Qisda Corporation (2352) Earnings Call Transcript & Summary

Hello, investors. Good afternoon. Welcome to Qisda Corporation, the Third Quarter Results of 2025 Investor Conference. This conference is chaired by Chairman, Peter Chen; and President, Joe Huang; and our CFO, Jasmin Hung; Co-chaired by GM of each business group; GM of Information Technology Business Group, Daniel Hsueh; GM of Commercial and Industrial Business Group, Yu-Chin Lin; GM of Medical Business Group, Harry Yang; GM of Business Solutions Business Group, Joshua Tzeng; GM of Networking and Communications Business Group, April Huang and our CIO, Michael Wang. Today's conference is estimated to take 1 hour. Agenda is as follows: First, our CFO, Jasmin, will walk us through the third quarter financial results of 2025, followed by Chairman, Peter and President, Joe, to bring us the business update and outlook. Next, GM of each business group will give us a briefing about the performance of each business group. Later, we will enter Q&A session. [Operator Instructions] Before we commence, we want to remind all the investors to pay attention to the safe harbor notice as the statements are subject to risks. Please spend some time to read through the Slide 4 safe harbor notice. Thank you very much. Next, we will leave the floor to our CFO, Jasmin, to walk us through the 2025 third quarter financial results and business updates.

Hello, investors. Good afternoon. I am CFO of Qisda Group, Jasmin. First of all, for Qisda Group, I will give a brief introduction. Our business spanning information technology, medical, smart business solutions and networking communication, the 4 major pillars. Our global presence include manufacturing, sales, R&D, for manufacturing located in Taiwan, China and Vietnam. For sales, we have more than 200 locations worldwide. For R&D, mostly located in Taiwan and China. Our capital was reduced from NTD 19.27 billion down to NTD 15.8 billion. For the first 3 quarter, revenue reached NTD 155.7 billion. Revenue breakdown by area, mostly located in Asia accounted for 53%, Americas 30%, Europe 16%. For our business group's revenue mostly located in our original IT business, revenue reached NTD 82 billion in the previous 3 quarters. Our major products include displays, projectors and professional display module. And the second major business group is BSG. Revenue reached NTD 26.8 billion, focused on IT Intelligence and OT Intelligence and OMO online and offline solution. For IT Intelligence, we offer AI computing, cybersecurity, edge to cloud integration and digital transformation services. For OT, we focus on green energy, automation and industrial computer. Our third major business group is Medical. Revenue reached NTD 22.3 billion. We offer medical services and equipment and consumables and dialyzer. For medical service, we have 2 BenQ Hospital, 1 located in Nanjing, 1 located in Suzhou. We also have pharmaceutical health care channel, NORBEL BABY and medical management consulting, Concord Med for equipment and consumable, mostly is BenQ Medical Tech. For dialyzer, we have manufacturing site in Taiwan and a bigger manufacturing site and sales location in Shanghai. For NCG, revenue reached NTD 16.1 billion, mostly LAN, MAN and wireless broadband and so forth. Others, we have BenQ material, polarizer and functional film and other related products. Other than the distribution of our consolidated subsidiaries, we have key investments under equity method, Darfon, Rapidtek and Topview, and FVOCI, AUO. Let's take a look at the third quarter financial results. In general, the entire Qisda Group, the revenue in the third quarter -- the performance was not ideal. The third quarter revenue was NTD 52.5 billion, up by NTD 1.7 billion, slightly went up by 3% Y-o-Y. OP income amount was NTD 0.82 billion Y-o-Y, down by NTD 0.43 billion. Profit attributable to Qisda, NTD 0.25 billion, down by NTD 0.8 billion Y-o-Y. And we want to elaborate on the premise of slightly increase on revenue, 3% contributed from HVA, Medical, BSG and NCG enjoy slight growth on Y-o-Y basis. However, IT business suffered from a decrease on revenue due to the ODM business mode of Qisda Group for display and projectors. Since we have overseas warehouses, due to the tariff concerns to meet the requirement of our client, we have to shift our goods to our overseas warehouses, and that was highly impacted by the exchange rate of USD. Last year, it was 32.3. And this year, it was somewhere around 30. So the inventory cost was highly impacted by the exchange rate. And also due to the impact of America tariff, the demand from client also declined. For IT, the ODM projector and display revenue were highly impacted. And second, the polarizer from BenQ material, that is also related to display. So the revenue was also significantly impacted, and that was the decline of IT in revenue, and that also led to the entire performance. And other than ODM, we also have our branding business. And the revenue and profit this year in the first 3 quarters, we have pretty good performance and mostly because it has a gaming product. And also in China market, we enjoy a good outcome of branding performance. And for high value-added business, revenue was NTD 26.2 billion, up by NTD 3.4 billion, enjoyed a 2-digit growth, 15%. However, OP income amount on a Y-o-Y basis did not increase too much. Medical, BSG and NCG enjoyed 2-digit growth on revenue. However, OP income amount only increased slightly. That said, OP income margin for those 3 businesses in the first 3 quarters went down. Luckily, with the growth in revenue that offset the decrease in OP income margin. So the OP income amount can have a slight increase. IT HVA, it is also included in the IT industry for the professional display module and other subsidiary, the OP income amount also decreased. The third quarter year-to-date revenue went up slightly, NTD 8.2 billion, up by 6%. Profit attributable to Qisda was NTD 1.09 billion, down by NTD 0.88 billion Y-o-Y. EPS was NTD 0.59, down by NTD 0.41 Y-o-Y. The revenue growth mainly came from Medical and BSG business group. OP income amount was majorly impacted by IT business and also BenQ material polarizer, the profitability went down and also NCG. In the first 3 quarters, BSG profitability increased on Y-o-Y basis. Other business group compared to the same period last year, OP income amount decreased. Let's take a look at the consolidated statement of comprehensive income. The third quarter revenue was NTD 52.5 billion, gross margin 16.9%. OP income, NTD 818 million. Net income attributable to Qisda was NTD 251 million. EPS was NTD 0.15 for gross margin remained flattish. For OP income margin went down from 2.5% last year to 1.6% this year. For net non-OP income, the third quarter last year is a positive figure. This year, the third quarter was negative NTD 12 million. That was because last year, we enjoyed one-off asset disposal and also the dividend issued by AUO was more last year. Compared to the second quarter, the revenue went down by 2%. However, OP income remained flattish, and EPS was down by NTD 0.04. For the consolidated statement of comprehensive income year-to-date, that was not ideal. Revenue went up by 6%, up by NTD 8.1 billion. Gross margin went up by 0.3 percentage points. However, business group operating income amount went down. So the OP income margin went down to 1.7%. The amount went down by NTD 779 million. For net non-OP income, for the first 3 quarters last year, we have gain from one-off disposal of our subsidiaries and also the dividend issued by AUO was more last year. The EPS was NTD 0.59, down by NTD 0.41 Y-o-Y. Next slide, consolidated balance sheet highlight. The total asset in the third quarter was NTD 198.9 billion compared to the second quarter, that was not much change. Total asset up by NTD 2.1 billion. Total liability, the debt ratio was 71%. The ratio of asset and liability remained consistent with the second quarter. For the financial ratios, for the cash conversion cycle was 93 days compared to the second quarter, 94 days, slightly went down by 1 day, not much change to other indicators. For financial trend, quarterly trend for this year, other than the first quarter, that was under NTD 50 billion. starting from the second quarter, it was over NTD 50 billion. For the OP income amount, the third quarter was better than the second quarter. For the gross margin remained over 16%. OP income margin dropped from 2.x% to 1.x%. However, the performance in the third quarter was better than the second quarter. For the same period in the third quarter comparison, please refer to the content on this slide. For the business group revenue trend, the upper left, that was the total revenue of high value-added business group, revenue reached NTD 26.2 billion compared to the second quarter, NTD 26.7 billion, down by NTD 0.5 billion. Medical, starting from the fourth quarter last year to this year third quarter, 4 consecutive quarters, we enjoyed the revenue scope over NTD 7 billion. BSG, starting from this year second quarter, over NTD 9 billion revenue. NCG, the revenue over NTD 5 billion. IT revenue went down, however, remained over NTD 20 billion revenue scope. This is the -- each business group revenue growth table. The column marked in yellow was the gross margin range. except for the others, which is the BenQ Material gross margin went down. Other business group remained in the same range. However, the OP income margin went down, as I said before. This is the revenue breakdown by each business group. This slide is the Qisda Group's listed companies' financial results. In general, -- this year, in the first 3 quarters, some subsidiaries are suffering such as SIMULA, Alpha, Hitron and BenQ Material in the previous 3 quarters suffered from a loss, which bring a bigger Y-o-Y differences on the Op income amount. And all the other subsidiaries more or less were impacted. So the profit also went down. Please refer to the content of this slide.

Hello, investors and friends from Press Media. I am Chairman of Qisda Group, Peter Chen, and our CFO have shared the financial results. From the numbers, we can see that the revenue and profit, basically, especially profit in the past few years, the third quarter compared to previous years, this year performance was weak. The third quarter used to be the peak for revenue. However, this year, the EPS was NTD 0.15. With the weak performance, I want to apologize to our stakeholders. The third quarter, we have such weak performance. And the reason our CFO has elaborated, this is impacted by the exchange rates and tariff and so forth which lead to the weak performance in the third quarter continuing from the second quarter. From previous investor conference, I have brought a forecast about the third quarter performance compared to the second quarter. The overall situation in the third quarter will be weak. And the number has revealed in today's conference. The revenue went down on a Q-o-Q basis, also the profits. In the entire industry, this might be a shared question. How come the Taiwan market -- stock market, the share value is reaching historical high? How come so many companies are still suffering from weak performance? About the reason, it is because of the peak of the Taiwan stock market was enjoyed by 2 groups. One is advanced semiconductor, TSMC related, either it's CoWoS or other upstream and downstream vendors. It has a strong effect and build new plant rapidly and uplift the rapid growth of the supply chain. And the second one is AI industry from data center-related or server-related industry, such as high power or cooling systems. These are based on the computing power of AI. And these 2 businesses, the share value were high, and that uplift the entire effect in Taiwan stock market and all the other industry are universally suffering. And how is America tariff is going to affect Taiwanese industry? Since IT industry is included in Section 232, which include most of our products are in grace period as well. However, the demand was weak. The demand in the United States market was weak. Starting from the third quarter, we can see that it was evident. And moving forward to the fourth quarter, basically, we can estimate the flattish performance in the fourth quarter, whether in the Thanksgiving or yesterday's Singles' Day or the coming Christmas, all these holidays, we don't see the strong demand globally. We didn't see an evident improvement. So we can see that as to the AI-related business, our business group, we have AIoT business to provide solutions. In the AI deployment, we have initiated many years ago, starting from 2014, we have started to initiate such business group development. This is the second major in all of our business groups. And our deployment, especially in edge computing, we have DFI, we have APLx technology in edge computing. This should gradually reveal its effects as in on-premises, the computing power demand will increase. This is not evident for now. The evident performance is in data center and server. And the effort of our team need to be improved. We have Ace Pillar and AEWIN. In COMPUTEX Expo, we have showcased our products many times. We have server security-related products and cooling system products. We have showcased in COMPUTEX. The scope of our team is limited. So the contribution could not be evidently seen in our shipment. We have been actively improving in our resources enhancement for -- as to the data center for NCG Business Group. It is well known that Alpha Network has -- the major product is Switch. This is the strongest product line for Alpha Network. For Acton Technology, the performance and the stock value are both high. And their major product is also Switch because they have entered this business many years ago. So they are the major benefiter to this upsurge. And Alpha Network team is also actively breaking through to accelerate the development and new product can be seen in the expo, especially the 1.6 terabytes products, and they are working hard to catch up the upsurge of data center demand. And we are actively deploying. However, we're still too slow to reveal the outcome in the current performance. We will put more efforts and to bring the best -- the better outcome on our performances. And as to Medical Business Group, this year, revenue is evidently growing. However, the profit was partially impacted. It was not as much as our prediction. We need to reorganize and come up with better portfolio and hope to see a better and evident growth on revenue and profits. And for the IPO progress of BBHC, in the past year, we have been actively arranging and hope to see a good outcome in the near future. The progress is going per our schedule. This is my briefing. Mostly, I still want to apologize to our stakeholders about our performance in the third quarter with the EPS only NTD 0.15. The fourth quarter should be around the same as the third quarter. And we anticipate starting from next year, we can move out from the trough this year and hope to move into the black next year. This is my briefing. And later, we will have our President and GM of each business group to bring us more detailed information. And later, we will enter the Q&A session. Thank you.

Hello, I'm President, Joe Huang. For the fourth quarter outlook, our Chairman has already brought us the overall operation and the future highlight. For the external environment, I think we have a pretty good understanding and Chairman also bring us more information. I will not further elaborate. In general, in the fourth quarter, the external environment is full of uncertainty, which include tariff policy and geopolitical issues and exchange rates that impact the demand and also make our clients more conservative. And we don't enjoy the good performance in the peak season. For IT industry, the fourth quarter is the traditional peak season. However, due to the U.S. government shutdown and major layoffs and the conservative stocking situation from our clients, it is not promising. However, industrial PC and edge AI markets are showing strong momentum and demand for networking and communication is gradually recovering. For IT and high-end gaming displays maintained strong momentum. And the fourth quarter is traditionally the peak season for household market. The demand for commercial market remains low, which was impacted by the U.S. government shutdown and major layoff would have an impact on overall sales. For BBHC, continue to process listing procedure and continue to expand the biomedical science scope and pharmaceutical distribution channel and participate in the medical technology exhibition to showcase the latest AI smart solutions. For the Medical Business Group, the first 3 quarter reached -- revenue reached NTD 22.3 billion and anticipate to be over NTD 30 billion. And for the BSG, focused on the development of computing power, software services and core intelligence business, increased the investment in research and development for AI and prepare for future AI application. And our Chairman said that we have invested a lot in our research momentum. And in the future 1 to 2 years, we could anticipate a good result. NCG benefiting from the traditional peak season, the fourth quarter operation is expected to grow compared to the previous quarter. Meanwhile, increasing the scope of investment in high-end switches and AI and hope in the future, we will have a major growth. Other than pursuing our business growth, we think that for operate sustainably in the enterprise, we have to bear the responsibility for the environment and society. We call for our grand fleet partner to enhance sustainable influence. In the previous 3 quarters, we have received 12 sustainability awards, which is the best affirmation to our contribution and also to our long-term investments. That was my briefing.

Next, I will have GM of each business group to bring us the summary of the third quarter and the fourth quarter outlook. Later, we will enter the Q&A session. First, I will have GM of ITG Daniel Hsueh.

Hello, everyone. I'm responsible for the performance of ITG. I'm Daniel Hsueh. Here's to bring you the highlight of the third quarter and outlook for the fourth quarter. Global display market sales in the third quarter declined. High-end display, except for the OLED devices, the demand haven't recovered yet. Household market demand remained flattish. As to the commercial market, especially in the U.S. market, the demand is sluggish, yet Qisda display sales amount grew on Y-o-Y and Q-o-Q basis, enjoy a dual growth. For the fourth quarter outlook, fourth quarter global display market sales compared to the same period last year, which enjoyed advanced shipment due to the tariff concerns is estimated to decline at a certain degree. Commercial demand haven't seen an upturn. Household market demand are also conservative. As for sales amount of Qisda display in the fourth quarter, household market growth is promising, yet commercial display sales amount is estimated to drop and will affect the overall sales amount. This is my briefing.

Next, let's have GM of CIG, Yu-Chin, to bring us a briefing.

Hello, investors. Next, I will bring you the briefing of CIG. I am Yu-Chin Lin. The highlight of the third quarter, the goods exported to the America, we have shifted manufacturing site to Taiwan and the planned shifting is completed, adding the mass production of new models. Revenue in the third quarter enjoyed double-digit growth. However, declined on a Y-o-Y basis. As to the industrial and commercial clients, due to the tariff concerns, they pulled in orders in the second quarter. In the third quarter, they turned conservatively controlled the inventory level. As to the automobile business, the new product CPU module was officially in the mass production phase. This is a new revenue stream, although the quantity grew monthly. However, due to the weak performance of vehicle market, the shipment is lower than vehicle plant's prediction. The fourth quarter outlook, the projector -- the schedule of projector co-developing project with client delayed, adding the revisions of requirements from clients that will affect the fourth quarter revenue. As to the industrial and commercial clients, turned conservative in managing inventory since the third quarter. The trend in the fourth quarter will remain the same as the third quarter with conservative shipment and inventory control. As to the automobile new product CPU module, which has AI computing power, 8.7 trillion of operations per second, which is used for speech recognition and driver monitoring and et cetera. In the fourth quarter, the demand for Tier 1 client in Germany increases monthly. This is my briefing. Thank you.

Thank you. Next, we will have GM of Medical Business Group, Harry Yang.

Hello, investors. I am GM of Medical Business Group, Harry Yang. Here is to bring the briefing of the highlight of the third quarter. The third quarter, the entire revenue in Medical Business Group grew 15% Y-o-Y. Among them, medical devices grew 29%. In the third quarter, our revenue reached NTD 22.3 billion based on the performance -- the current performance since the fourth quarter is traditionally the peak season, we are anticipating to reach over NTD 30 billion. And we have 3 businesses. The first one is health care retail business, which include drug stores and B2B channels. For drug stores, we continue our strategy to initiate the expansion of new stores and M&A. For M&A, the investment, we continue to progress. If we have any good news, we will share with everyone. For optimizing our stores -- for our current stores, since the spec of Ding Ding Drugstore is fairly big, and now we have in-store shop models to work with other vendors, which include Korean [ Kinsome ] stores and ventilators and Japanese hair products to optimize our entire stores to create better revenue and profit. For medical devices, for equipment and consumables, we have new products currently. And in China, we have reallocating and begin the manufacturing phase. For Image, other than our original ultrasound, we have new product, low-intensify focused ultrasound. Now we continue to ship to our clients, and this will be a major growth driver in the future. And the fourth one is the dialyzer. We have begun shipment in Korea. Korea is the sixth major dialysis market. And after years of effort, we have shipped to Korea. This is my briefing. And now I want to forecast on December 4, that would be the medical technology exhibition. We have participated for 9 years, and we have 3 major highlights I want to share with you. The first, this is the first time we offer experience with geriatric medicine ecosystem to do demonstration, and we focus on geriatric medicine from the in-hospital treatment to out-of-hospital prevention, we have over 10 technology applications. And the second is AI technologies. We have 3 highlights, and we will showcase them in the venue. And the third one is that we will launch new products. For now, I will keep it confidential. And please visit our booth on December 4, to the BenQ booth. And for the fourth quarter outlook, the entire fourth quarter should be the peak season for medical business, and we have potential to have better performance than the third quarter and will continue to grow. This is my briefing. Thank you.

Thank you, Harry. Next, GM of BSG, Joshua Tzeng.

Hello, investors and friends from press media. Hello. I am GM of BSG, Joshua Tzeng. In the third quarter, our revenue grew Y-o-Y and each business enterprise Smart IT focused on AI info security and cloud service and networking, the 4 pillars, we will increase revenue and reduce expenditure and continue to optimize overseas business. For Enterprise Smart OT, Industrial PC, we have seen the recovery and mostly because of the re-enabling of global manufacturing industrial capital expenditure, expansion of edge AI and replenishment of demands of smart manufacturing and automation. For cybersecurity market, we will expedite ODM project simple submission and new server product research to develop collaboration opportunity with client. For smart automation, semiconductor CoWoS and CoPas process, demand for TGV testing devices persisted. However, machinery and machine tool factory haven't seen an upturn in the third quarter enjoyed an yearly growth, benefiting from M&A and successfully entered tire equipment, semiconductor and robot supply chains order. For OMO, online and offline, virtual and physical integration in the third quarter in Europe and the U.S. and U.K., we have high growth margin models shipments. For Singapore, we also finished sign-off for the major projects. The fourth quarter outlook, we will continue to focus on computing power, software and services and smart core business development and enhance our AI investments and assist our customers in AI implementation. For computing power, we will enlarge AI server team to develop minimum quantity, diversified, customized AI servers and edge computing products. For the service in software, established cross enterprise AI team develop enterprise ERP application AI solutions such as analysis, prediction and strategic suggestion and industrial AI applications such as food industry operation AI, finance industry, customer service AI and so forth. For smart automation, we will develop smart manufacturing AI applications such as AOI defect detection and 3D vision deep learning and digital twin application. Thank you.

Thank you, Joshua. Next, we will have GM of NCG Business Group, April Huang to bring us a briefing.

Hello, everyone. I am GM of NCG Business Group. April Huang. This is to bring you the highlight of the third quarter of NCG Business Group. In the third quarter, benefiting from Indian market growth. In the third quarter, the revenue compared to the second quarter has grown 3% Q-o-Q and 18% Y-o-Y. Eventually, in the third quarter, starting from the beginning of this year to the third quarter, we have enjoyed 1.5% growth Y-o-Y. Starting from the third quarter, we have slowly, slowly growing. For the profits due to the improvement of economic scale, we have better performance in profits, which was also evidently better than the second quarter. For the fourth quarter outlook, with the benefit of system integrations traditional peak season, we estimate this growth momentum to continue in the fourth quarter. This is my briefing. Thank you.

Thank you, April. Next, we will enter the Q&A session.

All right. I am Chairman of Qisda Group, Peter Chen. For the questions submitted by the shareholders, we will answer them one by one. As for the BBHC IPO progress and the second question is the financial debt position, how can we perform a reasonable management? We will have CFO, Jasmin to answer those questions.

First of all, for BBHC IPO progress, we continue to put an effort and hope to bring good news as fast as possible because many processes are regulated by the Hong Kong Exchange, so I cannot reveal much. We will proceed this progress. And the second question is regarding financial debt. As a matter of fact, our total debt is around the same compared to other companies. For financial debt, we have performed internal adjustment with consideration of capital cost. So we increased financial debt ratio. And the second of all, we have many consolidated subsidiaries. So we have performed asset inventory to increase the capital effect of each subsidiaries. So regarding the disposal of the assets and non-core investment plans, those are long-term plans. So the financial risks remain controllable for DMS regarding operational activity requirements with positive cash inflow, which is enough to offset the expenditure for growth and M&A activities. Okay. For the BBHC IPO progress, I have also shared earlier in the conference. So far, it is still in progress. And of course, to go public in Hong Kong, this is the first attempt for Qisda Group, and we have encountered many challenges different from going public in Taiwan, and we are tackling those challenges one by one. As answered before, we anticipate in the near future, we can bring a positive outcome. And we continue to put effort, and we're in the final phase. Hopefully, we can bring good news soon because in Hong Kong Exchange, they have very restrict regulations, so we cannot reveal much. But please rest assured, we are actively deploying the IPO progress. And the second question, are we going to continue the M&A activities? If you have paid attention in the past years, our pace for M&A activity has slowed down. For example, last year, the acquired subsidiaries in the last year, one of them is Ding Ding Drugstore, NORBEL BABY and the second one is transpect, manufacturing, strapping machines. Those are the M&A activities. And a year ahead, in 2023, we barely have any M&A activities. So you can see that in the past 2 to 3 years, we have slowed down our pace in M&As. And it doesn't mean that we will not proceed in distributing our current 3 major high value-added business groups. We will be prudent. And we hope to be able to establish a mature, compatibility and economic scale so to achieve the anticipated outcome. That's why we slowed down the pace. And currently, the first thing on our team's priority chart for the subsidiaries after M&A is to perform proper post-investment management. And I want to apologize because many of the subsidiaries in the previous years, we have performed pretty good management. However, to be frank, the organization is getting bigger and bigger. So we have encountered some challenges. And in the past years, the company we acquired, all of the GMs sitting here have also taken charge of management level of our subsidiaries to be their Chairman, and we hope to give some more time to them to our great amount of the subsidiaries after M&A. For them to be able to continue the operation and create their own management level, they can continue its performance. And it will take some time. And I would like to ask you to pay some more patience to our subsidiaries. They are operating healthily. What we need to do is to improve their performance. And we want to put more time and effort in reorganizing and enhancing our post-investment management to bring the anticipated result of each company, and we will not excessively increase the strength of our M&A activity. We will keep being prudent for those companies that fit our missing parts. We will still consider to acquire them and to complete the grand fleet. And we will be more prudent and careful and spend more time on how to perform better post-investment management and bring out the best performance. And I have reiterated many times, we have many good weapons. How can we sharpen them to better its synergy and to make better portfolio and bring out the best outcome. We need to enhance this part. After all, we have many good weapons, and we hope to increase our operational effects. And this is the brief description of our M&A activity and focus on profits. As I have said earlier, especially in AI-related industry and NCG, data center-related Alpha Network products through the products, as we have mentioned, 1.6 terabytes SWIFT or the AEWIN product 2-phase immersion cooling system or data center server, cybersecurity related product of AEWIN's, we have been actively deploying. And of course, if we can bring positive breakthrough in the near future, we hope to bring the results on the numbers of the financial performance. As to the other question regarding the semiconductor uprising price, would it affect the cost of our product? And that goes without saying, especially for switch. We're talking about DDR4 and DDR5. All investors, you may pay great attention to those. The cost of DDR4 and DDR5 have increased over 5x. This would impact the overall cost of our products and also lead to the increase of terminal products. Should we have the GM of NCG, April Huang to have further description.

Hello, everyone. Regarding this part, in NCG Business Group, our clients, they -- for some major parts, we have been sharing transparent pricing with our clients. Therefore, for the major parts, especially very well-known parts, they all know the pricing is rising, and we have proper -- we have performed proper negotiation and reasonable cost transfer with our client. Thank you.

And another question regarding Medical business group. Now we're focusing in Asian markets. What are our future strategy, our overseas market, what is our advantages? What is our smart medicine distribution? I will have our GM of Medical Business Group, Harry to answer this question.

Hello, investors. I am GM of Medical Business Group. For this question, yes, indeed, Medical Business Group mainly located in Asia other than China and India and Southeast Asia, we have distribution, especially in Southeast Asia. Other than our original medical devices, we also distribute dialyzer market, especially in Thailand market. And the performance in Thailand is fairly good. For our overseas distribution, we're muscling in European and U.S. markets. We have visited some vendors in Germany, and we're actively seeking out some strategic partners, especially for advanced medical devices. The development pace in Europe and America is ahead of us, and we will keep putting effort. For smart medicine, the distribution of smart hospital, we have been deploying in this aspect, especially in China, Nanjing and Suzhou Hospital. And we have a special unit to deploy smart hospital. Other than that, we have distribution in smart medicines. For example, MarkeTech, Qisda collaborated with MarkeTech, focused on smart medicine development in AI cardiopulmonary examination, X-ray and AI health management platform. And in recent years, in general, in the smart medicine market, we have distributed widely and deeply. This is my answer. Thank you. All right. I will give some supplementary information. For medical distribution, we are based in Taiwan and expand to Asian country and then muscle into European and American country. This is the major direction because medical industry have the nature of high complexity and the entry challenges are a lot, especially in gaining the certificates for Class I to Class III products. For Class I, it would take 1 to 3 years. For Class II, will take 3 to 5 years. For Class III, they are mostly implants, would take 5 to 10 years. They are products such as stents. The entry challenges are high. For our deployment, we are slowly, slowly reviewing the effect. And the revenue have reached over NTD 23 billion in the first 3 quarters. And this year, we anticipate a significant growth than the past year. And the width and depth of our medical development, we are definitely ahead of other companies in Taiwan, and we will keep exploring and cultivating. For hospital industry, our BenQ Hospital in China, Nanjing and Suzhou and Guangxi Province, Guigang City, we have 3 hospitals. And Guangxi, Guigang is our investment under equity methods. Our hospitals located overseas. This also highlighted the differences of the Taiwanese hospitals because the hospitals in Taiwan, most of them are juridical persons or juridical associations. They cannot go public. Why -- why it takes so long for us to go public in Hong Kong? This is because of their strict regulations. And this is a very rare thing for a hospital to go public. What's worth saying is that overseas hospitals, we have the initial ICT business starting from 2017, our hospital have been profitable and even underwent 3-year pandemic era which has great impact to hospital, but we still stand strong and have stable profits. This is why we are qualified to acquire the IPO progress in Hong Kong Exchange and to have this result in overseas market. This is very rare. We have put our target outside Taiwan. In China, the medical market is very competitive, and we are able to bring out such good results. We value the results and the expansion of our medical industry, starting from Taiwan, looking into Southeast Asia and gradually muscling into the European and American markets, we have experienced deeper and wider scope of growth and to establish a very solid basis for Qisda Group. The distribution of medical business group will create a major difference between us than other companies. For other companies, it will be very difficult for them to have such medical distribution and the effect will gradually revealed. Please be anticipate to our future outcome. And this is my supplementary information, and we only have 3 minutes before we wrap up. And next question regarding the growth in 2026, I'm pretty confident we can see a growth. The revenue compared to last year, our CFO also shared with us, up by NTD 8.2 billion profit, however, affected by multifactor declined. And next year, we anticipate revenue to continue to grow and profit can have a significant improvement. And we hope this year could be the trough and next year we can tackle all the challenges we are facing this year and to achieve the outcome. And for the development of drone, you can see that other than Qisda team has cultivated in the past years in drone industry we achieved 100% localized supply chain, and this is also the direction of our effort. And currently, it is going smoothly per schedule. And through the -- through investment in start-ups, one company called [ RFgen, ] this is the start-up spin-off from Department of Aeronautics and Astronautics of NCKU focusing on agricultural drone. And if you have visited our booth in COMPUTEX, the drone can bear 40 kilograms, and it can be applied in farming for spraying pesticides. We have collaborated with Ministry of Agriculture. In the past, we rely on human power to spray pesticide through the drone that can bear 40 kilograms of pesticide to eliminate the risk for the farmers, to do the tasks for the farmers so that they don't have to bear the risk that might cause harm to their personal health. Likewise, drone can be used to end-to-end commercial usage. This is widely used globally in America and in China, for example. Starting from the order being placed, if the commodity is under 40 kilogram, it can be shifted to the designated locations to their houses, to their balconies, to their yard and et cetera. Since this is not legalized under Taiwanese regulation, it is already broadly used worldwide. Likewise, drone can be applied to clean the solar panels. As everyone knows, there are so many solar power plants in Taiwan. And for the panels, after a few months, because of the humid environment in Taiwan and severe air pollution, they will accumulate the dust and particles, and it would change the conversion rate and so the panel needed to be cleaned. So now we can use drone to clean the panels in the power plants, and it is also widely applied, and it can be expanded to cleaning the windows of the tall buildings. Some of the commercial buildings, we can frequently see that we're applying manpower to do the cleaning, and it will cause concerns regarding security. Using drone, it is a safe way to clean the windows. And this is the application under the collaboration with RFgen. And the other partner, Dragonfly UAS, for firefighting and disaster relief in Taiwan. They have gained many orders, around 600 devices. And it is also applied to measurements. We rely on Dragonfly UAS team to do device development. And it has already hit the market to launch new products. And I also participate in drone alliances. The application of drone in the future will be unlimited. We have put pretty good scale in this aspect. And the outcome is slowly, slowly revealing and hope to see a financial performance and contribution in the near future. Due to the limited time, this is already 3:02 now, and we should wrap up the Q&A session and our investor conference. Thank you so much.

Thank you for participating in Qisda Group, the Third Quarter 2025 Online Investor Conference. We are wrapping up today's conference, and we will upload the video and audio document after the call. Thank you for your participation. You may disconnect now. [Statements in English on this transcript were spoken by an interpreter present on the live call.]