Company profile

The company was founded in 1980 and is a multinational private enterprise group primarily focused on automotive components. Since 2008, the company has expanded its business through overseas acquisitions. Currently, its main business segments include intelligent chassis systems (encompassing air suspension systems and lightweight chassis systems), thermal management systems, sealing systems, and the humanoid robot business. In 2024, the company achieved a revenue of RMB18,854 million (RMB, the same below), a yoy increase of 9.33%, with domestic and overseas revenue shares at 51.71% and 48.29%, respectively. The net profit was RMB1,254 million, a yoy increase of 10.63%.

Investment Summary

Stable Growth in the First Half of 2025
In the first half of 2025, the company recorded revenue of RMB9,846 million, net profit attributable to the parent company of RMB817 million, and net profit excluding non-recurring items of RMB780 million, with yoy growth rates of +1.83%, +14.11%, and +21.53%, respectively. The gross margin was 23.58%, a yoy increase of 1.35 percentage points. In the second quarter of 2025, the company recorded revenue of RMB4,992 million, net profit attributable to the parent company of RMB415 million, and net profit excluding non-recurring items of RMB414 million, with yoy growth rates of +0.31%, +16.74%, and +21.61%, respectively.

Stable Growth in Traditional Businesses and Rapid Development of New Businesses
In recent years, the company has actively expanded into the new energy vehicle (NEV) sector, focusing on intelligent chassis systems. It has also achieved international leadership in several new energy sectors, including thermal management systems, lightweight chassis systems, and air suspension systems. In the first half of 2025, the revenue from cooling systems (thermal management), rubber business, sealing systems, lightweight chassis, and air suspension systems reached RMB2,606 million, RMB2,043 million, RMB1,942 million, RMB1,546 million, and RMB568 million, respectively, with yoy growth rates of +2.77%, +5.88%, +0.27%, +8.08%, and -0.66%. In the first half of the year, the company's sales in the new energy sector reached RMB3,762 million, accounting for 39.56% of its automotive business revenue, with domestic new energy sector sales reaching RMB2,887 million, accounting for 52.94% of domestic revenue.

In terms of orders, air suspension systems, lightweight chassis, and cooling systems have received orders amounting to RMB15.8 billion, RMB5.5 billion, and RMB7.1 billion, respectively.

Internationalization Strategy Reaching Harvest Phase
Since 2008, the company's internationalization strategy has gradually entered a harvest phase. From 2014 to 2018, through a series of overseas acquisitions, such as Germany's KACO and France's TFH, the company accelerated its international expansion. As of the first half of 2025, the company's production share in Asia, Europe, and the Americas was 65.41%, 25.04%, and 9.55%, respectively. By effectively integrating global resources, the company has quickly improved its technology, brand, profitability, and customer base, achieving dual-wheel drive through internal growth and external expansion.

Actively Expanding Liquid Cooling and Robot Business to Explore Growth Opportunities

Building on its automotive thermal management business, the company is actively expanding into energy storage thermal management, and supercomputing center thermal management. In the energy storage field, it has launched a series of liquid cooling units and immersion liquid cooling units. In the supercomputing center thermal management field, its main product is the CDU (cold liquid distribution unit). In the future, based on actual needs, the company plans to gradually apply immersion technology to supercomputing center thermal management and is currently accelerating customer engagement.

In the robot business, the company has completed its industrial layout in joint assemblies, harmonic reducers, planetary reducers, and force sensors through its subsidiaries, such as Anhui Ruisibo and Xinghui Sensing. The company's rubber products have already been matched, and lightweight skeletons have been sent to customers for sampling, ultimately aiming to achieve production and manufacturing of robot joint assembly products. The company and its subsidiaries have signed strategic cooperation agreements with Shenzhen Zhongqing Robot Technology Co., Ltd. and EFFORT Intelligent Equipment Co., Ltd. It has also signed project intention cooperation agreements with Shenzhen Zhuji Power Technology Co., Ltd., forming an upstream and downstream industrial chain layout to promote the development of robot body manufacturing and OEM business.

Investment Thesis

The company's automotive business remains stable, while it actively explores liquid cooling and robot business opportunities. We are highly optimistic about the company's development prospects.

As for valuation, we expected diluted EPS of the Company to RMB 1.21/1.45/1.63 of 2025/2026/2027. And we accordingly gave the target price to RMB 29, respectively 24/20/17.8x P/E for 2025/2026/2027. "Accumulate" rating.

Historical P/E Band
Source: Wind, Company, Phillip Securities Hong Kong Research

Risk Factors

1) Progress of new production line is below expectations;
2) Overseas market risk;
3) Macroeconomic downturn affects product demand;
4) Sharply rising raw material prices or sharply falling product prices.

Financials

(Closing price as at 26 September)

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