Lihong Inspection (1586.HK) 2025 Interim Report Analysis: AI-Driven Transformation Leads TIC Industry Innovation, Comprehensive Coverage of Bulk Business Qualifications Strengthens Growth Foundation

Amidst global economic volatility and uncertainty in the commodities market during the first half of 2025, the company delivered a performance report emphasizing 'heavy investment in R&D and long-term planning,' while continuing to advance its dual-driven strategy of 'globalization × AI.' Revenue for the first half of the year reached approximately HKD 602.8 million, with profit attributable to owners of the company amounting to approximately HKD 40.7 million. Despite short-term profitability being affected by strategic investments, the company made significant progress in AI technology implementation, bulk business expansion, and ESG capability building, laying a solid foundation for medium- to long-term value growth.

Comprehensive Implementation of AI Strategy: Inspection Business Enters a New Phase of Intelligence

The year 2025 marks the 'AI Empowerment Inception Year' for Lihong Inspection. The company’s self-developed 'Lihong AI System' has been successfully deployed across three core scenarios: energy inspection, quality prediction, and safety management. This signifies the official transition of traditional inspection operations into a new phase driven by intelligent technologies. Through the deep integration of large-scale model technology with inspection data, the company has achieved dual breakthroughs in enhancing testing efficiency and reducing reliance on manual labor. Additionally, by incorporating IoT and multimodal AI technologies, the company is actively advancing the development of a safety intelligence platform, providing innovative solutions for enterprise safety management. Looking ahead to the second half of the year, the company plans to promote the global deployment of its AI system while focusing on cutting-edge areas such as cross-border inspection mutual recognition and AI-based carbon emission accounting, further solidifying its technological leadership.

Full coverage of bulk business qualifications achieved, reinforcing the core competitive moat.

As the 'ballast stone' of its business, Lihong Inspection has continued to achieve significant breakthroughs in the field of bulk commodity inspection. In the first half of 2025, the company secured two new designations as a qualified inspection agency: for 'Cast Aluminum Alloy Futures' on the Shanghai Futures Exchange and 'Polysilicon Futures' on the Guangzhou Futures Exchange. To date, Lihong has become one of the few third-party inspection agencies domestically to possess comprehensive qualifications from all five major futures exchanges, covering 13 core futures categories spanning base metals, new energy materials, ferrous products, and energy chemicals. This complete qualification matrix not only reflects the high recognition of regulatory authorities and the market for Lihong's professional capabilities but also establishes a unique advantage in the inspection of new energy materials, laying a solid foundation for serving leading global bulk commodity clients. The coverage of exchange qualifications is as follows:

Global network continues to expand, with notable progress in emerging market presence.

Leveraging its continuously expanding global network, Lihong Inspection has achieved remarkable results in its international expansion efforts. As of June 2025, the company's global branches and professional laboratories have increased to 80, covering 19 countries, with a total global workforce of 3,574 employees. In emerging markets, particularly resource-rich regions such as Africa and the Middle East, the company has provided comprehensive inspection services to mining and energy companies through localized team development, effectively supporting the global resource supply chain layout.

ESG strategy fully implemented, with prominent value creation in green service chains.

Centered around its ESG sustainable development strategy, Lihong has built a comprehensive green service ecosystem, forming end-to-end capabilities in three key areas: clean energy, environmental protection, and climate change. As a core trader in Beijing’s carbon market, the company was honored with the 'Best Trading Award of 2024' in the first half of the year, with its carbon asset development and trading capabilities receiving authoritative recognition. With global carbon market rules gradually becoming clearer, Lihong will fully leverage its expertise in carbon market mechanisms to assist more enterprises in aligning with international emission reduction frameworks.

Future Outlook: Bulk Commodities as Foundation, Green Growth Momentum, Intelligence-Driven Development.

Looking ahead, Lihong Inspection will adhere to three key development directions: advancing the deep application of AI technology across all inspection scenarios to build an industry-leading intelligent service platform; deepening its footprint in emerging markets to establish an efficient cross-border inspection service network; and seizing opportunities in the global carbon market to become a leading low-carbon integrated service provider in the Asia-Pacific region.

Group Chairman and CEO Mr. Li Xiangli stated, 'Our investments in AI technology R&D, global branch expansion, and qualification acquisition in the first half of the year reflect strategic choices based on long-term value creation. The deep integration of AI with traditional inspection operations has not only improved service efficiency but, more importantly, constructed a difficult-to-replicate technical competitive moat. Combined with our full qualification advantages in bulk commodity business and our first-mover advantage in the ESG domain, the company is well-positioned to embrace broader growth opportunities in the TIC (Testing, Inspection, and Certification) industry.'

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