Key takeaway

In 2025, the company’s revenue stabilized while profit growth accelerated, indicating that as the lithium battery industry recovers, the company is clearly benefiting as a core supplier of lithium battery back-end equipment. The company’s neworders signed recorded rapid growth. Downstream products such as small steel-cased batteries, energy storage, and solid-state batteries are opening new growth space. The company’s earnings are expected to grow rapidly in 2026. Meanwhile, the company is actively advancing global expansion and has established deep cooperation with Korean, Japanese, European, and US clients. Its overseas expansion results are beginning to emerge.

Event

The company released its 2025 annual report and 1Q26 report. In 2025, operating revenue was RMB2.997bn, up 0.52% YoY. Net profit attributable to shareholders of the parent company was RMB0.368bn, up 12.88% YoY. Net profit attributable to shareholders of the parent company excluding non-recurring items was RMB0.345bn, up 11.06% YoY.

In 1Q26, operating revenue was RMB0.845bn, up 24.31% YoY and 206.55% QoQ. Net profit attributable to shareholders of the parent company was RMB0.128bn, up 10.62% YoY and 844.62% QoQ. Net profit attributable to shareholders of the parent company excluding non-recurring items was RMB0.127bn, up 9.05% YoY and 915.27% QoQ.

Quick Take

Revenue bottomed out and stabilized in 2025: Overseas business has become a new growth engine

In 2025, the company achieved revenue of RMB2.997bn, up 0.52% YoY. Among this, 4Q25 revenue was RMB0.276bn, down 11.09% YoY. 1) By segment, charging and discharging equipment/other equipment/accessories recorded revenue of RMB2.552bn/RMB0.361bn/RMB0.051bn, representing YoY changes of -1.24%/+3.37%/+123.38%, respectively.

The company’s traditional lithium battery back-end equipment business is gradually emerging from the trough and operating conditions have improved, while the accessories business achieved explosive growth. 2) By region, the domestic market recorded revenue of RMB1.314bn, down 34.37% YoY. The company is still recognizing orders signed during the industry downturn, and revenue remains under pressure. The overseas market recorded revenue of RMB1.651bn, up 72.84% YoY. Overseas business has become the core engine driving the company ’s revenue growth.

On a single-quarter basis, in 4Q25 revenue and profit declined due to the pace of order recognition. In 1Q26, performance achieved significant growth both YoY and QoQ. As the company gradually recognizes orders signed during the industry upcycle in 2026, its earnings are expected to improve quarter by quarter.

Full-year gross margin slightly under pressure, operating cash flow surged YoY

In 2025, the company recorded net profit attributable to shareholders of the parent company of RMB368mn, up 12.88% YoY; net profit attributable to shareholders of the parent company excluding non-recurring items reached RMB345mn, up 11.06% YoY. Full-year profit growth outpaced revenue growth. In 2025, gross margin was 28.36%, down 2.97pct YoY; net margin was 12.29%, up 1.35pct YoY; net profit attributable to shareholders of the parent company margin was 12.29%, up 1.35pct YoY. The full-year gross margin declined slightly due to the timing of order revenue recognition, while net margin and net profit attributable to shareholders of the parent company margin increased, benefiting from cost reduction and efficiency improvement as well as improving industry prosperity. Specifically: 1) Gross margin side: Gross margins of charging and discharging equipment, accessories, and other equipment were 27.78%, 50.04%, and 23.27%, respectively, with YoY changes of -3.51pct, -2.62pct, and -2.31pct.2) Expense side: In 2025, the company’s overall period expense ratio was 13.89%, down 0.73pct YoY. Among them, selling expense, administrative expense, R&D expense, and financial expense ratios changed by +0.89pct, -0.48pct, +0.44pct, and -1.58pct YoY, respectively. 3) Cash flow: In 2025, net cash flow generated from operating activities was RMB1.196bn, up 606.55% YoY; the ratio of net cash flow from operating activities to net profit was 324.67%, up 272.80pct YoY.

Leading lithium battery back-end equipment provider, continued deepening of global presence and market expansion

The company is closely aligned with downstream customers and actively captures opportunities from downstream technology iteration. New products such as small steel-cased batteries, energy storage, and solid-state batteries are opening up new growth space. As leading consumer electronics manufacturers promote battery solution replacement, demand for small steel-cased battery equipment is strong. As a core equipment supplier in the back-end segment, the company will directly benefit. Meanwhile, the energy storage market is also developing toward larger-capacity battery cells, creating demand for equipment upgrades and replacement. Solid-state batteries place higher technical requirements on back-end products, which significantly increases the value per unit of back-end equipment and boosts equipment demand. As a leading equipment manufacturer in the back-end segment, the company is actively aligning with related demand and is expected to benefit from the future development of solid-state batteries.

The company is accelerating its global expansion. Its internationalization strategy is advancing across multiple fronts and has delivered notable results. For Korean customers, the company continues to deepen cooperation with core Korean clients such as LG, Samsung, and SK. To enhance localized service capabilities and mitigate tariff risks, it has built the Korea phase II plant in Cheonan, South Korea. For Japanese clients, the company has successfully entered Toyota's mass production line system and deepened cooperation. For European and U.S. clients, the company has made a breakthrough and become a supplier to Tesla, while steadily advancing equipment delivery and technical coordination for Volkswagen PowerCo projects in Spain and Canada.

Earnings forecast and investment recommendation

We expect the company to achieve operating revenue of RMB4.018bn, RMB5.298bn, and RMB6.592bn in 2026– 2028, representing YoY growth of +34.09%, +31.84%, and +24.43%, respectively; net profit attributable to shareholders of the parent company is projected to reach RMB503mn, RMB652mn, and RMB804mn, representing YoY growth of +36.46%, +29.76%, and +23.33%, respectively, corresponding to P/E ratios of 38.31x, 29.52x, and 23.94x; considering the company’s continued rapid growth in newly signed orders each year, new growth opportunities from downstream products such as small steel-cased batteries, energy storage, and solid-state batteries, as well as the smooth progress of its internationalization strategy, we give a “Buy” rating.

Risks:

1. Risk of macroeconomic and international relations volatility: The company’s major overseas clients include Samsung SDI, LG, SK, and Volkswagen, while some clients have established factories in markets such as the United States, Europe, and Southeast Asia. Therefore, macroeconomic policies and international relations may lead to reduced or even suspended cooperation between the company and its overseas clients, which may adversely affect the company’s operating results.

2. Risk of declining gross margin of main products: The company’s main product, the lithium battery production line post-processing system, faces pressure from market competition and customer price reduction requirements; if the company cannot maintain its established competitive advantages and further enhance cost control capabilities, it may result in fewer orders for its main products or a further decline in gross margin.

3. Risk related to customer acceptance: Revenue recognition in the lithium battery post-processing equipment industry mainly depends on equipment acceptance; if the industry experiences severe fluctuations in the future, some downstream lithium battery manufacturers may operate at low utilization rates or suspend operations, and if their operating performance declines significantly and funding becomes tight, they may delay or refuse equipment acceptance, which could have a material adverse impact on the company’s operating results.

4. Risk of exchange rate fluctuations: Part of the company’s sales revenue comes from overseas markets and is mainly settled in USD and EUR; therefore, exchange rate fluctuations, especially RMB appreciation, may have a certain impact on the company’s financial position.

5. Risk of new technology iteration: The company’s after-treatment system equipment developed and produced based on electrochemical principles is used in the production of various rechargeable batteries such as nickel–metal hydride and lithium-ion batteries. The related equipment technology upgrades and product replacement cycles are relatively fast, and peers in China and abroad may launch more advanced technologies more quickly, which could cause the company’s R&D to lose value and make it difficult to complete its R&D plans.