Key takeaway

GEB mainly engages in bearing cages and precision components, and its “bearing cages + precision components” dual-engine growth strategy has entered a stage of deep integration and coordinated growth, with scale effects beginning to emerge. On July 16, wholly owned subsidiary Boyuan Zhiqu plans to invest RMB50mn in Chenyu Precision through a capital increase. Upon completion, it will hold a 55.56% equity stake, achieving controlling interest and consolidated reporting. Chenyu Precision mainly engages in the manufacturing of metal components such as liquid cooling plates, connectors, and gears based on PM and MIM processes. This investment mainly focuses on MIM-process liquid cooling plates, and leveraging its precision component processing capabilities, the company is expanding into liquid cooling structural components, which is expected to open up a new growth curve.

Event

On July 16, wholly owned subsidiary Boyuan Zhiqu plans to invest RMB50mn in Chenyu Precision through a capital increase. Upon completion, it will hold a 55.5556% equity stake, achieving controlling interest and consolidated reporting. Chenyu Precision mainly engages in metal components such as liquid cooling plates, connectors, and gears based on PM and MIM processes. This investment mainly focuses on MIM-process liquid cooling plates.

Quick Take

Deeply engaged in the manufacturing of precision mechanical components, with diversified business expanding into emerging application fields

GEB mainly engages in bearing cages and precision components, and is expanding into fields such as low-altitude flight, embodied intelligence, semiconductors, AI computing power liquid cooling, and hydrogen energy. The company takes precision stamping technology as its core business. Its bearing cage downstream applications cover automobiles, wind power, construction machinery, rail transit, aerospace, and high-end equipment sectors; precision components are mainly used in automotive transmissions, engines, new energy electric drive systems, as well as door lock and seat systems.

The company adheres to the “bearing cages + precision components” dual-engine growth strategy, and will focus on four core businesses in the future: bearing cages, automotive precision components, automotive electric drive components and assemblies, and hydrogen energy. It is committed to becoming a world-class solution provider for core precision mechanical components.

Dual-engine growth strategy advances, with rapid shipment volume growth in wind power bearing cages and electric drive products

In 2025, bearing cages and accessories achieved main business revenue of RMB834mn, up 30.8% YoY, of which revenue from wind power-related products reached RMB391mn, up 61.0% YoY; precision components achieved main business revenue of RMB1.007bn, up 69.3% YoY, of which revenue from new energy electric drive stators and rotors reached RMB525mn, up 231.2% YoY. Revenue from new energy electric drive stators and rotors in 1Q26 maintained a high growth trend, increasing 178.3% YoY to RMB154mn. By region, domestic and overseas main business revenue in 2025 reached RMB1.673bn and RMB168mn, up 51.8% and 29.3% YoY, respectively. The company’s “bearing cage + precision components” dual-engine growth strategy has entered a stage of deep integration and coordinated development, while the precision components segment successfully expanded into emerging sectors such as new energy vehicles and industrial automation.

Scale effect initially emerged, expense ratio declined

In 2025, the company’s overall gross margin was 26.03%, down 2.60pcts YoY. Gross margins of bearing cages and accessories and precision components were 37.49% and 20.08%, respectively. The higher revenue contribution from the precision components business led to a slight decline in gross margin. Net profit attributable to shareholders of the parent company margin was 7.28%, basically flat YoY. The company’s operating revenue continued to expand, and the scale effect initially emerged. The period expense ratio declined 2.25pcts YoY to 17.14%. Selling expense, administrative expense, R&D expense, and financing expense ratios were 1.73%, 8.42%, 6.46%, and 0.52%, respectively, changing by -0.49, -0.86, -0.93, and +0.02pcts YoY, respectively.

Capital operation continued to advance, extending into server liquid cooling thermal management

The RMB970mn convertible bond issuance was successfully completed, mainly invested in the intelligent manufacturing project for key high-end equipment components. In June 2026, the company completed the issuance of RMB970mn convertible corporate bonds, mainly invested in the intelligent manufacturing project for key high-end equipment components, as well as the intelligent manufacturing project for precision components of joint modules and semiconductor heat sinks. After reaching full production, the related fundraising investment projects will form annual production capacity of 2.10mn motor stators, 1.95mn motor rotors, 60,000 low-altitude aircraft motors, 30mn semiconductor heat sinks, and 3.50mn harmonic reducer flexspline blanks. On the one hand, the fundraising investment projects can expand production capacity for stators and rotors of new energy vehicle drive motors and strengthen cooperation with core customers; on the other hand, leveraging existing core technologies such as precision machining and centrifugal casting, the company will extend into the low-altitude economy, robotics, and semiconductor sectors.

Acquisition of 100% equity interest in Guangzhou Unipres, integrating advanced stamping processes. Regarding mergers and acquisitions, the company acquired 100% equity interest in Guangzhou Unipres for RMB116mn, and Guangzhou Unipres was included in the consolidated scope starting from July 8, 2026. This deal will help expand the company's business scale and enhance market competitiveness. The company will subsequently fully leverage Guangzhou Unipres' strong stamping capabilities, mature management experience, and high-quality customer resources, deeply integrating them with its own precision machining and refined management capabilities to expand new products and new business customer groups; meanwhile, it will capitalize on Guangzhou Unipres' location and plant facility advantages to build or replicate non-fuel vehicle end-product production lines, improve asset operation efficiency and market response speed, better serve customers in South China, and strengthen regional market competitiveness.

Acquiring a controlling stake in Chenyu Precision to expand into fields such as liquid cooling plates. The

wholly owned subsidiary Boyuan Zhiqu plans to invest RMB50mn in Chenyu Precision through a capital increase. Upon completion of the capital increase, it will hold a 55.5556% equity stake, achieving controlling interest and consolidation. Chenyu Precision mainly engages in metal parts such as liquid cooling plates, connectors, and gears based on PM and MIM processes. This investment mainly focuses on MIM-process liquid cooling plates. Relevant samples have passed customer verification and can achieve mass supply based on customer order demand. After the investment is completed, Chenyu Precision's front-end MIM integrated molding and back-end CNC processing for liquid cooling plates will complement and integrate with the company's existing processes, promoting resource sharing and deep collaboration between both parties in technology R&D, product design, supply chain management, and customer channels. This will help improve the server liquid cooling and heat dissipation industry chain, enrich the product matrix, and expand new business growth drivers. The counterparty has committed that Chenyu Precision's net profit for 2027-2029 will be no less than RMB20mn, RMB26mn, and RMB33mn, respectively.

Investment recommendation: GEB has established a dual-engine growth structure of “bearing cages + precision components,” with rapid volume ramp-up in wind power bearing cages and new energy electric drive stators and rotors. In the future, as production capacity from convertible bond-funded projects is released, new businesses are expected to gradually expand into low-altitude flight, embodied intelligence, liquid cooling and heat dissipation, and other fields, driving further growth in revenue and net profit:

(1) Bearing cages and accessories: Revenue from the wind power sector in 2025 increased by 61.0% YoY, and the company will continue to promote rapid volume ramp-up in wind power bearing cages and machined bearing cages. Considering growth in wind power product orders and the release of new capacity, we assume revenue growth rates of 30%/20%/25% for 2026-2028, respectively; some newly added capacity in 2026 will still be in the ramp-up stage, and thereafter, with economies of scale and product mix optimization, we assume gross margin of 36.5%/37.0%/37.5%, respectively.

(2) Precision components: Revenue from new energy electric drive stators and rotors increased 231.2% YoY in 2025, and continued to increase 178.3% YoY in 1Q26. Considering the increase in order share from core customers and the gradual release of capacity from the stator and rotor investment projects, we assume revenue growth rates of 55%/20%/35% for 2026-2028, respectively; as capacity utilization improves and the scale of new energy electric drive products expands, we assume gross margin of 20.5%/21.5%/22.5%, respectively.

(3) Chenyu Precision liquid cooling business: Assuming the capital increase is completed successfully, Chenyu Precision will be included in the consolidated scope in 2H26. The MIM liquid cooling plate business is currently in the sample verification and mass supply preparation stage, and volume ramp-up is expected to begin in 2027. The counterparty committed that Chenyu Precision's net profit will be no less than RMB20mn/RMB26mn/RMB33mn in 2027-2029, respectively. Based on a 55.5556% shareholding ratio, it is expected to contribute approximately RMB11mn and RMB14mn in net profit attributable to shareholders of the parent company in 2027 and 2028, respectively.

The company is expected to achieve operating revenue of RMB2.843bn/RMB3.401bn/RMB4.428bn in 2026 -2028, representing YoY growth of 40.69%/19.65%/30.18%, respectively; net profit attributable to shareholders of the parent company is expected to reach RMB198mn/RMB258mn/RMB337mn, representing YoY growth of 34.70%/30.28%/30.30%, respectively, corresponding to PE of 29.74x/22.83x/17.52x, respectively. The company's wind power bearing cages and new energy electric drive stators and rotors are entering a rapid volume expansion stage, while convertible bond-funded projects and external acquisitions will drive capacity expansion of core products and the layout of emerging businesses. We initiate the coverage of the company with "Buy" rating.

Risks:

(1) Demand from downstream new energy vehicle and wind power industries falls short of expectations: The company's precision components and bearing cage businesses are significantly affected by new energy vehicle production and sales, wind power installations, and customer production schedules. If industry demand growth slows, market competition intensifies, or order releases from core customers fall short of expectations, revenue growth and profitability of related products may be affected. Assuming the company's gross margin decreases by 2pcts in 2026-2028 due to downstream new energy vehicle and wind power industry demand falling short of expectations, net profit attributable to shareholders of the parent company would reach RMB145mn/RMB193mn/RMB250mn during the same period, representing YoY changes of -1.34%/+33.15%/+29.51%, respectively.

(2) Construction progress and capacity ramp-up of fundraising investment projects fell short of expectations: The convertible bond fundraising investment projects involve products such as stators and rotors for new energy vehicle electric drive systems, low-altitude aircraft motors, harmonic reducer flexspline preforms, and semiconductor heat sinks. If project construction, equipment commissioning, customer expansion, or capacity ramp-up progress falls short of expectations, the newly added capacity may not be absorbed in a timely manner, which may affect the release of economies of scale.

(3) Customer validation and commercialization progress of new products fell short of expectations: Products such as low-altitude aircraft motors, flexspline preforms, semiconductor heat sinks, and MIM liquid cooling plates are still in the customer validation or mass production introduction stage. If customer validation cycles are extended, product technology iterations occur, or bulk order implementation falls short of expectations, it may affect the revenue contribution of new businesses and the cultivation of a second growth curve.

(4) M&A integration results fell short of expectations: Guangzhou Unipres and Chenyu Precision still need further integration with the company in areas such as customers, technology, production, and management systems. If the release of synergies, order expansion, or post-investment management results fall short of expectations, it may lead to the operating performance of the target companies falling below expectations, and may result in risks related to failure to meet performance commitments and goodwill impairment.