Key takeaway

As a leading automotive trim enterprise, the company achieved steady revenue growth. This demonstrates the advantage of its business scale and customer base. Short-term profit pressure does not change its strategic determination. It will continue deep internationalization, horizontal diversification, and forward-looking venture in new business segments. Looking ahead to 2026, we suggest paying attention to whether the company can effectively control costs, achieve smooth ramp-up of overseas capacity, and make substantial breakthroughs in new businesses (seats/robot). Event The company released its 2025 financial results. In 2025, the company achieved a revenue of RMB15.524bn, up 17.04% YoY. The net profit attributable to shareholders of the parent company was RMB815mn, down 16.54% YoY. In 4Q25, the company achieved a revenue of RMB4.111bn, up 19.96% YoY. The net profit attributable to shareholders of the parent company was RMB192mn, down 25.87% YoY.

Quick Take

Steady revenue growth and short-term profit pressure

1. On the revenue side, the company achieved steady revenue growth. This was mainly driven by the continuous volume increase of orders from major customers. The door panel assembly, bumper assembly, and seat businesses grew rapidly. By business segment, the annual revenue of instrument panel assembly, overhead console assembly, door panel assembly, interior accessories, bumper assembly, exterior accessories, and seats and seat accessories was RMB9.557bn, RMB127mn, RMB3.08bn, RMB319mn, RMB674mn, RMB234mn, and RMB625mn, respectively. These represented YoY changes of -14.48%, +6.63%, +42.14%, +54.85%, +42.02%, -19.14%, and +317.69%, respectively. The sales to the top five customers accounted for 77.92%. This shows its solid cooperative relationship with core customers (such as internationally renowned electric vehicle brands, Geely, and Chery).

2. On the profit side, the gross profit margin in 2025 decreased by 1.63 pcts YoY to 18.01%. The net profit margin decreased by 2.11 pcts YoY to 5.25%. The main reasons for the profit decline include intensified industry competition and annual price reduction pressure from customers (the gross profit margin of the main business instrument panel assembly decreased by 2.87 pcts). The operating cost growth rate (19.43%) was higher than the revenue growth rate (17.04%). The administrative expense increased by 42.90% YoY (due to increased employee headcounts and depreciation and amortization). The R&D expense increased by 25.79% YoY (due to incre ased R&D of new products and new processes).

3. Regarding cash flow, the net cash flow generated from operating activities of the company was RMB768mn, down 40.60% YoY, mainly due to the increase in cash payments.

Comprehensive implementation of internationalization and diversification strategies

1. Acceleration of globalization strategy: The company established subsidiaries in Germany (Munich, Bavaria) and the United States (Kentucky), and increased capital for production bases in Slovakia and Mexico for expansion. Overseas assets have accounted for 20.82% of total assets, and revenue in North America and Europe achieved exponential growth (North America +216.57%, Europe +85,768%), showing initial success in overseas market expansion, aiming to better serve international customers and avoid trade policy risks.

2. Expanding the second growth driver: 1) In terms of seat business, the company completed the acquisition of 70% equity of Anhui Ruiqi Automotive Parts Co., Ltd. to integrate seat business resou rces, aiming to build it into a new growth driver. In 2025, the company's revenue from seats and seat accessories increased by 317.69% YoY, but the gross profit margin decreased by 4.75 pcts YoY, still in the integration and investment period. 2) In terms of robot business: The company established a wholly-owned subsidiary Changzhou Xinquan Intelligent Robot Co., Ltd. in December 2025, focusing on core components of robot, marking the company's official entry into the emerging sector to seek medium and long-term development potential.

3. Capital market operation: Officially initiated the issuance of H shares and listing on the Main Board of the Hong Kong Exchange, aiming to build an international capital platform to provide financial support for overseas business expansion and R&D innovation. Investment recommendation: We expect the company's operating revenue from 2026 to 2028 to be about RMB18.2bn, RMB21.4bn, and RMB25.3bn respectively, and the net profit attributable to shareholders of the parent company to be RMB899mn, RMB1.005bn, and RMB1.265bn respectively, corresponding to PE multiples of about 37x, 33x, and 26x respectively. Considering the performance upside that the company's globalization and diversification layout may bring, we maintain the "Buy" rating.

Sensitivity analysis: Under the optimistic scenario, the company's revenue grows rapidly, and raw material costs decrease significantly. We expect the company's 2026-2028 revenue to be about RMB18.5bn, RMB22.1bn, and RMB26.4bn respectively, and the net profit attributable to shareholders of the parent company to be about RMB1.09bn, RMB1.252bn, and RMB1.587bn respectively, corresponding to PE multiples of about 31x, 27x, and 21x respectively. Under the pessimistic scenario, the company's revenue grows slowly, and raw material costs increase slightly. We estimate the company's 2026-2028 revenue to be around RMB18.1bn/RMB21.1bn/RMB24.7bn respectively, and net profit attributable to shareholders of the parent company to be around RMB829mn/RMB914mn/RMB1,147mn respectively, corresponding to PE multiples of about 40x/36x/29x respectively.

Risks: Deteriorating industry competition landscape; raw material prices and RMB exchange rate may fluctuate sharply; customer expansion and mass production progress of new projects may fall short of expectations.