Good afternoon, everyone. Thank you so much for joining the second quarter 2025 earnings call for AirTAC International Group, presented by Goldman Sachs Asia Industrials team. Today, we have AirTAC International Group, ticker 1590.TW, with us, one of the most focused, popular automation companies in Asia. It is our pleasure to welcome Mr. Ivan Tsao, CFO of AirTAC. Ivan, thank you so much for your time today. Thank you, Isayama-san, and good day, everybody. This is Ivan Tsao speaking from AirTAC International Group. Thank you so much. We, Goldman Sachs Asia Industrials team, will be the host and the moderator of today's earnings call. We have Tsao Wang, our Taiwan Industrials and Tech Analyst, and myself, Yuichiro Isayama, Head of Asia Industrials. We'll be the co-host and moderator of the call today. There are some statements we have to make beforehand. Today's call is strictly for clients, analysts, or investors invited from AirTAC International Group or from Goldman Sachs only. It is not intended for media and a soft record. If you're not an investor or an analyst and did not receive an invitation to join this call directly from AirTAC or Goldman Sachs, you should hang up now. Also, please be remembered that this call is not for the purpose of sharing or receiving non-public or otherwise confidential information. Attendees are public side market participants who may not receive or should not request non-public or otherwise confidential information about issuers or about the markets or securities. For today's call, we are going to be starting with Ivan's presentation on second quarter earnings review and full-year outlook commentary, followed by the Q&A session. For the Q&A session, we take your questions via Zoom function. You need to press the raise your hand button to be in the queue to ask questions directly. We truly appreciate your cooperation to limit to two questions at once. If you have additional follow-up questions, please raise your hand again to be in the queue. Please also do note that we often have quite many live participants asking questions, so we may try to look into the Zoom Q&A box, but we may not have enough time to go through all of them. If you have anything specific to ask, please raise your hand. Also, please be mindful that the chat function is disabled for us, so we're not going to be able to see even if you put in a question in there. Please raise your hand or type in the question to the Zoom Q&A box. Thank you so much for your patience. I have nothing further to state. Ivan, the floor is all yours. Thank you so much. Thank you again, Isayama-san, and good day, everybody. Welcome to join this call. Let me brief our second quarter results and current market situation. First of all, more than 90% of our revenue and expenses are denominated in Renminbi, and Renminbi is our functional currency. FX impact on our operating income level is limited. Our consolidated financial statements are settled in Renminbi and then converted to NT dollar at a certain exchange rate. The recent sharp appreciation of NT dollar has not affected our actual operating financial status, but we are listed in Taiwan and have to report NT dollar term financial statements to the Taiwan government. Stronger NT dollar results in a lower growth rate of our NT dollar term financial numbers. This situation is only due to the conversion of the reporting exchange rate. In addition, observing the impact of the U.S.-China tariff issue, we thought most of the China customers have experienced the U.S. tariff since 2018. Although new tariff factors have had a partial impact on China's current economy, it's mostly caused by psychological factors' influence, and this time will not be greater than that in 2018. Currently, for the recovery of the China economy, the importance of how the China government continues to implement more policies to restore people's consumption competence and enterprises' willingness to expand domestic demand is far greater than the impact of U.S. tariffs. For AirTAC, we are still closely observing the development of the tariff fixation and proposing a corresponding strategy timely to continue to increase market share and support revenue growth. The Pneumatic industry still can sustain single-digit growth annually once there are no too severe non-economic issues, and we still expect it could be flat to low single-digit growth for the Pneumatic industry in China in 2025. By continuously developing new products and improving our brand image, we expect our annual revenue growth rate to be 10% higher than the industry growth rate. Our approved consolidated revenue for the second quarter of 2025 was RMB 2.102 billion, an 11% growth year-on-year. Gross profit was RMB 967 million, an 8% growth year-on-year. Gross margin was 46.0%. Operating income was RMB 641 million and 8% growth year-on-year. Operating margin was 30.5%. It's in line with our expected net non-operating loss was RMB 38 million, including RMB 67 million of FX loss, RMB 25 million subsidy from government, RMB 7 million of interest income, and RMB 3 million of interest expenses. Income before income tax was RMB 603 million, a 6% decline year-on-year. Pre-tax margin was 28.7%. Net profit was RMB 478 million, a 6% decline year-on-year. Net margin was 22.8%. EPS for the second quarter of 2025 was NTD 10.19, and it's NTD 19.86 for the first half of 2025. Revenue from top eight industries for the second quarter of 2025, the biggest one still was electronics, around 29% to our consolidated revenue. It's a 6% growth year-on-year. The second one was battery, around 14% to revenue, 117% growth. Auto was 10% to revenue, 35% growth. Packaging was around 8% to revenue, 1% growth. Machine tool was 7% to revenue, 2% growth. General machinery was around 5% to revenue, 11% growth. Textile was around 4% to revenue, 14% decline, and LG lighting was 4% to revenue. It's around 35% decline year-on-year. For the current market situation, there are still some customers who are watching the development of the tariff from the U.S. before they decide on their expansion plans. Uncertainty is always worse than a bad outcome, as customers usually do not make major decisions to expand their capacity. Recent tariff negotiations seem to be moving in a positive direction. In addition, the China government continues to release many stimulus policies in the past couple of months and attempts to restore people and corporate confidence in government policies. Some of them have improved their confidence and increased their end product consumption or increased their capacity expansion. The overall market demand was slowly recovering since the late of 2024, and overall shipment was better than our expectations in Q1 of 2025. Just in line with Q2 of 2025, mostly could be affected by the U.S. tariff issue's psychological impact. As of the demand of various industries for Pneumatic components in 2025, we expect the electronics industry's demand could be 10% growth in 2025 at the beginning of the year because so many customers say there could be more new models launched or new specs upgraded in 2025. Pneumatic supports customers' production process, not in their end product. Once customers have more new models launched or specs upgraded, they need more new assembly lines to support their production. However, due to some customers observing the development of the tariff negotiations, especially those in the consumer electronics industry or applications, shipment in the electronics industry in the second quarter was lower than our original expectations. For battery demand, the government announced its guidance for the EV and battery industry for 2025 in late last October, and demand was accelerated from last November. We expect double-digit revenue growth from battery in 2025, and it's more than 1% growth in the past four months. Also, it was better than expectations. Moreover, government stimulus policies for replacing old equipment to be new equipment can get subsidies are still in the market. Many traditional application customers, like machine tools, general machinery, and packaging, can enjoy positive growth for 2025. It's meant to high single-digit growth in the first half of 2025, and also better than our expectations from those traditional demands. Battery revenue growth from the automotive industry also could be expected for 2025. We have improved our brand image on auto customers and also enjoy better share again in less demand. Even the overall auto industry has not recovered significantly. We have had double-digit revenue growth in the past couple of years, and we expect double-digit revenue growth from auto in 2025. Even in the coming years, it still could be expected, and it also has been better than our expectations in the first half of 2025. We still have some demand issues on solar and also have suffered a 50% decline in the first half of this year. Even it still could be weak for the year. Its decline rate has narrowed from 55% in the first quarter to 8% in this June. In addition, it's just around 4% of our revenue and won't affect our business too much in 2025. Selective items for selective customers still have some pricing competition in the Pneumatic market, but it's rational, basically. The weak Japanese yen will not affect the competition with our Japanese peers, mainly because the cost of materials accounted for about 40%- 50% of Pneumatic customs. Also, most of the main material cost was metal materials. Japan's own production of metal always should be limited, so it needs to purchase metal materials from foreign suppliers. A weaker yen will increase the cost of materials, but it still can enjoy the benefit of Japanese production capacity in labor costs and overhead. In addition, the production capacity of many competitors in Japan is around 40% plus. Another 3% is in China. The currency impact should be similar to AirTAC, so the stronger yen or weaker yen never affected the competition between AirTAC and Japanese peers. Material costs have been relatively stable and fluctuate within a reasonable range, which will be friendly for our profit margin in 2025. OP margin still has to depend on revenue scale and capacity utilization rate. Even we can improve our margins by launching more higher margin new products, improving our selling product mix, and continuing to improve internal efficiency to reduce production costs. Turnover days of inventory was around 124 days, and it's around 117 days for receivable turnover days at the end of June. Both of those numbers are healthy, and our Pneumatic capacity utilization rate is around 1% currently, and it's just around 30% for our Ningbo capacity. For the development of Ningbo business, industry demand is still pretty weak, and peers still keep aggressive pricing. We have changed our pricing policy since the third quarter of 2024 and also extend new sales stretch from this February. Even shipment volume has been more than 20% growth year-on-year, the lower pricing still has not improved our monthly revenue, obviously. We still expect we could have RMB 600 million revenue in 2025 and additional RMB 300 million for internal demand to support our Pneumatic cylinder product. Also, expect we can achieve 50% capacity utilization rate at the end of this year, and the production gross margin of Ningbo could be around 30%, and it's just around 20% in 2024 and first quarter, even first half of 2025. If the utilization rate is 80%, gross margin could be around 40%. Even 40% gross margin is lower than our existing Pneumatic business. We use the same sales team to do closed selling, Pneumatic and Ningbo, and without too much additional OpEx, it still can improve our consolidated OP margin with continuous utilization rate improvement. Sorry about that. Capacity expansion, gross margin still will be improved. Pneumatic is the short lead- time business, and no matter the economy is good or bad, Pneumatic don't have to digest the inventory in sales channels or customer sites, and its visibility is only around one month. Why is one month? Because the probability of the order delivery with one month is a little higher. We cannot ensure whether the demand for the next quarter will be better or bad. We can only predict the annual shipment based on our experience, market situation, and feedback from our customers. Uncertainties are still in the market. We ask our China sales team and overseas sales team still have to do their best, and also ask China sales team have to achieve 35% China Pneumatic market share by 2030. That means additional RMB 2-RMB 3 billion revenue can be increased from our China Pneumatic business. Even our Ningbo sales progress is slower than our expected. We still could have 30% China market share and around RMB 5 billion revenue in around 10 years from China Ningbo business. We were requested by our Pneumatic customers to develop their electrical controller system demand. After five years of development and sales, we have had around RMB 400 million revenue in 2024, and it still could be better and better. We also expect we could have RMB 2-RMB 3 billion in 10 years and continue to develop electrical cylinders to support higher precision push power demand. We have had parts of electrical cylinders include stepping motor, Ningbo proximity switch, and the servo motor and driver still in development. We still can support such demand when the demand is obviously improved. Just those four businesses can support AirTAC enjoying double-digit revenue growth in the next 10 years. We expect the whole year of 2025 can return to low single-digit or flat digit for the whole industry of Pneumatic, and we still have 10% revenue growth at least from Pneumatic products plus the revenue contribution of Ningbo business. We keep the same guidance for revenue growth rate for 2025, though 10% growth. Operating margin could be around 30%. CapEx will be around NTD 2 billion- NTD 3 billion in 2025. We have generated free cash flow by NTD 6.4 billion in 2023 and NTD 8 billion in 2024. We also have increased our cash dividend payout from 35% in 2021 to 55% in 2025. It still will be higher in the coming years, and it could be around 60% in 2026. Lastly, in the past two to three months, so many investors have asked me why we have decided to exit our U.S. market. This is a rumor spread by competitors. We are just changing our sales model to have our U.S. distributors place orders directly to our Ningbo factory with FOB terms, and we can reduce the potential risk of U.S. tariffs. This is my briefing. Should you have any further questions, we can discuss it. Thank you. Thank you so much, Ivan, for your presentation. Everyone, we're going to be moving on to the Q&A sessions. We're going to be taking your questions live, preferably. You can put in the question into the Zoom Q&A box too. Once again, if you have any questions, please raise your hand to be in the queue. I will open the line accordingly. I appreciate if you could limit the question to two per person at one time. Let me have my colleague who covered AirTAC as the first speaker. The floor is yours. Please state your name and also the company. Thank you, Isayama-san. Hi, everyone. Hi, Hi, Ivan. This is Tsao from Goldman Sachs. My first question will be on the second half 2025 outlook. Given that you still believe that overall China Pneumatic market demand to be up a little bit year over year in overall 2025, and your revenue still outgrow the overall market by 10%, I just want to know what's your thought on the second half demand outlook, especially from the electronics and also the auto and battery industry. Thank you. Yes, basically, the shipment, the daily shipment still was around 10% or 10% growth year-on-year year to date. It could be, it had been better in the first quarter, but second quarter, some of the customers have been affected by the U.S. tariff issue. Even affected by tariff issue, the shipment is still in line as always affected. Basically, we still expect the China government will continue to implement more stimulus policies to restore people's confidence or improve their domestic economy. Even Pneumatic still have its similarity. The second quarter used to be the peak season. The third quarter will be declining single-digit quarter over quarter. Monthly revenue in the third quarter also will be lower than the second quarter. It's the similarity in 2024. Even we have a lower monthly revenue in the third quarter than the second quarter of this year, the year-on-year, the monthly revenue year-on-year base still could be 10%. We still expect the demand of Pneumatic still will recover gently or gradually. The second quarter used to be the peak season of electronics. We will not expect electronics demand can sustain 10% or double-digit revenue growth for 2025. It still could be mean to have single-digit for the whole year of 2025. It could be mean single-digit in the second half of 2025. Auto is still pretty good. Month to date still has around 30%- 40% growth year-on-year. I mentioned earlier, we have improved our brand image in auto customers. Basically, we still can enjoy better share again from the market. Battery still could be better. Even it has been more than 1% in the past four months. It could sustain such more than 1% growth year-on-year in the second half. It's still too early to tell. It still could be high double-digit revenue growth for the rest of the year. Thank you. Thank you, Ivan. My next question will be related to the volume discount you provided to your key customers that you already expressed in the last few results calls. I just want to understand what is the result of this volume discount you provided to your customers in 2025, at least year to date. How should we think about, is that the key reason why we see that the gross margin in the second quarter of 2025 to be less than the fourth quarter, less than the last year, second quarter of 2024? Is there any other reason we see that the gross margin to decline and the OP margin to decline year over year? Thank you. Basically, lower gross margin or OP margin in the past four quarters, mostly caused by the ECFA issue. China has canceled some items' tariff benefits between the states. We have to relocate some product production from Taiwan factory to Ningbo factory, and such capacity still has to accrue depreciation expenses without any output. In addition, we still have to lay off some operators in Taiwan factory. Such situation could be better from the third quarter of this year. The tariff issue between the states still is there. We still will consider what product production being relocated is better for our consolidated basis. For example, some electrical controller product, it was produced in Taiwan factory by the second quarter of 2024, and the gross margin just around 30%- 40%. After we relocate such production to our Ningbo factory, such product gross margin could be more than 50%. We have to suffer a couple of quarters lower output or zero output to relocate such capacity. Basically, once year-on-year compared to base from the third quarter of this year, we believe we will be year-on-year growth or improved. Got you, Ivan. That's pretty clear. I'm back to the queue. Thank you, Isayama-san. Thank you so much, Tsao. Your next question is coming from Bill Lin. Bill Lin, I have requested to unmute. Please unmute yourself and state the name and the company and ask questions. Thank you. Okay. Thank you, Isayama-sama, and thanks, Ivan, for taking my question. I'm Bill from JPMorgan. Ivan, I think my question is also about the gross margin part. Apart from the impact of the ECFA and the production relocation, can you share with us about the pricing trend about light Pneumatic and the Linear Guide product? I also want to understand what is the Linear Guide sales in the second quarter for you. Thank you. Okay. The price is still rational for the Pneumatic industry. What I mentioned, there's still selective items for selective customers that have selective price competition. The reason why we have project pricing discounts or annual discounts for specific customers, just for specific customers, not all the customers, is because we try to approach more new customers or prevent some customers from being bothered by specific competitors. We still believe such pricing strategies are successful in the past couple of quarters. We not just can increase our market share, we also can have a stable or much better relationship with specific customers. We have accrued reserves for such pricing discounts by RMB 6 million a month. It doesn't mean we will have RMB 72 million pricing discounts for the whole year of 2025. Maybe in the fourth quarter of 2025, we will assess if such RMB 6 million monthly discount reserve is too high or too low. Basically, it could be too high. We can reverse such discount reserve. The pricing for Ningbo, even peers still keep very aggressive pricing, but the pricing began to decrease aggressively from the end of 2021 to the middle of 2024. From the middle of 2024 to this moment, the pricing has been at a low level or bottom, and most of the peers have not decreased their pricing further after the middle of 2024. The overall demand is still pretty weak, and pricing has been a little stable from the middle of 2024, but still at a very low level. You can see other peers, their gross margin or operating margin in the past couple of quarters has been much lower than the past couple of years. Thank you. Oh, thank you, Ivan. I think my second question is about what is the Linear Guide sales in the second quarter, if you can share with us. Pardon? I mean, the Linear Guide sales in the second quarter, how much is the number in Renminbi, if you can share with us? You mean the monthly revenue? No, I mean the quarterly sales of Linear Guide in the second quarter. Quarterly sales is around RMB 150 million. Got it. Thank you, Ivan. No question from my side. Thank you. Thank you. Thank you so much, Bill. Your next question is coming from Iris Zhen. Iris, please unmute yourself. Thank you. Oh, thank you very much. This is Iris from Deutsche Bank. Thank you, Isayama-sama, and hi, Ivan. Two questions. The first one is on profitability. I believe you've already answered about the bulk of it. I just want to double-check, what is the ECFA impact on the operating profit margin or on the gross profit margin in the first half? I want to double-check if my understanding is correct that you are basically implying that the gross profit margin and the operating profit margin should see a year-on-year growth or a year-on-year improvement in the second half versus the second half of last year? Yeah, basically, we expect our quarterly gross margin or OP margin will be better in the second half of this year compared to the second half of last year, quarterly. It's very difficult to tell the exact impact for tariff in the first half of this year because the product production and the volume of the production was pretty various in the past two to three quarters. At least it could be more than 0.6% PP or 1% PP. It's very roughly numbers for you. The impact factors are various and pretty, it's so many impact factors of the OP margin impact by ECFA. Understand. That's already very helpful. My second question is on the top line. If we think about your target or guidance of the full year for the top line of being low double-digit growth for the full year, and I believe it's in Renminbi terms, right? We have 10% in the first half. This implies a slight acceleration of growth in the second half of the year. Do you think this acceleration comes more from the market that can potentially pick up in the second half of the year, or do you think it's more AirTAC can do better than the market? Maybe both of them, because the impact from U.S. tariff may be lower and lower because some customers may still have to make some decisions for their capacity expansion. We still will apply different kinds of sales strategies. We also have improved our brand image, and we also expect we could have a better share again from the market. It also could be because of the low base of the second half of last year. We can have double-digit revenue growth in the second half of this year. Okay, very helpful. Thank you, Ivan. Thank you. Thank you so much, Iris. Your next question is coming from Jason Luo. Jason, please unmute yourself and ask a question. Jason, your line is open. If it is not working, please reconnect yourself. Let me move on to some of the questions that came through from the Boston Q&A box. Sorry about it, Jason. Now we can hear you. Jason, I'm sorry. Can you start from the beginning again? Thank you. Okay. Thank you. Thank you for my question. This is Jason Luo Fang from Capital Management. My first question is about the environment. In June and July, the China government announced the anti-environmental or, we say, the inter-district competitive policies. Do you see our clients being more conservative in the purchase or the future guidance? Thank you. Sorry, I cannot understand the question that you mentioned. Sorry. My question is the anti-environmental like a nature in their policy. Have you seen our clients being more conservative in the purchase or for their confidence? Basically, such kind of shipment may be still pretty similar to the first quarter or the first couple of months of the year. Some policies have some deferred impact. It's still too early to tell if such new policies will affect customers' behavior or not. We still have to observe that. In the past one to two months, we haven't seen too much change. Okay. My second question is for the second half of the year, the utilization rate of the Linear Guide, could you give us more detail for your expectations? Thank you. Basically, even though we have overcapacity for years, we still have to keep basic utilization rate to let our operators can have experience or accumulate their experience. 30% or high 20% utilization rate will be kept in the rest of the year. Once we have a better shipment, maybe we still will depend on the shipment improvement and increase our utilization rate. We still expect we could have a higher utilization rate at the end of this year. We won't increase too much Linear Guide inventory, just want to keep our utilization rate, basically. Okay, it's really helpful. Thanks for listening. Thank you. Thank you so much, Jason. There is one question, two questions coming from one investor. Let me ask that on behalf of Ivan. Thank you so much for your time today. Please, can you clarify AirTAC's U.S. strategy and the changes made in recent months in response to U.S. tariffs? Our client letter suggesting a U.S. withdrawal is entirely fictitious is the first question. I appreciate it if you can answer that, Ivan. Yes, basically, we have a sales subsidiary in Houston. In the past, we have built inventory for our direct customers and distributor customers. We have to import inventory and pay tariff first. Such inventory just stays in our Houston warehouse. It doesn't mean all of those inventories can be sold to our customers. We have potential or sinking costs of the tariff expenses. Many fixed costs or expenses in the U.S. are pretty high. For example, our Houston warehouse rental, we have to pay $70,000 a month. The tariff issue still could be uncertain. From this May, we have informed our customers, including distributors and direct account customers, we will give them some pricing discounts, but they have to place orders to our Ningbo factory directly. The trading term could be FOB Ningbo factory or Ningbo port. AirTAC doesn't have to take the tariff for any customers. We not just can decrease our tariff sinking cost, we also can decrease our monthly warehouse rental. In 2024, U.S. subsidiary almost lost $5 million. After we change such model, we can make money from U.S. subsidiary. Thank you so much, Ivan. The second question is about the electronics area. Ivan, thank you once again. Please, can you outline AirTAC's competitive positioning within electronics and any progress in penetrating into semiconductor manufacturing supply chains? Yeah, basically, AirTAC was a small company in the past. We started our China Pneumatic business from traditional application. Many high application customers still have a pretty deep brand image for Pneumatic suppliers. They always believed Japanese-made, European-made are better than Chinese-made like AirTAC. After 2011, 2012, we began to develop high application SKUs to support such higher applications. We still have to spend more time to improve our brand image. We have success in the past 10 years. Basically, not just improve our brand image, we also have a wider product portfolio that can convince more electronics customers to trust AirTAC is good enough and can support most of their demand. Many customers don't be afraid to be punished by their existing suppliers once AirTAC doesn't have too wide or once AirTAC cannot support most of their demand. Such a situation happened in the past five or seven years. It's one of the reasons why we can continue to get shares from the market because we have a wider product portfolio. We also can enjoy multiply effect to improve our market share. For Semi, in the past, we have not focused on Semi-SKU development because we have so many easy money items that are not developed and launched. We prefer to do those easy money items first. The second one, many Semi-customers have some abnormal requirements to AirTAC, but such abnormal requirements, they have not pushed on other Japanese peers. We don't think Semi-customers are, Semi-businesses are the best business for AirTAC. We have not put it on our first priority and developed it. The third one, in the past one to two years, the China government had local procurement, local production process. Many local China Semi-equipment players came to AirTAC actively trying to seek any cooperation with AirTAC. After we searched all of our product SKUs, just limited products can support customers' limited demand. Our pricing is just around 40% of SMC's pricing. We still can enjoy 70% gross margin from such demand. From the end of last year, our board has authorized or even asked management to develop Semi-items aggressively. This progress is still on track. We talk to the market. Maybe in two years, such Semi-revenue won't be improved, obviously, but it still could be higher and higher. Around two years later, it could be another growth engine for AirTAC business. Thank you. Thank you so much, Ivan. Your next question has come from Kenny Chen. Kenny, please unmute yourself. Thank you. Hi, Ivan. I have two questions. The first one, I just want to follow up on the impact from ECFA you just mentioned. Can we get some sense that will this continue to be impacting second quarter's margin, or it will be totally resolved somewhere in the second quarter or third quarter? Any impact or not in the second half of the year still depends on the ECFA development. Any SKUs or any product production in Taiwan will be lower efficient than our Ningbo factory production. We still will consider to move some product production from Taiwan factory to Ningbo factory. Such process impact still depends on the scale of the product production relocation. We have to lay off additional operators in Taiwan or not. Basically, such impact won't be like the height as it did in the past four quarters. We are not. Okay, got it. Very clear. The second one is kind of a relatively long-term, or maybe we have to wait and see. I see your quarterly sales have been increasing year on year for many quarters. There will still be a cycle for industrial automation, factory automation, this kind of an industry. I'm wondering if you can give us just a brainstorm or any thought you have right now for 2026 or the next cycle. Will you see some more constructively positive views on 2026, 2027, or do you want to warn us of some of the downside risk going forward? Thanks. Basically, Pneumatic is a very short-term, short lead-time business. We cannot tell the situation in 2026 or 2027. In the past 20 years, every two years, we have an upcycle, and another two years could be a down cycle. Every four years, it's a cycle, including down cycle and upcycle. This weak demand is starting from the end of 2021. Mostly, it was affected because it was too hot in the first half of 2021. The China government wants to calm down the overall demand. The second one, the China government has some abnormal control for specific applications or specific industries from September or October of 2021. Mostly, it was related to a particular issue. We say this weak demand from the end of 2021, we prefer not to define it as a cycle issue. It's a non-economic issue to affect that. After the government has resolved most of the political issues, they try to restore the China economy from the end of 2023, but most of the people have lost confidence in government policies. Even some pretty strong enterprises also spend their capacity conservatively. The government continues to release more stimulus policies but restores people's confidence in tax time. Even though Pneumatic demand has been better from the end of 2024, and we also talk to the market, it just could be a gentle recovery, slight recovery. It won't be a burst-out rebound like it did in the first two upcycles. Basically, once it's just slightly recovered from the end of 2024, we also believe the China government still will continue to release more stimulus policies. This recovery cycle from the end of 2024 will last longer than two years, but it still depends on the China government policies. Got it. Very clear. Very powerful. Thank you, Ivan. Thank you, Isayama-sama. Thank you so much, Kenny. Your next question comes again from Tsao, Tsao Wang from Goldman Sachs. Tsao? Thank you, Isayama-san. Hi, Ivan. This is me again. A little bit more housekeeping question from me. The first question is related to your inventory days by the end of this quarter, sorry, end of the second quarter. How should we think about the inventory level going into the second half of this year for Pneumatic and also Linear Guide? That's the first question. Thank you. Basically, 124 days is too low for the Pneumatic business. We still will depend on the shipment market situation and some fixed costs and decide the index rate in the third quarter or fourth quarter. Basically, we used to decline our index rate from July or August of the year, and October will be the lowest one. We increased our index rate from the end of November or from December. We still have to consider if the inventory level is good enough to support our customers' short lead-time demand or not. Basically, 124 days at the end of this June is not healthy, is not good numbers for the production cost. Got you. That's pretty clear. We're basically implying that the inventory level will continue to go up in the second half and probably will not lower our utilization rate so fast in the second half of this year compared to the past few years. Okay. Yes, basically yes. Got you. That's pretty clear. My next question will be coming from the market share outlook or the market share in 2025 because we continued to hear some feedback from the Chinese industrial automation suppliers and also the customers saying that they have a better intention to buy localized local production products, just like your products, compared to the Japanese peers or Germany peers' products. I just want to understand the trend. Have you also seen this trend happening? Should we expect the market share to be higher than 30%, 35% in probably the next one to two years? Thank you. Yeah, basically, we have been seen as a local China company for years. The situation you mentioned also has been happening in the past one to two years. It's not easy to denominate how fast it will be because different customers have different considerations and also have different procurement behavior. Basically, we have very high confidence to enjoy 35% China Pneumatic market share by the end of 2030. Thank you. That's pretty helpful. I'll back to the queue. Thank you, Isayama-san. Thank you so much. We're actually just about to finish the time. If I may finish with one final question from myself, actually. Ivan, is there any changes in terms of cash flow outlook that you are having? I think you started to step up on the shareholder return from last year. Given the, I would say, rather a moderate business condition that you've been seeing for this year, are you having any views that maybe you need to think more about the shareholder return going forward, or you want to deploy further capital towards even further new businesses, including M&A and such? Any update on the cash flow? If you can mention about it as a closing remark, that'll be deeply appreciated. Thank you so much. Thank you. Basically, we don't have any acquisition plan currently, even in short or medium terms. Our CapEx just could be NTD 2 billion to NTD 3 billion in 2025, 2026, even 2027. The next CapEx expansion depends on the scale of our electrical actuator business. Even if we have a little higher CapEx in 2028 or 2029, it just could be a little more than NTD 3 billion a year. We still can generate pretty good free cash flow. Basically, the cash dividend payout will be higher or how higher it will be still depends on our balance sheet item situation. Once we have better revenue growth, we need more working capital demand because our cash cycle could be around 220 days. Higher revenue means we need more working capital. Basically, to keep our payout ratio to be around 60% from 2026 to the near term, it won't be difficult for AirTAC. Thank you so much for that commentary. Everyone, we would like to conclude the call. Ivan, thank you so much for pushing yourself despite the fact that you've been having a sore throat. We truly, truly appreciate your effort in here. If there is nothing further, we would like to conclude the call. Ivan, would you like to have any other closing remarks? No, basically it's good. All righty, then. Thank you so much, everyone, for joining today's call with AirTAC International Group second quarter 2025 results. We hope that you're going to be having a great weekend ahead and hope to see you sometime soon. Thank you, everyone. The close is going to get concluded. Thank you, Ivan. Have a great day. You too. Thank you, Isayama-sama, and thank you, everybody. Have a good day. Thank you, everyone. We're going to close the call.