CBAT

CEO mentioned 2025 was a transitional period with product portfolio structural upgrade, aggressive capacity expansion. Dalian facility commissioned new 4135 production line, Nanjing facility added new production lines. Battery pack integration operation initiated, deep strategic partnership with Spiral in Africa. Raw material segment had power turnaround. CFO detailed financials, margin compression due to ramp-up and raw materials, but other income bolstered by compensation payment and financial hedging structure.

Project consolidated sales will hit record high in 2026 with explosive growth. Anticipate battery business gross margin to gradually rebound in second half of 2026 and be better in full year 2026 than currently.

Battery segment: Fourth quarter battery business revenues were about $30.82 million, an increase of 35.8% year over year. Full year battery business contributed $105.98 million. Raw material segment: Full year revenue for this segment surged 123% year over year to $89.21 million.

Export tax rebate phase-out for lithium ion battery, from 13% to 9% in 2026 April, 6% in 2026 April and complete elimination by 2027 January. Proactive steps taken like localizing global supply chain and financial hedging.

Q: Good evening, everyone. Fantastic news to see high trends suddenly turning things around. I wonder if you could talk a little bit about where you see gross margins in the battery business and when you think they might normalize as you ramp up capacity.

A: Let me answer a question. So I think it's back in Q3 and Q4 when our Nanjing Phase 2 and our Dalian operations and new products kick in. Our growth margin was affected severely. So right now we are in a phase of ramping up capacity, and we believe that the Dalian facility ramp-up would be completed in the first half of this year. which we have already received way enough orders for this new product. And for Nanjing phase two, because it's much bigger, so our timeline is for early 2027, but we have confidence to try our best to catch up the timeline. So our target would be also the second half of 2026. But the reasonable timetable will be early 2027. So Ideally, in the second half of this year, our gross margin will gradually rebound, and I believe in the full year of 2026, the gross margin number at least looks better than right now.

Q: And could you describe a little bit more about the cell packing business, and do you see that becoming a growth opportunity for the company? particularly in the LED market?

A: I will answer the question first, and then even please help with the interpretation for Jason. Jason, I think, can add some points. So we have received a substantial order from one of our major African customers who actually are originally from India. And starting early 2025, this substantial order kick in and they use most, I think all of the sales and purchase were from 1930 to 140. And in order to do that, we have already set up a battery pack assembly unit within our structure. And this unit is dedicated to purchase sales from our 19th factory and put the sales into a battery pack and sell it to the African customer. And this customer has already become one of our top five customers as of 2025. And we are also looking forward to a much deeper and more comprehensive collaboration with each other. Maybe in the future, our collaboration will extend beyond the area of LEV into energy storage sector. So I think this is what I want to add. Please, Jason, if there's anything you want to add. Mr. Hu, the question here is more about the assembly of our module, especially the future growth. What do you think? Especially in the car industry, Just now, Mr. Jay Wei has probably said that we currently have an independent department operating this part of the electronic assembly. Then mainly use us to buy our Nanjing 32140 products and then use the assembly of the light car and then sell it to Africa. At the same time, we will also consider doing some ESS main energy aspects. Apart from that, do you have any other questions about the market that you need to add? There's only one thing that Jason would like to add, which is the advantage of our battery cell using the LEV market. So this has already been demonstrated in the Southeast Asian market and Indian market. So our product, no matter our cell or battery pack, performs really well in high temperature. This is very critical to this kind of application. So we think we may meet the same success as we already did in the Southeast and Indian market.

Q: Are you seeing anything on the energy storage front as it relates to grid storage, best companies, and is that impacting your R&D plans for new cell formats that could come out at the end of the decade?

A: Yes, the next question is whether we have any new progress in terms of storage. For example, in some big stores, are there any plans for development? For example, research is a new type of battery to be used in this big store. Then this plan can be in the medium term in the next 10 years. At present, we are mainly focused on the family soil, as well as the Yangtze and Bianxie soil. These three markets are currently mainly used in our large-scale products. At the same time, we are also doing large-scale sustainable development. In the future, it is possible to realize mass production in our new factory. Our large-scale is sustainable in the development. So currently for the ESS market, I think we are only focusing on the home ESS, balcony ESS, and also portable ESS, which are all smaller size. But in addition, we are also in research and development of our big prismatic cell, which can be used in what you just mentioned, the great size energy storage system. So that will be one of our target products for this.

Q: Hello and good morning. Now I've reviewed the 40135 ramp up data and the margin compression. And I have a structural and validated solution for the thermal wall and charging limitations impacting your daily in production. Now I submitted a brief to your executive inbox and I sent one to your engineer as well and I'm just wanting to confirm that you've received that and if we could make a time to discuss those matters in a private forum.

A: There are just daily, there are thousands of emails coming in. So it may be in the junk box or maybe it's just be in front of it. So can you just resend the email and we'll make sure that related personnel would just look into it. Okay. I can resend them all. I sent them on the 28th. Early in the morning, but I can resend them. There's one to the CEO, the second in command, and your engineer that all you've got to copy through that email, and I tagged you all. Okay. We'll just review it. Okay. Well, thank you very much. That's my only question to see if you've gotten that.