81: Chapter 81: At the Pinnacle of Trillions 1

9:00 AM, August 1st, precise release.

30 minutes before the market opened, traffic monitoring on the Spark Group official website began to soar almost vertically. Tens of thousands of investors, analysts, reporters, and countless eyes were refreshing the same page simultaneously.

At 9:00 sharp, the page updated.

Spark Technology Co., Ltd. 2017 Semi-Annual Report》 — The title was concise, the font solemn.

But the numbers below were like a nuclear bomb dropped into the capital market.

The report used a visually striking design: on the left, data from the first half of 2016, in grey tones; on the right, the first half of 2017, in flaming orange-red. The contrast was shocking.

Consumer Electronics Business

Sales: 20 billion rmb (40% year-on-year growth)

Gross Margin: 52% (5 percentage points higher year-on-year)

Note: Sales in the North American market dropped to zero due to the 'Entity List', with all growth coming from the domestic market (+65%) and non-US markets like Russia and Southeast Asia (+120%). Product mix moved up, with the average price of drones increasing to 9,500 rmb, and the average price of action cameras increasing to 3,200 rmb.

Three-Electric Systems Business

Sales: 60 billion rmb (800% year-on-year growth)

Gross Margin: 38% (slightly lower than the long-term target due to the initial phase of mass production)

Note: 420,000 power battery packs delivered (Geely 150,000, Volkswagen 80,000, Tesla 50,000, others 140,000); 380,000 motor and electronic control systems delivered. Capacity for the next two years has been locked, with orders on hand exceeding 140 billion rmb.

Bedrock chip business

Sales: 20 billion rmb

Gross Margin: 60% (reflecting technology premium)

Note: Mass production ramp-up of the 28nm 'flint one' chip went smoothly, with yield increasing to 92%. It has covered Spark's own product lines (drones, action cameras, smart bands) and external customers (IoT chips for three domestic mobile phone manufacturers, cockpit chips for two automotive Tier 1 suppliers).

New Materials Business: Graphene + Battery Materials

Sales: 5 billion rmb (300% year-on-year growth)

Gross Margin: 65% (extremely high technical barriers)

Note: Special silicon-carbon anode materials are supplied in bulk to CATL and BYD; high-strength and high-conductivity special alloys are initially replacing imports, used for Hongqi H9 body structural parts; new ceramic-based composite materials have entered the trial stage in the aerospace field.

Key Consolidated Group Data

Total Revenue: 105 billion rmb (210% year-on-year growth)

Net Profit: 42 billion rmb (580% year-on-year growth)

Net Profit Margin: 40% (28% in the same period last year)

Earnings Per Share (EPS): 40 rmb

Net Cash Flow from Operating Activities: 90 billion rmb

Cash and Equivalents on Hand: 130.37 billion rmb

On the last page of the report was a simple bar chart: Spark's net profit for the first half of the year (42 billion) had already exceeded the full-year profit of the 20th ranked company in the A-share market last year.

No celebratory pictures, no executive speeches, only these cold, precise, yet shockingly energetic numbers.

The capital market was instantly ignited.

Shen Nanpeng's Calm Interpretation

At 10:00 AM, the video conference for over 300 investment institutions began on time.

Shen Nanpeng appeared in the center of the screen. He was wearing a tie today, a rarity, but his expression was as calm as ever, even a bit serious. The background was the simple conference room at Xinghuo Headquarters, with no decorations on the walls.

Good morning, investors and analysts, his opening had no pleasantries. I know you have many questions, let's start with the interpretation of the data.

He pulled up the core data page, the red dot of the laser pointer landing precisely on several key numbers.

The explosive growth in the first half of the year mainly came from three aspects, Shen Nanpeng said at a steady pace, as if stating an established fact. First, the explosive dividend of the new energy vehicle industry. We stepped on the time window, and the technical leadership of the three-electric systems was transformed into market dominance.

Second, the acceleration of domestic chip substitution. 'flint one' not only satisfied our own use but also began to be exported. This is not just revenue, but a manifestation of ecological influence.

Third, the sales of new materials began to exert force. This is the result of high-intensity R&D investment over the past three years, and now it is entering the payback period.

He paused and added, What needs special explanation is the consumer electronics business. In the situation of losing the North American market, we achieved 40% growth through product upgrades and channel cultivation. This proves that Spark's product power itself is the biggest moat.

Next was the Q&A session. The first question went straight to the core.

An analyst from Goldman Sachs: Mr. Shen, a 40% net profit margin is terrifying in the manufacturing industry. Do you think this level is sustainable?

Shen Nanpeng seemed to have expected it: In the short term, this profit margin benefits from economies of scale and technology premiums. When others cannot make your product, or cannot make it as well as you, the pricing power is in your hands.

He changed the subject: But in the long term, as we continue to increase investment in fields such as chip process upgrades, automotive intelligence, and new material R&D — I mean investments in the tens of billions or even hundreds of billions — the overall net profit margin will gradually return to a reasonable range of 35% - 40%. Spark does not make money by cutting costs, but by technical leadership. And maintaining that leadership requires huge, continuous investment.

The second question came from a top domestic private equity firm: With cash on hand exceeding 130 billion, what are the specific investment plans for the future?

Three directions, Shen Nanpeng held up three fingers. First, battery technology iteration. The R&D of solid-state batteries and sodium-ion batteries has entered the pilot stage, requiring the construction of new R&D centers and trial production lines. Second, breakthroughs in chip manufacturing processes. The tape-out of the 14nm 'Flint three' is imminent, and 7nm R&D has started; these are the real 'money pits'. Third, the globalization of production capacity. The joint venture factory in Germany needs additional investment, and the production base in Southeast Asia is accelerating construction.

He finally emphasized: Spark's logic is very simple: invest the money earned into places that can build a wider moat. We will not sacrifice long-term investment to maintain high profit margins.

The meeting was originally scheduled for 45 minutes, but it actually lasted an hour and a half. Shen Nanpeng answered 17 questions, from financial details to technical routes, from market competition to geopolitical risks, and every answer was supported by detailed data and clear logic.

At the end, Shen Nanpeng looked at the camera and said one more thing, which was rare: Everyone, please look at these numbers rationally. Spark is still climbing the mountain; we have only seen better scenery now, and we are still far from the top. Thank you.

The screen went dark.

But the heartbeat of the capital market was already too fast to stop.

First Day: Gap Up (August 1st)

At 9:15 AM, the centralized bidding began.

Spark Technology's order book was instantly overwhelmed by surging buy orders. The buy-one price was pushed directly from yesterday's closing price of 1,500 rmb to 1,650 rmb — the limit-up price. The amount of buy orders jumped crazily: 5 billion, 10 billion, 15 billion... finally settling at 21.73 billion.

It set a record for the largest closing order amount for a single stock in the history of the A-share market during the centralized bidding phase.

At 9:30, the market opened.

The stock price was sealed at the 1,650 rmb limit-up without any suspense. There were very few sell orders, with only sporadic hundreds of shares traded. The eyes of the entire A-share market were focused on this one code.

Retail investor forums were completely boiling.

Spark is awesome! The national destiny stock is confirmed!

42 billion net profit in the first half... I calculated it, earning 230 million a day on average, 9.6 million an hour, 160,000 a minute... even breathing is making money!

What was I doing when it was 1 rmb two years ago? I was laughing at it for being an ST stock and about to be delisted! Now I want to slap myself!

Where is that guy who 'forgot his password'? Come out quickly and let us get some of that luck!

The legendary retail investor who 'forgot his password' was dug up again. Some busybodies calculated based on public information: if he really forgot his password after buying 5,000 shares in 2015, based on the stock price of 1,650 rmb, the market value of his holdings would be 8.25 million.

From 5,000 to 8.25 million, in over two years, a return of nearly 1,650 times.

Financial media headlines were everywhere:

《Spark Earns 42 Billion in First Half, a Counterattack Myth Under Sanctions》

《40% Net Profit Margin! Spark Redefines Chinese Manufacturing》

《Two Trillion Market Value in Sight, Will Spark Become the New King of A-shares?》

The Shenzhen Securities Regulatory Bureau's hotline was blown up. Most were asking whether Spark would release a risk warning announcement. The staff member smiled bitterly: According to the rules, an announcement is only required if the cumulative deviation of the closing price increase over three consecutive trading days exceeds 20%. This is only the first day, and it is a rise driven by performance...

Rationality? In the face of such a set of numbers, rationality seemed pale and powerless.

Second Day: Institutions Snatching chips (August 2nd)

August 2nd, Wednesday.

At centralized bidding, Spark opened at the limit-up again — 1,815 rmb.

But today's situation was slightly different. Around 9:40, the limit-up was briefly opened. A huge amount of sell orders suddenly poured out, and more than 3 billion rmb was traded in an instant. The market gasped.

However, just three minutes later, larger buy orders surged in. Dragon and Tiger List data showed that the top five seats for buying during this period were all dedicated to institutions, with a total purchase of 12.08 billion rmb. The largest buy order came from 'Institution Dedicated 1', with a single transaction of 5.82 billion rmb.

Foreign capital also joined the carnival. Funds going north through the Hong Kong Stock Connect net bought 8.53 billion rmb of Spark Technology that day, accounting for nearly 70% of the total turnover.

The limit-up was sealed again, and the closing order was thicker than yesterday.

The market's interpretation was: some large institutions or original shareholders were taking the opportunity to reduce their holdings, but more institutional funds were frantically taking over. This was not a disagreement, this was the exchange of old and new funds, a repricing of Spark's value by the market.

A well-known private equity boss posted a meaningful message in his Moments: It is meaningless to discuss whether Spark is expensive now. When everyone in the market wants to own it, the price is determined by the most optimistic group of people. The problem now is not whether to choose Spark, but whether you can still buy it.

That night, Li Ming, chief analyst of the electronics industry at CITIC Securities, released a 58-page in-depth research report.

The title was shocking enough: 《Two Trillion Is Just the Starting Point, Detailing Spark's Five Growth Engines.》

The report broke down Spark's business into five levels:

Cash Cow Layer (Consumer Electronics, Three-Electric Systems): Providing continuous and stable cash flow and profit.

Growth Engine Layer (chips, New Materials): Highest technical barriers, determining the future ceiling.

Ecological Empowerment Layer (Overseas Military Industry, Automotive, Hongqi Automobile): Opening up the industrial chain and building a closed loop.

Strategic Reserve Layer (Solid-state batteries, autonomous driving): Laying out the next decade.

Value Revaluation Layer (Military Industry, Industrial Internet): Hidden valuation treasures.

The report finally gave a target price: 2,500 rmb. Corresponding to a market value of 2.625 trillion.

We believe that Spark is evolving from an excellent hardware company into an ecological platform based on core technology. The value revaluation brought by this evolution is far from over.

This research report was frantically forwarded in the institutional circle. On many fund managers' desks, a printed copy appeared overnight.