Raw material and commodity prices

We usually work with multiple suppliers to reduce risks associated with product supply.

Business · p. 150

During the Track Record Period, raw materials cost represented the largest component of our cost of sales, which represented 76.7%, 76.4% and 75.0% of our total cost of sales for the years ended December 31, 2023, 2024 and 2025, respectively.

Financial Information · p. 210

in 2023, 2024 and 2025, direct raw material costs represented approximately 56.4%, 56.0% and 56.0% of our revenue for PCBs, respectively; in contrast, for the same year, direct raw material costs represented approximately 84.0%, 81.5% and 82.2% of our revenue for touch panels and LCMs.

Financial Information · p. 184

Our selling prices do not always follow raw material costs or on the same timeline, which can also lead to fluctuations in margins and results.

Financial Information · p. 184

While we seek to mitigate these risks through multi-sourcing, longer term supply arrangements, inventory planning and commodity hedging, sustained volatility could negatively impact our production efficiency, profitability and overall financial performance.

Financial Information · p. 184

the average market prices of lithium carbonate decreased significantly from RMB230,000 per ton in 2023 to RMB81,000 per ton in 2024 and RMB68,000 per ton in 2025.

Financial Information · p. 196

Our production process involves multiple stages requiring approximately 30 days, resulting in a turnover period from raw material procurement to product sales of approximately two to three months.

Financial Information · p. 196

To mitigate this pricing mismatch risk, we have adopted a multi-pronged strategy: (a) price-locking arrangements with back-to-back customers (including recycled product traders and futures traders), under which both procurement costs and selling prices are locked simultaneously through back-to-back sales contracts

Financial Information · p. 196

As a result, our gross profit margin was affected by the fluctuations of procurement prices of chips.

Financial Information · p. 234

In addition, during the Track Record Period, prices of our core raw materials such as master control chips, memory chips and flash memory chips experienced increases.

Business · p. 189

During the Track Record Period and up to the Latest Practicable Date, we had not adopted any hedging policies for fluctuations in the prices of raw materials.

Business · p. 189

For the FY2023, FY2024 and FY2025, our materials and components costs was approximately RMB154.1 million, RMB75.4 million and RMB174.7 million, respectively.

Financial Information · p. 199

We adjust our selling prices in response to, among other things, fluctuations in parts and equipment prices and sub-contracting costs, which thus affect our revenue.

Financial Information · p. 200

We maintain open communication with customers regarding changes in raw material prices, logistics costs and exchange rates and negotiate pricing adjustments as needed.

Business · p. 146

In 2023, 2024 and 2025, the cost of raw materials represented 18.4%, 25.0%, and 27.1%, respectively, of our total cost of sales.

Business · p. 127

In addition, we monitor market trends, price fluctuations of raw materials, inventory, customer orders and capital allocation to make informed decisions about stockpiling.

Business · p. 127

Our inventories increased by 42.8% from RMB194.7 million as of December 31, 2025 to RMB278.1 million as of March 31, 2026, primarily due to (i) continued inventory preparation for scheduled furnace maintenance, and (ii) strategic inventory build-up in response to tightening supply conditions and anticipated pricing pressure in electronic yarn, which is our major raw material.

Financial Information · p. 185

In 2023, 2024 and 2025, our cost of raw materials accounted for 71.7%, 69.9% and 71.1% of our total cost of sales, respectively.

Financial Information · p. 163

At the same time, we enhance our bargaining power through large-scale procurement and closely monitor the supply and demand dynamics of key raw materials to optimize procurement timing, thereby improving supply chain stability and cost control.

Financial Information · p. 163

Historically, costs of raw materials, logistics fee and labor costs have collectively accounted for over 89% of our cost of sales.

Financial Information · p. 207

According to F&S, between 2023 and 2025, hot-rolled steel coil (HRC) and glass experienced decreasing trend in average price, while the average price of aluminium experienced an overall upward trend.

Financial Information · p. 208

Since the selling price of our products are generally determined on a cost-plus basis, fluctuations in the purchase price of these key raw materials will have a significant impact on our revenue level and profitability.

Financial Information · p. 208

Changes in the availability and price of raw materials could have a significant impact on our operating costs, profit margin and results of operations.

Financial Information · p. 218

We have also established price-adjustment mechanisms with certain customers, under which we may raise product prices if raw material costs increase significantly.

Business · p. 143

According to Frost & Sullivan, the average market price of (i) copper increased from RMB60.1 thousand per ton in 2023 to RMB70.8 thousand per ton in 2025, and (ii) aluminum increased from RMB16.0 thousand per ton in 2023 to RMB18.8 thousand per ton in 2025.

Financial Information · p. 194

In 2023, 2024 and 2025, our costs in relation to raw materials consumed amounted to RMB5,103.8 million, RMB7,242.5 million and RMB7,808.3 million, accounting for 45.5%, 52.0% and 50.5% of our total cost of sales,

Financial Information · p. 194

(ii) conducting R&D on new materials and expanding our qualified supplier base to reduce single-supply reliance; and (iii) maintaining close communication with customers for cost-sharing arrangements with customers in the event of significant industry-wide cost increases.

Business · p. 149

Feed and feed ingredients costs represented 70.2%, 69.1% and 66.3% of our total cost of sales in 2023, 2024 and 2025, respectively.

Financial Information · p. 213

Furthermore, we enter into forward delivery contracts with suppliers for agreed quantities of feed ingredients at fixed prices, typically with delivery periods of up to 180 days.

Business · p. 165

Based on the above, the Directors consider that the internal control measures are effective and are adequate to address risks arising from market price fluctuations.

Business · p. 165

The total purchase amount for raw materials were approximately RMB349.2 million, RMB432.9 million and RMB540.3 million for the years ended December 31, 2023, 2024 and 2025.

Business · p. 145

To effectively manage our risks associated with the price fluctuations of our raw materials, we analyze the consumption and other data of major raw materials, carry out research on market trends and prepare periodic procurement budgets.

Business · p. 145

In the event that there is an increase in the price of raw materials, we should be able to adjust the selling price of our packaging products to reflect such increase in the price of raw materials.

Business · p. 145

Our results are significantly affected by fluctuations in the costs of raw materials and key components, particularly batteries and electric drive axles.

Financial Information · p. 211

According to CIC, the three-electric components cost of the new energy heavy-duty truck generally represent approximately 60% to 70% of the total cost.

Financial Information · p. 223

We manage the volatility of prices of raw materials and components by signing long-term cooperation agreements with suppliers, under which (i) pricing and supply terms are agreed for a one-year period and (ii) for the subsequent year, revised pricing can be negotiated based on expected procurement volume, prevailing market conditions and annual price reduction mechanisms based on cost changes.

Business · p. 160

During the Track Record Period, media resources cost accounted for approximately 96.9%, 96.7% and 97.0% of our total cost of sales, respectively.

Financial Information · p. 198

These costs are closely linked to the scale of marketing campaigns conducted for our customers, the pricing of advertising inventory and user traffic on social media platforms, and the fees charged by content creators and media partners.

Financial Information · p. 198

Our ability to manage such costs through efficient campaign planning, long-term cooperation with content creators and media partners, and the use of AI-powered solutions to optimize marketing performance has been an important factor affecting our gross margins and overall profitability during the Track Record Period.

Financial Information · p. 198

For the years ended December 31, 2023, 2024 and 2025, our total procurement costs of TCM raw materials were approximately RMB881.3 million, RMB974.2 million and RMB996.2 million, respectively, representing approximately 76.9%, 78.0% and 74.6% of our total revenue, respectively.

Business · p. 170

In 2023, raw material procurement prices increased significantly due to market fluctuations; however, starting from 2024, the prices of TCM raw materials have steadily decreased.

Business · p. 151

We build up a strategic inventory of raw TCM materials on a need basis, and particularly if we anticipate price increases based on our industry knowledge.

Business · p. 170

Our procurement costs constituted a significant portion of our overall cost structure.

Business · p. 145

Hypothetical increase/(decrease) of 15% | (15,500) | 15,500 | (14,592) | 14,592 | (24,228) | 24,228

Financial Information · p. 207

We believe that in the event of price increases, we have the ability to respond to a portion of the price increase by adjusting our service fees under our Service Framework Agreements with the Clinics.

Business · p. 142

For illustrative purposes only, assuming that all other factors affecting our financial performance remain constant (including assuming that material price fluctuations cannot be passed on to customers through price adjustment mechanisms), the sensitivity analysis of the impact of fluctuations in the cost of raw materials/relevant inventories for our consumer-class scenario products and services being 5%, 10% and 15% on our loss before income tax in 2024 and 2025 is as follows:

Financial Information · p. 210

Our cost of sales is influenced by the prices of key components and raw materials, including power semiconductors, chips, wire and permanent magnets.

Financial Information · p. 175

In 2023, we strategically maintained relatively high levels of raw material reserves for chips, semiconductors and magnetic steel, as there had been supply shortages in the market and we increased purchases towards the end of the year.

Financial Information · p. 193

During the Track Record Period, due to industry-related factors, the prices of our major raw materials were subject to cyclical fluctuations.

Business · p. 156

In general, where fluctuations in major raw material costs exceed a commercially acceptable range that would materially affect the expected profit margin of the relevant product, we would initiate price adjustment discussions with customers.

Business · p. 151

The financial performance of our new energy materials, critical metal resources, and lithium-ion battery and end-of-life vehicle recycling is subject to fluctuations in the market prices of critical metals, in particular nickel, cobalt, tungsten and lithium.

Financial Information · p. 191

In particular, for our new energy materials business, in respect of procurement, we primarily take reference to metal price of global indices over an agreed period as the metal pricing benchmark, applying negotiated discount rates when sourcing raw materials.

Financial Information · p. 191