in 2027. This is driven by:
1. Product Mix: Higher share of overseas sales (estimated 40%+ by 2027) which carry 5-10% higher margins than domestic sales.
2. Scale Effects: Fixed costs are spread over a larger revenue base as volumes recover.
3. Cost Control: Continued optimization of the supply chain and localized sourcing in Vietnam/US to mitigate tariff impacts.
4. Consumables Mix: Growth in high-margin graphite sales.

C. Expense Ratio Assumptions

• R&D Expenses: Maintained at ~8-9% of revenue. Critical for maintaining technological leadership in N-type and large-wafer technologies. Absolute spend increases in 2026-2027 as revenue grows.
• Selling & Administrative Expenses: Expected to decrease as a percentage of revenue due to operating leverage. The company has already demonstrated cost discipline in 2024-2025.
• Financial Expenses: Net financial income is expected due to cash reserves and low debt levels.

D. Working Capital and Cash Flow

• Receivables: Days Sales Outstanding (DSO) may remain elevated in 2025 due to customer cash flow pressures but should normalize in 2026-2027 as industry profitability improves.
• Inventory: Inventory levels are being managed tightly. The shift to made-to-order for overseas projects helps reduce inventory risk.
• CapEx: Moderate capital expenditure required for maintaining overseas facilities and R&D centers. No massive greenfield investments planned in China, preserving cash.

E. Sensitivity Analysis

To assess the robustness of our thesis, we conducted a sensitivity analysis on the 2027 Target Price based on variations in Net Profit and P/E Multiple.

Note: The Base Case implies the current price fairly values the 2027 earnings. However, the Upside comes from:
1. Multiple Expansion: If the market rewards the "global tech" status with a higher P/E (e.g., 18-20x).
2. Earnings Beat: If overseas orders exceed expectations, pushing 2027 profit above CNY 900 million.
3. Earlier Recovery: If the 2026 earnings are stronger than predicted, the present value of future cash flows increases.*

Given the current price of CNY 44.63 and a total share capital of 235 million shares, the Market Cap is approx CNY 10.48 billion. Our Base Case suggests the stock is fairly valued if it only trades at 13.4x 2027 earnings. However, growth stocks in recovery often command a premium. A 18x P/E on 2027 earnings would imply a target price of CNY 58.50, representing a 31% upside. Furthermore, the strong cash flow generation in 2026 (CNY 1.05B OCF) could support dividend payouts or share buybacks, further enhancing total return.

F. Corporate Governance and Shareholder Structure

• Major Shareholders: The report mentions Dong Rui Da and other shareholders. Institutional investors should review the latest shareholder register to understand the concentration of ownership.
• Management Alignment: Management’s focus on overseas expansion and prudent financial management suggests alignment with long-term shareholder value creation.
• Transparency: Regular disclosure of order books and overseas progress will be key to maintaining investor confidence.

Final Remarks

Liancheng Numerical Control represents a classic "turnaround" investment opportunity within a high-growth secular industry. The confluence of a cyclical bottom in China and a structural boom in global renewable energy manufacturing creates a powerful tailwind. By leveraging its unique international assets and technological heritage, Liancheng is well-equipped to navigate the complexities of the modern geopolitical landscape.

For institutional investors, the key is patience and perspective. The 2025 numbers are ugly, but they are largely irrelevant to the 2027 outlook. The real story is the transformation of Liancheng from a domestic cyclical player into a global technology provider. We believe the market will eventually recognize this transformation, leading to a significant re-rating of the stock.

Recommendation: Accumulate on weakness. Hold for medium-to-long term. Monitor quarterly execution of overseas orders.

Disclaimer:
This report is prepared by Shanxi Securities Institute for institutional investors only. The information contained herein is based on sources believed to be reliable, but no representation or warranty, express or implied, is made regarding its accuracy or completeness. The opinions expressed are subject to change without notice. This report does not constitute an offer to sell or a solicitation of an offer to buy any securities. Past performance is not indicative of future results. Investors should conduct their own independent research and consult with their financial advisors before making any investment decisions. Shanxi Securities and its affiliates may hold positions in the securities mentioned in this report.