Good day, ladies and gentlemen. Thank you for standing by, and welcome to CBAK Energy Technologies Second Quarter and First Half of 2025 Earnings Conference Call. [Operator Instructions] As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time. Now I will turn the call over to [ Arena ], IR specialist of CBAK Energy. [ Arena ], please proceed.

Thank you, operator, and hello, everyone. Welcome to CBAK Energy's Earnings Conference Call for the Second Quarter and First Half of 2025. Joining us today are Mr. Zhiguang Hu, or Jason, Chief Executive officer of CBAK Energy; Mr. Thierry Li, Chief Financial Officer and Company Secretary; and [ Evan ], who will help with our interpretation, will joint us for the Q&A section. We released our results earlier today. The press release is available on the company's IR website at ir.cbak.com.cn, as well as from the Newswire Services. A replay of this call will also be available in a few hours on our IR website. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today. Further information regarding this and other risks and uncertainties is included in the company's public filings with the SEC. The company does not assume any obligations to update any forward-looking statements except as required under applicable laws. Also, please note that unless otherwise stated, all figures mentioned during the conference call are in U.S. dollars. With that, let me now turn the call over to our CEO, Mr. Zhiguang Hu. Please go ahead, Jason.

Hello, everyone. Thank you for joining our earnings conference call for the second quarter and first half of 2025. As discussed last quarter, our Dalian facility are undergoing transition from Model 26650, a small format battery that had been in use for nearly 2 decades to model 40135, a much larger and a more advanced model that enjoy strong market popularity. This transition have led to a sharp decline in Dalian's net revenues and gross profit. Given that we operate 2 major battery production base, any downturn in Dalian significantly impact our consolidated results. Meanwhile, our Nanjing facility are facing supply constraint due to surging demand for our model 32140 cells. Phase 1 of our Nanjing plant, which began operation in 2021 is already running at full capacity. We reported last quarter that Phase 2 [indiscernible]. However, its completion has been delayed by a few months to Q4, limiting our ability to fulfill additional pending orders. In short, Dalian is building a new production line for Model 40135 cells. Without existing and prospective customers currently testing samples and awaiting mass production, Nanjing is operating at full capacity and are able to accommodate further demand until Phase 2 comes online. Since both the Model 40135 production and Nanjing Phase 2 expansion are expected to be ready in Q3 to Q4, we anticipate a strong recovery in our consolidated results by year-end. This situation explains the slowdown in our performance over the past 2 quarters. As of June 30, 2025, we reported net revenue of $40.52 million, down 15 percentage from $47.79 million in the same period of 2024. The primary driver of this decline was a sharp reduction in sales to customers in the residential energy storage market who had previously purchased a lot of volume of Model 26650 cells. Sales…

Thank you, Jason. As Jason just mentioned, our net revenues declined primarily due to our strategic transition from a small format battery model to a larger, more advanced model. Alongside this revenue decline, we reported net losses attributable to CBAK Energy shareholders of $3.07 million and total net losses of $3.36 million. Of this, the battery segment accounted for $2.07 million in net losses, while our raw materials production unit Hitrans reported net losses of $1.06 million. Despite weaker performance in our battery segment, Hitrans delivered a notably improved result. Net revenues for Hitrans reached approximately $19.43 million, up 59.36% from $12.9 million in the same period of 2024. Its net losses narrowed by 33.02% from $1.56 million in Q2 last year to $1.06 million in the same period this year. This improvement reflects Hitrans' sustained efforts to expand its market presence. In the second quarter and first half of 2025, the unit successfully secure several new customers, driving growth in raw material sales. Furthermore, a modest decline in raw material prices during the first half of 2025 stimulated customer demand and encourage additional order placements. Looking ahead, we firmly believe that with the completion of our product portfolio upgrade and Phase 2 Nanjing project by year-end, combined with Hitrans' continued expansion into new high-quality customers and the ongoing recovery in the raw material prices, the financial performance of both Hitrans and our battery segment will see a strong rebound in the near future. Thank you. We will now open the floor for the Q&A section. Operator, please go ahead.

[Operator Instructions] We will take our first question, and the question comes from the line of Brian Lantier from Zacks Small-Cap Research.

I wonder if you could talk a little bit about the competitive landscape right now. And if you're experiencing any pricing pressures or if customers are really focusing on the products and the availability of your products?

[Foreign Language]

Okay. I think the price -- first issue is the price. As you know, now the battery technology develop very quick. And every year, the performance such as capacity increased. Why the battery cell capacity increase because the high capacity can reduce the cost. And the market right now is very sensitive for the cost. So CBAK transfer small battery to larger battery cell to reduce the cost to meet the market requirement. And the volume, actually, now the market volume is increased very quick too because now for [indiscernible] market now needs battery such as consumer market and 2-wheels and 3-wheels market and electric vehicles. So the volume increase is very big.

Okay.

Sorry, Brian, let me add some points. I think following what Jason just commented right now because most of the leading battery players in China are producing prismatic cells, which has a much lower cost advantages over our technical route. However, right now, as you may know, that all the manufacturers for cylindrical cells are actually trying their best to upgrade their product to a much larger battery model. So actually, the larger your battery would be actually the lower -- the better cost-effective your battery is going to be. So our strategy is just to keep investing in the R&D programs to try to produce a larger size of our batteries. The project of 40135 is the one that we are currently investing. It's a major upgrade from 26650. The size will be much, much larger, which means there its cost would be effectively lower than our current product. In the future, as we always say, we are also investing in the R&D of the Series 46, which will be much larger than all the current products we have. We believe that with the time being and with all our R&D programs going very well, we will eventually have a very cost effective products in the market. And that product would target all the major customer market that values -- that would just pay attention -- pay great attention to the costs, including the 2-wheeler and 3-wheeler markets that Jason just mentioned.

Great. My next question was going to be on the 46 series cells. Where do you stand in that development? And when do you think, best case scenario, you could actually be producing something like a 46950 or something along those lines?

[Foreign Language]

Actually, now we make the research and development for 46 series from already more than 2 years. And our target, we will achieve the mass production of 46 series cell at the end of next year. And, yes.

Yes. Let me add some point. As Jason just say, we have already spent enough time on the R&D of series 46, we have probably a couple of actual models to choose, 46120 or 46950. A lot of the models to choose. It actually depend on our major customers' preference. I think the key elements determining when we are going to mass-produce the Series 46 is actually the capital. Because right now, the equipment and production life for Series 46 is extremely expensive at this moment. Unless we have securing significant orders from our customers, otherwise, we will be very cautious about investing into this expensive production line, considering -- especially considering we have already 2 expansion projects at hand, a project for 40135 and the project for 32140. If we have a choice, we would like to complete a fund raising and then proceed with the construction of production line for 46. Otherwise, we prefer the completion of the current 2 projects first.

Okay. Great. That's helpful. What -- were there specific factors that caused the delay in the Nanjing expansion? Was it tied to uncertainty around possibly expanding in Malaysia first? Or just -- or was it difficulty securing equipment? If you have any color around what caused that delay, I'd appreciate it.

[Foreign Language]

Let me respond to this question. I think the major issues causing the delay of our Nanjing project actually comes down to our equipment supplier. Some of our major equipment suppliers face problems sending over their equipment. So as a result, we have probably a couple of months of delay. We don't think we're going into any legal tussles with the suppliers because that would cause much longer delays. We are going to resolve these problems very soon. So expectedly, we are going to -- I think we're going to complete the expansion for this phase by the end of this year.

Okay. Great. And just a housekeeping. Have you been active, have you disclosed yet if you've been active under the $20 million buyback? And if you have, how much capacity is still available under that buyback?

Well, yes, up until we announced the stock buyback program, we did spend certain cash buying our stock back. I think we have so far spent about roughly -- we need to check the number, but roughly between $1.3 million to $1.5 million at this moment and the stock price was pushed up above $1 dollars. I think it's still strongly underestimated, our company, but we will see how the market goes and determine when we're going to buy the stock back again because the program is a 1-year long program.

[Operator Instructions] Seeing no more questions in the queue, let me turn the call back to Jason for closing remarks.

Thank you, operator, and thank you all for participating in today's call and for your support. We appreciate your interest and look forward to reporting to you again next quarter on our progress Thank you.

Thank you, all, again. This concludes the call. You may now disconnect.