Daotong Technology 2025 Annual Report Analysis: Net profit attributable to parent increased by 46.02% to 936 million yuan, with a significant 175.20% decrease in financial expenses

Operating Revenue: Three Major Businesses Drive Revenue Growth of 22.90%, AI and Software Business Gross Margin Exceeds 99%

In 2025, the company achieved operating revenue of 4.833 billion yuan, a year-on-year increase of 22.90%, mainly due to the synergistic growth of three major businesses: intelligent vehicle diagnostics, smart charging, and AI and software.

From a business structure perspective:

• Intelligent Vehicle Diagnostics Business: Achieved revenue of 2.980 billion yuan, a year-on-year increase of 15.83%, with TPMS products performing well, generating revenue of 1.007 billion yuan, a significant increase of 42.73%, and a gross margin increase of 2.98 percentage points to 58.31%; automotive comprehensive diagnostic product revenue was 1.392 billion yuan, a year-on-year increase of 9.83%; ADAS product revenue was 381 million yuan, a slight year-on-year decline of 2.36%.
• Smart Charging Business: Revenue of 1.242 billion yuan, a substantial year-on-year growth of 43.83%, with a gross margin increase of 3.94 percentage points to 41.08%, and significant results from overseas market expansion with benchmark projects landing in North America and Europe.
• AI and Software Business: Revenue of 552 million yuan, a year-on-year increase of 22.85%, with a gross margin as high as 99.24%, nearing a state of complete profitability, becoming the company’s core growth engine with high gross margins and high stickiness.

From a regional perspective, North America remains the main source of revenue, with revenue of 2.532 billion yuan, a year-on-year increase of 28.39%; revenue in China was 116 million yuan, a year-on-year increase of 22.35%; revenue in Europe was 909 million yuan, a year-on-year increase of 16.23%; revenue from other regions was 1.216 billion yuan, a year-on-year increase of 17.40%, with ongoing improvement in global market layout.

Profitability Indicators: Non-recurring Net Profit Growth Exceeds Net Profit Attributable to Parent Company, Profitability Continues to Improve

Net Profit Attributable to Parent Company: Year-on-Year Increase of 46.02% to 936 million yuan

In 2025, the company achieved a net profit attributable to shareholders of the listed company of 936 million yuan, a year-on-year increase of 46.02%, with a growth rate higher than that of operating revenue, mainly due to improvements in gross margin, control of period expenses, and increased investment income. The company’s overall gross margin was 55.90%, a year-on-year increase of 1.62 percentage points, with significant increases in the gross margin of the smart charging business, while the AI and software business maintained an exceptionally high gross margin.

Non-recurring Net Profit: Year-on-Year Increase of 60.67% to 869 million yuan

The non-recurring net profit attributable to the parent company was 869 million yuan, a year-on-year increase of 60.67%, with a growth rate far exceeding that of the net profit attributable to the parent company, indicating a significant improvement in the profitability of the company’s core business, with a relatively small impact from non-recurring gains and losses. Non-recurring gains and losses primarily include a loss of 29.5632 million yuan from the disposal of non-current assets and government subsidies recognized in the current period of 17.2311 million yuan, totaling 66.9895 million yuan.

Earnings Per Share: Basic Earnings Per Share Increased by 46.39% Year-on-Year

The basic earnings per share were 1.42 yuan/share, a year-on-year increase of 46.39%; the basic earnings per share after deducting non-recurring gains and losses were 1.32 yuan/share, a year-on-year increase of 62.69%, matching the growth rate of non-recurring net profit, reflecting high-quality growth in the company’s core profitability indicators. Diluted earnings per share were 1.25 yuan/share, a year-on-year increase of 31.58%.

Expense Analysis: Management and R&D Expenses Increase, Financial Expenses Turn Profitable

Overall Situation of Period Expenses

In 2025, the company’s total period expenses were 17.284 billion yuan, a year-on-year increase of 12.71%, with significant increases in management expenses and R&D expenses, while financial expenses turned from positive to negative.

Sales Expenses: Year-on-Year Increase of 2.77% to 575 million yuan

Sales expenses were 575 million yuan, a year-on-year increase of 2.77%, with a growth rate lower than that of operating revenue, mainly due to increased transportation and travel expenses resulting from business growth, but overall expense control was effective. The sales expense ratio was 11.89%, a year-on-year decrease of 0.22 percentage points, indicating improved efficiency in expense utilization.

Management Expenses: Year-on-Year Increase of 22.22% to 396 million yuan

Management expenses were 396 million yuan, a year-on-year increase of 22.22%, primarily due to the company’s implementation of equity incentives for management personnel, with share-based payment expenses increasing by 46.201 million yuan. The management expense ratio was 8.19%, a year-on-year decrease of 0.01 percentage points, with expense growth matching the company’s scale expansion.

Financial Expenses: Year-on-Year Decrease of 175.20% to -16.4524 million yuan

Financial expenses were -16.4524 million yuan, a significant year-on-year decrease of 175.20%, turning from a profit of 21.8776 million yuan last year to a loss, mainly due to an increase in exchange rate gains compared to the previous period. Among them, interest expenses were 74.6279 million yuan, interest income was 28.3069 million yuan, and exchange gains and losses were -86.5932 million yuan.

R&D Expenses: Year-on-Year Increase of 21.84% to 775 million yuan

R&D expenses were 775 million yuan, a year-on-year increase of 21.84%, mainly due to continued increases in investment in AI technology, increases in salaries for R&D personnel and professional service fees, as well as the implementation of equity incentives. The R&D expense ratio was 16.03%, a year-on-year decrease of 0.11 percentage points, maintaining a high level of research and development investment intensity.

R&D Investment and Personnel Situation: Continuous Increase in R&D Investment, Optimization of Personnel Structure

R&D Investment: Total Investment of 874 million yuan, Capitalization Ratio Increases

In 2025, the company’s total R&D investment was 874 million yuan, a year-on-year increase of 28.47%, of which expensed R&D investment was 775 million yuan, a year-on-year increase of 21.84%; capitalized R&D investment was 98.9894 million yuan, a year-on-year increase of 123.74%, with the capitalization ratio increasing from last year’s 6.51% to 11.33%, as some R&D projects entered the capitalization stage. R&D investment accounted for 18.08% of operating revenue, a year-on-year increase of 0.79 percentage points, continuously increasing the integration of AI technology and business.

R&D Personnel Situation: Slight Decrease in Number of Personnel, Significant Increase in Salaries

As of the end of 2025, the number of R&D personnel in the company was 966, a decrease of 29 from the end of the previous year, accounting for 34.79% of the company’s total staff, a year-on-year decrease of 1.47 percentage points; total salaries for R&D personnel were 517 million yuan, a year-on-year increase of 20.46%, with the average salary for R&D personnel being 535,500 yuan, a year-on-year increase of 24.10%, reflecting improved treatment for core R&D personnel and optimized personnel structure.

In the educational structure of R&D personnel, those with a bachelor’s degree or higher accounted for 94.41%, including 16 PhDs, 132 Master’s degrees, and 766 Bachelor’s degrees, providing support for R&D innovation; the age structure is primarily between 30-40 years old, accounting for 56.42%, indicating a youthful R&D team with strong innovative vitality.

Cash Flow Analysis: Operating Cash Flow Declines Year-on-Year, Financing Cash Flow Exits Substantially

Net Cash Flow from Operating Activities: Year-on-Year Decrease of 20.32% to 596 million yuan

The net cash flow generated from operating activities was 596 million yuan, a year-on-year decrease of 20.32%, mainly due to a significant increase in cash payments for purchasing goods and receiving services, which rose by 41.66% year-on-year to 2.476 billion yuan. Cash received from sales of goods and services was 5.017 billion yuan, a year-on-year increase of 20.65%, basically matching the growth rate of operating revenue.

Net Cash Flow from Investment Activities: Year-on-Year Improvement of 63.06% to -75.9819 million yuan

The net cash flow generated from investment activities was -75.9819 million yuan, a year-on-year improvement of 63.06%, mainly due to cash received this period from the sale of shares and employee investments, as well as an increase in cash recovered from the disposal of financial assets. Cash inflow from investment activities was 1.853 billion yuan, a year-on-year increase of 3508.60%, primarily from recovering the principal of structured deposits and other financial asset investments of 1.841 billion yuan; cash outflow from investment activities was 1.929 billion yuan, a year-on-year increase of 218.16%, mainly for expenditures on structured deposits and other financial asset investments of 1.797 billion yuan.

Net Cash Flow from Financing Activities: Year-on-Year Decrease of 104.12% to -671 million yuan

The net cash flow generated from financing activities was -671 million yuan, a significant year-on-year decrease of 104.12%, mainly due to increased cash outflows from dividends and stock repurchases this period. Cash inflow from financing activities was 74.8446 million yuan, a year-on-year decrease of 62.58%; cash outflow from financing activities was 746 million yuan, a year-on-year increase of 41.05%, including cash payments for dividends, profits, or interest of 614 million yuan, and cash payments related to other financing activities of 132 million yuan, mainly for stock repurchase expenditures of 100 million yuan.

Risk Factors: Multi-dimensional Risks Coexist, Global Layout Responds to Challenges

Core Competitiveness Risks

2. Technology Iteration Risk: The development of intelligence and new energy in the automotive industry is rapid; if the company fails to grasp technological trends and product technologies cannot be iterated in a timely manner, it may lose its technological advantage.
3. Talent Loss Risk: Competition for talent in the industry is fierce, and the loss of core technical personnel may weaken the company’s R&D capability and competitiveness.
4. Technology Leak Risk: Despite confidentiality measures, there is still a possibility of core technology leaks, affecting the company’s technological barriers.
5. Intellectual Property Dispute Risk: Overseas operations face a complex legal environment and may encounter intellectual property disputes, which, if mishandled, could adversely affect production and operations.

Operational Risks

2. Overseas Operation Risk: Overseas revenue accounts for over 90%; if related countries or regions undergo significant policy or market changes, it will affect the company’s overseas business.
3. Raw Material Supply Risk: Core raw materials such as IC chips are dependent on imports; if the supply chain is unstable or prices fluctuate, it will impact production and costs.
4. Scale Expansion Risk: Rapid growth in business and asset scale may affect operational efficiency if management capability does not keep up in a timely manner.

Financial Risks

2. Exchange Rate Fluctuation Risk: Overseas business settlements are mainly conducted in US dollars and euros; fluctuations in the RMB exchange rate will affect company performance.
3. Inventory Decline Risk: The net inventory at the end of the period was 1.668 billion yuan, accounting for 33.66% of current assets; if raw material prices or product market prices decline significantly, inventory may face impairment losses.
4. Export Tax Rebate Policy Change Risk: Export products rely on export tax rebates; if policies change, it will affect the company’s profitability.
5. Gross Margin Decline Risk: If market competition intensifies, product prices decline, or costs rise, the gross margin may decline.

Industry Risks

2. Industry Policy Change Risk: Policy changes in the new energy and automotive diagnostics industries may lead to fluctuations in downstream demand.
3. Market Competition Risk: The industry is highly competitive; if the company cannot maintain technological leadership, market share and profitability may decline.

Macroeconomic Environment Risks

Changes in the macroeconomic environment, such as international trade frictions and geopolitical risks, may adversely affect the company’s global supply chain and market expansion. The company has responded to risks through a global production base layout (Shenzhen, China; Haiphong, Vietnam; North Carolina, USA; Mexico).

Executive Compensation: Chairman and General Manager Pre-tax Compensation of 1.4237 million yuan

During the reporting period, the total pre-tax compensation received by Chairman and General Manager Li Hongjing from the company was 1.4237 million yuan; Vice General Manager Nong Yingbin’s pre-tax compensation was 1.1904 million yuan; Vice General Manager Deng Renxiang’s pre-tax compensation was 1.3516 million yuan; information related to the financial director was not disclosed separately, and core technical personnel Yin Hui’s pre-tax compensation was 1.4803 million yuan. Executive compensation is linked to the company’s performance growth, making the incentive mechanism effective.

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