During the Track Record Period, cost of goods consistently represented the largest component of our cost of sales, accounting for over 92.0% in each period.
Financial Information · 第 209 页
Accordingly, fluctuations in the supply availability, procurement costs, foreign exchange movements, and import-related taxes and duties may directly affect our cost of sales and gross profit margins.
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However, our operating results may be adversely affected by supply disruptions, significant increases in procurement costs, or changes in import policies and tax regimes, particularly if such cost pressures cannot be passed through to customers in a timely manner.
In 2023, 2024, 2025 and the four months ended April 30, our cost of raw materials accounted for 87.2%, 85.6%, 85.7%, 86.9% and 86.5% of our total cost of sales, respectively.
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However, we experienced fluctuations in raw materials prices, particularly with respect to battery cells used in our new energy products, driven in part by volatility in lithium carbonate prices.
Business · 第 145 页
For battery cells, we secure order commitments from distributors with prepayments, which enables us to lock in procurement prices with our suppliers for a period of approximately one month, thereby reducing our exposure to short-term price swings.
In March 2026, oil prices increased notably following recent geopolitical developments, with average gasoline and diesel prices rising by approximately 18.4% and 14.5%, respectively, compared with their average levels in 2025.
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Our Directors have assessed the impact of recent oil price fluctuations and are of the view that they have not had, and are not expected to have, any material adverse impact on our operations, primarily because: (i) fuel expenses only accounted for 3.2%, 3.2%, 2.7% and 2.4% of our total revenue in 2023, 2024, 2025 and for the four months ended April 30, 2026, respectively; (ii) we are increasing the proportion of new energy vehicles; and (iii) as of the Latest Practicable Date, our major domestic transportation services suppliers generally had not increased pricing pursuant to annual framework agreements, while cost changes in international operations typically had been passed on to customers through reasonable pricing adjustments.
Any significant increase in direct material prices, in particular raw milk prices, or supply disruptions could adversely affect our gross profit margin if not offset by pricing adjustments, product mix optimization or operational improvements.
Financial Information · 第 190 页
To mitigate the risks associated with the price volatility and supply constraints of buffalo raw milk, we have adopted a diversified procurement strategy.
Our cost of raw materials accounted for 81.8%, 85.7%, 86.8%, 83.2% and 87.5% of our total cost of revenue in 2023, 2024, 2025 and the three months ended March 31, 2025 and 2026, respectively.
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To strengthen our supply chain management, we have adopted measures such as dual sourcing for our key components and retaining multiple suppliers for principal raw materials and enhancing our bargaining power in raw material purchases by leveraging our growing scale and centralized procurement.
Our raw material and components primarily consist of steel, wires and cables, control system, castings, and motors and drives, which collectively accounted for approximately 94.0%, 92.7%, 92.3% and 90.1% of our total cost of sales in 2023, 2024, 2025 and the three months ended March 31, 2026, respectively.
Financial Information · 第 170 页
A significant increase in raw material prices that we are unable to pass on to our customers could materially and adversely affect our gross profit margin and results of operations.
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To mitigate these risks, we have implemented supply chain management policies, including maintaining safety inventory levels, diversifying our supplier base, and engaging in strategic localization of key component procurement.
Electricity costs constitute a significant portion of our cost of revenue, particularly in connection with the operations of our self-owned battery-swapping stations.
Financial Information · 第 188 页
The gross loss increase in 2024, despite a mild rise in revenue, was primarily driven by more intense market competition, which led to lower service fee pricing in certain regions, as well as fluctuations in electricity costs during the year.
Business · 第 138 页
We also plan to improve electricity cost management by increasing consumption during lower-tariff periods and utilizing electricity transactions through the powertrading market.
The cost of raw materials and packaging materials accounted for 12.6%, 17.9% and 17.4% of our overall cost of sales for the years ended March 31, 2024, 2025 and 2026, respectively.
Business · 第 120 页
Further, in general, we seek to pass on increases in cost of raw materials to our customers if such increases affect our business operations and profit margin.
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This was primarily attributable to (i) the relatively low proportion of raw material costs within our total cost of materials, (ii) our long-standing supplier relationships, which provide a degree of pricing stability, and (iii) our diversified sourcing, such that we do not rely on any single type of raw material.
You should pay particular attention to the fact that our historical revenue growth during the Track Record Period was to a large extent attributable to increasing silver prices, which may not be sustainable.
Business · 第 163 页
During the same years/period, our silver nitrate procurement costs amounted to RMB2,667.0 million, RMB3,830.4 million, RMB4,815.4 million, RMB1,392.8 million, and RMB4,062.0 million representing 98.6%, 99.1%, 99.6%, 99.4%, and 99.6% of our procurement costs of raw materials, respectively.
Financial Information · 第 202 页
We currently do not hedge against any fluctuation in silver price.
Raw materials are an important component of our cost of sales.
Financial Information · 第 208 页
in respect of CMP Pads business, raw materials such as cushion pads, microspheres and prepolymers, which act as core raw materials, have been gradually transitioned from external procurement to in-house manufacturing, resulting in a significant decrease in unit cost of sales.
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Due to factors such as fluctuations in material prices, changes in market supply and demand dynamics, and technological advancements, our procurement prices and quantities may vary.
For instance, according to Frost & Sullivan, the price of copper showed a relatively steady upward trend from 2020 to 2025 at CAGR of 10.4%, while the price of aluminum alloy witness an increase at CAGR of 6.8% from 2020 to 2025.
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If we are unable to pass on such increase in raw material prices to our customers, our profitability may be adversely affected.
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During the Track Record Period, we did not experience material fluctuations of raw material prices.
In particular, the pricing of our products is closely tied to the cost of memory wafers, which are our primary raw materials.
Business · 第 166 页
To mitigate these risks, we have strengthened our business relationship with key customers who regularly place large orders.
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Furthermore, our results of operations are subject to industry cycles in the global memory product market, which directly influence our pricing, margins, and revenue through recurring periods of price volatility and supply-demand imbalances.
During the Track Record Period, raw material costs accounted for 27.5%, 22.4%, 24.9%, 23.2% and 25.9% of our revenue in 2023, 2024, 2025 and the three months ended March 31, 2025 and 2026, respectively.
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For example, in response to fluctuations in gold prices, we have negotiated a price adjustment mechanism with certain customers.
Fuel, consisting largely of diesel fuel for locomotives, and lubricants accounted for 14.7%, 12.1% and 13.8% of the Group’s total cost of sales in the years ended 31 December 2023, 2024 and 2025, respectively.
Financial Information · 第 175 页
Electrical power accounted for 4.3%, 5.6% and 7.2% of the Group’s total cost of sales in the years ended 31 December 2023, 2024 and 2025, respectively.
Financial Information · 第 175 页
To manage price risk, the Group usually conducts procurement tenders at the beginning of each calendar year on fixed-price terms, with flexibility to decrease the initially fixed price if market prices for the relevant commodity or service decline.
In FY2023, FY2024 and FY2025, the cost of raw materials accounted for 64.6%, 67.2% and 65.8% of our total cost of sales, respectively.
Financial Information · 第 206 页
The price of the hog plum fruits is subject to adjustments based on the yield of the relevant year whereas the price of other auxiliary materials and packaging materials generally fluctuates according to the market conditions.
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We have not entered into any hedging activities in relation to their prices.
Our raw material costs were RMB190.2 million, RMB213.4 million and RMB347.2 million in 2023, 2024 and 2025, respectively, representing 80.4%, 84.0% and 85.2% of our total cost of revenue for the same periods, respectively.
Financial Information · 第 222 页
Our raw material costs 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 · 第 222 页
Through commercial negotiations with suppliers, we have reduced procurement costs for major materials from our major supplier by approximately 10% for the first quarter of 2026 compared to December 2025, while extending payment terms to 90 days.
Our largest cost component is raw materials costs, which amounted to RMB5,059.5 million, RMB12,761.4 million and RMB20,804.2 million, accounting for 87.0%, 89.7% and 89.6% of our total cost of sales in 2023, 2024 and 2025, respectively.
Financial Information · 第 234 页
The prices of these materials are subject to significant volatility due to supply-demand dynamics, geopolitical factors and fluctuations in commodity markets.
The largest component of our cost of sales is raw materials consumed, which consist mainly of tungsten carbide, stainless steel wire, film substrates, brush plates and ceramic strips, accounting for 62.3%, 63.8% and 67.2% of our cost of sales in 2023, 2024 and 2025, respectively.
Financial Information · 第 212 页
We generally adopt a one-time pricing model.
Business · 第 159 页
During the Track Record Period, we did not enter into any long-term supply agreements with our suppliers that included fixed-price arrangements.
山东省环能设计院股份有限公司Shandong Huanneng Design Institute Company Limited
设备及材料成本占服务成本约三至五成
In FY2023, FY2024 and FY2025, equipment and materials accounted for approximately 46.0%, 34.5% and 46.2% of our cost of services, respectively, and construction and installation costs accounted for approximately 34.3%, 44.2% and 31.4% of our cost of services, respectively.
Financial Information · 第 190 页
While most of our contracts build in price adjustment clauses, we may not be able to pass the full amount of any cost increase to our customers and our results of operations may be adversely affected.
Financial Information · 第 190 页
Gross loss was recorded for these projects mainly because of cost overruns such as price volatility in certain materials for our EPC projects.