The fluctuations in the prices of raw materials, particularly copper-clad laminates, copper balls, and other key PCB manufacturing inputs also affect our results of operations.
Financial Information · p. 186
In periods of rising raw material prices, our cost of sales increased, which exerted pressure on gross profit margins if such cost increases could not be fully passed on to customers in a timely manner.
Financial Information · p. 186
We maintain long-term cooperative relationships with major suppliers of copper-clad laminates and other key materials, which help support stable supply and provide a degree of cost visibility.
In addition, the cost and stability of wafer procurement have a material impact on our gross profit and overall profitability.
Financial Information · p. 185
The cost of wafers increased from RMB385.3 million in 2023 to RMB417.8 million in 2024, and further to RMB448.4 million in 2025.
Financial Information · p. 185
The high-cost inventories were mainly delivered in 2023, during a period of softening downstream demand and declining product prices, which led to the year-on-year decrease in our gross profit margin.
Our financial results have been, and will continue to be, affected by changes in the fair value of our biological assets.
Financial Information · p. 233
Therefore, the fair value of our biological assets could be affected by, among other things, the accuracy of such assumptions, and any changes in the estimates may affect the fair value of our biological asset significantly.
Financial Information · p. 233
Our net other gains and losses changed from a loss of RMB18.3 million in 2024 to a gain of RMB78.3 million in 2025, primarily due to the increase in gain arising from changes in fair value less costs to sell of biological assets (unrealized) and (realized), which in turn due to the increase in market price during the same year.
The cost of sales primarily consisted of material and manufacturing costs, which amounted to RMB951.8 million, RMB915.6 million and RMB834.9 million in 2023, 2024 and 2025, respectively, representing 94.1%, 92.9% and 92.0% of our total cost of sales during the same periods, respectively.
Financial Information · p. 217
The price and supply of our raw materials are affected by various factors, including changes in macroeconomic conditions, international trade policies and tariffs, upstream supply capacity, adjustments to suppliers’ business strategies and fluctuations in currency exchange rates.
Financial Information · p. 217
Given the competitive nature of the market, we generally cannot pass on price increases for raw materials, parts and components to our customers in full.
For the years ended December 31, 2023, 2024 and 2025, our direct material costs amounted to approximately RMB8,830.4 million, RMB7,258.2 million and RMB10,091.6 million, respectively, accounting for approximately 77.4%, 71.5% and 78.0% of cost of sales during the same periods, respectively.
Business · p. 164
During the Track Record Period, we conduct commodity hedging activities to effectively manage the risks of significant price fluctuations of such raw materials and enhance the stability and sustainability of our operating performance.
Business · p. 169
Under this mandate, the combined margin and premium for these activities is capped at RMB150 million, with the maximum notional contract value not exceeding RMB1.5 billion on any trading day.
As our revenue generated from the sales of gold products represented 40.8%, 32.6% and 32.2% of our total revenue for the year ended December 31, 2023, 2024 and 2025, respectively, it is deemed necessary for us to pay close attention to global prices for gold.
Financial Information · p. 218
Our Group’s policy is to maintain a high hedge ratio (approximately 88.5% by weight, after VAT adjustment), which we had done so during the Track Record Period, and naked positions are not permitted.
Business · p. 154
As a result of our successful hedging strategies, even though we recorded individual loss-making trading transactions (excluding relevant hedging profits) of RMB53.0 million, RMB120.3 million and RMB121.4 million as of December 31, 2023, 2024 and 2025, respectively, the reported losses on individual physical transactions were substantially offset by gains on related derivative instruments as the losses primarily arose from two scenarios.
raw materials accounted for 71.1%, 74.1% and 73.0% of our total cost of sales in 2023, 2024 and 2025, respectively.
Financial Information · p. 181
The procurement costs for such raw materials may fluctuate due to a number of factors beyond our control, such as supply chain disruptions and inflation, and we are susceptible to significant changes in the availability, price and standard of key raw materials.
Financial Information · p. 181
We have implemented cost management measures against potential disruptions to our supply chain.
Our raw material procurement costs, such as automotive-grade chips, constituted a considerable portion of our cost of sales for the years ended December 31, 2023, 2024 and 2025, which amounted to RMB256.3 million, RMB182.3 million and RMB199.5 million, representing 76.1%, 53.7% and 37.4% of our total cost of sales in the corresponding years, respectively.
Business · p. 155
The prices of raw materials are susceptible to price fluctuations due to supply and demand trends, foreign exchange rates, transportation costs, government regulations and tariffs, price controls, economic climate and other unforeseen circumstances.
Financial Information · p. 214
Concurrently, we established long-term strategic partnerships with key suppliers to secure raw material prices, thereby ensuring supply stability.
For most of our procurement agreements, unless we provide written consent, prices will not be increased for any reason, and our suppliers assume the risk of raw material price fluctuations.
Business · p. 158
For certain components that are primarily made from bulk commodities such as steel, we have established a price adjustment mechanism with our suppliers.
Business · p. 158
However, as our customer contracts are fixed-price agreements, periods of high volatility in raw material markets may expose us to the risk of actual costs exceeding initial projections, thereby compressing our profit margins.
During the Track Record Period, direct materials, which primarily comprising copper used in our copper-based cultural and creative products, accounted for approximately 51.9%, 47.1%, 47.1%, 46.9% and 47.6% of our total cost of sales for the years ended December 31, 2022, 2023, 2024 and the nine months ended September 30, 2024 and 2025, respectively.
Business · p. 122
During the Track Record Period and up to the Latest Practicable Date, we had not adopted any hedging policy or entered into futures contracts or other hedging instruments in relation to copper or other raw materials.
Business · p. 123
Copper is the primary raw material used in our production process, and fluctuations in copper prices have a direct impact on our cost of sales and gross margin.
In 2022, 2023, 2024 and the nine months ended September 30, 2024 and 2025, our raw material costs were RMB1,129.3 million, RMB1,110.9 million, RMB1,627.5 million, RMB1,169.8 million and RMB1,681.9 million, representing 63.3%, 62.2%, 65.4%, 65.4% and 67.3% of our total cost of sales, respectively.
Financial Information · p. 183
The prices of such raw materials are susceptible to price fluctuations due to various factors beyond our control.
Financial Information · p. 183
We have implemented various cost-control measures, including improving the raw material utilization, reducing scrap rate and optimizing processes through dedicated engineering initiatives.
For the years ended December 31, 2023 and 2024 and 2025, our costs of raw materials and components were RMB638.9 million, RMB834.3 million and RMB811.3 million, respectively, accounting for 67.6%, 69.9% and 73.0% of our total cost of sales during the respective periods.
Business · p. 164
We have adopted comprehensive policies and measures to manage supply chain risks and fluctuations in raw material prices.
Business · p. 164
During the Track Record Period, we have not experienced any significant material fluctuation in prices set by our suppliers, material breach of contract on the part of our suppliers or material delay in delivery of our orders from our suppliers.
The prices of some of our raw materials, particularly copper wires and silicon steel, are closely linked to the prices of the bulk commodities copper and steel, and thus are subject to fluctuations due to market changes.
Business · p. 142
To mitigate the impact of such fluctuations, we have adopted the following measures: (i) incorporating a raw material price-linking mechanism into contracts with some of our customers and suppliers, enabling us to adjust prices in response to market fluctuations; (ii) implementing centralized procurement for bulk materials and entering into long-term framework agreements with major raw material suppliers to secure more favorable pricing and more stable supply; (iii) establishing a scientific inventory model: based on market trend forecasts, we strategically increase raw material reserves when prices are low and reduce inventory levels when prices are high; and (iv) continuously improving our production processes to enhance material utilization while reducing scrap rates and material waste.
In 2022, 2023, 2024 and the nine months ended September 30, 2024 and 2025, raw materials costs accounted for 91.3%, 92.3%, 92.8%, 93.1% and 92.6% of our cost of sales, respectively.
Financial Information · p. 293
As a result, our inventory of memory chips increased by approximately two times from December 31, 2024 to September 30, 2025.
Business · p. 248
During the Track Record Period and up to the Latest Practicable Date, we had not adopted any hedging policies to mitigate the effect of fluctuations in the prices of raw materials.
Market price of raw material like copper set significant impact on our business results and we have implemented several measures to mitigate the effects of procurement cost volatility and ensure stable raw material supplies
Business · p. 174
For example, with respect to our communication cable products and NEV power transmission products, the relevant customer contracts provide that the selling prices shall be with reference to fluctuations in copper prices.
Business · p. 174
our Directors are of the view that, during the Track Record Period, our pricing flexibility and procurement management measures were effective in mitigating the impact of raw material price fluctuations on our financial performance as evidenced by our stable gross profit margin of 30.2%, 31.3%, 30.5% and 31.3% for the three years ended December 31, 2022, 2023 and 2024, and the nine months ended September 30, 2025 respectively.
In addition, we had raw material costs of RMB379.4 million, RMB202.8 million, RMB252.3 million, RMB174.2 million and RMB193.1 million in 2022, 2023, 2024 and the eight months ended August 31, 2024 and 2025, respectively, representing 46.4%, 43.8%, 44.0%, 44.6% and 42.0% of our total revenue in same respective periods.
Financial Information · p. 264
To mitigate raw material price fluctuations, we regularly analyze market conditions, utilize digital tools for real-time price tracking, establish long-term supplier relationships and sign long-term contracts.
Financial Information · p. 264
Benefiting from our effective procurement management system and flexible production capabilities, our cost of sales decreased and our gross profit margin increased during the Track Record.
In 2022, 2023, 2024 and the nine months ended September 30, 2024 and 2025, we used future contracts, foreign exchange forward contracts and interest rate swap contracts to hedge risks, we also used bank wealth management products to reallocate short-term idle capital.
Business · p. 272
Since the launch of hog futures in China in January 2021, we were among the first companies in China to establish hog futures delivery warehouses and participate in the delivery of the initial batch of futures contracts.
Business · p. 272
To mitigate our risk exposure, we mostly entered into futures and options products, which enable us to sell hog products at a fixed price to hedge against price dropping of our hog products.
In FY2022, FY2023, FY2024, 10MFY2024 and 10MFY2025, our total raw material costs are approximately RMB11,035.0 million, RMB14,424.9 million, RMB15,970.5 million, RMB13,306.7 million and RMB14,234.7 million respectively, accounting for 93.3%, 91.1%, 90.8%, 91.3% and 91.1% of our total cost of sales, respectively.
Financial Information · p. 266
The raw materials used in our production are subject to price volatility caused by external conditions, such as changes in market supply and demand, fluctuations in commodity prices, changes in government policies and natural disasters.
Financial Information · p. 266
As at the Latest Practicable Date, we have not entered into any hedging arrangement to mitigate our exposure to the fluctuations in the cost of raw materials.
During the Track Record Period, the selling price of our copper products fluctuated in line with market changes.
Summary · p. 5
According to Frost & Sullivan, the copper price quoted on the London Metal Exchange increased from RMB42,600 per tonne in 2020 to RMB66,500 per tonne in 2024 at a CAGR of 11.8%.
Financial Information · p. 287
Financial liabilities at FVTPL represented the non-ferrous futures contracts we held to hedge against price volatility of metals.
Changes in the price of wafers and other raw materials or in the costs of packaging and testing services may result in fluctuations in production costs and our gross profit margin.
Financial Information · p. 293
However, through such close collaboration with our wafer suppliers with advanced technology, we are able to lower costs while maintaining higher average selling prices of products which are hence associated with a higher gross profit margin.