During this crucial transition period in 2025, all business lines of the company, including electronic atomization products, HMB products, specialty atomization, inhalation therapy, and beauty atomization, have made expected progress. Among them, beauty atomization is actively developing and requires more support to achieve survival and growth; progress in other business lines such as atomization products, HMB, and inhalation therapy is in line with expectations. The company expresses gratitude to investors and looks forward to future development.

Looking back at the development of HMB business, the stock price was around 13-14 yuan ten years ago, thanks to investor support, the stock price performed well. In the past year, the company has cooperated with strategic partners, initial technological achievements have been made, business has expanded to Japan, Siberia and other places, and products have been recognized by consumers. Investors are optimistic about the future prospects of HMB business, the company continues strategic investment, and the future is full of expectations.

The dialogue emphasizes the outstanding advantages of Halo products in restoring tobacco flavor and achieving rapid heating in five seconds, which significantly enhances the user experience, especially in the Japanese market. Customers have high recognition of the products, and market investments and sales promotion activities have been effective, especially in the Sendai region. Looking ahead, the company plans to further optimize product market adaptability, expand customer base, and achieve maturity and popularity of HMB products through continuous technological innovation and product iteration, enhancing user satisfaction and market share.

The dialogue discussed the current development status of the electronic cigarette products as the core source of profit, pointing out the inactive nature of the Chinese market and the shift in business focus towards Europe, America, and some parts of Asia. The future development direction should pay attention to the impact of market trends and layout changes on business results.

The dialogue discussed the new opportunities in the US and European markets due to policy changes. The US market has strengthened regulatory enforcement and strict supervision of major brands, but also provided opportunities for differentiated brands. The European market has shifted towards product and technology-based competition due to policy interventions such as the ban on single-use products. The company has achieved a leading position in the US market with its strong product and technology innovation capabilities, and is confident about future development. Overall, the combination of policy changes, product technology, and organizational channels has driven the company's strong performance in the first half of the year, with optimistic prospects for future development.

The conversation emphasized that the company's investment in inhalation therapy products is gradually yielding results, including high praise during the FDA application process and pharmaceutical companies willing to pay contract signing fees as sales agents. This indicates a possible positive cycle in the future, and the company is confident in achieving its growth curve plan.

After experiencing a period of decline, the automated special purpose business is expected to stabilize and achieve a slight growth this year, thanks to new leadership and product innovation, which will contribute to the company's profit. The beauty atomization products have received positive reviews from consumers, and the company has strengthened its marketing team. It is expected to be profitable within the next two years.

Discussed the market development potential of the company's HMB products, pointing out the need to go through stages such as product introduction, development, and growth, with significant development expected in the next one to two years. At the same time, emphasized the importance of multi-business line layout and management upgrades, including agency cooperation, atomized beauty and other emerging fields, and increasing efficiency through small team major department system to achieve win-win results.

The dialogue emphasizes the company's confidence in its diversified business layout, as well as its strategy to achieve common dreams through employee incentive programs. It mentions that the company has overcome initial challenges and is moving towards a leadership position in the industry, calling for continued support and strategic determination to contribute to society and the world together.

Reported the financial performance for the first half of 2025, with a revenue growth of 18.3%, exceeding the initial expectations for the year. The gross profit margin remained stable at 37.3%, with research and development expenses totaling 72.3 billion, and sales and distribution costs increasing by 31.2%. Management expenses saw a significant increase due to one-time expenses, and efforts are being made to reduce costs and improve efficiency.

In the fourth quarter of 2023, the company introduced a long-term incentive plan, leading to a short-term increase in administrative expenses, but it is expected to reduce the proportion of administrative expenses in the long term. After adjustments, net profit decreased from 753 million to 737 million, a 2.1% decrease. Taking into account the impact of the incentive plan and taxes, actual profits increased by 8%. The first half of the year saw revenue growth in the high single digits, with profits exceeding expectations, and the European electronic vapor product market grew by over 30%.

The dialogue discussed the impact of the increase in U.S. tariffs on the compliant product market, as well as the performance of the company in the European, American, and Chinese markets. The proportion of revenue from the European market has significantly increased, while the American market has been affected by non-compliant products, but the performance of compliant product market has improved. Sales of compliant products in the Chinese market remain stable. The company has pledged to support customers in product launches, exceed milestones in inhalation therapy business, and plans to further expand its beauty atomization business. B-end business has grown significantly, and ODM business in Europe and other overseas markets has performed well.

The dialogue discussed the threat of disposable products to environmentally friendly products in the short term, but as many countries around the world, such as the UK, implement bans on disposable products, environmentally compliant products will dominate the market. At the same time, it emphasized the need to strengthen product development and channel capabilities to respond to market changes and ensure competitiveness.

The report reviewed the company's performance in the American, European and other markets, including compliance challenges, research and development investments, overseas operational expansion and management optimization measures, emphasizing patent advantages, market expansion and brand product growth strategies.

The report detailed the four main business segments of the company in the atomization technology field: nicotine delivery, special applications, inhalation therapy, and beauty atomization, emphasizing its core position and large user base in the global market. As an industry leader, the company provides comprehensive atomization solutions with a wide range of services, especially performing well in overseas markets. In the first half of 2025, the company's core business showed steady performance, demonstrating its continued influence and market competitiveness in the atomization technology field.

Starting in 2024, our brand's products have taken the largest share in the open platform product market. By continuously upgrading core products and developing new series to closely follow market demand, especially in the European market, we have seized the opportunities brought by structural changes and policy adjustments, achieved technological innovation and product optimization, and received high praise from consumers and commercial customers. In the first half of this year, the European market achieved a significant growth of 38%, showcasing the strong advantages of our brand in market insight, research and development capabilities, and compliance.

The discussion focused on the complexity of the US electronic cigarette market, including market fluctuations caused by legislative differences in various states and inventory clearance issues due to increased federal enforcement. Compliant companies are facing pressure, but it is anticipated that the market will gradually recover with the acceleration of OTA GMT approvals and increased transparency in PMT. In terms of H and B products, the company plans to collaborate with strategic clients to drive global market expansion, particularly making progress in Europe and Japan, aiming to achieve sustained growth within the industry.

The dialogue emphasizes that the company focuses on research and development, dedicated to solving user pain points, improving quality of life and health through technological means. It highlights the company's progress in the treatment of respiratory diseases and the innovation in beauty technology, including revolutionary developments from skin applications to 3D atomized transmission. Currently, the company has completed its research and development production plan, actively promoting commercialization, and has launched its first household product in the beauty field, receiving initial market recognition.

The conversation revolved around the key year of 2025 as the company's transformation year, discussing the rapid recovery of the electronic atomization business and the successful launch of HMB products, as well as the company's self-iteration and rapid growth under technological drive. Emphasis was placed on improving operational efficiency through platform-based products, localized marketing and operations, and active communication with regulatory agencies to ensure manageable product launch pace. At the same time, the company is exploring the beauty atomization business and continuously focusing on business models to enhance company performance. In the future, the company will focus on three main areas: electronic chips, materials, life sciences and medical, and integrated automation, aiming to achieve satisfactory results by 2030 as part of the ten-year plan.

Discussed the transition of the company from focusing on electronic cigarette products to also venturing into the HMP field, as well as the adjustment of business model from equipment-oriented to focusing on both products and equipment. Additionally, it introduced the change from centralized management to departmental authorization structure, emphasizing the importance of frontline decision-making, departmental empowerment, and incentive mechanisms, reflecting the company's comprehensive transformation and upgrade strategy.

The conversation discussed the transformation achievements in the first half of the year, emphasizing the external and internal opportunities brought by policy changes and technological innovation, especially the market recognition of non-combustible heating products, increased customer confidence, increased resource investment, future product iteration plans and strategic planning are consistent, showing good management and business transformation prospects.

Discussed the effectiveness of internal incentive mechanisms within the company, including stock incentives and year-end bonuses tied to performance, as well as the positive work atmosphere that results from this. Additionally, explored how companies can ensure that products meet regulatory requirements in the face of medium to long-term regulatory changes through research and development, compliance, and market insights, especially in the electronic cigarette industry. Emphasized that compliant and innovative products will be recognized by the market, and companies are confident in this.

The discussion centered around the performance of HMB products in the market and future planning, discussing product features, the stability of the customer base, market potential, and emphasizing the importance of product iteration, differentiated technology, and FDA approval as a key milestone event. The future possibility of achieving breakthrough growth within the company in the next five years was also discussed.

Discussed the importance of building the growth curve of the enterprise, as well as how to drive product iteration by addressing the existing pain points of HMB products, while also mentioning future capacity expansion and supply chain optimization plans. In addition, the company's market outlook for HMB products, including product design and order status, was explored, and considerations for future dividend plans were revealed, emphasizing the determination to maintain high market value and shareholder returns.

The company announced its fifth-year interim dividend plan, emphasizing the return on long-term support for shareholders. At the same time, it discussed the current financial situation and future capital expenditure needs, indicating that dividends will not affect future operating capital. Management stated that they are committed to enhancing future profitability, creating more value to reward shareholders, and welcome investors to contact the company's IR team regarding any other queries.